Gas Driller Opposes Pipeline Rules, Asks Landowners to Raise Concerns

- Gas Driller Opposes Pipeline Rules, Asks Landowners to Raise Concerns

Tuesday, August 09, 2011
Knight Ridder/Tribune Business News
by Laura Legere, The Times-Tribune, Scranton, Pa.

New permitting requirements affecting natural gas pipelines in Pennsylvania have raised the ire of Chesapeake Energy, which is encouraging natural gas leaseholders to join it in protesting the rules.

In a recent letter sent to landowners in the Northern Tier, Chesapeake's vice president for government relations, David J. Spigelmyer, called the updated requirements enacted by the U.S. Army Corps of Engineers on July 1 "unnecessary, time consuming and redundant."

Delays caused by the new permit reviews have stranded 128 of the company's drilled and completed Marcellus Shale wells without pipelines and are "costing Pennsylvanians royalty income," he wrote.

The new rules replace federal regulations that expired in June controlling pipeline construction and other surface-water impacts in Pennsylvania. A change in the regulations requires companies to detail all of the streams and wetlands to be crossed by a pipeline project -- some of which stretch for hundreds of miles -- rather than outlining only the impacts of each stream crossing individually.

The new permits allow regulators to consider the cumulative surface-water impacts of the projects, which are increasingly spiderwebbing the commonwealth to tie new Marcellus Shale wells to interstate pipelines that bring the gas to market.

Army Corps of Engineers spokeswoman Stacy A. Ouellette said the permit "streamlines the process for activities throughout the state of Pennsylvania" and within multiple Army Corps of Engineers boundaries. The permit also allows Pennsylvania "to issue permits for activities having minimal impact to waterways and wetlands, reducing redundancy between the corps and state," she said.

In a description of the regulations published in the Pennsylvania Bulletin in May, Pennsylvania Department of Environmental Protection Secretary Michael Krancer said that the revised permit incorporates federal and state standards in one process and "continues a streamlined process for permit applicants without compromising comprehensive environmental protection."

PennFuture president Jan Jarrett said the cumulative review offered with the new permit is "a good thing." The need for additional regulatory oversight of pipeline construction was highlighted in recent weeks when two failures at a pipeline project in Susquehanna County dumped drilling mud into a high-quality waterway, she said.

"It's unfortunate to see a company coming out opposing updated regulations that address natural gas pipelines," she said. "We would rather see them doubling down and working with the regulations that are clearly aimed at protecting Pennsylvania's water resources rather than stirring up and scaring the landowners who they work with."

Chesapeake said the potential review of all stream and wetland crossings increases the average review time for a project from 45 days to nearly 300 days and unfairly singles out Pennsylvania projects for extra layers of review.

Along with the letter written by Mr. Spigelmyer, Chesapeake provided landowners with a form letter to send to their senators and congressmen that says, "At a time of great economic uncertainty in this country, it seems unproductive that the federal government would take such a drastic step to limit the ability of landowners like me to benefit economically from natural gas production."

In a statement Monday, Mr. Spigelmyer said the Baltimore District of the Army Corps of Engineers began applying aspects of the permit change over the last year and "the delays are already evident."

"This is obviously of great concern to landowners who've had wells drilled on their land and who are wondering why their wells are not yet producing and marketing gas," he said. "It is of equal concern to Chesapeake as each of our wells represents the investment of millions of dollars in capital that can't begin to produce a recovery of investment, let alone a return on investment, if we cannot predictably plan for the development of pipelines necessary to get gas to market."

Copyright (c) 2011, The Times-Tribune, Scranton, Pa.

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RIL Asks Govt to Expedite Approvals for $7.2B BP Deal

- RIL Asks Govt to Expedite Approvals for $7.2B BP Deal

Tuesday, July 05, 2011
Knight Ridder/Tribune Business News
by Anupama Airy and Gaurav Choudhury, Hindustan Times

Amidst concerns raised by central intelligence agencies over the $7.2-billion (Rs 32,400-crore) Reliance Industries Ltd (RIL)-BP deal, RIL is pushing for speedy approvals to the deal and has cited BP's entry into India as a "major boost to the energy security of the country." Mukesh-Ambani led RIL had signed a deal to sell a 30% stake in 23 oil and gas fields to BP.

RIL's letter dated June 10, asking the petroleum ministry to "expedite approvals" for its deal with BP, comes within days of a June-1 note of the ministry of home affairs conveying concerns of intelligence agencies. The agencies had voiced concerns over the handling of a "natural resource" such as gas by a new player with BP's financial muscle, which would not only take away a large chunk of the gas marketing and transportation business of India's national gas carrier GAIL India Ltd, but will also raise the cost of oil and gas for user industries.

While conveying its "security no-objection certificate" to the RIL-BP deal, the home ministry has asked the petroleum ministry to "take into account" these observations while "considering the case."

However, RIL said that "BP's entry will add value to India's exploration and production (E&P) sector...BP's entry as an international oil and gas major with proven deep ater experience will be a major boost to the energy security of India."

RIL has rebutted the intelligence agencies' observation that it needs to be ascertained whether the New Exploration and Licensing Policy (NELP) contract has a provision of sale of assets and whether it allows BP to sell or transport gas outside the country.

The gas marketing joint venture "is not part of NELP and is governed by a different policy framework for which we will obtain necessary approvals from the authorities concerned," RIL has told the petroleum ministry.

A RIL spokesperson said the company does not want to comment on any inter-ministerial communication and the June 10 letter to the petroleum ministry was self-explanatory.

The deal marked one of the biggest foreign direct investments in a single year in India. Europe's second-biggest oil company bought a 30% stake in 23 oil and gas blocks owned by RIL by paying $7.2 billion or Rs 32,400 crore. RIL will get another $1.8 billion if it strikes more oil or gas. However, the petroleum ministry approval is a mandatory pre-requisite for the deal to go through.

Copyright (c) 2011, Hindustan Times, New Delhi

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Interior Dept Asks Congress to Raise Oil-Drilling Violation Fines

- Interior Dept Asks Congress to Raise Oil-Drilling Violation Fines

Wednesday, June 29, 2011
Dow Jones Newswires
WASHINGTON
by Tennille Tracy

The Interior Department is asking Congress to increase fines for oil and natural gas companies that break offshore drilling laws, with one Interior official saying current fines are more of a "trivial nuisance than an effective deterrent."

The department urged Congress to take this step while announcing a modest increase to existing fines to reflect inflation adjustments, as required by law. The department said it is restricted from raising penalty rates beyond inflation rate increases.

The maximum civil penalty rate for violations of the Outer Continental Shelf Lands Act will increase from $35,000 to $40,000 per day, while violations under the Oil Pollution Act go from $25,000 to $30,000 per day.

Michael Bromwich, director of Interior's Bureau of Ocean Energy Management, Regulation and Enforcement, said in a statement Wednesday that Congress should raise the rates "significantly."

"The inadequacy of our civil authority hampers our ability to effectively regulate offshore activities, and renders such fines a trivial nuisance rather than an effective deterrent" he said.

The bureau has undertaken several measures to tighten offshore drilling standards since the Deepwater Horizon oil spill.

Copyright (c) 2011 Dow Jones & Company, Inc.

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US Govt Asks for Legal Certainty in Indonesia's Oil Industry

US Govt Asks for Legal Certainty in Indonesia's Oil Industry

Tuesday, May 10, 2011
Knight Ridder/Tribune Business News
by Rangga D. Fadillah, The Jakarta Post, Indonesia

The US Department of Energy called on the Indonesian government to ensure the certainty of energy sector contracts and regulations to attract more investment from US companies.

Tom Cutler, the department's director for European and Asia Pacific affairs, said that following Indonesia's impressive economic growth over the past several years, the country needed more investment to develop its energy potential to cope with fast-growing domestic demand.

"The most important [thing to attract investment] is certainty. Once you have a contract with certain terms, companies want those terms to stay in place, because they make business calculations based on whatever the contract terms are," he told reporters on the sidelines of the US-Indonesia Energy Investment Roundtable in Jakarta.

Investment from US companies would help Indonesia boost its energy supply since they have been proven of being capable to provide capital and technology not only in the oil and gas sector but also in renewable energy, Cutler said.

US companies were interested in developing all of Indonesia's energy resources, including geothermal, bio-energy, hydro and wind, he added.

"We heard that Indonesia has 40 percent of the world's geothermal resources. We've some of the best companies in the world, like Chevron, which are interested in developing geothermal resources," he said.

Recently appointed US Ambassador to Indonesia Scott Marciel said US companies were interested in undiscovered oil and gas reserves offshore or in deep waters.

"According to our data, 90 percent of Indonesia's undiscovered oil and gas reserves are located in offshore and deep water areas," he said during his opening remarks.

Cutler said that to reverse the declining trend in oil production, Indonesia was in dire need of more investment to find more oil and gas reserves.

The nation's oil production is currently 916,000 barrels of oil per day (bpd), far below a government target of 970,000 bpd for 2011. Indonesia produced 954,000 bpd in 2010, below a target of 965,000 bpd.

Energy and Mineral Resources Minister Darwin Zahedy Saleh, who also attended the roundtable, said he would consider providing fiscal "incentives and more attractive production-sharing arrangements" to potential investors in the energy sector.

However, he did not elaborate in detail on the form of the incentives and more attractive production sharing arrangements.

"The government is also ready to consider fiscal incentives to encourage acceleration of resources development, as well as more attractive terms and conditions in production-sharing contracts," he said in his speech.

Darwin said he hoped that the bilateral roundtable would be soon followed by the participation of more US investors, not only in oil and gas, but also infrastructure development, new and renewable energy development and energy conservation.

Copyright (c) 2011, The Jakarta Post, Indonesia / Asia News Network. Distributed by McClatchy-Tribune Information Services.

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Alaska Governor Asks Govt to Expedite Offshore Drilling Projects

Alaska Governor Asks Govt to Expedite Offshore Drilling Projects

Friday, April 01, 2011
Dow Jones Newswires

by  Cassandra Sweet

Alaska's governor asked federal regulators to move ahead in allowing new oil development in the Arctic Ocean, as the state looks for ways to shore up declining production.

In a letter sent Thursday to U.S. Interior Secretary Ken Salazar, Gov. Sean Parnell wrote that "Alaska is the United States' most important and abundant domestic source of future oil and gas." He cited a 2008 U.S. Geological Survey report that estimated more than 10 billion barrels of oil and more than 100 trillion cubic feet of natural gas lay beneath the surface of Alaska's Beaufort and Chukchi Seas. Parnell seized on current concerns in the U.S. about the stability of foreign sources of oil, amid turmoil in the Middle East and rising oil prices.

"We need to develop and increase our domestic supply of oil and gas," Parnell wrote.
Parnell and other Alaska officials have been working to streamline oil production taxes and take other measures to attract more onshore and offshore oil and natural gas development in Alaska. Parnell has introduced legislation, currently working its way through the state legislature, that would slash oil production taxes put in place by his predecessor, former Alaska Gov. Sarah Palin.

Parnell said Wednesday that he had set a "new goal for Alaska" of 1 million barrels of oil production per day through the Trans Alaska Pipeline System within ten years. Current oil production shipped from Alaska's North Slope 800 miles to the port of Valdez through the pipeline system is about 600,000 barrels per day, down from its peak of about 2 million barrels a day 20 years ago.

While the state has encouraged production on state lands and in state waters, for which the state would earn production royalties, officials are also keen to see new offshore drilling in the Outer Continental Shelf, as Alaska collects fees from oil shipped through the Trans Alaska Pipeline.
Alaska's government has also encouraged development of a natural gas pipeline that would ship gas from the North Slope to Canada and the Continental U.S. An alternative project would entail building a liquefied natural gas terminal that would export Alaska gas to overseas markets.

TransCanada and ExxonMobil are developing a $41 billion gas pipeline that would stretch 1,700 miles (2,700 kilometers) from the North Slope to a network of pipelines that connect Alberta, Canada, to the Midwest. A joint venture owned by BP and ConocoPhillips called Denali, has a rival Alaska pipeline plan, with a similar price-tag. Both sets of developers have held open seasons to determine interest by gas shippers in their projects. The companies have not yet released the results of their open seasons.