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Energy Blog

Sean Hackbarth  George Frey/Bloomberg.A rig drills for natural gas outside Rifle, Colorado. Photographer: George Frey/Bloomberg.

Colorado is a key battle ground in the debate over shale energy development. Earlier this week, voters in one community, Loveland, looked past the scare tactics of shale energy opponents and rejected a moratorium on hydraulic fracturing:

Thousands of Loveland residents voted against Question 1, the only item on the city’s special election ballot, which proposed a two-year moratorium on fracking and a study of the process’ potential health impacts.

B.J. Nikkel, director of the Loveland Energy Action Project, told the Denver Business Journal, “Loveland serves as a great example that when voters receive the right information and encouragement they see through the activists’ deception and fear tactics.”

Karen Crummy, spokeswoman for Protecting Colorado’s Environment, Economy, and Energy Independence, added:

This election should serve as a warning to those pushing similar ballot proposals statewide. Coloradans will not be manipulated by uncompromising activists peddling fear instead of facts.

A number of energy-related referendums could be on the state ballot this fall. A November 2013 poll found that Coloradans support hydraulic fracturing 51% to 34%.

Shale energy opponents’ goal is clear: Scare the public with misinformation. When informed that shale energy development results in job creation and economic growth, voters support it.

Follow Sean Hackbarth on Twitter at @seanhackbarth and the U.S. Chamber at @uschamber.

Sean Hackbarth  Daniel Acker/Bloomberg.Sections of pipe sit on the ground in Atoka, Oklahoma. Photographer: Daniel Acker/Bloomberg.

Critics like Tom Steyer’s Next Gen Climate operation wants you to believe that the Keystone XL pipeline will only create a few dozen jobs. However, after looking at the construction of the southern leg of the pipeline, the truth is far different.

A new report finds that construction of the 485-mile Gulf Coast Project, stretching from Cushing, Oklahoma to Nederland, Texas, created thousands of jobs and added billions to local economies.  The Gulf Coast pipeline is the portion of the proposed Keystone XL pipeline that was able to be built because it didn't require a Presidential Permit.  It is helping improve the transportation of oil sands crude to Gulf Coast refiners - the same crude that Keystone XL will carry.

The report, prepared by Southern Methodist University's Maguire Energy Institute for the Consumer Energy Alliance, found that in Oklahoma and Texas, the project resulted in

Over $5.7 billion in new economic activity. Over 42,000 person years of new employment. Over $217 million in additional state and local taxes.

The authors write:

[T]he Gulf Coast Project pipeline contributed substantially to the economic health of most of the counties along the alignment during the 2012-2014 construction period. In the years ahead, recurring expenditures for operations and maintenance of the pipeline will continue to support jobs while generating income and tax revenues for Oklahoma, Texas and the 24 affected counties.

Counties in Oklahoma where the pipeline was construction saw an average per capita income increase of 78%. Three counties—Seminole, Hughes, and Coal—saw over 90% increases. For counties in Texas, the average per capita income increase was 58%.

On a press call, Bud Weinstein, an economics professor at Southern Methodist University’s Cox School of Business and one of the reports’ authors noted that "most of these counties are comparatively low-income, rural counties.” Construction of the Gulf Coast Project has been a "tremendous economic tonic." For instance, the report finds “pipeline activities averaged 31 percent of personal income” in Oklahoma.

During construction, TransCanada spent about $6 million per month directly in the local community. Here are some examples of local entrepreneurs taking advantage of the business opportunities the pipeline's construction offered:

For instance, Clifford Bryant, a local entrepreneur in Prague, Oklahoma, reports that construction of the pipeline “doubled our city sales tax receipts.” Clifford bought a mobile RV and trailer park when he heard that TransCanada would be bringing a construction yard to town for its Gulf Coast Pipeline Project.  Previously, only 11 of the 57 spots in the park were occupied.  Once construction began, all 57 were occupied. Clifford notes that a full RV park contributes as much as $8,000 a month in electricity fees alone to the municipal utility.

In the Southeast Texas town of Kountze, Jeremy Kunk’s Ready Ice Company sold approximately 30,000 pounds of ice per week to pipeline construction sites in its area. The ice improved safety by keeping workers cool and hydrated.  Kunk expects that the economic boost supplied by pipeline projects will be long-lasting. “Pipeline construction such as TransCanada’s Gulf Coast Pipeline Project is going to feed our refineries more product and keep us hopping for the next five, 10 years at least.”

Joe Penland is another Texas business owner who benefited from TransCanada’s pipeline construction. Joe owns Quality Mat Company in Southeast Texas. His company partnered with TransCanada to make the Gulf Coast Project safer. With a patented concept, Penland fabricates more than 250,000 mats per year in his facility inside the Beaumont city limits.  He leased the mats to TransCanada during construction of the Gulf Coast Pipeline in Oklahoma and Texas.

Positive benefits would extend to more states if the northern leg of the pipeline, linking Alberta to Nebraska, were approved by the Obama administration. “Similar state and local economic benefits can be anticipated should the United States give the go-ahead for construction of the Keystone XL pipeline from Hardisty, Alberta to Steele City, Nebraska,” the authors write.

"I would expect similar impacts" to those found in Oklahoma and Texas if the northern leg of the Keystone XL pipeline is approved, Weinstein said on the press call.

Follow Sean Hackbarth on Twitter at @seanhackbarth and the U.S. Chamber at @uschamber.

Thomas J. Donohue

The link between energy and security is increasingly evident as geopolitical hot spots flare up around the world. Global oil prices have gone up 4% since the beginning of June as Iraq—the second-leading producer in the Organization of the Petroleum Exporting Countries—is under siege by insurgents, threatening exports and sending reverberations through oil markets. Russia is using its vast natural gas supplies—on which much of Europe and Ukraine depend—to wield geopolitical control in the ongoing conflict with Ukraine.

For good or for ill, those who have energy have power and influence in a global economy. Today, the United States and its abundant resources can be a force for good in our own economy and for stability around the world.

We’re sitting on a 200-year supply of oil and have enough natural gas to last 115 years—and we’re discovering more resources every year. Thanks to entrepreneurship and ingenuity driven by the private sector, we’ve been able to access and develop more oil and gas than ever. As a result, U.S. petroleum imports have fallen from 60% to 35% in less than a decade. And with the combined resources of our friends and partners in Canada and Mexico, North America is on track to be energy independent by 2020 and could be a net energy exporter by 2030.

The positive effects of the U.S. energy boom are benefiting the rest of the world too. The drop in U.S. oil imports and the increase in U.S. exports of refined products have helped keep international prices relatively stable—even amid market shocks and supply disruptions. Businesses and consumers would be much more vulnerable to geopolitical strife or the whims of foreign dictators or forces without a steady flow of U.S. Supply.

Yet we can do more. As America tears down impediments to the development and export of U.S. energy resources, including oil, gas, and coal, our allies can reduce their dependence on imports from uncertain or even hostile suppliers. That would promote greater global stability. How much more leverage might Europe, a key U.S. partner, have over Moscow if it didn’t need to turn around and buy Russian oil and gas?

Besides security benefits, energy bolsters our domestic economy, creates jobs, drives manufacturing, and generates revenue. But if we’re going to fully realize any of these benefits, we must see a change in U.S. policies that promote endless permitting delays, wrongheaded regulations, attempts to pick winners and losers among industries, and political agendas.

U.S. energy can be a powerful force for good at home and abroad—but only if we let it.

Sean Hackbarth  Newsweek.Source: Newsweek.

The Newsweek graphic above sums up the wishful thinking behind EPA’s proposed carbon regulations. The story that's attached to it delivers some “coal, hard” facts [emphasis mine]:

Five countries dominate the global consumption of coal. China, the U.S., India, Russia and Japan are the world’s biggest coal burners. In recent years, the growth in coal consumption of developing countries, especially China and India, has overtaken growth in developed nations like the U.S.

The U.S. is the second largest consumer of coal in the world today, but China’s consumption dwarfs all others. Last year, while the U.S. consumed 925 million tons of coal, China is estimated to have consumed 4 billion tons. Each year China consumes almost as much coal as the rest of the world combined.

Here's another fact. As the Christian Science Monitor reports, demand for coal will continue to rise:

For now, coal remains behind oil in terms of its share of global energy demand, capturing 30.1 percent compared to oil’s 32.9 percent. But that could change. In a December 2012 report, the International Energy Agency predicted that by 2017, coal would become the world’s top source of energy. Between 2012 and 2017, annual global coal consumption is expected to jump by 1.2 billion tons, which is equivalent of adding the coal consumption of Russia and the US combined.

Even if these proposed regulations are implemented, by 2030 global emissions will still be about 29% higher than in 2011.

President Obama can say all he wants, “We cannot exempt ourselves from the rules that apply to everyone else.” The truth is that with these proposed carbon regulations, we’ll have less-affordable, less-reliable electricity production. When the number one goal on most people's minds is generating faster economic growth to put more Americans back to work, imposing a costly burden like this is counterproductive. 

Follow Sean Hackbarth on Twitter at @seanhackbarth and the U.S. Chamber at @uschamber.

Sean Hackbarth  Jimmy Jeong/Bloomberg.A mining truck carries oil sands in Fort McMurray, Alberta, Canada. Photographer: Jimmy Jeong/Bloomberg.

The spice must flow.

If you ever watched the 80s sci-fi flick Dune, you remember that haunting line. Since in Dune’s universe, the spice was required for interstellar space travel, someone would find a way to ensure it didn’t remain locked up on a desert planet.

Just like the spice flowed in Dune, crude oil will flow from Canada’s oil sands to hungry energy markets. The Canadian national government approved a pipeline running west from Alberta:

The Canadian government approved Enbridge Inc. Northern Gateway pipeline, eliminating the final major regulatory obstacle for the conduit that would move Alberta oil to the Pacific coast for shipment to Asia.

The approval of the C$6.5 billion ($6 billion) project by Prime Minister Stephen Harper’s cabinet is subject to Enbridge satisfying the 209 conditions placed on the proposal by a regulatory review panel in December, Natural Resources Minister Greg Rickford said in a statement today from Ottawa.

“The proponent clearly has more work to do in order to fulfill the public commitment it has made to engage with Aboriginal groups and local communities along the route,” Rickford said in the statement.

[Prime Minister Stephen] Harper’s government has made building energy infrastructure a national priority, part of C$650 billion of investment in more than 600 existing or planned projects over the next decade to develop the country’s natural resources, including the world’s third-largest pool of recoverable crude reserves.

Crude producers such as Canadian Natural Resources Ltd. and Cenovus Energy (CVE) Inc., facing a five-year average discount of almost $20 a barrel for their oil relative to U.S. benchmarks, are seeking new markets. Canadian oil-sands output is set to more than double to 4.1 million barrels a day by 2025 from 2013, according to the Canadian Association of Petroleum Producers, an industry group.

John Ivison of the Canada’s National Post noted, “Canada is now committed inexorably to developing Asian markets for its resources.”

Asian nations will be pleased, while Americans should be distressed.

Much has to be done before construction begins on the Northern Gateway pipeline. However, it’s clear that Canada continues looking for ways to move its oil sands crude to market. Rail terminals being built and TransCanada's plan to convert a natural gas pipeline to transport oil sands crude from Alberta to the Atlantic coast are examples some of the many oil sands transport projects underway. Whether it’s by rail, barge, or pipeline, the oil will flow to where it’s needed.

Keystone XL opponents want us to believe that by stopping its construction, development of Canada’s oil sands will also be stopped. As we can see, that’s a pipe dream.

At least the State Department didn’t buy into that when it released its final environmental impact statement. It concluded that

[A]pproval or denial of any one crude oil transport project, including the proposed Project [Keystone XL], is unlikely to significantly impact the rate of extraction in the oil sands or the continued demand for heavy crude oil at refineries in the United States based on expected oil prices, oil-sands supply costs, transport costs, and supply-demand scenarios.

Yet, the Keystone XL pipeline has been awaiting approval for over five years. As we wait, we miss out on the thousands of jobs that will be created and the economic benefits the pipeline will bring to state and local economies.

You don’t have to go into a trance like Paul Atreides did to understand the nature of the global energy economy. You only have to remember this:

The oil will flow.

The Obama administration should relent in their obstruction and finally approve the Keystone XL pipeline.

8 Key Facts about the Keystone Pipeline from U.S. Chamber of Commerce

Follow Sean Hackbarth on Twitter at @seanhackbarth and the U.S. Chamber at @uschamber.