blog2007

Canada, U.S., Mexico sign trilateral energy accord

CBC News
Monday, July 23, 2007

Canada, the United States and Mexico signed what officials are calling a historic energy accord on Monday, sharing information about the science and technology of energy.

Natural Resources Minister Gary Lunn, U.S. Secretary of Energy Samuel Bodman and Secretary of Energy for Mexico Georgina Kessel signed the trilateral accord in Victoria.

Lunn said the accord — a framework designed to stimulate innovation and to share and help build capacity in all three countries — will encourage the countries to develop clean energy.

'We need to break through to an era of low, even zero, emission fossil fuel production and use.'— Natural Resources Minister Gary Lunn

One of the first goals is to draft common standards for energy-efficient appliances, such as refrigerators and air conditioners, he said.

"We need to break through to an era of low, even zero, emission fossil fuel production and use," Lunn said.
Continue Article

Bodman said the U.S. government recognizes the challenge posed by global warming, but cautions: "Whatever happens, you will damage economic growth because it will cost something to remove carbon dioxide, so the question is how do you balance that."

The three energy ministers made it clear they plan to continue developing oil and natural gas and to keep them flowing in a single North American market.

But Lunn said they took no position on developing petroleum off the B.C. coast, and didn't endorse the idea of banning tankers from northern waters — a proposal the federal New Democrats and environmentalists are demanding.

Lunn said a voluntary agreement remains in place to prevent tanker traffic from Alaska from using the northern B.C. coastal waters.

Investigation, Oversight of Refinery Operations and Profits Is Urgent, Says Group

PRNewswire-USNewswire
July 23, 2007

SANTA MONICA -- Oil refineries' deliberate failure to boost gasoline inventories, in combination with unusual maintenance and accident shutdowns, drove this spring's record pump price spike, concludes a study conducted for OilWatchdog.org and The Foundation for Taxpayer and Consumer Rights. The nonprofit, nonpartisan FTCR called for investigation and oversight of refinery operations, costs and profits to prevent continuation of a two-year pattern of price spikes. (See the full study at http://www.consumerwatchdog.org/resources/KatrinaLessons2007.pdf).

"This study tells us that the entire refining industry learned a vile lesson from Hurricane Katrina: Refiners can neglect infrastructure, make too little gasoline, suppress inventories and still haul in record profits," said Judy Dugan, research director of OilWatchdog. "It's the opposite of what U.S. drivers and the economy need, but it serves oil companies' bottom line."

The study, "The Katrina Syndrome: Low Supplies=High Prices," was conducted by independent oil industry analyst Tim Hamilton for the nonprofit, nonpartisan FTCR and its OilWatchdog.org project, which reports on and critiques oil industry political influence and misdeeds. FTCR had asked Hamilton to explain how gasoline prices spiked so high this year when crude oil prices were lower than last year even as pump prices broke records in May and June.

"This study shows that the principles of free enterprise no longer apply to motor fuel refiners," said Hamilton. "Instead of being financially penalized for failing to meet the needs of their customers, the oil companies are rewarded by price spikes at the pump. This creates a financial incentive to short the supply of gasoline and diesel each spring."

The study was released as a week of oil company profit reports began. It found:

Gasoline prices spiked upward in the spring, disconnected from crude oil

"If gas prices had followed the crude oil trend into the spring, drivers across the country might have seen pump prices increase from $2.28/gallon in February to $2.44/gallon in May [2007]. Instead, national pump prices skyrocketed to $3.15 in May, a staggering 87 cents per gallon, or 38% increase, during a period when crude prices rose only 7%."

Chart 1 http://www.consumerwatchdog.org/images/1-GasAboveCrude.gif

Low inventories pushed prices

"Since regulatory decontrol of the refining industry in the 1980s, the industry has basically set fuel production rates and inventory levels at its discretion. ... Historically, the industry refined more gasoline and diesel during the winter than was sold at the pump ... in the spring and summer, the predictable increase in demand was served without a price spike. ... Inventory was also adequate to largely compensate for unexpected disruptions, mechanical or weather-related, at refineries.

"In April of 2007, inventories of gasoline controlled by the industry were dramatically lower than in either of the two previous years. The drop from 2005 to 2007 was 9.6% [nationally]. With the supply of gasoline provided by the industry dropping below the level needed to fulfill demand, prices spiked to another record high."

Chart 2 http://www.consumerwatchdog.org/images/2-GasInvenDropSpring.gif

In California, gasoline inventory dropped 13.5% from April 2005 to April 2007, pushing an even more severe price spike


Chart 3, http://www.consumerwatchdog.org/images/3-WestGasDropSpring.gif

The industry utilizes refinery production to control inventory levels

"In recent years, unplanned refinery outages that would have gone unnoticed in earlier years are blamed as the causes of gasoline price spikes. However, the underlying cause is the companies' decision not to maintain supplies sufficient to compensate for refinery downtime. ...

"The companies owning refineries have significant discretionary control over how much gasoline is refined each year. In the long term, companies decide whether to build or upgrade production capacity. In the short term, they decide how and when to conduct planned maintenance or "turnarounds" that limit production. Finally, during periods of normal operation, companies use their discretion to limit or increase the flow of crude into the refinery and the volume of gasoline and other refined products coming out to storage terminals. Pipeline breaks, fires and nature-related problems also occur, and their effect is related to the age and maintenance of refineries, both of which are under the companies' control."

Chart 4, http://www.consumerwatchdog.org/images/4-ProdSlowCutInven.gif

The study also found that diesel fuel prices, unlike gasoline, did not spike this spring in large part because inventories entering the period of the price spike were larger than in previous years, not smaller. They are proof of the dramatic effects of inventory on price.

Chart 5, http://www.consumerwatchdog.org/images/5-DieselInvenOppoGas.gif

Chart 6, http://www.consumerwatchdog.org/images/6-DifPricePatGasDiesel.gif

Chart 7 http://www.consumerwatchdog.org/images/7-DiesFlatGastSpike07.gif

"This spring's gasoline price spike was a foregone conclusion when refiners restricted gasoline inventories instead of boosting them over the winter and early spring, then planned long maintenance shutdowns," said Dugan. "Even this spring's unplanned refinery outages were not just acts of fate, since they are directly related to lack of modernization and quality of maintenance on aging equipment."

FTCR concludes that only state or federal regulation is likely to change the price-spike pattern.

"Without new state or federal investigation and oversight of oil industry refining practices and the regulation of gasoline supplies, consumers can expect dramatic price spikes to be an annual event, with higher prices lingering through summer," said Dugan.

SOURCE Foundation for Taxpayer and Consumer Rights

Lots of energy, shortage of policy

National Petroleum Council
An Oil and Natural Gas Advisory Committee to the US Secretary of Energy

Facing the Hard Truths about Energy
A comprehensive view to 2030 of global oil and natural gas

Executive Summary

Terence Corcoran
Financial Post
July 21, 2007

The U.S. National Petroleum Council's new report on global energy markets, believed to be one of the most extensive studies of its kind, received mixed reviews this week from greens and others whose policy ideas depend on an ever-present looming catastrophe. Especially put out by the 470-page report, titled Facing the Hard Truths About Energy, were the peak-oil theorists, who believe disaster is imminent as the world supply of conventional oil is set to peak, triggering a catastrophic decline.

There isn't much disasterism in Facing the Hard Truths. It certainly aims to send an alert to the effect that "total global demand for energy is projected to grow from today's huge base by 50% to 60% to 2030 -- the result of rising incomes around the world and population growth." Looking forward, it says that even 25 years from now oil, coal and gas will still account for 80% of world energy consumption

But such an increase in demand does not portend doom; it simply means making sure policymakers in the United States and around the world don't turn this increase in energy demand into a crisis, a crash or worse. "The world is not running out of energy resources," says the report.

One reason the report received lukewarm receptions is that it was produced by a committee headed by Lee Raymond, the former chairman and CEO of Evvil-Mobil, the world's largest oil company and a pariah among climate activists. They've been trying to get Mr. Raymond removed from the study since he was appointed by U.S. Energy Secretary Samuel Bodman. "Mr. Raymond is unquestionably the worst choice for leading a study on resolving America's energy crisis," said one activist group.

Au contraire. Thanks to Hard Truths, Mr. Bodman and U.S. politicians -- and the rest of the world -- have a comprehensive energy report at hand that doesn't slavishly track the Gorey hysterics and peak-oil fetishisms that dominate the media and much of the political landscape.

Just for starters, the report's forecast of an increase of up to 60% in energy demand by 2030 obviously doesn't give any serious credence to United Nations Kyoto-style calls for a 50% reduction in carbon emissions. What the report does acknowledge is that increasing CO2 emissions controls "could restrict fossil fuel use, which currently provides more than 80% of the world's energy." In other words, if politicians are going to try to cut emissions, they should do so in ways that don't destroy the energy supply system. The report pointedly sidesteps climate change altogether. "The NPC did not examine the science of climate change."

The main theme of Hard Truths, in fact, is that policymakers pose the greatest risk to energy supplies. There is plenty of fossil-fuel energy in the world, plus new renewable sources. The problem isn't supply, it's political. "Over the next 25 years, risks above ground -- geopolitical, technical, and infrastructure -- are more likely to affect oil and natural gas production rates than are limitations on the below-ground endowment."

If we have a national or global energy crisis, it will have been created by policy. The report estimates 40 billion barrels of oil and 250 trillion cubic feet of gas of reserves exist in areas of the United States currently off limits to exploration and development.

The report's optimistic outlook, especially regarding the United States, assumes that political obstacles to essential infrastructure will eventually give way to sensible policy.

Globally, the energy markets are increasingly at the mercy of national governments that "are likely to be influenced by geopolitical considerations and less by the free play of open markets and traditional commercial interactions among international energy companies." The objective, says the report, is to shape international energy policy to keep markets open. Getting all major energy-dependent nations -- the United States, China, India, Canada, Mexico, Russia, Saudi Arabia -- to adopt co-operative, market-expanding policies is essential to avoid risks that could severely curtail energy supply by 2030 and turn a world of plenty into a world of shortages.

The report goes out of its way to highlight a key policy issue for the United States. It needs to distinguish between calls for energy independence and energy security. As a report press release puts it, "the concept of energy independence is not realistic in the foreseeable future, whereas U.S. energy security can be enhanced by moderating demand, expanding and diversifying domestic energy supplies, and strengthening global energy trade and investment. There can be no U.S. energy security without global energy security."

When it comes to prescriptions, Hard Truths often promotes its own set of bad ideas. "Free and open markets should be relied upon wherever possible to produce efficient solutions," it says before trotting out a batch of not-so-free-market subsidies and regulations. Aid for shale oil, help for clean-coal technology, programs to "moderate demand," R&D funding, and support for carbon sequestration are among the proposals.

These are really sops to pacify political interests. While they pose some risks, governments could do a lot worse.

The value of the U.S. National Petroleum Council Hard Truths report on global energy is that it might help save the United States, and Canada and the rest of the world, from hard times.

SaskPower eyes clean-coal facility

$2-billion plant would be first in North America to utilize carbon-capture and storage technology

SHAWN MCCARTHY
Globe and Mail
July 16, 2007

Saskatchewan's provincially owned utility is set to deliver a reality check for the notion that the world can increasingly rely on coal-fired electricity, while aggressively battling climate change.

At a board meeting later this month, SaskPower directors will decide whether to proceed with a $2-billion clean-coal plant, one of the world's first commercial-scale, coal-fired power plants that would produce virtually no greenhouse gas emissions.

Instead, the carbon dioxide emissions would be captured and piped to the nearby oil fields in southeastern Saskatchewan, where companies would inject the gas to enhance oil recovery and, in the process, leave it permanently stored underground.

The proposed project would be the first coal-fired power plant in North America to utilize carbon-capture and storage technology. But it is just one of several competing projects the utility is considering as it looks to add 300 megawatts to its power supply by 2012.

"It certainly is a real test" for clean-coal technology, Bob Page, a University of Calgary professor and former vice-president of Calgary-based TransAlta Corp., said in an interview.

"It's about the credibility of the technology - you need to test it out in Canadian weather conditions to make sure it can operate efficiently. And secondly, we're all going to be very interested in terms of what the costs are for capture and storage. These are all things that are germane to the whole field."

Coal is the fuel of choice for many utilities around the world - especially in the United States, China and India.

It is cheap and plentiful, but it is also the worst offender among fossil fuels in terms of release of carbon dioxide, a key greenhouse gas.

The Ontario Liberal government, for example, has promised to phase out the use of coal in its electricity mix as part of its effort to reduce such emissions. Its Nanticoke coal-fired plant is the largest single emitter of greenhouse gases in the country.

But Saskatchewan - along with Alberta and Nova Scotia - relies heavily on coal for electricity and all three provinces are involved in research to develop commercially viable, clean-coal technology. Similar developments are occurring in the United States and Europe, though to date no utility has proceeded with a commercial plant that includes capture and storage of carbon.

But the SaskPower board won't support the current project if it is too costly. Among other alternatives, the board will consider building a high-efficiency coal-fired plant, which would reduce CO{-2} emissions by roughly 25 per cent compared to the current technology. It is also looking at natural gas-fired projects that could be combined with wind or biomass generators, and is considering imports from hydroelectric sources in Manitoba.

SaskPower officials would not comment on the impending decision. But industry officials said the Saskatchewan project could mark a watershed in the effort to commercialize carbon-capture and storage technology and persuade a skeptical public that coal has a robust future in a carbon-constrained world.

On the face of it, SaskPower could not be better positioned to take a leadership role on the technology:

The province has coal deposits that should last some 300 years;

It has oil fields where CO{-2} injection has been used to improve oil recovery, providing a market for emissions from the proposed coal plant and an additional revenue stream from the sale of the carbon dioxide;

It is a Crown corporation, with a far greater ability to flow through additional costs to ratepayers than the privately owned utilities in neighbouring Alberta, which are also examining the feasibility of clean coal.

Still, the provincial utility has a responsibility to deliver the lowest-cost electricity to its customers, and observers say it wants to ensure it does not get saddled with a white elephant that would unnecessarily drive up power costs.

"The hurdle they've got, of course, is cost," said Malcolm Wilson, director of the energy and environment program at the University of Regina.

SaskPower has indicated that it could get the same output of electricity from a high-efficiency coal plant for half the capital cost, not including revenues from the oil companies. It must decide whether the potential revenue stream and the possible cost of reducing emissions in the future justify the additional cost now.

Mr. Wilson said it is not clear that the oil fields of southeastern Saskatchewan can handle the 8,000 tonnes per day of CO{-2} that a coal-fired power plant would produce.

Even with enhanced recovery methods, those fields are expected to decline rapidly in a few years, and the region's major operator, Calgary-based EnCana Corp., is already purchasing a supply of CO{-2} from a heavily subsidized coal gasification plant in North Dakota.

SaskPower's plan to clean up coal

Clean-coal technology is expected to virtually eliminate emissions of carbon dioxide, a major cause of climate change, while removing pollutants such as sulphur dioxide and nitrous oxide that cause smog and acid rain.

Coal's dark side

Coal-fired power plants currently use chemical scrubbers to remove sulphur dioxide, nitrous oxide and particulate matter from flue gas - the remaining emissions are mostly harmless nitrogen but also contain up to 15 per cent carbon dioxide. There is no economical way to separate the nitrogen and carbon dioxide.

How it's cleaned up

SaskPower would use an "oxyfuel" technology, in which the coal is burned in oxygen, rather than air, which is 79 per cent nitrogen. The resulting exhaust is more than 80 per cent carbon dioxide, plus water vapour and small amounts of other components. Another clean-coal technology, known as integrated Gasification Combined Cycle process, pre-treats the coal and transforms it into synthetic gas before burning it to make electricity.

Utilizing CO2

SaskPower would capture the carbon dioxide before it is released into the atmosphere, then compress it and pipe it to oil industry customers. The plant would be located in southern saskatchewan, near mature oil fields where companies can inject CO2 underground to enhance oil recovery. Recent studies of EnCana Corp.'s CO2 injection project near Weyburn suggest the greenhouse gas will remain trapped underground for thousands of years.

PetroChina walks away from Gateway

COMMENT: This is egg in the face for Canada's trade diplomats and the government of Stephen Harper. But it's probably okay with Enbridge, which announced it was backing away from the Gateway Pipeline project (oil sands oil to Kitimat and then to Asia) when it became painfully obvious that the competition was getting ahead of Enbridge by advancing new pipelines to move oil sands product into the continental US. That, and Enbridge wasn't able to cut a deal with PetroChina. So, cut the losses.

Meanwhile, Enbridge has filed an application with the NEB for its Clipper pipeline to Superior Wisconsin, and is moving ahead with connected expansions in the US, including and extension to the US Gulf Coast, in partnership with ExxonMobil.

Meanwhile, the leader of the pack to the US midwest is Trans Canada Pipelines Keystone project. And TCPL is sounding the market with its own Gulf Coast entry.

And growing capacity on the west side of the continent is Kinder Morgan's Trans Mountain Pipeline which has planned a set of increments to BC's urban lower mainland, refineries in northwest Washington State, and tanker delivery to California or other Pacific ports.

Gateway could have been Enbridge's Edsel. Many of BC's First Nations and environmentalists and opponents of oil tankers in Hecate Strait and Dixon Entrance, are taking some comfort from this news from China, delivered in Calgary.

NORVAL SCOTT
Globe and Mail
July 12, 2007

CALGARY - - PetroChina [PTR-N], one of China's national oil firms, has withdrawn its support for Enbridge Inc.'s Gateway pipeline, citing a lack of progress in the $4-billion project that it says is the result of a lack of support from both Canadian companies and the federal government.

Speaking on the sidelines of a TD Securities conference in Calgary, Yiwu Song, vice-president at China National Petroleum Corp., PetroChina's parent company, said the company is fed up with waiting for support for the project from the Canadian side, and consequently is walking away.

"The environment is not comfortable. We tried to come here and we can't," said Mr. Song. "We sincerely wanted to do something and open up a new market for Canadian crude . but Canada doesn't want to open up its own markets to us. So we cannot co-operate, and I really don't know how to help."

PetroChina had agreed a memorandum of understanding with Calgary-based pipeline firm Enbridge to take half of the crude from the 400,000 barrels a day Gateway pipeline, which would take oil from Alberta's oil sands to the Canadian West Coast. From there, the crude would be exported to markets currently out of reach for Canadian producers, such as California and Asia. PetroChina

The pipeline was originally intended to come on stream in 2009, with the prospect of opening up new markets for Canadian crude initially exciting producers. However, support from Canadian shippers began to dwindle as domestic North American prices for crude rose as a result of pipeline reversals that opened up a larger market in the U.S., and the pipeline was delayed until 2012-14. Consequently, Mr. Song said PetroChina refused to make firmer commitments to the project when recently asked to by Enbridge, and the company's involvement is therefore over for now.

Mr. Song criticized the lack of commitment from Canadian producers to doing business with China, saying they weren't willing to open up their domestic market to Chinese firms, and that they weren't used to doing business with China, believing the country was "a hundred years behind."

He also singled out the Conservative federal government as being less than supportive of Gateway, saying, "In my country, for a project this big, the government has to support it." He added that the First Nations and regulatory issues that Gateway would have had to overcome to be brought on stream were a factor in the company's decision.

Upon being asked whether the previous government of Paul Martin was more supportive, Mr. Song replied, "That's for sure. They were more positive and understood our business."

Mr. Song added that while PetroChina has no interest in pursuing its interest in Gateway for now, the company did "still carry some hope that this might happen [in the future]."

He also said that he had no complaints about working with Enbridge, noting that Enbridge chief executive officer Pat Daniel, "Tried very hard to get us set up with Canadian producers, but it didn't work. This was an opportunity for Enbridge and us to do business, but we couldn't do anything."

---

PetroChina dropping $3B pipeline, Enbridge still online

The Canadian Press
Friday, July 13, 2007

Enbridge Inc. was taken by surprise Thursday by comments PetroChina International, its major partner in an ambitious Alberta to British Columbia pipeline, was pulling out of the $3-billion project.

At an oilsands conference in Calgary, Yiwu Song, vice-president of China National Petroleum Corp., PetroChina's parent company, told media the company was tired of the lack of government and producer support for their business, and was dropping the project.

"We have not discussed CNPC's comments with them," said spokesman Glenn Herchak. "so it would not be appropriate to comment."

The withdrawal of China, which had tentatively committed to 50 per cent of the pipeline's capacity, could spell the end of the already endangered project.

The proposed Gateway pipeline was designed to ship about 400,000 barrels per day of crude from Alberta's oil sands to Asian markets and California via a new marine terminal in Kitimat, B.C.

Enbridge announced last November it was slowing the pace of the project to focus on its more advanced Alberta Clipper pipeline project to markets in eastern Canada and the U.S. Midwest.

The Alberta Clipper would eventually reach the Gulf Coast and the large number of refineries in the region, a crucial component for Canadian producers to access oil-hungry U.S. markets.

According to Enbridge, details on the memorandum of understanding signed with PetroChina on Gateway were confidential. But reports indicate the state-run corporation had committed to half the crude throughput on the line.

Herchak said other potential customers still are interested in Gateway, and the company is keeping to a 2012/2014 start-up date.

"While China could be a market for Gateway production, Asia Pacific and California are also potential markets," he said.

Enbridge currently is in discussion with oilsands producers, refiners in California and offshore, as well as potential customers in Japan and Korea, Herchak said.

Costs Surge for Building Power Plants

By MATTHEW L. WALD
NY Times Online
July 10, 2007

General Electric called in reporters yesterday for a briefing on a nuclear plant it is trying to sell in partnership with Hitachi, a plant it said can be built faster than before, operated reliably and have a vanishingly small chance of an accident.

But what will it cost? After some hemming and hawing, company executives gave figures by the standard industry metric, dollars per kilowatt of capacity, but in a huge range: $2,000 to $3,000.

"There's massive inflation in copper and nickel and stainless steel and concrete," said John Krenecki, president and chief executive of GE Energy. The uncertainty is not just in nuclear plants, he said; coal plant prices are now similarly unstable.

As talk of building new power plants rises sharply, so does the cost. A new fleet of coal-fired power plants and a revival of nuclear construction after three decades are both looking tougher lately.

For example, in late 2004, Duke Energy, one of the country's largest utilities and most experienced builders, started planning a pair of coal-fired power plants to replace several built around the middle of the last century, at Cliffside, in western North Carolina. In May 2005, the company told regulators it wanted to spend $2 billion to build twin 800-megawatt units. But 18 months later, in November 2006, Duke said it would cost $3 billion. Then the state utility commission said to build only one of the plants, and in May of this year Duke said that would cost $1.83 billion, an increase of more than 80 percent from the original estimate.

Duke's experience may be extreme but it is hardly isolated.

"There's real sticker shock out there," Randy H. Zwirn, president of the Siemens Power Generation Group, said in an interview. He estimated that in the last 18 months, the price of a coal-fired power plant has risen 25 percent to 30 percent.

Part of the problem is huge price increases for the raw materials that plants are made from, including copper and nickel, which is what makes steel stainless. But the cost of finishing those commodities into components is also rising.

"There's a lack of production and manufacturing facilities in this country, and that may be partly to blame," said Jason Makansi, a consultant with Pearl Street, a consulting firm in St. Louis that specializes in electric utilities. But, he said, "the bigger culprit is the incredible demand in China and the rest of Asia."

"Basically everything is being sent over that way."

A result of demand in China and India, he said, is that "Duke and others want to build a new power plant based on inexpensive coal, but the capital cost to build that plant is doubling before they even put a shovel in the ground."

And other kinds of projects that use similar materials, everything from oil refineries to natural gas terminals, are competing for the same materials and labor, experts said. "So many industries are at cyclical peaks at the same time," Mr. Krenecki of G.E. said. "We can't forecast how long that will continue."

Mr. Makansi and others say a result is that consumers, already paying more for electricity because the price of coal and especially natural gas is up, will pay even more for new generating stations.

Duke was not surprised that prices were up, but realized when it actually took in bids from suppliers that the situation was worse than expected. Analysts say that the companies that make major plant components will gear up to meet new demand and eventually price increases will moderate. But James L. Turner, president and chief operating officer of Duke's United States electric and gas system, said the company could not wait for prices to reverse.

"Given customer needs and demand growth on our system, we don't have the luxury of waiting to see if it all settles down in a decade," he said, although the company says it would like to undertake more vigorous steps to cut demand through higher energy efficiency.

Duke was reluctant to discuss exactly what it was paying for major components. But Siemens, a supplier, gave some examples for a typical combined-cycle natural gas power plant, one that burns the fuel in a gas turbine to drive one generator, then makes steam from the exhaust to drive a second generator. The high-pressure piping for steam, used on a 293-megawatt plant, is up about 60 percent in the last two years, to about $1.12 million, according to the company. The equipment that uses exhaust heat to make steam, used at a 590-megawatt plant, is up about 40 percent in the last two years, $15.1 million in April of this year vs. $10.7 million in May 2005, according to Siemens.

Simply moving a 435,000-pound turbine for a 198-megawatt plant from factory to the plant site now runs about $100,000, according to Siemens, up from about $50,000 two years ago.

Nuclear plants still on the drawing board are also affected.

"For nuclear and for coal, we pretty much figure it's going to be about the same effect," said Revis James, an economist at the Electric Power Research Institute, a nonprofit consortium in Palo Alto, Calif. No matter what the technology, he said, "there's been a huge amount of change in the baseline estimates people are using."

Renewable energy is not immune. "Costs have increased for wind as they have for other technologies," said Christine Real de Azua, a spokeswoman for the American Wind Energy Association. "While wind farm operations are not hit by fuel price volatility, steep increases in the cost of raw materials like copper and steel and other factors have driven up the price of wind turbines," she said in an e-mail statement.

Her association recently republished data from a utility that buys large amounts of wind power, Puget Sound Energy, showing that prices in 2006 ranged from about 8 cents to 10.5 cents a kilowatt-hour, up from 2004, when it was 4.5 to 6 cents. A recent study by the National Renewable Energy Laboratory, part of the Department of Energy, showed a steadily declining price from 1999 to 2005, but an increase in 2006. The study said that wind power was generally competitive with other sources of energy but that rising costs were "starting to erode that value."

But the wind energy association said that competing technologies show even steeper increases.

All of this is bad news for efforts to slow climate change, experts say. Equipment to capture carbon dioxide from the smokestacks of power plants would be made of all the things that are rising in price: concrete, structural steel, steel vessels, valves and pipes. That equipment would require somewhat less of the most expensive components, the ones on the generation side that are meant to resist the highest temperatures, pressures and corrosive materials. But it would all be assembled by the same types of workers who are in short supply for building conventional power plants.

Preston Manning's market based approach to the environment inspires coalition

COMMENT: It's the market that demands the goods, and the market is part of the solution. "Manning argues for something called full-cost accounting, or integrating the environmental costs of producing a good into its market price." And for appropriate regulatory and fiscal regimes to make it happen. Hot damn, this APPEARS exciting.

And this is being said in Alberta where it's all pickup trucks and vast over-consumption of energy? Well, the article says that's "only partly true." Where full-cost accounting in the oil sands might be a bit tricky. Like, would a barrel of oil cost a million dollars? It SOUNDS like a great start.

But what's this about implementing a price for water, even if it's just "nominal"? How does putting a price on water get to full-cost accounting for those pickup trucks and overconsumption of energy?

When we put a price on something, doesn't the model change from common wealth to private wealth? Privatized water - that's a whole different spin to full-cost accounting.

What's the appropriate degree of skepticsm? After all, Stephen Harper and Gordon Campbell have come around on climate change, haven't they? Well, haven't they?

Oilweek Magazine
31-May-2007

Preston Manning's market based approach to the environment inspires coalition
The suburbs of Calgary sprawl beyond the reach of the city‘s public transportation system, swallowing up what were once tiny communities like Okotoks and Airdrie and putting pressure on water resources.

To the north, the factories in Edmonton‘s so-called refinery row belch pollutants day and night, their lights casting an eerie glow that can be seen from kilometres away.

Further north still is the moonscape of the oil sands.

That image of Alberta hardly casts the province at the centre of a burgeoning environmental movement, but Preston Manning wants to challenge that perception.

Last winter, just a short distance from Calgary in the town of High River, the former Reform Party leader gave a speech that observers say pushed an already rich environmental movement in the province to new heights _ a push that‘s coming from the right.

Manning calls his vision of a greener, yet even more economically prosperous Alberta, “balancing the ecological budget,‘‘ and says the most important thing the environmental movement can do is bring big business on board.

“It‘s the market that produces the vast majority of goods and services which produce environmental stress and pollutants as a byproduct,‘‘ Manning said in a telephone interview.

“I don‘t think you‘re going to alleviate that stress, or treat the pollutants in a way that returns them harmlessly to nature, unless the market‘s part of the solution.‘‘

Manning argues for something called full-cost accounting, or integrating the environmental costs of producing a good into its market price.

A shift to a mindset in which people commit to buying only environmentally friendly products, and are willing to pay a premium for them, is key, said Manning.

“That force would have greater impact on the market than all the speechifying or policy declarations by governments put together,‘‘ he said.

Still, that won‘t happen unless the government is willing to step in and provide incentives to encourage consumers to make environmentally conscious choices, Manning added.

“If Alberta started pricing water, even if it just establishes some nominal price to get people used to the idea that it isn‘t free, anybody that‘s using water would have to take that into account,‘‘ he said.

Manning acknowledges that this approach would have its problems, but “at least we‘d be starting down the right road.‘‘

During his speech in High River last winter, Manning called for a grassroots conversation, or a “stewardship coalition,‘‘ between the public, business and government to identify common objectives and concerns.

Manning‘s concept of an environmental stewardship coalition was just that _ a concept _ until a group of five young politicos decided to get together and act on his suggestions.

Nick Gafuik was one of the architects of the Alberta Environmental Stewardship Coalition, and is now chairman of its steering committee.

“We decided very quickly that there was an opportunity to start bridging the gap between the intense public interest in this issue and the political discourse,‘‘ Gafuik said.

The primary objective of the coalition is to initiate a discussion between individuals from all walks of life, and interest groups from all points on the political spectrum, he said.

“We look back at the debates that have occurred in the political sphere in recent times, on things like health care, as a cautionary tale,‘‘ Gafuik said.

“The health-care debate has settled into very divided camps where no real discussion actually happens. ... My fear is that the environment question has the potential to emerge as that kind of debate too.‘‘

Gafuik said the aim of the coalition is to “step over that polarization and agree that environmental stewardship _ that is, understanding and caring for the relationship between our prosperity and our environment _ is a worthwhile endeavour.‘‘

Manning says the only way to bridge the gap between industry, government and the public is through a populist approach to environmental decision making _ an approach he says has a rich and storied history in Alberta politics.

“It‘s part of the DNA of Alberta to take grassroots political action,‘‘ Manning said.

“Some historians say that‘s a frontier phenomenon: It doesn‘t matter what family you come from, everybody‘s equal and there‘s not a lot of structure so you‘ve got to create your own. That‘s part of the political tradition here.‘‘

Political scientist Allan Tupper agrees that Canadians shouldn‘t be surprised to find Alberta at the forefront of the nation‘s newfound interest in environmentalism.

“People think Alberta is all pickup trucks and vast over-consumption of energy, and that‘s partly true, but it‘s just as true in Ontario,‘‘ said Tupper, who worked at the University of Calgary for 20 years but will soon assume a post at the University of British Columbia.

“People should take note of what Preston Manning‘s been saying. This is the leading voice of the environmental movement right now, and it really is rooted in the nature of Alberta‘s society, which really isn‘t understood in all its riches.‘‘

Even if the stewardship coalition seems like a made-in-Alberta approach to environmentalism, Manning hopes its tactics will resonate outside the province.

“I think it‘s got potential in other parts of the country,‘‘ he said.

“It‘s the people who burn the hydrocarbons that create as many problems as the people who produce them.‘‘

Manning notes that Ontario‘s transportation industry is a “huge burner of hydrocarbons.‘‘

“These same issues are relevant in other jurisdictions, and hopefully our democratic approach to the environment will find appeal there too.‘‘

IEA sees oil supply crunch looming

SHAWN MCCARTHY
Globe and Mail
July 9, 2007

OTTAWA — Global oil companies will reap the windfall from growing demand and constrained supply for years to come – and consumers should expect higher fuel prices for the foreseeable future, the International Energy Agency says in a report released Monday.

In its medium-term outlook, the agency warns that higher crude prices over the last several years have failed to trigger the typical market response of slowing demand and additional supplies.

Instead, while demand growth has slowed in the developed world, booming economies in Asia and Middle East have taken up the slack. The emerging economies and developing world will soon account for nearly half the crude oil demand in the world, according to the IEA, which is the energy monitoring arm of the developed world.

At the same time, the agency is forecasting only modest growth in crude oil supplies, as the producers struggle to offset declines from existing fields.
This file photo shows the Seadrill 3 being unveiled at its christening ceremony in Singapore in May, 2006.

This file photo shows the Seadrill 3 being unveiled at its christening ceremony in Singapore in May, 2006. On Monday, the International Energy Agency said it expects demand to rise faster than expected from now until 2012 while production lags, leading to a supply crunch. (Reuters)

“Despite four years of high oil prices, this report sees increasing market tightness beyond 2010,” it concluded.

While there will be some spare capacity among members of the Organization of Petroleum Exporting Countries in the next few years, that cushion will drop to “minimal levels” by 2012.

As a result, the energy agency is forecasting “substantially higher cash returns to shareholders” of global oil companies, whether those owners are governments or private investors.

The IEA does not include a specific price forecast in its outlook, but with crude prices hovering above $70 (U.S.) a barrel, it provides little hope for a significant easing. And it predicts even tighter markets for natural gas at the turn of the decade.

The only potential silver lining for hard-press motorists: investment in refining capacity has picked up, meaning the North America gasoline markets will be better supplied. As a result, refiners' margins, which have driven pump prices higher this year, should ease somewhat.

Globally, the IEA forecasts that demand for crude oil products will grow by 2.2 per cent a year on average to 95.8 million barrels a day in 2012. It expects 1.3 per cent average annual growth in North America, and 0.7 per cent in Europe, but forecasts 3.6 per cent yearly growth in demand in emerging economies and developing world.

But while prices remain high, the agency said supply growth will remain under pressure, partly due to the high cost of production and the delay of major projects. The increasing assertiveness of governments in producing regions will also be a growing factors.

“Supply side uncertainty is further exacerbated by resource nationalism and geopolitical risk, constraining the ability of the industry to produce the 3-million barrels per day of production needed each year to offset the effects of decline,” it said.

(Coal fired) Power plant would bury greenhouse gas

By Warren Cornwall
Seattle Times environment reporter
6 July 2007

For people worried about global warming, it's one of the Holy Grails: Figuring out how to affordably take greenhouse gases and permanently store them underground.

Now, a small Northwest company says it will do just that in a coal-fueled power plant it wants to build near the banks of the Columbia River in Southeast Washington.

If successful, the plant near Wallula, Walla Walla County, would be among the first power plants in the nation to curb its impact on the climate by keeping some of its carbon dioxide from floating into the atmosphere.

The use of thick volcanic rock known as basalt to trap the carbon could also have repercussions in places such as India - a country with extensive basalt fields, lots of coal and a growing appetite for electricity.

"The implications of this new technology could have a real impact not just here but around the world," said Tim Killian, spokesman for the Wallula Energy Resource Center, the name of the proposed $2.2 billion plant.

But success is still uncertain. It hinges partly on whether the power plant really can get the carbon dioxide to stay deep underground and whether it can be done while producing affordable power.

Power plants today don't capture carbon-dioxide emissions to store underground, said Sean Plasynski of the U.S. Department of Energy's National Energy Technology Laboratory.

That's partly because using current technology, it would dramatically increase the cost of producing the electricity, he said. There are also technical challenges, such as ensuring the carbon dioxide remains buried instead of leaking into the air.

But concerns about global warming and continued reliance on coal for power have spurred interest in siphoning the greenhouse gases from power plants underground - a strategy known as sequestration.

The Washington Legislature put its weight behind the approach this year, with a law that says new power plants supplying power to Washington must be as clean as modern, natural-gas-fueled power plants, or they must sequester the excess greenhouse gases. That rules out a standard coal-fired plant.

The proposed Wallula power plant would produce enough power to meet roughly a third of Seattle's power needs by converting coal into a liquid fuel and burning it. During the conversion, the company said, the carbon dioxide could be filtered off, converted into a liquid and pumped deep underground into the tiny cracks and bubbles in the basalt.

Overall, the process could cut carbon-dioxide emissions by 65 percent, Killian said. The company hopes to have the plant running by 2013.

The project is being pursued by a private Gig Harbor-based firm, Wallula Resource Recovery. It has initial financial backing from an arm of Edison International, a major U.S. energy company. The state agency overseeing power-plant construction still must review the project, with an eye toward carbon-dioxide emissions; and the governor must approve it.

The plant offers a testing ground for U.S. Department of Energy scientists who think basalt could be an ideal geologic formation for sequestering carbon.

Pete McGrail, a scientist at the Pacific Northwest National Laboratory in Richland, said basalt could trap the carbon dioxide and react with it to make calcium carbonate - the same mineral that forms the white deposits on bathtubs.

Starting this winter, he plans to drill wells as deep as three-quarters of a mile into the ground where the power plant would be built, then pump several thousand tons of liquid carbon dioxide down the holes. Then he will watch to see if the carbon dioxide stays put and starts turning into calcium carbonate. Scientists from India will take part in the tests to see if the process could work in their country as well, McGrail said.

"This would be a potential solution or at least part of a solution for greenhouse-gas problems," he said.

But Marc Krasnowsky of the NW Energy Coalition, a Seattle-based environmental group, urged caution.

"What's positive about Wallula's proposal is that it puts sequestration up front," he said. But "effective sequestration at commercial scale remains a somewhat distant possibility."

Wallula Energy Resource Center

Integrated Gasification Combined Cycle (IGCC)

IGCC Schematic
Click image for larger view

The Wallula Energy Resource Center (WERC) will showcase world changing power technology to help meet the Northwest's growing need for electric power. See our June 14, 2007 Statement.

The Wallula Energy Resource Center will use "gasification" technology developed by Mitsubishi Heavy Industries, Ltd. (MHI) to convert coal into a synthetic gas. This "syngas" will run Mitsubishi turbines to generate electricity for use by regional utilities. By gasifying the coal WERC will capture approximately 65% of the coal's embedded carbon dioxide (CO2) and safely - and permanently - sequester the greenhouse gas into deep subterranean basalt formations.

The Wallula Energy Resource Center will use Integrated Gasification Combined Cycle (IGCC) technology (see Video Introduction) to generate at between 600-700 megawatts of electricity, an amount equal to half of Seattle's total power requirements. IGCC, coupled with sequestration, will enable WERC to fully comply with the CO2 emission performance standards recently adopted by Washington State.

WERC will cost approximately $2.0 billion, which would make it the largest proposed private investment ever made in Eastern Washington. During the three-year construction period, WERC will employ an average of 530 workers. More than 100 permanent employees will be needed to operate the plant.

Project description

25 Coalbed Methane development wells in Peace River

COMMENT: GeoMet and Canada Energy Partners announced the intention to drill 25 wells in the Peace River Project. In the government’s “3-Phase process” for coalbed methane (evaluation/exploration, feasibility/development, production) , this project is the first in BC to move to the feasibility stage.

Canada Energy Partners is a company formed by Ben Jones of Louisiana whose Peace River Corporation acquired the original coalbed methane rights in and around Hudson’s Hope. Both Gilbert L Dozier and Gilbert H Dozier were investors in Peace River Corp. Both Doziers also have an association with Hillsborough Resources in its coalbed methane project on Vancouver Island, through Cornerstone Gas of which Gilbert H is a director, and Gilbert L was a director of Cornerstone’s predecessor company, Texas Canadian Ventures.

Seven wells have already been drilled, plus one water disposal well, plus five wells earlier by Peace River Corp.

In both the evaluation and feasibility phases, the three-year confidentiality period applies with respect to public disclosure of technical findings at the wells – gas, water, etc.

3-Phase process: http://tinyurl.com/2zvs9z
www.geometinc.com
www.canadaenergypartners.com

GeoMet, Inc. Announces Planning for Initial 25 Development Wells at Peace River Project.

Houston, Texas – July 3, 2007 - GeoMet, Inc. (NASDAQ: GMET) (“GeoMet” or the “Company”) announced today the decision to move its Peace River exploration and evaluation project (the “Project”) into the next phase of activity. GeoMet’s wholly-owned Canadian operating subsidiary, Hudson’s Hope Gas, Ltd., will immediately begin the necessary steps to drill approximately 25 wells. The Project consists of approximately 44,468 gross acres (22,334 acres, net to the Company) in the Peace River area near Hudson’s Hope, British Columbia. GeoMet is the operator and owns a 50% working interest in the Project. Canada Energy Partners Inc. (TSV-X: CE) owns the remaining interest.

During the last three years, the Company has drilled or recompleted seven production test wells, one produced water disposal well and conducted gas desorption tests on all the targeted coal seams. The Company has recently completed an extensive economic evaluation based on the test well program and projected development and operating costs, which yielded attractive results.

Hudson’s Hope Gas, Ltd. will begin consultations with affected communities and First Nations (Canadian indigenous populations). GeoMet will begin the design of the initial drilling plan which will include at least one produced water disposal well and the necessary project infrastructure and gas treating and sales facilities. Thereafter, GeoMet will finalize permitting and, after final approval by the Company’s Board of Directors, initiate construction of drilling locations and infrastructure. Drilling would commence sometime thereafter depending upon seasonal operating restrictions and/or conditions.

About GeoMet, Inc.

GeoMet, Inc. is an independent energy company engaged in the exploration for and development and production of natural gas from coal seams (“coalbed methane” or “CBM”). Our principal operations and producing properties are located in the Cahaba Basin in Alabama and the Central Appalachian Basin in West Virginia and Virginia. We also control additional coalbed methane development rights, principally in Alabama, British Columbia, Colorado, Louisiana, Virginia, and West Virginia.

For more information please contact Stephen M. Smith at (713) 287-2251 or ssmith@geometcbm.com or visit our website at www.geometinc.com.

Is This the Beginning of the End for Damming America's Big Rivers?

Tara Lohan
AlterNet
July 2, 2007

Usually shareholders meetings don't include traditional Native American salmon bakes and intertribal healing dances. But at the recent shareholders meeting for Berkshire Hathaway -- owned by investment icon Warren Buffett -- Omaha, Neb., got a taste of native culture -- all the way from the Pacific Northwest.

Yet the tribes -- the Karuk, Yurok, and Hoopa of California, and the Klamath Tribes of Oregon -- weren't there to sing Buffett's praises like most of the attendees. They were there to introduce people to threatened native cultures and let Buffett know he made a really bad investment a few years back when his subsidiary Mid-American Energy Holdings bought power company PacifiCorp.

By doing so, Buffett, who is known as one of the world's savviest investors, landed himself in the middle of a social justice and environmental conflagration. While Buffett's investments are making many millionaires, his company is impoverishing the people of the Klamath Basin in Southern Oregon and Northern California who depend on a now ailing Klamath River for their livelihoods and cultural traditions.

The tribal members, who are part of a coalition of native tribes, environmentalists and fishermen, were at the shareholders meeting to pressure PacifiCorp to help save near endangered salmon populations by removing four hydropower dams on the Klamath River, which snakes from the central Oregon-California border, out to the Pacific Ocean, 20 miles south of Crescent City.

The dams are blocking fish passage to necessary spawning grounds and water trapped behind them creates a bath tub affect, heating up the river and causing toxic algae blooms that threaten the health of salmon populations, which tribal members depend on for food and fishermen depend on to make a living. Today 90 percent of the members of the once resource-rich tribes like the Karuk are living below the poverty line, and downstream fishermen have seen their income fall by up to 90 percent in recent years.

If the dams come down, it would be the biggest dam removal project in U.S. history and would revitalize one of the country's best salmon rivers and one of the region's last subsistence economies.

The prospect used to be a big "if," but lately the coalition has been gaining momentum and is backed by local, state and federal agencies. They even have environmental advocate Robert Kennedy Jr. and top lawyer Joe Cotchett (who is currently representing Valerie Plame in her suit against the Bush administration).

The coalition believes they are solidly in the right in terms of environmental concerns, social justice and even economics. All they really need is for the power company to see the light -- and they are hoping Warren Buffett can be the spark.

"We have been hoping Warren will realize these dams are a bad investment and realize that they are causing disease and poverty all over the north coast and southern Oregon," said Regina Chichizola of the organization Klamath River Keeper. "We are hoping that he will realize that if he is going to be a philanthropist, trying to solve issues of disease and poverty in third-world countries that these dams are causing the same issues that he is trying to fight in other places."

A river, a culture threatened

As a massive Omaha arena was filled with 27,000 shareholders, Warren Buffett took questions from the crowd -- an adoring crowd -- of people made wealthy by his business decisions. "Everyone basically stood up and talked about how wonderful he was and how they were going to name their first born son Warren," said Craig Tucker who works for the Karuk Tribe and attended the shareholders meeting.

But then Ronnie Pellegrini of Eureka, Calif., stood up and told Buffett how her family, who fish for Pacific salmon, lost 90 percent of their income last year because the fishery was virtually closed for 700 miles of coast line.

And Windy George of the Hoopa Tribe stood up with five girls dressed in Brush Dance regalia, a traditional healing dance, and asked Buffett to meet with the tribes to understand what the loss of salmon means to the native people.

"We felt like it would be inappropriate to show up and lay all the blame at the feet of Warren Buffett, because he has this massive empire and this is a tiny piece of it," said Tucker. "Our intent was for him to know about the Klamath River, know where it was, and that the dams that he owns are having a devastating impact on people's lives, and it is in his own self-interest to do the right thing."

For the last two years, a group of 28 different parties consisting of state agencies, farmers, fishermen, environmentalists and tribal members have been trying to reach a settlement in the basin over water.

The Upper Basin of the Klamath watershed that feeds the headwaters of the Klamath River is one of the country's largest irrigation projects. In the early 1900s the Bureau of Reclamation began draining the wetlands and lakes in the area to entice settlers to farm. For the last hundred years, the high desert has been transformed into farmland -- at a large environmental cost.

But, in recent years, increasing water shortages have caused conflict between farmers and fishermen. As farmers remove water from the river for irrigation, less is left for salmon populations. The conflict erupted in 2002 when a massive fish die-off occurred, killing 70,000 adult salmon on their way to the spawning ground and devastating the fishing industry.

Four dams on the river have exacerbated these water shortages. "The dams are the single biggest impediment to having a healthy, sustainable, harvestable fishery on the Klamath River," said Tucker.

The dams block over 300 miles of spawning habitat for salmon -- cutting off some of the best areas for the fish, as well as denying fishing access entirely to the Klamath Tribes of Oregon, who live above the dams and who have a federally mandated treaty right to be able to take salmon for subsistence.

Downstream, where the Karuk, Hoopa, and Yurok -- the three biggest tribes in California -- as well as thousands of commercial fishermen live, things are even worse.

"The lower river suffers from all the water quality problems that the dams create," said Glen Spain of Pacific Coast Federation of Fishermen's Associations, the largest trade association of commercial fishermen. "The water behind Iron Gate Dam is just a giant hot water bathtub. That creates massive algae blooms including some of the worst toxic algae blooms in the world." A survey last year by the U.S. EPA and the Karuk Tribe found the toxicity was 3,900 times the World Health Organization's standards.

The effect on fishermen has been severe. When salmon populations are below a certain level on the Klamath, it impacts the entire coast's fishery. "It affects thousands -- all the way down to Monterey and all the way up to the Columbia River," said Spain. "It affects the whole chain of commerce -- if ports can't deliver the fish, then warehouses don't have fees, the moorage fees don't get paid, people lose their boats, people's mortgages don't get paid, they can't shop, the processors don't have fish, they can't deliver product to restaurants, they can't export. It is a massive problem. Right now Congress has earmarked $60.4 million in disaster assistance to those communities. We estimate that the total economic coast was nearly $100 million -- and that is just for the loss of one year's fishery."

It's about the money

Although the dams have caused problems, including treaty violations since they were first built beginning in 1917, the effort to remove them has gained traction recently because the dams are up for relicensing. The Federal Energy Regulatory Commission (FERC) is a federal agency that issues 50-year licenses for private companies to operate power dams.

This is the first time that these dams will be reviewed in the modern era of environmental law and policy. They will be subjected to the standards of the Endangered Species Act, the National Environmental Protection Act, the Clean Water Act and other state regulatory measures.

"A lot has changed since the last relicensing. The power grid has expanded, we have multiple other sources of energy and options for replacing the dams we didn't have before," said Spain. "We have stronger environmental regulation, and we now are acutely aware of the impact the dams have on an incredibly valuable salmon run. The Klamath typically generated the third largest salmon run in the nation. To extinguish those runs to generate a few megawatts of power is not a cost-effective solution."

But PacifiCorp is not as quick to dismiss their facility. According to Tom Gauntt of PacifiCorp, the four dams generate 169 megawatts for about 70,000 residences and he said the company intends to keep working with parties to come to a settlement but would not comment on whether the company was considering removing the dams.

Those opposed to the dams believe PacifiCorp will run into problems trying to have the dams relicensed. The Department of Interior and Commerce ruled in January that PacifiCorp must include ladders for fish passage. But the cost of doing so would be even greater than removing the dams altogether and getting replacement power -- about $100 million more, according to a report from the California Energy Commission and the Department of the Interior.

But the economics are not an easy issue. Installing fish ladders, while expensive, is something the company can pass off as an improvement and put the burden of the expense on customers.

"They don't want the precedent coming out that they are going to remove dams," said Chichizola. "That is the thing that will hurt them. They don't want to have to deal with dam removal, and they don't want to have to deal with fish populations, and they don't want to have to deal with Native American tribes. It is way easier for them to put the cost on the ratepayers."

Environmental groups argue that the turbines on the dams produce only 2 percent of the company's overall power and could be replaced using alternative energy, although PacifiCorp denies that wind or solar could replace "steady hydropower."

But pressure is now coming from many different sides. The fisheries department of the National Oceanic and Atmospheric Administration (NOAA), a federal agency run by appointees from the Bush administration also recommended that the best way to achieve fish passage in the Klamath River was to remove the four dams.

However, only FERC can mandate that the dams come down, and the commission is composed of five presidentially appointed officials "who all have ties to the energy industry," said Tucker. "It is a classic example of the fox guarding the hen house."

FERC will likely be releasing their decision on the fate of the dams sometime soon. The commission filed a draft Environmental Impact State last year. "They concluded that dam removal was probably the best option," said Spain. "And at least two dams should come down. You never hear FERC say that. They are an agency that has never seen a dam they didn't like."

The final EIS is due in a month and PacifiCorp also faces tests by state water quality certification processes, which may be a serious problem for the company.

The backup plan

Despite the overwhelming evidence against the dams, opponents aren't counting on FERC to resolve the measure.

Two lawsuits are currently being filed that may be needed if FERC doesn't mandate the dam removal. One involves a fish hatchery that the company was required to build to replace salmon populations but now fails to meet the standards of the Clean Water Act. Another is a lawsuit that alleges the dams constitute a public nuisance because of the threat of toxic algae -- a serious health risk to wildlife and humans.

A separate settlement process that involves larger basin water issues and includes the farmers is also under way. Opponents hope to influence company shareholders and Buffett himself by attending shareholder meetings every year until the dams come down, said Chichizola.

"People in the basin now see that the basin is interconnected. We have been tied together for generations by this umbilical cord called the Klamath River," said Spain. "All the politicking in the world -- all the protests and marches and congressmen in the world aren't going to create more rain. We have to live within our means. We have been lurching for the last two decades from crisis to crisis in the basin."

If the dams are removed it will be not only a huge environmental victory, but it would be a significant achievement for coalition building -- bringing together industry, farmers, fishermen, and native tribes -- parties who have historically been pitted against each other.

"I think the Klamath River is a prototypical example of all that has gone wrong with Western water law and water policy," said Spain. "But it is also one of the few rivers where all the pieces are there for restoration. People will need to change and many communities are afraid of change. There have to be compromises along the way, and many people don't want to compromise. But the status quo is no longer viable."

And the Klamath may set the stage for dam removal in other areas. Currently there are 75,000 dams in the United States blocking 600,000 miles of river. In the West, over 100 salmon runs have gone extinct and 25 are listed as endangered. Residents in areas like the Klamath have been questioning the worth of many dams. and their voices are finally beginning to be heard.

"PacifiCorp and Warren Buffett do not own the Klamath River," said Tucker. "The federal government has given them permission to use the river to make electricity, and every 50 years the question is asked, 'What is the public benefit?' We are arguing that if you answer that question honestly, these dams do more harm than good."

Tara Lohan is a managing editor at AlterNet.

© 2007 Independent Media Institute. All rights reserved.

View this story online at: http://www.alternet.org/story/55587/