Friday, August 15, 2014
U.S. Democrats Embrace Shale Boom Ahead Of Midterm Elections
When House Republicans took up a measure to speed the government's reviews of applications to export natural gas, a move long sought by energy companies, the unexpected happened: The bill won "yes" votes from 47 Democrats.
The bill's sponsor, Rep. Cory Gardner (R., Colo.), anticipated some Democratic backing, but not that much. Rep. Steve Israel of New York, who leads the Democrats' House campaign arm, was a yes, as was House Minority Whip Steny Hoyer of Maryland. Both voted in 2012 to restrict oil and gas exports.
The energy boom is shaping a new kind of Democrat in national politics, lawmakers who are giving greater support to the oil and gas industry even at the risk of alienating environmental groups, a core of the party's base. The trend comes as oil-and-gas production moves beyond America's traditionally energy-rich states, a development that also is increasing U.S. geopolitical influence abroad.
"It's a huge business opportunity for the country," said Rep. John Delaney (D., Md.), who was among 17 first-term lawmakers who voted yes on Mr. Gardner's bill. It passed the House and now awaits action in the Senate.
Mr. Delaney, whose district extends from the Washington-area suburbs to the West Virginia border, opposes a moratorium Maryland has placed on fracking. "I think that has really hurt the western part of my district."
"When four or five states were responsible for the vast majority of oil and gas production, it was easy to say this is a Republican issue, because most of those states happened to be Republican states," said Kevin Book, managing director at the Washington, D.C.-based consulting firm ClearView Energy Partners. "But now that oil and gas production is spreading through unconventional technologies, there's many more states."
It is a theme playing out ahead of November's midterm elections, with some Democrats trying to balance environmental groups' concerns about climate change and an industry they see as carrying economic benefits.
This tension recently flared in Colorado, where Democrats have been at odds over measures restricting fracking, a process that has unlocked vast supplies of oil and natural gas from rocks deep underground.
In response to concerns about potential groundwater pollution and drilling close to homes, Rep. Jared Polis, a liberal Democrat, had been pushing for a ballot initiative to limit fracking. His move drew opposition from Gov. John Hickenlooper and Sen. Mark Udall, Democrats in tight re-election races in Colorado. Party leaders feared the measures would allow the GOP to cast Democrats as anti-industry. Mr. Polis retreated last week after the governor agreed to set up a commission to address the issue.
Some Republicans are skeptical of the Democratic Party's growing support and note many Democrats want more regulations. At the same time, GOP leaders say the phenomenon has moved beyond rhetoric. Rep. Kevin McCarthy (R., Calif.), the new House Majority Leader, said in a recent interview he has noticed Democrats being more supportive of the energy boom, "because they see their economy grow by it."
Mike McKenna, president of conservative lobbying firm MWR Strategies, which has close ties to GOP congressional leadership, said "it's a genuine shift and an important one." Among the drivers, he said, is the local tax revenue that comes from related economic growth.
Since March 2008, oil production has increased 58% and natural-gas output has risen 21%, making the U.S. the world's largest producer of both fuels, according to federal and international agency statistics. Jobs directly related to oil and gas production have nearly doubled in the past 10 years to 697,600, government data shows.
Support is strongest in states that reap the most from new production and the development export terminals for liquefied natural gas in places like Maryland and Oregon. Fracking is poised to start or already has in swing states including Ohio, North Carolina and Nevada.
Hail Shale: World Awash In Oil Shields Markets From Price Shocks
Fighting across Iraq, Libya, Ukraine and Gaza, and an accelerating economy, should mean higher oil prices. Yet crude is falling. What’s changed is the shale fracking boom.
Six years ago, oil soared to a record $147 a barrel as tension mounted over Iran’s nuclear program and the world economy had just seen the strongest period of sustained growth since the 1970s. Now, West Texas Intermediate, the U.S. benchmark price, has traded below $100 for 10 days and Brent, the European equivalent, tumbled to a 13-month low yesterday.
What’s changed is the shale fracking boom. The U.S. is pumping the most oil in 27 years, adding more than 3 million barrels of daily supply since 2008. The International Energy Agency said yesterday that a supply glut is shielding the market from disruptions. Bank of America Corp., Citigroup Inc. and BNP Paribas SA concur.
“North America has pushed out an incredible amount of crude oil that it used to import,” Ed Morse, the head of commodities research at Citigroup, said in a phone interview from New York yesterday. “The world doesn’t need that much.”
The U.S. imported 7.17 million barrels a day of crude in May, a 26 percent drop from the same month in 2008, according to data compiled by the Energy Information Administration, the Energy Department’s statistical arm. Foreign deliveries will meet 22 percent of U.S. demand next year, the lowest level since 1970, the agency said yesterday.
U.S. gross domestic product will grow 3 percent in 2015, accelerating from 1.7 percent this year, according to the median forecast from 84 economists surveyed by Bloomberg. Job openings rose in June to the highest level in more than 13 years, firming up the labor market picture for the second half of the year, according to the U.S. government.
The nation’s output is forecast to climb to 9.28 million barrels a day next year, the highest level since 1972, the EIA said. The agency cut its 2014 price forecast for WTI to $100.45 a barrel yesterday from a July projection of $100.98.
Oil markets became more resilient to the threat of global supply disruptions because of “spare capacity” and softer global demand, Francisco Blanch, the head of commodities research at Bank of America in New York, said by phone yesterday.
“Growth in oil demand was far outpacing our ability to physically supply oil” in the first half of 2008, Harry Tchilinguirian, the head of commodity markets strategy at BNP Paribas in London, said by phone yesterday. “The price of oil needed to rise promptly to ration demand.”
The Next Energy Revolution: Deep Water Fracking
Energy companies are taking their controversial fracking operations from the land to the sea — to deep waters off the U.S., South American and African coasts.
Cracking rocks underground to allow oil and gas to flow more freely into wells has grown into one of the most lucrative industry practices of the past century. The technique is also widely condemned as a source of groundwater contamination. The question now is how will that debate play out as the equipment moves out into the deep blue. For now, caution from all sides is the operative word.
“It’s the most challenging, harshest environment that we’ll be working in,” said Ron Dusterhoft, an engineer at Halliburton Co., the world’s largest fracker. “You just can’t afford hiccups.”
Offshore fracking is a part of a broader industrywide strategy to make billion-dollar deep-sea developments pay off. The practice has been around for two decades yet only in the past few years have advances in technology and vast offshore discoveries combined to make large scale fracking feasible.
While fracking is also moving off the coasts of Brazil and Africa, the big play is in the Gulf of Mexico, where wells more than 100 miles from the coastline must traverse water depths of a mile or more and can cost almost $100 million to drill.
Those expensive drilling projects are a boon for oil service providers such as Halliburton, Baker Hughes Inc. and Superior Energy Services Inc. Schlumberger Ltd., which provides offshore fracking gear for markets outside the U.S. Gulf, also stands to get new work. And producers such as Chevron Corp., Royal Dutch Shell Plc and BP Plc may reap billions of dollars in extra revenue over time as fracking helps boost crude output.
Fracking in the Gulf of Mexico is expected to grow by more than 10 percent over a two year period ending in 2015, said Douglas Stephens, president of pressure pumping at Baker Hughes, which operates about a third of the world’s offshore fracking fleet.
Coal getting cheaper too
Coal imports to the U.S. are rising sharply even as coal mines close throughout Central Appalachia. A big reason: price. Total U.S. coal consumption is expected to increase 3% to 862 million tons this year.
It costs $26 a ton to ship coal from Central Appalachia to power plants in Florida compared with $15 a ton to get coal from a mine in Colombia, according to research firm IHS Energy.
Labor costs are lower in Colombia, and it’s much more cost effective to move coal by ship, which can transport well over 50,000 tons of coal, than by train, usually made up of more than 100 railcars, each carrying only 100 tons of coal. In addition, a global coal glut has helped weaken prices for Colombian coal.
Coal imports surged 44% to 5.4 million metric tons during the first six months of 2014, compared with a year ago, according to Global Trade Information Services. Two-thirds came from Colombia, which ramped up coal production and exported 24% more coal during the first five months, compared with the same period in 2013, the data provider said.
Total U.S. coal consumption is expected to increase 3% to 862 million tons this year, according to the Energy Information Administration. The expected rise reflects frigid weather earlier this year, which boosted demand at all power plants, including those relying on coal.
Why we still need coal
Even while hundreds of coal-fired electric power plants are being retired or converted to natural gas on account of new Environmental Protection Agency (EPA) regulations — 361 units so far according to Americaspower.org over the coming years — an odd thing happened this winter.
Coal electricity production increased dramatically, by 8.5 percent, to 543.4 billion kilowatthours (kWh) for the months of January through April compared to the same period in 2013. The culprit? The particularly cold and harsh winter.
Overall, end use of all electricity from all providers was up 3.6 percent to 1.265 trillion kWh for January through April, and overall generation was up 3.98 percent to 1.278 kWh. Increased coal electricity generation accounted for more than 87 percent of the increase.
Natural gas electricity generation, on the other hand, took a big hit the first four months of the year, down 3.2 percent to 289.1 billion kWh. This followed delivery problems for gas this past winter in the northeast, leading to communities with those types of plants to lean on coal-generated grid power from Midwestern states.
This past winter, according to bv.com, in New York and New England, “insufficient pipeline capacity to deliver growing peak demand gas needed for gas-fired electric generators, as well as residential and commercial consumers” led to supply shortages in the northeast and big price jumps.
That’s not good, since natural gas is supposed to be what replaces coal on the grid, yet it does not appear to be capable of fulfilling peak demand.
Should the same thing happen over the coming years, the grid will become increasingly taxed as the remaining coal-powered plants attempt to fill in the gap, only with less capacity to do so.
Consider that coal as a percent of the grid had dropped from 51 percent in 2005 to 38.5 percent market share in 2012. But because of the cold surge, that figure jumped back up to over 42 percent the first four months of 2014.
Yet, that trend might not last much longer as more coal plants are brought off-line by the EPA, resulting in a 16 percent cut to coal electricity capacity.
This is something even the New York Times acknowledged in a March 10 article by Matthew L. Wald. “Scores of old coal-fired power plants in the Midwest will close in the next year or so because of federal pollution rules intended to cut emissions of mercury, chlorine and other toxic pollutants. Still others could close because of a separate rule to prevent the damage that cooling water systems inflict on marine life,” writes Wald.
The Times warns ominously, “For utilities, another frigid winter like this one could lead to a squeeze in supply, making it harder — and much more expensive — to supply power to consumers during periods of peak demand.”
So, we’re cutting coal electricity’s supply via the regulatory process, precisely at a time when demand appears to be increasing.
In short, increased coal electricity production was needed during this harsh winter to meet increased electricity demand and delayed natural gas supplies. So, why are we shutting down 16 percent of coal electricity capacity with punitive EPA regulations?
If anything, it appears we need coal now more than ever. Is anyone at the EPA or White House listening?
GREENIE ROUNDUP FROM AUSTRALIA
Three current articles below
Greenies criticize new coal railway in Qld.
THE state's coordinator-general has approved Indian firm Adani's 300km rail line, linking the Galilee Basin with the Abbot Point coal terminal on the Great Barrier Reef.
But Australia Institute analyst Mark Ogge says the massive project will drive down global coal prices and could potentially cause the closure of Surat and Bowen Basin coal mines.
"This has all the signs of an economic train wreck for the state," Mr Ogge warned. "If you are a farmer, tourist operator, manufacturer or coal miner other than in the Galilee basin, today's approval is almost certainly bad news for you."
Greenpeace's Ben Pearson was disappointed that the railway, planned to transport more than 100 million tonnes of coal per year, had been given the state's nod. "It's very bad news for landowners along the route and it is very bad news for Australians who care about the climate and care about our Great Barrier Reef," he told AAP. "We certainly haven't given up on stopping federal approval of the rail line."
But Queensland Resources Council chief executive Michael Roche congratulated Adani and described the rail and mine project as a pioneer plan.
Premier Campbell Newman said the project would be giving back to the state for at least 50-60 years.
But he's asked the coordinator-general to be mindful of impacts on landholders because local member and government MP Vaughan Johnson has concerns about the route. "Vaughan is quite rightly being the voice of his constituents," the premier said.
"I have asked him (the coordinator-general) to be very mindful on the ground. We'll do our best to mitigate those impacts."
Federal government approval, required for the project to go ahead, is due by September 30.
Great Barrier Reef still facing significant threats, assessment for World Heritage Committee shows
Panic about the reef is a hardy perennial; I remember it from 50 years ago. But coral recovers quickly from damage. The Greens would only be happy if all human influences were removed
Two major reports into the health and management of the Great Barrier Reef have found parts of the World Heritage site are still under pressure and the central and southern areas are deteriorating.
Federal Environment Minister Greg Hunt today released a strategic assessment and a five-yearly outlook for the reef.
The United Nations' World Heritage Committee is concerned about the Abbot Point port expansion and the plan to dump of three million cubic metres of dredge spoil within the marine park.
It is due to decide next year whether to list the reef as a World Heritage site "in danger".
The outlook report, prepared by the Great Barrier Reef Marine Park Authority (GBRMPA), found the health of the reef was still worrying compared to its last report five years ago.
"Even with the recent management initiatives to reduce threats and improve resilience, the overall outlook for the Great Barrier Reef is poor and getting worse," the authority's chairman Russell Reichelt wrote.
While pollutants entering the reef had measurably reduced since 2009, the greatest risks have not changed.
They include climate change, farm run-off, coastal developments and fishing.
In recent years, a series of major storms and floods have affected an ecosystem already under strain, and the accumulation of all impacts had the potential to further weaken its resilience.
"This is likely to affect its ability to recover from series disturbances, such as major coral bleaching events, which are predicted to become more frequent," the report said.
"The Great Barrier Reef is an icon under pressure.
"Without promptly reducing threats, there is a serious risk that resilience will not be improved and there will be irreversible declines in the region’s values.”
The report found the northern third of the region has good water quality and its ecosystem was in good condition.
However, the habitat, species, and ecosystem in the central and southern inshore areas had continued to deteriorate because of human use and natural disasters.
The dugong population, which was already at very low levels, had declined further in those areas.
Overall, some species were rebounding, including humpback whales, estuarine crocodile and loggerhead turtles.
Hunt confident reef won't be listed as 'in danger'
Federal Environment Minister Greg Hunt said there had been some improvements, but there needed to be more.
"The report is a mixture of pressure and progress," he said.
"In the south, there were some real negatives, to be honest. Now is the moment that we have to turn around the reef."
He said he was confident the Government would do enough to save the reef from being listed "in danger", including reducing port developments.
"It was put on the review list on somebody else's watch," he said. "Our task is to not just remove it from the watch list, but to make sure the reef recovers to its former glory."
Environmentalists want the Government to commit billions to reduce water pollution.
WWF-Australia CEO Dermot O'Gorman said billions were being spent to save the Murray River, and the reef needed the same commitment.
"Australians are deeply concerned that our national icon is dying on our watch," he said.
Uriarra solar farm west of Canberra will increase bushfire risk: report
A proposed solar farm near Uriarra Village west of Canberra would increase the risk of bushfire, a report commissioned by residents has found.
Elementus Energy has submitted an application to build a 26,000-panel solar farm near the village, which could power more than 1,400 homes.
But residents have long called for its relocation further away from their homes.
The report by fire analysis expert Helen Bull found the solar farm would increase the likelihood and risk of fire affecting the Uriarra Village community, and proposed tree screening could hamper firefighting efforts.
But the company behind the project has argued that infrastructure at the site would mitigate the risk of bushfire in the area.
The report recommended the proponent work with the fire services and community to further investigate risks presented by the project and opportunities to improve fire-response times.
"A fire burning in the proposed screen planting is expected to impact on the village through radiant heat and ember attack, although the effect would be short-term," the report said.
Ms Bull's report was partly based on a review of the development application and a site inspection, and noted there were limitations to its analysis, including limited information and a short time frame for its preparation.
Uriarra residents' spokeswoman Jess Agnew said the report's finding strengthened residents' arguments for the relocation of the solar farm.
"Now this is what we've been pushing for all along and this finally confirms what we need as well as putting the 22 kilowatt power lines underground," she said.
Solar farm will 'mitigate bushfire risk'
But Elementus Energy's managing director Ashleigh Antflick told told 666 ABC Canberra Uriarra residents already lived in a zone of high bushfire risk and previous plans for the village had called for dense visual screening along its northern edge.
"My suggestion to the villagers is the use of the land across the road from the village will in fact be a bushfire mitigant for them because we will be taking very good care of the land upon which the solar facility is located," he said.
"The screening that we've proposed is there obviously to mitigate the visual impact of the solar farm and that it represents a fire risk in and of itself we can I think accept.
"But what you need to do is look a bit further beyond the trees themselves and say in the direction that a fire would ordinarily approach Uriarra Village where those trees could become a concern, what are we doing?
"What we're doing is having a very well managed 40 hectare solar farm site where there are significant pieces of firefighting infrastructure including roads for Rural Fire Service vehicles to make quick and speedy access right to the very far edge of the site."
Mr Antflick said there would also be a 40,000 litre water tank on the site and the company had shifted the planned solar farm away from the village at residents' request.
"The nearest home is 150 metres away from the leading edge of the nearest solar panel," he said.
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Posted by JR at 3:29 AM