As President Barak Obama begins his Alaska visit today, we bring readers these observations from our energy consultant friends…and others (i.e.
ADN, NYT, CNN, NPR, CBS, Reuters, USA Today (Note: "Climate Change" overtakes energy as focus of trip…consistent with the Obama policy of elevating climate change as top 'national security' priority.  -dh)

Our great Aussie energy consultant friend begins the week with this observation, beginning with news of an ENI natural gas discovery in Egyptian waters, almost equal to the 35 TCF of stranded Alaska North Slope gas.

  • Italian oil and gas giant ENI reported a major gas discovery over the weekend.  This was the finding of a ~30 TCF (gas-in-place) gas-field in deep water off-shore Egypt.  The company has already signalled that it will pursue its development aggressively.

  • Gas in Egypt can readily feed both the nation's voracious energy needs and export markets through existing liquefaction infrastructure. The find will no doubt disappoint neighbour Israel, from both monetary and geo-political stability points of view, who was hoping to supply Egypt from its own large offshore gas fields.

  • In theory this find could indicate that there is a whole trend of deepwater gas fields remaining to be discovered in the Eastern Mediterranean – with profound implications for European gas markets, Russian ambitions for the Turk-stream pipeline, etc.

  • As we noted last week, Putin is due to visit China this week, but hopes of signing some sort of deal during that visit over the Altai (AKA the Western route pipeline, or the Power of Siberia-2 pipeline) appear slim.  Recent media reports have instead suggested that some sort of deal could be inked over the supply of gas to China from Vladivostock (sourced by pipeline from Sakhalin Island). 

In the midst of market volativity and the Obama Administration EPA initiatives against carbon fuels, our unnamed, Mid-Atlantic energy consultant friend offers this observation: 

We caution investors against overreacting to the near-term impact of the final Clean Power Plant (CPP) rule, and observe that the rule's effects will likely vary across the country and across companies.  There are several reasons to be skeptical that the rule will be as impactful in reality as it now appears.   How exactly the CPP influences individual firms, utility or otherwise, will hinge on their specific circumstances and the approaches particular states take toward compliance, which will take years to play out. 
Takeaways: 
  
·         Very Lengthy Implementation. It will take many years before the rule is truly 
  
·         State Cooperation Remains Key, Although Problematic. The rule’s effectiveness hinges upon state cooperation, which is far from assured.  Large coal burning and mining states have already expressed their disdain for the rule, and in many cases have filed or backed lawsuits opposing it.  It is very questionable whether key coal burning states will cooperate with EPA to develop adequate SIPs in a timely fashion, or at all.  While EPA can develop state specific Federal Implementation Plans (FIPs) as an alternative, that would take time and be challenging to put into effect. 
  
·         Litigation. Until now, legal challenges of the rule have been deemed legally premature.  Now, with the rule out and due to be published in the Federal Register, those hurdles will lift, allowing litigation to commence.  Since these suits will proceed over many months, they won’t stop some states from developing SIPs and submitting them for EPA review in the interim.  We maintain that the rule is legally vulnerable on several grounds, including its call forreductions in emissions from outside the fences of power plants, and its statutory underpinning, Section 111(d) of the Clean Air Act, which has not been thoroughly litigated in the past. 
  
·         The Next Administration Will Moderate the Rule.  Regardless of who wins the White House in 2016, Republican or Democrat, they are going to put their imprimatur on the CPP.  A Republican would likely stop implementation and direct the EPA to come up with a new much less aggressive approach that would effectively put the rule on hold for several years.  A Democrat, with their eye on reelection, would likely retain the broad parameters of the rule, but adjust it to moderate the impact on key states like Ohio, Pennsylvania and Virginia, states that produce or burn significant amounts of coal.  Since the confirmation of a new EPA administrator will likely take at least six months and the confirmation of key EPA personnel upwards of one year, there will be a significant delay for any actual changes to the CPP.