Mexico’s Congress approved a bill to end a 75-year state oil monopoly and generate as much as $20 billion in additional foreign investment a year.
The nation’s most significant economic reform since the North American Free Trade Agreement secured the required two-thirds majority in a 353-134 lower-house vote yesterday. The proposal must be ratified by state assemblies, the majority of which are controlled by the alliance backing the reform.
The bill will change Mexico’s charter to allow companies such as Exxon Mobil Corp. (XOM) and Chevron Corp. (CVX) to develop the largest unexplored crude area after the Arctic Circle. Supporters say the overhaul could propel Mexico into the top five crude exporting countries while opponents say it will funnel resource wealth to foreign investors. The peso gained.
“The reform will energize Mexico’s economy,” Carlos Capistran, chief Mexico economist at Bank of America Corp., said in a telephone interview yesterday. “Congress was able to pass a better-than-expected constitutional reform.”
Producers will be offered production-sharing contracts or licenses where they get to own the pumped oil and will be allowed to log crude reserves for accounting purposes.
The rest here.
Capital New York reports:
The anti-fracking movement in New York state started with a series of ProPublica articles published in the Albany Times Union in 2008, according to a report revealed by Wikileaks.
That revelation came as part of a trove of files Wikileaks unearthed from Stratfor, an Austin-based global intelligence company. Stratfor was hired by oil and gas companies, as well as many other global corporations to investigate and profile activist groups and media organizations. One of its targets was the Pulitzer Prize-winning ProPublica, the nonprofit that distributes its investigative content to news organizations for free, including the Times Union. The report detailed the risks of drilling in the Marcellus Shale, which is the rock formation containing natural gas spread underneath the state’s Southern Tier.
The report concluded: “The growth of the Marcellus shale was largely not a controversial issue until mid-2008, when ProPublica stories given to the Albany, New York Times Union (and reprinted elsewhere) detailed researcher and activist reports of potential water contamination and carried the message that, according to ProPublica’s editor in chief, New York was about to ‘put legislative and regulatory protocols into place to give the industry carte blanche to drill wherever it chose.’ Out of this series of articles came the backlash by local groups and delays that continue to beset operations in the region.”
In 2009, Stratfor investigators provided a report to the American Petroleum Institute, which spent $503,903 on lobbying and activities including educational outreach in the first half of this year, that pinpointed growing environmental activism in the state. The group also produced a report detailing the early growth of anti-fracking groups in the state for ExxonMobil, which spent $2 million to promote fracking in New York in 2012.
The rest here.
Oppenheimer oil analyst Fadel Gheit believes oil prices are in a bubble.
Gheit says 20-30% of the current oil price reflects a “supply risk premium” that will disappear when Iran’s nuclear issue is finally resolved.
“We believe the current oil price bubble will burst eventually and the question is not if, but when and to what level,” writes Gheit in a note to clients. “Oil prices in the $75-$85 range would help spur global economic growth, keep inflation low, boost consumer confidence, and still fund many new oil projects. Settling the nuclear issue could open Iran’s vast oil and gas resources to western oil companies, increase supplies, lower oil prices and squeeze speculation out of the picture.”
The rest here.
We have to kill eagles in order to save them.
That’s now the official policy of the U.S. Interior Department. On Friday, the agency announced that it would grant some wind-energy companies permits that will allow them to kill or injure bald and golden eagles for up to 30 years without penalty.
The move is an unprecedented gift to the wind-energy industry, which has been lobbying for the 30-year permit for several years. Shortly after the deal was announced, the wind-energy lobby issued a statement that would make George Orwell proud. An official with the American Wind Energy Association declared that this “is not a program to kill eagles.” It is, he claimed, “about conservation.”
Well then. We can now rest easy. Big Wind is saving eagles by getting permits to kill them.
Dozens of environmental groups, including the American Bird Conservancy, the Conservation Law Center, and the National Audubon Society, opposed the deal. Under the headline “Interior Dept. Rule Greenlights Eagle Slaughter at Wind Farms,” Audubon issued a statement calling it “a stunningly bad move” and quoting the group’s president and CEO, David Yarnold: “Instead of balancing the need for conservation and renewable energy, Interior wrote the wind industry a blank check.” He called it “outrageous” that “the government is sanctioning the killing of America’s symbol, the Bald Eagle.”
Another group, the San Diego–based Protect Our Communities Foundation, said it remains opposed to the new permit program “because it would harm eagles, has not been adequately studied, and violates federal law.” Kelly Fuller, a consultant working for the group, told me that the permit deal “is a gift to the wind industry and a disaster for eagles and the people who care about eagles.” She said the big question now is which environmental groups will take the lead in suing the Interior Department.
There are many stunning facets to this development. Among the most obvious: It was just two weeks ago that the Justice Department finally began enforcing federal wildlife laws against the wind industry. On November 22, Justice announced that it had reached a $1 million settlement with the owner of two Wyoming wind projects that had killed protected birds.
The plea deal, with Duke Energy, marks the first time that the federal government has enforced the Migratory Bird Treaty Act against the wind industry. By bringing criminal charges against Duke — for killing 14 golden eagles and 149 other protected birds — the Justice Department ended the double standard on enforcement of the act. Over the past few decades, federal authorities have brought hundreds of cases against the oil-and-gas sector for killing migratory birds, while the wind industry has enjoyed a de facto exemption. Then, just days after finally bringing one member of the wind industry to justice, the Obama administration appears ready to give away the store.
Want more outrage? The federal government wants to give decades-long permits allowing the wind industry to kill the bird that has been our national symbol since 1782. Never mind that the Continental Congress spent nearly six years haggling over the design for the Great Seal of the United States before finally settling on the one we now have.
Never mind that the bald eagle has been a protected species under federal law since 1940. The golden eagle gained similar protection in 1962.
Never mind that, under the Endangered Species Act, the bald eagle was protected from 1976 to 2007. It finally graduated from the federally protected list — it’s among only a handful of species ever to do so — thanks only to the investment of tens of millions of taxpayer dollars in conservation efforts, including captive-breeding projects. Some of those efforts were sponsored by the Fish and Wildlife Service.
Never mind the symbolism of the bald eagle or its history. The wind industry, which already enjoys lucrative subsidies and, in many states, mandates, has declared itself “green.” And the Obama administration, in its enthusiasm for all things environmental, gave Big Wind what it wanted.
If you want to get madder still, consider this: On September 11, some of the top raptor biologists at the Fish and Wildlife Service issued a report that found that the number of documented eagle kills by wind turbines has increased dramatically over the past few years, rising from two in 2007 to 24 in 2011. In all, some 85 eagles have been killed by wind turbines since 1997. And that figure is “an absolute minimum,” Joel Pagel, the lead author of the report, recently told me. Among the carcasses: six bald eagles.
In an interview shortly after the publication of his findings in the Journal of Raptor Research, Pagel told me that he and his colleagues have since documented additional eagle kills by wind turbines in Idaho, Montana, Nevada, and North Dakota. He refused to give a number but said “it’s quite a few.” There are now 14 states where the problem has been identified, he said, adding that more than half of the eagle carcasses have been found “incidentally” — that is, by people not out looking for them. And so the total of dead eagles is likely far higher than what Pagel and his colleagues are reporting.
Want yet more more outrage? Back in April, the Fish and Wildlife Service issued a report saying flatly that “there are no conservation measures that have been scientifically shown to reduce eagle disturbance and blade-strike mortality at wind projects.” That is, the more turbines we build, the more eagles are killed. The gift to the wind industry followed only months after this report.
But the biggest outrage of all — and yes, I know there are plenty to choose from — is the claim by both the federal government and Big Wind that adding more wind turbines will have some salutary effect on climate change.
In its press release, the Interior Department maintains that the new permits will “help the renewable energy industry,” which, says Secretary Sally Jewell, is “vitally important to our nation’s future.” Why it’s “vitally important” wasn’t spelled out; undoubtedly the underlying rationale relates to the issue of climate change.
For its part, the American Wind Energy Association in its press release once again repeated Big Wind’s Big Lie, calling wind energy “one of the cheapest, fastest, most readily scalable ways available now to address climate change.”
A bigger fib is hard to conjure.
As I wrote in these pages last month, wind turbines are nothing more than climate-change scarecrows. If we accept Big Wind’s claim that all U.S. wind turbines (whose total capacity is about 60,000 megawatts) are cutting carbon dioxide emissions by 80 million tons per year, then domestic wind energy is reducing global carbon dioxide emissions by a whopping two-tenths of 1 percent. That’s a burp in a hurricane.
The math is fourth-grade simple. Global carbon dioxide emissions are now about 34.5 billion tons per year. Since 1982, those emissions have been increasing by an average of about 500 million tons per year. Therefore, if we wanted to merely halt the rate of growth in global carbon dioxide emissions by using wind energy alone — and remember, this won’t displace any of the existing need for coal, oil, and natural gas — we would have to install about 375,000 megawatts of new wind-energy capacity every year. That much wind capacity would require setting aside a land area the size of Germany every year. The foolishness of such a scheme is readily apparent, and all the more so in light of the global backlash against the wind industry, from Australia to Wisconsin.
And to add one more dash of craziness to the insanity: The American Wind Energy Association is lobbying for an extension of the production tax credit, the 2.3-cent-per-kilowatt-hour subsidy given to wind-energy generators. A one-year extension of that subsidy will cost taxpayers $6.1 billion.
In short, the Obama administration wants to allow Big Wind to kill eagles even though one species, the bald eagle, our national symbol, spent three decades on the endangered-species list. This move comes after federal biologists have documented that the eagle-kill problem is increasing, and after the Fish and Wildlife Service itself has found no proven conservation measures that could reduce bird kills at wind projects.
Big Wind may be allowed to legally kill eagles for decades to come while doing effectively nothing to reduce carbon dioxide emissions or address climate change. Big Wind wants subsidies while it does so. And all of this is happening because no one — and I mean no one — on the green Left or in the Obama administration dares to do the math.
— Robert Bryce is a senior fellow at the Manhattan Institute. His fifth book, Smaller Faster Lighter Denser Cheaper: How Innovation Keeps Proving the Catastrophists Wrong, will be published in May.
Megabucks donor to the Democratic party and President Obama, Ted Steyer — profiled last month in the New Yorker — is keeping up his pressure on Team Obama and Keystone XL. From today’s Los Angeles Times:
Tom Steyer, the billionaire hedge fund executive and environmental activist from San Francisco, chose his venue carefully.
The reference was to a speech by Obama in June in which the president declared he would approve Keystone only if backers of the pipeline could prove that the project would not accelerate climate change. The pipeline is designed to move hundreds of thousands of barrels of oil daily 1,200 miles from Canadian tar sands to Gulf Coast refineries.
The conclusion reached at Steyer’s conference was unanimous and hardly surprising. Experts invited by Steyer and other conference organizers, all of whom oppose the project, declared that it would not meet the president’s test.
The event was another reminder of how politically awkward Keystone has become for Obama. Steyer is one of the president’s biggest donors. A fundraising event he held at his home during the reelection campaign was one of Obama’s most successful. Other deep-pocketed donors listen to Steyer. Democrats in Washington are eager to tap his funds.
And Steyer is on a crusade against Keystone. The billionaire not long ago quit his job running a major San Francisco hedge fund to spend all his time campaigning on global warming issues. Pressure applied by Steyer, the star of his advertising campaign against Keystone, has helped put into limbo a project that once seemed headed for approval.
Obama’s comments at Georgetown and elsewhere since that speech have indicated that he is strongly considering denying the project the approval it needs to go forward.
The rest here.
And in other Keystone XL news, the part of the pipeline that didn’t need President Obama’s approval is set to go live January 3. Via Bloomberg:
TransCanada’s Gulf Coast pipeline can carry 700,000 barrels of crude a day to Port Arthur, Texas, from Cushing, Oklahoma. The Calgary-based company disclosed its plan to start service on Jan. 3 in a filing yesterday with the U.S. Federal Energy Regulatory Commission. That adds to the capacity of the Seaway pipeline owned by Enterprise Products Partners LP (EPD) and Enbridge Inc. (ENB), which now carries 400,000 barrels a day to Houston from Cushing. The operators have said they expect Seaway’s capacity to reach 850,000 in the first half of 2014.
[. . .]
“This pipeline startup enables refineries to move significant amount of crude from the Mid-continent to the Gulf Coast,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston. “That reinforces that the logistical bottleneck is moving from Cushing to Gulf Coast.”
Building the 700,000-barrel-a-day Gulf Coast line will cost $2.3 billion, TransCanada has said. It began construction in August 2012. After the line’s initial capacity is reached, it will be able to expand to 830,000 barrels a day, according to the company.
The pipeline was originally part of TransCanada’s Keystone XL project, which entered its sixth year of U.S. review last month. President Barack Obama initially rejected the conduit in January 2012, citing concerns with its path through ecologically sensitive lands in Nebraska.
TransCanada reapplied with a new Nebraska route last year and split the project in two, proceeding with the Gulf Coast project — the southern portion of the network that doesn’t require federal permission.
Even with success on this Gulf Coast line, it’s foolish to think Steyer will give up. The WSJ reported: “Mr. Steyer and his group contributed some $8 million to the successful election of Democrat Terry McAuliffe as governor of Virginia last month.” With that kind of money, it will be hard for Dems to say no to Steyer’s environmental agenda.
Bjørn Lomborg writes the inconvenient truth in today’s New York Times. The greater threat to the world is poverty, not climate change:
PRAGUE — There’s a lot of hand-wringing about our warming planet, but billions of people face a more immediate problem: They are desperately poor, and many cook and heat their homes using open fires or leaky stoves that burn dirty fuels like wood, dung, crop waste and coal.
About 3.5 million of them die prematurely each year as a result of breathing the polluted air inside their homes – about 200,000 more than the number who die prematurely each year from breathing polluted air outside, according to a study by the World Health Organization.
There’s no question that burning fossil fuels is leading to a warmer climate and that addressing this problem is important. But doing so is a question of timing and priority. For many parts of the world, fossil fuels are still vital and will be for the next few decades, because they are the only means to lift people out of the smoke and darkness of energy poverty.
More than 1.2 billion people around the world have no access to electricity, according to the International Energy Agency’s World Energy Outlook for 2012. Most of them live in sub-Saharan Africa and in Asia. That is nearly four times the number of people who live in the United States. In sub-Saharan Africa, for instance, excluding South Africa, the entire electricity-generating capacity available is only 28 gigawatts – equivalent to Arizona’s – for 860 million people. About 6.5 million people live in Arizona.
Even more people – an estimated three billion — still cook and heat their homes using open fires and leaky stoves, according to the energy agency. More efficient stoves could help. And solar panels could provide LED lights and power to charge cell phones.
But let’s face it. What those living in energy poverty need are reliable, low-cost fossil fuels, at least until we can make a global transition to a greener energy future. This is not just about powering stoves and refrigerators to improve billions of lives but about powering agriculture and industry that will improve lives.
Over the last 30 years, China moved an estimated 680 million people out of poverty by giving them access to modern energy, mostly powered by coal. Yes, this has resulted in terrible air pollution and a huge increase in greenhouse gas emissions. But it is a trade-off many developing countries would gratefully choose. As China becomes wealthier, it will most likely begin to cut its air pollution problem through regulation, just as the rich world did in the 20th century. But, admittedly, cutting carbon-dioxide emissions will be much harder because these emissions are a byproduct of the cheap energy that makes the world go around.
The rest here.
Our power grids rely on the green-energy version of the WOPR. Via the Los Angeles Times:
In a sprawling complex of laboratories and futuristic gadgets in Golden, Colo., a supercomputer named Peregrine does a quadrillion calculations per second to help scientists figure out how to keep the lights on.
Peregrine was turned on this year by the U.S. Energy Department. It has the world’s largest “petascale” computing capability. It is the size of a Mack truck.
Its job is to figure out how to cope with a risk from something the public generally thinks of as benign — renewable energy.
Energy officials worry a lot these days about the stability of the massive patchwork of wires, substations and algorithms that keeps electricity flowing. They rattle off several scenarios that could lead to a collapse of the power grid — a well-executed cyberattack, a freak storm, sabotage.
But as states, led by California, race to bring more wind, solar and geothermal power online, those and other forms of alternative energy have become a new source of anxiety. The problem is that renewable energy adds unprecedented levels of stress to a grid designed for the previous century.
Green energy is the least predictable kind. Nobody can say for certain when the wind will blow or the sun will shine. A field of solar panels might be cranking out huge amounts of energy one minute and a tiny amount the next if a thick cloud arrives. In many cases, renewable resources exist where transmission lines don’t.
“The grid was not built for renewables,” said Trieu Mai, senior analyst at the National Renewable Energy Laboratory.
The frailty imperils lofty goals for greenhouse gas reductions. Concerned state and federal officials are spending billions of dollars in ratepayer and taxpayer money in an effort to hasten the technological breakthroughs needed for the grid to keep up with the demands of clean energy.
Making a green energy future work will be “one of the greatest technological challenges industrialized societies have undertaken,” a group of scholars at Caltech said in a recent report. The report notes that by 2030, about $1 trillion is expected to be spent nationwide in bringing the grid up to date.
The role of the grid is to keep the supply of power steady and predictable. Engineers carefully calibrate how much juice to feed into the system as everything from porch lights to factory machines are switched on and off. The balancing requires painstaking precision. A momentary overload can crash the system.
California has taken some of the earliest steps to address the problems. The California Public Utilities Commission last month ordered large power companies to invest heavily in efforts to develop storage technologies that could bottle up wind and solar power, allowing the energy to be distributed more evenly over time.
Whether those technologies will ever be economically viable on a large scale is hotly debated. The commission mandate nonetheless requires companies to produce enough storage by 2024 to power about 1 million homes.
“Energy storage has the potential to be a game changer for our electric grid,” Commissioner Mark Ferron said.
Some utility officials warn, however, that the only guarantee is that ratepayers will be spending a lot. The commission’s goals, while laudable, “could cost up to $3 billion with uncertain net benefits for customers,” Southern California Edison declared in a filing.
$3 billion? Have fun with that California. The rest here.
Let’s hope so. Bloomberg:
Canada’s bid to become what Prime Minister Stephen Harper calls an energy “superpower” is at risk as approval delays for new pipelines threaten an industry already hurt by high costs and rival production.
The world’s sixth-largest crude producer can’t get its surging crude supplies to markets in Asia where prices are higher than in North America. Decisions in the next year or so on proposed pipelines designed to connect oil-sands production to supertankers on the Atlantic and Pacific coasts may set the tone for the future of the nation’s energy industry.
“There’s no doubt that over the next 12 to 24 months, there will be some significant decisions made on pipelines infrastructure in Canada,” Ian Anderson, president of the Canadian division of Kinder Morgan (KMP) Energy Partners LP, said in a Nov. 29 interview in Lake Louise, Alberta. “What’s important about the time frame is, there’s a window of opportunity here to build this infrastructure.”
Prime Minister Harper is counting on Asian markets to reduce the $30 a barrel discount between Canadian heavy crude and the U.S. benchmark as well as to provide job and economic growth and boost tax revenue. Harper has referred to Canada as an emerging energy superpower because it has the world’s third-largest oil reserves, and as output from the oil sands is projected to double over the next decade.
Further delays on pipeline projects may set back Canada’s ability to capture rising demand for fossil fuel and condemn its producers to lower prices, said Judith Dwarkin, director of energy research at ITG Investment Research Inc. in Calgary.
The rest here.
Gina McCarthy, while speaking at the liberal Center for American Progress, said, the “EPA next June will propose new standards that will also provide significant flexibility to the states that will protect public health from carbon pollution from existing power plants.”
States had been asking for this “flexibility,” but no details, as of yet, on just how flexible the standards will be.
Williamsport, Pa. — A constant, mild hiss.
That was my chief observation when I returned to Anadarko Petroleum’s Landon Pad A, a natural-gas site in Lycoming County, Pa. October’s quietude was totally unlike the cyclone of equipment, personnel, and activity that dominated this spot last June, when Anadarko and the American Petroleum Institute hosted journalists and policy analysts here.
Back then, engineers used a pressurized blend of 90 percent water, 9.5 percent sand, and 0.5 percent chemicals to shake subterranean shale deposits and awaken natural gas that has slumbered since the dinosaurs died. This hydraulic fracturing, or “fracking,” occurs some 6,000 feet underground. This is 5,000 feet beneath the water table — deep enough to bury three Empire State Buildings.
Anadarko’s Landon Pad A during fracking operations last June. Photo: Deroy Murdock.
This spot now resembles the scene of a once-raging party that has been cleared out and cleaned up. The trucks have driven off. Dozens of workers have moved on. The cranes are gone. What remains are three acres of gravel-covered farmland, five completed wells, and a steady, low-volume whoosh. This is the sound of natural gas being captured; counted by a “cash register” gauge that measures output and, thus, royalties; and conveyed via yellow pipes into the broader natural-gas market. The result? Warm bedrooms on crisp nights and hot showers on cold mornings.
Despite the shrill complaints of fracking foes, this productive but tranquil patch demonstrates how much greener fracking is than other power sources — even “green” ones.
Fracking should soothe those who fret about CO2.
Since 2002, carbon dioxide output has grown 32 percent globally, Manhattan Institute senior fellow Robert Bryce wrote for Bloomberg View in September. “In the U.S., meanwhile, carbon dioxide emissions were 8 percent lower in 2012 than they were in 2002, largely due to a surge in shale gas production, which has reduced coal use.” Indeed, fracking has helped America keep its unratified Kyoto Protocol commitments while other countries decry so-called global warming and yet continue boosting CO2.
New York City, home of über-frackophobe Yoko Ono, is benefiting enormously from fracking.
“New York has the cleanest air now of any major American city,” Gotham mayor Michael Bloomberg told journalists on September 26. Thanks to both purer heating oil in local buildings and the conversion of others to natural gas fracked along the Marcellus Shale, New York’s air has not been this clear in 50 years, officials say. As the Associated Press’s Deepti Hajela reported, decreases in sulfur dioxide, soot, and other pollutants are preventing 2,000 emergency-room visits and 800 deaths annually. This concrete positive vastly outweighs the theoretical risk that fracking someday, somewhere possibly might taint someone’s drinking water — maybe.
Water is a precious resource. So, conservationists should smile at how little water fracking requires — compared to other energy sources. According to the U.S. Energy Department and the Ground Water Protection Council, it typically takes three gallons of water to produce 1 million British thermal units of energy from deep-shale natural gas/fracking. Atomic energy requires 11 gallons per million BTUs. Coal: 23 gallons. Corn ethanol? A whopping 15,800 gallons. And soy biodiesel requires nearly triple that amount: 44,500 gallons per million BTUs. That’s 14,833 times the water needed for fracking.
But what about ground-water pollution? The hysteria that fracking poisons drinking water lacks one key ingredient: evidence.
As former EPA chief Lisa Jackson testified before Congress in May 2011: “I’m not aware of any proven case where the fracking process itself has affected water.” New York State’s politically frackophobic Andrew Cuomo administration even concluded that “no significant adverse impact to water resources is likely to occur due to underground vertical migration of fracturing fluids through the shale formations.” A December 2011 Department of Environmental Conservation draft report added that “there is no likelihood of significant adverse impacts from the underground migration of fracturing fluids.”
Protecting habitat is another key eco-priority. Fracking succeeds here, too. An SAIC/RW Beck study found that natural-gas companies use 0.4 acres of land to generate a year’s supply of electricity for 1,000 households. Nuclear power requires 0.7 acres. Coal consumes 0.75 acres. Wind power needs six acres. And solar cells require 8.4 acres to fuel 1,000 households annually. This is 21 times the habitat impact of natural gas. So, if you are a Gila monster or a Joshua tree, cheer fracking and hiss solar.
What about wildlife?
Anadarko’s Brad Milliken says that rattlesnakes are protected in Pennsylvania, unlike his home state of Texas. The company, Milliken says, retains “what I would call a rattlesnake wrangler. If we see a snake, we call him up, and they relocate him temporarily” until work has been completed. “All of our contractors understand not to disturb the snakes.”
Before installing a new pipeline, Anadarko checks for Indiana bats as they migrate in May and June. Obstructing their flight paths “changes their way of life and can be detrimental to their health,” Milliken explains. In such cases, he says, Anadarko would reroute a pipeline rather than threaten these bats.
In contrast, the “Earth friendly,” taxpayer-subsidized wind industry slaughters thousands, perhaps millions of bats unlucky enough to fly into the giant Cuisinarts that are their turbines. (My friend Paul Driessen of the Center for a Constructive Tomorrow has documented this carnage with tragic eloquence.)
Nearly a century of horror movies have equated bats with Dracula. Too bad. These hideous creatures do a beautiful thing: Gobble mosquitoes. By one estimate, a brown bat devours nearly 8,700 such insects annually. So, ironically, “ecologically sensitive” wind turbines are butchering bats. This is great news for mosquitoes, which do suck human blood. On this vile path lies a hike in West Nile virus and other mosquito-borne diseases.
Could gas producers frack even more cleanly? Innovation, of course, could yield safer and more Earth-friendly production methods. Cal Cooper of the Apache Corporation wisely proposed at a Manhattan Institute energy-policy conference that gas companies “could transport fracking chemicals in powder form and mix them with water at production sites, rather than ship them around in liquid form, which risks a spill in transit.”
Rather than blindly decry fracking, environmentalists should encourage more ideas like Cooper’s. Beyond that, they should embrace fracking for being easy on the air, water, land, and wildlife — in most cases far easier than the “sustainable” energy sources that ecologists adore.
— Deroy Murdock is a Manhattan-based Fox News contributor, a nationally syndicated columnist with the Scripps Howard News Service, and a media fellow with the Hoover Institution on War, Revolution and Peace at Stanford University. He visited natural-gas production facilities near Williamsport, Pa., on an October fact-finding tour arranged by Energy in Depth and the Anadarko Petroleum Corporation.
In 2005, the Wall Street Journal published an op-ed titled, “Oil, Oil Everywhere.” The gist of the piece is that there’s no shortage of oil in the world, but that there’s an economic problem because all the incredibly cheap oil is in places with really bad governments. This makes investing in oil fields that have higher extraction costs a dicey business as oil producers with low costs can simply flood the market. An excerpt:
The cost of oil comes down to the cost of finding, and then lifting or extracting. First, you have to decide where to dig. Exploration costs currently run under $3 per barrel in much of the Mideast, and below $7 for oil hidden deep under the ocean. But these costs have been falling, not rising, because imaging technology that lets geologists peer through miles of water and rock improves faster than supplies recede. Many lower-grade deposits require no new looking at all.
To pick just one example among many, finding costs are essentially zero for the 3.5 trillion barrels of oil that soak the clay in the Orinoco basin in Venezuela, and the Athabasca tar sands in Alberta, Canada. Yes, that’s trillion — over a century’s worth of global supply, at the current 30-billion-barrel-a-year rate of consumption.
Then you have to get the oil out of the sand — or the sand out of the oil. In the Mideast, current lifting costs run $1 to $2.50 per barrel at the very most; lifting costs in Iraq probably run closer to 50 cents, though OPEC strains not to publicize any such embarrassingly low numbers. For the most expensive offshore platforms in the North Sea, lifting costs (capital investment plus operating costs) currently run comfortably south of $15 per barrel. Tar sands, by contrast, are simply strip mined, like western coal, and that’s very cheap — but then you spend another $10, or maybe $15, separating the oil from the dirt. To do that, oil or gas extracted from the site itself is burned to heat water, which is then used to “crack” the bitumen from the clay; the bitumen is then chemically split to produce lighter petroleum.
In sum, it costs under $5 per barrel to pump oil out from under the sand in Iraq, and about $15 to melt it out of the sand in Alberta. So why don’t we just learn to love hockey and shop Canadian? Conventional Canadian wells already supply us with more oil than Saudi Arabia, and the Canadian tar is now delivering, too. The $5 billion (U.S.) Athabasca Oil Sands Project that Shell and ChevronTexaco opened in Alberta last year is now pumping 155,000 barrels per day. And to our south, Venezuela’s Orinoco Belt yields 500,000 barrels daily.
But here’s the catch: By simply opening up its spigots for a few years, Saudi Arabia could, in short order, force a complete write-off of the huge capital investments in Athabasca and Orinoco. Investing billions in tar-sand refineries is risky not because getting oil out of Alberta is especially difficult or expensive, but because getting oil out of Arabia is so easy and cheap. Oil prices gyrate and occasionally spike — both up and down — not because oil is scarce, but because it’s so abundant in places where good government is scarce. Investing $5 billion dollars over five years to build a new tar-sand refinery in Alberta is indeed risky when a second cousin of Osama bin Laden can knock $20 off the price of oil with an idle wave of his hand on any given day in Riyadh.
But what has happened since 2005? Oil prices and oil demand stayed high and investment flooded into areas with good government and expensive oil, to the point that the United States is poised to lead the world in oil production.
Which brings us to the Iran deal and how a successful agreement could lead to Iran’s modernization of its oil industry, and a sharp increase in production. This — as the piece above from 2005 argues — would make the oil drilling operations here in America and Canada unprofitable. The American energy boom could become a bubble and pop. Christopher Helman makes this very argument at Forbes.com:
Over the long run the easing of sanctions against Iran spells trouble for the economics of the tight oil plays that have sprung up across the United States in recent years. The Eagle Ford and Permian Basin and Bakken need sustained high oil prices to make the economics of expensive drilling and steep decline rates pay off. It’s no coincidence that America’s great oil and gas renaissance has coincided with sanctions on Iran and unrest in Libya. The concern for U.S. drillers is that successful Middle Eastern diplomacy could end up being the worst thing for their business. If crude oil benchmarks were to fall to $75 a barrel and stay there for a couple months you’d see drilling rigs across Texas and North Dakota fall silent.
That’s a lot of ifs, however. And one little talked about aspect of the nuclear deal that I’ve only heard articulated by John Bolton is that “[m]ajor oil-importing countries (China, India, South Korea, and others) were already chafing under U.S. sanctions, sensing President Obama had no stomach either to impose sanctions on them, or pay the domestic political price of granting further waivers.” This suggests that demand for oil will remain high for the foreseeable future and there will be room for both Middle Eastern and American oil producers.
For years, the wind-energy sector and renewable-energy advocates have repeatedly claimed that wind turbines are essential to the fight against carbon dioxide emissions and catastrophic climate change. Here’s the reality: Wind turbines are nothing more than climate-change scarecrows.
The proliferation of wind turbines over the past few years has not, and will not, result in statistically significant reductions in global carbon dioxide emissions. That point can easily be proven with a bit of simple math, which I’ll do in a moment.
Before we look at the numbers, allow me to bolster my thesis by pointing you to an open letter issued recently by some of the world’s top climate scientists. Although the language they used was not as blunt as what I’m using here, they made a similar point. That is, if the world’s policymakers and environmentalists are serious about addressing climate change, then they must admit that renewable energy simply cannot meet the world’s soaring demand for energy at prices that consumers can afford.
The letter, which was clearly aimed at anti-nuclear environmental groups such as the Sierra Club, Greenpeace, and the Natural Resources Defense Council, was signed by James Hansen, a former NASA scientist; Kerry Emanuel of the Massachusetts Institute of Technology; Tom Wigley of the University of Adelaide in Australia; and Ken Caldeira of the Carnegie Institution. The letter says that while renewables “like wind and solar and biomass” are growing, those sources “cannot scale up fast enough to deliver cheap and reliable power at the scale the global economy requires.” It went on, saying that “in the real world there is no credible path to climate stabilization that does not include a substantial role for nuclear power.”
The four concluded their epistle by saying that if environmental activists have “real concern about risks from climate change,” then they should begin “calling for the development and deployment of advanced nuclear energy.”
Frances Beinecke of the NRDC offered a predictable response to the letter, telling The Associated Press that nuclear is not a “panacea.” She added that “the better path is to clean up our power plants and invest in efficiency and renewable energy.”
Ah yes, efficiency and renewables — the two-legged stool upon which the Green Left has been trying to balance its untenable energy policies for decades. Never mind that even as energy efficiency has increased dramatically, energy demand has been soaring. Global energy use has nearly doubled since 1982, according to the BP Statistical Review of World Energy. As for non-hydro renewable energy, despite decades of hefty subsidies and in some cases, mandates, it now provides about 2 percent of the 250 million barrels of oil-equivalent energy (from all sources) that is being consumed globally every day.
The hard truth is that renewable energy cannot even keep pace with soaring global energy demand, much less replace significant quantities of hydrocarbons. That’s not an opinion. It’s basic math.
Last year, all of the wind turbines on the planet provided about 2.4 million barrels of oil equivalent per day to the global economy. That sounds like a lot until you compare wind’s contribution with that of the world’s fastest-growing source of energy: coal. In 2012, global coal use increased by about 2 million barrels of oil equivalent per day. Thus, just to keep pace with the growth in coal usage, we’d have to nearly replicate the entire global fleet of wind turbines — some 285,000 megawatts of capacity — and we’d have to do so every year.
The same is true for solar energy. I’m bullish on solar. I have 3,200 watts of solar panels on the roof of my home in Austin, Texas. (Yes, I got a big subsidy to install them.) The rapidly declining cost of photovoltaic panels is encouraging. But last year, all of the world’s solar installations contributed just 400,000 barrels of oil equivalent per day to the global economy. Thus, just to keep pace with the growth in coal usage, we’d have to install about five times the world’s existing solar capacity — which totaled about 100,000 megawatts in 2012 — and we’d have to do so every year.
Now let’s look at carbon dioxide emissions. In 2012, the American Wind Energy Association claims, wind energy reduced U.S. carbon dioxide emissions by 80 million tons. Again, that sounds significant. But consider this: Last year, global emissions of that gas totaled 34.5 billion tons. Thus, the 60,000 megawatts of U.S. wind-generation capacity reduced global carbon dioxide emissions by about two-tenths of 1 percent.
To make the point even clearer, let’s look at the history of carbon dioxide emissions. Since 1982, global carbon dioxide emissions have been increasing by an average of about 500 million tons per year.
If we take the American Wind Energy Association’s claim that 60,000 megawatts of wind-energy capacity can reduce carbon dioxide emissions by about 80 million tons per year, then simple math shows that if we wanted to stop the growth in global carbon dioxide emissions by using wind energy alone, we would have to install about 375,000 megawatts of new wind-energy capacity every year. If we assume each turbine has a capacity of two megawatts, that would mean installing 187,500 wind turbines every year, or nearly 500 every day.
How much land would all those wind turbines require? Again, the math is straightforward. The power density of wind energy is 1 watt per square meter [PDF]. Therefore, merely halting the growth in carbon dioxide emissions with wind energy would require covering a land area of about 375 billion square meters or 375,000 square kilometers — an area the size of Germany — and we would have to do so every year.
What would that mean on a daily basis? Using wind alone to stop the growth in carbon dioxide emissions would require us to cover about 1,000 square kilometers with wind turbines — a land area about 17 times the size of Manhattan Island — and we would have to do so every day. Given the ongoing backlash against the wind industry that is already underway here in the U.S., Canada, Europe, and Australia, the silliness of such a proposal is obvious.
The punch line here is equally obvious: If we are going to agree that carbon dioxide is a problem, then we must embrace the technologies that are most effective at reducing our production of that gas. As Hansen, Wigley, and their colleagues point out, that means nuclear. And while the climate scientists don’t mention methane, we are also going to have to use lots of natural gas, as that’s the only other fuel that can supplant significant amounts of coal.
Over the past few years, the U.S. and other countries have been subsidizing the paving of vast areas of the countryside with 500-foot-high bird- and bat-killing whirligigs that are nothing more than climate talismans. Wind turbines are not going to stop changes in the earth’s climate. Instead, they are token gestures — giant steel scarecrows — that are deceiving the public into thinking that we as a society are doing something to avert the possibility of catastrophic climate change.
— Robert Bryce is a senior fellow at the Manhattan Institute. His fifth book, Smaller Faster Lighter Denser Cheaper: Innovating toward a Greener, Richer World, will be published next May.
The editors write:
Big Oil has squared off against Big Agriculture in the dispute over the federal mandate to mix corn-based ethanol into the nation’s fuel supply. Both sides are powerful and self-interested, but Big Oil has the edge in this case for being right.
The ethanol mandate should be cut because it is a misguided policy. It forces the public to use and subsidize a product that is both uneconomical and environmentally destructive, given the land, fuel and fertilizer needed to grow, harvest and transport all the corn.
So it was good news last week when the Environmental Protection Agency for the first time proposed to trim the ethanol mandate.
Congress should go further and revise the law that requires increasing amounts of ethanol in gasoline — a law conceived during the post-Sept. 11 attacks anxiety over the nation’s then-growing reliance on Middle Eastern crude oil and before the consequences of mass ethanol production were well understood. Better yet, it should eliminate the law altogether.
The reduction the EPA has proposed is modest: U.S. fuel companies would be allowed to use about 6 percent less ethanol in 2014 than this year. The rationale is that U.S. gasoline use is falling, mainly because cars are becoming more fuel-efficient.
Without such a change, fuel companies might have to break through the so-called blend wall, producing gasoline with more than 10 percent ethanol — even though many U.S. cars and trucks aren’t designed to run on mixes with higher amounts of ethanol. The alternative would be to buy credits granting exemptions from adding ethanol. A bidding war for these credits earlier this year helped drive up the price of gas to almost $4 a gallon.
The rest here.
The editors of the Daily Iowan, newspaper for the University of Iowa, write:
The Associated Press made a splash with its investigation into corn-based ethanol in the United States last week, and now it has the whole industry up in arms over the findings.
The AP reported that farmers contaminated local water, eradicated wildlife habitats, and destroyed substantial tracts of conservation land in the rush to raise more corn that could be sold to ethanol plants. Not exactly flattering. And definitely not something the ethanol industry wants everyone to know about, which may explain the Renewable Fuels Association’s Geoff Cooper’s statement to reporters that “We find it to be just flabbergasting. There is probably more truth in this week’sNational Enquirer than AP’s story.”
Clearly, the industry is wildly panicked. And it should be. On Nov. 15, the Environmental Protection Agency, noting that biofuel legislation passed in 2007 has not been working as well as hoped, proposed reducing the amount of ethanol in the national fuel supply. By 2014, it would cut 3 billion gallons of biofuels that are blended into gasoline.
This will inevitably mean losses for Iowans. A map from Iowa Workforce Development shows that there are numerous ethanol plants scattered around the state, providing thousands of jobs, many of which are in small towns that have been shriveling up for decades.
Don Hofstrand, the codirector for Ag Marketing Resource Center, explained in a newsletter that Iowa’s corn farmers also benefit from ethanol because it drives demand for corn, raising prices and ultimately increasing profits.
As promising as it may seem at first glance, ethanol is not a reliable path to ensuring Iowa’s future economic success. We say this knowing fully that a move away from ethanol would not bode well for much of rural Iowa in the short term, but if the state economy remains heavily invested in ethanol, we will get hammered the instant something goes wrong. And in volatile industries such as oil and corn, that is only a matter of time.
The rest here.
Via The Hill:
The White House is threatening to veto House GOP bills that would thwart Interior Department hydraulic fracturing rules and force regulators to speed up oil-and-gas drilling permits.
In a pair of statements Tuesday morning, the White House slammed two GOP energy bills slated for votes this week, arguing that they would dismantle important environmental protections.
The bill to block planned Interior Department regulation of the oil-and-gas extraction technique dubbed “fracking” would prevent Interior from ensuring that it occurs in a “safe and responsible manner,” the White House said.
“The bill, as reported, would undermine these efforts and instead require [Interior’s Bureau of Land Management] to defer to existing State regulations on hydraulic fracturing on Federal lands, regardless of the quality or comprehensiveness of the State regulations – thereby preventing consistent environmental protections,” the White House said of the bill sponsored by Rep. Bill Flores (R-Texas).
Interior is preparing rules, which would apply to fracking that occurs on federal and Indian lands, that force disclosure of chemicals used in the fracking process and create standards around well integrity and management of so-called flowback water.
A second and broader bill on the floor this week would set new deadlines for issuing drilling permits; set a floor on the amount of land offered for oil-and-gas leases; and charge activists thousands of dollars in fees to lodge formal protests of leases and permits, among other provisions.
“[The bill] would reverse Administration oil and gas leasing reforms that have established orderly, open, efficient, and environmentally sound processes for energy development on public lands. Specifically, this bill would favor an arbitrary standard for leasing in open areas over leasing on the basis of greatest resource potential; limit the public’s opportunity to engage in decisions about the use of public lands; raise the potential for costly litigation, protests, and delays; strip the ability of the Department of the Interior to issue permits to drill based on important environmental reviews, clearances and tribal consultation; and curtail the use of public lands for other uses like hunting, fishing, and recreation,” the White House said of Rep. Doug Lamborn’s (R-Colo.) bill.
Lamborn’s bill is on the floor Tuesday, and the fracking measure will receive votes later in the week.
The rest here.
President Bush called for building the Keystone XL pipeline last Thursday during a luncheon with energy executives in Pittsburgh.
“I think the goal of the country ought to be, ‘How do we grow the private sector?’ That ought to be the laser-focus of any administration,” Bush said at the DUG East conference, where he was the luncheon’s keynote speaker. “And therefore, once that’s the goal, an issue like Keystone pipeline becomes a no-brainer.”
“If private-sector growth is the goal and Keystone pipeline creates 20,000 new private-sector jobs, build the damn thing,” the 43rd president said, garnering applause from over 4,000 oil and gas executives in attendance, according to DeSmogBlog.
The Keystone XL pipeline has been a thorn in the side of the Obama administration for some time, pitting the president’s environmental supporters against the need to create jobs. Currently, the pipeline is still unapproved.
This post has been amended since its publishing; George W. Bush was the 43rd President of the United States, not the 41st.