Topic A: Energy - Analysis, discussion & commentary on energy exploration, development and innovation
Roll Call: Latest News on Capitol Hill, Congress, Politics and Elections
August 21, 2014

Oil and Gas Companies Add More Than 10,500 New Jobs in 2Q14

Fuel Fix reports that “oil and gas companies added more than 10,500 new jobs in the U.S. in the second quarter of the year.”

“More than 4,000 of those new jobs were in Texas, according to Rigzone, which analyzed data from the Bureau of Labor Statistics.”

“There are now around 113,900 oil industry jobs in Texas.”

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Commentary: The Importance of Debating Energy Policies—Not Technologies

Robert Fares, a Mechanical Engineering Ph.D. student at the University Texas at Austin, writes in Scientific American: “As a researcher working in the area of energy technology and policy, I often find myself drawn into debates surrounding certain energy technologies, and what role they should play in the future energy system. People are quick to list the specific benefits or drawbacks of one technology over another: ‘Wind energy is fine at the small scale, but it will never scale up like nuclear!’ ‘Electric vehicles will never be mainstream! We should be using natural gas!’ ‘Battery storage is expensive and won’t last! We should be using thermal storage!’”

“Regardless of whether or not these claims are based in fact, I believe it’s a mistake to frame our choice of energy strategy in this way. Today, the energy we use comes from a variety of sources. The U.S. Energy Information Administration’s most recent total energy flow diagram shows exactly where the United States gets its energy, and what that energy is used for. With U.S. energy coming from coal, natural gas, domestic oil, nuclear, renewables, petroleum imports, and more, it’s clear that we do not currently rely on any one particular energy source. In fact, we benefit from a diverse mix.”

The piece concludes: “Instead of debating technologies, we should debate the most practical and immediate steps we can take to reduce carbon emissions today using any technology at our disposal. There’s no time to waste. We need meaningful action to reverse the current climate trend before its too late.”

Commentary: Mexico’s Reform Program

Enrique Peña Nieto, the President of Mexico, writes in the Financial Times: “Today we are the world’s 10th-largest oil producer and our recoverable shale gas resources rank sixth. The energy reform will allow us to take advantage of our natural resources in a sustainable way, while observing basic principles of sovereignty. This reform will ensure the energy sector again becomes an engine for economic growth, by guaranteeing the supply of oil, gas and electricity at competitive prices.”

“It creates opportunities for private companies to invest, and improve and expand the sector’s infrastructure. This will increase oil production from the current 2.5m barrels a day to 3m by 2018. Likewise, natural gas production will grow from 5.7bn cubic feet a day to 8bn by 2018. Pemex (Petróleos Mexicanos) will be more competitive and will have the autonomy needed to operate as a modern company, as well as the opportunity to forge alliances and reduce operating costs. The reform will promote investment in renewable energies, an area where Mexico has immense potential. It is expected that with this reform, Mexico’s gross domestic product will increase by 1 per cent by 2018 and 2 per cent by 2025.”

The piece concludes: “In the coming months we will implement the policies to bring these reforms into action. Our goal is to make Mexico more open, productive and competitive, with sound public finances and skilled human resources; so we can play a more active role in the global economy and provide our people with a better quality of life. Together we are building a new Mexico.”

Big Oil Appears to Win Tax Fight in AK

Fuel Fix reports that “by a slim margin, Alaska’s new business-friendly oil tax regime appears to have overcome efforts to revert to the higher levels that became a signature policy of former Gov. Sarah Palin.”

“A measure on the state’s primary ballot Tuesday would have reinstated Alaska’s progressive oil taxes, originally installed in 2007 and dismantled last year in an effort to lure oil companies to the state. The old taxes were tied to crude prices, and oil companies say they would have hampered the industry’s new plans for investments in the state’s lagging oil production.”

“Some companies had said they might pull out of Alaska operations if the measure passed. Unlike any other state, Alaska owns all of its subsurface rights and is bound by its state constitution to receive the maximum benefit from all of its resources. Opponents of the tax scheme adopted last year, which the ballot measure would have repealed, characterized it as a giveaway to Big Oil that could cost the state $1 billion per year in state tax revenue.”

Commentary: Obama’s Second-Term Energy Policy Working

John Deutch, professor of chemistry at the Massachusetts Institute of Technology and a former director of energy research and undersecretary at the U.S. Department of Energy, writes in the Wall St. Journal that “President Obama has put energy and the environment at the top of his second-term agenda. The focus has been on climate change, and on exploiting the unexpected plenty of North American oil, gas and energy technology. The administration’s progress has been notable—especially in comparison with health care, immigration and foreign affairs.”

“The president’s highest priority is to reduce the carbon-dioxide emissions of existing electricity generating power plants. In June the Environmental Protection Agency released an unexpectedly thoughtful and well-supported plan setting specific goals for reducing emissions chosen from a menu of measures…”

The piece continues: “The president’s strategy to reduce CO2 emissions through regulation thus appears to be succeeding, though the EPA may suffer a backlash.”

The piece concludes: “President Obama is having greater success in advancing his energy agenda in his second term than in his first. But it will take more than one successful term to secure the country’s energy future. To coin a phrase for the next president: One good term deserves another.”

Commentary: Modern Alchemy Skirts U.S. Energy Policy

Peter Tertzakian, chief energy economist at ARC Financial Corp. in Calgary and  author of two best-selling books, “A Thousand Barrels a Second” and “The End of Energy Obesity,” writes in the Toronto Globe and Mail: “Try as they might, medieval alchemists were unable to turn lead into gold.”

“But today’s North American oil wizards are at work with their own magic wands, performing value-adding tricks. U.S. refineries are running full blast, turning domestic crude oil into higher-priced petroleum products for world markets. That alchemy is helping oil companies circumvent the 1975 U.S. oil export ban, for it’s verboten to sell unrefined crude abroad, but fair trade to sell distilled liquids such as gasoline, diesel and naphtha.”

“Canadian oil producers can be thankful for the U.S. refinery magic. Alberta’s oily products would be worth less than tin without this relief valve for flushing surplus black gold out of the North American system.”

The piece concludes: “The flexibility of energy products to masquerade in different forms is a big reason why the industry’s market magic always seems to find its way around government policy and social impediments.”

Q&A with American Petroleum Institute’s Senior Economic Adviser

The Casper (WY) Star Tribune reports that “Rayola Dougher, a senior economic adviser with the American Petroleum Institute, is a keynote speaker at the Petroleum Association of Wyoming’s annual meeting Tuesday and Wednesday in Casper.”

“She took some time out this week to talk to the Star-Tribune about issues facing the oil and gas industry today.”

CO Oil and Gas Task Force Decision Delayed

The Denver Post reports that “picking the task force charged by Gov. John Hickenlooper to make recommendations on new gas and oil regulations has been delayed by an outpouring of interest.”

“La Plata County Commissioner Gwen Lachelt, a Democrat from Durango who has been appointed chairwoman of the task force, said Hickenlooper had hoped to make the announcement last week, but an avalanche of applications has delayed the process.”

“The hope is for an announcement on the membership this week.”

Preview: Idaho Energy Summit

The Idaho Statesman reports that “the inaugural Intermountain Energy Summit is headlined by U.S. Secretary of Energy Ernest Moniz, who will speak alongside federal politicians, energy experts and private industry leaders, who will lead panel discussions. The focus: the future of energy policy and production in North America.”

“The conference Tuesday and Wednesday will be different than attendees may be used to, Idaho Falls Mayor Rebecca Casper said.”

“‘It’s not going to be workshops where you learn something and go home,’ Casper said. ‘It’s more – what did you bring? What are your thoughts given the data that was just presented?’”

More Research Identified for Clean Vehicle Technology

Fuel Fix reports that “two Texas research groups landed government grants to study new technologies that improve fuel efficiency and reduce costs as part of the Obama administration’s promotion of clean vehicles.”

“The U.S. Department of Energy announced $55 million for 31 new projects, most of which are aimed at meeting the goals of a government challenge issued two years ago, for the U.S. auto industry to produce plug-in electric vehicles by 2022 that are as affordable and convenient as gasoline-powered cars.”

“Some money also went to research aimed at improving power trains, fuel, tires and auxiliary systems.”

China Seeks U.S. Help in Shale Exploration

The Houston Chronicle reports that “China is looking to the West – and especially to Texas – as it seeks to unlock its vast shale formations in hopes of launching an American-style energy revolution.”

“Facing stubborn rock and high costs, Chinese oil companies are giving U.S. firms a bigger stake in exchange for the tools and technology of hydraulic fracturing, which helped turn American production around and gave the nation new status as an energy power.”

Company Tries to Turn Algae into Energy

The New York Times reports that “although algae grow prodigiously and contain potentially useful molecules — especially lipids, which can be turned into high-energy fuel and other products — extracting those molecules has proved complicated and expensive. So far, virtually the only marketable products based on algae have been high-end skin creams.”

“But a Nevada company, Algae Systems, has a pilot plant in Alabama that, it says, can turn a profit making diesel fuel from algae by simultaneously performing three other tasks: making clean water from municipal sewage (which it uses to fertilize the algae), using the carbon-heavy residue as fertilizer and generating valuable credits for advanced biofuels.”

Analysis: ‘Sons of Wichita’ and U.S. Oil Refineries

The Financial Times writes: “One of many reasons for putting Daniel Schulman’s Sons of Wichita on your summer reading list is that it is a useful reminder that the least glamorous parts of the energy business can sometimes be the most lucrative.”

“The biography of the billionaire Koch brothers tells how Fred Koch, the patriarch who laid the foundations for the family’s fortune, started a highly successful company selling thermal cracking technology, a standard feature of modern oil refineries. Today Charles and David Koch, two of Fred’s sons, control a vast and diversified business empire, but the roots of it all are in refineries.”

The piece concludes: “For Fred Koch, defending his competitive advantage meant two decades fighting through the courts to protect his rights to his thermal cracking technology.”

“With international pressure now added to the calls from oil-extraction companies for them to be allowed to export crude, US refiners today are facing a similarly intense battle to protect their interests.”

 

Alaska Voters to Decide on Oil Production Tax

The Associated Press reports that “amid a fog of conflicting claims, Alaskans head to the polls Tuesday to decide if the state’s old system for taxing oil companies, passed in 2007 after some lawmakers were suspected of bribery, is better than the new system, a tax cut passed last year to try to attract investment from petroleum companies.”

“Ballot Measure No. 1 asks voters if they want to reject the 2013 law that supporters have dubbed the “More Alaska Production Act.” Advocated by Gov. Sean Parnell, it replaced the production tax known as “Alaska’s Clear and Equitable Share,” or ACES, that was championed by former Gov. Sarah Palin.”

“Critics call ACES an investment killer. It gave tax credits for investment but included a progressive surcharge that companies said ate too deeply into profits, discouraging new investment.”

Energy Secretary Calls Industry Criticism of Natural Gas Export Overhaul ‘B.S.’

Energy Secretary Ernest J. Moniz in a one-on-one interview Friday with CQ Roll Call signaled that any further changes to how his agency processes natural gas export applications will have to come from Congress, as the Energy Department tries to end a controversy over how the United States ships gas to nations that are not trading partners.

In addition, Moniz dismissed industry complaints that DOE has moved too slowly on export applications as “B.S.,” noting the department can’t take final action until a separate Federal Energy Regulatory Commission review is completed. Some U.S. energy companies eager to expand new overseas markets say the Obama administration is dragging its feet.

Moniz said that lawmakers will have to be the ones to make any more decisions about gas exports now that his agency has laid out its final rules on an overhaul. “Not from the administration, I don’t expect any changes to the process,” Moniz told CQ Roll Call. “Let’s see if Congress acts.”

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