Monday,
April 21

 
BUSINESS

There's no drought in Austin

Texas’ water worries unlikely to interfere with oil and gas agendas

Two hot issues, water conservation and the state’s natural gas and oil boom, came together before a joint house committee hearing on Wednesday. Could frugal, stern water conservation get in bed with oil and gas’s devil-may-care ways? Alas, for the members of the natural resources and energy resources committees, the hearing on water usage in hydraulic fracking was more boring than a mediocre Valentine’s Day rom-com.

To this viewer, Wednesday’s invited testimony lacked the necessary frisson to create a compelling plot. It focused heavily on the industry’s innovation without a peep from any conservation or community groups. They appeared neither to give testimony nor as an influence on any present committee members, who acted primarily as passive listeners rather than hard-nosed interrogators.

“It wasn’t lost on anybody that there wasn’t a sense of balance at the joint hearing,” said Representative Trey Martinez Fischer (D-San Antonio), a member of the natural resources committee.

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That hydrogen sulfide has to go somewhere

Illustration by Martha StroudIs a complaint about a leaky disposal well a business squabble or a percolating health risk? A Railroad Commission hearing could help answer that question.

Houston-based Layline Petroleum is pressuring the Texas Railroad Commission to hold a hearing about the safety of a key disposal well that stores toxic waste from more than 180 gas and oil wells in the Eagle Ford Shale.

The disposal well and the pipeline that serves it, both operated by Regency Field Services of Dallas, were shut down for five weeks in late summer and early fall while Layline plugged a nearby oil well that had become contaminated with hydrogen sulfide – a common natural-gas companion that’s lethal at 1,000 parts per million and can cause serious physical injury at concentrations as low as 50 ppm when inhaled. (By comparison, hydrogen cyanide, once a popular bedbug remedy and an Agatha Christie favorite in the form of potassium cyanide, summons the Grim Reaper at 3,500 ppm.)

Since then, unexpected levels of hydrogen sulfide have been detected in at least two other production wells in the area.

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Will the Eagle Ford kill renewable energy in our lifetime?

Here’s my hypothesis1: The abundance of cheap domestic natural gas – what I’m calling the Natural Gas Revolution - makes “renewable” energy sources like wind and solar financially untenable, and possibly unnecessary, for the next 90 years.2

I can’t prove my hypothesis because energy pricing is complicated.

Figuring out the "price" of energy derived from traditional fuels such as coal, natural gas, and nuclear is not as straightforward as it may seem. I’ve made an attempt based on a conversation with an official at CPS Energy in San Antonio. But every financial assessment depends on a series of assumptions: from the future price of input fuels, to regulatory changes, to models that take into account the depreciation of assets such as a nuclear or coal plant.

We know that energy produced from nuclear and coal plants has relatively low prices, partly because, in the case of my local utility, it bore the cost of building the nuclear and coal plants long ago. As a result, we can afford that energy. We also like the price of natural gas, because both plant construction and current market prices are low.

On the other side of the ledger, my local utility in recent years added solar- and wind-derived energy to its energy portfolio, both of which cost considerably more. At a free-market price, wind power would be about 50 percent more expensive than natural-gas energy, but a federal government Production Tax Credit (PTC)3 brings the wind-energy price within the range of natural-gas-derived energy.

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The high cost of an oil and gas tax break

 

What does the oil & gas industry care most about in Texas?
Big corporate and capital intensive businesses tend to treat elected officials like high-priced escorts, a lesson I learned firsthand during my recent visit to the Eagle Ford Shale with a Texas State Rep. We were treated grandly, fed and toured, and shown all their big tools.

But, in the end, will they really respect us in the morning? In Texas, why should they?  

A very drilling-friendly party with a supermajority in the House dominates the legislature, and the oil and gas industry knows their representatives will be willing and compliant. This matters a whole lot because of the massive, targeted tax breaks the industry currently gets from the State of Texas.

The State Rep and I asked our Eagle Ford hosts what their biggest hopes and fears were when it comes to legislative policy in Texas. I thought potential answers might include environmental regulation, natural-gas conversions for vehicles, preparing a 21st-century workforce in South Texas, or upgrading overland infrastructure to help move hydrocarbon from their wellheads to the refineries.  

Well, dear reader, you’re not going to believe this, but their biggest concern was preserving their targeted tax break for natural-gas drilling.

Really? You don’t say! You mean the large, altogether unnecessary and ultimately fiscally irresponsible tax subsidy targeted at oil and gas drillers? You mean the extra $7.4 billion the legislature has deposited in their Halloween industry treat bag over the past eight years? The $7.4 billion in natural-gas revenue otherwise earmarked for the Texas Rainy Day Fund and public education?

Yes, that one.

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SARA's guide to the Eagle Ford Shale

The San Antonio River Authority is finishing final edits this week on a handbook designed to help local governments manage the Eagle Ford Shale oil and gas boom.

SARA Project Engineer Melissa Bryant said the book will offer guidance on issues such as stormwater management and protecting surface and groundwater quality. An accompanying CD will include fill-in-the-blank model ordinances.

“We want them to feel empowered to retain ownership of their communities,” Bryant said.

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