Free Markets, Free People

Energy

Jobs, Jobs, Jobs …

Or not.

What is something you probably shouldn’t do if you want to see an industry “save or create” jobs?  

Increase their costs?

U.S. oil and natural gas producing companies should not receive federal subsidies in the form of tax breaks because their businesses contribute to global warming, U.S. Treasury Secretary Timothy Geithner told Congress on Wednesday.

It was one of the sharpest attacks yet on the oil and gas industry by a top Obama administration official, reinforcing the White House stance that new U.S. energy policy will focus on promoting renewable energy sources like wind and solar power and rely less on traditional fossil fuels like oil as America tackles climate change. 

Got that? They shouldn’t get tax breaks because they “contribute to global warming”. Freakin’ incredible. An ideological reason given to deny tax breaks. Here’s government again picking winners and losers.

The Obama administration’s budget would levy an excise tax on oil and natural gas produced in the Gulf of Mexico, raising $5.3 billion in revenue from 2011 to 2019.

And in a time of financial crisis, that cost will be passed on to whom?

Obama’s budget would also place a $4 per acre annual fee on energy leases in the Gulf that are designated as nonproducing. The budget proposal projects the fee would generate $1.2 billion from 2010 to 2019.

Of course, they’re talking millions of acres out there. As Sen. Cornyn points out, it won’t be the ExxonMobile’s or the Chevrons which will be hurt by this:

Senator John Cornyn of Texas criticized the tax increases, saying they would hurt independent energy companies that provide a large share of U.S. oil and gas supplies.

“My view is that higher taxes on small and independent producers here in America will make us more dependent on imported oil and gas while we transition to cleaner energy alternatives, a goal we all share,” said Cornyn. “And it will also hurt job retention and job creation in the energy sector, which provides an awful lot of jobs in this country.”

Pure brilliance.

Yup – it’s all about “saving or creating” jobs – if government approves.

~McQ

Petard. One Each. Hoist When Ready …

Do you like the thought of “pollution free power?”

Yeah, me too. That’s why I like nuclear power and processing the waste as France does (yeah, yeah, even a blind pig finds an acorn, ok?).

But I also want my “pollution free power” to do two things – be consistent in its output and not kill thousands of bats and birds.

Heh … yes friends the latest obstacle the “wind power” advocates have to overcome are -wait for it- environmental activists.

Wind-energy programs in New York – including a developer’s plan to build the city’s first wind farm at Staten Island’s mothballed Fresh Kills landfill – are tied up in red tape because their projects will endanger bats, birds and other wildlife, The Post has learned.

The nocturnal flying mammals are getting slaughtered because they have a strange habit of flying into the blades of wind turbines during the warm spring and summer months, operators and wildlife advocates said.

“An energy source simply cannot be ‘green’ if it kills thousands upon thousands of bats,” said Bat Conservation International.

Moonbat Dream Killers

Moonbat Dream Killers

Uh, no, it can’t. So, if fish can hold up dams and marsh rats can hold up developments, certainly the lives of “thousands upon thousands” of bats are worthy of saving.  We have to stop this unmitigated slaughter by those brutish wind turbines. – I mean if everyone is going to be consistent about all of this.

[As an aside, can you think of better spokes person for the Bat Conservation International than Gotham's favorite bat?]

Staten Island Borough President James Molinaro blasted a city Parks Department report that raised objections about the proposed Fresh Kills wind farm. The study warned of “significant adverse impact to birds and bats.”

Molinaro said the city study even complained the 460-foot turbines would impact insects.

“Can you imagine that? They’re worried the turbines would kill too many mosquitoes,” he fumed. “We want to kill mosquitoes! The city spends lots of money each year to kill mosquitoes because they carry the West Nile virus.”

Er, Mr. Molinaro, can you guess what bats and birds feed on? In fact the bats ingest about 600 mosquitoes an hour.

There are those who say bats and windmills can coexist:

He conducted a study that found that lowering the speed of wind turbines or shutting them down during “low-wind” nights reduced bat fatalities by 82 percent at a Pennsylvania facility.

Shutting them down, eh? You sure generate a lot of power when they’re in that state don’t you?

But the bats, and activists, are happy.

The point? Getting solar and wind power on-line isn’t going to be any easier than any other power source the environmentalists take a dislike too. If you think, for instance that the enviros are going to let someone carpet the Mojave Desert with solar panels, you’d probably believe that Tim Geithner made a “mistake” on his taxes.

And even if you can get past the enviros and their law suits every step of the way, there are right of ways to attempt to purchase, permits, regulations, etc all of which have to be met and/or accomplished before the first kilowatt of power courses from any of these facilities (providing its a windy day and the bats are asleep). Anyone who thinks this is a quick and easy process on the road to pollution free energy independence just hasn’t been paying attention.

~McQ

Thoughts On The Speeches

First the Obama speech.  My overall impression was that of a campaign speech.  High flying rhetoric, intentions hidden in comfortable rhetoric that Americans find more acceptable than other and contradictions which were so evident that I’m surprised the media let them pass (ok, not really, but I thought I’d jab them a little).  However, in reality, it was much more than that as I’ll cover a little further on.  But, as usual, very well delivered.  

The Jindal speech, on the other hand, suffered by comparison.  And, in fact, it suffered badly.  Whoever helped him put that together should have skipped the “folksy” stuff and gotten down to business.  By the time he finally got to the point, I was slack jawed with stupification.  Having just sat through a 45 minute Obama speech I wanted a quick “give it to me now” response.   5 minutes into the Jindal speech we still didn’t know where he was going with it.  My guess is by that time, most people who had thought about watching him had thrown up their hands,  hit the can and were raiding the liquor cabinet.

Back to the Obama speech.  As I thought about it more I realized he’d very carefully hidden the intention of his administration and the Democrats to convert this country into a cradle to grave European-style socialist country.  Seriously.  It’s all in there, but you have to carefully pick it out.   While he never came right out and said it,  he sure hinted around the edges.  Probably the closest he came to actually laying it out was this:

That is why it will be the goal of this administration to ensure that every child has access to a complete and competitive education –- from the day they are born to the day they begin a career. 

The same basic message was given concerning health care.  When speaking about the budget he made this statement:

 It includes an historic commitment to comprehensive healthcare reform –- a down payment on the principle that we must have quality, affordable healthcare for every American.

Two things to note – he didn’t say “health insurance” for every American. He said “health care”. And he also seems to have backed off of not making this mandatory.

He hit it again when talking about the two largest entitlement programs we have:

To preserve our long-term fiscal health, we must also address the growing costs in Medicare and Social Security. Comprehensive healthcare reform is the best way to strengthen Medicare for years to come. And we must also begin a conversation on how to do the same for Social Security, while creating tax-free universal savings accounts for all Americans. [So those "savings accounts" of old W's weren't so bad after all, huh? - ed.]

And here is where one of the glaring contradictions comes out. While claiming that the government’s version of health care will be much more efficient and less costly than the private version, he contradicts himself when he says we must get the spiraling Medicare and Medicaid costs under control. I’ll remind you of what we were promised Medicare would cost when it began, and I’ll further remind you that the real cost ended up at least 6 times that amount. I’ll also remind you that each year, that program has about 60 billion in waste, fraud and abuse. One of the efficiencies Obama claims will bring cost down is the elimination of that waste, fraud and abuse. That promise is as old as politics and still unfulfilled.

Last night, during the liveblogging, when Obama got to the auto industry, and started throwing “we” around, I asked “who is the ‘we’ he keeps talking about? Of course when you read the passage, I’m sure you will be able to figure it out:

As for our auto industry, everyone recognizes that years of bad decision-making and a global recession have pushed our automakers to the brink. We should not, and will not, protect them from their own bad practices. But we are committed to the goal of a retooled, reimagined auto industry that can compete and win.

I bet “we” are. The question is, will the “we” who are known as the public be willing to buy these autos designed and “reimagined” by government?

And, of course, the populist Obama was present as well . That’s a very old and tired political trick which still manages to work unfortunately. A method of creating an emotional distraction while you propose things which are much worse:

This time, CEOs won’t be able to use taxpayer money to pad their paychecks or buy fancy drapes or disappear on a private jet. Those days are over.

Just hearing a President of the United States say such a thing should send shivers up your spine. Instead it was one of the major applause lines of the night.

And this too should have caused those who love freedom to pause and understand the underlying promise of the words spoken:

A surplus became an excuse to transfer wealth to the wealthy instead of an opportunity to invest in our future. Regulations were gutted for the sake of a quick profit at the expense of a healthy market.

Transfer wealth to the wealthy? How by letting them keep more of their money? How is that a “transfer”? Well, it becomes a transfer if you believe it really isn’t theirs at all. And the spending spree the Democratic Congress and the Obama administration are embarking upon certainly makes that case. With the lie about “no earmarks” in the “stimulus” bill again given voice, and with a 410 billion omnibus spending bill with 9,000 earmarks and another trillion being thrown into the financial sector, not to mention the cost of health care “reform”, S-CHIP and the coming cap-and-trade system, there’s no question where the “transfer of wealth” will be going during the next 4 years is there?

~McQ

“Climate Change” And The Obama Administration – Huge Power Grab In The Offing

No doubt this will somehow end up being blamed on “global warming”:

A rocket carrying a NASA global warming satellite has landed in the ocean near Antarctica after an early morning launch failure.

The mishap occurred Tuesday after the Taurus XL rocket carrying the Orbiting Carbon Observatory blasted off into the pre-dawn sky from California’s Vandenberg Air Force Base.

“Orbiting Carbon Observatory”? It is apparently now the “Submerged Carbon Observatory”.

In other climate change news, it seems the new “Climate Czar” is ready to rock and roll on the question of carbon regulation:

President Barack Obama’s climate czar said Sunday the Environmental Protection Agency will soon issue a rule on the regulation of carbon dioxide, finding that it represents a danger to the public.

The White House is pressing Congress to draft and pass legislation that would cut greenhouse gases by 80% of 1990 levels by 2050, threatening to use authority under the Clean Air Act if legislators don’t move fast enough or create strong enough provisions.

Note that last line – certainly what one would expect an unelected “czar” to do, wouldn’t you say? Note also that the EPA intends to declare CO2 a “danger to the public”. Yes friends, the gas you exhale as a part of your respiration, the one that plants use in photosynthesis, is suddenly going to be a “danger to the public”.

Officially recognizing that carbon dioxide is a danger to the public would trigger regulation of the greenhouse gas emissions from coal-fired power plants, refineries, chemical plants, cement firms, vehicles and any other emitting sectors across the economy.

All those economic sectors and industries which are supposedly going to be engaged in our recovery via infrastructure improvement, providing critical power and fuel or on the list to be rescued by bailout funds. Does that make any sense at all?

Critics of putting an expensive premium on carbon say that such a schedule may be overly optimistic given the global financial crisis and the ramifications that putting a cap on greenhouse gases would have across nearly every sector of the economy. Tough action too fast, they say, not only could curb manufacturing and create an energy crisis by halting new power plant construction, but also could force a rapid migration of businesses overseas to cheaper energy climes.

But zealots don’t really care about such things – I mean, this is about “saving the planet” you know? And this isn’t just about Browner. She has some powerful backing:

Specifically, Obama wants an economy-wide law – instead of just some major emitting sectors – and to auction off 100% of the emission credits, which analysts say could exponentially increase the cost of emitting, as well as the pay-off for low-carbon projects.

So, given this, does anyone still doubt that we’re going to be in this recession for quite some time once the Czar throws the lever on this little power play (no pun intended)?

Wait, there’s more.  If you’re at all concerned with the expanded power this gives the federal government, you ain’t seen nothin’ yet:

Separately, Browner said the administration was also going to create an inter- agency task force to site a new national electricity transmission grid to meet both growing demand and the President’s planned renewable energy expansion. Siting has been a major bottleneck to renewable growth, and lawmakers and administration officials have said they’re likely to seek greater federal powers that would give expanded eminent domain authorities.

Hope and change.

~McQ

Ah, Chu

Yup, nothing like the best qualified for the job:

Energy Secretary Steven Chu may be a Nobel laureate Ph.D. in physics, but his first forays into energy policy suggest he’s a neophyte when it comes to the ways of Washington.
 
At a forum with reporters on Thursday, the head of the department that has traditionally taken the lead on global oil-market policy, was asked what message the Obama administration had for the Organization of Petroleum Exporting Countries at its meeting next month.
 
“I’m not the administration,” the Cabinet secretary replied. “I will be speaking and learning more about this in order to figure out what the U.S. position should be and what the president’s position is.”
 
Chu, who is still without a deputy, said he feels “like I’ve been dumped into the deep end of the pool” on oil policy.

He may be a Nobel laureate, but it is obvious that he isn’t at all prepared for the job of Energy Secretary. How, given his obvious lack of knowledge about oil, can he put a comprehensive energy plan together for the US? Well, he wasn’t brought in to consider oil – he’s going to be the “green guy”. Oil, coal and other Neanderthal energy sources aren’t really something he’s concerned himself with. But now, he is the man.

Makes you feel all warm and fuzzy, huh? Knowing all of that certainly reassures you that his priorities are going to be what is best for the US and not best for the agenda, doesn’t it?

~McQ

How Not To Handle A Recession, Yet Take Advantage Of A “Crisis”

Unproven science is apparently going to drive an administrative (instead of legislative) push to regulate carbon dioxide. In the middle of a “crisis” which President Obama calls the worst since the 1930s, the EPA is apparently going to drastically raise the cost to do business in critical sectors:

The Environmental Protection Agency is expected to act for the first time to regulate carbon dioxide and other greenhouse gases that scientists blame for the warming of the planet, according to top Obama administration officials.

The decision, which most likely would play out in stages over a period of months, would have a profound impact on transportation, manufacturing costs and how utilities generate power. It could accelerate the progress of energy and climate change legislation in Congress and form a basis for the United States’ negotiating position at United Nations climate talks set for December in Copenhagen.

Note that none of the “change” appears to be good for the US or its consumers. Instead, we’re likely to see it put even further stress on families on the margin and drive more layoffs and higher unemployment.  But the world will love us, or at least the UN.

I don’t think there’s any question at the moment as to whether Obama is going to govern as a centrist or liberal, is there?

~McQ

Chevron’s Kern River Basin – Things That Make You Go “Wow”!

As most of you know I took a short trip to beautiful Bakersfield California a couple of weeks ago at the behest of the American Petroleum Institute (who paid for the trip) to tour Chevron’s Kern River Basin oil fields. Here’s a short intro video by API that will get you into the game.

Jeff Hatlin, the guy describing most of the facilities and the area, was a fabulous tour guide. And the rest of the staff there (Jim Swartz, David Boroughs, Carla Musser, Ray Thavarajah, Kevin Kimber, Kelly Lucas and Omer Saleem) took a day out of their busy schedules to acquaint 4 bloggers with a huge asset that has been producing oil for over 100 years. My thanks to all of them.

As you might imagine, the “easy oil” days of yore are long over. As Jane Van Ryan, the narrator of the video, notes, the area was first discovered because oil was literally seeping out of the ground. No more. The oil produced at Kern River is what is known in the industry as “heavy oil”. That means the viscosity is very high. For many years in the early days, its viscosity limited its use to asphalt and roofing tar.

That presents an interesting set of problems when you talk about recovery. You’re trying to pump some pretty thick stuff out of the ground and, as you can imagine, that takes a whole bunch of energy. And the oil doesn’t sit in pools, but is distributed throughout the sand layers. So it seems obvious that the way to address the problem is to find a way to lower the viscosity of the oil and cause it to flow before trying to recover it.  As you might imagine, that’s not as easy as it sounds. The way Chevron has addressed those needs is through steam flooding and new drilling techniques such as horizontal drilling.

You saw Jeff Hatlin talk about how that steam is generated (and you got to see the steam generators in the video) and injected into the ground. In the 20 square miles of the Kern River Basin facility, there are approximately 770 steam injection wells helping the 8,700 production wells bring up the oil from depths of over 1,000 feet. What the steam injection wells have allowed Chevron to do is move the field from its primary production days, when only 5-10% of the oil was being recovered, to a production percentage between 50 to 80% with steam flooding. This enhanced recovery technique has helped Chevron keep the field at an 80,000 bpd production rate when, without it, it would be producing very little oil at all.

Another technique which allows more efficient recovery is the 3D modeling that you saw Dale Beeson talking about.  The model in the video has 155 million cells, each 50′ x 50′ x 2′.  That’s a massive amount of information stored, updated and accessible to the Chevron staff as they plan their next wells.  Much of the data for this model is gathered through 660 “observation wells” drilled strategically over the vast property.  Temperature and fluid saturation are monitored allowing for efficient heat management and the location of the richest oil deposits. It is through the integration of that information plus the nearly 1,000,000 data points gathered through out the field on any given day by other means, that Chevron meets its goal of reducing its production decline in the Kern River Basin to 1% a year.

A final technique introduced into the Kern River field in 2006 is horizontal drilling. The 3D modeling helps Chevron exactly pinpoint layers of oil producing sand and using advanced drilling techniques, precisely place the horizontal well in that sand layer. To give you an idea of the efficiency difference, a typical vertical well will produce about 3 bpd of oil. A horizontal well will produce about 100 bpd.

Given all of that, however, there was something else I learned that just blew my mind. While they’re producing that 80,000 bpd of oil, they’re also pumping up 555,000 bpd of water. In fact they joke about really being a water production facility which produces oil as a by-product. That’s more true than you might imagine.

But it also means they must process a half a million barrels of water a day, separate the oil from it and do something with the remaining water. This is where it gets interesting. You heard Jane mention they process and purify some of it through walnut shell filters for agricultural use. In fact, they have about 272,000 bpd in excess that they send through that process and then is sold to California for use in growing all those luscious veggies Californians are so wild about. My guess is that most of California has no idea that’s the case. That avocado you’re enjoying may have been produced with water from Chevron’s Kern River Basin field.

So what do they do with the remaining 231,000 bpd of the water they pump up?  They make steam.  Lots and lots of steam.  And that brings us to something else of which I’m pretty sure the average Californian isn’t aware.  Part of that steam powers up to 20% of the California electrical grid.   It’s called ‘cogeneration’, and Chevron has actually built steam powered electrical plants on the field which are plugged into the California power grid and provide on-demand electricity.  They use the waste steam generated in the steam injection process to power these plants.  Clean energy and highly efficient clean production.

That’s what had me saying “wow” at the end of the trip.  Two critical commodities to California – electricity and water, produced as  by-product of a third critical product, oil.  And all three are produced in a efficient, environmentally friendly way.

If I were Chevron, I’d be telling this story everywhere I could.  It’s not quite the resource-raping, greed-is-king “Big Oil” caricature the media and many of our politicians are fond of painting, is it?

The Rush To Pass Global Warming Legislation

It sounds innocuous enough – at least in the broad language used below. I’m talking about Sen. Boxer’s promised push to move “global warming” legislation through Congress within weeks (or, per Boxer, no later than the end of the year):

Boxer’s principles for global warming legislation aim for a law that would:

— set “certain and enforceable” short and long-term emissions targets;

— ensure state and local entities keep working to address global warming;

— establish a market-based system that cuts carbon emissions;

— use revenues from this carbon market to help consumers make the transition to clean energy and invest in new technology and efficiency measures;

— ensure a level global playing field with incentives for polluting countries to give their share to the international effort to curb climate change.

These goals won quick applause from environmental and conservation groups, including the National Wildlife Federation, the Pew Center on Global Climate Change, Environment America and Environmental Defense Fund.

Well of course those groups applauded the list. They’ve been beating the AGW drum for years. And it occurs to me that one of the reasons Boxer is working so hard to move this into the legislative hopper as quickly as possible because the skeptic’s voices are becoming increasingly heard.

Like anything else, there’s a window for legislation and I think Boxer sees that window starting to close. The information countering the AGW nonsense is starting to build momentum. Boxer understands that at some point there will be a tipping point. Already polls have flipped and for the first time more believe the climate change we’re undergoing is the result of natural cycles and not man-made emissions.

If that gap continues to widen, and I believe it will, plus the cost to do what Boxer and the Democrats want to do is given more visibility, the opportunity to pass such legislation will wane (just as we see support for the present stimulus bill withering as more and more information about it becomes available).

Boxer and the Democrats hope to strike while the iron is hot – no pun intended.

Hope and change.

~McQ