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Oil and Gas Roundup — Sept. 3

September 03, 2013
TOPICS: In the news
A roundup of oil and natural gas industry news from around the state, nation and world:

MIT professor: global warming is a ‘religion’

Throughout history, governments have twisted science to suit a political agenda. Global warming is no different, according to Dr. Richard Lindzen of the Massachusetts Institute of Technology.

“Global climate alarmism has been costly to society, and it has the potential to be vastly more costly. It has also been damaging to science, as scientists adjust both data and even theory to accommodate politically correct positions,” writes Lindzen in the fall 2013 issue of the Journal of American Physicians and Surgeons.

According to Lindzen, scientists make essentially “meaningless” claims about certain phenomena. Activists for certain causes take up claims made by scientists and politicians respond to the alarmism spread by activists by doling out more research funding. — creating an “Iron Triangle” of poor incentives.

“How can one escape from the Iron Triangle when it produces flawed science that is immensely influential and is forcing catastrophic public policy?” Lindzen asks.

Lindzen compares global warming to past politicized scientific movements: the eugenics movement in the early 20th century and Lysenkoism in the Soviet Union under Stalin. However, the MIT professor argues that global warming goes even beyond what these past movements in terms of twisting science.

“Global Warming has become a religion,” writes Lindzen.

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Might Mexico's new approach to oil and gas shake things up in U.S.?

Here's a question: Will Mexico develop a forward-thinking national energy policy before the United States? A week of positive headlines might turn out to be nothing but ink on paper, but could the Mexican political momentum be the catalyst that outpaces or deflates American energy gains?

Mexico was the first country with significant oil and gas deposits to nationalize the ownership of its hydrocarbons, which it did in 1938. Proceeds from hydrocarbons account for roughly one-third of Mexico's revenue and one-fifth of all its exports. However, while their resources are vast, the state controls all aspects of the development and ownership of the mineral rights. Production has declined in recent years.

Last week, Mexican President Enrique Pena Nieto said, “This is the first step in creating an energy sector for the 21st century for Mexico.” He was referring to a constitutional amendment to essentially end the monopoly in its oil and gas sector by allowing a profit-sharing model with private companies. It's a bold statement, but one that comes from a government that has built an effective, working coalition that, in just a few months, passed constitutional reforms limiting powerful public teacher unions and removing immunity for public officials from criminal prosecution.

Mexico's oil and gas reserves are significant. The U.S. Energy Information Administration lists Mexico as one of the 10 largest oil-producing nations in the world, and it lists the nation fourth in the estimated natural gas reserves from shale.

Will Mexico's constitutional amendment to reform their energy industry pass? Experts say it is highly likely it will be enacted by the end of the year.

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Eagle Ford-related lawsuits on the rise

The Eagle Ford Shale boom is filling South Texas court dockets.

The region’s unprecedented oil and gas activity has generated legal work since its beginning, but this year marks the steepest upswing in shale-related litigation, local lawyers say.

“We’re five years into this play, so the timing is about right,” said David Roth, chair of San Antonio law firm Cox Smith’s energy group. “Divorces generally don’t happen in the first year, right?”

During the boom’s outset, both land owners and oil companies were focused on development, Roth said. But, now that the oil is flowing, both parties want to ensure they protect their profits.

Eagle Ford activity has driven Cox Smith’s energy litigation up 100 percent over the past three years, Roth estimates.

In some cases, the chain of paperwork that dictates ownership of mineral rights dates back decades, lawyers say. Discrepancies in those documents often spill over into family feuds that are resolved at the courthouse.

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National Park Service urges BLM to ignore science on hydraulic fracturing

Last week, the National Park Service submitted comments to the Bureau of Land Management regarding the latter’s proposed federal rule on hydraulic fracturing. The NPS naturally has an interest in ensuring that development is done responsibly in U.S. parks, so the fact that it weighed in was unsurprising. But what the NPS claimed about hydraulic fracturing in those comments was nothing short of appalling.

The most notable? In a section entitled “Air Resources,” the NPS cited none other than anti-fracking activist Tony Ingraffea, specifically his recent op-ed in the New York Times, which claimed that methane “leaks” could be as high as 17 percent. Based on Ingraffea’s claims — which were universally panned almost immediately after the op-ed ran earlier this summer — the NPS made a series of recommendations that it believes the BLM should incorporate into its proposed rule.

That’s right: A taxpayer-funded federal agency categorically ignored what the U.S. Department of Energy, the U.S. Environmental Protection Agency and a virtual consensus of scientists across the country have said about greenhouse gas emissions from shale gas, choosing instead to promote the views of one of the most widely discredited stars of Gasland Part II.

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Lawmakers press Interior on HF rule trade secrets provision

The Interior Department faces competing Capitol Hill pressures over how often it should allow oil-and-gas drillers to avoid disclosure of chemicals used in hydraulic fracturing by claiming they’re trade secrets.

Sen. James Inhofe, R-Okla., in a letter to Interior’s Bureau of Land Management, says trade secret exemptions in draft hydraulic fracturing regulations should be expanded.

He wants the rule to ensure that oilfield service contractors, not just oil-and-gas companies, can directly use trade secret exemptions in the planned BLM rules.

“BLM is effectively eliminating trade secret protection for the vast majority of companies that need it — the service companies,” he writes in comments on the proposed rule.

“Service companies (and the chemical suppliers they work with) are predominantly the holders of hydraulic fracturing trade secret information because they are typically the ones that develop the innovative technologies and formulas used in the process,” adds Inhofe, a veteran member of the Senate Environment and Public Works Committee.

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