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Energy Blog

Fuel Fix reports that this past weekend, oil began flowing through the Gulf Coast Pipeline, the southern leg of the Keystone XL pipeline:

TransCanada has begun moving oil into the Keystone XL pipeline’s southern leg, which runs from Oklahoma to the Texas coast, a company spokesman said Monday.

“TransCanada is pleased to confirm that at approximately 10:04 am Central Time on Saturday, December 7, 2013, the company began to inject oil into the Gulf Coast Project pipeline as it moves closer to the start of commercial service,” TransCanada spokesman Shawn Howard said in an email.

The pipeline owner will need to fill the newly constructed line before it can begin delivering oil to refineries along the Gulf Coast, including those in Houston. TransCanada plans to fill the new pipeline system with about 3 million barrels of oil in the coming weeks, the company said.

It’s time for the administration to end the five-year delay and approve the northern leg to allow more Canadian and U.S. crude oil to reach U.S. refineries. As Mark Green at Energy Tomorrow writes, we’ve waited long enough:

Opening the Keystone XL’s southern portion underscores the cost of delaying the northern portion – measured in new U.S. jobs, economic stimulus and energy security through a stronger energy partnership with Canada. In the time the administration has been considering whether to grant a cross-border permit for the northern leg – which also would deliver oil from the U.S. Bakken region – the entire project could’ve been built twice by now.

The State Department has concluded that the Keystone XL pipeline would not have a significant impact on the environment and would support thousands of jobs.

As we wait, we miss out on the jobs that would be created as well as the added energy security.

You’ve probably heard by now that America is in the midst of an oil and gas boom that’s led to unprecedented energy independence and the creation of millions of jobs. Now it appears, Mexico wants to replicate that success – and in the process open up new opportunities for U.S. companies.

After a bruising battle, Mexico's Congress voted Thursday to open the country’s state-run oil industry to foreign and domestic investors—ending 75 years of government control.

The 353-134 vote will allow the government to give private companies contracts and licenses to explore and drill for oil and gas, deals now prohibited under Mexico’s constitution. The move is expected to generate as much as $20 billion in additional foreign investment a year. Investor’s Business Daily puts the historic reform in perspective:

Mexico's reversal didn't come a moment too soon. Since 2006, its energy production has fallen sharply from underinvestment due to a bad combination of zero foreign investment, which it shut out in 1938, and the state's habit of draining Pemex for cash to finance a third of its own budget.

The low production is evident in its oil exports to the U.S., which have fallen from nearly 2 million barrels of crude a day in 2006 to less than 1 million in 2013. As U.S. oil rigs light up the Gulf of Mexico each night, the crude-rich Mexican side stays as dark as North Korea.

Mexico's 75 years of poor policy created a lost opportunity. Oil had become a smaller and less significant part of its economy even as the technical advances of fracking were making the U.S. and Canada the new Saudi Arabia. But it might be able to catch up, as global demand, according to ExxonMobil's 2014 energy outlook, is forecast to grow 35% by 2040.

U.S. Chamber President and CEO Tom Donohue says that U.S. companies are well positioned to benefit from this market-opening move:

We are going to be able to develop services and competencies in dealing with energy that are transferrable from one country to another. They have some differences in commodities and have their own regulatory systems, but all of it will be in the context of a lot oil, a lot of gas, a lot of coal and a fundamental ability to attract manufacturing, to improve supply chain and to drive the creation of jobs and economic growth.

Energy is just one area that offers great promise for strengthening U.S.-Mexico ties. This week in Washington, D.C., business leaders from the United States and Mexico explored economic opportunities for both countries and identified future priorities for collaboration in areas including infrastructure, regulatory cooperation, customs modernization, and education and workforce development.

“By working together, we can help build a future of shared prosperity, security, and efficiency between the United States and Mexico – a goal worthy of our very best efforts,” Donohue added. “Doing so will allow us to further integrate the North American market and make it more competitive in the global economy.”

Mexico is the second largest global market for the United States. Last year, the two countries exchanged nearly $500 billion in goods trade, equal to $1.35 billion of commerce crossing our shared border daily. That trade supports six million jobs in the U.S., as this new infographic by the U.S.-Mexico Leadership Initiative illustrates. (Click here for more infographics on this important trade relationship.) 



As U.S. domestic crude oil begins to flow to Gulf Coast refiners through the southern portion of the Keystone XL pipeline, two polls show strong support for approving construction of northern section.

First, a Harris Interactive poll for the American Petroleum Institute finds that 72% think that it’s in America’s national interest to approve the Keystone XL pipeline.

Second, the Bloomberg National Poll finds that 56% see the Keystone XL pipeline as “an opportunity to improve U.S. energy security.”

With so much public support, why has the pipeline been delayed for five years? Bloomberg asked respondents that question and came back with an answer: Politics. Sixty-one percent say that the delay is more about the White House avoiding “political problems with environmental groups protesting the decision” than about addressing environmental concerns.

Even though the State Department has concluded that Keystone XL will have little impact on the environment, the White House chooses to listen to anti-energy forces rather than the public.

The wait has gone on long enough. The opportunity is here to create thousands of jobs and get more energy from Canada. The President can give the country a much-needed Christmas gift by approving the Keystone XL pipeline.

Shale energy production will “continue to lift domestic supply and reshape the U.S. energy economy” and will result in near-historic levels of domestic crude oil production, higher levels of natural gas production, and dramatically reduce our reliance on imported energy, a new federal government report finds.

“Higher production volumes result mainly from increased onshore oil production, predominantly from tight (very-low-permeability) [shale] formations,” states the Energy Information Administration’s Annual Energy Outlook 2014 (AEO 2014).

Because of hydraulic fracturing and horizontal drilling, crude oil production through 2016 will increase by 800,000 barrels per day annually to reach production levels not seen since 1970. By 2021, 51% of domestic crude oil production will be from shale.

As for natural gas, production will increase by 56% by 2040, boosting manufacturing and exports. “Industries that supply equipment for increased natural gas production, as well as industries benefitting from lower natural gas prices, account for much of the higher growth in manufacturing,” the report states. For example, a Bloomberg story reports that the American Chemistry Council expects that abundant natural gas will push the U.S. chemical industry to be 21% larger than Europe’s by 2020.

Higher domestic energy production will also mean decreased energy imports and increased energy security. “[N]et use of imported energy sources, which was 30% in 2005, falls from 16% of total consumption in 2012 to 4% in 2040,” the report states.

In addition, the United States will have such an abundance of natural gas that it will be a net liquefied natural gas (LNG) exporter by 2016 and a net exporter of natural gas in 2018, the report estimates.

Daniel Yergin, vice president of energy consultant IHS, said, “This is not only about energy, but also is providing a big boost to the U.S. economy at a time when it really needs a boost.”

The report doesn’t predict where increased energy production will take place, but based on recent history, expect much of it to happen on private and state lands. We could see even greater production if more federal land is opened to development.

One major caveat with the AEO 2014 is that it assumes current laws and regulations continue into the future. All bets are off if the administration imposes duplicative regulations on hydraulic fracturing or makes it even harder to develop oil and natural gas offshore.

Nevertheless, through innovation and risk-taking, the shale energy boom has been a bright spot for the economy. With policies that embrace our energy abundance, we can continue reaping its benefits.

Here’s further analysis of the report:

UPDATE: I note that by 2018, the United States will be a net exporter of natural gas and crude oil production will increase through 2016.

“It’s gold in those hills,” says Gregg Wingo, gesturing toward the Appalachian foothills surrounding his wood-paneled office in southeastern West Virginia.

A modern-day prospector of sorts, Wingo is co-owner of Refrigeration Recycling, a busy operation that breaks down old refrigerators, drains the ozone-depleting Freon, and refurbishes them for reuse. If it’s in bad shape, Wingo’s team strips the unit and sells the metal scrap.

In scenic Greenbrier County, nestled on the edge of the Monongahela National Forest, the traditional use of rundown fridges is as a root cellar or cattle trough, Wingo tells FreeEnterprise.com during a recent visit to his business.

Times are changing, and he and his partner Micheal Monte are benefitting from a greater awareness of sustainability in the community. They recently inked a deal with the Greenbrier County Solid Waste Authority so that area residents can drop off their fridges at the local recycling center or landfill for free.

“This solved the problem, we should no longer see refrigerators dumped in creeks, and over the hill and stuff,” says Bob Bennett, manager of the Greenbrier Recycling Center.

Wingo sees only upside — for his business, the environment, and the local community. “Our area of West Virginia is heavily dominated by the tourism business, so they understand the idea of trying to sustain the environment very strongly,” he says.