By Emily Holden (@emilyhholden)
Today’s Washington Brief:
- Coal miners travelled to Pittsburgh to protest EPA hearings on a proposal to reduce carbon emissions from coal-fired plants, E&E's Manuel Quiñones reports. Ken Ward at Charleston Gazette says coal production in West Virginia would continue to plummet with or without the rule.
- Three Midwestern senators introduced a bipartisan bill to prevent more propane shortages next winter, The Hill's Timothy Cama reports.
- Wall Street Journal's Christian Berthelsen and Lynn Cook tell the story behind a $40 million shipment of unrefined oil that became the first unrestricted export since the 1970s, "a tale involving two determined energy companies, loophole-seeking lawyers, and an unprecedented boom in American drilling that could create a glut of ultralight oil."
Today’s Business Brief:
- American oil and gas companies are paying less in federal income taxes as they take advantage of tax incentives for drilling and capital expenditures, Wall Street Journal's Daniel Gilbert reports.
- Three West Coast governors are opposing offshore drilling, AP reports.
- Utilities have a new automated information-sharing program for communicating about cybersecurity threats with the federal government, SNL's Esther Whieldon reports. Whieldon has another grid security story with an unexpected twist. At least two electric utilities are installing bull's-eyes at substations in the hopes of deterring people from firing into their facilities.
Today's Chart Review:
Nonhydro renewables now routinely surpass hydropower generation
from Energy Information Administration
Mark Your Calendars (All Times Eastern):
Friday: Quarterly Earnings-- Southwestern Energy Co, Cheniere Energy Inc, Cheniere Energy Partners LP, Chevron Corp
15-17: Utilities and Infrastructure
OPINIONS, EDITORIALS, PERSPECTIVES
23-24: Morning Consult
25: Wall Street Journal
26: Los Angeles Times
27: Houston Chronicle
RESEARCH REPORTS, ISSUE BRIEFS, DOCUMENTS
28: Governors of California, Oregon and Washington
29: Sen. Al Franken, Sen. Rob Portman, Sen. Tammy Baldwin
1) U.S. Energy Firms Rewarded With Tax Deferrals
from Wall Street Journal by Daniel Gilbert
The U.S. energy boom is producing a little-noticed side effect: American oil and gas companies are paying less in federal income taxes. Energy companies are spending billions of dollars a year to drill in shale formations across the country, sending the nation's daily oil output up by almost 50% in just the past few years. Techniques like hydraulic fracturing and horizontal drilling, which make it possible to tap petroleum in these new fields, make each well cost millions of dollars. All that spending has allowed drillers to take advantage of incentives in the tax code for drilling and capital expenditures, deferring billions of dollars in income tax. Ultimately, companies will have to pay some or all of the taxes. But as long as they continue to invest heavily, the spending shelters their income and allows them to defer taxes for years, experts say.
2) 3 West Coast governors oppose offshore drilling
from Houston Chronicle (AP)
The governors of California, Oregon and Washington sent a letter to Interior Secretary Sally Jewel on Thursday to stress that they don’t want the possibility of drilling off of the West Coast. The Interior Department is developing an updated plan for its Outer Shelf Oil and Gas Leasing Program, and the governors formally stated their opposition to the inclusion of any oil or gas lease sales off the coast as part of any new plan. Govs. Jay Inslee, of Washington, Jerry Brown, of California, and John Kitzhaber, of Oregon, wrote that their three states “represent the fifth-largest economy in the world” and their ocean-dependent industries contribute billions of dollars to the region each year.
3) Coal miners descend on Pittsburgh to protest EPA hearing
from E&E by Manuel Quiñones
Several thousand coal miners, other union workers and supporters flooded the streets here in opposition to U.S. EPA's proposals to reduce carbon emissions from coal-fired power plants. Action in the streets, including a smaller presence by climate activists, overshadowed the agency's daylong listening session on the regulations on the 13th and 15th floors of the federal building downtown. Police arrested more than a dozen union activists, including United Mine Workers of America President Cecil Roberts for sitting in front of the building's steps in protest.
4) Is This How to Sell Americans on Fighting Global Warming?
from Bloomberg by Peter Coy
Economists figured out long ago that the free market is the best way to curb greenhouse gases. But economists aren’t so good at packaging anti-global-warming plans to win over a skeptical segment of the public. That’s where Representative Chris Van Hollen, a Maryland Democrat, comes in. Today Van Hollen introduced a bill he calls the Healthy Climate and Family Security Act of 2014, cleverly wrapping an economic concept in the virtues of health, family, and security. The bill would require companies to have permits to produce or import carbon-containing fuels such as oil, coal, and natural gas. The permits, instead of being allocated politically, would be auctioned off by the government, so they would get into the hands of the emitters who need them the most. A similar auction system drastically reduced emissions of sulfur dioxide—which causes acid rain—quicker and cheaper than experts expected.
5) EPA carbon rule does not give credit for early actions, Wisconsin Energy CEO says
from SNL by Amy Poszywak
Regarding the U.S. EPA's recently proposed carbon rule, Wisconsin Energy Corp. Chairman and CEO Gale Klappa said his main concern is that it does not give credit to companies, such as Wisconsin Electric Power Co., that have taken early action to reduce emissions. Speaking on the company's second-quarter earnings call July 30, Klappa said Wisconsin Energy has invested $9 billion in infrastructure since 2003, with much of that amount either associated with efficient generating units, renewables, energy efficiency or other approaches that have reduced greenhouse gas emissions.
6) Recent History Suggests Tougher Russia Sanctions Are Needed
from Wall Street Journal by Jay Solomon and Marcus Walker
The U.S. and Europe made good this week on their threats to start penalizing broader sections of Russia's economy in a bid to force President Vladimir Putin to end his support for separatist rebels in Ukraine. But recent history of the use of financial sanctions by Washington and Brussels—including against Iran, North Korea and Syria—suggests that significantly more pervasive penalties, particularly against Moscow's energy sector, would be needed to change the Kremlin's calculations, said current and former U.S. officials and sanctions experts. Even then, it is uncertain whether Mr. Putin values Russia's economy more than his influence over Ukraine.
7) Senate bill targets propane shortages
from The Hill by Timothy Cama
Three Midwestern senators introduced a bill Thursday aimed at preparing for and mitigating propane shortages like the one that hit their region this past winter. Sens. Al Franken (D-Minn.), Rob Portman (R-Ohio) and Tammy Baldwin (D-Wis.) said their bill would improve propane supply and pricing information, better coordinate shortage responses, study whether propane reserves should be established and help farmers get propane storage tanks. “This bipartisan bill will help us respond more quickly to future shortages and it will help prevent them in the first place,” Franken said in a statement.
8) EPA water office left rudderless by Senate inaction
from E&E by Nick Juliano and Annie Snider
Last November, moments after Senate Democrats triggered a controversial rule change meant to speed confirmation of President Obama's executive branch and judicial nominees, Senate Majority Leader Harry Reid recalled the plight of Ken Kopocis, who was awaiting a vote on whether he would take the reins at U.S. EPA's water office. "We have one nominee who deals with making sure the water we drink and the air we breathe is pure. He's been waiting almost 890 days because they don't like that agency. It's that fretful Environmental Protection Agency," Reid said in the Nov. 21 news conference. "It's an undeniable fact that the obstruction we've seen in recent years is something altogether new and very, very different." Now it's been 1,147 days that Kopocis has been waiting, and still his confirmation seems no closer than it was nine months ago, despite Democrats' decision to trigger the so-called nuclear option.
9) U.S. Index Futures Decline as Investors Await Jobs Report
10) U.S. Oil Exports Ready to Sail
from Wall Street Journal by Christian Berthelsen and Lynn Cook
A tanker of oil from Texas set sail for South Korea late Wednesday night, the first unrestricted sale of unrefined American oil since the 1970s. How that $40 million shipment avoided the nearly four-decade ban on exporting U.S. crude is a tale involving two determined energy companies, loophole-seeking lawyers, and an unprecedented boom in American drilling that could create a glut of ultralight oil.
The Singapore-flagged BW Zambesi is the first of many ships likely to carry U.S. oil abroad under a new interpretation of the federal law that bars most sales of American oil overseas. Analysts say future exports appear wide open: as much as 800,000 barrels a day come from just one of the many U.S. oil fields pumping light oil.
11) U.S. oil dives below $100 on Kansas refinery outage, equity drop
from Reuters by Anna Louie Sussman
U.S. crude oil tumbled more than $2 on Thursday, going below $98 a barrel, hitting the lowest level since March on news of a potentially lengthy shutdown at a Kansas oil refinery, while Brent also slipped amid signs of robust OPEC oil production. CVR Refining said its 115,000-barrel-per-day refinery in Coffeyville, Kansas might be shut for as long as four weeks after a fire in a gasoline-related unit on Tuesday. The refinery is a major consumer of benchmark West Texas Intermediate (WTI) crude.
12) Steyer takes on oil interests in 'donnybrook' over motor fuels in cap and trade
from E&E by Anne C. Mulkern
Billionaire activist Tom Steyer is challenging oil industry-led efforts to keep motor fuels out of California's program to cut carbon emissions, ratcheting up an already heated battle. Steyer accused oil companies yesterday of trying "to avoid paying their fair share" as they push to stop expansion of the cap-and-trade program for greenhouse gas pollution. Come January, it's slated to wrap in the transportation sector, forcing 14 refineries to start buying permits for emissions tied to in-state gasoline and diesel sales. Oil companies and their supporters say the regulation will trigger pump price increases that hurt consumers and the economy. Steyer questions that argument.
13) Arctic Drilling Despite Russia Sanctions: Is Exxon Flinching?
from Wall Street Journal by Daniel Gilbert
Exxon Mobil Corp. has been unflinching in its plan to drill for oil in Russia’s Arctic seas, in spite of the mounting tensions between the Western leaders and the Kremlin. But as it reported earnings Thursday, the company’s comments on Russia– or non-comments–sure seemed flinching.
14) Shell keeps Arctic drilling on table for 2015
from Houston Chronicle by Jennifer A. Dlouhy
The future of oil exploration in some U.S. Arctic waters may rest with federal courts, but Royal Dutch Shell’s CEO said Thursday the company is undaunted by the legal logjam. “The fact that we can’t move ahead now legally doesn’t meant that we have slowed everything down,” CEO Ben van Beurden told reporters in a conference call to discuss Shell’s second quarter earnings. “We are continuing to be ready for a campaign when we are allowed to do so.” Van Beurden’s comments Thursday marked a shift from his previous suggestions that Shell’s Arctic ambitions might not mesh with the company’s bid to prove its fiscal restraint to investors. And his words fly in the face of environmentalists now trying to convince Shell’s shareholders that Arctic oil exploration is unwise.
Utilities and Infrastructure
15) Utility data, agency intel unite under new program to find, foil cyberattacks
from SNL by Esther Whieldon
Utilities will soon have a new way to identify, track and thwart cyberattacks: an automated information-sharing and analysis program developed by a U.S. Department of Energy national laboratory. The Cybersecurity Risk Information Sharing Program, or CRISP, as designed by the Pacific Northwest National Laboratory, bridges a gap in public-private sector information sharing by combining and comparing what federal agencies know about cyber threats with what is happening at multiple utilities and organizations, according to North American Electric Reliability Corp. documents. The program allows utilities and grid operators to voluntarily share near real-time metadata with PNNL experts in order to ferret out malicious code or other hacking activities, including those generated by nation states. Program participants receive machine-to-machine mitigation instructions through a secure network.
16) Utilities installing bull's-eyes at substations to combat frequent attacks
from SNL by Esther Whieldon
Want a cheap way to keep people from shooting up your substation? Give them something else to aim at. At least two electric utilities have taken up this practice in hopes of deterring people from firing into their facilities and it appears to be working, a grid reliability official and a technology consultant told an IEEE Power & Energy Society 2014 General Meeting at National Harbor, Md., on July 31. Utilities face increasing political pressure to protect their critical electric equipment and systems following a number of high-profile attacks on substations, including when someone fired more than 100 bullets into Pacific Gas and Electric Co.'s Metcalf station in 2013.
17) Experts ask, how much is grid resilience worth?
from E&E by Peter Behr
PSE&G, New Jersey's largest utility, which was devastated by Superstorm Sandy's blitzkrieg in 2012, was awarded $1.1 billion in spending authority by regulators to harden its network -- less than one-third of what it requested. The message was clear, said Jorge Cardenas, the utility's vice president for asset management and centralized services. "When you go to regulators with such a big program, you'd better have some numbers behind it that kind of tell them there is something here of value that people will be willing to pay for," Cardenas told an audience at the IEEE Power and Energy Society meeting in Maryland this week.
18) Win over EPA won’t save Southern W.Va. coal, experts say
from Charleston Gazette by Ken Ward
This week, West Virginia leaders were painting a picture of the rosy future that could await the coal industry, were it not for the Obama administration. Sprinkled among comments criticizing proposed reductions in greenhouse gas emissions, the state’s elected officials made it sound like the good times could be just around the corner for the coalfields — if only the U.S. Environmental Protection Agency would get out of the way. Speaking to a coal industry rally in Pittsburgh on Wednesday, Gov. Earl Ray Tomblin cited projections he said showed “coal will be the world’s leading source of energy” in 2035. Testifying at an EPA public hearing in Washington, Sen. Joe Manchin, D-W.Va., noted that coal is expected to continue to provide at least 31 percent of U.S. power through 2030, and that coal use by other countries, primarily China and India, is growing...However, what Tomblin, Manchin and other coal industry supporters weren’t saying is that less and less of the coal that gets burned will come from the hills and hollows of Southern West Virginia. Experts agree that coal in the state’s southern counties remains in a long-term downward spiral, regardless of what the EPA does or doesn’t do about global warming.
19) WildEarth Guardians — a persistent coal opponent in western US — is growing
from SNL by Taylor Kuykendall
WildEarth Guardians, a group that has proven a tenacious opponent to coal development in the western United States, is growing with no intention of slowing down. On July 21, the organization announced the availability of its 2013 annual report detailing its progressive growth. Over the past 25 years, WildEarth has expanded its mission from an initial focus on one timber sale in New Mexico to its current focus on wolves, endangered species, protecting rivers and addressing climate change. The group's focus on the "climate crisis" has landed "killing coal" among its top priorities.
20) U.S. Hits China Solar Firms
from Wall Street Journal by Biman Mukherji
The U.S. is shaking up the global solar-equipment industry by imposing heavy antidumping tariffs on Chinese makers, a move that is benefiting not just producers at home but also those operating in Asia and encouraging them to expand. The Commerce Department has issued preliminary tariffs on solar products of around 20% to 40% from China and Taiwan, saying they were sold too cheaply to U.S. buyers. The panels from China had flooded the market and pushed down global prices, but with prices now rising from Chinese importers as they have to deposit money in U.S. escrow accounts until the preliminary findings are confirmed, buyers are turning elsewhere.
21) Hydropower Getting Surpassed by Wind, Solar and Other Renewables
from Roll Call by Randy Leonard
This year will be the first in which other renewable forms of generation produce more electricity than hydropower, the Energy Information Administration reports. Hydropower has provided a steady 20 to 30 billion kilowatt hours per month over the past decade, while the contribution from wind, solar, geothermal and other renewables has climbed from less than a third of that.
22) Wind-Power Sector Hopes for Sea Change
from Wall Street Journal by Jan Hromadko
For years, Germany's ambitious effort to generate bountiful electricity with wind farms rising from the deep blue sea has been drowning in red ink. Now, investors like Blackstone Group LP and suppliers like Siemens AG are looking to buck that trend. Offshore wind holds enormous potential for plentiful, environmentally friendly energy because the open sea is almost always windy. But ever since Germany started planning investments in the sector—around the start of the century—obstacles have piled up, including a lack of component suppliers and the absence of equipment needed to link turbines to the national power grid. Even the ships needed for construction out in open water were unavailable. As a result, early offshore-wind projects blew through budgets and schedules because developers had to invest billions of dollars in ports, special barges and power connections.
OPINIONS, EDITORIALS, PERSPECTIVES
23) The Uniquely American Shale Gas Boom
from Morning Consult by Tom Farrell, CEO of Dominion Resources
Some environmentalists oppose any further natural gas production, and believe instead that non-nuclear carbon-free energy sources ought to provide all of our energy needs. That would be great, if we could ignore laws of physics and economics of keeping the lights on, houses warm and energy bills reasonable – all favored by the public. Of course, the energy sector ought to minimize the environmental impact of energy. But we also must produce and deliver that energy reliably, affordably and at a scale sufficient to deliver what our homes and businesses require – at all times. Natural gas ranks as today’s fuel of choice because of price, abundance and reliability, thereby relegating renewable energy sources, such as wind and solar, to niche roles – at least for now. This is not an either/or proposition. Our country needs natural gas and renewables. And carbon-free, large-scale nuclear. At this time, however, natural gas is the only fuel that offers our industry short lead times, affordability and reliability while also protecting the environment.
24) Oil, Natural Gas and Wind: Not an Either – Or, but A Win-Win for the Environment and Economy
from Morning Consult by Randall Luthi, President of the National Ocean Industries Association
On July 21, Politico ran a story entitled “Greens gird to oppose opening Atlantic to oil drilling,” noting that the environmental community plans to mobilize all its resources in an effort to block the process by which the Interior Department determines where to allow leasing of offshore oil and natural gas tracts between 2017 and 2022. In the words of Yogi Berra, it’s deja vu all over again. Whenever the policy question arises of developing the domestic energy resources of the nation’s Outer Continental Shelf (OCS), the environmental community pulls out hysteria-inducing arguments about how this cannot be allowed. But, a quick look at the map shows that it is being embraced elsewhere. Virtually every nation abutting the Atlantic Ocean in this hemisphere is benefitting from offshore energy: Canada, Brazil, Mexico, Trinidad and Tobago, Venezuela, Colombia, and even Cuba. The United States stands virtually alone in ignoring the vast resources beneath the sea floor.
25) Anti-Fracking Laws vs. Property Rights
from Wall Street Journal by Merril Matthews
The growing efforts by state and local governments to stop hydraulic fracturing, or "fracking," to extract natural gas could end up in the Supreme Court. These efforts may unconstitutionally limit property owners' ability to profit from their mineral rights. More than 170 New York towns and cities have used zoning laws to restrict or prohibit fracking, and in June New York's Supreme Court turned back a challenge to this practice. Pennsylvania allows local municipalities to restrict fracking. Colorado and California are struggling with the issue. Even in pro-energy Texas, the relatively small town of Denton, about 30 miles north of Dallas, has a fracking moratorium while the city considers whether to impose a permanent ban.
26) California needs to overhaul its protection of groundwater
from Los Angeles Times by Editorial Board
There are many environmentally worrisome aspects of oil and gas production, and one is the injection of wastewater back into the ground. This process — a way of disposing of the contaminated water created during the drilling process — is done in conventional oil and gas drilling, and is even more common in fracking, which uses large amounts of water to fracture rock and release oil. The concern is that the injection process can end up poisoning the aquifers that provide drinking water. Now, California has ordered oil and gas companies to stop injecting wastewater from their operations into 10 wells in the Bakersfield area, and is looking at about 100 more wells to see whether they should be closed too. It's unknown how many if any of these wells involved fracking operations. But the state's very lack of knowledge shows that it is a long way from the point where it should allow any large-scale expansion of fracking. Decades ago, the U.S. Environmental Protection Agency identified wells where water could be injected without poisoning potentially potable water. In 1981, it transferred the main responsibility for overseeing those wells to the state. But in 2011, the EPA commissioned a study that found the state was doing an inadequate job.
27) Putin's Power
from Houston Chronicle
Fracking is more effective than bullets when it comes to containing Russian President Vladimir Putin's Soviet-era ambitions. Empowered by oil funds and a gas pipeline yoke on Europe, Putin has resuscitated a Cold War ethos of nationalism and expansionism. Yet after the invasion of Crimea and Russian militias seizing sections of eastern Ukraine, it seemed as if Europe's red line was located somewhere a few miles east of the Brandenburg Gate. It took the attack on Malaysia Airlines flight MH17 to finally shock Europe back to reality, where Russia stands as a legitimate threat to a peaceful continent. These aggressive moves have gained Russia few friends, but as Tsar Alexander III once said, Russia's only allies are its army and its navy. For the 21st century, pipelines should be added to that list. And that is where the United States must focus containment efforts.
RESEARCH REPORTS, ISSUE BRIEFS, DOCUMENTS
28) Western States' Opposition to Outer Continental Shelf Oil and Gas Leasing Program
from Governors of California, Oregon and Washington
As Governors of California, Oregon, and Washington, we write to express our strong opposition to the inclusion of any new proposed oil and gas lease sale off our shared coast in the 2017-2022 Outer Continental Shelf Oil and Gas Leasing Program.Together, our three states represent the fifth largest economy in the world. Our ocean dependent industries contribute billions of dollars annually to our region and sustain our coastal communities. Residents and visitors from around the world enjoy the recreation, scenic, and spiritual bounty of our spectacular shores. While new technology reduces the risk of a catastrophic event such as the 1969 Santa Barbara oil spill, a sizeable spill anywhere along our shared coast would have a devastating impact on our population, recreation, natural resources, and our ocean and coastal dependent economies.
29) Summary of Franken, Portman, Baldwin Propane Shortage Legislation
from Sen. Al Franken, Sen. Rob Portman, Sen. Tammy Baldwin
Rural residents in many areas of the U.S. depend on propane to heat their homes and livestock barns. This past winter, however, an extremely serious propane shortage in the Midwest, Northeast, and areas of the South caused skyrocketing prices and hurt homeowners and businesses. This bill would help prevent and respond to future propane shortages by targeting and addressing the root causes of last winter’s shortage.