Tag Archives: XL Keystone Pipeline

Canadian cousins: stick with Harper!

You wouldn’t know it from the American media, of course, but Canada too is headed into a national election. And they also just had their first debate.
Among the 35 million Canadians, of course, many welcome the fact we don’t take more interest in their affairs. For when we do, it often is a disaster. Note the continuing schmoozle over the Keystone XL Pipeline that even snuck into our national presidential debate. It has become symbolic as well as a practical concern for us down here as well as for Canadian oil and gas. For Americans, it represents an aggressive energy policy and jobs versus supposed environmental concerns. For the Canadians, it is another example of how common North American interests are hostage to domestic political concerns, especially in the U.S., critical to Canada’s expanding exports markets especially at a time of falling oil prices.
There was some irony, too, in the fact that some of the basic points in their debate were not too far from our own. Prime Minister Stephen Harper was under attack as the Canadian economy sags, intertwined with the slow American recovery. The North American Free Trade Agreement [NAFTA] among the United States, Canada, and Mexico has spurred the largest trading relationship in the world, running well over $2 billion daily. With one in every seven jobs in Canada depending on U.S. trade, no wonder the ups and downs of the U.S. economy have almost immediate impact north of the border.
Critics say Harper, running for another four-year term subject to parliamentary support, has pushed up the national debt by $150 billion and that despite his tax cuts private sector investment founders. Harper’s response is that they want to raise taxes and create bigger deficits which would only make things worse. Sound familiar?
Harper hints he won’t seek another term after this one. Of course, in one of the world’s most complicated parliamentary systems, he could drop through an unforeseen parliamentary trap door at almost any time. Furthermore, Canada has its own peculiar longer term national issues. And they were brought up in the complicated debate that tangles four different national parties – with strong regional interests. Harper’s three opponents, young [44] Liberal Party Leader Justin Trudeau, New Democratic Party Leader Thomas Mulcair and Green party Leader Elizabeth May, are all left of his own steadfast prairie conservatism. .
Canadian politics, exemplified in its second largest province, French-speaking Québec, are as often as not even more conflicted by provincial and federal allegiances than our own contradictions between states and federal voting patterns. The socialist Canadian Democratic Party, for example, is now caviling to French-speaking separatists. But despite the end of the Liberal Party’s virtually monopoly in Québec, it still hangs on to a sizeable if fissured federal delegation from the province. The Canadian West has a long tradition of maverick populist movements which, in some ways, Harper exemplifies.
Perhaps the biggest question in this fall’s election [Oct. 19] is how much the young [44] Liberal Party leader Justin Trudeau can trade on his father’s spectacular popularity as an earlier prime minister. If his father, Pierre Elliot Trudeau, recalled for Americans a Canadian John F. Kennedy in his two prime ministries totaling 15 years, young Trudeau sometimes looks and acts like a Canadian Barack Obama.
We have watched, admiringly, as Harper has taken Canada further out of the U.S shadow, particularly given Obama’s faltering foreign policy. He has been forthright about pushing the Keystone pipeline project, while at the same time threatening to take Canada’s oil directly to Chinese and other growing Asian markets with an alternative pipeline to the Pacific. His careful balance of Communist China as a major trading partner is a model for Washington.
Caught up in the mob scene in our own presidential derby, we will be watching the Canadian choice out of the corner of our eye. It’s one of the most important, if unrecognized, American interests. But we are quietly cheering for Harper — if that won’t hurt his chances furthering resentment against the colossus to the south which in the past has played its own role in Canadian politics.

American LNG to the rescue! Not exactly

by Sol Sanders

 When Sec. of State John Kerry tried to lead an LNG posse to rescue the Europeans, blackmailed in the Ukraine affair by their heavy dependence on Russian natural gas, his bluff was soon called.

True, the U.S. has a growing natural gas surplus. Converted, it can move over oceans as liquefied natural gas [LNG]. But we are still years away from multibillion-dollar facilities and a fleet of refrigerated tankers that would turn domestic supplies into a geopolitical weapon.

At the moment the U.S. has only one LNG export operation in Alaska dedicated to the Japan market. A Louisiana facility – ironically revamped in mid-construction from importing to exporting – will go on stream shortly. And while the Energy Department has approved seven applications for building new LNG exporting plants, only one has received the environmental go-ahead. Another two dozen haven’t been vetted.

Americans might seek comfort from the fact that Germany and Europe have evolved energy policies as screwed up as the Americans. But not much, if you consider that cheap energy has been the lifeblood of the U.S. economy from the beginning, when we cut down whole forests to produce heat for survival and steam to speed our industrial revolution.

Obama and company eschewed all that as part of his America “transformation”. He went for higher energy costs to goose-step the economy into so-called alternative sources. Obama’s first Energy Secretary, Nobel Physics Laureate Steven Chu, made raising consumer prices his number one priority — $9 gasoline at the pump! he said.

The death knell for that mangled attempt at Soviet-style planning – what with hundreds of millions of taxpayers’ dollars in bankruptcies of campaign contributors’ solar — came with “fracking”. That technological breakthrough reaches natural gas in rock formation at new lower depths Water, chemicals and horizontal drilling, rather suddenly in the traditional energy timetable, brought huge, still expanding estimates of less polluting natural gas. It promises what every recent president, Democrat or Republican, has championed, a return to “American energy independence” ended in the 1970s. In fact, the prospects for domestic gas and “tight oil” [found along with shale gas] looks to make the U.S. soon a net energy exporter.

With incredible chutzpah, Pres. Obama keeps taking credit for the new energy picture.

But to really maximize this Shale Revolution, the Obama Administration would have to make 180-degree turns. The most dramatic example: the Administration refuses, after five years and studies on top of studies, to weather environmentalist flack to okay the XL Keystone Pipeline. None of the studies so far have raised important environmental concerns, and its sponsors are zigzagging around alleged potential hazards for Nebraska aquifers. The pipeline would not only bring Canadian tar sands oil to Houston refineries, some of it for export. But along the way it would pick up new crude produced in the Dakotas.

All privately-financed, Keystone is the symbol of the Administration’s refusal to acknowledge the extent of the current foul-up. A positive Keystone decision alone would not, for example, solve the problem of the new Dakota oilfields flaring gas, that is burning it at the wellhead in the process of extracting crude. Estimates of that waste now run to a billion a year.

The latest announced Keystone delay by the State Dept. – it holds jurisdiction because the project is trans-border – looks to go well past the mid-term elections, perhaps even 2016. But it’s an index of the general energy confusion that the President is under attack from once staunch trade unionists for the construction jobs the Keystone would provide.

It’s significant, too, that Keystone’s Canadian TransCanada Pipeline, which operates a 60,000-mile network in all the major gas basins in North America, has just launched a $!00-million extension toward Houston. There a swelling petrochemical industry – returning from outsourcing abroad because of cheap gas – waits with open valves. TransCanada spokesmen do not acknowledge the possibility it aims for an LNG installation on the Gulf but that seems likely.

Gas producers enthusiastically support LNG exports, looking to relieve concern the domestic surplus will turn into a disincentive for new prospecting and production. Fracking is expensive and low hanging fruit are already being picked. Yet there are strong political arguments to keep on pumping new gas. Where production has gone rapidly, for example in Pennsylvania, in addition to jobs and associated businesses, fees netted state coffers more than $2 billion since 2008.

So is there anything the Obama Administration could do now with the new found American energy wealth to at least slap Putin’s wrists?

Kerry might take a leaf from Ronald Reagan’s book. When Poland’s Communist government declared martial law in 1981, and the NATO allies refused to join Washington in sanctioning the Soviets, Reagan moved unilaterally against U.S. subsidiaries operating abroad. The West Europeans along with American business howled. Norman Bailey, Reagan’s National Security Council economic ubermeister, won a bitter battle to halt U.S. technology going to new Soviet pipelines. Bailey succeeded at the height of The Cold War, but only temporarily, even then against bitter opposition from West European governments and some elements in U.S. business.

Obviously, saving the Europeans from themselves is going to take much more professionalism. Even though LNG [and its cousin, LPG, liquefied petroleum gas] are in short supply, there are possibilities virtually everywhere with the new shale smarts. For example, Washington has encouraged LNG technology companies to help Britain develop a reserve which could supply its electricity needs for 50 years, if unfortunately located in a populated area just north of London. Other Europeans, including Ukraine, have begun investigating their strong shale possibilities.

Longer term, America should probably look to gas as a transportation fuel. Christopher Faulkner, CEO of Breitling Energy, a leading driller, argues for the estimated $5-6 billion needed for LNG filling station pumps. Switching long-haul trucking alone would net annual savings equivalent to recent oil imports. Some municipal bus lines, Washington, D.C., for example, have already gone to LNG. Even though it now costs about $30,000 for recent passenger models [less than a $1,000 for older cars], a switch could reduce the average driver’s tab [driving less than 100 miles a day] by two-thirds. And if done on the Detroit’s production line, it probably would cost far less. Tokyo and Hong Kong taxis have been using LPG efficiently for more than a half century, ironically the result of force-feeding Indonesian LNG production in one of the greatest corruption scandals in petroleum history.

But then logic doesn’t necessarily prevail, especially among intellectuals talking energy. The environmentalists’ infatuation with short-run electric cars ignores the fact that – so far – inventors have not made a revolutionary battery breakthrough. Electricity can be store in relatively small amounts. If, in the unlikely event, millions of American cars would be plugged overnight to recharge, our creaking electrical grid would collapse. Furthermore, non-polluter electrical car advocates ignore the fact almost half of U.S. electricity is still fueled by coal, the bete noire of the environmentalists.

Overarching all this speculation about energy scenarios is the general political intent of the Administration. There is a dark suspicion in many quarters about Kerry’s continuing powwows with Russian Foreign Minister Sergey Lavrov, the announced “success” of which which Putin nullifies almost immediately in public statements. If we are up against more of Obama’s red lines, the LPG weapon may continue to rest in its scabbard.


Ideology, technology, and – coming up a poor third – common sense

Nowhere is the struggle fiercer between half-aspiring ideology and good old common sense than in the Obama Administration’s energy strategy – or lack thereof.
Having been ambushed by intrepid technology in the exploitation of natural gas — – “the shale revolution” — the country’s energy markets are in partial abeyance. The shale gas has blocked the initial Obama drive to raise fuel and energy prices to force consumers to higher [if heavily subsidized even when facing bankruptcy] “alternative energy sources”. At the moment, the U.S. energy economy is poised between the fact that the new technology has brought abundance, even a temporary surplus, of natural gas, and the risk a falling price might inhibit further exploitation of increasingly greater estimated reserves.
The door is still closed for maximum exploitation of gas, the least polluting by far of all the fossil fuels, government fiat [refusal to lease public lands, pipeline certification, etc.]. But there is growing pressure on the Obama Administration’s despite its leftwing base and the problem of “face” for an obvious strategy to bolster a stagnant economy and the worst employment situation since the Great Depression.
Meanwhile, not only is the shale revolution building toward the vaunted calls from every recent president for “energy independence”, but it is creating additional revenues for those states who have defied the Obama Administration and its handmaiden the Environmental Protection Agency’s harassment. Pennsylvania’s more than six thousand unconventional wells, either producing gas or under development, lifted $224.5 million in fees off the state’s taxpayers backs last year. More than $2 billion in state tax revenue has been generated since 2008.
Despite the logic of giving shale gas free rein, the enviromentalistas continue to rant about the possible impacts of fracking – the method of reaching the gas — although there has been no significant pollution episode. That’s not only because of caution and superior technology of the drillers but the fact that the shale deposits generally lay hundreds of feet below water aquifers. Fracking skirts them and then drills horizontally to get at the gas [and sometimes oil]. On the contrary, there have been several disastrous train wrecks in the U.S. and Canada, with the rapidly increasing movement of new found American oil by rail rather than through more efficient pipelines.
Nor do the enviromentalistas concede that the movement from coal to gas turbines for producing electricity has reduced the overall levels of pollution. Nor is there recognition that the cost of failure to authorize pipelines – the most dramatic example, the proposed Keystone XL pipeline which would carry Canadian crude, picking up Dakota oil enroute, to the Houston refineries and a portion, perhaps as much as 15%, into export. A part of that tragedy is that millions of cubic feet of gas are being “flared” – allowed to burn off in the air – in the Dakota oilfields because there are no pipelines or liquefying facilities to carry it to market. Not only do 1500 wells flare an estimated $100 million worth of gas each month, but the resulting pollution represents an unnecessary additional pollution hazard.
In one of the most curious misplaced arguments making the rounds of the talking heads spewing out nonsense on energy is the advocacy of government subsidized electric cars. Until there is a revolutionary breakthrough in battery science, there is no efficient way to store electricity. Recharging the car batteries at their current level of efficiency in electric engines is after all based on the nation’s creaking electricity grid, about half of which is now produced by the devil incarnate of the enviromentalistas, coal. Imagine what would happen in the unlikely event there were millions of electric cars that needed overnight recharging.
Chris Faulkner, Breitling Energy, one of the leading lights in the fracking industry and as much of a mavim on world energy as you will find, argues that $5-6 billion would set up LNG pumps in the nation’s filling stations. Relatively modest changes in 1960s car engines –  at a cost of less than $1,000 a car, $30,000 for contemporary models – would permit them to use liquefied natural gas [LNG]. In fact, LNG is being used by some city bus lines already [e.g., Washington, D.C.]. And imported Indonesian LNG has been in common use in Japan, Hong Kong and Taiwan for almost 50 years. [A French company has just signed a contract to export U.S. LNG to Taiwan.] Faulkner points out that if the large transcontinental trucking companies went to LNG at current costs, the saving would be about the tab of current purchases of foreign oil.
Perhaps someone will whisper the dirty little secret that LNG at the pumps would reduce the average motorist’s fuel tab by up to two-thirds. Is that going to happen before the elections this fall – or will we have to wait for 2016?