US Energy Growth Requires Infrastructure Investment

Real Clear Energy recently published an opinion editorial by Mead Treadwell, former lieutenant governor of Alaska and CEO and Chairman of Qilak LNG, which focuses on the development of North American Arctic LNG exports. Treadwell highlights the importance of America’s economic growth in oil and natural gas production and how further investment in pipeline expansion may support this continued growth.

But Treadwell points to statistical information from the U.S. Energy Information Administration to underscore how some officials and opponents have seemingly hindered growth of American energy. Treadwell writes:

“Despite a 200% increase in US oil production and a 40% jump in natural gas output since 2010, construction of the pipelines needed to move products to consumers has lagged. While new projects are coming online at a record rate, opposition to key pipelines threatens to leave the U.S. energy market fragmented.”

Treadwell refers to some other examples of the US missing out on economically rewarding energy benefits. Treadwell points out:

“Earlier this year, the Empire State used the Clean Water Act to shut down a nearly $1 billion natural gas pipeline that would have connected the state’s power plants with gas-rich fields in Pennsylvania and Ohio, and reduced the average price of electricity in New York City which currently stands at 21.0 cents per kWh, 54 percent higher than the national average (13.6 cents per kWh).”

Continuing through the article, Treadwell notes how pipelines support US energy exports by lowering the trade deficit, therefore supporting the economy. Treadwell also points out, “Investing in modern energy infrastructure enables the US to provide long-term, low cost, reliable energy to consumers, which in turn makes domestic industries like manufacturing and agriculture more cost-competitive relative to foreign rivals.” Self-reliance not only benefits the US, but our allies as well. By turning away from foreign energy imports sourced from unstable regions, we can bolster our national security while promoting American energy independence.

The United States has a promising future regarding its energy potential. But as Treadwell emphasizes, if we want to reap these benefits for our nation, we must properly invest in our pipeline networks today.

U.S. Must Continue to Invest in LNG Exports

The Associated Press reported that China and Russia have launched a 3,750 mile long gas pipeline, “an outcome of their long-planned energy partnership.” China is the world’s largest energy consumer and needs new supply sources to meet their demand while Russia is looking for alternative economic partnerships due to volatile relations with the U.S. and Europe. The pipeline, “Power of Siberia,” is the result of $400 billion deal from 2014 in which Russian state energy company Gazprom agreed to deliver 38 billion cubic meters of natural gas annually to China National Petroleum Corp for the next 30 years. Russian president Vladimir Putin was quoted:

“This step takes Russia-China energy cooperation to a whole new level and brings us closer to achieving the goal set together with Chinese President Xi Jinping of extending bilateral trade turnover to $200 billion in 2024.”

This is just the latest addition to energy expansion by our nation’s adversaries. Too many of our allies in Europe are dependent upon Russia, and increasingly China, to meet their energy needs. The best way the U.S. can counter these developments is to increase investment in our energy exports.

To start, the U.S. must continue to invest in modern pipelines to safely and efficiently transport energy to export terminals along the coast and consumer markets. Pipelines have proven to be the safest, most efficient, and most environmentally-conscious means to move natural gas to markets.

Furthermore, the U.S. must continue to invest in LNG export terminals. A flurry of investment is on the horizon, from Lake Charles LNG in Louisiana, to Eagle LNG in Florida, to FERC’s recent approval of 4 major export projects in Texas.

The U.S. has been trending in the right direction to accomplishing these goals under the Trump administration and his “energy dominance” doctrine that welcomes investment and streamlines regulations to allow economic expansion. The United States recorded its first month as a net petroleum exporter since 1949 last week and is currently the third largest LNG exporter worldwide – and is on pace to become the top LNG exporter in the next five years.

U.S. Records First Month as Net Petro. Exporter but Infrastructure Buildout Key to Sustaining Exporter Position

Last week the U.S. Energy Information Administration (EIA) published data on the country’s petroleum and crude oil position. For the first time since 1949 the United States is a net exporter of petroleum and crude oil products by nearly 90,000 barrels a day.

As reported by E&E News EIA calculations put average net imports for 2019 at 520,000 barrels per day but an expected net export position up to 750,000 barrels per day in 2020. Moreover, the anticipated 2020 turnaround compares starkly with previous decades that lacked production from the ongoing shale production boom.

Since the 1970s the U.S. has been heavily dependent on petroleum and crude oil imports, reaching imports over 6.5 million barrels per day. That dependency extended well into the 1990s – trending upwards to 8.5 million daily barrels – and into the 21st century before peaking at 10 million a day in the year 2000.

In 2003 – a year when the country imported over 9 million petroleum and crude barrels daily – Time Magazine captured Americans’ energy frustrations in a piece titled ‘Why U.S. Is Running Out of Gas.’ Authors Donald L. Bartlett and James B. Steele noted “…it is that the U.S. is likely to be faced with recurring oil and natural-gas crises for some years to come. Their duration and severity remain to be seen,” with consequences of “…a hidden tax of tens of billions of dollars on American consumers.”

Energy independence has long been a policy goal of the U.S for national security, private commerce, and consumer purposes. Bartlett and Steele highlight the earlier legislative efforts to combat the country’s reliance of foreign energy. President Richard Nixon in 1973 pledged that “…in the year 1980, the United States will not be dependent on any other country for the energy.”

History reminds that legislative solutions lacked the necessary oomph and industry how-to to achieve energy independence. Instead, private investment in production, transport, and export infrastructure have redefined the American energy industry.

Thanks to the development of safer and more efficient production methods in the shale industry production records in the Bakken and Permian regions continue to be broken monthly if not weekly.

The latest data from the EIA is encouraging though industry members and government officials must plan extensively for the future. This includes promoting the development of the right infrastructure. Industry members are taking the lead by showcasing better and better production technologies, creating sophisticated and safer transport systems, and efficient export terminals on the country’s coasts.

With the country turning to a new electoral season and much talk from Democratic primary hopefuls interested in reorienting away from fossil fuels it is important to consider the significance of the county being on the cusp of achieving an energy goal five decades in the making.

California Restaurant Association Aims to Overturn Berkeley Natural Gas Ban

The California Restaurant Association is taking aim at Berkeley, California’s ban on natural gas infrastructure in newly constructed buildings, saying the ordinance will do little to further environmental goals while imposing undue harm on businesses and consumers.

In a lawsuit filed last week, the trade association asked a the U.S. District Court for Northern California to void the ban, arguing that that the city “bypassed clear federal and state law” in passing it.  

Berkeley became the first city in the nation to ban natural gas in new buildings last summer when it caved to the demands of Green New Dealers who’ve proven to be more concerned about playing politics than advancing sound policies.

“With millions of Californians sitting in the dark to avoid wildfires, and California’s energy grid under historic strain, banning the use of natural gas is irresponsible and does little to advance the climate goals,” CRA said. “[A] shift to “all electric” also will impose greater costs on Berkeley businesses and consumers, in the midst of an affordable housing crisis.”

The lawsuit comes amid growing questions over whether the environmental benefits of going all-electric are rooted in fact. According to Stanford University Professor Anthony Kovscek, swapping out natural gas for electricity could will increase – not decrease – CO2 emissions.

“[M]aking electricity from natural gas and then using electricity to heat water for an early morning shower produces roughly three times as much CO2 as using natural gas directly,” Kovscek recently wrote. “We need to question critically whether banning new natural gas hookups actually reduces carbon dioxide emissions as natural gas will continue to be used—just in a more inefficient way.”

Natural gas has been credited as a key factor “a major factor in recent reductions in the carbon intensity of electric generation in the United States,” according to the U.S. Energy Information Administration. From 2005 to 2018, cumulative emissions reductions attributable to shifts from coal to natural gas totaled 2,823 million metric tons of CO2, the federal agency said in a recent report.

FERC Approves Construction of Four LNG Export Projects in Texas

The Federal Energy Regulatory Commission (FERC) yesterday announced the approval of four LNG projects located in Texas. This major step forward was also reported on by Reuters and The Houston Chronicle. Three of the approvals are for new projects in the Brownsville area: NextDecade Corp’s Rio Grande LNG, Exelon’s Annova LNG, and Texas LNG. The fourth project is a seven train expansion of Cheniere’s Corpus Christi LNG. These facilities combined represent 6.5 billion cubic feet per day (bcfd) of export capacity – an important development as the U.S. continues to produce a record amount of natural gas.

Once in operation, these projects will play a key role in providing reliable, affordable energy to U.S. allies around the globe. According to Reuters, “One billion cubic feet is enough gas to supply about 5 million U.S. homes for a day,” and this announcement puts the U.S. on track to be the third largest LNG producer this year – behind Qatar and Australia – and the largest by 2024.

FERC Chairman Neil Chatterjee emphasized the importance of the projects:

“The Commission has now completed its work on applications for 11 LNG export projects in the past nine months, helping the United States expand the availability of natural gas for our global allies who need access to an efficient, affordable and environmentally friendly fuel for power generation.”

The economic benefits are major gains as well. According to The Houston Chronicle:

“The three Brownsville projects represent more than $38 billion of private investment, thousands of construction jobs and hundreds of high-paying permanent jobs in one of the poorest regions of the United States.”

Although these numbers are estimates, they display very high economic opportunity. This is a significant step for American energy globally and just one of the first phases in continued expansion and investment in our nation’s critical energy infrastructure.

Gas pipeline embargo stifles growth, hurts New Yorkers

The Albany Times-Union published an op-ed by Brigham McCown, GAIN strategic adviser and former head of the Pipeline and Hazardous Materials Safety Administration. The op-ed highlights the adverse effects of New York Governor Cuomo’s moratorium on natural gas pipelines.

Due to the ban on new energy infrastructure, suppliers have had to get creative by using “virtual pipelines” like transportation by truck. These methods are less safe than pipelines. The Manhattan Institute even reported transportation by truck is almost 40 times as dangerous.  McCown describes the risks involved:

“Last month a tractor-trailer carrying compressed natural gas overturned after swerving to avoid a deer outside of Binghamton. Eighty families were forced to leave their homes, the driver of the tanker tragically lost his life, and drivers on the interstate lost hours of drive time…. one wonders whether [Cuomo] second-guessed — as many in New York now are doing — his administration’s ill-advised de-facto moratorium on pipeline infrastructure.”

The moratorium is not only a safety issue but a consumer issue, too. For example, the added transportation cost for fuel means higher costs for New Yorkers. Shortages have led to fewer new gas connections, stopping affordable housing projects and repairs to homes. As McCown explains, “The reality is that citizens require greater access to natural gas. Cuomo’s pipeline moratorium is only stifling growth and hurting customers.”

Creating new pipelines would benefit New Yorkers in numerous ways – such as less wear and tear on the roads – but Cuomo has stood by his embargo as a commitment to protect water and health even though public health can suffer in a variety of ways when people lack access to reliable energy. In addition replacing carbon-intensive shipping methods, such as by truck, with cleaner pipelines would improve the air quality and climate. While Cuomo has managed to increase costs for consumers and prioritize the less safe options of transport by truck and rail, some voices are challenging the governor’s anti-energy policies:

“For example, the Federal Energy Regulatory Commission waived the authority of New York regulators to continue stalling the Constitution pipeline project, a move that could help New Yorkers break out of energy gridlock.”            

McCown concludes:

“It is hard for policymakers to worsen safety while at the same time increasing costs to consumers. Congratulations, Governor Cuomo, you have managed to do both.”

GAIN’s Tom Magness: Bayou Bridge Pipeline Remediation is a Work in Progress

GAIN strategic adviser Col. Tom Magness recently had a letter to the editor featured in the Daily Iberian regarding Bayou Bridge environmental remediation. The letter reads:

The Bayou Bridge Pipeline has been operating safely for more than six months. Nonetheless, environmental groups have launched new allegations against developer Energy Transfer criticizing its environmental remediation process in the Atchafalaya Basin.

Critics should remember that full project completion, including any remediation requirements, does not happen overnight. Major infrastructure projects like Bayou Bridge can require months, sometimes years, of considerable restoration to return the land to as close as possible to its original state. To be clear here, the terms of the permit allow for full restoration and approved remediation over the next several years. That work is ongoing.

This project is still a work in progress, all within the terms of the developer’s permit. The work is not complete, and the remediation and restoration required by the permitting agencies is ongoing. Pipeline construction does require some earthwork, all consistent with the requirements in the permit and ultimately, all to be restored within allowed parameters.

The U.S. Army Corps of Engineers carefully reviewed and permitted the pipeline based on their findings of “No Significant Impacts” to the environment. Energy Transfer’s extensive impact avoidance, remediation, and mitigation goals were a major component of its planning, with extensive attention paid to preserving the integrity of the Atchafalaya Basin. Today, they continue construction and operation activities with those important goals in mind.

Activists also overlook the fact that pipelines are the safest and most environmentally-conscious method of transporting energy. The Alternatives of truck and rail are less safe, less efficient, and have a more significant impact on the environment. Investment in safe, modern energy infrastructure is key to American energy development and economic success. Pipelines can be a win for all parties and far better for the environment than reasonable alternatives.

To be sure, this is a process that takes time to be accomplished correctly — and to standard. Community members should have the confidence to identify concerns about our critical waterways. They should be equally confident that developers and regulatory authorities are working together closely to accomplish a successful remediation process that allows for important infrastructure projects while ensuring the long-term sustainability of our environment.

Tom Magness
Grow America’s Infrastructure Now Coalition (GAIN)
Baton Rouge

GAIN Member Highlights Benefits of Texas Pipelines

Last week, Texas Pipeline Association President Thure Cannon was published in the San Antonio Express-News.  The piece noted the importance of pipeline infrastructure for domestic energy production and transportation as well as the benefits to national security from increased access to American-produced energy.  It also stressed the benefits to Texas of increased investments in pipeline infrastructure.

As Thure pointed out in the piece:

Our state boasts a modern oil and gas industry better positioned than ever to be a global leader and a domestic economic driver. The United States is producing record-breaking amounts of crude oil and natural gas, and has cemented its status as the world’s leading producer. That’s good news for our economy, our security and our future.  But we need to be mindful that a lack of pipeline infrastructure can put a cap on the industry’s impact by making it more difficult for resources to make it to consumers, trading partners and manufacturers.

If Texas is going to maintain its modern energy dominance, expanded pipeline infrastructure has to be part of the equation. Policymakers at all levels of government would do well to consider this as they chart our path forward.

Click here to read the entire San Antonio Express-News piece.

Damaging Infrastructure Puts Others at Risk

The Duluth News Tribune published an opinion editorial by Craig Stevens, former senior adviser to U.S. Energy Secretary Sam Bodman and GAIN spokesman. In the article, Stevens discusses the “rapidly developing” trend in which anti-energy protestors have taken to vandalizing energy infrastructure in attempts to delay construction. 

Stevens points to a recent incident where federal prosecutors have charged vandals Jessica Reznicek and Ruby Montoya for conspiracy to damage an energy facility after the pair damaged the Dakota Access Pipeline as it was being built. He points out,

“Ironically, despite claims that the Dakota Access pipeline poses a threat to the environment and surrounding communities, bigger threats are in the dangerous and unlawful vigilante tactics of protesters like Montoya and Reznicek. The pipeline has now been operational for more than two years, safely and efficiently transporting the energy that American consumers use and need every day.”

Unfortunately, this incident is not unique as there have been other localities that have resorted to imposing harsher penalties on people that purposefully damage infrastructure. Stevens continues,

“There have been dozens of recorded incidents of pipeline vandalism and unlawful protest over the last decade across the United States and Canada. A number of states, from Louisiana to Pennsylvania and Texas to Ohio, have introduced or passed legislation to counter these dangerous protests, to keep workers and bystanders safe, and to protect critical infrastructure.”

Putting oneself and others in harm’s way is not the best way to exercise First Amendment rights. But as Stevens points out, energy opponents will have to accept responsibility for their actions.

ND’s Bakken Region is Rich with Energy Resources

The Grand Forks Herald Editorial Board published a guest column touting the economic benefits received from energy resources in the Bakken region. After the Dakota Access Pipeline began operating, it was capable of carrying 470,000 barrels of oil daily. The Board noted this influx of oil created savings of about $7.50 per barrel which led to increased production and thus more tax dollars for the community. In the Board’s own words:

“So the pipeline, fiscally speaking, has been good to North Dakota’s bottom line.”

This week, The Grand Forks Herald reported that “a deposit of sand in north-central North Dakota could be a boon to the state’s oil industry.” The sand was found in McHenry County and also in Mercer County and is a “variety specifically needed in the process of hydraulic fracturing.” This sand is not usually found in North Dakota and is costly to haul, thus making this discovery particularly thrilling for producers in the region. The Board wrote:

“[T]hat cost might not seem like much by itself. But considering each well requires thousands of tons of sand, the costs can quickly add up. Having a source of sand within the state can greatly reduce shipping costs. In the Herald’s report, published Sunday, the newspaper noted that savings could amount to as much as $150,000 to $300,000 per new Bakken well.”

The GAIN Coalition applauds The Grand Forks Herald’s Editorial Board for promoting the economic benefits of energy infrastructure development in North Dakota and across the region. As the Bakken region continues to further develop and grow, it is important that North Dakotans learn more about the potential benefits and opportunities they can bring to the state.