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  • W&J Energy Review | January 29 2014


Editors: Diana Stares, Jack Myint

Local Affairs

Falling oil prices bring slowdown in shale drilling | Inquirer, January 25 2015

The slowdown in domestic oil drilling is spilling over into the Marcellus Shale natural-gas region. Several large drilling companies have announced plans to reduce 2015 capital-spending plans in Appalachia in response to low energy prices. Some producers and service companies have already announced layoffs. "There's a tightening of capital," said David J. Spigelmyer, president of the Marcellus Shale Coalition, the industry trade group. "Cap-ex [capital expenditure] programs have declined fairly significantly here in the first quarter. I think that's going to continue for a while." Though Marcellus Shale producers mainly extract natural gas, which is priced independently of oil, they are not immune to the downward pressure on world oil prices. Producers in the "wet gas" areas of Western Pennsylvania, West Virginia, and eastern Ohio have announced the biggest reductions in drilling plans. They chiefly target natural-gas liquids such as propane, butane, and ethane, whose prices move largely in conjunction with oil markets, which have collapsed. 


Pa. Oil And Gas Royalty Bills Clear Senate Committee | Law360, January 22 2015

A Pennsylvania state legislative committee gave approval on Wednesday to a pair of bills aimed at increasing protections for landowners locked in lease deals with oil and gas drillers.  In its first meeting of the new legislative session, the Senate Environmental Resources and Energy Committee signed off on bills that would require drillers to more thoroughly detail deductions taken out of royalty checks and forbid retaliation against landowners who question the payments they receive. “Our goal is to ensure that leaseholders across Pennsylvania are treated fairly,” Sen. Gene Yaw, R-Bradford, said in a statement. “Across my district, leaseholders have contacted me with concern over inadequate payments and questionable deductions from their royalty checks. This legislation will undoubtedly work to level the playing field.” Senate Bill 147 would require drillers to provide a thorough accounting on royalty check stubs for the total amount of oil or gas extracted from a landowner’s property, as well as a complete list of any taxes, production costs or other deductions taken from the payment. The legislation would allow landowners to inspect a company’s records to ensure that they had received everything owed under the contract.


A nuanced decision on oil, gas revenue from shale wells | Pittsburgh Post-Gazette, January 13 2015

The words “Robinson Township” appeared 16 times in a Commonwealth Court opinion issued last week that upheld the state legislature’s right to use oil and gas revenue from drilling in state forests for general spending. In some quarters, that alone is either a victory or a disappointment. The township’s name is a shorthand reference to a case the Pennsylvania Supreme Court decided in late 2013, in which a plurality of the justices revived the dormant environmental rights amendment to the state constitution. The opinion boldly reasserted the commonwealth’s responsibilities for protecting public natural resources.  Because it was a plurality opinion — meaning more justices joined it than other opinions, but not enough for a majority — legal observers had wondered what weight future courts would give the precedent. In last week’s decision, which was considered a loss for the environmental group that brought the case, the Commonwealth Court said that while the plurality opinion in the Robinson case is not binding, it is persuasive. The judges cited the plurality’s interpretation of the environmental rights amendment repeatedly. “The Robinson Township case I think had a profound impact on the analysis that the court employed,” said John Dernbach, a law professor at Widener University and an expert on the state’s environmental rights amendment.


Looking to Pa.'s economic future, I see green .. energy, that is | Pennlive, January 5 2015

Pennsylvania's energy future is at a crossroads. Across the state, new companies have leveraged our history in manufacturing and traditional energy production to make our state a leader in the global clean energy market. With a variety of state policies that have encouraged industry growth, Pennsylvania has experienced a boom in employment and economic benefits.  We should seize upon this opportunity to promote energy efficiency and independence while enhancing the resiliency of our power systems. Pennsylvania is one of eight states featured in new research from The Pew Charitable Trusts, entitled "Clean Economy Rising." The research shows that Pennsylvania has demonstrated clean energy leadership, which has delivered job growth, private investment, and deployment of renewable power. Both state and federal policies have contributed to this growth. Pennsylvania's Alternative Energy Portfolio Standard calls for 18 percent of the state's electricity to come from advanced energy sources by 2021. Eight percent is to come from renewable power, and the remaining 10 percent from other alternatives.


Report Recognizes Pennsylvania as Clean Energy Leader | 90.5 WESA, January 3 2015

Pennsylvania is becoming a nationwide leader in the clean energy industry. That’s according to a new report released by the Pew Charitable Trusts, which highlights eight states that have demonstrated leadership in clean energy policies, installation and economies. The goal was to analyze states outside of those usually credited with clean energy advances such as California. Jessica Lubetsky, Clean Energy Initiative officer, said the commonwealth has positioned itself to take advantage of what it already has – especially its manufacturing industry. “So we’re seeing a lot of clean energy in the form of industrial energy efficiency of large solar installations that are related to those manufacturing facilities,” Lubetsky said. With the ability to produce 3.3 gigawatts - which would power 2.5 million homes for a year - using clean energy, Pennsylvania ranks sixth in industrial energy efficiency technology. “So technology like combined heat and power or waste heat to power that are capturing that steam you often see coming off industrial sites – using that steam to generate more electricity and heat for a building,” Lubetsky said. The commonwealth ranked fourth in energy- and environment-related employment in 2011 with 136,000 jobs.


What's Next for Pennsylvania After the Year of Green Energy? | Marketwired, January 7 2015

Renewably sourced electricity, particularly solar energy, is proving to be an important part of our future. In fact, 2014 was a banner year for renewable energy sources. It's predicted that by the end of 2014, the U.S. will install an estimated 6.5 gigawatts (GW) of solar energy -- a 36 percent increase over 2013. Solar is the fastest growing source of renewable energy in America, accounting for a record 53 percent of all new electric generating capacity installed in the first half of 2014. So how do customers, specifically those in Pennsylvania, fit into America's growing renewable energy landscape? Today, Pennsylvania ranks 9th in solar installations among the 50 states, as well as D.C. and Puerto Rico. More than 1.3 million residential and commercial rooftops in the Pennsylvania could host solar panels, but not everyone in the state has solar-friendly rooftops. For example, residents with heavy tree coverage may find it difficult to go solar. For those who can't install solar, there are other options, such as choosing green energy plans. According to the Choose Energy Pennsylvania Empowerment Report, 32 percent of households that use Choose Energy to shop for their energy plans select a green plan. 


National Affairs

How Fracking Contributes to Oil Glut, Cheap Fuel for You and Me | Forbes, January 26 2015

Gasoline prices seem to be descending by the day. At some stops you could buy a gallon for less than two dollars. Taking inflation into account, it would be a delight for the average consumer to see gasoline go down to about a dollar a gallon, half its current price. As far as consumers are concerned, the cheaper, the better. However, what seems good for the typical consumer is not necessarily good for the global or just the American economy.  Oil-and-gas producing countries such as Russia, Nigeria, Iran and Venezuela, counting on oil to balance their precarious budgets, are suffering. OPEC seems to have given up on demanding prices go one way or another, leaving Saudi Arabia, the single biggest, most powerful oil producer, to decide for itself. The Saudis, of course, resist lowering production for fear of losing market share if prices rise again. Saudi Arabia is so important, so valuable in terms of America’s interests, that President Obama is shortening his visit to India to attend the funeral of Saudi Arabia’s long ruling King Abdullah. Saudi Arabia may be a monarchy, one of the world’s harsher dictatorships, but no one doubts its importance for U.S. interests and policies as a pro-western kingdom in a region roiled by conflict.

Obama: America is No. 1 producer of oil, gas |, January 21 2015

The United States and Russia are the top producers of natural gas -- with the United States producing 29.5 trillion cubic feet in 2012, and Russia producing 23 trillion. Oil production growth has contributed to the United States’ ability to produce more oil than it imports for the first time in about 20 years. The Energy Information Administration expects American production to continue to grow in 2015, despite recent lower crude oil prices. The majority of U.S. oil production growth is concentrated in four regions: Bakken, N.D.; Eagle Ford, Texas; the Niobrara region in the Upper Midwest states; and the Permian Basin of Texas and New Mexico. North Dakota and Texas together comprise almost 50 percent of all crude oil production in the United States -- compared to 2010, when the two states combined produced just 26 percent of all U.S. crude oil production. In 2013, energy markets consultant group PIRA Energy published a report that said shale production is one of the driving forces behind the country’s production growth. Shale oil and gas are commonly associated with hydraulic fracturing, or fracking, which is the process of using water pressure to fracture a rock to release natural gas and oil. The United States is the world leader in shale gas production.

Offshore Wind Energy Would Produce Twice as Many Jobs as Oil and Gas Operations in the Atlantic | HuffPost, January 23 2015

Did you know that coastal activity in Atlantic states--ranging from fishing, tourism, recreation and more--supports about 1.4 million jobs and net about $95 billion in gross domestic product every year? That means that anytime you head to the East Coast and spend time fishing or eating local seafood, for example, you are stimulating the local economy and supporting jobs. Unfortunately, the federal government could be threatening these jobs and economies by moving forward with offshore oil and gas exploration and development in the Atlantic. Last week, Oceana released a report that highlights the benefits of a clean and sustainable energy alternative: offshore wind energy. The report found that offshore wind would create twice the number of jobs and twice the amount of energy in the Atlantic Ocean than offshore drilling. The report also highlights how offshore drilling could jeopardize the healthy Atlantic Ocean that jobs and local economies depend on, challenging claims by the oil and gas industry that offshore drilling in the Atlantic will move the U.S. closer to energy independence, create jobs and generate revenue.


Will Falling Oil Prices Kill Wind and Solar Power? | ScientificAmerica, January 22 2015

The price of oil has plummeted from more than $100 a barrel in July to less than $50. Meanwhile the U.S. has become the world’s leading producer of natural gas, helping the country become more self-sufficient on energy. Will this abundance of fossil fuels derail the world’s shift to renewable sources of energy, such as wind and solar power? And what does this shifting energy landscape mean for the role of fossil fuels in the U.S. energy mix? And what about nuclear power—should concern of the safety of nuclear waste trump the benefits of exploiting this noncarbon-polluting source of energy? To find out we asked Steven Chu, professor of physics and molecular and cellular physiology at Stanford University and former Department of Energy secretary in the Obama administration. Chu also received a Nobel Prize in Physics in 1997 for his work cooling and trapping atoms with lasers. Follow the link above for the edited transcript of the interview.


Most U.S. Businesses Will See a Boost From Cheap Oil, Economists Say | The Wall Street Journal, January 26 2015

Most U.S. businesses will benefit from lower oil prices this year, but the cheaper energy bill also threatens to derail a recent driver of economic growth, according to a new survey of business economists.Three-fourths of economists said their business or industry will feel the effects of the price drop, with 57% expecting a positive impact, and 18% anticipating a negative impact, according to a survey from the National Association for Business Economics released Monday. “By a three-to-one ratio, it’s positive,” said James Diffley, a senior director at IHS Economics and the survey’s chairman. “The 18% though represent those industries that benefit directly from oil and gas. So, yeah, there’s a negative, but we think the positive outweighs the negative.” Cheap fuel is expected to give the economy a boost this year as consumers turn around and spend what they’re saving at the pump. Gas prices have fallen to close to $2 a gallon, and are poised to fall below that, one of the swiftest declines on record.


Energy Secretary: US Won’t Reach Goal of 1 Million EVs in 2015 |, January 26 2015

In his 2011 State of the Union address, President Barack Obama said he wanted the U.S. to become the first country with one million plug-in electrified vehicles (PEVs) on the road by 2015, but the U.S. Energy Secretary last week conceded the goal won’t be met. To date fewer than 300,000 plug-in hybrids and all-electric vehicles have been sold, but Energy Secretary Ernest Moniz said he remains optimistic that the country isn’t particularly far away from hitting the one-million mark. “We’re going to be a few years after the president’s aspirational goal of the end of 2015, but I think that we are within a few years of reaching that goal,” Moniz told the Detroit News last week. Up through 2014, green car analyst Alan Baum says 295,322 electrified vehicles have been sold. This total includes both plug-in hybrid electric (PHEV) and battery electric vehicles (BEVs).


International Affairs

India, US announce steps to promote clean energy | The Times of India, January 25 2015

Prime Minister Narendra Modi on Sunday dismissed that there was any pressure to ink a pact similar to US-China agreement on emission cuts as India and the US announced important steps to promote clean energy and confront climate changeSpeaking after talks with visiting US President Barack Obama here, Modi said "President and I expressed hope for a successful Paris Conference on climate change this year". Obama said that the two countries have agreed to make "concrete progress" in phasing out major greenhouse gases apart from expanding solar energy initiatives and launching joint projects to improve air quality in Indian cities. Both the countries agreed to "pursue" for a strong global climate pact on emission cuts in the forthcoming UN climate conference to be held in Paris in December this year. To read an official White House press release on U.S-India Climate and Clean Energy Cooperation, please click here.


China Dominates the World of Wind, but the U.S. Wind Energy Market Rebounds | Spectrum, January 26 2015

In 2014, the wind energy market in the United States grew sixfold, but it was still dwarfed by the world leader in wind: China. China’s 2014 wind installations were up nearly 40 percent over 2013’s, according to new data from Bloomberg New Energy Finance (BNEF). China installed 20.7 gigawatts last year, nearly half of the world’s total and more than four times the 4.7 gigawatts installed in the United States. The strong figures for wind reflect a solid year for clean energy investment worldwide. Global clean technology investment was $310 billion in 2014, according to BNEF—up 16 percent from the previous year, but still a little lower than its peak of $317.5 billion in 2011. Offshore wind saw record investment in 2014, but it was really rooftop solar photovoltaic installations that drove the rebound of clean energy overall.


U.S. Officials Hope To Steer Caribbean Countries Away From Venezuela | FDL, January 26 2015

The White House reported the event as an “energy round-table” discussion of “a cleaner and more sustainable energy future in the Caribbean through improved energy governance, greater access to finance and donor coordination.” While there is no mention of Venezuela, the Atlantic Council, a sponsor of the event, explicitly mentions Venezuela as the reason for the meeting. The Atlantic Council primarily works in securing the interests of NATO. With individuals like International Monetary Fund (IMF) director Christine Laguarde and World Bank President Jim Kim appearing, the event will take advantage of low oil prices hurting Venezuela at the current moment. Associated Press journalist Ben Fox wrote, even though Venezuela would not be brought up, “it will be on everyone’s minds.” Currently, Venezuela provides oil to Caribbean countries through Petrocaribe, which began in 2005 under former Venezuelan President Hugo Chavez. 


A Pipeline Against Peace: Israel's Recent Gas Deals May Exacerbate Tensions in the Middle East | Foreign Affairs, January 26 2015 

In October 2014, Israel struck a $15 billion gas deal with Jordan—it would export 1.6 trillion cubic feet of gas for the next 15 years, starting in 2017, from one of its two newly discovered oil fields in the Mediterranean. This deal was the latest in a string of negotiations that Israel has made in the region. The previous one, in January 2013, was signed with a Palestinian company—a $1.2 billion contract for 168 billion cubic feet of gas over 20 years. Both of these agreements, shepherded by the U.S. State Department, will ostensibly renew economic, and potentially political, cooperation between Israel and Arab states—Egypt has also expressed interest in tapping the mammoth reserves. As a result, Israel’s gas is being called a “lifeline for peace” in the Middle East. But the energy negotiations, conducted behind closed doors and with little public support, may do little to bring actual peace.


Why Saudis Are Holding Strong on Oil | Bloomberg, January 26 2015

A consensus has emerged since the death of King Abdullah of Saudi Arabia that the kingdom will not change course on oil policy. This consensus is probably right, at least for the short term.  It is, however, correct for reasons other than the ones that most observers have invoked. Moreover, while it looks unlikely that the kingdom will alter oil production in the coming months, barring a major change of heart of non-OPEC producers, interesting changes to Saudia Arabia's cabinet roster and other energy policies and could be closer than most realize. The basis of the conventional wisdom is rooted in personalities. New King Salman bin Abdulaziz has pledged continuity, stating he will adhere to the “correct policies” of his predecessors. 


The Top 10 Stories you need to know about Oil & Gas Today | Oilpro, January 26 2015

  • OPEC Says $45 Is The Oil Price Bottom, Expects Quick Rebound.
    Oil prices rose early Monday, erasing early losses after OPEC's Secretary-General reiterated over the weekend his expectation that the oil market would bottom out around current levels. By 1317 GMT Monday, Brent was trading at $49.13/barrel, up $0.34, recovering from an early low of $47.57. OPEC Secretary-General Abdullah al-Badri said in an interview with Reuters, "Now the prices are around $45-$55 and I think maybe they reached the bottom and will see some rebound very soon."

  • Oil Falls After Greek Election Sends Euro Tumbling.
    Oil slid in early Asian trade on Monday, with US crude falling close to a six-year low, after Greece's election results heightened uncertainty in the euro zone and depressed the bloc's currency against the dollar. Greece's left-wing Syriza appeared on course to trounce the ruling conservatives in Sunday's snap election, setting up a possible confrontation with international creditors.

  • Howya Holding Up? Taking Stock Of The US Drilling Drop So Far.
    US drilling activity has been falling for 10 weeks now, and we are starting to build enough history to make some interesting observations about the shape of this downcycle. On November 21, the US land rig count peaked at 1,864. Today the rig count is down 296 rigs from that high, to 1,568 (-16%). In December, the rig count declined 94 rigs. With a week still to go in January, the rig count is already down more than double that (-202 rigs in January so far). The downturn has accelerated as 2015 budgets take hold.

  • Could New Saudi King Mean A Change To Oil Policy?.
    The death of Saudi Arabia’s King Abdullah and the ascension to the throne of his brother Crown Prince Salman last Friday set oil markets atwitter speculating that the country’s hands-off oil pricing policy might change. Hope springs eternal, but the royal decree that reappointed Ali al-Naimi as Saudi Arabia’s Oil Minister soon dashed those hopes, and with them the oil prices rally associated with the announcement of Abdullah’s death. If the new king isn’t going to come to the rescue of the global oil industry, who will?

  • Venezuela In The Crosshairs - US To Host First-Ever Caribbean Energy Summit This Week.
    Today, US Vice President Joe Biden will host the first Caribbean Energy Security Summit in Washington, DC. Representatives from all countries of the region, except Cuba, will convene in the US capital, together with officials from the UN, European Union and global financing agencies such as the Inter-American Development Bank and World Bank. "Exhibit A" on the agenda will be addressing the decades-long addiction of countries in the region to Venezuela's oil, as falling oil prices continue to assail the Latin American country's economy and threaten its Caribbean crude clients.

  • Double Whammy: Alaska O&G Sector Battles Oil Prices AND White House.
    President Obama proposed designating 1.4 million acres of the Arctic National Wildlife Refuge as protected wilderness, drawing cheers from environmentalists but setting off a bitter new battle Sunday with the Republican-controlled Congress over oil and gas drilling in pristine areas of northern Alaska.

  • A Look at Campeche Bay and $48/barrel Economics.
    How does $48/barrel affect Mexico and the Bay of Campeche, Ciudad del Carmen? With the supposed market glut, and the balky mind-set of Saudi producers, who report $900 billion in reserves, the rest of the world has to deal with low oil prices. That includes Ciudad del Carmen, Campeche.

  • UK Parliament Group Calls For Shale Gas Fracking Moratorium.
    An influential committee of UK MPs has called for a moratorium on fracking in the UK on the grounds that it could derail efforts to tackle climate change. The government's drive for shale gas should be put on hold because it would lead to more reliance on fossil fuels, the Environmental Audit Committee said.

  • Canadian Oil Sands Firm Southern Pacific Files For Bankruptcy.
    Canadian oil sands-focused company Southern Pacific Resource Corp. has filed for protection from creditors through an insolvency filing under Canada’s bankruptcy law. The company said it determined that protection under Canada’s Companies’ Creditors Arrangement Act (CCAA) was the best course to pursue, considering the global low oil prices and its own low levels of production.

  • Hedge Funds Bet Oil Will Fall Further.
    Hedge funds boosted bearish wagers on oil to a four-year high as U.S. supplies grew the most since 2001. Money managers increased short positions in West Texas Intermediate crude to the highest level since September 2010 in the week ended Jan. 20, U.S. Commodity Futures Trading Commission data show. Net-long positions slipped for the first time in three weeks.