Coos County Refuses to Coo for Fractivists

Constitution Pipeline - MarkindDaniel B. Markind, Esq.
Weir and Partners, LLP

 

Coos County voters do not back down to fractivists and reject a measure to ban to construction of the Jordan Cove LNG Export Terminal.

Following what generally was a quiet two weeks for shale news, a major decision came a sparsely populated area of the West Coast – Coos County, Oregon.

Last March, FERC took the unusual step of denying the proposed Jordan Cove LNG Terminal on the Oregon Coast and the Pacific Connector Pipeline that would have transported natural gas from Canada to Coos County for export.  In December that decision was upheld.

Following the Presidential election, Jordan Cove’s owners, Williams Partners and Veresen Inc. of Calgary, reapplied with FERC in January after the Trump Administration took office.  In response, opponents of the project put Measure 6-162 on the Coos County ballot.

coos county

This initiative, which would have banned the project, was written so broadly that most experts doubted its constitutionality.  Partially because of the constitutional question, many of the usual supporters of such initiatives did not put their weight behind Measure 6-162.  Still, Veresen spent over $600,000 to defeat it, dwarfing the $12,000 proponents could raise.

On Tuesday, the ballot initiative went down by over 3-1.  While there are many reasons for the resounding decision, the residents of rural southern Oregon clearly were not prepared to make a blanket statement that no pipelines or gas terminals will be allowed there.  Given that result, it would be interesting to see how residents in places like Garrett and Allegany County, Maryland, where fracking was banned by state law earlier this year, would vote if given the chance to actually weigh in on their own destiny.

Closer to home, the Pennsylvania Department of Environmental Protection reported yesterday that the number of drilling permits has dropped 59% from this time in 2014.  Despite that, Pennsylvania gas production continues to boom.  Last year Pennsylvania produced 5.1 Tcf of natural gas.  The State is such a colossus that it is now the second largest natural gas producer, behind Texas.

Putting that in perspective, Texas has had a robust energy industry for a century and Pennsylvania for a decade.  It is extraordinary how prolific Pennsylvania’s gas fields are (especially in the Northeast) and how skilled the industry is at extracting the gas.

That’s the good news.  On the flip side (and while not bad long term), the industry still needs to do a better job of policing itself.  Last week FERC suspended action on the Rover Pipeline in Ohio after state officials raised concerns over the spilling of 2 million gallons of a nontoxic bentonite mud used as drilling lubricant.

Coos County

The delays should be short term (only a month or two), but they highlight the fact that the industry has to hold itself, and be held, to the highest standards.  The potential profits and public benefits (including environmental benefits) of shale gas and oil extraction are huge, but so are the environmental obligations.

Mistakes always will be made, and nobody is perfect, but for those of us who support both shale extraction and environmental protection, cutting corners, being sloppy or simply not caring isn’t good enough.  Not in this industry.

Next week President Trump travels overseas for the first time.  His first stop is Saudi Arabia.  Formerly, of course, the Kingdom was indispensable to us for economic reasons.  Now its significance is as much military and political.  It acts as a check on Iranian influence.

Trump goes to Saudi Arabia with a stronger hand than previous Presidents thanks entirely to the shale industry.  OPEC no longer has control over world oil price or supply.  As a result, the power relationship has shifted accordingly.

New potential alliances have come into being (Egypt, Israel, Saudi Arabia for example) while old ones have frayed.  President Trump is expected to initiate his own peace proposals for the Middle East, or at least the Arab/Israeli conflict.  To once again paraphrase P. T. Barnum, “No one ever went broke betting against Arab/Israeli peace”.  Should the President actually make headway, however, he can thank the changed power relationships due to shale for significant influence in the attitudes of the parties.

Finally, Moody’s Investors Service reported last week that the abundance of Marcellus Shale gas threatens to “wreak havoc” in the electrical generation market in the “PJM” area – the land affected by the PJM interconnection.  This is a huge area from Delaware to Michigan.

The market disruption will be such that there could be widespread closures of coal power plants (again meaning a cleaner environment) and that other power generators will be squeezed.  In fact, these other power generators (such as nuclear) are running to their state legislatures looking for subsidies, all because of shale.  How ironic it will be if we end up paying subsidies to keep open nuclear power plants after so many people spent so many years trying to shut them down.

The post Coos County Refuses to Coo for Fractivists appeared first on Natural Gas Now.

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