Energy Tomorrow Blog
Posted May 27, 2015
Wall Street Journal commentary (Engler and McGarvey): America’s business and labor leaders agree: President Obama and Congress can do more to modernize the permitting process for infrastructure projects—airports, factories, power plants and pipelines—which at the moment is burdensome, slow and inconsistent.
Gaining approval to build a new bridge or factory typically involves review by multiple federal agencies—such as the Environmental Protection Agency, the U.S. Forest Service, the Interior Department, the U.S. Army Corps of Engineers and the Bureau of Land Management—with overlapping jurisdictions and no real deadlines. Often, no single federal entity is responsible for managing the process. Even after a project is granted permits, lawsuits can hold things up for years—or, worse, halt a half-completed construction project.
Posted May 26, 2015
Reuters: U.S. Republicans have had to watch from the sidelines as the Obama White House has taken political credit for America's unexpected energy boom and tumbling gas prices. Now it has left their presidential candidates scrambling for a way to reclaim leadership on an issue the party once seemed to own.
Their apparent answer: calling time on a 40-year-old federal ban on crude oil exports and using the newfound energy bounty to strategic advantage.
"We've got an abundance of supply," Wisconsin Governor Scott Walker said this week in Oklahoma at a gathering of putative Republican candidates for next year's presidential election. Lifting the ban, he said, would allow exports to "our allies in Europe, where, instead of being dependent on (President) Vladimir Putin and the Russians, they could be dependent on Americans."
Posted May 26, 2015
Thinking about American energy, one underappreciated component is our national maritime system – connecting sources of oil with U.S. destinations and also exported domestic resources that help make the U.S. an energy superpower. National Maritime Day last week reminds us of the vital link this system provides in the energy supply chain.
Noteable: America’s marine highway system consists of more than 29,000 nautical miles of navigable waterways – the most extensive system in the world – infrastructure that’s vital to our economy, about 42 percent of all waterborne trade in the U.S. in 2012 was comprised of crude or petroleum products, reflecting the fact the U.S. imports about 10 million barrels of oil per day and more.
Posted May 20, 2015
The Wall Street Journal (Leon Panetta and Stephen Hadley): The United States faces a startling array of global security threats, demanding national resolve and the resolve of our closest allies in Europe and Asia. Iran’s moves to become a regional hegemon, Russia’s aggression in Ukraine, and conflicts driven by Islamic terrorism throughout the Middle East and North Africa are a few of the challenges calling for steadfast commitment to American democratic principles and military readiness. The pathway to achieving U.S. goals also can be economic—as simple as ensuring that allies and friends have access to secure supplies of energy.
Blocking access to these supplies is the ban on exporting U.S. crude oil that was enacted, along with domestic price controls, after the 1973 Arab oil embargo. The price controls ended in 1981 but the export ban lives on, though America is awash in oil.
The U.S. has broken free of its dependence on energy from unstable sources. Only 27% of the petroleum consumed here last year was imported, the lowest level in 30 years. Nearly half of those imports came from Canada and Mexico. But our friends and allies, particularly in Europe, do not enjoy the same degree of independence. The moment has come for the U.S. to deploy its oil and gas in support of its security interests around the world.
Posted May 19, 2015
Solid bipartisan support for important energy legislation is on display in the U.S. Senate, with members of a key committee considering a number of ways to increase access to domestic supplies of oil and natural gas – as well as bills ending 1970s-era restrictions on U.S. crude oil exports.
Energy security is about having secure, reliable energy supplies to fuel broad economic expansion and create opportunity for individual Americans. When we remove outdated export restrictions, allowing U.S. energy to reach global markets, studies have detailed how domestic production will be stimulated – again, creating jobs and economic growth here at home. API Executive Vice President Louis Finkel talks about new legislation offered by Democrat Heidi Heitkamp, similar to legislation offered last week by Republican Lisa Murkowski, that would lift the crude export ban and boost U.S. energy:
“Bipartisan leadership on this issue keeps the focus on the consumers and workers that will benefit from free trade in crude oil. … Study after study shows that lifting outdated limits on crude exports will allow America to create more jobs, cut the trade deficit, grow the economy, and put downward pressure on fuel costs. Exports will help keep U.S. production strong in a tough market, and they will provide our allies with an important alternative to energy from less friendly regimes.”
Posted May 19, 2015
Oil and Gas Investor: The technology that fueled the U.S. shale revolution could breathe new life into old oil fields outside of North America.
More than 170 mature oil plays worldwide have the potential from horizontal drilling and hydraulic fracturing to produce as much as 141 billion barrels (Bbbl) of oil, according to an IHS report on May 13.
Of the estimated 141 Bbbl of potentially recoverable oil using unconventional techniques, 135 Bbbl exist in plays that would likely require hydraulic fracture stimulation to produce. Roughly 6 Bbbl sit in plays that may not require hydraulic fracturing.
Posted May 18, 2015
Sometimes, amid the back and forth of discussions over energy policy, it’s helpful to talk about the real-world impacts of various policy choices.
Right now in Pennsylvania, a proposed natural gas severance tax that would supersede the state’s existing impact fee is being debated vigorous – chiefly because the current impact fee has been good for the commonwealth, very good.
It’s been so good that some question the wisdom of swapping the current system for a severance tax – especially given a recent study showing that the net effect likely would be less energy development, resulting in billions in economic losses and nearly 18,000 fewer jobs supported by 2025. We’ve likened it to the proverbial folly of killing the golden egg-laying goose.
So, if the current impact fee has been good for Pennsylvania, can we be more specific? Yes.
Posted May 18, 2015
Wall Street Journal: BRUSSELS—The European Union is increasing pressure on Washington to include an energy chapter in a planned trans-Atlantic trade deal that would allow U.S. exports of natural gas and oil and reduce the bloc’s dependency on Russia.
In an interview with The Wall Street Journal, Maros Sefcovic, the EU’s energy chief, said that easing flows of liquefied natural gas and crude oil from the U.S. to the EU is one of the bloc’s goals for the trans-Atlantic trade and investment partnership, or TTIP, that is currently under negotiation. The U.S. has so far resisted an energy chapter in TTIP, but the shale-gas boom in the U.S. and the EU’s trouble with Russia have pushed the issue into focus.
“We believe that the energy chapter in TTIP…could make a quite important contribution to the mutually beneficial trade exchange, but also to the energy security of the EU,” Mr. Sefcovic said.
Posted May 15, 2015
Bloomberg BNA: The chairman of the Senate Energy and Natural Resources Committee said May 14 that she is inclined to include standalone legislation that would end the 40-year ban on the export of domestic crude oil as part of a broader energy package the committee is drafting.
“I’d like to have it in there,” Sen. Lisa Murkowski (R-Alaska) told reporters. “It just makes sense in there, as part of the bigger, broader energy updating our architecture.”
The bill, the Energy Supply and Distribution Act of 2015 (S. 1312), released May 13, is scheduled to be the subject of a June 4 hearing on “energy accountability and reform,” along with other bills that could end up in the broader energy package, which is expected to be unveiled later this summer.
Posted May 14, 2015
Wall Street Journal: After slashing production for months, U.S. shale-oil companies say they are ready to bring rigs back into service, setting up the first big test of their ability to quickly react to rising crude prices.
Last week, EOG Resources Inc. EOG, -0.08% said it would ramp up output if U.S. prices hold at recent levels, while Occidental Petroleum Corp. OXY, +0.93% boosted planned production for the year. Other drillers said they would open the taps if U.S. benchmark West Texas Intermediate CLM5, -0.88% reaches $70 a barrel. WTI settled at $60.50 Wednesday, while global benchmark Brent LCOM5, -0.13% settled at $66.81.
An increase in U.S. production, coupled with rising output by suppliers such as Russia and Brazil, could put a cap on the 40% rally in crude prices since March and even push them lower later in the year, some analysts say.
“U.S. supply could quickly rebound in response to the recent recovery in prices,” said Tom Pugh, a commodities economist at Capital Economics. “Based on the historical relationship with prices, the fall in the number of drilling rigs already looks overdone, and activity is likely to rebound over the next few months.”