Winter in Wyoming

I am definitely already dreaming of a white Christmas in Wyoming.

As December is upon us tomorrow, I have started listening to holiday music and making my Christmas wish list for Santa – as I read the news this morning, it looks like one of the items on my list is coming to fruition.

Oil prices are up, way up, this morning. The markets are posting large percentage increases – I hope this is truly reflective of a rebalancing in the markets.

As I write this article, WTI Crude Oil is up over 7.76% to $48.74 per barrel and Brent Crude is up 7.78% to $49.99 per barrel, according to Bloomberg Energy.

The headlines this morning reflect the cause of the increase in prices – OPEC will reduce production output by more than 1 million barrels per day:

Many people are skeptical of whether this will actually have lasting, positive impacts that are more stable than the volatility we have had in recent years. This reportedly comes from unknown details in the deal’s mechanics – how long the deal will last and how it will be enforced.

Meanwhile, its beginning to look a lot like Christmas and I am hoping for snow. Let it snow, let it snow, let it snow!

Snow

 

water sign

Could Colorado be liable for costs the State of New Mexico incurred in responding to the Gold King Mine wastewater release?

It could be…it remains to be seen.

The case is State of New Mexico v. State of Colorado, case number 220147-ORG, in the Supreme Court of the United States. An outline of the seven (7) issues pending in the case can be found here.

  • What are the basics of the case?

In general, the case asks whether Colorado is responsible, at least in part, for the Gold King Mine wastewater release that happened in August of last year. Although the EPA accepted responsibility for the wastewater release, New Mexico alleges that Colorado’s environmental planning and decision-making were flawed and contributed to the 3 million-gallon wastewater release.

According to The Denver Post, “New Mexico contends Colorado is partly responsible for water pollution from the Gold King and other leaking inactive mines that drain hundreds of gallons of acidic metals-laced muck every minute into waterways. New Mexico Attorney General Hector Balderas called Colorado’s conduct before the spill reckless and argued that New Mexico residents are suffering as a result.”

  • Case status

In June, the State of New Mexico filed its Bill of Complaint, which can be found here in its entirety, and alleges that Colorado played a direct role in the wastewater release and is “directly responsible for the hazardous conditions that preceded the catastrophe.”

Yesterday, the Office of the U.S. Solicitor General was invited to file a brief expressing the views of the United States on the lawsuit. In particular, and according to Colorado Public Radio, the views of the Department of Justice and the Obama administration on the lawsuit were sought by the Supreme Court. The Department of Justice provides that “the task of the Office of the Solicitor General is to supervise and conduct government litigation in the United States Supreme Court.”

See my prior posts about the Gold King Mine wastewater release here.

Stay tuned for the developments in this case – we will continue to monitor it and provide you with updates.

Norway and Natural Gas

In today’s global energy economy, do you know what we do not talk about enough? Norway. That’s right…Norway.

It turns out I am not the only one who thinks this – the U.S. Energy Information Administration (“EIA”) featured a Today in Energy on Norway this week.

Many people in the U.S. do not realize what a hitter Norway is for Europe in the energy industry.

  • Takeaway: Norway is a heavy hitter.
  • Side Note: Norway is not a member of OPEC.

In fact, last year Norway hit record natural gas exports for the country – reportedly exporting 115 billion cubic metres (bcm).  Norway was reportedly the third-largest exporter of natural gas in the world after Russia and Qatar as of 2013 and currently contributes about 4% of all non-OPEC oil production.

After a two-year downturn (primarily due to prices), the Norwegian Petroleum Directorate reportedly now expects a high level of activity in Norway.

Europe is reportedly planning to “rely heavily on [natural] gas for the coming two decades and beyond in its energy supply mix.”

In fact, only yesterday the Norwegian Minister of Petroleum and Energy, Mr. Tord Lien, reportedly opened The Economist Energy Summit in London. As discussed in “Natural Gas is An Essential Part of a Sustainable Energy Future,” Mr. Tord Lien articulated how “Norway has both the resources and the infrastructure to remain a stable and long-term supplier of natural gas to the European market.”

  • What does the future hold for Norway’s energy industry?

Its controversial…some say that things are looking gloomy, some say things are looking up. The following headlines summarize both sides – click each to read the full article:

Like the United States, Norway is getting more efficient in its drilling operations and has been simplifying its projects. While there are some doubts about what Norway’s energy future may hold, one thing is for sure: we should keep Norway on our radar and pay attention, especially to its natural gas.

 

Water spout

Today, the Wyoming Department of Environmental Quality (“DEQ”) released its final report on the water quality issues within the Pavillion Gas Field Cistern Area entitled, “Pavillion, Wyoming Area Domestic Water Wells Final Report and Palatability Study” (“Final Report”). A full copy of the Final Report can be found here.

  • Refresher:

By way of background and to remind you of what we are talking about, Pavillion, Wyoming, is a tiny town located in Fremont County that came into the headlines in about 2009 when the Environmental Protection Agency (“EPA”) came to my home state in response to complaints about water quality.

The controversy was over whether hydraulic fracturing in the Pavillion Gas Field contributed to the pollution/contamination of an underground aquifer that was a source of drinking water.

As reported by the EPA, in March of 2009, the EPA sampled 39 individual wells to “collect data to assess groundwater conditions and evaluate potential threats to human health and the environment.” The EPA further conducted additional sampling in January of 2010 of 21 domestic wells and has “sampled groundwater and soil from pit remediation sites, produced water, and condensate from five production wells.” The EPA also installed two monitoring wells in the Pavillion area in 2010.

The EPA turned over the investigation to the State of Wyoming in 2013.

The full timeline of events can be found here.

  • Takeaways from the Final Report:
  1. Unlikely hydraulic fracturing impacted water. According to the Pavillion Groundwater Report Fact Sheet: “Evidence does not indicate that hydraulic fracturing fluids have risen to shallow depths utilized by water-supply wells. Also, based on an evaluation of hydraulic fracturing history, and methods used in the Pavillion Gas Field, it is unlikely that hydraulic fracturing has caused any impacts to the water-supply wells.”
  2. Issues with inorganic compounds are likely naturally occurring. There are also a lot of factors at play such as the origin of the gas coming from an upward migration in the Wind River Formation and presence of bacteria in water-supply wells that must be considered.
  3. There is limited baseline water quality data, predating development of the Pavillion Gas Field that hinders reaching firm conclusions on causes and effects of reported water quality changes.
  4. According to the Casper Star Tribune, the findings in the Final Report do not substantially deviate from the study conducted by the Wyoming Oil and Gas Conservation Commission which was completed in 2014.
  • What is Next?

According to the Pavillion Groundwater Report Fact Sheet:

A public meeting is scheduled to be held in Riverton, Wyoming in early December of 2016 to provide the opportunity for clarification on the information on the report.

The bottled water delivery program that was instituted is set to end on March 31, 2017.

Further monitoring is recommended and the Final Report includes a recommendation that the EPA plug its monitoring wells in the field.

The Paris Agreement

Today, November 4, 2016, The Paris Agreement will enter into force. The Eiffel Tower and Arc de Triomphe will reportedly be floodlit green to celebrate this landmark occasion.

The New York Times article entitled, “The Paris Agreement on Climate Change is Official. Now What?” hits the nail on the head. Now that The Paris Agreement has gone into effect as of today, the question on everyone’s mind is “what is next?”

As the International Energy Agency (“IEA”) reports, “[t]he question now turns to implementing the terms of the agreement, helping nations meet their goals and, more critically, ratchet them further.” The IEA will release its World Energy Outlook 2016 later this month, which is said to highlight pathways to reach these targets on an individual country by country basis.

By way of a refresher, lets quickly recap the takeaway points of what The Paris Agreement does. The full text of The Paris Agreement can be found here.

Takeaway points:

  • Central Aim: Strengthen global response to the threat of climate change.
  • How: By keeping global temps in check.

“Holding the increase in the global average temperature to well below 2 degrees Celsius above pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5 degrees Celsius above pre-industrial levels, recognizing that this would significantly reduce the risks and impacts of climate change.” The Paris Agreement, Article 2, Paragraph 1(a).

The New York Times succinctly stated: “The Paris Agreement, reached in December among 195 countries, was never imagined as the silver bullet for global warming. Rather, the goal of the agreement was to stave off the most devastating effects of climate change by limiting the increase in global temperatures to two degrees Celsius, and to just 1.5 degrees Celsius if possible.”

  • Other Goals of The Paris Agreement: Strengthen the abilities of countries to deal with the impacts of climate change.
  • How: Help each other out – financially and technologically. Foster adaptability and help those that are vulnerable.

Now that we have had our quick refresher, as The New York Times asks, the question on all of our minds is “now what?”

As The Paris Agreement is implemented, there will surely be challenges. Among other things, The Paris Agreement requires the parties to “put forward their best efforts” through “nationally determined contributions” (“NDCs”) and to regularly report on their emissions and implementation efforts.

  • So what are NDCs exactly?  They are the key to this whole process…

Before The Paris Agreement and each country’s plans were finalized, they were referred to as “intended” – Intended Nationally Determined Contributions or “INDCs.” They then become finalized and are “NDCs.”

NDCs are basically a country’s successive implementation plan, its framework, its playbook, on how to reach its objectives under The Paris Agreement. The NDCs are the process that will be used to achieve transparency and to help countries achieve their goals.

Papua New Guinea was reportedly the first country to finalize its national climate plan under The Paris Agreement – read the full story here.

In line with the transparency goal, the NDC (interim) Registry can be found here.

In order to address the “now what” issue, Time reported today in an article entitled, “Landmark Paris Climate Agreement Takes Formal Effect. It’s Not Nearly Enough,” that international climate negotiators will meet next week in Marrakech, Morocco, which will “provide the first opportunity since [the 2015 climate summit] in Paris for all parties to the agreement to iron out implementation details.”

Working out the actual implementation details will be the next step, now that the international framework is in effect. Stay tuned for more information!

 

 

Pheasant

The first weekend of November signals one thing to me – pheasant hunting.

When I was a young girl, I remember my grandfather gearing up to go pheasant hunting. He generally wears Pendleton shirts with his Levis in the fall and winter time, and I remember him layering up to face the Wyoming wind. He loves to hunt pheasant. Honestly, he just loves to be outside in Wyoming; the fun of hunting is a bonus.

My grandma told me not to mention the time grandpa got shot in a field while pheasant hunting in the late 1960s…

My grandma also repeats the famous saying that “a bird in the hand is better than two in the bush.”

That phrase has been bouncing around my head this morning as I have been continuing to watch the price of oil decline after finally recovering and hitting the $50 per barrel mark and as I have been reading everyone speculate about future prices.

As I am sure you are aware, oil prices plunged yesterday. According to the Nasdaq article entitled, “Is This the Most Bearish Oil Report of All Time?” prices fell following a buildup of crude oil inventories. Again. And OPEC speculation. Again.

As I write this article, according to Bloomberg Energy, WTI Crude is at $44.51 per barrel and Brent Crude is at $46.20 per barrel.

Prices like those make me wish I was sitting in a field with my grandpa wearing an orange hat or visiting with my grandma while she cooked up the birds he just brought home.

On that note, Wyoming pheasant seasons opens November 5.

Also, Colorado Pheasant hunters are said to be in for a banner year this year. According to The Denver Post, the 2016-2017 season opens statewide November 12th and surveys of the bird’s population “looks better than good.” In fact, the article reports that “[t]he pheasant population in northeast Colorado has really come on strong and should provide excellent hunting.” Quail are also said to be good this year.

For more pheasant hunting nostalgia while trying to forget about oil prices and what future oil prices might be, see this article written by Bob Krumm for the Billings Gazette – “Wyoming Outdoors: Pheasant Hunting Brings Back Childhood Memories.”

 

Wyoming Cowboys

There are very few things that I will get up at 5:00 a.m. to do – catch a flight, catch a fish – that’s about it.

This morning, however, I left Denver at about 5:30 a.m. to arrive in Laramie in time to be a guest lecturer for the University of Wyoming’s Agricultural Law class, taught by Justina Floy, Staff Attorney for the Second Judicial District Court.

I previously discussed my last adventure as a guest lecturer in the post, “The Future Looks Bright,” because I was so blown away by the enthusiasm of the students and how highly engaged they were.

This morning’s guest lecture was no different – I pulled into Laramie just as the sun was coming up and excitement was in the air. I was surprised to see that students were already at my favorite local coffee shop to get a little caffeine jolt before class.

The students in Ag Law class again asked thoughtful questions and were curious and insightful. It was interesting to see what topics were on their minds…questions such as:

  • How will the upcoming political changes impact Wyoming’s energy industry
  • Will there be a drastic shift away from coal
  • Are oil companies willing to work through problems with surface owners
  • What happens to access roads after the oil companies no longer need to access their wells

A couple of other very thoughtful questions caught me off guard for an 8:00 a.m. class the morning after Halloween; a day when I remember people skipping their early morning classes and going to get breakfast instead, sometimes still wearing a toga.

In my opinion, the most thoughtful question was:

What industries would I suggest that Wyoming look to in order to diversify its economy so that it is not so heavily reliant on revenue from commodities that are subject to boom and bust cycles.

This question has no easy answer – we discussed other revenue sources for the state like tourism, Sheridan’s new coal mine, renewable energy sources and Governor Mead’s “doubling down” on coal. As discussed in an article from earlier this spring, the full text of which can be found here, Gov. Mead’s revised energy plan includes 11 new initiatives and “includes a ‘carbon innovation’ effort that is intended to further the development of clean-coal technologies and other ways to reduce carbon emissions for conventional fossil fuels.”

The truth is that Wyoming’s youth carry the solution to finding out how to diversify the revenue sources.  They are innovative and bringing their A-game.  Seeing that young and engaged students are thinking about Wyoming’s future energy strategy brightened my day. As I have said before, the future is certainly bright.

Perception

A new national survey and report by Makovsky, entitled How Americans Make Energy Decisions – And the Sources and Channels They Trust the Most, has been recently released. The full study can be accessed here.

As discussed in the Oil & Gas 360 article, New Survey Shows that Americans Significantly Overestimate Renewable Energy’s Role in Powering the Nation, the results reflect a big difference between perception and reality.

As someone who consistently overestimates things (IE: “my car is parked 5 miles from here;” “that trout I caught was at least 29 inches long;” “I am a whiz, practically a professional, on skis, skates, etc. – you name it,” said while hiding my skinned up and bruised knee), I found the results of this survey particularly interesting.

Here are a few takeaways from the survey and the Oil & Gas 360 article discussing the same:

  1. Americans considerably overestimate renewable energy’s role in the U.S.’s overall energy use and seriously underestimate the role of coal, oil and natural gas now and in the future.
  • The survey found that, “In 2016, solar and wind together made up just 3% of U.S. energy consumption, while survey respondents put the figure at 20%.”
  • “Furthermore, respondents predict that wind and solar will make up 34% of energy consumption in five years; however, the experts predict that they will be less than 5% of our energy consumption.”
  1. The most interesting statistic in the survey was about coal, oil and natural gas usage:
  • “And, although coal, oil and natural gas together comprise 87% of energy used today, survey respondents estimated them at 69% of the mix – underestimating how much these fossil fuels still dominate today’s energy mix by about 20%.”
  1. Biggest takeaway: Americans do not appreciate that coal, oil and natural gas are the primary energy sources in the U.S.
  • “More specifically, Americans viewed the nation’s dependency on oil to be in a trend of decline, providing only 20% of our energy needs in five years, an eight-point drop from current perceptions.” According to the survey, coal is perceived to be experiencing a similar decrease in five years.
  • The survey provides that in reality, however, the EIA’s forecasts tell a different tale. “EIA forecasts that oil and coal use will be about the same as they are today [in five years].”
  1. TV is king.  The good thing is that Americans are interested in news related to the energy industry – TV news rated as our main source of energy information in the survey. The conclusion of the survey is that energy companies must realize these incorrect perceptions and address them head on in their marketing efforts.

Perception can be misleading…it is vital that we understand the roles of oil, natural gas, coal, solar and wind energy.

 

Pumpkin Bread

This time of year, canned pumpkin seems to line my pantry shelves and people start bringing me zucchini from their gardens to use in my baking. For this reason, nearly everything I bake in the fall contains pumpkin or zucchini – there is something about the leaves changing that makes me long for the smell of warm spices. I even spike my coffee in the mornings with cinnamon and nutmeg. Luckily, a friend’s husband who was recently in Qatar brought her back a bunch of wonderful cinnamon and she has been kind enough to share her cinnamon stash with me…

This all comes from the urge to use what we have. We have fields full of bright orange pumpkins and gardens full of large snake-like zucchini this time of year. While I have been known to bake my pies out of fresh sugar pumpkins, I always seem to have canned pumpkin on hand in the fall to use in my baking. One thing I really love about baking is that it allows me to creatively use what I have.

Speaking of using what you have, the U.S. Energy Information Administration (“EIA”) released an interesting publication on the same topic today. A full copy of the post can be found here. The main topic is coal and how low-cost coal in the Rocky Mountain region has supported coal-fired electricity generation in the area.

The Rocky Mountain region has historically used what it has.

Coal has traditionally been a dominant source of electricity generation in the Rockies due to the resource’s abundance in that location. In fact, the EIA reports that “in the eight Mountain states, coal-fired power generation made up almost 50% of the region’s total generation in 2015, compared to the national average of 33%. A decade ago, coal’s share in Mountain states was even higher, at 63%.”

The EIA publication discusses the following: “In 2015, Montana, Wyoming, Utah, Colorado, and New Mexico accounted for 79% of the region’s coal-fired electricity generation. The other states in the region—Arizona, Idaho, and Nevada—lack abundant coal resources. Instead, hydropower dominates electricity generation in Idaho, while natural gas plays a bigger role in Arizona and Nevada.”

Along the same lines, renewable energy generation and generating capacity has also been increasing. The EIA reports that, “[w]ind generation increases were mostly in Colorado and Wyoming, while solar generation growth was mostly in Arizona and Nevada.”

Talk about using what you have!

Pumpkin patch

Saddle Up

Lately, it seems like everyone is trying to predict the future of oil prices. I tend to think predicting the future of anything is frankly, pretty darn difficult. See my post last month entitled, “Is Predicting the Future of Energy Like Driving Down a Dirt Road at Night with No Lights On.”

It got me thinking…what would the legendary cowboy, John Wayne, say about the future of oil prices?

Hold your horses, pilgrim…

First, what are energy folks saying about the future of oil prices?

The New York Times (“NYT”) published an article today entitled, “Not Everyone’s So Sure Low Oil Prices Will Stay Put.” The NYT article explains in detail how the predictions are for the average price of oil over the next year vary from the low $50 per barrel range to the $60s based on the fact that “a few experts have gone out on a limb, arguing that the market has become complacent in its outlook, just as it was when the price stayed above or close to $100 from 2011 to 2014.”

As we previously discussed, the U.S. Energy Information Administration (“EIA”) is projecting that Brent crude oil prices will average $51-52 per barrel in 2017.

Also, it should be noted, as always, that many considerations have an impact on the price of oil. From OPEC, international relationships and the value of the dollar to basic supply and demand considerations – there is a lot that could play a role. A good summary of these issues can be found here in an article published today by MarketWatch.

So what would John Wayne say about the future of oil prices?  Oil prices have been such an unpredictable ride lately, and the truth is, the future is difficult to predict. I think if John Wayne was asked what he thought about the future of oil prices, he’d walk into the saloon and say:

“Courage is being scared to death but saddling up anyway.”

This and more John Wayne quotes can be found here.