From: Morning Consult
To: Scott Jenkins,
Subject: Morning Consult Energy: Murkowski Report Advocates Crude Oil Swaps; Senators Urge Delay for Power Plant Emissions Rule
Date: Fri May 23 13:46:29 MDT 2014


By Emily Holden (@emilyhholden)



Today’s Washington Brief:

  • The top Republican on the Senate Energy Committee released a report on the merits of the U.S. swapping a glut of light crude oil with nearby countries. Sen. Lisa Murkowski has advocated lifting a long-standing ban on crude oil exports but has no immediate plans to introduce legislation on the matter, Reuters' Timothy Gardner reports

  • Forty-five senators, including some Democrats from energy-intensive states, are seeking extra time for input on the EPA's forthcoming proposal to cut carbon pollution from power plants, Reuters reports

  • The Ukraine crisis has sparked a quiet lobbying boom in Washington, Bloomberg's Margaret Talev and Jonathan Allen report


Today’s Business Brief:


  • China and Russia's $400 billion natural gas deal could complicate liquefied natural gas projects in Western Canada, the Western United States and the Gulf of Mexico, Financial Post reports

  • The North Carolina Senate outlawed disclosing fracking fluid secrets, Reuters' Mica Rosenberg reports.  
  • Federal cybersecurity experts don't have enough knowledge about threats to the energy industry, but they know it faces more risks from hackers than most sectors. The energy industry was the target of more than half of the 257 incidents reported to the Department of Homeland Security in 2013, SNL's Corbin Hiar reports


Today's Chart Review: 


Americans Try to Conserve Energy, But Don’t Know Much About It

from Morning Consult by Meghan McCarthy





1-7: General
8-16: Oil
17: Natural Gas
18: Utilities and Infrastructure
19: Coal
20-21: Nuclear 
22-24: Renewables




25-26: Wall Street Journal 
27: Forbes 
28: Houston Chronicle 



29:Staff for Sen. Lisa Murkowski 
30: OECD 
31: Millward Brown Optimor 







1) Forty-five U.S. Senators Seek Extra Time for Input on EPA Carbon Rule

from Reuters by Valerie Volcovici 


The Environmental Protection Agency should double the amount of time the public will have to give input on its forthcoming proposal that will aim to cut carbon pollution from power plants nationwide, 45 U.S. senators urged on Thursday. The senators, Republicans and Democrats from energy-intensive states, sent a letter to EPA Administrator Gina McCarthy asking for an extended comment period for the proposal that it will unveil on June 2, which will contain the first mandatory limits on carbon emissions from the sector. Stakeholders will need extra time to analyze the rule and its impact on electric reliability and consumer cost, the senators said.


2) Ukraine Crisis Drives a Quiet Lobbying Boom in U.S.


3) Water Infrastructure Bill Passed by Senate

from Wall Street Journal by Kristina Peterson


The Senate overwhelmingly passed a water infrastructure bill on Thursday, approving the first legislation since 2007 that authorizes new port, dam and flood-protection projects. The House earlier this week passed the bill, the product of bipartisan negotiations merging versions passed by each chamber last year. The legislation, one of the rare recent instances of both chambers approving bills through traditional procedures and without the pressure of an imminent deadline, now heads to President Barack Obama. The water infrastructure bill, passed on a 91-7 vote, includes a long-stalled project to expand the Savannah Harbor to accommodate bigger ships once the Panama Canal expansion is completed. The bill also authorizes projects deepening and making other improvements to Boston Harbor and Palm Beach Harbor in Florida.


4) Outside Groups Shelled Out $4.5M for Agency Officials' Travel

from E&E by Kevin Bogardus and Robin Bravender 


In June 2012, Chesapeake Energy Corp. led more than a dozen U.S. EPA officials on a tour of its hydraulic fracturing operations near Sayre, Pa. Fracking, and how the federal government regulates it, is of great concern to Chesapeake. The energy company spent $1.8 million on lobbying that year -- including lobbying EPA on its hydraulic fracturing study looking into potential impacts on drinking water, according to disclosure records on file with the Senate. The Chesapeake excursion is among thousands of trips that EPA officials -- including top brass -- have taken on someone else's dime since 2010, according to trip reports obtained by Greenwire. Overall, EPA has accepted more than $4.5 million to pay for hotels, meals, travel and other benefits from outside groups over the past four years. Corporations, industry associations, nonprofits, foreign governments and others with a stake in EPA's rules -- including groups with registered lobbyists -- regularly pay for EPA official travel, according to reports the agency has filed with the Office of Government Ethics.


5) North Carolina Senate Outlaws Disclosure of Fracking Fluid Secrets

from Reuters by Mica Rosenberg


The North Carolina Senate on Thursday voted to make it a crime to disclose the chemicals used in hydraulic fracturing, or fracking, even as big U.S. oil companies elsewhere consider releasing more information about the fluids to address public concerns about the environment. The legislation, proposed by three Republican state senators and passed by a vote of 35-12, aims to protect trade secrets about fluids used to extract oil or gas from wells using fracking, which blasts sand, water and chemicals deep beneath the earth's surface. Environmentalists concerned about groundwater contamination and health risks want more information made public.


6) Wrenching Political Change Comes to N.C., and Energy is Part of the Struggle

from E&E by Daniel Bush and Josh Kurtz


...As Congress remains in a permanent state of paralysis, and the electoral discourse becomes ever-more dominated by attack ads funded by shadowy, deep-pocketed forces, statehouses have increasingly become laboratories for policy innovations and political reform. But North Carolina has seen a dramatic change in political direction in just the past two election cycles, a lurch to the right fueled in part by some of the same big-moneyed interests that are playing in national politics...most of the coverage has focused on emotional fights over budget cuts and social issues -- like Medicaid funding, deep tax cuts for businesses and the wealthy, teacher pay, access to abortion, and voter ID laws. Increasingly, though, environment and energy will come to the fore.


7) U.S. Index Futures Little Changed Before Home-Sales Data





8) U.S. Could Swap Light Crude to Ease Oil Boom Glut: Sen. Murkowski

from Reuters by Timothy Gardner 


To help shrink its growing glut of oil, the United States could swap light crude to nearby countries without having to issue time-consuming new rules or findings, according to a report released on Thursday by a senior senator. The debate about overturning a 40-year-old ban on U.S. oil exports has sharpened as the domestic boom is expected to make the United States the world's top crude producer by next year, bigger than both Saudi Arabia and Russia. Brimming supplies could begin to discourage U.S. energy companies from producing crude sometime next year. Petroleum exchanges between the United States and Canada in the 1970s and 1980s were common exceptions to the ban and should occur now, said the report released by Senator Lisa Murkowski of Alaska, the top Republican on the chamber's energy committee.


9) U.S. Rail Regulators See 'Pockets of Concern' with Misclassifying of Bakken Crude

from Platts by Herman Wang 


U.S. rail regulators are finding that most shippers are properly classifying Bakken crude cargoes in accordance with hazardous materials rules, the head of the Federal Railroad Administration said. Still, "there are pockets of concern," FRA Administrator Joseph Szabo said in an interview set to air Sunday on "Platts Energy Week," and the agency intends to continue its "Bakken Blitz" surprise inspection campaign to ensure crude-by-rail shipments are delivered safely...The agencies have said shippers were not always correctly identifying on manifests what kind of crude they were carrying, which could lead to highly volatile crude being shipped in containers not designed to safely store it or emergency responders following the wrong protocols when responding to a spill. The campaign has so far resulted in three fines totaling $93,000 issued to Hess, Marathon Oil, and Whiting Oil and Gas for mislabeling their oil.


10) Secrecy of Oil-by-Train Shipments Causes Concern Across the U.S.

from Wall Street Journal by Russell Gold and Betsy Morris 


...Secrecy still cloaks the rapidly expanding business of shipping crude by rail, leaving local officials from Portland, Ore., to Toronto struggling to obtain details about oil shipments. Driven by long-standing railroad-industry fears about stirring local protests or terrorist attacks, there is no central repository for information on oil trains or other hazardous materials. Nor are there easy-to-find maps of train routes from the oil fields of North Dakota and Texas to refineries on the Gulf of Mexico and the East and West coasts. An emergency order from the U.S. Transportation Department in June will start requiring railroads to alert states about oil trains originating in North Dakota. But the rules, which follow accidents involving oil from North Dakota's Bakken Shale in such unlikely locations as Lynchburg, Va., and Aliceville, Ala., already are coming under criticism.

11) Keystone Developer Close to Decision on Rail Option

from Politico Pro by Andrew Restuccia and Talia Buford


The Obama administration’s repeated delays in approving the Keystone XL oil pipeline have the project’s Canadian developer considering shipping the fuel by train in the interim — an option that would be costlier, more polluting and potentially more dangerous. TransCanada has little choice but to examine the possibility in light of the huge market demand for oil, CEO Russ Girling said Thursday during a meeting in POLITICO’s newsroom...Still, Girling said choosing trains over pipelines as a means of moving oil would be going “backwards,” saying the industry had good reasons for adopting pipelines decades ago. 


12) TransCanada CEO: Delays Won’t Derail Keystone Approval

from Politico Pro by Andrew Restuccia 


TransCanada CEO Russ Girling is still certain the Keystone XL oil pipeline will win approval, despite the Obama administration’s recent decision to again delay a final verdict. “This pipeline will get built. I just don’t know when it will get built,” Girling said in an interview with POLITICO Thursday, though he has “no idea” whether its approval will come before the end of Barack Obama’s presidency. Girling dismissed the fervent opposition to the pipeline, at one point even calling anti-Keystone activists’ arguments “garbage.” And he said that the massive fight over the project will eventually be nothing but a historical footnote.


13) Continental Resources CEO Sees U.S. Lifting Oil Exports Ban by 2015

from Wall Street Journal by Chester Dawson

Continental Resources Inc. Chief Executive Harold Hamm said he expects Congress to lift the U.S. ban on crude oil exports as soon as 2015. "We do need to be able to export this light tight oil," Mr. Hamm said on Thursday, referring to oil extracted from shale formations. Mr. Hamm, who was speaking at an energy industry conference here, leads a company that is a major producer of that type of light crude from North Dakota's Bakken Shale. The U.S. has had a de facto ban on exporting oil dating back to the 1970s. "The next session of Congress we'll get that done, probably 2015," he said.


14) Marathon Petroleum to Buy Hess Retail Arm

from Wall Street Journal by Erin McCarthy 


Hess Corp. on Thursday said it agreed to sell its retail business to Marathon Petroleum Corp. 's Speedway LLC unit for total cash consideration of $2.6 billion. Hess had filed for potential spinoff of its retail unit earlier this year but also left the door open for a sale of the business. The transaction includes all of Hess's retail locations, transport operations and shipper history on various pipelines, including about 40,000 barrels a day on Colonial Pipeline, Marathon said. The deal will make Speedway the largest company-owned and company-operated convenience-store chain in the U.S. based on revenue, said Speedway President Tony Kenney.


15) EU Energy Security Threatened by Russia Buying Refineries -Report

from Reuters by Barbara Lewis


Russia's strategy of buying up oil refineries in Europe could compromise the bloc's energy security, EU officials said in a draft report prepared for the region's leaders. Europe's refining sector has been weakened by a combination of high oil prices, slack demand and poor profit margins, prompting many companies to sell off refining units, which Russia has been buying...In a report prepared ahead of a summit meeting of EU leaders in June, the European Commission is expected next week to make public its vision of how to improve energy security in response to the crisis in Ukraine, the transit route for roughly half the gas Russia exports to the European Union. Among the many issues it says need to be closely monitored, it cites increased Russian ownership of EU refineries.


16) Air Pollution is a $1.7T Health Problem, OECD Finds

from E&E by Julia Pyper


Air pollution is costing the world's most advanced economies plus India and China $3.5 trillion per year in lives lost and ill health, with a significant amount of the burden stemming from vehicle tailpipes, according to a new report by the Organisation for Economic Co-operation and Development (OECD). In the 34 OECD member states, the monetary impact of death and illness due to outdoor air pollution was $1.7 trillion in 2010. Research suggests that motorized on-road transport accounts for about 50 percent of that cost. In China, the total cost of outdoor air pollution was an estimated $1.4 trillion in 2010. In India, the OECD calculated the toll at $500 billion. "It makes for an alarming read," said OECD Secretary-General Angel Gurría in launching the report here yesterday at the International Transport Forum (ITF) 2014 summit.


Natural Gas


17) China and Russia’s US$400-Billion Natural Gas Deal ‘Complicates’ New LNG Projects

from Financial Post by Yadullah Hussain 


Russia’s US$400-billion natural gas deal strengthens Vladimir Putin’s hand and gives China greater leverage to secure better pricing deals with Canadian and other exporters looking to capture a slice of the Asian market. “This is the biggest contract in the history of the gas sector of the former USSR,” said Mr.Putin, after state-controlled Gazprom signed a deal with China National Petroleum Corp (CNPC) Wednesday...“The deal removes a part of the demand that would have been met by LNG,”  said Peter Howard, president of the Canadian Energy Research Institute. “It makes the game a little more congested with regard to LNG projects in Western Canada, Western United States, Gulf of Mexico, Australia and Mozambique — it is going to make it a little more complicated.”



Utilities and Infrastructure


18) Cybersecurity Experts Detail New Attacks on Energy Companies, Advocate for Legislation

from SNL by Corbin Hiar 


Federal cybersecurity experts are operating with incomplete knowledge of the cyberthreats facing the energy industry and other sectors that have been targeted by individual hackers, terror groups and foreign governments, according to a top intelligence official at the U.S. Department of Homeland Security...One thing that federal cybersecurity analysts are certain of is that the U.S. energy industry faces more risks from hackers than most sectors. Indeed, it was the target of 56% of the 257 cybersecurity incidents reported to the DHS Industrial Control Systems Cyber Emergency Response Team, or ICS-CERT, in 2013.





19) EPA Reaches Deal with Duke to Clean River Coal Ash

from Houston Chronicle (AP)


Federal environmental officials said Thursday that they have reached a deal with Duke Energy to clean up its mess from a massive coal ash spill into the Dan River that coated 70 miles of the waterway in North Carolina and Virginia with toxic gray sludge. The U.S. Environmental Protection Agency announced it had finalized an enforceable agreement with the nation’s largest electricity company over the Feb. 2 spill that was triggered when a pipe collapsed at Duke’s Dan River Steam Station. EPA will oversee the cleanup in consultation with federal wildlife officials under provisions in the Superfund law. Duke will reimburse the federal government for its oversight costs, including those incurred in the emergency response to the spill.





20) For Atom-Friendly Asia, a Nuclear Power Boom—in the West, Stagnation

from Scientific American by Katherine Tweed


More than a decade ago a contract was signed to build the world’s first third-generation European pressurized reactor (EPR) in Finland. The cutting-edge, 1,600-megawatt nuclear power plant, Olkiluoto 3, which its French maker Areva boasted as the most advanced safety design of the time, is still under construction today. There have been various setbacks as well as endless finger-pointing between Areva and the Finnish utility TVO, which are locked in court battle over expanding costs. Now the reactor might not be completed until at least 2017, if at all, with a price tag of $11 billion, more than double its original estimate. The Olkiluoto 3 situation is not unique. Another Areva EPR in Flamanville, France, is also behind schedule and over budget. A recent government deal for two new EPRs in the U.K. has also come under fire. The prospects for a nuclear power revival are no better in the U.S.


21) Russia May Build Eight Nuclear Reactors for Iran

from Reuters by Svetlana Burmistrova, Alissa de Carbonnel and Steve Gutterman


Russia plans to sign a contract with Iran this year to build two more nuclear reactors at its Bushehr power plant as part of a broader deal for up to eight reactors in the Islamic state, a source close to the negotiations told Reuters on Thursday. It was not immediately clear how this might affect six global powers' talks with Iran addressing disputed aspects of its nuclear programme. Iran has resisted demands for cuts in its uranium enrichment capacity, pointing to plans for a future network of nuclear power stations. Western powers want any lasting agreement with Iran to put to rest suspicions that it could develop nuclear weapons-making ability through enrichment. Iran denies any such intent.





22) How Green Energy Won Out Over Fossil Fuels in a Red State

from National Journal by Clare Foran


Wind is going head to head with natural gas at the heart of the fracking boom—and wind is winning.

Fracking—a drilling technique that involves breaking open shale rock formations to extract oil and natural gas—has taken Texas by storm. The Lone Star State is dotted with drill sites and leads the nation in natural-gas production. But wide open spaces and strong gusts make it an ideal place to turn turbines. And Texas also takes the top spot for states with the most wind power. Green energy has steadily gained traction in the deep-red state. In 2003, wind made up less than 1 percent of the power supply, according to state grid operator the Electric Reliability Council of Texas. By 2013, that share had risen to roughly 10 percent.

23) Payback Time for Solar-Power Energy Systems

from Wall Street Journal by Sanette Tanaka


New research finds that homes with photovoltaic (PV) systems sell for an average $24,705 more for a typical 3.1-kilowatt system than homes without PV systems, says lead author Ben Hoen, a researcher at Berkeley Lab in California. Photovoltaic systems convert sunlight directly into electricity using solar panels made of semiconductor materials. These systems differ from various other solar-heating systems, which use the sun's energy to generate heat. The systems aren't cheap. A 6.1-kilowatt system spanning 350 square feet costs about $28,000 for parts and installation, though tax incentives may help offset the cost, says the Solar Energy Industries Association, a trade group. In the eyes of buyers, the systems depreciate quickly. The market discounts them by 9% each year they age, even though the system has a life span of about 25 years, according to the study.

24) Watchdog Wants Probe Into Relaxed Fuel Regs

from The Hill by Benjamin Goad 


A watchdog group suggested Thursday that the Environmental Protection Agency’s (EPA) move to lower the renewable fuel standard came at the behest of big business. The allegation drew sift rebuke from the EPA, which said the action was the result consultation with a broad range of groups and careful government analysis. In a letter to EPA Inspector General Arthur Elkins, Citizens for Responsibility and Ethics in Washington requests a formal probe into whether Delta Airlines and the Carlyle Group, a Washington-based investment firm improperly influenced the decision. The proposal, unveiled last year but not yet finalized, reflects the EPA’s first ever action to decrease the amount of renewable fuels that must be blended into traditional ones.





25) The EPA's Carbon Capture Flip-Flop
from Wall Street Journal by Brian H. Potts


…Talk about inconsistency: In its coal-plant proposal, the EPA admitted that CCS would increase the capital cost of every new coal plant built in this country by about 35%. Even with this staggering price tag, the agency still found the technology economically viable (and since then, the agency has given no indication that its position has changed). Meanwhile, an EPA regional office and its administrative judges decide that a 25% capital cost increase is prohibitively expensive. The agency is either incredibly sloppy or simply incompetent. Either way, if—like me—you want this country to reduce its greenhouse-gas emissions, you should be worried.


26) The Limits of China-Russia Cooperation
from Wall Street Journal by Ali Wyne

Russian President Vladimir Putin's visit to China this week underscores the two countries' growing ties. He signed a $400 billion energy deal, a decade in the making, whereby Russia will supply China with 38 billion cubic meters of gas annually for three decades. Moscow and Beijing are also conducting a week-long joint naval drill in the East China Sea, and IHS Jane's Defense Weekly reports that Mr. Putin has agreed to transfer to China several S-400 missile-defense systems, among Russia's most sophisticated military assets. So are we seeing the emergence of a Chinese-Russian axis? Not quite. These developments are consistent with longstanding Sino-Russian relations, which in general remain more superficial than strategic.


27) China-Russia Gas Deal Should Unleash A Euro-Fracking Revolution

from Forbes by Christopher Helman 


Russia and China today cut a $400 billion, 30-year deal whereby Gazpromwill deliver at least 1.3 trillion cubic feet of natural gas to China annually. Russia will build $55 billion worth of pipelines and processing plants to deliver the gas from Siberia. This is a lot of gas, about one-fifth of China’s current annual demand. And it should be causing concern across Europe, which last year relied on Russia for about 30% of its gas supply, or about 6 trillion cubic feet. With Vladimir Putin threatening to cut off gas shipments to Ukraine — the conduit for about half of Europe’s Russian imports — it should be patently obvious to all European policy makers that they must wean themselves off of Russian gas. The answer for Europe is not more windmills and solar panels. The answer is fracking. 


28) Awash in Risk
from Houston Chronicle

Tank cleaning is an extremely dangerous job. You've probably never given it much thought, yet the petrochemical industry couldn't get along without it. Tank workers clean the rail cars, tanker trunks and inland barges that transport chemicals used to make everyday materials like foam, paint and plastics. These workers sometimes work in places hot enough to melt the rubber on their boots, sometimes with special suits, harnesses or masks. But not always ("Largely invisible, tank cleaning industry awash in risk," Page A1, May 11) …Statistics on work-related injuries and deaths in an industry should be readily available as safety enforcement officials need them to prioritize historical risks. But as to this industry, safety enforcement officials don't keep a tally of even the most basic facts, such as the number of deaths on the job - not to mention the number of workers who suffer nerve damage or cancer related to workplace chemical exposure. To identify 51 on-site deaths over the past 15 years, Chronicle reporter Ingrid Lobet pieced together OSHA records and news reports.





29) Crude Pro Quo: The Use of Oil Exchanges to Increase Efficiency

from Staff for Sen. Lisa Murkowski 


Vast historical precedent exists for the authorization of oil exchanges between the United States and nearby nations. An exchange program between the U.S. and Canada functioned for nearly a decade, supported by three administrations from both political parties. Temporary exports through Panama have been authorized by successive administrations from at least President Carter to President Clinton, and such exports are even occasionally authorized today. The term “adjacent foreign state” has typically included Canada, Panama, and Mexico, but the record suggests that a more flexible interpretation could include other Latin American and Caribbean nations – and multiparty transactions could incorporate exchanged crude oil from producers around the globe. A broader liberalization of the crude export regime would still be necessary to protect jobs and production, but exchanges are relatively simple measures that could be taken now to provide some relief. 


30) The Cost of Air Pollution: Health Impacts of Road Transport

from OECD 


Outdoor air pollution kills more than 3.5 million people a year globally, far more than was previously estimated. Air pollution has now become the biggest environmental cause of premature death, overtaking poor sanitation and a lack of clean drinking water. In most OECD countries, the death toll from heart and lung diseases caused by air pollution is much higher than the one from traffic accidents. The OECD has estimated that people in its 34 Member countries would be willing to pay USD 1.7 trillion to avoid deaths caused by air pollution. Road transport is likely responsible for about half. Air pollution in OECD countries has fallen in recent years, helped by tighter emission controls on vehicles, but it has increased in China and India as rapid growth in traffic has outpaced the adoption of tighter emission limits. The switch to more polluting diesel vehicles in many countries threatens to arrest the downward trend in emissions from road transport in OECD countries. 


31) Most Valuable Global Brands 2014 

from Millward Brown Optimor 


The oil and gas category experienced the lowest brand value growth, 3 percent, because of slowed investment in exploration.