October 8, 2024 — Some new research from The University of Texas at Austin highlights the powerful — and sometimes counterproductive — role that very strict regulatory standards and stakeholder pressure can play in driving environmental improvements within the oil and gas industry. The certified market, a place where only firms who meet environmental criteria can sell gas (at a premium price), had the biggest single impact on environmental outcomes in the oil and gas industry.

The energy industry, particularly oil and gas companies, is under increasing pressure to decarbonize due to the increase in extreme weather events associated with climate change. Some of these companies have begun to voluntarily reduce their greenhouse gas footprint, motivated by social responsibility, pressure from activists, market opportunities or simply copying efforts of peer firms.

According to UT, the study, produced by researchers from both the LBJ School and Cockrell School, reveals that “while firms can respond to external pressure by making changes that enhance environmental performance, the nature and type of pressure significantly impact the outcomes. Not all activist efforts yield the same results, even when operating under similar financial constraints, and markets with very high barriers to entry may unintentionally hinder progress. These findings emphasize the need for strategic, well-targeted actions to ensure lasting environmental benefits at both the firm and industry levels.

“Some firms have begun to address the issue of natural gas flaring– whether out of a sense of social responsibility, fear of environmental activists, search for new market opportunities, or an impulse to mimic peer firms,” said LBJ School professor and a study co-author Varun Rai. “However, studying such complex drivers in real-world settings and with highly detailed market and resource data is challenging. To address that, in this paper we formulate a general framework that captures each of these factors, apply it to build an empirically-grounded model, and provide insights into the distribution of outcomes in the oil and gas industry’s flaring performance in the US.”

“Researchers developed an agent-based model—an increasingly important computational modeling technique in the AI era that relies on resolving the components of a system rather than specifying its aggregate dynamics—to simulate the decision-making processes of energy firms…
 

September 27, 2024 –The preliminary winner of a shares auction for control of a Citgo Petroleum parent company is an affiliate of activist investing company Elliott Investment Management, with a bid consisting of cash and credit valued at $7.286 billion, a court filing reveals.

The Citgo parent company is PDV Holding.

That Elliott affiliate is Amber Energy, which is owned by a group of strategic US energy investors led by Elliott.

Among the chief rivals to Amber in the bidding process were US oil refiner CVR Energy and mining company Gold Reserve.

Citgo assets include the Texas and Louisiana refineries along with another in Illinois.

Citgo is known to refine and process more than 800,000 barrels of oil per day, the seventh-largest US refiner.

Amber said on Friday it expects to close the deal…
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By Alex Mills

Oil and gas activity declined slightly during the third quarter as the industry outlook turned negative, according to oil and gas executives responding to the Dallas Fed Energy Survey.

“The business activity index, the survey’s broadest measure of the conditions energy firms face in the Eleventh District, decreased from 12.5 in the second quarter to -5.9 in the third quarter,” the Dallas Fed stated.

The business activity index was 0 for the 91 exploration and production (E&P) firms interviewed compared with -18.1 for the 45 services firms surveyed, suggesting activity was unchanged for E&P firms but declined for service firms, the Dallas Fed stated.

“The company outlook index turned negative in the third quarter, plunging 22 points to -12.1, suggesting modest pessimism among firms,” the Dallas Fed stated. “The overall outlook uncertainty index jumped 25 points to 48.6, suggesting mounting uncertainty.”

Oil and gas production was mixed in the third quarter, according to executives at E&P firms. The oil production index increased from 1.1 in the second quarter to 7.9 in the third quarter, suggesting oil production slightly increased in the quarter. Meanwhile, the natural gas production index declined from…
 

By Alex Mills

Crude oil and natural gas prices were flat during the first half of September, but the Energy Information Administration expects prices to rise by the end of this year.

Crude oil prices on the New York Mercantile Exchange dropped below $70 per barrel briefly but bounced back to $73 on Sept. 19.

“More oil will be taken out of inventories in the fourth quarter of 2024 that we previously expected because OPEC+ announced that they will delay production increases until December,” EIA stated in its Short-Term Energy Forecast.

“Although market concerns over economic and oil demand growth, particularly in China, have increased, causing oil prices to fall, OPEC+ production cuts mean less oil is being produced globally than is being consumed. We expect the Brent crude oil spot price to average $82per barrel in the fourth quarter of 2024.”

“We forecast natural gas prices will remain relatively flat in the upcoming shoulder season during September and October before prices rise through the end of 2025,” EIA stated. “Price increases in 2025 reflect U.S. natural gas production that does not keep pace with growth in U.S. liquefied…
 

From the Energy Information Administration:

September 18, 2024 — The heat content of dry natural gas delivered in Texas, which uses the largest volume of natural gas in the United States, was among the lowest nationwide in 2023, averaging 1,018 British thermal units per cubic foot (Btu/cf), or 1.7% below the national average (1,036 Btu/cf), according to our Natural Gas Monthly.

The heat content of natural gas is an indicator of its composition and quality and can vary greatly depending on the geology of the producing basin. Wet natural gas is composed primarily of methane, which has a heat content value of 1,010 Btu/cf, as well as other hydrocarbon gases, mainly ethane and propane. Ethane has a heat content of 1,770 Btu/cf, and propane has a heat content of 2,516 Btu/cf. When there is more ethane and propane, the average heat content of the natural gas stream is higher.

Processing plants in Texas use a cryogenic cooling process to recover natural gas liquids (NGLs) from the natural gas stream to make…
 

September 16, 2024 — The US Energy Information Administration said on Monday that it “recently implemented a new model for forecasting crude oil and natural gas production from the U.S. Federal Offshore Gulf of Mexico (GOM) in the Short-Term Energy Outlook (STEO). In our latest outlook, we forecast that GOM production will remain relatively flat with new fields offsetting the natural production declines from existing fields.

“We forecast that 1.8 million barrels per day (b/d) of crude oil will be produced in the GOM in 2024 and 1.9 million b/d in 2025, compared with 1.9 million b/d in 2023. We expect GOM natural gas production to average 1.8 billion cubic feet a day (Bcf/d) in both 2024 and 2025, compared…
 

September 16, 2024 — Energy Transfer says a fire along an LNG pipeline in the Houston area will take hours to burn off. It began with an explosion between 9:30 am (according to one eyewitness) and 10 am (according to Deer Park’s mayor) in Houston near Spencer Highway and has spread to the suburban towns of Deer Park and La Porte.

Firefighters are attempting to keep the fire from burning properties nearby, though some homes close to the pipeline have suffered some damage. Cause of the fire has not been officially determined.

Of primary concern earlier …
 

Against a backdrop of policies aimed at reducing greenhouse gas emissions, operators of a handful of natural gas plants have taken early steps to integrate hydrogen into their fuel streams. Hydrogen alone does not create CO₂ emissions when combusted.

A few natural gas power plant operators in the United States have taken or announced plans to take one of three steps:

• Testing cofiring hydrogen at existing facilities
• Upgrading existing turbines to use a blend of natural gas and hydrogen
• Including the capability to use a blend of natural gas and hydrogen when building new natural gas power plants

Natural gas is the single-largest source of energy used to generate electricity in the United States, making up 43% of electricity generation in 2023, but hydrogen use is not currently widespread or used regularly in the plants where it has been tested. The process of burning a blend of…
 

By Alex Mills

As natural gas production continues at a record pace, liquefied natural gas (LNG) exports are expected to double between 2025 and 2028.

The U.S. Energy Information Administration (EIA) reported this week that North America’s LNG export capacity is on track to more than double between 2024 and 2028 from 11.4 billion cubic feet per day (bcf/d) in 2023 to 24.4 bcf/d in 2028 “if projects currently under construction begin operations as planned.”

EIA says 9.7 bcf/d additions will come from U.S. facilities, 2.5 bcf/d from Canada, and 0.8 bcf/d from Mexico.

The Biden administration stopped all new U.S exports in January to key Asian nations and other countries that are not free-trade partners.

A federal court overturned the moratorium, which forced the Biden administration to grant the first LNG export license this year. The Energy …
 

September 6, 2024 — From the Railroad Commission of Texas:

“The final numbers have been tallied, and the Railroad Commission plugged 1,012 orphan wells in Fiscal Year 2024 using state funds. This exceeded the fiscal year’s goal of plugging 1,000 wells with state funds, making it the eighth year in a row in which the RRC has surpassed its legislative target!

“State funds that are used by the RRC to plug wells are from oil and gas industry revenue, including, but not limited to, well plugging reimbursements, fees and bonds or other financial securities paid by the industry.

“We continue to be a national leader in addressing orphaned wells,” said Danny Sorrells, RRC Deputy Executive Director. “Our extensive well…
 

September 3, 2024 — Note from the RRC: “The Railroad Commission of Texas continues to take public input on proposed rules to revamp the agency’s critical rules regulating waste management facilities in Texas.

“This is the first overhaul of RRC’s waste management rules in four decades. The proposed rules factor safety and groundwater protection as well as technological advancements in the energy industry’s resource development in Texas.

“The public comment period on the proposed rules opened on August 16 and will continue through September 30. This week the RRC will also hold two hearings for public input on the proposed rules.  One hearing will be held in-person on Thursday in Austin, and the RRC will hold a virtual hearing on Friday. More information on both hearings, including how they can be viewed via webcast, can be found on the RRC website.

“Persons who have requests for special communication or accommodation needs for the hearings can contact the RRC Rules Coordinator at rulescoordinator@rrc.texas.gov.

“Information on the proposed waste management rule amendments can be viewed on the RRC website at https://www.rrc.texas.gov/general-counsel/rules/proposed-rules/ under Chapters 3 and 4.”
 

September 3, 2024 — Refiner Phillips 66 is selling East Texas natural gas processing and gathering assets to Houston-based Voyager Midstream Holdings, a portfolio firm of Pearl Energy Investments, Phillips said Tuesday

Voyager said the assets are located in Panola, Rusk and Harrison counties in Texas and…
 

In Depth Opinion/Analysis by Jeff Masters, PhD, a former Chief Meteorologist at Weather Underground

The words of explorer John Wesley Powell on the eve of his departure into the unexplored depths of the Grand Canyon in 1869 best describe how I see our path ahead as we brave the unknown rapids of climate change:

We are now ready to start our way down the Great Unknown. We have an unknown distance yet to run, an unknown river to explore. What falls there are, we know not; what rocks beset the channel, we know not; what walls rise over the river, we know not. Ah, well! We may conjecture many things. The men talk as cheerfully as ever; jests are bandied about freely this morning; but to me the cheer is somber and the jests are ghastly.

Powell’s expedition made it through the canyon, but the explorers endured great hardship, suffering near-drownings, the destruction of two of their four boats, and the loss of much of their supplies. In the end, only six of the nine men survived.

Likewise, we find ourselves in an ever-deepening chasm of climate change impacts, forced to run a perilous course through dangerous rapids of unknown ferocity. Our path will be fraught with great peril, and there will be tremendous suffering, great loss of life, and the destruction of much that is precious.

It is inevitable that climate change will stop being a hazy future concern and will someday turn everyday life upside down. Very hard times are coming. At the risk of causing counterproductive climate anxiety and doomism, I offer here some observations and speculations on how the planetary crisis may play out, using my 45 years of experience as a meteorologist, including four years of flying with the Hurricane Hunters and 20 years blogging about extreme weather and climate change. The scenarios that I depict as the most likely are much harsher than what other experts might choose, but I’ve seen repeatedly that uncertainty is not our friend when it comes to climate change. This will be a long and intense ride, but if you stick through the end, I promise there will be a rainbow.

By late this century, I am optimistic that we will have successfully ridden the rapids of the climate crisis, emerging into a new era of non-polluting energy with a stabilizing climate. There are too many talented and dedicated people who understand the problem and are working hard on solutions for us to fail.

Although there is a major climate change hurricane approaching, we’re busy throwing a hurricane party, charging up our planetary credit card to pay for the expenses, with little regard to the approaching storm that is already cutting off our escape routes. This great storm will fundamentally rip at the fabric of society, creating chaos and a crisis likely to last for many decades.

The intensifying climate change storm will soon reach a threshold I think of as a category 1 hurricane for humanity — when long-term global warming surpasses 1.5 degrees Celsius above preindustrial temperatures, a value increasingly characterized over the last decade as “dangerous” climate change.

For humanity as a whole, this amount of warming is risky, but not devastating. Global warming is currently at about 1.2-1.3 degrees Celsius above preindustrial temperatures and is likely to cross the 1.5-degree threshold in the late 2020s or early 2030s.

Assuming that we don’t work exceptionally hard to reduce emissions in the next 10 years, the world is expected to reach 2 degrees Celsius of warming between 2045 and 2051. In my estimation, that will be akin to a major category 3 hurricane for humanity — devastating, but not catastrophic.

Allowing global warming to exceed 2.5 degrees Celsius will cause category 4-level damage to civilization — approaching the catastrophic level. And warming in excess of 3 degrees Celsius will likely be a catastrophic category 5-level superstorm of destruction that will crash civilization.

We must take strong action rapidly to rein in our emissions of heat-trapping gases to avoid that outcome — and build great resilience to the extreme climate of the 21st century that we have so foolishly brought upon ourselves.

According to the Carbon Action Tracker (see tweet below), we are on track for 2.7 degrees Celsius of warming; if the nations of the world meet their targets for reducing heat-trapping climate pollution, warming will be limited to 2.1 degrees. There’s a big difference between being hit by a Cat 4 versus a Cat 3, and every tenth of a degree of warming that we prevent will be critical.

Climate change’s impacts will be highly asymmetric

As climate scientist Michael Mann explains in his latest book, “Our Fragile Moment,” great climate science communicator…
 

In its latest Short-Term Energy Outlook (STEO), the US Energy Information Administration forecast that crude oil production in the United States will grow to an average of 13.7 million barrels per day (b/d) and marketed natural gas production will grow to an average of 114.3 billion cubic feet per day (Bcf/d) in 2025. Most of the forecast growth in oil and natural gas production comes from the Permian region of western Texas and eastern New Mexico, where the EIA expects productivity gains, new and expanded infrastructure, and high crude oil prices will support rising production.

From the EIA: “In order to better capture drilling activity in several onshore U.S. regions, our STEO now makes use of multiple drilling productivity metrics. The number of active rigs is the first in a sequence of metrics that affects regional production; currently more rigs…
 

By Alex Mills

Vice President Kamala Harris has proposed an economic plan, which includes price controls, to fix the problems created during the Biden-Harris administration. The plan involves establishing federal price controls on food and implementing punishment for grocery stores for “price gouging.”

The history of price controls dates back some 50 years and involves energy.

On August 15, 1971, ironically Harris introduced her plan on August 16, President Richard Nixon introduced his “90-day price freeze” on many items including petroleum. Shortages began the next year, and the industry was fast-tracked to allocation controls and a suite of government programs to increase supply or reduce demand.

“The 37^th president of the United States got on the wrong side of economic law three years before his resignation by imposing the first peacetime wage-and-price controls in American history,” wrote Robert L.Bradly, Jr., Senior Fellow at the American Institute of Economic Research.

Nixon’s Phase I turned into Phase II…
 

August 20, 2024 — The Environmental Partnership recently released its 2024 Annual Report detailing the ongoing success of the U.S. oil and natural gas industry’s collaborative efforts to reduce methane emissions. The report shows measurable results across all of the Partnership’s eight environmental performance programs that span the entirety of the energy supply chain. Todd Staples, president of the Texas Oil and Gas Association (TXOGA) issued the following statement:

“The Environmental Partnership’s member companies have proven, once again, that collaboration, innovation and commitment to a shared goal of reducing emissions are achieving meaningful and lasting environmental results. TXOGA applauds not only their ongoing success, but the continuing growth of the Partnership and its impact.

“Through the Partnership as well as other industry-led collaborative efforts such as the Texas Methane & Flaring Commission and the Texas Seismicity…
 

August 16, 2024 — RRC Commissioners voted to publish for public comment proposed amendments that are critical to updating the agency’s rules regulating waste management facilities.

This is the first overhaul of RRC’s waste management rules in four decades. Groundwater protection is a major factor in the rule amendments, and they also take into consideration the need for historical rules to adapt to technological advancements in the energy industry’s resource development in Texas.

The amendments pertain to not only waste from oil and gas operations, such as rock and other material pulled up from the ground during drilling, but also encapsulate waste from other operations for which the Legislature has given the RRC jurisdiction. Examples include geothermal, carbon sequestration and brine mining wells.

The proposed rule updates requirements on the design, construction, operation, monitoring, and closure of waste management units, and help improve the Commission’s ability to track and collect data on oilfield waste transported throughout Texas.

Many of the amendments codify informal guidance…
 

By Alex Mills

Drilling for new oil and natural gas reserves in Texas and across the nation has declined 10% this year, but production continues at a record pace.

Historically, production declined when the Baker Hughes Rig Count, a key economic indicator, declined.

The U.S. rig count was 588 this week, which is a decline of 66 from last year at this time. Even the Permian Basin, the most active area in the nation, has declined 23 this year from 327 in August 2023 to 304 this week.

Today’s oil companies have become more efficient in the exploration-and-production game.

The industry now is drilling multiple wells from a single pad, which cuts the cost of moving the drilling rig each time to drill a new well. Companies also…
 

August 16, 2024 — The Railroad Commission of Texas assessed $2,173,382.40 in fines involving 715 enforcement dockets against operators and businesses at the Commissioners’ Conference on Thursday.  The Commission has primary oversight and enforcement of the state’s oil and gas industry and intrastate pipeline safety.

Master default orders for operators that failed to appear at Commission enforcement proceedings can be found on the RRC Hearings Division web page.

Master Agreed Orders in which operators…
 

By Alex Mills

The demand for crude oil and natural gas in the U.S. and around the globe continued at a record pace through the first half of 2024 and producers in Texas and throughout the nation struggled to keep pace with consumer demand.

On the international scene, the Organization of Petroleum Countries (OPEC) believes that demand will rise by 2 million barrels per day to 106 million barrels per day.

The Energy Information Administration forecast global consumption will increase by 1.1 million barrels per day this year.

EIA expects crude oil prices to increase during the second half of the year.

“The Brent crude oil spot price ended July at…