Historians will note that, beginning circa 2007, the discovery of emerging resource plays in the continental United States was accompanied by advances in oil and gas drilling, improvements in technical analysis and soaring private equity investment. It will be more difficult for historians to determine whether, and to the extent, invention, necessity and/or liquidity proved the mother of discovery – and which type of discovery? Land grabs have been a prelude to each play’s success or failure during this period, with landmen and brokers racing one another to buy or lease up acreage against a backdrop of surging and sinking commodity prices, escalating and then stabilizing lifting costs, a proliferation of cash and carry joint ventures and an explosion of foreign investment in domestic oil and gas. Not business as usual. (more…)
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Category: Upstream Energy
Fracking in Europe – EU Parliament has voted to require Environmental Impact Assessments for shale gas developmentsTuesday, October 22, 2013 9:46 am by Alastair Young, Darren Spalding, Jason Hutt and Olga Galin
On 9 October 2013, the European Parliament narrowly voted in favour of an amendment to the EU’s Environmental Impact Assessment Directive (EIA Directive) which would require environmental impact assessments (EIAs) to be performed for hydraulic fracturing for coal bed methane, and in shale and formations with shale-like permeability and porosity. If the amendment becomes law, the amended EIA Directive would require all private and public shale gas and many other unconventional exploration projects involving hydraulic fracturing in the EU to undertake an EIA.
The effect of this change would be to remove the discretion that EU Member States currently have as to whether or not to require a full EIA as part of the permitting process for certain projects. (more…)
FERC Finds that Generators Providing Reactive Power without Compensation Must Have Rate Schedule on File; Will not Exercise Enforcement Authority for Past Transgressions in Light of Current Policy ClarificationFriday, October 18, 2013 9:33 am by Sandy Rizzo and Stephen Hug
On October 17, 2013, the Federal Energy Regulatory Commission (“Commission”) issued an order finding that all generators providing Reactive Supply and Voltage Control Service (“reactive power”) must have a rate schedule on file with the Commission governing that service, even when the generator does not receive compensation for the service. Traditionally, the Commission only has required generators to file a rate schedule addressing its provision of reactive power if it received compensation for providing the service. Going forward, however, all generators providing reactive power will be required to have a rate schedule on file with the Commission governing the provision of reactive power, even if they provide this service at no charge. (more…)
Yesterday, after many weeks of speculation, the Commission issued an order extending the filing deadline of the 2013 Q3 Electric Quarterly Reports (EQRs) filings from October 31 to “a date to be determined.” This extension follows a series of similar delays and significant technical issues associated with the revised EQR filing requirements put in place by Order Nos. 768, 768-A, and 770.
As part of the preparation for the new filing requirements, FERC had made available to the public an EQR Sandbox Electronic Test Site (Sandbox) that was meant to be a testing platform to help users acclimate to and prepare for the new filing requirements and system. The Sandbox was made available on July 12 and was meant to be available until September 1. Following the testing period, the Sandbox would be taken offline to prepare it to go live well in advance of the original October 31 filing deadline. (more…)
Charles Nixon and Tim Wilkins
On October 4th, the Texas Commission on Environmental Quality (TCEQ) released a preliminary draft of a proposal to establish greenhouse gas (GHG) permitting regulations for the state of Texas. This action kicks off what is likely to be a lively discussion between stakeholders and regulators over the design of Texas’s GHG permitting program. But it represents a first step toward an important change from the status quo.
For almost three years now, Texas companies have been subject to two different permitting authorities for air permits: the U.S. Environmental Protection Agency (EPA) issues GHG permits under a Federal Implementation Plan (FIP), while TCEQ issues permits for all other regulated pollutants. The dual permitting scheme has not been a model of efficiency. (more…)
In a 149 page opinion, the US District Court for the District of Maryland yesterday ruled in PPL EnergyPlus, LLC et al. v. Nazarian that the State of Maryland’s actions to secure the development of new power plants by setting the price to be received by a new plant in the PJM market for the next 20 years intruded on the federal government’s role to set wholesale prices and thus violates the Supremacy Clause of the US Constitution due to field preemption. This case is critically important to incumbent generators because successful state actions to suppress wholesale prices in organized markets by mandating the execution of contracts for new generation at non-market prices would undermine the ability to make merchant investments based upon expectations of future supply and demand dynamics. A similar case is pending in the US District Court for the State of New Jersey based on that state’s law requiring utilities to purchase supply from “new generators” at an established price.
In addressing the competing claims between the plaintiffs and defendant as to the authority of the federal government versus the states, the court explained as follows:
While Maryland may retain traditional state authority to regulate the development, location, and type of power plants within its borders, the scope of Maryland’s power is necessarily limited by FERC’s exclusive authority to set wholesale energy and capacity prices under, inter alia, the Supremacy Clause and the field preemption doctrine. Based on this principle, Maryland cannot secure the development of a new power plant by regulating in such a manner as to intrude into the federal field of wholesale electric energy and capacity price-setting. Furthermore, Maryland’s stated purpose to use the Generation Order to secure the existence of sufficient and reliable electric energy for Maryland residents does not permit invasion into a federally-occupied field. Where a state action falls within a field Congress intended the federal government alone to occupy, the good intention and importance of the state’s objectives are immaterial to the field preemption analysis. (more…)