Preview Newsletter
PM ACC 9/9/2016
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(ACC Mentioned) INSIGHT: 2020 EU Car Emissions Targets Will Increase Plastics Adoption
Sep 9, 2016 | ICIS
By Mark Victory
French car maker Renault told ICIS on Friday that a recent news story suggesting diesel engines will disappear from most of its European vehicles because of the cost of meeting tighter emissions standards was “nothing new”. -
(ACC Mentioned) A CEO Reflects on the 15th Anniversary of 9/11
Sep 9, 2016 | Memphis Business Journal
By Stan Silverman
Sunday marks the 15th anniversary of 9/11, the day of the worst terrorist attack on our country. Each year I write and share my reflections on that day. -
EPA Releases Additional Q&As on New TSCA
Sep 9, 2016 | National Law Review
By Lynn L. Bergeson
On September 2, 2016, the U.S. Environmental Protection Agency (EPA) released additional guidance on its implementation of the new Toxic Substances Control Act (TSCA) in the form of additional questions and answers (Q&A). -
G.E. Spent Years Cleaning Up the Hudson. Was It Enough?
Sep 9, 2016 | New York Times
By Jesse McKinley
Ask Matthew Traver, the mayor of this village north of Albany, his opinion of General Electric and its two closed factories that spilled PCBs into the Hudson River for decades, and his words could not be clearer. -
One Texas Field Could Be Turning Around U.S. Production
Sep 9, 2016 | E&E Energywire
By Nathanial Gronewold
Signs of recovery in the oil market are being clouded by predictions that the fall in U.S. crude production is approaching an end. -
Another Gusher in Cowboyistan
Sep 8, 2016 | Wall Street Journal
By Editorial Board
Governments draft white papers and formulate plans on future energy production. U.S. frackers produce energy. And a new discovery in West Texas might do more to improve the environment than a year’s worth of climate conferences. -
Commentary: Knowledge Has Helped Industry Drill Safely in Arctic for Decades
Sep 9, 2016 | Fuel Fix
By Nikki Martin
As environmental groups continue to try to find ways to ban fossil fuel development, they often point to pictures of snow-covered tundras to make the point that we “just don’t know enough” about the Arctic environment to be able to operate there safely. -
Wilderness Society Misses the Point on Arctic Drilling
Sep 9, 2016 | The Hill - Congress Blog
By Kara Moriarty
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North Dakota Governor Activates National Guard to Keep Peace at Pipeline Protest
Sep 9, 2016 | Natural Gas Intelligence
By Richard Nemec
North Dakota Gov. Jack Dalrymple on Thursday activated part of the state National Guard to help back-up civilian law enforcement dealing with a protest in the south-central part of the state along the construction route for the Dakota Access oil pipeline. -
U.S. Intelligence Chiefs Push Back at Hackers, Russian Aggression
Sep 9, 2016 | E&E Energywire
By Blake Sobczak
Top U.S. intelligence officials this week warned of rising hostilities in cyberspace, while carefully avoiding linking Russia to hacking attacks on the Democratic Party. -
(ACC Mentioned) Building Green with Energy-Efficient Materials: Insulation
Sep 9, 2016 | USGBC (In The Energy Collective)
By Kathryn St. John
Did you know that the energy lost through a building’s walls, roofs and windows is the largest single waste of energy in most buildings—especially in hot summer months? -
States, Utilities Fault Stringency of EPA Guidance to Curb Regional Haze
Sep 9, 2016 | Inside EPA
By Stuart Parker
States and power industry groups are warning that EPA's draft guidance for how states should reduce haze-forming emissions as they craft compliance plans for the agency's regional haze programs is too stringent, saying the Clean Air Act requires EPA... -
Utah, Energy Groups Challenge EPA Decision Imposing Haze Plan on State
Sep 9, 2016 | Inside EPA
By Stuart Parker
Utah and energy groups are suing EPA in the U.S. Court of Appeals for the 10th Circuit over the agency's decision to partially disapprove the state's plan for reducing regional haze and replace it with a federal plan, which EPA imposed on Utah after finding...
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(ACC Mentioned) INSIGHT: 2020 EU Car Emissions Targets Will Increase Plastics Adoption
Sep 9, 2016 | ICIS
By Mark Victory
French car maker Renault told ICIS on Friday that a recent news story suggesting diesel engines will disappear from most of its European vehicles because of the cost of meeting tighter emissions standards was “nothing new”. Nevertheless, the report reignites the discussion around the future of diesel cars under new EU-wide emissions targets, and the opportunities this creates for automotive plastics markets.
“With regards to the recent Reuters report there is nothing new, Renault has always said that it will adapt its offer according to the local market demand,” said Chloe Yemm, Groupe Renault spokesperson.Renault has been a leading manufacturer of and a heavy investor in diesel technology. “Diesel makes up around 70 per cent of Renault's sales in the UK today.” Yemm added.
Adoption of diesel cars in Europe was pushed heavily in the wake of the Kyoto treaty in 1997 – which introduced measures to reduce carbon emissions by 25% over a 10 year period – because diesel cars emit 15% less carbon than petrol. Tax breaks on diesel cars in the intervening years and fuel efficiency encouraged consumer take-up.
Nevertheless, diesel cars emit around four times the nitrogen oxide (NO2) of their petrol counterpart and in 2012 the World Health Organisation re-classified diesel engine exhaust from “probably carcinogenic” to “carcinogenic,” and in recent years diesel has been facing a backlash culminating in the VW emissions scandal in 2015.
New EU-wide emissions standards come into force in 2020-2021. By 2021, car manufacturers will need to achieve a fleet average for new vehicles of 95 grams of CO2 per kilometre - representing fuel consumption of 4.1 litres/100km for petrol vehicles and 3.6 litres/100km for diesel, with limits set on a value curve according to vehicle mass, with only the fleet average regulated. The new standards will begin to be phased in by 2020.
There is a strong financial incentive for auto manufacturers to meet these standards. From 2019 any fleet average excess over emissions standards will be charged at €95/gram of emissions excess for each of its registered vehicles.
Prior to the VW emissions scandal, diesel had been seen as a help to auto manufacturers seeking to meet these targets because of its lower CO2 emissions.
Nevertheless, following the scandal new "real world" testing has been introduced which leaves the majority of current diesel models struggling to meet nitrous oxide (NO2) emissions limits without expensive redesign, meaning that they are no longer a cost-effective way to achieve fleet averages.
This is something that ICIS predicted would be one of the major repercussions of the VW scandal in its white paper in the immediate aftermath, and it now appears to be coming to fruition.
With a limited timeframe to meet emissions standards and a major route to achieving this now effectively blocked by the new testing environment, increased lightweighting of vehicles is perhaps the easiest and most cost-effective way of meeting these targets being as it is an already ongoing trend in the market.
Metal prices have strongly rallied in recent months – in part because of investor flight to safetyin the wake of the UKs vote to exit the EU. Meanwhile the ICIS Basket of Automotive Petrochemicals (IBAP) – a weighted indicator of the cost of petrochemical raw materials used in the production of automotives – is currently €15/tonne of total vehicle weight (TTVW) below its long-term average of €292.26/TTVW.
This places plastic markets in a strong position to take advantage of any additional lightweighting initiatives as opposed to alternatives such as aluminium-based alloys.
In particular, commodity plastics such as polypropylene (PP), polyvinyl chloride (PVC) and nylon – which are already heavily used in the automotive industry – stand to benefit most.
Newer materials such as carbon fibre are unlikely to see much of a benefit from emissions standard-linked lighweighting because, despite underlying growth of around 25% per annum (according to market estimates) in the carbon fibre market, they are cost prohibitive.
To see why plastics are an exciting metal replacement material for automotive manufacturers, the best example is provided in the American Chemistry Council’s annually published Plastics and Polymer Composites in Light Vehicles report, the latest of which came out in October 2015.
According to that report, automotive plastic materials form approximately 50% of a lightweight vehicle’s volume, but only about 8% of the vehicle’s weight.
Diesel cars had been under fire before the VW scandal. In early 2015, the City of Paris said that in order to improve air quality it was aiming to have diesel cars out of the city by 2020.
Nevertheless, the higher emissions targets and "real world" testing have likely precipitated the shift away from diesel and the limited time frame to provide an alternative will mean auto manufacturers will probably turn to a proven route –such as lightweighting – with proven materials – such as PP, PVC, and nylon – rather than face not being able to engineer cheaper ways to manufacturer material such as carbon fibre, or risk expensive research and development programmes over-running or failing to produce workable solution.
When a deadline looms, you stick to what you know, and – as the ACC figures show – what automotive companies know is how to replace metal with plastic.
The automotive industry is a major global consumer of petrochemicals which contributes more than a third of the raw material costs of an average vehicle. ICIS tracks the movement of petrochemical raw material costs in auto production both globally and regionally with the weighted ICIS Basket of Automotive Petrochemicals (IBAP).
Additional reporting by Truong Mellor
http://www.icis.com/resources/news/2016/09/09/10032903/insight-2020-eu-car-emissions-targets-will-increase-plastics-adoption/
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(ACC Mentioned) A CEO Reflects on the 15th Anniversary of 9/11
Sep 9, 2016 | Memphis Business Journal
By Stan Silverman
Sunday marks the 15th anniversary of 9/11, the day of the worst terrorist attack on our country. Each year I write and share my reflections on that day.
Two hijacked aircraft flown by terrorists destroyed both World Trade Center towers. A third aircraft caused significant damage to the Pentagon. A fourth aircraft was brought down by courageous passengers in a field in central Pennsylvania before it could reach its target, possibly the Capitol Building.
The war on terrorism has certainly changed since 9/11. Those who want to harm us no longer highjack aircraft and use them as weapons as members of the terrorist group al-Qaida did on Sept. 11, 2001. ISIS is the new foe in the war against terrorism, on the ground in Syria and Iraq as well as in our own cities, where individuals and small cells of terrorists attack to create fear and havoc.
No one can ever forget where they were at 8:45 am on 9/11. As then CEO of PQ Corp., I reflect on how that day impacted me and my employees.
I was at the Greenbrier Hotel in White Sulphur Springs, West Virginia attending a board meeting of the American Chemistry Council. After a staffer entered the meeting and handed a note to the chairman, his face turned white as he announced that a plane had hit the North Tower of the World Trade Center.
We all gathered around a TV just outside the meeting room and watched with horror as a second plane hit the South Tower. It was then immediately evident that the United States was under attack.
As then CEO of PQ Corporation, my first thought was for the safety of our employees and those traveling away from home. Our company operated in 19 countries, and it was not uncommon for many of our employees to be traveling within their respective countries and between countries around the world.
I called my executive assistant and asked that she learn if any of our employees were on those four flights or were visitors to the World Trade Center towers or the Pentagon that day. I also asked for a list of employees who were on trips to or from the U.S., as well as employees on flights scheduled to pass over the continental U.S. I knew that it would be days before these employees could reach their business destination or home.
I wanted to return to corporate headquarters as soon as possible. Since all flights were grounded, my wife and I drove our rental car seven hours to Valley Forge. We stopped twice — once for gas and once to get something to eat.
The genuine concern and connection offered by the people who reached out to us at both stops was nothing like we have ever experienced. They wanted to know where we had started our trip and where we were heading. They provided advice on the route we should take, and long-haul truckers made recommendations on the best places to eat along the way. I thought that this is a small slice of America at its best — strangers showing concern for travelers passing through their communities.
When I arrived home that night, I learned that all PQ employees were safe. I received a report indicating the location of those employees in travel mode. Our travel department had already arranged hotel rooms for those who could not arrive at their destination.
Rental cars were reserved for those who could drive home. Two of our plant operations managers drove from Los Angeles to Chicago, where one lived, and the other continued on to Philadelphia. The administrative assistant of our purchasing manager was on her honeymoon in Europe. Our travel department was able to get her and her husband on a flight back to the U.S. a few days later.
What do I recall as the “best personal experience” of the horrible tragedy of 9/11 and the days that followed? It’s that we all pulled together as a nation and we had genuine concern for each other.
I recall the brave first responders in New York and Washington who saved countless lives at their own peril. I recall those first responders who made the ultimate sacrifice. I recall those brave passengers who resisted the hijackers over a field in Pennsylvania and prevented an additional catastrophe.
I recall the generosity of PQ employees who contributed funds to help the victims’ families. I recall attending the hockey season’s opening game of the Philadelphia Flyers in October, where there was not a dry eye in the house when our national anthem was sung.
I recall visiting the site of the World Trade Center a month after 9/11 to pay my respects, walking on hallowed ground. I will never forget these experiences.
Stan Silverman is the former president and CEO of PQ Corp. He also is founder and CEO of Silverman Leadership and is vice chairman of the board of trustees of Drexel University.
http://www.bizjournals.com/bizjournals/how-to/growth-strategies/2016/09/a-ceo-reflects-on-the-15th-anniversary-of-9-11.html
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EPA Releases Additional Q&As on New TSCA
Sep 9, 2016 | National Law Review
By Lynn L. Bergeson
On September 2, 2016, the U.S. Environmental Protection Agency (EPA) released additional guidance on its implementation of the new Toxic Substances Control Act (TSCA) in the form of additional questions and answers (Q&A). EPA added a series of Q&As of particular relevance given the fast-approaching TSCA Section 6(h) deadline of September 19, 2016, for industry to request a risk evaluation for persistent, bioaccumulative, and toxic (PBT) chemicals listed in the 2014 TSCA Work Plan. Section 6(h) outlines a procedure requiring “expedited” regulatory action that is intended to reduce exposures to these chemicals to the “extent practicable.” As written, chemicals subject to Section 6(h) will not undergo a risk evaluation as with other high-priority chemicals. Instead, EPA will proceed immediately to assess and identify appropriate risk management actions for these chemicals that EPA believes achieves the goal of reduced exposure to the “extent practicable.” EPA is required under new TSCA to issue the proposed risk management rules by June 2019, three years from enactment of new TSCA, and issue the final rules six months thereafter.
As we noted in an earlier blog, this deadline poses ups and downs. On the one hand, absent a risk evaluation, fast tracking the process necessarily invites worst-case assumptions and a high degree of probability that regulatory actions will be extensive. On the other hand, in the absence of a defined risk evaluation process and a yet-to-be-defined fee assessment process or schedule, volunteers may be few and far between. Understandably, a potential requester can be expected to want to know what the risk evaluation cost will be before making a commitment to pay that amount. Even with these uncertainties, under some circumstances the election may be worth considering and stakeholders are urged to consider the risks and benefits quickly, asSeptember 19 is only days away.
EPA’s new Q&As pertinent to PBTs relate to:
Which PBTs are covered;
The elements to be included in the request;
The scope of the request for an assessment;
Fee assessment; and
Whether withdrawal of the request is allowed.
Interestingly, EPA’s Q&As address some, but not all, questions. Careful review of the questions and EPA’s answers is advised. In short:
There are seven substances on the Work Plan list that are PBTs;
There is no formal request form; all that is required is the substance and company identity, along with the contact information of the requesting official;
Entities requesting the assessment are disallowed from defining the scope and EPA intends to “evaluate the chemical substance in accordance with TSCA section 6(b)” regardless of a more narrowly defined set of uses of interest to the submitter;
The submitter will be expected to pay for the full assessment; and
The request is irrevocable and cannot be withdrawn.
While EPA’s interpretation comes as no surprise, reasonable people are likely to disagree as to whether the law must be read as EPA reads it. EPA may find more willing sponsors if, for example, the fee is limited to cover the scope of nominated uses. EPA could evaluate a broader scope, but the additional expense would not be entirely borne by the nominating company.
http://www.natlawreview.com/article/epa-releases-additional-qas-new-tsca
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G.E. Spent Years Cleaning Up the Hudson. Was It Enough?
Sep 9, 2016 | New York Times
By Jesse McKinley
Ask Matthew Traver, the mayor of this village north of Albany, his opinion of General Electric and its two closed factories that spilled PCBs into the Hudson River for decades, and his words could not be clearer.
“G.E.,” he said, “has done a lot of damage to this community.”
But ask Mr. Traver if he and other residents believe that the industrial giant should continue dredging the Hudson to remove more of the chemical poison — as G.E. did for years before finishing last year — and his answer is equally firm, if surprising.
“I’d say the general consensus in this community is, ‘You’ve dredged, you’re done,’” he said. “It’s over.”
That sense of resignation, shared by some others on the Upper Hudson, is the direct opposite of a position taken recently by the New York State Department of Environmental Conservation, which is pushing the federal government to closely consider the issue of whether G.E.’s cleanup efforts have been enough.
The federal Environmental Protection Agency has said that the company fulfilled its promises under a 2005 order, resulting in the removal of nearly three million cubic yards of contaminated sediment. But Basil Seggos, the commissioner of the Department of Environmental Conservation, in a recent letter to the E.P.A.’s top official in New York, challenged the federal remedy, saying “unacceptably high levels of PCB-contaminated sediment remain in large portions of the Upper Hudson.”
“The work is not done,” Mr. Seggos said in the letter to Judith Enck, the agency’s regional administrator who oversees New York.
The state believes that at least 136 acres of underwater sediment in the Upper Hudson — stretching north from Albany — harbor “unacceptably high” levels of PCBs, or the synthetic chemical polychlorinated biphenyl, which was used to make transformers, capacitors and other electrical products. The state bolstered its claim by pointing to an analysis by the National Oceanic and Atmospheric Administration showing that the recovery of fish in the Lower Hudson was not as robust as hoped.Continue reading the main story
The Environmental Protection Agency, responding to the state’s concerns, noted that it disagreed with the findings on fish recovery and questioned NOAA’s methods, which the agency said took place at a single sampling station near Albany shortly after the completion of dredging. “It is not possible for the fish to recover immediately,” the agency said.
The cleanup of the Upper Hudson paid for by G.E. was prescribed to remove over 2.5 million cubic yards of sediment and encompass a roughly 40-mile stretch of the river, from the Troy Dam to Fort Edward. Its progress is assessed every five years.
But Mr. Seggos, in an interview, said federal officials had allowed G.E. to declare mission accomplished too soon. “Both the amount of sediment and the fish are suggesting that the initial goals of the remedy have not been, and may not be met, for decades,” he said.
The state’s move has been cheered by environmentalists, who have long lobbied for more expansive solutions to a pollutant whose toxicity was first suspected in the 1930s.
“It’s been clear that this was a partial cleanup,” said Ned Sullivan, the president of Scenic Hudson, a nonprofit group based in Poughkeepsie. “New York State stood up and said, ‘We do not believe that what has been conducted to date is sufficient.’” Mr. Sullivan also noted that dozens of communities on the river had shown support for additional measures.
The questions around the dredging also come at an awkward moment in G.E.’s history on the Upper Hudson, which dates to the end of World War II. In January, the company closed its plant in Fort Edward, having moved 200 jobs to Florida, at about the same time that it said it would move its headquarters from Connecticut to Boston, despite an active effort by Gov. Andrew M. Cuomo to woo G.E. to New York.
In May, the company also began demolishing its nearby Hudson Falls plant, an Eisenhower-era relic that sat on the edge of the Hudson, its soil so polluted with PCBs that engineers dug tunnels 200 feet into bedrock to capture minute amounts of poison seeping into the river.
For its part, the company hailed what a spokeswoman called its “world-class engineering work” and the $1.6 billion it spent on dredging efforts. “The PCB levels in the Upper Hudson have already shown significant declines,” said the spokeswoman, Deirdre Latour, adding that the E.P.A. had already agreed that the company had met its obligations under the agreement, and that “ no additional dredging was necessary.”
And while the E.P.A. is still conducting a review of the project, due next spring, “We’re confident that assessment will show the dredging project achieved the agency’s goals of protecting public health and the environment,” Ms. Latour said.
The long-running campaign to restore the Hudson, one of America’s signature waterways, has yielded cleaner waters. Still, the result of the five-year review could be used to compel G.E. to do more dredging.
But regardless of the outcome of that review, due in April, the company has left behind a deep vein of anger and pain as a result of its plants’ closings and their history of pollution.
“They contaminated it, cleaned some of it up,” Mayor Traver, of Fort Edward, said. “And left us high and dry.”
The state Department of Environmental Conservation cites maps showing scores of spots along the Upper Hudson where elevated levels of PCBs still sit in the silt below the water. Mr. Seggos, the agency’s commissioner, believes additional cleanup could take as little as two years, though it would be expensive.
Cassie Wilusz and her mother, Gail Taras, who live in Schuylerville, a river town with a smattering of upscale businesses, said that if the state believed more dredging was needed, it should be done. “At the end of the day, I want my daughter to be 40 and be able to go in the water,” said Ms. Wilusz, 35, whose daughter is 6.
The state’s move has been cheered by environmentalists, who have long lobbied for more expansive solutions to a pollutant whose toxicity was first suspected in the 1930s.
“It’s been clear that this was a partial cleanup,” said Ned Sullivan, the president of Scenic Hudson, a nonprofit group based in Poughkeepsie. “New York State stood up and said, ‘We do not believe that what has been conducted to date is sufficient.’” Mr. Sullivan also noted that dozens of communities on the river had shown support for additional measures.
The questions around the dredging also come at an awkward moment in G.E.’s history on the Upper Hudson, which dates to the end of World War II. In January, the company closed its plant in Fort Edward, having moved 200 jobs to Florida, at about the same time that it said it would move its headquarters from Connecticut to Boston, despite an active effort by Gov. Andrew M. Cuomo to woo G.E. to New York.
In May, the company also began demolishing its nearby Hudson Falls plant, an Eisenhower-era relic that sat on the edge of the Hudson, its soil so polluted with PCBs that engineers dug tunnels 200 feet into bedrock to capture minute amounts of poison seeping into the river.
For its part, the company hailed what a spokeswoman called its “world-class engineering work” and the $1.6 billion it spent on dredging efforts. “The PCB levels in the Upper Hudson have already shown significant declines,” said the spokeswoman, Deirdre Latour, adding that the E.P.A. had already agreed that the company had met its obligations under the agreement, and that “ no additional dredging was necessary.”
And while the E.P.A. is still conducting a review of the project, due next spring, “We’re confident that assessment will show the dredging project achieved the agency’s goals of protecting public health and the environment,” Ms. Latour said.
The long-running campaign to restore the Hudson, one of America’s signature waterways, has yielded cleaner waters. Still, the result of the five-year review could be used to compel G.E. to do more dredging.
But regardless of the outcome of that review, due in April, the company has left behind a deep vein of anger and pain as a result of its plants’ closings and their history of pollution.
“They contaminated it, cleaned some of it up,” Mayor Traver, of Fort Edward, said. “And left us high and dry.”
The state Department of Environmental Conservation cites maps showing scores of spots along the Upper Hudson where elevated levels of PCBs still sit in the silt below the water. Mr. Seggos, the agency’s commissioner, believes additional cleanup could take as little as two years, though it would be expensive.
Cassie Wilusz and her mother, Gail Taras, who live in Schuylerville, a river town with a smattering of upscale businesses, said that if the state believed more dredging was needed, it should be done. “At the end of the day, I want my daughter to be 40 and be able to go in the water,” said Ms. Wilusz, 35, whose daughter is 6.
http://www.nytimes.com/2016/09/09/nyregion/general-electric-pcbs-hudson-river.html?rref=collection%2Fsectioncollection%2Fscience&action=click&contentCollection=science®ion=stream&module=stream_unit&version=latest&contentPlacement=2&pgtype=sectionfront
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One Texas Field Could Be Turning Around U.S. Production
Sep 9, 2016 | E&E Energywire
By Nathanial Gronewold
Signs of recovery in the oil market are being clouded by predictions that the fall in U.S. crude production is approaching an end.
Rising activity in Texas' Permian Basin, along with production from a large backlog of drilled but uncompleted wells, may cause U.S. oil output to end its steady decline by the end of this year, and could even bring about a reverse to growth, according to research by an industry consultancy.
Analysts at Rystad Energy say it's possible that U.S. production has already stopped falling, citing upward revisions to government production figures. Rystad analyst Artem Abramov said in an interview that the bottoming of the production decline curve stems not from rising offshore production, but rather unexpected growth in onshore oil output.
Abramov said his firm had expected companies actively tapping drilled but uncompleted wells were slowing the decline curve. But the unexpected race by many companies to capture value out of the Permian Basin caught observers off guard. This phenomenon is likely leading to a halt in the U.S. production decline curve underway, much sooner than initially expected.
"We were actually quite a bit surprised by how fast the drilling activity, basically the new wells, contributed in the Permian," Abramov explained.
The U.S. Energy Information Administration doesn't agree. Its latest forecast shows U.S. production continuing its fall, albeit slowly, out to 2017. It will be in the middle to later part of that year that the global supply and crude demand will come into closer balance, creating an environment more favorable to oil prices, EIA concludes (EnergyWire, Sept. 8).
Should data confirm that production has stopped falling in the United States, that may compel traders to drag oil prices lower if they think that the industry is ramping up again too quickly.
Some industry watchers in Houston are of two minds on these questions.
Yesterday, analysts at Wood Mackenzie hosted reporters here for a briefing on the near-term outlook for oil and refined fuels markets. The emerging picture suggests "we've got a rebalancing underway," said Ann-Louise Hittle.
Nevertheless, she said there is a possibility that data showing U.S. output no longer falling would compel markets to drag crude prices lower toward the end of this year. Wood Mackenzie is maintaining its call for a 2016 average price of around $45 per barrel. (International oil prices rallied yesterday and could be heading back to $50 per barrel.)
Supply draw ahead?
Still, Wood Mackenzie's analysts agree with EIA that 2017 will likely prove a pivotal turnaround year for the industry.
Data on oil in storage suggest draws on stockpiles may become more common than additions next year as demand perks up and the markets take crude from storage to make up for what is lacking in new upstream projects. By the second half of 2017, traders should notice "a large supply draw," Hittle said, encouraging a steady recovery in the oil price to $60 per barrel and above, good numbers for an industry now capable of making U.S. tight oil projects work at lower oil prices.
Of course, this all assumes there is no recession in the United States or globally, Hittle added.
Abramov sees November and December showing strong production results stemming from increased onshore activity. Figures confirm this will likely lead to another dip lower for oil prices. But such a move lower should be relatively short-lived, Hittle argued, since a two-year period of lower upstream investment will inevitably force refineries to cut into oil in storage as crude demand steadily rises.
Wood Mackenzie's team also stressed the importance of watching what the industry does in the Permian. That West Texas and southeastern New Mexico oil patch is quickly emerging as the center of the U.S. onshore shale and tight oil industry as the crude price steadily recovers (EnergyWire, July 5).
Recent merger and acquisition (M&A) activity centered on the Permian shows the industry is all too aware of this, said Wood Mackenzie energy industry expert Skip York.
"The Permian is the key player on how responsive tight oil is to that rising price environment," he said. "Twenty-five percent of all global M&A activity is happening in the Permian."
http://www.eenews.net/energywire/2016/09/09/stories/1060042541
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Sep 8, 2016 | Wall Street Journal
By Editorial Board
Governments draft white papers and formulate plans on future energy production. U.S. frackers produce energy. And a new discovery in West Texas might do more to improve the environment than a year’s worth of climate conferences.
In an area near the Davis Mountains that many experts concluded wasn’t worth fracking,Apache Corp. has found the equivalent of an estimated two billion barrels of oil, and possibly more.
We say “equivalent” because the field contains vast quantities of natural gas and oil. The Journal reports that some early wells are so prolific they can break even at a gas price of 10 cents per million British thermal units, compared to a recent $2.80. This suggests fat margins for Apache, but also continuing pressure on energy users to switch from coal to cleaner-burning gas. Even without the Obama-Clinton policy of throwing coal miners out of work, the market has been moving the U.S. to a new energy mix. Notice it’s not happening because politicians showered taxpayer funds on alternative energy sources, but because a company risked its own money and ignored conventional wisdom.
“This is a giant onion that is going to take us years to unveil and peel back,” Apache Chief Executive John Christmann IV says. “The industry dogma about this area, all the fundamental premises that most people had about it, were just wrong.” There’s a message here about the benefits of decentralized authority and the freedom to try ideas that seem crazy to others.
http://www.wsj.com/articles/another-gusher-in-cowboyistan-1473376949
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Commentary: Knowledge Has Helped Industry Drill Safely in Arctic for Decades
Sep 9, 2016 | Fuel Fix
By Nikki Martin
As environmental groups continue to try to find ways to ban fossil fuel development, they often point to pictures of snow-covered tundras to make the point that we “just don’t know enough” about the Arctic environment to be able to operate there safely. As a part of an industry that has pioneered technology to take pictures thousands of feet below the earth’s surface without drilling a single hole, it’s hard to agree with that assessment.
We know a lot more about the Arctic environment than activists claim, and this knowledge has helped the industry operate in the region safely and responsibly for many decades. As the Department of the Interior finalizes its 2017-2022 offshore leasing program, it should use this breadth of expertise to inform the drafting process – and allow Arctic oil and gas lease sales in the coming years.
The companies we represent provide industry with the understanding of the physical environment it needs to operate, including detailed, three-dimensional pictures of rock formations thousands of feet below the surface before a drill bit has even touched the ground. Those pictures allow petroleum engineers to predict where oil and gas resources are likely located, plan for potential hazards like shallow gas pockets and faults, select the equipment best suited to the conditions, and drill with the smallest footprint possible.
We have used this kind of technology all over the world – including in the Arctic, for over five decades now – so we know exactly what lies beneath those snow-covered tundras. And the potential is enormous. According to the U.S. Geological Survey, the American Arctic holds 34 billion barrels of oil equivalent of oil, about 15 years of U.S. net oil imports at 2015 levels, and another 60 barrel of oil equivalent of gas.
But what we know doesn’t stop there. We have also seen that Arctic oil and gas development can take place safely and responsibly – as it has for decades now, ever since the first commercial well was drilled in the Canadian Arctic in 1920 and the first offshore Arctic oil field began production in 1986. In fact, the industry’s long history of operating in Arctic conditions has facilitated technological advancements that have made development safer and minimized industry’s footprint on the environment.
We also know a great deal about the wildlife and the animals that inhabit the Arctic. The Geological Survey has been collecting Arctic geological and botanical information ever since the late 1800s, and two federal agencies began a comprehensive environmental assessment of the offshore Arctic in 1973.
The quest to further our understanding of the Arctic continues today. The Bureau of Ocean Energy Management develops and manages ongoing scientific research programs in the Arctic, while the oil and gas industry continues to fund and lead research projects in order to improve its ability to respond to a spill in the rare case one might occur.
For example, just one company alone invested $5 billion on its Arctic oil spill research program, compared to the $164 million the federal government had spent on oil spill research over an 11-year period. On top of that, several oil and gas companies have pledged $20 million to support the Arctic Oil Spill Response Technology Joint Industry Program to advance oil spill research.
Finally, we know that Arctic oil and gas development can help bolster our nation’s energy security and contribute meaningfully to meeting the growing demand for energy in the U.S. and around the world. Even though the United States has earned the coveted spot of the world’s top oil and gas producer in recent years, the Energy Department projects that production in the Lower 48 will begin falling in the 2020s and continue declining through 2040.
To avoid scrambling then and resorting to importing oil and gas from other countries, we have to start planning now. And because drilling in the Arctic will take a minimum of a decade and quite possibly longer, we have to start laying the ground for production now.
As the Bureau of Ocean Energy Management finalizes its offshore oil and gas leasing program this fall, it must include Arctic lease sales. It must act not on shortsighted whims and scary hypotheticals, but on what we know: That our Arctic resources can be developed safely and responsibly to secure our nation’s energy future.
Nikki Martin is the President of the International Association of Geophysical Contractors.
http://fuelfix.com/blog/2016/09/09/commentary-knowledge-has-helped-industry-drill-safely-in-arctic-for-decades/
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Wilderness Society Misses the Point on Arctic Drilling
Sep 9, 2016 | The Hill - Congress Blog
By Kara Moriarty
As President Obama weighs the impact of whether to include the Arctic in the United States’ 2017-2022 lease round, it is essential that he makes a decision based on proven facts, not unsubstantiated dogma. Unfortunately, opinion pieces like the one from the Wilderness Society earlier this week, “President Obama should remove Arctic Ocean from offshore oil lease program”, do little to inform that process, serving only to cloud the issue.
Arctic drilling is safe and hardly new. Claims that “the oil industry lacks the technology to recover significant percentages of spilled oil even from calmer, temperate waters,” fly in the face of numerous studies and a long history of more than 50 years of successful Arctic development. In particular, the most authoritative study of the subject to-date, a 600-page report by the National Petroleum Council concluded that, “Most of the U.S. Arctic offshore conventional oil and gas potential can be developed using existing field-proven technology”.
Opponents will of course argue that this was a report by the oil industry, even though representatives of the State of Alaska and several leading environmental organizations participated in its findings. But there are numerous facts that support the viability of Arctic development. To date, the federal government has funded nearly $475 million in studies across Alaska through its Environmental Studies Program, producing more than 1000 technical reports and peer-reviewed publications, which have already been used to authorize 25 Arctic lease sales.
These studies have shown time and again that risks associated with drilling in the offshore Arctic are frequently misrepresented, particularly since the majority of operations take place in shallow and open, ice-free waters. In fact, most of the Chukchi continental shelf is less than 50 meters deep and oil and gas formations in the Arctic tend to be in low pressure areas, making the possibility of a blowout less likely. There have also been substantial advances in spill prevention and response technologies over the last several years, including mechanical containment and recovery equipment.
The suggestion that oil and gas development will damage the Alaskan Natives’ lifestyle is equally misguided. According to The Wilderness Society, banning the Arctic from the 2017-2022 leasing round will protect “the subsistence resources that sustain the people and culture of the Alaska’s northernmost communities.” This is a clear misrepresentation of local views and an attempt to provide the Wilderness Society and its peers with a justification for their position on Arctic drilling. In reality, a majority of Alaskans support oil and gas development throughout the state. Just this week a long feature appeared in the New Yorker that charted in some detail how Native communities have cautiously but overwhelmingly come to support resource development as an essential part of their unique way of life.
Native communities have repeatedly objected to environmental groups appropriating their voice and on no fewer than six occasions over the last few months, their leaders have felt obliged to author articles to that effect (found here, here, here, here,here and here), culminating with the Mayor of Wainwright, who directly challenged the behavior of environmental activists:
“Despite the self-serving rhetoric propagated by many ENGOs, we are not victims of climate change. We are not opposed to development. We are not going to abandon our culture or subsistence lifestyles. We are also not going to close the door on our collective future by preemptively shutting down economic opportunities in our own backyard.”
The concluding premise of the Wilderness Society’s argument appears to be that given “the rush of companies” to return their leasing options, including the region in the next leasing round is unnecessary. Or, to put it another way, that the industry’s lack of current activity means that it will never again wish to operate in the region. This argument is shortsighted and ignores the basic rules of economics. Companies still retain over 251 leases in the Beaufort Sea, and we simply have no way of knowing what the global energy landscape will look when future Arctic resources are ultimately developed. Indeed, the long lead times required and the fact that the first lease sale will not begin until 2020, means that the production is unlikely to begin until after 2030.
Under the terms of the leasing program, the Secretary of the Interior will be able to remove or cancel a lease sale if there is a lack of interest, but once the schedule is finalized new areas cannot be added. At heart it is therefore a question of options; excluding the Arctic permanently and unnecessarily limits our options, including the future Administration’s ability to make that decision based on industry’s actual interest and the United States’ actual needs. Surely, that is a better solution.
Kara Moriarty is president of the Alaska Oil and Gas Association.
http://www.thehill.com/blogs/congress-blog/energy-environment/295105-wilderness-society-misses-the-point-on-arctic-drilling
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North Dakota Governor Activates National Guard to Keep Peace at Pipeline Protest
Sep 9, 2016 | Natural Gas Intelligence
By Richard Nemec
North Dakota Gov. Jack Dalrymple on Thursday activated part of the state National Guard to help back-up civilian law enforcement dealing with a protest in the south-central part of the state along the construction route for the Dakota Access oil pipeline.
About a dozen guardsmen will be deployed to a traffic control checkpoint in the protest area, and another 100 members of the Guard will be on standby, ready to respond if needed. Local law enforcement officials reported "unlawful acts and aggressive actions" taken by some protesters.
Dalrymple's action putting "public safety as the top concern" came of the eve of a major ruling from a Washington, DC, federal district court judge that is expected on Friday regarding a request from the Standing Rock Sioux Native American tribe for a preliminary injunction to stop construction now under way on the $3.8 billion project, which is sponsored by Texas-based Energy Transfer Partners (ETP).
A coalition of pipeline supporters, the Midwest Alliance for Infrastructure Now (MAIN), applauded the governor's move, calling the atmosphere around the growing pipeline protest "emotionally charged and escalating." MAIN's Craig Stevens said the Guard would "maintain a peaceful environment."
Despite reports to the contrary from weary protesters, the head of the National Guard said troops will not patrol the protest encampment north of Cannon Ball, ND, near the Sioux reservation and the border between North and South Dakota. Representatives from various tribes around the nation and environmental activists have been joining the encampment over the past two weeks as legal filings have been flying between the Sioux tribe and ETP's Dakota Access Pipeline LLC unit.
"The Guard is not heading south," said Maj. Gen. Alan Dohrmann. "Its role here is to promote, like everyone else, public safety and to help out with law enforcement so we can free up officers with patrol cars to go down there and have a visible presence."
Up to 12 Guardsmen will relieve law enforcement officers at a traffic control checkpoint on Highway 1806 about six miles south of Mandan that has been in place since mid-August, Dohrmann said. The checkpoint will be converted to a traffic information point, and the other 100 members of the Guard will be on standby alert.
Morton County and North Dakota Highway Patrol officials said hundreds of protesters are in and around the encampment about 35 miles south of Mandan, and there have been 37 people arrested on charges including preventing arrest, disorderly conduct and criminal trespass at pipeline construction sites along Highway 1806.
U.S. District Judge James Boasberg of the District of Columbia on Tuesday rejected an emergency filing by the Standing Rock Sioux for a temporary restraining order to prevent ongoing construction of the project (see Daily GPI, Sept. 7). However, ETP voluntarily suspended construction activity in the area of the protests.
Union workers and protesters have repeatedly squared off, each accusing the other side of infringing on its rights to protest or to work peacefully in building the pipeline. Stevens argued that none of the Sioux tribe's concerns are legitimate and said their issues were addressed earlier in the permitting process.
"The pipeline is sited along a long-utilized energy corridor that has undergone significant construction over the past few decades and of which state archeologists issued a 'no significant sites affected' determination several months ago," Stevens said. "The pipeline will not cross into the Standing Rock Sioux's reservation and, once operational, will be among the safest, most technologically advanced pipelines ever constructed."
http://www.naturalgasintel.com/articles/107698-north-dakota-governor-activates-national-guard-to-keep-peace-at-pipeline-protest
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U.S. Intelligence Chiefs Push Back at Hackers, Russian Aggression
Sep 9, 2016 | E&E Energywire
By Blake Sobczak
Top U.S. intelligence officials this week warned of rising hostilities in cyberspace, while carefully avoiding linking Russia to hacking attacks on the Democratic Party.
"I don't think any of us are comfortable with the current situation in terms of levels of cyber activity — the kinds of activity we're seeing on our own nation [and] the kinds of activity we're witnessing elsewhere," Navy Adm. Michael Rogers, director of the National Security Agency, said at the annual Intelligence & National Security Summit in Washington, D.C., yesterday. "There is not a significant price they're [hackers] paying for some pretty aggressive actions, and I would argue that's not in our best long-term interests."
Rogers' comments came in response to a question about concerns that Russia may be seeking to meddle with the U.S. election process, via the country's reported role in recent data breaches at the Democratic National Committee and the Democratic Congressional Campaign Committee (EnergyWire, July 27). The Kremlin has denied involvement in the theft of Democratic officials' emails and opposition research, but that hasn't stopped private cybersecurity companies from tracing the digital intrusions back to Russia.
Rogers shared the stage at the summit yesterday with five other directors of U.S. intelligence agencies, including FBI Director James Comey and CIA Director John Brennan.
Like Rogers, Comey declined to comment specifically on allegations that Russia is behind recent cyberattacks, but he said his agency is investigating and would "take very seriously the notion that a nation-state actor is messing in some way" with the U.S. electoral process.
For his part, Brennan emphasized "the importance of working as a nation to make sure that we have the ability to protect our systems, our networks from these types of intrusions and efforts to destroy us."
Responding to a separate dust-up with Russia, in which a Russian fighter plane reportedly skirted dangerously close to a U.S. Navy jet over the Black Sea on Wednesday, the head of the Defense Intelligence Agency sought to put the conflict in historical perspective.
"With regards to Russian activity lately, whether it's Tsarist Russia, Soviet Russia or Russia in the 21st century, we are always going to have a Russia that believes it should be viewed as a great power," said DIA Director Vincent Stewart. "And a great power will compete with other great powers, and we're going to have times when we bump into each other around the world, where interests collide. And I think that's probably the norm rather than the exception."
Earlier at the conference, Director of National Intelligence James Clapper pointed to President Obama's carefully worded comments on the Democratic email hacks, in which the president said "experts" have pinned the attacks on Russia.
"I won't get ahead of the president on this, particularly while the FBI is still conducting an investigation," Clapper said. "But I can reiterate his other point: The Russians hack our systems all the time ... cyber will continue to be a huge problem for the next presidential administration, as it has been a challenge for this one."
A new cyber post
The White House has hastened to address that cyber challenge in the last few years, as hackers continue to claim headlines by victimizing U.S. agencies and American companies. Last summer, hackers broke into the Office of Personnel Management and stole sensitive personal information from millions of federal workers (Greenwire, June 5, 2015). In other instances, suspected Iranian, Russian and Chinese hackers have infiltrated critical U.S. networks, such as those that oversee the power grid and water systems. While no computer hackers have been known to cause physical damage to any U.S. infrastructure, elsewhere in the world they have managed to snarl traffic and even cut the lights to homes and businesses (EnergyWire, July 14, 2015; EnergyWire, July 18).
In response to these looming cyberthreats, President Obama yesterday carved out a new position in the national security hierarchy: chief information security officer. The White House announced in a blog post that Gregory Touhill, currently a deputy assistant secretary in the Department of Homeland Security, would be the first to fill the post, putting the former Air Force brigadier general in prime position to steer cybersecurity strategy in the final months of Obama's presidency.
Touhill's current, self-styled role as "cyber neighborhood watch" captain for DHS has seen him circle the United States, spreading the word on online dangers. As deputy assistant secretary for cybersecurity and communications at DHS, Touhill was among the highest-ranked Obama administration officials to directly brief critical infrastructure operators on the threat from a Dec. 23 cyberattack on Ukraine's power grid.
In an officewide email, DHS assistant secretary for cybersecurity and communications Andy Ozment congratulated Touhill on the White House job and lauded his efforts to improve cybersecurity at OPM following last year's massive breach.
Ozment also commended Touhill's outreach to the private sector, writing that "thanks to his efforts, private sector participation in our public-private information sharing programs has significantly expanded, and many more companies understand and utilize our services."
Touhill spoke to those efforts at the Intelligence & National Security Summit yesterday, before news of his career move broke. Some in the private sector have claimed that DHS's information-sharing efforts are often stymied by its desire to keep certain threats a secret. DHS's drawn-out response to the hack of Ukrainian power utilities — an attack that was later tied back to Russia — has faced particular criticism (EnergyWire, July 19).
While not necessarily referring to the Ukraine case, Touhill acknowledged yesterday that overclassification is "something, from a cultural standpoint, we've got more work to do."
"We're trying to change the paradigm so that [cyberthreat information] is not classified to ultra-ridiculous by default, but rather, you've got to justify why it should be classified to begin with," he said.
http://www.eenews.net/energywire/2016/09/09/stories/1060042570
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(ACC Mentioned) Building Green with Energy-Efficient Materials: Insulation
Sep 9, 2016 | USGBC (In The Energy Collective)
By Kathryn St. John
Did you know that the energy lost through a building’s walls, roofs and windows is the largest single waste of energy in most buildings—especially in hot summer months? As a result, the energy efficiency of a building often depends on the materials that help create its envelope. With the recent LEED® 2009 minimum energy update, projects are paying even closer attention to how tight they can make their envelope to drive down energy usage and costs. The results can be staggering: use of energy-saving products and technologies in building envelopes help save enough energy annually to power, heat and cool up to 56 million households or run up to 135 million vehicles each year.
A building’s envelope consist of its walls, windows, all the insulation in between its walls, the sealants used on walls, air and vapor barriers in its walls, roofing material and much more. Product specifiers should look for envelope components that support occupant comfort, ensure clean air and keep moisture out, avoid hazardous materials and reduce heating and cooling loads—all while using resources efficiently and generating low embodied materials impact.
At the American Chemistry Council (ACC), our member companies offer marketplace solutions that project teams can use to increase the energy efficiency profile of buildings and help achieve global goals for sustainable manufacturing. According to Mahesh Ramanujam, COO of the U.S. Green Building Council, “The products and materials that ACC’s member companies offer in the market directly contribute to more sustainable outcomes for the building and construction industry. These products consistently raise the bar on how our buildings perform, especially from an energy efficiency standpoint, and help the building and construction industry to meet their sustainability goals. By continuing to provide innovative product solutions, ACC’s member companies are accelerating market transformation for the built environment."
Material Profile: Insulation
When looking to green a building’s envelope, project teams should start by considering the insulation products they are using. Insulation reduces the exchange of heat (both heat gain and heat loss) through the many surfaces in a building—walls, ducts, roof, etc. In a well-insulated building, less warm air escapes during the winter, and less cool air escapes during the summer, reducing the amount of energy needed for heating and cooling. Insulation can actually be one of the most practical and cost-effective ways to improve a building’s energy efficiency: by improving the insulation in new and existing buildings, you can enjoy significant savings and reductions in energy usage. In addition, insulation can also keep moisture out and improve air quality, leading to significant health benefits such as increased worker productivity and a reduced risk of the spread of diseases.
Framing accounts for 25 percent of a building’s wall surface and, when left un-insulated, contributes significantly to energy loss. Dow STYROFOAM™ Brand XPS Foam Insulation is one example of a product that reduces energy flow through the walls of a building by providing a complete, solid layer of insulation. This durable rigid foam solution helps residential and commercial architects, designers, builders and contractors minimize heat transfer, increase energy efficiency, prevent moisture intrusion and withstand heavy loads. It also helps reduce air infiltration, which accounts for 25 to 40 percent of the energy used for heating and cooling a typical home.
§ Diving Deeper: According to Elena Webster, a sustainability manager at Dow Building & Construction, Dow STYROFOAM™ Brand XPS Foam Insulation offers users high-performance advantages, including more R-value with less wall thickness, reduces the potential for condensation within the wall assembly, meets continuous insulation requirements and helps meet global, national and regional energy-efficiency targets. When installed properly, it can significantly reduce fossil fuel consumption, heating and cooling costs and associated greenhouse gas emissions.
Insulation materials can also generate impressive savings. The Department of Defense (DoD) uses more than two-thirds the energy of all countries in the world and accounts for 80 percent of our government’s energy use. Because of this, DoD is committed to energy-efficiency: by switching to BASF’s spray polyurethane foam (SPF) to insulate U.S. Army tents and hospitals, DoD was able to save more than $1 billion in fuel costs annually. Products like SPF can help project teams save big. SPF are insulating air-sealing products that create air barriers within a building’s envelope by sealing and insulating difficult areas, such as windows, doors, penetrations and more. SPF lowers heating and cooling costs by preventing air leakage and maintaining comfortable temperatures indoors.
§ Diving Deeper: According to Woody Gontina, a residential marketing manager at BASF Corporation, BASF’s SPF contributes to a building’s sustainability by lowering its resource requirements. SPF makes a building more energy-efficient, which reduces greenhouse gas emissions from power plants. It also can make buildings more durable, which allows them to last longer. Longer-lasting buildings mean less virgin materials required for replacement buildings.
To learn more about chemistry’s role in building and construction, and how B&C products are making buildings more energy-efficient, project teams can also visit BuildingwithChemistry.org.
http://www.theenergycollective.com/usgbc/2387561/building-green-with-energy-efficient-materials-insulation
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States, Utilities Fault Stringency of EPA Guidance to Curb Regional Haze
Sep 9, 2016 | Inside EPA
By Stuart Parker
States and power industry groups are warning that EPA's draft guidance for how states should reduce haze-forming emissions as they craft compliance plans for the agency's regional haze programs is too stringent, saying the Clean Air Act requires EPA to offer more-flexible guidance than what they see as unreasonably tough measures.
The concerns are outlined in recent comments filed on the guidance, proposed in July, and add to criticisms raised over a related draft rulemaking to revise parts of EPA's haze program -- which aims to reduce emissions to improve visibility to natural conditions in “Class I” national parks and wilderness areas by 2064.
The haze program has faced a series of delays in states crafting their state implementation plans (SIPs) outlining the air pollution control measures they will impose, as well as legal challenges to SIPs and decisions by EPA in some areas to impose federal implementation plans (FIPs) where it deems SIPs inadequate. The May 4 proposed rule to update the program would delay some haze compliance deadlines, among various other changes.
EPA's related guidance released in July details how states should evaluate air emissions sources for imposing controls of haze-forming emissions, and how to drive down pollution in the second phase of the regional haze program, which runs from 2018-2028. The first round of regional haze SIPs covered 2008 through 2018.
The guide focuses on technical concepts for SIP planning such as “uniform rate of progress” (URP), which determines the “glide path” states must meet to lower pollution, long-term strategy (LTS) needed to attain the URP, and controls to achieve reasonable further progress (RFP) by individual emissions sources.
For example, the agency says states should consider screening a high proportion of emissions sources -- at least 80 percent -- to see if they merit full “four-factor analysis” for reasonable progress goals, which include choice of emissions control technology. The four statutory factors EPA must consider under the air law are: cost of compliance, time necessary for compliance, energy and non-air impacts and remaining useful life of the source.
In comments, critics say the guide would require screening of too many sources regardless of progress being made toward restoring visibility in an area, and that EPA is excluding consideration of vital factors.
The Western States Air Resources Council (WESTAR), representing state air quality agencies in 15 Western states that have some of the largest Class I areas, says in its Aug. 22 comments, “EPA has proposed unrealistic and overly conservative screening mechanisms for [LTS] development that capture a large fraction of in-state sources contributing to anthropogenic visibility impairment (EPA recommends 80 percent).”
'Impact Threshold'
WESTAR also faults EPA's “conservative” use of a one percent “impact threshold” to determine if a state’s sources affect visibility at out-of-state air quality monitors, and therefore need to be regulated to mitigate these effects. The group says this echoes EPA's policy on determining “significant contribution” of upwind states to downwind states' air quality problems in the different context of satisfying air law “good neighbor” provisions.
The threshold “is identical to the significance level EPA has used to evaluate interstate impacts” on areas violating ambient air standards, the comments say. “EPA needs to provide a much more detailed and robust demonstration that fully characterizes the modeling tools available to support these thresholds, if they are to be used for the regional haze program. One of the problems with these approaches is that two large source sectors (mobile and international) that contribute to visibility impairment (and are beyond most state control) are excluded from consideration in the LTS development. This unduly focuses the LTS on in-state stationary and area sources.”
The guide also recommends states not consider mobile sources for a four factor analysis, or include them in the 80 percent. But WESTAR notes this sector accounts for more than 50 percent of haze-forming nitrogen oxides emissions in its region, calling it “unjustified” to conduct four factor analyses on a large portion of state stationary and area sources without consideration of visibility impairment resulting from mobile and international sources.
Also, WESTAR says that EPA's assumptions about the prevalence of wildfire and other natural phenomena affecting visibility levels are inflexible and do not take account of likely changes caused by climate, or policy changes by land managers. And the group calls the SIP work required by EPA through the guidance an “unfunded mandate,” and asks EPA to provide additional funds to states to cover the costs of the work.
States' Criticisms
In comments filed Aug, 18, the Arizona Department of Environmental Quality makes many of the same points, saying that EPA errs at the outset by including international emissions in calculation of a state's URP, or glide path. “As these emissions are uncontrollable by States, they should be excluded from any calculations associated with the glide path."
In the eastern region of the country, the Kentucky Division for Air Quality, the state's air regulator, in its Aug. 22 comments also takes exception with the 80 percent screening threshold, saying it is “subjective, has no supporting basis, and may be unreasonable high for many Class I areas” such as those exceeding the progress required by their URP glide path.
The Virginia Department of Environmental Quality echoes this point, saying in Aug. 22 comments that, “Given the resources needed to conduct a four-factor analysis on a facility or a source sector, this percentage is much too high, especially for Class I areas where visibility improvement is significantly more expeditious than that suggested by the URP.”
Utilities' Concerns
Meanwhile, industry groups are also critical of the draft guidance, with the Utility Air Regulatory Group (UARG), representing electric generating utilities outlining a host of concerns with the document.
In Aug. 22 comments UARG says several provisions in the guidance “could be interpreted as establishing or suggesting requirements that are purportedly binding on states, or at the very least strong presumptions that states would have to bear a significant burden to rebut, based on language EPA uses in the Draft Guidance. It is important that EPA carefully review and revise as necessary such language” to avoid even the appearance of a binding requirement.
UARG says it is concerned about an overarching theme in the guidance that EPA will assess states' plans for “reasonableness,” saying this approach is not anchored in the Clean Air Act. UARG fears this mirrors an interventionist stance that has seen the agency reject SIPs and replace them with FIPs during the haze program's first phase, from 2008-2018. During this period, SIPs imposed best available retrofit technology (BART) on sources, a one-time requirement, but EPA sometimes disagreed with states' analysis of what represents BART.
UARG says EPA in the draft guidance adopts a “vague, virtually standardless” approach to determining if state decisions on reasonable further progress may be approved by the agency. “EPA says it will not adopt 'any general formula or bright-line test to evaluate state decisions.' Instead, EPA provides a litany of actions that EPA recommends states take. EPA then asserts that it will review those actions for consistency with the [air law], the Regional Haze Rule, and 'this and other relevant guidance,' and with 'reasonableness,'” the comments say. However, UARG warns, under the air law, “states, not EPA, get to decide what measures are reasonable.”
The Class of '85 Regulatory Response Group, another electric utility sector body, says in its Aug. 22 comments that EPA's draft guidance is excessively prescriptive, but also that EPA has suggested states take steps in their SIP analysis in the wrong order.
For example, the group says “EPA should rescind its proposal that states must evaluate the four statutory factors to select reasonable progress controls before they calculate their reasonable progress goals,” arguing that the goals should precede the determination of controls. The agency focuses on costs to the exclusion of other factors, such as remaining useful life of the source, the group says.
http://insideepa.com/daily-news/states-utilities-fault-stringency-epa-guidance-curb-regional-haze
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Utah, Energy Groups Challenge EPA Decision Imposing Haze Plan on State
Sep 9, 2016 | Inside EPA
By Stuart Parker
Utah and energy groups are suing EPA in the U.S. Court of Appeals for the 10th Circuit over the agency's decision to partially disapprove the state's plan for reducing regional haze and replace it with a federal plan, which EPA imposed on Utah after finding that its emissions control strategies fell short of Clean Air Act requirements.
The challenges pose another legal test for EPA's haze program and its use of federal implementation plan (FIPs) through which it directly writes emissions control requirements for states whose haze plans it rejects.
Utah filed its suit Sept. 1 with the 10th Circuit, followed by a Sept. 2 suit from the PacifiCorp electric power company, and separate Sept. 6 petitions for review filed by the utility Deseret Generation & Transmission Cooperative and the Utah Associated Municipal Power Systems. The latter describes itself as a political subdivision of Utah that provides electric energy on a nonprofit basis to community-owned power systems in the Intermountain West.
EPA issued the FIP in a July 5 Federal Register notice denying Utah's state implementation plan (SIP) for meeting the haze program, which aims to restore visibility in national parks and wilderness areas by 2064. Regional haze plans largely focus on reducing haze-forming emissions from power plants.
The Register notice disapproves of an alternative to best available retrofit technology (BART) advanced by the state in its plan. Under EPA's regional haze program, BART is a one-time emissions control requirement for air pollution sources found to be impairing visibility in national parks and wilderness areas.
To be permissible, alternative plans must demonstrate they will achieve greater pollution cuts than BART. However, EPA in its Register notice said Utah's plan failed to meet this requirement. The Utah plan would establish an alternative to controls for nitrogen oxides (NOx) that would otherwise be required to control four electric generating units (EGUs) at two power plants in the state operated by utility PacifiCorp.
The alternative relied on controls already installed at the four EGUs considered subject to BART by EPA, plus controls installed on an additional generating unit and the shutdown of another industrial facility not subject to BART. EPA's FIP, replacing Utah's SIP, therefore imposes NOx controls on the four EGUs.
EPA in its July 5 Register notice rejects criticism of its methodology from the state and industry commenters, and defends its right to evaluate the “reasonableness” of the state's calculation of “reasonable further progress,” a required criterion under the haze program, in conjunction with consideration of BART.
http://insideepa.com/daily-news/utah-energy-groups-challenge-epa-decision-imposing-haze-plan-state
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