Energy Week – August 6, 2021

Energy Friendly News from the Rocky Mountains and Elsewhere

– Dino Headed for Extinction? Gas Certifier Gets Competition, Incident Response Fail, NM Jumps to No. 2 Oil Producer, True Plastic Recycling, NREL Permitting App for Solar, More Taxes Will Solve Everything, IDCs Work so They Must Go.

By Dan Larson

Sinclair to Go the Way of the Dino? HollyFrontier Corp. added two more refinery pins to its map of the Western U.S. this week when it agreed to pay $2.6 billion for nearly all of Sinclair Oil’s assets.

In addition to Sinclair’s pair of refineries in Wyoming, HollyFrontier picked up branded marketing assets, pipelines, storage and distribution terminals. HFC currently operates refineries in Kansas, Oklahoma, New Mexico and Utah and storage facilities and pipelines. No word on if the company will maintain the Sinclair brand or if Dino the mascot faces extinction.

In May, HollyFrontier said it planned to buy Shell’s Puget Sound refinery in Washington as the oil major continued to sell down its refining assets.

Sourced from Only the Finest Gas Pockets: In May, Crestone Peak announced it agreed to sell natural gas to XCEL under its Responsibly Sourced Gas program. Natural gas produced under the program is monitored and certified by Project Canary as part of its TrustWell certification process. No word from Civitas, the company formed from the merger of Bonanza Creek and Extraction Oil that acquired Crestone in July, if it will continue participation in the Project Canary program under the new regime.

And this week, we learned that Chesapeake Energy will go with MiQ and Equitable Origin for certification of its natural gas. MiQ certification is based on “methane intensity, company practices and methane detection.” As one industry observer noted, the “Responsibly Sourced Gas market is getting crowded.”

Incident Response Fail: By Aug. 4, one of the three wells that had been burning for two weeks at a site near Keene, ND, was brought under control. The site is operated by Petro Hunt.

Update: On Aug. 9, the Bismarck Trib reported the remaining two wells were brought under control over the weekend.

Neither Petro Hunt nor Wild Well Control, the service company brought in to manage the well fires, provided local news media with details of how the well fire was being brought under control.

As a result, most information about the incident was coming from public officials and passersby with camera phones. This is generally considered a less than ideal way to manage a crisis story.

Basic incident response protocol calls for regular briefings for the press, whether it is an onsite interview or a simple, one-sentence post to social media. Just put something out there. Petro Hunt did itself no favors by hunkering down during the incident.

NM Rises to Second Largest Oil Producer: Operators across the Land of Enchantment boosted oil production by 4% during July to reach a record 1.22 million b/d, according to the monthly production report from the EIA released Friday.

New Mexico’s higher production levels topped North Dakota, moving it up to second among America’s biggest onshore oil suppliers.

Better Plastics Through Chemistry: Although science keeps getting dragged through the mud for political advantage and Twitter points, scientists always find a way to make things better. How about plastic that can be recycled economically.

The answer, according to scientists at the University of Akron’s School of Polymer Science, lies in identifying the proper chemical monomers to be combined to form the polymers needed to produce thermally stable and mechanically durable plastics. Polymers are the useful, everyday materials found in everything from tires and fishing boats to electronics and medical devices.

Existing methods for breaking down plastics for recycling either reduce the complex polymer structures by heating and then reforming the melted plastic into a new product. Or, heat the plastic to an even higher temperature and fraction off the resulting crude into various chemical building blocks. Both methods are expensive, limiting demand for the output.

What the polymer scientists in Ohio found was when certain monomers are selected for synthesis into useful polymers, they can be returned to their original state using the same catalysts they were formed with. As a result, plastic is reduced back to the original monomers, ready to be synthesized into a new plastic baby buggy bumper.

App Streamlines Solar Permitting: National Renewable Energy Lab announced release of an all-in-one app for securing solar installation permits. Intended to bridge the gap between installers and local governments, NREL says SolarAPP+ “reduces install times, reduces project cancellations, and expands access to renewable energy.”

It now appears the days of neutral R&D from government labs for energy types ended with the pandemic.

Forget Holes in the Boat, Bail Faster: Few things can make eyes glaze and attention drift faster than mention of U.S. budget deficit. But let’s give it a try anyway.

Now nearly double the nation’s GDP, the national debt is projected to grow again by 100% within the next 20 years. And the longer any sort of realistic effort to shrink the deficit is delayed, the further the nation’s sinks into debt.

There are three primary means of reducing the rate of debt expansion, let alone actually reducing the deficit. One requires cutting non-interest spending, the other involves raising revenues and a third approach is a combination of the two. Clearly, the Biden administration, as shown in its $1 trillion infrastructure bill and its $3.5 trillion 2022 budget proposal, sees raising revenue as its path to the future.

Night of the Zombie Oil Subsidy: If you are against everything about the oil and gas industry, “fossil fuel subsidies are a vexed and peculiar topic,” declares one anti-oil activist. Sort of like zombies.

“Everyone agrees they are bad and should be eliminated,” said no one who relies on reliable, affordable energy ever.

On the other hand, the writer laments, subsidies for oil and gas E&P never go away. But that does not stop the opposition from trying.

If you want to make oil and gas more expensive, push for the removal of traditional tax credits and investor incentives. In his first budget as president, Biden takes aim at 13 separate tax credits and deductions available to oil companies and their investors.

Among the baker’s dozen under the gun in the president’s wish list for 2022 are intangible drilling costs, enhanced oil recovery credit and the percentage depletion allowance.

For perspective, read this article for clear descriptions of the potentially devastating impact of Biden’s advocacy for the removal of tax breaks and investment incentives that seed development domestic oil and gas production.

Acknowledging their success while arguing for the removal of intangible drilling costs, the opposition writer declares “deducting IDCs encourages investment in new oil and gas projects and creates new jobs. That’s what subsidies do! It just happens that we no longer want to encourage investment in oil and gas,”

He concludes by proclaiming, “the issue is not whether the subsidy does what it’s designed to do. It does. The question is whether we still want to do the thing it does. We do not.”

Well, my friend, some of us do want to keep reliable, affordable oil and gas flowing from domestic sources to the American economy by allowing IDCs to do what they are designed to do.

Energy Week© is produced by Dan Larson Communications. It is intended to provide an alternative, positive view of the vital role energy plays in our lives, our work and our future. Inquiries welcome, diatribes ignored and clever ideas examined. Contact.