Energy Week – July 30, 2021

Energy Friendly News from the Rocky Mountains and Elsewhere

– Tourism Threatened, Poor Photo Choice, Mixed Message on Jet A, Older Workers Need Not Apply, Hazards of Cooking with Gas, Larimer County Boxes Out Wells, Guardians of the Catastrophe and Runner Up, One New Logo Replaces Three, Oil Prices Flat.

By Dan Larson

Peak Season: Stopped in Idaho Springs for a tankful and a cold drink on Friday noon and was gratified to see dozens of out-of-state license plates fueling up at the busy gas stations. The line inside the convenience store moved quickly while back outside, the whole town seemed to buzz with tourists. Yes, it is the peak of the summer season and the mountains are again drawing crowds of delighted travelers.

After missing a year, Colorado’s tourist economy resumed its place as a prime supplier of new dollars coming from somewhere else. Those new dollars support jobs, commerce and public revenue. Busy, free-spending crowds appearing across Colorado highlight the recklessness behind the unrelenting squeeze on supplies of motor fuel. That continuous pressure to cut the source of a reliable flow of the dense, portable energy source known as gasoline does certainly threaten the steady stream of minivan families and trailer-towing campers eager for scenic vistas and pine-scented campgrounds.

Restrictive policies, activist theatrics and relentless climate doomcasting will only result in supply shortages and excessive prices. During the decades it will take to transition the bulk of personal vehicles from liquid fuel to battery power, tourists will still want to marvel in the majesty of Colorado’s purple mountains. Choking off the supply of motor fuel during that transition will certainly turn it into a luxury item affordable only to a small slice of the population.

Keeping the crowds away from America’s natural wonders appears to be the latest line of attack for those who see a different future. The future they envision features dense urban centers designed to keep everyone within walking distance of life’s amenities. Interurban travel, in their crystal ball, consists solely of electric-powered shipping on automated corridors and high-speed passenger rail that ignores rural towns. To make a gasoline-free future, they see gasoline as a luxury expense with public subsidies doled out for essential travel.

Setting the Table: How do you prepare readers for your next hard-hitting, in-depth look at an intensifying clash between expanding neighborhoods and an existing industry? Plop a repellant image symbolic of that industry right on the front page, that’s how.

It is interesting that the Denver Post decided to splash its first telling of the reverse-setback issue across the front page of section two in the Sunday, July 31, edition. This came after the paper had first posted the story online on Friday. In Friday’s print edition, the editor’s choice for the front page of the main section was a wire-service story under a three-column photo of a gunky, dirt-encased wellhead in Texas, certainly reinforcing the popular notion of oil and gas as a dirty, careless business.

The hook in the AP story involved hardships a Texas ranch family has suffered from abandoned wells on their land. That the wells were improperly plugged provided a springboard into the often-told story of hazards posed by an EPA-estimated 3.2 million abandoned wells across the country.

But without a big number, it is not news. And a more accurate number is far smaller. The problem with 3.2 million abandoned wells is in the definition of an abandoned well. The EPA lumps into the same “abandoned well” data pile any well that is not pumping, even those temporarily shut-in. In fact, the EPA corrals temporarily shut-in wells into the same general category as undocumented wells drilled decades ago and for which ownership does not exist.

A more realistic number, one that differentiates truly orphaned wells from those simply idled, is provided by the Interstate Oil and Gas Compact Commission. That more accurate figure falls between 366,000 and 802,000 orphaned wells with the majority of those drilled more than half-century ago and for which records do not exist. But why let an inflated, inaccurate number get in the way of a good story.

Mixed Message of the Week: Demand for jet fuel is “sluggish” says an analyst at Platts, putting downward pressure on Gulf Coast refineries. On the other hand, American and Delta Airlines say they are running into jet fuel shortages at some small and mid-size airports in the West.

No Surprises There: Even as news drips daily about the difficulties faced by employers filling jobs, a new report highlights how older workers are being shut out.

Produced by Generation dot org, an employee education firm, the report notes that hiring managers see older workers, those older than 45, as having the least relevant experience for the job while also not fitting in with company culture. However, once hired, older workers do the job as well or better than their younger peers and are much more likely to stay with the company over the long term.

Utility gas meters

Toeing the Line: Moving public policy in one direction must be supported by a narrative that can be explained and illustrated with quotable experts and supportive statistics. When you want readers to believe that household cooking with natural gas must be eliminated as a thought-starter toward acceptance of the all-electric home, stories about the environmental hazards and health risks of cooking with gas must be commissioned.

Buried in a story found on a Colorado energy website about the hazards of gas cooking is this proclamation: “Led by Denver, a combined 15 cities and counties in Colorado have signed on” to an effort spearheaded by the Sierra Club to force natural gas out of buildings. Clearly, the bandwagon is rolling down the mountain and we should soon “expect to see building codes in Colorado mandate all-electric buildings in new construction.”

Forget the Powder, Hide the Oil: Larimer County’s Board of Commissioners voted unanimously July 29 to approve a sweeping rewrite of the county’s land-use codes. Of the significant revisions, the rules now require new well setbacks of more than one-third mile, effectively shoehorning any new oil and gas development into a half-dozen or so non-residential zones. In addition, between the obsessive site monitoring and testing, expert reviews and staff reports, and wary exaggeration of health hazards it is unlikely anything more than a small handful of new wells and maybe a pipeline will ever be developed in Larimer County.

Last year, oil and gas operations in Larimer County produced 940,000 barrels of oil and 6.9 billion cubic feet of natural gas, enough to place it in the top ten oil producing counties in Colorado and the top 15 in natural gas, according to data from the Colorado Oil and Gas Conservation Commission.

Back in April, Larimer commissioners voted to extend the county’s moratorium while it rewrote its oil and gas regulations. The moratorium on new permitting will likely be lifted now that the new regs are in place. However, it is doubtful that any operator will seek approval where none can be given.

During public testimony on the rules rewrite, several rewrite opponents allowed that the county’s restrictions on new development likely will be litigated and possibly overturned. Do you think?

This Week’s Guardians of Catastrophe: Despite years of emissions reductions as the largest economies switch fuels to reduce carbon, the human race faces “untold suffering” unless political muscle is immediately brought to bear on any continued use of fossil fuels, according to a paper released July 28 by the Alliance of World Scientists.

Founded by academics at the University of Oregon, the alliance strives to “tell it like it is” when it comes to its obligation to spread alarm and disregard alternatives.

Supported by a fortress of charts and graphs, their warning declares “the climate crisis has arrived. It is accelerating faster than expected and more severe than anticipated, threatening nature and the fate of humanity. Especially worrisome are irreversible climate tipping points leading to a catastrophic ‘hothouse Earth,’ well beyond the control of humans.” In other words, we’re toast and there’s nothing that can be done.

But wait, there’s more.

Runner up for this week’s G of C award goes to Arthur Dahl, a former UN executive for environment and sustainability. His most recent paper, published by International Environment Forum, which is described as a “Bahá’í-inspired professional organization,” was selected because it focused on a specific aspect of the climate emergency.

“The most significant driver of unsustainability is the high-consumption lifestyle associated with wealth and affluence,” Dahl declares. Resistance to climate inevitability is futile unless of course we give up on affordable energy to heat homes and to light the darkness. We must accept an austere, jobless future as part of a transition to a new world order.

Unfortunately, it is unlikely there is a place for most of us in that vision of the future.

New Logos and Familiar Faces: It is a chain of events common to the oil and gas industry since the breakup of the Seven Sisters in 1911. Oil Company A sees an opportunity to better itself, the timing is right and Oil Company B is looking for a buyer. Soon after, Oil Company XYZ steps up and buys Oil Company A because proven reserves always beat having to find new ones. And so it goes.

Since late last year, merger and acquisition activity has stirred the industry from the Bakken to the Permian and lately it involves companies in Colorado. The latest to appear is the newly minted logo of Civitas Resources, a company formed by the joining of Bonanza Creek Energy, Extraction Oil & Gas and Crestone Peak Resources. Last year, Bonanza Creek and Crestone added resources when they acquired respectively, High Point Resources and ConocoPhillips’ assets in Colorado.

The new outfit will be led by Eric Greager, the president of Bonanza Creek and a former executive at Encana/Ovintiv. Ben Dell, chairman at Extraction and a partner at equity firm Kimmeridge, will serve as board chair at Civitas.

Earlier this year, several familiar Colorado companies were also involved in deals. In May, Cimarex Energy was acquired by Houston-based Cabot Oil and in March, Midland-based Diamondback Energy acquired QEP Resources.

More proof that in the oil and gas business, everything is for sale. It’s just waiting for the right price.

Oil Prices This Week: Markets were flat for most of the week. Forward month WTI closed the week at $73.81. Natural gas closed the week down 3.7% at $3.91 MMBtu. Hughes reported the rig count for the week at 488, down 3 from last week but still double from one year ago.

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. Inquires welcome, diatribes ignored and clever ideas examined. Contact.