Clark: Gulf of Mexico Energy Critical to Alabama Manufacturers, Economy

The following guest blog is provided by George Clark, President of Manufacture Alabama, the only trade association in the state dedicated exclusively to the competitive, legislative, regulatory and operational interests and needs of manufacturers and their partner industries and businesses.  A PACE partner, Manufacture Alabama works to create a business and political climate that promotes a positive, competitive environment and enhances the opportunity for growth of all Alabama manufacturers.

As Alabama’s voice for manufacturing and industry, Manufacture Alabama fully recognizes the critical importance of affordable and reliable energy.  Manufacture Alabama member companies are among both the largest producers of energy in the state and the largest consumers of energy in the state.

Given that these same companies also support thousands of high-paying careers, it is easy to understand that energy development is key to supporting Alabama’s economy and job base.  In Alabama, the Gulf of Mexico plays an especially vital role.

Consider that in Fiscal Year 2014, Gulf of Mexico oil and gas activity generated an average 1.35 million barrels of crude oil per day and supported 18,000 jobs and $1.5 billion in GDP for Alabama alone.  Furthermore, it is estimated that opening access to the Eastern Gulf of Mexico could produce additional benefits for Alabama in the form of 21,000 new jobs, $1.7 billion annually for the state’s economy, and over $3.5 billion in state government revenue.  This is also estimated to produce enough resources to replace nearly 60% of our daily crude oil and petroleum product imports from the Persian Gulf.

While a select few have been calling on the federal government to shut down access to the Gulf of Mexico and keep the Gulf’s resources locked under the seabed forever, Alabamians understand the foolhardy nature of such shortsighted rhetoric.

The Gulf of Mexico is a critical backbone to the health and well-being of Alabama, the Gulf Coast region, and the nation as a whole.  Indeed, energy development in the Gulf benefits our economic, employment, and national security, while helping to protect our environment as well.

For example, prior to finalizing a 2017-2022 oil and natural gas leasing program – which includes the Central and Western Gulf but excludes the majority of the Eastern Gulf still under congressional moratorium –  President Obama’s Interior Department concluded that removing the entire Gulf of Mexico from the leasing program would result in billions of dollars in environmental and social costs as production substitutes are brought in from other sources and countries.  It also found that the United States would have to rely on imports to replace almost 60% of the lost production.

To make Alabama the best business location in the U.S. for manufacturers, it is important to have federal policies in place that will facilitate stable and affordable supplies of energy.  That is why, as the Alabama Legislature works its way through the home stretch of the 2017 Regular Session, Manufacture Alabama is supporting efforts to secure a resolution urging the federal government to provide for continued and expanded access to the Gulf of Mexico.

Given the important role of offshore oil and natural gas revenues in securing a strong coastline and safeguarding the state’s infrastructure, it is also why we are calling on the Legislature to support congressional action to lift the annual cap on federal offshore revenue sharing that is currently in place for Alabama and the Gulf Coast states to our west.

With the right business and policy climate in place, there is no limit to what manufacturers and all businesses and residents in Alabama can achieve.  For that reason, Manufacture Alabama is proud to support a federal energy policy that includes the Gulf of Mexico and access to the full range of its benefits for generations to come.


Pipeline Benefits Consumers, North Dakota

The Dakota Access Pipeline remains a highly visible, highly controversial energy infrastructure project. As news reports convey, the pipeline project has been hotly contested by environmental groups and Native American tribes who live near the area where it is being built. Meanwhile, the State of North Dakota has supported the pipeline’s construction, believing it to be a safe means of transporting crude oil and a source of massive potential revenue for the state.

Helping to reinforce the state’s position, a new report from the Associated Press has confirmed that the state stands to gain $110 million per year in tax revenue from the pipeline. Keep in mind that the state’s General Fund is about $6 billion.

The pipeline, built by Dallas-based Energy Transfer Partners, will carry oil more than 1,000 miles to a shipping point in Illinois and will be in service in the coming days. This is good news for the nation’s energy infrastructure, as drillers have needed a cheaper means of transporting oil. The State of North Dakota, suffering through budget cuts due to declining tax revenues, could also use a shot in the arm from the pipeline project.

“Every dollar they get extra is good for the state as well,” state tax commissioner Ryan Rauschenberger said recently.

Over the past decade, North Dakota has become the second biggest producer of oil in the United States, with only Texas producing more. Its location is far from major oil markets, though, making transportation expensive and lowering profits from the oil’s extraction. This restricted transportation environment has forced the state to lower its taxes on each barrel of oil.

Today, North Dakota’s oil is shipped by either truck or train. Using the Dakota Access Pipeline to move oil instead would save $3 per barrel on shipping costs according to Ron Ness, president of the North Dakota Petroleum Council. State tax officials estimate every dollar per barrel saved on shipping costs means about $33.6 million in added tax revenue each year.

“Every dollar back is a win for producers, the state and mineral owners,” said Ness, who called the Dakota Access pipeline the most important infrastructure project in North Dakota since the interstate highway system.

The pipeline will link to existing pipelines that serve Gulf Coast refineries, which will pay a premium price for high quality oil from North Dakota.

Additionally, the pipeline is expected to generate $55 million in property taxes each year in the four states that it crosses, including $10 million in North Dakota that will provide much-needed revenue to the state’s rural areas. Adding the property taxes to the $100 million in oil taxes generates the $110 million in additional revenue for North Dakota.

The U.S. needs more energy infrastructure to make sure that domestic energy sources get to market. Specifically, we need more pipelines that can bring raw product from extraction sites to refineries. Having those pipelines in place helps reinforce our nation’s energy independence and security. As energy consumers, we all benefit when energy resources get to market more quickly with fewer costs.


Wright: Nuclear Essential for Energy, Jobs

A March 1st opinion piece in Insider Advantage serves as an important reminder about the value of nuclear power to American energy. The author, Tal Wright, is an Atlanta-area media and marketing communications consultant. The piece, entitled “Nuclear Power Must Remain an Option for Energy & Jobs” and reprinted in its entirety below, is available online here.

Interviews with laid off coal miners in the aftermath of President Donald Trump’s victory may be anecdotal, but they’re a reminder of the demise of just one industry that has provided generations of families with well-paying, blue collar jobs that have been lost to new environmental regulations.

The Trump Administration inherited President Obama’s Clean Power Plan, which will result in cleaner and more expensive power production – and energy-related job losses – well into Trump’s presidency. In this context, the U. S. Energy Information Administration projects a total of 92 gigawatts of coal-fueled capacity will retire by 2030 – about 30 percent more (32 GW) without Obama’s EPA Clean Power Plan requirement.

That’s a lot of coal-fueled power plants and thousands, if not millions, of jobs that will continue to disappear on Trump’s watch – due to U. S. government regulations – not international competitors or unbridled immigration.

Combined with lower natural gas prices and the extension of renewable tax credits, Obama’s plan will accelerate utilities’ shift toward less carbon-intensive generation. That’s good news for the environment – and bad news for American workers and the country’s energy future.

The huge contributions that coal-fueled plants make to the electric energy grid are being replaced largely by natural-gas fueled generators. These plants emit significantly fewer pollutants than coal, and are capable of meeting large, base-load energy demands. And since most U.S. utilities have given up on nuclear, and already use natural gas to meet base load and peak needs, America is well on its way to becoming overly dependent on natural gas as a source of electricity.

While we should continue to invest in renewables like solar and wind, it’s important to remember these technologies rely on unpredictable weather patterns.

Nuclear power must remain an option for replacing at least a portion of the 92 gigawatts of coal-fueled electric energy production and thousands of lost jobs.

But nuclear power’s future is in jeopardy.

Toshiba, the Japanese firm which owns Westinghouse, the company that builds reactors and nuclear power plants, recently announced it would take a multi-billion dollar charge against operations due to cost overruns, quality control problems, and delays at the four nuclear power units currently under construction in the United States.

Two of these new units are under construction at Plant Vogtle, a nuclear power plant complex located southeast of Augusta.

Westinghouse has experienced many of the same problems that occurred with earlier nuclear power construction projects – including design changes, mandated by regulators, despite pre-approved, standardized designs.

Nuclear power plants take years to build, cost billions to construct, employ thousands of people during their construction phases and hundreds of people for operations. They generate thousands of megawatts of electric energy, produce almost zero emissions and serve customers for up to 60 years.

There are reports about the need to repair or replace crumbling highways, bridges and other public infrastructure, and how these projects could help create jobs for Americans. We’ve got an equal amount of work to do on the nation’s energy infrastructure.

That’s why our nation should preserve nuclear power as an option for replacing at least a portion of the 92 gigawatts of electric energy production and thousands of lost jobs it is about to lose.