January 13 Colorado Energy Cheat Sheet: Oil and gas drive Colorado’s economy, but outlook uncertain; Western Slope feels effects of regulation; WOTUS repeal?

January 13, 2016 by michael
Filed under: CDPHE, Environmental Protection Agency, Hydraulic Fracturing, preferred energy, renewable energy, solar energy 

Oil and gas development contributes a rather large percentage to Colorado’s economic condition, and new numbers confirm its continued importance to the state:

A new economic report shows that oil and gas development contributed billions to Colorado’s economy in 2014 generating benefits that researchers conclude “impact every citizen in the state.”

Prepared by the Business Research Division of the Leeds School of Business, University of Colorado Boulder, for the Colorado Oil and Gas Association (COGA), the report details how oil and gas development contributed $31.7 billion in total economic impact to Colorado’s economy in 2014, along with “supporting 102,700 jobs and $7.6 billion in compensation.” From the report:

“The oil and gas industry, along with nearly all extraction industries, inherently provides substantial economic benefits due to its integrated supply chain, high wage jobs, and propensity to sell nationally and globally. Much of Colorado’s oil and gas is sold outside of the state, contributing wealth to owners, employees, governments, and schools, all of which are beneficiaries of oil and gas revenues.” emphasis added

Energy in Depth has a complete review of the report’s findings.

The state’s oil and gas development would be crippled if newly proposed ballot measures calling for a ban on hydraulic fracturing and other regulatory limits are passed in 2016.

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Lower oil commodity prices–a drop from $90 per barrel in 2014 to roughly $30 per barrel in January 2016 means great prices at the pump, but not good news for Colorado’s oil and gas workers:

KUSA – Oil is in an all-out freefall, dropping from roughly $90 dollars a barrel at the end of 2014 to just more than $30 per barrel Tuesday.

It’s enough to make you wonder if the industry is starting to panic.

Colorado Oil and Gas Association president and CEO Dan Haley said when commodities drop, challenges emerge.

“You’ll see some restructuring, you’ll see some tightening of jobs,” Haley said, adding that in 2015, about 2,000 people lost their jobs due to falling oil prices.

The full fallout is not likely to be known when or if the price has hit bottom, or begins to rebound, in the short or long term. Rig numbers are down and students at Colorado School of Mines are worried about the future of the industry, according to the article.

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A report on job creation tied to a “100% renewables” future is looking a little damaged, according to the folks at Energy in Depth:

A Stanford professor who claims a transition to 100 percent renewables would be a major job creator has scrubbed his website of data showing significant long-term job losses from such a plan, according to a new review by Energy In Depth. Online records show that the professor, Dr. Mark Jacobson, edited his documents just hours after an Energy In Depth report revealed how the transition to 100 percent renewables would cause a net loss of more than 1.2 million long-term jobs, based on data pulled directly from Dr. Jacobson’s website.

The decision to alter his own data could raise additional questions about Dr. Jacobson’s plan for a 100 percent renewables energy system, a plan that has already faced significant criticism from the scientific and environmental communities.

Even if the jobs were there, as Dr. Jacobson contended, not everyone on the left is on board the “100% renewables” bandwagon:

Earlier this week, Dr. Jacobson granted a separate interview to the left-wing blog Daily Kos, which gave him a forum to respond to Energy In Depth’s report. But Dr. Jacobson likely did not anticipate another Daily Kos blogger criticizing his 100 percent renewables plan as impractical. In a comment posted to the article including Dr. Jacobson’s interview, an environmental blogger said that “no electric utility is ever going to adopt Jacobson’s plan” because, among other things, the “wind power component of Jacobson’s plan cannot be relied upon for reliable electric power generation and supply.”

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Two Colorado Republicans reacted to President Barack Obama’s final State of the Union address and in particular the plight of Colorado’s Western Slope communities hit hard by the administration’s regulations:

U.S. Rep. Scott Tipton, R-Colo., whose 3rd Congressional District trails the rest of the state in the economic recovery, said the president would do well to visit his district.

“I would invite him to visit Craig or Delta,” Tipton said in an interview. “They have lost good-paying jobs and are struggling right now.”

Both communities in Colorado’s 3rd Congressional District have been hard-hit by coal-mine closures. Arch Coal, a major coal supplier and employer on the Western Slope, declared bankruptcy on Tuesday, before the speech.

“The president talked about significant government interference in the marketplace that will most likely imperil jobs on the West Slope of Colorado,” said U.S. Sen. Cory Gardner, R-Colo.

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Speaking of Arch Coal’s bankruptcy:

Arch Coal Inc.’s bankruptcy filing Monday signals that the coal industry’s shakeout is entering a crucial phase, which will result in more small, unlisted mining companies, record numbers of mines for sale and lower wages for workers.

Over a quarter of U.S. coal production is now in bankruptcy, trying to reorganize to cope with prices that have fallen 50% since 2011, battered by competition from natural gas and new environmental rules. Arch, the biggest domino to fall so far, is trying to trim $4.5 billion in debt from its balance sheet.

Competitors Walter Energy Inc., Alpha Natural Resources Inc., and Patriot Coal Corp. all filed for court protection last year.

But bankruptcies only spell death for current corporate structures, not necessarily the mines they operate. And the U.S. still gets 34% of its electricity from coal, according to the Energy Information Administration, and that number is still expected to be around 30% by 2030. “The question is, what is that 30% going to look like?” says Steve Nelson, chief operating officer at Longview Power LLC, a 700-megawatt coal-fired plant in northern West Virginia.

Market-driven changes are good–the transition from coal-heavy electricity to natural gas is not a problem, and beneficial to the environment–when done without government mandates. Onerous regulations designed to put coal out of commission, from fuel switching initiatives in Colorado to the Environmental Protection Agency’s Clean Power Plan, are not beneficial to the country’s economy and to the individuals and communities impacted by layoffs and dislocation, as well as skyrocketing residential electricity rates.

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Should be an interesting event and will definitely address some of the impact to Colorado of recent commodity downturns in oil:

By: Vital for Colorado
Event Description
Join us in discussing lifting the U.S. Oil Export Ban and what it means to Colorado. Our esteemed panel includes U.S. Representative Ed Perlmutter (D) CO and U.S. Representative Ken Buck (R) CO, Christopher Guith, U.S. Chamber of Commerce’s Institute for 21st Century Energy, Geoff Houlton, Dir. of Commodity Fundamentals Anadarko Petroleum Corp., John R. Grizz Deal, CEO IX Power Clean Water, and Craig W. Van Kirk, Professor Emeritus Petroleum Engineering Colorado School of Mines. This is a free event but registration is encouraged.

WHEN
Thursday, January 21, 2016 from 5:30 PM to 7:30 PM (MST) – Add to Calendar
WHERE
Colorado School of Mines Green Center – Bunker Auditorium – 924 16th Street Golden, CO 80401 – View Map

The Independence Institute is not affiliated with the event.

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The EPA’s Waters of the United States rule is facing legislative repeal, subject to President Obama’s veto:

House lawmakers are poised to pass legislation repealing what is probably the Environmental Protection Agency’s (EPA) most hotly contested regulation: an attempt to expand its authority over bodies of water across the country.

The House will vote Wednesday on a bill that would repeal the EPA’s so-called Clean Water Rule under the Congressional Review Act — a law that allows Congress to vote down executive branch regulations. EPA’s water rule has been heavily criticized by lawmakers who see it as a huge expansion of government power and could mean more regulations for private landowners.

“We want them to go back and do a new rule,” Ohio Republican Rep. Bob Gibbs told The Daily Caller New Foundation in an interview. Gibbs sent a letter to House leadership last year asking them to defund EPA’s water rule in the 2016 budget bill.

The Senate passed a bill repealing EPA’s water rule in November, sparking huge outcry from environmentalists who support more federal control over bodies of water. The House is likely to pass the repeal with bipartisan support, sending it to President Barack Obama.

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