December 9, 2010

She SaidIt: CEO of Big Wind Comes Clean on Taxpayer Handouts, “Without them, theIndustry Couldn’t Operate.”Politico (12/8) reports, “A pot of sweetenersin the form of tax extenders for pet energy industries could help ease thebitter pill that Democrats may have to swallow if they agree to the tax dealPresident Barack Obama and Republicans carved out. The expiring tax incentivesdesigned to boost ethanol and other energy industries might be enough toattract Democratic votes to extend the Bush-era tax cuts for two years. Part of the Baucus proposal wasa one-year extension of a 45-cent ethanol excise tax credit at 36 cents pergallon. This decrease in the subsidy for the mainly corn-based gasolineadditive is backed by House and Ways Means Democrats and the White House. Thetax totaled at least $5 billion this year and cutting the credit to 36 centsshould bring the annual cost down about $1 billion. Along with the possibledecrease in the ethanol credit, the White House also specifically cut out oftheir deal with Republicans $1.4 billion in federal grants that would boostwind, solar, geothermal and biomass projects. Denise Bode, CEO of the AmericanWind Energy Association, contends there is a misperception that theseincentives were born in the stimulus plan.“It’s a longtime business tax extender that was tweaked in orderto allow business in the renewable sector to continue to operate,” Bode saidWednesday. “So it’s not an original stimulus package program.”

1. That’s the Number of Deepwater PermitApplications Pending Before Interior Dept. So What’s Obama Admin. AnnounceYesterday? More Red Tape, Uncertainty – Won’t be Happy Till that Numberis Zero.Houston Chronicle (12/9) reports, “The Obama administrationwill require environmental studies before approving any deep-water wells – anew regulatory hurdle that virtually assures the government will notgreen-light any of those projects soon. In outlining the plan Wednesday, thenation’s top offshore drilling regulator said he hopes the environmentalreviews will add "weeks, not months" to the deep-water permitting processcritics say is already too slow. Butoil and gas industry leaders were skeptical, noting that even though the Obamaadministration lifted its moratorium on deep-water drilling in October, thegovernment has yet to approve any new wells that would have been blocked by theban. Dan Naatz, a vice president for the Independent Petroleum Association ofAmerica, said the move would further delay deep-water drilling by creating arequirement for reviews he called redundant. Mark Shuster, the manager of Gulfof Mexico exploration for Shell Oil, said it’s a significant concern that thegovernment no longer will exempt even relatively common sidetrack operationswhere new well holes are drilled near existing ones. If the assessment planencompasses all new drilling from offshore platforms – not just from drillingrigs – it will strain the ocean energy bureau’s resources, Shuster said. Thereviews also add to oil companies’ workload because they must supplyenvironmental information – a process that can take several weeks – beforeregulators can conduct their assessments.”

We Always Knew “Green” Jobs are Temporary Jobs; Now Big Wind Confirmsit: Without Taxpayer Handout to Wind Industry, “Tens of Thousands of Jobs” areat Risk. Bloomberg (12/8) reports,“Jobs will be cut in the solar and wind industries unless a U.S. tax-grantprogram that companies have relied on is extended, renewable-energy advocatessaid. Retention of the 1603 program, which gives developers grants equal toone-third of a project’s value, wasn’t included in the tax package negotiatedby President Barack Obama and Republicans in Congress. The program, nowscheduled to expire on Dec. 31, was added to last year’s stimulus act to helpcompanies unable to get financing during the financial crisis. The grantprogram is “the most important policy for continuing growth of therenewable-energy industry in the United States,” Rhone Resch, president andchief executive officer of the Solar Energy Industries Association, said todayon a conference call with reporters. More than$5.5 billion in grants had gone to companies as of November, supporting morethan $18 billion in clean-energy development, according to the solar-industrytrade group. Denise Bode, CEO of the American Wind Energy Association, said“tens of thousands of jobs” are at risk. The wind industry would create 20,000new jobs next year if the grants are extended, renewable-energy groups said ina letter yesterday to congressional leaders. The workforce may contract by 25percent without them, the groups said.”

Meanwhile, Nat Gas Industry inPennsylvania Hiring Thousands, Investing Millions, All a Resultof What we Call the Market.PittsburghTribune-Review (12/9) reports, “RangeResources Corp. could employ 1,000 workers in Western Pennsylvania five toeight years from now, an executive said Wednesday as the natural gas producermarked the start of construction on its new Appalachian offices.The FortWorth-based company has 300 employees now in the region and 400 acrossPennsylvania. All but about 20 are from Pennsylvania, West Virginia and Ohio,Ray N. Walker Jr., senior vice president of Marcellus operations, said at thebuilding site in the Southpointe II complex in Cecil in Washington County."We are hiring the whole gamut," Walker said, from office workers to roustaboutswho labor at drilling sites, plus welders and fitters, geophysicists andgeologists. "There will be a whole lot more of the hourly workers that wewill hire going forward, as we get more wells," Walker said, estimatingRange Resources has hired just over 100 people in Western Pennsylvania thisyear. The company will have 180,000 square feet of space in its new building on13 acres of a hillside above Consol Energy Inc.’s headquarters. Southpointehouses offices for 58 energy-related companies, Walker said, and gas producershave other offices scattered around the region. Range Resources recently openeda field office near the Washington County Fairgrounds in Chartiers.”

Wind Energy Affordable? Not in the Ocean State; New Projectto More than Double the Cost of Electricity. Associated Press(12/8) reports, “A renewable energy company has proposed what it says would bethe largest offshore wind farm in the United States: a 200-turbine,1,000-megawatt project off the coast of Rhode Island that would provide powerto multiple states along the East Coast. Deepwater Wind LCC, which recentlymoved its headquarters from New Jersey to Providence, says the turbines wouldbe far enough offshore as to be barely visible from land and would be locatedin the ocean waters of Rhode Island Sound. The company has submitted anapplication for the project, estimated to cost between $4 billion to $5billion, to the U.S. Department of the Interior to lease the site where itplans to build the wind farm. It hopes to begin construction in 2014 and havethe first turbines in operation by the end of 2015. The project will requirestate and federal approval. The Deepwater Wind proposal is on top of a muchsmaller pilot project planned by the company off the coast of Block Island.Rhode Island Attorney General Patrick Lynch has appealed the power purchaseagreement to the state Supreme Court, saying the 24.4-cents-per-kilowatt dealwould force Rhode Islanders to buy overpriced electricity.”

Messagefrom the Mexican Government to US-Based Oil and Gas Companies: If the AmericanGov. Doesn’t Want You Operating in Their Waters, You’re Investment is WelcomeHere. Wall Street Journal (12/8) reports, “Mexico’sSupreme Court has given state oil monopoly Petroleos Mexicanos the green lightto continue with plans to award incentive-based service contracts to privatecompanies that want to drill for oil in the country. At the same time, thecourt reiterated Mexico’s exclusive obligation and right to develop its oilwealth, reinforcing the understanding that any reserves and hydrocarbonsproduced remain the property of the state. The court issued a statement lateTuesday saying reforms to Mexico’s restrictive energy laws in 2008 are in linewith the country’s Constitution, which bars Mexico from granting oilconcessions or property rights in the energy sector to private oil companies,foreign or domestic. The ruling supports Pemex’s intentions to broaden itscollaboration with private firms, while offering the company legal cover incase of future legal challenges, says George Baker, of Houston-based consultingfirm Energia.com. A source within Pemex echoed Mr. Baker’s assertion, sayingthe ruling "removes obstacles" that may have prevented Pemex from hiringprivate firms to drill. Mexico expropriated foreign oil assets in 1938 and hassince kept foreign participation in the industry to a minimum. But with oilproduction sliding, the state company, which is extremely short on funds andtechnology, has been searching for ways to work with foreign energy companiesthat can offer both.”