Keystone XL: Welcome to the Proxy Energy War - Plus three more articles
From James Stafford of OilPrice
Keystone XL: Welcome to the Proxy Energy War
Now that elections are over, everyone is waiting for a decision on the Keystone XL pipeline, but it's not so easy amid the atmosphere of protests that have even traditionally oil-friendly Texans putting up a fight.
Lawsuits, intensifying protests, conflicts of interest and the underlying notion that the pipeline is not really essential are causing the Obama administration no end of discomfort.
At stake in this atmosphere of civil disobedience is a $7 billion, 1,179-mile pipeline project that will transport Canadian tar sands to refineries in south Texas, courtesy of TransCanada. In Texas alone, the pipeline affects some 850 landowners.
TransCanada has been playing dirty, and Texans won't have it. If there is one state in the US where the phrase ‘ eminent domain' sparks revolutionary panic, it's Texas. And while the pipeline protests were earlier the strict purview of ‘tree-hugging' activists, it became a local Texas issue when TransCanada started having private land condemned by the court so it could buy it up on the cheap. So far, it has acquired 100 tracts of land in this manner, out of the 800 it has to date acquired.
One Texan has gone so far as to sue the state over its handling of the pipeline, which is supposed to cross his land. Specifically, he's suing the Railroad Commission of Texas, which is tasked with regulating pipelines. According to the lawsuit, the Commission wrongfully granted TransCanada a permit and is failing to protect water supplies and ensure safety precautions. The landowner is also seeking an injunction and restraining order against the Commission.
On Monday, the situation took a headline-grabbing turn when two activists blockaded themselves inside a pipeline in East Texas.
In Oklahoma, things have gone a bit smoother, with construction already under way in full force.
In Nebraska, the pipeline is challenged by the environmental risk to the Sandhills region. On 4 December, a public hearing opened on the Nebraska route, which will lay the groundwork for a final decision by the state's governor.
In Washington, though, support for Keystone XL seems to be moving along nicely, though it still does not have the final approval of the State Department, which is necessary as the pipeline crosses an international boundary.
While some politicians say the pipeline is a no-brainer, others disagree. Democrats are divided over the issue, with those in states whose economies depend on oil generally supporting the construction, while others balk. Republicans are generally united in support over Keystone XL.
Will the pipeline bring thousands of jobs? Probably—estimates range from 3,000 up to 20,000. Is it vital to US energy security? In so much as Canada is vital to US security. So, not really.
Energy security expert Michael Levi, of the Council on Foreign Relations, told Oilprice.com that the Keystone XL Pipeline is both “non-essential to US energy security” and “not disastrous to climate change.”
“It has been overblown by both sides in the debate. It is one pipeline that would carry a modest, but non-trivial amount of crude, and that would help create economic incentives to increase production, again, by a modest but not earth-shattering amount.”
From Levi's perspective, the real issue here is trends. “I think if you replicate a pattern like the one that some would like to see for Keystone and you start blocking pipelines all over the place, then that becomes a larger economic problem.”
So welcome to the proxy war over energy.
Overall, there is a general optimism that the pipeline will go ahead, eventually. But here's another new sticking point: the nomination for US Secretary of State, Susan Rice, who happens to hold shares in TransCanada, which is seeking State Department approval for Keystone XL.
It's a bit of a conflict of interest that promises to get messy. Rice and her husband have stock in TransCanada valued at between $300,000 and $600,000. She also has some $1.25 million in stock in Canada's Imperial Oil Ltd. (IMO), as well as in a handful of smaller Canadian oil companies.
By. Jen Alic of Oilprice.com – The No.1 source for oil prices
Mexico to Privatize State Oil Company Pemex?
Big potential changes south of the border. Mexican President-elect Enrique Pena Nieto has announced that he wants increased private investment in the nation's energy industry.
Will this include Mexican state oil company Petroleos Mexicanos, more familiarly known as Pemex?
The question is significant for the U.S.
Mexico is, according to the U.S. Energy Information Administration, now America's second largest source of imports. Of the United States' total crude oil imports averaging 9,033 thousand barrels per day (tbpd), Mexico provides 1,319 tbpd, exceeded only by Canada with 2,666 tbpd.
No, says Pena Nieto. Speaking to reporters in Ottawa last month, Nieto said, “I have publicly talked about Mexico's need to open ourselves up to the participation of the private sector in the energy sector, however this doesn't mean privatizing state run companies. I hope that this will happen with investments in Pemex but we can't postpone the benefits that Mexicans deserve to get through energy development.”
Following a lunch with Canadian Prime Minister Stephen Harper, Pena Nieto told reporters, " Clearly, if we evaluate Mexico's energy potential, it will require more infrastructure development and investment for exploration and exploitation of this important resource, and eventually, for refining."
The upside for Mexicans? The country's constitution stipulates that the nationn's oil and gas in Mexico belongs to the Mexican people, and Pemex is the only company allowed to develop it.
On a national scale this leaves Mexico without energy captains of industry or private oil companies, but bereft of foreign investment, technology and expertise.
And the sad reality is that Pemex oil production is in decline , from 2006 Pemex's average daily oil output was 3.3 million barrels per day, but in 2011, just 2.54 million bpd.
On the plus side, last month Pemex announced the discovery of a field 16 miles from Villahermosa, Tabasco, that may contain reserves of 500 million barrels of crude oil. In any case, Pena Nieto is moving quickly to reorganize Pemex . Pena Nieto has appointed energy secretary Joaquín Coldwell, president of the National Executive Committee of the PRI to replace current Pemex president Jordy Herrera. Pena Nieto is pressing forward on reforming the country's energy sector, in order to attract foreign investment. Mexican energy analysts believe that foreign capital could be crucial to reviving Pemex's declining oil output, sharing the profit on private projects for exploration and production in deep waters as well as allowing foreign private capital to participate in the new business of developing new unconventional shale gas and shale oil reserves.
But Pena Nieto's efforts to open Mexico's closed energy sector still face an uphill struggle, as any real energy reform would require Constitutional changes, which have stymied previous governmental efforts.
Still change is in the air, as Nieto and leaders of Mexico's three largest political parties have agreed to work toward allowing competition into some of Pemex's operations, as well as revising mining royalty agreements. Nieto signed a document stating that Mexico will make “the necessary reforms to create a competitive environment in the economic processes of refining, petrochemical, and transportation of hydrocarbons.”
As Mexico is currently the world's No. 7 oil producer, the implications of Nieto's efforts are significant.
But U.S. oil companies operating in the Gulf of Mexico might have competition for Pemex assets. Four months ago China's State-owned China National Offshore Oil Corp. proposed buying Canada's Nexen Inc. (NYSE:NXY), paying roughly $15.1 billion for Nexen Inc.'s common and preferred shares for Nexen's worldwide operations including the North Sea, Colombia and the Gulf of Mexico. The Gulf of Mexico concessions from the U.S. government are the potential deal breaker for CNOOC, so, should other operations there arise, then America's oil companies can likely expect some eastern competition.
By. John C.K. Daly of Oilprice.com – the No.1 source for oil prices
Will Regulators Damn Keystone XL?
Starting Tuesday, U.S. regulators will hold regular meetings on oil and natural gas pipeline safety standards. A series of pipeline issues, ranging from a deadly gas pipeline explosion in California, to a massive oil spill in Michigan, have brought pipeline safety to the forefront of the American energy debate. The safety meetings, scheduled in Virginia, come days after environmental regulators in Nebraska end a public comment period for Keystone XL, one of the most contentious U.S. pipeline issues.
The U.S. Pipeline and Hazardous Materials Safety Administration scheduled hearings beginning Dec. 11 in Virginia. During those meetings, safety committees are expected to review proposed rules related to pipeline damage prevention. PHMSA described the committees as " statutorily mandated advisory committees that advise PHMSA on proposed safety standards, risks assessments, and safety policies for natural gas pipelines and for hazardous liquid pipelines."
In October, the Nebraska Department of Environmental Quality announced it was finished with its draft evaluation report for the proposed reroute of the Keystone XL pipeline through the state. In its 600-page draft, the NDEQ found that TransCanada's new proposal "avoids the region that was identified as the Sandhills by NDEQ, which is based on extensive research conducted by various state and federal agencies several years ago."
NDEQ closed the period for written testimony on the reroute Friday. Bold Nebraska, an advocacy group opposing the pipeline, said this week that TransCanada's route remains problematic, however.
"TransCanada (NYSE:TRP) is still risking our aquifer and still risking the fragile sandy soils of our state," said Bold Nebraska's Executive Director Jane Kleeb in a statement. "When TransCanada first submitted their route to the U.S. State Department, their designation of the Sandhills was much larger and much more accurate to the reality of the Sandhills region."
Nebraskans get about 85 percent of their drinking water from regional aquifers, a November report published in the journal Environmental Science and Technology states. The study found few published groundwater case studies on the fate of tar sands oil, the type of crude designated for Keystone XL, but noted there may be a residual impact. The report recommended for the pipeline a "risk-managed route." That route targets a section of the state that was "intensely spray-irrigated, row-cropped (and) underlain by contaminated groundwater." This route, the report finds, would provide easier access should any emergency response be needed for Keystone XL.
Supporters of Keystone XL say the project is needed to ensure U.S. energy security and support jobs. U.S. Rep Fred Upton, R-Mich., chairman of the House Energy and Commerce Committee, said the pipeline could "create an estimated 100,000 or more direct and indirect jobs" for American workers. Detractors, like Bold Nebraska, however, said any potential benefits far outweigh the risks.
The journal report finds that pipeline spills have declined considerably during the past 10 years. While it's unclear what action the PHMSA may consider in its safety review, it's clear that, despite high-profile concerns like the so-called fiscal cliff, regulators are taking pipeline issues seriously as the North American energy boom gains steam.
By. Daniel J. Graeber of Oil Price
Scientists Find Mega-Oil Field ... 1,300 Light Years Away
Have our wishes been answered? Scientists have found an oil field which contains 200 times more hydrocarbons than there is water on the whole of the Earth.
Time to wave peak oil goodbye forever … but before you do I should probably inform you of the tiny hiccup in any plan to develop this oil field.
It is around 1,300 light years away.
The scientists work at the Max Planck Institute in Germany, and using the 30m-telescope of the Institute for Radio Astronomy they discovered a vast cloud of hydrocarbons within the Horse Head Nebula galaxy in the Orion constellation.
Upon discovery of the cloud IRAM astronomer Viviana Guzman declared that, “the nebula contains 200 times more hydrocarbons than the total amount of water on Earth!”
Just for those of you curious as to exactly how many barrels of oil that roughly equates to, here you go: one hundred and fifty-five quintillion, two hundred and thirty-eight quadrillion, ninety-five trillion, two hundred and thirty-eight billion, ninety-five million, two hundred and fifty thousand, or 155,238,095,238,095,250,000 barrels.
Now like me you might be wondering how oil, which is supposedly produced from organic matter buried millions of years ago, could possibly exist in space. Well it turns out that these hydrocarbons were likely created by the fragmentation of giant carbonaceous molecules called polycyclic aromatic hydrocarbons, which are produced during the death of a star.
There is even a theory that molecules such as these could have served as the first organic compounds for creating life.
By. James Burgess of Oilprice.com – The No.1 source for oil prices