SenateEnergyCommitteeclearspro-KeystoneXLmeasure,with

Senate Energy Committee clears pro-Keystone XL measure, with Mary Landrieu pointedly leading the charge

posted at 4:41 pm on June 19, 2014 by Erika Johnsen

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In the face of the relentless dillydallying on the part of the Obama administration on the Keystone XL pipeline, Canada went ahead and starting exploring the potential of cutting deals with other markets in Asia — and yesterday, the Canadian government approved their own Northern Gateway pipeline to carry crude from the Alberta oil sands out to the Pacific Ocean for shipment via tankers. There has been some speculation about the possibility of the Obama administration approving the Keystone XL pipeline now that Iraq’s oil output is on seriously unstable footing (although, reality check: The Keystone XL pipeline by itself wouldn’t have enough of an impact on the global oil market to directly mitigate any future disruptions from the Middle East), but I have the gravest doubts that the Obama administration is going to say anything more about the pipeline until after the elections, come what may.

Regardless, Democrat Mary Landrieu has no intention of backing off of her campaign to use the pipeline’s elevated name recognition to differentiate herself from President Obama and tout her ostensible clout as head of the Senate Energy Committee to her energy-lovin’, red-state constituents. Via Time:

Mary Landrieu chairs the Senate Committee on Energy and Natural Resources, a perch that offered the vulnerable Louisiana Democrat an opportunity Wednesday to mix policy and politics.

With President Barack Obama delaying a decision on the Keystone XL pipeline and Senate Majority Leader Harry Reid reluctant to schedule a floor vote on a bill that would subvert Obama’s authority, Landrieu pushed through a committee vote on the controversial pipeline. It passed, 12-10, with Landrieu joining Republicans to vote in favor of the project.

The move could be a political boon for Landrieu, a moderate Democrat locked in a difficult fight to win reelection in the conservative Bayou State. One recent poll found that 67% of Louisiana voters favored construction of the pipeline, with just 12% opposing the project. Nearly four in five respondents cited Keystone as an important issue in the race.

And with Landrieu’s main Republican challenger Bill Cassidy up by three points in RCP’s polling average, I suppose it is a worthwhile political endeavor. As practical endeavor, however — not so much, as Republicans pulling for the Senate majority are wont to point out. Via National Journal:

“I do question the purpose of today’s vote,” said Sen. John Barrasso, who heads the Senate Republican Policy Committee, ahead of the vote in the committee that Landrieu chairs. “With all due respect this vote seems more like a cheerleading exercise than a meaningful effort to get Keystone built.”

“The obstacle of getting Keystone built is Senator Reid and members of the Senate who continue to elect him majority leader,” Barrasso said. …

But Landrieu fired back at the Wyoming Republican before the vote, challenging the idea that she’s merely staging a piece of political theater.

“There was no popcorn and Coca-Cola handed out today in this meeting, and there were no tickets sold to get in here,” Landrieu said, addressing Barrasso directly. “This is the United States Senate.”

But as far as Harry Reid actually allowing a vote on the measure before the midterms? Fuhgeddaboudit, unless somehow some major political calculus changes before November.

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Tags: Canada, Democrats, energy, Keystone XL Pipeline, Louisiana, Mary Landrieu, Oil and Gas Industry

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Report:TheU.S.isabouttobecomea

Report: The U.S. is about to become a “titan of unprecedented proportions” in the oil market

posted at 8:41 pm on June 17, 2014 by Erika Johnsen

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And a darn good thing it is, too. The International Energy Agency’s researchers have in previous reports noted that they were counting on an acceleration in oil production from Iraq as a pretty clutch factor in the global formula that determines oil prices; Iraq’s major energy hubs don’t seem to be in any immediate danger, but sans that hoped-for output acceleration or even just with stagnant output, growing global demand could start sending prices upward in a big way — and Iraq is hardly the only traditional supplier struggling with political instability and investment problems.

It’s encouraging news, then, that the United States is on track to become the world’ biggest oil exporter by 2020 — and even better, that other countries with potential shale deposits are now moving more quickly than expected on adopting the hydraulic fracturing and horizontal drilling techniques that have helped us get there.

In its most recent analysis, which takes a five-year view of the oil market, the IEA predicted that tight oil production from outside the U.S. could account for 650,000 barrels a day of global oil supply by 2019.

Although that is just a fraction of the 5 million barrels a day the U.S. is expected to produce from its shale oil fields by 2019, it highlights the continuing impact techniques like fracking are likely to have in helping increase global oil supply even toward the end of the decade when the IEA expects U.S. oil production growth to plateau.

Indeed, by some estimates, the U.S. contains no more than 15% of the world’s total shale and light tight oil resources, but the impact of their development on the oil market is already profound. By the end of the decade the IEA expects North America to produce 20% of the world’s oil supply and to have become a “titan of unprecedented proportions” in oil product markets as its exports of refined products soar.

Other countries might not have the resources or the geology (not to mention the relative regulatory and investment freedom, because of their own self-imposed folly) to replicate our shale boom, but it’s pretty amazing to remember that just a few years ago, nobody was expecting this miraculous turnaround — and that it’s happened largely outside of the Obama administration’s purview.

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Tags: energy, exports, Middle East, oil, Oil and Gas Industry, OPEC, shale

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WillPresidentObamatakethehintfromNorth

Will President Obama take the hint from North Dakota’s energy boom during his visit?

posted at 7:11 pm on June 13, 2014 by Erika Johnsen

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President Obama journeyed to North Dakota on Friday where, for the first time during his entire presidency, he visited an American Indian reservation to “tout the strides his administration has made with Native Americans, unveil new education and economic measures aimed at Native Americans, and speak of the difficult work that remains to pull many tribal members out of crippling poverty and endemic unemployment.” Indeed. For the number of ways in which the federal government blithely engenders the conditions that keep many Indian reservations in states of crippling poverty, I recommend this handy piece from PERC’s Shawn Regan at Forbes, but while President Obama happened to be in North Dakota this afternoon anyway, why wouldn’t he finally take the opportunity to at least momentarily draw the nation’s attention to the state’s uniquely productive energy boom and economic prosperity? Via the Bismarck Tribune:

Is the president skipping what some call the North Dakota economic miracle because the solutions aren’t coming out of Washington? Or is it because the president’s Environmental Protection Agency just issued a costly new set of rules for all U.S. electricity providers that could adversely impact North Dakota’s energy costs and continued economic prosperity?

We’d argue that the president should view North Dakota’s economy and energy landscape as a model for other states to emulate, with an incredibly low unemployment rate of 2.6 percent; high-paying jobs; low-cost, affordable energy (some of the least expensive in the nation); and clean air. Indeed, North Dakota’s energy abundance and diversity is one reason Gallup named it the happiest state in the nation.

Small businesses play an important role in the state’s energy landscape — from manufacturing parts and supplies for the energy sector to building homes and providing needed services for workers attracted by new created high-wage jobs.

North Dakota’s affordable, ample energy supply also frees these businesses from the burden of high energy costs, enabling them to grow and employ even more people. In turn, small businesses can pass their savings down to consumers, helping families live better, more affordable lives and bolstering the local economies of the communities they call home.

The geopolitical implications of allowing America’s energy boom to expand are just the gravy.

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Tags: Barack Obama, economy, energy, jobs, national security, North Dakota, Oil and Gas Industry

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Isittimetostartnurturingastronger

Is it time to start nurturing a stronger “NOPEC”?

posted at 2:31 pm on June 13, 2014 by Erika Johnsen

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The obvious answer is an emphatic, resounding “Duh!“, and the insurgency going down in Iraq is far from the only very excellent reason why. In just the past couple of years, we’ve seen major production disruptions from Libya, Sudan, and Nigeria; we’ve sidelined Iran with sanctions on their energy-dependent economy to put pressure on their nuclear program; and Venezuela is looking none too stable these days, is it?

These guys are all big players in the worldwide energy scene, and since the most efficient way to engender global energy security and economic prosperity is to consistently add greater volumes to the “global bathtub” that is the international oil market, the North American reserves recently unlocked by technological innovation present an excellent opportunity for Canada, the U.S., and Mexico to ramp up production and make some major money while applying downward pressure on global gas prices. As CNBC’s Ron Insana notes, fully unleashing our combined energy forces is an excellent strategy to start employing more robustly, on behalf of both our economy and our foreign policy:

With the U.S. leading the way in the fracking revolution, Canada in tar sands and with a newly liberalized energy sector in Mexico, North America could easily rival and exceed OPEC’s production of crude oil, natural gas, distillates and other petrochemical products—making North America the envy of the energy world.

It saddens me that in the absence of any cogent fiscal policy efforts emerging in Washington, something as simple, and beneficial, as the notion of NOPEC has not made its way to the West Wing. …

Combined, NOPEC could become the “swing producer” of energy products in world markets, helping to drive down prices of energy products that are currently hostage to OPEC’s whims, geopolitical risk and, on occasion, excessive speculation that whips oil markets round and round.

In addition, a concerted effort by the Three Amigos could also expand the opportunity for North America to become the world’s manufacturing hub, thanks to advantageous energy pricing, increasingly competitive labor markets, property rights protections, the rule of law and relative political stability.

There are, unfortunately, some major standing obstacles to this empowered NOPEC scenario, not the least of which is the Obama administration more or less stalling on allowing offshore drilling, drilling on federal lands, and furthering Arctic exploration. What’s more, the White House seems determined to stick it to Canada by continuing to dither on the Keystone XL pipeline, so as not to appear too sympathetic to the fossil fuel industry and piss off the Tom Steyers of progressive donor circles. Mexico, for its part, has finally, mercifully decided to break up its state monopoly and allow for foreign investment in their energy sector — although the perhaps even bigger problem is that foreign investors might not want to even go there, what with the gang violence that has pieces of Mexico sliced and diced into veritable war zones. Via Bloomberg:

Oil shale drillers in Texas have had to contend with environmental opposition and soaring costs. A few miles south of the border in Mexico, Angel Torrez and co-workers duck gunfire sprayed from drug traffickers. …

Torrez’s predicament reveals the challenge facing Mexico as it attempts to replicate the kind of shale bonanza taking place in Texas. …

“Shale will not take off in Mexico like it did in Texas in the near future,” Dwight Dyer, a senior analyst at the consulting company Control Risks, said by telephone from Mexico City. “Unless the security situation along the northeastern border improves significantly, smaller companies will probably take their time before jumping in.” …

The crime wave has also been hitting the national oil company’s bottom line. More than $300 million in stolen natural gas condensate from the Burgos basin was smuggled across the U.S. border by drug cartels from 2006 to 2010, according to a lawsuit filed by Pemex in a Houston federal court in 2010. Fuel-theft losses rose to 10.3 billion pesos ($790 million) last year from 3.5 billion pesos in 2009.

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Tags: domestic energy production, energy, Oil and Gas Industry

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Iraq’sinsurgencycouldmeanasummerofpain

Iraq’s insurgency could mean a summer of pain at the pump

posted at 3:31 pm on June 12, 2014 by Erika Johnsen

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So it begins.

Sectarian violence in Iraq sent the price of oil skyrocketing on Thursday, propelling both Brent and West Texas Intermediate up more than two percent amid growing concerns about a threat to global supply.

After a delayed reaction to turmoil raging in the country, oil prices soared as open warfare between rebel forces—threatening a reconquest of the country barely a few years after U.S. forces departed—and the government spilled on to the world stage. Iraq is a member of OPEC, second only to Saudi Arabia as one of the world’s largest producers of crude.

With violence threatening Iraq’s civilian population and overwhelming the country’s security forces, a shadowy group known as the Islamic State in Iraq and Sham (ISIS) has managed to seize control of key cities including Mosul, the country’s second-largest, Ramadi, Falluja and Tikrit. Fears about global supply mounted, as reports surfaced that Russian tanks had moved into beleaguered Ukraine, sending crude on a tear and overwhelming the impact of lackluster U.S. economic data.

Iraq’s oil production is still going about its usual business as of right now, and doesn’t look like there’s any imminently huge threat of disruption. As one group of Macquarie analysts put it, however, “Although attention on Iraq has faded over the past two years, we have continued to believe that the political stability there was at best fragile. If the current situation overflows into oil-supply disruption, the total volume at risk could be material.” And as of yesterday, this was happening:

Sunni Islamist militants from the Islamic State in Iraq and the Levant (ISIS) have rapidly expanded their control of Iraq as a whole. The group is now said to be within range of overtaking Iraq’s biggest oil refinery in the city of Baiji.

The Baiji refinery can produce over 300,000 barrels of oil per day and supplies oil to the majority of Iraq. The refinery is also tasked with supplying power to Baghdad, Iraq’s capital city. Iraq is OPEC’s second biggest oil producer. …

Security sources told Reuters that the ISIS jihadists drove into Baiji, the home of the refinery, with a caravan of armed vehicles. The militants then proceeded to burn down the court house and police station, and freed masses of prisoners from jails.

It’s impossible to predict how any of this is going to play out, of course, but markets are feeling pretty edgy right about now — and as Keith Johnson at Foreign Policy posits, Americans might have largely forgotten about the Iraq war, but it’s very possible they’re about to be reminded at the gas pump:

Depending on Iraq’s ability to rally its own security forces and successfully fight the group, the uprising could also upend Baghdad’s plans to increase oil production in other parts of the country and assert control over exports in the semi-autonomous northern region of Kurdistan. All that becomes hugely important when global oil markets are looking at growth in Iraqi production as the great hope to keep the world fully supplied.

“Iraq needs to deliver; it’s as simple as that. This is not good, irrespective of whether there’s a short-term impact or not,” said Amrita Sen, an oil markets analyst at Energy Aspects Ltd, an energy consultancy in London.

“You need a lot of incremental supply increase from Iraq, which the current dynamics are saying is not going to happen,” Sen said.

However, Baghdad’s efforts to fight the militants could have knock-on effects on the huge oil fields in southern Iraq that account for the bulk of Iraqi output. Every time the Iraqi government moves troops from the south to fight militants in other parts of the country, oil companies’ operations are disrupted because of security concerns. In fact, Sen said, the increased cost of security is undermining the appeal of Iraq’s massive and easy-to-extract oil reserves.

One bright spot all of this is that the United States’ oil and gas production has lately exploded — no thanks to the Obama administration — helping to absorb some of the recent downswings in production from places like the also politically unstable Libya, Sudan, and Nigeria. Major disruptions or even just a lack of production growth from Iraq combined with the ongoing sanctions on Iran, however, could be a bridge too far to keep global gas prices below some very economically painful levels.

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Tags: domestic energy production, gas prices, Iran, Iraq, Middle East, oil, Oil and Gas Industry

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The United States produced enough energy to suppy 84 percent of its needs in 2013

TheUnitedStatesproducedenoughenergytosuppy

Mexico’soilindustryisfinally,mercifullyreadyto

Mexico’s oil industry is finally, mercifully ready to open for business

posted at 6:31 pm on June 8, 2014 by Erika Johnsen

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While the United States’ oil and gas industry has lately been going absolutely gangbusters, Mexico’s oil production has been declining over the past decade — and it isn’t very difficult to figure out why. The state-owned oil company Petroleos Mexicanos, a.k.a. Pemex, was founded in the 1930s and has precluded foreign as well as private investment into the development of Mexico’s considerable oil and gas reserves throughout most of its history. The prevailing populist/socialist-ish sentiment that tends to look on said foreign and private investment as little better than plunderage of The People’s natural resources has kept the industry from following in the United States’ footsteps, but as President Peña Nieto put it when signing the legislation removing these self-imposed economic shackles last December, “we’ve decided to overcome the myths and taboos to take a great leap into the future” — and that time is almost nigh. Via the Washington Post:

Pemex has always functioned as an arm of the state. It’s the biggest Mexican company and the country’s biggest taxpayer. In the final quarter of 2013, Pemex paid 50 percent of its revenue — $16 billion — in taxes to the federal government, which uses the state-owned company to fund a third of its budget. Pemex posted a loss of $5.8 billion for the quarter, bringing its total loss for 2013 to $13 billion. It lost $2.74 billion in the first quarter of 2014. …

Edgar Rangel of Mexico’s National Hydrocarbons Commission, which oversees and regulates oil exploration, predicts that the opening of the country’s energy industry will bring in up to $30 billion of foreign investment annually and create as many as 2 million jobs.

The law’s approval prompted Moody’s Investors Service in February to raise Mexico’s credit rating one level to A3 from Baa1, saying it will help add about one percentage point to the country’s annual gross domestic product growth by 2018. …

For foreign oil giants such as Chevron, Exxon Mobil and Royal Dutch Shell, it means gaining access to untapped oil reserves that Pemex says could total 113 billion barrels, including 26.6 billion in the deep waters of the Gulf of Mexico. The reserves are worth $11 trillion.

And the Energy Information Administration estimates that Mexico has at least the sixth-largest shale gas reserves in the world, which — with a little innovative technological/financial help — could help fuel a shale boom of their own.

Mexico’s Congress still needs to pass the secondary legislation that will officially open up the country’s industry, and Pemex and its powerful union are still acting a little cagey on just how much freedom they want these new investors and companies to have, but once everything gets sorted out, the industry should be ready for business sometime later this year — and this is exactly the kind of introduction to more economic and business freedom that Mexico sorely needs.

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Tags: economics, free trade, investment, jobs, Mexico, Oil and Gas Industry, Pena Nieto, wealth

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StateDeptcorrectsKeystoneXLreporttoaccount

State Dept corrects Keystone XL report to account for more railroad deaths, times four

posted at 6:01 pm on June 6, 2014 by Erika Johnsen

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I don’t know how much more evidence we could possibly need to confirm that terrestrial pipelines are more efficient, more safe, and more environmentally friendly than oil-and-gas transport by rail — but the Obama administration just provided some. In an update to the report on Keystone XL released in January that basically concluded the pipeline’s construction would have a neutral impact on carbon emissions, the State Department corrected some errors by quadrupling its estimation of the accidental human deaths that may occur if oil-by-rail shipment continues to proceed apace, via Reuters:

The State Department on Friday corrected several errors it made in a key study evaluating the impact of the proposed Keystone XL pipeline, including a understatement of how many people could be killed on railroad tracks if the project were rejected and oil traffic by rail increased. …

The January report determined that blocking the controversial pipeline could increase oil train traffic and lead to an additional 49 injuries and six deaths per year, mostly by using historical injury and fatality statistics for railways. …

But the report mistakenly used a forecast for three months of expected accidents rather than full-year figures, officials said. The correct estimate of deaths should be roughly four times as large – between 18 and 30 fatalities per year. …

Revising that footnote has no impact on the State Department’s estimation of expected greenhouse gas emissions tied to the pipeline, a spokesperson said.

For the umpteenth time: Canada is going to develop their oil sands with or without the approval of the Keystone XL pipeline — hence the State Department’s conclusion on the project’s emissions neutrality. There are plenty of other eager markets available besides ours to which Canada can sell their wares, and in the meantime, all the adamantly opposed eco-radicals have really achieved in thwarting the pipeline is an explosion in railroad shipments from Alberta, Canada to our refineries in the Gulf. Really well done, guys.

With that in mind, Josh Kraushaar at National Journal posed a rather interesting question today concerning energy issues in particular and the administration’s agenda in general going forward: Does Obama even care anymore?

The president reportedly has told his close allies that losing the Senate would be “unbearable,” but his administration is doing everything possible to make things difficult for his party’s most vulnerable senators. On energy issues alone, the administration’s decisions to impose new Environmental Protection Agency regulations on coal-fired plants and indefinitely delay a decision on the Keystone XL pipeline could help burnish his long-term environmental legacy, but at the expense of losing complete control of Congress.

Even as the White House and environmental allies are insisting the regulatory push is a political winner, Obama is getting pushback from his own party. In Kentucky, Alison Lundergan Grimes took a page out of Senate Minority Leader Mitch McConnell’s playbook, deeming the administration’s EPA regulations part of its “war on coal.” Other battleground-state Democrats have been more circumspect in their reaction, but few have embraced the new regulations with open arms. And every red-state Senate Democrat up in 2014, whose fates determine whether they hold the majority, criticized the administration for its latest delay in approving construction of Keystone XL. Sen. Mary Landrieu in Louisiana has even tailored her campaign messaging around opposition to Obama on energy issues.

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Tags: Barack Obama, energy, Keystone XL Pipeline, Oil and Gas Industry, Senate Democrats

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Bloomberg:ForgetSiliconValley;entrepreneurialmillenialsareheading

Bloomberg: Forget Silicon Valley; entrepreneurial millenials are heading to the Texas oil patch

posted at 1:21 pm on May 21, 2014 by Erika Johnsen

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California Gov. Jerry Brown practically laughed in Texas Gov. Rick Perry’s face when Perry brought to California his ongoing campaign to promote the Lone Star State’s business-friendly tax and regulatory charms to major companies, but Texas’s economic prowess combined with their eagerness to get on board with the unconventional drilling techniques that have spurred an oil-and-gas production boom on state and private lands in just the last few years is already taking its toll on the more chimerical California.

As Joel Kotkin at City Watch detailed back in March, a handful of big energy companies have been pulling up from California and planting roots in Texas recently as California’s regulations and permitting process become increasingly and deliberately onerous, and as Bloomberg reports today, it isn’t just well-established energy companies looking for better opportunities elsewhere. The young and the restlessly entrepreneurial are noticing that some of today’s best chances for technological innovation and wealth creation aren’t necessarily in Silicon Valley anymore:

Mark Hiduke just raised $100 million to build his three-week-old company. This 27-year-old isn’t a Silicon Valley technology entrepreneur. He’s a Texas oilman.

The oil and gas industry is suddenly brimming with upstart millennials like Hiduke after decades of failing to attract and retain new entrants. Now that a breakthrough in drilling technology has U.S. oil and gas production surging, an aging workforce is welcoming a new generation of wildcatters, landmen, engineers, investors, entrepreneurs and aspiring oil barons. …

Hiduke’s company, Dallas-based PetroCore LLC, received the $100 million commitment from a local private-equity firm in May. He and his three partners plan to buy underdeveloped land and drill shale wells, he said. They’ll draw on the expertise of their engineer, who, at 57, is old enough to be his father.

The shale boom has “created a lot of opportunity for young professionals to jump in and be given enormous responsibility,” Hiduke said by telephone May 6. “It’s pretty much tech and then energy.”

As oil and gas producers change their focus from grabbing land to drilling, young entrepreneurs are forming companies to trade everything from minerals to leases and wells to equities. They’re competing against, and sometimes collaborating with, industry veterans twice their age.

I don’t know how many more testaments we could possibly need to reaffirm the fact that the booming oil-and-gas industry is one of the few supports holding up an Obama economy that is otherwise being held together by spit, but this is definitely one of them.

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Tags: California, energy, entrepreneurship, jobs, millennials, Oil and Gas Industry, Texas, wealth

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TheWhiteHouseistakingan“activelook”

The White House is taking an “active look” at the crude oil export ban, whatever that means

posted at 6:41 pm on May 9, 2014 by Erika Johnsen

The United States’ crude oil production is on track to hit an all-time record high within just a few short years, and most fortunately for America, that fact doesn’t seem to be entirely lost on an otherwise fossil-fuel begrudging Obama administration. I shudder to think what the monthly jobs reports would look like if the White House wasn’t riding on the coattails of our incidental production growth, although the president is still looking for potential ways to exert more authority over hydraulic fracturing (the technology that very suddenly and fortuitously for him spurred the shale boom on state and private lands) and his administration has been deliberately sluggish with issuing drilling permits for offshore and federal lands — but the way the regulatory situation stands right now, opening up more areas for drilling actually might not be that helpful anyway.

U.S. producers have been mostly prohibited from exporting crude oil (not to be confused with refined gasoline) since the drama with OPEC back in 1973, and because of our specific refining capacity, we are already rapidly approaching the point at which the U.S. market won’t be able to absorb much more production growth. Instead of sittin’ pretty with a glut on our hands, allowing crude-oil exports would enable Americans to take full advantage of our abundant energy resources and to create jobs and grow wealth uninhibited by utterly arbitrary free-trade restrictions; Obama’s Energy Secretary Ernest Moniz has mentioned before that the administration might be willing to get on board with some revisions to the ban, and even one of his ultra-progressive senior advisers echoed that sentiment this week, via the Financial Times:

The White House is examining the longstanding US ban on exports of crude oil, a senior official has said, offering the Obama administration’s most detailed statement yet of its thoughts on the issue.

John Podesta, who is one of President Barack Obama’s most senior advisers, said the administration was “taking an active look” at the strains caused by the US shale oil boom. Any change would have implications for oil traders, refiners and consumers worldwide. …

Asked on Thursday about the administration’s thinking on crude oil exports, Mr Podesta said: “We’re taking an active look at what the production looks like, particularly in Eagle Ford, in Texas, and whether the current refinery capacity in the US can absorb the capacity increase to refine the product that’s being produced.”

“We’re taking a look at that and deciding whether there’s the potential for effectively and economically utilising that resource through a variety of different mechanisms,” he told Columbia University’s Center on Global Energy Policy conference in New York.

The politics of lifting the ban — both for the executive and the legislative branches — are (needlessly) tough, especially since critics on both side will raise the specter of potentially higher gasoline prices, but I’ll let Scott Lincicome at the Cato Institute take care of that one:

Because U.S. and Canadian refinery capacity is finite, America’s newfound energy abundance has led to a glut of domestic oil and caused domestic crude oil prices (West Texas Intermediate and Louisiana Light Sweet) to drop well below their global (Brent) counterpart.  One might think that this price divergence would mean lower U.S. gas prices, but such thinking fails to understand that U.S. gasoline exports may be freely exported, and that gasoline prices are set on global markets based on Brent crude prices.  As a result, several recent analyses – including ones by Citigroup [$], Resources for the Future and the American Petroleum Institute – have found that liberalization of U.S. crude oil exports would lower, not raise, gas prices by as much as 7 cents per gallon.

Read: The price we pay for actual gasoline at the pump is largely determined globally, while refiners enjoy the domestic benefits of a closed crude market — and the sooner we can rid ourselves of the self-inflicted opportunity costs of the export ban, the better off we’ll be.

Tags: Barack Obama, economy, energy, exports, jobs, Oil and Gas Industry, White House

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Europe:Youknow,maybewewerealittle

Europe: You know, maybe we were a little hasty about pooh-poohing Canada’s oil sands…

posted at 1:21 pm on May 9, 2014 by Erika Johnsen

The Keystone XL pipeline proposal is just as politically charged as ever, but practically speaking, the project is getting less and less relevant by the day. Canada would still very much like to get the pipeline started if they can, since terrestrial pipelines are the safest, cleanest, most cost-effective way to get the job of shipping done, but as everyone who doesn’t have their head determinedly stuck in the [oil] sand has already acknowledged, that oil is going to find its way to market one way or another — and if it’s not via pipeline or railroad to our refineries in the Gulf, then Canada will build out their own pipelines and railroads to the coasts for shipment by sea.

Canada has generally been thinking about Asia as the prime foreign market to buy up their oil sands, but the last few months of Russian aggression on the continent have started to affect Europeans’ previously high-minded feelings on the matter. Their overly expensive and failed green schemes combined with decreasing stability from their traditional energy partner has them feeling a bit more humble about the oil sands whose advances they once rejected, via the Financial Post:

As Europe reels from Moscow’s belligerence and utter dependence on its oil and gas supplies, the Harper government is positioning itself as a reliable partner ready to offer energy security to the continent.

Eager to diversify their energy resources, European countries are also warming up to Ottawa and softening their tough stance on the oil sands as they look to reduce their dependence on Russia’s oil and gas supplies.

The European Union has previously deemed the oil sands as one of the dirtiest forms of oil and its proposed Fuel Quality Fuel Directive would effectively make Canadian crude unwelcome in European refineries. But Russia’s latest aggressive moves in Ukraine have compelled the continent to take another look at Alberta crude.

“I feel better about it now than perhaps we have at any point in time,” Mr. Rickford said. “It was a very positive signal from the G7 energy ministers I met with. My discussion with European Union Council Representatives again [gave] a strong signal that this was moving in the right direction for Canada.”

Canada’s plans to build liquefied natural gas projects and crude oil pipelines from west to east was received with “enthusiasm” by his G7 counterparts, he added.

Whatever they ultimately decide to do, it would take a few years for both Canada and Europe to build the requisite infrastructure for shipping and receiving any petroleum products — but it sounds like Europe’s baronial green ideals are finding reality a little more difficult to contend with than they’d like.

Tags: Canada, energy, Europe, Keystone XL Pipeline, Oil and Gas Industry, Russia, Vladimir Putin

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Obamaadministrationfinallyallowingforalittleexploratory

Obama administration finally allowing for a little exploratory fracking on public lands in Nevada

posted at 1:21 pm on April 29, 2014 by Erika Johnsen

The Obama administration is quite partial to taking credit for the widespread economic benefits of the shale boom — brought on by the freshly deployed technology of hydraulic fracturing and horizontal drilling — despite the fact that the lion’s share of the production increase has happened on state and private lands while the federal government has deliberately slow-walked new drilling leases on the third of the surface area of the United States it controls (and let’s not even get started on the offshore drilling opportunities it has actively thwarted). This rule has held particularly true in Nevada, where the feds own over 80 percent of the land and have been fairly passive-aggressive in only processing a few mining and drilling permits here and there — which is a damn shame, because eastern Nevada sits atop the Chainman shale play and could potentially benefit enormously from the widespread introduction of hydraulic fracturing.

In 2005, the U.S. Geological Survey estimated that the Chainman formation could have as much as 1.598 billion barrels of oil and 1.836 trillion cubic feet of natural gas sittin’ pretty underground, and it looks like energy companies are finally getting around to exploring the possibility further — mostly on private land so far, but with at least the tiniest bit of cooperation from the federal government, via the AP:

In a state world-famous as a gold producer, Houstonbased Noble Energy Inc. is looking deep underground to make big bucks from previously untappable oil deposits, spending up to $130 million to identify the possible rewards.

The venture is still in its early stages, with company representatives saying they have yet to assess the true potential, but word is out it could be significant. …

“What’s unique about Nevada is it really is a frontier area,” said Kevin Vorhaben, Rockies business unit manager for Noble Energy. “It’s a chance to get in and really do the right thing for oil and gas development. We’re excited to be in Nevada.” …

Noble’s activities target a checkerboard of private and public land in northeastern Nevada generally located between Elko and Wells north and south of Interstate 80. Sixty-seven percent of the 580-plus square-mile area is privately owned, with the remaining public land managed by the U.S. Bureau of Land Management.

The BLM is currently processing environmental assessments for Noble to drill up to 20 wells at Mary’s River, 4 miles northwest of Wells and up to another 20 just west of Jiggs. Fracking would be used to complete all wells drilled.

The two exploratory wells already drilled, with fracking already conducted at one, are located on private land about 17 miles east of Elko.

It’s too soon to know if Nevada will be the next North Dakota or Texas when it comes to shale development and economically viable extraction, but at least the federal government isn’t totally trying to stand in the way of progress here. That’s something, I suppose.

Tags: Department of the Interior, drilling, fracking, Nevada, Obama administration, Oil and Gas Industry, public

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Source from: hotair

Report: Energy production on federal lands is still declining

Report:Energyproductiononfederallandsisstill

Californiaenergycompaniesaregettingtheheckoutta’

California energy companies are getting the heck outta’ dodge and moving to Texas

posted at 7:21 pm on March 7, 2014 by Erika Johnsen

Texas Gov. Rick Perry‘s cross-country campaign to promote his state’s favorable tax and regulatory conditions and attract businesses and jobs throughout his tenure hasn’t been based on him just talking the talk; Texas can absolutely walk the economic walk, too, as WaPo reports:

Texas experienced stronger job growth than the rest of the nation from 2000 to 2013, according to the Federal Reserve Bank of Dallas. Not only that, a pair of researchers note in a Thursday research publication, but Texas leads the nation in creation of jobs at all pay levels, too.

“Texas has also created more ‘good’ than ‘bad’ jobs,” they write. “Jobs in the top half of the wage distribution experienced disproportionate growth. The two upper wage quartiles were responsible for 55 percent of net new jobs. A similar pie chart cannot be made for the rest of the U.S., which lost jobs in the lower-middle quartile over the period.”

As we noted above, Texas does have a larger share of its population earning the federal minimum wage or less  than any state but Idaho, but it helps that things are cheap.

Bam. And what, do we suppose, might be one of the hugely driving factors behind this robuster-than-everyone-else level of equitable job creation? It couldn’t possibly be that Texas has been conscientiously developing their energy reserves — like, for example, the Eagle Ford Shale, could it? While other states — like, say, California — have been quixotically ignoring their own resources in favor of their politically preferred pet projects? Joel Kotkin has yet another great piece out today detailing that very conspicuous phenomenon:

The recent decision by Occidental Petroleum to move its headquarters to Houston from Los Angeles, where it was founded over a half-century ago, confirms the futility and delusion embodied in California’s ultragreen energy policies. By embracing solar and wind as preferred sources of generating power, the state promotes an ever-widening gap between its declining middle- and working-class populations and a smaller, self-satisfied group of environmental campaigners and their corporate backers. …

In all but forcing out fossil-fuel firms, California is shedding one of its historic core industries. Not long ago, California was home to a host of top 10 energy firms – ARCO, Getty Oil, Union Oil, Oxy and Chevron; in 1970, oil firms constituted the five largest industrial companies in the state. Now, only Chevron, which has been reducing its headcount in Northern California and is clearly shifting its emphasis to Texas, will remain.

These are losses that California can not easily absorb. Despite all the hype about the ill-defined “green jobs” sector, the real growth engine remains fossil fuels, which have added a half-million jobs in the past five years. If you don’t believe it, just take a trip to Houston, where Occidental is moving.

And the beat goes on.

Tags: California, economy, energy, jobs, Oil and Gas Industry, Rick Perry, Texas

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Source from: hotair