Skip to main content

Features

All of the Above

by Adam Bruns

In July 2017, U.S. Secretary of the Interior Ryan Zinke announced that the Department would offer 75.9 million acres offshore Texas, Louisiana, Mississippi, Alabama, and Florida for oil and gas exploration and development. It wasn’t new: Offshore leasing was going on under the previous administration too. But it was one of many steps taken during the year — including, yes, the drastic reduction in the size of Bears Ears and Grand Staircase national monuments — to further maximize the prospects for energy development on public lands.

"Our Outer Continental Shelf lands offer vast energy development opportunities and we are committed to encouraging increased energy exploration and production in these offshore areas to maintain the nation’s global dominance in energy production," Zinke said in July. "As a global energy leader, we will foster energy security and resilience for the benefit of the American people. A strong offshore energy plan that responsibly harnesses more of our resources will spur economic opportunities for industry, states, and local communities, creating jobs and revenue.  That’s why we also are developing a new national Outer Continental Shelf oil and gas program that will best meet our future energy needs."

The announcement followed a ceremony in April when President Donald Trump, joined by Secretary Zinke and members of Congress from coastal states, signed the America First Offshore Energy Executive Order, which aims to expand OCS energy exploration and development through review of the five-year leasing program and reconsideration of certain regulations pertaining to offshore energy potential.

"I am going to lift the restrictions on American energy, and allow this wealth to pour into our communities," said President Trump.

California: Energy Capital

In a number of communities, American energy was already doing quite well: In the Marcellus and Utica shale regions in Pennsylvania, Ohio and West Virginia, for instance, natural gas production growth (to 17 billion cubic feet per day in 2015) and growth potential caused the U.S. Energy Information Administration to project it would double in the next 35 years, accounting for 40 percent of the nation’s natural gas production.

California can be a land of contrasts, but both sides of the coin point to its value as an energy hub. Lauded worldwide for its progressive environmental and energy policies, the state is also home to 19 oil refineries, producing among other products around 7 million barrels per week of gasoline. Meanwhile, In 2016, turbines in wind farms generated 13,500 gigawatt-hours of electricity — about 6.81 percent of the state’s gross system power.

Zinke Gov Brown

Friends? U.S. Secretary of the Interior Ryan Zinke gave a thumbs-up and California Gov. Jerry Brown did not in this photo from an April 2017 meeting. The DOI manages 23 million acres of federal land in California.

Photo courtesy of DOI

California Governor Jerry Brown signed into law in July 2017 an extension of the state’s cap-and-trade plan to 2030. It had been set to expire in 2020. The law exempts oil refiners, fossil fuel power plants and food processors, among others, from direct emissions regulations, requiring them to buy permits to release greenhouse gas emissions into the atmosphere. The measure also includes tax breaks for some of those same industries.

The move comes even as the state seeks to clamp down further on emissions in general. Eleven years ago, California’s Global Warming Solutions Act (AB 32) set the goal of reducing greenhouse gas emissions to 1990 levels by 2020. "California is on track to exceed that target, while the state’s economic growth has continued to outpace the rest of the country," said the California Air Resources Board in December, as it approved the 2017 Climate Change Scoping Plan. The plan calls for further reducing climate-changing gases an additional 40 percent below 1990 levels by 2030, and will require California to double the rate at which it has been cutting emissions of those gases.

Widening the Gulf?

Refiners in the Gulf of Mexico have largely recovered from capacity reductions caused by Hurricanes Harvey and Irma in fall 2017, and related petrochemical investment has rebounded too in such locations as Corpus Christi, where the port commission in December approved a lease agreement with Vitol Inc. and Harvest Pipeline Company for lease of a 22-acre tract for development of a state of the art crude oil export terminal and also approved a lease agreement with Gulf Coast Growth Ventures (GCGV) Asset Holding LLC — an ExxonMobil-SABIC JV — for a 13-acre multipurpose cargo dock and a 35-acre marine terminal facility at the Port of Corpus Christi. GCGV plans to construct and operate a world-scale ethane steam cracker for production of ethylene and derivative units for production of polyethylene, and monoethylene glycol (MEG). The project will use ethane gas from major production areas in the US and export the polyethelene and MEG to markets worldwide.

Like California, this area of Texas likes its energy in all forms too: Also in December, Port Corpus Christi announced it expected to reach a new wind turbine cargo milestone by handling more than 3,000 large wind turbine components including wind turbine blades and tower sections. While those components end up at wind farms across the nation, Texas continues to lead the nation as the no. 1 wind energy industry state with over 20,000 MW of installed wind power capacity. In 2017 wind power surpassed coal-fired power generating capacity in Texas.

Meanwhile, out in the Gulf itself, the Gulf of Mexico OCS, covering about 160 million acres, has technically recoverable resources of 550 million barrels of oil and 1.25 trillion cubic feet of gas, accounting for nearly three-fourths of the oil and a fourth of the natural gas produced on federal lands. As of July 3, 2017, 15.6 million acres on the U.S. OCS were under lease for oil and gas development (2,947 active leases) and 4.1 million of those acres (842 leases) were producing oil and natural gas. More than 97 percent of these leases are in the Gulf of Mexico; about 3 percent are on the OCS off California and Alaska.

On July 6 — reinforcing the theme that America’s independence and its energy independence might be intertwined — Secretary Zinke signed a secretarial order to tackle permitting backlogs and delays, identify solutions to improve the permitting process on federal lands, and to identify solutions to improve access to additional parcels of federal land that are appropriate for mineral development. As of January 31, 2017, the Bureau of Land Management (BLM) had 2,802 Applications for Permit to Drill (APD) pending. The five BLM field offices with the highest number of pending APDs were:

  • Casper, Wyoming: 526
  • Vernal, Utah: 506
  • Dickinson, North Dakota: 488
  • Carlsbad/Hobbs, New Mexico: 388
  • Farmington, New Mexico: 152

“Oil and gas production on federal lands is an important source of revenue and job growth in rural America but it is hard to envision increased investment on federal lands when a federal permit can take the better part of a year or more in some cases," Zinke said.

All in all, it was a year to remember for energy industry proponents wishing to optimize all of the nation’s assets. Zinke summed up his and their outlook:

"I’ve spent a lot of time in countries across the world," he said, "and I can tell you with 100 percent certainty it is better to develop our energy here under reasonable regulations, rather than have it produced overseas under little or no regulations."

All of the Above

by Ron Starner

how can a state ranked sixth and seventh in production of natural gas and oil, respectively, also be home to the world-leading National Renewable Energy Laboratory? How does an oil and gas sector that employed 233,000 and contributed more than $31 billion to the state economy in 2015 feel at home in the same territory that requires investor-owned utilities to acquire 30 percent of their power from renewables by 2020?

Very comfortably, it turns out. Two recent projects demonstrate why.

In late 2016, Houston-based BP’s U.S. Lower 48 onshore business announced it would establish its 200-employee headquarters in Denver to be closer to its substantial asset position in the Rocky Mountain region and what it called “an important energy hub of the future.”

“In some ways, this is a homecoming for us,” said David Lawler, CEO of BP Lower 48, in reference to the past presence of BP legacy companies in Colorado. “With two-thirds of our operated oil and natural gas production and proved reserves in the Rockies, world-class universities nearby and a wealth of industry expertise in the region, Denver is a logical and strategic place for us to be and a natural fit for our business.” Lower 48 onshore operations span five states and seven oil and gas basins. The Lower 48 unit is the largest operator in the Colorado side of the San Juan Basin, where the company’s business interests in 1,300 wells span more net acres than a city twice the size of Denver.

In early 2016, Envision Energy — the second-largest wind turbine company in China, employing more than 1,000 and managing over 50 gigawatts of assets worldwide — announced the establishment of its Global Blade Innovation Center in Boulder, Colorado, to complement a global digital innovation lab in Silicon Valley and a digital energy research center in Houston. The new site is headed by Kevin Standish, the former chief engineer of blades at Siemens Wind in the U.S., which has its own robust presence in Colorado.

“The sustained trend in the wind industry towards increasing larger turbine rotor sizes and power ratings demands that turbine designers make simultaneous advances in aerodynamics, loads, controls, acoustics, structure, materials and manufacturing excellence,” said Standish at the announcement. “Our priority is to hire the best engineers from wind, aerospace and other high-tech industries to build up a top-notch team of engineering competence and capability here in Boulder.”

Living Laboratories

Envision more recently has embarked on an “Energy IoT and Smart City Technology Alliance” with Microsoft, Accenture and other partners, with an initial focus on China. But the effort has more than a little in common with Colorado’s own smart city plans at Peña Station Next, a self-sufficient community near Denver International Airport that embraces smart technology, community, clean energy, and mobility. The development will not only produce its own energy but also store that energy to move toward a completely redundant power grid. The development is committed to harnessing Panasonic’s CityNow technology and independent energy systems. Area developer L.C. Fulenwider, Inc., the airport and Panasonic Enterprise Solutions Company have led investment in the development, with Panasonic committing to a major presence in the area a few years ago. Meanwhile, the U.S. Department of Energy’s (DOE) National Renewable Energy Laboratory (NREL) is partnering with Panasonic and Xcel Energy to simulate and optimize the energy load profile of the 382-acre development.

All of the above were scheduled to be on full display in October 2017, when Peña Station played host to the DOE’s Solar Decathlon competition, where 12 collegiate teams from around the world test how well they did in building solar houses featuring the latest in energy-efficient design, smart home solutions, water conservation measures, electric vehicles and sustainable buildings. Linda Silverman, Solar Decathlon director, has been with DOE for nearly 30 years, and has Denver connections, having earned her bachelor’s degree in finance at the University of Colorado. She’s seen the area evolve to becoming a national sustainability leader.

“I remember looking toward Denver and seeing the brown cloud,” she says of the region’s past pollution, which led people to see energy as a dirty industry. NREL’s establishment in 1977 began to turn things in a new direction. Its presence was just one factor leading DOE to bring its Solar Decathlon to town. In addition to having a big enough venue, a strong family of universities and a strong media market, Silverman says, Denver is a place “where people are really interested in energy efficiency, renewable energy and innovative building.”

A 2012 study of eight years’ worth of Solar Decathlons found that 16 percent of students on the competing teams had started their own clean energy firms, and 76 percent were employed in the overall clean energy field. Silverman says 15 years of competitions has spurred her team to launch a Solar Decathlon alumni association. That sort of select global community has a lot in common with the corporate and higher education communities of Colorado. Silverman says NREL, the Colorado School of Mines, her alma mater in Boulder and the University of Denver (a collaborator with a UC-Berkeley team at the Decathlon) contribute to a critical mass of energy experience in the state.

Meanwhile, the real-life lab at Peña Station — situated on the University of Colorado A line commuter rail network linking downtown Denver and the airport — is taking things to the next level. Linda Silverman calls Peña Station a particularly compelling site because its smart-city aspirations mesh so well with the vision of the event, i.e. exploring new ways of living and working with energy consumption in mind. A solar-powered parking lot is already in place for the event, taking advantage of the state’s more than 300 sunny days a year.

“So people can see the future,” she says, “right there.”