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Producing at All-Time Records

The U.S. shale revolution that started in 2008 has not just transformed our domestic energy outlook but also energy markets around the world.

Over this time, U.S. crude oil production has surged 140% to 12.2 million b/d, while gas output is up 55% to 88 Bcf/d.

The U.S. is now easily the world's largest oil and gas producer, yielding 20% more oil and 25% more gas than Russia

As it turns out, contrary to wide assertions, U.S. crude production didn’t peak in 1970, and U.S. gas production didn’t peak in 2005.

The American shale boom itself is a testament to the non-stop evolution of oil and gas operational efficiencies and technologies.

The U.S. oil and gas industry is stronger today than it’s ever been.

The price collapse from 2014 to 2017 forced the industry to cut costs to survive.

And with some 100 E&P firms going bankrupt during that time, those left standing are mean, lean oil and gas producing machines – and more consolidation will allow them to persist during challenging times of low prices.

This is why IHS Markit says that 1.9 million new jobs in oil and gas will open up from 2016 to 2035.

Will Still Supply the Bulk of Our Energy

Today, oil and gas are our two most important sources of energy, meeting 65% of total U.S. energy demand.

We lean on oil for 97% of our transportation needs, and increasingly, natural gas leads by generating 35% of all U.S. electricity.

And there’s so much more to come.

Quietly, the U.S. Department of Energy recently projected that gas will easily add the most amount of power capacity through 2050, at 235,000 megawatts.

This will be a cornerstone of meeting our climate change and environmental goals: “Thanks to Natural Gas, US CO2 Emissions Lowest Since 1985.”

Gas will also remain integral to heating, manufacturing, and in the underappreciated business of “peaking plants,” flexible gas units that backup intermittent wind and solar power.

And at 19-20 million b/d, U.S. oil demand remains “buoyantly very high.”

Oil (transport) and wind and solar (power) compete in different sectors of the U.S. economy.

And U.S. car sales in 2018 were 17.3 million units. Just 2% of them run on electricity.

“Electric vehicle revolution will come from China, not U.S.”

Indeed, the U.S. Department of Energy predicts that oil and gas will still supply over 60% of our energy needs for as far out as it currently models (2050).

All of this mandates that we must produce more oil and gas along with the infrastructure required for their expansion.

If not, we will expensively and dangerously be forcing ourselves to rely more on the global supply chains, largely now in the hands of more “politically risky” producers like OPEC and Russia.

California and the New England states illustrate exactly what happens when you pass laws that block the domestic production of fuels that you still vitally need: Saudi Arabia for oil and Russia for gas.

Going Global

Not just being the largest oil and gas producer, The U.S. could also become the largest global seller of these essential fuels within five years

The American oil export boom started in December 2015 with a law change to ship crude beyond just neighbor Canada.

And gas followed suit in February 2016 when our first LNG export facility in the contiguous U.S. (Cheniere Energy’s Sabine Pass) shipped its first cargo from Louisiana.

At over 2.5 million b/d, U.S. crude oil exports were 35% higher last month than they were in April 2018, made even more impressive given the trade war with China.

Oil product exports were double that.

Much more is coming.

There are at least eight proposals for new deepwater oil ports along the Gulf, augmented by expansions of existing terminals.

And these new projects aim to fully load VLCCs (Very Large Crude Carriers) within a single day.

By early next year, U.S. Gulf crude export capacity should be around 8.5 million b/d.

For natural gas, with three operational today, three more LNG export facilities will be online by the end of this year.

Our total LNG export capacity stands to reach nearly 8 Bcf/d, or nearly 20% of the total global demand market.

Although unlikely to all come online, proposed projects are five or six times that amount.

Our gas prices are low and transparent, and our LNG contracts are far more flexible.

Today at 4-5 Bcf/d and reaching some 30 nations, we are slated to become the leading LNG exporter before 2025.

Let's hope that we don't get in our own way: “China to increase tariffs on US LNG to 25%.” We better get this right, fast: "Russia Could Take Hold Of China’s Entire Gas Market."

Those opposing U.S. LNG development plans are handing this critical and soaring market to Vladimir Putin: "Russia’s wants to raise its share of the global LNG market to as much as 20 percent by 2035, after having doubled its share to 8 percent last year."

Indeed, just like getting the required pipelines built, especially from the booming Permian Basin in West Texas, the infrastructure build-out to ship oil and gas around the world from the Gulf will be bumpier than it should be.

But, the world is depending on us.

The U.S. will be responsible for over 70% of new global oil supply over the next five to seven years at least, so prices will be that much higher if we don’t produce as called upon.

In addition, U.S. natural gas will also help others cut dependence on riskier suppliers (‘Freedom gas’: US opens LNG floodgates to Europe), while also lowering their greenhouse gas emissions by lessening their overreliance on coal and backing up wind and solar power.

Blue state politicans take note: dire warnings from the International Energy Agency on oil and gas have to do with not enough investment in producing them.

That tells you all you need to know about how robust global demand for these essential commodities really is.

Regulators denied an application for a $1 billion natural gas pipeline that environmentalists said would set back the fight against climate change.

By Vivian Wang and Michael Adno

May 15, 2019

In a major victory for environmental activists, New York regulators on Wednesday rejected the construction of a heavily disputed, nearly $1 billion natural gas pipeline, even as business leaders and energy companies warned that the decision could devastate the state’s economy and bring a gas moratorium to New York City and Long Island.

The pipeline was planned to run 37 miles, connecting natural gas fields in Pennsylvania to New Jersey and New York. Its operator, the Oklahoma-based Williams Companies, pitched it as a crucial addition to the region’s energy infrastructure, one that would deliver enough fuel to satisfy New York’s booming energy needs and stave off a looming shortage.

But environmental groups said Williams was manufacturing a crisis to justify a project that would rip apart fragile ecosystems, handcuff New York to fossil fuels and hobble the state’s march toward renewable resources.

The result was an arcane but fevered battle over what was potentially New York’s most fraught environmental decision since it banned fracking in 2014. The fight also took on political overtones, as progressive activists pressed Gov. Andrew M. Cuomo to urge his Department of Environmental Conservation to reject the application, casting it as a threat to his environmental legacy.

In a statement announcing the denial, the conservation department did not refer to the firestorm that had preceded its decision, aside from noting that it had received comments from more than 45,000 people about the project — 90 percent of whom opposed it. The department laid out its decision in technical terms, noting that construction would contaminate New York’s waters with mercury and copper.

“Construction of the NESE pipeline project is projected to result in water quality violations and fails to meet New York State’s rigorous water quality standards,” the department said, referring to what is formally called the Northeast Supply Enhancement pipeline.

While the pipeline had not attracted anywhere near the attention of the Keystone XL or Dakota Access pipelines that carry oil in the Great Plains region, within the insular world of New York politics it became a flash point in a larger debate about fighting climate change, spurring economic development and whether it was possible to marry the two.

Ahead of the decision, a chorus of Democratic elected officials denounced the pipeline, including the New York City comptroller, Scott M. Stringer, and Mayor Bill de Blasio. Hours before the decision was due on Wednesday, 11 United States representatives, including Jerrold Nadler, Alexandria Ocasio-Cortez and Hakeem Jeffries, wrote a letter to Mr. Cuomo in opposition.

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Last month, President Trump signed two executive orders designed to speed up the construction of pipelines and make it more difficult for states to reject them.

Wednesday’s decision thrilled activists and environmental groups who had spent months railing against the project. The Natural Resources Defense Council, a powerful national environmentalist group, used Twitter to call the decision a “huge win.”

Mr. Cuomo, for his part, had distanced himself from the dispute. At an unrelated news conference on Wednesday before the decision, he told reporters that he was not involved in the environmental agency’s deliberation process.

But in a nod to the heated nature of the debate, he said, “I told them, ‘Make the decision on the facts, not on the politics,’ and that’s what they’re going to be doing.”

He did not immediately comment after the pipeline decision.

New York regulators noted that they had denied the application “without prejudice,” meaning that the Williams Companies, the pipeline’s operator, could reapply. Company officials said they planned to do just that.

“The Department of Environmental Conservation raised a minor technical issue with our application,” Chris Stockton, a Williams spokesman, said in a statement. “Our team will be evaluating the issue and resubmitting the application quickly.”

Regulators in New Jersey must also decide on the project in June, though the state would not receive any of the gas; officials there said they had not made a decision.

The heart of the debate revolved around whether the pipeline was even necessary.

Williams had said the new pipeline could help accelerate the replacement of fuel sources that emit more carbon dioxide — the equivalent, company officials said, of taking 500,000 cars off the road for a year.

More critically, it said, without the extension, billions of dollars in infrastructure and development projects could stall. Williams and National Grid projected that natural gas demand would rise 10 percent in the next decade in New York City and Long Island. National Grid has threatened to impose a moratorium on new gas hookups in New York City and Long Island if the pipeline is not approved, just as Consolidated Edison has in Westchester County.

After New York in 2016 rejected a permit for the Constitution Pipeline Company, another Williams project, the company sued the state; that case is pending.

“The demand for natural gas is at an all-time high, and the existing infrastructure is at capacity,” Scott Hallam, a senior vice president at Williams, said in an interview before the decision.

Mr. Stockton, in his statement after the denial, said he was confident Williams could win approval soon enough to “avoid a moratorium that would have a devastating impact on the regional economy and environment.”

But opponents mounted a two-pronged campaign aimed at discrediting the companies’ statistics and warning Mr. Cuomo of damage to his environmental legacy.

Suzanne Mattei, the former head of the New York City branch of the state’s environmental conservation agency, was commissioned to write a report on the proposed pipeline by 350.org, an activist group that seeks to end the use of all fossil fuels. Her research showed that the claim of unmet gas demand was “a lot of smoke and mirrors,” said Ms. Mattei, who now works as an attorney at a public policy firm.

She pointed to a company presentation by Williams last year that predicted that several states in the Northeast could “experience flat to negative gas-demand growth” in the next 20 years as renewable energy proliferated. And while National Grid said it would need to supply 8,000 new natural gas hookups each year, Ms. Mattei said the number appeared speculative and inflated.

Mr. Stockton, the Williams spokesman, said that national trends did not capture demand for particular states or regions, and that New York’s economic development plans set it apart from the energy needs of other states.

John Bruckner, the president of National Grid New York, called the 350.org report “misleading” and said it “misrepresents many essential facts related to the need for natural gas in our region.”

But the activists’ critiques extended beyond demand, to the broader threat of climate change. Federal officials had also expressed concern on that front. Though the Federal Energy Regulatory Commission on May 3 authorized the project to proceed, one of the four commissioners, Richard Glick, said the body had failed to “give climate change the serious consideration it deserves.” Mr. Glick, a Democrat, was appointed by Mr. Trump.

Activists used that argument to pressure Mr. Cuomo politically with protests and phone-banking campaigns, warning that his progressive credentials would be imperiled if he allowed state regulators to approve the pipeline.

“Banning fracking is a great step in the right direction,” said Robert Howarth, an ecology and environmental biology professor at Cornell University. “Allowing a build-out of gas infrastructure — I think that would just be a very sad addition to that, undercutting the governor’s legacy for sure.”

But Williams and National Grid have considerable political influence, too. Williams hired a lobbying firm, Kivvit, that is led by Mr. Cuomo’s former campaign manager. It also donated $100,000 last year to the Democratic Governors Association, which later gave $20,000 in in-kind contributions to Mr. Cuomo’s campaign.

Mr. Cuomo, who has also made infrastructure a cornerstone of his tenure, has demurred when asked to stop taking money from fossil fuel companies.

The denial was a blow not only to Williams and National Grid but also to New York’s business and labor communities. Vincent Albanese, the director of policy and public affairs for the New York State Laborers, which represents over 40,000 members in the construction industry, said a moratorium on new gas hookups would jeopardize jobs. The union has spent more than $600,000 on Facebook ads in the past year promoting the pipeline, according to Facebook’s database.

Kathryn Wylde, the president of the Partnership for New York City, an influential business group, said investors needed to feel confident in the city’s energy supply.

“The continuity of investment in job creation really depends on certainty about the energy supply,” she said, adding, “It’s clear that it’s not going to be sufficient without the pipeline.”

But opponents of the pipeline said they would redouble their activism against any renewed efforts by Williams.

“The state has made it clear that dangerous gas pipelines have no place in New York,” Kimberly Ong, a senior attorney at the Natural Resources Defense Council, said. “We will continue to ensure this reckless project is shelved forever.”

Vivian Wang is a reporter for the Metro Desk, covering New York State politics in Albany. She was raised in Chicago and graduated from Yale University. @vwang3

NY lawmakers propose bill to bar development of fossil fuel infrastructure in state
Map of proposed Williams pipeline extension, which would connect the existing natural gas line. (Courtesy of Williams Companies)
 

ALBANY — An environmental bill unveiled Monday could block construction on a pipeline that would bring natural gas to the city.

The legislature, sponsored by Sen. Jen Metzger (D-Ulster County) and Assemblywoman Nily Rozic (D-Queens), would ban the development of new plants or pipelines and also direct state energy officials to create a plan for moving the electrical grid entirely off fossil fuels by no later than 2040.

If passed, the measure could put a stop to any project that has yet to be permitted, including the 23-mile-long Williams pipeline, set to carry fracked natural gas from shale fields in Pennsylvania, through New Jersey into the five boroughs.

A general view of the Williams Gas Pipeline Transco tankers seen along the Hackensack River in N.J.
A general view of the Williams Gas Pipeline Transco tankers seen along the Hackensack River in N.J. (Julio Cortez/AP)

“I think that we really need to move away from importing natural gas and really think seriously about renewables here in New York,” Rozic said Monday.

Lawmakers will have to move quickly to kill the Williams pipeline, named for energy company Williams Partners L.P.

The project is slated to be approved or denied by the state Department of Environmental Conservation by May 16.

Democrats have been on a green kick in recent weeks. Last week, the State Senate passed a collection of eco-friendly bills meant to protect New Yorkers against toxic toys, establish a constitutional right to clean air and water and to protect the state’s environment and natural resources.

Lawmakers are also weighing a vote on the Climate and Community Protection Act, which calls for a 100% reduction of all emissions by 2050, attaches fair labor standards to green projects and includes equity provisions that require 40% of the state funds used for the transition away from fossil fuels be invested in low-income communities and communities of color.

Metzger said the fossil fuel bill is intended to complement the sweeping legislation.

“The urgency of climate change requires a rapid transition to clean energy,” Metzger said. “We cannot achieve that transition, or the economic benefits to New York that it promises, if we continue to invest in new fossil fuel infrastructure and extend our dependence on fracked gas and oil from out of state.”

The increased use of natural gas in electricity generation contributes to long-term “climate stabilization objectives,” according to a new study published in Nature. Notably, the study’s top line finding should address concerns that natural gas is less effective at reducing emissions than initially anticipated:

“We found that the coal-to-gas shift is consistent with climate stabilization objectives for the next 50-100 years. Our finding is robust under a range of leakage rates and uncertainties in emissions data and metrics. It becomes conditional to the leakage rate in some locations only if we employ a set of metrics that essentially focus on short-term effects. Our case for the coal-to-gas shift is stronger than previously found…”

The study is unique in that it is the first to employ a “multimetric approach” to analyze the impact which takes into account “short-term (a few decades) and long-term (about a century) climate impacts.”

Methane emissions intensity is declining in the top U.S. oil and gas basins.

The study comes at a time when the U.S. oil and gas industry is making significant strides in reducing methane emissions leakage rates, a fact that was noted in the study:

“A recent synthesis study gave a leakage estimate of 2.3% for the United States…CH4 measurements and inventory data are concentrated in the United States, leaving the leakage estimates in the other parts of the world more uncertain. Leakage rates outside of the United States could be high due to fewer regulatory oversights on environmental issues, among other factors.”

recent EID analysis found that in the Permian and Appalachian basins methane emissions intensity – emissions per unit of production – decreased by 57 percent and 82 percent, respectively, from 2011 to 2017.

The increased use of natural is improving air quality.

In addition to climate impacts the study notes that increased use of natural gas to meet energy demand also could lower emissions of other air pollutants and improve air quality:

“…air quality can be evaluated together with climate impacts, which could probably strengthen the case…”

This trend is already occurring, according to the U.S. Environmental Protection Agency’s 2018 “Our Nation’s Air” report that found air pollution declined 73 percent from 1970 to 2017 at the same time America’s gross domestic product  increased 262 percent. Most notably, the EPA data showed that emissions of sulfur dioxide (SO2), nitrogen oxide (NOx) and fine particulate matter  — widely viewed as the most harmful air pollutants — have collectively declined 55 percent since 2005.

The findings of the Nature study also align with the latest EPA data released this month which show that greenhouse gas emissions in the United States fell 12 percent from 2005 to 2017 while natural gas production increased 51 percent:

The Nature study provides yet another proof point that the United States is leading the world in carbon emissions reductions thanks in large part to our embrace of natural gas. As natural gas continues to be an increasingly important energy source to meet the demand for electricity, there could also be more long-term climate benefits to come. As Independent Petroleum Association of America’s Executive Vice President Lee Fuller stated:

“America’s oil and natural gas producers are working hard to develop America’s own abundant resources in a safe and environmentally sound manner. The federal government’s own data confirms methane emissions have fallen in recent years and are continuing to drop, even as oil and natural gas production has risen. As technology has improved, the industry’s processes have become more efficient. Responsible energy development has and will continue to play a leading role in making the United States the world leader in greenhouse gas reductions.”

Below is a rewrite of a Letter to the Editor submitted about a month ago. By the time it was printed I rewrote it to keep it current. It's all factual with sources noted.

The Otsego Otsego County Energy Infrastructure Summit group reconvened tonight at the Oneonta Town Hall for a progress report. Most of the members and their "advisors" seem to lean towards renewables only and a few are openly anti gas. The leadership maintains that the group is in a fact finding phase. We'll see and keep reporting.
The LTE's title; "While Otsego County Dithers. China Plans 700 Coal-Fired Power Plants.
Oneonta needs natural gas. The latest skirmish in local Gas Wars is over a decompressor station in the old D & H railyard. NYSEG's gas feed to Oneonta is seasonally limited. There's no guarantee of supply to large users during protracted cold spells. NYSEG won't upgrade the feeder line for years to come. Businesses and our local IDA support the decompressor station; the anti-gas faction oppose it. Most agree that affordable energy is key to regional economic growth. That would be gas.

The focus on a stable year-round economy is not new. Since 2005 the County has created three economic plans. All cited our tech, tourist, educational, and cultural advantages. The results: minimal growth, an aging population while the young flee for opportunity. A fourth Plan is now in the works. We transformed our IDA, Otsego Now, into a one-stop shop to facilitate financing and administrative hurdles. We've hired two IDA CEOs. They've been clear. Both said we need the availability of natural gas if want to keep and create jobs in this area.

A relatively small, organized, articulate, dedicated, close-minded group are opposed to ANY form of gas expansion. They feel the use of fossil fuels will destroy the planet. The timeline to Doomsday is elastic; some say twelve years and it's curtains. Others offer various endpoints to be fossil fuel free. The year 2050 is popular. The Energy Information Agency (EIA) contradicts this, predicting in 2050 gas will still be 40% of our energy mix.A second local group favors ALL forms of renewable and gas energy. Their composition is more defuse, many in private business, mostly quiet, hesitant to speak up in public. Their voices are rarely heard. Finally, most people don't care much one way or another, as long as the lights go on and the stove works. Public opinion polls consistently confirm climate change is a low priority. In last month's CNN's poll of the most important issues for the 2020 election, climate change didn't even make the Top Ten.

So, given diverse opinions and our economic needs, how do we move the needle towards growth? Is opposition to any form of fossil energy useful even from an ecological standpoint? Perspective helps.

Some facts; the use of coal worldwide in electric generation is a major source of greenhouse gas (GHG). In the USA natural gas is replacing coal at power plants, reducing GHS. Still the United States produces about 15% of the world's GHG. Who's producing the other 85%? Some recent headlines are helpfull, "Coal Isn't Dead. China Proves It," (Forbes 1/19/19) states China will build 700 more coal fired generators by 2027. A second article "Coal is King in India and Likely to Remain So" (Brookings Institute, 3/8/19) confirms the coal-based trend. Mining.com notes that there will be 1,600 new coal generators built in 62 \countries by 2027.

There's your problem. And here we are in Otsego County dithering over emissions from couple of truckloads of natural gas delivered to the D&H railyards in order to get and keep local jobs. P-L-EA-S-E!!!

The D & H fractivists ignore the fact that the substitution of gas for coal in power plants is the main reason USA emissions have fallen to 32 year lows. This happened in spite of an 85 million population growth, a growing economy, and more energy use per capita (EIA Energy Report 10/29/18). As a result the USA, of all the industrial nations, will come closest to meeting the Paris Accord goals. Credit this to fracked gas.

Germany, the paragon of climate correctness, has spent close to a trillion dollars on green energy. It gets 28% percent of its electricity from renewable sources. Recently its efforts have plateaued. It is unable to produce cost-effective "clean" energy without the help of two gas (yes, GAS) pipelines from Russia and three proposed LNG ports near Hamburg. They did so because the electic rates have skyrocketed to over three times what we pay in NYS. Germany now supports a whole new class of people called the "the energy poor" who pay over 10% of their income for energy. Think about it. If we can't attract employers at current electric rates, how are going to do so when the rates triplMeanwhile, the USA overflows with gas. The EIA reports production records set and domestic consumption at all-time highs. The Marcellus, the second largest field in the USA, is just down th road from us. The Utica Shale, by all accounts, is also prolific. New Yorkers, the fourth largest consumers of natural gas, are zeroed out of this bonanza. No new gas for us from under our feet or piped down our streets? Is that the deal? Sound right to you?

We need natural gas. We need it now.

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