Tag: "infrastructure"

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

Mexico Opens to Big Energy

For the past 55 years, Mexico has prohibited private companies from owning any of its oil and natural gas production. The national oil and gas company PEMEX, once a major international energy player, has been reduced to an irrelevant player due to the government’s ever increasing and frequent siphoning of funds from PEMEX. The demise of PEMEX and the rise of the reform minded President Enrique Pena Nieto opens the door to changes to the Mexican constitution now allowing big energy companies to purchase oil and natural gas land.

Mexico’s break-even costs are low:

  • Deep water production is $50/bbl or lower.
  • Energy output from Mexico’s deep water could be transported to the U.S. by existing infrastructure.
  • Mexico is far more stable than the Middle East.

Mexico is currently 10th in oil production and opening the country up to big energy will greatly benefit Mexico and the world energy market.

Jul 13, 2015 | Leave a Comment | by

Double the Cap on Private Activity Bonds

Congress’ extension of U.S. surface transportation policy for another two months provides a little more time to improve current policies. With the added time, I want to offer a ninth recommendation for reforming U.S. surface transportation policy. Robert Poole and I recommend that Congress double the lifetime cap on private activity bonds (PABs).

State and local governments are embracing public-private partnerships (P3s) for large-scale transportation infrastructure projects. Because these projects leverage limited state funds with significant private capital, Congress, in SAFETEA-LU allowed state or local entities on behalf of P3 developer/operators to issue up to $15 billion in tax-exempt revenue bonds. The bonds are an obligation of the P3 project, not government. But with the increasing pace of P3 projects, two-thirds of the $15 billion has already been allocated. In a four- to six-year reauthorization, the remaining $5 billion worth of PABs will likely be far less than the demand for using this financing tool.

Increasing the $15 billion cap will likely match the flow of P3 deals suitable for PAB financing. This is consistent with the length of the reauthorization bill, for a six-year bill, the cap should be increased to $30 billion, for a four-year bill the cap should be increased to $25 billion and for a two-year bill the cap should be increased to $20 billion.

There are several reasons why increasing the cap it vital. The combination of tax-exempt PABs and supplemental Transportation Infrastructure Finance and Innovation Act (TIFIA) loans has generated considerable P3 investment in much-needed infrastructure. As of September 2014, these financing tools enabled states and other governments to obtain $23.4 billion worth of highway, transit and intermodal projects for total government outlays of $5.56 billion — more than four times the direct outlay of traditional tax funding. Both PABs and TIFIA are examples of “project finance,” in which dedicated project revenues (such as tolls) are the funding sources to pay off the Private Activity Bonds and repay the TIFIA loans. This kind of leverage is critically important at a time when Congress has difficulty increasing the amount of funding it can provide to the states under traditional highway and transit programs. But without an increase in the cap on PABs, that source of financing will likely dry up within the time frame of the 2015 reauthorization bill.

The principal benefit of an increase in the cap on PABs is the continued robust growth in P3 transportation infrastructure projects, which makes limited state highway and transit funds go much further. Federal taxpayers are not at risk, since the debt service on PABs comes from dedicated project revenues such as tolls. Some federal accountants view the tax exemption on these bonds as costing the Treasury tax revenue that bond-buyers would have paid if the bonds had been taxable. But in many cases, in the absence of tax-exempt bonds, the project might not pencil out as a P3 and would either be built by a tax-exempt government entity or not be constructed.

Jun 17, 2015 | Leave a Comment | by

Political Versus Market Energy Economics

With news of a consensus on its financing structure, details of a proposed natural gas pipeline called the Turkish Stream are expected to be finalized as early as June 18th. The pipeline, which is estimated by internal sources to cost over $2 billion, will originate in Russia, pass through Turkey and end in Greece. The move seems very strategic of Russia — one of the largest exporters of gas in the world — which has shown interest in the financial backing of Greece’s new leadership under leftist hardliners. Ironically, amidst a very public distaste regarding the European Union’s stance on repayment of Greek debts, the ailing state has expedited approval of the project, which would bottleneck Russian gas through the country, forcing many European countries to pay them transit fees.

The U.S. Department of State (DOS) warned that expanding Europe’s dependence on Russian gas would only increase political instability in the region and could reduce price competitiveness of natural gas in Europe, however members of Greece’s ruling party, Syriza, quickly rebuked the observations and labeled them as attempted blackmail. The DOS also claimed that Russia did not build the pipeline out of benevolence or even a desire for financial gain, but purely to snub the Trans-Adriatic Pipeline, an alternative Western-backed project which was also forecasted to bring needed gas resources from Azerbaijan to Europe through Greece. Members of the DOS even went so far as to say that Turkish Stream in itself is not an economic investment, and there are perhaps a few reasons to believe so:

  • The offshore portion of Turkish Stream completely circumvents other European countries in almost a comical fashion given the alternative price of simply building land-based pipelines through Ukraine… this costly act of political angst immediately made the marine portion of the pipeline $600 million more expensive;
  • According to the Energy Information Administration (EIA) Russian gas has been losing market share with almost every passing year for over ten years, while European demand for gas has fallen and stagnated, no doubt due to Europe’s lethargic growth numbers:

Nat Gas Prod and Consumption

  • Perhaps in an effort to shift infrastructure costs onto the European Union (EU), Russia has announced a “build it yourself” policy for all potential client nations hoping to have pipelines connecting them to Greece… while such a proclamation may seem efficient for them and strategically savvy, consider that many European countries such as Sweden now acquire less than 48 percent of their energy consumption needs from fossil fuels. In the meantime, Italy, Romania, Germany, Estonia and Bulgaria among many others are in the process of phasing out much of their gas use, and are actually years ahead of their target schedules for implementation of nuclear and renewable energies.

At the aggregate level, natural gas is an extremely profitable energy resource which is seeing double-digit growth across many different countries, mainly in the developing world. However, mature economies such as those in Europe have not characterized themselves as extremely profitable or high-growth markets, meaning that they are among the least likely areas to see attractive returns on expensive fossil energy infrastructure projects like Turkish Stream.

 

Jun 15, 2015 | 1 comment | by

U.S. 100 Percent Renewable Energy Plan Lacks Price Tag

Engineers from Stanford and U.C. Berkeley have developed a state-by-state plan to convert the United States to 100 percent renewable energy by 2050. The plan aims to:

Eliminate air pollution mortality, create jobs and stabilize energy prices.

The researchers behind the plan, referred to as “The Solutions Project,” examined the amount and source of energy consumed by the residential, commercial, industrial and transportation sectors in each state. Though the plans calls for aggressive changes to infrastructure and energy consumption methods, Jacobson and Delucchi ― the engineers behind the project ― claim the conversion is technically and economically possible with technology that already exists.

Jacobson and Delucchi claim replacing all fuel usage with electricity through their plan would yield significant energy savings, reducing total end-use power demand by 39 percent by 2050.

Though a neat concept, the lack of a visible price tag is worrisome. The engineers admit that the up-front costs of conversion would be steep, but doesn’t seem to offer a comprehensive cost for the project, either by state or as a whole.

 

Jun 10, 2015 | 1 comment | by

White House Releases Quadrennial Energy Review for Earth Day

Yesterday, the Obama administration released the first installment of the new Quadrennial Energy Review (QER), a four-year cycle of assessments deigned to provide a roadmap for U.S. energy policy. This first installment focuses on the needs and opportunities for modernizing the nationwide infrastructure for transmitting, storing, and distributing energy. Dr. John Holdren and Dan Utech said:

Today, America has the most advanced energy system in the world. A steady supply of reliable, affordable, and increasingly clean power and fuels underpins every facet of our nation’s economy. But the U.S. energy landscape is changing dramatically, with important implications for the vast networks of pipelines, wires, waterways, railroads, storage systems, and other facilities that form the backbone of America’s energy system.

The administration hopes that careful analysis and modernization of energy infrastructure will promote economic competitiveness, energy security, and environmental responsibility.

This first QER installment comes just in time for Earth Day, which has spurred many sectors of the government into action. Over the past two days, the House of Representatives sent an energy efficiency bill to the president’s desk, the Department of Justice and the EPA levied $5 million in penalties against ExxonMobil for a 2013 oil spill, Democratic House members introduced the “strongest anti-fracking” bill yet brought to the House, which would ban fracking on all federal lands. The president is also doing his part, touting his plans to impact climate change at debates in Florida.

Though Earth Day has a tendency to bring out people’s far-fetched energy plans, it does do some good as well. According to the Annual Energy Outlook, improvements in energy efficiency, increases in energy demand, and the stabilization of energy-related carbon dioxide emissions have all benefited since the first Earth Day 45 years ago.

 

Apr 22, 2015 | Leave a Comment | by

U.S. Energy Infrastructure Still Lacking

Energy booms, whether from oil or gas, will continue as both technology develops and more resources are discovered. However, each energy boom puts a strain on our existing energy infrastructure. For instance, oil can be transported by truck, ship, rail and pipeline. Pipeline is the safest and most reliable way to transport oil. Even with 185,000 miles of liquid petroleum pipeline across the United States, there is just not enough to transport the huge volume in the current boom. The lack of pipeline has increased transportation by rail and rail accidents during this time.oil_by_rail

  • The recent increase in transportation of oil by rail has increased the number of rail accidents.
  • In 2014, 70 percent of petroleum products and crude oil were shipped by pipeline, while 3 percent was shipped by rail.
  • A recent study by Fraser affirms their safety by reporting transporting oil by pipeline is 30 times less harmful than by train.

More and more oil is extracted every day and our storage capacity is overflowing. Two things need to happen that will greatly alleviate this situation. First, more pipelines are needed to transport all of this new oil. Second, all of this oil needs a place to go. Building more storage capacity only temporarily alleviates the problem. The crude oil export ban needs to be lifted so that the oil can get out of the over capacity storage units and enter the energy market.

Apr 06, 2015 | 1 comment | by

Natural Gas Supply and Demand — A Structural Problem in the Northeast

The cost of residential heating and cooling in the Northeast is comparatively high, with no clear end in sight. Fracking regulations and outright bans are pushing whole industries out of densely populated municipalities as well as entire states such as New York, where the extraction methodology has met strong opposition at each level of government. Even the importation of natural gas from other states such as Pennsylvania — which remains very active in tapping Marcellus shale deposits — is becoming difficult, with neighborhood groups and city governments opposing pipelines and other forms of infrastructure to support burgeoning energy demand.

Vocal adversaries of gas withdrawals and transport site two reasons for supporting gas restrictions:

  • the danger to the environment through the practice of fracking and the construction of gas pipes
  • falling property value due to aesthetic degradation from pipelines around residential areas

Unfortunately these opponents still pay a hefty premium on limiting the availability of gas through higher residential heating and cooling prices. Below, northeastern states are compared to Texas, Louisiana, Wyoming, Colorado and Oklahoma, some of the top natural gas producing states.

Natural Gas Prices

Even despite more temperate summers, colder winters contribute to the fluctuating above-average heating costs faced by many residents in the Northeast. Placing restrictions on sources of heating is therefore likely to have a negative synergistic effect — at least financially — on many locals.

In conclusion, crowded regions that pine for their power needs to be met are ironically, unable to make concessions for it with $700 million projects such as the Constitution Pipeline between Pennsylvania and New York being put on hold. With virtually incomparable levels of population density, Southern and Midwestern states do not suffer from the congestion which limits gas transfer. Logically, New Englanders were found to be overpaying for gas by $3.58 per thousand cubic feet of gas by the Energy Information Administration. This amount may seem trivial, but for long-term residents and businesses, it represents a huge cost.

Apr 01, 2015 | 1 comment | by

The Effect of President Obama’s Keystone XL Veto

President Obama officially vetoed the Keystone XL pipeline project after bipartisan votes by both the House and Senate landed the bill on his desk. Without the Senate to block legislation from getting to his desk, the president is now planning to veto many bills that pass both houses. Veto-proof coalitions are now needed to pass legislation that provides benefits like the Keystone XL project.

The entire Keystone pipeline system is almost complete, the fourth and final phase of the system is known as Keystone XL. The Keystone XL Pipeline is a proposed 1,179-mile (1,897 km), 36-inch-diameter crude oil pipeline beginning in Hardisty, Alberta and extending south to Steele City, Nebraska. This pipeline is a critical infrastructure project for the energy security of the United States and for strengthening the American economy. The Keystone XL pipeline would have the capacity to transport 830,000 barrels of oil per day to Gulf Coast and Midwest refineries.

Approving the estimated $5.3 billion Keystone XL project would create approximately 9,000 construction jobs. When combined with the southern portion of the Keystone pipeline (the Gulf Coast Project), it is estimated that the total $7 billion pipeline could:

  • Create 13,000 construction and 7,000 manufacturing jobs.
  • Add $20 billion to U.S. GDP.
  • Add $5 billion in taxes revenue to local counties.
  • Generate as much as $5.2 billion in property tax revenue for Montana, South Dakota, Kansas, Oklahoma, Nebraska, and Texas collectively.
  • Over 2.6 million miles of pipeline in the United States that deliver both liquid petroleum products and natural gas, while the Keystone XL portion of the Keystone pipeline is less than 1,200 miles long.
  • The Canadian Energy Pipeline Association predicts that pipeline projects are worth $1.298 trillion dollars to the Canadian economy and $15.52 billion dollars in additional salaries to its citizens.
  • The U.S. State Department reported an increase of 42,000 jobs during the construction process, and roughly 118,000 jobs to maintain the pipeline and the refineries.
  • 70 percent of petroleum and crude oil are currently shipped by pipeline, which in recent years has proven to be safer than shipping oil by rail.

A recent study by the Fraser Institute affirms their safety by reporting pipeline accidents are a staggering 30 times less harmful than by train. According to a study by Southern Methodist University’s Maguire Energy Institute, there are substantial economic benefits with the TransCanada Keystone Pipeline System.

The United States’ State Department issued a multi-thousand page report which took years of research, compilation and coordination to produce which concluded definitively that the Keystone pipeline would be safe ― it would have “no significant impacts.”

Feb 25, 2015 | 2 comments | by

Human Waste Provides Water and Energy to Poor

Recent efforts have advanced philanthropic efforts to help those that are needy around the globe. Third world nations with extremely poor populations with 1.2 to 2.4 billion people are an easy target for these groups. Over 95 countries have renewable energy support polices compared to 15 countries in 2005.

The climate conferences, such as the Lima Climate Negotiations, had a focus on providing energy resources and other resources to communities with existing infrastructure. However, the rural communities or “off-the-grid” populations are left out. More efforts are needed to give access to these communities so that they can also receive these resources.

Innovative projects, such as a next generation steam engine Omniproccessor, that converts human waste from 100,000 people into 86,000 liters of drinkable water and 250 kilowatts of electricity, are planning to reach these communities.

Climate conferences must be more human centered and less climate centered. Otherwise, too many “off-the-grid” communities around the globe will continue to suffer. Projects like the Omniproccessor have a chance to achieve what the governments continue to fail to do for the extreme poor around the globe, faster and more efficiently.

 

Jan 12, 2015 | 3 comments | by
Next Page »