At the end of April, twenty-two members of the Western Energy Alliance traveled Washington, DC in the hopes of representing the perspectives Western energy employees. Over the course of a few days, WEA members met with Senators and Congressmen as well as the Secretary of the Interior, Ryan Zinke. Though there still remains some legislative ground to cover as the area’s oil and gas industry work toward the future, the Washington, DC Call-Up was a great opportunity for Western oil and gas producers to introduce themselves to new staffers on the Hill, catch up with seasoned veterans, and most importantly discuss what the industry does to provide everyone in the United States a much needed and sought after product at a very affordable price.
On April 17, a home in Firestone, Colorado erupted in a violent blast, killing two people and badly burning a third. The explosion killed Joseph William Irwin III and his brother-in-law Mark Martinez. It also seriously injured Martinez’s wife, Erin. Though investigators from Firestone have yet to determine a cause for the explosion, the scope of their investigation extends to a vertical well operated by Anadarko Petroleum located about 200 feet from the home.
The well’s proximity to the home combined with Texas-based Anadarko Petroleum’s decision to close and inspect 3,000 of its vertical wells across the state have combined to form a real publicity problem for the oil and gas industry as a whole.
It seems that for lack of a proper culprit, a convenient scapegoat will do.
On Tuesday, April 25, the Oregon House of Representatives passed a bill that would place an outright ban on hydraulic fracturing for the next decade. More than that, the bill — Oregon House Bill 2711 — would make it illegal to advance any rule making efforts regarding fracking. If turned into law, the bill would put a complete halt to the advancement of any fracking project in the state and might, as Oregon conservatives claim, any type of extraction in the state.
On April 22, people around the world gathered for Earth Day. The annual celebration is used historically as an opportunity to raise environmental awareness and get people involved in the effort to preserve our glorious planet. In 2017, environmentalists throughout the United States used the opportunity to stage a “March for Science.” The various parades, protests, and the like were executed with the implicit understanding that science isn’t a factor for the US government when considering environmental policy.
And while the “March for Science” was an all-inclusive criticism of federal policy, one of the chief areas of concern was the US government’s continued support for hydraulic fracturing. Of course, those people marching in support of science are overlooking some pretty important facts in their pursuit of “knowledge.”
During his Presidential campaign, Donald Trump made no bones about his support for the domestic coal industry. For Trump, the quest to save coal is a quest to save jobs in the Northeast. Since taking office, Trump hasn’t turned his back on the coal industry. Unfortunately, most experts think that the President’s legislative efforts to help a once vibrant American industry may be quixotic at best.
An Environmental Regulation Rollback
On Tuesday, March 28, Donald Trump issued an executive order with the goal of eliminating several Obama-era environmental regulations. Specifically, Trump’s executive order revokes a rule designed to reduce carbon emissions from power plants. The legislation also overrules several Obama policies that sought to mitigate the effects of climate change.
For Trump, however, putting United States citizens to work should be the nation’s top priority. As he explained before he signed the order, “My action today is the latest in a series of steps to create American jobs and to grow American wealth. We’re ending the theft of American prosperity and rebuilding our beloved country.”
Though that goal is absolutely admirable, the sweeping changes may have come too late to save the flagging coal industry.
Coal Is Simply Past Its Prime in the United States
In 2017, something remarkable happened. For the first time, coal was dethroned as the top fuel used for power. Who took the top spot? Natural gas, of course. Currently, the United States is the world’s largest producer of natural gas, and the industry has plans in place to expand even further in the coming years.
The decision to ramp up natural gas use in the United States wasn’t the choice of oil and gas companies, either. It was a decision made largely by several utilities companies who set in motion plans to replace their coal infrastructure with cleaner burning natural gas. Extraction companies are simply meeting the need of energy producers in the United States and the rest of the world.
Ten years ago, coal might have been saved, but the Obama administration regulations got just enough time as the law of the land that utilities companies and coal extraction companies were forced to set in motion an irrevocable transition to natural gas.
To try and undo the millions in set up costs in order to go back to dilapidated coal mines which would likely cost millions more to repair and restaff just doesn’t make sense for many American companies.
The United States Is Oil and Gas Country
Let’s not even mention the fact that all but a few holdouts have acknowledged that hydraulic fracturing is much less harmful to the environment than coal, even though it totally is.
In terms of sheer dollars and cents, natural gas is the preferred method of extraction for most energy companies for obvious reasons. It’s cheaper, it’s safer, and it’s much easier on the planet Earth. Not only that, but a transition to natural gas extraction stands to make the United States billions in annual income as we work to meet the growing international demand.
The fact is, coal had its time in America, but the new millennium requires a technological step forward, and for the time being that’s oil and natural gas.
Even as the United States’ oil and gas extraction efforts are reaching new levels of production and success in spite of continued controversy over fracking, our neighbor to the South is struggling to keep their industry afloat. Mexican state-owned oil company Pemex is proof that oil and gas isn’t a sure bet when it comes to business.
Pemex Is Failing Hard
In early March, reports began to surface that Pemex was functionally bankrupt. One of the Mexican government’s main sources of revenue, Pemex is also one of the world’s most indebted oil firms; they’re in a financial hole nearly $90 billion deep, and things aren’t looking good for recovery.
In fact, Pemex’s profit and production have been dropping steadily for more than a decade, a decline that’s deprived the Mexican government of billions in revenue for the last two years. This is a big deal in Mexico, where Pemex is a major source of federal income.
In other words, it’s largely true that as Pemex goes, so goes the fate of Mexico.
The Contradicting Actions of the Trump Administration
Anyone who’s been paying attention to the world in the last few months will probably be aware that Donald Trump is currently working with United States federal agencies to stymie illegal immigration by building a wall along the southern border of the US.
This dogged pursuit of a border wall has drawn divisive reactions from the oil and gas industry. Leaders claim that solid international relationships are increasingly important to future success. Paradoxically, though, the Trump administration’s recent actions have had little to no impact on our country’s business relationships with Mexico.
Why? Because Mexico needs us.
The Mexican Oil and Gas Dilemma
The reason that Trump and his team have been able to operate with such impunity is simple. Mexico’s oil and gas industry is wholly dependent on a good relationship with the United States. Regardless of our social stance on the country, Mexico simply needs our oil and gas products.
In recent years, Mexico has made a huge infrastructure switch, converting their factories, companies, and homes from diesel fuel and other petroleum to natural gas. As a result, Mexico has had to resort to importing about 60 percent of their natural gas from the United States. In the last seven years, the import rate of natural gas from the US to Mexico has risen by 300 percent, and it’s expected to go even higher by 2020.
That being said, the increased dependence on US oil and gas has spurred several conversations among “government and industry circles, [who] are discussing alternatives, whether gas can be brought from other regions. It’s a very important discussion to keep having, now that trade between the two countries is being re-examined.”
Mexico’s Surprising Oil and Gas Leverage
So, Pemex is broke, and Mexico is currently very reliant on the United States to feed its energy needs. In other words, it would seem that the United States is firmly in a position to control the future of Mexico’s oil and gas industry (and, by extension, the future of Mexico itself).
Yet, the faint threat of Mexico’s withdrawal from a business relationship with the United States is enough to send ripples of concern through the United States’ oil and gas industry. Not only is a lot of the United States’ capital invested in selling natural gas to Mexico, a lot of potential profit is still to be made within the country.
On March 23, Italian oil company Eni discovered what they termed a “meaningful” volume of oil. According to specialists, the potential volume of oil is more than was originally estimated by Pemex.
As Mexico’s current primary partner in oil and gas extraction and supply, the United States could make a lot of money in Mexico, provided we maintain a relationship that inclines their government to keep doing business with us. The United States may be right next door, but there are still other countries happy to cross the pond and do business with Mexico.
The chief argument used by anti-fracking protesters is that, put bluntly, fracking is bad for the environment. Why, anti-fracking proponents ask, when we could implement renewable energy across the board, would we waste our time with a process that’s not good for the environment and the people living in it?
Perhaps environmentalists would argue that the answer to that question is “money.” But, let’s assume for a second that the people who run oil and gas companies aren’t interested in completely destroying the planet just to pad their pockets. They live here, too, after all. Perhaps there’s another reason that the country continues to rely more and more heavily on hydraulic fracturing?
As the United States’ oil and gas industry begins extracting more and more petroleum and shale, the office the President has set its eyes on a renewed push into the Gulf of Mexico.
After several weeks of back and forth, it seems as though Colorado Attorney General Cynthia Coffman and Boulder County will be seeing each other in court.
On Tuesday, February 14, AG Coffman filed suit against the state county over its five-year moratorium on hydraulic fracturing. Coffman called the suit illegal while Boulder County attorneys dismissed the claim as a waste of time.
In recent months, Colorado has become a breeding ground for the fracking debate. The state’s large liberal base has repeatedly butted heads with those hoping to extract the state’s wealth of petroleum resources. In Boulder, the most recent fight is boiling down to the legal outcome of a single question.
Should the locals control fracking in their area, or should the state oversee oil and gas developments?
At the moment, the hopes are high in the energy industry that the next four years will see some really positive change. After a period of years in which the domestic oil and gas industry has seen a tremendous dry spell thanks to a combination of foreign meddling and increasingly harsh restrictions and regulations, even the possibility of hope is a sign of real, positive change. Of course, the outgoing President isn’t going to sit on his hands until President-elect Trump is sworn into office in January.