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Energy Blog

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Christopher Guith Off limits

It’s an interesting question. That we’re even entertaining it, however, shows you how far off the rails candidates from Secretary Clinton, to interest groups, to the Democratic Party Platform have gone in proposing to ban energy production on federal lands in one way, shape, or form. It’s easy to spout rhetoric to rally the troops in a campaign season, yet shouldn’t politicians be answerable for the promises they make? We think so.

This week the Institute for 21st Century Energy launched the Energy Accountability Series, designed to do exactly that…hold politicians and interest groups accountable for their proposals. 

In this first report, we answer the question: What If Energy Production Was Banned on Federal Lands & Waters?  In short, the answer is that America’s economy would lose nearly 400,000 jobs and $70 billion in annual GDP. Considering that we get about 25% of our energy from federal lands, it’s a wonder these numbers aren’t higher.  But if you live in a state with lots of federal energy production, the impacts could be devastating. 

Take Colorado. It could lose 50,000 jobs and over $120 million in annual royalties, nearly half of which is ear-marked for state education. 

Wyoming? It would kiss $9.3 billion in economic output goodbye. 

And New Mexico could see almost $500 million in royalties and over 24,000 jobs vanish.

Since states cannot readily borrow the way the federal government can and they also must balance their budgets UNLIKE the federal government, the lost income from a ban would hit especially hard on critical state services like education, roads, and first-responders.

What’s at stake for future of #energy in #CO? @KarenAHarbert weighs in on @ColoradoOilGas panel #RMES2016 pic.twitter.com/D0EEksniF2

— Energy Institute (@Energy21) August 25, 2016

That’s just for onshore.

Turning our attention to offshore federal production, the impacts of a federal energy ban in the Gulf of Mexico would be even more painful.  Oil production from the federal Gulf accounts for just under 20% of total domestic production.  Shutting off that spigot would put the country on the wrong track, with less energy security and more job losses. 

The Gulf States of Texas, Louisiana, Mississippi, and Alabama stand to lose over 110,000 jobs and $24 billion in lost GDP. 

Moreover, a federal law called the Gulf of Mexico Energy Security Act requires the federal government to share a portion of the royalties it collects with the adjacent states that “host” the energy production.  While this has been happening on a small scale since 2009, next year it’s scheduled to skyrocket to as much as $350 million annually.  That’s a huge chunk of change those states are legally and rightfully entitled to, but they won’t see a dime of it if energy production is banned.

Federal energy production is too crucial to America’s energy security and economic health. Politicians who support banning it should have to explain why.

Unfortunately that has yet to happen, but our new report will ensure that Americans understand the very real consequences of such backward-looking policies.

Editor's note: This originally appeared on The Institute for 21st Century Energy's blog.

Sean Hackbarth Pipelines in front of a dusky sky.

August temperatures aren’t the only things flaring up in the Great Plains as anti-energy protesters try to stop construction of an oil pipeline.

Emboldened by President Barack Obama's rejection of the Keystone XL pipeline in 2015, anti-energy protesters have set their sights on stopping the Dakota Access Pipeline.

A valuable addition to U.S. energy infrastructure, the pipeline will cross four states connecting the oil-rich Bakken region in North Dakota with other pipelines in Illinois, allowing oil to reach refineries and making America less dependent on foreign imports.

dapl-map-full.jpg Route of the Dakota Access Pipeline.Route of the Dakota Access Pipeline.Route of the Dakota Access Pipeline. Source: Energy Transfer Partners, L.P.

Energy Transfer Partners, the company building the pipeline, says the $3.7 billion project will create 8,000 - 12,000 construction jobs and inject $156 million in sales and income taxes to local economies. Lachlan Markay at the Washington Free Beacon notes it has the backing of the Laborers’ International Union of North America (LIUNA).

Approval of the pipeline’s construction went through the standard process of public hearings and comment periods with four states and the federal government. But the public permitting process hasn’t stopped protesters.

In North Dakota, hundreds of protestors—many not from the area--have built a camp near a construction site where the pipeline will travel under the Missouri River near the Standing Rock Sioux Reservation. The Army Corps of Engineers approved the pipeline’s water crossing there in July.

The protests have turned ugly. Local public radio reports that construction has been halted because law enforcement worried that some protesters had pipe bombs and guns. Dozens have been arrested for trespassing and disorderly conduct. The FBI is investigating an incident where someone pointed a laser pointer on a North Dakota state government plane that was watching the protesters.

The protests got so bad that on Friday North Dakota’s Governor Jack Dalrymple (R) issued an emergency declaration in the construction area to make “available other state resources for the purpose of protecting the health, safety and well-being of the general public and those involved in the protest.”

On Tuesday, LIUNA, the International Union of Operating Engineers, the Teamsters, and United Association sent a letter to Gov. Dalrymple urging him to allow construction to restart: 

We strongly encourage you to utilize the power of your office to keep our workers safe and to ensure protestors are following the letter of the law of North Dakota. While they may have a right to protest, we also have a right to do our jobs in a safe environment. Protestors who did not avail themselves of nearly two years of public discourse of the project should not be allowed to continue endangering themselves, construction workers, or law enforcement while trespassing on land legally leased to this project.”

North Dakota hasn’t been the only place where violence has broken out. Earlier this month, along the pipeline’s path in Iowa, three arsons were committed, damaging $1 million in heavy construction equipment.

Pipelines are Safe

Protesters argue that the pipeline will threaten local water supplies, but the fact is pipelines safely move oil all the time. A report from the American Petroleum Institute and the Association of Oil Pipe Lines finds that 99.999% of crude oil and petroleum products are safely delivered. In 2014, 9.3 billion barrels of crude oil were delivered—a 31% increase since 2010.

While more oil has been transported, there have been fewer spills. “The number of pipeline incidents per year in public spaces (i.e. outside of operator facilities) have declined by more than half since 1999,” the report notes.

What’s more, pipelines aren’t a new thing. Hundreds of thousands of miles of pipelines every day safely move energy to households and businesses that need it. For instance, the amount of crude oil pipelines has increased by 29% to 72,400 miles in the last five years.

dot_gastransmission-hazliquidpipelinesmap.jpg  U.S. Department of Transportation.Map of U.S. pipeline transportation system. Source: U.S. Department of Transportation.Source: U.S. Department of Transportation.
Part of “Keep It In the Ground” Movement

Given that pipelines have been around for decades, have a strong safety record, and the Dakota Access Pipeline was closely studied before receiving its permits, we should wonder what the protests are really about.

It’s not fears about water pollution. As North Dakota resident Rob Port at SayAnythingBlog.com, who has been all over this story explains, it’s about stopping oil development period:

The protesters say the pipeline, which crosses the Missouri River at its confluence with the Cannon Ball river near the reservation, puts clean water at risk. That’s certainly an important issue for the reservation, which draws its drinking water from the river near the pipeline crossing, but it’s worth remembering that the American landscape is dotted with pipelines crossing rivers. There are thousands upon thousands of pipelines in America, and building them would have been impossible if we didn’t know how to get them across rivers.

Which makes the claims of the protesters about the Dakota Access project curious. This project is nothing new. It’s an important bit of infrastructure for America’s renewed energy industry. It’s of particular importance to North Dakota’s oil industry in that it will ease oil transport headaches and make development in this state more resilient to low prices.

As new infrastructure, it’s a game changer. But in terms of its actual construction? This isn’t groundbreaking stuff.

But then, these protests aren’t really about the pipeline. They’re about obstructing infrastructure which would support the on-going development of oil resources

The activists air-dropping into North Dakota from all over the country, and even the world, are not anti-pipeline so much as they’re anti-oil. That’s an important distinction. While it may be within the realm of the reasonable to protest a specific infrastructure project, I think most Americans would consider trying to choke the domestic oil industry to death by blocking infrastructure to be an extreme goal.

Don’t believe me? Consider the website for EarthJustice, an activist group which has filed a lawsuit against the pipeline on behalf of the Standing Rock tribe and is currently seeking an injunction to block legally the on-going construction protesters like Woodley are trying to block physically.

The group describes themselves as “opposing infrastructure development that could lock us into decades of dirty fuels.”

“We are working with affected communities to fight pipelines, export terminals and other major infrastructure projects that will spur more gas drilling and burning for decades to come,” the group says in the portion of their website dedicated to describing their work.

Block the infrastructure, block the development.

The “Keep it in the ground” movement rears its head, not that they're their hiding that fact. Bold Alliance founder Jane Kleeb, one of the ringleaders in opposing the Keystone XL pipeline, told Politico, "What should have happened after Keystone got rejected was a huge influx of resources to local and state groups fighting pipelines."

Stopping the Dakota Access Pipelines and making it more difficult to get oil out of the Bakken—no matter the cost to jobs and energy security—is a means to their radical end of eliminating energy use in the U.S. 

Sean Hackbarth New lock at the Panama Canal. New lock at the Panama Canal. Photo credit: Susana Gonzalez/Bloomberg.

Just like the global economy interconnects countries to produce benefits for billions of people, particular policy issues interconnect to produce positive outcomes.

We see such a confluence in Central America.

The expansion of the Panama Canal (infrastructure improvement) has opened the door for U.S. natural gas producers who are using fracking (energy) to supply energy-hungry Asian markets (trade). From Bloomberg Businessweek:

When the Panama Canal’s expanded locks slid open in late June, perhaps no one was happier than executives in the U.S. shale industry. With the goal of making the U.S. a global powerhouse for natural gas exports, these frackers have their sights on Asia. Now they have a more direct route that could significantly benefit their bottom line.

Nine years of construction work at a cost of more than $5 billion have equipped the canal with a third set of locks and deeper navigation channels, crucial improvements that doubled the isthmus’s capacity for ferrying goods between the Atlantic and Pacific oceans. Within a week of opening, officials said they had more than 170 reservations for transits this year, mostly for so-called New Panamax cargo carriers that couldn’t fit through the old canal.

For natural gas suppliers, the expansion comes at a pivotal moment. It coincides with a big increase in U.S. shale production and the construction of several Gulf Coast export terminals designed to help American gas muscle its way onto the world market. The canal’s deeper channels can accommodate the kind of football-field-size tankers that transport liquefied natural gas (LNG), shaving 11 days and one-third the cost of the typical round trip to Asia. In July the U.S. Department of Energy predicted 550 tankers could be crossing each year by 2021.

“We can send gas ships that couldn’t fit through the canal before,” says Bill Diehl, president of the Greater Houston Port Bureau, a maritime industry trade group. “Asia looks like a good market for us now. The shipping costs look like a fair fight.”

The Energy Information Administration (EIA) projects the United States will be a net natural gas exporter by 2017 and remain that way through 2040.


Before the expansion, the EIA noted that “only 30 of the smallest LNG tankers” could pass through the Panama Canal. Now, 90% of the LNG tanker fleet can use it.

Going through the Panama Canal will cut 11 days off the trip and make it 35% cheaper to ship LNG to Asia and South American customers touching the Pacific Ocean. This is great news for energy producers looking to save money given low energy prices.

eia_panama_canal_lng_transit.png  U.S. LNG export contracts likely to transit Panama Canal.EIA: U.S. LNG export contracts likely to transit Panama Canal.Source: Energy Information Administration.

With fracking and the canal, two important pieces are in place. What’s missing for American natural gas exporters to really strike while the iron is hot is a modernized review process for LNG export applications. The Senate energy bill, passed in April and supported by the U.S. Chamber, would requires that the Energy Department take a maximum of 45 days after environmental reviews were completed to make a decision.  

The House and Senate have each passed their own energy bills that include LNG application streamlining. They should negotiate their differences in the conference committee and send a finalized bill to President Barack Obama.

That will give American companies more opportunities to satisfy hungry global energy markets.

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