.The Texas Energy Report

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…
 

August 7, 2024 — Four groups representing Southeast Texas cities and consumers on Wednesday filed a protest with the Public Utility Commission of Texas (PUC) against CenterPoint’s withdrawal of a rate increase request, while accusing the company of significantly overcharging customers.

The Gulf Coast Coalition of Cities, the Gulf Coast Utilities Coalition, the Houston Coalition of Cities, and the Texas Consumer Coalition filed the request for intervention with the PUC, offering a Joint Response Opposing CenterPoint Energy Houston Electric LLC‘s notice of withdrawal.

The filing contends that CenterPoint doesn’t have the authority to “unilaterally withdraw this case.”…
 

August 5, 2024 — The Railroad Commission of Texas issued a total of 771 original drilling permits in July 2024. The total includes 685 to drill new oil or gas wells, 12 to re-enter plugged wellbores and 68 for re-completions of existing wellbores.

The breakdown of well types for total original drilling permits in July 2024 is: 137 oil, 48 gas, 544 oil and gas, 28 injection, and 14 other permits.

In July 2024, Commission staff processed 805 oil, 222 gas, and 355 injection completions for new drills, re-entries and re-completions.

Detailed data on drilling permits and well completions for the…
 

August 2, 2024 — Statewide and county crude oil and natural gas production for May 2024 reported in the tables below came from 160,233 oil wells and 83,415 gas wells.

Crude oil production reported by the RRC is limited to oil produced from oil leases and does not include condensate, which is reported separately by the RRC. For full oil and…
 

August 2, 2024 — Chevron is moving its headquarters from California to Houston over the next several years, the company said in a statement Friday.

Plans are to move Chairman and CEO Mike Wirth and Vice Chairman Mark Nelson to Houston before the end of this year, joining the company’s 7,000 local employees and other senior managers for “better collaboration and engagement with executives, employees, and business partners.”

Chevron’s 2,000…
 

August 1, 2024 — State tax income from Texas natural gas production was up 152% in July when compared to the same month a year, with a notable increase in oil taxes as well.

Natural gas production tax last month totaled $164 million, a 152% jump from July 2023, according to the state comptroller’s office.

Oil production taxes totaled $557 million…
 

August 1, 2024 — CenterPoint has filed papers to withdraw its request to the PUC for a rate increase “without prejudice,” just after the money is needed to “make significant investments in our infrastructure.”**

The rate hike was intended to help recover costs from recent storms, estimated to be about $1.8 billion.

Hurricane Beryl in Southeast Texas last month is estimated to have cost the power delivery system $1.3 billion.

CenterPoint and its CEO Jason P. Wells have come under scrutiny from the state legislature this week, with some lawmakers critical of the utility’s communications and recovery efforts following Beryl.

See the PUC filing receipt here.

 …

By Alex Mills

Vice President Kamala Harris, who presumably will be the Democrat nominee for President following the withdrawal of Joe Biden last week, apparently is not a fan of America’s oil and gas industry.

Even though Harris has not officially won the Democratic nomination yet (the convention will be held in August), her previous statements and positions indicate she will push for more regulations and laws to make finding and producing more hydrocarbons in the U.S. more difficult.

She served only four years in the Senate (2017-2021) as the junior Senator from California. She ran for President against Biden and a host of other candidates, but dropped out of the race before the primaries began. Now, she is getting a chance to run as the Democratic candidate for President without obtaining any delegates or facing other potential candidates in a debate on the issues.

During her term in the Senate and as a candidate for President she made numerous statements opposing hydraulic fracturing, which has been a critical…
 

By Alex Mills

July 20, 2024 — It’s official: Donald J. Trump is the Republican Party’s candidate for President of the United States of America for the third time.

All indications point to Trump taking many of the same positions on energy issues that he took in 2016 and in 2020, which included reducing taxes and regulations, encouraging drilling and production, and approval of new infrastructure projects.

Trump overturned many of the restrictions and regulations implemented by President Obama, and he has said he will reverse many of the programs adopted by President Biden.

Trump has said many times this year he will encourage the domestic oil and gas industry to “drill, baby, drill.” He believes that a healthy oil and gas industry contributes to a healthy economy and decreases U.S. reliance on foreign energy.

The Biden administration has reduced leasing of federal public lands (onshore and offshore). Trump most likely will seek to change the Biden leasing practice and offer more lands for exploration.

Additionally, the Biden administration has issued a temporary…
 

July 15, 2024 — As in many areas of modern life, big data has become a big deal in nuclear engineering. A Texas A&M nuclear engineering professor will investigate artificial intelligence’s ability to harness data to improve the next generation of nuclear reactors.

By Alex Mills

July 13, 2024 — The debate over climate change and the possible causes and solutions have included many topics including methane emissions from crude oil and natural gas. The discussion has been ongoing for quite some time.

Recently an official from the oil and gas regulatory agency in Texas pointed out that the industry in Texas, along with the oversight of the agency, has been able to significantly decrease emissions.

The official is Wayne Christian, who was first elected to the Texas Railroad Commission in 2016, pointed out the success achieved.

“We all want clean air and water,” Christian began. “We all want to be good stewards of our land and natural resources. And over the last 50…
 

July 1, 2024 — The Texas comptroller’s office says oil production tax income during June was up eight percent when compared to a year ago.

The state took in $493 million last month, similar to estimates made by the US Energy Information Administration, which three weeks ago called for an 8% increase in Permian Basin oil production in 2024.

Natural gas production tax income at $171 million was down 7 percent in June 2024 compared to June 2023, according to Texas Comptroller Glenn Hegar.

Motor fuel taxes took in $340 million, up…
 

July 1, 2024 — A federal judge on Monday blocked the Biden administration’s ban on approving LNG export applications, a win for a coalition of 16 states, including Texas.

The effects of Monday afternoon’s injunction are likely to be minimal in the short term, with the Department of Energy (DOE) continuing to study whether new export permit applications are in the public interest. The pause has no effect on current imports.

The preliminary injunction issued by US District Judge James D. Cain Jr. in Louisiana was in response to a suit (Louisiana v. Biden, 24-cv-406, US District Court, Western District of Louisiana (Lake Charles)) filed by the states in March claiming the DOE, under direction from the Biden administration, doesn’t have the authority to broadly cancel future permits.

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Consumption of electricity in the U.S. commercial sector has recovered from pandemic levels, with annual U.S. sales of electricity to commercial customers in 2023 totaling 14 billion kilowatthours (BkWh), or 1%, more than in 2019.

However, the growth in commercial demand for electricity is concentrated in a handful of states experiencing rapid development of large-scale computing facilities such as data centers.

Electricity demand has grown the most in Virginia, which added 14 BkWh, and Texas, which added 13 BkWh.

Based on expectation that regional electricity demand will grow, forecasts have been revised upward for commercial electricity demand through 2025, according to the US Energy Information Administration’s (EIA) June Short-Term Energy Outlook (STEO).

About this EIA report:

“Commercial electricity demand in the 10 states with the…
 

By Alex Mills

Crude oil and natural gas prices edged upward during the second quarter of 2024, which added to a modest increase in activity.

Oil prices hovered around $80 per barrel on the New York Mercantile Exchange, and natural gas was $2.70.

The Federal Reserve Bank of Dallas released its survey of oil and gas executives this week that indicated growth in industry activity.

“The business activity index, the survey’s broadest measure of the conditions energy firms in the Eleventh District face (which includes Texas), increased from 2.0 in the first quarter to 12.5 in the second quarter,” the Dallas Fed said.

The oil production index advanced from -4.1in the first quarter to 1.1 in the second quarter. The near-zero reading suggests production was essentially unchanged. Meanwhile, the…