Comment: President Barack Obama dined last night at the Anchorage home of Alaska Dispatch Publisher Alice Rogoff (NGP Photo). We hope that in addition to climate change issues, Alaska's major publisher was able to also discuss other matters.
Read other national and international news accounts of President Obama's Alaska visit, here.
We provided additional links, yesterday, here.
Alaska's dependence and constitutional reliance on natural resources largely rest upon Trans Alaska Pipeline System (TAPS) sustainability. This is because 90% of the state operating budget and over a third of Alaska's economy are based on oil revenue.
TAPS' sustainability, the President should know, depends in large measure on federal policies affecting the National Petroleum Reserve-Alaska; the Alaska National Wildlife Refuge (1002 area); oil and gas lease sales; energy project permitting, regulation and conditions.
Rogoff, a well known organizer of Arctic forums would also be in a good position to emphasize the importance of protecting US jurisdiction in the Arctic. Guarding American interests is particularly important as Russia becomes more and more provocative in staking out high value oil and gas resources in the Arctic, building infrastructure and increasing its military presence.
We have noted Canada's diligence in caring for its Arctic domain. The United States, Canada's NORAD partner, should be doing the same. -dh
Calgary Herald by James Wood: The president of the country’s major oilpatch lobbying group says the energy industry doesn’t want government to put its planned review of Alberta’s energy royalties on hold.
Alaskans Prepare For President Visit
"We don’t have a lot of presidents who stop here unless they’re low of fuel,” Gov. Bill Walker (NGP Photo) said...."
White House Video/Alaska Public Television: "...the president says he’s coming to Alaska because it’s on the front lines of climate change, with lives and communities already being disrupted.
“What’s happening in Alaska isn’t just a preview of what will happen to the rest of us if we don’t take action. It’s our wake-up call,” Obama says. “The alarm bells are ringing. And as long as I’m president, America will lead the world to meet this threat — before it’s too late.” (See the video.)
Comment: Your writer suggests that Alaskans better learn that this president and his party and its supporters are determined to:
-STOP development in Alaska.
-Eliminate free enterprise jobs and conservatively voting employees.
-Replace them with bureaucrats loyal to the regime, supported by armies of environmental and social activists.
In these pages, we have provided ample demonstration of this principle.
We remember treating President Carter and Interior Secretary Cecil Andrus well on their visits to the state. They burned our olive branch when the two then created -- with their congressional allies -- the Alaska National Interest Lands Conservation Act.
ANILCA continues to VIOLATE THE STATEHOOD COMPACT and descimate Alaska's economy.
The Obama Climate Change initiatives are only pretext to the accumulation of more partisan power at Alaska's expense and at the expense of every American energy consumer and job seeker and supporter of Arctic Sovereignty and national defense.
For those still in doubt, read our report, "UN Climate Change Chief, Christiana Figueres: Against Capitalism...."
To these 'end justifies the means' operatives, it's not about the environment; it's about power.
Lastly, we think all recent presidents have underrated Alaska's importance to North America's Arctic defenses, which should be founded on assuring jurisdiction over and development of Arctic resources. Without a proper national defense and natural resources to back it up, North America is vulnerable and all other issues then become academic if not irrelevant. -dh
The letter notes the many natural resource wonders of Alaska and the need -- and constitutional mandate -- for Alaskans to develop those resources.
In part, it says, Alaska depends on the responsible development of its natural resources to expand and support its economy. Article VIII of our state constitution mandates that we develop our resources to the maximum benefit for all Alaskans. To do that, we need access and responsibility for our own lands. (See the complete letter here....)
Interior Secretaries (i.e. 1, 2) for this Administration alone have accomplished not one step toward supporting Alaska's best interest -- which parallels the best interest of all Americans: responsible development of Alaska's resources.
We expect the president and secretary of state have not become more respectful of Alaska's constitutional guarantees and obligations. We expect them to be greeted by armies of environmental activists, many of them flown in to celebrate a new era of eco-domination over Alaska's Constitution.
...and, as we prepare to welcome the presidential delegation, we also remember memorizing at the school of hard knocks the definition of insanity.
Salon thinks we're insane for overusing a cliche. But we always "consider and are often comforted in knowing the source" of criticism.
Peace, dear reader. -dh
Today's Consumer Energy Alliance relevant energy links:
Alaska Business Monthly: Message to President Obama from Alaska On behalf of our organizations and the tens of thousands of jobs we represent, we welcome you and Secretary John Kerry to Alaska. Thank you for coming, and we hope you take the opportunity to learn Alaska's true story and its value to the nation. As you visit our state, often referred to as “The Last Frontier,” you will see firsthand Alaskans’ achievements and the tremendous opportunities that are yet untapped for the United States.
Capital Soup: Officials to Converge in Tampa to Discuss Shared Opportunities and Challenges in Energy at Gulf Coast Energy Forum
Members of the Gulf Coast’s diverse energy community will gather in Tampa on Wednesday for the annual Gulf Coast Energy Forum, sponsored by Consumer Energy Alliance (CEA) and the Partnership for Affordable Clean Energy (PACE). The Forum will bring together grassroots leaders, elected officials and organizations across the Gulf Coast, as well as thought leaders in the energy field, to discuss shared opportunities and challenges in energy for the region.
Consumer Energy Alliance: Consumer Energy Alliance Welcomes New Member: Ohio AgriBusiness Association
Consumer Energy Alliance (CEA) is pleased to welcome the Ohio AgriBusiness Association (OABA) as its newest affiliate member. Established in the late 1800s, OABA represents more than 240 companies including manufacturers and suppliers of plant nutrient and protection materials, the grain warehousing and marketing industry, the feed and seed industry, as well as businesses providing equipment, financing, insurance, and consulting, to agribusiness.
Consumer Energy Alliance: Energy Day Festival Links Future Generations with Future Prosperity
The U.S. Dept. of Labor announced in October that the number of job openings in the U.S. has reached 4.8 million, the highest since January 2001. In addition, a recent report by Manpower, a worldwide staffing company, predicted that the number of jobs in the energy sector, unquestionably one of the nation’s fastest growing industries, would nearly double to about 3 million by 2020.
Consumer Energy Alliance: For President Obama, Responsible Development Should be Job #1 in the Arctic
In National Journal, Consumer Energy Alliance President David Holt responds to the question “Can Arctic Drilling Be Done Safely?” with a resounding yes, outlining how responsible arctic development is paramount in ensuring West Coast energy stability and national energy security.
Christian Science Monitor: Oil prices collapse: Will Arctic drilling survive the crash?
Italian oil group ENI is expected to begin production from the Goliat Field off Norway in a few short weeks. The project, which has cost $5.6 billion, is expected to produce 34 million barrels of oil per year by the second year of production.
Business Insider: Low oil prices are making Arctic drilling even tougher
Italian oil group ENI is expected to begin production from the Goliat Field off Norway in a few short weeks. The project, which has cost $5.6 billion, is expected to produce 34 million barrels of oil per year by the second year of production.
Alaska Dispatch News: Alaska Gov. Walker to Obama: Help us put more oil in the pipeline
President Barack Obama is visiting Alaska next week, where he’s expected to argue climate change is an urgent problem that requires international action. The message he’ll hear from Gov. Bill Walker? Walker wants the federal government to help Alaska access more fossil fuels — consumption of which is widely viewed as one of the primary drivers of climate change.
Alaska Dispatch News: Obama won't let real Alaska voices disrupt climate change photo-ops on Arctic trip
President Barack Obama is coming to Alaska. So what? He’s not coming to learn. He’s made that perfectly clear in the video he circulated when he announced his trip. He’s coming to use Alaska as a backdrop to further his argument on climate change.
E&E News: Obama's Alaska trip will help him present a more dramatic view of climate change
President Obama's summer climate change tour will culminate in the Alaskan Arctic next week, putting him in a setting that has experienced the country's most dramatic climatic changes and one that Obama hopes will help him boost public support.
Washington Times: Obama accuses Kochs of un-American campaign to undermine green energy
President Obama accused conservative opponents of his climate change agendaMonday night of carrying out an un-American campaign to protect their fossil fuel interests at the expense of the country. “They’re trying to undermine competition in the marketplace and choke off consumer choice and threaten an industry that’s turning out new jobs at a fast pace,” Mr. Obama said at a clean energy summit here.
Town Hall: Las Vegas Review-Journal: Obama’s Clean Power Plan Is ‘Unlawful Overreach’
You know about Obama’s Clean Power Plan that will save all of humanity from the non-threat that is global warming. It aims to reduce carbon emissions by nearly 30 percent from 2005 levels by 2025. In the process, the regulatory costs will soar into the hundreds of billions of dollars, millions of jobs from black and Hispanic communities will be gutted, fixed-income seniors will have their budgets nuked by rising energy costs, and the plan pretty much punishes states that didn’t vote for Obama in 2012.
Forbes: Fracking Is Our Clean Power Plan
As environmental groups gather to strategize maximum mileage from the president’s “Clean Power Plan,” they would do well to remember what they might regard as the greatest environmental triumph of this century: The U.S. already leads the world in carbon emissions reduction, with emissions down 26% since the shale boom hits its stride in 2007.
Fierce Energy: Billion dollar injection: Obama shepherding new era of clean energy
President Obama's been busy over the past couple days. In addition to giving the keynote at the National Clean Energy Summit in Las Vegas -- where he announced a robust set of executive actions and private sector commitments to advance the country's transition to cleaner sources of energy and cut energy waste -- he has blessed more than a billion dollars in initiatives to advance innovative clean energy technologies.
Heartland Institute: Affordable Energy Summit Counters Obama-Reid Event
A coalition of Republicans, Democrats, and Libertarians rallied today in Las Vegas to call for affordable energy and an end to government favoritism toward so-called “clean” energy sources. Speakers at the Affordable Energy Summit 8.0 explained wind and solar power championed by Barack Obama, Harry Reid, and renewable power activists at the rival Clean Energy Summit 8.0 are prohibitively expensive, yet producing few if any net environmental benefits.
Huffington Post: Environmental Activists Arrested Outside John Kerry's House
Twenty activists protesting an international pipeline expansion project were arrested outside Secretary of State John Kerry’s residence in Washington, D.C., on Tuesday. They were part of a group of about 100 demonstrators organized by the youth environmental group Midwest Unrest. The protesters were calling on Kerry to block Enbridge Energy from expanding its Alberta Clipper oil sands pipeline, which runs from Canada to Superior, Wisconsin.
Associated Press: Part of Indiana BP Oil Refinery Reopens; Ohio Gas Prices Could Fall
BP says it has restarted a portion of a large Indiana oil refinery whose unplanned shutdown for repairs caused gasoline prices in the region to spike earlier this month.
OilPrice.com: Fate of U.S. Fracking Could Rest With Colorado Supreme Court
The oil and gas landscape is changing fast these days. And a big item this month suggests the courts may have a major impact on shaping the sector over the coming months. Especially issues like fracking.
Lincoln Journal Star: Bold Nebraska searching for evidence of TransCanada influence
Bold Nebraska has gone fishing. Volunteers for the environmental advocacy group known for its opposition to the Keystone XL pipeline spent hours Tuesday poring over boxes of records from former Gov. Dave Heineman’s administration.
Bloomberg: Oil plunge has gone too far, Morgan Stanley says
The global oil market is healthier than it looks, signaling that crude’s plunge to six-year lows has probably gone too far. While futures tumbled below $45 a barrel in London for the first time since 2009, Morgan Stanley and Standard Chartered Plc say other measures suggest physical markets for crude have stabilized or even strengthened in recent weeks.
Bloomberg: Energy Companies Cheaper Than Assets after Rout, Oil Search Says
Oil and gas companies are looking more attractive to buy than individual assets following the plunge in share prices, according to Oil Search Ltd., Exxon Mobil Corp.’s partner in Papua New Guinea.
Houston Chronicle: Tough times force companies to cut deeper, innovate
Oil prices recovered slightly Tuesday from the dramatic sell-off a day earlier, but not enough to brighten the dim outlook that's intensifying the industry's drive to find new ways to slash costs and operate more efficiently.
Fierce Energy: When is enough enough? Energy efficiency in Nevada, California
As the National Clean Energy Summit 8.0 wraps up in Nevada, a new report from the national nonpartisan business group Environmental Entrepreneurs (E2) and the Natural Resources Defense Council (NRDC) identifies energy efficiency as an economically beneficial way for Nevada to meet new carbon pollution limits set by the federal Clean Power Plan -- the cornerstone of President Obama's climate agenda.
San Francisco Gate: Troubled California oil field regulator faces major overhaul
California’s embattled oil field regulatory agency will undergo a sweeping overhaul following revelations that the office for years let petroleum companies dump their waste water into federally protected aquifers.
Denver Business Journal: Pain and gain on the way for oil and gas industry, say experts at COGA energy summit
The pain isn’t over for the oil and gas industry, according to speakers at the Rocky Mountain Energy Summit, the Colorado Oil & Gas Association’s annual industry conference underway this week.
Fuel Fix: Oil is falling, but Eagle Ford, Bakken output on the rise
Oil prices are tumbling this year, but production from the Eagle Ford Shale and Bakken formation increased slightly between June and July, according to Bentek Energy. Average oil production in the Eagle Ford in South Texas was 1.6 million barrels per day in July, up by about 10,000 daily barrels over June production.
KGBT: Low oil prices haven't hurt the Texas economy — yet
Just one short year ago, Texas drilling country rumbled with activity and high expectations that the good times would last a long while. So much for that. Amid a plunge in oil prices, the bonanza has paused at the very least, wiping out thousands of jobs in the oilfields and communities dependent on them.
The Oklahoman: Budgets for oil drilling likely to decline again in 2016, according to experts at Oklahoma conference
The double dip of low oil prices over the past two months likely will lead to more severe cuts in drilling activity next year, speakers said Tuesday at the Pipeline and Energy Expo in Tulsa. "We've been thinking for three or four months that 2016 budgets would be smaller than 2015. Now we think they will be even smaller," said Skip York, vice president of integrated energy at Wood Mackenzie.
Monroe News Star: Revenue lost: Severance tax gives producers big break
The state of Louisiana may have missed out on some $1.1 billion in severance tax collections over the past five years as the result of a continuing state exemption that provides horizontal well operators substantial breaks or, in some cases, what amounts to a free pass.
The Advocate: Legislative Auditor: Louisiana missing out on hundreds of millions of dollars from oil and gas incentive
Louisiana has forgone hundreds of millions of dollars in taxes every year recently to spur the use of an oil and gas drilling technique that was being improved when the subsidy was created two decades ago but is commonplace now, a legislative audit says.
The Plain Dealer: Ozone alert: smog battle heats up again, manufacturers say cleaner air will kill them
Another battle about ozone is beginning. The air waves and blogosphere will soon be thick with warnings about lost jobs versus lost lives as the health and manufacturing industries engage in another round of fighting about lowering the amount of ozone in the air you breathe.
The Vindicator: FrackFree Mahoning Valley hosts town hall meeting on frackingThursday night
FrackFree Mahoning Valley will have a town hall-style meeting from 7 to 9 p.m. Thursday at the First Universalist Church of Youngstown, 1105 Elm St., to discuss the impact of fracking.
UPI: North Dakota plans more wind power capacity
In parallel with the White House, North Dakota said it was planning to connect a 43-turbine wind farm to the grid as part of an "all of the above" strategy. North Dakota Lt. Gov. Drew Wrigley was on hand for a ceremony to celebrate the upcoming completion of the Thunder Spirit wind farm, a 43-turbine wind farm with a maximum capacity of 107 megawatts of power.
WOWK-TV: West Virginia oil and gas safety panel to meet Wednesday
A panel appointed by Gov. Earl Ray Tomblin is holding its second meeting to study safety within the oil and natural gas industry. The Oil and Natural Gas Industry Safety Commission plans to meet Wednesday at the West Virginia state office building in Fairmont.
The Sanford Herald: Fracking restrictions challenged
Proposed changes to a local ordinance would restrict hydraulic fracturing and other mining activities in parts of Lee County, but not everyone is convinced they would be legal — namely the former chair of the N.C. Mining and Energy Commission.
The Journal Press: Supervisors to hold public hearing next week on fracking rules
The King George Board of Supervisors will take public comment at a 6 p.m. meeting onSept. 1 on proposals to tighten rules for oil and gas drilling in the county zoning ordinance and the Comprehensive Plan pertaining to fracking.
StateImpact Pennsylvania: Marcellus Shale drillers fined for methane migration
State environmental regulators say three natural gas drillers contaminated 17 separate drinking water wells in north central Pennsylvania and together the companies have paid close to $375,000 in fines. The Department of Environmental Protection blamed well construction for methane migrating into drinking water supplies.
Reading Eagle: David Rusk: Gov. Wolf's Property Tax Reform Plan Would Help More than GOP Proposal
At the entrance to the Martin Luther King, Jr. Memorial in Washington, D.C., is carved one of Dr. King's most famous themes: "The arc of the moral universe is long, but it bends toward justice." Gov. Tom Wolf's proposals to reform property taxes and state school funding would bend that arc a bit further toward justice in Pennsylvania.
Then, bookmark our April 17 commentary. -dh
Comment: Critical reading of today's events below demonstrates some good news in the form of COP's new drilling at its CD5 property on the Alaska North Slope (ANS). Then, we note from our Australian and Ohio analysts the increased difficulty faced by an ANS gas transportation project in a low energy price, high production environment.
ALASKA DECISION MAKERS: Does this not mean Alaska must become even more competitive to market its natural resources, not less? See this week's August 18 editorial, "Outrageous Decisions"; here are some reviews. -dh
Wilderness Society vs. Institute for Energy Research
But Brune apparently was trying to speak for Alaska's Native people. He also suggested that no new oil and gas areas should be developed because climate change (in his opinion) required all new energy to come from alternative energy sources (i.e. wind, solar, etc., we presume). This is more evidence that, indeed, to enviro-activists the 'end justifies the means,' and intellectual honesty has no role in their strident advocacy. -dh
Today ConocoPhillips (NYSE:COP) announced that development drilling has begun at its CD5 drill site on the North Slope. CD5 is the first oil development within the boundaries of the National Petroleum Reserve-Alaska (NPR-A), and first oil is expected in the fourth quarter of 2015. Click here to view the full news release.
THE ENERGY ANALYSTS SPEAK...AND, YOU READ IT HERE FIRST!
Today we bring you two of our favorite private analysts, whose names shall not be revealed.
One writes from the Mid Atlantic interior state area while the other writes us from far across the Pacific.
Today's Aussie O & G Observer writes:
- ...the Alaska LNG Project is....(Read more)
- The oil market has been smashed again overnight.... (Read more)
Our Ohio Observer says:
- The highwater mark for rigs operating in the Bakken during the past two years was October 2014 (see below) at 194. Since that time, the number of rigs has fallen 60%. Yet production is almost at record monthly levels, and (Read more)
AJOC by Elwood Brehmer.
All Alaska Gasline Development Corp. contracts would be open to the public under a draft regulation proposed Aug. 13 at its board of directors meeting.
A contract submitted for board approval would be posted on the Alaska Gasline Development Corp., or AGDC, website at least 10 days prior to the meeting at which it is to be discussed, the draft regulations state.
Overall, the five pages of proposals limit what types of confidentiality agreements the corporation and its directors can enter into.
“If the regulations are adopted in this form it is simply going to be fairly open going forward,” AGDC attorney Ken Vassar said. “We’re not going to enter into any contracts that by their terms are themselves confidential. That’s just not an agreement that would be available to u
Today's Consumer Energy Alliance links to issues important to NGP readers:
Argus Media: States urge dismissal of Oregon LCFS suit
The federal court lawsuit brought by the American Fuel and Petrochemical Manufacturers Association (AFPM), American Trucking Association and Consumer Energy Alliance echoes arguments they made against the California LCFS. The judge in that case said that the AFPM lawsuit could not go any further because of a 2013 decision by the US Ninth Circuit Court of Appeals that said the California program did not explicitly discriminate against out-of-state products in violation of the US Constitution.
Alaska Dispatch News: With Obama's visit less than two weeks away, details trickle out
Public officials and residents alike, from Anchorage to the 400-person village of Kivalina on the northwest coast, are watching and waiting for more details about President Barack Obama’s upcoming visit to Alaska.
Fox News: Clinton hit for breaking with Obama on Arctic drilling, staying mum on Keystone
Hillary Clinton is taking heat from Republicans for breaking with the Obama administration on Arctic drilling while continuing to hedge on her position on the Keystone XL Pipeline.
National Post: Kelly McParland: Obama’s Arctic drilling rationale doesn’t even convince supporters
Barack Obama is a curious individual. The U.S. president has delayed making a ruling on Canada’s Keystone XL oil pipeline for seven years, seeking to burnish his environmental credentials and please supporters in the green movement. The refusal upset Ottawa no end, but the White House deemed Canada’s vexation less crucial than making a point about the importance of battling climate change.
Town Hall: Poll: Americans Think Obama’s Climate Change Plan Will Increase Energy Costs – They’re Right
The Obama administration’s plan to cut carbon dioxide emissions by nearly 30 percent from 2005 levels by 2030 has a majority of Americans feeling their wallets since electrical costs are projected to go up. The increase specifically places fixed-income seniors in the cross hairs. Moreover, the projected job losses are will hit rural America the worst.
Real Clear Energy: One Loser in Obama's Climate Plan? Existing Nuclear
Right now, the biggest source of clean energy in the United States is nuclear power. The country's 99 commercial reactors provide 20 percent of our electricity, all without emitting carbon dioxide. Compare that with wind at 4.9 percent or solar at 0.6 percent.
Heartland Institute: House Cuts EPA Budget, Would Block Clean Power Plan
The House Appropriations committee cut funding for the Environmental Protection Agency (EPA) by 9 percent, or $718 million, and blocked key Obama administration climate rules when they approved a $30.17 billion Interior and Environment spending bill.
Fuel Fix: Commentary: Fossil Fuels are the Solution, Not the Problem
The George C. Marshall Institute has recently released a study on fossil fuels and the economic well-being. It describes why energy is an essential input to economic activity. Because fossil fuels are such a large part of the world’s energy supply, they play a dominant role in enabling people everywhere to enjoy a higher standard of living and greater personal freedom.
Forbes: Pennsylvania and Truth in the Incidence of a State Severance Tax
Pennsylvania policymakers are nearing a two-month budget stalemate between Governor Tom Wolf and state GOP leadership, at least part of which can be attributed to their divergent views on the implications of a proposed severance tax on the production of unconventional natural gas.
Economic Times: Oil prices hit 6-1/2-year low as US crude supplies rise
Oil prices in New York sagged to a new six and a half year low Wednesday following data showing an increase in US petroleum stocks. US benchmark West Texas Intermediate for delivery in September dropped $1.82 to $40.80 a barrel on the New York Mercantile Exchange. The contract fell as low as $40.46 a barrel earlier in the session.
New York Times: Oil Companies Sit on Hands at Auction for Leases
With oil prices collapsing and companies in retrenchment, a federal auction in the Gulf of Mexico on Wednesday attracted the lowest interest from producers since 1986. It was the clearest sign yet that the fortunes of oil companies are skidding so fast that they now need to cut back on plans for production well into the future.
San Antonio Express-News: Low crude prices affect offshore drilling auction
Oil and gas companies are set to pay $22.7 million for drilling rights in the Gulf of Mexico following a lackluster government auction Wednesday that reflected low crude prices. With just five companies participating and only 33 leases sold, the turnout marked the smallest western Gulf of Mexico lease sale since area-wide auctions began in 1983.
Fuel Fix: Oil and gas cos. among most profitable per employee, analysis finds
Oil and gas companies were among the best at squeezing the most revenue from a small number of employees last year, according to data collected by a business research website. Researchers from FindTheCompany calculated profits per employee among companies on the S&P 500 in 2014. Among the top 25 companies ranked according to that metric, 15 were oil and gas exploration and production companies.
UPI: Wood Mackenzie: Mexico oil swaps only slight U.S. move
Approval for oil swaps with Mexico opens the spigot for U.S. crude oil, but might not be the export indication supporters are hoping for, an industry analyst said. The U.S. Commerce Department last week granted a request from Mexican energy company Petroleos Mexicanos, known also as Pemex, to swap as much as 100,000 barrels of U.S. crude oil per day for Mexican refining. The deal forbids the re-export to other nations.
Houston Chronicle: Senators ask SEC to review oil companies' disclosure on offshore risk
A dozen senators are asking the Securities and Exchange Commission to probe whether oil and gas companies are fully disclosing the risks associated with their offshore operations.
Alaska Journal of Commerce: Paper: Cooperate rather than lead on AK LNG
A leading U.S. economist says a large natural gas pipeline project is vital to the state’s economic future and that the state should cooperate with experienced large companies in developing the project rather than attempting a plan for the state to lead the project.
Orange County Register: Obama's Clean Power Plan is bad news for California
The White House recently released its Clean Power Plan, which aims to reduce the nation’s carbon dioxide emissions by 32 percent by 2030. Almost immediately, California Gov. Jerry Brown praised the plan, claimed it should be the model for international agreements and touted California’s own statewide plans. But California’s carbon control program should be a warning to the rest of the country, not an endorsement of the president’s plan.
The Argus Leader: My Voice: Getting Washington working again for Americans
When Republicans campaigned for the Senate majority in 2014, we made a simple, yet important pledge to the American people: If you elect Republicans to the majority, we will get the Senate, which has been dysfunctional for years, working again. That was not a half-hearted campaign slogan; it was a commitment on which we intended to deliver.
The City Wire: Arkansas severance tax revenue set fiscal-year record, pace falls in new year
Arkansas severance tax collections tumbled nearly 59% in the first month of the state’s fiscal year 2016 as Fayetteville Shale drillers were unable to sustain production levels due to continued weak natural gas prices, spending cuts and fewer operating rigs.
Lincoln Journal Star: Local View: Five seasons Nebraska should reject the EPA’s mandate
The EPA’s “Clean Power Plan” would drastically increase energy costs for all Nebraskans without achieving its stated goal of combating climate change.
Milwaukee Journal Sentinel: Enbridge claim hard to swallow
None of us should be surprised when fossil fuel company executives tell a whopper or two in order to promote their interests, protect their massive government subsidies or avoid regulation of the deadly carbon pollution they freely loose upon Earth's increasingly damaged atmosphere.
Chicago Tribune: Colorado already put methane caps on drillers, and it worked
For an idea of how the U.S. government's proposed methane rules will affect drillers, look no further than Colorado. The state became a test case for similar controls last year when a coalition of energy companies and environmental groups agreed on measures to cut the pollution. In a bid to address smog, regulators there adopted the nation's first requirements for oil and natural gas companies to find and fix methane leaks.
Wheeling Intelligencer: W. Va Leaders Bash Clean Power Plan
For better or for worse, depending on one's perspective, President Barack Obama's Clean Power Plan will significantly change America by the year 2030 - if its goal of cutting 32 percent of CO2 emissions from electricity plants becomes reality.
Andover Townsman: Natural gas pipeline could add $950K to tax coffers
Andover could rake in nearly $1 million in new property tax revenue if a plan by energy giant Kinder Morgan to build a high-pressure natural gas line through town ever comes to fruition. Kinder Morgan officials said last week that Andover would get $950,000 in tax revenue while Methuen would earn $700,000 for being hosts to a portion of the gas pipeline. Dracut, meanwhile, could earn more than $2 million for hosting some of the key infrastructure for the pipeline system.
Observer #2 (Ohio). The highwater mark for rigs operating in the Bakken during the past two years was October 2014 (see below) at 194. Since that time, the number of rigs has fallen 60%. Yet production is almost at record monthly levels, and has increased in the past two months. Part of this has to do with the number of uncompleted wells dropping by 77, leaving 848 still in the inventory of uncompleted wells. This volume can apparently be maintained for some time. According to the monthly report from the North Dakota DMR,
At the end of June there were an estimated 848 wells waiting on completion services, 60 less than at the end of May.
The current rig count plus NC well inventory is sufficient to maintain 1.2 million barrels of oil per day for 24 months
Bottom Line: If this carries over to other oil shales, it is going to be difficult to see any drop in domestic crude oil production in coming months.
Observer #1 (Australia) The oil market has been smashed again overnight (more below). Current sentiments appear to be very bearish, with every piece of bad news being the signal for a sell-off.
A quote from Tudor Pickering Holt's daily note to clients yesterday is set out below. To my mind this provides a clue as to the source of much of this bear-ishness:
"The snapback in stocks / commodities coming out of the 2008/2009 financial crisis spoiled us…it’s usually not that easy exiting a down cycle."
This to me says that the market is going through the "five phases" of grief after last year's oil price crash - and we are now only at the second phase: anger that the re-bound has not yet come (and is not in sight). If this cod-psychology is correct, then we have still three phases to go....
Brent closed down more than 3% at US$47.00, whilst WTI was even harder hit, closing down 4.3% at US$40.55. The twelve month forward price is now worse than it was during the 2008/09 GFC induced oil price fall.
The numbers du jour which induced this fall was data from the EIA's weekly report, which indicated that US crude inventories increased by 2.6 mmbbls (although net product inventories - gasoline and distillate - fell by 2.1 mmbbls). The market consensus figure earlier in the week had not anticipated the extent of the build. The EIA also reported that US daily imports had increased by ~0.5 mmbopd - implying that the US is being used as the global storage site of last resort.
The Henry Hub natural gas price closed down 1c at US$2.71.
Regular followers will recall that this blog considers that the Alaska LNG project is the tortoise of the LNG world - well placed to beat some of the flashier hares. However, Alaskan politics is currently bouncing a few rocks off the shell of this plodder. Readers around the world will recall that Alaskan Governors can often be colourful characters - looking no further than one of the favoured running mates of The Donald, one Ms Sarah Palin.
Not wanting to be beaten by Ms Palin's appetite for socialist oil industry taxes, the latest Governor (Bill Walker) has introduced a concept worthy of Hugo Chavez: taxing gas resources in the ground (a "reserves tax") at the same time as he has signaled he would like the State to takeover 51% of the BP/Exxon/Conoco AKLNG project.
As this is the USA, I expect reason to prevail eventually - but this shows that LNG projects everywhere are subject to politicians mistaking fragile eggs for golden gooses.
Governments and fracking
Victoria's Auditor General released a report yesterday concluding that the State was not as well placed as it should be to manage issues associated with on-shore oil & gas exploration. This has led the Greens to issue a clarion call for the ban of fracking for the period of "forever" (rather than the usual mealy-mouthed five year moratorium). The Farmer's Federation wants more "science". Clearly more than a million safely fracked wells don't provide a statistically valid sample size......
Company news - Armour Energy Ltd (AJQ)
Micro-cap AJQ has announced today that it has signed a non-binding deal with large US private equity firm, American Energy Partners (AEP) under which the latter may farm-into AJQ's Northern Territory acreage.
AEP was founded a few years ago by the colourful ex-CEO of Chesapeake Energy (the second largest US gas producer), Aubrey McClendon. This is the first deal that it (or Chesapeake, to my knowledge) has done outside the USA - the well costs, etc, will not be familiar!
If the deal is turned into a binding one, it will see AJQ be 25% free-carried through a US$100M program, and receive US$11M cash up-front as well.
AEP's founding investor was another US private equity firm, Energy & Minerals Group (founded by ex-Exxon MD Lee Raymond's son) - who themselves recently entered the Northern Territory through a farm-in with private Australian company, Pangaea Resources.
Company news - A J Lucas Ltd (AJL)
AJL has a 40% stake in the UK's best known shale gas exploration company, Cuadrilla Resources, who were recently awarded further exploration licences in on-shore England.
Company news - Beach Energy Ltd (BPT)
BPT today announced that it had appointed an acting-CEO - Neil Gibbons - as MD Rob Cole was absent for family reasons.
Company news - Santos Ltd (STO)
Tomorrow STO will announce its half-yearly results. Its full year results in February included a A$1.6B write-down - but using oil price assumptions that are significantly higher than the current forward strip - or indeed than the bearish sentiments on price that came from Woodside's results briefing earlier this week.
STO will have to walk a narrow line between not being seen as being over-optimistic on oil prices versus not wanting to precipitate the equity raising which its leadership has nailed its credibility to not doing.
Quote of the day
Aubrey McClendon's robust views on the fracking debate:
"We frack all the time. What’s the big deal? Where is the mushroom cloud? Where are the dogs with one leg?”
Gas/LNG links courtesy of Larry Persily, Kenai Peninsula Borough:
Oil and gas news briefs for Aug. 20, 2015
Report says U.S. LNG must be price competitive to succeed
RBN Energy; Aug. 17) - The U.S. over the next three to five years will become a top exporter of LNG, and may emerge as the world’s leading exporter by the mid-2020s. The 12 liquefaction trains now under construction at five sites in the Lower 48 states together will have the capacity to export up to 54 million metric tons per annum, about 7 billion cubic feet of gas a day. How much more the U.S. LNG export potential can grow is covered in a report released this week by energy analytics firm RBN Energy.
The report, “LNG is a Battlefield — The Prospects for U.S. Success in Overseas Markets,” said that despite gas becoming the “hydrocarbon of choice for power generation, heating and many other uses across much of the global energy market … LNG must not be cost-prohibitive.” And until LNG demand grows as expected over the long term, the short-term view looks week. “A lull in demand growth — coupled with new liquefaction capacity — has bloated LNG supplies and slashed prices in the past year.”
Even with low oil prices, which have dropped the oil-linked price charged for LNG under traditional long-term supply contracts, “the U.S. should remain a cost-competitive supplier to international markets,” the report said. A lot will come down to price, it said. “Returns on investment in U.S. LNG export infrastructure as well as the extent of future expansion depend on price competitiveness in international markets.”
Buyers’ market pushes Australia LNG developer to focus on costs
(Reuters; Aug. 19) – Australia’s largest independent oil and gas producer Woodside Petroleum said it has stepped up marketing for its proposed Browse floating liquefied natural gas project, but conceded it is facing a buyers' market against a backdrop of weak oil prices. “The project will need to deliver an acceptable return at the current expectations of oil pricing, meaning it needs to break even at the sorts of oil prices we’re seeing in the marketplace today,” CEO Peter Coleman said.
Despite some analysts expecting a delay, the company is still targeting a final investment decision on Browse in the second half of 2016, having moved into the front-end engineering and design phase this year. Woodside has been able to cut cost estimates by 20 to 30 percent for the subsea and pipeline pieces of the long-delayed project off Western Australia, which analysts previously estimated at $45 billion when it was planned with a land-based liquefaction plant.
The partners are now focused on driving down costs so Browse can be profitable even if oil fails to rebound, and will be marketing the gas aggressively this year. One of those partners, Shell, whose floating LNG technology is the template for Browse, recently said it was far from certain the partners would approve the project.
Gazprom faces serious challenges, including all-time low production
(Agence France Presse; Aug. 16) - Facing a cold shoulder from Europe and increased competition at home, Gazprom has struggled to assert dominance on the global energy market, prompting speculation the natural gas giant could have no choice but to splinter. With the Russian economy slipping into recession on the back of lower oil prices and Western sanctions over Ukraine, the economy ministry has predicted Gazprom would produce 14.6 trillion cubic feet of gas this year, an all-time low for the company.
Gazprom's market capitalization has crashed in recent years. Before the 2008 global financial crisis, the company was worth over $300 billion. Its value now hangs around $50 billion, trailing far behind other major energy companies. "Gazprom is confronted with the greatest challenge in its history," said Chris Weafer, a partner at the Macro Advisory consultancy firm. "What remains to be seen is whether Gazprom becomes an appendage of the foreign ministry or evolves into a global energy company."
Gazprom is grappling with a series of issues, including its recent loss of the Ukrainian market, Europe's energy diversification and increased competition at home. And without U.S. technology blocked by sanctions, experts fear that Russia will not be able to exploit its Far East resources that had been destined for LNG exports. "This is bad news for Russia because the production of LNG is a strategic objective in the region," said Valery Nesterov, an analyst at Sberbank Investment. Some analysts have said Gazprom could benefit from dividing into smaller entities that would be more efficient and transparent.
Gas supply a question for Canada’s East Coast LNG export projects
(Globe and Mail; Canada; Aug. 17) - Two proposed liquefied natural gas projects on the Nova Scotia coast have received approval from Canada’s National Energy Board to export LNG, but they are counting on U.S. producers to supply much of the gas. In that case, they likely need new pipeline capacity to move that gas into New England to provide the supply to underpin their ambitious plans. Pieridae Energy and Bear Head LNG each received Canadian approval of their gas export license late last week.
The two projects are in addition to two others proposed for Nova Scotia and New Brunswick, all of which count on Canadian and U.S. gas making it north to the proposed liquefaction plants. “The big questions are: Where is the gas going to come from, and how are you going to get it to an LNG facility,” Fred Bergman, senior policy analyst with the Atlantic Provinces Economic Council, said in an interview.
Nova Scotia’s offshore fields have supplied gas to Canada’s Maritimes provinces and the U.S. Northeast for years, but will begin a steep decline later this decade unless companies develop new gas reserves. Another option for the LNG plants is Spectra Energy’s plan to build a new gas pipeline from the prolific Marcellus Shale field in Pennsylvania to New England, where it can be moved into Nova Scotia. But that project has run into stiff opposition in Massachusetts.
Oman struggles with growing domestic demand vs. LNG exports
(Platts; Aug. 18) - Over the past two years, Oman has quietly expanded the number of countries to which it exports LNG to well beyond those with which it has long-term supply contracts. In a state that needs increasing volumes of gas to fuel its oil and heavy industrial sectors, this raises far-reaching questions about energy strategy and allocation of gas resources to exports vs. domestic needs.
Oman’s government two decades ago saw LNG exports as an important means of diversifying the economy and moving state revenues away from a heavy dependence on oil exports. A total of 10.4 million metric tons per year of LNG production and export capacity was developed, with plants commissioned in 2000 and 2005. Oman signed long-term supply contracts with Japanese, South Korean and Spanish buyers, which in some cases were also the project shareholders.
Oman planned to negotiate additional contracts with new customers, predominantly in Asia. However, industrial expansion and rampant population growth in Oman, as elsewhere in the Arabian Peninsula, meant that securing domestic gas supply quickly trumped exports as a government priority, leaving the LNG plants significantly underutilized. In 2011, senior government officials suggested that at least one of the plants might be decommissioned once the long-term supply contracts expire.
Top LNG carrier owners join up to market short-term charters
(Reuters; Aug. 18) - Three of the world’s top liquefied natural gas carrier owners have decided to market 14 vessels jointly on a spot-charter basis, part of a new pooling arrangement aimed at cutting operating costs in a depressed market. The pool, consisting of eight modern vessels from Norwegian shipper Golar LNG and three each from Gaslog, headquartered in Monaco, and Dynagas, based in Greece, will commence chartering operations in September, a statement from Gaslog said Aug. 18.
A glut of newly built LNG vessels emerging from shipyards in Asia has been one factor driving down daily charter rates to around $30,000 per day, compared with $130,000 two years ago. "The LNG Carrier Pool allows the participating owners to optimize the operation of the pool vessels through improved scheduling ability, cost efficiencies and common marketing," the statement said. The vessels will seek employment exclusively for charters of 12 months or less.
The move reflects a growing LNG market shift toward short-term trading of cargoes as prices come under pressure and new production from Australia and the United States is expected to add to oversupply. "The real driver primarily is the fact that we are seeing the short-term shipping market growing substantially. In the year to date there have been 97 short-term vessel fixtures versus around 78 in 2014," said Gaslog CEO Paul Wogan. "It's becoming a much more important piece of the (LNG) shipping market.”
LNG spot market in Asia back up to $8
(Platts; Aug. 18) - The Platts LNG Japan-Korea Marker for September deliveries averaged $8.007 per million Btu July 16 – Aug. 14, up 8.3 percent from August, the highest month-on-month gain so far this year, on renewed buying interest and waning availability of spot cargoes in Asia. It was the highest monthly average price since February, when it was $9.911. However, it’s the seventh consecutive month that prices have hung around $7 to $8 since falling from the $9-to-$10 level in January-February.
With northeast Asian end-user demand still tepid and Indian importers reluctant to pay more than $8, the market appeared to have hit a ceiling. Even with the slight boost to $8, year-on-year the marker for September deliveries was down 25.2 percent compared with the average price a year ago at $10.702.
B.C. communities want share of energy project revenues
(Globe and Mail; Canada; Aug. 17) - The indirect cost of workers commuting to energy-sector jobs has prompted 21 local governments in Northwest B.C. to band together and press the province for a greater share of project revenues. Representatives met in Terrace, B.C., on Aug. 15 to formalize the Resource Benefits Alliance. Stacey Tyers, the group’s chairwoman, said workers used to move their families into northwestern B.C. towns for new projects but now most people fly in and out for a job.
“[Workers] use our services, they impact our social systems while they’re here. They use our hospitals … but there’s no contribution to the community in that regard,” said Tyers, who is also chairwoman of the Regional District of Kitimat-Stikine. She said the “unprecedented” agreement between communities empowers them to work on their shared goal of funneling provincial cash from energy projects back to the communities.
The alliance wants a commitment based on a percentage of project profits, and they’ve given themselves three months to get the province to start negotiations. The alliance calculated a 3 percent revenue share would produce $1 billion to cover infrastructure, mitigate social impacts and develop a legacy fund. The communities have amassed an infrastructure deficit of $500 million, Tyers said, as workers stretch capacity to the limit for roads, sewers and water but take their wages back to their home communities.
B.C. LNG hopeful starts site evaluation work
(North Coast Review; BC; Aug. 18) – Chinese-owned Nexen Energy has taken another step in the early days of its proposed liquefied natural gas export terminal on Digby Island, in front of Prince Rupert, B.C., with its provincial application to begin evaluating the site for potential development. The Aurora LNG project applied Aug. 5 to the B.C. Ministry of Forests, Lands and Natural Resources for an investigative-use license for geotechnical and geophysical studies.
If approved, the first phase of work would occur before the end of September, with the second phase to continue through the end of the year. Nexen would set up a temporary staging area for the work, transporting crews and equipment to the site by water taxi, boat, barge or helicopter.
The project has been estimated at about $20 billion to build a plant with capacity of 10 million to 12 million metric tons per year. Nexen has talked of making an investment decision on the project in 2017. The company has started its application process with the B.C. environmental assessment office. In addition to Nexen holding a 60 percent stake, two Japanese companies hold 40 percent of Aurora LNG. The proposal is one of almost 20 LNG hopefuls looking at supplying B.C. gas to overseas markets.
Oregon community debates LNG project workforce housing camp
(The World; Coos Bay, OR; Aug. 17) – The North Bend (Ore.) planning commission has extended the public comment period on Jordan Cove LNG's workforce housing camp application an additional 10 days. Following the commission’s contentious hearing July 20 on the conditional-use permit for the housing camp, city staff received an abnormally large amount of written testimony. They weren't able to get it all online until late Aug. 14, and the commission unanimously agreed Aug. 17 to keep the record open until Aug. 27.
After that deadline, Jordan Cove will have until Sept. 3 for its rebuttal. The commission will meet Sept. 21 to issue a decision, which could be appealed to the North Bend City Council. Meanwhile, the community debate continues. Boost Southwest Oregon members turned out Aug. 17 to support the project. “This area was built on industry, not on tourism. And I love tourism, it's really great if we can survive on that, but it's industry that builds this city, so I'd just like to see more of it,” said Bruce Payne, of Coos Bay.
The anti-LNG crowd also showed up, ready to make their case against the housing camp for the proposed liquefied natural gas plant and export terminal. Simpson Heights resident Ron Wiggins questioned the city sewer system’s ability to take on the camp with almost 1,900 workers.
Santos on target for September start-up of Australia LNG plant
(Sydney Morning Herald; Aug. 18) - Santos has marked a major milestone at its $18.5 billion liquefied natural gas project in Queensland, Australia, that firms up its start-up target for around the end of September, but its shares softened further as the market remained preoccupied by funding concerns and the weak oil price. Santos reported that it had introduced coal-seam gas into the first LNG production unit at its GLNG project on Curtis Island in Gladstone, signaling the huge project is within weeks of start-up.
It will now move to start up the pre-treatment units for the gas, then chill down the liquefaction units to start making LNG. Santos CEO David Knox said the upstream coal-seam gas fields are now "fully operational," while the plant is the final stages of commissioning. Construction at the flagship project has been underway for the past 4½ years. At full production, the plant will be capable of making 7.8 million metric tons of LNG per year. Partners include Malaysia’s Petronas, Korea Gas and France’s Total.
Israel reaches deal for development of offshore gas field
(Reuters; Aug. 16) - Israel's Cabinet Aug. 16 approved a deal with a U.S.-Israeli consortium that would move forward development of the huge Leviathan offshore gas field. The controversial deal reached late last week, which Prime Minister Benjamin Netanyahu believes will bring Israel several billion dollars in the coming years from development of Leviathan and two smaller fields, still needs parliamentary approval.
The deal will allow Texas-based Noble Energy and Israel's Delek Group to keep ownership of the largest offshore field, Leviathan, with an estimated 22 trillion cubic feet of gas. In return for retaining their stakes in Leviathan, the two companies are required to sell off other assets, including stakes in another large deposit called Tamar. Critics of the plan said the government gave into most of the companies' demands and left Noble and Delek with too much power by controlling most of Israel's gas reserves.
Israel, which has gone from an energy-dependent country to a potential gas exporter, currently receives its gas for electricity generation from Tamar, which began production in 2013. Leviathan is slated to begin production in 2018 or 2019 and expected to supply billions of dollars of gas to Egypt and Jordan in addition to supplying Israel. As part of the deal, the companies agreed to invest $1.5 billion in the next two years toward developing Leviathan, and also agreed to lower domestic gas prices for several years.
U.K. to open areas for fracking; opponents vow ‘hundreds of battles’
(The Guardian; UK; Aug. 18) - Large areas of Yorkshire, the northwest and the east Midlands are to be opened up to fracking after the British government announced it will offer a fresh round of licenses for oil and gas exploration, covering 1,040 square miles. Areas near Leeds, Sheffield, Lincoln and Nottingham are to be offered to companies in an expansion plan that green groups predicted would trigger “hundreds of battles” over the future of the countryside.
Ineos, the Anglo-Swiss chemicals group that wants to lead the U.K.’s shale gas industry, was awarded three licenses and said the latest ones could pave the way for gas to be pumped by 2020. The applications are subject to approval by local councils, which will have 16 weeks to decide. The government promised last week to step in if councils fail to keep to the deadline.
The government’s promise to fast-track shale gas in the U.K. comes on the back of strong opposition by environmental groups and a decision by the Lancashire county council to reject an application by exploration firm Cuadrilla on the grounds of visual impact and noise. Both Scotland and Wales previously imposed moratoriums on fracking for shale gas.
EIA lowers its U.S. oil forecast to $49 this year, $54 in 2016
(U.S. Energy Information Administration; Aug. 19) - Amid high uncertainty in the global oil market, the U.S. Energy Information Administration has lowered crude oil price forecasts in its Short-Term Energy Outlook, expecting West Texas Intermediate crude to average $49 per barrel in 2015 and $54 in 2016 — $6 and $8 lower than forecast in last month's energy outlook.
Concerns over the pace of economic growth in emerging markets, continuing (albeit slowing) supply growth, increases in global oil inventories, and the possibility of increasing volumes of Iranian crude oil entering the market contributed to the changed forecast, the EIA said.
Pennsylvania looking at more revisions to oil and gas rules
(Pittsburgh Post-Gazette; Aug. 18) - Pennsylvania environmental regulators are making a list of items they want to see in another major revision to the state’s oil and gas rules, just as they near the end of a contentious rule-drafting process that will have taken half a decade when it is finished next year. In an Aug. 12 conference call to announce the final rules package for aboveground oil and gas activities, Department of Environmental Protection Secretary John Quigley cast his comments repeatedly toward the future.
“This is not the end of the process,” he said. “There is more study needed on additional measures, and there will be more rule-making in a separate process, to ensure responsible drilling and protection of communities, public health and the environment.”
Regulators gave few details about what the next round might hold, but they signaled some areas. Quigley said the agency will release more information about the potential scope of the next regulatory package, probably between October and December.
Rules to control noise from well sites — which the department drafted then dropped from the current package, calling them “premature” — might become part of a future regulation after the agency develops a best-practices guide, state officials said. Quigley said the agency is “looking in particular at public health protections” as it compiles a list for the next regulatory package “because that is certainly one of the areas of biggest concern.” One source said air quality issues would be covered in the next round.
Breaking News: Bureau of Safety and Environmental Enforcement (BSEE) Director Brian Salerno today announced that Shell has received approval of one Application for Permit to Modify (APM) to conduct exploratory drilling activities into potential oil-bearing zones offshore Alaska at one of the wells at the Burger Prospect, Burger J. Read More....
OUTRAGEOUS: Alaska's "Socialist Governor In Sheep's Clothing" Begins To Bear All. See Tim Bradner's piece in the Alaska Journal of Commerce. We will have plenty of comment tomorrow. -dh
"Gov. Bill Walker is still pushing North Slope producers for a larger share of the Alaska LNG Project, and may promote a state gas reserve tax as leverage against the companies, state legislative leaders briefed recently on the governor’s plans said in interviews."
After extensive review and under a robust array of safety requirements, Bureau of Safety and Environmental Enforcement (BSEE) Director Brian Salerno today announced that Shell has received approval of one Application for Permit to Modify (APM) to conduct exploratory drilling activities into potential oil-bearing zones offshore Alaska at one of the wells at the Burger Prospect, Burger J. The company remains limited to the top section of the Burger V well.
Shell submitted an APM on August 6 to modify the Burger J Application for Permit to Drill (APD), which previously restricted Shell from drilling into oil-bearing zones since a capping stack was not on hand and deployable within 24 hours, as required by BSEE. A capping stack is a critical piece of emergency response equipment designed to shut in a well in the unlikely event of a loss of well control. The capping stack, staged on the vessel M/V Fennica, is now in the region and capable of being deployed within 24 hours.
“Activities conducted offshore Alaska are being held to the highest safety, environmental protection, and emergency response standards,” said Salerno. “Now that the required well control system is in place and can be deployed, Shell will be allowed to explore into oil-bearing zones for Burger J. We will continue to monitor their work around the clock to ensure the utmost safety and environmental stewardship.”
Shell is still prohibited from simultaneous drilling at Burger J and V, in accordance with the approved APDs, which define limitations related to marine mammal protection consistent with requirements established by the U.S. Fish and Wildlife Service (USFWS). Consistent with regulatory requirements, a USFWS Letter of Authorization (LOA) issued on June 30 requires Shell to maintain a minimum spacing of 15 miles between active drill rigs during exploration activities to avoid significant effects on walruses in the region.
Under the LOA, Shell is also required to have trained wildlife observers on all drilling units and support vessels to minimize impacts to protected species. Shell must stay within explicitly outlined vessel operating speeds and report daily regarding all vessel transits.
To ensure compliance with this and other conditions, BSEE safety inspectors have been present on the drilling units Noble Discoverer and Transocean Polar Pioneer 24 hours a day, seven days a week to provide continuous oversight and monitoring of all approved activities. The inspectors are authorized to take immediate action to ensure compliance and safety, including cessation of all drilling activities, if necessary. BSEE experts have been engaged in thorough inspections of both drilling units and Shell’s response equipment.
The Burger Prospect is located in about 140 feet of water, 70 miles northwest of the village of Wainwright.
BSEE’s close oversight of drilling operations in the Chukchi Sea this year is consistent with its continuing efforts over the past five years to upgrade safety standards to improve the safety of offshore oil and gas development. In addition, building on the lessons learned from Shell’s 2012 drilling operations in the offshore Arctic and incorporating the recommendations of a Departmental review of those activities, the Bureau of Ocean Energy Management (BOEM) on May 11, 2015, provided conditional approval of Shell’s Exploration Plan, which established numerous additional stringent safety requirements:
· All phases of an offshore Arctic program – preparations, drilling, maritime and emergency response operations – must be integrated and subject to strong operator management and government oversight, as detailed in Shell’s Integrated Operations Plan;
· A shortened drilling season to allow time for open-water emergency response and relief rig operations late in the drilling season before projected ice encroachment;
· Capping stack must be pre-staged and available for use within 24 hours;
· A tested subsea containment system must be deployable within eight days;
· The capability to drill a same season relief well;
· A robust suite of measures to avoid and minimize adverse impacts to marine mammals and their habitat, impacts to Native subsistence activities, and other environmental impacts; and
· Drilling units and their supporting vessels must depart the Chukchi Sea at the conclusion of each exploration drilling season.
The Department has also published proposed regulations to ensure that future exploratory drilling activities on the U.S. Arctic Outer Continental Shelf are done safely and responsibly, subject to strong and proven operational standards andShell’s Chukchi Sea operations are being held to many of standards in the proposed regulations.
NGP Readers may find the APM and decision letter here.
Comment: Alaskans beware.
To the extent that the Walker administration socializes industry in Alaska, to that extent will free enterprise forces be replaced with political forces.
With a Municipally regulated (i.e. political appointees, Mayor and Assembly become regulators) natural gas utility supported by a subsidized state agency controlled by the Governor corruption of public utility regulation in Fairbanks is inevitable.
-Dave Harbour, former Chairman, Regulatory Commission of Alaska.
ADN by Alex DeMarban. The state attorney general has rejected an effort by a Hilcorp subsidiary to acquire an LNG facility at Point MacKenzie, saying the deal could harm utility customers in Fairbanks.
Attorney General Craig Richards, however, rejected the deal on Monday after Harvest said it could not accept proposed changes, such as a pricing mechanism presented by Richards as part of an effort to lower gas prices for Fairbanks customers.
Harvest Alaska, owned by Hilcorp, had agreed in November to purchase the Titan liquefied natural gas facility along Cook Inlet and to manufacture and sell the gas to Fairbanks Natural Gas for 10 years. Both Titan and FNG are owned by Pentex Alaska Natural Gas.
* * *
Rep. Mike Hawker (NGP Photo), said he was very disappointed in the attorney general’s decision because it concentrates an LNG plant and delivery system in the hands of a state entity.
“We created AIDEA to help facilitate private sector solutions and this administration is turning AIDEA into a government monopoly in direct competition with the free marketplace,” Hawker said.
The Walker administration is stopping a properly executed free-market deal so it can “usurp” assets and subsidize Interior energy prices as the state faces a $3.5 billion budget deficit, Hawker said.
“This is bad because we are now putting AIDEA and the government into the direct business of managing the public utilities for the Interior of Alaska,” he said. ”We’re creating a long-term dependence on a new government subsidy at a time ...." Read more at ADN....
From the Senate Energy Committee: See How Envronmental Extremism is Destroying California Lives
Aussie Oil and Gas Observer: The smashing of the Shanghai stock market yesterday – an 8.5% fall (the biggest one day decline in eight years) – has reverberated around the world in both stock markets and commodity markets, and oil was not left out of the carnage. *** Japan’s average LNG price (per mmbtu) for June was down again – at US$8.65. Volumetrically this figure is largely driven by contract purchases. At this price, few if any Australian LNG projects would have been sanctioned in the last decade. ***
Quote of the day, from the classic play (and movie) Glengarry Glen Ross, which captures something of the atmosphere within employee ranks in oil companies at present:
“As you all know first prize is a Cadillac El Dorado. Anyone wanna see second prize? Second prize is a set of steak knives. Third prize is you’re fired”.
Commentary: We are very proud -- and respectful -- of one of our readers, an Australian energy expert, for acting on our suggestion that he begin writing an energy blog (Column Right).
We call him "Aussie" here, because his active energy investing and consulting do not allow him the flexibility of using his proper name on his blog at this time.
Aussie is a brilliant thinker, observer of energy trends and realities, and writer. He is also prolific, producing new commentary almost daily. He knows North American energy issues well.
In short, we are delighted to begin bringing you his commentary.
We think you'll share our respect for his wisdom and insight as he tackles the effect of this week's economic crisis in China on energy projects, prices, projections and employees.
Following is a clip from his email today. -dh
Our Face Book comment on this issue:
The science is not settled (See Praeger University comment below).
Believing that it is settled is justifying environmentally extreme movements designed to bloat bureaucracies and amass political power by forming critical partnerships with subsidized businesses that could not survive in a non-subsidized world.
This process is also known as "crony capitalism" which is designed to destroy capitalism and free enterprise over time.
One of many effects of "climate politics" is justifying massive income redistribution from economical fossil fuels, taxpayers and utility ratepayers to subsidize expensive alternate fuels represented by countless lobbyists.
This video is a true public service that can be useful in communicating basic facts to our fellow citizens, fellow taxpayers, and fellow utility ratepayers.
We are are being misled by armies of entrepreneurs with alternate energy profit motives who are major funders of political campaigns.
We can think of this wealth transfer alliance as the eco-crony capitalist-political cycle of life. -dh
New Video: What They Haven't Told You about Climate Change
Since time immemorial, our climate has been and will always be changing. Patrick Moore explains why "climate change," far from being a recent human-caused disaster, is, for a myriad of complex reasons, a fact of life on Planet Earth.
Senate Energy Committee - California Drought and ESA
ICYMI: This is a very interesting piece on the current drought in California that’s causing a “humanitarian disaster” in the Golden State. Charles Cook chronicles his firsthand experiences in California’s Central Valley that’s experiencing devastating economic impacts stemming from the state’s ongoing drought crisis. -
From: Michael Tadeo, Senate Energy and Natural Resources Committee
Golden State Dust Bowl: How environmental extremism is destroying California’s Central Valley (National Review)
August 10, 2015, Issue
By, Charles C. W. Cooke
Central Valley, Calif. — The road to Fresno is flanked by missed opportunities. Just ten years ago, to drive across this extraordinary valley was to be blinded by miles upon miles of burgeoning green life. Now, the fields that run alongside State Route 180 resemble the squares on a giant, schizophrenic checkerboard. On one block there are pistachios, almonds, tomatoes, and grapes, stretching as far as you can see; on the next all is brown and fallow, and the dust swirls upward toward the heavens. On the edge of the small farm town of Mendota, an abandoned sugar plant stands defiantly against the sky. It is beautiful, in a peculiar way — a fading Hopper sketch for an unsure world. This was a resolute place, once.
That was before the decline; before the worst drought in 1,200 years turned some of America’s most fertile ground into a Dust Bowl; before soft-handed politicians in a faraway city took a look at an economic miracle and concluded that it was expendable. There is no question that God has played His role in bringing about this crisis: It has not rained consistently in the Central Valley for half a decade now, and the reservoirs in the northern part of the state are dangerously low. But Caesar must share in the blame. Because the valley is liable to become parched in rainless times, California has constructed a complex system of pipes and pumps that funnel lifesaving water southward from the Sacramento–San Joaquin Delta. Since 2007, that system has been deliberately crippled. In that year, the Natural Resources Defense Council convinced a judge that, by operating the pumps at high capacity, California was killing too many smelts — a small fish that is explicitly protected within the Endangered Species Act. In consequence, the throughput was severely curtailed, and the farmers, who under the state’s “seniority” system have the last claim on the water, were all but cut off. Two years later the drought began, and a blow was struck upon a bruise.
On the edge of a field on the outskirts of Mendota, unemployed farmworkers have built a tattered town. In another era it would have been described as a “Hooverville”; today, it bears no appellation at all. These are forgotten people, and their hamlet is veiled by indifference.
I meet Frederico, a Guatemalan farmhand who has lived here for six years. He has only a few dollars to his name — kept in cash, of course — but he considers himself “one of the lucky ones” nevertheless. “I could have nothing,” he tells me, gesturing toward a hut that he has built from abandoned sheets of wood and a stretch of discarded canvas. “But I have a house.”
Frederico is one of the many workers in California’s Central Valley who have seen their livelihoods all but destroyed by the Great Drought. “I manage to work a little here and there,” he explains, “but the water . . . the water. Often I have to go 20 miles to find work.”
Above all else, he misses the shade. “In 2008 and 2009, they started to cut my hours,” he says. “Eventually, I couldn’t pay rent.” So he moved here, to a dusty pasture by the side of a highway, and he built his tumbledown shack. “I went to the recycling place and found the bits for my house,” he recalls. “There were trees here. But they burned down. It is so hot.”
Frederico’s neighbor, a new arrival to the camp, is burning trash in a hole. He, too, has come from Mendota. “I was living in an apartment building,” he tells me, declining to give his name. “But when I lost my job, I didn’t have money for rent.” His landlord wanted a long-term lease, and he couldn’t pay. Since moving out here, he has gained occasional employment. But it is barely enough to provide food and water. “If somebody finds a job,” he tells me, “they communicate it to the whole camp. That person becomes a hero.”
He does not expect to move out anytime soon. “I am working on a garden,” he says, with a proud smile. He has started to decorate, too, putting on a wooden front door and hanging a painted sign from the roof. There is a bank of dirt behind the first row of homes, and he has planted seeds into it — some oak, some pine. Eventually — in decades — they will accord him some relief from the sun.
I meet the town’s self-appointed leader, a Salvadoran immigrant who has been here for six years. “I felt super when I was able to work,” he tells me. “Now I can’t buy medicine; I can’t buy food. I used to work 40 hours a week. Now I work eight.” Compared with the elderly workers, who cannot compete in this market, he has it good. “The older people are getting into drugs and alcohol,” he says. “I resolve any conflict here. People have started to respect and look up to me.”
Happily, he has little to do as peacemaker. Generally, the camp’s 50 or so residents look out for one another, sharing skills and food and news of job openings. When things become especially dire, some ride broken bicycles around the fields, in search of bottles that might carry a small recycling value. And then they wait: for work, for the food bank, for a sign from above.
Some of these people are in the United States illegally; others are citizens who have fallen on hard times. The cynic will wonder whether it is America’s problem that a group of lawbreakers cannot find work. I caught myself wondering precisely this when touring the camps. And yet, wherever one’s sympathies lie on that thorny question, to look at the tents in isolation is a mistake. Mendota’s unfortunates are symptomatic of a much, much broader problem — a canary in the coal mine. A decade ago, the Central Valley was a wonder of the world — a place where anybody could find work. Today, it is playing host to a humanitarian disaster.
In the parking lot outside a gas station in nearby San Joaquin, Mayor Amarpreet Dhaliwal runs me through the decline. An immigrant from Punjab, in India, Dhaliwal has seen the region at its best and worst. “I’ve been here since 1983,” he says. “I worked in the fields for my first year and a half. I did everything that the farmworkers do. The picture has been slowly changing.”
The scene that Dhaliwal paints is best described as one of trickle-down poverty. “I’ve been running a small business here since 1991,” he says. “There aren’t so many customers these days. I also run an agricultural-hardware business here in town — and a small farm. We have seen the same trend. I have the numbers for the last 14 or 15 years, and there’s a downward trend. We’re just waiting for the rain.”
As we chat, a couple of older men amble slowly and unsurely down the fading railway lines that run through the city. One of them is wearing a ripped vest and a faded New York Yankees cap; the other is in a filthy Dickies shirt and a tattered Puma hat. Neither man has many teeth left, and those that do remain are rotten and brown. The heavy green stains on the pair’s jeans and sneakers reveal that they are returning from a shift in the tomato fields. This has been a good day.
Such days are few and far between. “They used to come and drag us out of the house,” one of the men tells me. Now, “they rotate people around to give us all a chance.”
“Sometimes people bring them food or clothes,” Mayor Dhaliwal says. “The charities have stepped up to the plate. We have a kitchen that comes two days a week. We also have a food bank. And that’s great. But these men want to earn their bucks. They don’t want handouts. This is about dignity. I want real jobs out there. I want people lining up around the block, not handouts.”
As we leave, the taller of the men clasps his hand around Mayor Dhaliwal’s arm and speaks quickly in Spanish. He is clearly nervous. “He is saying that he sleeps poorly because he lives next to the railway line,” Dhaliwal tells me. “He is worried that the gas tanks behind his home are going to explode and kill him.”
“I got this mark from a snake,” the mayor tells me, pointing to the long scar that runs along his elbow. He looks at up at the sky. “I could have died, but God saved me.”
In Huron, I meet with a peer of Dhaliwal’s, Mayor Sylvia Chavez. Home to 7,000 people, Huron is the fourth-poorest municipality in all of California. “Look outside,” Chavez urges me. “It’s June, and the town is empty — as if it were a winter day! Usually, we’d have trucks and buses coming through. Usually, there would be traffic lines at the four-way stop. Usually, there would be lots of new faces.”
Not anymore. Huron, which has a population that is 98 percent Hispanic, has an unemployment rate of 35 percent. “The guy at the gas station across the street no longer sells gas, because there’s nobody to sell it to,” Chavez tells me. “He just does contract work now.” This, it seems, is a fairly common story. Ten years ago, Huron Tire Service Inc. was in such demand that the owner was running out of space in which to keep his inventory. “There were piles of tires all over the place,” Chavez says. Today, he orders his supplies ad hoc.
The decline in commercial activity has hit the city’s government hard. Sales-tax and gasoline-tax receipts are down dramatically. Courtesy of harsh spending cuts, 2015 was the first year in five that the city was in the black. “We’re just holding on,” Chavez tells me. “We’ve had to cut a lot. It’s difficult to know what to do.”
The human cost is real. “People used to leave their doors open at night,” Chavez recalls. “Now they can’t leave anything outside. We have a lot of stealing now. There are break-ins at homes; there is theft from farms and stores. I don’t walk around late at night anymore.” Domestic violence and child abuse have become “big problems,” as has substance addiction. Chavez cannot work out why the decline of the area hasn’t become a bigger story. Why isn’t it leading the national news?
Even locally, there is a good amount of shoulder-shrugging. “I went to a meeting in Fresno,” she says, rolling her eyes, “and they were talking about putting together a new committee to regulate the supply of groundwater. I sat there listening to them and I thought, Another agency: That’s exactly what we need!”
Huron serves as a particularly extreme example of the Central Valley’s predicament. But the challenges that it is facing are by no means unique. In her downtown office, the sheriff of Fresno County, Margaret Mims, lays out the numbers. “Back in 2010,” she explains, “we just didn’t have the sales or property taxes. So we had to lay a whole lot of people off.”
“A whole lot” is no exaggeration. In the space of a few months, the county had to let 77 people go. “We lost deputy-sheriff positions. We lost correctional-officer positions. It affected everybody.” Things are improving — slowly. But, Mims sighs, the department is “still about 70 deputies short of where we were in ’09.”
“The unemployment rate has made the gangs worse,” Mims tells me, “especially if there is violence in the home. The kids look outside, and they see the gangs. They move from a dysfunctional family to a functional one.” Such behavior makes the economic picture considerably worse, contributing to a disastrous spiral that is going to be extremely difficult to break. A piece of copper from an automated pump may be worth around $10 to a criminal, but it costs around $2,000 to replace. Even worse, if farmers do not initially notice the theft, they may have to wait for replacement parts and end up losing their crops. This results in fewer opportunities for work, which leads more people to crime, which . . .
“In the ’09–’10 budget year, we closed down three floors of our county jail,” Mims recalls with a grimace. “We just couldn’t hold people who needed to be held. That was a horrible time to live through.” It was not just petty thieves who benefited from the absence of jail space. “There are 442 inmates per floor. We had to let 1,326 people go,” Mims says. “We couldn’t afford the staff that it took to guard them. I just hated the message that it sent. The feeling out there was, ‘We can do whatever we want because they don’t have jail space.’” Eventually, Mims had to draw a line — at murderers.
Todd Suntrapak, the CEO of Valley Children’s Hospital, knows all about such tough choices. The drought, he tells me, is “not a very sexy issue.” In consequence, the coverage of its ruinous fallout has been “limited to this valley.” “That this is not a bigger issue in Sacramento — or even nationally,” he submits, is “unimaginable.”
For the facility he manages, the drought has been little short of a disaster. Valley Children’s is the only pediatric hospital between San Francisco and Los Angeles, and it was short of doctors when times were good. Now, it simply cannot cope with the demand. “We have seen double-digit increases in volume to our ER for the last four years,” he records. “Thirty-three percent of kids in the area are living in poverty, and that number is likely to increase.”
Newly unemployed workers continue to stream in, mostly “coming for the primary care that they were unable to get in their communities.” By the time they get here, they’re invariably sicker. Because so many fields are fallow, the amount of particulate matter in the air has increased considerably. This has led to an increase in chronic respiratory diseases, and it has provoked lethal complications among those who are already ill. “The dust can be a death sentence,” Suntrapak concludes. “If you have a weak immune system, it’s catastrophic.” And it’s not just the environment. The “child-abuse-prevention team is busier than it’s ever been.”
This year, Suntrapak’s staff is already 20 percent over its budget assumptions. The state is paying, too. Eighty-two percent of the patients at Valley Children’s are on Medi-Cal, California’s version of Medicaid. Six years ago, that number was 70 percent. For many, it is no mean feat just to get here. “They use up whatever gas money they have for the month just to reach us,” he tells me. “And then they can’t pay for the medication they need.”
At an emergency meeting run by El Agua Es Asunto de Todos, attendees are tearing their hair out. El Agua was formed by a former consul to Mexico, Martha Elvia Rosas, in the hope that sustained action would draw attention to the water crisis and force the federal government to act.
The speakers are schoolteachers, charity workers, medical professionals, university professors, family farmers, and local politicians — not your typical critics of runaway environmentalism. But, having watched their communities crumble, they have been moved to act. “There has to be a compromise,” one woman tells me before the meeting starts. “People are suffering.”
“People go to the grocery store,” says a teacher from the city of Firebaugh, “and they see melons, they see lettuce, they see tomatoes — and they think it’s all okay. In San Francisco, they turn on the faucet and they see water. It’s all taken care of. Nobody cares. People haven’t seen the devastation that’s going on here.”
When I ask for information, the visitors surround me and share their stories of decline. A once “vibrant school system with lots of parent support” has been turned into a nightmare, in which families “starve and scrape together to survive”; there is abundant “domestic violence,” and “kids need constant counseling”; single-family homes are now “hovels for multiple families,” while “garages are shelters for out-of-luck workers”; the food banks have “gone from assistance to subsistence” — so necessary, perhaps, that “in 70 or 80 percent of communities, they are indispensable.”
One gentleman, a soft-spoken local politician whose constituents have been hit hard, strikes a desperate tone. “We’re losing hope,” he laments. “Is anybody out there listening to us?”
He is unsure that they are. “We’re starting to think of extreme ideas,” he says. Those ideas? Blocking the freeway; limiting the flow of produce to market — anything that will force people to pay attention.
It is clear that he is just blowing off steam with such talk. Even the most passionate of my interlocutors — a middle-aged Hispanic man who talks in fiery, urgent language — is aware that such courses of action would be counterproductive. “This is a population that wants to work, not cause trouble,” he tells me. “If they had their way, you would only see them early in the dawn hours of the morning, when they are going into the fields. Then you would see their shadows when they leave the fields at night. They are not going to do anything sensational. They don’t want to ruffle feathers.”
He will be setting no fires. But his anger is real, and it is palpable. “I love the environment,” he says. “I fought to protect the majestic redwoods. But when our group invited the EPA to meet with the farmworkers and families here, they declined.” So, disgracefully, have California’s elected representatives. Time and time again I hear it said that politicians outside California are more interested in finding a solution than those within. “Where is Barbara Boxer? Where is Nancy Pelosi?” Noting caustically that Hispanics are being disproportionately affected, some go so far as to suggest that there is racism at play.
There is not — just environmental zealotry and an arrogant indifference to its human cost, borne by these people suffering under the sun. People who walked into the fields looking for the American dream but found it dammed at the source. If it so wished, Congress could amend the Endangered Species Act tomorrow, and the valley could enjoy a little more of the water that it needs to raise its daily bread. But, for now at least, Congress will not do so — not, one suspects, until breakfasting grandstanders in Washington, D.C., come to ask in irritation why the orange-juice jugs are empty and there are no longer any melons in the fruit bowl.
Deputy Communications Director
Senate Energy & Natural Resources Committee