Tag Archives: Arctic drilling

Why cheap oil is the key to beating climate change

Repost from The Guardian

Why cheap oil is the key to beating climate change

Keeping the price of a barrel of crude at $75 or less will devastate the profitability of fossil fuel extraction – as the shelving of three tar sands projects demonstrates

By Mitchell Anderson, 11 December 2015 11.59 EST
‘If the Canadian tar sands investments that were halted this year stay dead, the world will avoid another 1.6tn tonnes of dangerous carbon emissions.’ Photograph: David Levene for the Guardian

As world leaders enter the home stretch of the Paris climate negotiations they should keep in mind a key measure of success in limiting carbon emissions: cheap oil. The lower the global price of oil, the more it stays in the ground – due to the brutal, if counterintuitive, logic of the petroleum marketplace.

Most of the easily extracted oil deposits are long gone. What’s left are high-cost, high-risk long shots such as the Alberta tar sandsdeep-water reservoirs off Brazil, and drilling the high Arctic. Companies hoping to profit from the last dregs of the petroleum age need to convince their investors to part with massive amounts of capital in hopes of competitive returns often decades down the road.

Billions have already fled the Alberta oil sands in the last year as the global price of oil collapsed from over $100 per barrel to below $40. Shell has just called a halt to its Carmon Creek project in Northern Alberta, writing off $2bn in booked assets and 418 million barrels of bitumen reserves. A barrel of bitumen will release about 480kg of carbon dioxide from extraction, refining, transport and combustion. This head office write-down means that 200m tonnes of carbon will not be released into the atmosphere.

Two other tar sands projects were also shelved this year with reserves of about 3bn barrels. If these investments stay dead the world will avoid another 1.6tn tonnes of dangerous carbon emissions. Together the cancellation of these three projects alone amount to the equivalent of taking more than 14m cars off the road for the next 25 years.

There a simple correlation between future emissions and the price of oil needed to make that profitable. Such a graph has been compiled by Carbon Tracker, a UK-based non-profit organisation set up to educate institutional investors on the increasing financial risks of the fossil fuel sector.

Its message to investors is simple: the world must limit additional emissions to below 900 gigatons to avoid potentially catastrophic climate consequences – and 40% of this future carbon budget – about 360 gigatons – is projected to come from the oil sector. Anything more than that must stay in the ground – the so-called unburnable carbon.

And what’s the price of oil that could save to world? Anything below $75 a barrel of Brent crude means that companies cannot profitably extract more than 360 gigatons of the world’s remaining reserves – no messy policy solutions required.

Just last year the price of Brent crude was about $110 a barrel, a price that would gainfully produce about 500 gigatons of carbon emissions by 2050. Now it is less than $50, which would only produce 180 gigatons over the same period. If prices stay where they are, the world will avoid some 320bn tonnes of carbon emissions by 2050 in precluded production from uneconomic oil fields.

To put this in perspective, that is 25 times larger than reductions the Kyoto protocol was supposed to achieve if it had worked (it didn’t), and 180 gigatons below the oil emissions limit scientists say we need to avoid a world with more than two degrees of warming. Economic turmoil aside, the global commodities market just served up massive progress on an issue in desperate need of some good news.

Carbon Tracker recently revised its calculations to include the turmoil in the oil market, but the basic correlation is the same: lower fossil fuel prices devastate the economics of future extraction.

Seen through this lens, a key measure of our success in controlling carbon emissions should be keeping commodity prices of fossil fuels low. And while the main driver of the current slump in prices is the current glut of supply, it’s important to realise that almost every policy intervention to avert climate disaster is directly or indirectly aimed at lowering the price or profitability of fossil fuels such as oil and coal.

Efficiency and conservation incentives reduce demand, as do vehicle emission standards and investing in public transit. Carbon pricing means that fossil fuel companies can no longer use the atmosphere as a free dumping ground for CO2, so also lowering profitability.

But doesn’t cheap gas mean that people just use more of it? Not really. While there is a weak economic link between declining prices and increasing consumption, key producers like Saudi Arabia are in fact fretting that slowing growth in Asian markets and already peaked demand in developed countries will lead to a long-term decline in the world’s appetite for oil.

I dearly hope that world leaders can somehow negotiate transformative change. But perhaps the best they can do is nudge economic indicators like crude prices in the right direction and get out of the way. The unstoppable forces of the global marketplace will hopefully do the rest.

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    Hillary Clinton finally says she opposes Keystone pipeline, implies support for oil trains

    Repost from the New York Times
    [Editor:  Playing both “sides” and giving in to the supposed inevitability of crude by rail, this quote from the article: “Anticipating criticism from backers of the project that her opposition would cost construction jobs, she pledged to soon detail a clean energy policy that would put thousands of Americans to work repairing leaky existing pipelines and improving train tracks that carry oil by rail.”  See Sen. Bernie Sanders’ unequivocal view on Keystone XL.  – RS]

    Hillary Clinton Says She Opposes Keystone Pipeline

    By Trip Gabriel, September 22, 2015 5:35 pm ET
    Clinton described some drug companies as “bad actors making a fortune off of people’s misfortune.” Photo: Gareth Patterson, Associated Press
    Hillary Clinton | Photo: Gareth Patterson, Associated Press

    Hillary Rodham Clinton said on Tuesday that she opposed building the Keystone XL oil pipeline, revealing her position on an issue that divides two Democratic constituencies, organized labor and environmentalists, and that she has long declined to address.

    In announcing her opposition to the project, a litmus test for grass-roots environmentalists and which her rivals for the Democratic nomination had already opposed, Mrs. Clinton said that the pipeline was “a distraction from the important work we have to do to combat climate change.”

    She declared her position during a campaign appearance in Iowa and on the day Pope Francis, who has challenged the world to act decisively on climate change, arrived in Washington amid a burst of attention. An aide to Mrs. Clinton said that the campaign had briefed the White House ahead of her announcement.

    Mrs. Clinton said that building the nearly 1,200-mile pipeline, which would carry heavily polluting oil from Canada to refineries on the Gulf Coast, was not “in the best interest of what we need to do to combat climate change.”

    Anticipating criticism from backers of the project that her opposition would cost construction jobs, she pledged to soon detail a clean energy policy that would put thousands of Americans to work repairing leaky existing pipelines and improving train tracks that carry oil by rail.

    There are “a lot more jobs from my perspective on a North American clean energy agenda than you would ever get from one pipeline crossing the border,” she said.

    Energy and policy experts have long said that the battle over Keystone XL is chiefly political, because the pipeline would have little effect on either climate change or the United States job market. A State Department analysis last year found the pipeline would not significantly add to carbon pollution, because the oil was already reaching refineries by other pipelines and by rail.

    Asked repeatedly about the pipeline since she declared her candidacy this spring, Mrs. Clinton has said that because she initiated a review of the project while secretary of state, it was inappropriate for her to weigh in while the Obama administration studied the issue. While a member of the administration in 2010, she said she was inclined to approve it.

    She declined to address the issue even when she rolled out the first phase of a plan in July to produce a third of the nation’s electricity from renewable sources like wind and solar by 2027.

    “If it is undecided when I become president, I will answer your question,” Mrs. Clinton told a New Hampshire voter at the time who pressed her on the Keystone question.

    She was criticized by Senator Bernie Sanders of Vermont, a staunch pipeline opponent, who said, “I have a hard time understanding that response.”

    Last week, Mrs. Clinton moved away from her careful neutrality, telling voters that she was “putting the White House on notice” that she would announce her position shortly, “because I can’t wait.”

    In a statement on Tuesday, Mr. Sanders said he was glad Mrs. Clinton “finally has made a decision, and I welcome her opposition to the pipeline.”

    Environmental groups also applauded Mrs. Clinton. “Secretary Clinton’s recent clean energy proposal, coupled with her opposition to drilling in the Arctic Ocean and now to Keystone XL, is both inspiring and exciting,” the League of Conservation Voters said in a statement.

    Jeb Bush, the former Florida governor seeking the Republican nomination, said on Twitter that Mrs. Clinton’s pipeline opposition means she “favors environmental extremists over U.S. jobs.”

     

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      Obama’s two faces on climate change

      By Roger Straw, Editor, The Benicia Independent

      ObamaTwoSidesDear President Obama: I read two articles about you in this morning’s news.  What’s wrong here?  You are all worried about climate change as it relates to national security, but not as it relates to climate change itself??!  See below …

      OBAMA: It’s real!


      Climate change a threat to national security, Obama warns

      Associated Press, SFGate (San Francisco Chronicle), 5/20/15

      NEW LONDON, Conn. — President Obama has argued for action on climate change as a matter of health, environmental protection and international obligation. On Wednesday, he added national security.

      Those who deny global warming are putting at risk the United States and the military sworn to defend it, he told cadets at the U.S. Coast Guard Academy. Failure to act would be “dereliction of duty,” their commander in chief said.

      He said climate change and rising sea levels jeopardize the readiness of U.S. forces and threaten to aggravate social tensions and political instability around the globe.

      The president’s message to climate change skeptics was unequivocal: “Denying it or refusing to deal with it undermines our national security”

      “Make no mistake, it will impact how our military defends our country,” Obama said on a crisp, sunny morning at Cadet Memorial Field. “We need to act and we need to act now.”

      Seated before him were 218 white-uniformed graduates, pondering where military service will take them in life.

      Obama drew a line from climate change to national security that had multiple strands:

      • Increased risk of natural disasters resulting in humanitarian crises, with the potential to increase refugee flows and worsen conflicts over food and water.
      • Aggravating conditions such as poverty, political instability and social tensions that can lead to terrorist activity and other violence.
      • New threats to the U.S. economy from rising oceans that threaten thousands of miles of highways, roads, railways and energy facilities.
      • New challenges for military bases and training areas from seas, drought and other conditions.

      Preparing for and adapting to climate change won’t be enough, he said. “The only way the world is going to prevent the worst effects of climate change is to slow down the warming of the planet.”

      He laid out his administration’s steps to reduce carbon greenhouse gas emissions, including strict limits on emissions from vehicles and power plants. The government expects those emission reductions to provide the U.S. contribution to a global climate treaty that world leaders are expected to finalize in December. Obama said it doesn’t take a scientist to know that climate change is happening.

      The evidence is “indisputable,” he said.

      OBAMA: Eh, well …


      Eugene Robinson: Obama drills a hole in his climate policy

      By Eugene Robinson, The Contra Costa Times, 05/19/2015

      Here are two facts that cannot be reconciled: The planet has experienced the warmest January-March on record, and the Obama administration has authorized massive new oil drilling in the Arctic Ocean.

      “Climate change can no longer be denied … and action can no longer be delayed,” President Barack Obama said in an Earth Day address in the Everglades. Indeed, Obama has been increasingly forceful in raising the alarm about heat-trapping carbon emissions. “If we don’t act,” he said in Florida, “there may not be an Everglades as we know it.”

      Why, then, would the Obama administration give Royal Dutch Shell permission to move ahead with plans for Arctic offshore drilling? Put simply, if the problem is that we’re burning too much oil, why give the green light to a process that could produce another million barrels of the stuff per day, just ready to be set alight?

      Please hold the pedantic lectures about how the global oil market works: Demand will be met, if not by oil pumped from beneath the Arctic Ocean then by oil pumped from somewhere else. By this logic, the administration’s decision is about energy policy — promoting U.S. self-sufficiency and creating jobs — rather than climate policy. The way to reduce carbon emissions, according to this view, is by cutting demand, not by restricting supply.

      But we are told by scientists and world leaders, including Obama, that climate change is an urgent crisis. And on the global scale — the only measure that really matters — the demand-only approach isn’t working well enough.

      The concentration of carbon dioxide in the atmosphere is an astounding 40 percent higher than it was at the beginning of the Industrial Revolution, when large-scale burning of fossil fuels began. Fourteen of the 15 warmest years on record have occurred this century, with 2014 measured as the warmest of all. And the National Oceanic and Atmospheric Administration announced last month that January through March 2015 were the warmest first three months of the year ever recorded.

      It’s not that demand-side efforts are entirely ineffectual against climate change; without them, emissions and temperatures would be rising even faster. But it is hard to argue that the current approach is doing enough.

      If we are going to avert the kind of temperature rise that climate scientists say would be catastrophic, some of the oil, coal and natural gas buried in the ground will have to stay there.

      “Drill, baby, drill” was a slogan Republicans used during the 2008 campaign, but it became a reality under Obama. According to the U.S. Energy Information Administration, domestic oil production zoomed from 5.4 million barrels a day in 2009 to 8.7 million barrels a day last year, a level not seen since the waning days of the Reagan administration.

      Obama has opened vast new lands and offshore tracts to oil drilling. To be fair, he has also put some sensitive areas off-limits, including in the Arctic. But overall, under Obama, the United States has come to threaten the likes of Saudi Arabia and Russia for supremacy in fossil-fuel production.

      This is part of what Obama calls his “all of the above” energy strategy, in which he fosters growth and innovation in renewable energy sectors, such as solar and wind, while also promoting U.S. self-sufficiency.

      Anticipated rules from the Environmental Protection Agency limiting emissions at coal-fired power plants may go a long way toward reducing the nation’s carbon footprint. But given the urgency, why shouldn’t Obama also take such an approach to climate change? Why not attack the supply side of the equation by firmly deciding to keep drilling rigs out of the Arctic Ocean?

      The environmental risk alone would justify saying no to Shell’s plans; a big spill would be a disaster. But even if Arctic oil can be exploited without mishap, we’re talking about billions of gallons of oil being added to a market that is currently glutted. It doesn’t matter whether that oil is eventually burned in New York or New Delhi, in Los Angeles or Lagos.

      If we don’t take a stand in the Arctic, then where? And if not now, when?

      Eugene Robinson is a syndicated columnist.
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        Obama Administration Approves Shell’s Arctic Drilling Plans

        Press Release from Sierra Club

        Obama Administration Approves Shell’s Arctic Drilling Plans

        Monday, May 11, 2015
        Contact:  Virginia Cramer, 804-519-8449, virginia.cramer@sierraclub.org

        WASHINGTON, DC– The Obama administration granted approval today for Shell Oil to move ahead with plans to drill in the Arctic’s Chukchi Sea.  The decision comes against a backdrop of growing opposition in Seattle and across the country to Arctic drilling, and just as the U.S. assumes leadership of the Arctic Council.

        In response Michael Brune, Executive Director of the Sierra Club issued the following statement.

        “We are deeply disappointed that just days after the United States took over chairmanship of the Arctic Council, an international body dedicated to protecting the Arctic environment, the Obama Administration decided to allow Shell to move forward with its dirty and dangerous plan to drill in our Arctic waters. This is exactly the wrong message to send to the world.

        “Shell’s poor track record in the Arctic does not inspire confidence in its ability to drill safely in the unique and harsh environment of  America’s Arctic Ocean. In fact, an analysis by the Obama administration itself  predicts a 75% chance of a major oil spill if Shell is allowed to drill in America’s Arctic Ocean.

        “Both science and common sense is crystal clear in telling us that undeveloped dirty fuels, especially those in the Arctic, must remain in the ground if we are to avoid the worst consequences of climate disruption. Downplaying the threats drilling poses to our climate, communities, and environment — as Shell continues to do — does not in reality make the threats any less serious. The Obama administration must say no to drilling in America’s Arctic Ocean, cancel these leases, and remove future leasing from the five-year offshore drilling plan.”

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        Campaign Name:
        Our Wild America

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