Letter to the editor: Pipeline optimization secures Illinois’ energy future

Peoria Journal Star, Pekin Daily Times, and the Southern Illinoisan recently published a letter to the editor by GAIN spokesman Craig Stevens regarding this week’s ICC hearing and the important benefits of optimizing the Dakota Access Pipeline. Read the full letter below:

On March 5 and 6, the Illinois Commerce Commission (ICC) will hold a hearing to consider a proposal to construct a pump station along the Dakota Access Pipeline (DAPL) that would support the increase of the line’s capacity to 1.1 million barrels per day without the need for mainline construction.

DAPL has been safely operating since June 2017 — transporting crude oil from the Bakken to the Patoka Energy Terminal in Patoka, Illinois. With record production coming out of North Dakota’s oilfields, DAPL Optimization would support Bakken production and bolster Patoka’s role as a critical energy hub for the United States. Investing in American energy infrastructure and development strengthens American energy and national security.

Patoka, as the offtake for DAPL, serves to store and distribute crude oil for refining, ultimately helping to turn the oil into commercial products American rely on every day.

The project — which has the support of nearly two-thirds of Illinoisans — will ensure safe, reliable transport for American energy, create new economic opportunities for the state, and produce millions in tax revenues for schools, emergency services, infrastructure projects, and other social services.

North Dakota and South Dakota swiftly approved their provisions of DAPL Optimization. The ICC should approve the project to continue to support the more than 100,000 high-skilled jobs the energy industry employs in Illinois each year.

Craig Stevens, spokesman for Grow America’s Infrastructure Now

API Report Reveals Devastating Economic Consequences of Proposed Fracking Ban

Earlier today, the American Petroleum Institute released an analysis detailing the economic consequences of a ban on fracking and federal leasing for energy development. The report was unveiled in response to Democratic candidates’ vows to completely ban fracking as a means of energy extraction.

The products derived from fracking are playing an increasingly important role in America’s energy mix. Natural gas has become the largest individual energy source for the U.S. industrial sector, with the power generation and industrial production from fracking consuming two thirds of U.S. natural gas production.

In response to the report, GAIN spokesman Craig Stevens said, “API’s report illustrates how a fracking ban will undermine national interests by reducing economic and industrial output, massively increasing the cost of household energy, crippling the agricultural sector, and weakening our national security.”

Hydraulic fracturing has become the predominant means of extracting oil and natural gas in the United States, with 95% of U.S. of petroleum products being produced using hydraulic fracturing. Energy companies have made significant financial and human capital investments in fracking. According to the report, the proposed bans would result in a cumulative $7.1 trillion loss to GDP by 2030, and account for over 7.5 million jobs lost nationwide by 2022. Annual household incomes would see a decline of 4.3%, or roughly $5,000 each year.

Household energy costs would also skyrocket, with the average household seeing their electric bills go up more than $600 a year. This includes increased costs for gasoline, residential natural gas for heating, electricity, and heating oil.

The agriculture industry would also face sizable impacts, with total cumulative losses exceeding $275 billion.  Additionally, the cost of staple crops would rise dramatically. Fertilizer manufacturing costs are significantly dependent on energy prices, and a ban on fracking and federal leasing could increase the cost of natural gas delivered to fertilizer manufacturers by an average of more than 170%.

A fracking ban would have striking international implications, as post-ban America would be highly dependent on foreign supplies of natural gas. By shifting the United States from a net exporter of natural gas to being highly dependent on foreign imports, a ban would make our country less secure and offer our geostrategic and geopolitical adversaries leverage.

Democratic candidates are ignoring the markets and experts with their fracking ban proposal. Though a fracking ban might grow in fervor during election season, such a policy would be a tremendous setback to the U.S. economy that depends heavily on natural gas and for the dominant geopolitical role the U.S. plays in global energy markets.

DAPL Optimization Key to Illinois Energy and Economic Prosperity

Next week the Illinois Commerce Commission (ICC) will convene in Chicago to consider a proposal for a new pump station that would allow Dakota Access Pipeline (DAPL) to increase its pipeline capacity.

Since 2017, the pipeline has been safely transporting nearly 570,000 barrels of crude oil per day (bpd) from North Dakota to Patoka, IL. And thanks to the continued expansion of crude oil production in North Dakota’s Bakken region, Energy Transfer, operator of DAPL, has proposed a project that would allow the pipeline to carry up to 1.1 million bpd.

The DAPL Optimization plan will deliver much needed relief to the Bakken oil fields that have routinely faced transport constrictions due to a lack of pipeline capacity. The DAPL Optimization proposal, which would support the increased capcity would be done without the need for new mainline pipeline and serve as a key upgrade to the energy and economic landscape of Illinois.

Illinois’ Patoka Oil Terminal is DAPL’s primary offtake and already serves as one of the Midwest’s busiest energy distribution centers. With a storage capacity of up to 19 million barrels, it is also a key component of the region’s energy security.

For Illinoisans, the Patoka Oil Terminal has been a staple of its local and energy communities for decades. Patoka has a storied history in the state’s energy production and now showcases the modern feats of skilled union labor and industry member engineering.

Patoka and the energy industry in the state has also been a boon for unions where they get to hone their skills and earn family – supporting wages. It’s a large part of why Illinois has over 130,000 energy workers.

Most importantly: Illinois citizens support this project and the broader energy industry. A recent poll found that nearly 9 out of 10 Illinoisans agreed the energy industry plays an important role in the state’s economy. Nearly 85% of respondents identified DAPL as a key driver for state and local tax revenues that go to support public services like schools, social services, and police, fire, and emergency responders. Support from 83% of residents on the impressive safety record of DAPL is also worth noting.

Ahead of next week’s hearing, GAIN encourages the ICC to acknowledge the importance of DAPL Optimization and its potential to benefit the state’s economy and union jobs by approving the Optimization project.

Two Major Bills Idling in Illinois Legislature Would Increase Utility Charges for Residents

Two major Illinois bills are aiming to reach 100% renewable power by 2030 for the state are currently under consideration in the state legislature – but come at a cost.. A recent article from Energy News Network by Kari Lydersen highlights how two pieces of legislation – The Clean Energy Jobs Act (CEJA) and Path to 100 – are aiming to boost the renewable resources industry in Illinois.

Path to 100 would increase monthly charge rates of Illinois residents from the current rate, 2%, to 4% by 2026 – doubling energy costs. CEJA, if set in place by 2020, would increase the rate to 2.6% and hit 4.88% by 2023.  These notable increases would hit residents hard, specifically harming low-income residents. Opponents to the bills are concerned with high prices that will come with these changes.

Lydersen addresses opposition to the bills, writing:

The Illinois Chamber of Commerce also opposes CEJA’s changes to how Illinois gets capacity, arguing that it would subsidize nuclear plants and raise bills significantly, especially on large business customers. CEJA proponents say the chamber is not adequately taking into consideration how much capacity costs will increase through PJM because of the recent FERC ruling.”

Supporting renewable energy and working to lower emissions are important goals – however, it is crucial that we consider energy costs for low income Illinoisans and create realistic expectations. Illinois has a sizeable poverty rate at 13.5% and legislators should keep these individuals in mind when making decisions that will have a significant financial impact on residents.

Lydersen writes that proponents of the Clean Energy Jobs Act believe renewables must take the lead over other sources of energy – including natural gas. However, natural gas produces half the amount of carbon dioxide per unit of energy compared to coal. Compared with other fossil fuels, natural gas is an inexpensive resource produced here in the United States.

When considering energy legislation for the future, lawmakers should consider options that are realistic and benefit not only the environment but also everyday people.

Pipeline Protests causing major issues for Canadian transit

Major railway blockades have taken over Canada – causing Prime Minister Justin Trudeau to convene a meeting with ministers and members of parliament to map out a path forward. Fox News highlighted how thousands of rail passengers across the country were forced to cancel trips as environmental activists blocked major tracks across the country – what the Canadian Chamber of Commerce called an ‘emergency.’

The burdensome blockades are the activists’ response to the approved plans to build the $5 billion Coastal GasLink natural gas pipeline that crosses into Wet’suwet’en First Nation territory in Houston, British Columbia. Standoffs between the Royal Canadian Mounted Policy (RCMP) and the Wet’suwet’en Nation escalated this past week – leading to dozens of protester arrests.

Protester Vanessa Gray told CTV News:

“We are here for as long as we can be disruptive. We are here in solidarity with the Wet’suwet’en land defenders, the hereditary chiefs that oppose the pipeline, with solidarity with everyone who has faced violence from the police arrests and people who are still faced with surveillance from the police. We are here also to shut down Canada.”

These protests clearly miss the mark – as passenger rail travel has nothing to do with a natural gas pipeline – and come at the expense of Canadians simply trying to get from point A to point B. The Canadian National Railway (CN) is working to mitigate the protests and end the illegal blockades that are impacting productivity and discouraging safe transit for citizens across Canada. After having to cancel more than 400 trains over the past week, CN has resorted to laying off more than 400 workers as the prolonged protests continue.

In a statement, CN president and CEO JJ Ruest said, “This situation is regrettable for its impact on the economy and on our railroaders as these protests are unrelated to CN’s activities, and beyond our control.”

Trudeau is working alongside officials to ensure protests will cease to prevent any further harm to the country’s economy and ensure Canadians can continue to travel safely.

North Dakota PSC’s DAPL Optimization Approval an Important Step for Energy Infrastructure

Today the North Dakota Public Service Commission voted 3 – 0 to approve the proposed Dakota Access Pipeline (DAPL) Optimization plan that would add a pump station to the pipeline’s route in Emmons County. North Dakota joins South Dakota in green lighting the second of three pump stations proposed to increase the pipeline’s capacity up to 1.1 million crude oil barrels per day to its offtake at the Patoka, Illinois Oil Terminal. Illinois and Iowa regulators will review the proposal in the coming months.

It is encouraging to see regulators acknowledge the value and importance of DAPL Optimization. North Dakota is ranked second among U.S. states in crude oil production and proved reserves, however, bottleneck difficulties have at times stifled energy delivery to key points across the country. Since coming into service in 2017, DAPL has been a key and safe transport component for the Bakken region, accounting for approximately 40% of the Bakken’s daily output. DAPL Optimization will offer much needed pipeline capacity to alleviate export constrictions.

Moreover, DAPL Optimization is a welcomed infrastructure project in North Dakota. A recent poll found that nearly 70% of North Dakotans support DAPL Optimization and 95% believe the oil industry to be important to the state’s economy.

Micah Roberts, Partner at Public Opinion Strategies, who conducted the poll on behalf of the GAIN Coalition, noted “[f]ully 77% of residents say it is important to them that oil is transported by pipeline and 79% agree that the Dakota Access Pipeline is providing a safer means of transportation than truck or rail. From safety to economic benefits, the polling shows the vast majority of North Dakotans support the industry and are in favor of increasing DAPL’s capacity.” 

Further, since 2017 Dakota Access has paid nearly $25 million in taxes to the state. An added pump station through optimization will generate more tax revenues for communities to deploy towards public services like schools, hospitals, and emergency services. Energy Transfer, the pipeline’s operator, will again rely on North Dakota’s skilled unions to see the project to completion, making DAPL Optimization an important job opportunity for many. GAIN applauds the North Dakota Public Service Commission for its decision today and is keen to see the remaining states review and swiftly approve DAPL Optimization. The coalition’s statement on the approval can be read here.

Unnecessarily High Energy Bills are Taking a Toll on American Families

Americans are paying far too much for their electricity bills. According to the U.S. Energy Information Administration, the average American family paid 4% more per kilowatt hour of electricity in November 2019 than in December 2017. This unfortunate reality comes despite the latest drops in natural gas prices. A recent op-ed in Real Clear Energy from the Lexington Institute’s Paul Steidler demands that states answer for ridiculously high energy bills.

Policymakers and regulators must work to ensure that Americans are not being weighed down by unnecessarily high energy costs. Low income families spend 8.6% of their income each year on energy costs – an astounding three times more than non-low-income households spend according to the U.S. Department of Energy.

Steidler describes this challenge, writing:

A September 2018 study by the U.S. Energy Information Administration found one in five American households goes without food or medicine at least once a year to stay warm in the winter or cool in the summer. Seven million households face this decision nearly every month.

People should not have to choose between keeping their homes warm or feeding their kids. Natural gas accounts for 35% of our nation’s electricity generation and using this resource drives down the electric bill and lowers usage of fuels such as coal – which emit higher levels of greenhouse gases.

But despite natural gas’ key role in lowering carbon emissions and providing reliable, affordable energy, many consumers cannot get access to this fuel due to energy infrastructure bans. States such as New York are making it difficult on their own residents, or those in New England, as Steidler points out:

New York’s failure to approve new pipelines causes consumers in New York and New England to pay an estimated $2 billion more in energy costs each year, or $233 for a family of four.

There are many factors affecting each state that determine what its retail price of electricity will be. These include renewable energy purchase mandates as well as the hidden taxes and infrastructure costs.

Supporting natural gas production and infrastructure development is more important now than ever and is crucial to ensuring affordable energy for households across America.

Pipelines – the safest, most cost-efficient and environmentally-friendly form of natural gas transit – can help ensure electricity costs remain affordable for American families. Policymakers and legislators must work together to ensure they are continuing to support the pipeline network – promoting affordable energy for all.

The Private Sector Offers Solution to Democrats’ Expensive Infrastructure Plan

The fact that America needs to repair and expand our country’s critical operating systems stands undisputed, but far more contentious is determining how to pay for the much-needed overhaul. A recent op-ed in Mass Transit Magazine offers a practical payment solution for a five-year, $760-billion infrastructure package plan House Democrats unveiled last month: the private sector. Craig Stevens, spokesperson for Grow American’s Infrastructure Now explains:

“Strong public-private partnerships will help mobilize projects, mitigate taxpayer liabilities and prioritize the most pragmatic and pressing needs. In Europe and around the world, progressive contracting has produced more reliable services, better consumer experiences and helped deploy modern assets and technologies. It would have similar results here in the states and provide the impetus to get a deal off the ground.”

The American Society of Civil Engineers gave the United States’ infrastructure a “D” grade in 1998 and almost two decades later failed to improve it even one letter grade, instead America received a “D+” in 2017. Even more concerning, 2017 saw six categories’ grades remain unchanged from 2013, Aviation, Bridges, Dams, Drinking Water, Energy, and Roads, and three categories, Parks, Solid Waste, and Transit’s grades decline. America needs an infrastructure boost, and a workable solution, like public-private partnerships, to support paying for the daunting bill. Stevens further detailed:

“Public-private partnerships offer a paradigm shift. Unlike government, private builders and operators have a financial interest in delivering high-quality services. That incentive drives modernization and new technologies, which make roads, bridges, airports, railroads and telecom systems safer and more reliable, and the experience for consumers more enjoyable. It also shifts financial risks off taxpayers and onto private enterprise, a critical point worth emphasizing.”

This bill represents an opportunity for lawmakers to come together and pass a serious bill that will benefit all Americans. Stevens articulately summarized the issue:

“Lawmakers are right to prioritize our country’s infrastructure. The United States needs as much as $2 trillion of investment over the next 10 years to modernize and bring our infrastructure into good repair. But Washington shouldn’t go at it alone. Working with the private sector will improve efficiencies, produce better services, protect our communities, and bolster our economy – not to mention, help answer the looming question of how to pay for a comprehensive infrastructure agreement.”

Texas Makes History, Oil and Gas Industry Pays $16.3 Billion in Taxes and State Royalties

The Texas oil and natural gas industry set a new record when it paid more than an astounding $16 billion in state and local taxes and state royalties in fiscal year 2019. The Texas Oil & Gas Association (TXOGA) shared a new report detailing how the oil and natural gas tax revenue benefits Texans.

This oil and natural gas tax and royalty revenue infuses funding into Texas education, transportation, healthcare and infrastructure through the State Highway Fund, the Economic Stabilization Fund, the Permanent School Fund and the Permanent University Fund.

The Economic Stabilization Fund, more commonly known as the Rainy Day Fund, is entirely funded by taxes paid by oil and natural gas companies and interest from the Rainy Day Fund itself. This money has made significant lasting affects felt across Texas. TXOGA noted in the last legislative session alone, lawmakers appropriated more than $6 billion from the Rainy Day Fund including:

  • More than $1.1 billion to the Texas Teacher Retirement System, with half being invested in the pension fund and the other half financing a “13th check” of up to $2,000 for retired Texas teachers.
  • $807 million to the Texas Education Agency to help school districts affected by Hurricane Harvey.
  • $840 million to the Texas Water Development Board to develop and update flood risk maps across Texas and to provide grant funding for flood-related projects.
  • $445 million to the Health and Human Services Commission to improve state hospital facilities.
  • $125 million for grants to counties to plan, maintain, and reconstruct roads affected by oil and gas development.

Additionally, Texas school districts received a remarkable $1.54 billion in property taxes from mineral properties producing oil and natural gas, pipelines, and gas utilities. These funds help Texas provide a robust education improving children’s knowledge and skills to set them up for the brightest possible future.

Todd Staples, president of TXOGA eloquently summarized the results of the report saying;

“Oil and natural gas does more than fuel our cars, power our homes and businesses, form the building blocks of our everyday goods and secure our nation.  Taxes paid by the oil and natural gas industry support teachers and schools, build roads, boost essential and emergency services, improve healthcare facilities and bolster our state’s infrastructure,” he added,  “Since 2007, the oil and natural gas industry has paid more than $149 billion in state and local taxes and state royalties.  That’s money that benefits every Texan – whether you live near the oil patch or not.”

Texas should continue to invest in oil and natural gas industry and appreciate the reciprocal investment put back into the Lone Star State.

IEA Reports Natural Gas Playing Key Role in Reducing Carbon Emissions

The International Energy Agency (IEA) reported yesterday that global energy-related carbon dioxide emissions stopped growing in 2019 – despite widespread expectations of another increase. The IEA noted several factors contributed to this significant development, including the increased use of natural gas for power generation in advanced economies like the US. The IEA noted:

After two years of growth, global emissions were unchanged at 33 gigatonnes in 2019 even as the world economy expanded by 2.9%. This was primarily due to declining emissions from electricity generation in advanced economies, thanks to the expanding role of renewable sources (mainly wind and solar), fuel switching from coal to natural gas, and higher nuclear power generation.

A significant decrease in emissions in advanced economies in 2019 offset continued growth elsewhere. The United States recorded the largest emissions decline on a country basis, with a fall of 140 million tonnes, or 2.9%. US emissions are now down by almost 1 gigatonne from their peak in 2000. Emissions in the European Union fell by 160 million tonnes, or 5%, in 2019 driven by reductions in the power sector. Natural gas produced more electricity than coal for the first time ever…

Across advanced economies, emissions from the power sector declined to levels last seen in the late 1980s, when electricity demand was one-third lower than today. Coal-fired power generation in advanced economies declined by nearly 15% as a result of growth in renewables, coal-to-gas switching, a rise in nuclear power and weaker electricity demand.

The IEA’s data comes as the United States continue to produce record amounts of natural gas from the Marcellus, Utica, and Permian formations. Using domestic-sourced natural gas to produce electricity and heat American homes and businesses is key to further bolstering the economy and ensuring both grid reliability and energy security.