March 30, 2009
Earth Hour is a joke
COMMENT: Thank-goodness someone said it.
Editorial
National Post
Friday, March 27, 2009
There are probably already some people who are complaining about how Earth Hour was soooo much less commercial back when the whole thing started (in 2007). The "awareness-raising" event, scheduled for Saturday, may now mostly serve the purpose of raising awareness of how much hucksterism, corporate insincerity and plain illogic is involved in today's shrink-wrapped yuppie environmentalism. All one really needs to know about the nature of Earth Hour is that Coca-Cola--a vendor of products whose existence is unjustifiable on any environmental premise whatsoever -- is one of the leading sponsors and promoters. You are definitely not going to hear the company suggesting that anyone take an "awareness-raising" break from drinking refrigerated sugar water in plastic bottles.
It's almost enough to make one nostalgic for the crazy anarchistic eco-hardasses of the past -- radical enviro-obsessives such as Edward Abbey or Arne Naess, who at least had guts and integrity. They would have been disgusted by an opportunistic performer such as Nelly Furtado, who observed 2008's Earth Hour with a floodlit, electronically amplified pop concert in Toronto's Nathan Phillips Square.
Defenders of environmental "awareness" exercises feel that such gestures are justified in the name of education -- but it's not some sort of exotic secret that one saves energy by turning off the lights during Earth Hour. Household light is, in fact, the most obvious form of elective energy expenditure there is -- which explains why people think they are making such a profound public statement by going without it for a brief moment, notwithstanding the very low cost in foregone comfort.
Not to be overly cranky about a subject notorious for driving many of our fellow conservatives to distraction (Hi there, Peter Foster), but what exactly does Earth Hour teach us -- except that so many environmental consciences can be bought off mighty cheaply? Or that David Suzuki types can create satisfying illusions of solidarity, effectiveness and concerted action by inventing contrived quasi-religious ceremonies for ourselves?
Then again, we're not environmentalists. We're capitalists. In fact, we're capitalists who've been known to enjoy an ice cold Coke, not to mention a wholesome musical concert now and again. It's not that we don't recognize some rudimentary concept of environmental appropriateness in lifestyle, conduct and thinking. But we prefer to put our faith in the inter-twined march of technology and the free market rather than feel-good slogans and rituals.
Technology can serve to make us more comfortable with the same amount of energy, and at a much lower cost in negative environmental externalities. The ways in which it has done so are numerous and obvious. (See, e. g., this week's news of the 56 miles-per-gallon Tata Nano.) Yet most people may not realize, for example, that in some places (like the U. K.), the peak level of greenhouse emissions per capita was passed almost 100 years ago. The inventors of fibreglass insulation alone created cumulative energy savings that defy calculation. Yet most of us don't even realize that our attics are full of the stuff.
March 29, 2009
Natural gas faces two-year squeeze
By Shaun Polczer
Calgary Herald
March 28, 2009
ConocoPhillips predicts prices will languish
Kevin Meyers, President Of ConocoPhillips Canada (Photograph by: Ted Jacob, Calgary Herald, Calgary Herald)
Speaking to reporters at the company's downtown head-quarters, Kevin Meyers said he doesn't see a meaningful recovery for natural gas--and expects the possibility of even lower prices--for at least 18 to 24 months.
Although costs for drilling and services have fallen as much as 20 per cent, gas prices have fallen farther and faster, shedding about three-quarters of their value since summer.
"The cost environment will adjust slowly," Meyers said. "But until the gas bubble comes down, you're going to see even lower prices."
Meyers' comments came as gas futures in plunged 32 cents, or more than 10 per cent, in New York on Friday to $3.63 US per million British thermal units--down almost 20 per cent in one week and the lowest level since September 2002. By contrast, they were near $10 at this time last year.
Falling prices have prompted several producers to cut capital spending and shut in drilling rigs.
While Canadian drilling activity is being curtailed ahead of the annual spring thaw, Baker Hughes reported Friday that the U. S. rig count fell to the lowest level since 2003.
Joining other big producers like EnCana Corp. and Canadian Natural Resources, Conoco will slash 35 to 40 per cent from its natural gas budget this year, Meyers said.
The company expects to spend about $900 million in 2009 to develop its gas prospects, which include positions in the Montney and Horn River basins in northeast British Columbia.
Conoco is one of the country's largest natural gas players after successive acquisitions of Gulf Canada in 2002 and Burlington Resources in 2006. It produced a little more than one billion cubic feet (bcf) a day in 2008, about seven per cent of Canadian output.
Analysts said prices could fall further as North American inventories approach record levels. The U. S. government's Energy Information Agency(EIA) on Thursday recorded a surprise three bcf storage increase last week, marking an early start to the traditional injection season that starts in April.
As of March 20, the EIA said stocks were 372 bcf higher than last year and 280 bcf above the five-year average of 1.37 trillion cubic feet (tcf). At that rate, inventories will brush up against the theoretical 3.8 tcf capacity well before summer, says Gil Dawson, a commodities strategist with SBM Inc. in Calgary.
"We call that hitting the wall," he said.
With no place to store their gas, producers would be forced to shut in wells or sell it for almost nothing. SBM doesn't make price forecasts and instead identifies market trends -- and the trend is toward higher supplies and lower demand.
When the wreckage from the financial crisis and the recession clears, the North American gas market could be oversupplied by as much as five billion cubic feet a day, prompting Dawson to suggest gas prices have a lot further to fall.
"We don't see the bottom yet," he said.
But over the longer term, Conoco's Meyers said the company still thinks gas prices will be high enough to support two major pipelines from Alaska and the Mackenzie Delta.
"We still believe the long-term gas price will sustain an economic project," he said. "It's not about what you think gas prices will be in 2010, it's your view of what they look like in 2020 or 2030 that matters."
© Copyright (c) The Calgary Herald
Alberta faces hot debate on nuclear power
Paula Simons
Times Colonist
March 29, 2009
It certainly doesn't look explosive. Unlike most recent Alberta government reports, with their glossy photo spreads and snappy names, the Nuclear Power Expert Panel Report on Nuclear Power and Alberta comes bound in a blue-and-grey cover as dull as its title.
No pretty children -- just charts and graphs, with line illustrations that look like they came from a 1973 high school science text.
But don't be misled. This is a report with the potential to ignite a firestorm, nowhere more than in the Peace River region, where Bruce Power is considering building Canada's first nuclear power plant in almost 20 years. (The site is about 125 miles from the B.C. border, giving British Columbians an interest in the decision, if not a voice.)
Just how radioactive could this report be? Well, Alberta Energy took care to release it when the legislature was not sitting, Energy Minister Mel Knight was out of the country and Premier Ed Stelmach was "unavailable for comment."
You might wonder why a report that looks so apolitical has to be handled so delicately. The expert committee, chaired by Harvie Andre, the former federal PC cabinet minister and former professor of chemical engineering, made no recommendations. Its members simply tried to write a straightforward, unemotional summary in clear, accessible English of the mechanics of nuclear reactors, and of the pros and cons of nuclear power.
But when it comes to nuclear power, there's no such thing as neutral.
Every scientific "fact" can be interpreted differently.
The committee's makeup didn't help to give it broad credibility. Apart from Andre, the panel included two respected business professors, a professor of engineering physics and a board member of Atomic Energy of Canada Ltd., whose expertise is nuclear safety. There were no environmental scientists, physicians or biologists on the committee.
Without such perspectives for balance, the report can hardly help but come across as pro-nuke. It strongly stresses the environmental upsides of nuclear power, and downplays the risks by assuming that new recycling techniques, some of which, the report acknowledges, don't yet exist, will take care of nuclear waste.
It also downplays the health risks of nuclear power, citing as undisputed fact a controversial 2006 epidemiological study by the International Atomic Energy Agency and the World Health Organization that found only 56 people had died in the Chornobyl nuclear accident, even though that number has been hotly disputed.
Of course, no report on nuclear power could have failed to create political fallout.
The debate has always been passionate and divisive -- especially now, when fears over global warming are giving a fresh environmental push to the pro-nuclear argument. But passionate -- even divisive -- debate is just what is needed. And if this not-quite-so-neutral report starts that debate, then it will have served a valuable purpose.
Albertans have an extraordinarily important choice before them.
Do they embrace nuclear power, with its potential to produce bountiful, reliable electricity without the carbon emissions and air pollution of coal-fired plants?
Or do they opt to stay away from a controversial technology, with its high costs, its potential for rare but deadly accidents and its hard-to-handle radioactive waste?
Finding truly neutral information on the subject isn't easy.
And this isn't a simple right/left, blue/green argument anymore. There are plenty of environmentalists who now champion nuclear power as an important tool to fight global warming, and plenty of traditional, conservative rural Albertans who fear the consequences of a technology with the potential to create long-lasting environmental havoc.
Has the provincial government made up its mind already? Is nuclear power in Alberta a done deal?
I don't think the answer is a simple yes. Mel Knight, the energy minister, comes across as bullish on nuclear energy, but the read I get off Stelmach is that he's treading carefully, doesn't want to be pushed into nuclear by anyone -- including the Harper government, which is dead keen to kick-start Canada's flagging nuclear industry.
So to give itself plenty of political cover, the government will now embark on a round of stakeholder consultations and focus groups and polls.
It plans to create an online forum, where we can all chime in -- though it's not up yet.
Alberta Energy says it wants the views of all Albertans. And I think they should oblige. Some decisions are too important to be left to politicians
News Release
March 26, 2009
March 26, 2009
Alberta government releases Nuclear Power Expert Panel report
Process to gather views from Albertans begins next month
Edmonton... The Alberta government has released the report of the Nuclear Power Expert Panel. Albertans will now be asked to share their views on the issues covered in the report and the option of nuclear power generation in Alberta.
“The Expert Panel has provided a factual report that provides the basis for a fully informed discussion in Alberta on this issue,” said Energy Minister Mel Knight. “I would like to thank the members of the Expert Panel for their work.”
Beginning in April, the Alberta government will conduct extensive public consultations to gather views of Albertans on nuclear power in the context of the province’s electricity system. The Nuclear Power Expert Panel report and a consultation workbook and questionnaire being developed will serve as the basis for these consultations.
“The views of Albertans will be important in developing a provincial approach on the issue of nuclear power generation,” Knight added. “The Alberta government has been clear that the province will not take a position until we hear from Albertans.”
The public consultation process will be managed by an independent research firm that will collect the data and provide a summary of the findings to the government after the completion of the public consultation process.
The Nuclear Power Expert Panel was appointed in 2008 with a mandate to gather information and present the facts on nuclear energy to Albertans. The report does not offer any recommendations. The report presents factual information to help provide a clear understanding of the nature of nuclear power generation, its relative risks and benefits and comparisons to other forms of electricity generation.
For more information or a copy of the Nuclear Power Expert Panel Report visit www.energy.alberta.ca.
-30-
Media inquiries may be directed to:
Jason Chance
Director
Alberta Energy
Communications
780-422-3667
Jason.chance@gov.ab.ca
To call toll free within Alberta dial 310-0000.
Backgrounder
March 26, 2009
Overview of the Nuclear Power Expert Panel report
The report is written to provide an overview of the issues specifically related to adding nuclear-powered plants into the province’s inventory of electricity generating facilities and covers the following topics:
1. Electricity in Alberta
Analysis of the electricity supply and demand situation in Alberta indicates that significant additional electrical power will be needed in the future to maintain and improve the standard of living of Albertans. The decision to build a plant - whether powered by thermal combustion, water, wind, biomass, or nuclear - is a private-sector decision taken by a company based on its assessment of the project’s economic viability.
2. Options for meeting Alberta’s needs
Options for addressing the need of increased electricity supply include more fossil-fuel-burning power plants, more renewable sources such as hydroelectricity, biomass or wind, greater energy efficiency, as well as nuclear power. Each technology has trade-offs associated with it. Such trade-offs include the availability of technology, environmental impacts, costs and operating implications for Alberta’s electricity system.
3. An overview of nuclear power
The way a nuclear power plant generates electricity is very similar to a fossil power plant where heat produces steam that drives a turbine and generator. The main difference is that the initial heat is produced from nuclear fission. Nuclear power has been in use for generating electricity for more than 50 years, and more than 400 units are in operation worldwide. Nuclear power has attracted renewed interest recently because it does not release carbon dioxide or other air pollutants during operation.
4. Nuclear fuel management
The ‘nuclear fuel cycle’ includes the how fuel is mined and milled, how it operates in a reactor, and how it is disposed. Once fuel is discharged from the reactor, it is highly radioactive and continues to produce heat. In an open cycle, the fuel is placed in a reactor only once. After discharge, it is stored prior to ultimate disposal. In a closed cycle, 99 per cent of this material can be recycled to be reused as nuclear fuel while the remaining waste fission products decay comparatively quickly.
5. Nuclear safety
Safety issues specific to radioactivity, including radiation’s impacts on health and the environment; the safety goals and approaches related to nuclear power plants; plant design related to safety; lessons learned from past nuclear incidents; and issues associated with low-level waste.
6. Nuclear electricity in Alberta
A nuclear generating plant would have implications related to integration into the Alberta transmission grid as well as regional and provincial impacts associated with communities, infrastructure needs and the economy. Any nuclear generating plant would be a major construction project and have social impacts on schools, hospitals, transportation infrastructure, Aboriginal communities, local economies, housing and so on, much like other large industrial projects.
7. Nuclear regulation in Canada
In Canada, the Federal Government has the authority and responsibility for approving and regulating all nuclear facilities and nuclear-related activities. The Canadian Nuclear Safety Commission regulates the process for licensing new nuclear power plants and provides the necessary licences for site preparation, construction, operation, decommissioning, and abandonment. Normal provincial approvals required for any major project would also be required, based on the province’s constitutional responsibility for land and resources.
Nuclear Power Generation Public Consultations
The Alberta government is launching a multi-faceted public consultation process to hear the views of Albertans on nuclear power.
Albertans will be presented with the information gathered by the Expert Panel and asked for their feedback. The public consultation process will be managed by an independent research firm (selected by an open, Request for Proposals process) that will collect the data and provide a summary of the findings to the government after the completion of the public consultation process.
Albertans will be able to provide their views in a number of ways.
* Albertans can review and complete an interactive online workbook and feedback form that will cover the themes of the Expert Panel report (available in April).
* Alberta citizens may also review and complete a paper copy of the workbook and feedback form, available by phoning toll-free 310-0000, then 780-427-0265. Albertans can also print off a copy at the local public library or local office of the Member of the Legislative Assembly.
* Discussion groups with stakeholder groups, representative of environmental, business, energy, and other interests will be held.
* Discussion groups with randomly selected Alberta citizens will be held in 10 communities across Alberta.
* A public opinion survey representative of Albertans will be conducted.
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Media inquiries may be directed to:
Jason Chance
Director
Alberta Energy
Communications
780-422-3667
Jason.chance@gov.ab.ca
To call toll free within Alberta dial 310-0000.
Did Goldman Goose Oil?
Christopher Helman and Liz Moyer
Forbes Magazine
April 13, 2009
How Goldman Sachs was at the center of the oil trading fiasco that
bankrupted pipeline giant Semgroup.
Lloyd Blankfein's Goldman Sachs turned up everywhere (Jin Lee/Bloomberg News)
When oil prices spiked last summer to $147 a barrel, the biggest corporate casualty was oil pipeline giant Semgroup Holdings, a $14 billion (sales) private firm in Tulsa, Okla. It had racked up $2.4 billion in trading losses betting that oil prices would go down, including $290 million in accounts personally managed by then chief executive Thomas Kivisto. Its short positions amounted to the equivalent of 20% of the nation's crude oil inventories. With the credit crunch eliminating any hope of meeting a $500 million margin call, Semgroup filed for bankruptcy on July 22.
But now some of the people involved in cleaning up the financial mess are suggesting that Semgroup's collapse was more than just bad judgment and worse timing. There is evidence of a malevolent hand at work: oil price manipulation by traders orchestrating a short squeeze to push up the price of West Texas Intermediate crude to the point that it would generate fatal losses in Semgroup's accounts.
"What transpired at Semgroup was no less than a $500 billion fraud on the people of the world," says John Catsimatidis, the billionaire grocer turned oil refiner who is attempting to reorganize Semgroup in bankruptcy court. The $500 billion is how much the world would have overpaid for crude had a successful scam pushed up oil prices by $50 a barrel for 100 days.
What's the evidence of this? Much is circumstantial. Proving oil-trading manipulation is difficult. But numerous people familiar with the events insist that Citibank, Merrill Lynch and especially Goldman Sachs had knowledge about Semgroup's trading positions from their vetting of an ill-fated $1.5 billion private placement deal last spring. "Nothing's been proven, but if somebody has your book and knows every trade, it would not be difficult to bet against that book and put the company into a tremendous liquidity squeeze," says John Tucker, who is representing Kivisto.
What's known for sure is that Goldman Sachs, through J. Aron & Co., its commodities trading arm, was in prime position to use such data--and profited handsomely from Semgroup's fall. J. Aron was Semgroup's biggest counterparty, trading both physical oil flowing through pipelines and paper oil, in the form of options and futures.
When crude oil peaked in July, Semgroup ran out of cash to meet margin requirements on options contracts it had with Aron, contracts on which it had paper losses of $350 million. Desperate to survive, Semgroup asked Aron to pony up $430 million it owed on physical oil. Aron said no, declared Semgroup in default on its contracts and demanded immediate payment of losses.
Some answers may emerge in late March when former FBI director Louis Freeh releases a report on the trading surrounding Semgroup's demise. He was hired by Semgroup and given subpoena power by the bankruptcy court judge in Delaware. Meanwhile the Securities & Exchange Commission is investigating, and lawyers involved in the bankruptcy say that Manhattan District Attorney Robert Morgenthau's office is looking into the actions of New York firms in the collapse. His office declines to comment.
March 26, 2009
Irving's next frontier: electricity
COMMENT: Last year an LNG import terminal and regasifier was approved just east of St. John's, New Brunswick. Then a pipeline was approved which would move the gas directly to Maine. The NEB approved natural gas import and export applications. Then the economy fell apart.
Natural gas prices have plummeted. The cost of LNG relative to natural gas prices in North America flipped. So what is the "highest and best use" (or the most profitable, or are those the same thing?) of this gas now?
This article is about a proposal to use some of that natural gas to generate electricity, and wheel the electricity into Maine and thus into the eastern US grid.
Think there might be a few New Brunswickians who don't think this is all good, that their province and coast should be the oil and gas gateway for Maine and the US northeast? Some echoes of Sumas Energy 2, as well.
SHAWN MCCARTHY
Globe and Mail
March 25, 2009
OTTAWA — Irving Oil Ltd. is looking to expand its energy exporting empire into electricity with a proposal to build a 600-megawatt gas-fired power plant that would be a key supplier to an ambitious new “energy corridor” that New Brunswick and Maine plan to develop.
New Brunswick Premier Shawn Graham and Maine Governor John Baldacci Wednesday launched a study to determine the feasibility of a new transmission corridor, which would carry electricity, natural gas and gasoline from the province to the energy-hungry U.S. Northeast.
In an interview Wednesday, Mr. Graham said the energy corridor is the “missing link” in the province's plan to encourage construction of billions of dollars worth of energy projects aimed at export markets.
“The energy corridor is a unique concept in that it is an energy pathway or highway that is going to bundle together different forms of energy, which is going to increase the security and reliability for the northeastern states,” he said.
“And it also minimizes the environmental impact, which is critical for this project.”
The project would include transmission lines for up to 1,500 megawatts of power exports, as well as pipelines for increased gas and petroleum exports. There are currently transmission lines and pipelines from New Brunswick to the United States, but they are at or near full capacity.
On behalf of the two governments, Irving will conduct a feasibility study to determine the best route and most efficient configuration for the proposed new energy corridor.
The company, which is owned by the Irving family, is a major regional producer of oil and gasoline and is completing a $1-billion liquefied natural gas (LNG) plant. It also has plans with partner BP PLC to spend up to $8-billion to double the size of its Saint John refinery to become the largest in North America.
Now, the company is planning to expand its power business, using feedstock from the LNG facility to fuel a power plant to be built near Saint John. It would then export the electricity to New England, where prices are among the highest in North America.
Irving already has two smaller gas-fired power plants that feed the New Brunswick grid and provide some electricity for export.
“This is in direct response to our regional leaders' vision to supply secure, reliable and clean energy to the New England marketplace,” said Jeff Matthews, Irving Oil's director of business development.
“It's also a response to the vision of President Obama and Prime Minister Harper in terms of internationally securing a supply of energy, building ties between our two countries and tapping into the renewable resources that we have specially here in New Brunswick and Maine,” Mr. Matthews said.
He said the natural gas plant would provide both base-load electricity and incremental capacity that could be used to backstop the huge but inconsistent wind power generation that is being developed in the province and in Maine.
Irving itself is conducting feasibility studies on wind power and on tapping the tidal power of the Bay of Fundy. But Mr. Matthews said the company is ready to work with governments and other power companies to ensure development is complementary.
The other potential customer for the expanded transmission capacity is the proposed nuclear reactor that would be built at Pointe Lepreau, N.B., and owned by a investors' consortium led by Atomic Energy of Canada Ltd. and its private sector partners.
March 25, 2009
Environmentalists in a Clash of Goals
By FELICITY BARRINGER
New York Times
March 24, 2009
WHITEWATER CANYON, Calif. — As David Myers scans the rocky slopes of this desert canyon, looking vainly past clumps of brittlebush for bighorn sheep, he imagines an enemy advancing across the crags.
 To counter the efforts of environmentalists who are helping power companies pinpoint sites for solar-power technology, David Myers has proposed that Congress put hundreds of thousands of acres of federal land in the Mojave Desert off limits as a national monument. (Ann Johansson for The New York Times) |
That specter is of an army of mirrors, generators and transmission towers transforming Mojave Desert vistas like this one. While Whitewater Canyon is privately owned and protected, others that Mr. Myers, as head of the Wildlands Conservancy, has fought to preserve are not.
To his chagrin, some of Mr. Myers’s fellow environmentalists are helping power companies pinpoint the best sites for solar-power technology. The goal of his former allies is to combat climate change by harnessing the desert’s solar-rich terrain, reducing the region’s reliance on carbon-emitting fuels.
Mr. Myers is indignant. “How can you say you’re going to blade off hundreds of thousands of acres of earth to preserve the Earth?” he said.
As the Obama administration puts development of geothermal, wind and solar power on a fast track, the environmental movement finds itself torn between fighting climate change and a passion for saving special places.
The conflict began playing out almost a decade ago in places like Cape Cod, Mass., where a plan to place 130 wind turbines in Nantucket Sound has pitted energy-conscious environmentalists against local residents who fear harm to aquatic life and the view.
It has spread west to Mojave-area locales like flatland near the Ivanpah Valley, 130 miles northeast of here, where a proposal to install three clusters of 50,000 solar mirrors has prompted anxiety over the fate of endangered tortoises.
Terry Frewin, a local Sierra Club representative, said he had tough questions for state regulators. “Deserts don’t need to be sacrificed so that people in L.A. can keep heating their swimming pools,” Mr. Frewin said.
For traditional environmentalists, industrial intrusions have always been anathema. They have fought such encroachment since John Muir opposed the dam that inundated the Hetch Hetchy Valley next to Yosemite almost a century ago. Similar opposition governs today’s campaign against drilling in parts of the Arctic National Wildlife Refuge.
At a national level, that strategy is meshing with support for new policies intended to change how electricity is generated, how cars are made and how people live. “It’s not enough to say no to things anymore,” said Carl Zichella, a Sierra Club expert on renewable power. “We have to say yes to the right thing.”
So environmentalists like Mr. Zichella and Johanna Wald, a lawyer and longtime ecowarrior at the Natural Resources Defense Council, have joined an industry-dominated advisory group that makes recommendations to California regulators on where renewable-energy zones should be created.
“We have to accept our responsibility that something that we have been advocating for decades is about to happen,” Ms. Wald said. “My job is to make sure that it happens in an environmentally responsible way.”
The nation’s new interior secretary, Ken Salazar, called this month for a task force to map potential energy sites. To counter those efforts, Mr. Myers has proposed that Congress put hundreds of thousands of acres of federal land in the Mojave Desert off limits as a national monument. The monument would stretch from Joshua Tree National Park to the National Park Service’s Mojave Preserve and would include the Sleeping Beauty Mountains.
The domain would encompass 960 square miles that the Wildlands Conservancy donated to the federal Bureau of Land Management for safekeeping plus a few hundred more.
Last week, Senator Dianne Feinstein, Democrat of California, also proposed a national monument to protect much of the same land.
“I’m a strong supporter of renewable energy and clean technology, but it is critical that these projects are built on suitable lands,” said Mrs. Feinstein, who heads a subcommittee that oversees the Interior Department budget.
There is particular urgency to the hunt for renewable-energy sites in California. A 2006 state law requires utilities to produce 20 percent of the California’s electricity from renewable sources by 2020.
The goal is already a stretch, experts say, but Gov. Arnold Schwarzenegger wants to increase it to 33 percent. Getting there will mean rapid construction of plants and power lines.
To balance that goal against guarding the habitat of endangered species like the desert tortoise, Mr. Zichella, Ms. Wald and other environmentalists have shuttled between Sacramento, San Francisco and desert communities to learn about the specifics of power grids, solar technologies and desert ecosystems.
They are not always greeted warmly.
“We’re environmentalists,” said Jim Harvey, whose Association for a Responsible Energy Policy represents a coalition of activists in the Mojave area. “These people, who are supposed to be sitting next to us, are sitting across from us.”
Mr. Harvey’s group says that rooftop solar panels could be vastly expanded in heavily populated areas around Los Angeles. With energy conservation that would make desert clusters of solar plants unnecessary, it says.
Mr. Zichella and others counter that a wide embrace of expensive rooftop panels will be slow in coming. “The most prudent course is not to put all our renewable eggs in one basket,” Mr. Zichella wrote recently.
A reconciliation between the two environmental camps seems likely. As national and state targets mandate more and more renewable-energy projects, many say, environmentalists will have an incentive to work jointly to broker solutions with politicians and the energy industry.
“We are learning and understanding the trade-offs between things, and they are hard,” said Pam Eaton, deputy vice president of the public lands campaign of the Wilderness Society, who has been working to bridge gaps between environmentalists.
“You’ve got the short-term impact of a project versus a long-term problem, which is climate change,” Ms Eaton said.
In the Mojave, the biggest fight centers on high-voltage lines that are needed to reach areas where energy will be produced. The likely spots are separated from customers by two large national park properties, several wilderness areas and military bases like the Twenty Nine Palms Marine Corps reservation.
Finding a route for a project called Green Path North, which traverses those installations, fragile ecosystems and angry communities, has been difficult. One path “goes right between my house and the mountains,” Mr. Harvey said.
That is the kind of strife that Mr. Zichella and Ms. Wald are trying to ease.
Aware that internal debate is unavoidable, Carl Pope, the executive director of the Sierra Club, suggests a greater effort to balance competing priorities.
“What you have to do,” Mr. Pope said, “is show that you’ve done the best job you can.”
Safeguards on drilling make sense
COMMENT: I'm not aware of oil and gas industry complaints in BC, but the relationship of the industry to government is very much an insiders club exclusive mainly to industry, the Oil and Gas Commission, and the Ministry of Energy, Mines and Petroleum Resources. Only those people would know what complaints there are - and how industry is mollified or government softens its position.
We do know that the royalty structure hasn't been visited in over a decade which suits industry marvellously. BC's maximum royalty threshold of $3.40 per thousand cubic feet (mcf) of natural gas was set when $3.40 was thought to be an extraordinarily high price for gas. Gas shot through $3.40 in the middle of 2002 and hasn't come close since (yesterday's index price at Sumas was $4.70/mcf, well off the recent year averages in the $6-$8 range). There have been absolutely no echoes of BC trying to repeat Alberta's royalty review of last year.
But nominal royalties are only the tip of a giveaway iceberg to the oil and gas industry. Some of the "regimes" concocted within MEMPR for unconventional operations, like coalbed methane, deep drilling, summer drilling, have bent over backwards to discount the royalty and grant royalty credits to encourage investment. The "Net Profit Royalty" scheme can permit a project with a royalty as low as 2%.
What possible public interest does that serve? Especially since it is intended to stimulate more fossil fuel production in a world in climate crisis.
I'm off topic. Sorry.
This article is written by an industry insider in Colorado who thinksthat environmental regulations and the costs they impose on industry are just fine, and entirely appropriate.
By Michael P. Dowling
The Denver Post
Posted: 03/22/2009
Oil and gas brought me to Colorado 25 years ago. I spent 10 years in the business, supporting my family while developing resources we all use. This innovative industry now performs feats that were unthinkable in my day, routinely drilling wells a mile deep with a half-mile horizontal reach. Two dozen of these wells are drilled from a single pad. A single large pad can cost almost $50 million and resembles a factory in a hay meadow or alongside a stream.
The upside of this amazing technology is that we are unlocking valuable domestic energy resources. But we are also industrializing large swaths of our natural and agricultural landscapes. Colorado has over 38,000 producing wells, with another 100,000 in sight. The number of well permits issued has increased 700 percent in less than 10 years. By contrast, car and home ownership took a half-century to double.
The pace of oil and gas operations has largely sidestepped the environmental protections adopted by other industries over the past 40 years. No one would suggest we can revive the auto industry by eliminating air bags or catalytic converters and going back to leaded gasoline. No one thinks we should stimulate the housing industry by canceling modern safety and environmental standards. Yet some suggest that protections recently adopted by the Colorado Oil and Gas Conservation Commission be delayed or dropped. This would be an historic mistake.
Relative to the million-dollar cost of drilling and operating modern wells, there is minimal cost to recording the types of chemicals pumped underground, lining waste pits, controlling noxious fumes near schools and hospitals, and locating new facilities a few hundred feet away from public water supplies. Likewise, rules requiring operators to cluster facilities and share roads where practicable and to avoid the most critical tiny percentage of wildlife habitat when they can will cost little and may save money in the long run.
Oil and gas companies assess every proposed well's viability across a broad range of future economic conditions. This is a cyclical industry. Drilling rig rental rates, which pushed $30,000 per day one year ago, are now headed to $15,000 or lower. An average well will produce for up to 20 years, so the cost of sensible steps to protect public health and the environment is truly lost in the noise of these bigger factors.
Some people call the new rules a tax on industry. This is nonsense. If I make a dollar profit while shifting 10 cents of pollution and cleanup to my neighbor, I have merely made him pay some of my production costs. The entire economy benefits if I pay the smaller, upfront penny or two to prevent my own mess in the first place. It's like having a painter spread a drop cloth so he doesn't ruin your carpet.
It's no secret that the oil and gas industry is hurting. Yet this is a famously profitable and resilient business. Operators will continue to drill in Colorado in expectation of higher prices, though the pace may be slower than in recent years. Every one of these new wells will mark the land for decades and will impact our air and water, our wildlife and our lives.
We have the knowledge and the ability to do this right. Won't it be a shame if we don't?
Michael P. Dowling is a former oil and gas industry executive and a member of the Colorado Oil and Gas Conservation Commission.
March 24, 2009
U.S. may tug on B.C. wallet for shipwreck protection
By Jack Knox
Times Colonist
March 17, 2009
Just in time for the 20th anniversary of the Exxon Valdez disaster comes this scary little reminder from our own backyard:
Last Monday, as it was about to enter Juan de Fuca Strait en route to Vancouver, the 541-foot grain ship Vijitra Naree got into trouble, had to shut down its main propulsion engine, began drifting toward Duntze Rock in two-metre swells.
Not keen on a cargo ship poking a hole in its hull, Washington state authorities sent the rescue tug Hunter chugging out from its base at Neah Bay.
It was the 42nd time in 10 years that the tug has churned to the aid of a crippled ship -- the 42nd time that we Canadians have piggybacked on Washington taxpayers who have been shouldering the entire cost of preventing shipwrecks in the strait.
But if all goes as planned in the state house at Olympia today, the $3.6 million US annual cost of keeping the tug at Neah Bay will soon shift to the ships themselves -- but only the ones bound for American ports. Canada will still get a free enviro-ride.
Not that spilled fuel respects borders. In 1988, when an oil barge sank off Grays Harbor, Wash., 250 kilometres from Vancouver Island, beaches were fouled from Sooke to Nootka Sound. In July 1991, when the Japanese fishing vessel Tenyo Maru sank near the entrance to Juan de Fuca Strait after colliding with the Chinese freighter Tuo Hai, oil drifted as far south as Oregon.
The Tenyo Maru went down with roughly 1.7 million litres of fuel on board. That's slightly less than the fuel capacity of the Vijitra Naree.
Other cargo ships carry four times as much.
The oil tankers that pass through the strait each day might carry 150 million litres -- four times as much crude as was spilled by the Exxon Valdez when it ground into Bligh Reef in Prince William Sound on March 24, 1989.
The fact that the Vijitra Naree was drifting toward Duntze Rock set off Fred Felleman's radar. "I consider it the Bligh Reef of Washington," the Seattle-based environmental consultant said yesterday. Most of us might be blasé about the thousands of ships that slip past our front porch each year -- tankers hauling Alaska crude to Cherry Point, Asia-bound coal carriers from Roberts Bank, tugs pulling barges of Vancouver Island gravel all the way to California -- but Felleman is keenly aware of the potential for disaster to strike in the strait, which is why he has been leading the charge for tighter shipping regulations for the best part of two decades.
Which is also why he's happy to see state legislators pushing a bill that would transfer the cost of the rescue tug to the shipping industry as of July 2010.
State funding has always been a year-to-year thing -- "it's basically been an annual bake sale" -- so the bill will bring certainty.
It will still not, however, bring equality.
The cost to the industry has been estimated at $300 to $600 each time a ship sails through the strait.
But since Washington has no jurisdiction over vessels sailing to and from Canada, the fee would only apply to ships using U.S. ports. That's despite the fact that the strait is basically a two-lane international highway -- inbound vessels use the American side, outbound use the Canadian. Where Washington pays to keeps that rescue tug at Neah Bay, Canada relies on "tugs of convenience" to aid disabled vessels -- the only problem being that such tugs are rarely found at the western end of the strait.
The bill being debated in Olympia carries a clause calling on the state to ask B.C. to "share the marine response assets required under this act." In other words, they're saying they're tired of giving us a free ride and it's time for Canadians to share the responsibility.
As it is, when it comes to protecting the shores of Vancouver Island from the next Exxon Valdez, we should all be singing God Bless America.
© Copyright (c) The Victoria Times Colonist
See also:
Legislation makes Strait's oil-spill boat permanent
The mighty tug protects state waters
March 21, 2009
Natural Gas, Suddenly Abundant, Is Cheaper
COMMENT: Natural gas prices were an intense subject of discussion years ago with the GSX Pipeline. At the time, BC Hydro's energy economist was predicting a long term future price for natural gas of $3 a thousand cubic feet. Gas had recently shot up to $10 with the California energy crisis, so GSX opponents were taking every opportunity to observe that $3 might be a tad unrealistic. As you can see from the gas price chart at the bottom of this article, BC Hydro and the BC government abandoned their economist and bailed on the Duke Point gas plant and the GSX, just before gas flared up to $16/mcf.
These high prices stimulated investment in getting cheap gas to North America and elsewhere in the high-demand, developed world - the LNG industry took off in tandem with the prices and we witnessed proposals for LNG import terminals all around North America. Well, prices have fallen again, with the discovery of a lot of shale gas from northeastern BC to Texas, and with global economic collapse. And fallen too have been many of the LNG import proposals. One of BC's LNG projects, Kitimat LNG, last year said it was reversing direction and would be exporting LNG (though some observers think the company is just trying to mollify its investors and keep the project alive, somehow, anyhow). The Texada Island project of WestPac LNG has disappeared from sight, gone silent, economically unviable, and resoundingly unpopular, with BC Hydro stating categorically that it has no intention of buying electricity from any new natural gas fired generation plants in BC.
That doesn't mean it is dead. More likely it is undead, out there among the vast wasteland of other unviable and unbuilt projects which came in with so many exuberant promises ... and quietly faded away a year or two later.
By CLIFFORD KRAUSS
New York Times
March 20, 2009
HOUSTON — The decline in crude oil prices gets all the headlines, but the first globalized natural gas glut in history is driving an even more drastic collapse in the cost of gas that cooks food, heats homes and runs factories in the United States and many other countries.
A liquefied natural gas plant on an island near Russia will supply Asia and the United States. (Natalia Kolesnikova/Agence France-Presse — Getty Images) |
Six giant plants capable of cooling and liquefying gas for export are due to come on line this year just as the economies of the Asian and European countries that import the most gas to run their industries are slowing.
Energy experts and company executives say that means loads of gas from Qatar, Egypt, Nigeria and Algeria that otherwise would be going to Japan, Korea, Taiwan and Spain are beginning to arrive in supertankers in the United States, even though there is a gas glut here, too.
With industrial and utility use of natural gas declining, gas prices in the United States have already declined by two-thirds since the summer. Prices are not likely to go down much more, experts say, but an increase in imports is likely to keep them low until the global economy recovers and drives demand back up.
That is good news for American consumers and many businesses, since gas provides about a fifth of the power generated by electric utilities and is a vital component for fertilizers, plastics and other industrial products. But it is bad news for proponents of energy independence, who cheered the boom in domestic gas drilling and production over the last four years.
Gas industry executives expect that liquefied gas imports into the United States will at least triple in the second half of this year. That comes as domestic producers have lowered their rig count in natural gas fields around the country by 50 percent in the last several months because of the fall in prices, leading to an expected drop in production by the end of the year.
Normally a decline in production would result in a rising gas price, leading to an eventual recovery in drilling. But energy executives say that increasing imports will probably delay a recovery in production, which until now depended almost entirely on national market forces.
“The United States used to have gas bubbles all by itself; now the world can have a gas bubble,” said Donald Hertzmark, a consultant who advises energy companies on international gas projects. “Over the next few years, a globalized gas market will exert a moderating influence on gas prices here in the United States.”
For Mr. Hertzmark the decline in natural gas prices will mean a major stimulus for the domestic and world economies. American oil executives see it another way.
Rodney Waller, a senior vice president at the oil and gas company Range Resources, called the expected surge in liquefied natural gas imports part of a “pile on” of problems including plummeting demand, prices and credit besetting companies that stretched their exploration and production budgets in recent years to meet expanding demand.
“Any time you push the price down, you push down the ability of U.S. independents to add reserves and production domestically,” he said. He warned that some small and midsize oil and gas companies “with debt that are in trouble now will simply get pushed over the brink.”
Natural gas is becoming a world commodity like oil. It is still loosely connected to world oil benchmark prices and its price, usually set by longer-term contracts everywhere except for the United States and Britain, can diverge widely from one continent to another. Until the last few years, liquefied natural gas was a high-priced necessity for countries that did not produce their own gas supplies or have access to piped reserves; but it now has become a cheap economic driver for countries like Japan with few energy resources.
But as more terminals have been built, the amount of gas that is shipped from one continent to another in giant tankers has climbed. And now the emergence of the global market in gas is about to take a giant leap.
The global capacity for liquefied natural gas exports of 200 million tons a year will increase by 25 percent with the completion of six new plants in Qatar, Russia, Indonesia and Yemen, totaling $48 billion in investments, and the upgrading of a seventh plant in Malaysia. National energy companies in those countries, assisted by ExxonMobil, Total, BP and Shell, rushed construction of those projects in recent years to satisfy the mushrooming appetite for energy around the world. More large plants are due on line in 2010 and 2011.
“We had many years of ever increasing demand so the world geared up for that, but what the world did not prepare for was an economic recession that is global in scope and in impact,” said Darcel L. Hulse, president and chief executive officer of Sempra LNG, a division of Sempra Energy that operates an import terminal in Mexico and is completing construction on a facility in Louisiana. “That is what has exacerbated the imbalance of supply and demand to such an excess.”
Some analysts say companies may slow completion of a few of the new export terminal projects. “The companies will want to bring them on line because they want to recoup their investments made over four to five years and pay off their loans,” said Nikos Tsafos, an analyst at PFC Energy, a firm that advises governments and energy companies.
The international gas glut and expected surge in gas imports represent a reversal from trends of less than a year ago when the world suffered a shortage of liquefied gas and prices spiked in the United States and elsewhere.
Natural gas in the United States costs a little over $4 per thousand cubic feet, down from a peak of more than $13 last year. Oil now costs a bit more than $51 a barrel, down from a peak of more than $145 in July. On average, world spot prices for liquefied natural gas cargoes have come down by more than two-thirds since last summer.
March 18, 2009
Tri-National Meeting of Energy Sector Workers
Major Energy Sector Workers Conclude Meetings in Mexico City
Carleen Pickard
Council of Canadians
March 18, 2009
Mexico City / March 18, 2009 – Representatives from leading energy sector unions and civil society organizations from Mexico, the United States and Canada met in Mexico City for the third annual round of meetings. This network formed in 2007 to confront the secretive and undemocratic Security and Prosperity Partnership (SPP) being discussed in meetings of the leaders of the three countries.
Without a set date for next the SPP Summit, energy sector workers met this year to discuss and share challenges and strategies of workers and civil society with regard to the energy sector in the wake of the global economic crisis. The object of the meeting was to develop a common vision for energy security in North America, as well as coordination and an ongoing strategy for solidarity and support.
Mexican and Canadian delegates were critical of their governments’ responses to the economic crisis to date in protecting workers while delegates from the United States were optimistic about President Obama's stance. Recognizing the important opportunity to confront climate change, an emphasis was placed on union involvement in the development of a greener energy workforce and ensuring fairness for workers. Central to North America's energy future is a just transition strategy to protect workers and communities whose livelihoods are threatened or have been lost in the move away from more intensive forms of energy extraction and generation.
Members of the tri-national network also called for the renegotiation of the North American Free Trade Agreement, in particular the proportionality clause obligating one country to export renewable and non renewable resources to another country even in times of scarcity in the country of origin. This is of particular threat to Canada, which supplies close to 70% of the oil imported to the United States. Under NAFTA Canada is prohibited from reducing this supply.
The final declaration from the tri-national meetings states: “we will move toward union of the movements in each country in order to address the negative consequences of trade agreements and neoliberal globalization policies, and create more just and sustainable conditions for our countries.”
Delegates from Canada included: Communications, Energy and Paperworkers Union National President Dave Coles and Vice President Joseph Gargiso; the Canadian Union of Public Employees, including Catherine Bert, representing the workers of Hydro Quebec, local 4250; the United Steelworkers Union; Common Frontiers; Reseau Quebecoise sur L'Intergration Continental RQIC; KAIROS Ecumenical Network; and the Council of Canadians.
of Energy Workers Of North America
Mexico City, March 16 – 18, 2009
At its Third Tri-National Meeting, unions, networks and social movement organizations from the energy sector of Canada, the US and Mexico committed to seeking solutions to the major challenges facing the sector in their respective countries and in the region overall.
The three countries are facing serious problems in their attempt to confront the current global economic crisis affecting North America as well as the other countries of the world: the crisis of the banking system, unemployment, the criminalization of social protest, the destruction of productive forces, deterioration of the environment, the irrational exploitation of energy resources, privatization and the dismantling of social programs and services.
The response of the governments of the three countries has been different. In Canada and Mexico, people of the region have also been unable to exercise democratic and effective control over their governments, which seem to be more concerned about protecting the interests of the transnational elite. The arrival of Barack Obama in the presidency of the United States, elected democratically, opens the way to a new era in the relations among the three countries.
Workers in the energy sector in the three countries, along with their unions and social movement groups, have been bearing the brunt of this frontal attack, with the disappearance of jobs en masse, and the loss of social supports. This is why we are seeking strategies and common actions to take on these challenges.
In that search, the major guiding principles of our tri-national relationship are:
1. Solidarity within and among sectors and peoples for the mutual defence of human, labour and environmental rights, including the rights of indigenous peoples and communities.
2. Sustainability, including on one hand, the creation of “green” jobs and generation of renewable energy from sources that are less polluting and lower in carbon emissions, and on the other, just transition toward a new energy grid, which implies compensating and supporting those who have lost or are at risk of losing their jobs in the sector as well as for communities affected either by the desertion of obsolete industries or changes in land use for the production of alternative energy sources.
3. Sovereignty of peoples to exercise their right of access to and use of their natural and energy resources limited only by democratic will, and the civilian oversight of the administration and regulation of resources, for example, removal of obligations relating to NAFTA’s proportionality principle, which requires the export of renewable and non-renewable resources even in times of scarcity in the country of origin.
Areas of action:
1) Development of a common vision on energy and reinforcement of coordination within each country;
2) The renegotiation of NAFTA to ensure that trade meets the needs of peoples and not those of corporations, and the rollback of the anti-democratic and secret SPP process;
3) The struggle for democratic labour law reform in the three countries to encourage free association, trade union autonomy, collective bargaining and trade union democracy and against neo-liberal reform proposals (such as the Lozano proposal in Mexico) and in favour of pro-union measures (such as the Employee Free Choice Act in the US);
4) International pressure on governments to enforce and respect labour rights, for example through the campaign against employer protection contracts in Mexico;
5) Pressure campaigns against transnational companies that violate labour human and environmental rights, by taking advantage of the influence unions in one country can bring to bear on the actions of the same employer in other countries;
6) Pressure to implement international measures to protect the environment that punish companies rather than developing countries;
7)Campaigns to stop privatization and deregulation processes;
8) Building alliances and cross-sectoral unity to look for holistic solutions;
9) Efforts to defend the environment to ensure a sustainable future for workers.
We are critical of the recent proposed statement of the Fifth Summit of the Americas to be held April 16 to 18 in Port of Spain, Trinidad and Tobago, which stated that “the principles of the market, free trade and investment systems…are fundamental for economic growth, employment and the reduction of poverty.” On the contrary, we insist that this is the time to question such positions and propose a definitive rejection of the neo-liberal model. We should promote policies that favour energy and food sovereignty, mechanisms of citizen control and effective wealth redistribution programs that contribute to social justice.
We are committed to ongoing coordination with the unions in the energy sector along with the networks and social movement organizations and the global union federations in a spirit of hemispheric solidarity. Through new coordination mechanisms we are developing we will move toward union of the movements in each country in order to address the negative consequences of trade agreements and neo-liberal globalization policies, and create more just and sustainable conditions for our countries.
Carleen Pickard
Director of Organizing/Council of Canadians
#700 - 170 Laurier Ave W Ottawa, ON K1P 5V5
t. 613.233.4487 x 223/1.800.387.7177 c. 613.301.8346
Founded in 1985, the Council of Canadians is Canada's largest advocacy organization, with members and chapters across the country. If you believe that our social programs and public services should be strengthened, not privatized; that our foreign and trade policies should be independent, not subservient to the United States; and that our water and natural resources should be protected, not exploited, please join us as a member.
www.canadians.org
Obama Tries to Draw Up an Inclusive Energy Plan
By JAD MOUAWAD
New York Times
March 17, 2009
After gasoline prices rose above $4 a gallon last summer, Republican cries of "drill, baby, drill" forced candidate Barack Obama into a rare retreat. Under pressure, he said he would support some expansion of offshore oil drilling, while still emphasizing conservation and renewable energy.
Now, as the Obama administration outlines its energy plans, it is caught between oil companies, who are reminding the president of his campaign pledge, and environmental groups, who are demanding a reinstatement of the drilling ban that Congress lifted in September.
The renewed fight over offshore drilling comes amid efforts by the White House to map out an ambitious new energy policy for the country. For the first time since the Carter administration, an American president is putting energy at the center of his domestic agenda.
Mr. Obama must decide what strategies are most likely to achieve his goals of diversifying the nation's fuel supplies, developing alternative energy sources, reducing oil consumption, and curbing carbon emissions that contribute to global warming.
Part of that equation is what role the administration sees for domestic supplies. Since taking office, it has scrapped rules issued in the final days of the Bush administration that would have opened up vast new areas for offshore drilling well into the next decade.
At the same time, the administration is allowing the Interior Department to go ahead on Wednesday with a long-planned auction of leases in the Gulf of Mexico that includes 4.2 million acres that had been off limits since 1988.
For the moment, the offshore debate has been eclipsed by the economic crisis and the sharp fall of oil prices. Gasoline now sells for less than $2 a gallon on average, and oil has fallen about 70 percent from its summer peak.
But the magnitude of the nation's energy challenge is not growing smaller. While the United States is the world's top oil consumer, its output has been falling since 1971. Oil imports now make up more than 60 percent of the nation's daily consumption of 19 million barrels.
Yet for more than 30 years, drilling off most of the American coastline has been forestalled by opposition from coastal states and environmental groups. The skeptics insist that the nation cannot drill its way out of oil dependency and that expanded drilling poses an environmental threat to coastlines. About 85 percent of the nation's coasts are now off limits, including most of the Pacific and Atlantic seaboards and the western coast of Florida.
Yet considerable untapped oil may lie offshore. Around the world, deepwater exploration has been the most dynamic source of petroleum growth in the last decade, in places like West Africa and Brazil.
American waters in parts of the Gulf of Mexico where drilling is allowed have been the biggest source of growth in domestic oil production since the 1990s, because of deepwater discoveries and technological advances that have allowed drilling in ever-deeper waters. As a result, estimated reserves in the Gulf of Mexico have grown sevenfold in the last 30 years.
The Interior Department estimates that undiscovered oil reserves total 86 billion barrels, four times the nation's official proven reserves. The bulk of that potential oil, nearly 68 billion barrels, is in areas that are already accessible to drilling in the Gulf of Mexico and Alaska.
Based on decades-old surveys, the Interior Department estimates that an additional 18 billion barrels may be found in the coastal zones that were off limits until recently. But the oil industry thinks that could be a serious underestimate given the lack of exploration.
Since Mr. Obama's inauguration, petroleum executives have used every opportunity to press their case for more domestic production. With fewer places to drill around the world, the biggest oil companies, including Exxon Mobil, Chevron and Shell, argue that more domestic oil production is not incompatible with the administration's goals of lowering imports and using energy more efficiently.
In hearings before Congress, at analyst meetings and petroleum conferences, and in television advertising, oil companies and their main trade group, the American Petroleum Institute, have highlighted the sector's contribution to jobs and revenue for the government, and argued that oil and gas would be needed for decades, even with the development of alternative fuels.
They also say that energy prices could rise sharply once the economy comes back to life, and that without more supplies, the world risks another energy shock.
"The need to make more oil and natural gas available for Americans is clear," Tim Cejka, Exxon's president of exploration, recently told the House Committee on Natural Resources. "The United States'
continued economic growth and prosperity depend on access to reliable and affordable supplies of energy."
On the other end of the spectrum, environmental groups are pressing Congress to reinstate a moratorium on offshore drilling, which alarmed Democrats allowed to lapse when prices surged last year. For some of these groups, the oil industry's position is wrongheaded at a time when the nation is embarking on a drive to reduce emissions from fossil fuels.
"We now have an opportunity to take a much more balanced approach to our energy system," said Wesley Warren, the director of programs at the Natural Resources Defense Council. "But the oil industry is not saying anything new here, which is very disappointing."
The battle over offshore drilling is being renewed as relations between the new administration and the oil industry, which enjoyed a cozy relationship with the Bush administration, have soured.
The president's budget would increase taxes on oil companies and would raise the cost of fossil fuels in order to pay for alternative energy sources. The industry has also objected to being stripped of tax credits, which it claims will harm production in the long run.
Charles T. Drevna, the president of the National Petrochemical and Refiners Association, said the new administration "looks at the oil and refining industry as a piggy bank to fund other energy programs."
Since taking office, the administration has rolled back many of President Bush's energy policies, including "midnight rulings" that opened up oil and shale developments in Utah and Colorado, and greatly expanded leasing in the outer continental shelf, as offshore waters are known.
The administration has made clear that it does not want to be rushed about offshore drilling. The Interior Department plans to hold a series of public meetings in April before drawing up a five-year plan for exploration within the next six months.
In the meantime, it is seeking to increase renewable power sources.
On Tuesday, the Interior Department resolved a two-year standoff with the Federal Energy Regulatory Commission on which department has authority to issue offshore wind permits. The disagreement had forestalled the development of alternative energy offshore.
"The outer continental shelf will have its niche place in our energy policy," Ken Salazar, the secretary of the interior, said in an interview. But he added that offshore oil supplies "should be looked at in the context of a comprehensive energy policy."
March 11, 2009
Washington big guns take up oil sands cause
Claudia Cattaneo
Financial Post
March 10, 2009
From the recently formed Center for North American Energy Security (CNAES), headed by former Republican Congressman Tom Corcoran, to the American Petroleum Institute (API), some of the world's major oil companies and former U.S. ambassadors to Canada like Gordon Giffin, some big guns in Washington's lobby community are taking up the oil sands cause.
Rather than leaving the Canadian embassy, Alberta's government office in Washington or Canadian oil sands developers to do all the talking, American interests are throwing their weight behind Canada's oil to protect their investments from the green agenda of President Barack Obama.
Mr. Corcoran said there has been intense lobbying in the United States to limit the use of Canadian oil sands. "The new development is that there is pushback. A number of the major oil companies ... have substantial interests in Canada. ConocoPhillips, Exxon Mobil, Shell, have a corporate strategy to develop the oil sands and are well aware of the sizeable market here in the U.S.
"I think a good case can be made for the importance of Canadian oil sands to the U.S. It just has not been made up to this point," said Mr.
Corcoran, who encouraged Canadian oil sands companies to join his group's efforts.
Lobbyist Michael Whatley, a partner with HBW Resources in Washington and former chief of staff to former Republican Senator Elizabeth Dole, said Canadian envoys like Alberta's Gary Mar are doing a great job -- he described him as a "force of nature" in the U.S. capital -- but Washington's insiders can do more.
"Gary is limited in terms of the strict lobbying he can do, because he is a governmental official from a foreign government," Mr. Whatley said. "We work with the Administration, with Congress, outside the beltway with other trade organizations and groups, and we try and build strong allies.
We work with the truckers, the manufactures and the chambers, and make sure that people are echoing what we say when we go and meet with policy makers.
"It's a big-league issue. And it needs big-league players," Mr. Whatley added.
Indeed, Mr. Whatley, who also represents CNAES, said his group is borrowing from the playbook of the environmental lobby, which does five things really well: It uses consistent messages -- no oil, no coal, clean water and clean air; it is aggressive and loud; it builds support outside Washington, working state governments and foreign governments; it rewards good political behaviour and punishes bad behaviour to the point of taking down opponents in election campaigns; and it recruits good allies, such as organized labour or educators.
Jim Ford, vice-president of regulatory affairs at API, said he's not in a position to judge the effectiveness of Canadians in Washington. "What I can tell you is that we do get heard," he said. "We are a constant part of the conversation on policy that affects our industry."
The Alberta government first began pushing the oil sands in Washington when in 2004 it dispatched Murray Smith, a former energy minister, to the U.S. capital to promote the oil sands as a secure source of energy to a sympathetic Republican administration.
Since then, they have become well known, but as a source of "dirty oil"
that key U.S. legislators want to do without.
"Today, because of the environmental issues, it's not about selling oil, it's about defending oil," said Mr. Mar, Mr. Smith's successor. "It's a harder job. I came to recognize that energy and environment are two subject matters that are inextricably intertwined, and a third one is economic security."
Mr. Mar said his job has expanded to work with state and municipal governments, some of which are developing policies that could be hostile to the oil sands, from low carbon fuel standards, to refusing permits to refineries wanting to take more Canadian heavy crudes, to prohibiting state procurement of oil sands-derived fuels.
He welcomes the help from the U.S.
"It's an effort that I think is going in the right direction in terms of educating the policymakers and administrators of the importance of this resource," he said. "Of the 13 countries the U.S. gets its energy from, only three are open and transparent and democratic, Canada, Mexico and Norway, and I would argue that we have the most stringent environmental standards of any of the 13."
The lobby to defend the oil sands has been ramping up in the past two years.
Part of the impetus came from the environmental movement, seen as picking on the oil sands as a culprit of climate change.
"Somehow, [the oil sands has] become the poster child," said one diplomatic source who noted the focus on Canada was deliberate because it's a democracy where green groups can put pressure on elected officials.
"It's no accident at all that nobody's moaning and bitching about production from Venezuela's heavy oil," the diplomat said. Venezuela provides 11% of U.S. oil imports, Canada 23%.
Other catalysts for the surge in the pro-oil sands campaign were Section 526, part of U.S. legislation passed in December, 2007, that threatened to prohibit use of fuels derived from oil sands in federal vehicles; high gasoline prices that heightened concern about America's energy security; California's push for a low carbon fuel standard that is seen as a template for a national standard.
The appointment of powerful Democrats to key climate change and energy posts and Mr. Obama's determination to quickly implement climate change legislation, got even more of the energy lobbyists attention.
"We definitely have a changed situation in Washington today, both as a result of the election of President Obama and stronger Democratic majorities and, therefore, stronger support for doing something definitive on climate change, on doing definitive things on moving to alternative and renewable sources of energy," Mr. Ford said.
Mr. Ford said API, a trade group whose membership includes 400 companies involved in all aspects of the oil industry, from production to refining, began making the oil sands a "louder" part of its conversations with the Washington community about two years ago, when policymakers were making moves to inhibit its use.
API defends the oil sands as necessary to North American energy security.
It ranks the oil sands as one of its top priorities, linked to climate change and the Low Carbon Fuel Standard, along with tax policy, access to oil and gas reserves and renewable fuels.
Its oil sands message: "Canada's our very nearby neighbour, we have the most cordial relations that one can have, they are already our largest source of imported oil, and the potential for being able to increase our level of energy security by increasing the amount of oil that we receive from Canada, from our point of view, is an attractive prospect," Mr. Ford said.
"We like to point out that bitumen is basically heavy oil and that there are other sources of heavy oil imported in this country, Venezuela being a good example, and that's been going on for decades. And when folks raise greenhouse gas concerns, we basically point to the fact that both the U.
S. and Canada are figuring out and coping with climate change."
Meanwhile, the Center for North American Energy Security (CNEAS) advocates the development of unconventional fuels like the oil sands, oil shales and heavy oil in the U.S., Canada and Mexico.
"It's just crazy to take reserves of the magnitude that we are looking at here, in terms of oil sands in Canada, oil shale in the U.S. and heavy oil in both places, plus Mexico, off the map," said Mr. Whatley.
Other members of the pro-oil sands lobby include the Canadian American Business Council; the Consumer Energy Alliance, lawyers like Mr. Giffin (who sits on the board of top oil sands developer Canadian Natural Resources Ltd.) and James Blanchard, a former American ambassador to Canada and a director of Enbridge Inc., the pipeline company that ships most of Canada's oil to the U.S.
Observers said the Washington offices of U.S. oil majors like Exxon Mobil Corp., Chevron Corp. and ConocoPhillips, have become active on the file on their own and through organizations they belong to. Foreign majors like BP PLC, Royal Dutch Shell and Total SA are also increasingly participating in the oil sands debate.
March 10, 2009
Legislation makes Strait's oil-spill boat permanent
COMMENT: Quiet days on the LNG front, so here's a story about rescue tugs. These are the specially powered and equipped tugs which are dedicated to rescuing ships in distress. They're expensive, but a necessary part of the regime to reduce shipping and spill risks.
Following the Exxon Valdez disaster twenty years ago, an impressive regime of regulation and protective facilities, including rescue tugs, was implemented in Prince William Sound. A Tanker Exclusion Zone (TEZ) was agreed - for tankers only, unfortunately - that draws a line well west of the BC coast. And around 2000, a rescue tug was installed at Neah Bay, near the northwest tip of the Olympic Peninsula on the Strait of Juan de Fuca. But funding for the Neah Bay tug was always seasonal, impermanent, and at risk. Two years ago, Washington State agreed to pick up the full tab, for 12 months coverage.
A news release a few days ago announced that "Shippers will pay for tug in Juan de Fuca Strait". We've now heard Enbridge make the undertaking that it will provide rescue tug capacity for the tankers that will service its Northern Gateway Pipeline which if it is built will trigger regular oil and condensate tanker traffic from Kitimat out to the Pacific.
Goodness only knows, we need rescue tugs on the mid & north coast - there's enough shipping, barging, and tankering already going on. Depending on this most-assuredly-US tug in Neah Bay, and whatever tugs of convenience might be available on the mid-coast, is asking for trouble.
But the Enbridge "solution" is worse than the problem. It's like striking a deal with smokers in the office to install exhaust fans, only if the smokers can smoke at their desks.
By ROBERT McCLURE
P-I Reporter
Seattle Post-Intelligencer
March 8, 2009
Shippers to pay tug's tab
For more than two decades, environmentalists and their allies have pushed for a tugboat to be stationed at a pivotal point along Washington's coast to rescue ships in danger of running aground and spilling oil. Now, it looks like they are finally about to win that fight.
The Washington Senate and House of Representatives last week both passed nearly identical pieces of legislation (HB1409 and SB5344) requiring oil tankers, cargo ships and other vessels entering Washington waters through the Strait of Juan de Fuca to pay for a tug to be assigned permanently to Neah Bay, near the state's extreme northwestern tip. Minor differences in the bills are expected to be worked out, and Gov. Chris Gregoire is expected to sign the legislation.
Passage is expected to roughly coincide with the 20th anniversary of the Exxon Valdez oil spill March 24. That spill in Alaska's Prince William Sound is credited with vastly improving oil-spill safety measures nationwide -- although risks remain, and scientists say the risk of a major oil spill is the single greatest short-term threat to the survival of Washington's imperiled orcas.
Even before the Exxon catastrophe, Seattle environmental activist Fred Felleman was proposing the stationing of a tug to aid vessels in distress. And he's worked the issue at the state and federal level ever since.
"There's a great sense of relief that we were able to learn the lessons of Prince William Sound without having to suffer the impacts of a catastrophic spill first," Felleman said. "Even though it took 20 years, it's still better than having to learn by the school of hard knocks."
Since 1999, the state has paid to temporarily station a tug at Neah Bay during the stormy winter months. But environmentalists, the Makah Indian Tribe and others pushed for a year-round tug, saying accidents happen in all kinds of weather. They also wanted a permanent funding source.
The Legislature responded by telling shippers they will have to pay the cost of the tug, currently about $3.5 million a year, and that they have until December to work out among themselves how to split the costs, and must fork over money starting in July 2010.
Several factors made 2009 the year to finally pass the measure, advocates said:
- The economic downturn. Legislators wrestling with the budget devil were happy to unload $3.5 million a year in costs.
- The state Department of Ecology vigorously backed the bill.
In a little-noticed development Dec. 31, the Coast Guard adopted a salvage and firefighting regulation ordered by Congress in the wake of the Exxon spill regarding oil-spill preparedness. The rule said explicitly for the first time that the federal agency would not try to pre-empt state actions requiring oil-spill protections more strict than those required at the federal level.
"The steamship operators began to run out of excuses," said Chad Bowechop, manager of the Makah Tribe's Office of Marine Affairs.
Michael Moore, who represents cargo shippers as the local representative of the Pacific Merchant Shipping Association, has long maintained the tug is not necessary. Other tugs can be mobilized if there's a problem, he said.
"I didn't think (a tug) was the best way to spend the next several million dollars of marine-safety money," Moore said. "But politically, I think the state has become committed to having the tug there."
For years, the oil industry has said it was willing to fork out part of the cost of a tug -- but that it shouldn't be the only one to pay, since cargo ships also carry hundreds of thousands of gallons of fuel. Of the 41 ships the Neah Bay tug has been called out to aid since 1999, only two were oil tankers, and one of those was decommissioned. Oil companies have been beefing up safety measures for their tankers.
One factor in the legislation's success this year was the emergence on the legislative scene of freshman Sen. Kevin Ranker, D-San Juan Island, who made the tug a campaign issue and pushed hard for the legislation. The House sponsor is Rep. Kevin Van De Wege, D-Sequim. Both legislators' districts are in and around major shipping lanes.
Ranker said he didn't want to specify what different segments of the shipping industry should pay for the tug because he thinks the Legislature should not micromanage the industry. The legislation gives the industry Dec. 1 to arrive at a decision.
"If they can't, the Legislature will do it for them, and probably none of them will be happy," Ranker said.
P-I reporter Robert McClure can be reached at 206-448-8092 or robertmcclure@seattlepi.com.
Read his blog on the environment at datelineearth.com.