Becky Booher, Associated Press: Draft Gas Pipeline/LNG Bill Proposes Changes To AGDC/Taxes
Advice To Those Who Want A Vibrant Economy And Who Elect Politicians
Competition Perspectives: Part III (Part I, Part II)
by
Dave Harbour
Yesterday we finally finished a commentary on how important it is for a sovereign to pay attention to its competitive position as an investment climate.
No sooner had we turned off the laptop (from our perch this month high in the Ecuadorian Andes) than we received relevant news from Dan Healing, Calgary Herald. MGM is giving up on its effort to produce gas and shale oil in the Northwest Territories due to the excruciatingly long and prohibitively expensive regulatory process. (Note the sense of optimism in N.W.T. in 2012, even after struggling for success since 2007. Alaskan companies are doing their best to navigate the dangerous shoals appearing and disappearing among the flood of regulations, delays, laws, taxes and political campaigns on their side of the border. Citizens might want to note that in MGM's case over in the N.W.T., all signs were that projects were moving ahead–until the day of an unexpected press announcement.)
The Herald reported MGM President Henry Sykes as saying that, "licensing a horizontal oil well in N.W.T. takes longer than a year and costs millions of dollars. If an environmental assessment is ordered, the process stretches out for years and is no longer economic for a small company." But Healing reported that even a large company like Royal Dutch Shell found the process infeasible. (Read more)
We believe evidence is ample now that local political leaders — whether they be Alaskan, Canadian or Argentinean — better build into their tax and regulatory calculus how their very own policy changes affect their competitive positions as investment climates.
Political leaders ignore their own self-imposed development obstacles at the peril of jobs, education, economic opportunity and even social and cultural amenities that depend upon a vibrant place to live an work. (Misc. Note: …which is irrelevant if their real goal is to cripple the economy so that a an executive might find it easier to amass power amid chaos and even nationalize industries and socialize the economy.)
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STATE OWNERSHIP OF ENERGY INDUSTRIES Under the category of, "Other Observations", we received this email from one of our Australian readers, in light of the Putin/Ukraine tension: "How welcome would Putin's best mates in Rosneft be in Alaska right now if/when they exercise their option to come into Point Thomson?! "Maybe the advocates of an 'Alaskan NOC' would welcome another State owned oil company in the State? "Unfortunately the decision by the State {Alaska} to take direct equity ownership in aspects of the LNG project allows others to advocate further State ownership in the oil industry. "I must admit that if I had a taxing power that gave me money for no capital outlay, I wouldn't be bothering with ownership….but it's not uncommon for developing nations to want to do this (even Britain had a national oil company until 1982 when Mrs. Thatcher sold it off). "I do a bit of business in Mongolia (where per capita GDP is probably less than 1/20th of that in Alaska) and the Government is currently trying to promote the private sector as it retreats from mistakes brought about by over-exuberant desires for State ownership of key assets, etc. Cycles go around everywhere!" -N.Y. |
Bottom line: those who elect politicians should begin paying more attention to long term economic realities than to short term, special interest gains. -dh
Today's Energy In Depth Links:
NATIONAL
Hydro-fracking complaints are not supported by science. The Tennessean, Op-Ed. Former governor and U.S. Secretary of the Interior Ken Salazar says, “The science is here. Hydro-fracking is safe, and it’s important that the information gets out to the public.” He is right.
Study: officials view HF positively. Norwalk Reflector. Shawn Bennett, field director for Energy In Depth, said the survey results show that the economic benefits of shale development extend beyond just the oil and gas industry. "Local residents are getting jobs. They're spending more money," he said. "There's overwhelming support regarding the oil and gas industry in east Ohio," Bennett added.
TAEP urges US LNG exports. LNG Industry. In a letter to President Obama, the Texas Alliance of Energy Producers (TAEP) has asked for the pending export permits of liquefied natural gas (LNG) from the US to be quickly approved. The TAEP also urge Obama to support legislation in the Congress that also would allow exports of LNG.
Ohio Looks at Whether HF Led to 2 Quakes. New York Times. Mark Bruce, a spokesman for the department, said it was too early to determine whether drilling operations induced the earthquakes. “What we’re focusing on now is getting all the data from the company,” he said. “We’ll examine it first and decide next steps after that.”
Industry Group Says HF Could Help Ukraine. Roll Call. As Congress prepares to take up legislation in response to Russian intervention in Ukraine, a group representing American companies that rely on inexpensive gas is advocating an alternative approach. Instead of exporting natural gas, the Industrial Energy Consumers of America says the U.S. should export the hydraulic fracturing expertise that will let Ukraine — and other European countries — develop their own gas reserves.
Sage Grouse Rebellion. Wall Street Journal, Editorial. The prairie chicken sits atop Texas's Permian Basin oil bonanza, and the sage grouse is near the Bakken Shale in North Dakota. An Interior Department report describes the impact on the sage grouse of oil and gas operations as "universally negative and typically severe," even though modern horizontal drilling leaves a much smaller footprint than in the past.
An alternative to punishing Putin. Washington Times, Op-Ed. Energy abundance and diversity should be our goal. That means more fracking. That means tapping petroleum on federal lands. That means ending the ban on “flexible-fuel” vehicles capable of running on a variety of liquid fuels. That means eliminating bureaucratic barriers to entrepreneurship and competition — with investors, not politicians, attempting to pick winners.
EIA Lowers US Crude-Oil Production Estimates. Wall Street Journal. U.S. oil production will grow slightly less than previously expected this year and next, while consumption will remain steady in 2014 and expand in 2015, government forecasters said Tuesday.
INTERNATIONAL
Poland Proposes Tax Breaks for Shale Gas Industry. Wall Street Journal. Poland offered six-year tax breaks to the shale gas industry on Tuesday to speed up exploration work and reduce the country's reliance on Russian gas amid rising tensions in Ukraine. NOTE: Warsaw Business Journal also reports.
Putin Opens Up Europe's Energy Fault Line Along Oder-Neisse. Bloomberg. By moving forces into the Crimea region, the Russian president caused a jump in natural gas prices from the U.K. to Germany, highlighting Europe’s dependence on gas piped through Ukrainian territory. Polish Prime Minister Donald Tusk has turned on Germany, saying its appetite for Russian gas as it shifts to clean energy is “a threat to Europe’s security and sovereignty.”
China on Course to Exceed 2015 Shale Target with Fueling Find. Bloomberg. “China can easily beat the 2015 target, thanks largely to the accelerated pace of development from Sinopec’s Fuling project,” said Shi Yan, an analyst at UOB-Kay Hian Ltd. in Shanghai. Shi said contributions from other shale producers could lift 2015 output as high as 10 billion cubic meters.
Russia Pushes on With Gas Pipeline Despite EU Delaying Talks. Moscow Times. Gazprom, disregarding European Commission plans to delay talks, said it expected to sign deals this month on building its major South Stream pipeline to carry gas to Central and Southern Europe without crossing Ukraine.
IOC to buy stake in proposed PNW LNG terminal. Oil & Gas Journal. Indian Oil Corp. Ltd. (IOC) has signed an agreement with Progress Energy Canada Ltd., Calgary; Pacific Northwest LNG Ltd. (PNW LNG), Vancouver, BC; and Malaysia’s Petronas in which affiliates of IOC will purchase a 10% interest in the proposed PNW LNG export facility on Canada’s west coast and Progress Energy’s LNG-destined gas reserves in northeast British Columbia.
Worst Oil Stock Seeks Shale Boost as Colombian Boom Loses Luster.Bloomberg. “Unconventional and offshore are new frontiers we want to open in Colombia to continue incorporating reserves,” Deputy Energy Minister Orlando Cabrales said in an interview yesterday. “Ecopetrol, directly and with partners, is ready to do that.”
CALIFORNIA
Obama is right to ignore anti-HF alarmists. Alexandria Town Talk, Op-Ed. Fracking — which uses underground water cannons to free up natural gas and oil supplies — has the potential to create hundreds of thousands of middle-class jobs and vast new wealth in energy-rich California, according to a USC study. This would mean a gigantic influx of new tax revenue for a state government with a long list of unmet needs.
California's Brown Hears from Activists on HF. Associated Press. In a year when California Democrats are worried about motivating their voters, Gov. Jerry Brown heard another unwelcome message Saturday: Some Democratic activists are bristling over his administration's policies on hydraulic fracturing, or fracking. NOTE: San Francisco Chronicle also reports.
California Democrats Move To Ban HF. Huffington Post. California Democrats almost unanimously approved a progressive platform Sunday that included a proposed ban on fracking, breaking with Gov. Jerry Brown, who has indicated a willingness to explore the practice.
CALIFORNIA
Moo Creamery fears losing business over HF petition. Bakersfield Californian. Moo Creamery's owners know where their bread is buttered. Or, they do now. The couple is enduring a backlash, complete with nasty phone calls and threats to picket their Truxtun Avenue restaurant, over an anti-fracking petition they insist they never signed.
Ban hydraulic fracking in Butte County? Volunteers seek signatures to bring question to the voters. Gridley Herald. Citizens Action Network (CAN) announces the launch of the FRACK-FREE BUTTE COUNTY campaign to ban fracking (hydraulic fracturing) and other toxic extreme energy extraction activities in Butte County. A Campaign Kick-off Press Conference will be held atop Oroville Dam at 10am Thursday 3/13/14, including a brief presentation by several supporters, followed by Q&A and individual interviews.
ILLINOIS
HF Debate Heats Up Ahead of Election. WSIL TV. "We are not a pro-fracking group. We are against the community bill of rights," Garrett said. His group is working to strike down the initiative. Garrett said outside influences are at play, trying to make Johnson County a test case. "We don't want anything to do with this. We don't want expensive lawsuits in our county," he added.
NEW MEXICO
Land grant group joins Mora fight against oil drilling. Santa Fe New Mexican. The Mora Land Grant association has come down on the side of the Mora County Commission in a fight against the Royal Dutch Shell oil company and private landowners over oil and gas drilling.
NORTH DAKOTA
North Dakota oil boom: American Dream on ice. BBC News. Williston has a jobless rate of just 0.3%, thought to be the lowest in the nation. Signs everywhere in the Oil Patch proclaim: "Now Hiring". With no college degree and little experience, it's possible to land a job with a six-figure salary as a wildcatter, living in a "man camp".
Canadian Pacific talks safety. Press Republican. Warrensburg resident Robert Bradley was at the forum to ask for safer transportation of the Bakken Shale crude from North Dakota. “I’m very concerned about the safety of the cars,” Bradley said. “The DOT-111 cars have been deemed unsafe. They weren’t meant to haul crude oil, which is what they’re being used for.”
Testimony: 36 Percent of North Dakota Fracked Gas Was Flared in December.Huffington Post. The recent March 6 House Energy & Commerce Subcommittee on Energy and Power hearing titled "Benefits of and Challenges to Energy Access in the 21st Century: Fuel Supply and Infrastructure" never had over 100 online viewers watching the livestream at any point in time. And it unfolded in an essentially empty room. But the poor attendance record had no relation to the gravity of the facts presented by testifiers.
NORTHEAST
Consol hearing scheduled tonight on Allegheny County-owned land drilling.Pittsburgh Post Gazette. Findlay residents will get another chance tonight to hear about plans for gas drilling at Pittsburgh International Airport, with more discussion expected about Consol Energy’s emergency response plan and environmental assessment.
HF is Earth friendly. Roanoke Times, Op-Ed. EPA Administrator Lisa Jackson told Congress there have been no confirmed cases of drinking water contamination caused by fracturing operations. At a New Jersey conference, she added that the technology produces "a huge return on the investment." And the return on investment is not relegated only to energy companies. All Americans are benefitting from the increased domestic production of oil and natural gas.
Noble Energy to open regional HQ in Southpointe II in 2015. Washington Observer Reporter. With the structural steel for Noble Energy’s new regional headquarters rising behind him, Gov. Tom Corbett said Tuesday projects like it and many others in Southpointe II signify “a great day in Western Pennsylvania … but also a great day for the United States” where energy independence is concerned.
Noble Energy expects strong growth from Marcellus. Pittsburgh Journal. Noble Energy made official its new regional headquarters at Southpointe as the Houston-based energy firm makes a big office commitment to match what it expects will be aggressive growth in the Marcellus Shale. What started as an operation with not much more than a card table in the Pittsburgh region a little less than three years ago has now morphed into a 138,000-square-foot space in a new 208,000-square-foot building now under construction.
Drilling efficiently: Government changes how it calculates future oil and gas production because wells are producing more than before. Patriot News. Companies drilling in the Marcellus and other shale formations across the country are getting better at what they do, according to a report released today by the federal Energy Information Administration. "Increasing precision and efficiency of horizontal drilling and hydraulic fracturing" has resulted in each well producing more natural gas, on average, than seven years ago, according to the report. And that is changing the way production estimates for the United States are being calculated.
House panel weighs gas royalty legislation. State Impact. The state House Environmental Resources and Energy committee is weighing a proposal to restrict natural gas companies from withholding royalty money from Pennsylvania landowners. A 1979 state law requires oil and gas companies to pay a minimum 12.5 percent royalty to landowners who lease their property for drilling.
End excuses, fairly tax gas. Scranton Times-Tribune, Editorial. Even as the Marcellus Shale produces more than 20 percent of the gas behind the nation's vast energy industry expansion, many Pennsylvania politicians continue to treat the industry as a fragile start-up that would wilt under a fair tax burden. The argument always has been bogus. The industry is here because the gas is here; it is a disservice to all Pennsylvanians that the Corbett administration and the Legislature continue to pander to the industry by refusing to impose a fair extraction tax on natural gas.
Rep. Everett explains House Bill 1684. Towanda Daily Review. At a public hearing Tuesday on House Bill 1684, its author portrayed it as legislation that is needed to reflect the vast changes in the gas industry since the Legislature passed the Guaranteed Minimum Royalty Act in 1979.
End free pass for gas industry. Citizen’s Voice, LTE. Even as the Marcellus Shale produces more than 20 percent of the gas behind the nation's vast energy industry expansion, many Pennsylvania politicians continue to treat the industry as a fragile start-up that would wilt under a fair tax burden. The argument always has been bogus. The industry is here because the gas is here; it is a disservice to all Pennsylvanians that the Corbett administration and the Legislature continue to pander to the industry by refusing to impose a fair extraction tax on natural gas.
Congressman Holt Joins NJ Environmentalists in Calling for Ban on Hydraulic Fracturing. New Jersey Spotlight. Conservationists worry that methane byproduct of controversial natural-gas drilling technique could pollute water supply for 15 million people. With a new executive director coming on board at the Delaware River Basin Commission this week, it is time to ratchet down on drilling efforts, which involve the injection of huge amounts of water into shale deposits to recover natural gas, the groups said.
Maryland senators ask FERC to hold more hearings on plant. Bay Net. Honoring a request submitted by environmentalists, Maryland’s two U.S. senators have written to the Federal Energy Regulatory Commission (FERC) requesting the panel conduct five additional meetings on the Dominion Cove Point expansion project in Calvert County. The letter from Democrats Barbara Mikulski and Ben Cardin is dated March 6 and addressed to FERC’s Acting Chair Cheryl A. LaFluer and the three other commission members.
OHIO
Governor proposes tax changes. Toledo Blade. To help offset his goal of dropping Ohio’s highest income tax rate below the symbolic threshold of 5 percent, Gov. John Kasich on Tuesday proposed hiking taxes on smokers, shale oil and natural gas drillers, and larger businesses.
Drill Capital adding more hotels in Utica shale region, trying to lure restaurant chain. Columbus Business First. An energy investment firm with one hotel under construction in the Utica shale play region is building another in Noble County and has plans for a third. Drill Capital LLC also is trying to woo a restaurant chain to Carroll County, founder Farid Guindo told me. The New York City firm last year announced plans for its first hotel in Carrollton, spurred by oil and gas development of the Utica shale play.
Belmont County shale activity continues to benefit region. Herald-Star. Belmont County still may be in the early phases of the Utica shale rush, but Gulfport Energy, Antero Resources, Rice Energy, Hess Corp., XTO Energy and others now have applied for 80 drilling wells from the Ohio Department of Natural Resources. With drillers naming wells "Big Foot," "Blue Thunder" and "Monster," there are now 19 wells producing natural gas from the Utica formation across Belmont County. Successful wells are leading companies to spend hundreds of millions of dollars to acquire leases throughout the county, as Rice Energy alone paid out $100 million to landowners last year in a single week.
TEXAS
Dow Chemical plans new research compound near Houston. Houston Chronicle/Fuel Fix, Video. Dow Chemical Co. is building a new campus south of Houston where 2,000 employees will focus on product innovation, the latest Texas investment by a chemical company benefiting from the shale rush. The campus, which the company calls the Texas Innovation Center, will be in Lake Jackson, near Dow’s petrochemical complex in Freeport, and will consolidate work now done in several of Dow’s existing facilities in the area.
Crude oil inputs for refiners next year will hit their highest level since 2004. San Antonio Business Journal. Crude oil inputs for U.S. refiners such as San Antonio’s Valero Energy Corp. and Tesoro Corp. will next year rise to their highest level since 2004, according to new federal data. The inputs will top a previous high set 11 years ago to reach 15.6 million barrels per day, the U.S. Energy Information Administration reports in its latest Short-Term Energy Outlook, released today. “Over the next two years U.S. refining capacity and crude oil inputs to refineries are expected to increase as companies expand and build capacity to process the light crude oil from rising domestic production,” according to the report.
County officials say they can’t identify truck that shut down two Eagle Ford roads. San Antonio Business Journal. Karnes County officials say they are unable to identify the owner of a truck that spilled enough crude oil to shut down a pair of Farm-to-Market roads in one of the Eagle Ford Shale’s busiest areas. About nine total miles of FM 81 and FM 1144 have been closed since Monday to clean up the spill.
A footnote: All U.S. citizens should remember that the first amendment, a part of the Bill of Rights, promises that “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.” Vigilance to safeguard that Constitutional promise that our friends, family and ancestors have passed on to us at such great cost is the continuing price of a sustained land of freedom.
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