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Co-author Nikki Niloufar Hafizi

From the state of Washington to the streets of Paris, proposed taxes on carbon have been making headlines. Why a carbon tax, and what are the arguments for and against it?

Pricing carbon

A progressive carbon tax is a climate-change mitigation policy preferred by many economists. Their reasoning goes like this: Carbon and other greenhouse gas emissions contribute to collective problems such as air pollution and climate change, but the entities emitting the GHGs don’t pay for the damage to the “atmospheric commons”. The price of GHG-emitting activities is lower than its theoretical market price should be, and humans consume more than they otherwise would of these GHG-intensive products and services (think gasoline). A tax on carbon content would correct this market failure and incentivize market participants (consumers and producers … such as yourself?) to emit less carbon by changing their behavior and using different technologies. Continue Reading Carbon Taxes: Wrong Price, Wrong Time?

Any semblance of objectivity on the subject of the day is expressly disclaimed. This post contains distressing words, such as “oil and gas”, “fracking” and “jobs” that could cause severe emotional reactions in sensitive readers. If this post is contrary to your firmly held beliefs, proceed promptly to your downward facing dog.

As a thoughtful reader you might ask, Why should I vote against Proposition 112? Here are a few reasons: Continue Reading Colorado Proposition 112 – More Fuss

Referred to as the Setback Requirement for Oil and Gas Development, here is what Colorado voters will be asked to consider on November 6:

Shall there be a change to the Colorado Revised Statutes concerning a statewide minimum distance requirement for new oil and gas development, and, in connection therewith, changing existing distance requirements to require that any new oil and gas development be located at least 2,500 feet from any occupied structure in any area designated for additional protection and authorizing a state or a local government to increase the minimum distance requirement?

“Any area designated for additional protection” has been described as “sensitive areas”, such as “streams, intermittent streams, canals, and open spaces”. Current setbacks are 500 feet from homes and 1,000 feet from schools. Continue Reading Colorado Proposition 112: What’s the Fuss About?

Are you “woke”* vis-vis-vis global warming and the coming-any-day-now destruction of the coral reefs, the arctic ice pack, polar bears, coastlines, the flora, the fauna, you, me, and the entire natural world as we know it? Me neither. That’s because I elect to look past the first dozen or so results from a Google search of “global warming”, “climate change”, and related topics. Continue Reading There is Another Way to Report on Global Warming

Occasionally we visit issues larger than one-off courthouse decisions. Here are a few selected stories on the extent to which fracking contributes to rising levels of methane and, maybe, to climate change. There are conflicting facts and opinions, so decide for yourself. If you find a tilt in one direction, we’re just levelling the field. See the last entry. Continue Reading What’s New in the Methane Debate?

Co-author Chance Decker

You’ve seen the headlines.  The portrait is complete; the verdict is in; the clock has run down to zero. The devastation of Harvey is “unprecedented” and it’s all because of climate change. That’s not necessarily so, thanks to Powerline and Dr. Roy Spencer.  Read it and reach your own conclusion.

And now, on to the the law

Apache Deepwater, LLC v. Double Eagle Development, LLC asked whether a retained acreage clause provided for “rolling terminations” after the primary term or “snapshot termination”. As you might expect, the result depended on the language of the lease. Continue Reading Harvey and Climate Change, and Consideration of a Retained Acreage Clause

hysteriaThe climate change debate is too complex, agenda-driven, and politicized to be addressed adequately in these pages. But the hysteria and faux outrage over President Trump’s decision to withdraw from the Paris Climate Accord is enough to incite a bad case of the red-keister. So, if you are in need of ammo to repel those who are experiencing intense displeasure from the decision, here are a few well-considered reasons why the result just might be the correct one. You should read the articles themselves, and you aren’t being asked to agree.

It wasn’t such a big deal to begin with. Foreign Affairs

The US’s pledge is more burdensome relative to baseline projections then the pledges of the other major emitters. Three of the six can increase their emissions. This article is not one-sided, and suggests the best policy would have been to remain in the PCA but revise it so our goals are more consistent with other major emitters. American Action Forum

The agreement would have burdened the US with huge costs and no economic benefits. Americans for Tax Reform Continue Reading Why Leaving the Paris Climate Accord Could Be a Good Thing

wolfEffective this past August 3, the EPA has new regulations for methane and volatile organic compound emissions from oil and gas operations  As you know, reducing methane emissions is a key component of the President‘s climate change agenda.

Why should I care?

Because if you own or operate an oil and gas production, processing, transmission or storage facility, you will be required to comply with the new rule by no later than June 3, 2017. Other than that, don’t worry, be happy, and continue to go about your daily business in blissful ignorance of the impending regulatory burden.

What does it mean?

More expenses for operators of the aforesaid facilities, more demand for good inspectors, more operations for the EPA to meddle in oversee, and a risk of fines for a substantial failure to comply, whether willfully or by inadvertence.

Last weekend I heard Keith Kottrill of Innovative Ventures present a synopsis of the new standards.

The summary is an attempt in 22 pages to capture the spirit and effect of the new rule. It was not prepared by a lawyer and is not intended as a legal analysis. It is the product of Keith and his colleagues who will be implementing and conducting the on-site testing required by the rule. It should be viewed, relatively speaking if you aren’t an engineer, as a good place to begin to understand the rules.

Highlights

  • Get familiar with the term “Quad Oa”, an informal reference to the new rule.
  • There are two main parts of the rule: Control devices or practices must reduce methane and VOC emissions from certain equipment by 95%, and fugitive emission leak detection and repair (LDAR) applies only to well sites and compressor stations.
  • The rule applies to “affected facilities”, specific types of equipment or facilities that are new, modified, or reconstructed after September 18, 2015. Beware, those terms have certain, definite meanings under the rule.
  •  There will be a reporting and paperwork burden.
  • Look forward to quarterly inspections of some midstream facilities.
  • Generally, repairs must be made within 60 days.
  • See pages 13 and 14 for the EPA’s estimated industry-wide costs of compliance, including projected economic benefits. Honk if you believe the costs will be far higher.
  • The rule is based partially on a model called the the “Social Cost of Methane”, and the “methane-related monetized climate benefits” of the rule. Honk twice if you believe those models are based more on ideology than on science.

Time will tell how this rule will work. Among other things, supporters and detractors alike will learn the true extent of methane leakage in our oil and gas infrastructure.

A musical interlude

Today, girl singers you might not have heard of:

 

steam engineWhich of these statements makes sense to you:

A. “Never before have the rulers of a society intentionally driven it backwards to scarcer, more expensive, and less efficient energy.”

B. “Communism is the optimal system for avoiding dangerous global warming”.

C. “This is the first time in the history of mankind that we are setting ourselves the task of intentionally, within a defined period of time, to change the economic development model that has been reigning for at least 150 years, since the Industrial Revolution.”

D. “Giving society cheap, abundant energy would be the equivalent of giving an idiot child a machine gun.”

E .“Global warming, like Marxism, is a political theory of actions, demanding compliance with its rules.”

What the quiz says about you

B, C and D? Comrade, you took a wrong turn at “fueling” and failed to yield to “freedom”.

A and E? Then you should read Fueling Freedom: Exposing the Mad War on Energy by Kathleen Hartnett White and Stephen Moore.

If you want a real book review, go to the National Review. This post is more of a polemic, a defense of an honorable industry that is vital to the security and prosperity of the world (excluding Venezuela, of course).

Ms. White, Distinguished Fellow-in-Residence at the Texas Public Policy Foundation, spoke last week at TIPRO’s summer conference. See this PowerPoint for the high points of her presentation. It’s no substitute for the presentation itself, but if you want to know more you should read the book.

Facts that will impress your friends 

Here are compelling facts from the book that reveal the importance of fossil fuels to our modern way of life:

  • Human misery remained at about the same level for 100,000 years until the Industrial Revolution in the early 1800’s. Since then, misery has declined and millions have been lifted out of poverty and into the middle class. This progress is a result of human ingenuity and fossil fuels.
  • America produced three times as much food as it did a century ago, with one-third fewer man-hours, on one third fewer acres, and on and at one-third the cost. (Think, natural-gas based fertilizers, tractors, and other fruits of petroleum.)
  • In 1875 the average American family spent 74% of its income on food, clothing and shelter. In 1995 the same family spent 13% of its income on these fundamental necessities.
  • In cost per megawatt hour, oil and natural gas receive 64 cents, wind $56.29 and solar $775.64 in federal subsidies.

Some points might be overstated:

  • Haynesville and non-core Bakken operators might not agree that, “In many places fracking is profitable at $40 per barrel and in most places it is profitable at $50 per barrel.”

Now, for our musical interlude.

Sources for the quiz

A. Fueling Freedom, p. xv (no link, you gotta read the book).

B. IPCC chief Christina Figueres, Daily Caller, January 15, 2014.

C. Figueres, U N Regional Information Centre for Western Europe, February 3, 2015.

D. Paul Ehrlich.

E. Paul Johnson, The Nonsense of Global Warming, Forbes, September 8, 2008.

mosesDid Moses worry about the mineral rights when he parted the Red Sea?  Maybe Charlton Heston knows. What we know is that 3,500 years later if you plan to partition surface rights, the time to pay attention to the minerals is now.

In Hosek v. Scott, the parties had a deed partitioning the surface estate of 338.54 acres in Atascosa County, Texas. The partition deed said:

“This partition does not include any of the oil, gas and other, minerals in, on or under the [land], and same are to remain undivided for a period of [25] years from date hereof and as long thereafter as oil, gas or other minerals are produced in paying quantities from the [land].”

The question

Did the minerals revert to the owners of the surface estates after the period lapsed during which partition of the minerals was prohibited?

After the partition Hosek owned 207.77 acres (except 38.5 owned by Scott) and Scott owned 130.77. Scott conveyed the 38.5 acres to Hosek subject to the reservation of all minerals reserved in the partition deed.

Scott argues: Since the minerals were never partitioned he continues to own an undivided half interest in minerals under the Hosek tract.

Hosek responds:  The meaning of the deed is ambiguous and thus a fact issue exists.  The language intended that the undivided mineral interests revert to the surface owners after the expiration of 25 years and cessation of production.

Are there two reasonable interpretations of the partition deed?  If so, we need a trial. If not, judgment for Scott.

(I’ll skip the rules of contract construction that you’ve seen in this space before).

The answer

The minerals did not “revert” to the surface owner at the end of the 25 years. The deed expressly excluded minerals from the partition and the deed does not have language stating that the minerals would be partitioned at the end of the 25 years. Accordingly, Hosek’s interpretation would require the court to add language to the partition deed.  That, the court is not permitted to do.

The court ruled that the partition deed can be given a definite and certain meaning as a matter of law and is therefore unambiguous. The parties’ intent is expressed in the four corners and restricted partition of the minerals for the 25 years. At the end of that period, the restriction was lifted and the parties had the unrestricted right to partition the minerals, or not. They did not partition the minerals after the end of the 25 year restricted period. Scott wins.

I’m breaking my promise …

… never to write on climate change because the subject is too politicized. But this, from the announcement following the Paris climate change conference is too good to ignore:

“Also request the Subsidiary Body for Scientific and Technological Advice to undertake a work programme under the framework for non-market approaches to sustainable development referred to in Article 6, paragraph 8, of the Agreement, with the objective of considering how to enhance linkages and create synergy between inter alia, mitigation, adaptation, finance, technology transfer and capacity-building, and how to facilitate the implementation and coordination of non-market approaches.”

This 66-word morass of abstractions is what we’ve come to expect from bureaucrats, and it dismisses free markets for … what?  Here is Forbes‘ take on it. Michael Lynch says only a lawyer would love it. I object; that monstrosity is an insult to lawyers.

In honor of our special guest Moses we wish you Happy Holidays.