3-2-18

US Pipeline Economics Study 2017.  Sourced by the Oil & Gas Journal’s Pipeline Economics Report and FERC fillings, this data set captures information on pipeline and compression station constructions costs back to 2000. Additionally the report includes fiscal data for US oil and natural gas pipelines and data on estimated pipeline costs as presented in applications to FERC since 1980 for hundreds of onshore and offshore pipeline projects.


Oh, Canada!

Varcoe: Alberta job outlook brightens, but pipeline bottlenecks could cost province $9B.  Calgary Herald

Albertans will see more jobs created this year as the economy revs up, but pipeline bottlenecks could jeopardize up to $9 billion in additional royalty … on capital spending intentions says Alberta is expected to see a five per cent reduction this year to $54 billion, led lower by falling oil and gas spending.


Energy slump continues to drag down Canada’s investment plans.  Calgary Herald

Spending plans for oil and gas capital projects this year are down 12 per cent to $33.2 billion from 2017, according to a Statistics Canada survey … on people’s investments,” and that he hopes government measures to overhaul pipelinereviews will turn around a decline in energy sector spending.


President Trump Should Let Ethanol & All Alternate Energy Sources Compete Without Subsidy or Regulatory Fiat IN THE FREE MARKET PLACE

(Once again, we thank our Mid Atlantic Anonymous Energy Analyst for providing the following commentary on “Renewable Fuel Standards” {RFS}  -dh)

There was a lot of interest in the cellulosic ethanol scandal (having companies pay for a product that is not being produced, despite heavy subsidies and mandates) we wrote about last night. We decided to wade into discussing its Daddy –  the Renewable Fuels Standard (RFS). The RFS mandates that motor vehicle fuel, on an aggregate basis, will be blended with ethanol. The amount of ethanol required to be used nationally each year was decided in 2005 and 2007 as part of omnibus energy laws passed under the Bush II administration. It is a classic example of how the government is incapable of coherent government policy, especially when it comes to energy.

Let us set out a simple outline of this government policy. Oil prices broke out to the upside in 2003-04. In 2005 (shades of Jimmy Carter), Bush and Congress decided we could cut our dependence on foreign oil AND help clean up the environment at the same time by mandating that ethanol be blended, up to 10% of each gallon of gasoline used. Making some(wrong, as it turned out) forecasts about how many miles Americans were likely to drive each year through the early 2020s, drafters of the law set a minimum amount of ethanol that would be required to be used each year.

YearRenewable BiofuelAdvanced BiofuelCellulosic BiofuelBiomass-based DieselUndifferentiated Advanced BiofuelTotal RFS
2008900009
200910.50.600.50.111.1
2010120.950.10.650.212.95
201112.61.350.250.80.313.95
201213.220.51.00*0.515.2
201313.82.7511.00*0.7516.55
201414.43.751.751.00*118.15
2015155.531.00*1.520.5
2016157.254.251.00*222.25
20171595.51.00*2.524
2018151171.00*326
201915138.51.00*3.528
2020151510.51.00*3.530
2021151813.51.00*3.533
20221521161.00*436

If a given refiner did not use his allocation of ethanol under the RFS in a given year, it had to buy its way out of its requirement for each gallon of shortage. Fine. But suppose the number of gallons of gasoline goes downinstead of up, as forecast, or fell short of the forecast (fewer miles driven, hybrid cars, more efficient engines, and a host of other reasons). Cars can only safely take gasoline with a 10% blend of ethanol, so the refiners cannot increase the amount of ethanol per gallon.  What happens to the price of the indulgences (called RINs) that refiners have to pay for ethanol not used (remember this theme with cellulosic ethanol from last night?). You got it. The price of the RINs soars.  

The easy way out would be for government to admit it made a mistake, and lower the annual volume of mandated ethanol use. But GOVERNMENT WILL NEVER ADMIT IT MADE A MISTAKE. And the Renewable Fuels Association (ethanol producers backed by the corn farmers) is a very, very, very powerful lobby. The volume of corn acreage in this country does a lot of other ills, including raising the price of almost all other food products (but that is for another column or three).

Bottom Line: This is only going to get worse, as the volume of EVs and hybrids grows, and other trends move us to drive less (GPS, Uber, and other technologies). If we raise the gasoline tax in this country to pay for infrastructure (likely), it will put a further crimp in driving. But the RFS will not go away.

 


Reference:

Let Ethanol Fend for Itself

By Arthur R. Wardle
February 28, 2018

The East Coast’s largest and oldest oil refinery is declaring bankruptcy. In its January 22 filing, Philadelphia Energy Solutions (PES) — whose facilities can process 335,000 barrels of oil per day — cited the economic burden of complying with the Renewable Fuel Standard (RFS) as a primary contributor to its fiscal woes. Regardless of the merits of PES’s claims, the RFS is an economic and environmental burden on the United States and ought to be repealed.


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About the Author:

Dave Harbour, publisher of Northern Gas Pipelines, is a former Chairman of the Regulatory Commission of Alaska, a Commissioner Emeritus of NARUC, NARUC's Official Representative to IOGCC and Vice Chairman of NARUC's Gas Committee. He served as Gas Committee Chairman of the Western Conference of Public Service Commissioners. He also served as commissioner of the Anchorage Bicentennial Commission and the Anchorage Heritage Land Bank Commission.He earned a Bachelor of Arts Degree: English, at Colorado State University, a Master of Science Degree: Communications-Journalism at Murray State University and graduated from Utility Regulatory School for Commissioners at Michigan State University. He served as a Vice President for Communications and Public Affairs at Alaska Pacific University, taught bank marketing classes at the University of Alaska and was an English teacher at Los Alamos High School.Harbour served in ranks of Private - Captain during a 4-year assignment with the Army in Korea, Idaho, Georgia and Fort Meade and received the Meritorious Service Medal among other commendations.Harbour is also a past Chairman of the Alaska Council on Economic Education, the Alaska Oil & Gas Association Government Affairs Committee, the Anchorage Chamber of Commerce, the Export Council of Alaska and the Department of Commerce's District Export Council. He is a past President of the Alaska Press Club, American Bald Eagle Foundation, Consumer Energy Alliance-Alaska and Common Sense for Alaska.Harbour was instrumental in founding the American Bald Eagle Research Institute (UAS), the Alaska Support Industry Alliance, the Downtown Anchorage Business Partnership, and Arctic Power.He also served as CEO of several small Alaska organizations, including the Anchorage Parking Authority and Action Security, Inc. Harbour is also Chairman Emeritus of the Alaska Oil & Gas Congress.Harbour's wife, Nancy, is a professional, performing arts administrator and his three boys, Todd, Benjamin and William work in the fields of environmental management, energy marketing and medicine.