Here is Cory Renauer's (Photo-r) Alaska Gas Pipeline Risk Analysis (Seeking Alpha)
(Notice: two readers told me they encountered a 'virus warnining' when activating the link above. I checked the link several times and ran my virus program check on the URL. It received a clean bill of health. If anyone has information to the contrary, please advise. -dh)
(Comment: We do not believe readers should view this analysis as negative. It correctly characterizes the large volume of gas on the slope, potential markets and some of the cost advantages it enjoys amid the disadvantages of remoteness, logistics, etc. What the article should do is motivate Alaska decision makers to rapidly move to make the State's tax climate more competitive so that investors can be more confident that big money invested in the state is likely to produce an acceptable return and unlikely to be expropriated via future tax legislation. -dh)
(Excerpt; for the full story go here
.) expect America's technological
advantage regarding natural gas extraction will largely be diminished by the time the proposed pipeline is operational. At the last World Shale Oil & Gas Summit, held in Houston, more than half the attendees were foreign
. Their purpose was to soak up whatever knowledge they could about the advanced extraction techniques that are giving the US its edge, so they can be applied at home.
China is sitting on natural gas reserves
that may rival those of the US. The Chinese Government has recently allowed domestic producers like Sinopec (SHI
) and PetroChina (PTR
) to partner
with foreign firms. Chinese producers will, no doubt, quickly adopt the horizontal drilling and fracking techniques used by their new partners, further lowering profit margins for North Slope produced gas.
The most sobering reason to halt construction of the pipeline before it even starts is the fact that it might not even be necessary. The Arcticice
that makes an export facility on the north shore of Alaska impossible is rapidly decreasing. Last month Arctic sea ice levels reached record lows, and median ice edge levels are already well off from the shores of Alaska. By the time the proposed pipeline is functional, oil and gas shipping through the Bering Strait might rival the Strait of Hormuz.
Rapidly melting Arctic ice could render the pipeline unnecessary.
A $65 billion dollar price tag spread among Exxon Mobil Corp., ConocoPhillips Co., BP PLC, and TransCanada is hardly a cause for alarm. Even at currently depressed natural gas prices, there is enough easily extractable gas on Alaska's North Slope to make the proposed pipeline a break-even venture. Over the next 30 years I expect the overall effects of the pipeline on the balance sheets of the companies involved to be neutral. I would neither buy nor sell shares of Exxon Mobil Corp., ConocoPhillips Co., BP PLC, or TransCanada Corp. based on their involvement in this project.
Today's Consumer Energy Alliance Energy Clips:
Ryan blamed President Barack Obama for standing in the way of the Keystone XL pipeline and pushing too many environmental regulations that have cost jobs in the coal industry, a thorny issue for the president in southeast Ohio, where coal has a large footprint. He said similar control by Washington has hampered manufacturing growth throughout the Midwest, including Michigan and his home state of Wisconsin.
Action needs to be taken now and the current administration needs to start granting permits for oil exploration and drilling on federal lands. Approval of the Keystone XL Pipeline already passed in the House by a 293-127 majority vote with 69 Democrats abandoning the president, but the plan was blocked by Senate Democrats and a veto threat by President Obama. The pipeline would bring 700,000 barrels of oil a day and up to 20,000 jobs to the U.S economy, bringing a fresh start to a crippled nation whose future should be decided in November on strong leadership, not appeasing speeches.
State air pollution regulators say California’s air quality isn’t expected to get worse after the governor ordered the release of a dirtier blend of gasoline to help slash record-high pump prices. The California Air Resources Board issued a regulatory advisory a day earlier after Gov. Jerry Brown ordered it to allow so-called “winter-blend” gasoline to be sold in California earlier than usual to increase supply. AAA said the average price for a gallon of regular gasoline in California hit $4.668 Monday — the highest price in the nation and an all-time high for the Golden State. Analysts said the spike has been driven by refinery disruptions and corrosion issues in an important pipeline.
Concerns over reports Monday of a declining Asian economy helped push crude oil prices down for the second straight trading day. The World Bank downgraded its growth expectations for the Asia-Pacific region, where the Chinese economy is showing signs of flattening. In Europe, meanwhile, trouble continued, though leaders there agreed to set up a $648 billion recovery fund. Though the IMF praised Middle East economies for maintaining a watchful eye on global oil markets, the slide in energy prices continued into the second week of October. OPEC for September predicted more of the same for the global economy, noting few dark clouds were forecast on the horizon. The cartel has stuck to assertions that some growth may return to the global economy next year, a sentiment reinforced by the World Bank. The OPEC oil market report for October is scheduled for a Wednesday release.
The presidential campaigns’ coal war is intensifying, with each candidate promoting himself as the champion for coal and the miners who produce it. As GOP nominee Mitt Romney and President Barack Obama battle over the effects of environmental regulations on the industry and its workers, a recent study by The Brattle Group concluded that coal’s survival is more dependent on changing market forces than EPA rules. Economists at the consulting firm recently boosted their estimates on impending retirements of coal plants by 25,000 megawatts, finding that falling natural gas prices and declining demand for electricity have accelerated planned closures.
TODAY'S American Energy Alliance Energy Links:
Doubling down on the automobile mandate does make sense, if you are in favor of more deaths on the highway, a $3000 increase in the average price of a car, pricing millions out of the new car market, and limiting consumer choice. White House (10/8/12) reports: “On energy, I’m big on oil and gas, and developing clean coal technology, but I also believe that if we’re ever going to have control of our energy future, then we’ve got to invest in solar and wind and biofuels, and that it does make sense for us to double our fuel-efficiency standards on cars. And that's not a socialist plot -- (laughter) -- for us to reduce our energy usage. It’s the smart thing to do. It’s right for our national energy. It’s right for our economy. It’s right for the environment.”
“Temporary” right? The subsidies have been in place for 20 years. People have been using wind to generate electricity for more than 100 years. And if this stuff is really cost competitive, why are we subsidizing it? WSJ (10/8/12) reports: “At a time of intense debate over the federal
budget, government subsidies for wind and solar power are more contentious than ever. The question of whether those subsidies are justified has taken on fresh urgency with the looming expiration of a major wind subsidy.”
The Keystone XL Pipeline project, for those who may have forgotten, could replace all the crude we import from the Middle East. At least according to the Department of Energy. But the President is such a tightly held hostage (by the scarcity gang), that he will never approve it. The Romney crew should have an event every week on the project. AP (10/8/12) reports: “Mitt Romney's administration on Day One would approve a pipeline that would run from Canada to U.S. refineries in Texas, creating thousands of jobs and pushing America on its way to energy independence, Republican vice presidential candidate Paul Ryan said Monday.”
If regulations provide more benefits than costs, like our friends at EPA are always saying, wouldn’t the appropriate action here be to increase regulatory requirements, rather than waive them? Hasn’t Jerry Brown (“educated” by Jesuits, of course) just become part of the Big Oil machine (that claims regulations have, you know, costs) by this action? WSJ (10/7/12) reports: “Californians are grumbling about a gas price spike, which state officials blame on disruptions in the supply chain. Actually, they're paying through the nozzle for their greener-than-thou government.”
Shocker. WAToday.com (10/8/12) reports: “ONE hundred days after the government introduced a carbon price, power bill increases are the one visible impact.”
Do you remember when the Democrats were the party that tried to help coal country? Bobby Kennedy and Bobby Byrd and those dudes? The American Spectator (10/8/12) reports: “There was a time, half a century ago, when Democrats stood firmly on the side of coal miners and enacted programs to help alleviate the cruel poverty that for so long plagued rural Appalachia. Now, under the control of environmentalists, the Democratic Party is the coal miner's worst enemy and threatens Appalachia with a new kind poverty, even crueler for being the result of a deliberate policy. Folks in America's coal towns have not yet lost hope, even as they have been betrayed by the president who famously promised Hope. The end of Obama's war on coal may now be within sight, and the people of Coal Country could cast the deciding votes to end it.”