For our Canadian readers: Want to become a temporary member of the National Energy Board in Calgary? Knowing several of the Members and the Board's mission, we can say it would be both a high honor and experience of a lifetime to serve! -dh
This morning, Keith Kohl wrote a column for Energy and Capital revealing that the Lower 48 may be looking more closely at Alaska. He said, in part, "We've become a nation of spoiled children when it comes to energy. This is particularly true for those of us living in the Lower 48, where we've enjoyed a shale and tight oil boom. Of course, I say the “Lower 48” because field output in states like Alaska (Note: see the EIA chart here and relate it to our commentary yesterday…scroll down) has actually declined 74% since 1988!" -dh
COMMENTARY: This morning, U.S. Sen. Lisa  .JPG)
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Alaska Native News. (Reader Kaye Laughlin sends us this reminder of the increasing momentum toward the marketing of Alaska natural gas. -dh)
According to the DNR, re-starting export of LNG will stimulate natural gas production in Cook Inlet and spur more natural gas exploration. The Nikiski export plant was closed down because of shortages of LNG for local consumption in the state and an expiring permit in 2012. Those local needs have now been met through 2018 by Hilcorp, who purchased gas fileds from Marathon and Chevron. ConocoPhillips says that they applied for the new permit from the U.S. Department of Energy on Wednesday, but would not export any gas this winter because regional utilities will be given priority during the season when gas is in demand. But, the application requests a permit to export 20 billion cubic feet of gas as LNG per year. The 24-year-old plant was begun in 1969 by Phillips Petroleum and Marathon Oil. Phillips merged with Conoco and then Conoco-Phillips bought out Marathon's shares to become sole owner. |
In response to a September 5th letter from acting Department of Natural Resources Commissioner Joe Balash (i.e. now, the commissioner), asking them to re-open their mothballed LNG plant on the Kenai Peninsula to resume exports, ConocoPhillip has applied for a two-year export permit to do just that.As a former member of NARUC, your author has a special interest in the organization, having served as a vice chairman of its 'Gas Committee' and written a number of NARUC resolutions supporting northern energy policies–including one endorsing passage of the Alaska Natural Gas Pipeline Act of 2004.
We were also honored to serve as NARUC's Official Representative to the Interstate Oil and Gas Compact Commission (IOGCC), where we coordinated joint policy resolutions supporting Alaska in particular and sound energy policy generally.
We remain focused on NARUC because some of NARUC's resolutions, affect developing national policies in the Congress and Administration. NARUC deserves our scrutiny because members include not only regulatory commissioners from every state, including Alaska, but also federal commissioners from the FERC, FCC and even the Canadian National Energy Board. DOE's senior management participates in meetings as do Governors and members of Congress.
We, therefore, offer high praise to Senator Murkowski, who has addressed the organization several times, for exercising her national Energy Committee leadership with this key constituency. -dh
Today's Energy References:
BuildKXLNow.org: Alex Pourbaix Answers the Los Angeles Times
Facts matter. Activists certainly have their own opinions, but they are not entitled to their own set of facts. TransCanada, the builder and operators, of the Keystone Pipeline system recently wrote to the editorial board of the Los Angeles Times correcting the record on several claims made in their newspaper.
BuildKXLNow.org: Crossing the wrong line
The Washington Post editorial page raised its voice even louder among the broad coalition of Keystone XL supporters. WP: ENVIRONMENTALISTS HAVE drawn a line in the sand on the Keystone XL pipeline. It’s the wrong line in the wrong sand, far away from any realistic assessment of the merits — as yet another government analysis has confirmed.
Portland Daily Sun: Report: New England needs to add 2 billion cubic feet of natural gas pipeline
New England needs 2 billion cubic feet of new natural gas pipeline capacity to eliminate cost spikes and make New England competitive with the rest of the nation, according to a new consultant's study.
The Hill: Cruz looks beyond Keystone XL
Sen. Ted Cruz (R-Texas) is shifting his focus to the nation's energy policy, starting on Monday. At the Heritage Action for America's Conservative Policy Summit in Washington, D.C., on Monday, Cruz will make the case that, while President Obama should approve the Keystone XL pipeline, Republicans need to come up with other ideas to expand the country's energy production.
Mother Jones: Is Shipping Oil By Rail As Dangerous as the Keystone Pipeline?
When the State Department issued its long-awaited environmental impact statement on the Keystone XL project earlier this month, one of its key findings was that if the controversial pipeline wasn't built, oil-laden rail cars would pick up the slack. "Rail will likely be able to accommodate new production if new pipelines are delayed or not constructed," it argued. As we noted recently, that rail transit is already underway.
ABC News: Ted Cruz Makes Case for Keystone XL to 'Birkenstock-Wearing, Tree-Hugging' Activists
If you love the environment, Sen. Ted Cruz says you should love the Keystone XL pipeline too. "If you're a Birkenstock-wearing, tree-hugging Greenpeace activist, you should love the Keystone pipeline," Cruz said at the Heritage Action's Conservative Policy Summit on Monday. Cruz, R-Texas, focused his remarks on a push to deregulate the controversial practice of hydraulic fracking and expanding offshore exploration, and in the process, appealed to any environmentalists listening in on his remarks.
The Hill: Canadian PM: Keystone XL 'inevitable'
Canadian Prime Minister Stephen Harper says building the Keystone XL pipeline is "inevitable" as the history and economics of a U.S.-Canadian relationship outlast a presidency. In an interview with Bloomberg News, Harper said economic forces determine whether projects like Keystone go through, not fleeting political calculations.
Shop Floor: Keystone Suppliers Pen Op-Ed
The Keystone XL pipeline represents a lifeline for American workers and the U.S. economy, and the longer we wait for approval, the longer the creation of thousands of high-paying manufacturing jobs for American workers is put on hold. That was the message from NAM Members Albert Huber of Patterson Pump Company and Peter Bowe of Ellicott Dredges in a recent op-ed.
Hot Air: Canadian ambassador: Rejection of Keystone XL would “definitely strain” diplomatic relations
No kidding. Canada doesn’t exactly tend to rile easily, but there are only so many years of flagrant abuse and neglect they can take when their interests are clearly being put on the backburner in favor of assuaging the well-monied environmentalist lefties that have managed to turn the otherwise innocuous infrastructure project into a political firestorm.
BusinessWeek: WTI Crude Narrows Discount to Brent as Libya Increases Output
West Texas Intermediate crude gained for a fifth day, paring the discount to Brent on speculation that inventories in Cushing, Oklahoma, decreased last week and as Libya worked to restore supplies. WTI rose 18 cents to a six-week high. Supplies at the delivery point for futures may have dropped for a second time as the southern leg of the Keystone XL pipeline moved oil to the Gulf Coast. Brent dropped as Libya increased output after protests at the Sharara field ended, according to the country’s National Oil Corp.
Times Online: Corbett awards $750,000 grant to shale center
Gov. Tom Corbett Monday awarded a $750,000 Discovered in PA – Developed in PA grant to help launch the Shale Gas Innovation and Commercialization project, an initiative founded by the Ben Franklin Technology Partners of Central and Northern PA.
90.5 WESA: Cold Weather, Natural Gas Development Make It Harder to Get Propane to Market
The brutally cold winter experienced by much of the Midwest and Northeast this year is partly to blame for higher propane prices and for making the fuel harder to come by in parts of the country. The Pennsylvania Propane Gas Association, or PAPGA, said other factors include a decreased capacity to get the fuel from one place to another.
State Journal: WVU conference to focus on new rules for carbon dioxide emissions from coal-fired power plants
The third annual national energy conference at West Virginia University will focus on new rules from the Environmental Protection Agency to regulate carbon dioxide emissions from coal-fired power plants. Featuring experts from government, the private sector and environmental organizations, the conference will explore how these new laws will be navigated and affect the power industry, states and communities.
NASDAQ: Forget North Dakota, Texas is No. 1 for Oil
Advances in drilling technology are expected to help North Dakota hit the 1 million barrel per day mark at some point this year. But it's Texas that still holds the leadership position in terms of oil production. Don't mess with Texas.
Pittsburgh Post Gazette: Washington County's Robinson to withdraw from Act 13 lawsuit
Newly seated supervisors in Robinson, Washington County, plan to withdraw the township from a joint suit against Act 13, the state law regulating Marcellus Shale natural gas drilling. Township attorney Alan Shuckrow said Monday night that the lawsuit nonetheless would continue to carry Robinson’s name, and the case would move forward with the remaining plaintiffs.
Newsday: O'Reilly: The case against fracking is cracking
"From my opinion and from what I've seen…I believe hydraulic fracking is, in fact, safe. We know that, from everything we've seen, there's not a single case where hydraulic fracking has created an environmental problem for anyone." What right-wing, knuckle-dragging Neanderthal uttered that inanity?
Wall Street Journal: Secondary Sources: Death by Finance, Middle Class, Shale Gas and Housing
Dani Rodrik looks at how financial markets view emerging economies. “This is not the first time that developing countries have been hit hard by abrupt mood swings in global financial markets. The surprise is that we are surprised. Economists, in particular, should have learned a few fundamental lessons long ago. First, emerging-market hype is just that. Economic miracles rarely occur, and for good reason.
Michigan Live: 'Fracking' on the agenda for public meetings in Ottawa County
The Ottawa County Planning and Performance Improvement Department is hosting a three-part series of meetings about hydraulic fracturing, the controversial method used to improve production in oil and gas wells, also known as “fracking.”
Columbus Dispatch: Revised fracking-tax bill expands income-tax cut
House Republicans hope to roll out a revised fracking-tax bill this week with a slightly higher rate, a bigger income-tax cut and money directed to areas where shale drilling is most prevalent.
FuelFix: Shell recommends science for Arctic headaches
Extreme cold. Ice-clogged seas eight to 10 months every year. An ancient, indigenous people living on Alaska’s North Slope who hunt local Bowhead whale. Marine mammals, deep-sea coral and Greenpeace.
E&E News: POLICY: Obama admin quietly preparing pledge of deeper GHG emissions targets for U.N. talks
The Obama administration is quietly working on new greenhouse gas emissions targets to deliver to the United Nations, even as it struggles to craft regulations that will enable the United States to meet its current carbon-cutting goals.
Senator Murkowski's Speech to NARUC, today.
Address for NARUC’s
Winter Conference Meetings
Sen. Lisa Murkowski
February 11, 2014
“Thank you for the warm welcome. Last year I was honored to release my policy blueprint, Energy 20/20, during this conference. As I said then, my report was intended as a conversation starter, with the goal of developing policies that would make our energy abundant, affordable, clean, diverse, and secure. I’m grateful for the response it has received. And I’m particularly glad that after asking you to read its 120 pages, you were still willing to invite me back again.
“The focus of my remarks this morning will be narrower than a new vision for our federal energy policy – I want to use this time to discuss what it means to protect the reliability of our electric grid. I’ve written a white paper on this subject entitled “Powering the Future: Ensuring That Federal Policy Fully Supports Electric Reliability.” Any moment now it will be available on our Energy Committee website. You don’t need to rush for the exits, though, as I will cover much of my thinking on this important topic here with you.
“Let me start by noting that I was pleased to see that your agenda dovetails nicely with the subject of electric reliability. You have scheduled multiple sessions that focus on this issue, including the Polar Vortex debriefing, the value of the grid, and the European experience of integrating renewables.
“I also want to explain why I care so much about this issue – why, out of all the challenges we face, this one stands out to me, and why I have given it so much attention in recent years. My reason is that, like all of you, I recognize the essential role that electricity plays in our lives. Too much of the developing world is forced to live in energy poverty, but whether we are at home, at work, or just about anywhere else, we have an expectation that power will flow instantly.
“Nearly always, that expectation is met. We flip a switch or push a button and electricity flows. That’s no small feat; it’s the result of countless hours of thinking, planning, engineering, construction, and maintenance. That work – often your work – makes our lives better, and it makes the world around us possible.
“The grid’s reliability has improved over the years, and it is now rare to incur an outage on the bulk power system of significant duration. But there are also new factors and forces at play that could fundamentally alter and even degrade our grid network.
“There may always be threats to our grid – at some level, and in some form. There may always be squirrels and storms that can take out a line and cause an outage. Last year I spoke with you the morning after the Super Bowl, which lost power for 34 minutes. This year we had a blowout, not a blackout – and as a Seattle fan, I’m fine with that – but the experience of a year ago still remains quite vivid.
“Something on our minds after the news of last week, about a coordinated attack in California last April, is sabotage – the possibility of a physical attack that disables key parts of the grid. Sabotage has always been a risk, and we must recognize the need to protect against it. As policymakers, we must include physical security as a key issue in our discussions. And, further, we must take measured steps to protect the grid – not merely sensationalize the threat.
“Based on what I have been told, industry and regulators are appropriately applying new lessons to improve the physical security of electric infrastructure. More may need to be done. But we can’t draw the wrong lesson here, either. It would be a shame if newly-realized fears about physical security drowned out a sober conversation about the broader risks that we now face. What we don’t need to do is stoke the drama, educate bad actors, and make copycats more likely.
“One of the key points I want to make today is that sabotage is not the only threat we face in protecting the grid. As we enter into an era of new environmental regulations on power plants, coupled with preference and subsidies for power generation and use, we must also recognize that grid reliability could well be impacted by the decisions of our own federal government.
“I am concerned, as we all must be, with maintaining the stability of the grid as more and more baseload plants come off-line as a result of both market forces and regulatory constraints. Clearly price is a major factor that owners of electric generating units consider to determine fuel sources, but it is not the only one.
“Our natural gas production is at record high levels and generally this has led to low domestic prices. The Energy Information Administration projects natural gas will become the dominant fuel source for energy production by 2040. In line with EIA’s projection, we are already seeing a major shift. Approximately 150 coal-fired generators were retired between 2001 and 2010. During that same time period, more than 1,000 gas-fired generators came online.
“As natural gas assumes a larger market share, we must be mindful of the need for additional infrastructure to accommodate its increased role in electricity production. A more extensive gas pipeline network is needed to support the shift to gas (See Forbes commentary, below). Thanks to Acting Chair Cheryl LaFleur and Commissioner Phil Moeller (Note: a former resident of Alaska. NGP Photo. -dh) – who started the entire discussion in 2010 – FERC has been engaging stakeholders on this topic. As we rely more heavily on natural gas, better coordination between the electricity and gas sectors is necessary to protect grid reliability.
“As we examine the issue of grid reliability and diversity of fuel, we must acknowledge that even record natural gas production may not be enough to avert price volatility at every moment of every day. For example, just last month we saw major swings in natural gas prices on the PJM system, which caused the RTO to seek price cap relief from FERC.
“Keep in mind that not a decade ago, natural gas prices were high enough to prompt what many thought would be a very broad renaissance for emission free baseload nuclear power. The nuclear renaissance has obviously not been as strong as many of us had hoped. Low natural gas prices, high construction costs, and uncertainty surrounding regulations in the nuclear industry have all been factors. Just last year, four nuclear reactors were closed and a fifth unit is scheduled to shut down in 2014. At least two of these facilities will close as a result of economic factors. Despite receiving license renewals from the NRC, they were unable to generate power in an economically viable manner.
“In addition to market factors, and vitally important for policy discussions because public officials have distinct responsibilities, we must also examine the cumulative effect on baseload capacity of federal regulations – particularly those from the Environmental Protection Agency. Now of course I recognize that EPA has an important job to do, but it does not regulate in a vacuum. In many instances EPA’s regulations will render generating units uneconomic, with compliance requiring retrofitting, the use of best available technology, and downtime for installation.
“As state regulators, you are all too aware that to maintain grid reliability, there must be a level of certainty in the power supply. For example, if baseload coal and the ancillary services it provides account for almost 40 percent of our power, and EPA sets greenhouse gas emission limits without sufficiently considering whether technology is commercially available to meet the required standards, the impact on grid reliability could be severe. I am greatly concerned that federal policies could result in a grid that is less stable than even two years ago. And I am even more troubled that EPA – which has conceded that a single rule may have “localized” effects – has not sought from FERC or NERC an analysis of the cumulative impact its rules may have on grid reliability.
“Already this year, much of the Lower 48 has had a taste of what life is like during an Alaskan winter – an event known as the Polar Vortex. It not only caused cold weather across the nation; it also caused 50,000 megawatts of power plant outages. The electric industry has an impressive history of learning and improving from these system challenges. Yet we also caught a glimpse of the challenge that lies ahead. What we learned from the Polar Vortex is that for one key system, 89 percent of the coal capacity that is slated for retirement next year because of an EPA rule was called upon to meet rising demand. That raises a very serious question – what happens when that capacity is gone?
“Our reliance on installed, dispatchable power generation during extreme weather serves as a shining example of why diversity of baseload capacity is necessary to secure grid reliability. It should serve as a wake-up call for policymakers as well as federal and state regulators. The same might be said for nuclear baseload that could be put at risk by rules intended to protect more fish from power plant cooling systems.
“Today it is uncertain how many plants will retrofit to comply with various EPA regulations or simply close. It is uncertain if there will be enough time – to say nothing of sufficient capital available for investment – to build new facilities or other forms of generation needed to ensure the reliability of the grid.
“Now I am very much in favor of clean energy, which I define as “cleaner” than the next most likely alternative. Various state and federal policies, such as renewable energy requirements and direct financial incentives, have compelled significant deployment of intermittent energy resources. And this has brought forth another unique set of challenges.
“With the introduction of distributed generation, the concept of grid management is changing. Although it is commonly believed that additional power onto the grid at any time is helpful, if you pose this question to a grid operator, you will get the true story—the injection of electricity without regard to consistency presents challenges to grid management, and it imposes costs.
“As you know better than I, many states have adopted net metering policies, which allow customers with rooftop solar or other distributed generation systems to accrue credit for any electricity they sell to the grid. Electric providers are often required to buy this power at the full retail rate. You are the experts, but as I see it, regulatory policy must not create windfalls.
“The grid provides transmission, distribution, generation capacity, ancillary and balancing services to everyone throughout the day, to every customer fortunate enough to be connected. As I have considered electricity issues, I have considered how good it would be if my own state of Alaska had a more extensive grid. On the cover of my white paper is a picture of major transmission lines in the United States. From it, you can see the limited infrastructure in my home state. Power costs in rural Alaska averaged more than 55 cents a kilowatt hour in 2012.
“Whether here, in Alaska, or anywhere in between, our goal must be a grid that is more reliable and more affordable. To achieve that, we need to recognize the central challenge of electric reliability in the coming decade: finding a way to replace retiring base load capacity, while managing an increasingly variable energy mix. While grid reliability is a difficult topic to tackle, it must be addressed.
“In the Energy Policy Act of 2005, Congress properly gave the FERC-designated Electric Reliability Organization – NERC – the role of primary guardian of grid reliability. FERC also has its own role, which is not only to engage government agencies to ensure federal regulations do not increase the risk of disruptions to the grid, but more broadly to enable investments in robust and reasonably priced energy infrastructure.
“I challenge the leaders in this room and beyond it across all sectors of the electric industry to speak out more consistently and more candidly about the challenges you see. My colleagues and I will be particularly interested in your critique of federal policy and what we can do to improve it. We must be mindful that the burdens of maintaining the grid are fairly borne, that complex and powerful regulatory laws are judiciously administered, and that a due regard for balance prevents undue discrimination. And we must do all of this, as I stated, while we ensure that electric systems maintain and even improve their reliability.
“Thank you for having me.”
Forbes (2/8/14) reports: “We know where the gas is. The giant fields in Texas, Louisiana, Pennsylvania and elsewhere. And there’s plenty of it. The problem is that despite the thousands of miles of gas pipelines crisscrossing the country, there just aren’t enough of them going to the places that need it most. The trouble seems to be most acute in New England, where gas prices have shot up the most and where the supply bottleneck has gotten so severe that even newspapers like the Concord Monitor are editorializing in favor of more natural gas pipelines. State and federal regulators need to encourage their construction. NIMBYists in New England need to get out of their way. The other problem across the country is that in the face of what has appeared to be endless supplies of cheap natural gas we as a nation have stupidly turned our back on coal. From 50% of our electricity supply just five years ago, coal now provides for just 35%. Utilities across the country have closed down coal-fired power plants in response to ever more draconian emissions restrictions dictated by the Environmental Protection Agency.”
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