Tag: "exporting"

Murkowski Outlines Senate Energy Plan

In the GOP weekly address, Sen. Murkowski describes the Energy Policy Modernization Act, which includes liquid natural gas (LNG) exports. Looks like it is still on the Senate calendar this week…although it may slip.

On LNG exports, the bill requires the Energy Secretary to approve or disapprove LNG export applications within 45 days, so the applications don’t linger. That’s for nations that don’t already have free trade agreements with us, since most free trade agreements already address expedited LNG exports. It also puts federal energy regulatory commission (FERC) in control of all federal LNG authorizations.

The bill authorizes a new “e-prize” competition, which is basically an x-prize for energy. I’m seeing more and more of these x-prizes in public policy.

The section on nuclear power misses the opportunity to promote molten salt reactors, a nice byproduct of a robust rare earth element policy…but it does call for more nuclear reactor fusion and fission reactor prototypes, so that might encompass molten salt even if it isn’t listed specifically.

There are a ton of repeals and program eliminations, which is a good sign of conservative legislation.

Repeal of the methanol study.
Repeal of the weatherization study.
Repeal of various DOE programs.

Unfortunately, it also reauthorizes the Land and Water Conservation Fund, which is bad public policy.

Jan 25, 2016 | 1 comment | by Brian Williams

U.S. House Energy Bill Debate Today

The House of Representatives starts the debate today on 38 amendments out of an original 103 submitted for H.R. 8 —North American Energy Security and Infrastructure Act of 2015 — and concludes discussion tomorrow. The 2015 energy bill would modernize energy infrastructure, build a 21st century energy and manufacturing workforce, bolster America’s energy security and diplomacy, and promote energy efficiency and government accountability.

Despite the President’s threat to veto the House bill, lawmakers from both parties have over one hundred amendments to the Energy and Commerce Committee’s broad energy bill to discuss in this week’s floor debate.

The amendments included many policy recommendations relating to energy, natural resources, infrastructure and grid security. Below are a few of the 38 amendments to be debated:

Rep. Joe Barton (R-Tex.) has filed an amendment to repeal the crude oil exports ban.
Sean Duffy (R-Wis.) is proposing to require the Secretary of Energy to collaborate with the Secretariat of Energy in Mexico and the Ministry of Natural Resources in Canada when developing guidelines to develop skills for an energy and manufacturing industry workforce.
Rep. Gene Green (D-Tex.) has offered an amendment that would establish a permitting process within DOE, the Federal Energy Regulatory Commission and the State Department for cross-border infrastructure projects.
Rep. Scott Peters (D-Calif.) has an amendment that includes energy storage as a form of energy that DOE should consider to enhance emergency preparedness for energy supply disruptions during natural disasters.
Rep. Trent Franks (R-Ariz.) has an amendment that secures the most critical components of America’s electrical infrastructure against the threat posed by a potentially catastrophic electromagnetic pulse.

Dec 02, 2015 | Leave a Comment | by Lloyd Bentsen

Close to Lifting the U.S. Crude Oil Export Ban

Congress is planning to vote on lifting the ban on U.S. crude oil exports by the end of this month. Across the aisle, most Republicans support the end of the export ban. In fact, the Republican-controlled House is scheduled to vote on legislation that would lift the restrictions. In the Senate, Majority Leader Mitch McConnell said for the first time he supports lifting the ban.

Congress passed the ban after the 1973 Arab oil embargo, which sent gas prices soaring. Now, the “shale revolution” has stimulated tremendous domestic oil and natural gas production, thanks mainly to hydraulic fracturing and horizontal drilling methods. The Obama administration has permitted exports of some exchanges of oil with Mexico and federal policies permit exports of crude oil to Canada.

The EIA projects the U.S. will eliminate net energy imports sometime between 2020 and 2030. Rising oil prices would mean the U.S. reaches this landmark turning point sooner, but even low prices are unlikely to stop the swing from importer to exporter. The U.S. has been a net importer of energy since the 1950s.

Opponents of lifting the ban include former Secretary of State and presidential hopeful Hillary Clinton who said she would only support lifting the U.S.’s 40-year-old ban on oil exports if it was part of a broader plan that included concessions from the oil and natural gas industry. The United Steelworkers, which represent workers at several Louisiana refineries, contends that lifting the ban would jeopardize U.S. energy security and adversely affect gas prices.

The controversy over whether or not to lift the ban centers around fears that no ban could mean higher gasoline prices held by some Democrats and consumer groups. Further, environmentalists worry lifting the ban would lead to more oil & gas exploration and development. Even, President Obama opposes such legislation.

However, a recent Government Accountability Office review noted wide agreement among analysts that allowing crude exports would tend to decrease international oil prices, which is the way to depress gasoline prices. That is why analysts predict that lifting the export ban would increase U.S. crude oil prices by $2 to $8 per barrel but reduce U.S. gasoline prices by 1.5 cents to 13 cents per gallon.

Another recent report by the United States Energy Information Administration says that although unrestricted exports of U.S. crude oil would either leave global crude prices unchanged or result in a small price reduction compared to parallel cases that maintain current restrictions on crude oil exports, other factors affecting global supply and demand will largely determine whether global crude prices remain close to their current level.

Sep 21, 2015 | 1 comment | by Lloyd Bentsen

New Study Looks at Lifting the Crude Oil Export Ban

According to a new report out from the United States Energy Information Administration:

Recent increases in domestic crude oil production and the prospect of continued supply growth have sparked discussion on the topic of how rising domestic crude oil volumes might be absorbed, including the possibility of removing or relaxing current restrictions on U.S. crude oil exports.

Current laws and regulations allow for unlimited exports of petroleum products, but require licensing of crude oil exports.Through the first five months of 2015, crude oil exports averaged 491,000 b/d. In addition, exports of processed condensate through the first five months of 2015 are estimated to have reached an average of 84,000 b/d.

The discount of West Texas Intermediate (WTI) crude to North Sea Brent, the latter a key marker for waterborne light crudes, is expected to increase to more than $10/b in cases where current crude oil export policy is maintained and domestic production reaches or exceeds about 11.7 million b/d by 2025.
In cases where the Brent-WTI spread grows beyond $6/b–$8/b, removal of current restrictions on crude oil exports would result in higher wellhead prices for domestic producers, who would then respond with additional production.
Petroleum product prices in the United States, including gasoline prices, would be either unchanged or slightly reduced by the removal of current restrictions on crude oil exports.
Combined net exports of crude oil and petroleum products from the United States are generally higher in cases with higher levels of U.S. crude oil production regardless of U.S. crude oil export policies. However, crude oil export policies materially affect the mix between crude and product exports, particularly in the HOGR and HOGR/LP cases, which have high levels of domestic production.
Refiner margins (measured as the spread between crude input costs and wholesale product prices), which tend to increase as the Brent-WTI spread widens, would be lower without current restrictions on crude oil exports than with them in high-production cases where export restrictions lead to a widening Brent-WTI spread.

Although unrestricted exports of U.S. crude oil would either leave global crude prices unchanged or result in a small price reduction compared to parallel cases that maintain current restrictions on crude oil exports, other factors affecting global supply and demand will largely determine whether global crude prices remain close to their current level, as in the Low Oil Price case, or rise along a path closer to the Reference case trajectory.

Sep 09, 2015 | 1 comment | by Lloyd Bentsen

Lifting Crude Oil Export Ban Benefits U.S. Economy

The Government Accountability Office (GAO) suggests that removing crude oil export restrictions could both reduce consumer fuel prices and increase the price of U.S. crude oil from ~$2 to ~$8 per barrel.

Regulations implemented 40 years ago are being reviewed as technological advances in the extraction of crude oil from shale formations, commonly known as hydraulic fracturing or “fracking”, have contributed to increased U.S. oil production. In recent years U.S. crude oil prices have been lower than international prices but removing export restrictions could generate more revenue for oil companies and cause international crude oil prices to decrease.

If, as estimated, international crude oil prices do decrease, consumers could see anywhere from 1.5 to 13 cents per gallon drop for refined oil products such as gasoline and diesel. However, experts cautioned that estimates of the price implications of removing export restrictions are subject to uncertainties and there could be important regional differences.

Additionally, removing crude oil export restrictions could benefit in the following areas:

Economy: Removing export restrictions would lead to increased investment in crude oil production and increases in employment. This could result in additional positive effects for employment and government revenue.
Industry: Increased domestic production of crude oil will result from eliminating current export restrictions. Estimates range from an additional 130,000 to 3.3 million barrels on average per day until 2035.

After decades of generally calling U.S. crude oil production, from 2008 through 2014 production increased by about 74%. Perhaps, lifting the restrictions on crude oil could help both the economy of the U.S. and the average consumer.

Aug 12, 2015 | Leave a Comment | by Lloyd Bentsen

Senate Energy Policy Leaves Out Oil and Highway Funding

The focus of the Energy Policy Modernization Act of 2015 includes energy efficiency and conservation, protecting the electric grid and speeding up the application process for liquid natural gas refineries. The bill includes:

The secretary of the Energy Department to issue a final decision on applications to export liquefied natural gas within 45 days after projects have won approval from the Federal Energy Regulatory Commission.
The Strategic Petroleum Reserve, a stockpile of nearly 700 million barrels of oil, should be used only in emergencies — while there are legislative efforts to sell off some of that oil to help pay for surface transportation funding.

The most recent senate energy bill failed to address some of the most important energy issues currently facing the nation. The bill avoided such issues as:

The ban on exporting crude oil.
Keystone XL pipeline.
Federal gas tax reform.
The failure to fund our highway system.
Renewable Fuel Standard reform.

U.S. energy policy that includes natural gas, but leaves out oil, is not real energy policy. Protecting the electric grid and leaving out critical funding for the highway system, addresses half of our most pressing infrastructure needs.

Jul 27, 2015 | Leave a Comment | by Lloyd Bentsen

Feeling the Heat — Oil Export Stalemate in Venezuela

Typically when a currency falls in value, investors flock to purchase that country’s assets and exports under the new exchange rate. The Venezuelan government however, is stuck producing nearly the same output. Why? Simply put, because of the South American country’s involvement in the Organization of the Petroleum Exporting Countries (OPEC) and its incredible reliance on oil, which is estimated by Reuters to be responsible for 96 percent of government revenue. Venezuela is in a position where it cannot produce more oil — to take advantage of break-even costs as low as $40 per barrel — or less, due to burgeoning global supply’s effect on prices.

Venezuelan oil production has not risen substantially in almost two decades:

This is not the byproduct of a lack of private interest in the country: exploration and extraction companies such as Chevron already operate within Venezuela and the Bolivarian government even claims grievances against ExxonMobil for resource theft by its international waters with Guyana. This is not because the country is attempting to use its reserves more sustainably — Venezuela has the largest deposit of proven oil reserves, and owns over 17 percent of the world’s oil, compared to the rest of Latin America, which collectively owns less than 5 percent. The combined lack of productivity and revenue is due to OPEC quotas, which have become a thorn in President Maduro’s side. This has effectively stunted Venezuela’s production capacity compared to its neighbors:

Venezuela’s recent attempts to counter economic collapse and civil unrest have come in the form of two new deals:

Much like Nicaragua and Venezuela’s accord to trade coffee beans for crude oil, and Cuba and Venezuela’s deal to trade oil for teachers and doctors, Uruguay has now agreed to begin trading food for oil
India has joined China in becoming a key consumer of Venezuelan oil, with a long-term investment plan of $143.7 billion being put in place to develop infrastructure for oil production in Venezuela

Even if OPEC were to scale back production tomorrow, all of these attempts to harness and expand on the country’s competitive advantage are likely futile for Venezuela itself, as it has a fixed supply quota it cannot surpass. Additionally, because of that quota, strengthening oil trade with Asian countries has meant neglecting and making cutbacks with the rest of Central and South America. Supply shocks are already being felt in Petrocaribe, a trade bloc of Caribbean nations which rely heavily on Venezuelan crude.

Apart from simply diversifying their economy and liberalizing the market, it is becoming increasingly urgent that Venezuela corresponds with the needs of its people rather than the whims of OPEC. The ailing nation should reduce these regulatory barriers such that its production more accurately reflects growth in global oil demand, it is after all one of the few oil-rich nations that has yet to do so.

Apr 22, 2015 | 1 comment | by Santiago Bello

Local Support for Keystone XL, Despite Political Affiliation

The Keystone XL Pipeline continues to remain in a locked up battle mainly between political parties. However, a recent study suggests that while politics prevents the pipeline from completion, local support shows a different picture. Those that live close to the proposed pipeline route are in favor of the project despite their political party affiliation. A possible reason for this is the greater media attention in localized areas that focus on jobs and economic benefits.

TransCanada has run into a new problem while working on alternative to the Keystone XL pipeline. Native groups in Canada are blocking most development in their territory, at least without consent and benefits directly to those nations. Until they are on board with developments like the proposed pipeline to the Pacific coast, these local groups will stall an alternative to the Keystone XL.

Apr 20, 2015 | Leave a Comment | by Lloyd Bentsen

The Obsolete Crude Oil Export Ban

In the 1970s, during the Arab oil embargo, gasoline prices soared in the United States. Shortages created long lines of cars at the few gas stations that had fuel. In response, the U.S. began a series of policies that focused on its limited supply and high demand for oil. Policies included efforts to build up the oil reserves, reduction of oil imports and stabilization of the fuel prices. However, by the 1980s and 90s, oil imports to the U.S. were the highest ever and gas prices remained very volatile.

One particular policy was the Energy Policy and Conservation Act by President Ford in 1975. The act established a Strategic Petroleum Reserve, supporting an emergency storage of oil up to 727 million barrels and would last close to 160 days at a maximum withdrawal of 4.4 million barrels a day. The act also permitted the President to restrict exports of energy resources, such as crude oil:

Permits the President to restrict exports of coal, petroleum products, natural gas, or petrochemical feedstocks, and supplies of materials or equipment for exploration, production, refining, or transportation of energy supplies. Authorizes the President to exempt crude oil and natural gas exports from such restriction where he deems such exemption to be in the national interest, such as in recognition of the historic trading relations with Mexico and Canada.

The recent hydraulic fracturing boom, along with the discovery of vast amounts of oil deposits, has changed our domestic energy situation. For the first time since the 1960s, the United States is close to becoming energy independent. Therefore, many of the current policies of the 1970s are now obsolete.

Apr 13, 2015 | Leave a Comment | by Lloyd Bentsen

American Energy Renaissance Act — Why Oil and Gas Matter

The American Energy Renaissance Act of 2014 — a bill proposed by Senator and now presidential candidate, Ted Cruz — proposes many drastic changes to the status quo surrounding energy and environmental regulations, some of which include:

Giving only states the right to regulate hydraulic fracturing
Preventing the Environmental Protection Agency (EPA) from regulating carbon dioxide (CO2), methane, water vapor and nitrous oxide emissions
Repealing regulations on crude oil exports

Passage of the bill would be lauded by energy proponents, and while as a whole it would be no victory for traditional environmentalists, one of its provisions stands out, as it seeks to phase out engine-damaging ethanol fuel and create a higher standard for fuel economy. One can only truly understand the magnitude of improving fuel economy across the board by first looking at CO2 emissions by source:

Transportation, which is second only to the electric power sector in terms of carbon dioxide emissions, could see significant long-term reduction in emissions while creating a surplus in disposable income for Americans and business owners. Notably, passage of the bill does not imply that American oil companies would be at a significant disadvantage due to the simple fact that it would open a whole new niche for American crude in the international economy.

Also striking is coal’s share of carbon dioxide emissions in the electric power industry — for coal’s actual share in energy generation as seen below, it seems almost unwarranted:

Natural gas, while still not yet as widespread as coal, is very cost competitive, with liquid natural gas (LNG) at less than $10 per British thermal unit (Btu) while normal gas flirts with numbers around and below $5. Furthermore, if natural gas cannibalized market share from the coal sector — as is likely given the amount of continuing regulations on coal — it would help both the economy and the environment. Indeed, the Energy Information Administration asserts that for every million Btu generated, coal can release between 214 and 228 pounds of CO2 while natural gas creates almost half at 117 pounds per million Btu. While opponents of natural gas could cite its past price volatility, the past 5 years have been quite stable and the fracking boom is no reason to believe that the energy will be subject to much variance, at least not besides cyclical winter-heating and summer-cooling fluctuations, which coal can also be subject to. On the contrary, the market for coal is either becoming too expensive due to relentless regulation or disappearing altogether, especially abroad in developed countries.

The consumer free market response to any good or service in production is to demand quality proportional to whatever price level that consumer is willing and able to pay. With time, more countries are joining the ranks of developed nations who — like the U.S. — are characterizing themselves as more than willing to pay premiums on energy for better environmental quality. Additionally, natural gas has a history of matching or even beating domestic coal prices in the private sector, while mounting pressure on the public sector is slowly opening the international markets for both gas and oil.

Apr 08, 2015 | Leave a Comment | by Santiago Bello

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