Energy the Law | Gray Reed | Energy the Law

Time 2020-10-15 15:05:09

Web Name: Energy the Law | Gray Reed | Energy the Law

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As the US continues to be more successful in reducing CO2 emissions than the parties to the Paris Climate Accord, those who would do the St. Vitus dance on the grave of the domestic oil and gas industry should consider the risks posed by the alternatives. Here are thoughts from some who know better than I (Read the sources yourself for details):It won’t help.Dutch economist Bjorn Lomborg agrees that climate change is real, man-made, and something to be dealt with smartly. He contends that California forest fires are not caused by climate change, but rather by bad state fires supression policy. Any realistic climate solution will achieve next to nothing. Even if the entire United States were to cut all of its emissions tomorrow and for the rest of the century, temperatures would still climb just 3/10ths of 1°F.And China added 40 gigawats of coal-fired energy in 2019.At the risk of being redundant, it won t help.Solar is costly.According to a pro-solar site, Electricity from solar energy is five to 11 times more expensive to produce than from coal, hydro and nuclear sources. The problems are cost of technology, lack of efficiency of solar cells, and installation and maintenance costs. Technological advnces could overcome these limitations but it will take decades.Wind energy generates waste and other disadvantages It will cost $24 billion to dispose of 60,000 turbines currently used in the United States. Over the next 20 years the US alone could have to dispose of 720,000 tons of blade waste material. And enormous air and water pollution will occur in faraway countries where the mining, processing and manufacturing are done.… and is toxicAccording to Principia Scientific, Toxic and useless wind turbine blades can t be recycled, and the volume will quadruple over the next 15 years as blades reach their 15-to-20 year lifespan. Wherever it goes, we know it won’t be to West Coast and Northeast metropolises.The burden will fall on rural and poor communities.Despite promises that the permitting process is not stacked against rural communities, a 340 MW wind project was okayed in western New York despite objections from the three counties that will be affected. The project will include 117 turbines each standing 600 feet high and will gobble up 30,000 acres. So says Robert Bryce in Forbes. I say get used to it.Hydrogen is not the answer. For a number of reasons, its physical properties are incompatible with the requirements of the energy market. (Warning: This Watts Up WIth That! piece begins as a political rant but mellows out into a discussion of science.)China will win, children will lose.According to Jude Clemente in Forbes, the US is fully dependent on foreign countries for 14 of the 35 rare earth minerals the Administration considers to be critical to alternative energy development.  This will result in the transfer of trillions of dollars of wealth to China and further increase US dependence on the Chinese.Mark Mills in National Review agrees. And chldren in African countries  will pay the price.It won’t be a sustainable utopia.Tilak Doshi in Forbes asserts that rigorous economic analyses of the hidden costs of solar and wind counter claims that wind and solar power are already competitive with gas and coal power plants.RIP HOF ers Lou Brock, Whitey Ford, Bob Gibson, Al Kaline Joe Morgan, Tom Seaver The focus from many quarters on “Environmental, Social, Governance” is intensifying. If you attended TIPRO’s annual summer conference week before last you heard Rep. Kenny Marchant confirm his belief that ESG considerations are not going away. Your energy business will be more competitive if you understand ESG and embrace it.TOM MCNULTY, Principal and Managing Director at Valuescope, Inc., and JACK BELCHER AND PAUL LOONEY of Cornerstone Govrnment Affairs discuss ESG in “ESG A Valuation Framework”.Tom’s takeaways:ESG’s biggest impact falls on energy companies.Rather than resist, it is best to engage.Using Valuescope’s DEFINE-MEASURE-VALUE model, energy companies can demonstrate positive valuation impact from developing and implementing an ESG program.DEFINEESG metrics can be defined using one of several global standards, such as SASB.Measurement is possible now for more and more corporate metrics due to digitization, “Big Data,” and analytics.Comparative valuation techniques across portfolios and peer groups, along with specific valuation models for intangible assets, have been around for decades.ESG can unlock hidden value.If you don’t do it on your own you might be forced to do it by shareholders and regulators.You can gain a competitive advantage over your peer group by being a first mover.You can drive the narrative actively, rather than passively.You can mitigate the risks that poor ESG performance can have on your business.You will have access to capital that will engage only if your ESG program and assets are defined, measured, and valued.And a musical interludeCo-author Rusty TuckerWith the plunge in commodity prices many formerly profitable wells are now in the red, and we don t know for how long. This is causing non-operators to question the bona fides of the operations and of the operator, and to search for a way out of their obligations.The challenge: The operator is operating unprofitable wells where monthly costs exceed or barely equal revenues, making money on fixed COPAS overhead charges, and non-operators are going into the economic hole.  What can the non–operator do to stop the financial bleeding? Continue Reading My Operator is Making Money on the Well and I’m Not. What Can I Do? Part 1.Gas flaring, especially in the Permian and the Eagle Ford, is coming in hot these days at the Texas Railroad Commission. Presented here are viewpoints from several stakeholders in the discussion. My comments are summaries. For a fuller understanding please read the reports for yourself.The players are in general agreement on several points:There needs to be an end to routine gas flaring.Texas flares a lot of gas: About as much annually as all of its residential users combined, or maybe as much as the seven largest cities, or maybe Houston. It depends on who s talking. Values vary but in the Permian it ranges from $450 Million to $750 Million.Progress is being made, plenty for some, not enough for others.The Texas Methane and Flaring CoalitionThese seven trade associations and 40 operators are members of the Railroad Commission’s Blue Ribbon Task Force for Oil Economic Recovery. Their positon, among others:More detailed data submissions from operators will result in more effective operational and regulatory decisions that will reduce flaring.A proposed flaring matrix (see the report) identifies situations where flaring is necessary and makes recommendations for the application of Rule 32 that will result in overall flaring reductions because of the shortened time frame for administrative approvals.Methane emissions from oil and gas systems are down 23 percent since 1990.Texas flaring intensity is well below that of comparable countries according to the World Bank. Continue Reading How Will the Texas Railroad Commission Address Gas Flaring?Co-author Rusty TuckerDevon Energy Prod. Co., et al. v. Sheppard, et al is your kind of case if you are in search of:A roadmap for slicing and dicing royalty calculations in myriad ways,Pretty good summaries of the Supreme Court s notable decisions in Heritage Resources v. NationsBank, Judice v. Mewborne Oil, Chesapeake Exploration v. Hyder and Burlington Resources v. Texas Crude. (pp 12-19)A description of the gas fractionation process.For you scriveners: Reference to the Supreme Court’s lament for “the considerable time, money and heartache expended due to the use of “industry jargon, outdated legalese, or tenuous assumptions about how judges will interpret industry jargon or outdated legalese”. Continue Reading When is a Gross Proceeds Royalty not Paid on Gross Proceeds?Search Search About Charles Sartain I have been helping clients of all types resolve their commercial disputes for most of my 35 years as a lawyer. Of the many industries in which I have worked, the energy business is the most fascinating…MoreStay ConnectedSubscribe to this blog via RSSCharles Sartain on LinkedinGray Reed is a Texas-based, full-service law firm with over 140 lawyers in Dallas, Houston and Waco. Since 1985, our firm philosophy has been to provide high-quality legal services in a streamlined manner, to provide sophisticated and complex legal advice that is reasonably priced, and to provide big-firm results with small-firm efficiency. For 35 years, we have dedicated ourselves to achieving success for our clients, as they define success whether that is winning a critical lawsuit, closing a key deal, consulting to save taxes, or just giving good business advice to avoid disputes.Read More...

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