Oh, and the Keystone XL pipeline was vetoed by President Obama a year ago this past February because Congress tried to ram through approval, attempting to “circumvent longstanding and proven processes for determining whether or not building and operating a cross-border pipeline serves the national interest,” according to the president.
In both cases — Keystone XL and the Dakota Access — the planned pipelines traversed Native American tribal lands and/or water systems upon which these sovereign nations relied. The affected tribes have protested the credible threats these pipelines pose to their health and safety as well as their heritage and sovereignty.
The threat is real; there have been 11 pipeline accidents since 2000 on lines carrying oil or gasoline across the Dakotas. One of those pipeline accidents resulted in roughly 20,000 barrels or 865,000 gallons of oil spilling beneath a farm in North Dakota in 2013. There was a ten-day lag after the farmer brought the spill to the company’s attention until the state’s governor heard about the accident — ridiculous, considering North Dakota is the 47th largest state in terms of population, at less than 800,000 residents. It’s not like there were a lot of people in the way. The spill covered an area equal to seven football fields and clean-up is still under way and may not be completed until some time in 2017. The North Dakota Tesoro pipeline oil spill is one of the largest in the U.S. to date.
Oil producers and pipeline owners/operators have frankly been lousy in their responsibilities to the public. It’s not just the 11 pipeline accidents in the Dakotas since 2000; it’s a rather lengthy list of them across the entire country and a lengthy track record of crappy response to the damage done to the environment. My state, Michigan, which is surrounded by the largest bodies of fresh water in the world, is also the site of the largest oil pipeline spill in the U.S. In 2010, more than 1.1 million gallons of oil spilled, much of it into a waterway. Alarms notifying the pipeline’s owner, Enbridge, of the spill were initially ignored for 17 hours, blown off as operation notifications.
The Native American tribes have no reason whatsoever to believe oil producers and pipeline owners/operators will act with any more care than they have to date. Further, they have no reason to trust the U.S. government about these pipelines, either. They have been betrayed and damaged again and again by the U.S. — excessive and mortal police brutality, theft of human remains, theft and mismanagement of billions in assets, the indignity of fighting to remove the name of a mass murderer from public lands, the catastrophic contamination of the San Juan River supplying water to the Navajo nation — the insults are endless.
The latest insult: North Dakota’s Governor Jack Dalrymple signed an executive order to obtain more funding for additional police to deter approximately 1,500 protesters. The state has pulled water supplies used by the protesters and refused to allow portable toilets to be emptied. This follows a temporary restraining order granted to Dakota Access LLC by a federal district court against protesters’ interference with pipeline work. Native Americans have also been prevented from leaving reservation land, which may be a violation of civil rights and treaties.
Native Americans have legitimate concerns with the Dakota Access pipeline. For one, its planned route crosses the Missouri River which serves as the entire water source for the Standing Rock Sioux Tribe; the Army Corp of Engineers (ACOE) approved 200 water crossings by the pipeline in spite of requests by the Sioux to deny construction permits. The ACOE, however, reviewed and rejected an alternate pipeline route crossing the Missouri River near Bismarck as it was deemed a threat to the municipal water supply. This looks like outright racism on the face of it; the pipeline is a threat to 92% white Bismarck, but not a sovereign Native American tribe?
Secondly, the ACOE has been asked by U.S. Environmental Protection Agency (EPA), the U.S. Department of Interior (DOI) and the Advisory Council on Historic Preservation to conduct an investigation and prepare a formal Environmental Impact Statement (EIS), requiring consultation with the affected tribes. No EIS appears to have been conducted to date. In addition to the health and environmental safety concerns related to the pipeline’s installation and operation, the historical significance of the area is inadequately documented. The lack of a thorough assessment means the current Dakota Access pipeline plan may disrupt an older Mandan village site where Mandan may be buried. The site has cultural and religious significance to tribes and should be protected by the Advisory Council on Historic Preservation under federal law.
Dakota Access LLC is pressing for this pipeline to reduce the costs of oil. Shipping crude oil from North Dakota’s Bakken Shale reserve by rail or truck is more expensive than shipping by pipeline.
That is until ALL the true costs and externalities are added, like the spills, remediation, short- and long-term health and environmental problems are added. These costs haven’t been added to the true cost of oil and are instead a gamble which humans living nearest to the pipeline must pay if there is a failure.While the oil producers and pipeline operators continue to hammer away at the cost of oil, the price of oil has fallen. They can’t drop the cost fast enough and deep enough to realize a return on investment. They will cut corners as much as possible as the price of oil falls — and it will, if demand for oil also falls as it has with the rise of hybrid and electric vehicles. Cutting corners means there will be greater risk the pipeline will not be adequately monitored or maintained, just as it wasn’t in Michigan.
As more and more alternative, green energy resources come on line along with the technology to use them, it will make even less sense to invest in pipelines which may not carry all that much oil. The Bakken Shale reserve is estimated at several hundred billion barrels of oil, but the amount which can be recovered readily and economically is much less than 10% of the estimated total reserve. If the oil is too expensive to extract AND competing energy resources are both cheaper and available, why build this pipeline at all? How is enabling our continuing addiction to oil in the long-term best interests of our country?
It will take some spine to do the right thing and force this project to slow down for a full EIS assessment. It will take even more spine to point out we are both at the end of fossil fuel and at the limit of our disregard for Native Americans’ lives. It can be done, however; just ask Canada’s Justin Trudeau how he did it.
Today’s entry in the “What Could Go Wrong?” sweepstakes is quite a beauty, courtesy of Reuters:
Royal Dutch Shell (RDSa.L) has signed a deal with Iraq worth $11 billion (7 billion pounds) to build a petrochemicals plant in the southern oil hub of Basra, Industry Minister Nasser al-Esawi said on Wednesday.
Esawi told a press conference in Baghdad the Nibras complex, which is expected to come on line within five to six years, would make Iraq the largest petrochemical producer in the Middle East.
“The Nibras complex will be one of the largest (foreign) investments (in Iraq) and the most important in the petrochemical sector in the Middle East,” Esawi said.
Proponents of the deal undoubtedly will point to the fact that Basra is in the far southeastern part of Iraq, far from the swathe of territory controlled by ISIS. Others will even point to the apparent defeat of ISIS in Kobane and how that might signal a turning of the tide in the battle against them. And yes, oil output in Iraq has been steadily rising since that little blip in 2003. As of the time of that linked report from the US Energy Information Administration from 2013, there were other plans for another $24 billion or so in new refineries in Iraq’s oil-producing regions, so why not jump on this Shell plan?
It turns out that there is plenty of fodder for fans of Lee Corso to shout “Not so fast, my friend!” when it comes to this deal. Back in June, there were already rumblings that the big uptick in Iraq violence could threaten expansion of Iraq’s oil sector. Even that article, though, attempted to support the notion that the Basra area remained relatively safe:
As grim as the worst-case situations may be, most analysts still say there is no immediate threat to Iraq’s southern oil fields, which account for approximately 90 percent of the country’s production and oil export. Basra, the heart of Iraq’s oil economy, is situated in an area strongly dominated by Shiites who generally support the central government and are implacable enemies of the Sunni forces on the march in the north.
Badr H. Jafar, chairman of Pearl Petroleum, a consortium that operates in Iraqi Kurdistan, said it was “highly unlikely” that terrorists could disrupt production and operations in southern Iraq.
The New York Times article containing the quote above is dated June 13, 2014. Just a couple of days later, though, we have this:
Turkey’s consulate in the Iraqi city of Basra has been evacuated due to security concerns, Foreign Minister Ahmet Davutoğlu announced June 17. The 18 staff members at the consulate, including the consul general, were were taken to Kuwait, Davutoğlu wrote via his Twitter account.
And that wasn’t just a one-off thing. Consider this tweet from October:
Basra security continues to decline http://t.co/HRflA3t2oI
— Iraq Oil Report (@iraqoilreport) October 25, 2014
A number of airlines discontinued flights to Baghdad because a civilian airplane was hit by bullets there yesterday while landing, but coverage of that halt notes that flights continue in and out of Basra. There was a report January 12 of a plot to attack the port just 20 miles or so from Basra.
There is one more situation that suggests future problems around Basra:
Thousands of Iraqis are living in penury and running out of money after fleeing fighting and settling in the south of the country, the UN’s food agency said on Tuesday, warning that the situation was becoming critical for families in Najaf, Kerbala and Babil.
Jane Pearce, the World Food Programme’s (WFP) country director for Iraq, said structures had not yet been put in place to cater for the people fleeing into the three southern provinces.
WFP is distributing food to 50,000 displaced families in Basra, Dhi Qar, Qadisiya, Missan, Wasit, Muthanna, Najaf, Kerbala and Babil.
WFP needs $292m for its operations in Iraq this year, and has a shortfall of $200m.
Imagine that. Yet another region where the US has no trouble finding funds for bombs, weapons and “training” and yet the WFP is facing a shortfall of hundreds of millions of dollars. But never fear, I’m sure my adorable little troll will be around shortly to stamp his foot and inform us how disaster responders in all their glory have the situation safely in hand and the US can continue its work to create even more refugees because sufficient scraps will be found just in time to avert the worst.
And of course, folks living on the edge of starvation and death from exposure will never, ever be radicalized by such an experience. Sure, go ahead and build that $11 billion petrochemical plant. The US war-industrial complex will be happy to spend hundreds of times more than that amount defending the facility.
Among the many controversial provisions in the NDAA which President Obama signed into law on New Years Eve are provisions aimed at disrupting Iran’s ability to export oil by punishing countries that do business with Iran’s central bank. Although the harshest sanctions on Iran’s bank don’t take full effect for another six months (and Obama says in his signing statement that he will regard the measures as nonbinding if they affect his “constitutional authority to conduct foreign relations”), Iran’s largest oil customers are planning to cut back dramatically on Iranian imports. The European Union has agreed in principal to a complete embargo on Iranian oil and China has already cut their imports from Iran for January and February to half their previous amount.
The moves by the EU and China will hit Iran very hard. As seen in the table above, China is Iran’s largest oil importer, buying 22% of Iran’s exports (but this only accounts for 11% of China’s overall imports), so cutting their order for the next two months in half will have a major impact on Iran’s overall oil revenues if replacement orders are not found quickly. The EU follows closely behind China, buying 18% of Iran’s oil exports. Note that these purchases are not spread evenly among EU nations, as Italy and Spain combine to account for over 75% of total EU imports of Iranian oil. Should the EU embargo actually take place, and even if China does not further reduce its purchasing, Iran is looking at a loss of about 30% of its oil export volume.
The Wall Street Journal describes some of the details of how the Iran oil sanctions are designed to take effect:
The bill specifically targets anyone doing business with Iran’s central bank, an attempt to force other countries to choose between buying oil from Iran or being blocked from any dealings with the U.S. economy.
Certain sanctions would begin to take effect in 60 days, including purchases not related to petroleum and the sale of petroleum products to Iran through private banks. The toughest measures won’t take effect for at least six months, including transactions from governments purchasing Iranian oil and selling petroleum products.
Reuters provides details on the status of the EU embargo:
European governments have agreed in principle to ban imports of Iranian oil, EU diplomats said on Wednesday, dealing a blow to Tehran that crowns new Western sanctions months before an Iranian election.
Diplomats said EU envoys held talks on Iran in the last days of December, and that any objections to an oil embargo had been dropped – notably from crisis-hit Greece which gets a third of its oil from Iran, relying on Tehran’s lenient financing. Spain and Italy are also big buyers.
“A lot of progress has been made,” one EU diplomat said, speaking on condition of anonymity. “The principle of an oil embargo is agreed. It is not being debated any more.”
Iran’s threats to close the Strait of Hormuz are getting a lot of play in the press the past few days. As the ten days of naval war games for Iran that began on Saturday have continued, Iran’s bluster has gotten stronger, as have the US responses.
Ironically, Iran’s stated purpose when it began the war games included the desire to “convey a message of peace and friendship to regional countries” and yet, as can be seen in the video here, Iranian authorities are now saying that should their ability to export oil be curtailed through sanctions put in place by the US and European allies, they would close down the Strait of Hormuz, preventing exports by other countries in the region.
The impact of a real closure would be huge. Many of the numbers involved can be gleaned from this Bloomberg article published this morning. Iran’s oil exports amount to 3.6 million barrels a day, which means Iran only accounts for 23% of the 15.5 million barrels a day that pass through the Strait. It is believed that Saudi Arabia could produce an extra 2.5 million barrels a day in the event of sanctions halting Iran’s supply, and up to 200,000 more barrels a day could come from other countries in the region, so about 75% of Iran’s output probably could be replaced quickly.
However, with the Strait closed, the entire 15.5 million barrels a day could be disrupted. There is a pipeline being built by the United Arab Emirates that the Bloomberg article says will be ready “soon” and could bypass the Strait with 1.4 to 1.8 million barrels a day, but this would be only a very small fraction of the lost supply.
Even though such a closure would be seen as a direct response to the US and its European allies, the impact on China should not be overlooked. The CIA world factbook informs us that the US imports 10.3 million barrels a day and the EU imports 8.6 million, but China is next in line at 4.8 million barrels a day. How would China respond to such a huge disruption of their supply, especially if it comes about through a series of disagreements where they have not been included in the discourse? Continue reading
The Hill reports that, rather than forcing John McCain and a lot of endangered Republican incumbents to vote againt children’s healthcare again, Democrats in Congress are going to work on an energy bill that will include some allowance for drilling.
House Democrats are ready to propose an expansion of offshore drilling as part of a broader energy bill they plan to introduce this month, according to a top Democrat.
Democratic Caucus Vice Chairman John Larson (Conn.) said the majority is prepared to back “responsible” offshore drilling through a bill that could be brought to the floor as early as next week.
“We will consider responsibly opening portions of the Outer Continental Shelf for drilling while demanding that Big Oil companies use the leases they have already been issued or return them to the public,” Larson said Saturday in the Democratic response to the President’s radio address.
Larson said the legislation will also seek to curb excessive oil market speculation and call for a reinvestment of government royalties into alternative energy technology.
This is not actually news. When Obama said he would reluctantly accept more drilling as part of a package that included a lot of other, smarter energy policies, it became clear the party would follow his lead.
And, if it is done well, it might actually be brilliant jujitsu. If the bill were to define "responsible" by requiring that states agree to the drilling and by demanding that the drilling actually look like it would do some good, it would result in very little new drilling at all–because drilling is, from a policy standpoint, not "responsible." And a package could take the Republicans’ most successful (arguably, their only) policy recommendation, drilling, off the table for the election.
Of course, that all assumes this would be done well…
Meanwhile, in Alaska, the Caribou Barbie is trying to pull of her own energy jujitsu, though it’s not yet clear what that jujitsu might entail. Andrew Halcro reports that Governor Palin is trying to get the oil companies onto a conference call this week, but it’s not yet clear why she wants to talk.
Governor Sarah Palin has requested a conference call this week with the CEO’s of the major oil companies playing a role in the potential development of Alaska’s natural gas pipeline.
Surging economies in China and India fed by oil and gasoline have sent prices soaring over the past year, while tensions in oil producing nations like Nigeria and Iran have increasingly made investors nervous and invited speculators to drive prices even higher.
Violence in Nigeria helped give crude the final push over $100. Bands of armed men invaded Port Harcourt, the center of Nigeria’s oil industry Tuesday, attacking two police stations and raiding the lobby of a major hotel. Word that several Mexican oil export ports were closed due to rough weather added to the gains, as did a report that OPEC may not be able to meet its share of global oil demand by 2024.
Light, sweet crude for January delivery rose $4.02 to $100 a barrel on the New York Mercantile Exchange, according to Brenda Guzman, a Nymex spokeswoman, before slipping back to $99.15.
I’m not surprised in the least that this symbolic limit has been passed (however briefly–this was just a single transaction). It’s just kind of creepy that it happened on the first business day of the New Year (along with a 200 point decline in the Dow).
We started last year with the hope that somehow we could scale back Bush’s disastrous imperialism. A year later, Bush’s policies and the developed world’s addiction to oil continue to destabilize the world. Only now, the economic impacts of those policies are taking center stage.