There has been considerable debate about fossil fuel producers being given tax breaks to encourage production. Treasury Secretary Geithner has suggested that those days should be over, since the companies contribute to global warming. It is perhaps an indication of things to come.
"We don't believe it makes sense to significantly subsidize the production and use of sources of energy (like oil and gas) that are dramatically going to add to our climate change (problem). We don't think that's good economic policy and we think changing those incentives is good for the country," Geithner told the Senate Finance Committee at a hearing on the White House's proposed budget for the 2010 spending year.I suspect the days of being able to separate the debates on peak oil and climate change may be coming to an end. And yet, at the same time he spoke of the need to reduce the national dependence on foreign oil. The proposed budget would also charge $4 per acre for leases in the Gulf that are nonproducing. But the core proposal is to raise money from the cap-and-trade system that could be used to help pay for the middle class tax cut. The apparent rate for carbon dioxide production that is being bruited about is $20 a ton.
German Chancellor Merkel has said that the Nabucco gas pipeline should not be subsidized by public money. She sees the problem as being one of getting enough gas to supply the pipe, rather than raising the cash, since she anticipates enough private investment.. Germany has long been suspicious of the pipeline. Former Chancellor Schroeder, who is on the Board of the Nordstream pipeline to bring Russian gas to Germany, (as well as the TNK-BP Board) was today in Yugra, visiting the Kamennoe field, where TNK-BP get 70% of their production (40 million tons in 2008 or roughly 800,000 bd). The ex-Chancellor noted that it was one of the most modern fields he had seen, despite the economic conditions they hope to hold production at current levels this year. Italy meanwhile is calling for a high-level meeting with Turkey and Azerbaijan to discuss getting gas from the Shah Deniz field. This is some of the gas that might end up in the Nabucco pipeline.
On a slightly worrisome note, there was an interview with Kate Watters of Crude Accountability about Turkmenistan’s oil production. Worrisome since it has been through ecological concerns that Eastern European governments have sought control of Western investments. And there are areas where concerns are now being raised
Unfortunately, we have seen serious problems with IFI-financed projects in the Caspian region to date. The Karachaganak Field in Kazakhstan is one example where a recent audit by the IFC's own compliance mechanism found it to be out of compliance with numerous air monitoring requirements. Numerous complaints have been filed against the EBRD and IFC for their investments in the Baku-Tbilisi-Ceyhan pipeline, and we have grave concerns about the environmental impacts of EBRD financing at the Bautino Port in Aktau, Kazakhstan, which services the Kashagan field. Among other concerns at Kashagan are threats to the habitat of the Caspian seal.
Completion operations are underway on a well to test multiple prospective intervals in theHaynesville shale. The first fracture stimulated a fourteen-foot interval with 78,000 pounds of proppant. This zone is currently testing at approximately 400 thousand cubic feet per day (kcfd). The Company plans to test this first stage for three to four additional weeks before testing additional intervals. (Note these are vertical wells in the Haynesville gas shale).
One of the big targets for the stimulus package is to improve the national electricity grid, and its ability to distribute power. There are some growing concerns that the investment alone might not be enough. One problem is a recent court ruling said that states could over-rule the Federal Energy Regulatory Commission regarding putting these lines in place. Another is that there are not yet enough standards established for the new grid components, although with encouragement these could be developed relatively quickly. Standards are needed, since there are a number of competing products, for example in the smart electricity meters that are used to optimize domestic electricity use, and legislation may end up favoring one over others.
The TVA is spending over $1 million a day in cleaning up the coal ash spill in Tennessee, with the ultimate bill being expected to be in the $500 - $800 million range.
The Department of Energy is already starting to post some of the steps they are taking to spending their portion of the stimulus package. The initial breakdown into ten overarching programs is first defined and then the subdivisions are broken down into the sub-divisions, each with their own web page. These ultimately lead to the Funding Opportunity Announcements, two of which came out today, as an example:
The first FOA offers $35 million for component research, development, and analysis. The funding will support 20 to 30 projects to develop advanced technologies that will address important aspects of creating, managing, and using engineered geothermal reservoirs. The second FOA offers $49 million to support 5-10 domestic EGS demonstration projects. DOE seeks projects in a variety of geologic formations that will quantitatively demonstrate and validate reservoir creation techniques that sustain sufficient fluid flow and heat extraction rates for 5-7 years and produce at least 5 megawatts of electricity.
More stories can be found at The Energy Bulletin and Drumbeat at The Oil Drum.