Articles Posted in Uncategorized

Texas oil and gas operators have, in some ways, born the brunt of the misguided and ill-informed policies towards the energy industry of the Obama administration and the EPA. Plaintiff’s Exhibit Number 1: In 2010, a senior Environmental Protection Agency official, Alfredo Juan “Al” Armendariz, who was in charge of the federal region of the EPA that includes Texas, in a speech in Dish, Texas, compared EPA policy to the Roman policy of crucifying troublemakers. This part of the speech was captured by an audience member and uploaded to YouTube. Specifically, “Al” said of the Romans: “They’d go into a little Turkish town somewhere, they’d find the first five guys they saw, and they would crucify them. And then you know that town was really easy to manage for the next few years.” He compared this to the EPA’s policies of hitting a few oil companies as hard as possible to deter other energy companies from pursuing disfavored strategies.Mr. Armendariz was appointed by President Obama in late 2009 to head the EPA’s Region Six, which includes the states of Louisiana, Arkansas, New Mexico, Texas and Oklahoma, as well as 66 Tribal Nations, according to an EPA press release at the time. Regional Administrators, like Mr. Armendariz, are supposed to promote state and local environmental protection efforts and liaise with state and local governments.

Ultimately, poor Al resigned over the furor his remarks caused. Shortly after these remarks, Oklahoma Senator James Inhofe took the Senate floor and announced an investigation into how Mr. Armendariz had been blocking hydraulic fracturing, or fracing. The Senator specifically cited the case of Range Resources as an example of this bullying “crucifixion” policy. The EPA faxed a letter in December 2010 to the company telling them an “imminent and substantial endangerment” to public drinking water had occurred in Parker County, Texas, arising from Range Resources operations. The EPA, outrageously, threatened the company with fines of up to $50,000 a day. Eventually this case went to court and, after more than a year, the EPA finally realized it had no evidence and the case was dismissed in April 2012.

Senator Inhofe has continued to lead the way on this scandal, and issued a statement saying, in part, “After his revelation that EPA’s ‘general philosophy’ is to ‘crucify’ oil and gas companies, it was only right for Administrator Armendariz to resign… – but his resignation in no way solves the problem of President Obama and his EPA’s crucifixion philosophy.”

Washington has been telling Texas small business, including Texas oil and gas companies, how they should be run for a long time. For a few moments, Texas businesses had a chance to tell Washington what to do, and the overriding message was: stop meddling.Over 30 small Texas business owners met with Republican Congressman Pete Olson to discuss ways in which the federal government could help small businesses create jobs. Most businesses were in the manufacturing, chemical, and oil and gas industries. They complained about the federal government’s heavy hand, especially as represented by the Environmental Protection Agency. One businessman scoffed at the idea that growing levels of carbon dioxide contributed to global warming; instead, he believed that higher levels of carbon dioxide were a natural byproduct of warming.

Mainly, the group of business owners wanted the federal government to use regulation as a force of good, not to hamper small businesses. “They’re like police who just want to getcha,” a businessman complained about the federal regulatory agencies. In particular, the business owners requested that Washington require foreign companies to comply with the same regulations that American businesses comply with, or face higher import duties. They also requested that the federal government stop the process of bundling that results in larger companies being favored for contracts over smaller companies.

Business owners also had a long list of regulations that they wanted cut back or removed altogether. This included repealing the Dodd-Frank Act that purports to reform Wall Street, reducing the power of the Food and Drug Administration, creating sunset provisions on certain taxes and agencies, speeding the process for drilling permits, and reducing the amount of time and effort it takes to complete an Environmental Impact Statement, or eliminate it altogether.

“The jobs are there,” Congressman Olson claimed, “we just need to get the government off the private sector’s back” and allow them to come out. One businessman remarked that due to oppressive government regulations, he had to lay off several employees and move their jobs overseas.
Continue reading →

President Obama would have us believe that he considered everything when he came up with his latest plan to create jobs. Yet he ignored a plan that could create 1.4 million more jobs and $803 billion in revenue. According to a the Wood Mackenzie Study, funded by the American Petroleum Institute (API), the United States could increase oil production by 10 million b/d of oil equivalent, create 1.4 million jobs, and generate more than $803 billion by 2030, if we just developed existing resources within the country.

The Wood Mackenzie study was presented at an energy jobs summit in Washington, D.C. The study considered two different scenarios, the Current Path Case Production — what the job situation would be if the government continued on its current path — and Development Policy Case. Under the Development Policy Case, the study claimed that a jobs and revenue boon could result if the government opened up federal areas that were currently off-limits to drilling, such as the Eastern Gulf of Mexico, parts of the Rockies, and the Alaskan National Wildlife Refuge (ANWR); if it lifted a drilling moratorium in the state of New York; if more offshore drilling were allowed in the Gulf of Mexico; if the Keystone XL pipeline and other pipelines from Canada to the U.S. are approved; and if regulation of shale is done predominantly at the state level.

If the U.S. follows these steps, oil production would increase 76% over 2010 levels. For every job created directly for energy production, several more would be created indirectly, from revenue spent by the newly employed. Revenue would reach $36 billion by 2015.

All industry in Texas, not just the oil and gas industry, could be harmed by new ozone regulations proposed by the EPA. If there were recognizable health benefits, they would probably be worth it. In fact, the EPA has been trying to sell its new, tighter ozone standards based on its claims that they would provide substantial health benefits. However, the American Petroleum Institute, in a recent study entitled Summary and Critique of the Benefits Estimates in the RIA for the Ozone NAAQS Reconsideration, has found that the EPA has misrepresented the benefits of EPA’s proposed new ozone standards.The EPA’s figures are based on escalating benefits due to ozone-related mortality, even though the EPA has found no causal link between ozone levels and mortality. The result could be that industries are forced to make changes to produce less ozone, while the savings that they produce would never materialize.

The EPA seeks to tighten regulations that were put in place under President Bush in 2008. It claims that while the cost would be $90 billion per year, the costs would be offset by $100 billion per year in savings from medical expenses and missed workdays. However, the API study found that ozone benefits alone do not produce these savings. The EPA’s “savings” are based in part on cuts in soot pollution that may occur because of the new regulations. The problem with this is that soot pollution has nothing to do with ozone pollution. The API declares that, overall, the EPA’s plan for tightening standards is “out-of-cycle, not supported by science, and would have devastating economic consequences.” What’s more, the EPA has no idea how the new standards would be met, but one guarantee is that they would have a heavy impact on business, especially large businesses. Khary Cauthen, API’s government affairs director, predicts that “operations would close and business moved elsewhere. This isn’t a recipe on how to rebuild an economy.”

These findings throw a wrench in President Obama’s plans to tighten environmental regulations. While normally, the Clean Air Act requires the EPA to review regulations every five years, the administration claims that the standards need to be tightened sooner because the Bush administration ignored the EPA scientific panel’s recommendations. Yet by ignoring the five-year standard, the administration risks catching businesses off guard, which would make it even harder for them to meet the new stringent standards. Khary Cauthen believes that the president should pull the new regulations and wait until 2013 before making any changes. Obama has claimed that he wants regulations based on “science, not politics,” and that he would weigh the costs on businesses and local communities before enacting a rule. The API findings ought to give him plenty of reasons to rethink the new regulations, unless the president believes no other scientists besides the pseudo-scientists at the EPA are credible. There is mounting evidence that this is exactly what he believes.

I was interested to read recently about a new crude oil pipeline to be built by Enterprise Products Partners LP and Enbridge Inc. All new projects like this have the potential to create jobs, maximize local productivity, and ensure that our state’s natural resources are utilized in safe, secure, and productive ways. This latest proposal is unique in that most of the largest new pipelines are designed to carry gas. This line would instead bring oil to the Gulf Coast from the Cushing, Oklahoma storage hub. According to the latest report on the project in the Oil & Gas Journal , under the current plan, a 800,000 barrel-a-day crude oil pipeline would be designed, built and operated to bring oil from Cushing to Enterprise’ Texas Gulf Coast refining complex. This would be the largest pipeline connecting the Oklahoma oil storage hub with Gulf Coast refiners.

If the proposal continues as planned, the 36-in. OD Wrangler Pipeline will begin at the Enbridge Cushing terminal and then extend 500 miles south along pipeline corridors ending in southeast Harris County at Enterprise’s ECHO oil storage terminal. All told, the new crude oil pipeline would provide access to refineries in Texas City, Baytown, and along the Houston Ship Channel. The pipeline is set to accommodate a variety of grades and oil sources. In addition to the main pipeline, the joint project plans also include the creation of an 85 mile line to the Beaumont/Port Arthur refining center. On top of that, additional storage necessary for the operations of the new pipeline will be built and housed at Enterprise’s ECHO site in Harris County, Texas.

The two companies announced a binding open commitment for available capacity on the new pipeline which ran from October 3rd and ended last Wednesday. Depending on the timing of required regulatory approvals and commitments from interested shippers, the companies hope to design, build, and begin operating the new line in less than two years. Under the current proposal, the line would enter service in mid-2013.