Daily Archives: October 10, 2011
US President Obama has vowed he will push communist financial reform’s through before he leaves office. Draconian legislation like Dodd-Frank and the ridiculous Volker Rule are key to the communist agenda set by the current administration.
A Desperate Obama launched an onslaught against banks and Republicans this week for working to block financial reform and return America to prosperity, Obama, now one of the least popular Presidents in history, is yet again using a populist tone to cash in on public anger over Wall Street practices.
Obama is heading towards a 2012 election without hope of victory due to his inability to create jobs or spark a significant recovery even after spending a record amount during his office.
Obama already has a reputation for his anti-business stance starting with his harsh rhetoric about corporate compensation at the beginning of his term.
The US Communist party said of the 2008 election of Obama: Obama’s 2008 victory was more than a progressive move; it was a dialectical leap ushering in a qualitatively new era of struggle. Marx once compared revolutionary struggle with the work of the mole, who sometimes burrows so far beneath the ground that he leaves no trace of his movement on the surface. This is the old revolutionary ‘mole,’ not only showing his traces on the surface but also breaking through.
The old pattern of politics as usual has been broken. It may not have happened as we expected but what matters is that it happened. The message is clear: We can and must defeat the ultra-right, by uniting the broadest possible coalition that will represent an overwhelming majority of the people in a new political dynamic.
A look at the Obama Reforms
Since Barack Obama took office, $38 billion in new major regulations have been introduced, imposing an unprecedented burden on businesses, according to last month’s report by the Heritage Foundation.
An overly regulated environment is creating uncertainty — and uncertainty is perhaps the greatest obstacle for investing and hiring. The administration hastily introduced the 2,300 page Dodd Frank Wall Street Reform and Consumer Protection Act in the depths of the recession without fully understanding and studying the potential consequences of such unprecedented legislation.
To put the Dodd Frank bill in perspective, it is ten times the length of the Sarbanes-Oxley Act (66 pages) and the Gramm-Leach-Bliley Act (145 pages) combined. While a moderate level of regulation is necessary in large and vital sectors of the economy such as finance, housing, and healthcare, regulation is not the solution to the current economic problems that face the United States.
The administration must stop demonizing banks — as if they are not vital to the growth of credit and new business formation — and consider a moratorium on new regulations, an idea made popular by Presidential candidate Texas Governor Rick Perry.
Frank Keating in the Wall St Journal said “imagine a manufacturing company that deployed more than half of its work force as Occupational Health and Safety Administration (OSHA) compliance officers. Such a company would be unable to grow, let alone contribute to broader economic growth.
Yet banks across the country are feeling a similar pull on resources as the Dodd-Frank Act is implemented. Already federal regulators have issued 4,870 Federal Register pages of proposed or final rules affecting banks. Many more are still to come—for a grand total of more than 240 rules. And that’s on top of about 50 new or expanded regulations unrelated to Dodd-Frank that banks have had to absorb over the past two years.
Managing this mountainous regulatory burden is a significant challenge for a bank of any size. but for the median-sized bank—with 37 employees—it’s overwhelming. The cost of regulatory compliance as a share of operating expenses is two and a half times greater for small banks than for large banks.”
Mr Keating is not alone, Jamie Dimon has argued along the same line, “We’ve been through two stress tests, one at the Treasury, one at the Fed. I believe most of the banks passed the recent ones with flying colors,” Jamie Dimon, JP Morgan Chase & Co.’s chief executive officer, told Fed Chairman Ben S. Bernanke June 7. “Now we’re told there are going to be even higher capital requirements,” and “we know there are 300 rules coming. Has anyone bothered to study the cumulative effect of all these things?”
One month later, Dimon’s boldness has proven to be less an emblem of power than a cry of frustration. Global banking supervisors are poised to impose higher capital requirements that Wall Street complains will crimp profits, hamstring its fight against foreign rivals and damage the U.S. economy. And Dimon, 55, who kept JPMorgan largely clear of the subprime mortgage fiasco and helped stabilize the financial system in 2008 by acquiring Bear Stearns Cos. and Washington Mutual Inc., will face the same new strictures as the industry’s rogues.
Another indication of the changing regulatory environment took place almost a month earlier and an ocean away. During a May 17 confirmation hearing on his appointment to a new British financial watchdog, Donald Kohn, a former Fed vice chairman, told British lawmakers he had abandoned his belief that bankers’ self-interest would keep markets safe.
“I placed too much confidence in the ability of the private market participants to police themselves,” he testified.
Today Financial Services Companies are under attack on Wall St
The Federal Housing Finance Agency, which oversees mortgage giants Fannie Mae and Freddie Mac, is expected to file suit against Bank of America, JPMorgan Chase, Goldman Sachs and Deutsche Bank, among other banks, the Times reported, citing three unidentified individuals briefed on the matter.
The suits stem from subpoenas the finance agency issued to banks last year. They could be filed as early as Friday, the Times said, but if not filed Friday it said the suits would come on Tuesday.
The government will argue the banks, which pooled the mortgages and sold them as securities to investors, failed to perform due diligence required under securities law and missed evidence that borrowers’ incomes were falsified or inflated, the Times reported.
Fannie Mae and Freddie Mac lost more than $30 billion, due partly to their purchases of mortgage-backed securities, when the housing bubble burst in late 2008. Those losses were covered mostly with taxpayers’ money.
The agency filed suit against UBS in July, seeking to recover at least $900 million for taxpayers, and the individuals told the Times the new suits would be similar in scope.
A spokesman for the Federal Housing Finance Agency was not immediately available for comment.
U.S. securities regulators have taken the unprecedented step of asking high-frequency trading firms to hand over the details of their trading strategies, and in some cases, their secret computer codes.
The requests for proprietary code and algorithm parameters by the Financial Industry Regulatory Authority (FINRA), a Wall Street brokerage regulator, are part of investigations into suspicious market activity, said Tom Gira, executive vice president of FINRA’s market regulation unit.
“It’s not a fishing expedition or educational exercise. It’s because there’s something that’s troubling us in the marketplace,” he said in an interview.
The Securities and Exchange Commission, meanwhile, has also begun making requests for proprietary algorithmic trading data as part of its authority to examine financial firms for compliance with U.S. regulations, according to agency officials and outside lawyers.
Shayne Heffernan: Steps to Real Global Growth
The USA and Europe have failed to spark a sustained recovery despite trillions in poorly directed bailout funds, now the calls for Austerity calls and a new Tax push threaten to truly derail growth in the western world.
Political maneuvering and Financial Smokescreens like QE’s and Twists replaced real economic stimulus over the last 3 years since the 2008 financial crisis. They have all been proven failures, Social Programs and Discounted Institutional landing do not replace hard core spending. The United States Federal Reserve actions were 100% negated by Dodd-Frank and the ridiculous Volker Rule, Institutions were offered discounted lending, however new regulations made the use of the funds by Banks impossible.
So 3 years and trillions later a recession is still on the table, unemployment remains, and will remain at record levels.
Austerity is not a bad thing, however it needs to be directed towards the size and cost of Government, NOT aimed at the citizenry. Government and the cost of Government in the Western world remains too high, new and increasingly complicated legislation makes the cost of government drift higher.
Now in Europe and the USA we see calls for Austerity, Tax Hikes, Basel Bank Rules and More and More Legislation, an insidious combination that will pave the way for a lengthy recession in the West. It will also open the door to the East, Corporations and Individuals will depart overly onerous government and make their home in emerging markets, as wee have seen happen for the last decade.
The lack of Infrastructure spending in the USA and Europe is staggering when compared to the huge developments undertaken in China and South East Asia.
Shayne Heffernan: Steps to Real Global Growth
A Powerful Leadership like Theodore Roosevelt with his Panama Canal or the Dwight Eisenhower Road System, the USA and Europe need a leader that can unite the country behind some large Public Infrastructure Developments and end the political circus that plays out daily in the media.
In Europe and the USA there needs to be real spending by Government, Roads and Especially Rail offer a direct line to impact the economic growth of both regions. The USA should be developing a rail network that covers North America and links to the emerging markets in South America, Europe could be investing in high speed rail networks that reach directly into Asia.
Europe and Asia need to lower rates.
Governments must shrink, however possible, society can not afford the governments that have developed.
Dodd-Frank and Volker style legislation must be overturned.
Basel III Bank Rules must be withdrawn.
Europe and the USA must lower taxes and make it attractive to start business in the country.
The Volker Rule, Denounced
The UK business secretary’s strong public criticism of the Obama proposals reflects widespread frustrations among ministers at a “sweeping” overhaul that was conceived and announced to the world without consultation with the UK.
Lord Mandelson’s comments are especially unwelcome in the White House as they came on the day that the Obama administration sent legislative proposals to Capitol Hill that would create the so-called “Volcker rule”.
Under the Obama-Volker plan, which shocked financial institutions and countries world wide when it was announced in January, provides that bank be barred from proprietary trading and owning hedge funds.
Stressing that Britain’s preferred co-ordinated action on banking supervision, Lord Mandelson said: “President Obama’s proposals on banking regulation, I have to say, came as a bit of a surprise to people working on the G-20 agenda and it is important that we keep the multinational agenda firmly on track.”
He argued that the so-called Volcker rule was over ambitious. “Trying to apply sweeping rules about the structure, content and range of activities of banking entities is too difficult to do,” he said. “Whatever their size, whatever their range of activities, you need good regulation first. “It’s the principle and practice of regulation you have to focus on, not the size of banks,” he added.
The proposed “rule”, named after Paul Volcker, its chief architect and former chairman of the Federal Reserve, faces an uphill struggle in the US Congress, with Democrats and Republicans questioning why the President saw fit to drop in the proposal late in the regulatory overhaul.
Banks are lobbied furiously against the proposal, which is designed to prevent institutions that benefit from government guarantees over their deposits from engaging in risky activity.
In comments that echo those of Lord Mandelson, Charles Dallara, managing director of the Institute of International Finance, which represents the largest global banks, called on countries to work together to avoid “fragmenting” a regulatory reform process begun at the Group of 20. “Either the G-20 leaders believe that the G-20 framework is the way to go or they do not,” he said.
And so it continues, the good news is Obama has lost so much support that his chances of passing any legislation now is almost Zero.
Shayne Heffernan oversees the management of funds for institutions and high net worth individuals.
Shayne Heffernan holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reach a peak market cap of $15b. He has managed and overseen start ups in Mining, Shipping, Technology and Financial Services. www.livetradingnews.com
- Too Big To Fail Under Dodd-Frank (baselinescenario.com)
- Obama chides banks, taps anger over Wall St – Reuters (news.google.com)
Shih Yen-shiang, speaking at a ceremony in Taichung Harbor to mark the 100th shipment of LNG delivered to the port, said gas-fueled power generation would reach 15 GW this year, or 35% of total power generation capacity, the news agency said.
“By 2030, the installed natural gas generating capacity will grow to 25,000 megawatts [25 GW],” he added.
Shih said the government has developed plans to build more natural gas storage tanks and transport pipelines on the island as part of its 30-year energy development plan, the report said.
Shih’s ministry has made sourcing, transporting, and storing natural gas top priorities in its energy policy, to support the increased usage of natural gas to reduce carbon emissions and global warming.
Taiwan’s Council of Economic Planning and Development approved a plan in September by state-owned CPC Corp. to add three 160,000-cubic meter LNG storage tanks at its Taichung LNG receiving terminal in central Taiwan.
The additional storage tanks would boost the capacity of the Taichung receiving terminal to 5 million mt/year from the present 3 million mt/year.
The project now has one final hurdle to clear — the environmental impact assessment. The expansion is due to start in July 2012 and slated for completion by end-2018.
CPC owns another 7.44 million mt/year LNG terminal at Yung An, in Kaohsiung city in southern Taiwan.
CPC imports all the LNG Taiwan consumes, with 70% of the cargoes going to state power generators such as Taiwan Power Company. Consumption by seven independent power producers, domestic and industrial users account evenly for the outstanding 30%.
Taiwan imported a total 8.01 million mt of LNG through to August this year, an 8.64% increase from the 7.37 million mt it imported in the first eight months of 2010. Taiwan imported a total 11.14 million mt of LNG in 2010, according to data from Taiwan’s Directorate General of Customs.
By Max Gostelow ( platts )
- LNG Demand East of Suez Expected to Surge (mb50.wordpress.com)
- Shale gas should make the world a cleaner, safer place (mb50.wordpress.com)
- USA: Jordan Cove Files for LNG Export Permit (mb50.wordpress.com)
- Jamaica: Bids Open for LNG Project (mb50.wordpress.com)
- Paupa New Guinea: FLEX Updates on Gulf LNG Project (mb50.wordpress.com)
- Chevron proceeds with LNG project in Australia (sfgate.com)
Two kilometres beyond an old logging road, workers are building the foundation of the future of Canada’s ailing natural gas business.
Since the summer, crews have blasted the hard rock at Bish Cove on the Douglas Channel, the deepest and widest fjord on the rugged north coast of British Columbia. More than 40,000 cubic metres have already been excavated to reform the land, in preparation for a $5-billion-plus project that would for the first time ship Canadian natural gas to buyers in Asia.
The earth-churning work at Bish Cove is a demarcation point in the history of the Canadian energy business. For the country’s natural gas producers, a door to Asia is a desperately needed lifeline. The industry has been battered by the emergence of abundant shale gas in the United States. Prices and profits have collapsed, and shipments to the U.S., Canada’s only export customer, have been halved. Without an export route to Asia, there is a risk that the major discoveries of shale gas in British Columbia, as well as reserves in Alberta, will be left in the ground.
There is urgency: Serious competition looms on the other side of the world in Australia, where there are some $200-billion of plans to build numerous plants that would triple exports to the same customers Canada is courting. But Canada has an advantage. Shipping times from Kitimat to buyers in Japan, South Korea and northern China are shorter, providing savings on transportation costs, industry officials say.
At a time when battles over environmental concerns threaten to slow down or derail major Canadian oil sands export projects such as TransCanada’s Keystone XL pipeline and Enbridge’s Northern Gateway pipeline, the vision to ship liquefied natural gas to Asia is quietly speeding toward reality.
The gas export plan could mean higher domestic energy prices for residential and industrial customers in the future and would crank up Canada’s greenhouse gas emissions. Yet there has been barely a ripple of protest and nobody risking arrest on Parliament Hill or on the doorstep of the White House.
In fact, the idea enjoys broad support, from politicians of all stripes to the local first nation and other aboriginal groups along a pipeline route that would bring the gas to Kitimat on the B.C. coast, where it would set out for Asia.
The Kitimat LNG project is a three-way joint venture between U.S. energy companies Apache Corp. and EOG Resources Inc. , along with Canadian gas giant Encana Corp. They are expecting to receive a crucial export permit from the National Energy Board within days. A decision to proceed is expected by early next year. Gas could be on ships by 2015.
A green light for the Kitimat LNG project could see the rapid establishment of a regional export hub, one that major global energy players are keen to join. By the end of this decade, three billion cubic feet a day of gas could flow through Kitimat – equal to all of B.C.’s current production and close to 20 per cent of Canada’s current output.
“This is huge. We embrace it. A lot of people are working,” says Ellis Ross, chief councillor of the Haisla Nation in Kitimaat Village across the channel from Bish Cove. “It’s going to be life-changing for us.”
The coming global LNG shortage
Exports of Canadian gas to the U.S. began in earnest in the late 1950s, after the completion of the Trans-Canada Mainline, but by 1970 growth plateaued and was flat through the mid-1980s. After deregulation under Brian Mulroney, the industry boomed and exports to the U.S. quintupled by the early 2000s, bringing vast wealth to Calgary. Indeed, despite oil’s higher profile, gas has long been Alberta’s economic bedrock. It has also bolstered Ottawa’s coffers.
Amid high natural gas prices during the past decade and uncertain future supply, experts throughout the gas industry were convinced the U.S. needed terminals to import gas and several multibillion-dollar facilities were built. They now sit mostly idle. One struggling importer, Cheniere Energy Inc. on the Gulf Coast in Louisiana, received approval in May to export gas, which it hopes to do by 2015.
Underlying the gamble Apache, EOG and Encana are making on LNG are the major positions those companies hold in the Horn River shale gas play in remote northeastern B.C. The resource is among the most promising in North America but remains stymied by its distance from U.S. markets and broad weakness in gas markets, which has already forced Encana to pull back on drilling this year. The company this week said it will drill fewer wells in 2012, even though it’s been tapping huge pools of gas.
As it increasingly draws from prolific domestic natural gas reserves, the U.S. is meeting more and more of its own gas needs, and some speculate that the country will eventually not need any gas at all from Canada. But in Asia the need is great, and the strong demand means prices are much higher.
“Tens of millions dollars are being forfeited each day,” economist Peter Tertzakian of ARC Financial said in a recent report. “Canadians are leaving a lot of coin on the table. … It is disconcerting that it has taken a steep loss in sales to begin acting on market diversification but at least the industry buzz is now all about tapping into a new era of growth.”
A slowdown in the nuclear industry after Japan’s disaster this year has added to the need for more gas in Asia. Buoyed by the region, global demand is predicted to double in the next decade, according to independent research firm Sanford C. Bernstein & Co. It expects the excess of LNG to decline and sees demand sopping up all available gas by 2020.
“While a year ago some market commentators talked of the global glut of LNG, we believe the focus for investors should be on the impending global LNG shortage,” analyst Neil Beveridge of Bernstein said in a recent report.
Royal Dutch Shell PLC , which is pushing gas over oil around the world, feels the pressure to move quickly, too. In 2008, at the top of the continental gas market, it overpaid in its $5-billion purchase of Duvernay Oil, which has large holdings in the Montney shale play in northeastern B.C. The company, chatter in Kitimat suggests, may soon unveil its own LNG plans.
Lorraine Mitchelmore, Shell Canada president, is coy. She concedes that without LNG, the gas Shell bought from Duvernay could be “stranded.” She points to growth in Asian demand, triple the rate of other importing regions, and cites the need to move quickly, noting the competing supply in Australia. Shell is among the players there, moving forward on a floating LNG terminal, which would be the world’s largest ship.
“For [Shell Canada], it’s about Asia. We’re sitting on the doorstep of a great market,” Ms. Mitchelmore said in an interview in Vancouver. “It’s an obvious market for Western Canada gas.”
Apart from its abundant supply, Canada has another advantage. LNG tankers burn some of their product to keep the liquefied gas supercooled at -160 C while in transit. Because of this, the quickest path across the globe is also the cheapest – and ships sailing from Kitimat can get to key Asian markets faster than competitors in Australia and Middle Eastern gas exporters like Qatar, the world’s No 1 in LNG.
“We’ve got it hands down. We’ve got a lot shorter transport time,” Tim Wall, the president of Apache Canada, said in an interview in Calgary. “We can deliver to markets cheaper.”
Apache’s decision to invest in LNG in Canada came after it took a minority stake in Wheatstone LNG, which was approved in September. It’s a giant Chevron Corp. project under construction in Australia. The scale of Wheatstone – $30-billion for everything from gas field development to the LNG plant – speaks to the scope of Canada’s competition. The first gas is to hit the oceans in 2016.
Apache has never built an LNG plant but its Wheatstone position has paid dividends in Kitimat. The company already has marketing teams based in Australia and they have begun the work of selling Canadian gas. Apache has inked deals with two major Japanese power producers and its consortium for Kitimat LNG is in talks with six customers.
The efforts make clear the economic underpinnings for exporting LNG. Sales contracts will span a full 20 years – several lifetimes in the natural gas business – and they bear no relationship to the North American supply and demand dynamics that have so thoroughly depressed prices on this continent. They are instead tied to the price of oil, which has been far stronger in recent years.
That’s not to say a LNG plant will rain profit. Apache initially pegged the Kitimat LNG price at $4.7-billion, with hundreds of millions already spent by the end of this year. But Mr. Wall acknowledges that detailed engineering under way will drive that price up – it’s not clear how much – and suggests margins may be slim.
“There is an economic case,” he says. “But it’s a huge investment – and the payout is going to be somewhat longer. You’re trying to open up markets. There’s a huge prize for Canada, to become a major supplier of energy across the world.”
Competition also looms. Tom Tatham, who runs BC LNG Export Co-operative LLC, has established a 50-50 deal with the Haisla and is proposing a mini-LNG plant. The idea, which would be a world first, is to build a LNG facility on a barge and float it to Kitimat before setting it down against the shore. First gas is targeted to move in 2014.
After the Second World War, the B.C. government wanted to stoke development in the province’s wild and vast northwest. It brought in what is now Rio Tinto Alcan to look at potential hydroelectricity to fuel what became the world’s largest smelter. Kitimat was carved from the wilderness to house workers and the remote town was the Fort McMurray of its time, with some of the highest wages in Canada. “A huge number of men came to work in the pot lines and make a fortune,” says Kieran Leblanc, who was one of the first children born in town, in a makeshift hospital.
For the people of B.C.’s North Coast, the idea of exporting natural gas is not new. In March of 1982, Dome Petroleum signed an agreement to sell liquefied gas to a Japanese company. The company set out to build a major export port just north of Prince Rupert, but the project died when Dome crumpled under a huge debt load. Those who worked on the Dome dream always held hope that, one day, such a project would get built.
“Is now the time? Well, it’s probably closer to the time than when we were doing it,” said J.R. Van Der Linden, who led the LNG project for Dome. He kept a picture of its design on his home wall for nearly two decades, only recently taken down to make room for pictures of grandchildren.
Electrical power will be a big question for Kitimat. Existing BC Hydro infrastructure is inadequate, especially if Shell follows Apache. A third serious name is also looking at Kitimat – Malaysia’s state-owned Petronas, a top LNG exporter. This year Petronas paid $1.1-billion for a 50-per-cent stake in Montney shale gas fields in northeastern B.C. that are controlled by Calgary-based Progress Energy Resources Corp.
Pipelines are yet another issue. To feed gas to Kitimat LNG, a $1-billion, 465-kilometre pipeline, Pacific Trails, is required to link to existing pipelines near Prince George in the province’s northeast, the home of the gas. Owned by the Apache-EOG-Encana venture, it would traverse a route roughly similar to the proposed Northern Gateway oil sands pipeline, which is vehemently opposed by almost every single first nation along its sketched path.
But for gas, first nations have taken a pragmatic position. Fifteen first nations, using $35-million provided by the province, will take an equity stake and are set to receive roughly $550-million over 25 years from the pipeline profits, an average of $1.5-million annually for each nation.
“It’s not the default position of first nations to oppose,” said David Luggi, chief of the Carrier Sekani Tribal Council. “We want to participate in the economy but there are limits. Oil will spill. It’ll end up on the water, whether on the coast, or our rivers, our lakes. I’m not saying gas is completely safe but it won’t pollute like oil would.”
There are hints support could be fragile. Around the northeast BC gas fields, some concerns among first nations have percolated. The fear is controversial fracturing technology – the explosive technique that unleashes shale gas below ground. It has sparked wide public concern and has led to temporary development halts, from France to Quebec and New York state. Any shift in B.C.’s openness to shale gas could have severe consequences for LNG plans.
“We’re certainly not going to promote something that’s harming any of our neighbours,” says Art Sterritt, director of Coastal First Nations, an alliance of groups on the B.C. coast.
For now, however, the support for gas drilling and exports is expansive. Nathan Cullen, NDP MP for the Kitimat region and a leadership candidate to succeed Jack Layton, backs LNG, as does John Horgan, an MLA on Vancouver Island and provincial NDP energy critic.
“The geology’s night and day. We’re drilling three kilometres in to the ground before we’re doing the fracking,” Mr. Horgan said. He’s concerned about water use but his greater worry is global competition. “We need to get going,” Mr. Horgan said. “We’re not the only people who are awash in gas.”
Kitimat was whipped by the global recession. Rio Tinto Alcan halted a $2.5-billion modernization of its smelter and West Fraser Timber, the country’s largest forestry company, shuttered an aging pulp and paper in early 2010. Thom Meier, general manager at 101 Industries Ltd., remembers when a hydroelectric expansion was suddenly halted in the 1990s. A four-line fax bore the news. “ ‘Cease all operations,’ ” Mr. Meier said. “We know the tap can turn off quickly.”
But these days, a burgeoning confidence pervades the town. 101 Industries recently built an aluminum dock that floats on the water at Bish Cove, where workers disembark to ready the gas export site.
With the Kitimat LNG project on the doorstep, and Alcan’s modernization now moving ahead, Kitimat’s three-decade decline could radically reverse. If Shell joins the action, the region could see its population of about 7,000 double as workers arrive to build the facilities.
Joanne Monaghan, the mayor, jokes that her mantle has become “mayor of boom” – a welcome change from “mayor of doom.”
“When I came 40 years ago, I said, ‘This is a giant that will some day wake.’ It’s waking.”
By David Ebner, Nathan Vanderklippe (theglobeandmail)
- Kitimat, B.C.: Ground zero in the race to fuel Asia (theglobeandmail.com)
- Sinopec Gains Canadian Shale Gas With $2.1 Billion Daylight Deal (businessweek.com)
- USA: Jordan Cove Files for LNG Export Permit (mb50.wordpress.com)
- USA: Wartsila Wins LNG Propulsion Equipment Contract for Offshore Vessels (mb50.wordpress.com)
- Bright Spot in Shipping: LNG Carriers (TGP, GLNG, APA, ECA, EOG) (247wallst.com)
- LNG Demand East of Suez Expected to Surge (mb50.wordpress.com)
- Enbridge to buy Encana’s 52% stake in Cabin gas plant (calgaryherald.com)
- The No. 1 Export for the Future (dailyfinance.com)
The United States is suffering from high unemployment, high energy prices, stagnant economic growth, and a massive budget deficit.
By expediting the development of offshore oil resources, the government could tackle all four of these problems simultaneously. Yet for some reason, the Administration continues to drag its feet.
In contrast, the Cuban government has no problem providing a hungry world with more oil. This is leading to an awkward situation indeed, especially when some experts who recently visited Cuba report that the Havana government is taking the project seriously and is heeding the lessons of the BP spill.
Rather than taking the Cuban move as a kick in the pants to expedite comparable American efforts, the U.S. government did what it does best—threaten punishment on private companies for daring to provide the world with more energy. According to a story from The Hill:
A bipartisan group of 34 House members is pressuring Spanish oil giant Repsol to abandon its plans to drill in deep waters off Cuba’s northern coast, warning that the company could face liability in U.S. courts.
Their letter to Repsol—which warns that its plans will “provide direct financial benefit to the Castro dictatorship”—joins existing concerns about the environmental risk of spills in the waters 60 miles from Florida’s coast.
As to current law, Repsol may be in jeopardy of subjecting itself and its affiliates to criminal and civil liability in U.S. courts. Violations of the Trading with the Enemy Act, the Cuban Liberty and Democratic Solidarity Act (LIBERTAD), the Alien Tort Claims Act and the Trade Sanctions Reform and Enforcement Act can lead to serious ramifications for individuals or businesses that deal with the Cuban regime. Additionally, there are only four U.S.-designated State Sponsors of Terrorism, and the laws that regulate commercial transactions with them, and the grave civil and criminal penalties that those laws impose, are comprehensive.
Repsol plans to begin looking for oil off Cuba’s coast as soon as late 2011, according to press reports.
This is not the place to discuss the pros and cons of the U.S. embargo on Cuba, except to say that if the original purpose of the 1960s policy was to hurt the Castro regime, it doesn’t seem to be working too well.
The important lesson for today is that the other governments of the world aren’t nearly as foolish as the Americans’. They recognize that when you have valuable natural resources located in your jurisdiction, it makes sense to go ahead and develop them.
The U.S. government can continue wagging its finger at everybody else, and lecturing them on how they should emulate our great example in government investments in renewables…or American officials might decide to unshackle entrepreneurs to create jobs and cheaper energy.
- U.S. Legislators Want Repsol to Leave Cuba (mb50.wordpress.com)
- Want to drill in Cuban waters? Perhaps forget doing business in the United States then… (gcaptain.com)
- Don’t talk oil with Cuba, lawmaker warns (mb50.wordpress.com)
- Chinese-built oil rig setting sail for Cuban waters (mb50.wordpress.com)
- Drill, Bebé, Drill (mb50.wordpress.com)
- Cuba Chases 5 Billion Barrels of Undiscovered Oil; U.S. Intervenes (forbes.com)
- US experts eye Cuba oil plans after BP spill (mb50.wordpress.com)
- U.S. Oil-Spill Experts to Visit Cuba (cubastation.wordpress.com)
Deepwater Wind this week officially submitted its plan to develop a utility-scale offshore wind farm off the coasts of Rhode Island and Massachusetts, in response to the U.S. Department of the Interior’s Bureau of Ocean Energy Management Regulation and Enforcement (BOEMRE)’s Call for Information and Nominations for offshore wind energy projects in the federal ocean waters off southern New England.
Deepwater Wind’s project – the Deepwater Wind Energy Center (DWEC) – will be the first of the “second generation” of offshore wind farms in the United States. With a capacity of approximately 1,000 megawatts, DWEC will serve as a regional offshore wind energy center serving multiple states on the East Coast.
“The Deepwater Wind Energy Center is poised to be the first regional offshore wind energy center in the United States with a wind farm and a transmission system serving multiple markets,” said William M. Moore, Deepwater Wind CEO.
DWEC will be sited in the deep ocean waters of southern Rhode Island Sound, where it will be barely visible from the shore. Construction is planned to begin in 2014 or 2015, with the first wind turbines in operation by the end of 2016 or 2017.
With as many as 200 wind turbines, DWEC will be the largest offshore wind farm ever planned in the United States. Because of the economies of scale gained by building a large facility and because of the continuing maturity of the offshore wind industry, DWEC’s power price will also be lower than earlier offshore wind projects proposed in the U.S. DWEC will demonstrate that as the offshore wind industry continues to mature, its energy prices will become increasingly competitive with plants that burn fossil fuels – but without the environmental problems that plague fossil fuel plants.
“This ‘second generation’ of offshore wind farms will be larger and farther from shore, and will produce lower priced power, using more advanced technology than any of the offshore projects announced to date,” Moore said.
Deepwater Wind previously filed an unsolicited nomination to BOEMRE to lease the ocean site where it plans to locate DWEC. Since then, Deepwater Wind, after consultations with area fishing groups and other stakeholders, has refined the ocean lease blocks it has nominated in order to accommodate multiple different project designs. At this early stage of project development, Deepwater Wind believes that additional input from key stakeholders, such as commercial fishers, should be considered before final project siting is determined. Deepwater Wind’s lease block nomination creates this flexibility by including enough area for different project configurations.
Deepwater Wind is also developing a regional offshore transmission network, the New England-Long Island Interconnector (NELI), connecting DWEC to southern New England and eastern Long Island. NELI will allow the wind farm to send power to multiple states in the region. Deepwater Wind plans to market power from DWEC to several states, including Massachusetts, Rhode Island, New York, and Connecticut.
Most of the turbines will be located 20 – 25 miles from shore. No turbine will be located any closer than 13.8 miles from inhabited land, with only a few turbines located at that distance. At these distances, the wind farm will be barely visible from the shore and the project site can take advantage of the stronger winds found in the open ocean.
Deepwater Wind’s proposal sites DWEC in the “Area of Mutual Interest” between the states of Rhode Island and Massachusetts. As a result of a competitive bid process held by the State of Rhode Island in 2008, Deepwater Wind is the state’s preferred developer in this Area of Mutual Interest. The utility-scale project is also outlined in the Joint Development Agreement between Deepwater Wind and Rhode Island.
Deepwater Wind will base its manufacturing and construction operations at Quonset Point, in Rhode Island, where the company has over 100 acres under lease option. Deepwater Wind is also exploring port and other facilities in Massachusetts to compliment its Quonset base.
As a 1,000 MW regional offshore wind energy center, DWEC is a first-of-its-kind project in several ways and serves as a model for future Deepwater Wind projects. First, it is the largest renewable energy project ever proposed for the northeast United States.
“Energy independence for our nation is possible only by taking bold steps to wean ourselves off of our addiction to fossil fuels,” Moore said. “Second generation utility-scale wind farms like DWEC can significantly reduce our need to burn fossil fuels, improve local air quality, and reduce greenhouse gas emissions – problems that are especially acute in the densely-populated Northeast.”
Second, the projected pricing of the power from DWEC is expected to be lower than that proposed for any offshore wind farm ever planned in the United States. The wholesale price of power depends on the final size of the project, the final configuration of the transmission system, and the continued availability of federal tax incentives, however Deepwater Wind expects the pricing on a kilowatt-hour basis to be in the mid-teens (measured in cents). DWEC will demonstrate that offshore wind is becoming increasingly competitive with fossil fuel plants.
Third, at 1,000 MWs, DWEC may entice both domestic and foreign suppliers to seriously consider establishing significant parts of their fabrication, manufacturing, assembly, and support services in Rhode Island and Massachusetts. According to the Memorandum of Understanding between those two states, they will coordinate economic development to maximize job creation in the region. Before DWEC, the United States market was seen as underdeveloped and not large enough to justify a new manufacturing base for suppliers of components such as turbines and blades.
BOEMRE will review Deepwater Wind’s lease request in consultation with taskforces organized at the state level in Rhode Island and Massachusetts.
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