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No Turning Back: Mexico’s Looming Fracking, Offshore Oil & Gas Bonanza

5:00 pm in Uncategorized by Steve Horn

Cross-Posted from DeSmogBlog

 

Pemex

A look at the Pemex energy boom.

After generations of state control, Mexico’s vast oil and gas reserves will soon open for business to the international market.

In December 2013, Mexico’s Congress voted to break up the longstanding monopoly held by the state-owned oil giant Petroleos Mexicanos — commonly called Pemex — and to open the nation’s oil and gas reserves to foreign companies.

The constitutional reforms appear likely to kickstart a historic hydraulic fracturing (“fracking”) and deepwater offshore oil and gas drilling bonanza off the Gulf of Mexico.

“This reform marks a major breakthrough in Mexico’s economic history only comparable to the signing of the North America Free Trade Agreement (NAFTA) in 1992,” international investing and banking giant Banco Bilbao Vizcaya Argentaria (BBVA) wrote in a January 2014 economic analysis.

What does this mean for the oil and gas industry in Mexico? And for the workers and those who live above these oil and gas plays or along the pipeline routes that will funnel the liquids to refineries? And how about for the Earth’s atmosphere?

Can Mexico’s fossil fuel infrastructure handle the boom? Can the country spare the precious freshwater supplies needed for thirsty fracking operations in an era of increasingly severe droughts and drinking water shortages? Can environmental, safety and public health regulations possibly keep up with this industrial boom?

DeSmogBlog will examine all these issues and more as Mexico opens its fossil fuel reserves to international exploitation in the weeks and months ahead. But, first, an overview of the state of play in Mexico’s energy reforms.

Full Circle: History of Mexican Energy Reforms

The contemporary history of Mexico’s energy industry started in 1938 when the federal government kicked out foreign oil companies and nationalized the oil and gas sector under the Pemex banner.

As a recent report published by the Congressional Research Service explains, nationalization occurred in the aftermath of a bitter labor dispute between Mexican workers and the international oil and gas firms who wanted to gain a foothold in the country.

“Tensions culminated in President Lázaro Cárdenas’ historic 1938 decision to abandon efforts to mediate a bitter labor dispute between Mexican oil workers and foreign companies and instead follow through on his threat to expropriate allU.S. and other foreign oil assets in Mexico,” the report explains.

Upon its creation in 1938, Pemex became a symbol of national pride and…united a disparate Mexican society against foreign intervention.

For 75 years, Pemex alone had access to Mexico’s massive oil and gas reserves. Mexico is the world’s 9th largest producer of oil and revenues from developing the resource fund roughly one-third of the country’s budget.

But Enrique Peña Nieto of the Institutional Revolutionary Party (PRI), elected in July 2013, has made the “open door” energy reforms — on top of reforms in a whole host of other policy spheres — a top priority for his administration as part of his “Pact for Mexico.”

There’s some historical irony at play here: Nieto’s PRI is the party that originally nationalized the Mexican oil industry to begin with.

And the constitutional amendments also bring labor relations full circle, as the new board of directors for Pemex won’t include union representation, even though a labor dispute served as the rationale for nationalization of the Mexican energy industry back in 1938.

All five union representatives have been removed from the board of Pemex, which is shrinking from 15 to ten members.

Gold Rush

Proponents for Mexico’s energy reforms envision a gold rush. They argue the constitutional amendments and accompanying secondary legislation still up for debate in the Mexican legislature could add as much as $35 billion in outside investment into the national coffers.

Pemex says $25 to $60 billion could come its way as a result of joint ventures it can now sign with international oil and gas companies, while the industry-funded Manhattan Institute says 2.5 million jobs and more than $1 trillion in revenue could be created by 2025.

Texas Observer investigative journalist Shannon Young is skeptical of the numbers and figures being tossed around, however:

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Joe Biden Turns Fracking Missionary On Ukraine Trip

1:39 pm in Uncategorized by Steve Horn

Cross-Posted from DeSmogBlog 

Caricature of Joe Biden

Joe Biden: Global fracking evangelist.

During his two-day visit this week to Kiev, Ukraine, Vice President Joe Biden unfurled President Barack Obama’s “U.S.Crisis Support Package for Ukraine.”

A key part of the package involves promoting the deployment of hydraulic fracturing (“fracking”) in Ukraine. Dean Neu, professor of accounting at York University in Toronto, describes this phenomenon in his book “Doing Missionary Work.” And in this case, it involves the U.S. acting as a modern-day missionary to spread the gospel of fracking to further its own interests.

With the ongoing Russian occupation of Crimea serving as the backdrop for the trip, Biden made Vladimir Putin’s Russia and its dominance of the global gas market one of the centerpieces of a key speech he gave while in Kiev.

“And as you attempt to pursue energy security, there’s no reason why you cannot be energy secure. I mean there isn’t. It will take time. It takes some difficult decisions, but it’s collectively within your power and the power of Europe and the United States,” Biden said.

“And we stand ready to assist you in reaching that. Imagine where you’d be today if you were able to tell Russia: Keep your gas. It would be a very different world you’d be facing today.”

The U.S. oil and gas industry has long lobbied to “weaponize” its fracking prowess to fend off Russian global gas market dominance. It’s done so primarily in two ways.

One way: by transforming the U.S. State Department into a global promoter of fracking via its Unconventional Gas Technical Engagement Program (formerly theGlobal Shale Gas Initiative), which is a key, albeit less talked about, part of President Obama’s “Climate Action Plan.”

The other way: by exporting U.S. fracked gas to the global market, namely EUcountries currently heavily dependent on Russia’s gas spigot.

In this sense, the crisis in Ukraine — as Naomi Klein pointed out in a recent article — has merely served as a “shock doctrine” excuse to push through plans that were already long in the making. In other words, it’s “old wine in a new bottle.”

Gas “Support Package” Details

Within the energy security section of the aid package, the White House promises in “the coming weeks, expert teams from several U.S. government agencies will travel to the region to help Ukraine meet immediate and longer term energy needs.”

That section contains three main things the U.S. will do to ensure U.S. oil and gas companies continue to profit during this geopolitical stand-off.

1) Help with pipelines and securing access to gas at the midstream level of production.

“Today, a U.S. interagency expert team arrived in Kyiv to help Ukraine secure reverse flows of natural gas from its European neighbors,” the White House fact sheet explains. “Reverse flows of natural gas will provide Ukraine with additional immediate sources of energy.”

2) Technical assistance to help boost conventional gas production in Ukraine. That is, gas obtained not from fracking and horizontal drilling, but via traditional vertical drilling.

As the White House explains, “U.S. technical experts will join with the European Bank for Reconstruction and Development and others in May to help Ukraine develop a public-private investment initiative to increase conventional gas production from existing fields to boost domestic energy supply.”

3) Shale gas missionary work.

“A technical team will also engage the government on measures that will help the Ukrainian government ensure swift and environmentally sustainable implementation of contracts signed in 2013 for shale gas development,” says the White House.

ExxonMobil Teaching Russia Fracking

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Russia with Love: Alaska Gas Scandal Is Out-of-Country, Not Out-of-State

12:25 pm in Uncategorized by Steve Horn

Cross-Posted from DeSmogBlog

A legal controversy — critics would say scandal — has erupted in Alaska’s statehouse over the future of its natural gas bounty.

It’s not so much an issue of the gas itself, but who gets to decide how it gets to market and where he or she resides.

The question of who owns Alaska’s natural gas and where they’re from, at least for now, has been off the table. More on that later.

At its core, the controversy centers around a public-private entity called the Alaska Gasline Development Corporation (AGDC) created on April 18, 2010 via House Bill 369 for the “purpose of planning, constructing, and financing in-state natural gas pipeline projects.”AGDC has a $400 million budget funded by taxpayers.

AGDC was intially built to facilitate opening up the jointly-owned ExxonMobil-TransCanada Alaska Pipeline Project for business. That project was set to be both a liquefied natural gas (LNG) export pipeline coupled with a pipeline set to bring Alaskan gas to the Lower 48.

TransCanada

Things have changed drastically since 2010 in the U.S. gas market though, largely due to the hydraulic fracturing (“fracking”) boom. And with that, the Lower 48 segment of the Alaska Pipeline Project has become essentially obsolete.

Dreams of exporting massive amounts of Alaskan LNG to Asia, however, still remain. They were made much easier on April 14, when the Kenai LNG export facility received authorization to export gas from the U.S. Department of Energy.

Enter the latest iteration of AGDC. This phase began in January 2014 after Governor Sean Parnell, formerly a lobbyist for ConocoPhillips, signed Senate Bill 138 into law.

The bill served as a Memorandum of Understanding (MOU) between Alaska, the AGDC, ConocoPhillips, BP, ExxonMobil, and TransCanada, with the four companies now serving as co-owners of the South Central LNG Pipeline Project.

Gov. Parnell also announced who would serve on the AGDC Board of Directors in September 2013, which began meeting in October 2013. And that’s where the story starts to get more interesting.

Meet Richard “Dick” Rabinow

Under Alaska state law, you have to be a state citizen to serve on state commissions like AGDC. But one of the seven Board members, Richard “Dick” Rabinow, is a citizen of a state far from Alaska: Texas.

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Interview: “Big Men” Director Rachel Boynton on Oil, Ghana and Capitalism

4:17 pm in Uncategorized by Steve Horn

 

Cross-Posted from DeSmogBlog

The subtitle of the newly released documentary film Big Men is “everyone wants to be big” and to say the film covers a “big” topic is to put it mildly.

Poster for Big Men shows a giant suited man holding a oil derrick

“Everyone wants to be big …”

Executive produced by Brad Pitt and directed by Rachel Boynton, the film cuts to the heart of how the oil and gas industry works and pushes film-watchers to think about why that’s the case. Ghana’s burgeoning offshore fields — in particular, the Jubilee Field discovered in 2007 by Kosmos Energy — serve as the film’s case study.

Boynton worked on the film for more than half a decade, beginning the project in 2006 and completing it in 2013. During that time, the Canadian tar sands exploded, as did the U.S. hydraulic fracturing (“fracking”) boom — meanwhile, halfway around the world, Ghana was having an offshore oil boom of its own.

Kosmos Energy (KOS), previously a privately held company, led the way. Adding intrigue to the film, Kosmos went public while Boynton was shooting. Kosmos didn’t do it alone, though: the start-up capital to develop the Jubilee Field came from private equity firm goliaths Blackstone Group and Warburg Pincus, a major part of the documentary.

What makes Big Men stand above the rest is the access Boynton got to tell the story. Allowed into Kosmos’ board room, the office of Blackstone Group, encampments of Nigerian militants and the office of the President of Ghana, the film has a surreal quality to it.

Now screening in Dallas, New York City and Portland, the film will soon open in theaters in Chicago, Seattle and Los Angeles.

After seeing the film at Madison’s Wisconsin Film Festival, I reached out to Boynton to talk to her about Big Men, what it had in common with her previous film (one of my favorites) Our Brand is Crisis and what other documentary projects she has on the go.

Steve Horn: I’ve seen your first film, Our Brand is Crisis, and there seems to be a continuity in a way between Our Brand and Big Men because Bolivian ex-president “Goni” (Gonzalo Sánchez de Lozada) was chased out of Bolivia eventually because he attempted to privatize Bolivia’s gas and was basically in office to begin with because people from the outside came in and helped place him there (U.S. Democratic Party political consultants and electioneers) to begin with.

One could see a similarity between the PR efforts led by those electioneers, which serves as the premise of Our Brand, and a western oil company like Kosmos coming into Ghana to bring offshore oil and gas drilling to the country.

Did what eventually happened in Bolivia with their gas market — because these U.S. consultants came in and helped get “Goni” elected —move you to start thinking about energy (oil, gas, etc.) as a documentary film topic?

Rachel Boynton: No, not at all. In that sense they’re totally unrelated. The origin of both projects is completely unrelated.

I finished Our Brand is Crisis in 2005 and it had its theatrical run in 2006 and so back in 2005 I started thinking about what I wanted to do next and at the time, oil prices were going through the roof and everyone was freaking out about peak oil.

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North Carolina Renewable Energy Initiatives Under Attack by ALEC

12:49 pm in Uncategorized by Steve Horn

Duke Energy

Duke Energy's Cliffside Coal Plant

Cross-Posted from DeSmogBlog

Renewable energy is under attack in the Tar Heel State. That’s the word from Greenpeace USA‘s Connor Gibson today in a report that implicates King Coal powerhouse, Duke Energy and the fossil fuel industry at-large.

The vehicle Duke Energy is utilizing for this attack is one whose profile has grown in infamy in recent years: the American Legislative Exchange Council (ALEC).

ALEC is described as a “corporate bill mill” by its critics. It’s earned such a description because it passes “model bills” written by corporate lobbyists and to boot, the lobbyists typically do so behind closed doors at ALEC’s annual meetings.

The ALEC-Duke Alernative Energy Attack

Gibson puts it bluntly in his exposé, explaning that North Carolina Republican Rep. Mike Hager “says he is confident that he has the votes needed to weaken or undo his state’s [renewable] energy requirements during his second term.” 

Hager is a former Duke employee, where he worked as an engineer. Duke maintains its corporate headquarters in Charlotte, NC. 

The model bill Hager appears likely to push is called the Electricity Freedom Act,” a piece of legislation calling for the nullification of any given state’s Renewable Energy Portfolio Standards (REPS). Passed in October 2012 by ALEC, the bill was actually co-written with the fossil fuel-funded think tank, the Heartland Institute (of “Heartland Exposed” fame). 

“We wrote the model legislation and I presented it. I didn’t have to give that much of a case for it,” James Taylor of Heartland told The Washington Post in a November 2012 investigative report.

Taylor’s claims are backed by economic analyses of a sort.

That is, the sort one would expect from a group heavily funded by the fossil fuel industry (Heartland) teaming up with a group receiving 98 percent of its funding from corporate interests (ALEC). As The Post explained back in November:

As part of its effort to roll back renewable standards, ALEC is citing economic analyses of state policies co-published by Suffolk University’s Beacon Hill Institute and the State Policy Network. Both groups have received donations from foundations funded by the Koch brothers.

Gabe Elsner of the Checks and Balances Project described ALEC’s game plan as a deceptive “one-two punch” against renewable energy to The Post.

“You push the legislation to state legislators and then you fund reports to support the argument and convince state lawmakers and all without any transparency or disclosure about the sources of this funding,” he said back in November.

North Carolina’s GOP (which according to the Center for Media and Democracy‘s (CMD)  SourceWatch has 45 ALEC members) appears set to go on the offensive against the state’s existing renewable energy standards. 

More to Come?

There’s far more of this to come in the weeks and months ahead in statehouses nationwide.

As Gibson explains, “According to its own documents, ALEC spent the last couple years monitoring states attempting to introduce state-level renewable energy portfolio standards in West Virginia, Vermont and Virginia as well as legislative attacks on REPS laws in New Hampshire and in Ohio.”

Renewable energy is under attack. That is, of course, unless its advocates fight back.

Photo by Rainforest Action under Creative Commons license