Environmental – Oil + Gas Monitor http://www.oilgasmonitor.com Your Monitor for the Oil & Gas Industry Mon, 15 Aug 2016 06:57:26 +0000 en-US hourly 1 https://wordpress.org/?v=4.6.9 Elimination of Engine Aftertreatment Key to Cutting Costs http://www.oilgasmonitor.com/elimination-of-engine-aftertreatment-key-to-cutting-costs/ Tue, 20 Jan 2015 14:38:16 +0000 http://www.oilgasmonitor.com/?p=8466 David Oliphant | MTU America Time is money, uptime is king and engine reliability is non-negotiable. In an environment of growing complexity, the oil and gas industry is looking for ways to drive escalating service and supply costs down. Balancing the scale between engine performance and efficiency can be a tightrope walk, but with the […]

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January 20, 2015
David Oliphant | MTU America
Time is money, uptime is king and engine reliability is non-negotiable. In an environment of growing complexity, the oil and gas industry is looking for ways to drive escalating service and supply costs down. Balancing the scale between engine performance and efficiency can be a tightrope walk, but with the recent leaps in advanced engine technology, the industry has welcomed new cost-cutting innovations, with new system-streamlining technologies on the horizon. Once in market, operators can expect to see maintenance and fuel costs controlled even before a new engine is installed.

Some recent notable engine technology advancements include common rail fuel injection and turbocharging. These key developments have allowed the oil & gas industry to make fundamental improvements in the efficiency and performance of its equipment. Common rail distributes fuel to injectors from a high-pressure fuel rail. The rail’s pressure, included at the start and end of the activation signal, is electronically controlled. This offers flexibility in controlling both the injection timing and rate, and can translate into a 5 percent gain in efficiency in diesel engines. Driven by exhaust gas, turbocharging increases engine performance by compressing the air so that more oxygen flows into the combustion chamber, resulting in higher fuel burn and power output.

Evolving Past Aftertreatment

Since the mid-2000s, diesel engine technology has been evolving to generate more power while running cleaner, and as a result, many became more complex with a number of subsystems, including aftertreatment systems like diesel particulate filters and oxidation catalysts. Now, however, some manufacturers have found ways to achieve Tier 4 compliance without these complex systems. Whether diesel particulate filters or oxidation catalysts, the elimination of aftertreatment saves oil and gas operations time and money.

Streamlined for Safety

Safety is also improved with the removal of aftertreatment. Diesel particulate filters require additional time for the user to complete the regeneration process. Like diesel oxidation catalyst aftertreatment, this in itself is a volatile process, as is any process involving heating a high-risk material. Near oil wells, high temperatures can be considered a serious risk, and, which can compromise safety for operators and equipment and result in unexpected costs. In addition to improvements in operational safety, the elimination of aftertreatment also eliminates related logistics costs, such as stocking catalyst fluid.

A Brighter, Cost-Effective Future

There’s no question that in 2015 and beyond the key for continued cost-savings will be efficiency in maintenance practices. When you can minimize downtime by streamlining your operation and strategically upgrading your fleet, you’ll drive operating costs down and output up. When eighty five percent of maintenance is fuel burn, brute horsepower alone without consideration of other critical factors can bankrupt an operation. Each manufacturer is blazing their own trail, selecting engine configurations that will satisfy their customers as well as federal regulators. This spirit of collaboration between engine manufacturers, distributor service networks and customers will continue to create greater efficiencies for the oil and gas industry, improving everyone’s bottom line.

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2014: Year of Futility in the Fight Against Climate Change http://www.oilgasmonitor.com/2014-year-of-futility-in-the-fight-against-climate-change/ Wed, 07 Jan 2015 12:00:25 +0000 http://www.oilgasmonitor.com/?p=8427 Steve Goreham | Climate Science Coalition of America The year 2014 was another year of futility in the fight against climate change. Climatists redoubled efforts to convince citizens that urgent action is needed to stop dangerous global warming. But the gap between public warnings and actual events produced an endless stream of climate irony. January […]

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January 7, 2015
Steve Goreham | Climate Science Coalition of America

The year 2014 was another year of futility in the fight against climate change. Climatists redoubled efforts to convince citizens that urgent action is needed to stop dangerous global warming. But the gap between public warnings and actual events produced an endless stream of climate irony.

January began with a frosty bang as an arctic air mass descended on the central United States, following a similar event in December. What was once called a cold snap is now ominously christened a “polar vortex.” Record-low daily temperatures were recorded from Minnesota to Boston, along with all-time seasonal snowfalls in many cities.

In a White House video released on January 8, John Holdren, chief science advisor to President Obama, made the paradoxical statement, “But a growing body of evidence suggests that the kind of extreme cold being experienced by much of the United States as we speak is a pattern that we can expect to see with increasing frequency as global warming continues.”

Also in January, passengers of the research ship Akademik Shokalskiy were rescued after the ship was locked in ice for 10 days near the antarctic coast. The expedition lead by professor Chris Turney had intended to study how weather patterns near Antarctica were changing due to man-made global warming.

On February 16, during a presentation in Indonesia, Secretary of State John Kerry stated that climate change was “perhaps the world’s most fearsome weapon of mass destruction.” Only two days later, protestors set fire to Kiev, the capital of Ukraine, leading to the resignation of President Viktor Yanukovych. In March, Russia seized the Crimea. In July, Malaysia Airlines Flight 17 was shot down over eastern Ukraine, and political unrest continues today. In the Middle East, slaughter of innocent civilians and beheading of western captives became a growing trend. Man-made climate casualties seem remarkably scarce in comparison.

In March, the Intergovernmental Panel on Climate Change of the United Nations releasedClimate Change 2014: Impacts, Adaptation, and Vulnerability, part of its Fifth Assessment Report. The report said that man-made climate change would reduce world agricultural output. Lead author Dr. Mark Howden stated, “There’s increasing evidence that climate change is also impacting on agriculture, particularly on some of the cereal crops such as wheat and maize. The negative impacts are greater and quicker than we previously thought.”

Meanwhile, farmers continued to ignore the warnings of the IPCC. According to the US Department of Agriculture, world agricultural production set all-time records for all three major cereal crops in 2014, with rice output up 1.1 percent, wheat up 11.2 percent, and corn up a whopping 14.0 percent over 2013.

The Obama administration continued its attack on coal-fired power plants, which provide about 40 percent of US electricity. In June, the EPA proposed new restrictions on carbon emissions that would make it virtually impossible to build a new coal-fired plant in the US. At the same time, more than 1,200 new coal-fired plants are planned across the world, with two-thirds to be built in India and China.

In his 2007 Noble Prize acceptance speech, former Vice President Al Gore warned that the arctic ice could be gone in “as little as seven years.” But arctic sea ice rebounded in 2014 and antarctic sea ice has been growing for decades. According to the University of Illinois, satellites measured global sea ice area at above the 30-year average at the end of 2014.

In September, the United Nations held a climate summit in New York City to urge the world to conserve energy and reduce emissions. Spokesman Leonardo DiCaprio stated, “This disaster has grown beyond the choices that individuals make.” Mr. DiCaprio neglected to mention his frequent flights on carbon-emitting private jets or his ownership of the world’s fifth largest yacht, purchased from a Middle East oil tycoon.

In October, climate skeptics reported the eighteenth straight year of flat global temperatures. Satellite data shows no temperature increase since 1997. The “pause” in global warming is now old enough to vote or to serve in the military.

Hurricanes and tornados are favored events for generating alarming climate headlines, but US weather events were few in 2014. US tornadic activity was below average and the lack of strong hurricanes continued. No Category 3 or stronger hurricane has made US landfall for more than eight years, the longest period since records began in 1900.

The last half of 2014 witnessed a steep drop in world petroleum prices from over $100 per barrel to under $60 per barrel. Hydraulic fracturing and horizontal drilling, technologies perfected by US geologists and petroleum engineers over the last two decades, produced an explosion in US oil production and triggered the fall in world prices.

But the concurrent drop in US gasoline prices to two dollars per gallon is not welcomed by man-made global warming believers. Former Energy Secretary Stephen Chu said in 2008, “So we have to figure out how to boost the price of gasoline to the levels in Europe.” English journalist George Monbiot has lamented, “We were wrong about peak oil: there’s enough in the ground to deep-fry the planet.”

With all the climate fun in 2014, what will 2015 hold?

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Liability Under Federal Environmental Law for Crude Oil Spills from Rail Cars http://www.oilgasmonitor.com/liability-federal-environmental-law-crude-oil-spills-rail-cars/ Wed, 24 Sep 2014 12:00:14 +0000 http://www.oilgasmonitor.com/?p=7815 Terrence M. Fay | Thompson Hine More crude oil was spilled from rail cars last year than in the nearly four decades since the federal government began collecting data on such spills in 1975. According to data compiled by the Pipeline and Hazardous Materials Safety Administration, more than 1.15 million gallons of crude oil was […]

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September 24, 2014
Terrence M. Fay | Thompson Hine

More crude oil was spilled from rail cars last year than in the nearly four decades since the federal government began collecting data on such spills in 1975. According to data compiled by the Pipeline and Hazardous Materials Safety Administration, more than 1.15 million gallons of crude oil was spilled from rail cars in 2013. By comparison, from 1975 to 2012, 800,000 gallons of crude oil was spilled from rail cars.

There was a time in our history when a carrier could spill crude oil from a rail car and leave the resulting mess for the impacted community to clean up. However, that time ended with the enactment of the oil and hazardous substance spill provisions of the Waterway Improvement Act of 1972, subsequently included as Section 311 of the Federal Water Pollution Control Amendments of 1972 (renamed the Clean Water Act (CWA) in 1977). In its current incarnation, that section expressly prohibits the discharge of “harmful” quantities of oil into the navigable waters of the United States from any “on-shore facility,” which is expressly defined to include motor vehicles and rolling stock of any kind.

After decades of tinkering with Section 311 of the CWA, Congress decided to significantly restructure and expand the federal regulation of oil spills previously contained in the CWA by amending it to include the Oil Pollution Act of 1990 (OPA). Under the OPA, a “responsible party” is strictly, jointly and severably liable for cleanup costs and other damages “for a … facility from which oil is discharged, or which poses the substantial threat of a discharge of oil, into or upon the navigable waters or adjoining shoreline….” The term “responsible party” is defined to mean the owner or operator of a “facility,” which is, in turn, defined to include any structure, equipment or device used for storing, handling, transferring or transporting oil. A fortiori, that definition is broad enough to include rail cars.

A responsible party under the OPA is liable for any costs incurred to prevent, minimize or mitigate oil pollution, whether those costs are incurred by the government, an Indian tribe or a private individual, including (1)(1) natural resource damages, which are recoverable by the United States; (2)(2) real or personal property damages, which are recoverable by the owner or lessee of the damaged property; (3)(3) damages for loss of subsistence use of natural resources; (4)(4) damages equal to the net loss of taxes, royalties, rents or net revenues from the damaged natural resources, which are recoverable by the United States and political subdivisions; (5)(5) loss of profits and earning capacity, which are recoverable by any claimant; and (6)(6) damages for net costs of providing increased or additional public services during spill clean up activities, which are recoverable by a state or political subdivision. In addition, a responsible party can also be subject to significant monetary penalties, including penalties for failing to report a spill of oil into the navigable waters of the United States to USEPA’s National Response Center.

Of course, liability under the OPA is triggered by an oil spill that reaches the “navigable waters of the United States.” What about spills of crude oil from train cars where the spill does not reach navigable waters – does federal law contain any mechanism for imposing liability for those spills? The answer is yes.

Although the federal Resource Conservation and Recovery Act (RCRA) is commonly thought of as the federal hazardous waste act, some of RCRA’s provisions reach beyond chemical waste regulation. In particular, RCRA prohibits the open dumping of any waste USEPA determines to be hazardous and imposes substantial administrative, civil and criminal penalties for the open dumping of such waste.

Since the USEPA Administrator has, by regulation, determined that wastes having a flash point of 60°C or 140°F are “hazardous” for regulatory purposes, if any waste resulting from oil spilled from a rail car, whether contaminated soil or contaminated water, exhibits the threshold flash point, a hazardous waste has been disposed of by open dumping in violation of federal law.

However, even if the waste material generated by a crude oil spill does not have the requisite flash point, RCRA still affords a mechanism, both to the government and to private citizens impacted by such a spill, to seek redress. Section 7003 of RCRA allows USEPA to seek injunctive (cleanup) relief against any person who contributes to the past or present handling, transportation or disposal of solid or hazardous waste if an “imminent and substantial endangerment” to the public health, safety or environment is created thereby. Oil-contaminated soil, at least, will likely be a “solid waste” for purposes of RCRA Section 7003. RCRA Section 7002 provides a tandem citizen suit remedy for private parties to seek injunctive (cleanup) relief if the government declines to act against the responsible party after receiving proper notice. In either case, liability will fall upon any person found to have “contributed” to the disposal of the solid waste posing the imminent and substantial endangerment, in this instance the soil and, possibly, the water contaminated with oil from the spill. It would not be much of a reach for a federal court to find that the rail carrier, the owner of the tank car from which the oil was spilled, and the owner of the oil (if different) all in fact “contributed” to the spill, at least for purposes of RCRA Sections 7002 and 7003.

In addition to the OPA and RCRA, liability for oil spills can be triggered under Section 112 of the federal Clean Air Act (CAA). Section 112(r) was originally intended to protect against the accidental emission of air pollutants, including volatile hydrocarbon emissions that might accompany a crude oil spill, from what is referred to as a “stationary source” (as distinguished from a “mobile source,” such as a locomotive). Section 112(r)(1) is known as the General Duty Clause, and it requires owners and operators to identify hazards, design and maintain a safe facility, and minimize the consequences of accidental emissions when they occur.

As interpreted by USEPA, the CAA’s definition of stationary source does not include air pollution sources used in “transportation, including storage incident to transportation, of any regulated substance” governed by regulations adopted by the U.S. Department of Transportation (USDOT). USEPA recognizes that containers used in transportation or under active shipping papers are subject to exclusive regulation by USDOT under the Interstate Commerce Act. That recognition notwithstanding, it is USEPA’s position that a rail car may become a “stationary source” subject to Section 112(r) during loading, unloading, or when the container is being stored at a facility not incident to transportation (i.e., not under active shipping papers).

In the event of a crude oil spill from a rail car not under active shipping papers, CAA Section 112(r) may impose strict (no fault) liability, and allows USEPA to file an action seeking civil penalties of not more than $37,500 for each day an owner or operator of a leaking rail car violates the General Duty Clause, as well as injunctive relief to prevent further violations. In addition, in the 1990 amendments to the CAA, Congress gave the USEPA Administrator an additional mechanism to enforce compliance with the CAA: the power to assess an administrative penalty of up to $25,000 per day of violation.

Whether under the OPA, RCRA, CAA or any combination of those acts, USEPA and parties impacted by crude oil spills from rail cars have ample authority to compel responsible parties to remediate crude oil spills and to impose significant monetary penalties to deter future spills.

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Stepping Up to the Challenge: How Local Communities in the Utica Shale Play are Taking Advantage of the Boom http://www.oilgasmonitor.com/stepping-challenge-local-communities-utica-shale-play-taking-advantage-boom/ Mon, 15 Sep 2014 08:29:27 +0000 http://www.oilgasmonitor.com/?p=7748 Zack Space | Vorys Advisors By now, all of us have heard about the far-reaching effect that shale fracking has had on our national energy policy. What is less clear is its impact on the many rural communities around the country that overlie the oil and gas-rich shale. Many of these areas have seen the […]

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September 15, 2014
Zack Space | Vorys Advisors
By now, all of us have heard about the far-reaching effect that shale fracking has had on our national energy policy. What is less clear is its impact on the many rural communities around the country that overlie the oil and gas-rich shale. Many of these areas have seen the shale boom as a sort of saving grace: one that promises good jobs and prosperity in regions where high poverty and unemployment have lingered for generations. Conversely, many shale communities are discovering that the shale boom is not without its challenges.

Shale communities are working hard to confront the stress that rapid oil and gas activity has placed on local infrastructure, educational, housing, and public safety resources. Simultaneously, they are striving to make the economic benefits of the play lasting and sustainable. Thanks to creative economic tools many of these communities are confident that the shale boom can be properly managed in the short term, and sustainable in the long term. And that is good news for many shale communities, which ironically have a history of natural resource-based economies that have resulted in boom-to-bust cycles.

For example, much of Eastern Ohio, which lies over the Utica Shale, is currently experiencing a rapid gas and oil boom. This boom is the latest in a long line of economic cycles founded in the extraction of natural resources. Many Eastern Ohio counties continue to pay the price for over-dependence on a once-booming coal industry. Most coal profits—during peak production—left the region, and were not invested in public infrastructure expansion. Moreover, apart from electrical generation facilities, there were no obvious downstream manufacturing markets for which the coal could be put to long-term use. A failure to promote economic diversification and build public infrastructure debilitated the region, which still reels decades after the coal boom peaked. Now, community leaders in the region are faced with the challenge of making the shale economy both robust and sustainable, and they appear up to the task.

Ohio law has created a number of creative economic development tools that allow county commissioners, mayors, and township trustees to leverage the shale economy for the creation of strong infrastructural build out: building new water and wastewater treatment and delivery systems, roads, schools, and industrial parks. Tax Incentive Financing and Joint Economic Development Districts are two such tools that are gaining in popularity among Eastern Ohio local governments.

Port Authority directors and other economic development professionals across the Eastern Ohio region are leading efforts to attract downstream manufacturers by developing industrial sites and aggressively marketing the region’s economic potential. What’s more, the Utica counties of Ohio have collaborated with one another in these efforts, demonstrating that a regional team is stronger than the sum of its individual parts.

Public-private partnerships are also working to promote sustainable growth. Communities have teamed with oil and gas developers and midstream companies to build and maintain roads, water and wastewater systems, broadband access and industrial parks. Educators—from secondary and vocational schools to higher-ed facilities—are working with the industry to create vigorous workforce development pipelines to ensure local workers have access to shale-related jobs.

Shale-based oil and gas production has presented both enormous challenges and incredible opportunities for the rural communities of shale country. Will this rural-based economic boom be different than those that preceded it? Early indications suggest that creative, collaborative actions on the part of local government officials and the industry, offer a chance to break the boom to bust cycle, making for long-lasting economic improvement.

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Energy Realities http://www.oilgasmonitor.com/energy-realities/ Mon, 21 Jul 2014 10:44:34 +0000 http://www.oilgasmonitor.com/?p=7511 Dr. Ken Morgan | TCU’s Geology, Energy and The Environment It is a reality that our world continues to demand and use more and more resources. Global population has increased to 7 billion with projections of 9 billion in just a few years. We have learned that economic and social stability relies on having a […]

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July 21, 2014
Dr. Ken Morgan | TCU’s Geology, Energy and The Environment
It is a reality that our world continues to demand and use more and more resources. Global population has increased to 7 billion with projections of 9 billion in just a few years. We have learned that economic and social stability relies on having a sufficient supply of at least three critically important resources: food, water and energy. Shortage of even one of these and a country is subject to buying (importing) on the open market. Can anyone imagine the U.S. having to buy food and/or water? But yet, we have become all to accustomed to being a nation that buys energy to help meet our expectations as a world economic leader and powerful international ally.

We are witnessing dramatic growth in energy demand from countries such as India, Brazil and, of course, China just to name three. China is projected to become the largest energy user in a few short years passing Europe and the U.S. in energy demand. There are projections that the world will need an additional U.S. equivalent amount of energy (100 quadrillion BTU’s, EIA, 2012) by 2030. Even with this additional energy production, almost 1/3 of the world will still be using biomass energy for cooking (2014 “Outlook for Energy”, ExxonMobil). Just think about the entire continent of Africa and the potential for energy market growth, if the world steps into that arena.

It is becoming a mad scramble for securing long term “reliable, cheaper and cleaner” energy supplies as global populations and demand are projected to be substantially higher over the next two decades. For the most part, in the “energy game”, the reality is you are most often either a buyer or a seller. So the questions we face are where will all of this new energy come from to meet the predicted demand, who will produce it and how much will it sell for?

The reality is we have been an energy buyer for decades so an even bigger question is just where will the U.S. be by 2030? Will we be an energy buyer or seller? It seems reasonable that we need to address this question since we continue to experience a shortfall of domestic energy production, the looming problem of rising global demand for energy and a $17 trillion dollar national debt that continues to grow.

With the discovery of gigantic “shale plays” in this country and the resulting dramatic growth of domestic supplies of oil and gas, maybe we have a real chance at swinging the energy game to our favor. Cheap energy has a way of winning over markets. As a geologist and professor I witnessed the amazing story of shale production right here near Fort Worth by the Mitchell Energy and Devon Energy teams almost 10 years ago. Over the coming months, I hope to share what we have learned and the reality of our potential place in the dramatically changing global energy landscape. In particular, we will focus on the natural gas sector of the industry both domestically and worldwide. We will explore if natural gas is really the cheap, clean and abundant energy resource to meet a generation of energy needs as we continue to develop new technologies to meet long-term domestic and global energy challenges.

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Baker Hughes Move: Prescription for Industry’s Future? http://www.oilgasmonitor.com/baker-hughes-move-prescription-industrys-future/ Fri, 23 May 2014 15:15:41 +0000 http://www.oilgasmonitor.com/?p=7204 Chris Faulkner
Breaking Ground: Insights from the Frack-Master

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May 23, 2014
Chris Faulkner | Breitling Oil and Gas

It’s been a long time coming: Baker Hughes’ announcement in April that it will disclose the chemicals used in its fracking fluids may just signal the start of a much-needed tidal change in the oil and gas industry.

Or not. The Baker Hughes announcement came with a qualification that could water down its promise considerably; the company will only disclose its frack fluid recipes “where accepted by our customers and relevant government authorities.” In other words, when acting as a contractor, Baker Hughes will not disclose its chemical mixtures if its customer objects.

Baker Hughes’ announcement comes on the heels of ExxonMobil’s agreement to disclose risks associated with its fracking operations, after years of shareholder pressure for greater transparency. Exxon’s first report, due in September, will address how it manages risks, limits impacts to air quality, handles chemicals, and mitigates damage to affected roads.

FracFocus, has been a national repository of voluntary frack fluid disclosures since its launch in 2011, but critics have pushed relentlessly for laws requiring such disclosure and even nitpicked about the organization and presentation of information on FracFocus. By mid-2013, by the way, FracFocus had “427 participating companies reporting chemical data for nearly 43,000 wells across the country,” according to a FracFocus news release.

Disclosure is a Start

Formation of FracFocus and moves like Exxon’s and Baker Hughes’ are precisely what industry needs if ever it can hope to turn the negative tide of public opinion in its favor. There are stacks of studies on industry’s side, but that has done little to combat the vitriol of the fractivists. We can blame it on a media that is more interested in controversial visuals and a celebrity-obsessed public that would rather jump aboard the latest Hollywood cause than actually read the research, but industry is also to blame.

Not because industry is guilty of the misdeeds of which it’s accused, though a few bad actors have been. Industry is to blame for its own public relations black eye because it failed to respond effectively to the public backlash after the Deepwater Horizon disaster and was caught like a deer in headlights when Gasland made fracking the next cause célèbre.

Part of the problem has been the refusal of many of the majors to disclose what’s in their frack fluids, leaving fractivists to imagine the worst possibilities from a frightening and endless list of options. Now comes the Baker Hughes announcement, atop California law requiring companies to list the chemicals in their frack fluids, a Wyoming law that could do the same (depending on the outcome of a lawsuit), and the $2.6 million Texas ruling in favor of a family claiming health issues as a result of nearby fracking operations. Can industry-wide disclosure be far behind?

Social License is the Goal

Disclosure is a start, an important one, but it’s not enough.

Disclosure is part of the “social license” oil and gas companies must apply for and secure before breaking ground on new operations. And earning the social license takes more than publishing a list or running a few ads. Getting the social license from communities where drilling is taking place requires some good, old-fashioned, in-person interaction. Oil and gas executives meeting with locals in town hall gatherings, in cafes and stores and movie theaters, even at the drill sites, to openly and frankly discuss the plans for their operations and address the concerns of affected residents.

The social license also requires prompt and honest response to community concerns and, most especially, to any operational issues that have risen to the level of public knowledge. Like industry’s stubborn refusal to disclose fracking additives, ignoring claims of wrongdoing or reports of accidents that could impact human health and the environment simply cannot continue to be industry’s modus operandi.

Blame Josh Fox and the fractivists, blame the pervasiveness and immediacy of social media, blame the news media’s penchant for colorful footage—but don’t make the mistake of thinking that any amount of research that supports the industry’s practices and track record gives industry the moral high ground in the public sphere. Winning public opinion takes elbow grease, applied in person, even one person at a time. The future of this industry may well depend on it.

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Top Land Use and Environmental Issues Facing Onshore Oil and Gas Operations http://www.oilgasmonitor.com/top-land-use-environmental-issues-facing-onshore-oil-gas-operations/ Fri, 25 Apr 2014 12:27:38 +0000 http://www.oilgasmonitor.com/?p=7070 Kamran Javandel

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April 25, 2014
Kamran Javandel and Emily Murray | Allen Matkins Leck Gamble Mallory & Natsis LLP

For onshore oil and gas operators, land use and environmental issues can present significant hurdles in the establishment of new facilities or the expansion of existing facilities. Land use and environmental challenges may even arise in the continued operation of existing facilities, particularly where there are new external developments or political pressures. Responding to and addressing these issues can result in significant costs and delays that may not be apparent on the face of the project. Operators need to be aware of these issues and the potential hidden costs. This article identifies top land use and environmental concerns facing oil and gas operators, and how they may arise.

Land Use Entitlements
A land use entitlement is a right given by a jurisdiction to develop land for a particular use. Land use entitlements include zoning, general and specific plans, and other types of permits that enable or restrict certain uses of or upon the land. In order to develop land for onshore oil and gas operations, including drilling, storage, refining, and transportation, the underlying land will generally need to be “entitled” for that use. Once the land is entitled for oil and gas operations, in most cases that entitlement cannot be taken away unless the use is discontinued. Operating without the appropriate land use entitlements in place can subject an operator to fines, orders to cease the use, and even criminal sanctions in some contexts.

For land that is not already entitled for oil and gas operations, an operator will need to seek and obtain the necessary entitlements from the appropriate jurisdiction(s). An operator does not necessarily have to own the land to seek the entitlements, but usually must demonstrate some control over the land, through a lease or pending purchase contract, for example. Obtaining the necessary entitlements can be very costly and time consuming, in some cases taking upwards of a year. Therefore, operators should conduct “due diligence” into the entitlement status of the subject land prior to undertaking a project, and have a thorough understanding of the extent of the existing entitlements, and any additional entitlements needed for the project.

Species and Habitat Concerns
There are many laws in place to protect endangered and threatened species, including both plants and animals, and the habitat for such species. Oil and gas operations frequently encounter species and habitat issues because oil and gas exploration and operation is predominantly conducted in rural, or less densely populated areas, where endangered and threatened species and habitat may be relatively undisturbed. Development in cities and other densely populated areas, by contrast, encounters far fewer species and habitat issues. In some cases, the presence of an endangered or threatened species or its habitat may be a complete bar to oil and gas operations, or may result in significant limitations.

In a timely example of this issue, the State of Oklahoma and the Domestic Energy Producers Alliance (DEPA) recently filed a lawsuit alleging that U.S. Fish and Wildlife Service (FWS) changes to the federal endangered species categorization process could unduly disrupt oil and gas production in Oklahoma. The State and other plaintiffs in the action claim that FWS is improperly rushing to make determinations regarding species status. Of particular concern to the State and DEPA is the lesser prairie chicken, which FWS is expected to soon designate as endangered. According to a DEPA spokesperson, this designation “could disrupt drilling and exploration on hundreds of thousands of very promising oil and gas lands in [Oklahoma].”

Oil and gas operators should thoroughly investigate the presence or proximity of endangered or threatened species or habitat before undertaking a project, and should monitor these issues for existing operations, as compliance with endangered species and habitat laws and regulations can be very costly for the operator.

Water Rights
Obtaining rights to use significant amounts of fresh water is essential to many types of oil and gas operations, including enhanced recovery, drilling and completion, and well stimulation. In arid locations, oil and gas operations may be competing with other users, including agricultural, for access to surface and groundwater. The allocation of rights to water is highly regulated and varies from state to state. For example, in Texas, surface water – such as that from a stream, lake, or river – is owned and managed by the State, and anyone who uses surface waters for oil or gas activities must obtain a water rights permit from the Texas Commission on Environmental Quality (TCEQ). By contrast, groundwater in Texas may be managed individually by landowners under the “rule of capture”, or collectively by landowners and groundwater conservation districts (GCDs).

Oil and gas operators need to have a complete grasp of the water needs of their operations, and a plan for obtaining such water. The permits needed and strategy may depend on the source of the water, such as surface or groundwater, and the applicable state and local regulations.

Other Permitting and Regulatory Requirements
In addition to the concerns identified above, oil and gas operations are subject to many other types of permitting and regulatory requirements at the federal, state, and local levels. Such permitting and regulatory requirements apply to spill prevention and control, air emissions, water quality, and noise, to name a few. A complete understanding of the regulatory framework for any oil and gas operation is necessary to avoid the potentially substantial costs and delays associated with non-compliance.

Written By Insider KAMRAN JAVANDEL


Javandel_Kamran_InsiderKamran Javandel is an associate in the Environmental and Natural Resources and Litigation departments of our San Francisco office. His practice focuses on representing and advising clients in environmental and business litigation issues.

Prior to joining Allen Matkins, Kamran was a senior staff scientist at Cambria Environmental Technology, Inc. (now Conestoga-Rovers & Associates) from 2004 to 2007. He managed the assessment and remediation of underground storage tank release sites. He consulted with major oil company clients to establish goals and develop action plans; directed subcontractors in investigations to assess subsurface soil and groundwater conditions; interfaced with professional engineers and geologists on remedial design solutions; collaborated with government agencies to ensure regulatory compliance; reviewed chemical analytical data; and authored reports.

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Local Law 43 – Less Costly Clean Fuel for New York http://www.oilgasmonitor.com/local-law-43-less-costly-clean-fuel-new-york/ Fri, 21 Mar 2014 14:15:32 +0000 http://www.oilgasmonitor.com/?p=6881 Richard Rapp | CCI Energy Solutions Following a winter that has added the term “polar vortex” to our vocabulary, it isn’t hard to imagine that one scene likely played out over and over in households across the country: a homeowner tears open an envelope and sighs, wondering how bills for heating oil ever got so […]

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March 21, 2014
Richard Rapp | CCI Energy Solutions
Following a winter that has added the term “polar vortex” to our vocabulary, it isn’t hard to imagine that one scene likely played out over and over in households across the country: a homeowner tears open an envelope and sighs, wondering how bills for heating oil ever got so high. Thankfully, recent legislation in New York City will help some residents dramatically lower costs by discontinuing heavy oil in favor of natural gas or other clean burning fuels.

Local Law 43 is the result of years of study and cooperation between groups including government officials, scientists and property stakeholders. Signed into law in 2010, the regulation requires more than 9,000 residential and commercial buildings to stop using heating oil No. 6 and switch to low sulfur No. 4 or No. 2 oil – or better yet, natural gas – by 2015. Boilers using No. 4 heating oil have until 2030 to convert to No. 2 or natural gas.

Transitioning away from No. 6 to cleaner fuels like natural gas is a smart move on many levels. According to information provided by the City of New York, natural gas can save consumers up to 30 percent annually in energy costs compared to oil.

Local Law 43 is also a boost for an economy still on the mend. Not only do energy savings translate into extra money in the pockets of many New Yorkers, but the process of converting heating systems to cleaner energy sources will generate hundreds of millions in economic activity and also provide jobs to hardworking Americans in and around the five boroughs.

The advantages of this reform extend beyond dollars and cents by improving the local environment – not to mention quality of life for City residents. In 2011, although only one percent of City buildings used No. 4 or No. 6 oils, they accounted for more soot pollution than all of the cars and trucks in New York City combined. Upon full implementation, Local Law 43 is expected to reduce fine particulate emissions from heated buildings by 63 percent and could lower the overall concentration of fine particles in the City’s air by five percent. To put those numbers into context, the reduction in annual PM emissions from converting one 200-unit apartment building from No. 6 oil to natural gas is equivalent to taking more than 45 delivery trucks off the road.

The new standards are already making a difference. In September, the New York City Department of Health and Mental Hygiene announced that the City’s air quality was the cleanest it had been in more than fifty years and cited the City’s clean heat programs as the most significant contributor to the improvements. Moreover, the agency estimated that since 2007, soot pollution dropped 23 percent, and sulfur dioxide levels plummeted 69 percent since 2008.

Cleaner skies and fewer PM emissions also mean fewer incidents of health problems like decreased lung function, aggravated asthma and even premature death. Already, the decline in air pollution levels has prevented 800 deaths and 2,000 emergency room visits and hospitalizations connected to lung and cardiovascular diseases per year, as compared to 2008 levels, according to the Department of Health and Mental Hygiene. Hopefully, that is a sign that other health issues will see similar declines.

So, as much of the country emerges from one of the harshest winters in recent memory, let’s look to the City of New York as an example of how government and the energy sector can work together to bring about meaningful energy reforms. For communities in colder climates, this could mean following New York’s lead and banning emission-heavy heating fuels and outdated boiler systems in favor of cleaner, more efficient alternatives. For cities such as Miami and Los Angeles, perhaps it means having a frank conversation about whether your current energy system could be improved to be more efficient, more environmentally sound and less costly. With similar levels of private/public cooperation around the country, we’ll be seeing a positive impact on America’s economy, environment and energy outlook in a New York minute.

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What is Causing the Global Water Crisis: Lack of Supply or Lack of Innovation? http://www.oilgasmonitor.com/causing-global-water-crisis-lack-supply-lack-innovation/ Mon, 17 Mar 2014 23:01:05 +0000 http://www.oilgasmonitor.com/?p=6837 Jim Matheson | Oasys Water The increasing demand for fresh water to support drilling activities has sparked passionate environmental and economic debate in the U.S. and throughout the world, especially as serious droughts in California and beyond are in the headlines. Against the backdrop of a global water crisis, oil and gas producers and innovators […]

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March 17, 2014
Jim Matheson | Oasys Water
The increasing demand for fresh water to support drilling activities has sparked passionate environmental and economic debate in the U.S. and throughout the world, especially as serious droughts in California and beyond are in the headlines. Against the backdrop of a global water crisis, oil and gas producers and innovators are needed at the forefront to implement and commercialize innovative water technologies that will minimize fresh water consumption and help the supply of freshwater keep up with the growing demand. This article looks at the global water crisis and provides an overview of an emerging technology that leading producers are using to treat the most challenging waters and add recycled freshwater back into the freshwater supply.

Of all the water on this planet, less than one percent is fresh and available for use. With an ever-increasing population, more food, power, and goods are needed – adding significant stress on our limited water resources. Researchers predict that at the anticipated usage rate, the demand for fresh water will be 40 percent higher than the available supply by 2030, making water the third biggest global risk according to the World Economic Forum – and for the oil and gas community – the single largest challenge that needs to be addressed in the coming years.

Though the Global Water Crisis is indeed global, at its current state, water concerns vary greatly between different regions. In the U.S. today, the average per capita water usage is 100 gallons per day, which is nearly 4 times greater than that of Europe. In arid West Texas, where significant oil and gas production is taking place, the City of Midland used 219 gallons per capita per day according to 2011 data from the Texas Water Development Board. It is said that the city has since slashed water consumption in half after the drought. Meanwhile, the International Energy Agency’s World Energy Outlook annual report forecasts that the United States will surpass Saudi Arabia and Russia as the world’s largest oil and gas producer sometime around the year 2020 due to the plentiful supplies of reserves and the decreased cost of extraction thanks to innovative drilling techniques. The “unconventional” techniques that are making this possible are also bringing the reality of the “energy-water nexus” to the Main Street’s of many communities around the U.S. as debates around the use of fresh water resources and waste water disposal management create both opportunities and challenges for the oil and gas industry. And as these technologies begin to proliferate around the world, water related issues and debates will surely follow.

Texas provides an interesting case study for how oil rich, water starved geographies can create more harmony between the economic and environmental aspects of drilling and water production. As one of the most arid states in the country, Texas has historically relied on state regulation of water use to endure extended periods of drought. Residents understand that the oil and gas industry requires significant allocations of fresh water and have traditionally been supportive given the economic impact of that industry in Texas. However, recent advancements in drilling technologies are changing the landscape. These innovations have opened up drilling sites that were formerly not financially viable, driving up the number of wells in the state almost 50 percent decade over decade and increasing fresh water requirements to anywhere from 7,500 to 18,000 m3 per well. This massive demand is creating pressure on the supply and use of water. In this context, there is another potential water source that can be used to augment the pressure on limited fresh water: produced water.

Produced waters are unavoidably extracted along with the fossil fuel resource (often at much higher volume than the oil or gas volumes) and contain a myriad of constituents. Two of the most problematic constituents when it comes to reuse for continued drilling activities are mineral hardness and salt (NaCl). Both of these constituents are dissolved in water, which means desalination technologies can be a solution. Historically, the primary means to remove these contaminates was through desalination using thermal evaporation and distillation. The high energy and high capital cost combined with low recovery of these systems have pushed the market toward lower cost membrane-based systems (e.g. reverse osmosis – RO) for desalination. However, when dealing with produced water flows, traditional membranes are often ineffective due to the levels present of the dissolved contaminants in produced water, which can be up to five times the levels found in seawater.

In recent years, a small number of start-up companies have begun developing solutions that turn these difficult, once unusable, waters into sustainable fresh water supplies at a lower total cost and utilizing less energy. One such technology is based on the principle of natural osmosis, whereby water flows from a state of lower to higher concentration, which has recently been adopted by the oil and gas market. This forward osmosis (FO) based system uses a “draw solution” to pull fresh water across a membrane leaving contaminants behind. The diluted solution is then sent through a recovery step whereby fresh water is separated by the concentrated draw solution in a continuous process using low-grade heat. The process uses up to 50 percent less energy than thermal evaporation, making water treatment and reuse an economically viable solution for oil and gas industry players.

Major corporations, including National Oilwell Varco (NOV), have begun adopting this technology for use in treating the most challenging produced waters and thereby providing a valuable fresh water source to producers at significantly lower cost than conventional methods. Because of the dramatic reduction in cost, the innovative solution can eliminate a pain point in the oil and gas community by providing a reliable source of fresh water, even in the most arid regions, while also reducing the cost to truck and dispose of produced water into injections wells.

As with most of the world’s most vexing problems, breakthrough technological innovations are becoming available to help alleviate the rapidly growing fresh water scarcity concerns. However, many of the barriers to adoption to bring them to market at scale are non-technological. Awareness, proper incentives, new policies and novel business models are needed to help drive widespread adoption of these solutions and turn today’s environmental and economics challenges into tomorrow’s fresh water resources.

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High Pressure, High Temperature Challenges and Policies for Oil & Gas Industry http://www.oilgasmonitor.com/high-pressure-high-temperature-challenges-policies-oil-gas-industry/ Fri, 14 Feb 2014 01:05:33 +0000 http://www.oilgasmonitor.com/?p=6670 Joe Serres | Serres Consulting Natural gas development projects proposed on rural private and rural public lands, including in areas that don’t see themselves as “producers” of oil and gas but merely in shipping lanes for the product, mark a radical shift in the world energy picture is raising environmental concerns in the United States. […]

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February 13, 2014
Joe Serres | Serres Consulting
Natural gas development projects proposed on rural private and rural public lands, including in areas that don’t see themselves as “producers” of oil and gas but merely in shipping lanes for the product, mark a radical shift in the world energy picture is raising environmental concerns in the United States. Until recently, the U.S. had been expected to import more natural gas, but now drillers are producing a lot more domestic natural gas; so much that prices are down, along with industry profits. Balancing this is the fact that many domestic corporations want plenty of cheap natural gas here in the U.S. to fuel manufacturing, and, individually, some of the export proposals have proven controversial in the communities where companies want to build them.

Whether the United States should export some of its newly abundant supplies of natural gas is a controversial issue before the Department of Energy. About two-dozen applications have been submitted to the agency for exports to countries that don’t have free-trade agreements with the U.S. One such plan, the Jordan Cove Energy Project, would sit on the North Spit of lower Coos Bay in Oregon. According to the proposed development plan there will be two huge storage tanks next to a 45-foot-deep berth for ships. Nearby, a new power plant would run the refrigeration necessary to turn natural gas into the much-easier-to-transport liquefied natural gas (LNG).The plant would process about 1 billion cubic feet of natural gas every day. That’s enough to meet the daily needs of nearly 4 million American homes but the gas wouldn’t stay in the U.S., as the principal markets for consumption are Asian countries- India, Japan, and South Korea. If the $6 billion project is built, several thousand construction workers would be brought in and housed. After construction, the company says, there will be about 150 new jobs with wages averaging $75,000 a year. That would be a boost to a region hit hard by the decline of the timber industry- but the controversy extends beyond this coastal area as the project requires a 230-mile-long pipeline to transport gas from Malin, Ore., on the other side of the Cascade mountain range, to the Oregon coast. The Pacific Connector Gas Pipeline would cross public and private land and over 350 salmon-bearing streams. This large-scale of a project has engaged a very diverse range of interested parties and has now been in the permitting process for several years.

Since Barack Obama was sworn in as President of the United States in 2009, the Environmental Protection Agency (EPA) has proposed and promulgated numerous regulations under the 11 pollution control statutes Congress has directed it to implement. The EPA has also been revisiting emissions, effluent, and waste management regulatory decisions made during earlier Administrations and proposing more stringent standards to address pollution that persists as long as 40 years after Congress directed the agency to take action. These actions are being driven by statutory requirements to reexamine regulations, by legal challenges and court decisions, or because of changing technologies or new scientific information. The magnitude of change under the Obama administration is a test for the oil and gas industry, but a broader test remains for the as the public remains unconvinced that the benefits from oil and natural gas development proposals are worth the environmental harm.
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The EPA’s air regulations are cost effective and, in fact, will spark increased profits while providing substantially more protection for clean air public health from coast to coast. The rules were spurred by the Clean Air Act, which requires the EPA to regularly review and update its air quality regulations in order to keep pace with science and technology. Highlights of the new rules include reducing volatile organic compound (VOC) emissions by 540,000 tons, an industry-wide reduction of 25%. VOCs react with sunlight to form ground-level ozone, the key ingredient of smog and contain other toxic compounds. The new rules come as air pollution from the oil and gas industry is increasingly impacting communities across the country. Environmental groups generally believe that the EPA is moving in the right direction, but in several cases they would like the regulatory actions to be stronger. Virtually all major EPA regulatory actions are subjected to court challenge, frequently delaying implementation for years. In many cases, EPA rules must be adopted by states to which the program has been delegated before actual implementation occurs (e.g., establishing air quality plans or issuing permits).

The challenge for the oil and gas industry is more significant than just regulatory compliance- what the industry has consistently failed to do is explain, upfront, the potential harm from their proposed actions on the health and environmental health of the population being affected, leaving a reliance on establishing cause and effect to private organizations, government regulators and outside health & safety experts. If this mode of operations changes the oil and gas industry will benefit from increased reliance and interaction with local communities.

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