Wednesday, February 20, 2013
The new robber barons: Government regulators
An oil and natural gas boom is underway in the United States, born of horizontal drilling and hydraulic fracturing, or “fracking.” It has created tens of thousands of well-paying jobs directly, and hundreds of thousands more in hundreds of businesses that supply and support the industry and its workers.
In North Dakota, the unemployment rate is 2.4 percent, in large part because of a huge increase in natural gas and crude oil production from deep shale rocks that yielded nothing prior to fracking. The new technology is also driving job growth, higher incomes, and increased tax revenues for hard-pressed state and local governments in Louisiana, Pennsylvania, Texas and other states.
Meanwhile, 350 miles north of Edmonton, Alberta, other innovators are producing billions of barrels from oil sands that stretch across an area the size of Utah. Shallow deposits are accessible via surface mining, while deeper lodes are tapped using in situ drilling and steam injection. As work is completed in an area, the land is restored to woodlands, grasslands, lakes and marshes, and the process moves on.
As with fracking, the oil sands create tens of thousands of high-paying jobs and generate billions in revenue, benefitting people from Fort McMurray, Calgary and Vancouver to Ottawa and Halifax, and throughout the United States. Construction of the Keystone XL Pipeline would multiply these benefits.
And yet, despite ample evidence that responsible development of these enormous energy resources could power a national economic, manufacturing and employment renaissance, the Obama Administration’s environmental ideologies and political debts to radical green groups could delay or stymie progress.
The new robber barons in the Executive Branch and Congress are not content only with taxing job creators and saddling our children and great grandchildren with trillion-dollar IOUs. They are using hard-earned tax money to finance wind, solar, biofuel and other schemes that primarily reward crony capitalist campaign contributors. They’re also locking up centuries’ of oil, gas, coal and uranium that could generate an economic revival, millions of jobs, and many billions in federal, state and local royalty and tax revenues.
Some say the way these robber barons use, abuse and ignore laws to advance this agenda reminds them of the infamous James Gang, which plundered banks and trains until Northfield, Minnesota citizens ended their lawless ways. Others say a better example is the Chicago-based Al Capone mob.
Still others point to the Capitol Hill “fiscal cliff” negotiations, as providing clues as to what lies ahead. President Obama says he favors a “balanced” approach to avoid fiscal calamity, but insists on raising taxes on high-income citizens – and will not discuss reining in entitlement expenditures that are lead life preservers on taxpayers and our economy. His Treasury Secretary tells us, “There are no options.”
The President’s unique concept of “balance” also defines his “all of the above” energy program. Like Humpty Dumpty, his words mean just what he chooses them to mean – as in all of the above-ground projects, but none of the below-ground resources. Perhaps the real question is, who is to be master … of our lives, natural resources, nation and pursuit of happiness?
Thus the Administration banned oil development on 1.6 million more acres of federal lands in the West and millions more on the Outer Continental Shelf, while delaying leasing and drilling in still more areas – on top of vast acreage and resources that Congress placed off limits through legislation. The ruling czars and robber barons also imposed ethanol-in-gasoline requirements that turn 40% of the nation’s corn crop into fuel, converting an area the size of Missouri from growing food crops to producing fuel that we could get by drilling, and driving up the cost of countless food products.
Their wind and solar programs waste billions of tax dollars on expensive, unreliable electricity projects that blanket habitats and steal our wildlife heritage, in violation of clear environmental laws.
Meanwhile, EPA issued still more hugely expensive rules that effectively ban the use of coal in electricity generation – sending coal’s contribution from 45% a few years ago to 35% today, and killing thousands of mining and utility jobs. Its latest rules demand that the transportation sector slash its soot emissions another 20% – ostensibly to reduce asthma, other illnesses and “thousands” of premature deaths.
In reality, the only health or environmental benefits exist in EPA computer models, press releases and cover-ups of illegal experiments on humans, whose response to being subjected to “dangerous” levels of soot actually disproved EPA’s claim that tougher standards are needed. EPA has also ignored the significant health risks caused by its regulations, especially for now unemployed older workers.
In the midst of all this, at the just concluded United Nations climate change negotiations in Doha, Qatar, Obama Administration representatives entertained brazen proposals to require developed countries to compensate less developed countries for “climate change damages” – under a wealth redistribution scheme that could potentially cost United States taxpayers hundreds of billions of dollars. Also in the works are EPA rules, laws and treaty agreements to force the US to curb fossil fuel use and CO2 emissions.
Inconvenient facts about these decisions were simply ignored – or treated much the same way as Steven Spielberg handled his powerful and entertaining Lincoln movie. It was released after the 2012 elections, many believe, so that minority and other voters would learn too late that it was our sixteenth president and other Republicans who championed the end of slavery – and northern and southern Democrats who fought to prevent passage of the Thirteenth Amendment, outlawing the heinous practice.
The robber barons say whatever is expedient – and then pursue policies that undermine the overall public welfare, while postponing many costly and politically explosive actions until after elections.
They also ignore and undermine the recent International Energy Agency forecast that, by 2020, the USA could be producing more oil than Saudi Arabia, currently the largest oil producer on the globe, thanks to advances in seismic, fracking, deepwater drilling and other technologies. A March 2012 Citi Global Problems and Solutions report painted a clear picture of the benefits that domestic energy development could bring – if government “public servants” and environmental “public interest” groups would permit it.
Cumulatively, the new production, reduced consumption and numerous activities associated with these technologies “could increase real GDP by an additional 2% to 3%, creating from 2.7 million to as many as 3.6 million net new jobs by 2020,” the Citi report stated. They could also shrink America’s “current account deficit” by 2.4% of GDP (a 60% reduction in the current budget deficit) and cause the dollar to appreciate in real terms by +1.6 to +5.4% – all by 2020.
In the next few decades, Citi concluded, the energy sector “could drive an extraordinary and timely revitalization and reindustrialization of the U.S. economy, creating jobs and bringing prosperity to millions of Americans, just as the national economy struggles to recover from the worst economic downturn since the Great Depression.” It would also “improve national energy security and reverse perennial current account deficits” for decades to come.
However, as the Manhattan Institute for Policy Research has made clear, these enormous benefits “are at risk if new restrictions are imposed on the industry, from delays in approval of liquid natural gas exports, to opposition to expanding ports for coal and gas export, to opposition to pipelines and refineries, and to the threat of redundant federal regulations on the technology of hydraulic fracturing.” Worse, foregoing these enormous benefits would bring little or no improvement to the environment or human welfare.
Abundant, reliable, affordable energy is the backbone of the US and global economy. Perhaps one day renewable energy will become a viable alternative to the hydrocarbons that sustain jobs and energize virtually everything we make, ship, eat and do. Until then, America and the world need to promote regulatory sanity and increased production of our enormous base of coal, oil and natural gas resources.
Why the world isn't running out of oil
Decades ago, the world was told it was running on empty. Today, we have more oil than we need. What’s fuelling the boom in black gold?
On the evening of April 18 1977, President Jimmy Carter invited television cameras into the Oval Office and portentously announced to the American people that “tonight I want to have an unpleasant talk with you about a problem unprecedented in our history. With the exception of preventing war, this is the greatest challenge our country will face during our lifetimes.”
The unprecedented problem was energy. Or rather, the lack of it. “We simply must balance our demand for energy with our rapidly shrinking resources,” said the 39th President of the United States. “The oil and natural gas we rely on for 75 per cent of our energy are running out.”
Carter’s talk was poorly received. Americans didn’t appreciate the apocalyptic message, still less his vision for tackling the situation, with its rather schoolmasterly demand for a collective show of moral backbone. But hardly anyone questioned his facts. And yet he was about as wrong as he could be. Far from running out, oil and natural gas reserves were, if not inexhaustible, then unfathomably vast. Nobody knew that then, but they do now.
Moreover, as well as bountiful oilfields in North America, Russia, Saudi Arabia and other producers in the Middle East, there are massive, barely tapped reserves in South America, Africa and the Arctic: not billions of barrels’ worth, but trillions. So the planet is not about to run out of oil. On the contrary, according to a Harvard University report published last year, we are heading for a glut.
The 75-page study, by oil executive Leonardo Maugeri, was based on a field-by-field analysis of most of the major oil exploration and development projects in the world, and it predicted a 20 per cent increase in global oil production by 2020.
In particular, the report highlighted the deep-water reservoirs in Brazil’s Santos basin, which are thought to hold as much as 150 billion barrels of oil, Venezuela’s “extra-heavy” oil in the Orinoco Belt, estimated at 1.2 trillion barrels, the oil sands in Canada, the Kwanza basin in Angola, and the Bakken and Three Forks fields in North Dakota and Montana, in the United States, which, Maugeri said, “could become the equivalent of a Persian Gulf-producing country” all on their own.
And the reason for this boom? A technological revolution that is transforming the way we both find and extract oil.
“We, as an industry, are now able to see what we had previously not been able to see, and find what we previously had not been able to find,” says Gerald Schotman, Shell’s chief technology officer, who is based in The Hague. “But we are also able to make more out of these reserves, by being cleverer about the ways we manage them.”
One of the greatest advances, and the procedure that’s dominated the headlines in recent years, for both good reasons and bad, is hydraulic fracturing, or fracking. In essence, fracking is a way of releasing oil or gas that is tightly bound up in shale rock, using immensely powerful water pumps exerting a pressure of up to 20,000 pounds per sq inch. Fracking was actually pioneered in Kansas in the Forties but it is only recently, thanks to numerous improvements, that it has become economically viable. Oil previously thought unreachable is now within our grasp.
And nobody is exploiting these advances with more enthusiasm than America. In just six years, the number of barrels being produced by the Bakken formation, a unit of shale rock occupying about 200,000 sq miles stretching from Montana to North Dakota, has increased 100-fold — from 6,000 a day to 600,000 a day – and made North Dakota the second-biggest oil producer in America, after Texas. The population of the main town, Williston, has tripled in 10 years as truck drivers and oilfield workers (not to mention strippers) have flocked there from all over recession-hit America. North Dakota has new businesses and new hospital wings, but also an infrastructure groaning under the weight of the influx. There is also a vociferous campaign against fracking by environmental groups who say the technique has the potential to contaminate underground water supplies, cause minor earthquakes and pollute the environment with vast quantities of toxic wastewater.
Supporters of fracking insist these dangers can be mitigated. And they point out the huge benefits. The boom in North Dakota is rapidly transforming America from a net importer of oil to a net exporter, thus reducing its dependency on the Middle East. China, Russia and Argentina, impressed by the results in the US, are also pushing ahead with their own fracking operations. And Linc Energy announced just last month that it was hoping to extract 233 billion barrels of oil from shale rock in the Australian outback, with a potential worth of £13 trillion.
But fracking is just one of many remarkable breakthroughs behind the new boom. As well as helping producers release so-called “tight oil”, technology has found a way to get at oil that’s mixed with sand and clay, known as tar sand, the largest deposits of which occur in Canada.
Again, like shale oil, extraction had been dismissed as economically unviable, but new processes that involve steam-heating the sands have made it a sound proposition; Canada is now producing up to 1.9 million barrels a day from oil sand projects, although, like fracking, it has attracted huge protests. Al Gore, the climate campaigner, has described tar sands as “the dirtiest source of liquid fuel you can imagine”, and labelled plans to build a major new pipeline from the tar sands of Alberta to refineries on the Texas Gulf, as “insane”.
The oil boom has also been fueled by new, more accurate methods of drilling. The invention of horizontal drilling means even if the surface site is several miles off target, companies are able to drill downwards and then turn sideways to get to the bottom of the well. A rig 300 miles out at sea can steer a drill down five miles, out five miles, and come within a couple of inches of the bullseye. In short, it means there is virtually no chance of drilling a dry well; oil companies had a 99 per cent success rate in 2011.
Companies are drilling deeper than ever before, too. The Yastreb rig on Sakhalin Island, just off the east coast of Russia, has set numerous industry records and, last August, its operators announced they’d drilled the world’s longest extended-reach well, plunging eight miles into the Earth – which is deeper than Mount Everest is high.
At the moment, basic geometry prevents anybody going much deeper than that. As Lance Cook, chief operating officer for Shell Projects & Technology in China, explains, the well bores have to be reinforced with steel, so that they don’t collapse, but the only way to sink the individual steel casings is for each one to be marginally smaller than the one before.
And, as Archimedes would have understood, that imposes limitations on depth. “If, right now, a company wanted to drill to 20 miles, say, the first casing string would probably have to be bigger than the building I’m sitting in,” says Cook on the phone from China.
Technology, however, has an unstoppable forward momentum, and what seems mind-boggling now will soon seem old-fashioned. In the past 10 years Shell has developed a technology called mono-diameter which will allow it to drop one steel casing through another, and then expand it to the same dimensions. In theory, this will facilitate the drilling of much deeper wells, although engineers still have to work out how to stop the steel melting at such depths.
As for the $64,000 question, that of where exactly the oil lies, there is a relentless quest for answers. Geologists at least know where not to look; hydrocarbons are formed by tiny decayed plants, algae and bacteria, which exist up to the outer reaches of the continental shelf, but not beyond, so mid-ocean drilling is pointless.
Closer to land, however, so-called “seismic vessels” trail between 10 and 20 cables, each up to nine miles long, probing sonically for oil and gas deposits. “With their trailing gear they are easily the largest man-made moving objects on Earth,” says Robin Walker, vice-president of marketing for WesternGeco, which operates a number of these behemothic ships. And they are properly huge. The biggest of them, Ramform Sterling, owned not by WesternGeco but a Norwegian company called PGS, carries 400 tons of highly sensitive electronic equipment deployed over an area equivalent to 830 football pitches.
Each seismic vessel uses an air gun to fire acoustic pulses of compressed air into the water. Sound waves then bounce off the underwater rock and are picked up by the streamers, which contain underwater microphones. By studying this data, geologists can then map reservoirs and identify whether they’re filled with oil, gas or merely water.
In the Seventies, seismic vessels tended to be converted fishing-boats, and the technology was only two-dimensional. Today they are custom built, cost up to £160m and use 3D imaging, greatly improving their accuracy. They are not infallible. Sometimes, the streamers get hopelessly knotted – “it’s the world’s biggest plate of spaghetti”, says Walker – and can take weeks to untangle. But all the same, the level of sophistication is breathtaking.
“What is going on out there is the marine equivalent of the space programme,” Robert Bryce, an American author and journalist specialising in energy issues, tells me. “And all of it is privately funded.”
The sums involved make your head spin. In total, “upstream” energy companies (the ones involved in exploration and drilling) spent £800bn last year. Shell alone paid £63m for exploration rights in 5,000 sq miles of water off the eastern coast of Canada. It would not have done so without extensive data suggesting the presence of hydrocarbons, but all the same, in many ways the most striking sentence in the press release announcing the deal was this: “Shell said it has yet to determine if its new exploration blocks could contain oil or natural gas.” What might Shell have paid if it knew for sure?
But competition among what the Pulitzer Prize-winning author Daniel Yergin calls “the wheeler-dealers, the operators, the finders, and the facilitators” is fierce. Everyone is out for their cut and executives are under pressure to buy up rights fast.
One of the fiercest battlegrounds over the past two decades has been Brazil. In years gone by the Santos basin, an offshore area 200 miles south-east of São Paulo, was impossible to probe for oil due to its thick layer of salt. (Salt is a poor transmitter of vibrations.) But improvements in seismology meant the area suddenly became a premier destination for oil companies and in 1999 Petrobras found a field containing around 700 million barrels of oil.
The success in Brazil then prompted geologists to look across the Atlantic to pre-salt formations in Angola. Knowing, as they did, that the coast of Brazil was once, 100 million years ago, adjoined to the west coast of Africa, they reasoned that similar oil reserves may exist there as well. In February last year their theories were proved right when a reservoir was discovered in Angola’s Kwanza basin thought to hold some 1.5 billion barrels of crude. Since then half a dozen oil groups, including BP and Total have secured exploration rights.
The successful bidders did not disclose the size of any so-called “signature bonuses” but it can be safely assumed they were hefty. In 2006, China’s giant Sinopec corporation set a world record when it paid $1.1bn for one offshore block. How much of this money will go to the Angolan people is a moot point, of course. The history of oil exploration in Africa is not a happy one. Angola was ranked a lowly 168th out of 182 countries in Transparency International’s recent “perceptions of corruption” index, so one has to wonder how much of the oil money will benefit the country’s neediest citizens, and how much will end up furnishing the palaces of tinpot dictators.
But it is naive in the extreme to imagine the genie will ever be put back in the bottle. As Robert Bryce says: “The world runs on oil, period. No other substance can compete when it comes to energy density, flexibility, ease of handling, ease of transportation. If oil didn’t exist we would have to invent it.”
German Scientists Vahrenholt and Lüning: PIK Greenland Meltdown Scenario Handily Refuted
Not long ago the catastrophe-obsessed scientists of the Potsdam Institute for Climate Impact Research claimed that another 1.6°C of warming may be enough to melt all of Greenland’s ice and cause global sea levels to rise catastrophically.
Keep in mind that the PIK is probably the biggest producer of catastrophe stories in the world after Hollywood.
Prof. Fritz Vahrenholt and Dr. Sebastian Lüning now say this fringe scenario has been handily refuted, citing a new, recently published international study authored by scientists of the Alfred Wegener Institute and others. They write:
"Good news coming out of Greenland. A new study involving the Alfred Wegener Institute (AWI) of Bremerhaven has refuted earlier horror scenarios of the Potsdam Institute for Climate Impact Research (PIK), which claimed that a warming of 1.6°C possibly could lead to a complete meltdown of Greenland’s ice mass.”
The AWI study contains a surprising conclusion, say Vahrenholt and Lüning, who write at their Die kalte Sonne blog:
"The surprising conclusion of the study, which appeared in the journal Nature: At air temperatures that were as much as 8°C higher than those of the 21st century, the ice mass melted far less then when compared to what was recently suspected. Back then the Greenland ice sheet played a far smaller role in the global sea level rise during the Eem interglacial than what was previously assumed. Should the current temperature rise in Greenland continue, then the reactions of the ice sheet in the wake of the Eem warm period apply as possible future scenarios for the ice mass on the island.”
Such is the difference between fishy models and reality. Lüning and Vahrenholt therefore now see a considerably diminished danger of an Greenland ice meltdown. Greenland was far from being ice-free during the Eem interglacial of 130,000 to 115,000 years ago. Lüning and Vahrenholt add:
"To the contrary: From the peak in the glacial period prior to the Eem, about 400 meters were lost in size, and it was 130 meters lower during the Eem 130.000 to 115.000 years ago than it is today. In the same time period it’s volume shrank a maximum of one quarter.”
Vahrenholt and Lüning conclude:
"The good news of the study was that the Greenland ice sheet did not react as sensitively to this temperature rise as previously thought.”
The Myth of ‘Acidification’ of Oceans
by Professor Cliff Ollier (School of Earth and Environment, University of Western Australia)
To demonise CO2 yet again, a false claim is that human production of CO2 will cause the oceans to become acid. ‘Acid’ is an emotive word to the general public, which is why it is seized upon by the alarmists in their search for yet another scare. In reality increasing CO2 makes the ocean become ‘less alkaline’, but never ‘acid’.
pH is a measurement of the amount of hydrogen ion concentration in a solution, the log of the hydrogen ion concentration with the sign changed. Because it is a log scale it is very hard to move a pH of 8.2 to 7.0, which is neutral.
The pH needs to be less than 7 to be ‘acid’, and this has not happened through at least the past 600 million years because it would dissolve limestones, and limestone have been deposited in the sea and not re-dissolved in the sea through all that time.
Many marine organisms need CO2 to make their coral skeletons, carbonate shells and so on. Corals also have symbiotic plants within their flesh that use CO2 in photosynthesis.
Marine life flourishes where CO2 is abundant. Professor Walter Stark wrote about a favourite place for scuba divers, the ‘Bubble Bath’ near Dobu Island, Papua New Guinea. Here CO2 of volcanic origin is bubbling visibly through the water so that the water is saturated with CO2. Abundant life flourishes to make the spot a spectacular diver’s delight. He reported many accurate measurements of pH in the area and concluded “It seems that coral reefs are thriving at pH levels well below the most alarming projections for 2100.”
The pH of sea water can be very variable and makes temperature measurement look like child’s play. Ocean pH varies regionally by 0.3, and seasonally in a particular location by 0,3. But nobody has ever measured ocean water below 7, which is what “acid” means. Rhodes Fairbridge told me that he found the day-night variation in a coral pool was 9.4 to 7.5.
There is another factor called Henry’s Law. Cold water can hold more CO2 than warm, so if you warm saturated water it gives off CO2. You can see the effect if you warm a glass of fizzy drink: it goes flat. The ocean-air interface is usually rough so interchange is rapid. Actually if the aim of the AGW activists is to keep the world cooler by reducing atmospheric CO2 they are going in the direction of increasing ‘acidification’ of the oceans.
One of the factors affecting ocean pH is photosynthesis by plants. Experimental results show that plants grow better if CO2 is increased, and greenhouse managers commonly increase the CO2 artificially to increase crops, often by 30% or more. There is every reason to suppose that marine plants also thrive if CO2 is increased. There is also experimental evidence that carbonate secreting animals thrive in higher CO2. Herfort and colleagues concluded that the likely result of human emissions of CO2 would be an increase in oceanic CO2 that could stimulate photosynthesis and calcification in a wide variety of corals.
Marine life, including that part that fixes CO2 as the carbonate in limestones such as coral reefs, evolved on an Earth with CO2 levels many times higher than those of today, as reported by Berner and Kothaval. It may be true to say that today’s marine life is getting by in a CO2-deprived environment.
Tuvalu has long been ‘hot news’ as the favourite island to be doomed by sea level rise driven by global warming, allegedly caused in turn by anthropogenic carbon dioxide. But if a coral island is sinking slowly (or relative sea level rising slowly) the growth of coral can keep up with it. In the right circumstances some corals can grow over 2 cm in a year, but growth rate depends on many factors. Coral islands, made of living things, are not static dip-sticks against which sea level can be measured. We have to consider coral growth, erosion, transport and deposition of sediment and many other aspects of coral island evolution – not just the pH of seawater.
Webb and Kench studied the changes in plan of 27 atoll islands located in the central Pacific, and found that most had remained stable or grown in area over about the past twenty years (despite measured rises in atmospheric CO2 over the same period), and only 15% underwent net reduction in area. One of the largest increases was the 28.3% on one of the islands of Tuvalu. This destroys the argument that the islands are drowning, and coral growth is not reduced by ‘acidity’.
Marine life depends on CO2, and some plants and animals fix it as limestone, which is not generally re-dissolved. Over geological time enormous amount of CO2 have been sequestered by living things, so that today there is far more CO2 in limestones than in the atmosphere or ocean. This sequestration of CO2 by living things is far more important than trivial additions to the atmosphere caused by human activity.
Australia will need coal-generated power for the foreseeable future
Coal will be a significant part of Australia's power generation mix for at least another 20 years, according to a new study.
University of Queensland researchers say coal-generated power could be halved without compromising the country's power supply, but they argue it will take decades of "orderly transition" to completely move to clean energy production.
"It's not possible to make a transition where the lights don't go out without easing coal down fairly gradually," UQ Professor of Economics and study co-author John Foster said.
"At the moment, over 80 per cent of our power is generated from coal [and] in the context of our report, Australia is what we call a non-resilient economy in terms of its power - it's very heavily dependent on one source."
Mr Foster added that if Australia is to meet its 2050 emissions targets, the time for action is now.
"When you look into the engineering and all the details, you realise what a long time it takes to make these transitions - 20, 30, 40 years is the kind of time scale that you're talking about," he said.
"To get 80 per cent [clean energy] by 2050, we'd have to be starting right now with a fairly dramatically important shift.
"If it was nuclear, we'd have to start right now, you'd have to put more into carbon storage.
"So most of our scenarios, we just wouldn't get to 80 per cent by 2050."
While the Australian Conservation Foundation (ACF) agrees that Australia's use of renewable energy will have to ramp up considerably to remain on target, it believes that the production of adequate levels of renewable energy can be achieved within 20 years.
"In the last year alone, solar power has dropped in price by 45 per cent and 75 per cent in the last three years," ACF climate change program manager Tony Mohr said.
"And that's led Bloomberg New Energy Finance to conclude that wind power and solar power are both cheaper than new coal fired power plants in Australia right now.
"So I'd say that really, we're seeing a much faster shift towards renewable energy than we would have thought of even just a couple of years ago.
"In South Australia right now, in September last year, there was a couple of days there where wind power was contributing 55 per cent of South Australia's total energy supply and in Spain they've had records set of about 60 per cent.
"Now that's what we can do today, so it's realistic I think to expect we'll be able to do much better in 20 years' time."
Australian Green party leader has a tantrum
Greens leader Christine Milne says her party's agreement with Labor is effectively over, citing a string of Government policies including its refusal to redesign the mining tax.
In a speech to the National Press Club in Canberra, Senator Milne says it has become clear that Labor no longer has the "courage or the will" to work with the Greens on a shared national agenda.
"Labor has effectively ended its agreement with the Greens," Senator Milne told the audience.
"Well so be it. But we will not allow Labor's failure to uphold the spirit of our agreement to advance the interests of Tony Abbott.
"We will not walk away from the undertakings we gave not only to the Prime Minister, but to the people of Australia, and that was to deliver confidence and supply until the Parliament rises for the election. "The Greens will not add to the instability that Labor creates every day for itself."
While her announcement will add to the air of instability that often surrounds the minority Government, Senator Milne's decision to guarantee confidence and to continue passing budget bills means the current parliament will continue until the election, due on September 14.
A spokesman for Prime Minister Julia Gillard has released a one-line statement in response to Senator Milne's speech.
"This is a matter for Christine Milne and the Greens. We will always be the party that puts jobs, growth and work first."
Deputy Prime Minister Wayne Swan says the Greens have opposed several pieces of Government legislation over the past couple of years, and he does not think the decision will affect how Parliament operates.
He told reporters at the Australian Workers' Union national conference on the Gold Coast that Senator Milne's decision highlights the fundamental differences between the two parties.
"The Greens want to abolish the mining industry. That's right over on the fringe," he said. "The Labor Party and the Greens are cut from a different cloth. We don't pander to special interests on our left or on the right."
Fellow Labor frontbencher Anthony Albanese believes Senator Milne's speech was fuelled by internal disunity within the Greens.
"We know that Christine Milne, since Bob Brown left the leadership of the Greens, has been under siege from the extreme elements of the Greens political party, led by Lee Rhiannon from New South Wales," he said.
Powerful union figure Paul Howes, who has publicly urged Labor to distance itself from the Greens, has also played down the end of the formal alliance.
"So what? I mean, the Greens haven't been supporting a whole range of Labor's initiatives in the Parliament," he told reporters at the Australian Workers' Union national conference on the Gold Coast. "There are numerous pieces of legislation in the Senate and in the House that the Greens have voted against. "Frankly, if Christine Milne wants to rip up an agreement? Excellent."
Liberal Senator Eric Abetz says despite Senator Milne's speech, the Greens will continue to prop up the Labor government through their guarantee of confidence and supply.
"Senator Milne's diatribe at the National Press Club today adds to the chaos surrounding this Government, but in reality nothing has changed," Senator Abetz said in a statement.
"The Greens have worked out how toxic the Labor brand is and are trying to distance themselves from it."
After the 2010 election, the then-Greens leader Bob Brown signed an agreement with Ms Gillard which helped Labor remain in office.
But the relationship between the two parties has been strained by a string of policy disagreements, most recently the push by the Greens to overhaul the mining tax following revelations it raised just $126 million in its first six months.
And Senator Milne fired another broadside at Environment Minister Tony Burke, describing his decision to reject a proposal to list Tasmania's Tarkine wilderness on the National Heritage register as "pathetic". "Minister Burke sold out the Tarkine to mining interests at the behest of New South Wales right [faction], Paul Howes."
"Only the Greens are standing up for the Tarkine - the largest tract of temperate rainforest left in Australia."
In March last year tensions between Labor and the Greens spilled over after Ms Gillard's described them as a "party of protest" which rejects the "moral imperative to a strong economy".
"The Greens will never embrace Labor's delight at sharing the values of every day Australians, in our cities, suburbs, towns and bush, who day after day do the right thing, leading purposeful and dignified lives, driven by love of family and nation," Ms Gillard said at the time.
Former Senator Bob Brown fired back, accusing the Prime Minister of "unfortunate and gratuitous" insults against the Greens which will "come back to bite her".
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