As the United States begins to enter a warming period leading up to the onset of Spring, Bracewell & Giuliani’s Scott Segal, head of the firm’s Policy Resolution Group, takes a look back on the Polar Vortex – the bouts of severe cold experienced by much of the country in early 2014. In this video interview, Scott discusses the impact of growing shale gas resources on the energy sector, the key role that coal-fired electric generation played during the Polar Vortex, and what this experience of severe cold tells us about future energy policy and prices.
WE KNOW ENERGY®
Video Interview: The Polar Vortex and Energy – A Look at the Impact of Shale and Coal on Energy PricesMonday, March 10, 2014 9:41 am by George Felcyn
Darren Spalding, Alastair Young and Nick Kendrick
On 24 February 2014, Sir Ian Wood delivered his Final Report (the “Report”) on the future of the UK Continental Shelf (“UKCS”). The Report sets out a number of conclusions and recommended actions relating largely to more stringent regulation, a focus on regional development and better industry co-operation. If the recommendations are implemented, they will fundamentally change the North Sea oil and gas industry.
The Report’s overriding message is that for production from the UKCS to be prolonged, a change to both the regulatory and commercial landscapes will be required. The Report proposes a new regulator (the “Regulator”) which would sit within the government department currently responsible for the oil and gas industry in the UK, the Department of Energy and Climate Change (or “DECC”). The Regulator will be tasked with developing strong relationships with both UKCS operators and the Treasury, and will enjoy a significant degree of independence and operational freedom. The Report envisages that the Regulator would be staffed with experienced personnel from industry as well as attracting top new graduates. To achieve this, the Regulator would – the Report suggests – be funded by UKCS operators and should offer agreed levels of service in return for such funding. On the commercial side, the Report supports much greater co-operation between operating companies, led by the introduction of regional development, increased third party access to infrastructure, wider sharing of data and streamlining of legal and commercial negotiations between parties. Any failure to co-operate in furthering these principles could subject the relevant party to sanctions from the Regulator, including the loss of a licence. (more…)
Darren Spalding and Laura Fox
The energy of the future could lie buried deep underneath the world’s oceans and the Arctic permafrost. Methane hydrates, also known as “flammable ice,” are vast reservoirs of natural gas trapped in ice-like crystals and hold out the potential to alter trade flows and reshape the geopolitics of energy.
As the name suggests, methane hydrates consist of a methane molecule surrounded by a cage of interlocking water molecules. It is effectively an ice that occurs naturally in subsurface deposits in freezing temperature and high pressure conditions. When melted or exposed to pressures and temperatures outside those where the ice is stable, the solid crystalline lattice turns into liquid water, and the enclosed methane molecules are released as gas. (more…)
The fracking revolution marches on as more and more oil and natural gas is extracted from the continental U.S. and delivered to market. In a development almost no one predicted even several years ago aggregate production of oil and gas within the United States is tops in the world, outpacing both Russia and Saudi Arabia. Long-lead time construction of midstream and processing facilities are now struggling to keep up with the surge in production, but pipeline, rail and processing capacity provided by the private sector continues to come online. Given time and capital midstream capacity is expected to catch up in the next few years and provide support to a sustained drilling boom in America. (more…)
Major news out of Europe confirmed the strongly held belief of many in the energy sector that European states will be the next frontier in the shale gas revolution, and it seems sooner rather than later.
In a much anticipated decision, on January 22, 2014, the European Union adopted a series of non-binding recommendations on companies engaging in hydraulic fracturing within the EU’s borders. The newly released recommendation calls for member states to adopt “minimum principles” for fracking in each member country, such as, for example, requiring a careful assessment of environmental impacts and risks, ensuring that wells conform to best practice standards, monitoring environmental effects, and informing the public about materials utilized in individual wells. The legislations calls for member states to apply the principles within six months and to report to the EU annually about what specific steps are being taken to comply. (more…)
Ryan Myers and Glen Kopp
After clearing a constitutional hurdle in late 2013, Mexico plans to open its energy market to foreign participation for the first time in seventy-five years, with the first investment opportunities possible later this year. Mexico has more than 10 billion barrels of proven petroleum reserves, and the country will face no shortage of potential investors.
But companies looking to participate in the newly available market would be wise to consider the compliance risks that come with doing business in Mexico. In particular, companies interested in Mexican energy should have a firm understanding of the Foreign Corrupt Practices Act and should adopt compliance policies tailored to the Mexican business climate. (more…)