American Energy Provides Security Amid Middle East Tensions

Unrest in the Middle East over the last six months has drawn the public’s focus to the serious vulnerabilities of energy markets and the countries tied to those markets. A recent op-ed by GAIN strategic adviser and former Major General James “Spider” Marks published in Inside Sources describes the latest and breaks down how the United States can bolster its national security and the global energy market: increase domestic energy production and exports to allies.

Marks describes the current state of play, noting:

Tensions in the Middle East escalated to a tipping point earlier this month when Iran launched ballistic missile attacks on U.S. and coalition military forces in Iraq. The offensive, which the regime acknowledged as retaliation for a U.S. drone strike days earlier that killed Iranian general Qasem Soleimani, commander of the elite Quds Force, brought relations between the United States and Iran closer to the brink of conflict than at any time since the 1979 Iranian hostage crisis.

In addition to this month’s attacks, there have been several instances that show the growing instability of the international energy market. Notably, the Iranian government launched a missile strike against two Saudi oil facilities last year, temporarily disrupting the flow to roughly 5 percent of the world’s supply. Furthermore, last year in the Strait of Hormuz, a critical shipping lane for about 20 percent of the world’s oil, Iran attacked mines, specifically going after U.S. oil tankers. In April, internal conflict in Libya also threatened to upend the global oil supply.

These disturbances in the global oil supply would have been cause for serious energy security concerns in the U.S. a decade ago, but not anymore. The U.S. is now the top producer of oil and natural gas in the world, effectively counterbalancing Middle East and OPEC countries’ leverage on energy. In fact, the U.S. has more than doubled its oil production from 5 million barrels per day in 2008 to almost 13 million barrels per day at the end of last year.

But as Marks points out, the U.S.’ incredible energy growth our country will require investment – from increasing production and refining to developing modern energy infrastructure to get the product to market. The op-ed notes:

That growth requires new pipelines, the safest and most effective form of energy transportation, to keep products moving from well sites to consumers. Yet, output remains well ahead of capacity in many areas, like West Texas’ Permian Basin, where bottlenecks have been so severe that drills have had to pay buyers to take natural gas off their hands. In other areas pipeline shortages prevent products from reaching consumers, like in the Northeast, where energy prices are known to spike during harsh winters despite proximity to the Utica and Marcellus shale plays.

Marks concludes by encouraging American policymakers to prioritize energy development and infrastructure, as energy investment will allow the U.S. to reach its full potential, and establish our long-term energy independence.

The 2020 Texas Elections Are Critical for Future of the U.S. Energy Sector

The 2020 Texas elections have the potential to affect the United States energy sector due to the state’s position as the largest oil- and gas-producing state. In fact, Texas produces and refines a third of our nation’s oil. Major impediments to the current energy buildout in Texas would ripple into the rest of the sector – impacting energy consumers not only in the United States, but across the globe.

This election cycle, Texans will not only participate in presidential and congressional elections, but will also designate the entire Texas House of Representatives, and more than half of the state Senate in what could be a facelift for state politics. Voters will also fill an important seat on the Texas Railroad Commission, the agency responsible for regulating the state’s oil, gas, and pipeline operations.

Traditionally Republicans, who have long-supported the development of the natural gas, oil, and pipeline sectors, have maintained control over the state legislature. But the state’s changing demographics introduce new uncertainty. This was highlighted in Texas’s most recent Senate election where Beto O’Rourke (D) lost to incumbent Ted Cruz (R) by a mere 214,921 votes.

It is important to point out the success and positive impact of the U.S. energy sector, specifically in natural gas and oil, has bolstered our national security, provided significant economic benefits, and continued to fuel the American economy. But a political flip in Texas could drastically affect the state’s – and country’s – gas and oil industry as evidenced in other states. For example, in 2018 after Democrats won control of both legislative chambers in Colorado, the state’s Democratic lawmakers then swiftly passed a law that overhauled the state’s gas and oil drilling regulations, despite economic loss.

It would behoove Texans to carefully consider the broader implications of all candidates’ policies on energy before casting their votes this November. As Carisa Lopez, political director at the Texas Freedom Network, a nonprofit group that is trying to recruit young, progressive voters told EE News, “We will see the consequences of this election for the next 10 years.”

GAIN encourages all Texans, including elected officials, to recognize the value of the state’s natural resources and position to lead the country to energy independence through continued energy development and infrastructure build out.

Dakota Access Pipeline Key to Illinois’ Energy Future

Crain’s Chicago Business recently published an op-ed from GAIN spokesman Craig Stevens highlighting an upcoming hearing in February where the Illinois Commerce Commission (ICC) will consider a request to increase the capacity of the Dakota Access Pipeline (DAPL). Optimization of Dakota Access requires no new pipeline construction, only the addition of three new pumps stations in North Dakota, South Dakota, and Illinois. If approved, the new pump station will allow for the increase in volume of DAPL from 570,000 barrels per day (bpd) to 1.1 million. This will be an essential decision for transporting record amounts of crude oil from the Bakken area in North Dakota to consumer markets across the Midwest. Stevens writes:

The added volume is a common-sense solution to meet growing infrastructure demands throughout the Midwest. Last month, the U.S. Energy Information Administration announced oil production in the Bakken exceeded 1.5 million bpd in October, and output is expected to climb another 3,000 bpd in January alone. That growth has helped push domestic production to record highs, which is helping to alleviate reliance on foreign suppliers and creating energy security here at home.

It’s also created a growing demand for reliable midstream infrastructure to get products safely to consumers. In recent years private developers have stepped up to deploy new pipelines, which provide the safest and most effective mode of transportation. But projects typically take years from introduction to completion. The result is a glut of supply hemmed off from end users, which pushes prices below sustainable levels and discourages investment.

With DAPL Optimization, the ICC has an opportunity to help answer the region’s infrastructure needs. The Dakota Access Pipeline was previously approved by both state and federal regulators after a vigorous 13-month review. For the past two and a half years, the pipeline has been safely transporting oil from North Dakota to the tank farm in Patoka, IL. Stevens concludes by encouraging the Commission to focus on the facts, and emphasizes the economic importance of this project:

It is critical that Illinois’ policymakers stick to the facts. If they do, they will see that the Dakota Access Pipeline optimization is a commonsense means to bring much-needed transportation capacity to meet the region’s growing demand. They will see it is an opportunity to secure the nearly $90 million of tax revenue generated by the state’s energy producers and more than $44 million in funding for schools.

The proposal before the Commission is not only important for Illinois at large, it’s critical to towns like Patoka and Vernon, whose growth relies on a robust, healthy energy industry. The Patoka Energy Hub is a lynchpin for the country’s energy security, but also for the security of families who call the area home.

Energy Transfer Joins North Dakota iPipe Consortium

The Williston Herald recently highlighted Energy Transfer, operator of the Dakota Access Pipeline, will join iPipe, North Dakota’s Intelligent Pipeline Integrity Program, which consists of oilfield companies seeking to prevent leaks and advance leak detection technology.

iPipe, which was formed in 2017, has pursued technology through advanced sensors and even satellite data to safely monitor pipeline systems. This is a step in the right direction for further bolstering the state’s critical energy infrastructure network.

Vicki Granado, vice president of Corporate Communications for Energy Transfer, believes this is an important safety feature. Granado said in a statement:

“Dakota Access Pipeline is excited to help steer the efforts of this program, and expects that the outcomes of this unique program will result in an even greater record of safe operations across the entire pipeline industry.”

Energy Transfer will be joining iPipe alongside companies such as DCP Midstream, Enbridge, Hess, and Oasis Midstream Partners.

North Dakota Petroleum Council president Ron Ness was pleased to hear Energy Transfer is taking strides to advance leak detection. He said:

“IPIPE is a model of how to blend entrepreneurship and applied research together via a private and public partnership. Energy Transfer Partners bring incredible knowledge and experiences to the table which will just enhance the potential for improved pipeline technology and leak detection.”

This announcement is an exciting development for North Dakota’s energy industry and a key reminder of the industry’s commitment to pipeline safety.

GAIN Adviser Weighs in on Merits of DAPL Optimization

Ahead of an early February Illinois Commerce Commission hearing GAIN advisor, retired Colonel Tom Magness, was featured in the State Journal-Register responding to an editorial which incorrectly mischaracterized the Dakota Access Pipeline (DAPL) Optimization plan set for regulatory consideration.

Colonel Magness, who spent much of his military career as a commander in the U.S. Army Corps of Engineers, pointedly reminded readers of the importance and value projects like the DAPL Optimization offer to the nation’s energy security and regional benefits.

To keep up with steadily increasing Bakken crude oil production, DAPL Optimization will modify the existing pipeline by adding three new pump stations to increase throughput and is “…good news for American energy security and production,” as Magness noted. DAPL has already been a success in reliably delivering energy resources and the proposed plan by Dakota Access doubles down on that very strength.

Moreover, coverage of the proposed plan has been woefully narrow and lacked acknowledgement of the benefits of pipelines and general and their ability to safely move American-produced energy to markets.

For more insights on DAPL Optimization Colonel Magness’ letter to the editor can be read in full here.

U.S. Energy Exports Lead to a Decline in the U.S. Trade Deficit

The Commerce Department recently reported that the United States trade deficit significantly decreased, down $3.9 billion from $46.9 billion in October to $43.1 billion in November – a major step in the right direction for our nation. The growth of U.S. energy production has increased self-sufficiency from importing foreign oil and producing enough for profitable exports.

The decreased deficit is largely a result of the increasing gap between what America imports and exports. The report demonstrated how the gap fell more than 8 percent to $43.1 billion, marking the biggest decline in a year. November exports totaled $208.6 billion, a $1.4 billion increase from exports in October. Further, November imports were down to $251.7 billion, a $2.5 billion decrease from October. Tariff changes with China under the Trump administration largely played a role in these shifts.

September 2019 marked the first month since 1973, when monthly records began, that the United States exported more petroleum than it imported.[1] This trend has continued since September. Notably, petroleum imports were worth $27.2 billion in November, when adjusted for inflation. This statistic is even more impressive when considering that this is the lowest level recorded since the Commerce Department began tracking it back in 1992.

The decrease of reliance on imported oil will continue to lower the trade deficit and strengthen U.S. energy independence. As options for foreign oil are beginning to look unstable, this is a smart move for the future of our country as we continue to strengthen domestic industries and increase job opportunities.

TXOGA celebrates 100 years of Oil & Natural Gas Production

The Houston Chronicle featured an outstanding triumph by the Texas Oil & Gas Association (TXOGA), the association has recently celebrated its 100th anniversary.

In an initial interview with Texas Inc., TXOGA president Todd Staples reflected on the past century of feats and shed some light on the future of the energy industry.

Staples discusses the importance of continuing to support the future of the pipeline infrastructure in Texas:

“They are the absolute safest ways to move products and if you want gasoline at your convenience store, to fuel your car or your school buses. Or you want natural gas to make sure you have affordable power for your homes. Our member companies work really hard to promote good and best standards for building and operating pipelines.”

With the recent approval of four South Texas LNG export terminals, including the location of three facilities at the Port of Brownsville, the economy in the region will benefit greatly. New pipelines in the area will support the vast amounts of natural gas produced by the Permian Basin and make Texas a frontrunner for LNG exports by providing affordable domestic prices and generate profits by selling to foreign markets. The Permian Express Pipeline System spans 430 miles and reaches the U.S. Gulf Coast and Mexico markets.

“The next 100 years are bright,” said Staples regarding the future of TXOGA and the oil and gas industry. “As we think about our future, oil and gas is committed to a cleaner, stronger energy future. We know that the components that we use, 96 percent that we use in our homes and in our hospitals and in our schools, come from oil and gas. It’s simply irreplaceable.”

Investing in the Texan pipeline network is critical to ensuring oil and gas production from the Permian Basin is serving America’s energy infrastructure to the best ability. This investment is crucial in ensuring the U.S. can remain a top LNG exporter in the global market.

North Dakota Reaches Significant Achievement in Oil Production

The Bismarck Tribune highlighted a significant achievement this holiday season – North Dakota now produces 1.5 million barrels per day.

Mineral Resources Director Lynn Helms believes growth will continue in the new year, “It should result in small increments of production growth through the year 2020.” The U.S. has picked up on oil production where countries like Saudi Arabia and Russia have fallen short. East Coast reserves have benefitted specifically throughout these disruptions.

North Dakota Pipeline Authority Director Justin Krinstad remarked, “Those East Coast refineries, they really only have two options for crude sourcing: that’s either waterborne barrels coming from foreign sources or it’s crude-by-rail coming into the region.” Bakken crude oil and the infrastructure that houses it came to the rescue.

North Dakota also saw a major triumph in natural gas transportation. The Elk Creek Pipeline of Oneok began operations carrying up to 240,000 barrels of LNG from the Bakken region to Kansas – offering tremendous support to natural gas plants that had needed support in order to perform at full capacity.

“You can have all the processing capacity in the world, but if you don’t have an outlet at the tailgate of that facility for those NGLs, that plant will become congested and it will not be able to operate at its stated capacity,” Kringstad said.

“It should be a very happy holiday for the state of North Dakota,” said Helms.

U.S. gas drillers saw record gains in 2018, EIA reports

The Houston Chronicle recently highlighted data from the U.S. Energy Information Administration reporting that U.S. natural gas production had its biggest one-year increase on record in 2018. The Chronicle notes:

“Driven by now more than decade-old advancements in hydraulic fracturing technology, production increased by 10 billion cubic feet per day last year – an 11 percent increase from 2017 – to 101.3 billion cubic feet per day. That led to a more 50 percent gain in gas exports, through LNG tankers and pipelines.”

The EIA report further described this energy milestone:

“As natural gas production increased, the volume of natural gas exports—both through pipelines and as liquefied natural gas (LNG)—increased for the fourth consecutive year, reaching 9.9 Bcf/d. Total natural gas exports grew 14% in 2018, and LNG exports grew by 53% to 3.0 Bcf/d. Both pipeline and LNG exports reached record monthly highs in December 2018 of 7.7 Bcf/d and 4.0 Bcf/d, respectively. The United States continued to export more natural gas than it imported in 2018, after being a net exporter in 2017 for the first time in nearly 60 years.”

In addition, the EIA has projected that natural gas exports by pipeline will exceed natural gas imports by pipeline in 2019 for the year.

The most significant gains were experienced in the Appalachian region with the booming Marcellus and Utica shale formations, closely followed by Texas’ Permian and Haynesville shale formations. Record natural gas production creates jobs, increased tax revenue, new economic development opportunities, and promotes LNG exports for our allies abroad – a key factor in stabilizing the global energy market and minimizing reliance on volatile foreign sources.

Historic Energy Milestone: U.S. Petroleum Net Exporter for First Time Since 1973

InsideSources recently published an opinion editorial by Andrew Cline, president of the Josiah Bartlett Center for Public Policy in New Hampshire, in which he discusses a remarkable milestone for American energy: for the first time since 1973, the U.S. exported more petroleum products than it imported in the month of September.

Despite this landmark achievement for energy independence, it has barely made its way into mainstream media coverage. As we’ve seen with the 2020 Democratic presidential candidates, many politicians and activists have advocated for steering away from fossil fuels in favor of renewable energy options, while ignoring some inconvenient facts.

Candidates and activists have given little regard to American history and the potential impact on consumers should traditional energy sources like natural gas be limited or banned. Cline notes:

“With the United States producing an abundance of energy, the old concerns about blackouts, shortages and astronomical prices have faded. Taking energy abundance for granted, politicians and activists have shifted to demanding that the energy comes from cleaner sources.

“The big energy stories are no longer U.S. production, but demands by activists and politicians to shift completely away from fossil fuels. Since Berkeley, Calif., banned natural gas hookups for new homes and businesses earlier this year, other communities across the country are considering following suit. In Massachusetts, with some of the highest energy costs in the U.S., Brookline, Mass., passed a similar ban, which is inspiring other communities in Massachusetts to do the same.”

The movement against natural gas is concerning, especially since it has played a critical role in lowering US carbon emissions from the electric sector considering it emits as much as 55% less carbon dioxide than coal. Despite the environmental benefits, affordability, and accessibility of natural gas – many of the presidential candidates have called for banning fracking and the construction of new energy infrastructure. Just this past week, presidential candidate and former New York City Mayor Michael Bloomberg claimed natural gas is “going to be worse than coal.”

These policies are shortsighted, and while they might play well during the Democratic primary, our nation relies heavily on natural gas and the need for this resource is expected to increase in coming years. As Cline points out:

“The EIA had predicted September’s net petroleum export milestone. This month, it predicted that “the share of U.S. total utility-scale electricity generation from natural gas-fired power plants will rise from 34 percent in 2018 to 37 percent in 2019 and to 39 percent in 2020” while coal’s share will fall from 28 percent in 2018 to 22 percent in 2020.” With record domestic energy production, it is deeply important that we continue to support and invest in further developing our energy resources and infrastructure network to move our country forward.