December 28, 2010

Deniers: Interior Dept. Continuesto Deny Existence of “Permitorium” on Offshore Energy – But Thanks toThis Piece in Today’s Chron, That Lie Is About to Die. Houston Chronicle (12/28) reports, “When federal officialslifted the ban on deep-water drilling in early October, Houston-based ATP Oil& Gas was ready to roll. The small production company was finishing up workon a well that tied into its Telemark production hub about 100 miles south ofthe mouth of the Mississippi River. It had filed a permit to drill a sidetrackoff an existing well — a relatively low-risk proposal for the world ofdeep-water drilling. It was even revised and updated to meet all of the newrequirements imposed on deep- water permits in the wake of the DeepwaterHorizon accident. “So I kept the crew out there because I felt certain thegovernment meant what it said,” ATP Chairman and CEO Paul Bulmahn said –that permit applications that met the new guidelines would be granted. Morethan 70 days later, the company is still waiting. At a price of about $330,000per day, Bulmahn has started to get impatient, leading him to take some actionsunusual for the company. He wrote a personal letter to President Barack Obama– copied to Secretary of the Interior Ken Salazar and Michael Bromwich,director of the Bureau of Ocean Energy Management, Regulation and Enforcement– pleading with him to “Please issue a permit so we can go back to work.”And on Sunday he ran the letter as an advertisement in the Chronicle. “I can’tafford to keep these workers employed and playing cards,” Bulmahn said.



Interesting Thing AboutEPA’s Pell-Mell Rush to Criminalize Carbon – Not Clear the AgencyActually Followed Its Own Rules During Implementation Process. Rep. Fred Upton and AFP’s Tim Phillipswrite (12/28) in the Wall Street Journal, “The EPA, of course, is in a hurry to moveahead. It wants to begin regulating the largest emitters first. But it has theauthority under its endangerment finding to regulate emissions by hospitals,small businesses, schools, churches and perhaps even single-family homes. Ascompanies wait for definitive court rulings, the country could face a de factoconstruction moratorium on industrial facilities that could provide badlyneeded jobs. Moreover, the EPA has never completed an analysis of how many jobsmight be lost in the process—although Section 321 of the Clean Air Actdemands that it do so. The best solution is for Congress to overturn the EPA’sproposed greenhouse gas regulations outright. If Democrats refuse to joinRepublicans in doing so, then they should at least join a sensible bipartisancompromise to mandate that the EPA delay its regulations until the courtscomplete their examination of the agency’s endangerment finding and proposedrules. Like the plaintiffs, we have significant doubt that EPA regulations cansurvive judicial scrutiny. And the worst of all possible outcomes would be theEPA initiating a regulatory regime that is then struck down by the courts.



EPA Wants 18-Wheelers toGet Fuel Economy of the Prius – But Did You Know EPA Itself Is ComplicitIn Declining Fuel Economy of Heavy Industrial Trucks? Marlo Lewis writes (12/28) on, “The declining fuel economy of 18-wheelersis a case of government failure, not market failure. Conveniently, EPA’s rolein holding back heavy-truck fuel economy is never discussed in the agencies’proposed rule. The trucking industry is highly competitive, profit-margins arethin, and fuel is the single biggest operating expense. Consequently, truckers,especially those who haul freight long distances in ”combination tractors”(semis), have a strong incentive to purchase vehicles incorporatingcost-effective improvements in fuel economy. Hence manufacturers also have astrong incentive to produce such vehicles. Yet the average fuel economy ofsemis declined by 1.2% annually over the past decade, according to theDepartment of Energy’s Transportation Energy Data Book. How can that be? … Inshort, at EPA’s behest, industry may have spent nearly $1 billion in the early2000s on penalties and R&D related to emission-control technology. Howcould that not crowd out significant investment in R&D of fuel-savingtechnology? How could it not divert significant engineering talent fromfuel-economy innovation to emission-control innovation?



Not Sure Where AWEA’sDenise Bode Went for the Holidays – But If This Editorial in TheOklahoman Is Any Indication, She Ain’t Welcome Back in Indian Country. The Oklahoman (12/27) editorializes, “Wind power has taken a poundingrecently as shale-sourced natural gas supplies grew and gas prices fell. T.Boone Pickens retreated from an ambitious plan to profit from the “Saudi Arabiaof wind” — his moniker for the American wind belt that includes westernOklahoma. Natural gas is a bridge fuel, offering a cleaner source of power thancoal and a vaster domestic supply than oil. But wind remains the most valuableplayer for environmentalists and their liberal teammates in Congress.Considering this, the Manhattan Institute’s Robert Bryce offers the term“boonedoggle,” a neologism for the once high hopes for wind power, combinedwith Pickens’ former enthusiasm for it and the Oklahoma native’s latter-dayrefocusing on natural gas. Another native Oklahoman is front and center in thedebate over wind power’s future. She’s Denise Bode, the former OklahomaCorporation Commissioner who left that job to run a natural gas industry tradegroup and left that job to run the American Wind Energy Association. A WallStreet Journal editorial last week threw a flag on Bode’s group for pushing aone-year extension of a $3 billion federal subsidy for renewable energyprojects. “Talk about throwing good money after bad,” the Journal wrote.“Despite more than $30 billion in subsidies for ‘clean energy’ in the 2009stimulus bill, Big Wind still can’t make it in the marketplace.”



Five Years Ago, Town ofTowanda, Pa. Had 3,000 People and About 1,500 Jobs; Today? Jobs and OpportunityAbound, All Thanks to the Marcellus Shale.Philadelphia Inquirer (12/27) reports, “Not so long ago, thistown was just the seat of Bradford County. Now, it lies at the epicenter ofnatural gas development in the Marcellus Shale region. It used to be a sleepylittle place on the Susquehanna River. Now, it’s a boom town. Help-wanted signsplead for waitresses, mechanics, truck drivers. Once-empty storefronts are nowoccupied in this hilly borough, population 3,000. Towanda has morning andmidday rush hours, thanks to the columns of trucks bearing water, sand, anddrill pipe. A banner hangs outside First Liberty Bank & Trust: "GasRights? We can help." "People used to call Towanda a ghosttown," said Shannon Clark, a Borough Council member and real estate agent."No more." So many title researchers have descended on the BradfordCounty Courthouse to examine deeds for gas leases that the county extendedoffice hours and installed tables in the hallways to accommodate the crowds.The rotunda looks like a college library during finals. The $7 millionChesapeake facility is the latest proof the boom in natural gas is here for thelong haul. Industry officials project that so much natural gas is contained inthe mile-deep Marcellus Shale that intense drilling activity will be sustainedfor at least a decade. Comprising prefabricated metal buildings surrounded by afence and a guarded entrance, the complex houses roughnecks who work forChesapeake’s subsidiary, Nomac Drilling L.L.C.



Woo Pig Sooie: XOM MakesHuge Investment in Arkansas’ Fayetteville Shale — $575M for the Shale Wells,and Another $75M for the Pipelines. Bloomberg (12/23) reports, “Exxon Mobil Corp agreed to pay $650 millionfor Petrohawk Energy Corp.’s natural-gas wells and pipelines in theFayetteville Shale, its second shale purchase this year. The Arkansas assetsproduce about 98 million cubic feet of gas a day, Houston-based Petrohawk saidtoday in a statement. The sale of the wells, valued at $575 million, iscomplete and has an Oct. 1 effective date. Exxon also agreed to buy pipelinesthat collect gas from Fayetteville Shale wells for $75 million. That sale issubject to regulatory approval and expected to close early next year, Petrohawksaid. Exxon Mobil, based in Irving, Texas, in June bought XTO Energy for $35billion including debt to add expertise and holdings in shale deposits, wherenew technology has reversed a decline in U.S. gas production and swelledreserves. “The logic behind the purchase of XTO and the purchase of thisacreage is very much in parallel,” said Pavel Molchanov, a Houston-basedanalyst for Raymond James & Associates Inc. who rates Exxon’s shares at“market perform” and owns none. “This represents an increase of about 40percent in acreage they own in the Fayetteville Shale.”



Mean-o Sino: ChinesePrepare to Slash Exports of “Rare Earth” Minerals to US for Second Time in 12Months – Bad News for Anyone With an iPhone or Suncatcher.Reuters (12/28) reports, “China cut its first batch of rare earthexport quotas for next year by more than one-tenth, in the face of a threat bythe United States to complain to the World Trade Organization over the exportlimits. China’s Commerce Ministry allotted 14,446 tonnes of quotas to 31companies, which was 11.4 percent less than the 16,304 tonnes it allocated to22 companies in the first batch of 2010 quotas a year ago. The Ministry said ina short statement on its website that it had added more producer companies tothe quota list, but has cut volumes allocated to trading companies for themetals used in high-tech goods. The export quotas were based on export volumesfrom the beginning of 2008 to October 2010, it added, without giving details.China produces about 97 percent of rare earth elements, which are usedworldwide in high-technology, clean energy and other products that exploittheir special properties for magnetism, luminescence and strength. The decisionto cut export quotas and raise tariffs has inflamed trade ties with the UnitedStates, European Union and Japan in particular. Last week, the U.S. TradeRepresentative office said China had refused U.S. requests to end exportrestraints on rare earths that have alarmed trade partners, and that Washingtoncould complain to the WTO, which judges international trade disputes.


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