Preview Newsletter
ACC AM 11/22/2018
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State Fines Chemours $13m, Requires Chemical Company to Provide Drinking Water
Nov 21, 2018 | Raleigh News & Observer
By Abbie Bennett
North Carolina environmental officials announced a plan Wednesday to fine Chemours $13 million and require the chemical company to provide permanent replacement drinking water. -
EPA Standardizes Test Method for More Perfluorinated Chemicals
Nov 21, 2018 | BNA Daily Environment Report
By Sylvia Carignan
Four compounds that have been contaminating drinking water now have a standardized EPA-approved laboratory testing method, reducing the need for commercial labs to invent their own. -
Michigan Plans Unique Testing to Assess PFAS Impact
Nov 22, 2018 | Detroit News
By Beth LeBlanc
In December, state officials will begin a one of its kind testing of Michigan residents to better understand the impact of the contamination by forever chemicals. -
Washington State Plans Alternatives Assessment for FCM PFASs
Nov 22, 2018 | Chemical Watch
Washington state has put forward its plan for an alternatives assessment for per- and polyfluorinated substances (PFASs) in paper food packaging, bringing a ban on the chemicals in food contact materials a step closer. -
Walgreens Adopts Chemicals Policy
Nov 22, 2018 | Chemical Watch
By Leigh Stringer
The Walgreens Boots Alliance, a global pharmacy giant with more than 18,500 stores, has adopted its long-awaited chemicals policy. -
Greater EU SVHC Substitution Incentives Needed – Industry
Nov 22, 2018 | Chemical Watch
By Clelia Oziel
EU authorities should "motivate" companies to actively look for alternatives to SVHCs by providing "positive incentives", such as tax cuts for producers, industry associations have said. -
Norwegian Review Finds That PFBS Persists and Is Mobile
Nov 22, 2018 | Chemical Watch
By Andrew Turley
Published studies suggest that PFBS, a substance in the same class as PFOS, persists and is mobile in the environment, according to a literature review by Norwegian authorities. -
(ACC Mentioned) Shale Gas Fuels U.S. Chemical Plant Construction
Nov 21, 2018 | Engineering News-Record
By Pam Radtke Russell
McDermott project managers held their breath as a nearly 3,000-ton module journeyed on a carefully ballasted barge along the Gulf Coast to Lake Charles, La. Anticipation mounted as the module arrived safely to the site of the $1.9-billion ethane cracker McDermott was building... -
Looking Forward At US Energy Policy In 2019
Nov 22, 2018 | Forbes
By Dan Eberhart
As we gather with our families today and give thanks for the blessings of the past year, it is a good time to take stock of where energy policy and global oil markets are headed in 2019. -
Dominion Atlantic Coast Pipe Approval Suspended by Army Corps
Nov 21, 2018 | BNA Daily Environment Report
By Rachel Adams-Heard
A U.S. Army Corps of Engineers office in North Carolina suspended authorization for Dominion Energy’s Atlantic Coast natural gas pipeline to conduct certain work after a key permit was halted by a federal appeals court, according to a letter. -
Massachusetts Gas Companies Adopt Stricter Safety Standards
Nov 21, 2018 | BNA Daily Environment Report
By Adrianne Appel
Natural gas companies in Massachusetts agreed to stricter voluntary safety practices following recent explosions, Gov. Charlie Baker (R) announced Nov. 21. -
OPEC’s Worst Nightmare: Permian Basin About to Pump a Lot More
Nov 21, 2018 | BNA Daily Environment Report
By Javier Blas
The map lays out OPEC’s nightmare in graphic form. -
Railroads’ Quarter 3 PTC Status Reports Show Continued Progress
Nov 22, 2018 | American Journal of Transportation
The Federal Railroad Administration (FRA) today released the 2018 Quarter 3 Positive Train Control (PTC) data, showing railroads’ continued progress toward meeting the year-end deadline for fully implementing PTC systems or qualifying for an alternative schedule. -
California, Quebec Cap-and-Trade Price Rises in Latest Auction
Nov 22, 2018 | BNA Daily Environment Report
By James Munson
California’s and Quebec’s latest auction of greenhouse gas emission allowances in a joint cap-and-trade market hit $15.31, almost a dollar higher than a fixed minimum price. -
Full Compliance, Declining Emissions, Robust Auction: It’s November in California’s Cap-And-Trade Program
Nov 21, 2018 | Environmental Defense Fund
By Katelyn Roedner Sutte
Today’s strong California-Quebec November 2018 carbon market auction results are the continuation of a month of good news about California’s landmark climate program. Cap-and-trade compliance is at 100% and emissions are falling... -
Can Pepco Charge Customers for Energy Efficiency? D.C. Climate Bill Draws Scrutiny
Nov 21, 2018 | Washington Post
By Fenit Nirappil
District residents may use less electricity but still see their power bills go up because of recent changes to pending climate legislation, according to environmental activists and some lawmakers.
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State Fines Chemours $13m, Requires Chemical Company to Provide Drinking Water
Nov 21, 2018 | Raleigh News & Observer
By Abbie Bennett
North Carolina environmental officials announced a plan Wednesday to fine Chemours $13 million and require the chemical company to provide permanent replacement drinking water.
The proposed plan or, “consent order,” between the North Carolina Department of Environmental Quality, Cape Fear River Watch and the chemical company is intended as a resolution after contaminants from the Chemours plant in Fayetteville were discharged into local water supplies.
The order requires Chemours to dramatically reduce its GenX air emissions, provide replacement drinking water and pay the fine to the DEQ.
Wilmington, Delaware-based Chemours Co. has faced questions for years about GenX, an unregulated chemical with unknown health risks, among other contaminants, that flowed from the company’s plant near Fayetteville into the Cape Fear River.
“People deserve access to clean drinking water and this order is a significant step in our ongoing effort to protect North Carolina communities and the environment,” DEQ Secretary Michael S. Regan said in a statement. “Today’s announcement advances the science and regulation of PFAS compounds and gives North Carolina families much-needed relief. I appreciate the hard work of DEQ’s dedicated and talented staff to help achieve this result.”
Under the order, Chemours must pay a $12 million civil penalty along with an additional $1 million “for investigative costs,” the state’s release said.
The chemical company could end up paying more if it fails to meet conditions and deadlines established in the proposed order.
Among many requirements, the order states Chemours must:
▪ Provide permanent drinking water “in the form of either a public waterline connection or whole-building filtration systems for those with drinking water wells with GenX” above a certain level;
▪ “Provide, install and maintain” special drinking water systems for well owners with combined polyfluoroalkyl substances (PFAS) amounts above a certain level;
▪ “Reduce air emissions of GenX through control technology and with a schedule of reduction milestones;”
▪ Continue to capture all its wastewater for off-site disposal;
▪ “Conduct health studies to determine potential health risks associated with releasing PFAS into the environment’”
▪ Sample and retest drinking water wells in areas with elevated chemical contaminants linked to the company;
▪ Submit and implement a plan to sample all wastewater and stormwater streams to identify any additional contaminants;
Submit a plan to the state to reduce chemical contaminants in groundwater along the Cape Fear River “by at least 75 percent;”
▪ “Notify and coordinate with downstream public water utilities” when there is the potential for a discharge of contaminants such as GenX into the Cape Fear River above healthy levels.
The Southern Environmental Law Center signed the proposed order on behalf of the Cape Fear River Watch and said the fine would be the largest “ever levied by the N.C. Department of Environmental Quality.”
“This agreement starts us down the path to a cleaner Cape Fear and safer drinking water by keeping Chemours’ air pollution and contaminated water from leaving its site,” Geoff Gisler, senior attorney for the SELC, who represents the Cape Fear River Watch in the case said in an emailed statement to The News & Observer Wednesday evening. “After decades of unchecked pollution from the Chemours’ facility, this order is a step forward in restoring the Cape Fear and protecting communities and families downstream.”
If the proposed order is accepted by the court after a 30-day public comment period, the order will resolve the NCDEQ’s pending lawsuit against the chemical company for violating North Carolina water quality laws.
Cape Fear River Watch also agreed to dismiss its federal lawsuit against Chemours for violating the Clean Water Act and Toxic Substances Control Act, the SELC said in a news release Wednesday.
The order would not, however, settle any other lawsuits against Chemours by citizens or water utilities in the state.
“Communities along the Cape Fear River have been terribly wronged by the contamination of our drinking water,” Cape Fear Riverkeeper Kemp Burdette said in an emailed statement to The News & Observer Wednesday. “We’ve been working to protect these communities since the news of Chemours pollution first broke. Today we can breathe a sigh of relief. Moving forward, we will be watching closely to ensure that Chemours does all that they have committed to do in this consent order.”
https://www.newsobserver.com/news/local/article222054060.html
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EPA Standardizes Test Method for More Perfluorinated Chemicals
Nov 21, 2018 | BNA Daily Environment Report
By Sylvia Carignan
Four compounds that have been contaminating drinking water now have a standardized EPA-approved laboratory testing method, reducing the need for commercial labs to invent their own.
The Environmental Protection Agency released the drinking water testing method for per- and polyfluorinated compounds Nov. 21. The updated method now covers GenX, a contaminant North Carolina environmental regulators have found in water near Chemours Co.'s Fayetteville plant.
Per- and polyfluorinated compounds (PFAS) can be found in nonstick and stain-resistant coatings in clothing, fast-food wrappers, carpets, and other consumer and industrial products.
The EPA’s previous test method only covered 14 PFAS compounds out of thousands. Laboratories had been modifying the EPA method to analyze nearly 30 compounds in different media, including soil and plastics. But the new test method goes some distance toward standardizing environmental monitoring efforts.
The updated test method has now been approved for 18 PFAS compounds in drinking water samples. The four additions are known as GenX, ADONA, 11C1-PF3OUdS, and 9Cl-PF3ONS.
In April, the North Carolina Department of Environmental Quality took legal action to require Chemours to get its air emissions and other sources of GenX under control. The state found evidence that air emissions from the company’s Fayetteville Works facility were causing widespread groundwater contamination.
https://news.bloombergenvironment.com/environment-and-energy/epa-standardizes-test-method-for-more-perfluorinated-chemicals
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Michigan Plans Unique Testing to Assess PFAS Impact
Nov 22, 2018 | Detroit News
By Beth LeBlanc
In December, state officials will begin a one of its kind testing of Michigan residents to better understand the impact of the contamination by forever chemicals.
State health officials plan to start testing the blood serum of residents in Kent County to study the link between drinking water with per- and polyfluoroalkyl substances, known as PFAS, and the resulting increase in a person’s body.
The assessment will test blood serum and drinking water samples from roughly 800 residents, half of which have been exposed to high PFAS levels through their water supply and half of which have low to no PFAS in their water.
Though the full assessment is expected to take two years, the state will work to get individual blood serum results to participants within two to four months after the blood draw, said Angela Minicucci, a spokeswoman for the Michigan Department of Health and Human Services.
“We chose Kent County first because they have had the highest number of homes with levels that exceeded the EPA advisory level,” and those PFAS levels were the highest in the state, Minicucci said.
Sandy Wynn-Stelt testified at a Nov. 13 hearing in Grand Rapids that drinking water at her Belmont home near a Wolverine Worldwide dumpsite has tested between 27,000 and 78,000 parts per trillion for PFAS, extraordinarily higher than the federal health advisory level of 70 parts per trillion. Wynn-Stelt’s blood serum tested at 5,000,000 parts per trillion in November 2017.
“Nobody can really tell me what this is going to do, how this is going to affect me, if it will affect me,” she said.
The toxic class of chemicals, once widely used in Teflon, Scotchgard, military bases and firefighting foam, is linked to some health effects, including cancer and immune system problems.
Officials have said Michigan's PFAS Action Response Team is ahead of many other states in addressing PFAS contamination. The team has been working for about a year to test municipal and school water supplies, identify sources of contamination, initiate litigation against polluters and engage the federal government in issuing federal guidelines for PFAS.
The department will begin contacting residents who have had their wells tested within the next month and begin testing Dec. 8, gradually ramping up the number of participants through the spring.
A public information meeting on the testing is scheduled for Nov. 27 in Grand Rapids.
Adults and children participating in the program are expected to sit through an hour-and-a-half clinic visit at the Kent County Health Department in which they will be interviewed about their exposure potentials. The visit will include a blood draw.
A second phase of the assessment will include a two-hour appointment at an individual’s home where a sanitarian will conduct water testing, Minicucci said.
“We’re estimating this will cost over a million (dollars) that will come out of the MDHHS budget that was set aside for PFAS,” she said.
Though northern Kent County is the first to undergo the assessment, the state also is considering other areas affected by the chemicals, including Grayling and Parchment.
The state is working with the U.S. Centers for Disease Control and Prevention and the federal Agency for Toxic Substance and Disease Registry. The exposure assessment in Kent County could increase the county’s chances for inclusion in the federal registry’s health study.
The health study will include testing in various communities throughout the United States and take up to five years to complete, said Agency for Toxic Substances and Disease Registry Director Patrick Breysse at the hearing last week in Grand Rapids.
“I wish there was a magic bullet that we could produce and we could produce it quickly,” Breysse said, but no one will “be served well by science that can’t stand up to the scrutiny of peer review."
https://www.detroitnews.com/story/news/local/michigan/2018/11/22/state-wants-test-800-kent-county-residents-pfas-exposure/2013663002/
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Washington State Plans Alternatives Assessment for FCM PFASs
Nov 22, 2018 | Chemical Watch
Washington state has put forward its plan for an alternatives assessment for per- and polyfluorinated substances (PFASs) in paper food packaging, bringing a ban on the chemicals in food contact materials a step closer.
Earlier this year, the northwestern US state passed a law to prohibit all PFASs in paper food packaging. This will only take effect, however, following the identification of safer alternatives, as specified in the state's toxics in packaging law (RCW 70.95G).
The Department of Ecology is required to conduct an alternatives assessment to identify safer options (chemical and non-chemical).
The proposal says it will consider chemical hazard, performance, cost and availability and exposure. There will be a focus on packaging intended for direct food contact, including applications used in the food service industry.
The department is accepting comments on the proposal until 4 December via a public comment form on its website.
The state banned the use of firefighting foams with PFASs in April.
https://chemicalwatch.com/72224/washington-state-plans-alternatives-assessment-for-fcm-pfass
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Walgreens Adopts Chemicals Policy
Nov 22, 2018 | Chemical Watch
By Leigh Stringer
The Walgreens Boots Alliance, a global pharmacy giant with more than 18,500 stores, has adopted its long-awaited chemicals policy.
The company announced in 2014 that its chemical policy would be published the following spring. It finally launched this month.
The company’s policy, which took effect on 8 November, establishes a restricted substances list (RSL). This includes chemical groups such as phthalates, certain parabens, nonylphenol and NP ethoxylates, as well as individual substances such as xylene, toluene, triclosan and plastic microbeads.
The RSL applies to baby, personal care and household cleaning products within Walgreens – and Boots UK-owned brands and exclusive consumer retail lines. In 2014, Walgreens purchased the remaining 55% stake in Boots UK, in addition to the 45% it bought in 2012.
The company says on its website that it has started working with its suppliers to reformulate these products with the goal of removing the listed chemicals by the end of 2021.
To move this process forward, it is encouraging suppliers to select ingredients identified under the US EPA’s Safer Choice programme, or use the criteria. It also urges suppliers to use ChemSec’s safer alternatives marketplace to evaluate and select safer substitutions.
It intends to report annually on its progress and update its RSL as "more scientific information becomes available". Chemicals on its RSL are selected from various authoritative lists.
Coinciding with its RSL, the company has developed a list of chemicals that it will monitor and, over time, look to restrict and/or minimise across its product portfolio. This list, which has not been released, will be used to update the company’s RSL.Personal care products
Specifically for beauty and personal care products, Walgreens will monitor six authoritative lists. These are:
· California’s Proposition 65 – reproductive and developmental toxicants and carcinogens;
· EPA’s Toxics Release Inventory PBTs;
· EU – Cosmetics Regulation Annex II;
· EU – Priority Endocrine Disruptors (Categories 1, 2);
· EU REACH – Annex XVII CMRs (Appendices 1-6); and
· The International Agency for Research on Cancer (Iarc) – categories 1, 2A and 2B.
These lists make up the Beauty and Personal Care (BPC) stewardship list, which is borne from an initiative set up by UK organisation Forum for the Future, The Sustainability Consortium and a group of companies in the industry, including Walmart and Target, with input from Walgreens.
Walgreens' policy asks all suppliers of its owned and third party brands to monitor the use of these chemicals within their beauty and personal care portfolios.
"Where ingredients are regulated we expect all our suppliers to comply with regulation and in accordance to the regulatory safety framework," the policy reads.Transparency
The company also plans to:
· list the ingredients in all own-brand household cleaners on product labels by the end of 2019;
· encourage suppliers of formulated products to publicly disclose intentionally added ingredients, either on package labelling or digitally; and
· encourage them to obtain credible certifications, such as the US EPA’s Safer Choice and Cradle to Cradle certifications.
Last week, the Mind the Store coalition of NGOs said Walgreens is one of the "most improved" retailers featured in its latest chemicals management report card. The company received a B-, which placed it in the top 10 out of 40 US retailers ranked.
In its report card, Mind the Store comments on Walgreens' policy, saying improvements could be made by strengthening accountability measures, including conducting its own testing and requiring suppliers to test in third-party approved laboratories.
It adds that Walgreens should expand the scope of its policy beyond the categories currently covered and require suppliers to conduct alternatives assessments to avoid regrettable substitutions. In addition, it urges the company to become a signatory to the Chemical Footprint Project and pilot it with key private label suppliers.
https://chemicalwatch.com/72225/walgreens-adopts-chemicals-policy
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Greater EU SVHC Substitution Incentives Needed – Industry
Nov 22, 2018 | Chemical Watch
By Clelia Oziel
EU authorities should "motivate" companies to actively look for alternatives to SVHCs by providing "positive incentives", such as tax cuts for producers, industry associations have said.
Their proposal, part of a review calling for improvements to the REACH authorisation process, was sent to the European Commission and Echa last week. It was also forwarded to the members of the Competent Authorities for REACH and CLP (Caracal) ahead of this week's meeting.
The associations suggest EU bodies establish a mechanism that provides "assurance of a minimum period of protection" for companies that invest in alternative processes and to allow them secure returns on investments.
The document was prepared by:
· SMEunited – the trade body for European SMEs;
· the European Automobile Manufacturers' Association (Acea);
· the European Aerospace and Defence Industries Association (ASD); and
· the European Association of Automotive Suppliers (Clepa).
The protection mechanism should be in place unless there is evidence of "overwhelming" risk from alternative substances, the group added. And to avoid 'regrettable substitution', chosen alternatives with the potential to be added to the authorisation list at a later stage "should be flagged as clearly as possible".
The associations also called for a more level playing field with non-EU companies. Their products are imported into the EU and may contain SVHCs, but they are spared the "burden" of the authorisation process, the group said.
Authorities, they said, could tackle this by:
· implementing a European programme to support investments in new technologies, or upgrades, such as the Horizon 2020, which already considers substitution projects;
· member states establishing positive incentives, like subsidies for innovation projects; and
· supporting activities and enhancing funds for research on alternatives.
In its second Review of REACH, the Commission proposed greater promotion of substitution. NGOs have said that the authorisation process "rewards the laggards and frustrates the frontrunners".Short timeframe
In their document, the group said the time between an authorisation decision on an SVHC and its sunset date is insufficient. In a "best-case" scenario, a company has less than six months to prepare itself, suppliers and downstream users and this creates "major" disruption to business.
A "reasonable" timescale around new conditions of use for an SVHC should be introduced, they said.
Additionally, they asked for a review of rules for applications covering multiple operators. Applicants in this situation, the group added, have encountered "difficulties" with Echa's Risk Assessment (Rac) and Socio-economic Analysis (Seac) Committees which interpret their documents as "overly broad or not having sufficient detail".
Companies are obliged to "estimate" the risks when data is lacking, but the committees evaluate these as "uncertainties", they said, and penalise them with reduced review periods.
The concerns could be mitigated by a review period based only on the availability of alternatives and the complexity of the sector, they added. And regulators should provide "clear and practical" expectations and review the procedure to monetise risk to human health or the environment.
Earlier this year, Germany called for a political discussion on the consequences of Seac’s "too simplistic" methodology to calculate the impact of chemicals.SME concerns
SMEs have "huge difficulty" in preparing authorisation applications on their own, the document said. This means "high dependency" on upstream applications. To combat this, the group called for better guidance on these so they can cover a broader group of companies, including SMEs. It also recommended a simplified procedure for low volumes, and exploring the possibility for regional authorisation applications.
SMEunited, formerly Ueapme, recently published a position paper on improving REACH for small and medium enterprises.
https://chemicalwatch.com/72233/greater-eu-svhc-substitution-incentives-needed-industry
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Norwegian Review Finds That PFBS Persists and Is Mobile
Nov 22, 2018 | Chemical Watch
By Andrew Turley
Published studies suggest that PFBS, a substance in the same class as PFOS, persists and is mobile in the environment, according to a literature review by Norwegian authorities.
The conclusion bolsters preliminary statements about the substance made by Norway in the context of prioritisation under REACH. Norway is expected to submit a REACH substance of very high concern (SVHC) proposal for the substance by March next year.
The review, conducted by the Norwegian Technical Institute on behalf of the Norwegian Environment Agency, says that degradation of PFBS has not be seen in any study conducted to date. It also describes the environmental persistence as "extreme".
Regarding mobility, the review says that PFBS contamination of the Arctic via water is expected by read-across from similar substances. For example, studies have found PFOS and PFHxS contamination of the Arctic through long-range transport.
This expectation is supported by measurement of PFBS in Arctic biota and Antarctic water, the review says. More generally, it is also supported by evidence that PFBS is "ubiquitous" in water samples. Studies have found it in marine and freshwater environments, as well as ground water and drinking water.
The bioaccumulation potential of PFBS is lower than that of similar substances, such as PFOS. However, studies have found "relatively high" concentrations of PFBS in plants grown on soil contaminated with per- and poly-fluoroalkyl substances (PFASs).
M and vM
Governments are increasingly restricting use of traditional PFASs, such as PFOS, because of their persistent, bioaccumulative and toxic (PBT) properties. Meanwhile, use of alternative, short chain PFASs, such as PFBS, is increasing.
The two substances are chemically and functionally very similar, suggesting that PFBS can be used as a substitute. However, there are growing concerns that they may also be similar in their risks to human health and the environment.
Norway outlined various concerns in February in a risk management option analysis conclusion document. The document said that, among other attributes, the substance fulfills both the persistent and very persistent criteria of REACH.
"It may even be categorised as extremely persistent, since no degradation is to be expected under environmentally relevant conditions." Additionally, PFBS is mobile and may irreversibly contaminate drinking water sources and the aqueous environment, the document said.Overall, "PFBS exhibits properties that give rise to an equivalent level of concern to PBT/vPvB [persistent, bioaccumulative and toxic/very persistent, very bioaccumulative] substances".
Then, in August, Norway notified Echa of its intention to submit an SVHC proposal for "PFBS, its salts and related substances" in August, again citing an "equivalent level of concern" of serious effects on the environment.
Consequently, PFBS could be a test case for SVHC designation on the basis that a substance is mobile (M) or very mobile (vM) rather than B or vB.
Germany’s Federal Environment Agency, UBA, proposed the idea in 2017 as a way to improve protection of human health and the environment from certain chemicals that do not meet the B criterion but are nevertheless of concern. The chemicals are of concern because they are persistent, mobile in water and reach drinking water sources because they do not bind to solid substances, such as sand or activated carbon, and cannot be removed by filters. The agency doubled down on its position in April when it ran a two-day workshop to explore the topic.
US situation
On 14 November, the US EPA published its draft reference doses for PFBS and Gen X chemicals as part of a broad effort to address the potential risks of PFASs.
https://chemicalwatch.com/72228/norwegian-review-finds-that-pfbs-persists-and-is-mobile
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(ACC Mentioned) Shale Gas Fuels U.S. Chemical Plant Construction
Nov 21, 2018 | Engineering News-Record
By Pam Radtke Russell
McDermott project managers held their breath as a nearly 3,000-ton module journeyed on a carefully ballasted barge along the Gulf Coast to Lake Charles, La. Anticipation mounted as the module arrived safely to the site of the $1.9-billion ethane cracker McDermott was building for a joint venture of South Korean Lotte Chemical and Houston-based Westlake. Over the course of the next two days, self-propelled modular transporters shuttled the component to its intended spot, where it was placed carefully on preconstructed piers. As seamlessly as two Lego bricks snapping together, the module fit snuggly in place. Over the next two months, an additional two heater modules—each over 2,500 tons and 155 ft high—made the daylong journey from Gulf Island Fabrication in Houma, La., and were set in place without a problem.
It was the first time McDermott had modularized its proprietary SRT heaters. “Probably the best decision we made on this project was to modularize the heaters,” says Heath Moncrief, construction director for McDermott. “It tremendously reduced labor in the field in a constrained labor market.”
Modularization is just one step owners, designers and contractors are taking to keep costs and schedules under control as they begin designing and building a second wave of chemical plants. The chemical boomlet began around 2011, with more than $100 billion worth of chemical projects already completed or underway and another $100 billion in the pipeline. The United States has become a chemical superpower, with low-cost shale gas simultaneously providing feedstock to create the chemicals and fueling the processes to create them. In that time frame, chemical construction’s slice of the manufacturing sector has grown to 45% in 2017, from 18% in 2011, according to the U.S. Commerce Dept. The U.S. feedstock’s cost advantage—only Saudi Arabia is cheaper—is so great it overcomes the higher costs of American materials and labor, says Martha Moore, an economist with the American Chemistry Council. ACC is tracking 333 chemical projects in the United States. Of the $200 billion in announced projects, 68% is from foreign companies or joint ventures involving a foreign company, like the JV of Lotte and Westlake. Lotte is also building an adjoining $1.1-billion monoethylene glycol (MEG) plant.
“We are seeing today what we didn’t see 20 years ago. We are seeing much larger projects to get synergies and cost efficiencies,” says Keith Manning, vice president of strategic enterprises for Zachry, which is expecting 2018 to be its biggest year in terms of work hours. The San Antonio-based firm is working on three new chemical plants.
“It defies the imagination the first time you show up on site and it is the size of a city,” says Robert J. Roest, commercial manager of special projects for Mammoet, which is working not only on the LACC plant, but also on several other chemical projects.
Korean Initiative
The 250-acre LACC site on Bayou D’Inde in Lake Charles isn’t as big as some of the megaprojects in the region, but it is by no means small. The site includes a cracker that will produce 1 million tons per year (tpy) of ethylene, a building block for many plastics. About half of that ethylene will supply Lotte’s adjacent MEG plant undergoing commissioning, which will produce 700,000 tpy of fiber-grade MEG for export. The other half of the ethylene will go to Westlake’s nearby plant.
McDermott received an EPC contract in excess of $1.3 billion for the cracker, including, among other things, for procurement of 124 miles of pipe. Under a separate $365-million contract, McDermott provided construction services for the MEG plant. Samsung performed engineering and procurement for the plant, including prefabrication of some elements, such as a 354-ft wash tower, in South Korea.
Before construction began on the greenfield site, LACC cleared trees, dug down 6 ft and stabilized the soil with stone and gravel. The site was bathtubbed to prevent flooding.
“We made a significant pre-investment here, so there would be less impact when it rains,” says Kyeong Jo Han, a director at Lotte Chemical and project manager for LACC.
Construction on both plants began in 2016, and because of that front-end effort, workers were able to return to the site sooner than to other area sites after Hurricane Harvey swamped the region in 2017.
In another early move to make the worksite desirable and attract labor, LACC and McDermott chose on-site parking rather than on-site laydown.
“Not using busing, that was a very big thing for our guys,” says Moncrief. At peak this summer, there were 3,700 workers on site. To make the best use of available laydown space, McDermott uses an integrated work system, with shelf-like outdoor storage that allows materials to be stacked vertically rather than spread out over the ground.
Workers are offered a completion incentive if they stay with the job until it’s complete.
In another effort to attract workers, McDermott and Lotte set out to create a safe jobsite. Everyone on the site has stop-work authority, and McDermott holds weekly roundtables with workers to discuss safety and other issues. The job recently logged 10.89 million work hours without a lost-time incident.
Working with a Korean company whose culture is based on relationships and respect has made the job go smoothly, says Vijay Rangraj, a McDermott senior project manager. “We have a one-team mentality,” he says. “It’s not owner and contractor. There’s no contractual friction. We just shake hands and get it done.”
Innovation
The rapid expansion of the chemical sector, primarily along the already labor-constrained Gulf Coast, led to some growing pains for the industry in a first wave of construction. The first round of plants built “were more costly and complex,” than anticipated, Joe Thompson, Bechtel’s manager of chemicals and downstream projects said in 2017 webinar.
Rising international costs could force companies to build elsewhere. International companies could choose to export U.S. ethane or ethylene elsewhere to produce downstream products. Construction in China, for example, costs 55% to 70% less than in the U.S., says Russell Heinen, an analyst with IHS-Markit.
Tariffs threaten to increase costs further, says Moore. There are 232 tariffs, including on steel, that could impact the cost of construction. A typical new cracker needs more than 18,500 tons of steel, she says.
One megaproject, Sasol’s 1.5-million-tpy ethane cracker and six chemical units nearing startup in Lake Charles, saw costs increase from $8 billion to $11 billion. A 2016 Sasol analysis attributed budget overruns in part to weather delays, an unexpected increase in contractor and labor costs, and lower productivity. In response, the company says it improved the engineering phasing, implemented synchronized workface planning and improved productivity and construction readiness through focused risk management processes.
Fluor, the EPC contractor for the Sasol job and three other under-construction chemical plants, is using innovation to improve quality, safety and productivity at its sites. Advances include active RFID tagging that sends a signal allowing workers to find material and labor, drones for surveying, and even artificial intelligence from IBM’s Watson to help predict outcomes. Some of these technologies were in place during the first wave but have really taken hold over the last three years through Fluor’s innovation group and through a partnership with the University of Houston, says Jack Penley, senior vice president of construction and fabrication for Fluor. Penley expects more innovation and technology will be used in the next round of chemical construction. At present he sees advances primarily in chemical and energy-related construction, but he expects they will become routine at other sites in the future. “All of these things cut down labor hours and make us more efficient, says Penley.
Additionally, to address worker shortages, Fluor started a free craft-training program on the Gulf Coast that has graduated 600 workers. Labor shortages will continue to exist, however, and technology and modularization help Fluor and other companies make the best of the craftworkers and laborers they do have. “It seems like when a wave comes, everybody is building at the same time and there’s a manpower struggle,” he says. “That’s exactly why we lean so much on technology.”
Advanced work packaging is the norm for most companies working in the sector, where massive projects depend upon good project execution. “It’s a construction-driven planning program to drive the work from the very start of the project,” says Manning. “It’s safe to say that we are taking it to a much higher level of planning—it’s a significant enhancement from what we were doing a few years ago.”
Burns and McDonnell uses advanced work packaging rendered in 3D so everyone knows where equipment will be “before we even put a shovel in the ground,” says Karen Bray, business development manager for chemicals. Such well-defined plans for project execution, among other things, ensure predictability from subcontractors, she says.
Burns and McDonnell is also using two-sided isometrics for pipes so craft laborers have a 3D model of where the next pipe in a unit should be, she says. Such advances help a workforce that grew up on video games visualize its next task.
“A lot of technology we are using—it does certainly attract the younger generation that wouldn’t necessarily think of construction,” as a career, says Penley.
Companies are also looking to control more variables to reduce risk. In addition to acquiring Ambitech to beef up its engineering and design capabilities, Zachry has also expanded its in-house pipe fabrication.
Mammoet has noticed a corresponding move toward consolidation in contracts to improve coordination. Historically, EPCs would shop out as many crane lifts as possible to different contractors, Roest says. Mammoet might get the heavy or technical lifts, and one or two other crane companies would be hired for other lifts. But “it turns out that’s not always the best way to go,” because the contractor has to interface with multiple subcontractors, says Roest. In response, Mammoet is being tapped to handle all lifts on more jobs. “For us it’s a massive change in the U.S.,” he says.
Mammoet didn’t have that arrangement with McDermott, but Mammoet’s experience still helped McDermott achieve a major innovation on the MEG plant. McDermott needed a ring crane to lift the MEG plant’s 345-ft wash tower that was fabricated in Korea and shipped to Lake Charles. After doing “quite a bit of engineering up front to make sure we could,” Roest says, Mammoet offered to extend the reach of its PTC 200 DS ring crane to 713 ft, allowing it to reach every corner of the MEG plant site and to complete 64 needed lifts. The innovation allowed McDermott to change its schedule for lifts without incurring additional costs.
“It became a unique opportunity. It allowed us to set all of the equipment a month quicker because we didn’t have to move around cranes,” says Jonathan Moore, project manager at McDermott.
Mammoet also played a role in another innovation by moving the modular heater units from Gulf Island Fabrication in Houma. Because the center of gravity on the units was so high, and the bayou relatively shallow, Mammoet conducted a trial run to ensure success.
Once each of the modules reached the LACC site, Mammoet used its self-propelled transporters to put the modules on previously constructed piers. Even absent the water transport, modularizing the units off site was a leap of faith for LACC and McDermott. “Heaters are very challenging to modularize because of intricacies of the pipe,” says Rangraj. “We were initially concerned.” Everything had to be perfect. “The engineering and construction has to be precise. If one concrete pier is out, it would be a disaster,” he says.
But the risk paid off, not only because it reduced the need for on-site labor. Access that was 360° around the module made the work more efficient than it would have been on site. Quality control was also improved because it was built partially indoors.
Labor will continue to be an issue for the chemical plants along the Gulf Coast as additional projects continue to be announced. Fluor and Zachry are both working on what’s billed as the world’s largest propylene oxide/tertiary butyl alcohol plant, being built by LyondellBasell in Channelview, Texas, and expected to come online by 2021. Total announced in September it will expand its Bayport Polymers Plant at a cost of more than $1 billion. In August, DowDupont announced it had begun construction to expand its 1.5-million-tpy ethane cracker in Freeport, Texas. Labor demands for those and other chemical plants, in addition to the mega LNG facilities being built along the Gulf Coast, are putting further strain on an already limited labor pool. In response, wages and per diems were expected to increase in the region this year, Moore says.
Worldwide Growth
The chemical activity, though, is not limited to the Gulf Coast. There have been dozens of announced and under-construction fertilizer plants in the Midwest. And then there’s Pennsylvania, where Shell, with Bechtel as the main works contractor, is building a $6-billion ethane cracker to take advantage of Marcellus Shale natural gas. It will be the first new cracker outside of the Gulf of Mexico in more than 20 years.
“The top two reasons Shell decided on Pennsylvania were proximity and abundance of feedstock, and proximity to customer base. Seventy-five percent of all the polyethylene demand is within a 700-mile radius of our facility,” says Ray Fisher, Shell spokesman.
The shale region could support another five ethane crackers, says Moore of ACC, and demand may warrant construction of those crackers. Worldwide demand for plastics has already outpaced other bulk materials, including cement and steel, according to a recent report from the International Energy Agency. By 2030, petrochemicals will account for more than a third of the growth in world oil demand and account for nearly half of it by 2050, according to the IEA. “Our analysis shows [petrochemicals] will have a greater influence on the future of oil demand than cars, trucks and aviation,” said Faith Birol, IEA’s executive director, in a statement.
And, IEA continues, “the production, use and disposal of petrochemical-derived products present a variety of climate, air quality and water pollution challenges that need to be addressed.”
The American Chemistry Council says new capacity is 30% more energy efficient than older plants. “A study by McKinsey & Co. found that on a global basis, for every unit of GHGs emitted directly and indirectly by the chemical industry, more than two units of emission savings are enabled through products and technologies provided to other industries and consumers,” according to the ACC.
ACC uses 2025 as the horizon for development of U.S. chemical plants. IHS-Markit says the U.S. will continue to dominate low-cost feedstock through 2030. “I certainly believe barring any black swan events, with our plentiful natural gas, favorable regulatory environment and the strong economy, I am confident we are going to see a significant activity level for at least the next five years,” says Manning. “All of us in the EPC industry are going to have to be prudent about what our resources and capabilities are. We have to be diligent and careful about what jobs we can do best.”
https://www.enr.com/articles/45920-shale-gas-fuels-us-chemical-plant-construction
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Looking Forward At US Energy Policy In 2019
Nov 22, 2018 | Forbes
By Dan Eberhart
As we gather with our families today and give thanks for the blessings of the past year, it is a good time to take stock of where energy policy and global oil markets are headed in 2019.
With Democrats winning a majority in the House and the return of divided government, it’s unlikely that both chambers of Congress and the White House will agree on broad, far-reaching energy legislation during the 116th Congress.
The new House majority will busy itself with conducting oversight of the Trump administration, which will slow but not stop the administration’s agenda on trade, the economy and energy production.
Congress has essentially taken itself out of the energy policy game – it’s been several years since lawmakers passed substantial changes to the bulk of federal statutes governing the energy sector. Incremental change is doable, but overall the chances for major policy shifts are low.
Oversight of the oil and natural gas sector has long been the domain of state-run agencies. The rise of federal oversight over methane emissions and wastewater disposal was a new phenomenon brought about by the previous administration. State officials have largely welcomed the return of regulatory autonomy, particularly oil- and gas-producing states like Texas, North Dakota, New Mexico, Pennsylvania, Alaska.
The Trump administration’s “energy dominance” policy has steadily unraveled the regulatory agenda of the previous administration into the fossil fuels industry – reversing course on Clean Power Plan, methane emissions, and pulling out of the Paris climate agreement over economic concerns.
However, more can be accomplished at the federal level to ensure that the United States remains the world’s largest oil and gas producer and a powerhouse in energy markets for the foreseeable future, reaping the huge economic and geopolitical benefits that come with this status.
The Interior Department can look for ways to maximize federal onshore gas and oil leasing. Lengthy permit turnaround times remain an intractable issue that must be solved if the Trump administration is going to make good on its promise to boost interest in federal lands and offshore areas. It is not enough to simply make more land and offshore acreage available – we also have to remove barriers to investment.
There is big money to be had by the federal treasury here – revenue that could be used for public programs and to pay down the debt. Just look at the near $970 million haul in New Mexico’s most recent lease sale.
Narrowing the scope of National Environmental Policy Act (NEPA) reviews to the most unique aspects of a drilling project is one way to accomplish this. Wait times for federal permits are considerably longer than the permitting time for drilling on private lands, including NEPA reviews that must be conducted at anywhere from three to five different points throughout a project. Streamlining the environmental review process, particularly given the nature of “multi-well pad drilling” for shale oil and gas, would be a significant step forward. It also can – and should – be done without reducing the protection of the environment.
Tort reform is another area where the regulatory process can be improved. Too often environmental activist and indigenous groups have used the NEPA process to challenge vital infrastructure projects in federal court. Trump’s efforts to fast-track the Keystone XL pipeline, for instance, have been set back by lawsuits, adding roughly $100 million-$200 million in cost to the 1,184-mile pipeline, according to TransCanada. While most of these projects will eventually be built, the use of the courts to delay them for as long as possible is designed to inflict economic pain on companies. That strategy not only discourages investment but also increases energy costs for consumers and forces producers to find other routes – primarily rail and trucking – to less efficiently move their product to market.
Over time, Trump’s appointment of conservative judges should help alleviate some of these legal obstacles to economic growth but for now, the administration’s hands are tied to a certain extent without further regulatory reform.
The White House has said it will work with Congress to streamline federal siting and environmental reviews, which will require all of its legislative skills now that Democrats control the House. While infrastructure spending may offer a rare opportunity for agreementbetween the two parties, Democrats are unlikely to go along willingly with efforts to revisit the nation’s bedrock environmental laws.
Trump’s $1.5 trillion infrastructure plan is also still largely without a funding structure. Under the plan, roughly $200 billion would come from the federal treasury, while the rest the White House envisions coming from state and local sources, and public-private partnerships. Democrats may not be opposed to new spending, but there’s something of a crisis brewing among Republicans who traditionally oppose unfunded spending.
Critical energy infrastructure is needed now more than ever as the United States emerges as an oil and natural gas exporting giant. Virtually every new incremental barrel of oil and much of the natural gas produced must be exported, which means we need more pipelines, export terminals, pumping stations, gas processing and treatment facilities, liquefaction plants and port expansions. Much of this spending could come from the private sector if the federal government can remove barriers to investment.
Trump’s plan is to set a time limit of 21 months for lead agencies to complete environmental reviews, and a hard deadline of three months after that for agencies to make decisions on federal permits. Setting firm time frames – something industry and Republican lawmakers have long pushed for – would reduce the number of redundant hoops that affect the ability of project projects to be built in a timely and cost-effective manner.
Additionally, the plan talks about requiring lead agencies on NEPA reviews to develop a single document rather than each agency conducting separate reviews, something that is currently encouraged in existing White House guidance but not mandated. The plan would also seek to narrow the scope of NEPA reviews by excluding consideration of alternatives that are not “legally, technically, or economically feasible.” It also seeks to tighten parameters to make it more difficult for nuisance litigation to artificially drag out the review process – and in some cases obtain legal rulings by lower courts that can cause costly delays that only benefit the lawyers.
Overhauling the environmental review process would be a major boost to the U.S. oil and gas sector and the economy, but it’s also a heavy lift in the era of “keep it in the ground,” especially as House Democrats talk of reviving the House Select Committee on Energy Independence and Global Warming and giving it legislative authority for the first time.
Failure to improve the process for siting pipelines and other critical infrastructure will artificially constrain the U.S. oil and gas sector and reduce output starting as early as 2020. It would also hamper progress on cutting carbon emissions by impeding the transition to cleaner-burning natural gas for electricity generation.
The White House should also remain focused on expanding markets abroad for U.S. energy. Secretary of Energy Rick Perry’s recent visit to Central and Eastern Europe highlighted the importance of diversifying Europe’s supply of natural gas to reduce dependence on Russia. Asia is also an important market for U.S. producers, especially China, which is locked in an ongoing trade fight with President Trump. It’s important to remember that energy exports offer the best way for the United States to reduce its trade deficit with China.
We should also promote the newly updated BUILD Act, which reforms how the United States finances public-private investments overseas. The law could help U.S. energy producers by offering attractive financing terms for projects overseas – specifically foreign import terminals and other infrastructure needed to receive U.S. LNG – that could help American companies ship more energy overseas at competitive costs.
https://www.forbes.com/sites/daneberhart/2018/11/22/looking-forward-at-us-energy-policy-in-2019/#2a2997011acc
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Dominion Atlantic Coast Pipe Approval Suspended by Army Corps
Nov 21, 2018 | BNA Daily Environment Report
By Rachel Adams-Heard
A U.S. Army Corps of Engineers office in North Carolina suspended authorization for Dominion Energy’s Atlantic Coast natural gas pipeline to conduct certain work after a key permit was halted by a federal appeals court, according to a letter.
“Because of that order, it is uncertain whether” the Corps’ Nationwide Permit 12, which is used to authorize work on pipelines, “will ultimately be available to authorize work for ACP in North Carolina,” the Nov. 20 letter said. The Corps’ Wilmington District “finds it appropriate to temporarily suspend” authorization and “await clarity.”
The U.S. Court of Appeals for the Fourth Circuit Nov. 7 granted environmental groups’ request to halt the project pending further review.
The 600-mile (966-km) Atlantic Coast project is being developed by Dominion, Duke, and Southern Co. and would cross West Virginia, Virginia, and North Carolina.
Dominion didn’t immediately respond to a request for comment
Nearly identical letters sent by Corps’ offices in Pittsburgh, Pa., and Norfolk, Va., according to the Sierra Club.
“There is no right way to build this dirty, dangerous pipeline and we won’t stop fighting it until construction is permanently halted,” Sierra Club Beyond Dirty Fuels Campaign Director Kelly Martin said in a statement.
The Sierra Club has received funding from Bloomberg Philanthropies, the charitable organization founded by Michael Bloomberg. Bloomberg Environment is operated by entities controlled by Michael Bloomberg.
https://news.bloombergenvironment.com/environment-and-energy/dominion-atlantic-coast-pipe-approval-suspended-by-army-corps
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Massachusetts Gas Companies Adopt Stricter Safety Standards
Nov 21, 2018 | BNA Daily Environment Report
By Adrianne Appel
Natural gas companies in Massachusetts agreed to stricter voluntary safety practices following recent explosions, Gov. Charlie Baker (R) announced Nov. 21.
Massachusetts is the first state where all natural gas companies have adopted the tougher standards, Baker said.
The agreement comes after a series of pipeline explosions in three Massachusetts communities in September that killed one person, injured 25, and destroyed 131 homes and businesses. The explosions in pipelines managed by NiSource Inc. affiliate Columbia Gas were caused by over-pressurization.
Shortly after the explosions, the Massachusetts Department of Public Utilities asked the seven natural gas companies working in the state to adopt safety standardsrecommended by the American Petroleum Institute.
Seven Companies AgreeThe seven companies that made the agreement—Columbia Gas, Berkshire Gas, Blackstone Gas, Eversource Energy, Liberty Utilities, National Grid Plc, and Unitil—are members of the Northeast Gas Association.
As part of the safety protocols, the companies will tighten up their oversight of contractors, Thomas Kiley, the association president, said in a Nov. 21 statement. They also will create plans for how they will investigate, respond to, and correct safety incidents and take steps to improve record keeping, Kiley said. The companies also will train employees in safety operations and in analyzing and managing pipeline risks.
National Grid has been following the standards for years, Christine Milligan, a spokeswoman for the company, told Bloomberg Environment Nov. 21.
Baker said his administration will work with the gas companies “to ensure that a culture of safety is in place at every level of utility business operations, and that the best possible policies and oversight are in place to protect public safety.”
Columbia Gas didn’t reply to a Bloomberg Environment request for comment Nov. 21.
https://news.bloombergenvironment.com/environment-and-energy/massachusetts-gas-companies-adopt-stricter-safety-standards
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OPEC’s Worst Nightmare: Permian Basin About to Pump a Lot More
Nov 21, 2018 | BNA Daily Environment Report
By Javier Blas
The map lays out OPEC’s nightmare in graphic form.
An infestation of dots, thousands of them, represent oil wells in the Permian Basin of West Texas and a slice of New Mexico. In less than a decade, U.S. companies have drilled 114,000. Many of them would turn a profit even with crude prices as low as $30 a barrel.
OPEC’s bad dream only deepens next year, when Permian producers expect to iron out distribution snags that will add three pipelines and as much as 2 million barrels of oil a day.
“The Permian will continue to grow and OPEC needs to learn to live with it,’’ said Mike Loya, the top executive in the Americas for Vitol Group, the world’s largest independent oil-trading house.
The U.S. energy surge presents OPEC with one of the biggest challenges of its 60-year history. If Saudi Arabia and its allies cut production to keep prices higher, shale will thrive, robbing them of market share. But because the Saudis need higher crude prices to make money than U.S. producers, OPEC can’t afford to let prices fall.
Cartel Squeezed
So the cartel finds itself squeezed between the-sky’s-the-limit U.S. output and softer demand growth. The 15 members, and allies including Russia, Mexico, and Kazakhstan, will discuss the possibility of their second retreat from booming American production in three years when they gather Dec. 6 in Vienna.
OPEC helped create the monster that haunts its sleep. After it flooded the market in 2014, oil prices crashed, forcing surviving U.S. shale producers to get leaner so they could thrive even with lower oil prices. As prices recovered, so did drilling.
Now growth is speeding up. In Houston, the U.S. oil capital, shale executives are trying out different superlatives to describe what is coming.
“Tsunami,’’ they call it. A “flooding of Biblical proportions’’ and “onslaught of supply’’ are phrases that get tossed around. Take the hyperbolic industry talk with a pinch of salt, but certainly the American oil industry, particularly in the Permian, has raised a buzz loud enough to keep OPEC awake.
Price Tumble“You’ve got an awful lot of production that can come in very economically,’’ said Patricia Yarrington, Chevron Corp.’s chief financial officer. “If you think back four or five years ago, when we didn’t really understand what shale could do, the marginal barrel was priced much higher than what we think the marginal barrel is priced today.’’
That shift makes shale resilient to a price tumble. After touching a four-year high in October, West Texas Intermediate, the U.S. benchmark, has fallen by more than 20 percent.
Only a few months ago, the consensus was that the Permian and U.S. oil production more widely was going to hit a plateau this past summer. It would flat-line through the rest of this year and 2019 due to pipeline constraints, only to start growing again—perhaps—in early 2020.
If that had happened, Saudi Arabia would have had an easier job, most likely avoiding output cuts next year because production losses in Venezuela and sanctions on Iran would have done the trick.
Instead, August saw the largest annual increase in U.S. oil production in 98 years, according to government data. The American energy industry added, in crude and other oil liquids, nearly 3 million barrels, roughly the equivalent of what Kuwait pumps, than it did in the same month last year. Total output of 15.9 million barrels a day was more than Russia or Saudi Arabia.
Rail Cars
The growth was possible because oil traders decided not to be stymied by the dearth of pipelines. They used rail cars and even trucks to ship barrels out of the region. But pipeline companies unexpectedly increased capacity, in part because they added chemicals known as “drag reduction agents’’ to increase flow. A new pipeline came online earlier than anticipated, and with three more expected between August and December next year, production is poised to skyrocket.
“The narrative has shifted significantly,’’ said John Coleman, a Houston-based oil consultant at Wood Mackenzie Ltd. “Six months ago, the market expected the bottleneck to ease in the first quarter of 2020. Now, it expects it in the second to third quarter of 2019.’’
Knowing that more transportation would be available next year, Permian companies are drilling wells but, for now, aren’t fracking many of them. Those wells are becoming a reservoir of ready-to-tap production once the new pipelines—Gray Oak, Cactus II, and Epic—come online.
“We’re going to see a reacceleration of well completions in the Permian in the second half of 2019,’’ said Corey Prologo, head of oil trading in Houston at commodity merchant Trafigura Group Ltd. “The pipelines are going to fill up very quickly.’’
The only obstacle for another surge is export capacity, as most of the incremental output will have to ship overseas. With terminals nearly full, Permian barrels could end piling up in the ports of Corpus Christi and Houston.
Transportation BottlenecksEven so, few in Houston, or in Midland, Texas, the hub of the Permian region, believe that growth will be anything but gangbusters next year because of the clearing of transportation bottlenecks.
“It will be a series of events throughout 2019 that occur,’’ said Jeff Miller, chief executive officer of Halliburton Co., the world’s biggest provider of fracking services. “But it’d be easy to see, as we finish the year, things being perfectly normal.”
By the end of 2019, total U.S. oil production, including so-called natural gas liquids used in the petrochemical industry, is expected to rise to 17.4 million barrels a day, according to the U.S. Energy Information Administration.
At that level, American net imports of petroleum will fall in December 2019 to 320,000 barrels a day, the lowest since 1949, when Harry Truman was in the White House. In the oil-trading community, the expectation is that, perhaps for just a single week, the U.S. will become a net oil exporter, something that hasn’t happened for nearly 75 years.
Saudis Concede
Saudi officials concede that the tsunami is coming. OPEC estimates that to balance the market and avoid an increase in oil inventories, it has to pump about 31.5 million barrels a day next year, or about 1.4 million barrels a day less than what it did in October.
Global oil demand has so far absorbed the extra U.S. crude barrels, limiting the impact on prices. The loss of output from Venezuela and to a lesser extent, Iran, even allowed Saudi Arabia, Russia, and a few others to boost production. But for the cartel, U.S. shale remains as intractable as in the past.
In early 2017, Khalid Al-Falih, the Saudi oil minister, told an industry forum that Riyadh has learned the lesson that cutting production “in response to structural shifts is largely ineffective.’’ The kingdom would only make one-time supply adjustments to react to “short-term aberrations,” he said, and otherwise allow “the free market to work.”
Nearly two years later, Al-Falih has lost enough proverbial sleep. He is about to make a U-turn. He will battle what increasingly looks like a structural problem: booming U.S. production.
—With assistance from Kevin Crowley, Catherine Ngai, and Dave Merrill.
https://news.bloombergenvironment.com/environment-and-energy/opecs-worst-nightmare-permian-basin-about-to-pump-a-lot-more
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Railroads’ Quarter 3 PTC Status Reports Show Continued Progress
Nov 22, 2018 | American Journal of Transportation
The Federal Railroad Administration (FRA) today released the 2018 Quarter 3 Positive Train Control (PTC) data, showing railroads’ continued progress toward meeting the year-end deadline for fully implementing PTC systems or qualifying for an alternative schedule.
“The progress made over the last year is a testament to what can be accomplished with proper focus and attention. We encourage any railroads seeking an alternative schedule to submit their formal requests in a timely fashion,” said FRA Administrator Ronald L. Batory.
The Quarter 3 data as of September 30, 2018, shows 24 railroads have installed 100 percent of the PTC system hardware required for implementation. Eleven other railroads have installed between 95 and 99 percent of the required hardware. All railroads using radio spectrum-based PTC have acquired sufficient spectrum. In part due to efforts from FRA, Quarter 3 data shows a 67 percent decrease in the number of “at-risk” railroads, down to five from 15 at the end of 2017. This is also a 44 percent decrease in at-risk railroads since Quarter 2 of 2018.
On August 24, 2018, FRA announced $203 million in grant awards for PTC implementation to 28 projects in 15 states. As of September 30, 2018, PTC is in operation on 71 percent of freight railroads’ required route miles, and 26 percent of passenger railroads’ required route miles.
FRA considered any railroad that had installed less than 95 percent of its PTC system hardware to be at risk of not meeting either the congressionally-mandated deadline of December 31, 2018, or the statutory criteria necessary to qualify for an alternative schedule. Hardware installation is an initial phase of implementation and only one of six statutory criteria required for an alternative schedule, which has a deadline of no later than December 31, 2020.
The five at-risk railroads as of Quarter 3 are the Capital Metropolitan Transportation Authority, Altamont Corridor Express, New Jersey Transit, Peninsula Corridor Joint Powers Board (Caltrain), and National Railroad Passenger Corporation (Amtrak). Together, they own or control approximately 1,302 route miles of the 58,000 route miles subject to the statutory mandate.
https://www.ajot.com/news/railroads-quarter-3-ptc-status-reports-show-continued-progress
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California, Quebec Cap-and-Trade Price Rises in Latest Auction
Nov 22, 2018 | BNA Daily Environment Report
By James Munson
California’s and Quebec’s latest auction of greenhouse gas emission allowances in a joint cap-and-trade market hit $15.31, almost a dollar higher than a fixed minimum price.
The price rise is significant because cap-and-trade is the backbone of each jurisdiction’s plan to reduce climate change, as well as a major revenue source for their environmental programs.
The two jurisdictions still have to wait for proceeds to be exchanged in U.S. or Canadian dollars to know the final amount of revenue each made from the sale of 78.8 million allowances, a note from Quebec’s environment ministry accompanying the results said Nov. 21.
California has earned $8.66 billion from the auctions since 2012 and Quebec has received C$2.65 billion ($2 billion) since 2013, according to the the California Air Resources Board and the Canadian environment ministry.
In a cap-and-trade program, the sources of emissions subject to a cap (for example, power plants or refineries) are required to hold allowances equal to the emissions they produce. Power plant operators acquire allowances through an auction (where they bid for the allowances they need) or allocation (where they are given a set number of allowances for free).
Advance Auction SalesThe auction, held Nov. 14, also included the sale of 9.4 million allowances for use in 2021 in what is known as an advance auction. The settlement price, which the two governments define as the price arising from an auction, in that case was $15.33, the note said.
California and Quebec force entities that emit more than 25,000 metric tons of carbon dioxide equivalent annually to participate in the market. The allowances, which the entities can also trade on a secondary market, give the entities to pollute.
The settlement price at the last auction, held in August, hit $15.05, and $14.90 in the advance auction.
The Nov. 14 auction was the second to take place since Ontario left the cap-and-trade market in July. Quebec and California have held run a joint cap-and-trade program since 2014.
They set the minimum price at $14.53 in both the current and advance auctions held this month. The minimum price, which rises over time, is meant to push each jurisdiction’s economy toward emission reduction targets.
https://news.bloombergenvironment.com/environment-and-energy/california-quebec-cap-and-trade-price-rises-in-latest-auction
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Nov 21, 2018 | Environmental Defense Fund
By Katelyn Roedner Sutte
Today’s strong California-Quebec November 2018 carbon market auction results are the continuation of a month of good news about California’s landmark climate program. Cap-and-trade compliance is at 100% and emissions are falling, demonstrating that addressing climate change is an integral part of doing business in the Golden State. November’s auction by the numbers
· All 78,825,717 current allowances sold, clearing at $15.31, 78 cents above the $14.53 price floor and 26 cents above the August auction. This is the final auction before the floor price has its annual increase.
· All of the 9,401,500 future vintage allowances offered sold at $15.33, 43 cents higher than in August. The current floor price of $14.53 will also increase for future allowances in the next auction.
· An estimated $813,013,694 was raised for California’s Greenhouse Gas Reduction Fund, which will go to support climate investments across the state and further reduce greenhouse gas and local air pollution. California’s market is strong & confidence is high
One critical data point showing the strength of this market is that the California Air Resources Board (CARB) reported 100% compliance from all entities covered by cap and trade for the three-year compliance period from 2015 to 2017. California businesses understand the program and know how to make it part of their business plan.
At the same time, greenhouse gas (GHG) emissions are falling, which is the key metric of program success. California’s ambitious 2030 target and the cap-and-trade program’s permitting allowances to be “banked” for later use mean businesses have an incentive to keep emissions well below the cap if possible rather than emit up to the level of the cap. This helps keeps emissions low but demand during auctions strong and steady.
The November auction results demonstrate yet again that the program has the right features to keep the market stable and drive emission reductions.
· This is the 7th cap-and-trade auction in a row where current allowances have sold out. Despite Ontario joining (and then departing) the program the market has remained stable and demand strong.
· Demand at this month’s auction in particular could be driven in part by anticipation of the increased price floor starting in 2019. November’s auction was the final opportunity to purchase allowances at the $14.53 floor price. In 2019 this price will increase 5% plus the rate of inflation, to approximately $15.60 floor price, so businesses might be planning ahead.
· The short-term restriction of allowance supply due to the “24 month rule” could also have helped boost demand in November’s auction. Almost 21 million allowances that have been unsold for 24 months were transferred to the Allowance Price Containment Reserve. This has the impact of a temporary cap tightening.
· November’s auction is the 2nd in a row where future vintage allowances have sold out, demonstrating that market participants have high confidence in the program post-2020. California’s emissions keep falling
Earlier this month, CARB released 2017 data from businesses required to report and verify their greenhouse gas emissions in California (known as the MRR report), which shows that GHG emissions continued to drop in 2017.
Between 2016 and 2017, total reported emissions (both those covered and not covered by cap and trade) fell by about 3.5 million metric tons, or 1.4%. Though not as large as the drop reported for 2016, this represents the fifth consecutive year of emissions reductions (7.5% since 2012), and is a strong indicator that California can keep emissions declining below the 2020 emissions reduction goal.
In every year since 2012, the electricity sector is responsible for the bulk of overall reductions. According to a CARB analysis, this reflects statewide trends including a 22% increase in solar electricity and a 50% increase in hydroelectricity, and a simultaneous decrease in electricity imports, especially from fossil fuels.
The 2017 MRR report also suggests sectors that regularly increase emissions may be approaching a turning point. Transportation fuel suppliers, responsible for the largest share of emissions in the MRR, have reported a decreasing growth rate since 2013. Between 2016 and 2017 emissions from this sector increased by just 1.3 MMt CO2e, the first time emissions increased less than 1 percent. Cement plants, another group of facilities which consistently increase emissions, also appear to be successfully ratcheting down their emissions growth rate.
These trends are consistent with expectations that there would be more near-term reduction opportunities in the electricity sector while it might take longer to bend the curve of emissions downward in the transportation and energy intensive manufacturing sectors. They also give hope that in time, all sectors of California’s economy can transition to a clean future.
California in 2017 outpaced the US on population, GDP, and employment growth. Over the same period, California continued to reduce emissions at least as much as energy-related CO2 emissions fell in the U.S. as a whole. California is demonstrating for another year that emission reductions and a thriving economy can go hand-in-hand. California is showing that with ambitious climate policies in place, the state can grow faster while making relatively deeper cuts in emissions compared to the U.S. as a whole. Next Steps
To maintain California’s robust market and stay on the path of reduced emissions and a thriving economy, CARB is in the process of updating the cap-and-trade regulations for 2021-2030. They are expected to adopt changes in the next couple of months. EDF will continue to watch this process closely and provide input to encourage the greatest possible climate ambition and maintain the environmental integrity of the program.
http://blogs.edf.org/climate411/2018/11/21/full-compliance-declining-emissions-robust-auction-its-november-in-californias-cap-and-trade-program/
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Can Pepco Charge Customers for Energy Efficiency? D.C. Climate Bill Draws Scrutiny
Nov 21, 2018 | Washington Post
By Fenit Nirappil
District residents may use less electricity but still see their power bills go up because of recent changes to pending climate legislation, according to environmental activists and some lawmakers.
The sweeping bill is meant to transition the city to 100 percent renewable energy by 2032 and to reduce carbon emissions. But the bill also has provisions to encourage people to use less energy, now a point of contention.
New language in the legislation allows D.C.-based Pepco Holdings to administer energy efficiency programs and pass the expense to customers at the time it would be allowed to charge customers to make up for lost revenue from lower usage.
Environmental activists call this a giveaway to the utility.
“Ratepayers would have higher bills in exchange for nothing,” said Mark Rodeffer of the D.C. Sierra Club.
Benjamin Armstrong, a Pepco spokesman, says its common for utilities across the country to include the costs of energy efficiency and to offset revenue loss in power bills. He said the new provisions would result in more customers taking advantage of energy efficiency programs.
Ralph Cavanagh, the energy program co-director for Natural Resources Defense Council, said it’s reasonable for utilities to try to profit from energy efficiency programs.
“You want to remove any conflict of interest that would cause the utility to earn more on higher polluting, higher costs resources than it can earn on energy efficiency,” said Cavanagh.
Rate increases in D.C. must be approved by the three-member Public Service Commission, which regulates utilities.
The climate legislation passed out of D.C. Council committees earlier this week, and is expected to come before the full D.C. Council for a first vote on Tuesday. But several lawmakers have already raised alarms over the new provisions.
“In essence, we are going to be having District residents pay twice,” D.C. Council Member Charles Allen (D-Ward 6) said at a recent committee hearing.
Council member Mary M. Cheh (D-Ward 3), the bill’s lead author, called the new provisions an “11th hour” dump from Pepco that hasn’t been vetted. She plans to try to strike out the language when the full council considers the legislation next week.
Cheh worries that authorizing Pepco to run energy efficiency programs would undercut the city’s Sustainable Energy Utility, which already runs similar programs with fewer costs to consumers.
“They might wind up being more expensive, and if there are any problems, the ratepayer might be on the hook for any liabilities that might ensue,” said Cheh in an interview.
The D.C. Climate Coalition is urging supporters to contact lawmakers to remove the new provisions from the legislation.
Council member Kenyan R. McDuffie (D-Ward 5), who leads the committee which inserted the language authorizing the rate increases, did not directly address the issue at a hearing this week. His office could not immediately be reached for comment.
When asked at the hearing about costs to consumers from the climate bill more broadly, McDuffie said they were inevitable.
“We have to balance those costs to consumers with our desire to move aggressively and swiftly toward the goals that have been outlined in this really comprehensive bill,” McDuffie said.
https://www.washingtonpost.com/local/dc-politics/can-pepco-charge-customers-for-energy-efficiency-dc-climate-bill-draws-scrutiny/2018/11/21/3a016b4e-edb0-11e8-baac-2a674e91502b_story.html?utm_term=.6e64234e4f5e
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