In the Pipeline: 3/1/11

Phrase of the morning: Political Coincidence — Almost a year goes by with no permits, and then days before a hearing on the Gulf, Bromwich caves and issues a permit to Noble Energy The Hill (3/1/11) reports: The Interior Department’s top offshore drilling regulator is strongly denying that Monday’s approval of the first deepwater drilling permit since last year’s BP oil spill was a political decision…The approval comes ahead of Interior Secretary Ken Salazar’s appearance before two Capitol Hill committees later this week to discuss Interior’s budget plan. Republicans and pro-drilling Democrats have for months bashed Interior for failing to issue deepwater new permits even though the formal ban was lifted in October…But Michael Bromwich, director of Interior’s Bureau of Ocean Energy Management, Regulation and Enforcement, said the permit for Houston-based Noble Energy had nothing to do with Salazar’s upcoming appearances or politics…“There is no politics associated with the approval of this application,” he told reporters on a conference call Monday. “It has nothing to do with anything other than the fact that it was ready to be acted on and approved.

Continued From Above: The one permit in the Gulf should off-set the loss in production in Alaska and besides, we can always import oil from OPEC Fuel Flex (2/28/11) reports: ConocoPhillips and BP PLC, two of the major oil and gas players in Alaska, say they expect their capital investment in the state to be flat this year…ConocoPhillips has at its disposal $900 million, or $170 million more than it spent in 2010. But spokeswoman Natalie Lowman told The Associated Press on Monday that spending the full amount is contingent upon several factors, including what it considers to be a more favorable tax structure in the state…The company also would need to receive the permits necessary to proceed with a project that would connect a drill pad in the National Petroleum Reserve-Alaska to company facilities in the Alpine field. And, she said, ConocoPhillips itself would again have to sanction that project, which has been on the drawing board for years…Considering all this, she said ConocoPhillips expects spending will be relatively flat.


Senator Hatch has found his free market roots just in time to guard against a challenge from his right in the primary The Hill (2/28/11) reports: A prominent Republican senator said on Monday that the United States had gone “too far into the radical environmentalist camp” after unrest in the Middle East that contributed to a rise in oil prices…Sen. Orrin Hatch (R-Utah), ranking member of the Senate Finance Committee, told reporters after a speech that energy development helped spark economic growth, and that he hoped people had begun to realize that the United States has plenty of natural resources…“We’ve got to wake up in this country,” Hatch said, raising the specter of $5-per-gallon gas prices. “We can’t run the country without energy. And yet the radical environmentalists are shutting the country down.”…Hatch also said that he was having trouble getting Democrats to join with him on cultivating natural gas, one of his pet issues, and also dubbed America “the Saudi Arabia of coal.”…Interior Secretary Ken Salazar is scheduled to testify on Capitol Hill this week, where he is expected to be asked by Republicans about current restrictions on offshore oil drilling.

Why is GM worried about gas prices? I thought the Volt was an EV, but more importantly, the way forward for the car industry Wall Street Journal (3/1/11) reports: General Motors Co. Chairman and Chief Executive Daniel Akerson said the U.S. auto industry isn’t yet prepared to respond to a major surge in gas prices, though car makers are in a better position than when prices spiked in 2008…”I don’t think the industry learned a lot of lessons from 2008—they will this time around,” Mr. Akerson said Tuesday on the sidelines of the Geneva motor show. “It would not be a good thing to see $5-a-gallon gas right now.”…GM, he said, is “not in perfect shape, but we are in better shape.”…U.S. auto sales sank to historic lows after fuel prices spiked in 2008 to close to $4 a gallon, the situation worsened by the collapse of the U.S. housing market and financial system. GM and its Detroit-based rivals were hit harder than foreign car manufacturers because of their dependence on large trucks and SUVs, which fell out of favor…Mr. Akerson said he believes the latest increase is “eposidic,” caused by turmoil in Libya. But he said a more gradual, continuous increase in fuel prices is inevitable.


What’s $300 million among friends? New CA initiative will pay folks to ‘green’ their houses Mercury News (2/28/11) reports: A new statewide program launching Tuesday will give homeowners rebates worth up to $4,000 if they make significant energy-efficient improvements to their houses…The $300 million program, called “Energy Upgrade California,” was developed by the California Energy Commission, local governments, utilities, the California Public Utilities Commission and contractors who specialize in home energy audits, upgrades and retrofits. The goal of the program, which has been in the works for over a year, is threefold: reduce household energy use, save consumers money on utility bills and create jobs in the state’s “building performance” industry. Funding for the program comes from several sources, including federal stimulus dollars and surcharges that consumers already pay on their utility bills…Consumers who want to make their homes more energy efficient — whether by adding insulation to the attic or purchasing a new hot water heater — are often at a loss as to where to begin, or what project to tackle first. It’s hard to keep up with an ever-changing menu of federal tax credits. And rebates often vary based on who your utility company is…Energy Upgrade California hopes to streamline the process, so there’s one-stop shopping for consumers from San Jose to San Diego.

Lots of numbers in this article and all they add up to bad news for wind and solar — natural gas is cheap and there’s plenty of it in the U.S. Fuel Flex (2/28/11) reports: U.S. natural gas production rose for a fifth consecutive month in December as output from wells in Alaska and Louisiana increased, the Energy Department reported…Gas production climbed 1.1 percent to 76.97 billion cubic feet a day from a revised 76.13 billion in November, the department’s Energy Information Administration said in a monthly report known as EIA-914…Output in the lower 48 states rose for a second month, increasing 0.2 percent to 66.76 billion cubic feet a day from a revised 66.60 billion. Production from Alaska increased 7.1 percent to 10.21 billion cubic feet a day from 9.53 billion, the government said in the report…Production in Louisiana gained 2.7 percent to 7.2 billion cubic feet a day from a revised 7.01 billion as drilling in the Haynesville Shale gas formation increased, according to the report. Output from the offshore U.S. Gulf of Mexico gained 2.3 percent to 5.85 billion from 5.72 billion as production resumed after platform maintenance and repairs, the government said…Natural gas for April delivery rose 7.1 cents, or 1.8 percent, to $4.076 per million British thermal units at 12:21 p.m. on the New York Mercantile Exchange. Prices have dropped 7.8 percent this month and are down 15 percent from a year ago.


While the world calls out for more affordable and reliable energy, the Bureau of Land Management discovers the perfect location for a solar farm BLM (2/28/11) reports: A draft plan on the solar potential of federal land identifies three Arizona sites encompassing nearly 14,000 acres as highly suitable for energy development…The plan, which covers six western states, is designed to ensure that renewable energy is developed in a smart and efficient way, said Eddie Arreola, supervisory renewable energy project manager for the Bureau of Land Management in Arizona…“The whole intent of the plan is to develop strategies to promote solar energy development in the state,” Arreola said. “We also want to find the best way to manage that renewable energy responsibly.”…The three proposed Solar Energy Zones are located on BLM land in western Arizona. One is roughly 25 miles southwest of Buckeye, another around 25 miles northwest of Wickenburg and another along U.S. 60 about 10 miles west of Vicksburg…Those zones were deemed most suitable when considering all possible drawbacks, including wildlife habitat, water usage, air quality, soil quality and tribal concerns, said Lane Cowger, a BLM renewable energy project manager in Arizona.

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