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.

Year Renewable Biofuel Advanced Biofuel Cellulosic Biofuel Biomass-based Diesel Undifferentiated Advanced Biofuel Total RFS
2008 9 0 0 0 0 9
2009 10.5 0.6 0 0.5 0.1 11.1
2010 12 0.95 0.1 0.65 0.2 12.95
2011 12.6 1.35 0.25 0.8 0.3 13.95
2012 13.2 2 0.5 1.00* 0.5 15.2
2013 13.8 2.75 1 1.00* 0.75 16.55
2014 14.4 3.75 1.75 1.00* 1 18.15
2015 15 5.5 3 1.00* 1.5 20.5
2016 15 7.25 4.25 1.00* 2 22.25
2017 15 9 5.5 1.00* 2.5 24
2018 15 11 7 1.00* 3 26
2019 15 13 8.5 1.00* 3.5 28
2020 15 15 10.5 1.00* 3.5 30
2021 15 18 13.5 1.00* 3.5 33
2022 15 21 16 1.00* 4 36

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.



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.