Federal Review Calls for Changes in State Oil Regulations

- Federal Review Calls for Changes in State Oil Regulations

Wednesday, August 31, 2011
The Bakersfield Californian
by John Cox

A recent federal review calls for tightening California's oversight of certain underground injection activities common in Kern County oil fields.

Saying more should be done to protect underground sources of drinking water, the U.S. Environmental Protection Agency-commissioned review recommends several measures that could make it harder for oil companies to get permission to inject steam, wastewater and other materials underground.

The review comes at a sensitive time for California local oil producers. For months the industry has howled about the more cautious, time-consuming approach that Sacramento has taken to regulating underground injection projects over about the last year and a half. Trade associations say delays cost jobs and worsen California's dependence on foreign oil.

Industry representatives said Tuesday it is unclear what exactly will be the impact of the review, a summary of which was posted online Friday by the state Division of Oil, Gas and Geothermal Resources. Oil industry spokespeople noted that DOGGR officials have not officially responded to the review.

Rock Zierman, CEO of the California Independent Petroleum Association, said he saw no "red flags" raised in the report. The most important question, he said, is how the recommendations are implemented by the state, if it comes to that.

"Keep in mind that much of what they're raising is a paperwork problem," Zierman said.

A DOGGR spokesman wrote in an email Tuesday that some of the review's findings are reflected in regulatory changes already instituted at DOGGR over the last three years. Spokesman Don Drysdale indicated that this point will be discussed in meetings tentatively set to begin next month between State Oil and Gas Supervisor Elena Miller and David Albright, the San Francisco-based manager of the EPA's Pacific Southwest Ground Water Office.

Drysdale added that any new rules would have to be drafted by DOGGR and then go through a public review process before being reviewed by the state Office of Administrative Law.

Since 1983, DOGGR has regulated underground injection projects under a "primacy" agreement with the EPA. The agreement requires periodic reviews such as the one posted in summary form Friday.

Three specific issues

In a letter to Miller dated July 18, Albright made specific mention of three issues discussed in the review, which was conducted by Horsley Witten Group, an East Coast environmental science and engineering firm:

• Unlike federal rules, DOGGR regulations do not clearly require the agency to protect water containing up to 10,000 milligrams per liter of dissolved solids. State rules define "fresh water" as containing no more than 3,500 milligrams per liter of dissolved solids;
• State regulators are approving underground injection projects based on reviews that extend a quarter mile around the proposed injection well. "Whereas the fixed radius approach may be appropriate for some injection wells," Albright wrote, other wells may require a wider area of study;
• Federal and state laws say that the maximum surface injection pressure must not exceed a level capable of fracturing the area's underground geology. DOGGR regulators, however, often use only estimates of the fracturing pressure, and that when they perform a more detailed pressure study, then fail to gather "the more accurate combination of surface and bottom-hole measurement."

Albright's letter to DOGGR made brief reference to several other matters raised in the Horsley group's review. These range from the professional qualifications of DOGGR's underground injection control staff and the frequency of project reviews to well plugging and abandonment requirements.

A theme raised repeatedly in the review is that DOGGR has lacked adequate staffing to address various regulatory challenges. It also notes that DOGGR has recently received approval to hire more staff.

DOGGR wrote Tuesday that in fiscal year 2010-11 it received approval to fill 17 underground injection control positions statewide. That brought DOGGR's total payroll to 157, not all of these related to underground injection.

The DOGGR district that includes Kern County performs more underground injections than any other district, comprising 86 percent of the state's active underground injection wells.

The specific uses of Kern injection wells range from cyclic steam (58 percent of all California's active underground injection wells) and steam flooding (14 percent) to water disposal (3 percent).

Cathy Reheis-Boyd, president of the Western States Petroleum Association, said she and her staff were anxious Tuesday to get a copy of the full EPA-ordered review, which was not available on DOGGR's website. She said the goal of WSPA, which represents the state's largest oil producers, was to begin work with DOGGR to address the federal government's concerns as quickly as possible and then return to the business of producing oil.

"From a bigger policy perspective," she said, "we really need to come to agreement on how we're going to proceed with all parties."

Copyright (c) 2011 The Bakersfield Californian (Bakersfield, Calif.)

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Cambodia Calls for Talks with Thailand on Disputed Oil and Gas Zone

- Cambodia Calls for Talks with Thailand on Disputed Oil and Gas Zone

Tuesday, August 30, 2011
Deutsche Presse-Agentur (dpa)

Cambodia called Tuesday for the newly elected Thai government to resume talks on resolving claims to a 27,000-square-kilometer stretch of seabed considered rich in oil and gas.

The Cambodian National Petroleum Authority, a government body, said it had "a firm commitment to finding an equitable and transparent resolution to the overlapping claims area."

"The [government] would welcome the resumption of open and official negotiation on this issue and will pursue such a course as soon as practicable," it said.

The statement marked the second time in little more than a month that Cambodia has sought to restart the talks.

The authority said discussions held from 2001 to 2007 had been "fruitful," adding that the government of Abhisit Vejjajiva, which took power in 2008 and had rocky relations with Phnom Penh, had sought to resolve the dispute prior to this year's election.

To that end, it said, Bangkok and Phnom Penh had held secret talks to try to reach a deal.

A number of major oil companies have signed exploration deals with Cambodia in the Gulf of Thailand, including the US firm Chevron Corp and France's Total SA.

In 2001, the two nations signed an agreement that outlined their joint management of resources in the disputed zone, but the details have yet to be worked out.

Cambodia hopes to reap a windfall from oil and gas revenues that could transform the impoverished nation.


Copyright 2011 dpa Deutsche Presse-Agentur GmbH

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Nova Scotia Calls For Deepwater Bids

- Nova Scotia Calls For Deepwater Bids

Thursday, June 30, 2011
CNSOPB

The Canada - Nova Scotia Offshore Petroleum Board (CNSOPB) has issued Call for Bids NS11-1. The Call consists of eight deep water parcels offshore Nova Scotia, some of which were nominated by industry. Bids must be received by Tuesday, January 10, 2012, 4:00 p.m. Atlantic Time. The Board will only accept bids from companies that have experience in the drilling of exploration wells in water depths greater than 800 meters in the past ten years.

“This Call for Bids includes deepwater parcels located in a largely unexplored area of Nova Scotia’s offshore,” says Stuart Pinks, Board CEO. “The Offshore Energy Technical Research Association’s (OETR) Play Fairway Analysis provides strong evidence that this area could have significant oil potential. The parcels are located in a geological region that contains many large undrilled structures that could trap oil or gas.”

The Board has made detailed geoscientific assessments and regulatory information associated with the parcels available on its website.

The successful bidder(s) will be awarded an Exploration Licence (EL) subject to federal and provincial Ministerial approval.

The CNSOPB is preparing a Strategic Environmental Assessment (SEA) for exploration activities in areas identified in this Call for Bids which will include two public comment periods; one on the scope of the assessment and the other public comment period on the draft SEA report. The SEA will identify any environmental issues that a successful bidder would need to address when performing a project-specific environmental assessment which is required before any activity can begin.

In addition, the public is invited to submit written comments to the Board on the lands included in this Call for Bids. Written submissions must be received by Tuesday, December 20, 2011, 4:00 p.m. Atlantic Time. Such submissions will be considered by the Board before an Exploration Licence is issued.

Written submissions from the public should be sent to:

Director, Resources & Rights, Canada - Nova Scotia Offshore Petroleum Board
1791 Barrington Street
6th Floor, TD Centre
Halifax, Nova Scotia
B3J 3K9
or via e-mail at callforbids@cnsopb.ns.ca.

Further information about the Call for Bids can be found on the Board’s web site at www.cnsopb.ns.ca.

The Canada-Nova Scotia Offshore Petroleum Board is the independent joint agency of the Governments of Canada and Nova Scotia responsible for the regulation of petroleum activities and resources offshore Nova Scotia.

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BOEMRE Calls for Comment on Newfield Revised EP

BOEMRE Calls for Comment on Newfield Revised EP

U.S. Bureau of Ocean Energy Management

The Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) on Wednesday announced that public comment is invited with respect to an Environmental Assessment (EA) for a Revised Exploration Plan (EP) submitted by Newfield Exploration Company. This Revised EP involves deepwater activity in the Gulf of Mexico and will be completed in accordance with new safety and environmental standards implemented since the Deepwater Horizon explosion and oil spill.

The Revised EP includes four proposed exploratory wells in approximately 6, 990 feet water depth, approximately 66 miles offshore Louisiana. Consistent with federal regulations, an EP is deemed "submitted" once all supporting materials and documentation has been provided. Once a plan is deemed submitted, BOEMRE has 30 calendar days to analyze and evaluate it. For more information on pending plans, go to: http://www.gomr.boemre.gov/homepg/offshore/safety/well_permits.html.

As part of its review, the bureau will prepare an EA specific to the proposed exploration activities. Upon completion of the technical and environmental review, BOEMRE must decide whether to approve the plan, require modifications, or disapprove the plan. An exploration plan describes all exploration activities planned by the operator for a specific lease or leases, including the timing of these activities, information concerning drilling vessels, the location of each planned well, and other relevant information that needs to meet important safety standards.

The 30-day time frame for review includes a 10-day public comment period to allow an opportunity to review and comment on the issues that should be considered by BOEMRE in preparing the EA for the plan. In an effort to make the comment opportunity more accessible, the public can both view and provide comments on agency documents at: http://www.boemre.gov/PublicComment.htm.

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Range Calls EPA Conclusions 'Sheer Guesswork'

Range Calls EPA Conclusions 'Sheer Guesswork'

Tuesday, May 03, 2011
Fort Worth Star-Telegram, Texas
by Jack Z. Smith

Range Resources, fighting claims by the U.S. Environmental Protection Agency that it "caused or contributed" to the contamination of two Parker County, Texas, water wells, says in court filings that the EPA's conclusions are "sheer guesswork" based on "threadbare-thin" reasoning.

In filings with the U.S. 5th Circuit Court of Appeals in New Orleans, Range also argues that the EPA's Dec. 7 emergency order against the Fort Worth-based natural gas producer requires the company to engage in fact-finding efforts that the agency itself should have undertaken.

The EPA pinpointed two Range natural gas wells, drilled more than a mile deep into the Barnett Shale, as the likely sources of methane contamination in the residential water wells in far south Parker County that are approximately 200 to 220 feet deep. Methane is the chief component of natural gas.

Range said "there is 5,500 feet of the earth's strata separating the bottom of the private water wells from the subsurface horizontal sections" of its gas wells, and that the EPA order "does not even set forth a theory how gas could migrate from Range's wells to the aquifer."

Range says the EPA's order imposed costly and excessive requirements far beyond the scope required to ensure protection of the drinking-water supplies of the two contaminated wells, which served nine people.

The EPA declined to provide specific responses to Star-Telegram questions about Range's criticisms of the agency's investigation. The EPA said Friday that it "stands by the order" and "seeks to ensure that the contamination found in the drinking water wells ... is properly addressed." The EPA said it would soon file briefs responding to Range.

Among Range's contentions, the company said the order directed it "to engage in long-term and costly remedial action, including conducting an extensive study of a 20-county aquifer [the Trinity Aquifer], identifying gas flow pathways anywhere within that aquifer regardless of the source and preparing a plan to eliminate those flows and remediate any area of the aquifer that has been impacted from gas from any source."

David Poole, senior vice president and general counsel for Range, estimated that the company already has spent $1.5 million to $1.75 million defending itself against the EPA order.

Range says the EPA ignored advice from an agency chemist, Doug Beak, to do more analytical work before concluding that Range's gas wells caused the contamination. Range obtained a Nov. 28 e-mail that Beak sent to Chris Lister, an EPA environmental engineer involved in the contamination investigation.

Beak said in the e-mail that data the EPA obtained from testing natural gas from a Range well and the gas in one of the contaminated water wells showed strong similarities, but that "this is not conclusive evidence."

The U.S. Justice Department filed a complaint in a Dallas federal court Jan. 20, saying that Range failed to comply with the EPA's order. Range appealed to the 5th Circuit, seeking the order's dismissal.

The EPA continues to oppose Range's request to take sworn depositions of Lister and another EPA official, Jerry Saunders, who were involved in the contamination investigation.

While the EPA says Range "caused or contributed" to the contamination, Range repeatedly has noted that John Blevins, the EPA official who signed the order, later retreated somewhat, saying in a Jan. 25 sworn deposition that Range "may" have caused or contributed to it.

The Texas Railroad Commission found March 29 that the Range gas wells did not contaminate the water wells. The commission agreed with staff examiners and Range consultants that the gas in the water wells likely came from the shallow Strawn geological formation, which is only a few hundred feet deep and into which some gas wells were drilled in the early 1980s.

The EPA did not participate in that inquiry.

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Musings: Updated 2011 Hurricane Forecast Still Calls for Active Year

Musings: Updated 2011 Hurricane Forecast Still Calls for Active Year

Tuesday, April 12, 2011
Parks Paton Hoepfl & Brown
by G. Allen Brooks


The latest forecast update from Professors Philip Klotzbach and William Gray of the Department of Atmospheric Science at the Colorado State University (CSU) says the upcoming hurricane season is expected to see above-average activity. The April 6th forecast is slightly lower than their December 2010 forecast largely due to uncertainty about the sea surface temperatures in both the South Pacific and South Atlantic oceans that can assist or retard the development and strengthening of tropical storms.

The forecasting team has developed a new April methodology based on a data collected from 1982-2010. There are four predictors employed in the model with two of them based on sea surface temperatures in the Atlantic and Pacific oceans. The Pacific Ocean for most of the past year has been cooler than normal, which helped contribute to the Atlantic basin’s storm activity last year mostly turning north before reaching the U.S. In general, sea surface temperatures in the eastern and central tropical Pacific Ocean have been 0.50C-1.00C below average.

Exhibit 21.  Pacific Ocean Sea Surface Temperatures Low


Source:  Colorado State University

On the other side of the globe, Atlantic Ocean sea surface temperatures remain at or above average levels. They have cooled recently but most likely that has been caused by a shift from a negative phase for the North Atlantic Oscillation to a positive phase. Atmospheric conditions currently are conducive for an active hurricane season as wind shear, a force that can limit the development and strengthening of tropical storms, across the basin has been well below average over the past two months.

Exhibit 22.  Atlantic Ocean Temperatures Near Normal
   
Source:  Colorado State University

With these conditions, the CSU forecasting team began looking for analog years to help fine-tune their forecast. They were looking for years generally characterized by weak to moderate La Niña conditions and above-average tropical Atlantic and far North Atlantic sea surface temperatures during February and March. They found five seasons that met these conditions. Four of them had either neutral or La Niña conditions during the hurricane season and all four of them were very active years. Those four years were 1955, 1996, 1999 and 2008.

Exhibit 23.  Analog Years For Hurricane Forecast
   
Source:  Colorado State University, PPHB

The forecasters also found 2006, which had the same February-March conditions. That year, however, experienced an unexpected El Niño, which greatly reduced hurricane activity.

The CSU team anticipates 2011 to be slightly more active than what was experienced in the average of these five analog years due to the very active season predicted by their new statistical model. It is interesting that there were only two analog years that fit the parameters for both the December 2010 and April 2011 forecasts, and those years were 1999 and 2008.

Exhibit 24.  Latest Hurricane Forecast Down Slightly

Source:  Colorado State University, PPHB

The CSU forecast calls for a total of 16 named storms, down one from the December 2010 forecast total. It also expects there to be nine hurricanes and five major hurricanes. The total number of storm days will be down by five, from 85 to 80, with a similar reduction for each of the other storm categories.

In terms of landfall probabilities, the forecast calls for a 72% probability of a storm hitting the entire U.S. coastline compared to the 52% average for the past century. There is a 48% chance of a landing on the East Coast including the Florida peninsula compared to the historic 31% rate.  For the Gulf Coast from the Florida Panhandle to Brownsville, Texas, there is a 47% chance of a tropical storm landfall versus the historical average of 30%. Despite the higher probabilities, nature is such that it is impossible to forecast with any degree of accuracy until a storm is on its way whether it will reach land.  For the offshore energy industry, it will need to be on alert this hurricane season, although if the current pace of permitting continues, there won’t be too many offshore rigs to have to worry about this fall. Is that a backhanded positive?

Download the PDF Musings041211.pdf

IOGA Calls Cuomo Admin. to Remain Committed to Expedited Nat. Gas Permits

IOGA Calls Cuomo Admin. to Remain Committed to Expedited Nat. Gas Permits

Tuesday, April 12, 2011
Independent O&G Association of New York

The Independent Oil & Gas Association of New York (IOGA of NY) wrote Governor Andrew Cuomo and all members of the New York State Legislature requesting an expedited review of permits that will enhance natural gas production in New York.

IOGA of NY, which represents nearly 400 members employing more than 4,500 people in the state, asked the governor to direct the Department of Environmental Conservation (DEC) to complete its revised Supplemental Generic Environmental Impact Statement (SGEIS) by July 1.

"Nearly three years has gone by since the state essentially halted the permitting of natural gas drilling in the Southern Tier," wrote Brad Gill, IOGA of NY executive director, in his letter to the governor. "During that time we have watched people, jobs, businesses and opportunity flee our state for Pennsylvania, Ohio and West Virginia, where those economies are rebounding strongly as a result of increased natural gas development."

The industry association also asked lawmakers to allow the DEC to complete the SGEIS, and reject all forms of obstructive legislation that would further delay responsible and well-regulated natural gas development.

"New York cannot afford to allow protests rooted in misinformation to halt the tremendous economic development opportunity that awaits our state," Gill wrote in his letter to each member of the Legislature. "I write to ask you to continue to apply reason, common sense and fact-based analysis as you consider the future of natural gas development in New York."

The letters were accompanied by two newly released informational sheets that point out the economic success that other states are experiencing from Marcellus Shale drilling activity.

"Our industry is asking the state to provide an economic opportunity that is balanced by environmental protection," Gill wrote. We are "asking that policymakers work right now to embrace the economic opportunity that is balanced by environmental protection, and allow science, reason and our existing rigorous SGEIS process to trump emotion as New York works to derive the benefits of natural gas."