Friday, August 1, 2014
PLACERVILLE, CALIFORNIA
99 CENTS

Fracking the economy

By
From page A4 | May 16, 2014 |

Count on one thing. The Obama administration dislikes oil. Though it touted the increased domestic oil production while President Obama ran for reelection, it will do everything it can behind the scenes to hinder it. Witness two years-going on three years of delay of the Keystone XL Pipeline to bring Canadian oil to the Gulf Coast refineries.

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Just this year the original Keystone Pipeline was completed and is delivering 700,000 barrels per day of Canadian Oil. This pipe begins in Alberta, heads east through Saskatchewan and Manitoba before heading south through North and South Dakota, then through Nebraska, Kansas and to Cushing, Okla. From a location on the Kansas-Nebraska border, a line branches off to south Illinois to serve Midwest refineries. This year the leg from Oklahoma to Texas and Louisiana was completed. That line is 2,151 miles.

The XL Pipeline would head directly south from Alberta through Montana, South Dakota, Nebraska and hook up with existing facilities at the Kansas-Nebraska border. A shorter route at 1,661 miles, it would bring considerably more oil — 830,000 barrels per day. It would also transport oil from North Dakota’s Bakken Fields and Montana’s Williston Field.

The Keystone Pipeline is 30 inches in diameter. The Keystone XL will be 36 inches wide. It will cost $7.6 billion. Promoters have estimated 20,000 jobs, including construction and steel and pipeline fabrication. Without the Keystone XL extension, Bakken oil will continue to be delivered exclusively by train.

Besides putting off a decision on the Keystone XL Pipeline from the presidential election of 2012 to after the coming November midterm-election, Obama is using his Environmental Protection Agency to attack shale fracturing that has produced record oil flows and natural gas. The government report for April is the U.S. oil industry is on track to produce 8.5 billion barrels of oil per day, a 20-year high. The prediction for 2015 is 9.2 billion barrels per day, the best since 1972. Americans consumed 18.9 billion barrels per day. Some forecasts see U.S. oil production meeting all U.S. demand by 2020.

Energy independence by 2020 could be an illusion if the EPA starts attacking shale fracturing. The first step is “considering” whether to gather information on the chemicals used in hydraulic shale fracturing. That opens a 90-day comment period.

Bloomberg News May 9 quoted the lead scientist for the Environmental Defense Fund as saying, “This is only the first baby step toward initiating the rule-making process EPA said it would undertake.”

In other words, expect more. The EPA wants to be the regulatory agency for fracking. It wants to preempt state regulatory agencies.

Oil is not the only fracking benefiting this country. Fracking in the Marcellus Shale in Pennsylvania has been creating a surplus of natural gas that utility companies are using to replace coal to generate power. There is so much natural gas that now permits are being sought to export it in a liquified form. It is so plentiful the price — at about $4.37 per million Btu — has become unhinged from the price of oil. This country is the biggest producer of natural gas — more than Russia.

The bargain price of natural gas is resulting in 48 factories and plant expansions that will rely on low natural gas prices. That’s $100 billion and $125 billion in petrochemical investments.

The low price of natural gas is attracting foreign companies. Between 2010 and 2012 energy intensive companies added 196,600 U.S. jobs, the Wall Street Journal reported March 24. This, in turn, is leading to more steel fabrication orders.

The trick is to keep the EPA from knocking the golden egg off the wall like Humpty Dumpty.

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