EPA Action Could "Annihilate" Business Investment
Alaska Senator Cathy Giessel (NGP Photo) responded this week to a California-based environmental activist who told the Wall Street Journal Alaskans favor more EPA controls in the state.
"The NRDC is urging EPA to issue the first pre-emptive veto in the 43-year history of the Clean Water Act," Giessel wrote. "If successful, this veto will annihilate business investment in my state and throughout our country. EPA is being litigated for its actions and rightly so. We can only hope our courts stop EPA’s usurping of power that Congress never delegated to them." (See Giessel's letter here. Her letter underscores the importance of supporting Senator Murkowski's non-partisan effort to curtail EPA's overreaching jurisdiction -- as we outlined here yesterday. -dh)
U.S. Sen. Lisa Murkowski (NGP Photo), yesterday commented on the Department of Energy’s proposal for considering liquefied natural gas (LNG) export applications:
“I have long warned that the United States faces a narrowing window of opportunity to enter the global gas trade. Projects have languished in the so-called ‘queue’ awaiting approvals from two separate agencies in a parallel process that often did not function well. This proposal for reform is a positive step toward fixing a needlessly confusing regulatory review that had become disengaged from economic reality.
Yesterday, Sen. Ron Wyden, (NGP Photo) added his significant support to LNG exports when he said from his office that:
“Natural gas is a strategic American advantage that is already creating jobs and making our industries more competitive in the world market. I have long said that the studies DOE has relied on need to be updated to reflect current market conditions and data. I am pleased to see DOE has taken my suggestions to heart and that we will look before we leap in order to maximize the economic and environmental benefits of natural gas.
A clearer process will mean more certainty for developers and workers about which projects are commercially viable.”
“I continue to oppose delays to the build-out of our export capacity, which I firmly believe to be in the national interest, and do not believe additional study is necessary. Multiple studies have confirmed time and again that the nation as a whole would benefit in both security and economic terms as a result of selling American gas to our friends and allies overseas.”
For NGP Reader calendars:
The House Natural Resources Subcommittee on Energy and Mineral Resources will hold an oversight hearing on Thursday, June 12th entitled “American Energy Jobs: Opportunities for Innovation.”
Innovation is at the heart of the American energy sector and advancements in technology are making our energy resources cleaner and more efficient, reducing the environmental footprint while increasing production capabilities. Cutting-edge technology is making it possible to explore new forms of energy; and existing energy resources, such as natural gas, are becoming more accessible. Using technological innovation to harness both alternative energy resources such as wind, solar, hydropower, and nuclear as well as oil, natural gas, and coal is driving job growth on American shores and creating new economic opportunities throughout the country.
Subcommittee on Energy and Mineral Resources Oversight Hearing on “American Energy Jobs: Opportunities for Innovation”
Witnesses by Invitation Only
Thursday, June 12, 2014
1334 Hearing Room in the Longworth House Office Building
Visit the Committee Calendar for additional information, once it is made available. The meeting is open to the public and a live video stream will be broadcast at http://naturalresources.house.gov/live.
5-29-14 RDC Alert: Help Senator Murkowski Fight EPA Overreach !!! - Murkowski Promotes Yergin Oil Export Ban Study
Alaska Mining Guru Steve Borell (NGP Photo) tips us that, "Sea NG Corporation is a Canadian company engaged in the development and commercialization of technology for marine transportation of compressed natural gas (CNG). Sea NG offers its customers a safe, economic and reliable method of transporting natural gas by ship." (We wouldn't be a bit surprised to see this company become more involved with Alaskan and Canadian coastal villages and rural construction and natural resource projects -- assuming its net, delivered BTU value meets or reduces prices paid for heating oil. -dh)
The analysis by Daniel Yergin (NGP Photo) and the consultancy IHS estimates ending the prohibition on exporting most domestic oil supplies could boost U.S. production by more than 2 million barrels a day, inject $750 billion of new investment into the economy, and reduce gasoline prices for American drivers by as much as 12 cents a gallon.
Resource Development Council for Alaska's Rick Rogers (NGP Photo) sends our readers this ALERT today:
Please consider writing to your local newspaper today in support of the Regulatory Fairness Act (S. 2156). This bill, introduced in March, and cosigned by U.S. Senator Lisa Murkowski in April, reigns in the Environmental Protection Agency’s (EPA) authority, as was initially intended by Congress.
Currently, the EPA is seeking to expand its authority under Section 404(c) of the Clean Water Act, so that it can effectively veto community and resource development projects before, during, and after the federal permitting process. This expansion of federal regulatory power could have widespread and long-lasting consequences for Alaska’s economy, as it deprives developers of any certainty that permit applications will be fairly considered and fully vetted by existing rigorous processes – or that permits issued will remain valid over the course of the project’s life.
In response to this overreach the Regulatory Fairness Act (S. 2156) was introduced in the U.S. Senate. It requires the EPA to use its 404(c) authority at the appropriate time – during the permitting process and only after a thorough environmental review – rather than preemptively or retroactively.
Please write a brief letter to the editor or your local newspaper, expressing your concern about how the EPA’s actions could impact business, communities, and the economy in Alaska. Additionally, take this opportunity to thank Senator Murkowski for supporting the Regulatory Fairness Act.
“The IHS analysis reinforces what I’ve been saying for months – modernizing the regulations that govern energy exports will create jobs, boost energy production, and help lower global oil and gasoline prices,” Murkowski said. “The current rules of engagement on energy trade were written at a time of energy scarcity, not abundance, and they are causing distortions in the market that is undervaluing America’s energy resources. It’s time to reverse a policy that has far outlived its usefulness – something that would benefit the entire country.”
The IHS study found that removing the ban on oil exports would have positive impacts on employment, GDP, and energy production, including:
- Increased oil production of 1.2 million to 2.3 million barrels per day;
- Declining gasoline prices by 8 cents to 12 cents;
- Creation of 394,000 to 859,000 jobs;
- Increased government revenues by $1.3 trillion to $2.8 trillion;
- Increased annual GDP of $86.4 billion to $170 billion.
The benefits of free trade would extend beyond oil-producing states, as well, with 24 percent of the new jobs created by lifting the ban occurring in states without production, according to IHS.
ALERT - ALERT - ALERT
|Information on today's Anchorage meeting with Commonwealth North on Government equity interest in an Alaska gas pipeline.|
Politico by Tal Kopan. “I would be warning against using a chess analogy because in chess we have rules, and clearly Putin doesn’t care about rules because what he’s been doing now in Ukraine, it violates international law and international treaties Russia has signed before,” Kasparov said on CNN’s “The Lead.”
Comment: The rule of law is all about citizens living within the law.
When a president like Putin cheats in chess or sends a disguised army into Ukraine, how can he be a trustworthy energy producer and marketer, business partner or neighbor? See our commentary, yesterday.
When a president like Obama unilaterally enforces or ignores laws, illegally targets political opponents with the power of government (1, 2, 3), has agencies overreach lawful authority, lies, or creates law by fiat, how is he to be trusted to defend the Constitution against all enemies, foreign and domestic? How can he be thought to fairly administer national energy policy? -dh
The Russians Have Come
Dear Reader: we always solicit new content, comment and facts from our highly knowledgeable and experienced readers -- along with additions/corrections to our commentary. Maintaining accuracy, with your help, is critical to the usefulness of our hundreds of thousands of pages of Northern energy archives spanning over 4 decades (See our internal 'search bar', upper right). -dh
In yesterday's Memorial Day commentary, amid unhappiness in Ukraine, we again reminded ourselves that the former owners of Alaska have returned as Alaska North Slope (ANS) investors. (We are also sensitive to US-Russian efforts to create an International park that could someday affect Alaska's commercial fisheries, energy and mining developers, Alaska Native Regional and Village Corporations, and free use of the Northwest Passage.)
One of our foreign, Pacific Rim readers observed that the logical extension of Russian ANS involvement, under Alaska Statutes, could have the result of, at least indirectly, introducing Alaska to the current Russian - Ukrainian dispute.
Yesterday, we also heard from another NGP reader, James Halloran, a Trustee of the Ohio Oil and Gas Association who is an astute analyst and observer of energy matters.
He commented on the big, $400 billion China-Russian gas sale and pipeline agreement which would result in a $20 billion gas pipeline investment in China and a $75 billion investment in Russia -- not counting the value of the gas sale. (We also note the market power Russia and China will be able to exercise on Western support industries beholden to them for service, supply and logistical contracts.)
Halloran said that, "We spent four years (1974-77) actively involved with the construction of the $1 billion (estimate) Trans Alaska Pipeline System, that eventually cost $8.9 billion. Factoring in inflation since the 1970s, we would estimate the Sino-Russian pipeline system is a comparable project, in terms of complexity and remote geography. TAPS got done on time, but it had the finest engineering teams in the world, plus the resources of five major oil companies, to accomplish the task. We also think this is going to be a project worthy of keeping the popcorn ready for watching it unfold. It is instructive that the Russians insist on their part of the pipeline as costing 'at least' $55 billion."
Below, let's review current headlines helping readers connect some of the world-wide dots reflecting Russia's energy strategy. In doing so, we recall the observation of our Pacific Rim reader yesterday about, "...ongoing interest in investing in Russia with the likes of Rosneft, notwithstanding the sanctions imposed upon Rosneft's CEO, Igor Sechin, personally.":
GE and OJSC Rosneft, a leader in Russia’s petroleum industry, today signed a memorandum of understanding (MOU) that lays the foundation for the two companies to jointly evaluate and develop commercial opportunities in oil and gas exploration and production in the Russian Federation. The MOU was signed by John Krenicki, GE vice chairman and president and CEO of GE Energy; and Igor Sechin, president of Rosneft.
Igor Sechin, President and Chairman of the Management Board, Rosneft and Dinesh Kumar Sarraf, Chairman of the Board of Directors, ONGC Videsh Ltd and Chairman & Managing Director, ONGC signed a Memorandum of Understanding at the St. Petersburg International Economic Forum, in the presence of Mr. Vladimir Putin, President of the Russian Federation. The Memorandum paves the way for the companies’ cooperation in subsurface surveys, exploration and appraisal activities and hydrocarbons production in Russia’s offshore Arctic. (WEN by Joseph R. Fonseca)
Rosneft and BP signed an agreement on Saturday to jointly explore for hard-to-recover oil in Russia, the first major deal for the state-run Russian oil company since the West imposed sanctions over Ukraine in March. Rosneft chief executive Igor Sechin, a close ally of President Vladimir Putin, has been targeted by U.S. sanctions along with some other members of Putin's so-called inner circle following Russia's annexation of Crimea from Ukraine in March. (WEN by Joseph R. Fonseca)
...at the 18th St. Petersburg International Economic Forum, Rosneft signed an Investment and Cooperation Agreement with North Atlantic Drilling Ltd. (NADL) and Seadrill Limited to form a long-term partnership aimed to develop Rosneft’s offshore and onshore projects until at least 2022. (WEL by George Backwell)
Venezuela's state-run oil firm PDVSA said on Saturday a $2 billion pre-payment from Russian oil producer Rosneft will be destined in part to develop its coveted Orinoco belt. (WEL by Joseph R. Fonseca)
A major gas deal between Russia and China could finally be sealed this week when Russian President Vladimir Putin visits China on May 20-21 and meets with President Xi Jinping. (Energy Daily, by Nick Cunningham)
Yves-Louis Darricarrère, Total's head of Exploration and Production, said that his group is committed to expand its activities in Russia and forecasts the country becoming the largest contributor to its production by 2020. Russia is key to Total's strategy of finding new reserves.... (WSJ, by Géraldine Amiel)
Here's the bottom line: in addition to the above, Reuters outstanding news team reports (by Vladimir Soldatkin; Editing by Lidia Kelly and David Evans), via Yahoo Finance, UK, that, "...Rosneft signed several deals at the St Petersburg International Economic Forum over the weekend, despite sanctions imposed on the company's chief executive Igor Sechin...," including:
"Rosneft and Union Cuba Petroleo (CUPET) signed Memorandum of Cooperation on projects in Cuba.
"Rosneft and United Arab Emirates' Mubadala Petroleum signed a cooperation agreement to "foster greater co-operation between the two companies in exploration and production".
"Rosneft and India's ONGC Videsh Limited signed a Memorandum of Understanding (MOU) for cooperation in exploration, appraisal and hydrocarbon production....
"Rosneft and PetroVietnam Oil Corporation agreed on key terms of long-term oil supplies to Vietnam...of up to 6 million tonnes a year via Russia's Pacific's Kozmino terminal in 2014-2039.
"Rosneft and Mongolia's NIC LLC signed a five-year oil products supply deal...for supply of more than 1.2 million tonnes of oil products from June 2014 to May 2019.
"Rosneft and Pirelli signed a Memorandum of understanding over marketing projects in Rosneft's retail network.
"Rosneft and Azerbaijan's energy firm SOCAR signed a joint-venture agreement...for oil and gas exploration and production projects including in Azerbaijan and Russia.
"Rosneft ... said the memorandum foresees a possibility of installation of different Alstom's "solutions and products for power generation, industrial automation and emission control...."
"Rosneft signed long-term gas supply deal with Fortum.
"Rosneft signed gas supply deal with RUSAL, EuroSibEnergo and Russian Machines."
Our Comments On These Connecting Dots:
1. Rosneft is an energy arm of the Russian bureaucracy. While decision making can be swift and supported by the weight of Russia's authoritarian leadership, it can also produce stunning failures arising from a) the presence of political influence, b) the possibility if not the likelihood of graft and corruption, and c) the ultimately, and by definition, "unmanageable" movements of the free market.
But Russia's grand energy strategy is not guaranteed. What if its effort and enormous investments into 'managing the mode and means of world energy production' could become frustrated by a) new and more aggressive competition (i.e. shale); b) unexpected and expensive technical delays (i.e. China gas pipeline); or, c) a dramatic world economic decline and an accompanying decline in energy demand. In that case, we believe Russia's current Ukrainian tantrum demonstrates its leader's propensity to adopt nationalism and imperialism as a means of confronting internal social and economic challenges. Doesn't this propensity make Russia a very dangerous bear, indeed, to have as a bedmate or energy partner?
2. Russia is one of the world's largest holders of natural gas and oil reserves. However, this week's events shown above demonstrate a move to more effectively dominate world oil and gas supplies and supply/distribution chains. The effect of such a growing monopoly (i.e. not forgetting China's equally aggressive oil and gas acquisition policy), is to make European and even Asian energy users less capable of acquiring reasonably priced and secure supplies from Russian (i.e. or Chinese) energy competitors. This would ordinarily bode well for Alaska's remote energy reserves, but then we note Rosneft's presence there, too.
We believe that investment advisors, were they to counsel Putin, might say that, "Adding external oil and gas investments to your already large internal reserves of oil and gas has the effect of concentrating, not diversifying, Russian investments. This increases the odds that with passage of time natural and artificial market forces could result in both massive national profits for Russia, and massive economic decline." Other world powers, depending on Russia's contractual and military stability and non-aggression have reason -- but not necessarily the insight or desire -- to believe that they share the risk of Russia's concentration of energy investments. Russia's growing energy market power can manifest itself as market strength; it can also result in the power to intimidate and create predatory pricing/supply policies, as we have witnessed in Europe.
3. Some of the flood of deals Putin succeeded in achieving last weekend may have been too hastily organized to meet an artificial, strategic deadline. Yes, he might have achieved some tactical benefit from stitching many of the world's largest oil and gas producers and support companies into a blanket of political and economic support. The modern-day Prince Putin provided a very impressive display of government/industrial coordination and effectiveness. However, history tells us that there are chinks in the armor that, as we describe above, may put the world at risk as Russia encounters unexpected bad results trickling from the impressive portfolio of Memoranda of Understanding (MOU).
- Take the deal with Argentina. A major oil company, Repsol, found out not too long ago that Argentina is not a trustworthy partner, as we reported here.
- Likewise, Argentina and other companies and governments involved in MOUs with Russia must trust in Russia's commitment to the 'Rule of Law', to living up to its contractual commitments. This might take on more of a 'religious leap of faith' than normal 'due diligence' in light of how Russia is treating European customers depending on it for stable, secure supplies of energy.
- With mounting aggressiveness, will Russia use the market power achieved through the weekend MOU and agreement signings to neutralize worldwide opposition to its dangerous designs on former and currently free Soviet republics? For example, will General Electric supply gas turbines and other technology to the Sino-Russian gas pipeline...and feel obliged to use its significant political muscle in the United States and Italy to urge appeasement in the face of Russian aggression? Will Total be inclined (or "encouraged") to advise the French and other governments on political matters affecting Russia, such as appeasement or increasing economic sanctions?
No, the Russians are not coming. They are already here in North America, South America, Western Europe, the Middle East, Africa, Asia and points between.
Those "Points" of Russian presence are like dots on a map.
We hope readers will connect them and apply their own conclusions and strategies to their own corporate, state, provincial and national interests.
The Russians are chess masters. Chess is the greatest game of strategy. It can be played innocently for fun and brain development. Its principles can also be used by expert players to outwit amateurs and more naive, less patient, less developed thinkers. A cheater can also 'win' a chess game that would otherwise be lost to a superior player.
Partners and opponents alike should be equally nervous about the presence, in their midst, of a modern, Russian prince proclaiming friendship or planning retribution.
We believe that those noted above do not fully comprehend the dangerous game in which they are engaged, with a partner/opponent who embraces such unpredictable values and unexpected aggressive capability.
See our brief commentary tomorrow, "Playing By The Rules", matching the trustworthiness of two of the world's major energy leaders.
CWN Forum – Today, May 28th
12:00pm-1:15pm, Dena'ina Center
Doors open at 11:30AM, program begins promptly at noon
On Wednesday, May 28th, Commonwealth North will hold the third of a three-part series discussing the State's plan to take a twenty percent equity share in a North Slope natural gas pipeline project. The Alaska Constitution states that, "The legislature shall provide for the utilization, development, and conservation of all natural resources belonging to the State, including land and waters, for the maximum benefit of its people."-What does, "maximum benefit" mean? -Should rural Alaskan's benefit from a project focused on the Railbelt? -Should Alaskan's expect access to gas at below market prices?
Our panel will discuss the concept of ensuring the maximum benefit of Alaska's resources in the context of this historic, multibillion dollar investment in a gas pipeline project.
The panel will include:
Gunnar Knapp, Ph.D., has been on the faculty of the University of Alaska Anchorage Institute of Social and Economic Research since receiving his Ph.D. in Economics from Yale University in 1981. Dr. Knapp has conducted a wide variety of research on the Alaska economy and Alaska resources, including in particular markets for Alaska seafood and management of Alaska fisheries resources.
Marty Rutherford retired in 2010 as Deputy Commissioner, Alaska State Department of Natural Resources. Rutherford has extensive experience with 26 years in Alaska state government, much of it in various positions in the Department of Natural Resources. Marty is currently Special Projects Manager for the Anchorage Office of Linc Energy.
Dermot Cole is a longtime Alaska reporter, columnist and author, based in Fairbanks. He has written extensively about Alaska and Alaska history for more than 35 years. A former reporter for the Fairbanks Daily News-Miner, his most recent book is "North to the Future: The Alaska Story, 1959 - 2009." Cole grew up in Pennsylvania and lived in Taiwan, Montana and Hong Kong before moving to Alaska in 1974. He is a graduate of the University of Alaska Fairbanks.
Larry Persily will moderate the panel. Persily is the federal coordinator for Alaska natural gas pipeline projects and a former deputy commissioner at the Alaska Department of Revenue.
Members, $20; Non-Members, $35
Thank you to our event sponsors!
5-26-14 Memorial Day - As Russia Threatens Ukraine Will Alaska Invite Russian Support of Gas Pipeline/LNG Project?
Point of Personal Privilege: On this Memorial Day I honor the memory of Dad (Col. Dave Harbour) and Mom (Bobbie) who were married in Honolulu a few days after the Japanese attack in 1941...and fellow veterans and supportive families, past and present, who defended America's constitutional principles through the country's majestic history of freedom and prosperity. -dh
Russian Company Involvement In Alaska Gas Pipeline Project?
One of our Pacific Rim readers writes over the weekend, "that Rosneft was granted by Exxon to come into Point Thomson (and hence the North Slope LNG project).
"Over recent days the Majors have been lining up to affirm their ongoing interest in investing in Russia with the likes of Rosneft, notwithstanding the sanctions imposed upon Rosneft's CEO, Igor Sechin, personally.
"The State of Alaska will become part of the current Ukrainian dispute with Russia if Rosneft exercises its option over Point Thomson, as the State law states:
11 AAC 82.605. Assignments
(a) Leases, oil and gas exploration licenses, permits, or interests in leases, oil and gas exploration licenses, or permits, may, with the approval of the commissioner, be assigned or subleased as provided in this section to a person or persons qualified to hold a lease.
"The Commissioner will therefore have to determine if Rosneft is a party that is “qualified” under Alaskan law to hold a lease!"
This reader, who is attracted by the State's opportunities, and searches for Alaskan investments, says, "I’ll continue to watch with interest from afar."
Please remember that, above all, we seek accuracy and are responsible for the reliability of our hundreds of thousands of pages of archives. We would encourage readers with additions/corrections -- or a different take on the ROSNEFT investment -- to comment either confidentially (as this reader requested), or on the record. -dh
Sunday, Post Church Service Commentary:
Dr. Charles Stanley (www.intouch.org, NGP Photo) gently reminds us that our actions have consequences and that we reap, "what we sow, more than we sow and later than we sow." We include this reference not to suggest that decision makers are bad or good people, but to emphasize the principle that actions have consequences.
Today's posting is for the benefit of Alaskan and Canadian decision makers who have said, "This is where the oil is; a tax or regulatory increase won't stop those oil companies. They have to do business with us. Where else are they going to go?"
The answer is that investors have a number of alternatives for using their money productively. They are prudent. They are decisive. To them, government support or opposition counts.
Below, is a relatively small but -- to the greater Norman Wells area -- highly significant way in which an Aboriginally controlled government decision process has adversely affected economic strength, jobs and opportunities in their region.
Contrast this with the gas sale agreement decision announced in Inuvik a few days ago.
CBC News. Husky Energy has withdrawn its application to horizontally drill and frack up to four wells in the Sahtu region of the N.W.T.
In a short note to the Sahtu Land and Water Board, the company said it has decided to postpone drilling for two years. It had intended to start drilling this coming winter.
Gregor Harold McGregor, mayor of Norman Wells, N.W.T., says Husky's decision to withdraw its fracking application isn't good news for the region's economy. (CBC)
The decision is a disappointment for businesses in the region that were hoping to capitalize on the project.
"I'm in a state of shock at the moment," said Gregor McGregor, mayor of Norman Wells.
"I wasn't expecting it. It sure isn't good news for the area, for the region. The economy here is very fragile, I've said that many times. I guess we're about to find out just how fragile it is."
Husky's decision comes a week after the Sahtu Land and Water Board delayed making a decision on the project. The board wanted more information about the project.
Earlier this year, ConocoPhillips — the other big energy player in the region — announced it will not be drilling in the region next winter.