Permian Basin is fueling continued rise in U.S. oil exports, set to overtake Saudi Arabia's by end of 2019

Wikipedia map also shows county lines

The oil boom in the Permian Basin is "perhaps the hottest" on the planet, and is the primary driver behind the United States' huge increase in production and exports in recent years, Steve LeVine reports for Axios.

The Permian Basin is producing about 4 million barrels of oil every day, which contributes to the roughly 8 million barrels (and rising) of crude oil, natural gas liquids and other petroleum products the U.S. exports every day. According to Rystad Energy, by the end of the year, the U.S. is projected to overtake Saudi Arabia's 9 million barrels of combined petroleum products exported daily, Ben Geman reports for Axios.

The U.S. will increase daily oil production by 4 million barrels by 2024, accounting for about 70 percent of global oil production growth over the next five years, according to a new report by the International Energy Agency. Most of that will be from the Permian Basin, Geman reports.

Bloomberg's Javier Blas tweeted a video of what the boom looks like up close: a miles-long stream of service vehicles and tanker trucks on US 285, which runs through the heart of the Permian Basin:

U.S. Route 285 between Orla and Pecos in Texas (Bloomberg video by Javier Blas)

China Energy's interest in W.Va. natural gas may not necessarily turn into big investment

China Energy, the world's largest power company by asset value, signed a non-binding letter of intent last week to invest $83.7 billion over 20 years to develop West Virginia's natural gas industry, but some remain skeptical that the deal may ever materialize.

For one thing, "As Bloomberg Intelligence energy analyst Michael Kay points out, not even U.S. energy pipeline giant Kinder Morgan Inc. budgets that much for growth projects. There just isn’t enough infrastructure with high enough returns to make it worthwhile," Emma Ockerman and Lynn Doan report for Bloomberg.

Politicians and companies have been trying to develop an energy hub in Appalachia since shale gas began booming almost a decade ago, but it's still easier and cheaper to drill for gas and use the from the long-existing transport hub on Louisiana's Gulf Coast. Energy companies in the Eastern U.S. also face substantial regulatory hurdles in getting projects approved. "Some project developers have spent over a year waiting for federal approval as landowners and environmentalists there lodge complaints and stage protests. Even as politicians push for more investments, pipeline giants from Energy Transfer Partners LP to Williams Partners LP are being forced to delay projects because of regulatory setbacks and legal challenges," Ockerman and Doan report.

Another pitfall of the China Energy deal is that most of the major infrastructure investments needed for the Appalachian energy market may have already been made. "Enough pipelines are coming online to increase the region’s take-away capacity by about a third. And so much gas-fired power generation has been built in the area that Moody’s Investors Service has warned of 'a gas-driven apocalypse' in the power market," Bloomberg reports. "Later this year, Dominion Energy Inc. will bring online a liquefied natural gas export terminal in Maryland, and an ethane export terminal at Marcus Hook, Pa., is already sending cargoes overseas."

China Energy will need to supply more details before the deal's feasibility can be assessed -- details that the Charleston Gazette-Mail's Ken Ward Jr. says are thin on the ground: "What kinds of natural gas processing plants, pipelines or cracker plants will China Energy Investment Corp. Ltd. build? Where? How many jobs will be provided and how many of them will go to West Virginians? Is the state’s environmental regulatory system up to the task of protecting residents? What about the long-term climate effects of the drive to burn more fossil fuels? Will this kind of investment in natural gas spell an even faster decline for West Virginia’s already struggling coal industry?"

Whether the memorandum of understanding comes to fruition remains to be seen. "At the end of the day what really counts is contracts," Jason Feer, head of business intelligence at Poten & Partners Inc. in Houston, told Bloomberg's Jim Polson. "An MoU is usually an agreement to continue talking."

U.S. about to become a net exporter of natural gas for the first time in 60 years

For the first time since 1957, the United States is poised to become a net exporter of natural gas. "That's according to data from the Census Bureau and the U.S. Energy Information Administration. While imports of gas are flat or falling, exports continue to rise, and the data give weight to government analysts' conviction that the United States is on track to become a net energy exporter, possibly as soon as within a decade," Nathanial Gronewold reports for Environment & Energy News.

The U.S. exported more gas than it imported for four out of the first six months in 2017, selling $593 million in natural gas to foreign countries and importing $566 million from gas pipelines from Canada and as liquefied natural gas (LNG). Exports to Mexico are rising, especially as Mexico relies increasingly on gas-fired power plants. Exports to Canada have risen steadily since the Vector pipeline went into service in 2000. The U.S. remains a net importer of natural gas from Canada, but Canadian imports are slowing since the "shale gas revolution unlocked huge new volumes of U.S. gas reserves," Gronewold reports.

Not all natural gas is the same though: imports and exports of natural gas this year overall are about equal at around $4.2 billion each, but the subset of liquefied natural gas sales is much more lopsided: The U.S. has exported $1.7 billion in LNG in 2017, but only imported $346 million worth. LNG exports are poised to grow even more, as Cheniere Energy's Sabine Pass "is now poised to expand export capacity. Freeport LNG south of Houston expects to begin liquefaction and shipments in late 2018 or early 2019. Dominion Energy's Cove Point LNG in Maryland will be in service by the end of this year, the company says. More projects are coming in Corpus Christi, Texas; elsewhere in the Gulf of Mexico region; and at Georgia's Elba Island," Gronewold reports.

Proponents of natural gas say natural gas exports will help close the U.S.'s trade deficit; there is no evidence it is doing so yet, but that may change in the future if the natural gas boom continues. The deficit created by goods trade with China and other countries is so large that energy exports have a ways to go before they'll make a substantial dent.

House passes bills to streamline permitting process for some oil, gas and electric lines

Construction workers lay a natural gas pipeline.
(Natural Gas Now photo)

The House of Representatives voted July 19 to streamline the federal permitting process for some oil and natural-gas pipelines, Timothy Cama reports for The Hill. The bill, sponsored by Rep. Bill Flores (R-Texas), would designate the Federal Energy Regulatory Commission as the lead agency for approving permits for interstate gas pipelines.

The House also passed a bill by Rep. Markwayne Mullin (R-Okla.), that would put FERC (instead of the State Department) in charge of electric transmission lines and oil and gas pipelines that cross the Mexican or Canadian border. The president would no longer be required to issue permits for cross-border lines, a move that would prevent future presidents from delaying projects as Barack Obama did with the Keystone XL pipeline.

Congressional Republicans say streamlining the review process will encourage timely decisions about pipelines, which will in turn create jobs and stimulate the economy. Democratic critics say that streamlining approvals is unnecessary because FERC already approves 90 percent of gas pipelines a year.

Horizontal hydraulic fracturing for oil is running into old-style oil wells and damaging them

A hydraulically fractured oil well near Stillwater, Oklahoma
(Photo by J. Pat Carter, Getty Images)

Supersized new oil wells are sometimes running into existing wells, a little-noticed consequence of the shale-oil boom that has triggered complaints and lawsuits, reports Erin Ailworth of The Wall Street Journal.

The emerging problem is known as a "frack hit," and it's popped up in Oklahoma, where a group of small oil and gas producers say more than 100 of their wells have been damaged by hydraulic-fracturing jobs done for larger companies, Ailworth reports.

"In hydraulic fracturing, or 'fracking,' firms pump sand and water deep underground at high pressure to break oil and gas from rock," Ailworth explains. "Some owners of older wells have filed reports with state regulators claiming their wells were flooded with water. In some cases, the wells became so full that the water rose to the surface and spilled over. Others have claimed that they had to shut in wells due to the damage. A few cases have ended up in court. While newer wells damaging older ones is a longstanding problem, the issue is gaining attention as shale companies employ new technologies to drill wells horizontally."

In Oklahoma, companies aren’t required to report frack hits unless there is a spill. "Regulators there have received fewer than 20 confirmed reports of such incidents in the last three years and are currently reviewing several more," Ailworth writes. "Oklahoma last month passed a bill that eases restrictions on where producers can drill horizontal wells more than a mile long. Vertical-well operators now worry their wells are more vulnerable than before."

Chad Warmington, president of the Oklahoma Oil & Gas Association, questioned allegations that hundreds of wells have been damaged. In some cases, he argued, frack hits can actually boost production from an affected well. "But given the potential for damage, the association supports making reporting frack hits mandatory, Mr. Warmington said, and would be open to having a mediation or arbitration process put in place. Some experts expect the situation will only get worse," Ailworth writes.

"We’ve got bigger fracks, so more chance of them reaching across, well-to-well," Jennifer Miskimins, an associate professor of petroleum engineering at the Colorado School of Mines, told Ailworth. "As we get closer and closer spacing, I think we’re going to see the occurrence go up."

ExxonMobil to test new type of fracking on Colo. oil shale; soda firm plans to try another method

A cousin of the rock-fracturing technology that has created an energy boom from deep, dense beds of shale may be used to extract oil and gas from shallower beds that have offered promise for decades but have defined commercialization.

"Exxon Mobil Corp. is continuing with a project to extract crude from oil shale in western Colorado, an area that other major oil companies have given up on," Mike Lee reports for EnergyWire. "The supermajor is one of a handful of companies moving forward with research on (160-acre) leases obtained from the Bureau of Land Management in Rio Blanco County. The BLM gave Exxon and another company, Natural Soda Holdings Inc., permission to proceed with testing at the end of February." A state permit is still needed, reports Dennis Webb of the Grand Junction Sentinel. (Sentinel map)

"Exxon plans to use a technique called electrofracking, in which the rock is split and filled with a mixture of cement and calcinated coke," which conducts electricity, Lee writes. "An electric current is passed through the mixture, heating the surrounding shale and converting it to oil and gas, according to a Department of Energy report."

Natural Soda, which produces sodium bicarbonate in the area by injecting hot water underground, plans to use a variant of that method to extract oil and gas from kerogen, a solid hydrocarbon that must be heated to be released from the shale. It plans on "producing oil from underground by heating it using either a downhole burner or a closed-loop steam system," Webb writes. He notes that environmentalists are skeptical that the new techniques will lead to commercial development of the vast oil-shale resource, but are glad to see that the projects will get closer environmental monitoring than previous ones in the area, which date to the late 1960s.

The latest developments offer an opportunity for journalists and readers to distinguish between oil shale, generally known as a surface or near-surface rock that contains kerogen, and shale oil, which is the liquid petroleum produced from deep, dense shales that could not be tapped commercially until the development of horizontal hydraulic fracturing.

Drug ring sprang from oil and gas boom in N.D.; leader found guilty of ordering hit on fellow dealer

Billy Owens

Too much money and too much free time can equal disaster in rural areas where shady characters are waiting to exploit any opportunities they can find. That's a problem in western North Dakota's Bakken Shale region, where a methamphetamine empire sprang up, with the drugs manufactured and sold across several Western states. Twelve people from North Dakota, Washington and Montana have since been indicted on drugs and weapon charges, and suspected ring leader Billy Owens is on trial for ordering a hit on fellow drug dealer Kenneth Moore.

Michael Cotter, the U.S. attorney for Montana, said those indicted as part of the drug ring, which began in April, 2012, "sought to exploit the Bakken region’s booming economy, but it was broken up by authorities working to curtail rising crime rates in the oil patch," The Associated Press reports. "Several people who were indicted face potential prison terms of 10 years to life if convicted. . . . At least six of the defendants were charged with possessing 50 grams or more of pure meth and 500 grams or more of a substance containing some amount of meth." (Read more)

Owens was found guilty today in Williams County. The Williston Herald is covering the trial, having reported on it Tuesday, Wednesday, Thursday. and Friday.

Studies find shale-gas wells leak less methane than expected, but wells aren't the whole story

A study by the University of Texas "found that leaks from shale-gas fracking appear to be quite low — which implies that swapping out coal for shale gas is indeed beneficial from a climate perspective," as long as gas producers are careful, Brad Plumer writes for The Washington Post. "As natural gas gets extracted from the ground and processed and transported, some of it can leak out into the atmosphere as methane. And methane is a powerful greenhouse gas in its own right, trapping more than 20 times as much heat as carbon-dioxide over a 100-year period,"  (World Resources Institute graphic)

"On the one hand, burning natural gas for electricity emits just half the carbon dioxide that you get from burning coal. But if the methane 'leakage rate' from all that natural-gas infrastructure gets above 3.2 percent, one recent study found, then natural gas starts to lose its climate advantage," Plumer writes. The Environmental Protection Agency estimated the leakage rate at around 1.5 percent in 2013, but other studies have estimated the rates to be higher. (EPA graph of greenhouse gas emissions in the U.S.)

But now, a peer-reviewed study by the University of Texas, which took direct measurements of 489 shale-gas wells recently drilled in the U.S., found that "the methane leakage rates from these wells were fairly low — lower, in fact, than the EPA's estimates," Plumer writes. "The EPA had estimated that about 1.2 million tons of methane were probably seeping out of these wells. But the researchers found that only around 957,000 tons of methane were coming out." While that seems like good news for natural gas, the study only looked at natural gas production, which accounts for about half the methane leaks from natural gas in 2011. The study was financed by the Environmental Defense Fund and nine oil and gas firms. (EPA chart: Sources of greenhouse gas emissions in U.S.)

"There's also a lot of methane that seeps out when that natural gas gets processed and moved across the country in pipelines. That's why the Environmental Defense Fund is financing 16 different studies to get a complete look at America's natural-gas infrastructure. Natural gas is still a fossil fuel in its own right. It may lead to fewer global-warming emissions than coal, but it still produces emissions." (Read more)

Pa. attorney general brings charges against Marcellus Shale production company for spill

Kathleen Kane

The office of Pennsylvania Attorney General Kathleen Kane has entered unprecedented waters. Kane's office is the first ever to bring criminal charges against a Marcellus Shale production company, after charges were announced Tuesday against XTO Energy Inc. for discharging more than 50,000 gallons of toxic wastewater from storage tanks at a gas-well site in 2010 in Lycoming County, an area that has 116,000 residents and includes Williamsport, Andrew Maykuth reports for the Philadelphia Inquirer. "XTO in July settled federal civil charges over the incident by agreeing to pay a $100,000 fine and deploy a plan to improve wastewater-management practices. The consent decree included no admissions of liability."

Kane's decision "has sent shock waves through the industry," Maykuth writes. "But environmentalists Wednesday hailed the prosecution of the Exxon Mobil Corp. subsidiary as a departure from the soft treatment they say the industry has received from Pennsylvania regulators." Industry leaders and the Pennsylvania Chamber of Business and Industry have protested the charges, saying they could create a hostile business environment 

XTO is charged with five counts of unlawful conduct under the Clean Streams Law and three counts of unlawful conduct under the Solid Waste Management Act, Maykuth writes. They face a fine of $25,000 per day for each violation. (Read more)

After earthquakes, Ohio governor orders new regulations on deep injection wells

Ohio Gov. John Kasich issued an executive order that immediately imposes new state regulations on deep injection wells used to dispose of chemically laced wastewater from oil and gas drilling. The Associated Press reports that the directive gives the Ohio Department of Natural Resources temporary authority to implement a list of rules announced after a series of Youngstown-area earthquakes was tied to one such well. The official order says the regulations will provide citizen protection possible without causing irreparable harm to an important industry.

Under the order, the chief of the state Division of Oil and Gas Resources Management will have authority to order preliminary tests at proposed well sites, prevent drilling where tests fail, and limit injection pressure. The state also can order installation of automatic shutoff valves and monitor for leakage. The order will not affect a moratorium Kasich placed on deep injection wells surrounding the epicenter of the quakes. The order is effective for 90 days.

New York landowners win right to negotiate pre-fracking oil and gas leases with Chesapeake Energy

More than 4,400 landowners in New York have won the right to seek more favorable oil and natural gas leases, after the state attorney general and a subsidiary of Oklahoma-based Chesapeake Energy Corp. came to terms last week.

"The leases, which were signed in the mid-1990s to the early 2000s, were prior to the proliferation of high-volume hydrofracking, a much-debated gas-drilling process that made formations such as the Marcellus Shale profitable. As such, the terms of the contracts are generally well under current market value," reports Jon Campbell of the Democrat & Chronicle in Rochester.

“Make no mistake about it," said Attorney General Eric T. Schneiderman, "this agreement will provide a safety net for thousands of landowners by allowing them the opportunity to negotiate fairer lease terms, both financial and environmental, regardless of their existing contracts. For landowners across the state, this deal literally will provide a new lease on life.”

"The leases had been subject to a force majeure claim from Chesapeake Appalachia LLC, which had tried to extend their terms amid an ongoing environmental review of natural-gas development in New York," notes Jay F. Marks of The Oklahoman. "Such claims typically involve uncontrollable circumstances such as natural disasters."

The agreement covers leases that have expired or would have expired before Dec. 31, 2013. Landowners will be able to negotiate leases with other energy companies, but Chesapeake retains the right to match those terms. Chesapeake admitted no wrongdoing, but the company will pay $250,000 to reimburse the state for its investigation of landowners' complaints. (Read more.)

Western states seek U.S. land for its resources

Legislatures of several Western states are demanding that the federal government give their states title to tens of millions of acres of public forests and ranges. The movement's goal is to open access to natural resources, which supporters claim will increase jobs and revenue for resource extraction companies. The states say they will send property-tax bills to Washington if the land isn't surrendered by the end of 2014.

"In the last 30 years, the radical environmental policies of these federal agencies have ground those industries to a halt -- right into the ground -- and almost killed them," state Sen. Al Melvin told the Arizona Republic. Legal experts say the movement has misread the scope of states' rights in the Constitution and that it will likely fail to survive court challenges. Opponents of the movement say it could threaten iconic landscapes, and that states aren't prepared to handle management of millions of acres, report Shaun McKinnon and Yvonne Wingett of the Republic.

Utah Gov. Gary Herbert has signed a package of bills to reclaim public land, and the state's U.S. congressmen and women have pledged support for it. In Arizona, a similar bill has passed the Senate and awaits approval in the House. A proposed ballot measure there would "declare the state's sovereignty over its land, air and water." The federal government owns 85 percent of Nevada's total area, according to 2004 data. It owns 57 percent of Utah and 48 percent of Arizona. (Read more)

Governor goes to Ohio's booming gas fields for his State of the State address, touts new jobs

By Bill Reader, Ohio University
Partner, Institute for Rural Journalism and Community Issues

Ohio Gov. John Kasich broke with tradition Tuesday by giving the annual State of the State address at a small-town high school in Appalachian Ohio rather than in the Columbus statehouse. Kasich spent a portion of his speech talking about the dominant issue in that region and a major plank in his administration's priorities — coal mining and natural gas exploration and drilling — just days after announcing a $500 million investment in the region's booming natural-gas industry.

"If we can create a national energy policy, we need an energy policy in Ohio," Kasich said in his speech. "We are the Saudia Arabia of coal. We need to clean it and burn it. We also need to be for renewable energy. We need to embrace renewable energy. We need to have energy conservation, and we need to use our natural gas through fracking. We can't degrade the environment at the same time we're developing this industry."

The first-term governor gave his speech in the auditorium of the Steubenville High School, on the Ohio River across from West Virginia's Northern Panhandle and near the Pennsylvania border. Steubenville has a population of fewer than 19,000, according to the U.S. Census Bureau.

The day before Kasich's speech, the Steubenville Herald Star reported that the governor had announced that Denver-based MarkWest planned to expand its processing plant in nearby Marshall County and to build new plants in the region.

The newspaper contacted the company to verify Kasich's claims: "A spokesman for MarkWest, who declined to give his name, said the company could not divulge the cost of the new plants. He also said the company is still working out the details for the exact locations for the Ohio facilities." The development could create hundreds of short-term construction jobs and more than 40 long-term jobs, a MarkWest official told the newspaper.

That region of Ohio has seen considerable activity related to the Marcellus and Utica shale gas exploration and drilling. Last week, the Herald Star reported that another related facility might be built in nearby Belmont County — an "ethane cracker" that would remove ethane from the "wet" natural gases in the shale deposits. A Kasich spokesman would only confirm to the newspaper that Royal Dutch Shell was considering building such a facility in Eastern Ohio. A local county commissioner told the newspaper that such a facility could create thousands of construction jobs and hundreds of long-term jobs.

Not all the news related to the oil-and-gas boom in Ohio has been about economic growth in the traditionally depressed region. Weeks earlier, D&L Energy held a news conference in Youngstown to discuss the company's oil-and-gas wastewater well near the city, which a Columbia University seismologist has said "almost certainly" caused as many as 11 small earthquakes in the region.

Ohio has about 170 such sites to dispose of the brine and fluids used in hydraulic fracturing, or "fracking," of the shale deposits to release the oil and gas. A special report by The Columbus Dispatch states that "more than half of the brine coming to Ohio injection wells is from the shale-gas fields in Pennsylvania" and "The disposal industry is expected to grow as Ohio’s shale is exploited."

Pa. court will decide if Marcellus gas should be redefined as a mineral, voiding leases

Marcellus shale gas drillers and landowners must wait for a lower court to determine whether thousands of drilling leases are legitimate, following the Pennsylvania Superior Court's ruling that oil and gas ownership rights are unclear, Jim Polson and Mike Lee of Bloomberg report.

This ruling comes following a legal dispute in which the defendants argue shale gas is contained within rocks and should be considered part of the mineral rights, despite the state's century-old practice of considering oil and gas rights separate, Bloomberg reports.

"The case may take as long as two years" to make its way through the lower court, Davide Fine, attorney for K&L Gates LLP said in a phone interview. Meanwhile, many gas and oil companies "may need to check the title to thousands of oil and gas properties they've leased," David Poole, general counsel of Range Resources Corp. told Bloomberg.

Ken Komoroski, attorney with Fulbright & Jaworski LLP in Pittsburgh, suggests a trade association or gas producer petition the Supreme Court to expedite the appeal process, Bloomberg reports.

Lease payments from natural-gas frackers increasingly offset school districts' budget cuts

More and more school districts in areas rich with gas-bearing shales are leasing land to gas drilling companies to alleviate budget shortages, Ben Wieder of Stateline reports. (Pennsylvania Department of Environmental Protection photo)

Blackhawk School District, 40 miles northwest of Pittsburgh, recently agreed to lease 160 acres to Chesapeake Energy at $2,000 per acre upfront and an additional 15 percent royalty on any profits from gas extracted, Wieder reports. The standard royalty is 12.5 percent. With a state funding reduction of $800,000, Jerry Wessel, the district's business manager, told Wieder, "The natural gas lease will help the budget situation some in the short term but hopefully even more over the long haul."

Other school districts see the benefits too. Last year, eight Texas districts received more than $5 million in bonuses and royalty payments from lease agreements with Cheseapeake.

While lease agreements may fill a financial void for many districts, environmental concerns about hydraulic fracturing continue. Pennsylvania has toughened well-casing and drilling regulations and joined other shale-rich states in requiring disclosure of certain chemicals following what industry and environmental officials refer to as "isolated incidents" of fracking spills, Wieder reports. New Jersey Gov. Chris Christie recently vetoed a bill to ban fracking, instead suggesting a one-year moratorium and further study. New York is currently under moratorium but is expected to relax it, except in the area that supplies New York City's water. (Read more)

Interior resumes oil-shale research, probes last-minute Bush-era decision to freeze low royalties

Interior Department Secretary Ken Salazar said Tuesday the department is investigating a decision by the last administration, just five days before former President Bush left office, that locked in royalty prices for oil-shale development in the West. Salazar expressed "serious concerns" about the changes made without public comment to existing oil-shale lease agreements, Jad Mouwad of The New York Times reports.

The decision locked in royalty rates, which are paid to the government for the right to drill on federal land, for 30,000 acres of existing oil-shale leases at 5 percent. The government is paid 16.7 percent royalty for oil in the Gulf of Mexico, Mouwad notes. News of the investigation came as Salazar also announced he would resume research programs for shale development in Colorado, Utah and Wyoming. He froze the research weeks after his appointment in February.

"Taxpayers deserve answers to serious questions about why these lease addenda were granted at the eleventh hour, under what circumstances, and at what potential expense to the federal treasury," Salazar told reporters. "We must reform our nation’s oil shale program." Oil shale deposits in the Green River formation are believed to hold 800 million barrels of potential resources, more than three times the known reserves in Saudi Arabia, Mouwad reports, with more than 70 percent of the resource on federal land. (Read more)

Preferences for the new research leases will be given to companies with "proposals that help to answer the questions of how much energy and water shale development will need and its impact on the environment," Mark Jaffe writes for The Denver Post. The American Petroleum Institute said in a statement: "Secretary Salazar's decision to resume the second round of research and development leases is a positive step." (Read more)

Interior Dept. withdraws Bush-era oil-shale leases

Interior Secretary Ken Salazar has withdrawn oil shale leases in Colorado, Utah and Wyoming, saying his department "would first study the water, power and land-use issues that complicate one of the nation's most abundant but controversial untapped sources of energy," report Jim Tankersley and Nicholas Riccardi of the Los Angeles Times.

Salazar, a former Colorado senator, is seeking comments for 90 days, beginning tomorrow, when a notice in the Federal Register will ask "industry, local communities, states and stakeholders for their advice on the terms and conditions that should be included in the second round of leases," reports the Denver Business Journal. Salazar maintains that the previous leases drawn up during the final days of the Bush administration were riddled with flaws, including "locking in low royalty rates that would shortchange taxpayers," the Business Journal reports.

"Those who have fantasized that oil shale is a panacea for America's energy needs have been living in a fantasy land," Salazar said. The Times noted, "The move marked the third time in a month that the Obama administration has frozen late-term Bush decisions that sought to spur domestic energy development over objections from environmentalists." (Read more)

Salazar, Vilsack will be Cabinet's rural voices

President-elect Barack Obama's picks to head the agriculture and interior departments will provide "two rural-tuned voices to the Cabinet of the most urban president in at least 100 years," write Jim Tankersley and Bettina Boxall for the Los Angeles Times. "The majority of conservationists and rural interest groups say ... Obama has taken a step toward fulfilling his campaign promise of revitalizing rural economies."

The appointment of former Iowa Gov. Tom Vilsack has prompted a look back at his record to gain a sense of what changes he may bring to the Department of Agriculture. "On matters of agriculture, Vilsack was a pragmatic centrist, content with incremental changes and reluctant to take steps to significantly disrupt the status quo," writes Chase Martyn of The Iowa Independent.

In his two terms as governor Vilsack worked to endear himself to both the left and right, meaning he tended to stay away from divisive issues such a factory-style hog farms. "Vilsack remained largely above the fray of ongoing feuds over the placement of confined animal feeding operations near rural communities," writes Martyn. "Groups on the left who would like to give local communities stricter control over where the CAFOs are allowed felt betrayed by their governor’s unwillingness to help, but his stance kept agribusiness interests relatively quiet."

In fact, "Vilsack’s most noticeable impact on rural Iowa did not involve changes to agricultural policy or stricter environmental regulations, but rather tax credits and business incentives," adds Martyn. But he favors tighter limits on farm subsidies, as does Obama. "Expect the incoming secretary of agriculture to achieve tangible results that are easy to explain, because that is Vilsack’s style," writes Martyn. "He will immerse himself in a few specific issues, come up with a few policy ideas, and set to work building a political consensus, diluting the original ideas when necessary." (Read more)

Salazar also has a reputation as a centrist. "Salazar is expected to forge compromises with those who have competing interests over mining, drilling on public land and the protection of endangered species," write Karen Crummy and Anne Mulkern in The Denver Post. "While this has bothered some liberal groups, Salazar has received a mostly warm reception by environmentalists and business groups." One of the first challenges Salazar would likely face at the Department of the Interior is the issue of oil shale mining on federal lands. Salazar has opposed what he considered the Bush administration's hasty attempt to allow commercial developers to lease Western lands for shale mining and processing. (Read more)

The department and its Office of Surface Mining will also be involved in discussions about changes in laws or regulations on mountaintop-removal strip mining for coal. Shares of publicly traded U.S. coal firms rose after Obama's announcement, suggesting Salazar is more favorable to coal than the president-elect, analyst Jeremy Sussman of Natixis Bleichroeder told the Reuters news service. "He is practical and not too ideological," Sussman said. "A bill he sponsored on capture and storage of carbon emissions was widely supported." (Read more) UPDATE, 12/19: Big coal operator Massey Energy led a decline in energy stocks, The Wall Street Journal reports.

Bailout bill boosts coal, oil shale and tar sands, but slashes a tax credit for biodiesel from animal fat

The financial-system rescue bill contained boons for coal gasification and liquefaction, and development of tar sands and oil shale, but cut in half a tax credit for converting animal fat into diesel fuel.

"The bailout package includes a 50 percent tax write-off on refinery construction, which would assist the oil shale and tar sands industries," writes Julie Cart of the Los Angeles Times. "The bill extends production credits for coal gasification plants and includes the end product, aviation fuel, in the alternative fuel category. . . . Critics of the measures note that the [coal and shale] breaks run counter to the carbon-reduction message Congress intended when it vowed to bankroll clean, renewable technology. And a substantial portion of the tax breaks go to energy companies already flush with record oil profits." (Read more)

The bill extends the tax credit for wind-energy production and biodiesel for a year, through 2009; "and the alternative fueling credit for ethanol blended gasoline (E-85) infrastructure, through 2010," notes Janie Gabbett of MeatingPlace.com, a journal for the meat industry. "It also cuts the federal tax credit to 50 cents per gallon from the current $1-per-gallon for companies that use animal fat to make renewable diesel fuel."

That threatens an 11-month-old project of Tyson Foods and ConocoPhillips to convert tallow from Tyson's beef-processing plant in Amarillo into diesel fuel at the oil company's refinery in nearby Borger, animal fat into diesel fuel. "Without the current $1 per gallon credit it is unlikely this venture will remain economically viable," Tyson spokesman Gary Mickelson told Gabbett. The plant is producing 300 to 500 barrels per day. (Read more)