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Exxon, Conoco, BP and TransCanada Make Progress on Alaska LNG Project

Executives for ExxonMobil, ConocoPhillips, BP, and TransCanada submitted a letter to the Parnell administration describing their companies’ progress in advancing an Alaska liquefied natural gas (LNG) export project.

“I’m encouraged that the companies have made significant progress in advancing a project and an associated schedule for commercializing North Slope gas,” Governor Parnell said. “Clearly, they have fully shifted their efforts to an Alaska LNG project.”

The companies’ letter addresses a critical benchmark that Governor Parnell laid out in his January State of the State address, calling on the companies to harden the numbers on an LNG project and identify a project timeline by the end of the third quarter.

The letter also addresses an additional third-quarter benchmark that Governor Parnell laid out in his address, calling on the companies to complete their discussions with the Alaska Gasline Development Corporation (AGDC) on the potential to consolidate their work. In the letter, the companies said they have established a cooperative framework with AGDC to share information.

“I am also encouraged to see the significant work between AGDC, which is advancing an in-state gas project, and the Alaska Pipeline Project (APP), which is advancing an LNG export project. Deeper cooperation between these two state-backed efforts is strongly in the state’s interest,” Governor Parnell said.

Prior to the announcement, ExxonMobil, ConocoPhillips and BP had met two earlier benchmarks laid out in Governor Parnell’s State of the State address. On March 29, the state and the companies resolved the Point Thomson litigation. The following day, the companies announced their alignment “on a structured, stewardable and transparent approach with the aim to commercialize North Slope natural gas within the Alaska Gasline Inducement Act (AGIA) framework.”

Letter from the producers and TransCanada provide details on the team they have assembled and the team’s activities in developing a project, building on their previous work to commercialize North Slope gas. The documents include a project timeline and a cost range covering various stages in the project development schedule and work plan. The documents also provide new details regarding the components of an Alaska LNG project, including a liquefaction facility, gas production and storage, a large-diameter pipeline, and a gas treatment plant.

Over the past six months, more than 200 employees from the four companies have been working on managerial, technical, and commercial aspects during this phase of the project schedule, according to the letter.

Given the massive size of the North Slope conventional gas resource (35 trillion cubic feet of reserves and more than 200 trillion cubic feet of undiscovered, technically recoverable resources) and the scope of the project as described by the companies, an Alaska LNG project will be one of the largest in the world.

While the companies have been developing their LNG project design, the Parnell administration has undertaken significant outreach to Pacific Rim markets to highlight the comparative advantages of Alaska LNG exports, and to other key stakeholders, including U.S. government officials in charge of export licensing.

The most recent of these efforts was Governor Parnell’s trade mission in September to South Korea and Japan, where he discussed Alaska LNG exports with leading government and industry officials.

Exxon, Conoco, BP and TransCanada Make Progress on Alaska LNG Project LNG World News.

Exxon, Conoco and BP Plan Alaska LNG Exports

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ExxonMobil, ConocoPhillips, BP and TransCanada, through its participation in the Alaska Pipeline Project, announced that they are working together on the next generation of resource development in Alaska.

The four companies have agreed on a work plan aimed at commercializing North Slope natural gas resources within an Alaska Gasline Inducement Act (AGIA) framework. Because of a rapidly evolving global market, large-scale liquefied natural gas (LNG) exports from south-central Alaska will be assessed as an alternative to a natural gas pipeline through Alberta.

Commercializing Alaska natural gas resources will not be easy. There are many challenges and issues that must be resolved, and we cannot do it alone. Unprecedented commitments of capital for gas development will require competitive and stable fiscal terms with the State of Alaska first be established,” the CEOs of ExxonMobil, ConocoPhillips and BP wrote in a joint letter to Governor Sean Parnell.

The producing companies support meaningful Alaska tax reform, such as the legislation introduced by Governor Parnell, which will encourage increased investment and establish an economic foundation for further commercialization of North Slope resources.

With Point Thomson legal issues now settled, the producers are moving forward with the initial development phase of the Point Thomson project. Alaska’s North Slope holds more than 35 trillion cubic feet of discovered natural gas, and Point Thomson is a strategic investment to position Alaska gas commercialization.

Source

Energy producers frustrated with Obama state visit

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Presidential motorcade prepares for President Obama's arrival

By Dan Potter

President Obama staging a photo op at the TransCanada pipe yard outside of Cushing today angers members of the Domestic Energy Producers Alliance.

DEPA’s Mike Cantrell says the President has proven for three years that he is against the fossil fuel industry.

“The irony of it is, he’s been unsuccessful because Congress wouldn’t go along with him. And now, he takes credit for the gains we’ve made in oil and gas production which have nothing to do with him and his policies. They’ve (occurred) in spite of him and his policies,” Cantrell said.

DEPA has cancelled plans to stage a protest in or near Cushing during the President’s visit.

“They’ve changed it from campaign visit to a state visit,” says Cantrell. “It’s not open to the  public.”

The President’s press entourage will be bussed from Oklahoma City to the Cushing event so even they wouldn’t come in contact with any protestors.

When asked what he’d say if he had a few minutes with President Obama, Cantrell says, “I’d say, Mr. President, we’d like to visit with you about domestic oil and gas. And that there’s a difference between U.S. domestic energy producers and royalty owners and the big oil companies that you seem to lash out at. But, in your lashing out at them, you have hit us all with your policies.”

Source

Alaska champions $40bn pipeline plan

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By Ed Crooks in London

BP, ExxonMobil and ConocoPhillips are in discussions about a $40bn project to export liquefied natural gas from Alaska to Asia, potentially opening up large but stranded reserves that currently have no route to market.

According to people close to the negotiations, the three companies and state authorities hope to reach agreement next week over a long-running lease dispute at Point Thomson, a large oil and gas field on Alaska’s North Slope.

A settlement would clear the way for the companies to hasten their commercial assessment of a large gas pipeline to Alaska’s southern coast, from where LNG could be shipped to China and other Asian countries. Sean Parnell, Alaska’s governor and a champion of the project, told the Financial Times he was “cautiously optimistic” that the plan would be able to move forward.

The state argues that BP, ExxonMobil, ConocoPhillips and Chevron have been too slow to produce oil and gas at Point Thomson, having agreed to a development plan in 1977, and he wants to take their lease away. John Minge, BP’s president for exploration in Alaska, told reporters in the state last week that talks about the dispute were on track to be resolved by an end of March deadline.

Alaska’s North Slope has proven reserves of 35tn cubic feet of gas – about one-eighth of US total reserves – and undiscovered resources estimated at 236tn cu ft. Without a pipeline, however, the gas is worthless.

Exxon and TransCanada, a pipeline company, have been working on a route to take the gas across Canada to the “lower 48” US states, but industry executives and government officials say the proposal was stymied by weak prices stemming from the shale gas boom.

Mr Parnell said Alaska was frustrated by the slow progress of plans to develop the gas, which could earn the state an estimated $400bn. He has been urging the companies to move forward with a shorter pipeline to the south coast of Alaska, where a new LNG plant could be built for export to Asia. “The gas is there, the market is there, particularly on the Pacific Rim,” he said. “There is no reason why we should not be able to move the gas to the market.”

The companies have warned that they need to assess the commercial case for the project, which would cost an estimated $40bn-$50bn and take at least 10 years to develop.

Source

Obama said ready to push partial Keystone XL approval

Obama will be in Cushing, Okla., the start point of the pipeline’s southern half on Thursday

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The Keystone XL project will extend TransCanada Corp.‘s Keystone pipeline that carries oil from northern Alberta to refineries in the United States. (TransCanada Corp.)

U.S. President Barack Obama is reportedly set to announce in Oklahoma this week that he’s expediting the permit process for the southern half of TransCanada’s controversial Keystone XL pipeline.

Citing a senior administration source, CNN reported on Tuesday that Obama wants to slash several months off a permit approval process that can ordinarily stretch on for as long as a year.

The administration wants to speed things up to deal with a glut of oil in Cushing, Oklahoma, where crude from the Midwest runs into a logjam on its way to refineries on the Gulf of Mexico.

Obama will make the announcement Thursday at a storage yard in Cushing, the starting point of the pipeline’s southern half.

Pipes that will be used to build Keystone XL to the Gulf Coast are being housed at the facility.

Gas prices rising

The announcement comes as prices at the pump continue to soar. Republicans are blaming Obama’s energy policies for rising gas prices and continue to attack him for rejecting Keystone XL in January.

The U.S. average price for a gallon of gasoline rose for the 11th straight day on Tuesday to $3.85 US, and soared to $4 a gallon in some states. That would amount to a little over a dollar a litre in Canada.

Millions of barrels of unrefined crude are sitting in storage facilities in North Dakota, in particular, but there’s a lack of pipeline capacity to carry it to the Gulf Coast and a limited number of rail cars that can transport the oil south. The state is currently in the throes of a major oil boom thanks to the discovery of the so-called Bakken Shale.

Obama’s recent praise of Calgary-based TransCanada’s decision to proceed with the construction of the southern segment of the pipeline signalled a shift in attitude from the White House after it rejected the pipeline outright in January.

The entire length of the proposed, $7.6 billion pipeline would stretch from Alberta’s oilsands through six U.S. states to the Gulf Coast.

No decision from State Dept.

The U.S. State Department has yet to make a decision on the pipeline, saying it needs more time to conduct a thorough environmental review of a new route around an environmentally sensitive aquifer in Nebraska. State department officials are assessing the project because it crosses an international border.

In November, under mounting pressure from environmentalists, the State Department deferred making a decision on Keystone until after this year’s presidential election, citing concerns about the risks posed to the aquifer.

Pipeline proponents cried foul, accusing Obama of making a cynical political move aimed at pacifying the environmentalists of his base and improving his chances of re-election.

Republicans then held the administration’s feet to the fire, successfully inserting pipeline provisions into payroll tax cut legislation in late December.

Within a month, facing a mid-February deadline imposed by that measure, Obama nixed TransCanada’s existing permit outright, saying there wasn’t enough time to thoroughly review a new route before giving it the green light.

But Obama also assured Prime Minister Stephen Harper that the decision did not reflect on the pipeline’s merits, but was merely necessitated by Republican pressure tactics. He welcomed TransCanada to propose another route.

Source

Politics sank Keystone XL, Exxon says

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Published: March. 12, 2012 at 6:47 AM

HOUSTON, March 12 (UPI) — A decision to delay a permit for TransCanada‘s Keystone XL oil pipeline was based largely on U.S. politics, an energy executive said.

U.S. President Barack Obama in January denied a permit for TransCanada to build the billion-dollar Keystone XL oil pipeline. Republican leaders had tried to push the permit through by including the pipeline in a bill that extended payroll tax benefits. Obama rejected the permit because of an “arbitrary” deadline proposed in the legislation.

Exxon Mobil Chief Executive Officer Rex Tillerson told a major energy conference in Houston that industry leaders were practicing due diligence with the project but it was the U.S. political system that was getting in the way of development.

The decision to deny the initial permit for TransCanada, Tillerson said, was because of “political calculations” in Washington.

“In the end, it was also a disservice to public employees who are charged with overseeing this process and who met their obligations,” he was quoted by the Platts news service as saying. “We must continue to engage elected officials of the public to communicate the consequences of failing to move forward with such strategic opportunities.”

Backers of the pipeline describe it as a “shovel-ready” project that would shield the U.S. market from the effects that Middle East tensions have on the oil market. Critics say crude oil from Canada, designated for Keystone XL, is one of the dirtiest types of crude oil.

TransCanada can reapply after it settles on a route through Nebraska.

Read more: UPI

The Anti-Jobs President

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Obama rejects the Keystone XL pipeline and blames Congress.

The central conflict of the Obama Presidency has been between the jobs and growth crisis he inherited and the President’s hell-for-leather pursuit of his larger social-policy ambitions. The tragedy is that the economic recovery has been so lackluster because the second impulse keeps winning.

Yesterday came proof positive with the White House’s repudiation of the Keystone XL pipeline, TransCanada‘s $7 billion shovel-ready project that would support tens of thousands of jobs if only it could get the requisite U.S. permits. Those jobs, apparently, can wait.

Unless the President objected, December’s payroll tax deal gave TransCanada the go-ahead in February to start building the pipeline, which would travel 1,661 miles from Alberta to interconnections in Oklahoma and then carry Canadian crude to U.S. refiners on the Gulf Coast.

The State Department, which presides over the Keystone XL review because it would cross the 49th parallel, claimed yesterday that the two-month Congressional deadline was too tight “for the President to determine whether the Keystone XL pipeline is in the national interest.” The White House also issued a statement denouncing Congress’s “rushed and arbitrary deadline,” which merely passed with overwhelming bipartisan support.

This is, to put it politely, a crock.

Keystone XL has been planned for years and only became a political issue after the well-to-do environmental lobby decided to make it a station of the green cross. TransCanada filed its application in 2008, and State determined in 2010 and then again last year that the project would have “no significant impacts” on the environment, following exhaustive studies. The Environmental Protection Agency chose to intervene anyway, and the political left began to issue ultimatums and demonstrate in front of the White House, so President Obama decided to defer a final decision until after the election.

The missed economic opportunity was spelled out Tuesday by Mr. Obama’s own Jobs Council, which released a report that endorsed an “all-in approach” on energy, including the “profound new opportunities in shale gas and unconventional oil.” The 27 members handpicked by the President recommended that he support “policies that facilitate the safe, thoughtful and timely development of pipeline, transmission and distribution projects,” and they warned that failing to do so “would stall the engine that could become a prime driver of U.S. jobs and growth in the decades ahead.”

Only last week the White House issued a “jobs” report praising domestic energy production, but that now looks like political cover for this anti-jobs policy choice.

State did give TransCanada permission to reapply using an alternate route, timetable indefinite. The construction workers, pipefitters, mechanics, welders and electricians who might otherwise be hired for the project—well, they must be thrilled with this consolation prize. Not to mention all the other Americans who might fill “spin-off” jobs on the pipeline’s supply chain like skilled manufacturers and equipment suppliers, or still others who might work in oil refining and distribution.

Environmentalists seem to think they can prevent the development of Canada’s oil-rich tar sands, and that their rallies against Keystone XL will keep that carbon in the ground. They can’t, and it won’t. America’s largest trading partner will simply build a pipeline to the Pacific coast from Alberta and sell its petroleum products to Asia instead, China in particular.

Such green delusions are sad, and Mr. Obama’s pandering is sadder, though everything the country stands to lose is saddest. If Mitt Romney and the other GOP candidates have any political wit, they’ll vindicate the Keystone’s “national interest” and make Mr. Obama explain why job creation is less important than the people who make a living working for the green anti-industrial complex.

Source

OPEC and Obama Team Up to Fight Major Energy Breakthrough

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The world’s energy markets are being completely transformed.

The results of the changes will affect the global power structure, and America is going to be a major benefactor of it all.

If you believe we’re going to live in a utopia of solar panels and windmills, think the world is coming to an end because of carbon dioxide, or happen to be an Arab sheik that’s made a fortune off of America’s endless thirst for oil, you’re not going to like the change.

But if you want to invest in the future of American energy — and make some “evil” profits by helping accelerate the real American energy boom — then you’re going to like where things are headed…

Environmentalists on a Mission

Our helicopter touched down in the middle of a remote forest in the Western Canadian countryside.

The pilot asked, “How long you guys planning to be here?”

“Maybe four or five hours.”

He breathed a sigh of relief.

“That’s good?” we wondered.

“Yes. Last time some people wanted to come out here, I ended up sitting here for 14 hours. A bunch of college kids… they were looking for a rare bird, or a salamander — any kind of animal, really.”

“I take it they weren’t successful.”

“Nope. If they had found what they were looking for, none of what we flew over would be here right now.”

We were up in Northern Alberta, just outside Ft. McMurray. The pilot was talking about the flying he was hired to do for a group of environmentalists on a mission.

They were scouring the region for any reason to shut down all of the oil sands projects. Their last desperate hope was to find a cute, cuddly animal they could use to turn the public against more oil, lower gas prices, and an ample supply of conflict-free energy…

They didn’t find anything, and the boom followed.

As Nick Hodge shows you in this video, the town is absolutely booming. Waitresses are making $20 an hour; mobile homes are on the market for $600,000 — and getting multiple bids!

It’s been building for five years. And there are still new projects being built, expanded, and discovered.

More importantly, it’s just part of what’s changing the future of American energy.

America’s Real Energy Future

America’s energy future will be much different than what most people picture today.

Al-Falih, President and CEO of state-owned Saudi Aramco, summed up what’s really going on in America’s energy industry best when he said earlier this week:

The confluence of four new realities — increasing supplies of oil and gas, the failure of alternatives to gain traction, the inability of economies to foot the bill for expensive energy agendas, and shifting environmental priorities have turned the terms of the global energy dialogue upside down. Therefore, we must recast our discussion in light of actual conditions rather than wishful thinking.

He’s absolutely right.

We won’t be surrounded by solar panels and windmills. The cover has been blown off the scam, and the world is waking up to this fact fast.

But hopes for more energy independence aren’t dying as a result. They’re actually becoming more of a reality than they’ve been in decades.

The U.S. currently imports just 46% of its oil from foreign countries. That’s down from 60% a few years ago. On top of that, less than 20% of those imports come from outside the Western Hemisphere.

Great news, right?

It is for many who want more secure fuel supplies and (eventually) lower prices.

But it’s not good news for everyone. And some very powerful interests are fighting this change every step of the way.

Winning Fighting the Future

The few but powerful are fighting the transformation and breaking out all the old cronyist tools to do so: political influence, fear mongering, etc.

The biggest (and most ridiculous) example came last week when the Obama administration announced it was punting on a “controversial” pipeline.

The project, known as the Keystone XL Pipeline, is to stretch from the oil sands in Alberta down to the refineries on the Gulf Coast. It would also pick up oil from the Bakken formation in North Dakota…

In all, the pipeline would add a steady flow of 435,000 barrels per day to the United States and create as many as 20,000 jobs to build it.

Sounds perfect. A slew of jobs and energy, all paid for without a single dime of government “investment.”

But there’s a problem.

Groups opposing the pipeline claim one of the nation’s largest and most important aquifers — the Ogallala Aquifer, which accounts for 78 percent of the water used by residents and industry and 83 percent of the state’s irrigation water — would be greatly harmed by a spill.

They claim a single spill from the proposed pipeline would endanger the Heartland’s water supply and well over half of the nation’s food supply.

Inside Climate News reports:

Even a fairly localized spill could cause serious problems. The Ogallala is already under threat from over-depletion, because people are pumping out groundwater faster than it can be replenished by rain and snow. The strain is apparent in northern Texas, where some fear another Dust Bowl as the water table continues to drop.
When TransCanada evaluated the risk of spills on the pipeline, it found that over the next 50 years there could be 11 spills, each releasing more than 50 barrels of oil. (A barrel holds 42 gallons.) But a recent research paper by John Stansbury, a professor of environmental and water resources engineering at the University of Nebraska places the risk at 91 such spills over 50 years.

Sounds ominous, I know.

We’ve got to stop a pipeline from going through this aquifer.

The risks don’t justify the rewards…

What they don’t tell you, however, is that the aquifer is already crisscrossed by pipelines (see map below.)

Ogallala Aquifer Pipeline Map

There are dozens of pipelines carrying oil, natural gas, petrochemicals, and more through the aquifer. And they’ve been there for decades.

It makes you wonder, is it really the aquifer they’re fighting?

Of course not. They’re fighting the oil.

And there are a lot of powerful interests on board…

Saudi Arabia probably has the biggest stake in preventing the Keystone XL from ever being built. And it’s only going to get worse.

In order to prevent the riots and upheaval that have swept through many of its neighboring nations, Saudi Arabia has lavished cash on its citizens through public works projects, services, and handouts to the tune of $130 billion.

The aggressive spending has pushed the oil-rich nation to the point at which it needs oil to trade above $88 a barrel just to break even.

But that break-even price is only going higher as its best customer is becoming less dependent…

The United States is now important less oil from Saudi Arabia than it has in ages.

The percentage of oil imports coming from Saudi Arabia have declined from 11.2% to 9.3% five years ago.

The successful completion of a rapid, cost-effective transport system for the massive amount of oil being pumped out of the ever-growing supplies in the Bakken and Canadian oil sands would only further reduce Saudi Arabia’s geopolitical stronghold in the energy industry.

So Long, Wishful Thinking… Hello, Growth and Prosperity

One of the things we like to do in Freedom & Capital is to look back from the future. We do this to put current events in perspective and in the context of a bigger picture.

That’s why we can see these current events from 20 years down the line as the point when the energy world really changed.

Old entrenched interests fought against change and advancement…

Governments and their cronies tried to prevent new energy sources from coming online…

Environmentalists tried anything they could to advance their vision of what the future will look like, regardless of how inefficient and costly…

In the end, simple economics won out.

The old energy companies responded to demand and high prices and they pushed forward, developing everything they could.

And investors who looked beyond the week-to-week madness of the markets, politics, and other events made absolute fortunes.

Good investing,

Andrew Mickey Signature

Andrew Mickey
Editor, Wealth Daily

 

 

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