"What Biden Can and Can’t Do After Declaring a Climate Emergency"

The rumors are once again circulating that the President is planning to issue some sort of Executive Order regarding climate and we happened to have this piece in the link-vault.

Blow a bit of dust off and its good as new. From Bloomberg, July 19, 2022:

Democrats and environmental activists are pushing President Joe Biden to declare a “climate emergency” and unlock sweeping powers to combat global warming after broad legislation stalled in Congress.

Biden has already vowed to “take strong executive action” if Congress doesn’t “tackle the climate crisis.” And White House officials are now weighing

the possibility of an emergency declaration that would empower the president to curtail oil drilling, curb fossil-fuel flows and fund clean-energy construction.

1. How would it work?
An emergency declaration by Biden would trigger powers laid out by a suite of federal laws — including energy statutes, the National Emergencies Act and the Stafford Disaster Relief and Emer­gency Assistance Act — that the president could wield to address the climate crisis.

Biden could curtail or block crude exports thanks to a national security exemption in a 2015 law that would allow him to re-impose licensing requirements and other restrictions on those flows. At the same time, the Aviation and Transportation Security Act — enacted after the Sept. 11, 2001 terror attacks — could empower him to coordinate domestic transportation in ways that limit the movement of fossil fuels.

Under the Outer Continental Shelf Lands Act that governs energy development in US coastal waters, he could also suspend offshore drilling, even on existing leases. That provision was invoked to suspend some activity in the wake of the Deepwater Horizon disaster in 2010.

2. What about clean energy?
A climate emergency would let Biden take advantage of a law typically used after major hurricanes and other natural disasters -- the Stafford Disaster Relief and Emergency Assistance Act -- to direct the Federal Emergency Management Agency to construct renewable energy projects using federal money. FEMA has $19 billion budgeted for fiscal year 2022 to address ongoing disasters, according to the Center for Biological Diversity, an environmental group urging the move.

Biden could also use the Cold War-era Defense Production Act and the federal procurement budget of $650 billion per year to manufacture clean transportation technologies and generate renewable energy, according to a report by the center. Biden has already used the same law to boost production of baby formula amid a national shortage. But the law specifically contemplates power production; the statute uniquely singles out renewable energy and storage as critical materials for national defense.

3. What can’t he do?
Some of the most powerful tools for propelling renewable power projects and advanced energy manufacturing were tax credits — now stymied in Congress — that can’t be easily duplicated through executive order. Any federal funding directed at the sector is finite, and can be quickly ended once a new president is in office....

....MUCH MORE

If one is interested, we saved the proposed Executive Orders prepared by the University of Colorado for President Obama in 2008. It runs to 213 pages and serves as the outro from August 2023's "Ahead Of A Possible Climate Emergency Declaration, Some Interesting Phenomena".

Hydrogen Wildcatters Still Need to Find Their First Gusher (OTOH helium drillers may have just done so)

And at the moment sources of helium are more important than sources of geologic hydrogen. You can always formulate hydrogen in its many colors grey, blue, green, pink etc. but helium in size is tough to find and being noble it can't be split off other chemical compounds because it just doesn't mix with common elements.

First up, Bloomberg Opinion, March 3:

Hydrogen Wildcatters Still Need to Find Their First Gusher
Prospectors must soon hit pay dirt in the rush for the promising fuel.

Think of an iconic image of the petroleum age, and you may well be picturing a fountain of crude spouting hundreds of feet into the air, scattering thousands of barrels around a smashed drilling derrick.

From Spindletop — the Texan oilfield whose 1901 blowout kickstarted the oil era and sparked nearby Houston’s transformation into one of America’s biggest cities — to the disaster 109 years later when a gusher on the seafloor of the Gulf of Mexico destroyed the Deepwater Horizon rig, such geysers have been synonymous with both the wealth and the damage that hydrocarbons can bestow. Those who hope to remake the energy industry for a zero-emissions world are still looking for their equivalent. 

Right now, the absence of a gas gusher is the main factor holding back geological hydrogen, a promising fuel that few had given any thought to 12 months ago. For decades, chemists and engineers have argued the simplest molecule, with the formula H2, might supplant the role of oil and gas in providing the heat, energy, and chemical feedstocks on which modern society depends. Only recently have geologists realized the earth’s crust might hold vast quantities of the stuff.  

It was long assumed that hydrogen’s reactivity would make it vanishingly rare in nature. That view looks much less solid now. Natural processes are probably producing 23 million metric tons a year, according to one paradigm-breaking 2020 study. Unpublished research by the US Geological Survey suggests that’s a gross underestimate: There might be 5 trillion tons below the surface, capable of producing 500 million tons a year, the Financial Times reported last month. That could be sufficient to displace about 40% of current natural gas consumption. The discoveries might spark a “clean energy gold rush,” New Scientist magazine announced in a recent cover story....

....MUCH MORE

Recently:
Meanwhile, In Albania: Hydrogen
Want To Be A Hydrogen Tycoon? Maybe Prospect For Ophiolite And Chromite Ore

And from The Western Journal via MSN, March 3:

Massive Reserve of Helium Found by Minnesota Exploratory Drill, Likely the Biggest Find Ever in North America  

A new find of underground helium in Minnesota could turn out to be one of the largest in the world, Minneapolis's WCCO-TV reported Thursday.

The drill site, just outside Babbitt in the northeastern part of the state, took about a month from initially breaking ground to get to a depth of 2,200 feet.

What it found there, Pulsar Helium CEO Thomas Abraham-James called "a dream."

"There was a lot of screaming, a lot of hugging and high fives. It's nice to know the efforts all worked out and we pulled it off," Abraham-James told WCCO.

He said that the concentration of helium sampled was 12.4 percent -- about 30 times what the outlet referred to as "the industry standard," and higher even than the company had forecast.

"12.4% is just a dream," the CEO told the outlet. "It's perfect."

Further analysis remains to be done, of course, but the finding confirmed work completed in 2011 that indicated the presence of helium deep under the surface, the Duluth News Tribune reported.

Companies generally pursue helium concentrations above 0.3 percent that they can locate, the outlet noted....

....MUCH MORE

"For Captured Carbon, Scientists Plot a Sub-Ocean Tomb"

This approach addresses one of the big risks of just willy-nilly burying CO₂: that the gas will somehow escape and a) re-enter the carbon cycle via the atmosphere or b) create a Lake Nyos (Cameroon, 1986) scenario which released naturally trapped CO₂ and killed over 1700 people and thousands of head of livestock. Solidifying the CO₂ as part of the entombment has had its  attractions since the Al Gore days:

I too have heard the siren song of carbon capture and storage.
There are two ways to use carbon once it is captured (still theoretical because of price but the cost is dropping, see below), either sequester it and remove it from the carbon cycle or reuse it in a closed loop hydrocarbon fuel infrastructure.
From 2007: "Can baking soda curb global warming?":

I have a fascination with calcium carbonate. But, being flexible, I am willing to consider the bicarbonate of various metals.

Some scientists have proposed compressing carbon dioxide and sticking it in underground caves as a way to cut down on greenhouse gases. Joe David Jones wants to make baking soda out of it.

Jones, the founder and CEO of Skyonic, has come up with an industrial process called SkyMine that captures 90 percent of the carbon dioxide coming out of smoke stacks and mixes it with sodium hydroxide to make sodium bicarbonate, or baking soda. The energy required for the reaction to turn the chemicals into baking soda comes from the waste heat from the factory.

"It is cleaner than food-grade (baking soda)," he said.

The system also removes 97 percent of the heavy metals, as well as most of the sulfur and nitrogen compounds, Jones said.

And a few months earlier:

... Right now I'm looking at calcium carbonate. Literally. Got a hunk of limestone. CaCO3. That's sequestered carbon, right?. Hmmm.
Make a green pitch, wrap it in recycled fiberboard; et voila! Return of the Pet Rock, eco-version! And seashells, same stuff, calcite. There's the hook! Mom, you're going to Miami Beach.

And many, many more. Use the 'search blog' box if interested.

The cost of the carbon capture stage is still exorbitant but who knows what advances are ahead?

From UnDark, February 19:

It’s a contentious idea, but advocates say storing CO2 under the seafloor could help address climate change—if it works.

In 2010, as the Deepwater Horizon rig sank and millions of gallons of oil gushed into the Gulf of Mexico, Kate Moran’s phone rang in Washington, D.C. At the time, she was assistant director in President Barack Obama’s Office of Science and Technology Policy, and government officials recognized that she brought years of ocean drilling experience. Within a matter of days, and guided by her understanding of deep ocean geochemistry, the government rapidly deployed resources and experts to manage the crisis, overseeing controlled burns, remote undersea vehicles, even air and sea traffic control systems. “It was remarkable,” Moran said recently of the mobilization. “Unbelievably remarkable.”

That memory looms large as Moran leads a project to mitigate the environmental impacts of fossil fuels on a much larger scale. Now president and CEO of the research institute Ocean Networks Canada, she is also the principal investigator for Solid Carbon, a project overseen by the institute that aims to permanently remove greenhouse gases from the atmosphere by entombing carbon under the seafloor.

“You can do big things in the ocean — the oil industry does,” Moran said, expressing dismay that governments have not marshaled resources like they did for Deepwater Horizon. “So why not look at a system where you could have essentially an independent system offshore that actually removes CO2 from the atmosphere and puts it away forever?”

In addition to transitioning away from fossil fuels, climate science experts are increasingly convinced that greenhouse gases will need to be removed from the atmosphere to avoid cascading impacts of climate change. A new global climate deal from the United Nations climate conference, COP28, doesn’t require countries to completely phase out fossil fuel use, but rather relies on investments in renewable energy and carbon removal techniques to mitigate the impacts of greenhouse gases. National climate plans, too, increasingly depend on carbon removal.

But it’s a gamble: Removing enough carbon dioxide on a large scale hasn’t been fully tested. And the slower the transition away from fossil fuels, the more carbon removal will be needed to reach goals and avoid catastrophes.

“My students always say, ‘But don’t we have to try?’ And the answer is absolutely,” said David Goldberg, a professor at Columbia University’s Climate School who designed the Solid Carbon plan with Moran.

Effective carbon removal is essentially a two-step process: first, remove the carbon dioxide from the air, and then somehow keep it from returning for at least several decades and ideally much longer. Forests and other plant life remove and store carbon dioxide naturally, but it risks returning through decomposition or fires. Solid Carbon would use machinery that filters out carbon dioxide both from sources of emissions, as well as directly from the air. The next step is finding a way to permanently store the trapped carbon dioxide.

Researchers at Solid Carbon are turning to basalt, a volcanic rock that easily reacts with acids like carbon dioxide, to turn the greenhouse gas into a carbonate rock under the seabed. Storing carbon in geologic formations like this is expected to be the most long-lasting method among options to keep carbon dioxide out of the atmosphere. Under the Cascadia Basin off the coast of Vancouver Island lies the most extensively studied ocean basalt. What’s more, it’s colossal: large enough in theory to store carbon from all global annual emissions many times over.

Solid Carbon offers a glimpse into the enormous scale that would be required to impact emissions. In one version of its plan, dozens of floating rigs on the Pacific Ocean would be coupled with many more wind turbines to funnel compressed, carbon dioxide nearly 2 miles under the sea. But that would only remove less than 1 percent of what climate scientists predict will be needed by 2050. If carbon removal techniques are to make any dent in emissions, they will need to scale up multiple magnitudes....

....MUCH MORE

I know Professor Moran is all over the earthquake risk but for readers who are unfamiliar with the area here's a little map of the Cascadia Subduction Zone from Kids Fun Science:

And more fun via Climateer Investing:
When The Megaquake Hits, The Living Will Envy The Dead

Okay, a bit of hyperbole in the headline but let's go with 10,000 dead, 30,000 injured and 2,000,000 people displaced and dependent on handouts.

We've had three posts on the Cascadia Subduction Zone, a couple links below.
There have been a few cat bonds issued over the years that cover Cascadia, they seem to be underpriced for the risk.*

"Why Is Oil Priced The Way That It Is?" (plus laser equipped sharks)

The author of this piece, Robert Rapier, has been observing and commenting on the passing parade in the energy biz for quite a while.*

Via OilPrice, July 13:

• General misunderstandings of how the oil market works are running rampant.
• Oil isn’t priced the way that it is because of greedy corporations, but because of something much simpler; supply and demand.
• The people outraged at oil companies todayy didn’t care about 2020 bankruptcies, yet those bankruptcies from 2020 helped set the stage for supply shortages today.

People who should know better are still deflecting the blame for high oil prices onto the oil companies. There is still a widespread misunderstanding of how oil and gas are priced. Further, I find that a lot of people think the fact that gasoline prices are at record highs along with oil company profits means oil companies are definitely gouging consumers. “Explain this!”, they will say, while showing me some link about Chevron’s profits (as if this revelation will finally make me see the light).

So I thought of a story to help readers understand.

I like to use analogies to break down complex topics into simple and relatable problems. Obviously an analogy isn’t perfect, but its purpose is merely to increase understanding.

I shared the following story on Facebook last month, and it resonated with people. Some suggested that it should be an article, so here it is.

The Chicken Farmer
Imagine that you raise chickens. You have a large operation, so you don’t sell your individual chickens to your neighbors. You take them to a market where they are auctioned off each week.

Sometimes the demand for chicken is strong. Maybe there is a season when people tend to eat more chicken. The price people are willing to pay — because everyone wants a chicken — goes up and you make more money.

Sometimes supplies are short. Perhaps your fellow chicken farmers had some bad luck with bird flu and they have fewer chickens for sale. If supplies are short and demand is strong, then you make more money.

There may be times when you make far more money than it cost you to raise your chickens. A windfall, if you will. People get angry with you for making more money at their expense. They may demand that you lower your price for your chickens, even though that price is being set at the auction.

Then there may be times when there is a bumper crop of chickens, but because of changing preferences, the public has decided to eat fish. Perhaps there is a widespread belief that the future belongs to the fish farmers.

You take your chickens to market, but you get far less for them than it cost you to raise them. You lose a lot of money. If you lose too much, you decide to exit the chicken business. This is going to impact chicken supplies in the future. But hey, as long as everyone is eating fish, no problem, right?

Whom did you gouge in this process? Sure, there are times when chicken prices were high and you were making a lot of money at the expense of your fellow citizens.

But that’s because people in that chicken market were all trying to get chicken. They were competitively bidding up to what they were willing to pay, not shelling out more because you decided to sharply raise the price of chicken....

...MUCH MORE

*Our last visit with Mr. Rapier was almost a year ago in "Highlights From The BP Statistical Review Of World Energy 2021" where the outro went a bit off the rails:

....Mr. Rapier is one of the long-lived commenters on things energy/environment, Here's a link from 2011: "How Much Are You Willing to Pay to be Nuke-Free?" and another from 2009: "Conoco Chief Says Replacing Oil May Take a Century. And: Oil Prices Ahead of Fundamentals (COP)" and yet a third where he questioned high-profile analyst, author, investment banker Matt Simmons on the cost of the Deepwater Horizon disaster in the Gulf of Mexico. Mr. Rapier was right, Mr. Simmons was wrong in his trillion dollar estimate.

And us? Among other things we were linking to stuff like: "'More BP Gulf Oil Spill Conspiracies Flourish -- From Algae Farms to Armed Dolphins' (APC; BP; HAL; RIG)"

Which reminds me, I should probably follow up on the Chinese Security Law posts which for some reason included this tidbit:

‘At Huawei, we’re not attaching laser beams to the heads of sharks’

—Alykhan Velshi, Vice President, Corporate Affairs, Huawei Technologies Canada, Markham, Ont.

Letter to the Editor, Maclean's Magazine, published July 23, 2019

Personally I think laser-enhanced sharks would be kind of cool, it's the required handing over of data should the Chinese government request it that gives one pause.

Here's the 2022 "Energy: The New BP Statistical Review Is Out"

"Highlights From The BP Statistical Review Of World Energy 2021"

 From Robert Rapier's R-Squared Energy blog, July 27:

Earlier this month the BP Statistical Review of World Energy 2o21 was released, covering energy data through 2020. The Review provides a comprehensive picture of supply and demand for major energy sources on a country-level basis. It is a primary data source for numerous companies, government agencies and non-government organizations.

Since its release, I have been busy analyzing the data and creating graphics. I strive to uncover nuggets of information and analyze the data in unique ways. In upcoming articles I will delve deeper into the various energy categories, but today I want to simply provide a high level overview of this year’s Review.

I will add a caveat regarding this year’s review. Typically, the Review gives us a comprehensive summary of energy trends. However, the Covid-19 pandemic really upended the energy markets in 2020, and we shouldn’t extrapolate some of these trends.

For example, as I will detail below, oil demand fell dramatically last year, but we already know that it has largely recovered in 2021. So it would be a serious mistake to think that last year’s plunge marks the beginning of long-term trends.

Energy Overview

Primary global energy consumption fell by 4.5% last year, which was the largest annual decline since 1945. About three-fourths of the decline came from oil, as the pandemic dramatically impacted the world’s transportation systems. Small declines were also reported in coal, natural gas, and nuclear consumption, while renewables and hydropower recorded gains.

However, despite the sharp decline in oil consumption, oil remained on top with a 31.2% share of all energy consumption. The remainder of global energy consumption came from coal (27.2%), natural gas (24.7%), hydropower (6.9%), renewables (5.7%), and nuclear power (4.3%).

Cumulatively, fossil fuels — shown below in shades of gray — still accounted for 83.1% of the world’s primary energy consumption in 2020.

 

The decline in energy consumption was prevalent throughout the entire world. Over 95% of the countries tracked by the review experienced a decline in energy consumption. By country, the U.S., India, and Russia contributed the largest annual declines in energy consumption....

....MUCH MORE

Mr. Rapier is one of the long-lived commenters on things energy/environment, Here's a link from 2011: "How Much Are You Willing to Pay to be Nuke-Free?" and another from 2009: "Conoco Chief Says Replacing Oil May Take a Century. And: Oil Prices Ahead of Fundamentals (COP)" and yet a third where he questioned high-profile analyst, author, investment banker Matt Simmons on the cost of the Deepwater Horizon disaster in the Gulf of Mexico. Mr. Rapier was right, Mr. Simmons was wrong in his trillion dollar estimate.

And us? Among other things we were linking to stuff like: "'More BP Gulf Oil Spill Conspiracies Flourish -- From Algae Farms to Armed Dolphins' (APC; BP; HAL; RIG)"

Which reminds me, I should probably follow up on the Chinese Security Law posts which for some reason included this tidbit:

‘At Huawei, we’re not attaching laser beams to the heads of sharks’

—Alykhan Velshi, Vice President, Corporate Affairs, Huawei Technologies Canada, Markham, Ont.

Letter to the Editor, Maclean's Magazine, published July 23, 2019

Personally I think laser-enhanced sharks would be kind of cool, it's the required handing over of data should the Chinese government request it that gives one pause.

"The Bias That Can Cause Catastrophe"

From the BBC:

The outcome bias erodes your sense of risk and makes you blind to error, explaining everything from fatal plane crashes to the Columbia crash and the Deepwater Horizon oil spill.

magine a pilot is taking a familiar flight along a known route, during which the weather takes a turn for the worst. She knows that flying through the storm comes with some serious risks – and according to her training, she should take a detour or return. But she has flown the same route before, in similar weather – and she hadn’t experienced any problems then. Should she continue? Or should she turn back?

If you believe that she is safe to fly on, then you have fallen for a cognitive quirk known as the “outcome bias”. Studies have shown that we often judge the quality of a decision or behaviour by its endpoint, while ignoring the many mitigating factors that might have contributed to success or failure – and that this can render us oblivious to potentially catastrophic errors in our thinking.

We often judge the quality of a decision or behaviour by its endpoint, while ignoring

 the many mitigating factors that might have contributed to success or failure

In this example, the decision to take the previous flight was itself very risky – and the pilot may have only avoided an accident through a combination of lucky circumstances. But thanks to the outcome bias, she might ignore this possibility and assume that either the dangers had been overrated, or that it was her extraordinary skill that got her through, leading her to feel even happier taking the risk again in the future. And the more she does it, the less concerned about the danger she becomes.

Besides leading us to become increasingly risky in our decision-making, the outcome bias can lead us to ignore incompetence and unethical behaviour in our colleagues. And the consequences can be truly terrifying, with studies suggesting that it has contributed to many famous catastrophes, including the crash of Nasa’s Columbia shuttle and the Deepwater Horizon oil spill....

...MORE

"Goldman at 150: How the ‘vampire squid’ became the world’s totemic bank"

From Spears' Magazine:

As the world’s most controversial bank marks its 150th anniversary, David Dawkins speaks to some of its leading British alumni and assesses its influence around the world today

On 25 April, a woman was peeled from the road outside Goldman Sachs’ unmarked office on Fleet Street. ‘BOOBY TRAP,’ roared The Sun. ‘Eco-warrior glues BREASTS to the road in most bizarre stunt yet.’ But it didn’t quite make sense. The protester, part of the Extinction Rebellion disruption, was not formally protesting against the financial crisis, 1MDB or the gulf between the haves and the have-nots. And Goldman Sachs is not directly a carbon polluter or climate change denier. 

Would gluing your breasts to the road outside Morgan Stanley, JP Morgan, RBS or Barclays have had the same effect? Probably not. But in 2019, the year of its 150th anniversary, Goldman is special like that.

Founded in 1869 in New York, Goldman wasn’t always such a totemic exemplar of the Financial World Order (and the hate that being so inspires). It was only in the Eighties and Nineties that it broke away from the pack. Today it has 30 offices around the world, more than 36,000 staff and $1.5 trillion in AuM and is quite the 21st-century behemoth. And, as at least one of the senior voices from the bank we spoke to makes clear, it’s tough at the top. With the success has come opprobrium.

Indeed, the idea of Goldman Sachs, the space it has come to occupy as the Bond villain business of the investment banking world, was created in the aftermath of the 2008 financial crisis. In 2015 it came bottom in the yearly Harris Poll ranking of the 100 most visible companies in the US. Even BP (post-Deepwater Horizon) was higher in the list, leading Bloomberg to claim: ‘People hate Goldman Sachs more than oil spills.’ But it’s more than that....

....MUCH MORE

The Nord Stream 2 Natural Gas Pipeline Is A Game Changer For Gazprom

We had planned to link to a Euractiv post on the new pipe when Oilprice came up with one.
So now you get both.
First though some orientation:

From Oilprice:

It’s difficult to imagine an energy company that’s more hated and more closely monitored than Gazprom.

Perhaps in the aftermath of the Deepwater Horizon spill, BP attained similar levels of public oversight.

Nevertheless, defying most trends, 2017 will go down in history as one of Gazprom’s successful years: for the first time in history, its share in Europe’s gas consumption reportedly reached 40 percent.

Despite seemingly crippling U.S. sanctions specifically targeting Gazprom’s European endeavors and the EU’s hastily engineered gas rules, the construction of Nord Stream 2 has been going forward as planned, moreover, the project’s European partners (Shell, Engie, OMV, Uniper, Wintershall) wholly fulfilled their financial obligations.

Gazprom increased gas sales to almost all its buyers in Europe. Germany’s intake reached a historic maximum of 53.4 BCm (Nord Stream-I utilization rate was equally at an unseen high of 93 percent). Turkey took in 29 BCm (18 percent growth). France totaled 12.3 BCm (7 percent growth). A combination of cold weather, low price and shrinking domestic gas output in Europe led Gazprom to a spectacular increase in production, too — its year-on-year growth amounted to 52 BCm/year.

Despite regularly occurring fakes that Gazprom is running short of gas, the gas giant is still keeping idle at 100-120 BCm/year of surplus production, mostly on the Yamal peninsula. So technically it can increase its supplies even further, but the real question is whether there will be sufficient demand to meet it.

Further dramatic Europe-bound increases are unlikely until Nord Stream 2 gets onstream. The next few winters might not be as cold as previous ones; oil-pegged gas prices start to appreciate and demand is constrained by existing supply routes. Still, once a pipe dream, now Nord Stream 2 increasingly stands out as Gazprom’s future claim on further European consolidation. The European Commission antitrust enquiry is effectively retracted from the DG Comp’s agenda after Gazprom agreed not to object to cross-border sales of resold Russian gas and make destination clauses flexible.

The EU legal service’s legal opinion on the applicability of the Third Gas Package to an offshore pipeline Nord Stream 2 (it found it was not) all but buried any future European Commission aspirations to block the project. The European Council chief, Donald Tusk, keeps on urging member states to adopt new EU gas rules which would specifically target maritime gas pipelines feeding the EU, however, Germany and France seem highly reluctant to go along with it. If the required legislation is not passed unilaterally before Nord Stream 2 is built (and its construction is already well underway and expected to be finished in 2019), Germany could treat the gas pipeline as a domestic matter, similarly to Nord Stream 1, and act without the EU’s supervision....

...MORE

HT: ZeroHedge

And from Euractiv:
EU need not fear new Russian gas pipeline

DISCLAIMER: All opinions in this column reflect the views of the author(s), not of EURACTIV.com PLC.

Europe’s continuing need for Russian gas – for reasons of proximity and price – is a reality, but it need not leave the EU over a barrel, writes Noah Gordon.

Noah Gordon is a researcher at the Centre for European Reform (CER), a London-based think tank.
Gazprom’s Nord Stream 2 pipeline project has fuelled fresh debate about the European Union’s dependence on gas from Russia.

Critics say that although Western Europe would benefit from cheaper gas, the new pipeline would give Moscow more power over Central Europe’s energy supply and damage Ukraine’s economy. But the risks to the EU can be mitigated if the bloc continues to build a better-integrated, better-connected gas market.

The proposed new pipeline would follow the route of Nord Stream 1 in the Baltic Sea between Russia and Germany, doubling its capacity. The backers of the project are Gazprom, the state-owned Russian company, and five energy companies from Germany, France, the UK, and the Netherlands.

Germany, which promises to become a more important energy hub if the project goes ahead, is supportive, as are Austria and the Netherlands. They argue that the new pipeline makes commercial sense and could also increase security of supply, citing the pricing disputes between Russia and Ukraine that disrupted gas flows to Europe in 2006 and 2009. In 2016, 53% of Russian gas exports to the EU went through Ukraine. With Nord Stream 2, Gazprom could reduce gas exports to the EU that go through Ukraine to around a quarter of current volumes.

However, a group led by Poland and the Baltic States want the pipeline cancelled. They argue that it is a political project to boost Moscow’s hand in the region, and note current import pipelines are only running at around 60% capacity. Moscow has previously interrupted gas flows for political reasons. They say the Nord Stream 2 project runs counter to the EU’s efforts to diversify its energy sources – in 2015 Russia was the EU’s largest single supplier and accounted for 37% of the EU’s natural gas imports.

Critics also note that additional revenues for Russia from Nord Stream 2 would soften the impact of EU sanctions against Moscow and deprive Ukraine of much of the €1.8 billion (nearly 2% of GDP) it earns annually in gas transit fees. It’s unclear how the EU can permanently frustrate Gazprom’s effort to circumvent Ukraine, but those losses would undermine European efforts to support the country. The European Investment Bank has lent Ukraine billions of euros to improve its gas infrastructure, while the EU is working with Ukraine’s state-owned energy company to clean up this notoriously corrupt sector....MORE

Previously:
August 2016
New Russian Pipeline In Baltic Sea Could 'Collapse' Ukraine
May 2014 
EIA Natural Gas Weekly Update: Russian Exports to Western Europe
April 2012 
Putin, Russian Oligarchs Rattled By Rising Importance of EU Shale Gas

See also:
"Berlin, Moscow Negotiate New Trade Accord".
-Reading Eagle
Feb. 12, 1940 

Plus maybe a hundred posts on Gazprom and a thousand on natural gas. Use the 'Search Blog' box if interested.

Corrected—Urban Planning and Energy

Correction: We inadvertently dropped the first two paragraphs and though the article still read surprisingly well, it's like coming into a movie twenty minutes late.
Regret the error.

*****

This piece comes to us via a recommendation by Richard Florida.
From the Congress for New Urbanism's Public Square Journal:

Nov. 2, 2017 
James Howard Kuntsler
The infinite suburb? They must be joking

In their visions of the future, the elite graduate schools of urban planning lately see a new-and-improved suburbia, based on self-driving electric cars, “drone deliveries at your doorstep,” and “teardrop-shaped one-way roads” (I think that means cul-de-sacs) as the coming sure thing. It sounds suspiciously like yesterday’s tomorrow, the George Jetson utopia that has been the stock-in-trade of half-baked futurism for decades. It may be obvious that for some time now we have lived in a reality-optional culture and it’s vividly on display in the cavalcade of techno-narcissism that passes for thinking these days in academia.

Exhibit A is the essay that appeared last month in The New York Times Sunday Magazine titled “The Suburb of the Future is Almost Here,” by Alan M. Berger of the MIT urban design faculty and author of the book Infinite Suburbia — on the face of it a perfectly inane notion. The subtitle of his Times Magazine piece went: “Millennials want a different kind of suburban development that is smart, efficient, and sustainable.”

Note the trio of clichés at the end, borrowed from the lexicon of the advertising industry. “Smart” is a meaningless anodyne that replaces the worn out tropes “deluxe,” “super,” “limited edition,” and so on. It’s simply meant to tweak the reader’s status consciousness. Who wants to be dumb?

“Efficient” and “sustainable” are actually at odds. The combo ought to ring an alarm bell for anyone tasked with designing human habitats. Do you know what “efficient” gets you in terms of ecology? Monocultures. GMO Corn grown on sterile soil mediums jacked with petroleum-based fertilizers, herbicides, and fast-depleting fossil aquifer water. It’s very efficient for producing corn flakes and Cheez Doodles, but has poor prospects for continuing further into this century. Likewise, conventional suburban sprawl, as we’ve known it. Efficiency in ecological terms beats a path straight to entropy and death.

Real successful ecologies, on the other hand, are the opposite of efficient. They are deeply redundant. They are rich in diverse species and functions, many of which overlap and duplicate, so that a problem with one failed part or one function doesn’t defeat the whole system. This redundancy is what makes them resilient, i.e. sustainable. Swamps, prairies, and hardwood forests are rich and sustainable ecologies. Monocultures, such as agri-biz style corn crops, and “big box” retail monopolies are not sustainable and they’re certainly not even ecologies, just temporary artifacts of finance and engineering. What would America do if WalMart went out of business? (And don’t underestimate the possibility as geopolitical tension and conflict undermine global supply lines.)

Monocultural suburbia
Suburbia of the American type is composed of monocultures: residential, commercial, industrial, connected by the circulatory system of cars. Suburbia is not a sustainable human ecology. Among other weaknesses, it is fatally prone to Leibeg’s Law of the Minimum, which states that overall health of a system depends on the amount of the scarcest of the essential resources that is available to it. This ought to be self-evident to an urbanist, who must ipso facto be a kind of ecologist.

Techno-narcissists such as Alan M. Berger take it as axiomatic that innovation of-and-by itself can overcome all natural limits on a planet with finite resources. They assume the new-and-improved suburbs will continue to run on cars, only now they will be driverless and electric, and everything in their paradigm follows from that.

I don’t think so. Like it or not, the human race has not yet found a replacement for fossil fuels, especially oil, which has been the foundation of techno-industrial economies for a hundred years, and it is getting a little late in the game to imagine an orderly segue to some as-yet-undiscovered energy regime.

By the way, electricity is not an energy source. It is just a carrier of energy generated in power plants. We have produced large quantities of it at the grand scale using fossil fuels, hydropower, and nuclear fission (which is dependent on fossil fuels to operate). And, by the way, all of our nuclear power plants are nearing the end of their design life, with no plans or prospects for them to be replaced by new ones. We have maxed out on potential hydroelectric sites and the existing big ones are silting up, which will take them out of service inside this century.

Electricity can also be produced by solar cells and wind turbines, but at nowhere near the scale necessary, on their own, for running contemporary American life. The conceit that we can power suburbia, the interstate highway system, truck-based distribution networks, commercial aviation, the US Military, and Walt Disney World on anything besides fossil fuels is going to leave a lot of people very disappointed.

 The truth is that we have been running all this stuff on an extravagant ramp-up of debt for at least a decade to compensate for the troubles that exist in the oil industry, oil being the primary and indispensible resource for our way of life. These troubles are often lumped under the rubric Peak Oil, but the core of the trouble must be seen a little differently: namely, a steep decline in the Energy Return on Investment (EROI) across the oil industry. The phrase might seem abstruse on the face of it. It means simply that it is becoming uneconomical to extract oil from the ground, even with the so-called “miracle” of “fracking” shale oil deposits. It doesn’t pay for itself, and the EROI is still headed further down.

In the 1930s, the oil industry could get 100 barrels of oil for every barrel of oil in energy they put into production. Drilling on the Texas prairie was like slipping a straw in a milk shake and the oil gushed out of the ground under its own pressure. Today, those old wells are far into depletion and we’re left with unconventional oil. Horizontal drilling and fracking into shale is enormously more expensive to carry out, and offshore deepwater drilling that requires a $100 million floating oil platform is nothing like slipping a straw into a milkshake. They have to go down a mile or more beneath the surface and then another mile into the undersea rock. It’s very expensive plus dangerous. (Remember the BP Deepwater Horizon blowout of 2010?)

The aggregate ratio of oil-out-for-energy-in these days is 17 to 1, and for shale oil it’s more like 5 to 1. You cannot run industrial civilizations at those EROI ratios. 30 to 1 is probably the minimum. And you can’t run renewable alternative energy systems without an underlying support platform of fossil fuels. The implacable reality of this dynamic has yet to sink in at the graduate school fantasy factories.

The world’s major oil companies are cannibalizing themselves to stay in business, with balance sheets cratering, and next-to-zero new oil fields being discovered. The shale oil producers haven’t made a net dime since the project got ramped up around 2005. Their activities have been financed on junk lending made possible by arbitrages on the near-zero Fed fund rate, itself an historical abnormality. The shale oil drillers are producing all-out to service their loans, and by producing all-out they have driven down the oil price, negating their profit....MORE 

So, other than that, it's all good?

Here's "The future of America’s suburbs looks infinite" op-ed piece by Chapman U's Joel Kotkin and MIT's Alan Berger at the OC Register.

Partly Thanks to Paywalls, Lobbyists and Insiders Know the Scoop, Citizens Not So Much

Only partly. A much more important reason is, to put it charitably, most of us are idots.
Yes, idots.
There, I said it.
From Washington Monthly:

Confessions of a Paywall Journalist

Thanks to a booming trade press, lobbyists and other insiders know what’s happening in government. The rest of the country, not so much. 

Back in 2009, I had a job with a Washington, D.C.-based newsletter called Water Policy Report. It wasn’t exactly a household name, but I was covering Congress, the federal courts, and the Environmental Protection Agency—a definite step up from the greased-pig-catching contests and crime-blotter stories I had chased at a community newspaper on Maryland’s Eastern Shore, my first job out of college.

One of my responsibilities at the newsletter was to check the Federal Register—the official portal that government agencies use to inform the public about regulatory actions. In December of that year I noticed an item that said that the Environmental Protection Agency had decided that existing pollution controls for offshore oil-drilling platforms in the Gulf of Mexico were adequate, and that there wasn’t enough pollution coming from those platforms to warrant further review or action.

Curious about that finding, I called Richard Charter, an environmentalist, oil-drilling expert, and senior fellow at the Ocean Foundation to ask him what he thought. Charter told me that the use of a general permit to cover discharges over a broad area like the Gulf of Mexico is ridiculous, and, more specifically, that there were ways in which the EPA went about reissuing the old permit that might not be totally legal under the National Environmental Policy Act.

But the more important issue, Charter said, was the hopeless inadequacy of the government’s oversight of offshore oil drilling. Federal oversight agencies had been documenting shortcomings and conflicts of interest at the Minerals Management Service for years, he said, and in 2003 the House Energy and Commerce Committee heard testimony outlining the ways in which response agencies and drilling companies were unprepared to handle a blowout if it got out of hand.

The dangers were not hypothetical, Charter said. The Montara blowout in Western Australia had just that August spilled more than one million gallons of oil into the Timor Sea and took seventy-four days to cap. Closer to home, if not in more recent memory, was the Ixtoc blowout in 1979, which spilled more than three million barrels into the Gulf of Mexico and took almost a year to cap.

I thanked Charter for his time and wrote my story about the EPA permit, ignoring the broader issue of oil platforms or their environmental risks. Five months later, BP’s Deepwater Horizon drilling platform exploded forty miles off the coast of Louisiana, killing eleven people and setting off the biggest environmental disaster in U.S. history.

By any measure, Deepwater Horizon was the most important environmental catastrophe of the decade, and it illustrated deep and profound shortcomings in the U.S. regulatory approach to offshore drilling. And when it happened, I knew that I had been handed a credible lead and had blown it.

But I couldn’t have followed that lead even if I had wanted to. Offshore drilling safety was tangential, at best, to the core issues covered by the newsletter I was writing for. The law firms and companies that subscribed to us paid thousands of dollars each for a subscription, and they paid that much because we helped them stay abreast of every bit of policy minutia that came out of the government in order to identify threats to their existing investments and potential new investments, or to keep their current clients informed and attract new clients. They paid for the story I wrote, not the story I missed.

On some level, I thought that if what Charter was telling me was that big a deal, it would already have been reported in the New York Times, or on 60 Minutes, or—more likely—in one of the regional newspapers like the Houston Chronicle or the New Orleans Times-Picayune, which report on areas where offshore oil drilling is a big part of the local economy and readers have a keener-than-average interest in the possibility of catastrophic oil accidents. I probably would have been right had it been twenty years earlier. But by 2009, newspapers in general, and the big regional papers especially, were in the midst of a colossal wave of downsizing brought about by the collapse of their business model. With internet outlets like Craigslist siphoning away their classified ads, newspapers could no longer afford to subsidize their large D.C. bureaus, with teams of reporters covering Congress and the agencies and writing stories about the intersection of government policy and issues important to their readers back home. According to a 2009 study by the Pew Research Center, the number of newspapers with bureaus in Washington fell by more than half from the mid-1980s to 2008. The number of newspaper reporters accredited to cover Congress fell by 30 percent between 1997 and 2009. The Center is currently working on research to update those numbers.

Political reporting, however, has not declined at all—quite the contrary. Campaigns, scandals, and fights within and between the parties are covered today with an alacrity that borders on obsession. Growing partisanship and divided government have made the stakes of each day’s political news seem immense, as anyone can see by watching the endless flow of scooplets from Politico and Talking Points Memo, or who watch hour after hour of commentary on FOX News or MSNBC. But while political news is everywhere, coverage of the day-to-day inner workings of government—the slow, steady development of policy in Congress, in the administration, and in the independent regulatory agencies, and how those policies are implemented—has become increasingly scarce in the media that average citizens historically have relied upon.

The opposite, however, is true of the “paywall press”—that is, high-subscription, insider-oriented news organizations like the one I worked for in 2009 and the ones I have worked for since. This sector of the Fourth Estate is booming, and its coverage of government has never been more robust. Trade outlets are steadily adding to their staffs in Washington. New entrants like Bloomberg Government and Politico Pro are experimenting with newer and faster ways to get their coverage to consumers. Long-standing trade publications are merging or being bought up for unbelievable prices.

The audiences for these publications are lobbyists, corporate executives, Hill staffers, Wall Street traders, think tank researchers, contractors, regulators, advocacy group and trade association policy wonks, and other insiders who have a professional interest in up-to-the-second news on the policy issues and whose institutions can afford subscription prices that run thousands of dollars per year. That’s not to say that trade journalists are shills for corporate interests. They are typically smart, energetic professionals with the same ethical standards and passion for digging as their mainstream colleagues. Indeed, with the mainstream press’s shrinking attention to government, trade reporters are often the only ones regularly covering important federal beats. But because of the nature of its business model, the trade press encourages its reporters to pursue the stories its elite readers most want, not necessarily the stories the public most needs—as I saw in my own experience covering offshore drilling.

The rise of the paywall press and the decline of mainstream media coverage of government aren’t causally connected. But the two trends coincide with a palpable populist outrage, in which average Americans are suspicious of how their tax dollars are being spent and observe Washington insiders operate at ever-greater levels of power and secrecy. The irony is that policy journalism in Washington is thriving. It’s just not being written for you, and you’re probably never going to read it.

A Senate gallery reporting credential is the gateway to reporting in Washington. Officially, a Senate press pass allows reporters to wander unaccompanied throughout the Capitol complex. Unofficially, it serves as an official press credential at conferences, agencies, and events around town. It is the solid-gold bona fide that separates the bearer from the public.

In pursuing this story, I analyzed the Congressional Directory from the 101st Congress (1989-1991) through the 113th Congress (2013-2015), counted how many reporters were listed in each bureau, and categorized each bureau as either a newspaper, newswire, trade publication, foreign bureau, or online publication.

What I found was that there are roughly the same number of accredited reporters in Washington today as there were twenty-five years ago, but that more of them are working for trade publications and fewer are working for newspapers and newswires....MUCH MORE

Uh Oh: "Judge rules BP was grossly negligent in oil spill" (BP)

Gross Negligence = $4300/bbl in fines.
From the Houston Chronicle's FuelFix blog:

A federal judge on Thursday ruled that BP’s oil spill in the Gulf of Mexico four years ago was the result of gross negligence or willful misconduct by the London oil company.

The decision could cost BP billions of dollars more in fines for fouling the ocean.

The 152-page ruling comes more than four years after a subsea well blowout triggered an explosion at BP’s leased Deepwater Horizon platform on April 20, 2010, killing 11 workers and sending millions of barrels of oil into the ocean, along with the drilling platform that sank a few days later.

It was the biggest oil spill in U.S. history, lasting 86 days and spreading across hundreds of miles of beach in Louisiana, Texas and surrounding states. It spurred thousands of lawsuits and billions in fines and cleanup costs for BP, Transocean and Halliburton.

U.S. District Judge Carl Barbier of New Orleans said in his ruling BP committed a series of negligent acts and omissions that resulted in the discharge of oil, including drilling a final 100 feet in the Macondo well “with little or no margin.”

A ruling of gross negligence is one of the key factors that could lead to the maximum penalty of Clean Water Act fines for BP, $18 billion, if Barbier later sides with U.S. prosecutors that 4.9 million barrels of oil spilled into the Gulf. Barbier has yet to rule on the amount of oil spilled, but could hand down a judgement at any time....MORE

"How to Burst the "Filter Bubble" that Protects Us from Opposing Views"

I may have the opposite problem, seeing a bit of merit even in the opinions of the lunatics who seem to gravitate toward me on crowded street corners.
From MIT's Technology Review:

Computer scientists have discovered a way to number-crunch an individual’s own preferences to recommend content from others with opposing views. The goal? To burst the “filter bubble” that surrounds us with people we like and content that we agree with.

The term “filter bubble” entered the public domain back in 2011when the internet activist Eli Pariser coined it to refer to the way recommendation engines shield people from certain aspects of the real world.
Pariser used the example of two people who googled the term “BP”. One received links to investment news about BP while the other received links to the Deepwater Horizon oil spill, presumably as a result of some recommendation algorithm.

This is an insidious problem. Much social research shows that people prefer to receive information that they agree with instead of information that challenges their beliefs. This problem is compounded when social networks recommend content based on what users already like and on what people similar to them also like.

This is the filter bubble—being surrounded only by people you like and content that you agree with.

And the danger is that it can polarise populations creating potentially harmful divisions in society.

Today, Eduardo Graells-Garrido at the Universitat Pompeu Fabra in Barcelona as well as Mounia Lalmas and Daniel Quercia, both at Yahoo Labs, say they’ve hit on a way to burst the filter bubble. Their idea that although people may have opposing views on sensitive topics, they may also share interests in other areas. And they’ve built a recommendation engine that points these kinds of people towards each other based on their own preferences.

The result is that individuals are exposed to a much wider range of opinions, ideas and people than they would otherwise experience. And because this is done using their own interests, they end up being equally satisfied with the results (although not without a period of acclimitisation). “We nudge users to read content from people who may have opposite views, or high view gaps, in those issues, while still being relevant according to their preferences,” say Graells-Garrido and co....MORE

"Obama seeks to lift natural gas demand" (WPRT; CLNE)

The FT appears to have the jump on the behemoths on this story.
From the Financial Times:

Plans to increase US demand for natural gas, including a new tax break for gas-fuelled trucks, are being unveiled by President Barack Obama on Thursday as part of the effort set out in his state of the union address to support “American-made energy”.

The proposals, some of which will require legislation from a Congress that has been reluctant to endorse any of president Obama’s initiatives, include a new lease sale of offshore drilling rights in the Gulf of Mexico, the second since the Deepwater Horizon disaster in 2010....MORE

We've been following T. Boone Pickens and George Soros' plays, Clean Energy Fuels and Westport Innovations respectively, for quite a while, use the search blog box, keywords Westport or CLNE.

"How Much Are You Willing to Pay to be Nuke-Free?"

From R-Squared Energy blog:

A Plan to Phase Out “Dirty” Energy
After the Deepwater Horizon spill in the Gulf of Mexico, someone said to me “We have to stop all offshore drilling.” My response was that I could get behind that idea, but I wanted to know what sacrifices the person was willing to make. That turned out to be the end of the conversation, because usually the people campaigning against these sorts of things believe that the consequences will be all good (no more oil spills) with no real downside (like less energy available). I can tell you with absolute certainty that we can live with no offshore drilling, but I can also tell you that the price of your fuel would be greater — and probably far greater — than it is today.

I believe that the reason we have so much “dirty” energy is that we demand cheap energy. I spoke to a reporter in Japan this week about the crisis at the Fukushima nuclear plant, and he said he couldn’t help but notice that despite some rolling blackouts now, Japan remains very much a country with all of the lights on.
Root Cause: Consumers Demand Cheap, Abundant Energy

This gets right to the heart of why we have nuclear power: We demand cheap energy; energy so cheap that we can afford to leave all of the lights in the house on all day long. Both coal and nuclear-generated electricity are viewed as cheap relative to many other options — admittedly debatable given charges of government subsidies and the occasional environmental calamity — as well as reliable (again, environmental calamities notwithstanding).

My response to the reporter was that I love lobster, but I rarely eat it because it is so expensive. If they served $2 lobster at McDonalds, we would all consume much more lobster and of course the supply of lobsters would be under pressure. If we all demanded cheap lobster and got angry when our lobsters became more expensive, politicians would work to give us what we want lest they be voted out of office. We would see all sorts of lobster-related subsidies designed to bring us all cheap lobsters (which have to be paid through taxes and/or deficit spending). Consequences of our cheap lobster demands — higher deficits and possibly no more lobsters — would be pushed onto another generation....MUCH MORE

U.S. Primary Energy Flow by Source and Sector, 2009 (Quadrillion Btu). Source: EIA.

Hurricane season draws to a close, Insurers/Reinsurers Score Big (BRK.B; ALL; TRV)

From Wunderblog:

November 30 marks the final day of the 2010 Atlantic hurricane season--a strange and highly active season. While it was an exceptionally active year, with 19 named storms, 12 hurricanes, and 5 intense hurricanes, deaths and damages were far below what one would expect from so much activity. To me, this year is most memorable for what didn't happen--we did not get a full fledged hurricane rip through the Deepwater Horizon oil spill, nor did a devastating hurricane cause massive loss of life in Haiti's vulnerable earthquake zone. However, two hurricanes from this year are virtually certain to get their names retired--Tomas and Igor--and two other storms that did billions of damage to Mexico, Karl and Alex, are likely to have their names retired, as well.

The 19 named storms, 12 hurricanes, and 5 intense hurricanes were 198%, 203%, and 217% of the 1950-2000 average for named storms, hurricanes and major hurricanes, respectively. The nineteen named storms ties 2010 with 1995 and 1887 for 3rd place for most number of named storms in an Atlantic hurricane season. Only 2005 (28 named storms) and 1933 (21 named storms) were busier (Atlantic hurricane records go back to 1851, though there were likely many missed named storms prior to the beginning of satellite coverage in the mid-1960s.) This year also featured twelve hurricanes, tying 2010 with 1969 for second place for most hurricanes in a season. The record is held by 2005 with fifteen hurricanes. The five major hurricanes this year puts us in a tie for ninth place for most major hurricanes in a season. This year's Accumulated Cyclone Energy (ACE) index was 163, putting it in 13th place for ACE since 1944. A "hyperactive" hurricane season is considered to have an ACE index of >175% of the median. According to Wikipedia, median ACE measured over the period 1951–2000 for the Atlantic basin was 87.5, so 2010 is a hyperactive year by that definition (183% of the median.)



Friendly steering currents for the U.S.
As active as the 2010 season was, only one weak tropical storm made a direct landfall on the U.S. (Tropical Storm Bonnie, which hit South Florida in August as minimal tropical storm with 40 mph winds.) During the 15-year active hurricane period from 1995 - 2009, 33% of all named storms in the Atlantic hit the U.S., and 30% of all Atlantic hurricanes hit the U.S. at hurricane strength. Thus, the U.S. should have expected the landfall of six named storms, four of them being hurricanes, and two being intense hurricanes. So, the U.S. really lucked out this year. For comparison, here's how the U.S. fared in the four other hurricane seasons as busy or more busy:

2005: 28 storms, 7 hit the U.S. (5 were hurricanes, and 4 of those major huricanes)
1933: 21 storms, 7 hit the U.S. (5 were hurricanes, and 3 of those were major hurricanes)
1995: 19 storms, 5 hit the U.S. (2 were hurricanes, and 1 was major)
1887: 19 storms, 5 hit the U.S. (3 were hurricanes, no majors)

We had twelve hurricanes in the Atlantic in 2010, yet none of them struck the U.S. Since 1900 there is no precedent of an Atlantic hurricane season with ten or more hurricanes where none has struck the U.S. as a hurricane. The eleven previous seasons with ten or more hurricanes--1870, 1878, 1886, 1893, 1916, 1933, 1950, 1969, 1995, 1998, and 2005--each had at least two hurricane strikes on the U.S. Since hurricane Ike (2008), there have been eighteen consecutive non US-landfalling hurricanes. Such a sequence last happened between Irene (1999) and Lili (2002), with 22 consecutive non US-landfalling hurricanes, and between Allen (1980) and Alicia (1983) with seventeen consecutive non US-landfalling hurricanes (thanks go to Adam Lea of tropicalstormrisk.com for these stats.)

No major Category 3 and stronger hurricanes have hit the U.S. since Hurricane Wilma of 2005. This is just the third such major hurricane drought since 1851. The other two such 5-year major hurricane droughts were 1901 - 1905 and 1910 - 1914. Also, 2010 is the only year besides 1951 when there have been five major hurricanes in the Atlantic, and none have hit the U.S. (1958 is also listed as such a year, but preliminary results from a re-analysis effort shows that Hurricane Helene hit North Carolina as a major hurricane that year.) There has never been a six year period without a U.S. major hurricane landfall.

The reason the U.S. got so lucky--and that Canada and Mexico took a much more severe beating than usual--was that the Azores/Bermuda high was farther east than usual, and there were more strong troughs of low pressure over the U.S. East Coast than usual. In addition, there was stronger high pressure than usual over the U.S. Gulf Coast, which deflected Caribbean storms into Mexico....MORE

No U.S. landfalls. Just pocket those premiums and mosey on down the road.

Moody's and GimmeCredit on Transocean including Mocondo Liability (RIG)

I don't like copying out whole articles, good writing deserves a visit.
In this case the writing is so tight I couldn't figure out where to make the jump. I'll link to the homepage so you can check it out if you wish.
From the Houston Chronicle's FuelFix:

Thumbs up or Thumbs down?
Mixed reports on Transocean

Credit rating firms GimmeCredit and Moody’s both issued updates on drilling rig operator Transocean today, but the tones of their assessments were quite different.

GimmeCredit says timing of $2 billion in new unsecured notes Transocean issued last week was “shrewd and opportunistic.”

Yes, there are a lot of possible financial liabilities the company might face from the Deepwater Horizon accident. But given Transocean’s $2.9 billion of cash on hand, $2 billion on a revolving credit facility, no looming liquidity needs and some $27.6 billion in new business on tap, GimmeCredit is upbeat on the outlook for the company.
“We’d bet that nearly all of these contingencies will take years to play out, making it highly desirable that the cash cushion be sustained,” GimmeCredit writes. With a strong outlook for the drilling market’s rebound, “There’s still more upside, as the moratorium ends and RIG’s strengths play out.”

Moody’s Investors Service, which dropped its ratingon Tranocean last month due to the Gulf oil spill, notes that the company’s exposure to potential damages from the disaster will likely be limited to $6 billion. That much the firm should be able to handle. “… but any damaged beyond that could force the company to consider other ways to raise capital, including asset sales.”

Moody’s estimates for spill costs (to all parties, not just Transocean) includes $6.1 billion for spill cleanup, between $4.5 billion and $30.2 billion for fines under the Clean Water Act and about $220 million for wrongful death lawsuits (based on an estimated $20 million settlement for each of the 11 workers killed in the blast).

Is Transocean prepared to handle a share of the payouts? Moody’s thinks the indemnification contract between BP and Transocean appears to keep the rig operator off the hook for any damages. However:

“If BP attempts to challenge the indemnification in court, it could conceivably win an interim judgment or fine for which Transocean could be responsible, possibly within the next 12-18 months — particularly if we see pressure from the U.S. government.”

The company has a $1 billion liability insurance policy, strong cash flow and has done well paying off past debt. But its credit facility has Material Adverse Effect that could prevent the company from tapping into it in some instances.

“Transocean should be able to manage the liabilities that emerge from Macondo — provided those liabilities remain within the limits that we expect, and do not exceed about $6 billion. But this cannot be taken for granted. The company’s role in the accident is unclear at the moment, and much depends on what investigations find and what the courts decide in future legal actions, which could conceivably exceed our worst-case expectatio

More on the FBR Downgrade: "Anadarko Petroleum Engulfed by Uncertainty" (APC)

Yesterday we had the blurb: "Anadarko Raising $1.5 Billion; Downgraded At Friedman Billings on Valuation (APC)" when the stock traded up 67 cents. Today however...
With the S&P 500 down 1.18% APC is off $2.39 (4.24%) at $53.94.
Here's Barron's Hot Research:

FBR Capital downgraded the energy firm to Market Perform from Outperform.
Anadarko Petroleum (APC: NYSE)
By FBR Capital Markets ($55.68, Aug. 9, 2010)
WE ARE DOWNGRADING Anadarko Petroleum (ticker: APC) to a Market Perform from Outperform to reflect our comfort with current valuation.

Our viewpoint reflects a conservative take on continued uncertainty around the Horizon event-related ultimate net liability to Anadarko as well as uncertainty around timing and rules of re-engagement with regard to resumption of Gulf of Mexico (GOM) drilling activity.
We believe investors should wait for reasonable clarity before further reducing event-related liability factored into the current stock price. Clarity on the regulatory front is also needed before credit to exploratory and development potential in GOM is ascribed back to the stock price.
We note we are raising our price target to $60 per share from $55 per share to reflect a reduction in the markets' ascription of event-related liability to $6 billion (primarily because of progress made on containment of leakage from the time of our last note in early June) from $8 billion. Our net asset value (NAV)-based price target assumes zero credit for future GOM discoveries and $6 billion for event liability. We will await developments on these fronts as well as results on key international exploratory drilling activity before revisiting our rating and valuation.

We calculate that the market is pricing in gross $55 billion in total liability associated with the Horizon incident for the joint venture partners of the project. We estimate that 85% of this liability or $46.5 billion has been ascribed by the marketplace to BP (BP), 11% or $6 billion to Anadarko and an implied 4% to Mitsui (MITSY). We note though that this is very different than what would be implied by the working interest (W.I.) ownership of 65% ($36 billion) for BP and 25% ($14 billion) for Anadarko.

Without deepwater GOM, Anadarko to us looks like a combination of Apache (APA) and Nabors Industries (NBL); these two companies trade at an average of 6.5 times 2010 and 5.9 times 2011 total enterprise value (TEV) multiples. On a cash flow basis, assuming an average $6 billion liability for the event, 2010 and 2011 TEV multiples for Anadarko calculate to 6.4 times 2010 and 5.8 times 2011. This approach affirms to us the relative stock price performance-driven calculation of $6 billion net Anadarko share of the liability.
Prior to the event, our 3P (proved, probable and possible) NAV of $175 per share for Anadarko by end of 2012 had assumed about $9 per share in value creation from deepwater U.S. GOM exploratory activities by end of 2012. We had also assumed $15 per share of value creation from development (Caesar Tonga Phase II, Lucius, Shenandoah, and Heidelberg) activities by end of 2012.

Assuming instead no credit due to uncertainty still associated with the future of GOM subsalt drilling, our 3P NAV declines to $110 today. Our price target for such an enterprise today would be 65% the 3P NAV, i.e. $72 per share. Deducting market implied $6 billion in liability from this implies current price of $60 per share NAV-based value.

We understand Anadarko's argument for gross negligence on BP's part. Also, it seems to make strategic legal sense for BP to purse an out of court settlement with its joint-venture partners. But, we will admit that we are really not qualified to determine if the above-discussed gross and/or company-specific allocation of liability is appropriate or too high/too low. As such, we are willing to presume that the market is correct in its quantification of total and assignment of individual liabilities and instead focus our efforts on fundamental outlook and gut feel with regards to the appropriateness of liability quantification and assignment of it.

We remain fans of the subsalt GOM potential for the industry in general. To us, Anadarko's Lucius project alone could be a billion-barrel field. As such, we believe that all the associated economic ramifications of domestic oil supply sources render reinitiating of drilling in deepwater GOM as an inevitability. But, indeed, rules of engagement need clarity before we give credit to the companies involved.

Material acreage positions and/or proven successes in frontier areas like Brazil, Ghana, Indonesia, Mozambique and New Zealand; need we say more. What we would note is that we are believers that exploratory renaissance is ongoing where countries that typically would not have come to mind are due to improvements in seismic and drilling technology.During the next couple of quarters, the next catalysts on this front are Iron Clad prospect (Mozambique), Wahoo South and Itauna prospects and Itaipu appraisal (Brazil).

The company reported earnings per share/cash flow per share (EPS/CFPS) 49 cents/$2.56 versus the FBR estimate of 59 cents/$3.12 and consensus of 37 cents/$2.75. The company also revised its full-year 2010 production guidance upward by 232 million barrels of oil equivalent (MMBOE) to 256 MMBOE for 2010. The company's diversified and deep portfolio is enabling the company to deliver results despite the deepwater issues.

-- Rehan Rashid
-- Saurabh Lele

Also at Hot Research:

• August 06 
• NetSuite's Sweet Quarter
• August 05 
• ADM's Catalysts Lining Up

Transocean contract says all blowout costs fall to BP (RIG; BP' APC)

Don't that beat all?
From NewsWatch: Energy:
Transocean released a copy of its contract with BP for the use of the Deepwater Horizon rig (see below), which seems to show much of the responsibility for spill-related issues falls to BP.
In the document all references to "company" mean BP and "contractor" means Transocean.
BP should pay for all the well-control costs, according to the document:

(c) Blowout and cratering
In the event that any WELL shall blowout or crater from any cause, including, but not limited to, the negligence or breach of duty (statutory, contractual or otherwise) of the CONTRACTOR GROUP, COMPANY shall be responsible for and release, indemnify and hold harmless CONTRACTOR GROUP for all CLAIMS resulting therefrom, and shall bear the entire cost and expense of, killing the WELL or otherwise bringing the WELL under control.

Transocean is responsible for spills on the surface of things like fuel from the rig, but BP is on the hook for pollution from the well:

(ii) Blow-out, cratering, seepage or uncontrolled release of hydrocarbons
Except as provided for under the provisions of Sub-article 21.5 (b) (i) but subject always to Sub-article 21.5 (b) (iv), COMPANY shall assume all responsibility for, including control, clean-up and removal of and shall release, defend, indemnify and hold harmless CONTRACTOR GROUP from all CLAIMS, howsoever caused and arising in relation to pollution or contamination which may result from fire, blow-out, cratering, seepage, or any other uncontrolled flow of oil, gas, wastes or other substance from any WELL arising out of the CONTRACT.

...MORE

Anadarko Trading Up After Earnings, Conference Call Tomorrow (APC)

The stock is up 85 cents (1.6%) at $53.99 in after-hours action.
Here's the press release via MarketWatch (It reads as if it were written by P.R. types aiming to reassure in conjunction with  attorneys aiming to say nothing ):

Anadarko Announces Second-Quarter Results
Raises Sales-Volumes Guidance While Reaffirming Capital Receives Commitments for New Five-Year Credit Facility 

Anadarko Petroleum Corporation (APC 54.00, +0.86, +1.62%) today announced a second-quarter 2010 net loss attributable to common stockholders of $40 million, or $0.08 per share (diluted). These results include certain items typically excluded by the investment community in published estimates. In total, these items decreased net income by approximately $284 million, or $0.57 per share (diluted) on an after-tax basis.(1) Cash flow from operating activities in the second quarter of 2010 was $1.566 billion, and discretionary cash flow totaled $1.278 billion.(2)

SECOND-QUARTER 2010 HIGHLIGHTS
-- Increased quarterly sales volumes by 6 percent over second-quarter 2009
-- Reduced lease operating expenses per unit by 15 percent over second-quarter 2009
-- Announced successful appraisal results in the Gulf of Mexico and Ghana
-- Achieved significant growth in shale programs
-- Continued to advance sanctioned mega projects on time and on budget

"During the second quarter, Anadarko's diverse portfolio continued to deliver upon our operating and strategic objectives with increased sales volumes, improved cost management and margins, continued drilling success onshore and offshore, and significant gains in drilling efficiencies," Anadarko Chairman and CEO Jim Hackett said. "Because of the company's strong and consistent portfolio performance, we are increasing full-year production guidance for the second time this year, while maintaining initial capital guidance. We now expect sales volumes to be in the range of 232 million to 236 million BOE (barrels of oil equivalent), representing an increase of 5 to 7 percent over 2009."...

...DEEPWATER HORIZON EVENT UPDATE
During the second quarter, the Macondo well in the Gulf of Mexico, in which Anadarko holds a 25-percent non-operating interest, discovered hydrocarbon accumulations. During suspension operations, the well blew out, an explosion occurred on the Deepwater Horizon drilling rig and the rig sank, resulting in the deaths of 11 crew members and the release of hydrocarbons into the Gulf. As previously stated, Anadarko believes that, based on the publicly available information, testimonies and investigations to date, this tragedy was preventable and likely the result of the operator's gross negligence and/or willful misconduct. A more detailed description of the potential liabilities related to this event are included in the company's second-quarter 2010 report on Form 10-Q that will be filed with the U.S. Securities and Exchange Commission....MORE 

CONFERENCE CALL TOMORROW AT 9 A.M. CDT, 10 A.M. EDT
Anadarko will host a conference call on Wednesday, Aug. 4, at 9 a.m. Central Daylight Time (10 a.m. Eastern Daylight Time) to discuss second-quarter results, current operations and the company's outlook for the remainder of 2010. The dial-in number is 888.680.0878 in the United States or 617.213.4855 internationally. The confirmation number is 39759023. For complete instructions on how to participate in the conference call, or to listen to the live audio webcast and slide presentation, please visit www.anadarko.com. A replay of the call will also be available on the Web site for approximately 30 days following the conference call.