Keystone XL: What They Are Saying

On his first day in office, President Joe Biden revoked a critical cross-border permit for the Keystone XL crude oil pipeline. This shortsighted political decision will have significant impacts on the U.S. economy, U.S.-Canadian relations, energy security, and our national security. Here is what the officials and industry groups are saying:

Montana Governor Greg Gianforte:

“Despite broad, bipartisan support for the Keystone XL pipeline, including from all members of Montana’s bipartisan congressional delegation and from Democratic Governors Steve Bullock and Brian Schweitzer who preceded me, I was disappointed that you signed an executive order today to halt its construction.

“A symbolic gesture for your fledging, hours-old administration, this decision has real and devastating consequences in Montana. With your executive order, gone are the thousands of good-paying American jobs, hundreds of millions of dollars in revenue to support our local communities and schools, the opportunity to advance America’s green energy infrastructure, and America’s energy security.”

North Dakota Governor Doug Burgum:

“For decades, a primary policy goal of every presidential administration has been to put America in a position to sell energy to our friends and allies versus buy it from our enemies. Finally achieving this policy of U.S. energy independence in recent years due to American innovation and entrepreneurship has led to low energy prices that help working families keep more money in their pockets, a resurgence in American manufacturing jobs and the ability to bring our soldiers home. Now is not the time to abandon this essential strategy.

“In North Dakota, we’ve experienced first-hand how major, modern pipeline infrastructure and an all-of-the-above energy strategy can create high-paying jobs, strengthen the economy, move product to market in the safest and most efficient manner, and advance U.S. energy independence. The Keystone XL pipeline accomplishes all of these goals, and revoking the permit is wrong for the country and has a chilling effect on private-sector investment in much-needed infrastructure projects, which is why we urge the President to reconsider.”

Senator Kevin Cramer:

“Hours ago President Biden bemoaned the loss of millions of jobs and promised to put people back to work, but now he’s taking action to eliminate thousands more. This is an early mistake by the President and a nod to far-left environmental extremists. I urge him to reconsider his approach.”

American Petroleum Institute (API):

“…revoking the Keystone XL pipeline is a significant step backwards both for environmental progress and our economic recovery. Pipelines are the safest, most environmentally friendly way to transport energy, and the economy cannot recover at full speed unless we deliver reliable energy from where it is to where it is needed. The Keystone XL Pipeline has been through more than 10 years of extensive environmental reviews, and today’s announcement is a slap in the face to the thousands of union workers who are already a part of this safe and sustainable project. This misguided move will hamper America’s economic recovery, undermine North American energy security and strain relations with one of America’s greatest allies.”

Grow America’s Infrastructure Now (GAIN) Coalition:

“This decision…will cost thousands of U.S. construction jobs, billions in economic activity, weaken U.S./Canadian relations, and ultimately make the world more reliant on energy from parts of the work that would do freedom and democracy harm. It will also have a chilling effect on infrastructure investment across the U.S.

“While environmentalists will undoubtedly cheer, the rest of the country will soon regret this Day One decision.”

Create Union Jobs, Invest in Infrastructure, and Boost the Economy – Unless it’s a Pipeline

Among a flurry of executive orders on his first day in office, President Joe Biden yesterday revoked a critical cross-border permit for the Keystone XL crude oil pipeline. More than a thousand jobs will be cut in the coming weeks as a result of the decision, with the majority of layoffs being unionized workers representing the building trades.

But that’s just the beginning. In an op-ed in the Washington Times, GAIN spokesman Craig Stevens explains the significant ramifications of the shortsighted political maneuver. Stevens writes:

Estimated to support 11,000 U.S. jobs in 2021 and generate $1.6 billion in gross wages, the $9 billion energy infrastructure project is well-positioned to be a lifeline to labor unions in the wake of the COVID-19 pandemic, not to mention the state and local government coffers that stand to benefit from nearly $140 million in annual property tax revenues along the pipeline’s route.

Stevens also underscores that the impacts extend beyond U.S. borders:

If completed, the project would transport 830,000 barrels of crude oil daily from Alberta, Canada, to Nebraska, and is intended to expand critical oil exports for Canada, which has the third-largest oil reserves in the world… Increasing safe, reliable access to Canadian oil is critical to reducing American energy imports from the Middle East, subsequently diminishing the influence of unpredictable foreign regimes who are often not ideologically aligned with U.S. foreign policy goals.

From fueling personal vehicles and the supply chain to serving as the building blocks for thousands of essential items, crude oil and petroleum products play a critical role in our modern economy, and blocking Keystone XL won’t reduce our need for them. As Stevens points out, “it will only increase reliance on the less safe and higher emissions-producing transport alternatives of truck and train.”

Stevens concludes:

As our nation looks forward and recovers from the coronavirus pandemic, it is critical that American policymakers and regulators welcome investment in our infrastructure network, as well as the thousands of good-paying jobs and millions of dollars in tax revenue and economic activity that come with it. Now is the time for logic and fact-based policymaking – not shortsighted, knee-jerk decisions intended to make bold political statements.

World’s Largest VLEC Departs Nederland Terminal with 911,000 Ethane Barrels Bound for China

In a key development for American energy exports, Energy Transfer today announced the first Very Large Ethane Carrier (VLEC) has been loaded under its joint venture with Satellite Petrochemical USA Corp., Orbit Gulf Coast NGL Exports, LLC (Orbit), and departed from Orbit’s newly constructed export facilities at Energy Transfer’s Nederland Terminal in Texas on January 17.

In a press release, Energy Transfer highlighted that the Seri Everest – the world’s largest VLEC – was loaded with more than 911,000 barrels of ethane destined for Satellite’s Lianyungang ethane cracker in northeastern Jiangsu Province, China, the largest single shipment of ethane to date. Its anticipated arrival at Lianyungang Port is mid-February 2021. The release noted:

Orbit’s export terminal at Nederland, one of only three U.S. ethane export terminals, includes a 1.2 million barrel ethane storage tank and an estimated 180,000 barrel per day ethane refrigeration facility. Energy Transfer’s Marcus Hook facility in Pennsylvania is also capable of handling VLECs. The combination of the two terminals represent over 50 percent of the U.S. waterborne export capacity.

Under the joint venture with Satellite, Energy Transfer is the operator of Orbit’s assets, which also include a newly constructed 20-inch pipeline originating at Energy Transfer’s fractionation and storage facilities in Mont Belvieu, Texas, for ethane deliveries to the Nederland export terminal as well as domestic markets in the region. In association with Orbit, Energy Transfer also completed its build-out of wholly owned infrastructure at Mont Belvieu to supply ethane to Orbit’s pipeline, and at Nederland to load the ethane onto VLECs.

The shale revolution has allowed the U.S. to become a leading producer of NGLs like ethane. Increasing U.S. ethane export capacity is key as the U.S. is now the world’s largest ethane producer, and bolstering our energy export capabilities strengthens American geopolitical interests at home and abroad and can help advance our foreign policy goals.

US Hits Oil Exports Milestone

E&E News reported the U.S. has exported more crude oil and petroleum products than it imported for the first time in more than 70 years based on new data from the U.S. Energy Information Administration (EIA). While the numbers show this is likely due to the drop in oil demand due to the onset of the COVID-19 pandemic in 2020, this is a major step forward for U.S. energy independence and a milestone for the top oil-producing country in the world.  

While energy-related carbon emissions are likely to rise this year and next, the EIA predicts emissions will remain 4% lower in 2022 than in 2019 as natural gas power-generation continues to rise, replacing less environmentally-conscious methods of electricity generation.

It is critical that the U.S. continue to bolster domestic energy production over the next four years and beyond not only for American energy needs, but also for the sake of the economy and our national security. An abundance of affordable, reliable energy can help with our nation’s post-COVID economic recovery, both for consumers and for the thousands of jobs the industry supports. Strengthening and expanding our domestic energy capabilities allows the US and its allies to become less reliant on foreign, sometimes unpredictable, foreign sources.

It is paramount that policymakers and regulators foster a regulatory environment that is conducive to expanded energy production and investment in critical infrastructure to ensure the U.S. remains a top exporter for decades to come.   

Texas’ Oil & Gas Industry Paid Nearly $14 Billion to State & Local Governments in FY 2020

The Texas Oil and Gas Association (TXOGA) recently released their 2020 Energy & Economic Impact Report which highlighted the extensive economic contributions of the industry, namely, their role in contributing nearly $14 billion in state and local taxes and state royalties in FY 2020. This equates to more than $38 million each day.

These funds are more important than ever before, given the widespread impact of the COVID-induced economic downturn. These funds benefit every Texan, as they are used to pay for and improve schools, universities, roads, and first responders and essentials services.

Even more impressive, TXOGA reports the Texas oil and natural gas industry has paid more than $162.9 billion in state and local taxes and state royalties since 2007, when TXOGA first started compiling this data. This also doesn’t include the hundreds of billions of dollars in payroll for some of the highest paying jobs in the state and economic ripple effect of the industry on other sectors of the economy.

Increased calls for the phase out of oil and gas in favor of an entirely-renewable grid overlooks these critical economic benefits, and the broader role the industry plays. As the TXOGA report notes:

Nearly every in-demand product we need to be safe and to save lives – from face shields and other PPE to ventilators and hand sanitizers – is made from oil and natural gas. Products and services that power our economy and keep life moving – from computers and high-speed internet connections to food deliveries and virtual celebrations – are all made possible because of oil and natural gas. In fact, even before the pandemic, 96% of products we use every day like pharmaceuticals, electronics, cosmetics and clothing are all made from oil and natural gas.

An all-of-the-above energy strategy that welcomes investment in renewable energy sources, but recognizes the crucial role of oil and gas, is key to our nation’s future economic success.

New House Bill critical to preserving U.S. energy security

E&E News has reported House Republicans have proposed a new piece of legislation to support infrastructure development and energy security amid President-elect Biden’s proposed oil and gas drilling ban on public lands. Rep. August Pfluger of Texas has proposed a bill entitled “Saving America’s Energy Future Act” (H.R.218) that would restrict the secretaries of the Interior and Agriculture from implementing a moratorium on oil and gas leases on federal lands. Rep. Pfluger expressed concern regarding the negative implications a drilling ban would create for the U.S. energy sector:  

“President-Elect Joe Biden campaigned on the promise to shut down drilling on all federal lands and phase out fossil fuels. This, in conjunction with ludicrous policies like the Green New Deal, could mean the end to our oil and gas industry and the American economy as we know it. The Permian Basin produces over 40% of our nation’s energy. This is clean, affordable, reliable energy that powers our nation, heats our homes, and allows us to defend ourselves. Energy security is national security, and nothing could be more important.”

Other House Republicans are backing Rep. Pfluger, including Reps. Tony Gonzales, Ronny Jackson, Pat Fallon, Brian Babin, and Jodey Arrington of Texas, Rep. Yvette Herrell (R-N.M.) and Rep. Stephanie Bice (R-O.K.). The state representatives hope the bill will yield a positive impact on U.S. energy security and economy as a drilling ban could pose a number of threats.

The American Petroleum Institute (API) has also released a study warning of the harmful implications such a ban could cause. U.S. oil imports from foreign sources could increase by 2 million barrels a day, putting our energy security in the hands of potentially unpredictable foreign regimes. U.S. households could spend a cumulative $19 billion more on energy by 2030 and nearly 1 million jobs could be lost by 2022. After sky-high unemployment rates and an oil crash induced by the COVID-19 pandemic, our nation cannot afford to endure another dire economic risk.

H.R.218 is crucial to protecting U.S. domestic energy production. Speaking of the bill, Rep. Ronny Jackson (TX-13) said:

“As someone who grew up working as a roustabout in the West Texas oil fields, I know firsthand how important oil and gas production is to our economy in Texas’ 13th Congressional District…I am proud to co-sponsor legislation like the Saving America’s Energy Future Act. This legislation will go a long way to help maintain America’s energy independence and Texas’ position as the nation’s leading oil and gas producer.”

“New Jersey LNG port should be an easy call”

The Wall Street Journal Editorial Board recently pointed out that President-elect Joe Biden will soon face his first test as to whether or not he’ll stick to his word to not ban fracking: will he allow a proposed LNG port to move forward?

The project, which would be located on the NJ side of the Delaware River in Gibbstown, is designed to allow natural gas extracted from the Marcellus Shale to be liquified and then transported by train to the port where it will be exported, mostly to the Caribbean.

The Journal’s Editorial Board writes:

The New Jersey LNG port should be an easy call. It has been approved by local authorities, is supported by unions for the jobs it would create, and it would help revitalize the area where it is being built. Same for the rule allowing rail transport of LNG. The test of Mr. Biden’s fracking pledge will be if he lets the project proceed without interference.

But many environmental activists and fossil fuel opponents disagree. Progressives are calling on Biden to kill the project – and block rail transport of LNG – but the Army Corps of Engineers and the Delaware River Basin Commission have already approved the port.

The LNG port will be key to providing safe, reliable, and affordable energy to our allies around the globe. Bolstering American energy production and export capabilities stands to significantly benefit US interests both at home and abroad.

Permian Drilling on the Rise

The Midland Reporter-Telegram reported oil and gas drilling in Texas’ Permian Basin has continued to trend higher in the first days of 2021.

MRT wrote:

Oilfield services company Baker Hughes and data analytics company Enverus reported Friday that the US rig count rose nine to 360, well above the record low 244 seen in August 2020. But the count remains well below year-ago levels – 421 rigs below the 781 tallied in the first week of 2020.

There were 275 rigs drilling for oil, up eight but 384 below the 659 seen last year. There were 84 rigs drilling for natural gas, up one for the week.

Texas reported 161 rigs, unchanged from the previous week but down 235 rigs from 396 last year. New Mexico added four rigs for 69 and was joined by Alaska, California, Oklahoma, Pennsylvania and West Virginia as producing states to add rigs for the week Ohio was the only state to decline, losing one rig.

As the US continues to slowly bounce back from the coronavirus-induced economic downturn, the oil and gas industry stands ready to fuel the US economy and American energy needs.

NIMBY Activists Take on Renewable Energy

While green energy advocates and the leadership of the Democratic Party – including President-elect Joe Biden – have vouched for continued investment in renewables in an effort to lower emissions and address environmental concerns, it seems not everyone is sold on developing this new infrastructure.

According to E&E News, “Not In My Backyard” (NIMBY) activists in Long Island have expressed opposition to the South Fork offshore wind farm project in New York. The South Fork project would consist of 15 turbines about 35 miles off the coast of Long Island and could deliver as much as 132 megawatts of power, or enough for about 70,000 homes.

The activist group, Citizens for the Preservation of Wainscott (CPW), has concerns over the export cable that will connect the turbines to a substation on land. The group has alleged the cable’s construction would ruin the “bucolic landscape, disrupt traffic and create fire hazards.” The project’s developers have assured opponents that the cable’s Wainscott route would have “”the least impact on the environment and the community.”

This challenge is just the latest in a long list of unrealistic and unsustainable anti-energy activism. The goal posts continue to be moved. NIMBY opposition to oil and gas pipelines has fueled legal fights across the nation in recent years. Now it seems renewable energy is falling subject to the same.

As the appropriate regulators and policymakers consider these challenges, it is critical to maintain focus on meeting our nation’s energy needs, the importance of strong domestic energy production, and the role of a robust energy infrastructure network in doing so.          

Fossil Fuels Remain Crucial to America’s National Security

The incoming Biden administration, among other imminent challenges, will have to stand firm against growing hostility from China, Russia, Iran, and other international adversaries. A recent op-ed by retired U.S. Army Major General James Marks, featured in Real Clear Energy, makes the case that American fossil fuels and the energy independence they confer are crucial to doing so.

Despite arguments to the contrary, petroleum is a versatile and affordable energy source for which there is currently no substitute. Besides fueling the US economy and supporting nearly 10 million American jobs, it is critical to our military strength, as fuel for our battleships and planes and as a major ingredient in modern defense technologies. Limiting domestic energy production, as the Biden administration has indicated a willingness to do, would force the US military to depend on its main geopolitical opponents for oil, sending them millions of jobs, billions of dollars, and crippling our ability to act against them militarily. Our allies would also suffer. Marks argues that growing US energy exports have:

“…provided [them] the room to refocus military capabilities away from oil fields in the Middle East to the growing omnipresence of China’s influence … [and] weakened the grip of oil-rich tormentors like Russia.”

One day, renewable energy technologies might be sufficiently robust to replace fossil fuels in some of their major applications. Until that time, it is crucial that American energy independence is protected through the continued development of the domestic oil and natural gas industry. Rather than conceding to progressive demands, President-elect Biden should instead follow the example of his democratic predecessor, whose administration oversaw a 35% increase in domestic natural gas production and an 80% increase in crude oil production. In a time of intense political polarization, energy security should be seized as an opportunity for bipartisan consensus.  Marks concludes that:

To walk back the hard-won progress of the past decade would undermine our interests, at home and abroad, and leave our nation vulnerable.”