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News

Gas Could Be the Calvalry in Global Warming Fight

Dec. 21, 2009, Miami Herald

Exxon Mobil makes $29B bet on natural gas
Exxon Mobil, the world's largest publicly traded oil company, is making a $29 billion bet that pressure to curb climate change will mean natural gas - cleaner than coal and suddenly much easier to reach - will become a crucial source of U.S. power.

Exxon agreed to buy XTO Energy in an all-stock deal at a 25 percent premium, showing how eagerly a company that is among the most conservative in a conservative industry is jumping into the market for natural gas.

As negotiators haggled in Copenhagen over a global plan to curb carbon emissions, the deal suggested Exxon sees change coming for an energy source best known now for heating homes.

There's more oil to be had
What city contributed most to the making of the modern world? The Paris of the Enlightenment and then of Napoleon, pioneer of mass armies and nationalist statism? London, seat of parliamentary democracy and center of finance?

Or perhaps Titusville, Pa.

Oil seeping from the ground there was collected for medicinal purposes -- until Edwin Drake drilled and 150 years ago -- Aug. 27, 1859 -- found the basis of our world, 69 feet below the surface of Pennsylvania, which oil historian Daniel Yergin calls "the Saudi Arabia of 19th-century oil."

Dominion spends $253M on W Virginia gas expansion
Power company Dominion Resources said Wednesday it will spend $253 million to upgrade a network of natural gas pipelines in West Virginia that was never designed to handle the gas bonanza that has been uncovered in the region.

Large portions of the state sit on top of the Marcellus shale, where a massive deposit of natural gas that touches five states is locked in tight rock formations.

Dominion, which operates one of the largest natural gas storage systems in the country, said it has simply been overwhelmed in West Virginia.

Sector Snap: Energy stocks rise
Energy stocks were most higher Monday, as investors weighed the potential burden of an Environmental Protection Agency finding that declares greenhouse gases a hazard to human health and advances the push for regulation.

The endangerment finding threatens the energy industry's big polluters, such as refiners and coal-based utilities, while power companies with a greener portfolio and solar parts and panel makers could gain from stricter regulation, analysts said.

Shares of utilities edged up across the board. Companies that have made considerable shifts toward energy efficient practices saw larger gains following the EPA's news. Shares of Exelon Corp. rose 86 cents to $50.16.

XTO founder to get cash, stock worth $43M
The founder of XTO Energy stands to get near $43 million in cash and stock after the natural gas producer agreed to be bought by Exxon Mobil in a deal worth about $30 billion, according to a regulatory filing Tuesday.

Bob Simpson will retire from the company under the deal and become a consultant for Exxon Mobil, according to the filing with the Securities and Exchange Commission.

Should the deal be completed, Simpson will also receive an award of 833,333 shares of XTO that are worth nearly $40 million based on Tuesday's closing stock price of $47.66. He also will get retention payments of nearly $25 million for his consulting work and a lump sum cash payment of $10.8 million.

Fuel of choice: natural gas
An unlikely source of energy has emerged to meet international demands that the United States do more to fight global warming: It's cleaner than coal, cheaper than oil and a 90-year supply is under our feet.

It's natural gas, the same fossil fuel that was in such short supply a decade ago that it was deemed unreliable. It's now being uncovered at such a rapid pace that its price is near a seven-year low. Long used to heat half the nation's homes, it's becoming the fuel of choice when building new power plants. Someday, it may win wider acceptance as a replacement for gasoline in our cars and trucks.

Natural gas' abundance and low price come as governments around the world debate how to curtail carbon dioxide and other pollution that contribute to global warming. The likely outcome is a tax on companies that spew excessive greenhouse gases. Utilities and other companies see natural gas as a way to lower emissions - and their costs. Yet politicians aren't stumping for it.

In June, President Barack Obama lumped natural gas with oil and coal as energy sources the nation must move away from. He touts alternative sources - solar, wind and biofuels derived from corn and other plants. In Congress, the energy debate has focused on finding cleaner coal and saving thousands of mining jobs from West Virginia to Wyoming.

Utilities in the U.S. aren't waiting for Washington to jump on the gas bandwagon. Looming climate legislation has altered the calculus that they use to determine the cheapest way to deliver power. Coal may still be cheaper, but natural gas emits half as much carbon when burned to generate the same amount electricity.

Today, about 27 percent of the nation's carbon dioxide emissions come from coal-fired power plants, which generate 44 percent of the electricity used in the U.S. Just under 25 percent of power comes from burning natural gas, more than double its share a decade ago but still with room to grow.

But the fuel has to be plentiful and its price stable - and that has not always been the case with natural gas. In the 1990s, factories that wanted to burn gas instead of coal had to install equipment that did both because the gas supply was uncertain and wild price swings were common. In some states, because of feared shortages, homebuilders were told new gas hookups were banned.

It's a different story today. Energy experts believe that the huge volume of supply now will ease price swings and supply worries.

Gas now trades on futures markets for about $5.50 per 1,000 cubic feet. While that's up from a recent low of $2.41 in September as the recession reduced demand and storage caverns filled to overflowing, it's less than half what it was in the summer of 2008 when oil prices surged close to $150 a barrel.

Oil and gas prices trends have since diverged, due to the recession and the growing realization of just how much gas has been discovered in the last three years. That's thanks to the introduction of horizontal drilling technology that has unlocked stunning amounts of gas in what were before off-limits shale formations. Estimates of total gas reserves have jumped 58 percent from 2004 to 2008, giving the U.S. a 90-year supply at the current usage rate of about 23 trillion cubic feet of year.

The only question is whether enough gas can be delivered at affordable enough prices for these trends to accelerate.

The world's largest oil company, Exxon Mobil Corp., gave its answer last Monday when it announced a $30 billion deal to acquire XTO Energy Inc. The move will make it the country's No. 1 producer of natural gas.

Senate Begins Own Oil Drilling Review

The News Service of Florida, Nov. 9, 2009 - Senate President Jeff Atwater announced Monday the chamber will conduct its own review of offshore drilling options. He also hinted that the report may not be completed by the time lawmakers meet in March for the 2010 Legislative session. "Offshore drilling is a complicated issue with significant ramifications for our State," Atwater said in a statement. "The citizens of Florida deserve a thoughtful and deliberative conversation free of rancor or hyperbole, and the Senate intends to provide a structure for that conversation within our body." The Senate Environmental Preservation and Conservation Committee will coordinate the study, the parameters of which were released to the public on Monday. To produce the report, the committee will work with the Century Commission for a Sustainable Florida, the Institute for Energy Systems, Economics, and Sustainability at Florida State University and the Legislature's Office of Economic and Demographic Research. The House has already begun reviewing the issue and is expected to have a bill ready for debate when lawmakers convene in March.

GES and FSI Announce New Company to Provide Tank Degassing Services on the East Coast

October 14 2009 -- FSI East Region LLC has been formed by environmental companies Groundwater & Environmental Services, Inc. (GES) and Field Specialties Inc. (FSI) to provide storage tank degassing and related services to petroleum refinery and terminal operators on the east coast. The new company will service tank farms, refineries, and terminals in a wide region extending from Maine to Florida.

FSI East will be operated as a separate entity. The company was formed to provide a cost-effective option for the reduction of volatile organic compounds (VOCs) associated with storage tank operations. FSI East uses innovative and energy-efficient internal combustion engine (ICE) technology to quickly and safely draw and destroy high concentrations of VOCs from tanks.

Related services include site permitting; logistical planning and scheduling; and compliance data management and reporting. All services are provided by a dedicated team adhering to the highest standards for the protection of health, safety, security and the environment.

"FSI East provides our clients with a new, safer, greener, and far more efficient option to maintain compliance during tank vapor degassing and cleaning activities," said Edward Van Woudenberg, president of GES. "We are very happy to be working with the professionals at FSI, who have been manufacturing ICE units for the environmental industry for 20 years. This venture will expand our mobile ICE fleet, which has safely performed more than 4,200 remediation events over the last ten years."

"The eastern region of our country is now under the umbrella of FSI technology," said Steve Carlisle, president of FSI. "With GES' professional technical support, we'll provide a safe and cost-effective product and service that will help the communities of this region to move one step closer to a cleaner environment."

GES is a leading provider of environmental services to the petroleum industry. GES offers a wide range of soil and groundwater assessment and remediation services with a focus on innovation and liability management. FSI is a leading general contractor servicing many areas of heavy industrial, petrol-chemical and pipeline vapor and air pollution control including tank and vacuum truck degassing. For more information, contact Robin B. Raudenbush, Vice President, 866-756-0788 rraudenbush@gesonline.com

Klement Gets Hurry-up Call on PSC from Governor

Bradenton Herald, Oct. 23, 2009 - MANATEE - His appointment to the Florida Public Service Commission was originally supposed to begin in January, but David Klement, of Bradenton, learned that he will be getting to work even sooner.

Klement, director of the Institute for Public Policy and Leadership at USF Sarasota-Manatee and former editorial page editor for the Bradenton Herald, said the governor's office called Thursday to inform him he had been appointed to fill the seat vacated by Commissioner Katrina McMurrian, who resigned earlier this month.

Klement and Benjamin Stevens of Escambia County had previously been appointed by Gov. Charlie Crist to replace McMurrian and PSC Chairman Matthew Carter.

Klement's appointment comes at a time when the PSC has been buffeted by controversy over a $1.3 billion rate hike request by Florida Power and Light Corp. and questionable contacts between FPL and PSC staff members. There have been allegations of calls and social gatherings between PSC commissioners and staff and representatives of the utilities they regulate. Crist announced it was time to "clean house" and said he would not reappoint McMurrian or Carter to the state panel that oversees utility service and rates. When McMurrian learned she would not be reappointed, she resigned her seat.

A PSC nominating committee also forwarded two other names to Crist for his consideration: Felicia Banks West, a former staff attorney for the PSC; and John Grayson, a Tallahassee accountant and former PSC inspector general.

"The whole experience has been surreal. I made this application in June as a very long shot," Klement said. "I felt I have the ability and experience to do it."  Klement received a briefing Monday and Tuesday from the PSC staff. "I got an idea of how huge the job is," he said.

In a press release announcing the appointment, Crist said, "David's community involvement and professional experience have given him a unique perspective on consumer issues. I look forward to his getting to work right away with the commission."   Klement's appointment to fill McMurrian's term began Thursday and ends Jan. 1, 2010. His four-year term begins Jan. 2, 2010, and ends Jan. 1, 2014, subject to confirmation by the Florida Senate, according to the press release.

Jerry Karnas of the Environmental Defense Fund said he has known Klement many years. "He is the right guy at the right time for the job," Karnas said. "He has the highest integrity and ethics."


Interests Differ on Money Drilling Would Bring In

By John Kennedy, The News Service of Florida - Oct. 21, 2009 - Florida's fight over oil-drilling Wednesday pivoted on green issues - as in dollars. Environmentalists challenged claims by drilling supporters that energy exploration along Florida's Gulf coast could draw as much as $2.25 billion-a-year into the state's recession-ravaged budget. Mike Sole, secretary of the state's Department of Environmental Protection, also told the House Select Policy Council on Strategic and Economic Planning that drilling in nearby Gulf states draws much less on average than the dollars promised by Florida Energy Associates, independent oil companies lobbying heavily for lawmakers to lift the state's 20-year-old drilling ban.

Alabama, for example, takes in between $50 million and $300 million from oil royalties and severance taxes, while Texas' share is about $45 million annually, Sole said. "At the same time, $50 to $300 million isn't small money," Sole said. "We're keeping an open mind. Let's get the facts….but we want to share the concerns of competing resources in a developing state like Florida is very real."

But the offshore oil initiative is certain to bring "quality jobs to Florida and not insignificant revenues into state coffers," said Eric Hamilton of the Florida Petroleum Council, a supporter of eliminating the moratorium on drilling. Rep. Jennifer Carroll, R-Green Cove Springs, also challenged those downplaying the dollar potential of drilling. She said no one really knows how much money the state could earn, since the volume of oil offshore is also an unknown. "All the dollars are just speculation right now," she said.

The House council, chaired by a leading oil exploration proponent, Rep. Dean Cannon, R-Winter Park, heard from a range of representatives of both sides of the drilling issue in an afternoon-long workshop. Cannon said the hearing was the first of many to hash out the array of issues contained in the drilling effort – which was backed by the House last spring but rejected by the Senate, which remains skeptical of the effort.

Eric Draper, lobbyist for the Florida Audubon Society, warned that overcoming legal challenges to drilling that are certain to emerge if the plan is approved by lawmakers would add years to a lengthy time frame he says would exist before the state saw a dollar from energy companies. "If you're thinking this will help with the budget problems of the next two or three years, don't count on it," Draper said. 



Florida Legislation

The Florida House of Representatives is tentatively scheduled to hold committee meetings during the following weeks this fall:
- October 5-9, 2009
- November 2-6, 2009
- December 7-11, 2009



Federal Issues

PHMSA Pipeline Technical Advisory Committees Meet

Source: AOPL. On December 9th and 10th, 2009, PHMSA’s natural gas and hazardous liquids technical advisory committees met in Alexandria, VA. On the agenda were votes for two proposed rules and presentations on various "policy issues". A welcoming reception was held on the evening of the 9th for the new PHMSA Administrator, Cynthia Quarterman.

The first vote was on PHMSA’s "One Rule", which addresses several proposed reporting requirements for pipeline operators. The most significant issues for natural gas operators were the proposed changes to the definition for natural gas pipeline reportable incidents to include incidents involving an unintended fire or explosion and replacing the $50,000 threshold with a release volume. The gas pipeline committee ultimately voted against unintended fire and explosion as a trigger for incident reporting and in support of a volume threshold of 10,000 mcf for incident reporting.

The most significant issue for the hazardous liquids industry in the "One Rule" proposal was the requirement to complete annual infrastructure reports for each operator ID and commodity by state. While integrity assessment information is proposed to be collected for any operator ID by commodity across interstate miles and each intrastate system for the ID, PHMSA also proposes to collect detailed infrastructure data (mileage by diameter, decade of construction, SMYS, gathering, and HCA type, and breakout tanks) per state for each operator ID and commodity. After extensive industry representative comments prompted a discussion of the reporting burdens and the need to improve the reporting template, the committee adopted a motion to support the PHMSA proposal.

The other regulatory proposal that was voted on was regarding the periodic update of standards references in PHMSA’s regulations. PHMSA received comments on certain parts of the proposal. They generally accepted corrections to titles that were forwarded, but did not accept comments recommending they adopt standards documents that had been updated after the proposal had been drafted. They asserted that future periodic updates will capture those documents. The natural gas pipeline industry asked that PHMSA consider NFPA 58, 59 and 59A separately from the rest of the proposal, which PHMSA agreed with. The committees vote to accept PHMSA’s proposed responses to comments on the proposed rule as discussed at the meeting.

The "policy presentations" addressed:
· Energy Demand & Projections; it was a panel of energy economists speaking on various influences on energy supply and demand that might impact pipelines.
· New construction; a government/industry panel discussed some of the new construction practices and issues identified by PHMSA in the past year, how the industry is responding, and how practices already in place appropriately manage new construction.
· An update on the Alaska Gas Pipeline and the activities of the Office of the Federal Coordinator.
· Integrity concerns about couplings (primarily small plastic-to-plastic and plastic-to-metal), assessment of unpiggable cased (natural gas) pipelines, and the use of excess flow valves for natural gas service to commercial buildings and multi-person dwellings.
· Climate; primarily looking at controlling and reporting methane emissions and carbon dioxide pipelines/carbon capture and sequestration.

Climate Change Bill Gets on a Bipartisan Path

Source: AOPL. December 10, 2009. Senators negotiating a bipartisan climate change bill unveiled the broad outlines of their plan to combine greenhouse gas limits with expanded offshore drilling, more nuclear power and protections for refiners in a bid to attract support from lawmakers. Sens. John Kerry, D-Mass., Lindsey Graham, R-S.C., and Joe Lieberman, I-Conn., announced their proposal as international leaders at a summit in Copenhagen were trying to devise a plan to combat global warming. The proposal sets a goal of cutting U.S. emissions of carbon dioxide and other greenhouse gases by 17 percent of 2005 levels by 2020 — a target that matches the House bill but is more lenient than the 20 percent envisioned by a separate Senate climate change measure. http://www.chron.com/disp/story.mpl/headline/biz/6764443.html

Environmental Protection Agency (EPA) Spill Prevention, Control, and Countermeasure Rule Effective in January

Source: AOPL. EPA's rule on Spill Prevention, Control, and Countermeasures (SPCC) will be effective January 14, 2010. On December 5, 2008, EPA amended the SPCC rule to provide increased clarity with respect to specific regulatory requirements. The Agency subsequently delayed the effective date of these amendments to January 14, 2010 to allow the Agency time to review the amendments; EPA also requested public comment on the delay of the effective date and its duration, and on the December 2008 amendments. Having reviewed the record for the amendments and the additional comments, EPA has decided to make only limited changes to the amendments but is removing the following provisions in the December 2008 amendments: the exclusion of farms and oil production facilities from the loading/unloading rack requirements; the exemption for produced water containers at an oil production facility; and the alternative qualified facility eligibility criteria for an oil production facility.

FERC  

FERC OKs Florida Gas Expansion Project to Serve State's Power Generation Demand

November 19, 2009 -- The Federal Energy Regulatory Commission (FERC) today approved Florida Gas Transmission's (FGT) $2.45 billion Phase VIII Expansion Project to serve natural gas-fired electric generators and utilities in Florida.

In authorizing the project, FERC imposed 43 conditions requiring FGT to mitigate any potential adverse environmental impacts identified by FERC Staff after its thorough analysis of the proposal.

In its Phase VIII Expansion Project, FGT will add more than 483 miles of pipeline loops, laterals and mainline and install 213,600 horsepower of compression at eight existing and one new compressor stations. The company also will acquire the existing 22.7 mile Martin Lateral, currently owned by Florida Power & Light Company (FPL), that will serve power plants located in Manatee, Martin, Miami-Dade, and Suwannee Counties, Florida. The Phase VIII Expansion will create 820,000 MMBtu per day of capacity on FGT's system from Alabama to Florida.

FGT will initiate service in two phases timed to meet customers' energy needs. The Phase 1 facilities are scheduled to begin service by July 1, 2010, and involve construction and operation of the Manatee Lateral and the FPL Manatee Metering and Regulating Station to serve FPL's Manatee Power Plant in Florida.

Phase 2 service is scheduled to start by April 1, 2011. It involves construction and operation of the remaining Phase VIII Expansion Project facilities.

In addition to providing service to FPL, FGT proposes to transport gas to five other shippers: Florida Power Corporation/Progress Energy Florida, Inc.; Seminole Electric Cooperative, Inc.; Tampa Electric Company; the Orlando Utilities Commission; and the City of Tallahassee, Fla.