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Wednesday, January 28, 2015

Obama Plans To Expand Offshore Oil Drilling

President Obama plans to open up parts of the Atlantic and Arctic oceans to new oil and gas exploration.  We support the plan for the Arctic but oppose the plan for the Atlantic.
The Interior Department’s five-year lease plan would allow drilling in three areas off the coast of Alaska and one in a portion of the Atlantic for the first time in nearly four decades.  The five-year plan determines what areas will be on the auction block for oil and gas exploration between 2017 and 2022.  The Interior expects 2021 to be the earliest a lease sale could happen.
The Interior Department believes the proposals would make available nearly 80 percent of the undiscovered, technically recoverable resources, while protecting areas that are simply too special to develop. The plan prohibits drilling in some areas and that the administration could close off additional areas going forward. 
The plan was released days after the administration moved to declare the 1.5 million-acre coastal plain region of the Arctic National Wildlife Refuge (ANWR) off-limits to oil and gas development.
A focus of the plan is development in the Gulf of Mexico, where 10 lease sales are proposed. It includes a new approach to hold two annual sales in the western and central Gulf, as well as a portion of the eastern Gulf.  The move allows for industry for invest more in the Gulf, one of the most productive basins for oil and gas. We support expanded Gulf development.
Only one sale each will be allowed in the Chukchi Sea, Beaufort Sea and Cook Inlet areas of Alaska, according to the proposed plan. New development in the Pacific Ocean is excluded from the plan.
Four of the five areas deemed off-limits by Obama had previously been excluded from the 2012-2017 lease sales. Those include the Barrow and Kaktovik whaling areas in the Beaufort Sea, and 25-mile coastal buffer in the Chukchi Sea.
In the Atlantic, the proposal will open the door to oil and gas development along the coasts of Virginia, North and South Carolina and Georgia.  A 50-mile coastal buffer zone would be required for lease sales in the Atlantic. We oppose this part of the plan.
It’s not the first time Obama has proposed opening up the Atlantic. He floated oil and gas development in the region for the 2012-2017 plan but scrapped the notion after BP’s 2010 Gulf of Mexico oil spill.  (The Hill, 1/27/2015)

Fewer Oil Rigs Needed To Produce More Oil in Lower 48

Lower 48 oil production outlook stable despite expected near-term reduction in rig count

graph of monthly oil production and rig count in the lower 48 states, as explained in the article text
Source: U.S. Energy Information Administration, January Short-Term Energy Outlook
Note: Graph does not include production from Alaska and the Federal Gulf of Mexico.


The Department of Energy, Energy Information Administration (EIA) projects that the sharp decline in oil prices over the last quarter of 2014, which has continued in January, is already having a significant effect on drilling activity in the United States, as shown by the 16% decline in the number of active onshore drilling rigs in the Lower 48 states between the weeks ending on October 31, 2014 and January 23, 2015, according to data from Baker-Hughes.
Moving from what has happened to forecasting the future is challenging, in part because market expectations of uncertainty in the price outlook have increased as reflected in the current values of futures and options contracts. When the latest edition of EIA's monthly Short-Term Energy Outlook (STEO) was issued on January 13, the 95% confidence interval for market expectations for prices in December 2015 was extremely wide, with upper and lower limits of $28/barrel (bbl) and $112/bbl, respectively. The growing uncertainty surrounding oil prices presents a major challenge to all price forecasts. EIA's January STEO forecasts Brent crude oil prices averaging $58/bbl in 2015 and $75/bbl in 2016, with annual average West Texas Intermediate (WTI) prices expected to be $3/bbl to $4/bbl lower.
Should its price forecast be realized, EIA projects that the number of operating rigs will decrease by approximately 24% from January to October 2015 before beginning to rebound in November 2015. However, the outlook for Lower 48 production reflects more than just the rig count. Other key factors include the efficiency of drilling, which EIA tracks in its Drilling Productivity Report, the rate of decline in production from existing wells, and changes in the amount of time between the start of drilling (called spudding) and the completion of the well.
As discussed in a previous Today in Energy article on the effect of declining crude oil prices on U.S. production, permits and drilling in North Dakota declined during the financial downturn of 2008-09, but production rates did not decline as substantially. At the time of the July 2008 oil price peak, drilling activity in the Bakken-Three Forks formations outpaced well completion activity as increasing numbers of wells were drilled. Averaging about 70 days before the oil price peak, spud-to-completion times almost doubled within two months, reaching more than 130 days. This increase created a backlog of wells that had been drilled but not yet completed. As fewer wells were drilled during the subsequent drop in oil prices, the spud-to-completion times decreased. Increased drilling activity in the Bakken since 2011 has once again increased spud-to-completion times, which have stabilized at more than 120 days per well, almost twice previous minimum levels. (DOE-EIA)

Tuesday, January 27, 2015

Senate Energy to Tackle LNG Permit Legislation

The Senate Energy & Natural Resources Committee will hold a hearing on LNG permitting legislation on Thursday at 10:00 a.m.

The LNG Certainty and Transparency Act (S. 33) was introduced last week and would provide certainty with respect to the timing of Department of Energy decisions to approve or deny applications to export natural gas.  The bill was introduced by Senator John Barrasso (R-WY)

Witnesses will include DOE's Chris Smith, Paul Cicio of the Industrial Energy Consumers of America, ANGA's Marty Durbin, NAM's Ross Eisenberg and David Koranyi, the Eurasian Energy Future Initiative at the Atlantic Council.  (Frank Maisano)

EPA Ozone Public Hearing Set for DC

EPA Headquarters
EPA will hold its ozone rule hearing on Thursday at EPA headquarters.  EPA will hold several public hearings on the proposed updates to the national air quality standards for ground-level ozone, also known as smog. EPA has proposed to strengthen the standards to a level within a range of 65 to 70 parts per billion(ppb) to better protect American’s health and the environment, while taking comment on a level as low as 60 ppb.

While the low end of the range in the proposed rule (65 ppb) is very troubling for industry and states, as low as background levels of ozone in many parts of the country and pushing as much as 94% of the nation out of attainment, 60 ppb would be devastating for manufacturing, oil and gas production and agriculture across the country.  One thing to consider: the Administration only has so much political capital at its disposal and it has made clear that controlling greenhouse gases is its legacy issue.

It is unclear that the Administration has the bandwidth to sustain both rules.  There is no doubt that many in Congress and the states will demand that the proposed ozone NAAQS be placed on a more realistic course.  Look for Strong pushback on Ozone/NAAQS from Oil and gas.  (Frank Maisano)

Tuesday, January 20, 2015

Domestic Refining Shifting From Imported Heavy to Domestic Light Crude

Regional refinery trends evolve to accommodate increased domestic crude oil production


Map of U.S. regional refining capacity, as explained in the article text
Source: U.S. Energy Information Administration
Note: As of January 1, 2014, there were 133 operating refineries with atmospheric crude oil distillation units (ACDU) totaling capacity of 18.9 million barrels per stream day. Heavy capacity denotes refineries with coking capacity; light capacity denotes refineries without coking capacity.
Note: Click to enlarge.

Recent rapid growth in U.S. production of light tight oil has raised interest in understanding how U.S. refineries, many of which are configured to process heavier crude oil, might accommodate increased volumes of domestic light crude. The U.S. refinery fleet, which is distributed across Petroleum Administration for Defense Districts (PADDs), varies both within and across regions in capacity, quality of crude oil inputs, utilization rates, and sources of crude supply.
Changes to crude oil supply patterns are most pronounced in the Gulf Coast. Net imports into the region have fallen by 2.3 million bbl/d, and light sweet crude imports have been largely replaced by domestically produced light, tight oil.  

More than 50% of the country's refinery capacity and most of the country's heavy crude processing capacity is located in the Gulf Coast (PADD 3). The region's 51 operating refineries with atmospheric crude distillation units (ACDU) have capacity totaling 9.7 million barrels per stream day (bbl/sd), 81% of which is located at facilities with coking capacity.
Crude oil production in the Gulf Coast region has increased by 1.9 million barrels per day since 2010. Gulf Coast receipts of crude oil from the Midwest (PADD 2), including both U.S. and Canadian production, also have increased. With more Canadian and domestic barrels moving south from the Midwest to the Gulf Coast region and lower demand for crude shipments from the Gulf Coast to the Midwest, net receipts for the Gulf Coast were positive in October 2014 for the first time since December 1985. This situation, with shipments and receipts of crude oil to and from other PADDs being roughly equal in the Gulf Coast region, is a change from the region's traditional role. The Gulf Coast has long been a source of crude supply for neighboring PADDs, both through the movement of domestic production and from imported crude oil coming into Gulf Coast ports.
With U.S. crude production in 2015 expected to average 9.3 million bbl/d, 700,000 bbl/d above the 2014 level, domestic refiners will continue to face changing supply and demand conditions, even as continued production growth in the first months of the year transitions to a more static production outlook as the effects of the recent sharp decline in oil prices are reflected in drilling decisions. Changes to infrastructure, refinery capacity, crude oil price differentials based on quality, and policy decisions will also affect refinery operations in the coming year. (DOE-EIA)

Thursday, January 15, 2015

EPA's Methane & Ozone Reduction Strategy for Oil & Gas Industry

EPA’S STRATEGY FOR REDUCING METHANE AND OZONE-FORMING POLLUTION FROM THE OIL AND NATURAL GAS INDUSTRY
As part of the Obama Administration’s commitment to addressing climate change, the U.S. Environmental Protection Agency (EPA) has outlined a series of steps it plans to take to address methane and smog-forming VOC emissions from the oil and gas industry, in order to ensure continued, safe and responsible growth in U.S. oil and natural gas production. The agency’s commonsense strategy will reduce methane pollution from new sources in this rapidly growing industry, reduce ozone-forming pollutants from existing sources in areas that do not meet federal ozone health standards,  and build on work  that states and industry are doing to address emissions from existing sources elsewhere.
Building on Commonsense Standards for Methane and VOC Emissions
  • Methane – the key constituent of natural gas – is a potent greenhouse gas with a global warming potential more than 25 times greater than that of carbon dioxide. Nearly 30 percent of methane emissions in the U.S. in 2012 came from oil production and the production, processing, transmission and distribution of natural gas. While methane emissions from the oil and gas industry have declined 16 percent since 1990, they are projected to increase by about 25 percent over the next decade if additional steps are not taken to reduce emissions from this rapidly growing industry.
  • EPA’s strategy will help avoid this anticipated increase in methane emissions from new sources, and will use both regulatory and voluntary approaches to accomplish this goal.
  • The agency also will extend requirements for addressing emissions of volatile organic compounds (VOCs) to additional sources, further reducing this key ingredient of ground-level ozone (smog).
  • The agency plans to build on its 2012 New Source Performance Standards for the oil and natural gas industry to achieve both methane reductions and additional reductions in VOCs. Those cost-effective standards relied on proven technologies already in use, provided flexibility and incentives for industry to modernize equipment and reduce pollution early, and strengthened accountability, all while supporting continued growth in the sector.
  • EPA will follow a similar approach as it develops cost-effective, commonsense requirements for new oil and gas sources that are significant emitters of methane and VOCs. The agency will talk with industry, states and tribes as it evaluates a range of approaches that can reduce methane and VOC emissions from sources such as the equipment and processes discussed in the 2014 White Papers. These could include completions of hydraulically fractured oil wells, pneumatic pumps, and leaks from new and modified well sites and compressor stations.
  • In developing the proposal EPA anticipates a process for engaging directly with states on approaches the agency should consider in setting standards. This engagement will help ensure that the standards the agency issues are effective in protecting public health and the environment while supporting continued growth in this sector.
  • A number of states regulate, or are considering regulating, air pollution from the oil and gas industry, and EPA’s strategy anticipates that they will continue to do so. Under the Clean Air Act, states have the authority to regulate air emissions from sources within their boundaries, provided their requirements are not weaker than federal rules. EPA plans to issue a proposed rule later this summer and a final rule in 2016.
  • In addition, EPA will continue and expand its work to promote voluntary adoption of cost-effective methane reduction technologies by the oil and natural gas sector.
Reducing Additional Pollution in Areas with Ozone Problems
  • EPA also plans to extend VOC reduction requirements to existing oil and gas sources in areas that could particularly benefit from VOC reductions: ozone nonattainment areas and states in the Ozone Transport Region. Reducing VOCs can help reduce smog, which is linked to a number of serious effects on public health.
  • The agency will do this by issuing Control Techniques Guidelines (CTGs) that provide an analysis of the available, cost-effective technologies for controlling VOC emissions from covered oil and gas sources. States would have to address these sources as part of state plans for meeting EPA’s ozone health standards.
  • CTGs give states critical information on cost-effective control technologies.  States have some discretion in applying these guidelines to individual sources.
  • Many controls to reduce VOCs also reduce methane as a co-benefit.  The CTGs that EPA issues also will also provide states and any tribes that choose to do so with a model they can put in place to address emissions from sources in other areas where oil and gas activities are concentrated.
  • EPA plans to propose CTGs in the summer of 2015, and issue final guidelines in 2016.
Industry Action to Reduce Methane Emissions
  • In addition to regulatory activities, several voluntary efforts to address these sources are underway, including EPA’s plans to expand the successful Natural Gas STAR Program by launching a new partnership in collaboration with key stakeholders later in 2015.
  • Under the new program EPA will work with the departments of Energy and Transportation and leading companies, individually or through broader initiatives such as the Downstream Initiative or the One Future Initiative, to develop and verify robust commitments to reduce methane emissions.
  • Voluntary efforts to reduce emissions in a comprehensive and transparent manner have the potential to yield significant methane reductions in a quick, flexible and cost-effective way. Achieving significant reductions through these voluntary industry programs and state actions could reduce the need for future regulations. The Administration stands ready to collaborate with participants in these and other voluntary efforts, including in the development of a regime for monitoring, reporting and verification.  (EPA)

Wednesday, January 14, 2015

Center Supports Liberty Port Ambrose LNG Project at Coast Guard Hearing

Full Written Statement

Center President Norris McDonald testified before the U.S. Coast Guard and the U.S. Maritime Administration in support of the Liberty Port Ambrose Liquefied Natural Gas Project.  The project will import natural gas into the United States and will provide diversity in energy delivery.  This gas is needed in lower New York and Long Island.


Norris McDonald at January 8, 2015 Hearing



Norris McDonald at January 8, 2015 Hearing


One hearing was held at the Sheraton Eaton Hotel in Eatontown, New Jersey.  Approximately 100 union members attended the hearing and expressed their support for the project.


Norris McDonald at January 7, 2015 Hearing


The other hearing was held at the Hilton New York JFK Airport Hotel in Jamaica, New York. Approximately 150 union members attended the hearing and expressed their support for the project.


Dan Durett at the January 7, 2015 Hearing


Full Written Statement

Center New York Director Dan Durett also made a statement at the hearing.  Dan provided the Center's local perspective on the project.

Port Ambrose is a deepwater port consisting of a submerged buoy system for natural gas deliveries that will be located in federal waters approximately 19 miles from the New York shore.  Each delivery is expected to provide an average of 400 million cubic feet of natural gas per day – enough to meet the energy needs of 1.5 million homes. The majority of these deliveries will occur during the peak demand periods of winter and summer.


Norris McDonald at 1:40:18 into the video


Saturday, January 03, 2015

Support The Liberty Port Ambrose LNG Project

The Center supports the Liberty Port Ambrose Liquefied Natural Gas Project

Port Ambrose is a deepwater port consisting of a submerged buoy system for natural gas deliveries that will be located in federal waters approximately 19 miles from the New York shore.  Each delivery is expected to provide an average of 400 million cubic feet of natural gas per day – enough to meet the energy needs of 1.5 million homes. The majority of these deliveries will occur during the peak demand periods of winter and summer.

Liquefied Natural Gas (LNG) supplies will arrive at Port Ambrose via specially designed Shuttle & Regasification Vessels (SRVs). Once the SRV is connected to the submerged buoy system, the LNG will be re-gasified on board and natural gas will be transferred into a new twenty-two mile subsea pipeline that will connect offshore into the existing Transco Lower New York Bay Lateral pipeline serving Long Island and New York City

The Liberty Port Ambrose Liquefied Natural Gas Project will import LNG that will be delivered from purpose-built LNG regasification vessels (LNGRVs) or Shuttle & Regasification Vessels (SRVs), vaporized on site and delivered through subsea manifolds and lateral pipelines to a buried main line connecting to the existing Transcontinental Gas Pipe Line Company (Transco) Lower New York Bay Lateral in New York State waters.  

On September 28, 2012, Liberty Natural Gas, LLC (Liberty), submitted an application to the
U.S. Coast Guard (USCG) and the Maritime Administration (MARAD) seeking a federal license to construct, own, and operate a deepwater port for the import and regasification of liquefied natural gas in federal waters off the coasts of New York and New Jersey

As stated in the Draft Environmental Impact Statement:

The purpose for licensing LNG deepwater ports is to provide a reliable and timely supply of natural gas and increase energy diversity, while considering impacts on the environment, safety, and security.

The Center agrees with the purpose of the project.

Thursday, December 18, 2014

Governor Andrew Cuomo To Ban Fracking in New York State

Governor Andrew Cuomo's environmental commissioner, Joe Martens, and acting Health Commissioner, Howard Zucker have recommended a ban on fracking across the state  of New York, citing excessive environmental and health concerns.  Governor Cuomo is deferring to their recommendations in making a final decision. A ban would end the state's current six-month moratorium on fracking.

The process of fracking involves shooting a mix of pressurized water, sand and chemicals to split rock formations to release natural gas and so-called tight oil.  The widely used, deep-drilling process, combined with horizontal drilling, has resulted in a surge in domestic-energy production.
State and local governments are pushing for bans over the health and environmental concerns, including the potential for earthquakes and the contamination of natural water supplies.

New York sits atop the Marcellus shale formation, which stretches 600 miles along the Appalachian Basin and is rich in natural gas deposits.

The state’s Department of Environmental Conservation will put out a final impact study early next year that will suggest a ban on fracking.  Martens will follow the report with an order prohibiting the process.  (Fox News, 12/18/2014)

Wednesday, December 17, 2014

2015 Gasoline Expenditures To be Lowest in 11 Years

graph of average annual household expenditures on gasoline and motor oil, as explained in the article text


Source: U.S. Energy Information Administration, Short-Term Energy Outlook


The average U.S. household is expected to spend about $550 less on gasoline in 2015 compared with 2014, as annual motor fuel expenditures are on track to fall to their lowest level in 11 years. Lower fuel expenditures are attributable to a combination of falling retail gasoline prices and more fuel-efficient cars and trucks that reduce the number of gallons used to travel a given distance.
Household gasoline costs are forecast to average $1,962 next year, assuming that EIA's price forecast, which is highly uncertain, is realized. Should the forecast be realized, motor fuel expenditures (gasoline and motor oil) in 2015 would be below $2,000 for the first time since 2009, according to EIA's December 2014 Short-Term Energy Outlook (STEO).
The price for U.S. regular gasoline has fallen 11 weeks in a row to $2.55 per gallon as of December 15, down $1.16 per gallon from its 2014 peak in late April and the lowest price since October 2009. Gasoline prices are forecast to go even lower in 2015. Gasoline prices are falling because of lower crude oil prices, which account for about two-thirds of the price U.S. drivers pay for a gallon of gasoline.
EIA's latest STEO forecasts that Brent crude oil prices will average $68 per barrel (bbl) in 2015, with prices up to $5/bbl below that annual average early in the year. The forecast for West Texas Intermediate (WTI) crude oil spot prices averages $63/bbl in 2015. However, the current values of futures and options contracts show high uncertainty regarding the price outlook. For example, WTI futures contracts for March 2015 delivery traded during the five-day period ending December 4 averaged $67/bbl. Implied volatility averaged 32%, establishing the lower and upper limits of the 95% confidence interval for the market's expectations of WTI prices at the expiration of the March 2015 contract at $51/bbl and $89/bbl, respectively. Last year at this time, WTI futures contracts for March 2014 delivery averaged $96/bbl and implied volatility averaged 19%, with only a $30/bbl spread between the corresponding lower and upper limits of the 95% confidence interval.
Increases in fuel economy are also contributing to lower motor fuel expenditures, as cars and trucks travel farther on a gallon of gasoline. According to the Environmental Protection Agency, the production-weighted fuel economy of cars has increased from 23.1 miles per gallon (mpg) for model-year (MY) 2005 cars to almost 28 mpg for MY2014, an increase of about 21%. Similarly, the fuel economy for trucks has increased 19%, from 16.9 mpg to 20.1 mpg in the same time frame.
In recent years, gasoline expenditures have accounted for about 5% of household expenditures. In the Bureau of Labor Statistics' (BLS) Consumer Price Index, gasoline accounted for 5.1% of consumer spending, as of October 2014. Reductions in the gasoline price ultimately impact the relative weight of gasoline compared to other expenditures (shelter, clothing, food, entertainment, and so on) in price indices compiled by BLS and the Bureau of Economic Analysis at the U.S. Department of Commerce.
The demand for gasoline is very price inelastic over short time periods, meaning changes in price have little impact on the number of gallons used. Falling gasoline prices allow households to spend their income on other goods and services, pay down debt, and/or increase savings.  (DOE-EIA)

Tuesday, December 16, 2014

Gasoline Prices Have Little Effect On Car Travel

The U.S. average retail price per gallon of regular motor gasoline has fallen 28% from its 2014 peak of $3.70 per gallon on June 23, to $2.68 per gallon on December 8. However, this price decline may not have much effect on automobile travel, and in turn, gasoline consumption. Gasoline is a relatively inelastic product, meaning changes in prices have little influence on demand.

Price elasticity measures the responsiveness of demand to changes in price. Almost all price elasticities are negative: an increase in price leads to lower demand, and vice versa. Air travel, especially for vacation, tends to be highly elastic: a 10% increase in the price of air travel leads to an even greater (more than 10%) decrease in the amount of air travel. Price changes have greater effects if the changes persist over time, as opposed to being temporary shocks.
Automobile travel in the United States is much less elastic, and its price elasticity has fallen in recent decades. The price elasticity of motor gasoline is currently estimated to be in the range of -0.02 to -0.04 in the short term, meaning it takes a 25% to 50% decrease in the price of gasoline to raise automobile travel 1%. In the mid 1990s, the price elasticity for gasoline was higher, around -0.08, meaning it only took a 12% decrease in the price of gasoline to raise automobile travel by 1%.  (DOE-EIA)

Federal Agencies Support State Water Trading Program

Federal Agencies Support Virginia’s Innovative Market-based Approach to Improving Water Quality in Chesapeake Bay
Virginia program to serve as model for similar programs across the country
U.S. Environmental Protection Agency (EPA) Administrator Gina McCarthy today joined U.S. Department of Agriculture Secretary (USDA) Tom Vilsack, Mike Boots of the White House Council on Environmental Quality (CEQ), Commonwealth of Virginia Governor Terry McAuliffe, a private investor and an Appomattox, Va. farmer to recognize an innovative, market-based nutrient trading program run by Virginia to improve the water quality of Chesapeake Bay. 

The cost-effective program has saved the Commonwealth more than $1 million, demonstrating an innovative means of meeting Clean Water Act stormwater requirements and Virginia state water quality goals for the bay. The program encourages economic investment while reducing phosphorus pollution to local waterways in order to meet water quality goals for the Chesapeake Bay.  It is expected similar programs will be established around the nation to provide new revenue sources for agricultural producers while reducing soil erosion and runoff.  
Virginia’s Department of Environmental Quality has created a demand and supply market for land conservation projects that are protective of water quality for future generations.  The agency’s stormwater program requires reductions of phosphorus runoff from certain types of road construction projects that can be achieved by purchasing phosphorus credits from state-certified credit banks. Credits purchased are generated by Virginia farmers in the Potomac and James River watersheds, whose farming practices have permanently reduced the amount of phosphorus flowing into those rivers and, ultimately, the Chesapeake Bay. 
The farm practices are certified by the state as “nutrient credit banks” and come solely from private investors, reducing reliance on public funds and generating a new revenue stream for participating farmers. These credits cost VDOT approximately 50 percent less than other, more traditional engineered pollution reduction practices, such as detention ponds, and underground filters. In addition, these banks advance other goals such as wildlife habitat, stream buffers and land preservation.‎
By advancing the goals of improving the health and regional economy of the Chesapeake Bay as laid out in President Obama’s 2009 Executive Order, nutrient trading is giving farmers additional income opportunities that help keep agricultural lands in production and stretch limited budgets by tapping private sector investments.
EPA and USDA are working together to implement and coordinate policies and programs that encourage water quality trading and will release a web-based water quality trading roadmap tool in early 2015. As part of a joint memorandum of understanding to support trading and environmental markets, the two agencies are centralizing information for buyers and sellers to utilize water quality trading. This resource library will be searchable and help users find information specific to their needs. Both agencies will sponsor a national conference in 2015 for stakeholders to share experiences and move forward with trading as a valuable tool for driving environmental improvement.  (EPA)

Friday, December 12, 2014

DOE Issues Final $12.5 Billion Nuclear Energy Loan Guarantee Solicitation

Today, the Department of Energy issued the Advanced Nuclear Energy Projects loan guarantee solicitation, which provides as much as $12.5 billion to support innovative nuclear energy projects as a part of the Administration’s all-of-the-above energy strategy. With the issuance of this solicitation today, the Department’s Loan Programs Office(LPO) now has open solicitations in four areas, also including the $8 billion Advanced Fossil Energy Projects Solicitation, the $4 billion Renewable Energy and Efficient Energy Projects Solicitation, and the $16 billion Advanced Technology Vehicle Manufacturing (ATVM) loan program.
Authorized by Title XVII of the Energy Policy Act of 2005, the Advanced Nuclear Energy Projects Solicitation would provide loan guarantees to support the construction of innovative nuclear energy and front-end nuclear projects in the U.S. that reduce, avoid, or sequester greenhouse gas emissions. While any project that meets the eligibility requirements may apply, the Department has identified four key technology areas of interest in the solicitation: advanced nuclear reactors, small modular reactors, uprates and upgrades at existing facilities, and front-end nuclear projects.
The full solicitation can be found online at energy.gov/lpo. The first deadline for Part I applications is March 18, 2015, followed by rolling deadlines approximately every six months.  
To date, LPO has supported a diverse portfolio of loans, loan guarantees, and commitments, supporting more than 30 projects nationwide. The projects that LPO has supported include the first nuclear power plant to begin construction in the U.S. in the last three decades, one of the world’s largest wind farms, several of the world’s largest solar generation and thermal energy storage systems, and more than a dozen new or retooled auto manufacturing plants across the country.  (DOE)

Wednesday, December 10, 2014

Subsequent License Renewal: Nuclear Plant 60 Years & Beyond

When nuclear power plants are built, the Nuclear Regulatory Commission (NRC) has the authority to issue initial operating licenses for a period of 40 years. Beyond that, the reactors need license renewals, and the NRC hasgranted 20-year license renewals to 74 of the 100 operating reactors in the United States. These reactors may now operate for a total period of 60 years. They represent a cumulative capacity of a little more than 69,000 megawatts (MW). The NRC is currently reviewing license renewal applications for an additional 17 reactors, and expects to receive seven more applications in the next few years.
With the bulk of the existing nuclear fleet licensed before 1990, nearly all existing reactors will be more than 60 years old by 2050. Unless a utility applies for and receives a Subsequent License Renewal (SLR) that could further extend the operating lives of their reactors up to 20 additional years, the reactors will not generate power beyond age 60. Although no applications for an SLR have been submitted, several utilities are evaluating whether to apply for one, including Dominion Resources for its Surry Power Station Units 1 and 2 in Virginia (current license expiration dates of 2032 and 2033) as well as Exelon for its Peach Bottom Atomic Power Station Units 2 and 3 in Pennsylvania (current license expiration dates of 2033 and 2034).
From a regulatory perspective, the NRC determined in August 2014 that existing license renewal regulations were sufficient to support the SLR process. The NRC's determination was supported by the May 2014 findings of the NRC's Advisory Committee on Reactor Safeguards, which stated that the current NRC license renewal framework would support SLR.
In making the decision to extend the operating lives of nuclear reactors beyond 60 years, the NRC will consider the long-term safety and security of continued reactor operation. In addition to the NRC, the U.S. Department of Energy, through its Light Water Reactor Sustainability Program, is one of several organizations studying the effects of aging on nuclear power plant systems, structures, and components. Other industry groups involved in studying SLR include the Electric Power Research Institute and the Nuclear Energy Institute. International groups, such as the International Atomic Energy Agency and the Organization for Economic Cooperation and Development's Nuclear Energy Agency, are also involved in addressing life extension issues in support of nuclear power plants around the world.
U.S. utilities already make significant investments in maintaining and upgrading the current fleet of U.S. nuclear power plants to ensure safe, secure, and reliable operation throughout their 40- or 60-year lifetimes. The Electric Utility Cost Group estimated that the industry invested $6.4 billion in capital projects to upgrade and maintain nuclear power plant systems during 2013.  (DOE-EIA)

Wednesday, November 26, 2014

EPA Proposes Smog Standards

Based on extensive recent scientific evidence about the harmful effects of ground-level ozone, or smog, EPA is proposing to strengthen air quality standards to within a range of 65 to 70 parts per billion (ppb) to better protect Americans’ health and the environment, while taking comment on a level as low as 60 ppb. The Clean Air Act requires EPA to review the standards every five years by following a set of open, transparent steps and considering the advice of a panel of independent experts.

EPA last updated these standards in 2008, setting them at 75 ppb. EPA scientists examined numerous scientific studies in its most recent review of the ozone standards, including more than 1,000 new studies published since the last update.  Studies indicate that exposure to ozone at levels below 75 ppb -- the level of the current standard -- can pose serious threats to public health, harm the respiratory system, cause or aggravate asthma and other lung diseases, and is linked to premature death from respiratory and cardiovascular causes. 

Ground-level ozone forms in the atmosphere when emissions of nitrogen oxides and volatile organic compounds “cook” in the sun from sources like cars, trucks, buses, industries, power plants and certain fumes from fuels, solvents and paints. People most at risk from breathing air containing ozone include people with asthma, children, older adults, and those who are active or work outside. Stronger ozone standards will also provide an added measure of protection for low income and minority families who are more likely to suffer from asthma or to live in communities that are overburdened by pollution.

According to EPA’s analysis, strengthening the standard to a range of 65 to 70 ppb will provide significantly better protection for children, preventing from 320,000 to 960,000 asthma attacks and from 330,000 to 1 million missed school days. Strengthening the standard to a range of 70 to 65 ppb would better protect both children and adults by preventing more than 750 to 4,300 premature deaths; 1,400 to 4,300 asthma-related emergency room visits; and 65,000 to 180,000 missed workdays.

EPA estimates that the benefits of meeting the proposed standards will significantly outweigh the costs.  If the standards are finalized, every dollar we invest to meet them will return up to three dollars in health benefits. These large health benefits will be gained from avoiding asthma attacks, heart attacks, missed school days and premature deaths, among other health effects valued at $6.4 to $13 billion annually in 2025 for a standard of 70 ppb, and $19 to $38 billion annually in 2025 for a standard of 65 ppb.  Annual costs are estimated at $3.9 billion in 2025 for a standard of 70 ppb, and $15 billion for a standard at 65 ppb.  

A combination of recently finalized or proposed air pollution rules – including “Tier 3” clean vehicle and fuels standards – will significantly cut smog-forming emissions from industry and transportation, helping states meet the proposed standards.  EPA’s analysis of federal programs that reduce air pollution from fuels, vehicles and engines of all sizes, power plants and other industries shows that the vast majority of U.S. counties with monitors would meet the more protective standards by 2025 just with the rules and programs now in place or underway. Local communities, states, and the federal government have made substantial progress in reducing ground-level ozone. Nationally, from 1980 to 2013, average ozone levels have fallen 33 percent. EPA projects that this progress will continue.

The Clean Air Act provides states with time to meet the standards. Depending on the severity of their ozone problem, areas would have between 2020 and 2037 to meet the standards. To ensure that people are alerted when ozone reaches unhealthy levels, EPA is proposing to extend the ozone monitoring season for 33 states. This is particularly important for at-risk groups, including children and people with asthma because it will provide information so families can take steps to protect their health on smoggy days.

EPA is also proposing to strengthen the “secondary” ozone standard to a level within 65 to 70 ppb to protect plants, trees and ecosystems from damaging levels of ground-level ozone. New studies add to the evidence showing that repeated exposure to ozone stunts the growth of trees, damages plants, and reduces crop yield.  The proposed level corresponds to levels of seasonal ozone exposure scientists have determined would be more protective.

EPA will seek public comment on the proposal for 90 days following publication in the Federal Register, and the agency plans to hold three public hearings. EPA will issue final ozone standards by October 1, 2015. (EPA)

The proposal 

Wednesday, November 19, 2014

Keys Energy Center To Build Power Plant in Maryland

Keys Energy Center, a subsidiary of Genesis Power LLC, is a planned 780Mw combined cycle, natural gas-fired electric power generating facility located on 30 acres of a 170-acre parcel 1.25 miles east Brandywine. The estimated assessed value of the plant, which will generate enough electricity, according to Genesis, to power roughly 500,000 homes, will be $627 million. 
The County Council on Nov. 6 approved a payment in lieu of taxes for the plant project, under which Genesis will pay Prince George's $43.4 million over 18 years, roughly half of what it would have paid with no tax break. The Maryland-National Capital Parks and Planning Commission will receive $12.7 million over the life of the PILOT. The annual PILOT payments decline year-over-year as a result of plant depreciation.
The Keys Energy Center will be financed by EIF Keys LLC, a wholly-owned subsidiary of EIF United States Power Fund IV LP, a $1.7 billion private equity fund.
The project, located on a former gravel mine, will feature two combustion turbine generators, two heat-recovery steam generators, one condensing steam turbine generator, an air-cooled condenser, and a natural gas-fired boiler. It will connect to Pepco's power grid via a transmission line that passes adjacent to the plant, and an on-site substation. There will be a 140-foot-tall stack, and an anticipated 272 warm and hot start-ups per year.
The rural Brandywine site was chosen, according to Genesis, to minimize impacts on ecology, air quality, water supply, view sheds, noise pollution, transmission capacity and "adverse social economic impacts." On Oct. 31, the Maryland Public Service Commission approved the project, reporting "no witnesses or local residents objected to construction and operation of the project on any grounds."
Construction of the Keys Energy Center is expected to take 32 months and require 400 workers. Genesis will need another 25 full-time employees to manage the plant once it is operational in 2017.  (Washington Business Journal, 11/12/2014)

Keystone Pipeline Fails In Senate: Warren Buffet Benefits

PRESIDENT'S CORNER

By Norris McDonald

I have written about how any rejection of the shortcut Keystone Pipeline addition will benefit Warren Buffet by shifting transportation of the Canadian oil from pipeline to rail.  Buffet owns the rails that would transport that oil.  The U.S. Senate just voted to kill the Keystone Pipeline (even though it is already operating) by one vote (59 - 41) [S. 2280]*.  The approval of the pipeline needed 60 votes to be approved.

Buffet is banking on cancellation of the Keystone XL pipeline to increase his share of oil-by-rail shipments.

Warren Buffett's Berkshire Hathaway announced through a regulatory filing with the Securities and Exchange Commission that it bought $524 million worth of Suncor stock last quarter. Suncor is a Canadian oil company that derives most of its current oil production -- and future expansion plans -- from Alberta's oil sands. 

Buffett bought Suncor to help ensure a steady supply of oil for his Burlington Northern Sante Fe (BNSF) railroad.  Oil currently accounts for about 4% of BNSF's freight. That's expected to double over the next several years. 

Suncor owns huge tracts of oil sands resources from which oil production is projected to continue to grow.

Suncor doesn't have the same transportation issues as some other oil sands producers. It has locked up more than enough pipeline and rail capacity to move its current and planed production for several years. Plus, it owns several refineries, which help the firm avoid having to sell its crude for the depressed, mid-continent prices.

* S. 2280 uthorizes TransCanada Keystone Pipeline, L.P. to construct, connect, operate, and maintain the pipeline and cross-border facilities specified in an application filed by TransCanada Corporation to the Department of State on May 4, 2012.

Tuesday, November 11, 2014

Low Gasoline Prices Leading To More Guzzler Purchases

Over the last month consumers have shown a fresh interest in the kind of SUVs — Hummers, Lincoln Navigators, Ford Explorers — that typified America’s bigger-is-better mindset of twenty years ago. The new mindset among some car buyers is a consequence of a domestic oil boom that has helped cause global crude prices to plummet in recent months, with the cost of a gallon of gas now below $3. 



As oil prices hit a three-year low, it creates the potential to push the U.S. further away from its dreary post-recession mindset, leaving instead a nation with more affordable air and road transportation options, higher consumer confidence, and more gas guzzlers driving around.
Demand in developed countries (including the United States) is down over the last few years, the result mostly of improving automotive fuel efficiency. Meantime, supply is way up, helped by U.S. wildcatters riding the “fracking” boom in the prairies of North Dakota and the plains of Texas.
The current $78 for a barrel of the benchmark West Texas Intermediate could scale back exploration and production plans if prices continue to drop.
Before the financial crisis, trucks almost always outsold cars, in some months grabbing as much as 59 percent of the market. Post-recession, the industry has flip-flopped; cars are more popular.
But not in recent months. In September, the truck market share was 53.5 percent. In October, it was 53.6. That is the best sustained two-month stretch since 2005.
The environmental concerns are significant. All told, automobiles account for about 50 percent of an average household’s emissions, but that can swing widely based on the vehicle. A big SUV will produce about three times the annual greenhouse gas tonnage emitted by a Prius. (Wash Post, 11/10/2014)

Monday, November 10, 2014

President Obama's Net Neutrality Plan



The President's Statement
An open Internet is essential to the American economy, and increasingly to our very way of life. By lowering the cost of launching a new idea, igniting new political movements, and bringing communities closer together, it has been one of the most significant democratizing influences the world has ever known.

“Net neutrality” has been built into the fabric of the Internet since its creation — but it is also a principle that we cannot take for granted. We cannot allow Internet service providers (ISPs) to restrict the best access or to pick winners and losers in the online marketplace for services and ideas. That is why today, I am asking the Federal Communications Commission (FCC) to answer the call of almost 4 million public comments, and implement the strongest possible rules to protect net neutrality.

When I was a candidate for this office, I made clear my commitment to a free and open Internet, and my commitment remains as strong as ever. Four years ago, the FCC tried to implement rules that would protect net neutrality with little to no impact on the telecommunications companies that make important investments in our economy. After the rules were challenged, the court reviewing the rules agreed with the FCC that net neutrality was essential for preserving an environment that encourages new investment in the network, new online services and content, and everything else that makes up the Internet as we now know it. Unfortunately, the court ultimately struck down the rules — not because it disagreed with the need to protect net neutrality, but because it believed the FCC had taken the wrong legal approach.

The FCC is an independent agency, and ultimately this decision is theirs alone. I believe the FCC should create a new set of rules protecting net neutrality and ensuring that neither the cable company nor the phone company will be able to act as a gatekeeper, restricting what you can do or see online. The rules I am asking for are simple, common-sense steps that reflect the Internet you and I use every day, and that some ISPs already observe. These bright-line rules include:
  • No blocking. If a consumer requests access to a website or service, and the content is legal, your ISP should not be permitted to block it. That way, every player — not just those commercially affiliated with an ISP — gets a fair shot at your business.
  • No throttling. Nor should ISPs be able to intentionally slow down some content or speed up others — through a process often called “throttling” — based on the type of service or your ISP’s preferences.
  • Increased transparency. The connection between consumers and ISPs — the so-called “last mile” — is not the only place some sites might get special treatment. So, I am also asking the FCC to make full use of the transparency authorities the court recently upheld, and if necessary to apply net neutrality rules to points of interconnection between the ISP and the rest of the Internet.
  • No paid prioritization. Simply put: No service should be stuck in a “slow lane” because it does not pay a fee. That kind of gatekeeping would undermine the level playing field essential to the Internet’s growth. So, as I have before, I am asking for an explicit ban on paid prioritization and any other restriction that has a similar effect.
If carefully designed, these rules should not create any undue burden for ISPs, and can have clear, monitored exceptions for reasonable network management and for specialized services such as dedicated, mission-critical networks serving a hospital. But combined, these rules mean everything for preserving the Internet’s openness.
The rules also have to reflect the way people use the Internet today, which increasingly means on a mobile device. I believe the FCC should make these rules fully applicable to mobile broadband as well, while recognizing the special challenges that come with managing wireless networks.
To be current, these rules must also build on the lessons of the past. For almost a century, our law has recognized that companies who connect you to the world have special obligations not to exploit the monopoly they enjoy over access in and out of your home or business. That is why a phone call from a customer of one phone company can reliably reach a customer of a different one, and why you will not be penalized solely for calling someone who is using another provider. It is common sense that the same philosophy should guide any service that is based on the transmission of information — whether a phone call, or a packet of data.
So the time has come for the FCC to recognize that broadband service is of the same importance and must carry the same obligations as so many of the other vital services do. To do that, I believe the FCC should reclassify consumer broadband service under Title II of the Telecommunications Act — while at the same time forbearing from rate regulation and other provisions less relevant to broadband services. This is a basic acknowledgment of the services ISPs provide to American homes and businesses, and the straightforward obligations necessary to ensure the network works for everyone — not just one or two companies.
Investment in wired and wireless networks has supported jobs and made America the center of a vibrant ecosystem of digital devices, apps, and platforms that fuel growth and expand opportunity. Importantly, network investment remained strong under the previous net neutrality regime, before it was struck down by the court; in fact, the court agreed that protecting net neutrality helps foster more investment and innovation. If the FCC appropriately forbears from the Title II regulations that are not needed to implement the principles above — principles that most ISPs have followed for years — it will help ensure new rules are consistent with incentives for further investment in the infrastructure of the Internet.
The Internet has been one of the greatest gifts our economy — and our society — has ever known. The FCC was chartered to promote competition, innovation, and investment in our networks. In service of that mission, there is no higher calling than protecting an open, accessible, and free Internet. I thank the Commissioners for having served this cause with distinction and integrity, and I respectfully ask them to adopt the policies I have outlined here, to preserve this technology’s promise for today, and future generations to come.