- New York Times: Shell receives conditional approval for Arctic oil drilling
- MarketWatch: U.S. shale oil output to drop next month, EIA says
- Wall Street Journal: OPEC expects oil prices to be about $76 a barrel in 2025
POLITICO Morning Energy for 5/12/2015
By DARIUS DIXON, with help from Alex Guillén and Darren Goode
SHELL ON THE CUSP: The Interior Department’s conditional approval of Shell’s Arctic offshore drilling plan yesterday pretty much came across as fightin’ words for environmentalists, Pro’s Elana Schor reports. The Obama administration placed a politically risky bet on Shell, and potentially allowing the oil giant restart its troubled Arctic offshore drilling plan despite fierce resistance from green groups. Interior’s move sharply escalates a confrontation with environmentalists that began when Shell scrapped its last Arctic drilling bid after a series of public stumbles in 2012.
The company and the regulators say that Shell is at long last ready to operate in the challenging environment of Alaska’s Chukchi Sea — a region that the green activists whom the president has long courted to back his climate change agenda say is far too sensitive to allow oil exploration. Shell still needs to obtain safety permits and endangered species consultations before it can begin drilling.
Interior’s projection of a 75 percent likelihood of a spill of 1,000 barrels or more in the Arctic offshore region, mentioned in its February environmental impact statement on Chukchi development, has become a major element of green groups’ arguments against the Shell plan. Elana has more for Pros: http://politico.pro/1E2Kvrt
Tell me how you really feel:
— “Giving Shell ‘conditional’ permission to drill in the Arctic is like giving a drunk keys to your car and asking them to please drive safe,” 350.org co-founder Jamie Henn tweeted.
— “The risks are simply too high to trust Shell to operate safely in a region as ecologically rich, remote, and unforgiving as the Arctic Ocean,” Alex Taurel, deputy legislative director for the League of Conservation Voter, said in a statement.
— “We are deeply disappointed that just days after the United States took over chairmanship of the Arctic Council, an international body dedicated to protecting the Arctic environment, the Obama Administration decided to allow Shell to move forward with its dirty and dangerous plan to drill in our Arctic waters,” Sierra Club executive director Michael Brune said in a statement. “This is exactly the wrong message to send to the world.”
WELCOME TO SLOW BAKE TUESDAY: I’m Darius Dixon and your morning host is on his third viewing of a recent segment from John Oliver’s “Last Week Tonight” where unveils mascots for 11 federal agencies (and, yes, there’s one for the Energy Department around the 6:15 mark): http://bit.ly/1FgGTZO (h/t Elana Schor). Send your energy news, tips and commentary to ddixon@politico.com, and follow us on Twitter @dariusss, @Morning_Energy and @POLITICOPro.
** A message from the Nuclear Energy Institute: It’s time to create a sustainable, integrated program for the storage and disposal of used nuclear fuel. The nuclear energy industry is committed to working with Congress, the administration, and state leaders on an integrated management solution for used nuclear fuel. Learn more: nei.org **
NOT AS EASY AS 123? The Foreign Relations Committee is holding a hearing this afternoon to review the “potential risks and rewards” of civilian nuclear trade with China — the biggest market for said technology. More than a month ago, President Barack Obama signed the renewal of a so-called 123 agreement with that country, which goes into effect after two time periods totaling 90 days of continuous session close unless Congress passes a joint resolution disapproving it. National Nuclear Security Administrator Frank Klotz and the State Department’s Thomas Countryman will testify.
Last night members of the Foreign Relations panel received a closed door briefing from Klotz, Countryman and three others several administration officials on the “commercial, political, and security implications” of the civil nuclear agreement. But lawmakers didn’t come out screaming bloody murder, according to Pro’s Alex Guillén. When asked about whether there was opposition to the agreement as he left last night’s briefing, Sen. Cory Gardner said “That is not what I intend to do at this point.” The Colorado Republican added: “I’m just at the point of trying to learn more about it and make sure I feel comfortable with the safeguards, both on technology and what happens after China has the information that goes along with the product.”
JUST CALL HIM MARKEY McFLY: The lawmaker to watch today may turn out to be Ed Markey. The Massachusetts Democrat was a major voice on the issue in 1985, when the original agreement was approved, as chairman of what was then called the Subcommittee on Energy Conservation and Power of the House Energy and Commerce Committee. Markey himself introduced a resolution asking President Ronald Reagan to re-submit the agreement with several new exemptions added in, though Congress ultimately passed a different resolution. Certification and implementation of the agreement didn’t happen until 1998 — and at that time Markey urged Bill Clinton against approving it, writing in a letter that he and others in Congress were concerned that implementing the agreement “could accelerate the acquisition of nuclear weapons by non-weapons states such as Pakistan or Iran.” Clinton ultimately went ahead with the agreement. The hearing starts at 2:15 p.m. in Dirksen 419.
Speaking of Markey, he released a trio of energy bills. Those measures include instructing the Interior Department to issue regulations to reduce natural gas flaring on public lands, review forward capacity auctions — such as the one New England recently had a controversy over — and prevent the oil and gas industry from “warehousing” drilling leases on public lands. http://1.usa.gov/1EyxXso
BILLIONAIRE ENTERS WEST VIRGINIA GOV RACE: The richest man in West Virginia is running for governor as a Democrat. Jim Justice, who is worth nearly $1.7 billion, announced his bid at a community center not far from the historic Greenbrier Resort, which he rescued from bankruptcy in 2009. Justice’s wealth and ability to self-fund a campaign make him the favorite to secure the Democratic nomination in 2016. Justice, who inherited a coal and timber fortune from his father, cuts a unique profile. He is a long-time supporter of prominent West Virginia Democrats like former Rep. Nick Rahall and the late Sen. Robert Byrd — but also donated more than $25,000 to a super PAC backing Senate Majority Leader Mitch McConnell. Pro Campaign’s Kevin Robillard has more: http://politico.pro/1FgYGQD
CHEMICALS INDUSTRY HIRES FORMER VITTER AIDE: The American Chemistry Council recently tapped Sen. David Vitter’s former counsel Bryan Zumwalt as its vice president for federal affairs, an interesting hire as the group continues to push for congressional approval of a bipartisan update to federal oversight of dangerous chemicals led by Vitter and Sen. Tom Udall. Zumwalt was Vitter’s energy and environmental counsel before becoming the Louisiana Republican’s top committee counsel when he was ranking on the Senate Environment and Public Works Committee last Congress. Zumwalt has been with ACC a little more than a month, a spokeswoman said. A few months after Vitter took over the panel in 2013, he introduced a bill that May to update the 1976 Toxic Substances Control Act with Sen. Frank Lautenberg. EPW on April 28 gave broad approval to a substantially revised version from Vitter and Udall.
MORGAN STANLEY TO DROP OIL BUSINESS FOR A COOL B: Queue up The Wall Street Journal: “Morgan Stanley struck a deal to sell its oil-trading and storage business to Castleton Commodities International LLC, bringing the bank closer to unloading a unit that has attracted heightened regulatory scrutiny. The terms of the transaction weren’t disclosed, but people familiar with the matter said the price tag was between $1 billion and $1.5 billion. The precise breakdown of the purchase price wasn’t clear. Most of the amount likely covers the value of physical assets and contracts, with some additional payment for the value of the trading franchise itself.”
Apparently, the third time’s the charm: “This is Morgan Stanley’s third attempt to sell the business in three years. Earlier negotiations with Qatar’s sovereign-wealth fund collapsed when both sides couldn’t agree on terms. An agreement to sell the physical-oil business to Russian state oil company Rosneft OAO failed to win U.S. approval earlier this year amid tensions over the Ukrainian conflict.” http://on.wsj.com/1Fa7khX
HOW DO YOU SLICE THE UNCERTAIN ECONOMICS OF CHEAP OIL? The New Climate Economy is releasing a 20-page briefing paper today co-authored by British economist Nicholas Stern attempting to untangle some of the impacts of low and uncertain oil prices. “After several years at high levels, oil prices dropped by more than half between June 2014 and January 2015. This realignment has caused companies and countries to reconsider their energy choices,” the report states. One interesting highlight in paper is the argument that “the longer term, low-carbon policy could help maintain lower fossil fuel prices.” In more detail, it reads: “[A]bsent the improvements in energy efficiency over the past decades, the world would have needed to source much larger volumes of energy supply, with significant upward pressures on prices. These effects mean a low-carbon transition could actually lead to lower fossil fuel prices in the long term.” The report: http://bit.ly/1K3aXcB
HONEYWELL PROJECT AIMS TO ZERO OUT GARRISON’S COAL: Honeywell is rolling out an announcement today unveiling a $22.4 million modernization project with the U.S. Army that will help an Illinois garrison eliminate its coal-fired steam heating system. As part of the effort, higher-efficiency natural gas boilers are being installed at the Rock Island Arsenal Garrison and the company guarantees the upgrades will generate enough savings each year to pay for the work. About 30 buildings are hooked up to the network and are expected to see cuts in water and energy consumption of more than 10 percent when the project is done. The upgrades to heating system are being funded by a 15-year energy savings performance contract from Honeywell that was awarded by the U.S. Army Corps of Engineers.
GREENING IT: Greenpeace is coming out with a new report this morning sizing up green credentials of major Internet companies, like Yahoo, Google and Facebook — and urging them to press their electric utilities. “Tech companies are increasingly turning to the smart choice of renewable energy to power the Internet, but they’re hitting a wall of stubborn monopoly power companies that refuse to switch to 21st century sources of energy,” said Gary Cook, senior IT analyst for Greenpeace USA, in a statement. The report takes particular issue with Dominion and Duke Energy for their low growth in renewable energy. The report will be available here around 9 a.m.: http://bit.ly/1EyyfPT
QUICK HITS
— Did Laurence Tribe Sell Out? The New Yorker: http://nyr.kr/1G0UWlg
— Colorado mine approvals failed to look at environmental impacts. The Denver Post: http://dpo.st/1cLkPKK
— Reid to host, Moniz, Podesta, others at annual green power conference in Vegas. The Associated Press: http://bit.ly/1E31Ss0
— Rudd’s ‘green light’ as Climate Secretary in U.K. BBC: http://bbc.in/1GZSdEJ
— Solar road in the Netherlands producing more energy than anticipated. UPI: http://bit.ly/1dYvHFm
— Sentinel to measure ocean height. BBC: http://bbc.in/1J7KSaR
Tags: energy, gas, oil, policy