Facts & Rumors # 539
January 20, 2024
Latest facts and rumors from the Marcellus, Utica, and Permian, Eagle Ford Plays
The Electric-Car Cheating Scandal. It’s hard to think of a worse environmental scandal in recent years than Volkswagen’s 2015 diesel-emissions cheating. The German automaker was rightly pursued by regulators, enforcement agencies and class-action lawyers.
The scandal ended up costing Volkswagen an estimated $33 billion in fines and financial settlements—and revealed that diesel-emissions cheating was endemic. In 2020 Daimler AG made a $1.5 billion settlement over emissions cheating in Mercedes-Benz diesel vehicles. (One of us helped secure that settlement.) Last year engine maker Cummins agreed to pay $1.7 billion to settle claims that it skirted diesel-emissions standards.
In all of these cases, regulators punished carmakers that had cut corners and misled the public. But when it comes to electric cars, the government has a cheating scandal of its own. That scandal, grabbing far fewer headlines, is buried deep in the Federal Register—on page 36,987 of volume 65.
When carmakers test gasoline-powered vehicles for compliance with the Transportation Department’s fuel-efficiency rules, they must use real values measured in a laboratory. By contrast, under an Energy Department rule, carmakers can arbitrarily multiply the efficiency of electric cars by 6.67. This means that although a 2022 Tesla
Model Y tests at the equivalent of about 65 miles per gallon in a laboratory (roughly the same as a hybrid), it is counted as having an absurdly high compliance value of 430 mpg. That number has no basis in reality or law.
For exaggerating electric-car efficiency, the government rewards carmakers with compliance credits they can trade for cash. Economists estimate these credits could be worth billions: a vast cross-subsidy invented by bureaucrats and paid for by every person who buys a new gasoline-powered car.
Until recently, this subsidy was a Washington secret. Carmakers and regulators liked it that way. Regulators could announce what sounded like stringent targets, and carmakers would nod along, knowing they could comply by making electric cars with arbitrarily boosted compliance values. Consumers would unknowingly foot the bill.
The secret is out. After environmental groups pointed out the illegality of this charade, the Energy Department proposed eliminating the 6.67 multiplier for electric cars, recognizing that the number “lacks legal support” and has “no basis.”
Carmakers have panicked and asked the Biden administration to delay any return to legal or engineering reality. That is understandable. Without the multiplier, the Transportation Department’s proposed rules are completely unattainable. But workable rules don’t require government-created cheat codes. Carmakers should confront that problem head on.
Mr. Buschbacher is a partner at the law firm Boyden Gray PLLC. He served in the Justice Department’s Environment Division (2020-21). Mr. Conde is counsel at Boyden Gray PLLC.
NatGas Production Drop. Thanks, MDN. EIA Jan DPR: Big production drop continues in M-U, Haynesville. Marcellus Drilling News. The latest monthly U.S. Energy Information Administration (EIA) Drilling Productivity Report (DPR) for January, issued yesterday shows EIA believes shale gas production across the seven major plays tracked in the monthly DPR for February will *decrease* production from the prior month of January. This is the seventh month in a row that EIA has predicted shale gas production will decrease for the combined seven plays. EIA says combined NatGas production will slide by 187 MMcf/d (million cubic feet per day). The Marcellus/Utica, called “Appalachia” in the report, is predicted to decrease by 159 MMcf/d in February compared with January, the biggest decrease in gas production for any of the seven plays.
Permian Associated NatGas Offsets Other Declines. Permian to partly offset natural gas production declines from gassy plays in early 2024, EIA says. NGI. Shrinking volumes from gassy plays will overshadow higher associated output from the Permian Basin to drive a modest decline in natural gas production from key Lower 48 regions in early 2024, according to the latest modeling from the U.S. Energy Information Administration (EIA).
NatGas Meets New All Time Power Demand. Thanks, MDN. PJM is the largest electric grid operator in the U.S. It serves 65 million people in 13 states plus the District of Columbia (including PA, OH, and WV). PJM came under withering criticism for an almost blackout during the cold Christmas snap of December 2022. If not for certain gas-fired peaker plants, like that in the Little Town of Bethlehem, the lights would have gone out during that brutal cold snap. Some 24% of the electricity supplied to PJM was not available during the 2022 cold snap due to equipment failures and lack of supply, including natural gas frozen off at well pads. We’re just coming through another winter storm and cold snap, one that created the most demand EVER for natural gas in this country (more than during 2022) and peak demand for electricity. And yes, we had well freeze-offs. But this time, the NatGas industry came through like a champ. No emergencies and no almost blackouts.
Cold Slowing LNG Exports. Deep freeze forces U.S. LNG exporters to cancel, delay cargoes. Bloomberg. The recent freeze across Texas and Louisiana disrupted scheduled exports of US liquefied natural gas, temporarily tightening some supply of the heating and power-plant fuel. The Cameron LNG export plant in Louisiana canceled at least one scheduled shipment, according to people familiar with the matter. Several other planned deliveries from Cameron and Cheniere Energy Inc.’s Corpus Christi facility in Texas were also delayed, they said.
Biden Trying Harder to Kill LNG. Biden climate policy review puts America’s thriving LNG sector at risk. Forbes. Surging exports of U.S. liquefied natural gas (LNG) have, over the past two years, helped Europe replace Russian pipeline gas imports that it depended on before the Ukraine in power generation there, helping to mitigate the carbon footprint of the region’s fast-growing economies.
FERC Approves Pipeline Without the Dems. Let’s There’s More Come. FERC greenlights pipeline projects despite Democratic rift. E&E News. The Federal Energy Regulatory Commission approved key pipeline projects Thursday during its first open meeting of 2024 — including a high-profile permit for the nation’s largest public power provider, which is seeking to transition away from coal. FERC voted to approve a permit for a 32-mile natural gas pipeline that would help fuel proposed gas-fired generation at the Tennessee Valley Authority’s Cumberland Fossil Plant. The commission also approved a Texas-to-Louisiana project by Williams Cos., which aims to expand an existing pipeline and boost gas flow to the Gulf Coast.
Critical Election for PA Energy. 2024 will be a critical election year for Pennsylvania energy. PA Live. Opinion. It’s the start of the new year and 2024 has been projected to bring high stakes for a fresh election cycle with the future of America’s energy security on the line. Pennsylvania, with its rich natural resources and vibrant commercial activity, has long been a cornerstone of America’s economic growth. As a swing state integral to key elections, Presidential candidates must realize that Pennsylvania’s economy cannot afford to diminish the importance of oil and gas for the state’s economic development.
December DUC Report. The number of drilled, but uncompleted wells reported for December in four of the U.S.’s most productive shale plays fell more than 15% from one year ago, Energy Information Administration data shows.
EIA’s just-released monthly Drilling Productivity Report reveals 2,273 “DUCs” in Appalachia (including the Marcellus and Utica Shale plays), the Bakken, Eagle Ford, and Permian basins.
The total was down 456 wells, or 16.7%, from the 2,729 DUCs reported in December 2022. The December figure was 30 DUCs below November 2023’s 2,303 total.
Appalachia was the only one of the four plays that recorded a year-over-year increase in DUCs, rising 147 wells, or 23.7%, to 768 from 621. There was no change in DUCs from November to December of last year.
The largest numerical year-over-year drop was in the Permian, where the total number of DUCs dropped by 239, or 22.4%, to 830 from 1,069, EIA found. The latest total was down seven wells from November.
The Bakken play saw its total number of DUCs fall by 208, or 39.2%, to 323 last month, from 531 in December 2022. The latest total was down 14 wells from November’s 337 total.
The Eagle Ford play recorded a 156-well, 30.7% drop in DUCs, to 352 from 508 one year ago. Last month’s total was down nine wells from November’s 361, EIA reported.
PA Permits January 2, to January 18, 2024
County Township E&P Companies
1. Allegheny Frazer Range
2. Allegheny Frazer Range
3. Butler Allegheny LOLA Energy
4. Greene Perry EQT
5. Indiana Young INR OPR
6. Indiana Young INR OPR
7. Indiana Young INR OPR
8. Indiana Young INR OPR
9. Lycoming Plunketts creek EQT
10. Lycoming Plunketts creek EQT
11. Lycoming Plunketts creek EQT
12. Lycoming Plunketts creek EQT
13. Lycoming Plunketts creek EQT
14. Lycoming Plunketts creek EQT
15. Lycoming Upper Fairfield Inflection Energy
16. Potter Ulysses JKLM Energy
17. Tioga Lawrence JKLM Energy
OH Permits January 7 to January 18, 2024
County Township E&P Companies
1. Carroll Brown EOG Resources
2. Carroll Brown EOG Resources
WV Permits January 8, 2024 to January 12, 2024
1. Doddridge Antero
2. Harrison Arsenal
3. Harrison Diversified Prod.
4. Marshall SWN
5. Marshall SWN
6. Marshall SWN
7. Marshall SWN
8. Monongalia Northeast Nat Res.
9. Ritchie Antero
