CDZ Fracking Picking up Again

[william the wie]

Somewhere above $40/bbl it makes sense to increase fracking production so it seems likely that the top of the market is about $43/bbl and declining as various economies kick in. So, slowly declining world energy prices seem likely as far as the eye can see. What will be the result

 

[waltky]

US District Court says frack away...

US District Court Strikes Down Fracking Regulations on Federal Lands
June 30, 2016 | The Department of the Interior (DOI) has no authority from Congress to regulate hydraulic fracturing (“fracking”) on federal and Indian reserve common-use lands, a U.S. District Court in Wyoming ruled last week.

Hydraulic fracturing is a process by which water, sand, and chemicals are injected into rock formations in order to release oil and natural gas. The stated purpose of the regulations, which were put in place by the DOI’s Bureau of Land Management (BLM), was “to ensure that wells are properly constructed to protect water supplies, to make certain that the fluids that flow back to the surface as a result of hydraulic fracturing operations are managed in an environmentally responsible way, and to provide public disclosure of the chemicals used in hydraulic fracturing fluids.”

But after the states of Wyoming, Colorado, North Dakota, Utah, the Ute Indian Tribe, the Independent Petroleum Association of America, and the Western Energy Alliance challenged the BLM’s authority to make these regulations, U.S. District Judge Scott Skavdahl ruled that BLM’s fracking regulations were indeed unlawful. “The Court finds that Congress has directly spoken to the issue and precluded federal agency authority to regulate hydraulic fracturing not involving the use of diesel fuels,” Skavdahl ruled.

He cited the 2005 Energy Policy Act, which specifically removes regulation of hydraulic fracturing from the Environment Protection Agency’s (EPA) jurisdiction, and argued that the court must presume that this applies to the DOI as well. “Given Congress' enactment of the EP Act of 2005, to nonetheless conclude that Congress implicitly delegated BLM authority to regulate hydraulic fracturing lacks common sense,” Skavdahl wrote.

His decision was not based on the merits of the regulations or fracking itself, the judge emphasized, but rather on the federal agency’s lack of authority to impose them. “The issue before this Court is not whether hydraulic fracturing is good or bad for the environment or the citizens of the United States. Regardless of how serious the problem an administrative agency seeks to address ... it may not exercise its authority 'in a manner that is inconsistent with administrative structure that Congress enacted into law’,” Skavdahl said, citing several precedents in case law. "The Constitutional role of this Court is to interpret the applicable statutory enactments and determine whether Congress has delegated to the Department of Interior legal authority to regulate hydraulic fracturing. It has not,” he concluded.

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[william the wie]

That's huge Waltky

 

[320 Years of History]

Somewhere above $40/bbl it makes sense to increase fracking production so it seems likely that the top of the market is about $43/bbl and declining as various economies kick in. So, slowly declining world energy prices seem likely as far as the eye can see. What will be the result

Accepting your figure of $43/bbl as the minimum price at which fracking becomes economically profitable, when oil prices remain below $43/bbl for protracted periods, frackers will:

• If they think it possible to do so, and they have the resources to do so, procure or develop less costly means of production, or
• Exit (temporarily or permanently) the fracking market/industry, or
• Attempt to increase the price of oil.

Which course of action any specific fracker pursues will depend on which approach they believe they are most able and most likely to achieve and which they can achieve with the least losses of profit/money.