Preview Newsletter
ET ACC PM 10/27/15
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(ACC Blog) Polyurethane Highlighted on Home Improvement Radio Show
Oct 27, 2015 | American Chemistry Matters
By American Chemistry
Whether we listen for today’s hit music, the most up-to-date news coverage or to make our commutes more bearable, many of us spend time each day tuning into our favorite radio stations. -
(ACC Mentioned) Industry Opposes Possible California Hazard Prioritisations
Oct 27, 2015 | Chemical Watch
ndustry comments, submitted to California's Developmental and Reproductive Toxicant Identification Committee (Dartic), has called on the body not to recommend prioritisation of metallic nickel, pentachlorophenol, PFOA or PFOS for development of hazard identification materials (CW 14 October 2015). -
US Lawmaker to Draft Legislation to Update Cosmetics Law
Oct 27, 2015 | Chemical Watch
Representative Frank Pallone (D-New Jersey) says he wants to work with colleagues in Congress to draft bipartisan legislation that will “finally allow the Food and Drug Administration (FDA) to ensure that cosmetics, used every single day, are not harmful.” -
Want to Avoid Toxic Cosmetics? Look for This Mark
Oct 27, 2015 | Eco Watch
By Lorraine Chow
We often hear about the toxic brew of chemicals lurking in everyday items such as makeup, shampoo and nail polish, so how do we which products won’t do us any harm? -
House to Pass Short-Term Policy Patch
Oct 27, 2015 | Politico Pro
By Jennifer Scholtes
With just three days left until transportation authority runs out, House lawmakers are set to vote today on their latest short-term extension — this time attempting to kick the can for another 22 days. -
Senators Form Bipartisan Caucus to Reform Rulemaking
Oct 27, 2015 | E&E Greenwire
By Ariel Wittenberg
Citing what they call an "out of control" regulatory system, senators from both sides of the aisle have joined forces to create a new Senate Regulations Caucus aimed at revamping the rulemaking process. -
EPA to Propose Reporting Rule for Natural Gas Plants
Oct 27, 2015 | E&E Greenwire
By Amanda Reilly
U.S. EPA plans to propose a regulation requiring natural gas processing plants to report releases of toxic chemicals to the air, water and soil, the agency told environmentalists in a letter released today. -
EPA May Require Gas Processors to Detail Toxic Emissions
Oct 27, 2015 | Politico Pro
By Elana Schor
EPA notified environmental groups on Monday that it "may be appropriate" to begin requiring natural gas processing plants to submit annual reports to an online database of industrial toxic emissions releases. -
Lawmakers Introduce Resolutions to Overturn EPA Climate Rules
Oct 27, 2015 | Politico Pro
By Andrew Restuccia
Senate Majority Leader Mitch McConnell and Sen. Shelley Moore Capito introduced disapproval resolutions today aimed at overturning EPA's climate regulations for power plants under the Congressional Review Act. -
New Shale Gas Boom Could Be on the Way
Oct 27, 2015 | Wall Street Journal
By Nicole Friedman
Natural gas prices plunged Monday to their lowest level in more than three years on concerns that the market will remain oversupplied this winter. -
Asset Sell-Off in Shale Patches Could Mean Return of Smaller Investors
Oct 27, 2015 | E&E Energywire
By Nathanial Gronewold
The collapse of oil prices is expected to open up opportunities for smaller investors to return to a space they were crowded out of during the shale oil boom. -
Southern Kansas Sees Sudden Spike in Earthquakes
Oct 27, 2015 | Washington Post
By Ryan Schuessler
A sudden spike of earthquakes in southern Kansas is raising eyebrows in the region, where there have been more earthquakes in the past two weeks than there were in the years between 1990 and 2013. -
Budget Deal Would Draw Down Oil Reserves
Oct 27, 2015 | The Hill - E2 Wire
By Timothy Cama
The federal government would sell millions of barrels from its massive oil stockpile under the budget deal struck by the White House and congressional leaders.
Industry and Association News - There are no clips to report at this time.
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(ACC Blog) Polyurethane Highlighted on Home Improvement Radio Show
Oct 27, 2015 | American Chemistry Matters
By American Chemistry
Whether we listen for today’s hit music, the most up-to-date news coverage or to make our commutes more bearable, many of us spend time each day tuning into our favorite radio stations.
Mighty House Radio listeners recently heard about the many benefits of polyurethane and spray polyurethane foam.
Lee Salamone, senior director of the Center for the Polyurethanes Industry, and Justin Koscher, director of the Spray Foam Coalition, spoke with the Mighty House Radio hosts about how polyurethane is present in many of the products that make our homes comfortable and stylish, including furniture, mattresses, appliances, carpet underlay and flooring.
They also discussed how spray polyurethane foam can play a major role in insulating and air-sealing homes and buildings – helping to reduce air leakage, which can result in lower utility bills*, reduced greenhouse gas emissions and improved indoor air quality by helping to eliminate the infiltration of dust and allergens.
Mighty House Radio is a weekly radio show, which is broadcast in several cities throughout the nation. Hosts Ron Cowgill and Rich Cowgill, along with producer Robbie Erhardt, are on the airwaves each Saturday morning to discuss many topics involving home improvement and repair.
Listen here: https://soundcloud.com/mighty-house-radio-show/acc-polyurethane-interview-17-oct-15.
At home with polyurethane
Home builders often need high-performance materials that are strong and durable, yet lightweight and easy to install. With its impressive strength-to-weight ratio, insulation properties, durability and versatility, polyurethane is a common component in building and construction. Polyurethane products can also enhance the aesthetic design of homes and buildings.
Appliance manufacturers also use polyurethane for many parts and components. The most common use of polyurethanes in major appliances is the rigid foam used in refrigerator and freezer thermal insulations systems, which helps keep food cold and fresh.
Because it is comfortable and durable, polyurethane – in the form of flexible foam and bonding adhesives – is one of the most common materials in upholstered furniture, bedding and carpet underlay.
* Savings vary. Find out why in the seller’s fact sheet on R-values. Higher R-values mean greater insulating power.
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(ACC Mentioned) Industry Opposes Possible California Hazard Prioritisations
Oct 27, 2015 | Chemical Watch
Industry comments, submitted to California's Developmental and Reproductive Toxicant Identification Committee (Dartic), has called on the body not to recommend prioritisation of metallic nickel, pentachlorophenol, PFOA or PFOS for development of hazard identification materials (CW 14 October 2015).
Dartic, which serves as the state's qualified experts on reproductive toxicity determinations for Proposition 65, will advise the Office of Environmental Health Hazard Assessment (Oehha) at a 9 November meeting, which substances should be considered for prioritisation.
The preparation of hazard identification materials could serve as a precursor to a substance's being listed on Prop 65 as reproductive or developmental toxicants.
Substances to be reviewed are:nickel;pentachlorophenol (PCP);perfluorooctanoic acid (PFOA);perfluorooctane sulfonate (PFOS); andtetrachloroethylene.
Nickel
The Nickel Producers Environmental Research Association (NiPERA) – a division of the global trade group, Nickel Institute – said that consumer exposure to metallic nickel, via inhalation or oral exposure, is “negligible or non-existent”. It also said that dermal absorption is “very low”, such that “the contribution of this exposure route to systemic blood nickel levels is essentially undetectable.”
NiPERA said that current epidemiological data does not support the priortisation of metallic nickel for the development of hazard identification materials.
Its comments were endorsed by a coalition of 15 trade groups, which included the American Chemistry Council (ACC), the Motor & Equipment Manufacturers Association (MEMA) and Plumbing Manufacturers International. The group advocated the substance be assigned a low priority.
PCP
The Western Wood Preservers Institute (WWPI) said, in comments, that PCP should not be considered for listing under Proposition 65 because the epidemiological data screen requirements, stipulated under Oehha's process, are not met. “None of the identified studies are of adequate quality or provide sufficient evidence to demonstrate that PCP is the cause of adverse developmental or reproductive effects in people,” it said.
The pentachlorophenol task force, representing the US and Canadian registrant of PCP, agreed with the WWPI comments.
PFOA and PFOS
A coalition of three NGOs – the Natural Resource Defense Council, the Center for Environmental Health and the Environmental Working Group – submitted comments, calling on Dartic to prioritise PFOA and PFOS for development of hazard identification materials.
“The scientific evidence linking these chemicals to adverse human health effects has grown substantially”, since Oehha's last review of the substances in 2007, said the coalition of NGOs.
But 3M Company said, in separate comment letters, that PFOA and PFOS should not be designated as high priorities for further evaluation, because the substances are due to be phased out fully under the EPA's global stewardship programmes by the end of 2015.
The perfluorooctanyl chemistries manufacturer added that since this phase-out began, there has been an “ unmistakable downward trend” in PFOA and PFOS residues in human blood, and the substance do “not warrant the extensive resources necessary for the preparation of hazard identification materials”.
No comments were submitted with regards to tetrachloroethylene, which is listed on Prop 65 as a carcinogen.
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US Lawmaker to Draft Legislation to Update Cosmetics Law
Oct 27, 2015 | Chemical Watch
Representative Frank Pallone (D-New Jersey) says he wants to work with colleagues in Congress to draft bipartisan legislation that will “finally allow the Food and Drug Administration (FDA) to ensure that cosmetics, used every single day, are not harmful.”
Mr Pallone, who is the lead Democrat on the influential House Energy and Commerce Committee, referred to a recent study that found that women have higher levels of triphenyl phosphate (TPHP), a chemical used in popular nail polish brands, in their bodies just 10 to 14 hours after painting their nails. The study was done jointly by Duke University and the Environmental Working Group (EWG).
TPHP, which has not been reviewed by the FDA for use in cosmetics, is a suspected endocrine disruptor, said Mr Pallone.
“Millions of Americans assume that the cosmetics they are using on a daily basis are considered safe, but that is a myth,” the congressman said. “This latest study shows that these products can contain harmful chemicals, and that they are being absorbed into the body and putting consumers’ health at risk.”
Popular cosmetics and other personal care products continue to be largely unregulated, despite the fact that they can be found in almost every drugstore and nail salon across the country, he said.
That is because the FDA does not have the “framework or resources to review or approve the chemicals used in cosmetic products before they are sold to consumers, or even regulate cosmetic products until after they have already reached the marketplace,” Mr Pallone said.
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Want to Avoid Toxic Cosmetics? Look for This Mark
Oct 27, 2015 | Eco Watch
By Lorraine Chow
We often hear about the toxic brew of chemicals lurking in everyday items such as makeup, shampoo and nail polish, so how do we which products won’t do us any harm?
Today, the Environmental Working Group (EWG) launched its “EWG VERIFIED: For Your Health” program in order to help consumers avoid toxic and potentially harmful goods.The drugstore is filled with a dizzying array of cosmetics and personal care products. As it happens, these products do not require FDA approval before they go on the market. Photo credit: Shutterstock
“So when you’re walking around Target, or Whole Foods or Walmart, looking for safe, chemical-free products that have been checked for transparency, hazardous ingredients and forGMPs [Good Manufacturing Practices], look for the EWG VERIFIED mark,” Jocelyn Lyle, the EWG’s vice president of development, told EcoWatch.
Just because a product comes from the supermarket or a drugstore doesn’t mean it’s safe to use on our bodies. The U.S. Food and Drug Association (FDA) does not approve or review cosmetic products and ingredients before they hit shelves. And it’s actually the responsibility of the manufacturer or distributor of a cosmetic to ensure that their products are safe when consumers use it, not the FDA.
This first-of-its-kind verification program is based off the environmental nonprofit’s already popular Skin Deep cosmetics database that rates the safety of more than 64,000 consumer products on a 1 to 10 scale, with 1 representing the best and 10 representing the worst.
To achieve the new EWG VERIFIED seal, products must receive a “green” rating score between 1 and 2 and meet additional criteria set by EWG scientists. According to Lyle, there are about 5,000 products from 300 brands in the database that belong to this category.
EWG VERIFIED products are free of substances on EWG’s “unacceptable” list (i.e. parabens, formaldehyde, triclosan, animal-derived ingredients, phthalates, microbeads and more). They also meet limits outlined in EWG’s “restricted” list, which includes ingredients that have been banned or restricted by U.S. or international government agencies or other authoritative public health bodies, such as the World Health Organization.
“We’re asking for what’s not found in packaging, not found on their website, not found on their label,” Lyle said. “We would like to work with brands that we know are committed to health and chemical-free cosmetics and personal care products.”
And yes, it’ll be an actual sticker or seal that brands can emblazon on their products. Check it out:
“For more than a decade, tens of millions of people have relied on Skin Deep ratings to limit their exposure to ingredients that do not meet our rigorous standards, but are still found in cosmetics because of weak regulations,” said Ken Cook, EWG president and cofounder. “EWG VERIFIED goes beyond basic ingredient labels to hold companies on the cutting edge of making the healthiest products to an even higher standard.”
“Our mark will make shopping even easier for overwhelmed consumers who want to quickly find a bottle of shampoo or a tube of toothpaste that is better for their health,” Cook added.
EWG VERIFIED is initially launching with the companies Beautycounter and MyChelle Dermaceuticals. Other companies and products will be added to the program in the coming weeks.
“Beautycounter is mission-driven—we use a rigorous ingredient selection process to ensure we’re making safer, effective skin care and beauty products, while simultaneously working to move the market and policy toward cleaner, healthier ingredients,” said Gregg Renfrew, Beautycounter founder and CEO. “Early participation in the EWG VERIFIED program is in full alignment with who we are.”
The EWG aims to increase transparency in the marketplace with its verification program. “Only products that include robust labels and meet our robust criteria, as opposed to minimal government standards, will be awarded our mark,” said Nneka Leiba, EWG deputy director of research. “We aim to spur the development of safer products in the marketplace.”
Eventually, the EWG plans to expand the program to include other goods, including household cleaners, food and more.
“It’s not just personal care products that are poorly regulated—it is household cleaners, food and a wide range of other goods,” Cook said. “It is our hope that products bearing the EWG VERIFIED mark will be available to consumers everywhere they shop to better inform their buying decisions.”
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House to Pass Short-Term Policy Patch
Oct 27, 2015 | Politico Pro
By Jennifer Scholtes
With just three days left until transportation authority runs out, House lawmakers are set to vote today on their latest short-term extension — this time attempting to kick the can for another 22 days. But getting this thing through the lower chamber isn’t expected to be the hard part. In the Senate, Barbara Boxer is still opposing the inclusion of a multiyear extension of the deadline for railroads to implement positive train control technology. And our Lauren Gardner reports that the senator is insisting she can forge a deal with Republicans to extend the PTC deadline for “months,” rather than through 2018.
Boxer says she’s confident she can negotiate a deal in the two days the Senate will have to consider the patch. “I’m trying to resolve it and give a reasonable extension — months, not years,” she told reporters on Monday. “Why pull this out? It’s because they don’t want the scrutiny, and it’s a special-interest earmark.” But if the California Democrat gets her way, the Senate will have to amend the legislation, sending it back to the House for another vote, almost certainly leading to a lapse in contract authority after Thursday.
‘By herself’: Although Boxer seems sure she can get others on board with blocking what she says amounts to a sweetheart carve-out, her GOP counterpart and one key Democrat aren’t buying her offer. “I think Barbara’s kind of by herself on this,” Senate EPW Chairman Jim Inhofe said Monday. And while top Senate Commerce Democrat Bill Nelson acknowledges that holding off on the PTC extension would give the “extra impetus” for enacting a long-term transportation bill this year, he says the threat of a nationwide rail shutdown is an “emergency” that warrants immediate action. “We’ve got to be practical about this and work this phased deal.”
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Senators Form Bipartisan Caucus to Reform Rulemaking
Oct 27, 2015 | E&E Greenwire
By Ariel Wittenberg
Citing what they call an "out of control" regulatory system, senators from both sides of the aisle have joined forces to create a new Senate Regulations Caucus aimed at revamping the rulemaking process.
Formed by Sens. Mike Rounds (R-S.D.), Ron Johnson (R-Wis.), Angus King (I-Maine) and Joe Manchin (D-W.Va.), the new group is meant to unify efforts to revamp federal rulemaking.
All four senators have long been advocates of regulatory reform and have been critics of recent U.S. EPA rules setting stricter standards for ozone as well as the agency's Clean Power Plan.
In May, Rounds introduced a resolution calling on House and Senate lawmakers to create a joint committee to review regulations crafted by federal agencies. That committee would also be charged with designing a congressional process for reviewing federal rules (E&E Daily, May 22).
"With more than 1 million federal regulations on the books today, the need for a common sense approach to address unneeded, outdated and unnecessary federal regulations is as important as ever," Rounds said in a statement today.
King, who sits on the Senate Homeland Security and Governmental Affairs Committee, has been working on a bill that would set up an independent commission to review agency regulations that already have been enacted. The nine-member panel established under the bill would be charged with recommending regulations that should be repealed (E&E Daily, Oct. 8).
"With thousands of new regulations taking effect every year, it's far past time that Congress got a better handle on the regulatory system that impedes American businesses and hampers vital growth and innovation," King said in a statement. "The Senate Regulations Caucus can lead that effort and spearhead an overhaul of ineffective, duplicative, or outdated regulations so that businesses in Maine and across the country can do what they do best -- create jobs and grow the economy."
Johnson, who chairs the Homeland Security and Governmental Affairs Committee, has been supportive of King's role. The panel passed four other regulatory reform bills earlier this month that would require agencies to perform more retrospective reviews of rules and provide more public notice of rulemaking initiatives, among other things (E&E Daily, Oct. 8).
"Unfortunately, Washington is all about addition," Johnson said in a statement. "As a result, layer upon layer of regulation has built up over the years that significantly hampers economic growth and success. Easing the burden of this regulatory burden has been one of my top priorities since coming to the Senate. I'm proud to be part of this bipartisan effort to identify commonsense regulatory reforms. For my part, I will earnestly concentrate on areas of agreement that unite us and that can lead to real results."
Manchin has joined legislative efforts to stop rules from being implemented, most recently co-sponsoring a bill in the Senate to stop U.S. EPA from enforcing its newly tightened ozone limit (E&E Daily, Oct. 7).
He said in a statement today that his state has "seen firsthand how federal regulations can stifle industry and destroy jobs."
"It is past time to significantly reform the federal regulatory process and reduce unnecessary red tape for job creators," Manchin said. "I'm truly proud to work with my colleagues from both parties to address regulatory reform and create a balance between beneficial federal regulations and a thriving job market."
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EPA to Propose Reporting Rule for Natural Gas Plants
Oct 27, 2015 | E&E Greenwire
By Amanda Reilly
U.S. EPA plans to propose a regulation requiring natural gas processing plants to report releases of toxic chemicals to the air, water and soil, the agency told environmentalists in a letter released today.
Gas facilities would be required to report releases under the Toxics Release Inventory, EPA said. But the agency rejected requests by environmentalists to require reporting at wells, compressor stations, pipelines and small facilities with fewer than 10 employees.
The Environmental Integrity Project, which released EPA's Oct. 22 letter, applauded the agency's decision.
"The oil and gas industry releases an enormous amount of toxic pollutants every year, second only to power plants in emissions," said Adam Kron, an attorney for the group. "With this decision, EPA is taking an important step in the right direction."
Through the Toxics Release Inventory, industrial facilities are required to report data on toxic chemicals released each year or managed through recycling and treatment. EPA collects the data and releases an annual report on emission trends.
Large manufacturing, metal mining, electric power generation, chemical manufacturing and hazardous waste treatment facilities are all required to report under the program.
Environmentalists have long urged EPA to extend the reporting requirements to oil and gas operations.
The Environmental Integrity Project was among almost 20 groups that petitioned in 2012 to have EPA add the oil and gas industry to the inventory. In January, the groups filed a lawsuit in the U.S. District Court for the District of Columbia over EPA's failure to respond to the petition.
The letter represents EPA's formal response to the 2012 petition.
EPA Administrator Gina McCarthy told the groups that the agency determined through an analysis of chemical data, plant operations and reporting thresholds that natural gas processing facilities likely meet the criteria to be included in the program.
"The addition of natural gas processing facilities to TRI would meaningfully increase the information available to the public," McCarthy wrote, "and further the purposes" of the Emergency Planning and Community Right-to-Know Act.
According to EPA, gas processing facilities manufacture, possess or use 25 chemicals for which reporting is required through the Toxics Release Inventory. Among those pollutants are xylenes, formaldehyde and benzene, all of which are linked to public health problems.
There are about 520 natural gas processing facilities in the United States; EPA says more than half would meet TRI reporting thresholds.
EPA didn't give a timeline but said it would propose a rulemaking to add natural gas processing plants to the inventory.
"EPA's decision today will help hold this industry accountable," said Aaron Mintzes, policy advocate for Earthworks. "While we prefer EPA require reporting industrywide, this step will provide the public a better understanding of the toxic contaminants in their communities."
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EPA May Require Gas Processors to Detail Toxic Emissions
Oct 27, 2015 | Politico Pro
By Elana Schor
EPA notified environmental groups on Monday that it "may be appropriate" to begin requiring natural gas processing plants to submit annual reports to an online database of industrial toxic emissions releases.
EPA's decision came in response to a January petition filed by the Environmental Integrity Project and 16 other groups calling for the agency to add the oil and gas industry to its Toxics Release Inventory. According to the agency, "more than half of the natural gas processing plants in the U.S." would meet the minimum standard required to begin submitting data to the inventory.
But the agency declined to add other portions of the industry to its annual emissions reporting mandate, noting that "EPA is currently engaging in a number of activities, including rulemaking, research, guidance, and other outreach, targeting the oil and gas extraction sector."
Nonetheless, greens were pleased with the move. "With this decision, EPA is taking an important step in the right direction," Adam Kron, an attorney with EIP, said in a statement.
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Lawmakers Introduce Resolutions to Overturn EPA Climate Rules
Oct 27, 2015 | Politico Pro
By Andrew Restuccia
Senate Majority Leader Mitch McConnell and Sen. Shelley Moore Capito introduced disapproval resolutions today aimed at overturning EPA's climate regulations for power plants under the Congressional Review Act.
McConnell and Democratic Sen. Joe Manchin introduced a resolution ( S.J. Res. 23.) with 46 other co-sponsors to kill EPA's final climate regulation for new and modified power plants. Capito and Democratic Sen. Heidi Heitkamp introduced a resolution (S.J. Res. 24) with 47 other co-sponsors to overturn EPA's final climate rule for existing power plants. Heitkamp is the only co-sponsor aiming to block the existing-plant rule who is not signed onto McConnell's resolution to block the new-plant rule.
Both resolutions are just short of the simple majority required for passage under the Congressional Review Act.
Retiring Rep. Ed Whitfield introduced two similar resolutions in the House on Monday: one (H.J. Res. 72) for existing plants and another (H.J. Res. 71) for new and modified plants. He had no cosponsors, but the resolutions would likely clear the lower chamber with ease.
Even if the resolutions do pass, they would be vetoed by President Barack Obama and lawmakers do not have enough support to overturn the veto.
McConnell's office said he plans to hold votes on the resolutions "later this year." The votes are expected to come shortly before or during the Paris climate change summit, which is scheduled for Nov. 30 to Dec. 11.
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New Shale Gas Boom Could Be on the Way
Oct 27, 2015 | Wall Street Journal
By Nicole Friedman
Natural gas prices plunged Monday to their lowest level in more than three years on concerns that the market will remain oversupplied this winter.
Adding to investors’ fears, some companies are hinting at a new production boom.
( To receive Moneybeat’s morning newsletter, click here: http://on.wsj.com/MoneyBeatUSSignup)
Most of the growth in natural-gas production in recent years has been in the Marcellus Shale in Pennsylvania and West Virginia. Some industry experts say the Utica Shale, which stretches into Ohio and also lies underneath the Marcellus in some places, could be just as bountiful.
EQT Corp.EQT -3.78% said in an earnings call Thursday that it has drilled wells in the Utica with very high production rates. EQT’s shares fell more than 7% that day.
“A year ago, it would have been hard to imagine a more prolific play than the Marcellus,” said David Porges, EQT chief executive, on the call. “However, if the deep Utica works, it is likely to be larger than the Marcellus over time.”
This comes on top of already-booming production. Total output rose to a record of 74.9 billion cubic feet per day in September, according to the latest Energy Information Administration estimate.
Deutsche Bank saDBK.XE -0.49%id in a note Monday it expects production from six companies focused on Northeast natural-gas production to exceed expectations for the third straight quarter.
Investors have been adding to their bearish bets on natural-gas prices. As of Oct. 20, money managers including hedge funds held one of the largest net bets on record that natural-gas prices would fall, according to the Commodity Futures Trading Commission.
To be sure, some analysts expect natural-gas production to decline in the coming months, as producers drill fewer new wells. The number of rigs drilling for natural gas in the U.S. has dropped 42% in the past year, according to oilfield-services firm Baker Hughes Inc.BHI -0.46% In addition, oil production has started to decline, which could limit the amount of natural gas extracted from oil wells.
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Asset Sell-Off in Shale Patches Could Mean Return of Smaller Investors
Oct 27, 2015 | E&E Energywire
By Nathanial Gronewold
The collapse of oil prices is expected to open up opportunities for smaller investors to return to a space they were crowded out of during the shale oil boom.
Signs are emerging that market players are mobilizing for the beginning of a more sustained sell-off of oil companies, assets, equipment and materials as crude prices stay low. Ratings agencies continue to report more downgrades and defaults, and bankers see the pace of bankruptcies accelerating.
It's taken a while.
Industry experts say the number of bankruptcies so far this year has numbered 18, a response to the halving of oil prices. Still, that number hasn't yet matched the 50 or so oil companies brought down as a result of the global financial crisis.
Michael Joy, a partner at BakerHostetler, a law firm involved directly in several oil industry bankruptcies, sees opportunities coming for smaller capitalized companies and so-called mom-and-pop oil businesses that are sometimes based only on a handful of wells or low-producing assets. Many of those companies left the shale patches when it turned out the costs of developing oil wells favored larger operators.
Now the tide is shifting in the other direction.
"It is an opportunity for smaller players to step up, buy an operating field, buy a group of wells, buy assets that company would have frankly simply held onto over the last couple of years even if they weren't planning to do much with them," Joy explained.
He sees the forthcoming "re-emergence of the small onshore domestic player."
In a wide-ranging interview of how the next chapter in the oil price bust will likely play out, Joy emphasized the positive, citing his past experiences. He recalled one case where all the assets of one defunct oil company were sold at auction at the pennies-on-the-dollar price of $18 million, split between two companies. That wasn't good for the bankrupt company's investors, but it was a wonderful business opportunity for those two purchasers, so long as they had the resources to sit on the assets and wait until the crude price recovers enough to make them profitable.
"It is a great time to start an oil company," Joy declared. "We've been talking a lot about the doom and gloom, but the reality is there always has to be someone on the other side of a transaction."Restless bankers
Those smaller investors will have competition, but Joy sees them in a great position to grab hold of opportunities that larger companies are likely to ignore.
Crude oil fell lower in value in trading yesterday. Industry financiers say distraught firms are running out of lifelines, in the form of extended credit and rescheduled payments that banks have been generous with in an effort to buy time in case the per-barrel prices turn around. That's unlikely to happen.
Private equity and hedge funds are raising cash to purchase distressed assets. Movement in the bond markets is also indicative of expectations that many companies are in worse shape than they are letting on and are about to go bust. Some companies have lost so much faith from the investment community that their listings on stock exchanges are in jeopardy.
The industry is also in the middle of having creditors redetermine the value of companies, basing the calculations on asset value and the diminished value of their oil reserves following the price collapse.
Generous lenders, yearlong hedges on price, and mass sell-offs of assets to raise cash have kept consolidation in the industry to a minimum this far, save for the pending Halliburton-Baker Hughes and Schlumberger-Cameron mergers. Insiders have also reported that sellers and buyers are having difficulty agreeing on a fair price for distressed assets.
"Paucity of quality investment opportunities, combined with uncertainty and lack of confidence in forward commodity price expectations, results in few deals being consummated," said analysts at the investment bank Wilcox, Swartzwelder & Co. in a status report on the state of mergers and acquisitions (M&A) in the oil sector.
Joy thinks that's about to change. He said signs are clear that a long-overdue shakeup in the industry is coming. He and others don't see it as a forthcoming wave of M&A activity but rather a drawn-out process where buyers in the coming buyers' market can wait patiently to find the best opportunities and best deals, even if oil field assets being bought up are relatively small.
"I don't think this is going to be a one- or two-quarter event. It's going to take probably, in my estimation, a year to two years for this to clear the market," Joy predicted. "You're going to start to see an increase in the number of companies going into bankruptcy. You're already beginning to see that."
Firms that have already filed for bankruptcy protections include Black Elk Energy Offshore Operations LLC, Samson Resources Corp., Dune Energy Inc., American Eagle Energy Corp. and more.
Several publicly traded exploration and production companies will be posting third-quarter earnings this week and on into early November.
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Southern Kansas Sees Sudden Spike in Earthquakes
Oct 27, 2015 | Washington Post
By Ryan Schuessler
A sudden spike of earthquakes in southern Kansas is raising eyebrows in the region, where there have been more earthquakes in the past two weeks than there were in the years between 1990 and 2013.
As of Oct. 26, there have been 52 earthquakes in Kansas since Oct. 15, most of a magnitude around 2.0 or 3.0. According to the Kansas Geological Survey, there were just 19 earthquakes in the state between 1990 and 2010. There were no recorded earthquakes in 2011 or 2012. The number of earthquakes in the state jumped from four in 2013 to 817 in 2014, according to the U.S. Geological Survey.
“In a typical year prior to 2013, we might have picked up one, two, three earthquakes,” said Rex Buchanan, interim director of the Kansas Geological Survey at the University of Kansas. “Obviously we’ve outdone that dramatically.”
All of the state’s earthquakes over the past stretch occurred in just two southern counties that run along the Kansas-Oklahoma border, raising questions about the quakes’ ties to hydraulic fracking in the region – although industry disputes the connection.
During the fracking process, a mixture of saltwater, sand and chemicals is blasted into the ground, breaking up rock formations to release oil and natural gas.
In 2000, there were just under 2,000 permitted wells in Kansas. By 2014, that number had grown to more than 7,000.
Fracking has been going on in Kansas since the 1940s, but the recent innovation of horizontal drilling – instead of vertical – requires more water. The wastewater is injected into disposal wells – “not exactly where it came from,” Buchanan said. He added that the earthquakes are likely being caused by the wastewater disposal wells, not the act of drilling itself.
“In Kansas, you produce a lot more saltwater than you do oil in the oil and gas production process,” Buchanan said. “We’re dealing with much greater volumes of water than ten years ago.”
A 2015 study from Stanford researchers came to similar conclusions. The study found that a spike in earthquakes in Oklahoma was caused by wastewater disposal wells, not drilling.
After a comparatively quiet summer, seismic events have picked back up in south-central Kansas. The largest quake over the past weeks occurred near the town of Caldwell in Sumner County where, on Oct. 27, there was a 3.6 magnitude earthquake.
In that same time period, there were just 11 earthquakes in the bordering counties to the south in Oklahoma.
Buchanan, who served on an earthquake task force appointed by Kansas Governor Sam Brownback, testified to state legislative committees earlier this year about fracking and earthquakes. In March, the Kansas Corporation Commission, the state agency that regulates the oil and gas industry, ordered hydraulic fracking operators in Harper and Sumner counties to reduce the amount of wastewater injected into disposal wells.
It is too early to tell if that move has any impact on the frequency of the earthquakes, Buchanan said.
“Linking a specific disposal well to a specific earthquake is very difficult,” Buchanan said. “Certainly we’ve got big disposal wells on our side of the border, and there are big disposal wells on the Oklahoma side. Finding how much influence with what’s happening in Oklahoma in terms of seismicity in Kansas, and vise versa, has been a challenge.”
Indeed, one representative of the industry challenged the proposed linkage.
“The likelihood that induced seismic events will occur in properly permitted and operated [disposal wells] is very small,” Edward Cross, president of the Kansas Independent Oil & Gas Association, said in an e-mailed statement. “Too often, the mere presence of nearby oil and gas wells or [disposal] wells results in allegations that they are the source.”
Cross added that seismic activity fluctuates naturally, and that it is too soon to tell if there is a relationship between wastewater disposal and seismic activity.
Tiffany Hartson, city clerk for the town of Harper, said she hadn’t felt any of the earthquakes this week, but that residents have noticed the increase over the past few years.
“A lot of people went out and got earthquake insurance they didn’t have before,” Hartson said. “It’s not really the topic of conversation. I don’t know if it’s because we’ve become so used to it, or what.”
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Budget Deal Would Draw Down Oil Reserves
Oct 27, 2015 | The Hill - E2 Wire
By Timothy Cama
The federal government would sell millions of barrels from its massive oil stockpile under the budget deal struck by the White House and congressional leaders.
The sale of 58 million barrels out of the 695 million barrels in the Strategic Petroleum Reserve (SPR) could anger lawmakers of both parties who have defended the stockpile and rejected attempts to sell it off for purposes unrelated to energy.
The White House, in encouraging lawmakers to vote for the budget deal reached Monday, called it “a responsible agreement that is paid for in a balanced way.” The oil sales would happen between 2018 and 2023.
The money would go toward an increase of $80 billion in the federal budget over the next two years, just under 1 percent growth.
Amid proposals to use the oil reserve to pay for a highway bill and new healthcare research, Sen. Lisa Murkowski (R-Alaska), chairwoman of the Senate Energy and Natural Resources Committee, led a charge this summer to protect the reserve and label any sales not related to energy security as irresponsible.
“Selling off millions of barrels of America’s strategic oil reserve at a time when spare capacity is low and the global threat environment is heightened would be an error of historic proportions,” she said at the time, in response to a highway bill proposal.
“Such a sale would be the largest in the SPR’s history — greater than all previous emergency drawdowns combined — and would undermine our nation’s energy security for a temporary gain. It would be like cashing in our home insurance policy to pay for repaving the driveway."
The Obama administration has generally agreed.
Energy Secretary Ernest Moniz, whose agency oversees the research, told senators earlier this month that the stockpile is too valuable to sell off.
“The SPR remains an extremely powerful and valuable energy security tool,” he said.
The low global price of oil has also concerned lawmakers who say that the federal government would be better off waiting for prices to rise. The West Texas Intermediate benchmark crude oil was at $42.80 Tuesday morning, less than half its price a year and a half ago.
The oil reserve is housed in four leased areas near the Gulf Coast.
The budget deal also proposes selling wireless spectrum to pay for the spending increases.
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