By Mollie Hemingway October 14, 2014
As the Ebola situation in West Africa continues to deteriorate, some U.S. officials are claiming that they would have been able to better deal with the public health threat if only they had more money.
Dr. Francis Collins, who heads the National Institutes of Health (NIH), told The Huffington Post, “Frankly, if we had not gone through our 10-year slide in research support, we probably would have had a vaccine in time for this that would’ve gone through clinical trials and would have been ready.” Hillary Clinton also claimed that funding restrictions were to blame for inability to combat Ebola.
Conservative critics have pointed out that the federal government has spent billions upon billions of dollars on unnecessary programs promoting a political agenda rather than targeting those funds to the fight against health threats.
Other limited government types point to the Progressive utopian foolishness seen in opposing political factions, both sides of which seem to agree humanity could somehow escape calamity if only we had a properly functioning government. People who don’t want an all-powerful government shouldn’t blame it for not having competence when crisis strikes.
What’s particularly interesting about this discussion, then, is that nobody has even discussed the fact that the federal government not ten years ago created and funded a brand new office in the Health and Human Services Department specifically to coordinate preparation for and response to public health threats like Ebola. The woman who heads that office, and reports directly to the HHS secretary, has been mysteriously invisible from the public handling of this threat. And she’s still on the job even though three years ago she was embroiled in a huge scandal of funneling a major stream of funding to a company with ties to a Democratic donor—and away from a company that was developing a treatment now being used on Ebola patients.
Before the media swallow implausible claims of funding problems, perhaps they could be more skeptical of the idea that government is responsible for solving all of humanity’s problems. Barring that, perhaps the media could at least look at the roles that waste, fraud, mismanagement, and general incompetence play in the repeated failures to solve the problems the feds unrealistically claim they will address. In a world where a $12.5 billion slush fund at the Centers for Disease Control and Prevention is used to fight the privatization of liquor stores, perhaps we should complain more about mission creep and Progressive faith in the habitually unrealized magic of increased government funding.
Lay of the Land
Collins’ NIH is part of the Health and Human Services Department. Real spending at that agency has increased nine-fold since 1970 and now tops $900 billion. Oh, if we could all endure such “funding slides,” eh?
Whether or not Dr. Collins’ effort to get more funding for NIH will be successful—if the past is prologue, we’ll throw more money at him—the fact is that Congress passed legislation with billions of dollars in funding specifically to coordinate preparation for public health threats like Ebola not 10 years ago. And yet the results of such funding have been hard to evaluate.
See, in 2004, Congress passed The Project Bioshield Act. The text of that legislation authorized up to $5,593,000,000 in new spending by NIH for the purpose of purchasing vaccines that would be used in the event of a bioterrorist attack. A major part of the plan was to allow stockpiling and distribution of vaccines.
Just two years later, Congress passed the Pandemic and All-Hazards Preparedness Act, which created a new assistant secretary for preparedness and response to oversee medical efforts and called for a National Health Security Strategy. The Act established Biomedical Advanced Research and Development Authority as the focal point within HHS for medical efforts to protect the American civilian population against naturally occurring threats to public health. It specifically says this authority was established to give “an integrated, systematic approach to the development and purchase of the necessary vaccines, drugs, therapies, and diagnostic tools for public health medical emergencies.”
Last year, Congress passed the Pandemic and All-Hazards Preparedness Reauthorization Act of 2013 which keep the programs in effect for another five years.
If you look at any of the information about these pieces of legislation or the office and authorities that were created, this brand new expansion of the federal government was sold to us specifically as a means to fight public health threats like Ebola. That was the entire point of why the office and authorities were created.
In fact, when Sen. Bob Casey was asked if he agreed the U.S. needed an Ebola czar, which some legislators are demanding, he responded: “I don’t, because under the bill we have such a person in HHS already.”
The Invisible Dr. Lurie
So, we have an office for public health threat preparedness and response. And one of HHS’ eight assistant secretaries is the assistant secretary for preparedness and response, whose job it is to “lead the nation in preventing, responding to and recovering from the adverse health effects of public health emergencies and disasters, ranging from hurricanes to bioterrorism.”
In the video below, the woman who heads that office, Dr. Nicole Lurie, explains that the responsibilities of her office are “to help our country prepare for, respond to and recover from public health threats.” She says her major priority is to help the country prepare for emergencies and to “have the countermeasures—the medicines or vaccines that people might need to use in a public health emergency. So a large part of my office also is responsible for developing those countermeasures.”
Or, as National Journal rather glowingly puts it, “Lurie’s job is to plan for the unthinkable. A global flu pandemic? She has a plan. A bioterror attack? She’s on it. Massive earthquake? Yep. Her responsibilities as assistant secretary span public health, global health, and homeland security.” A profile of Lurie quoted her as saying, “I have responsibility for getting the nation prepared for public health emergencies—whether naturally occurring disasters or man-made, as well as for helping it respond and recover. It’s a pretty significant undertaking.” Still another refers to her as “the highest-ranking federal official in charge of preparing the nation to face such health crises as earthquakes, hurricanes, terrorist attacks, and pandemic influenza.”
Now, you might be wondering why the person in charge of all this is a name you’re not familiar with. Apart from a discussion of Casey’s comments on how we don’t need an Ebola czar because we already have one, a Google News search for Lurie’s name at the time of writing brings up nothing in the last hour, the last 24 hours, not even the last week! You have to get back to mid-September for a few brief mentions of her name in minor publications. Not a single one of those links is confidence building.
So why has the top official for public health threats been sidelined in the midst of the Ebola crisis? Only the not-known-for-transparency Obama administration knows for sure. But maybe taxpayers and voters should force Congress to do a better job with its oversight rather than get away with the far easier passing of legislation that grants additional funds before finding out what we got for all that money we allocated to this task over the last decade. And then maybe taxpayers should begin to puzzle out whether their really bad return on tax investment dollars is related to some sort of inherent problem with the administrative state.
The Ron Perelman Scandal
There are a few interesting things about the scandal Lurie was embroiled in years ago. You can—and should—read all about it in the Los Angeles Times‘ excellent front-page expose from November 2011, headlined: “Cost, need questioned in $433-million smallpox drug deal: A company controlled by a longtime political donor gets a no-bid contract to supply an experimental remedy for a threat that may not exist.” This Forbes piece is also interesting.
The donor is billionaire Ron Perelman, who was controlling shareholder of Siga. He’s a huge Democratic donor but he also gets Republicans to play for his team, of course. Siga was under scrutiny even back in October 2010 when The Huffington Post reported that it had named labor leader Andy Stern to its board and “compensated him with stock options that would become dramatically more valuable if the company managed to win the contract it sought with HHS—an agency where Stern has deep connections, having helped lead the year-plus fight for health care reform as then head of the Service Employees International Union.”
The award was controversial from almost every angle—including disputes about need, efficacy, and extremely high costs. There were also complaints about awarding a company of its size and structure a small business award as well as the negotiations involved in granting the award. It was so controversial that even Democrats in tight election races were calling for investigations.
Last month, Siga filed for bankruptcy after it was found liable for breaching a licensing contract. The drug it’s been trying to develop, which was projected to have limited utility, has not really panned out—yet the feds have continued to give valuable funds to the company even though the law would permit them to recoup some of their costs or to simply stop any further funding.
The Los Angeles Times revealed that, during the fight over the grant, Lurie wrote to Siga’s chief executive, Dr. Eric A. Rose, to tell him that someone new would be taking over the negotiations with the company. She wrote, “I trust this will be satisfactory to you.” Later she denied that she’d had any contact with Rose regarding the contract, saying such contact would have been inappropriate.
The company that most fought the peculiar sole-source contract award to Siga was Chimerix, which argued that its drug had far more promise than Siga’s. And, in fact, Chimerix’s Brincidofovir is an antiviral medication being developed for treatment of smallpox but also Ebola and adenovirus. In animal trials, it’s shown some success against adenoviruses, smallpox, and herpes—and preliminary tests show some promise against Ebola. On Oct. 6, the FDA authorized its use for some Ebola patients.
It was given to Ebola patient Thomas Eric Duncan, who died, and Ashoka Mukpo, who doctors said had improved. Mukpo even tweeted that he was on the road to recovery.
Back to that Budget
Consider again how The Huffington Post parroted Collins’ claims:
Money, or rather the lack of it, is a big part of the problem. NIH’s purchasing power is down 23 percent from what it was a decade ago, and its budget has remained almost static. In fiscal year 2004, the agency’s budget was $28.03 billion. In FY 2013, it was $29.31 billion—barely a change, even before adjusting for inflation.
Of course, between the fiscal years 2000 and 2004, NIH’s budget jumped a whopping 58 percent. HHS’s 70,000 workers will spend a total of $958 billion this year, or about $7,789 for every U.S. household. A 2012 report on federal spending including the following nuggets about how NIH spends its supposedly tight funds:
- a $702,558 grant for the study of the impact of televisions and gas generators on villages in Vietnam.
- $175,587 to the University of Kentucky to study the impact of cocaine on the sex drive of Japanese quail.
- $55,382 to study hookah smoking in Jordan.
- $592,527 to study why chimpanzees throw objects.
Last year there were news reports about a $509,840 grant from NIH to pay for a study that will send text messages in “gay lingo” to meth-heads. There are many other shake-your-head examples of misguided spending that are easy to find.
Indeed. The Progressive belief that a powerful government can stop all calamity is misguided. In the last 10 years we passed multiple pieces of legislation to create funding streams, offices, and management authorities precisely for this moment. That we have nothing to show for it is not good reason to put even more faith in government without learning anything from our repeated mistakes. Responding to the missing Ebola Czar and her office’s corruption by throwing still more money, more management changes, and more bureaucratic complexity in her general direction is madness.
OnQuest said it has been awarded a contract by joint venture partners Stabilis Energy and Flint Hills Resources (FHR) to provide a turnkey scope of engineering services and project management for a 100,000-gallon-per-day natural gas liquefaction and distribution facility in George West, Texas, that will address demand for a reliable and safe supply of high-horsepower fuel to oilfields in Texas’s Eagle Ford Shale.
OnQuest will provide a fully functioning LNG facility with scope that includes project execution, engineering, construction, buildings, power and utilities. OnQuest’s sister company James Construction Group is contracted with OnQuest to construct the plant. Work begins immediately.
“OnQuest, James Construction Group, and our parent company Primoris Services Corporation are extremely pleased to have won the competition for the work at George West,” said OnQuest president Randolph R. “Randy” Kessler.
“We’re encouraged that the market for providing turnkey engineering, procurement and construction project supervision on micro-LNG process plants continues to grow,” said Kessler. “This win reflects Stabilis and FHR’s confidence in OnQuest’s ability to deliver LNG facility projects profitably and on schedule.”
Stabilis Energy is a Beaumont, Tex.-based holding company focused on investments in developing liquefied natural gas (LNG) in North America. Flint Hills Resources is a leading refining, chemical and biofuels company. Chart Industries will provide cryogenic and liquefaction equipment for the project.
“OnQuest shares Stabilis Energy and Flint Hills Resources’ commitment to expediting a cost-effective solution for operations in the Eagle Ford basin,” added Kessler. “And we look forward to working as engineering partners with technology provider Chart Industries.”
OnQuest specializes in lump-sum, turnkey engineering, procurement and construction project management (EPC). In 2008, OnQuest and sister company ARB, Inc., completed a micro-LNG plant producing 160,000 GPD LNG in Boron, Calif., for Clean Energy Fuels Corporation.
Established in 2002, OnQuest has become a global leader in turnkey engineering, procurement and construction for small and mid-sized LNG production and distribution facilities — in particular for companies requiring purpose-built facilities or that have natural gas assets far from existing LNG terminals. The company also provides engineering feasibility studies and project cost estimates to companies considering investments in mid-scale process plants.
Harvey Gulf International Marine CEO, Shane Guidry, announced that Harvey Gulf has secured plans to construct and operate the first LNG marine fueling facility in the United States, to be located at its vessel facility in Port Fourchon, Louisiana.
The fueling facility will be a vital addition to the growing national LNG supply infrastructure, supporting critical operations of the oil and gas industry’s offshore support vessel fleet operating on clean burning LNG.
Mr. Guidry commented: “To date, Harvey Gulf is the only company in North America that has committed $400M USD to build, own and operate LNG powered offshore support vessels as we’ll as two LNG fueling docks. It is clear that Harvey Gulf’s entire organization is committed to do its part to help reduce our impact on the environment.”
To support the development of the LNG fueling facility, Harvey Gulf has secured CH•IV International of Houston, Texas as the EPC (Engineering, Procurement and Construction) contractor. The facility will consist of two sites each having 270,000 gallons of LNG storage capacity. The tanks will be stainless steel Type ‘C’ pressure vessels with vacuum insulation and carbon steel exteriors. Each facility will be able to transfer 500 gallons of LNG per minute. Aside from the facilities primary role of supporting the Oil and Gas Industry, the facility will be capable of supporting over-the-road vehicles that operate on LNG. The estimate to complete the first site is February 2014, with the second site following shortly thereafter.
Expanding on its commitment to safety and security of vessel operations and port facilities, Harvey Gulf has actively enlisted the expertise of the USCG to participate at all levels of the development of this facility. Mr. Guidry noted “the success of our LNG new build program would not be possible without the gracious cooperation and commitment of the USCG personnel.”
Harvey Gulf also announced the signing of a 6th Offshore Support Vessel to be built at Gulf Coast Shipyard Group (formerly Trinity Offshore) in Gulfport, MS. With this 6th vessel, Harvey Gulf will become the largest owner and operator of LNG powered OSV’s in the world. These OSV’s represent an ongoing collaborative effort by the vessel designer, Harvey Gulf, ABS and the USCG to develop the most environmentally friendly OSV’s that will operate in the Gulf of Mexico, complying with the stringent ABS Enviro+ notation. With 43 persons on board, the vessels, carrying over 16,000 Bbls of liquid mud, 10,000 cu.ft. of dry cement and 1,500 Bbls of Methanol, are 302′x64′x24.5′ with 7,530 installed kW powering 2,700 kW z-drives.
It starts with getting into the transportation sector. When I started the Pickens Plan in 2008, there were about 200,000 vehicles on natural gas in the world; now there’s about 16 million. That growth’s coming from everywhere but the U.S. Places like Iran and Argentina. China’s already got 40,000 trucks on LNG [liquefied natural gas], and they import the stuff. And here we are in the U.S., with more natural gas than any other country in the world, and we aren’t doing a thing about it. It’s just amazing to me that these dumb f---s in D.C. don’t see this opportunity and try to capitalize on it.
The best thing to do is focus on heavy-duty trucks and give them a tax credit. It could work like a toll road, what you call a pay-for system. If you use it, you pay for it. So you give these guys a break upfront to convert to natural gas trucks, and then you tax the natural gas.
You don’t put natural gas in your corner gasoline station. You put natural gas in a truck stop. It’s a fuel that competes against diesel. There are about 8 million heavy-duty trucks in the U.S. If you convert them to natural gas, that boosts consumption by about 15 billion to 20 billion cubic feet a day. Right now we do about 70 billion cubic feet a day. So that extra demand would immediately boost the price and get drills moving again. Today natural gas is about $2.79 a gallon, compared with about $4.79 for diesel. That’s a huge advantage. But here’s the thing: If you take natural gas from about $4 (per thousand cubic feet) to $6, you only increase it by about 28¢ a gallon. So it’s cleaner by 30 percent and still cheaper by almost a half.
• Pickens is founder, chairman, and CEO of the hedge fund BP Capital. As told to Matthew Philips
Stabilis Energy LLC plans to build five LNG liquefaction facilities to service the high horsepower oilfield, marine, and rail fuel markets.
Stabilis has contracted Chart Energy & Chemicals to perform advance engineering for five LNG production plants for implementation in North America. Stabilis has selected Chart’s C100N and C250IMR standard LNG liquefaction plants, which produce 100,000 gallons and 250,000 gallons per day of LNG, respectively. Advance engineering will commence immediately.
Stabilis placed a deposit to secure a manufacturing space reservation with Chart, to ensure that the first LNG plant can be online in the 1st quarter of 2015 or before. Stabilis is still analyzing the data to determine the ideal location for the first plant. The location priority analysis will consider a number of issues including local gas supply and quality, regional LNG demand, as well as state and local permitting requirements and timelines. The four remaining plants are scheduled to come online at regular intervals throughout 2015 and 2016.
“Stabilis Energy believes LNG will be a major contributor to North American energy independence. High quality locally produced LNG is the only reliable, clean and efficient alternative fuel to diesel. LNG is proven to be the most cost effective fuel solution for high horsepower applications. Stabilis will supply off-road engine fuel requirements while supporting on-highway motor fuel markets with strategic distribution partners,” commented Casey Crenshaw, President of Stabilis Energy.
“Chart is very pleased to support Stabilis in their drive to implement LNG fuelling infrastructure in North America, and we are very pleased they have chosen Chart to provide the underlying LNG production plants. Our standard LNG plant platform provides Stabilis the ability to get LNG to market quickly, reliably and cost efficiently. We look forward to our ongoing relationship with Stabilis as their build out progresses,” stated Mike Durkin, President of Chart E&C.
With fuel savings between $1.50 and $2.00 per diesel gallon equivalent (dge), LNG-fueled trucks are being used by fleets for their most demanding routes: heavy haul, double-shift operations where truckers can consume 200 gallons per day, the World LNG Fuels conference concluded in January.
By using domestic LNG, operators can save as much as $75,000 annually in fuel costs, enough to pay for the cost of LNG equipment in 18 months.
Hindering this, however, is the higher weight of the LNG-fueled trucks, which weigh between 1,800 and 2,000 pounds (820 and 910 kg) more than their diesel counterparts. By law, most tractor-trailer combinations are limited to 80,000 pounds. Once the weight of the truck and trailer are deducted, payload capacity can be as little as 35,000 pounds. Thus, an increase in truck weight of 1,800 to 2,000 pounds can wipe away profits.
Truckers like Hoopes Transport President Preston Hoopes would like the U.S. DOT to consider waivers for the extra weight, given the benefits of the cleaner, domestic fuel.
“We need the government to allow extra weight. If the government wants us to use domestic LNG and CNG, they’ve got to give us weight help on our trucks,” Hoopes told World LNG Fuels 2013, held in Houston.
“We’re trying to get another trucking company in Pennsylvania to use LNG. They said ‘we can’t afford the extra weight, 2,000 extra pounds, which over a year’s time costs $20,000 in lost revenue,’” he said.
Hoopes operates some 50 trucks, 16 of which are LNG fueled, for a variety of cargos. In recent months, management has assigned their LNG units to their most fuel-intensive routes. They would like to move into the LNG-fuel supply business if the issue of weight can be resolved.
The U.S. Department of Energy has granted Pangea LNG Holdings, LLC, long-term, multi-contract authorization to export liquefied natural gas (LNG) to free trade agreement (FTA) nations from its South Texas LNG Project currently in development on Corpus Christi Bay.
Pangea LNG will be authorized to export up to 8 million metric tons per annum (mtpa) of LNG produced from domestic gas fields for a 25-year term commencing on the date of its first export. That amount is equal to 1.09 Bcf/day of natural gas.
Pangea LNG has also filed an application with DOE requesting authorization to export LNG to any country with which the U.S. does not have a free trade agreement in effect. That application, which was filed in December, is pending.
“Approval by the US DOE is a positive step forward for this project, which represents a significant investment in the development of the LNG market in the U.S.,” said John Godbold, Pangea LNG project director. “Exporting LNG will help stabilize U.S. natural gas prices, grow and sustain drilling and production jobs, and stimulate additional investment in developing the country’s gas reserves.”
DOE approval of FTA authorization is part of the regulatory process necessary to develop Pangea LNG’s new LNG export terminal on a 550-acre site. The site is located on the 45-foot deep La Quinta Ship Channel which is part of the Port of Corpus Christi, the sixth busiest U.S. seaport in terms of tonnage.
The South Texas LNG Project is subject to federal, state and local regulatory approvals with the Federal Energy Regulatory Commission (FERC) acting as the lead federal agency. Pangea will begin the FERC pre-filing process by the second quarter of 2013 and expects the project to be in operation by at least 2018.
FTA countries covered by the DOE authorization include Republic of Korea, Australia, Bahrain, Canada, Chile, Colombia, Dominican Republic, El Salvador, Guatemala, Honduras, Jordan, Mexico, Morocco, Nicaragua, Oman, Panama, Peru and Singapore.
Pangea LNG B.V. is a holding company with two major LNG export projects under development – the South Texas LNG Export Project on the Texas Gulf Coast and the Tamar Project in the Eastern Mediterranean. Pangea LNG is a developer of liquefaction projects which are designed to accelerate and support the monetization of gas reserves.
Gov. Bobby Jindal and Maurice Brand, Magnolia LNG Managing Director and Joint Chief Executive Director, announced the company’s plans to develop a $2.2 billion natural gas liquefaction production and export facility at The Port of Lake Charles.
The LNG project would create 45 new permanent jobs, with an average salary of $75,000 per year, plus benefits. LED also estimates the project would result in 175 new indirect jobs. In addition, the LNG project would require an estimated 1,000 construction jobs.
The company expects to make a final investment decision to move forward with the project in late 2014, after it secures permits and completes financing. The mid-scale LNG facility would be located on 90 acres at the port’s Industrial Canal, off the Calcasieu Ship Channel. Magnolia LNG would produce 4 million metric tons of liquefied natural gas per year, and construction would begin in 2015 pending the company’s attainment of permits and final financing.
Gov. Jindal said, “Magnolia LNG’s decision to move forward in developing a new LNG facility is great news for our state. Magnolia is the latest company that is choosing to invest in Louisiana because we have one of the best business climates in the country and we are continuing to foster an environment where companies want to create jobs.
“We’ve fostered a strong business climate because we have overhauled our ethics laws, revamped workforce development programs, eliminated burdensome business taxes, instituted reforms to give every child an opportunity to get a great education, and now we are taking on tax reform in order to make Louisiana the best place in the world for businesses to invest and create jobs for our people. In addition to our strong business climate, Louisiana’s abundance of natural gas, pipelines and accessible waterways, as well as our outstanding workforce, were key factors in Magnolia’s decision to choose our state. Facilities like these will help create and sustain thousands of jobs in the energy industry across our state and will ensure quality jobs for Louisiana families for years to come.”
Magnolia’s project would be positioned for direct access to several existing gas pipelines. Using its patented Optimized Single Mixed Refrigerant process, or OSMR™, Magnolia LNG would produce liquefied natural gas more efficiently with fewer emissions than other LNG processes. OSMR adds conventional combined heat and power technology with industrial ammonia refrigeration to enhance the performance of the liquefaction process. Magnolia LNG would distribute to domestic markets as well as countries that have free trade agreements with the U.S. The company also will explore a potential expansion to 8 million metric tons per year in the future.
“Southwest Louisiana’s attractive infrastructure and strong workforce made Lake Charles an ideal location for our planned facility,” Brand said. “We especially want to thank the Port of Lake Charles Commission for their partnership in identifying such an ideal location for this project. Whilst the company remains focused on securing the appropriate contracts, agreements and permits, we expect to commence construction of our first U.S. venture by 2015.”
Magnolia LNG will seek federal Department of Energy free trade agreement approval in 2013. The company will submit a pre-filing application to the Federal Energy Regulatory Commission in March, before it completes the selection of project partners by June 2013. The company plans to begin hiring in early 2015, with commercial operations to begin in 2018.
“The Port of Lake Charles has been able to provide a unique combination of location, infrastructure and transportation capabilities to help bring this project to the region,” said Port Executive Director Bill Rase. “Magnolia LNG will be a significant and welcome addition to Southwest Louisiana’s energy corridor. The Port’s staff and board of commissioners look forward to doing business with the company.”
LED began working with Magnolia LNG in late 2012. The company’s proposed 90-acre site would include a long-term lease with The Port of Lake Charles. When Magnolia decides to proceed with construction, the company is anticipated to make use of LED incentive programs, such as the Quality Jobs Program and Industrial Tax Exemption Program.
“This project is another demonstration of our capacity for strengthening Southwest Louisiana and the state to become a stronger energy producer,” said President and CEO George Swift of the Southwest Louisiana Economic Development Alliance. “We are appreciative of Magnolia LNG to make this investment in our region and for the Port of Lake Charles to once again to serve as the catalyst for this project. We look forward to their final investment decision next year.”
- $2.2 Billion LNG Liquefaction Facility Announced for Port of Lake Charles (gcaptain.com)
- Bechtel wins FEED contract for Mozambique’s first LNG project (transportationandstorage.energy-business-review.com)
- South Korea: STX Launches Ultramodern LNG Carrier VELIKIY NOVGOROD (worldmaritimenews.com)
- Critics of LNG Exports Undermining Domestic, Global Strategic Benefits (fuelfix.com)
- Demand for LNG to Outstrip Supply in 2013 (247wallst.com)