December 14, 2010

The Art ofa Hit Piece: Lead with a Positive, Then Go to Josh Fox-Like Claims and BigGreen Inc., to fill Out a 1,500 Word Hatchet Job on Shale Gas. USA Today (12/14) reports, “Residents here rejoiced two years ago whengas companies poked into a mammoth natural gas deposit 2 miles under theirhomes, sparking a modern-day gold rush. The companies offered residents tens ofthousands of dollars an acre to drill on their land, enriching some folksovernight in this rural corner of northwestern Louisiana. Then cows started todie. Methane seeped into the drinking water. Homes were evacuated when naturalgas escaped uncontrollably from a wellhead. Today, many residents and localofficials still praise the bounty reaped from the Haynesville Shale, one of theworld’s largest natural gas deposits, spread under Louisiana, Arkansas andeastern Texas. An estimated 250 trillion cubic feet of natural gas is trappedthere — enough to power the United States for more than a decade, saysKevin McCotter, a senior director with Oklahoma City-based Chesapeake EnergyCorp., the largest gas producer in the area. The shale has delivered a cleanenergy source while enriching residents, he says. Further testing andmonitoring should be done on the technique, which also is exempt from sectionsof the Clean Water Act and other federal environmental laws, says Josh Fox, afilmmaker whose documentary film, Gasland, profiles families across the USAimpacted by natural gas drilling. The film, released this year, shows residentssetting the water coming out of their faucets on fire because of flammablemethane gas in the water. "This process has never been investigated,"Fox says. "We don’t put out drugs in the market without testing themfirst."

EPA isConsidering New Regulations on Coal-Fired Generation that will Cost Upwards of$80 Billion. Who Pays? Silly Question, You, the Consumer. Merry Christmas toyou too, Ms. Jackson.Reuters (12/13) reports, “U.S. Environmental Protection Agencyregulations could cost the industry more than $80 billion and force up to70,000 megawatts of coal-fired power plants to retire over the next severalyears, investment bank FBR Capital Markets (FBCM.O: Quote) said in a researchreport Monday. Before even considering the potential effect of possiblegovernment efforts to reduce carbon dioxide emissions to combat global warming,the report forecast coal retirements would likely reach 45,000 MW, including12,000 MW already announced.FBR said utilities would likely install emissionscontrol equipment in larger coal plants, representing about 60,000 MW ofcapacity, and replace smaller units with natural gas-fired combined cycle gasturbines. While the EPA regulations will cost billions, regulated utilities arepoised to benefit from the stricter rules. Regardlessof whether regulated utilities or merchant energy companies install the emissionsupgrades or build new power plants, consumers will bear the ultimate cost.

Mr.President, China is Not “Winning” the Renewable Energy Race, They’re Winningthe Energy Race – Coal Imports to Rise 78% Next Year.Bloomberg (12/14) reports, “China and India may increase imports of coalby 78 percent to 337 million metric tons next year, further driving up pricesfrom the highest in two years and diverting supplies from Europe to Asia. Chinamay buy 233 million tons more of the fuel than it exports next year, up fromnet imports of 143 million in 2010, Citigroup Inc. said in a Nov. 29 report.India faces a shortfall of 104 million tons in the 12 months ending March 2012,mjunction Services Ltd., a Kolkata-based commodity trader, said in a note onDec. 6, citing Coal Minister Sriprakash Jaiswal. Asia’s two fastest-growingmajor economies are burning more of the fuel as economic expansion raisesdemand for electricity. The International Monetary Fund forecasts that China’sgross domestic product will next year expand 9.6 percent and India 8.4 percent.China added about 51 gigawatts of coal-fired capacity last year, more than halfthe total capacity of the U.K., according to data from Daiwa Capital Marketsand the U.S. Energy Department. China’s appetite for the commodity sentbenchmark domestic prices at the port of Qinhuangdao to a two-year high of $129a ton for the week ended Nov. 26, according to data from IHS McCloskey, aPetersfield, U.K.-based researcher. China will need 2 billion tons of coalover the next 10 years to fuel the country’s industrial development, the ChinaSecurities Journal reported today, citing Dai Yande, deputy head of China’sEnergy Research Institute.”

Over orUnder? Goldman Predicts $100 Oil in Six Months; Pipeline Takes the Under.Bloomberg (12/14) reports, “A drop in OPEC spare production capacitywill signal a “second stage” in the oil market’s recovery, lifting crude higherthan $100 a barrel by the second half of 2011, according to Goldman Sachs GroupInc. The Organization of Petroleum Exporting Countries will supply more oil,reducing its spare capacity, as global inventory levels “normalize” from anoverhang cause by the recession, the bank said in its 2011 commodities outlookdated yesterday. The 12-member group, which pumps about 40 percent of theworld’s crude, said at a Dec. 11 meeting it will maintain production targets atlevels agreed in December 2008. “Inventories have declined rapidly in recentmonths as global demand growth has accelerated to one of the highest levels onrecord,” Goldman analysts led by London-based Jeffrey Currie said in thereport. “We expect global demand growth to remain strong at over 2 millionbarrels a day.” Goldman Sachs, in yesterday’s report, predicted West TexasIntermediate crude, the benchmark grade traded in New York, will rise to $89 abarrel within three months, $100 within six months and $105 within a year. Oillast traded above $100 in October 2008 as commodities and equities fellfollowing the collapse of Lehman Brothers Holdings Inc.”

Enviro’sPulling out all Stops to Derail Keystone Pipeline Project; Will Create too ManyJobs, Provide Affordable, Reliable Energy for America –They’re AgainstBoth. E&E News (subs req’d, 12/14) reports, Environmentalgroups fighting a $7 billion U.S.-Canada oil pipeline yesterday charged thatSecretary of State Hillary Rodham Clinton’s ties to a former adviser who nowserves as a top lobbyist for the company behind the project leave her unable toimpartially evaluate the proposal. Citing freedom-of-information law, threeconservation groups pressing the State Department to reject the 1,900-mileKeystone XL pipeline sought records of any contact between Paul Elliott,government relations director for project sponsor TransCanada Corp., anddepartment officials evaluating the company’s request for federal approval. "TransCanadaclearly sees an opportunity to get this dangerous pipeline approved throughSecretary Clinton’s relationship with Paul Elliott," said Friends of theEarth campaigner Alex Moore in a statement. Corporate Ethics International andthe Center for International Environmental Law also joined the nonprofit on theinformation request. The battle over Keystone XL, which would nearly doubleU.S. imports of crude from the Canadian oil sands, began heating up this fallafter Clinton publicly said she was "inclined to" sign off on thepipeline despite fierce opposition from environmentalists. But while moreliberal Democrats align with environmental advocates in decrying the projectedgreenhouse gas footprint of fuel from Canadian oil sands, others in Clinton’sparty view Keystone XL as a much-needed solution to the continued need for oilimports.

SenatorGraham, Still Recovering from the Gas Tax Defeat, Now Pushing Mandate toIncrease Electricity Rates, Guarantee Market Share for Expensive Power. E&ENews (subs req’d, 12/14)reports, “As the Senate slogs through the final days of this session, Democratsfeel great frustration over the failure to pass major energy legislation –leaving them open to consider backing a once-balked-at Republican proposal fora clean energy standard early next year. "Boy, it will be a major disappointmentif this Congress shuts down at the end of this year without having doneanything on energy, anything of consequence," retiring Sen. Byron Dorgan(D-N.D.) said earlier this month. Butchampions of energy legislation are not licking their wounds. Instead, they arelooking toward next year. And a one-time, long-shot Republican idea is gainingsteam among both Democrats and Republicans. The proposal for a clean energystandard, which has been batted around for years and introduced most recentlyby Sen. Lindsey Graham (R-S.C.), has created a buzz on and off Capitol Hill inrecent weeks. Graham’s measure has been offered as an alternative to Bingamanand Brownback’s RES, which would require utilities to generate 15 percent oftheir electricity from renewable sources like wind and solar by 2021. Grahamand the CES measure’s other supporters want to see nuclear energy and"clean coal" included in the standard. Democratic Sen. Tom Carper(Del.) has also supported the idea of a broader mandate. The measure got asignificant boost last week when Energy Secretary Steven Chu said he was opento discussing the idea and urged Congress to seriously "think about"it. Yesterday, Alaska Democrat Mark Begich said he, too, believes the measurehas merit.”