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Oil and Gas Roundup — March 12

March 12, 2015
A roundup of oil and natural gas industry news from around the state, nation and world:

Measure banning local drilling rules passes Oklahoma House

The state House of Representatives has passed legislation that prohibits cities and other local governments from regulating oil and natural gas drilling operations.

House members voted 69-26 for the House Bill 2178  by House Speaker Jeff Hickman, R-Fairview. The measure is now set for consideration in the state Senate.

The measure bans local government from prohibiting or regulating oil and gas exploration, drilling, fracturing and production but permits them to enact ordinances involving road use, traffic, noise, drilling placement and fencing requirements for health and safety purposes.

Opponents complained that the measure does not go far enough to give local governments the authority to regulate drilling operations that are located near residences in rural areas.

Obama downplays Keystone, ignores State Department research on pipeline

President Obama on Friday ignored his own State Department’s research on the Keystone XL oil pipeline, dismissing the project and casting it as both economically unimportant and potentially harmful to the environment.

Speaking at a town-hall meeting at Benedict College in Columbia, S.C., the president defended his recent veto of legislation that would have approved Keystone. Mr. Obama said he vetoed the bill for technical reasons and has not yet made a final decision on the project.

“Its proponents argue that it would be creating jobs in the United States. But the truth is … it will probably create a couple thousand construction jobs for a year or two,” he said. “We’re not going to authorize a pipeline that benefits largely a foreign company if it can’t be shown that it is safe and if it can’t be shown that, overall, it would not contribute to climate change.”

But Mr. Obama’s own State Department contradicts his claims. The department’s environmental review of Keystone already has determined the pipeline would not significantly increase greenhouse-gas emissions or contribute in a measurable way to climate change because, the federal government predicts, Canada will extract its oil and send it to market with or without the project.

Mr. Obama also seriously downplayed the State Department’s job-creation estimates.

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Activists to blame seismicity on injection wells, but USGS sees it differently

A series of low-magnitude earthquakes have occurred in North Texas in recent years, and several scientists have identified underground wastewater injection activities as a possible culprit. Although there are thousands of injection wells throughout the Barnett Shale region, academics and U.S. Geological Survey researchers have identified fewer than two dozen of the wells as possible sources of felt seismicity.

According to the Railroad Commission of Texas, there are three categories for underground injection of wastewater associated with oil and natural gas production: injection for secondary or enhanced recovery (in which the wastewater is returned to the reservoir from which it originated to “enhance” the flow of oil); disposal into non-producing rock formations; and disposal into the producing formation from which it originated (which differs from secondary recovery in that the injection is not designed to stimulate additional production).

The National Research Council has observed that all of these injection activities pose some risk of inducing seismicity, provided the right conditions are present, but that the overall risk is quite low.

To further quantify that risk, Energy In Depth reviewed recently published research on earthquakes in North Texas, identifying the well locations that some scientists suggest may be associated with seismic activity. EID then compared that information against state data on the number and location of injection wells throughout the Barnett Shale region.

Based on EID’s analysis, over 99 percent of injection wells in the Barnett Shale have not been associated with felt seismic events. This finding is in line with many recent scientific studies indicating a low overall risk of induced seismicity, although additional research is ongoing. Moreover, given the complicated fault system and wide dispersion of injection wells in North Texas, any naturally occurring earthquake may have injection wells nearby – and such wells will immediately be subject to guilt by association.  While an injection well can induce seismicity under certain circumstances, careful study and analysis is needed to determine actual causation.

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Biofuel group proposes changes to RFS

The makers of advanced biofuels created with algae, animal fat and non-edible plant materials on Wednesday broke with traditional corn-based ethanol producers to call for sweeping changes to the nation’s biofuels mandates.

The appeal, delivered by Advanced Biofuels Association President Michael McAdams in a speech Wednesday, marks a major shift in the strategy for the diverse industry supporters of the 10-year-old renewable fuel standard, who have long stuck together in lobbying Congress to maintain the mandates.

Together, they have successfully beaten back stiff opposition from the oil industry and its leading trade group, the American Petroleum Institute, which have argued that the renewable fuels requirement is fundamentally broken and should be scrapped altogether.

But with his remarks Wednesday, McAdams signaled that the advanced biofuel sector believes its best hope for preserving a federal mandate for its innovative new renewable fuels comes by distancing itself from the first-generation ethanol that currently fulfills most of the mandate.

While the RFS “may be working for some” it “is not equally helpful to all sectors of the biofuels industry,” McAdams said. “The current RFS simply doesn’t work as well for companies trying to move cutting-edge technology from a demonstration plant to commercial scale.”

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Inhofe, GOP highlights state objections to EPA climate rule

Senate Republicans used a Wednesday hearing on the Environmental Protection Agency’s (EPA) landmark climate rule to highlight the objections from states that oppose the rule.

The GOP brought in officials from Indiana, Wyoming and Wisconsin — each of which has Republican governors and Republican majorities in both legislative chambers — to outline how they find the rule unreasonable, irresponsible and illegal.

Democrats on the Environment and Public Works Committee brought in officials from New York and California — whose governors are Democrats — to support the regulation, which aims to slash the power sector’s carbon emissions 30 percent by 2030.

It was the second hearing in as many months that the panel has held on the rule, to which Republicans strongly object and have sought to scuttle or change significantly.

“The proposal undermines the longstanding concept of cooperative federalism under the Clean Air Act where the federal government is meant to work in partnership with the states to achieve the underlying goals,” Sen. Jim Inhofe (R-Okla.), the committee’s chairman, said at the hearing. “Instead, this rule forces states to redesign the ways they generate, manage and use electricity in a manner that satisfies President Obama’s extreme climate agenda.”

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