Energy In-depth: Little Rock To Become 3rd Energy Improvement District
by January 23, 2015 6:59 am 238 views
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LITTLE ROCK TO BECOME 3RD ENERGY IMPROVEMENT DISTRICT
The Little Rock City Board of Directors unanimously adopted an ordinance this week to create an “Energy Improvement District” defined by the Little Rock city limits.
The district is allowed as part of a state law passed two years ago related to PACE – Property Assessed Clean Energy, an innovative financing mechanism that enables local jurisdictions in the state to establish energy improvement districts. Once established, the program allows commercial property owners to access 100% loans that are secured by the tax assessment on their property to fund energy improvement projects.
Projects fall under three categories: energy efficiency, renewable energy and water conservation. State law requires that the project must result in positive cash flow for the customer (energy savings must exceed cost of the loan).
The cities of Fayetteville and North Little Rock adopted ordinances last year.
PACE programs have been adopted in 24 states and the District of Columbia since 2008. More than 225 projects have been completed nationally totaling more than $73 million with another $225 million in projects in various stages of development, according to the Arkansas Advanced Energy Association.
BHP REDUCING FAYETTEVILLE SHALE PLAY RIG COUNT TO ‘ZERO’
BHP Billiton recently said it is still looking for a hasty exit from its unprofitable foray into the Fayetteville Shale play as declining natural gas prices continue to cast a dark cloud over the company’s U.S. drilling operations.
By rig count, BHP plans to cut the total number of operating drilling pads in the U.S. from 26 to 16. That also means the Australian conglomerate is essentially pulling up stakes in Arkansas’ maturing natural gas play with its current rig count at “zero” and its operational budget sliding to $100 million, BHP’s financial reports show.
ARKANSAS SEVERANCE TAX TALLY ON RECORD PACE, BUT LOW PRICES COULD END RUN
Arkansas’ severance tax collections hit a record for the month of December, but plummeting natural gas prices and declining rig counts could threaten the state’s incredible run of good fortune and production in the Fayetteville Shale, recent industry reports show.
Gross natural gas severance tax revenue during December rose a whopping 81% to $7.8 million compared to $4.3 million a year ago. For the three month period ended Dec. 31, 2014, collections were up 41.6% from $14.1 million for the same quarter of fiscal 2013, according to tax data compiled by the Revenue Division of the Arkansas Department of Finance & Administration.
The monthly and quarterly totals are a record for those respective periods, as new drilling techniques and high well production continues to fill state tax coffers.
S&P RESEARCHER SEES TOUGH 2015 FOR OIL & GAS PRODUCERS
Standard & Poor’s Ratings Services sees a gloomy 2015 for many oil and gas producers as low prices and competition are expected to cause many companies to struggle to keep their heads above water, according to a recent SNL Energy report.
In a Jan. 21 teleconference discussing the rating agency’s decision to downgrade 23 oil and gas companies, S&P Managing Director for Oil and Gas Research Thomas Watters said the agency had dropped its price expectations for natural gas from an average of $3.75/Mcf for 2015 and $4/Mcf for 2016 to $3.50/Mcf and $3.75/Mcf, respectively. The amount of gas produced in the Marcellus and Utica shales, he said, will not only keep prices down but also probably put gas drillers elsewhere in a difficult situation.
“We’ve seen a prolific shift in gas production. … The Marcellus and Utica shale plays are pretty much driving out production from the Barnett and Haynesville,” he said. “When you’ve got low-cost plays like the Marcellus and Utica that are bountiful, you pretty much put a cap on gas prices. We think it’ll be hard-pressed to see gas getting over $4 anytime soon, with how low-cost these plays are. I think that companies operating in the Haynesville and Barnett are going to struggle as the Marcellus and Utica plays are developed.”
Watters also said oil producers will struggle in 2015 as they will be impacted by oversupply, lower demand and a strong U.S. dollar.
“We get asked a lot: How low could prices go? Could they go below $40? That’s a distinct possibility. We don’t see any floor right now preventing that from happening,” he said. “But I would more beg the question: How long is this going to last? You could see it through early next year and into midyear next year before production starts to rebound.”
Read more at this link.