January 13 Colorado Energy Cheat Sheet: Oil and gas drive Colorado’s economy, but outlook uncertain; Western Slope feels effects of regulation; WOTUS repeal?
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
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.
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.
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.”
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.
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.
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
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.
Thursday, January 21, 2016 from 5:30 PM to 7:30 PM (MST) – Add to Calendar
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.
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.
December 3 Colorado Energy Cheat Sheet: US House resolutions push back on Clean Power Plan, rail vs. pipelines in Denver, Gold King Mine owner has strong words for EPA
Filed under: CDPHE, Environmental Protection Agency, Hydraulic Fracturing, New Energy Economy
The U.S. House passed two resolutions on the Clean Power Plan and carbon emissions this week:
The House sent a resounding message to the nations gathering in Paris for international talks on climate change by approving two Senate resolutions to block President Obama’s restrictions on power plants.
The resolutions now go to Obama. When the resolutions passed the Senate last month, the White House said Obama would veto the resolutions.
The House on Tuesday voted 242-180 to block the Clean Power Plan, a mostly symbolic measure by Congress to stop President Obama’s signature environmental regulation. The chamber also passed a second resolution to block carbon emissions limits on new power plants, 235-188.
The Clean Power Plan, seen as Obama’s signature environmental regulation, is the centerpiece of the administration’s commitments to the 21st Conference of Parties, or COP21, being held in Paris during the next two weeks.
Rep. Ed Whitfield, R-Ky., said the vote is meant to show the 195 other countries gathering in Paris that there are serious objections to the Obama’s plans in the United States.
“We want to send a message to the climate change conference in Paris that in America there’s serious disagreement with the extreme policies of this president,” Whitfield said.
There are at least two ways to ship crude oil and related fuels–by rail or via pipeline–and the recent surge in tank cars on the nation’s rail lines have mashed up against the rapid urbanization of former industrial and commercial areas of Denver, such as the neighborhoods between Union Station and the Platte River:
Peering through four panes of insulating glass, it’s not the noise that bothers Don Cohen as a daily parade of freight trains passes 50 feet outside his condo. He and some Riverfront Park neighbors are troubled by what they’re seeing on the tracks more frequently. Tanker trains carrying crude oil and other flammable liquids — reflecting a shift in energy trends — rumble past the gleaming high-rise condo and apartment buildings several times a week, he says.
Those tankers pass near other Denver neighborhoods, too, old and new, upscale and hardscrabble. Highways and railroads box in some areas, with only one way out if disaster were to strike.
The trains also travel near the city’s major sports venues and Elitch Gardens Theme and Water Park, raising fears among some about what might happen in a fiery derailment or other accident — however small the chances might be.
Appeals by Cohen and others to city officials for increased emergency planning have met with mixed success.
It’s difficult to ignore that the rail lines in the region have
The numbers of rail shipments have increased over the past 7 years:
Nationally, crude oil volume on the rails has skyrocketed from just shy of 10,000 tank cars in 2008 to about 500,000 last year, The Associated Press recently reported. In Denver, according to city officials’ summary of reports by the two major railroads, trains carried well over 15,000 tank cars of flammable liquids in a recent one-year period, including 8,000 filled with crude oil.
The owner of the Gold King Mine shares more insights into the August Environmental Protection Agency-triggered spill in southwest Colorado:
Todd Hennis, owner of the Gold King Mine, was vacationing at a remote lake in upstate New York when a friend sent him images of the Environmental Protection Agency-contracted crew’s triggered blowout on his property, effectively turning the Animas River into an orange spectacle. He was speechless and horrified, but not surprised.
“I’ve been trying to make everybody aware of the dangers posed by the Sunnyside Mine pool for 14 years,” he told The Durango Herald last week. “But when I saw the pictures, I just felt my life was over. I just thought, ‘Oh God, what did they do?’”
The EPA, investigating the Gold King Mine’s partially collapsed tunnel, accidently released an estimated 3 million gallons of acid mine drainage Aug. 5 into Cement Creek, down the Animas River and into the San Juan River in New Mexico.
Hennis, for his part, has long maintained increased flows from the Gold King Mine are a result of groundwater seeping from the vast, adjacent Sunnyside Mine network after it was plugged, first in 1996.
“I went up to the Sunnyside offices that were in Gladstone at that point and said, ‘I’d like to talk about the discharge,’” he said. “They denied everything, and have been denying it ever since.”
Hennis minced no words about how he felt since the EPA took over four months ago:
In the aftermath of the Aug. 5 blowout, Hennis said he gave the EPA the keys to his land for an immediate cleanup response. But since, he claims the federal agency has enforced a complete takeover of his property.
“They’ve been so thoroughly arrogant, incompetent, and frankly criminal in their outlook, that it’s kind of like dealing with the mafia,” he said. “It is very much an act of rape. I don’t mean to denigrate women who’ve gone through it, and for that matter, some men, but it’s been such an ugly penetrative act on an unwilling victim.”
An unrelated uranium mine spill near Cañon City has activists comparing it to the EPA Gold King Mine spill, though the volume is nowhere near as large as the August spill, and was located at a 30-year-old Superfund site (a designation many desired for area around the Gold King Mine):
Colorado health officials were reviewing an explanation from Cotter Corp. on Monday after a spill at Cotter’s defunct uranium mill in central Colorado — one of the nation’s slowest Superfund cleanups.
A pipeline leaked about 1,800 gallons last week on Cotter’s 2,538-acre property uphill from Cañon City and the Arkansas River.
Well tests in July found water in the waste pipeline area contained elevated uranium (577 parts per billion, above a 30 ppb health standard) and molybdenum (1840 ppb, above a 100 ppb standard).
This spill was the latest of at least five since 2010. Federal authorities in 1984 declared an environmental disaster and launched a Superfund cleanup.
This spill prompted comparisons to the EPA’s toxic spill near Durango:
“They need to eliminate the contamination at its source,” said attorney Travis Stills, who represents the community group Colorado Citizens Against Toxic Waste.
Buried mill tailings and impoundment ponds “continue to be sources of contamination. It’s some of the most toxic mining residue you could have — all of what you’d expect to find at a Gold King disaster, plus an overlay of uranium and radioactive isotopes, flowing into groundwater with a very direct route to people and the Arkansas River, ” Stills said. “What’s it going to take to get real action?”
Approximately 89 percent of the state’s oil production, or nearly 100 million barrels by year’s end, will come from Weld County in 2015, despite declining energy prices:
Despite a general slowdown in oil drilling across the Denver-Julesburg Basin and elsewhere, production growth in Weld County this year is on track to top 100 million barrels of oil.
Oil production growth in the county continues to cast a long shadow over the rest of the state, with more than 89 percent of the state’s production this year coming from Weld, up from 85 percent in 2014.
Industry analysts say operators are getting more oil from every well by drilling the best parts of the basin, employing improved well fracturing techniques and optimizing operations.
“We are seeing a relentless drive to push down costs across the basin,” said Reed Olmstead, manager of North America supply analytics, upstream strategy and competition at IHS Energy in Englewood. “Improved productivity is an important part of well economics, and in this price environment, only the best wells are getting drilled.”
Here are some of the staggering numbers from Weld County:
For the first half of 2015, Weld oil production averaged 8.7 million barrels per month, up from a monthly average of 6.7 million barrels in 2014.
Statewide oil production for 2015 so far is at 79.46 million barrels. Of that, 70.85 million barrels, or 89 percent, were produced in Weld. Rio Blanco is the second-largest oil county in Colorado with 2015 production of 2.6 million barrels produced to date.
Barring an unexpected drop-off in production, Weld is on pace to produce more than 100 million barrels of oil this year, a remarkable milestone considering the county produced just 26.8 million barrels in 2011.
In 2014, Weld produced 81.4 million barrels, or 85 percent, of the statewide total of 95.2 million barrels. For Weld, that was an increase of 13.8 million barrels, or 19 percent, from 2013 production.
Meanwhile, Sen. Michael Bennet (D) has introduced a bill designed to spur carbon capture technology:
A bipartisan measure being carried by U.S. Sen. Michael Bennet and a Republican senator from Ohio aims to boost capture and storage of carbon dioxide, which would not only keep it out of the atmosphere but make it available for use in boosting oil production.
Bennet, D-Colo., and Sen. Rob Portman introduced the Carbon Capture Improvement Act last month. It would help power plants and industrial facilities finance the purchase and installation of carbon capture and storage equipment. Businesses would be able to make use of private activity bonds, which typically are used by local or state governments, are tax-exempt, and can be paid back over a longer period of time.
The captured carbon dioxide could be stored underground or used by energy companies in a process known as enhanced oil recovery.
“This bill would reduce upfront costs, one of the largest impediments to carbon capture technology. It is good for the economy and good for the environment,” Bennet said in a recent news release. “In Colorado it would enhance our diverse energy portfolio. The captured carbon dioxide can be used by oil producers to extract more oil out of current wells — improving our energy security and boosting domestic energy production. It also reduces emissions from power plants and industrial facilities to help keep our air clean — which is something that Coloradans value and makes our state an attractive place to live.
“This bipartisan bill is a market-based, technology-neutral approach to attacking the problem that carbon dioxide creates.”
Finally, State Sen. Jerry Sonnenberg (R-SD1) says no to a carbon tax:
A tax on CO2 would also negatively impact those not directly tied to Colorado’s coal industry. From home heating to electricity to transportation, Coloradans depend heavily on energy to power their lives. The NAM study estimates that, under a carbon tax, prices for natural gas used for heating and electricity would rise more than 40 percent. Meanwhile, gasoline prices at the pump could jump by more than 20 cents a gallon. These price hikes will affect every family and business in the state and, by 2023, as many as 52,000 people could be put out of work.
This would hit rural Colorado especially hard, as the state’s agricultural sector would face higher prices at every level of production. These costs will ripple throughout the economy, affecting everyone from the ranchers and farmers who drive Colorado’s $40 billion agriculture industry, to families buying local produce.
This regressive, job-killing tax is often advertised as a market solution to cutting emissions. In reality, it’s simply another means of artificially raising the prices of affordable, reliable electricity and pressuring investment in expensive, unreliable energy sources like wind or solar. Rather than imposing additional costs on Colorado families, policymakers should adopt a real market solution that relies on technological innovation and consumer choice while retaining economic growth and low energy prices. If Colorado’s leaders are committed to protecting hard-working Coloradans and growing the state’s diverse economy, they should reject a carbon tax.
We’ve translated President Obama’s “all of the above” energy policy before. Basically, it’s to rid the US of energy from fossil fuels. Now, no translation is needed.
Dan Arvizu, director of Colorado’s own National Renewable Energy Laboratory (NREL), a taxpayer-funded arm of the Department of Energy, says “fossil fuels should be phased out by 2040 to blunt man-made climate change” reports the Denver Post.
Arvizu refers to natural gas as simply “a nice bridge technology, but not the answer we are looking for in terms of a transition and transformation,” away from fossil fuels and toward alternatives such as wind, solar, and biofuels, of which NREL is a champion.
NREL has seen its budget and influence grow under the Obama administration. We reported in September of last year that NREL’s budget exploded 63.4 percent from 2007 to 2010. While taxpayers suffered the worst economic crisis since the Great Depression, NREL received nearly $300 million in “stimulus” funds to create 219 jobs. To put that in perspective, Colorado’s oil and gas industry “directly employs over 40,000 people and supports over 107,000 jobs in the state and provides $6.5 billion in total labor income and $31 billion in economic output annually,” according to the Colorado Oil and Gas Association (COGA).
Even if COGA is off by a factor of half, the oil and gas industry is economically more beneficial to Colorado than NREL, which claims substantial increases in economic benefit but still doesn’t equal the percentage increase in its taxpayer-funded budget according to an NREL press release.
NREL’s economic impact grew 41 percent from FY 2009’s $588.3 million, and 12 percent from FY 2010’s $742 million, as construction continued on energy-efficient research and office buildings that will house employees leading the nation to a clean energy future.
So taxpayer-funded NREL wants to get rid of privately-funded fossil fuel industry. We now know what President Obama’s “all of the above” energy policy looks like and doesn’t really include all sources of energy.