CNH Issues Round 3 Bidding Guidelines for Exploration and Production in Shallow Waters

Posted in Energy, Mexico, Regulatory

On Sept. 29, 2017, Mexico´s National Hydrocarbons Commission (CNH) published the guidelines and model contracts for the first bidding process of “Ronda 3” (Round 3.1). Round 3.1 includes 35 exploration and production (E&P) contractual areas in shallow waters in the Gulf of Mexico, with a total surface of 26,265 km2 (10,140 mi2), approximately 1,988 million barrels of crude oil equivalent (MMBOE), and a remaining volume of 290 MMBOE. The contractual areas included in the bid are as follows:

  • 14 contractual areas located in the Burgos area, with a surface of 8,424 km2 (3,252 mi2), and 579 MMBOE of estimated prospective resources.
  • 13 contractual areas located in the Tampico-Misantla-Vercacruz area, with a surface of 12,493 km2 (4,823 mi2), 1,217 MMBOE of estimated prospective resources, and a remaining volume of 193 MMBOE.
  • 8 contractual areas located in the Southeast Basin area (Cuenca del Sureste), with a surface of 5,348 km2 (2,065 mi2), 192 MMBOE of estimated prospective resources, and a remaining volume of 96 MMBOE.

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New Contracting Model for Energy Transmission Lines in Mexico

Posted in Energy, Infrastructure, International, Mexico

On Sept. 18 2017, Mexico’s Ministry of Energy (SENER) announced the new contracting model for energy transmission lines. The new model will allow the implementation of tender processes for the award and execution of contracts for the management of electricity transmission (Contracts) with private parties in order for them to carry out, on behalf of the Mexican State, the financing, installation, maintenance, management, operation, and expansion of the required infrastructure for the provision of public transmission services. These tender processes are part of Mexico’s efforts to modernize its transmission infrastructure, anticipating increases in electricity generation and demand, with the assistance of the private sector.

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How Will Pa. Implement the Environmental Rights Amendment?

Posted in Pennsylvania, State & Local

The Pennsylvania Supreme Court’s June decision in Pennsylvania Environmental Defense Foundation v. Wolf, 161 A.3d 911 (Pa. 2017) (PEDF), has sparked many conversations about how the newly interpreted Environmental Rights Amendment to the Pennsylvania Constitution will be implemented. In my column this month for the Pennsylvania Law Weekly I hope to catalogue at least some of the issues to help move the conversation along.

For most of the last 40 years, the courts have tested statutes, actions of the executive agencies and decisions of municipalities under the three-part test of Payne v. Kassab.  In PEDF, the court made clear that Payne’s test no longer governed. The first sentence of the Environmental Rights Amendment sets out an affirmative right of “the people” to “clean air, pure water, and the preservation of the natural, scenic, historic and esthetic values of the environment.” Government cannot take action that impinges on that right without (a) evaluating the environmental effects of its action beforehand and (b) avoiding “unreasonable” adverse effects in light of the other governmental purposes of the action.

Further, the second sentence of the Amendment creates a trust, the corpus of which is all of the public natural resources of the Commonwealth. The Commonwealth is the trustee of that trust, and the beneficiaries are “all the people” including “generations yet to come.” When the Commonwealth sold some of that trust corpus in the form of natural gas leases in the state forests, it was obligated to use the proceeds to benefit the trusts’ purposes.

In Center for Coalfield Justice v. DEP, EHB Dkt. No. 2014‐072‐B (Aug. 15, 2017), appeal pending, No. 1290 CD 2017 (Pa. Commw. Ct. filed Sept. 15, 2017), the Environmental Hearing Board applied PEDF to a third-party challenge to two coal mine permit extensions affecting streams. A temporary impairment of a stream could be a reasonable incursion on the people’s first‐sentence constitutional right, but permanent loss of the stream would be unreasonable.

Almost every project has at least one opponent.  If every individual has a right to stop any project with any environmental impact, Pennsylvania will come to a grinding halt.  The Commonwealth must devise a way to implement Article I, section 27, so that it facilitates, and does not impede, useful change.

Read more from my article in The Legal Intelligencer supplement, PA Law Weekly, by clicking here.

CNH Issues Bidding Guidelines and Agreements for Pemex Farm-Out (Nobilis–Maximino Project)

Posted in Energy, International, Mexico

On Sept. 15, 2017, the Commissioners of Mexico’s National Hydrocarbons Commission (CNH) held a meeting to discuss and approve an invitation to bid, the related Bidding Guidelines, and the exploration and production license model agreement (the “License Agreement”) for the selection of partner(s) for PEMEX Exploration and Production (PEP).

This is the second association of PEP through a farm-out agreement for exploring and producing hydrocarbons in the deep waters of the Gulf of Mexico, which will be carried out in the Nobilis–Maximino field. This new association will allow PEP to take advantage of the Mexican energy reform and improve its operating capabilities; share financial, technological and geological risks; and apply best industry practices in its activities.

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Lessons of Hurricane Irma — State of Florida Focus on Hurricane Preparedness and Infrastructure

Posted in Energy, Environment, Florida, Infrastructure, Stormwater, Utilities

In response to the widespread impacts of Hurricane Irma in Florida (all coastlines and virtually every community), Speaker Corcoran of the Florida House of Representatives has created a new Committee on Hurricane Response and Preparedness. Speaker Pro Tempore Jeanette Nunez of Miami will chair the 16-member bipartisan Select Committee whose focus will be to gather information, solicit ideas, and make recommendations to the governor and legislature for actions that will aid in Florida’s recovery. The topics proposed for consideration by the Select Committee include mitigation of future storm damage;  efficient evacuation and re-entry; and protection of elderly, disabled, and other  vulnerable people. Subjects of  particular interest for those in the environmental and energy arena will be  “innovative ways to avoid or reduce flooding”  and efforts to limit power outages by “infrastructure hardening, solar lighting or underground utilities.” The Select Committee will also examine whether fuel reserves can be “established or expanded” to improve their availability for evacuees.  Finally,  although post-Hurricane Andrew building code changes were by most accounts,  successful in protecting the public from wind damage, building code revision is another area of potential focus for the Select Committee. Because of the desire to take meaningful action to improve the state’s hurricane readiness, the Select Committee is expected to move quickly to formulate recommendations for tangible improvements to disaster response capabilities prior to the 2018 legislative session.  On the Senate side,  Senator Brandes is pushing Governor Scott to establish a special commission to examine hurricane readiness, response, and recovery, with an eye towards planning for future preparedness while learning from the experiences of this recent effort.

Post-hurricane restoration will be a priority for state and affected local governments in Florida, with resilience and infrastructure among the priority considerations.  Stay tuned for future developments.

Hurricanes Harvey & Irma: Controlling Water, Mold, Bacterial Fallout

Posted in EPA, Florida, GT Alert, Stormwater, Texas, Water

Six Tips on Managing Water Damage, Mold Growth, and Bacterial Threats

As Florida, Georgia, South Carolina, Texas, and other impacted areas begin the journey to recovery after Hurricanes Harvey and Irma, property owners are faced with the challenge of addressing water damage, preventing or remediating mold growth, and heading off bacterial threats from potentially contaminated flood waters. When water damage, flooding, or moisture intrusion occurs, there are several important factors to consider, on a case-by-case basis, when addressing potential or actual mold, microbial, and bacterial impacts.

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Third Circuit Decision Impacts Perfection of Security Interests in Sales of Crude Oil

Posted in Oil & Gas

A recent court decision has reinforced the need to adequately document transactions for the physical sale of crude oil.  In Arrow Oil & Gas, Inc., et al. v. J. Aron & Company, et al. (In re Semcrude, L.P., et al.), Case Nos. 15-3094, 15-3095, 15-3096 and 15-3097 (3d Cir. July 19, 2017), the United States Court of Appeals for the Third Circuit held that producers that want to perfect a security interest in crude oil which they sell to an out of state buyer must file a financing statement in the state where the buyer is located.  Producers that have not filed such a financing statement do not have a perfected security interest in such crude oil.

This case stems from the sale of crude oil by a collection of upstream producer that sold crude oil on credit to Semgroup L.P and its affiliates (Semgroup). The crude oil was sold to Semgroup with Semgroup responsible for paying for the crude oil on the 20th day of the month following the sale. Semgroup in turn sold the crude oil to J. Aron and BP. Semgroup represented in its sales to J. Aron and BP that the crude oil was “free from all royalties, liens and encumbrances.” J. Aron and BP were responsible for paying for the crude oil on the 20th day of the month following the sale.

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Office of Fossil Energy of the Department of Energy Issues Notice of Proposed Rulemaking That Will Automatically Authorize Certain Applications To Export Small Volumes of Natural Gas

Posted in Energy, FERC

On Sept. 1, the Office of Fossil Energy of the Department of Energy (DOE/FE) issued a notice inviting public comment on a proposal which, if adopted, will authorize automatically applications to export small volumes of natural gas to non-Free Trade Agreement nations.  82 Fed. Reg. 41,570 (Notice).  As DOE/FE describes its proposal:

[T]he proposed rule provides that DOE, upon receipt of any complete application to export natural gas (including LNG) to non-FTA countries, will grant the application provided that it satisfies the following two criteria:  (1) The application proposes to export natural gas in a volume up to and including 0.14 Bcf/d; and (2) DOE’s approval of the application does not require an EIS or EA under NEPA—that is, the application is eligible for a categorical exclusion under DOE’s NEPA regulations.

82 Fed. Reg. at 41,572-73.  DOE/FE will not issue notice of nor receive public comment on any such application.

In its Notice, DOE/FE noted the development of a “small-scale export market” consisting chiefly of South American, Central American, and Caribbean nations.  While there is a demand in this market for American-produced natural gas, this demand is not sufficient to support exports from large-scale LNG terminals using conventional LNG tankers.  According to DOE/FE, the participants involved in this market typically view “small-scale” to be exports of less than 1.0 million metric tons per annum.  This computes to the 0.14 Bcf per day chosen by DOE/FE as the cutoff.  In support of its conclusion that these “small-scale” exports are in the public interest and may be automatically authorized, DOE/FE referred to a series of studies that the agency has commissioned since 2011 which show generally that increased exports of natural gas will likely generate economic benefits for the United States (e.g., job creation, enhanced tax revenues, and improved balance of trade) and that domestic supplies will be adequate to meet increased domestic demand and increased exports.  Further, increased exports into this small-scale market will enable electric generation to move from diesel and heavy fuel oil to natural gas with reduced GHG emissions and possible stronger demand for American-origin generating equipment.

Comments on DOE/FE’s proposal are due on Oct. 16.  Note also that DOE/FE’s proposal does not address whether the facilities involved in small-scale LNG projects are within the jurisdiction of the Federal Energy Regulatory Commission (FERC) and require FERC approval, which involves a separate, fact-specific analysis.

The UK’s Position Paper on the Post-Brexit Availability of Goods – Implications for Chemicals

Posted in Brexit, Chemicals, EU

The UK government has recently published a series of position papers outlining its thinking on a range of potential issues resulting from the June 2016 Brexit vote. The papers cover matters such as dispute resolution, cross-border arrangements on the Irish island, the treatment of European Union citizens, and data protection.

The EU’s Brexit negotiating team and many of the other EU member states have reacted to the publication of these papers with some scepticism. Nonetheless, the papers provide insight into the opening negotiating positions that the UK may adopt when the substantive terms of the UK’s future relationship with the EU comes to be discussed. Such discussions are currently timetabled for October, but only if sufficient progress is deemed by the EU to have been made in the ongoing round of preliminary talks. Currently, there are indications that this October deadline will be missed.

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The Death of Public Citizen in Pipeline NEPA Analyses: Was it Ever Alive?

Posted in Court Cases, Energy, NEPA

Last week we examined the Sierra Club v. Federal Energy Regulatory Commission decision from the D.C. Circuit holding that natural gas pipeline NEPA review must consider greenhouse gas emissions impacts from power plants served by the proposed pipeline. This week, we review the decision and its impact on pipeline projects:

In August, the U.S. Court of Appeals for the D.C. Circuit issued opinions in two appeals filed by the Sierra Club that address an agency’s obligation under the National Environmental Policy Act (NEPA) to consider the indirect environmental effects upstream or downstream of a proposed Federal action.  In the first case, Sierra Club v. U. S. Department of Energy, No. 15-1489 (D.C. Cir. Aug. 15, 2017) (Sierra Club (FLNG)), the Court held in a unanimous 3-0 opinion that in approving liquefied natural gas (LNG) exports, the Department of Energy (DOE) was not required to quantify the indirect effects of upstream “export-induced” gas production or the effect on downstream emissions resulting from changes in fuel sources.  In Sierra Club v. Federal Energy Regulatory Commission, No. 16-1329 (D.C. Cir. Aug. 22, 2017) (Sierra Club (Sabal Trail)), the Court held in a 2-1 decision that FERC was required to quantify the downstream emissions created by power plants to be served by a proposed pipeline.

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