Allison Winter, E&E reporter
Published: Thursday, June 28, 2012

Environmental advocates are focusing on the bottom line to promote marine protections on Capitol Hill. The Center for American Progress announced the “Blue Economy Initiative” yesterday in an effort to gather more data on the economic benefits of sustainable fisheries, renewable energy, coastal restoration, and tourism and recreation. “We Americans have a deep-seated love for the oceans, but we often lack the data to value them,” said Michael Conathan, director of the liberal center’s ocean program.

At a Washington, D.C., event kicking off the effort, Conathan said the program should help spread the word about the costs and benefits of marine protection. “It is easy for the American public to wrap their minds around employment activities from extractive industries, but it is harder to understand what is the value of a surfer or a kayaker or someone who enjoys a stroll on the beach,” he said. “These are free activities, but they don’t come without an economic benefit to their local
communities. That is what we’re really going to try to get at with this project.”

The center plans to produce a series of reports over the next year that will include analyses of fish stock assessments, Gulf Coast recovery efforts and investment opportunities for offshore wind.

Jane Lubchenco, administrator of the National Oceanic and Atmospheric Administration, attended the launch and praised the project. She said the 2010 Deepwater Horizon oil spill in the Gulf of Mexico showed the economy’s dependence on the coast. “One of the things that became strikingly obvious during Deepwater Horizon was just how dependent the economies of the Gulf were on the
health of the Gulf itself, which was at risk,” Lubchenco said. “I think that is one of the lessons. We can talk about numbers until we are blue in the face, but here is a striking example of how interconnected the coasts are and how the economy is connected to a healthy ocean and coastal area.”

NOAA estimates that the U.S. ocean economy contributed $153.1 billion to the gross domestic product in 2009. The effort comes as the Obama administration tries to get support for its National Ocean Policy and regional marine plans that would help designate areas for the development of renewable energy, shipping and fishing.

“We have made the mistake in the past of thinking about things sector by sector. … One of the major new innovations of this administration has been to acknowledge that we need more integration across those sectors and we need to be paying attention to healthy oceans and, to use a military term, ‘de-conflict,'” Lubchenco said.

Introduced in the summer of 2010, the National Ocean Policy would create a National Ocean Council and would support efforts at regional marine planning. The effort won broad support from conservation groups but has received push-back from congressional Republicans who see it creating a new federal bureaucracy. “It has been embraced by some places and is completely freaking out
others,” Lubchenco said.

Special thanks to Richard Charter

http://www.thebristolbaytimes.com/article/1226support_for_oil_spill_research_warranted_as

June 29th 7:13 pm | Carey Restino

There’s a lot of news about oil and gas developments in the Arctic this week. Shell tested its capping system, and is waiting for the final permits to launch its 2012 exploratory drilling in the Beaufort and Chukchi seas. Meanwhile, the federal government announced plans to open up two new Arctic lease areas in the next five years.

Included in both of these announcements was a lot of verbiage about protecting the environment and the rights of Native subsistence use, not to mention lots of quotes about listening to Native knowledge and incorporating it into the plans. It’s hard to tell when those sorts of statements are made, whether they represent a true intent or if they are statements incorporated because they know it will all sound better that way. Call me a skeptic, but I’d rather see some concrete plans to protect the Arctic as much as is possible woven into this approach.

One such plan was suggested last week by Sen. Maria Cantwell, D-Wash. The Oil Spill Research and Technology Act of 2012, which was introduced June 14, aims to bring oil spill technology up to speed with modern-day research by, essentially, throwing money at it. The plan is to institute a competitive grant program to universities and other institutions to research new methods and technologies to clean up oil spills, with special attention into methods to clean up oil spills in icy conditions.

It comes with a not-so-weighty $2 million per year price tag – and I’m not sure how much research that would buy, really, but it’s a start.

“We must do everything we can to prevent a spill, but if one happens, we need to have the best technology on hand to minimize damage,” Cantwell said in a release. “It’s time to bring the technology we use to clean up oil spills into the 21st century. This bill will help protect our growing coastal economy from the threat of oil spills.”

Alaskans know more than most what an impact a single spill can have to a fragile ecosystem. The Arctic is already under enough pressure as it is, with changing environmental conditions allowing for all sorts of unexpected situations, from storms to algae blooms. An oil spill, especially in an area where clean-up conditions are challenging, would be, almost certainly devastating.

When the Renda made its epic voyage to Nome last winter bringing fuel to the ice-locked community, lawmakers seized the opportunity to tout how much we need more ice breakers and U.S. Coast Guard presence in the Arctic. The propaganda machine really went into full swing, with the story spreading throughout the world.

And it’s true – more Coast Guard infrastructure is very important, it would seem, to helping guide the Arctic’s explosive expansion as an area of resource development and interest. But all the protection and manpower the Coast Guard has to offer won’t do a thing if the methods we have to isolate an oil spill don’t work in the icy Arctic waters.

Cantwell’s bill requires the Coast Guard to establish a program to evaluate and implement “best available technology” to respond and clean up oil spills. It also gives the Coast Guard the authority to review regional oil spill response plans every five years to ensure the best technology is in place.

There is so much we don’t know, and as Cantwell points out, the oil and gas industry currently lacks incentives and requirements to research, develop and adopt new cleanup technologies. Even in the best-case scenarios, oil response technologies currently used capture as little as 40 percent of spilled oil in the first 48 hours of a 50,000 barrel oil spill, Cantwell noted from a 2009 study in Washington State – a far cry from Alaska’s conditions. In fact, the senator noted, spill response technologies have changed little between 1989 and now.

The Deepwater Horizon disaster is another example of how impacted Alaska could be by a spill. It’s hard to know what to believe when it comes to oil and gas development. Environmental groups say there is no such thing as safe drilling in the Arctic.

That’s probably true, when it comes right down to it. Oil companies say they are dumping millions into equipment and technology to make drilling safer than ever before, and the federal government is justifying its approval of such action by saying it is requiring more of the oil companies than ever before. It all sounds good, considering we don’t seem to be slowing down our consumption of oil much. But it would be inspiring to see as much energy as was put toward the promotion of a greater Coast Guard presence be put toward the endorsement of Cantwell’s bill, and increased scientific study of oil spill response technology. Because if we’ve learned anything from past spills, it’s that what we have to offer technology-wise is inadequate. And in the Arctic, that inadequacy will be surely magnified exponentially.

Special thanks to Richard Charter

Posted on June 28, 2012 at 4:04 pm by Jennifer A. Dlouhy

The Obama administration on Thursday finalized a five-year plan for offshore drilling that focuses on allowing development in already-explored areas of the Gulf of Mexico and the Arctic to the chagrin of oil and gas companies who were hoping for more territory. The first sale of leases under the Interior Department’s 2012-2017 plan is set to take place this fall, with areas of the western Gulf of Mexico up for grabs. Eleven more Gulf of Mexico sales are planned, as well as three auctions of leases in the Cook Inlet near Anchorage and the Chukchi and Beaufort seas north of Alaska. The plan rules out lease sales in Atlantic waters, despite pressure from Virginia officials eager for oil and gas development off the commonwealth’s shores.

Interior Secretary Ken Salazar described the plan as “smart,” but “aggressive,” with planned auctions of waters around Alaska targeted to areas that have both big potential energy resources and small environmental and other conflicts.

But oil industry representatives and their allies in Congress said the administration’s plan would keep promising areas off the table. American Petroleum Institute Upstream Director Erik Milito said the program demonstrated “unnecessary restraint.”
The plan “makes more areas off limits than it makes available,” Milito said, adding that the program’s focus on the Gulf of Mexico overlooks promising new areas for development in the Atlantic and Pacific oceans. “While vitally important, the western and central Gulf of Mexico areas including in this proposed offshore program are not new areas,” Milito said.

Rep. Doc Hastings, R-Wash., the head of the House Natural Resources Committee, said the plan offers “a bleak future for American energy production” because it keeps the East and West Coast “under lock and key.”
And Randall Luthi, a former drilling regulator that heads the National Ocean Industries Association, called the administration’s plan “deeply disappointing.”

“Taking the entire East and West coasts off the table and further delaying Alaska sales clearly shows this administration is not following its own advice to lessen our dependence on foreign sources of energy by bolstering production here at home,” Luthi said.
The final 5-year plan, which replaces a Bush-era leasing program that ends June 30, is nearly identical to a proposal the Interior Department unveiled last November. The biggest change is a decision to delay a planned Beaufort Sea lease sale from 2015 to 2017.

Sales of drilling rights in the Chukchi Sea and Cook Inlet would take place in 2016. The oil industry recently has not had a big appetite to drill in federal Cook Inlet waters. But after the Bureau of Ocean Energy Management recently asked oil and gas companies about the region, there was enough support to move forward with a planned sale, said bureau Director Tommy Beaudreau. He described the industry interest as “significant.”

The Obama administration’s leasing plan continues a tradition in the Gulf of holding area-wide lease sales, with much of the non-leased acreage up for grabs.

But when it comes to the Arctic and Alaskan waters, the government is taking a different approach, borrowed from its handling of oil and gas drilling on federal lands. There, the acreage on the auction block will be selected to avoid harming wildlife and the native Alaskan communities that depend on whaling and fishing for food, Beaudreau said.
Many of the native Alaskan communities are “dependent on the ocean resources, literally, for survival,” Beaudreau said. “We need to be respectful of that, and we need to be protective of that.”

Salazar said that he fully expected the Arctic lease sales to go forth as planned, but stressed the importance of carefully selecting areas for auction. Already, the final five-year leasing plan walls off some areas north of Barrow, Alaska for development because of the subsistence whaling in the region. The administration also will preserve an existing 25-mile buffer zone along Alaska’s Chukchi Sea coastline and wall off the Hanna Shoal area that is home to a high concentration of marine life.

Shell Oil Co. is poised to begin exploratory drilling in the Chukchi and Beaufort seas this summer, under leases it purchased in 2005, 2007 and 2008. If that work is authorized as expected, it will add to the body of knowledge about the area’s potential oil and gas resources and guide future lease sales, Salazar said. Planned development in Canada’s Arctic waters as well as extensive scientific study also will be factored in, Salazar said. Salazar argued that there is too little information about potential oil and gas along the Atlantic coast _ including where it might be located _ “to make credible decisions” about drilling there. The Department of Defense has raised concerns about oil and gas drilling in some areas off the Virginia coast.

Environmentalists said the plan puts pristine Arctic areas up for grabs. “President Obama is doubling down on risky offshore oil development when he should be investing in clean energy,” said Miyoko Sakashita, oceans program director for the Arizona-based Center for Biological Diversity.

Special thanks to Richard Charter

http://www.reuters.com/article/2012/06/27/us-usa-lng-exports-idUSBRE85Q05820120627

By Ayesha Rascoe and Emily Stephenson
WASHINGTON | Wed Jun 27, 2012 1:45am EDT

(Reuters) – In a bitterly divided U.S. political environment, there’s at least one thing Republicans and Democrats can agree on: Avoid a public showdown on natural gas exports, arguably the most important energy policy decision in recent memory.

While fluctuating gasoline prices, the Keystone pipeline and the fight over fracking steal headlines, the question of how much of the newfound U.S. shale gas bounty should be shared with the rest of the world goes largely without comment or coverage — despite holding far wider and longer-lasting consequences.

The reason is clear: unlike the relatively simple, black-and-white issues that politicians often favor and voters connect to, liquefied natural gas (LNG) is deep, deep gray.

It affects a tangled web of constituents, from Big Oil to international allies such as Japan, pits free-trade orthodoxy against the domestic economy, and requires an awkward explanation of why allowing some exports — inevitably raising U.S. energy prices in the short term, even if at the margin — may ultimately be better for the country in the long run.
All the same, this U.S. president or the next will have to make a tricky decision, and its consequences may only become clear years from now: How much U.S. gas should be sold to other countries if it means boosting prices for consumers at home?

“Right now I don’t think this issue is getting anywhere near the attention it deserves,” said Democratic congressman Edward Markey, one of a small number of politicians actively seeking to rein in energy exports.

“Keystone and Solyndra are election-year political sideshows,” he said, referring to the bankruptcy of a government-funded solar panel maker. “This is the main event.”

But lobbyists on both sides of the issue say it suits them best to keep the subject out of the headlines. The gas producers that stand to benefit from higher selling prices see no upside from a public brawl, while many manufacturers who could benefit from continuing low prices shy away from anti-export statements.

With Congress unlikely to weigh in, the decision falls to a small, obscure unit of the Energy Department, the Office of Natural Gas Regulatory Activities.

The department’s statistical branch has been criticized for failing to predict how new drilling techniques would revolutionize the sector, and how quickly the vast stores of unearthed gas would send domestic prices to unsustainable lows.

So the natural gas office is now awaiting advice from a second and final report on the economic implications of exports — a report so sensitive that the government has kept it under wraps, including the identity of the consultants preparing it.

SHHHHHHHH, SOFTLY-SOFTLY
Not since the liberalization of power markets in the 1980s have politicians had more sway over future energy costs — or been less willing to grapple publicly with the issue.
Only one hearing on LNG exports has been held to date in the Senate, and in the House of Representatives, the Energy and Commerce Committee has no plan to hold hearings at the moment.

Markey has struggled to get traction behind legislation that would block gas exports, a measure almost certain to fail to pass through the divided Congress. Few lawmakers openly oppose exports, though even fewer vocally advocate a fully open market that would raise prices at home.

The Obama administration has said it will wait until the gas office releases the final economic analysis of LNG exports to make any decision on eight pending applications to sell liquefied natural gas to countries with which the United States has no free-trade agreement — the most political step of the multiple state and federal approvals needed to send LNG abroad.

The report was due out this spring, but in March the administration pushed back the release until later in the year. A White House official said on Monday the report could be released in the next few weeks.

Overall, the boom in the energy sector, coupled with a slow recovery in domestic manufacturing, could raise gross domestic product by 2 to 3.3 percent by 2020, according to a recent analysis by Citigroup. But exports could force politicians to play favorites, effectively choosing between energy companies and industry.

Democrats, often critical of the oil and gas sector, are wary of getting out in front of an issue that divides even the manufacturers benefitting from low gas prices. Republicans, who favor free trade and support fossil fuel development, are leery of being accused of raising costs for consumers and industry.

“No politician wants to be accused of raising end-user prices to add to oil companies’ bottom lines,” says Kevin Book, an energy analyst at Clearview Energy Partners.
So for most officials willing to take a stand, it is inevitably one of moderation. Few are ready to weigh in on the toughest question: How much is too much?

Senator Ron Wyden, a Democrat who has backed the pause in the permitting process, knows how quickly fortunes can change: just a few years ago he witnessed the battle over the prospect of a gas import terminal in his home state of Oregon at a time when the industry was convinced of a growing U.S. gas deficit.

Instead, the pioneering use of hydraulic fracturing and horizontal drilling has lifted economically recoverable U.S. reserves of natural gas to 500 trillion cubic feet, a previously unimaginable level.

“I’ve always supported market-expanding agreements, and I’m trying to balance that with the fact that, with natural gas, America now has a strategic advantage,” Wyden said.

“This is something where we now lead. I just want to make sure we don’t trade it away,” said Wyden, who is in line to be the top Democrat on the Senate energy committee next year. Unlike Markey, he has no plans to push legislation that would prevent exports, an acknowledgement of the issue’s complexity.

Republicans in the House Energy and Commerce Committee believe gas companies would likely export marginal amounts compared to the current supply, and any price effects will be minimal.

“If we don’t have some sort of exports, it’s not going to be economic to produce as much gas here,” a committee Republican aide said.

CONFLICT ON CONFLICT
Congressman Gene Green, a Democrat on the House energy committee who represents the greater part of eastern Houston, said he supports LNG export projects — on a case-by-case basis. His district includes a chemical complex, and such plants tend to be large consumers of natural gas. Several companies plan to build new U.S. facilities to take advantage of now-low prices.

“We can simultaneously have reasonable natural gas prices that foster chemical industry expansion while we export natural gas,” Green said.

Energy-intensive manufacturers are keen to use cheap gas to boost domestic production, but many companies also have plants overseas that could benefit from U.S. gas exports.

Others are wary of advocating any measures that would impinge on free trade. They too are taking a quiet, moderate stance.

Although Dow Chemical is a major consumer of natural gas, it supports a limited amount of exports, controlled perhaps by some kind of quota based on total gas production.

“As a proponent of fair and free trade, (Dow) opposes policies that arbitrarily limit reasonable exports of natural gas to free-trade agreement countries or that provide for unlimited global exports,” the company said in a statement.

BIG STAKES
The surge in gas output has made companies such as Chesapeake and Exxon Mobil’s XTO victims of their own success, unleashing a surplus of supply that could keep prices — and therefore profits — depressed for decades.

For them, selling gas to Japan or Europe — which buys imported LNG at five or six times the domestic price of $2.50 per million British thermal units — is essential to continue expanding their U.S. business, creating jobs in the process.

The shale gas boom is on track to support 1.5 million jobs across the United States by 2015, according to an industry-funded study by IHS Global Insight.

Export licenses will make big winners out of some firms such as Cheniere, which last year secured the first and, so far, only export permit from the Energy Department.

For those that get the green light, the multibillion-dollar terminals are likely to be buzzing for decades, freezing and compressing the gas at a temperature of -260 degrees Fahrenheit (-162 Celsius) for seaborne shipment on special tankers.

But others in the queue — which includes firms from utility Southern Co to gas giant BG Group and Australian bank Macquarie — could come out disappointed, as few analysts expect all the projects to be approved.

“I don’t think they are going to give blanket approval to all takers, but on a case-by-case basis, I think they would be favorably disposed if the supply is there,” said Frank Verrastro, director of the energy and national security program at the Center for Strategic and International Studies.

The eight projects pending review span from Maryland to Oregon. Including Cheniere’s Sabine Pass in Louisiana, these sites could export more than 12 billion cubic feet per day of gas — equivalent to about one-sixth of current U.S. demand.

TAPPING THE BOUNTY
If the gap between global and domestic prices remains wide, as many analysts expect, more export projects are certain to be brought forward and the government may draw a line in the sand.

A ban on energy exports is not without precedent. The Mineral Leasing Act of 1920 and the Outer Continental Shelf Lands Act require a presidential waiver for the sale of most unrefined crude oil abroad, essentially blocking exports.

Even with a boom in domestic oil output, the United States is in little danger of becoming an oil exporter. But gas is far less fraught with geopolitical significance.

“Oil has been a political issue. Natural gas has never been that,” said David Wochner, an attorney for the Sutherland law firm that represents natural gas producers.

Heather Zichal, a White House energy adviser, told a recent conference that the administration was not opposed to exports and that it wanted “analysis to drive the decisions”.

That puts the burden squarely on the Energy Department’s natural gas regulatory office and its coming report.

It remains to be seen whether the prognosis from the department’s commissioned study is more prescient than previous examinations of the shale gas surge, which has proven extraordinarily hard to predict.

A much-critiqued, department-commissioned analysis earlier from the Energy Information Administration found that approving all pending export applications could add as much as 9 percent a year to prices of the fuel in the next two decades.

A more recent report from the Brookings Institution moderated the EIA finding, predicting that sending U.S. gas abroad would have only a “modest” upward impact on prices and that U.S. manufacturers would stay competitive despite exports.

The department has declined to commit publicly to any timeline for evaluating the export applications. Facing no legislative deadline to act, it can essentially stretch out or speed up the process to its liking.

It is already honing its rationale, including the benefit of using exports as a “balancing” mechanism for the market, one that has been so volatile over past decades that drillers and users have struggled to make long-term plans.

“One of the potential impacts that you might have from LNG exports would be creating a stable block of demand, which helps the market get to a stable sustainable price,” Christopher Smith, deputy assistant secretary in the department’s office of fossil energy, told Reuters in February.

APPROVALS: WAIT AND SEE
The American Public Gas Association, a lobby group representing publicly owned gas distributors, has been one of the few groups to press lawmakers against exports and supports Markey’s legislation.

On the other side of the debate, the Center for Liquefied Natural Gas, a trade group that represents LNG companies, has been reaching out to lawmakers in Congress to “educate” on the process for approving exports.

It spent $40,000 on lobbying last year and about $10,000 in the first quarter of 2012, according to data from the Center for Responsive Politics. Cheniere spent $520,000 on lobbying last year, and $80,000 so far this year.

The LNG group does not want hearings or legislation. It wants Congress to step back and let the Department of Energy decide.

“There’s nothing we want done other than letting DOE do its job,” said Bill Cooper, the center’s president. “We want people to know about the process and that it does work when it’s allowed to.”

(Additional reporting by Roberta Rampton and Lily Kuo; Editing by Russell Blinch and Dale Hudson)

Special thanks to Richard Charter

http://www.pennenergy.com/index/petroleum/display/1225558377/articles/pennenergy/petroleum/offshore/2012/june/researchers-track.html?cmpid=EnlDailyPetroJune272012

June 26, 2012

A new report from researchers at the University of Florida illustrates that the 2010 Deepwater Horizon oil spill contributed significantly to the destruction of marshes in Louisiana, according to The Washington Post.

Led by professor Brian Silliman, the group investigated the rate of erosion at marshes in the state that were exposed to substantial amounts of oil compared to those that saw relatively minimal exposure.

They found that the oiled marshes eroded at twice the usual rate for the state’s marshes, as the marshes’ heavy grasses died and their roots ceased to hold together the banks of loose soil. However, the presence of the grasses did limit exposure in the area, as oil became trapped within the vegetation.

While the impact from the spill was significant, Silliman noted that the long-term effects of changes to the Mississippi river and rising sea levels were having a more dramatic impact on the marshes, but the research provides a better understanding of the impact oil spills can have on certain sensitive coastal regions.

The region has also moved past the incident to an extent, as Bloomberg reports BP recently won new oil leases near the destroyed rig.

An analysis of the impact of the Gulf oil spill can be found at PennEnergy’s Research area.

Special thanks to Richard Charter