Marcellus Natural Gas Production Continues to Exceed Expectations

Marcellus natural gas production continues to surprise even the experts, reaching 12 billion cubic feet per day according to this report in the Daily Mail.  Oil  and gas industry employment is up, as Phil Kabler reports here. Not all the news is good, though.  Jared Hunt, Daily Mail business writer, reports on the diminished  likelihood of getting an ethane cracker in the region.

US Supreme Court to Hear Greenhouse Gas Rule Challenge

The U.S. Supreme Court has agreed to hear an appeal of Texas v. EPA, in which the D.C. Circuit Court approved EPA’s greenhouse gas (GHG) regulations.  Numerous industrial organizations and states had challenged the D.C. Court’s upholding of the Endangerment Finding, in which EPA concluded that GHGs from mobile sources represent a danger to U.S. health and welfare, and the Timing and Tailoring Rules, in which EPA described how it would regulate GHGs for stationary sources under the Clean Air Act.  The two primary objections raised by industry were that EPA’s conclusion that GHGs are a danger (and therefore a pollutant to be regulated) is  unsupported scientifically, and that EPA’s conclusion that GHGs are a pollutant under the mobile source program should not  automatically result in GHG regulations for  stationary sources under the New Source Review program.

The Supreme  Court has decided to  consider only the very narrow, but very important, question of “whether EPA permissibly determined that its regulation of greenhouse gas emissions from new motor vehicles triggered permitting requirements under the Clean Air Act for stationary sources that emit greenhouse gases.” EPA has taken the position that once a pollutant is regulated under the Clean Air Act’s mobile source rule, it is regulated under other portions of the  Act as well, including New Source Review.  The Supreme Court will now tell us whether that is correct, or whether EPA’s GHG regulations are limited to mobile sources, at least until EPA would initiate rulemaking to impose GHG limits on stationary sources.

EPA recently set GHG New Source Performance Standards for electric generators that would essentially prevent construction of new coal-fired generating plants, and is presently preparing to set GHG standards for existing sources as well.   The Supreme Court decision will determine whether EPA has authority to adopt those rules.

The Supreme Court’sorder is at http://www.supremecourt.gov/orders/courtorders/101513zor_4g25.pdf

ORSANCO Delays Mixing Zone Prohibition

ORSANCO (the Ohio River Valley Water Sanitation Commission)  has elected to delay its prohibition on mixing zones for bioaccumulative substances until October 16, 2015.  The prohibition had been scheduled to go into effect on October 16, 2013 for the following substances:

Bioaccumulative Chemicals of Concern

Lindane	Mirex
Hexachlorocyclohexane	Hexachlorobenzene
alpha-Hexachlorocyclohexane	Chlordane
beta-Hexachlorocyclohexane	DDD
delta-Hexachlorocyclohexane	DDT
Hexachlorobutadiene	DDE
Photomirex	Octachlorostyrene
1,2,4,5-Tetrachlorobenzene	PCBs
Toxaphene	2,3,7,8-TCDD
Pentachlorobenzene	Mercury
1,2,3,4-Tetrachlorobenzene	Dieldrin

During the extension of the mixing zone prohibition, dischargers will be expected to be working on reductions in bioaccumulative substances.

Ken Ward's article on the Commission's action is here. 

The High Cost Of Renewable Credits

Command and control economies just don't work.  Congress requires refiners to blend gasoline with ethanol, but right now  gasoline consumption is dropping  and  there are relatively few cars that can use more than a 10% ethanol blend,so  refiners can't use all the ethanol they are supposed to.  To compensate, they  have to buy credits - i.e., pay a penalty for failure to use enough ethanol.  That gets tacked onto the price of a gallon of gas.

Jeff Macke of Breakout summarizes it this way.

 The vast majority — around 90% — of American cars don't work with an ethanol blend over 10%. When the ethanol requirements continued to rise while demand for end product fell, the refiners were reduced to buying and selling RINs or Renewable Identification Numbers, which are, in effect, credits that allow refiners to meet the terms of the 2005 Clean Air Act without producing fuel that is unsuitable for most cars.

So as demand for gas falls, refiners need to buy more RINs. From just pennies-per-gallon in January, RINs had soared over $1.40 by last summer. Lutz says as much as 75% of the additional cost was passed along to the consumer.

 Therefore, in an attempt to force cleaner burning fuels into the marketplace, the EPA created a policy that ended up artificially inflating the cost of refining gas when demand fell. So the refiners and consumers got gouged for not burning enough fossil fuels. Only the government could make refinery companies look sympathetic.

See the story here.  The good news is that Macke believes EPA will provide some relief on  renewable fuel credits, dropping the price of gasoline to perhaps less than $3 a gallon.