RRC lets environmental waivers stand
The Texas Railroad Commission has maintained state regulatory exemptions for oil and gas companies over objections by environmental groups concerned about pollution.
The three-member commission, which oversees the oil and gas industry in Texas, voted unanimously last week to confirm their May vote, which waived some fees and environmental rules for oil and gas companies squeezed financially by the worst oil crash in decades caused by the coronavirus pandemic.
The commission’s action last week was prompted by a Public Citizen lawsuit arguing the May vote was not properly noticed under Texas’ open meeting laws, and further extends regulatory exemptions that allow oil and gas companies to delay plugging in abandoned wells, pay lower fees and not pay some penalties.
Environmental and consumer advocacy groups such as the Sierra Club and Public Citizen pushed back against the commission’s move, arguing these temporary regulatory exemptions were no longer needed since crude prices have rebounded to near $50 a barrel, a price at which many oil and gas companies can break even.
Arctic drilling auction underwhelms
The Trump administration’s unprecedented auction of Arctic drilling rights Wednesday netted just $14.4 million from three bidders, with major oil companies steering clear of the sale.
Amid low crude prices, fears about a backlash from the public and the prospect of regulatory uncertainty, just two oil companies placed bids on leases in the Arctic NationalWildlife Refuge’s coastal plain: Knik Arm Services LLC and Regenerate Alaska Inc. They were joined by the Alaska Industrial Development and Export Authority, a state-owned economic development corporation that last month approved spending $20 million on coastal plain leases but has never spearheaded an oil exploration project.
Bids were provisionally delivered on 11 leases spanning about 553,000 acres (223,791 hectares), the Bureau of Land Management said.
“It is my hope that if and when commercial quanti
ties of oil are discovered on any of these leases, that this action will make history for generations to come,” yielding well-paying jobs, royalty payments and new sources of crude, said Deputy Interior Secretary Kate MacGregor.
Participants ponied up hundreds of thousands of dollars to nab leases they may never get to use, given President-elect Joe Biden’s vow to permanently protect the refuge. Though Biden has little power to revoke leases once they are issued, the incoming administration has wider discretion to block permits essential to mounting any activity on the tracts.
Oklahoma energy firm closes $5.8Bmerger
Devon Energy completed its acquisition of rival WPX Energy last week, creating one of the nation’s largest shale players with a dominant position inWest Texas.
The acquisition gives Oklahoma City-based Dev
on access to 400,000 acres in the Delaware Basin that spansWest Texas and New Mexico. The combined company is expected to have production of 277,000 barrels a day and save $575 million in costs
S&P Global Platts valued the transaction at $5.8 billion.
“This transformational merger enhances the scale of our operations, builds a dominant position in the Delaware Basin and accelerates our cash-return business model that prioritizes free cash flow generation and the return of capital to shareholders,” Devon’s Executive Chairman Dave Hager said in a statement.
Consolidation is sweeping the energy sector as the industry pulls out of the oil bust caused by the coronavirus pandemic. Oil and gas companies are joining forces and acquiring assets to better weather such downturns.
Recent mergers and
acquisitions deals include Chevron’s $13.7 billion acquisition of Houstonbased Noble Energy in October and Southwestern Energy’s $193 million acquisition of Montage Resources in November.
Under the terms of the Devon-WPX deal, WPX shareholders received 0.52 shares of Devon common stock for each share of WPX common stock owned. Devon shareholders own about 57 percent of the combined company and WPX shareholders 43 percent. WPX common stock will no longer be listed for trading on the New York Stock Exchange.