Bubble Rain – Steve Jurvetson

Big thanks to Common Dreams and DeSmog Blog for getting word about these two reports:

Drill, Baby, Drill: Can Unconventional Fuels Usher in a New Era of Energy Abundance?

Shale and Wall Street: Was the Decline in Natural Gas Prices Orchestrated?

What are we getting into?  Lots of drilling, lots of fracking, plus lots of frac sand mines already running in Wisconsin and a few mines and many mining proposals here in Minnesota…  I’ve seen the problems with contamination of wells from fracking, and with earthquakes in Ohio from injection of fracking waste water.  From here, it seems likely that the destruction will catch up with the gas extractors and it will all blow up.

BOOM!

But in addition to the no-longer-possible-to-ignore physical problems of water contamination, earthquakes, and empoundment failures, there are economic problems too.  Electrical costs follow natural gas prices, and I’ve been watching this for a while, as gas prices drop, as electric prices drop into the toilet, i.e., Electric Monthly Update (next one due out Feb. 25, 2013).  It’s not just decreased demand sinking the electrical prices, there’s the impact of natural gas prices due to overproduction.

In the second tab immediately below, we show monthly and annual ranges of on-peak, daily wholesale natural gas prices at selected pricing locations in the United States. The range of daily natural gas prices is shown for the same month and year as the electricity price range chart. Wholesale electricity prices are closely tied to wholesale natural gas prices in all but the center of the country. Therefore, one can often explain current wholesale electricity prices by looking at what is happening with natural gas prices.

Now two reports have come out that you should put on your “MUST READ” list:

Drill, Baby, Drill: Can Unconventional Fuels Usher in a New Era of Energy Abundance?

And another:

Shale and Wall Street: Was the Decline in Natural Gas Prices Orchestrated?

This is important stuff — particularly if, indeed, it’s a bubble about to burst.  From this spot on the planet, it’s hard to imagine otherwise.

The “Key Takeaways” of Drill, Baby, Drill: Can Unconventional Fuels Usher in a New Era of Energy Abundance? (really, that’s how the author put it… “Key Takeaways”… editor, anyone?):

KEY TAKEAWAYS

• World energy consumption has tripled in the past 45 years, and has grown 50-fold since the adventof fossil oil a century and a half ago. More than 80 percent of current energy consumption isobtained from fossil fuels.

• Per capita energy consumption is highly inequitably distributed. Developed nations like the United States consume four times the world average. Aspirations of growth in consumption by the nearly 80 percent of the world’s population that lives with less than the current per capita world average will cause unprecedented strains on the world’s future energy system.

• Oil is of particular concern given the geopolitical implications of the concentration of exporters in the Middle East, Russia and West Africa and the dependency of most of the developed world on imports.

• In the next 24 years world consumption is forecast to grow by a further 44 percent—and U.S. consumption a further 7 percent—with fossil fuels continuing to provide around 80 percent of total demand. Fuelling this growth will require the equivalent of 71 percent of all fossil fuels consumed since 1850— in just 24 years.

• Recent growth notwithstanding, overall U.S. oil and gas production has long been subject to the law of diminishing returns. Since peak oil production in 1970, the number of operating oil wells in the U.S. has stayed roughly the same while the average productivity per well has declined by 42 percent. Since 1990, the number of operating gas wells in the U.S. has increased by 90 percent while the average productivity per well has declined by 38 percent.

• The U.S. is highly unlikely to achieve “energy independence” unless energy consumption declines very substantially. The latest U.S. government forecasts project that the U.S. will still require 36 percent of its petroleum liquid requirements to be met with imports by 2040, even with very aggressive forecasts of growth in the production of shale gas and tight oil with hydraulic-fracturing technology.

• An examination of previous government forecasts reveals that they invariably overestimate production, as do the even more optimistic projections of many pundits. Such unwarranted optimism is not helpful in designing a sustainable energy strategy for the future.

• Given the realities of geology, the mature nature of the exploration and development of U.S. oil and gas resources and projected prices, it is unlikely that government projections of production can be met. Nonetheless these forecasts are widely used as a credible assessment of future U.S. energy prospects.

• Future unconventional resources, some of which are inherently very large, must be evaluated not just in terms of their potential in situ size, but also in terms of the rate and full-cycle costs (both environmental and financial) at which they can contribute to supply, as well as their net energy yield.

And it continues along this vein in the Shale and Wall Street: Was the Decline in Natural Gas Prices Orchestrated?

• Wall Street promoted the shale gas drilling frenzy, which resulted in prices lower than the cost of production and thereby profited [enormously] from mergers & acquisitions and other transactional fees.

• U.S. shale gas and shale oil reserves have been overestimated by a minimum of 100% and by as much as 400-500% by operators according to actual well production data filed in various states.

• Shale oil wells are following the same steep decline rates and poor recovery efficiency observed in shale gas wells.The price of natural gas has been driven down largely due to severe overproduction in meeting financial analysts’ targets of production growth for share appreciation coupled and exacerbated by imprudent leverage and thus a concomitant need to produce to meet debt service.

• Due to extreme levels of debt, stated proved undeveloped reserves (PUDs) may not have been in compliance with SEC rules at some shale companies because of the threat of collateral default for those operators.

• Industry is demonstrating reticence to engage in further shale investment, abandoning pipeline projects, IPOs and joint venture projects in spite of public rhetoric proclaiming shales to be a panacea for U.S. energy policy.

• Exportation is being pursued for the differential between the domestic and international prices in an effort to shore up ailing balance sheets invested in shale assets.

So now that you’ve read these short snippets, think you or anyone else will be putting any money into the gas boom?

OUT OF THE OFFICE!
Posting is sporadic until we get back.

It’s been SO long since I’ve been here, and I most miss February at the loading dock in a lawn chair!

The main thing I’ve noticed is that growing patterns have changed. There are hoop houses all over on the south end of Hwy. 101, and further up, there are grapes EVERYWHERE, oh my, what a difference. And it’s GREEN. Very very different.

Also learned yesterday — the redwoods are dependent on the fog for their moisture, and there are now 75% fewer days of fog than there were 100 years ago.  The average age of the trees we saw yesterday was 850-1,000 years.

Best of all — the elephant seals:

Live broadcast by Ustream

Here’s my latest missive to the Red Wing City Council, the final comment before tonight’s City Council meeting.  CLICK HERE TO WATCH IT. We’ll be watching on the train – hope signal is good tonight!

My missive:

All –

Greetings from Chicago.  FYI, I’m beginning a long planned vacation, and it’s not possible to rebook Amtrak without significant penalty, so with regrets, I will not be able to attend tonight’s meeting.

You will have some difficult but necessary decisions to make tonight.

There’s an important point I want to make about “our” Mayor Dennis Egan, and the options before the City Council.  It’s not binary — it’s not either/or.  Several people have said that he needs to choose one position or the other, framing it that there needs to be a choice of whether he will be “our” mayor or to represent frac sand interests.  But it’s too late for that.  He has already betrayed the people of Red Wing and his oath of office.   He’s shown us his moral and ethical views, he’s demonstrated an inability or unwillingness to take the issue seriously, and he has shown the extent of his denial.  That can’t be undone.

The issue before the council is Egan’s fitness as mayor, and not whether he should be given a choice to resign one position or the other.  Whether he resigns as the “voice of frac sand” or whether he is removed from that position as the PR liability that he is, it doesn’t matter at this point if he’s no longer representing frac sand.  With the facts of this issue, and with the Mayor’s behavior and public statements, the bottom line is that he can’t continue as Mayor because has shown us that he cannot be trusted to put the City’s interests first.

Mayor Egan has demonstrated that he’s not fit for office.  He shouldn’t be mayor.

Not only that, Steve Murphy and I agree that this is an impermissible conflict.  If Steve Murphy and I agree on something, it MUST be right!!!

Thank you for our attention to this issue.  I urge you all to act mindful of the Code of Conduct for Red Wing elected officials and your oath of office.

Carol A. Overland
Vacationing in Chicago and on the way to L.A.

p.s. I believe there are records of citizen complaints and comments that are missing from the packet and hope that the packets will be updated with all comments to date just prior to the meeting.

There is a lot more in the papers leading up to tonight’s meeting.  I’m going to cut and paste so that when they disappear into archives, they’ll be accessible.  First is the RW Beagle’s coverage:

Some citizens push for Egan to leave; he’s staying

Some citizens have called for Mayor Dennis Egan to step down since learning he is executive director of the new Minnesota Industrial Sand Council.

By: Anne Jacobson, The Republican Eagle

Some citizens have called for Mayor Dennis Egan to step down since learning he is executive director of the new Minnesota Industrial Sand Council.

Dale Hanson has taken his displeasure a step further: He launched a recall effort Friday morning via email.

“Even if I supported sand mine fracking in Minnesota (which I DO NOT), the mere appearance of conflict of interest and many other potential improprieties is enough to motivate me to attempt to recall Mayor Egan,” Hanson said in his blanket email.

The mayor said he doesn’t intend to resign.

“The flip side is I’ve had some very sincere phone calls: ‘We like your leadership.’ ‘We like what you’ve done,’” Egan said.

That involvement includes serving on the National Mayor’s Association executive committee, the Lake Pepin Legacy Alliance and working to resolve Mississippi National Golf Links’ future.

Hanson wrote that Egan’s new lobbying post to promote and protect mining interests is an embarrassment to the city and an affront to the democratic process.

“I sent out a ton of emails and I am totally confident that I will be getting many responses before Monday night’s City Council meeting,” Hanson said Friday afternoon.

The Red Wing Charter requires that five people sign before a recall committee can form.

Hanson anticipates that forming a steering committee, drafting the recall petition and submitting the paperwork to the city will take a week to 10 days. He then must gather at least 1,900 signatures or 20 percent of registered voters.

Carol Overland, a local attorney, is asking City Council members to oust Egan if he doesn’t resign. She was among the first to cry foul after Politics in Minnesota reported Feb. 1 the Minnesota Industrial Sand Council had formed to give frac sand mining operations, railroad, trucking and petroleum interests “a voice at the Capitol.” She blogged about it, sent emails and contacted City Council members.

The council instituted a moratorium, studied silica sand mining and, in October, passed an ordinance that makes such mining essentially impossible within city limits. Overland said this remains an economic, safety, health, land-use and power issue for all of Goodhue County.

“This has just got my blood boiling, how dare he,” Overland said.

Barring Egan’s resignation or ouster by council vote, Hanson said his plan is to get the ball rolling and let the steering committee take the lead.

“My personal hope is that the added pressure of a real recall will create positive change for this community,” Hanson said.

Now from the Rochester Post Bulletin:

Our View: Red Wing mayor shouldn’t serve two masters

Posted: Friday, February 8, 2013 3:04 pm

Red Wing Mayor Dennis Egan says he doesn’t see a conflict interest between his new job as a lobbyist for the frac-sand industry and his role as an elected official.

The trouble is, a lot of people do.

One Red Wing resident described the situation succinctly. “How can you represent citizens and the industry at the same time?” asked John Tittle, a member of Save the Bluffs, a citizen’s group opposed to frac mining. “It seems like it would be a conflict. It seems kind of obvious.”

Egan said there are no applications before the city for frac-sand facilities and, more important, the city passed an ordinance in October that essentially bans frac-sand mining. If a new frac-sand project is proposed, Egan said he will recuse himself from the discussion.

“In my mind, there’s not a conflict,” Egan said.

Still, the Red Wing mayor’s role as executive director for the Minnesota Industrial Sand Council — a consortium of aggregate, trucking and petroleum companies with interests in frac sand and gravel — raises pertinent questions about whether he can balance his employer’s interests with his community’s.

The Mississippi River corridor is in the heart of the frac-sand boom. More than 100 silica mines and processing facilities have been permitted during the last four years in southeastern Minnesota and western Wisconsin. The region has rich deposits of silica sand, the hard, round grains used in hydraulic fracturing — commonly known as “fracking” — to tap hard-to-reach oil and natural gas deposits.

Regulation of the frac industry so far has been largely left up to county, city and township governments, several of which have declared moratoriums of silica mining and processing while the environmental concerns are studied. At the state level, a Minnesota Senate committee has scheduled a Feb. 19 hearing for bills on sand mining.

Red Wing City Council President Lisa Bayley said part of the agenda for this coming Monday’s council meeting is to discuss what position the city should take on frac-sand issues at the Legislature. Will Egan, who has registered in St. Paul to lobby for the sand council, recuse himself from that discussion?

Bayley and another city council member, Peggy Rehder, said Red Wing will continue to deal with issues regarding truck traffic and barge loading of frac sand from the city-owned dock. Will Egan, whose new employers rely on trucking and shipping to move silica sand, recuse himself from those discussions, too?

Rehder, a former lobbyist, said she wants the city attorney to issue an opinion as to whether the mayor has a legal conflict of interest.

“Would I ever be a lobbyist and hold public office at the same time?” Rehder said. “No.”

We agree with Rehder. Despite Egan’s explanation, he must avoid even the appearance of a conflict of interest. And it’s not as if he’s a lame-duck mayor with little time left in office. He was re-elected in November, so he could be wearing two hats for a long time.

And on to the letters.  The next two are a hoot, because Steve Murphy and I are actually agreeing on something.  As I told the Council, if Steve Murphy and I agree on something it must be right.

Letter: Council should act if Egan won’t

Shame on lobbyist-Mayor Dennis Egan. It’s time for him to resign. If not, it’s time to eject “our” mayor from office. By: Carol A. Overland, The Republican Eagle

To the Editor: Shame on lobbyist-Mayor Dennis Egan. It’s time for him to resign. If not, it’s time to eject “our” mayor from office.

Why? Because he’s lobbying as the executive director of the “Minnesota Industrial Sand Council. Egan isn’t speaking for us or the city of Red Wing. Egan is the voice of frac sand interests.

Frac sand has been before the city of Red Wing, first as a moratorium and then as an ordinance. It remains an economic, safety, health, land-use and power issue for our city and county.

Politics in Minnesota reported formation of the Minnesota Industrial Sand Council to give frac sand mining operations, railroad, trucking and petroleum interests “a voice at the Capitol.” “Our” mayor is executive director of that voice.

Under the City Charter, our mayor has duties and responsibilities as the titular head, recognized as the official head of the city for all ceremonial purposes, to review city operations and make recommendations as he/she believes to be desirable and to review concerns on city activities raised by citizens and make recommendations as he/she believes desirable as to any corrective actions necessary.

Egan is to be representing voter constituents. We didn’t elect frac sand interests to be mayor. The ethics should prevent this representational conflict, but instead he’s taken the position as the frac sand industry’s lobbying arm, and he’s putting the call of the sand industry, and their money, in conflict with his duties as the titular head of the city. That’s wrong.

The city can act when an elected official puts his own interests or those of another in conflict with his duties to the city, or has the cloak of his elected position at the same time as he is paid to gain access or favor for a private interest. An elected official may be removed for cause (Charter, Section 2.05), and the City may also initiate an “Investigation of City Affairs” (Charter, Section 2.09). The Charter also authorizes Recall of the Mayor (Section 6.13-6.18).

Mayor Egan, resign. If not, it’s time for the city of Red Wing to act.

Carol A. Overland

Red Wing

And now Steve Murphy’s editorial:

Letter: City painted with political disdain

The recent developments surrounding the mayor of Red Wing and his employment with the sand mining industry as a paid lobbyist are extremely troubling. It matters not how you feel about the issue of frac sand mining or the use of hydraulic fracturing to harvest gas and oil; the distressing concern at hand is both a matter of law and one of integrity. By: Steve Murphy, The Republican Eagle

To the Editor:

The recent developments surrounding the mayor of Red Wing and his employment with the sand mining industry as a paid lobbyist are extremely troubling. It matters not how you feel about the issue of frac sand mining or the use of hydraulic fracturing to harvest gas and oil; the distressing concern at hand is both a matter of law and one of integrity.

I cannot claim to be an expert in the matter of conflict-of-interest issues. But, during the dry-cask storage debates of the early ‘90s I was accused of having a “conflict of interest” because of my employment with NSP.

The resulting lawsuit was hauled in front of the Minnesota Supreme Court, where the legal opinion rendered by Chief Justice Kathleen Blatz absolved me of any conflict. In the opinion of the court, the conflict standard was not met due to the fact that I was not making any financial gain — not in retirement payouts or medical plans or hourly pay, nothing. Also, the outcome of the overall nuclear debate, whether or not to shutdown nuclear power in Minnesota, did not impact my employment with NSP.

Neither of these instances holds true in Dennis Egan’s case.

I have heard Egan’s reasoning for not stepping down as mayor. His reasoning is simply ridiculous.

Because of the mayor’s actions, damage is being done to the stellar reputation that Red Wing and its residents have earned from people all across our state. It is also painting the elected members of the City Council with the same brush of political disdain.

The profession of lobbyist is already under assault. For those many lobbyists who are above-board and provide factual, accurate and comprehensive information to elected office holders and the public, this is giving them yet another black-eye.

Egan should either immediately resign as mayor of Red Wing or void his contract with the sand mining industry. Not to do so is unethical and a breach of public trust.

Steve Murphy

St. Paul

Steve Murphy formerly represented the Red Wing area in the Minnesota Senate.

Not only is it Hizzonor’s Birthday today, but he now says he lives in Red Wing!  Imagine that!  Maybe he’s learning something in his old age?

More importantly, today both the Minnesota Pollution Control Agency and the Minnesota Department of Health said in Comments to Winona County that a full blown Environmental Impact Statement is needed for the Dabelstein Yoder frac sand mine proposed in Winona County.

Minnesota Dept of Health Comment Letter February 6, 2013

Minnesota Pollution Control Agency Comment Letter February 4, 2013

This snippet from the MPCA letter pretty much says it all:

The Minnesota Pollution Control Agency (MPCA) staff believes that the information provided in the EAWs is insufficient to fully identify and assess the environmental effects of the projects.  The MPCA believes the necessary information can be obtained and evaluated most effectively by preparing an Environmental Impact Statement (EIS).  Consequently, we respectfully recommend that Winona County make a positive declaration on the need for an EIS for both projects and include within the scope of each EIS appropriate studies to abtain the lacking information as provided in Minn. R. 4410.1700, Subp. 2a, Item A.

The MPCA focused on “phased and connected actions,” looking at the multiple projects in the immediate area, operated by Minnesota Sands, LLC, and “cumulative potential impacts” addressing other projects that may interact with this one.  MPCA also listed many items where there was “insufficient” information.  What’s particularly surprising is that the applicants didn’t address air emissions, something that is so obvious, and which was an issue in the North Branch mining processing plant that was fined and shut down for operating without a permit.

The Dept. of Health was particularly interested in water,  including wells and groundwater quality, and again, air quality.  The MDH recommended a “Health Impacts Assessment” which would be a good way to characterize the issues and impacts on human health — as a part of the larger EIS — not in place of it.

This is an encouraging start.  Two state agencies have recognized the potential for significant impacts associated with frac sand mining.  Now let’s get to work and “do some digging.”  Can ya dig it?

KARE 11 was down here in Red Wing yesterday, and they caught up with Alan.  “It makes a laughing stock of Red Wing, that the Mayor would do this, would think that he can get away with this.”  Here’s the video — City Council President Lisa Bayley said it very succinctly, “you have to choose one or the other.”  Showing a big file of emails, she said  “You have to be very, very careful, those two things just cannot touch.”  Egan looks like he’s feeling the heat, steadfastly saying there’s no problem, that “the people of Red Wing knew I lobbied for controversial subjects when they voted for me.”  “These mines, those family owned Minnesota businesses, are not looking at mining the bluff, they’re not looking at mining the area.”

Photo of Maiden Rock frac sand mining operation across the river

Oh, right, Mayor Egan… get a clue!  This is NOT acceptable.  It’s time to resign.

MN mayor’s new ‘frac’ job stirring up controversy

Keep those emails coming to the Red Wing City Council members — tell them what you think of this:

sebion3@gmail.com, lisa.bayley@ci.red-wing.mn.us, deanhove@charter.net, michael.v.schultz@charter.net, peggy.rehder@ci.red-wing.mn.us, ralph.rauterkus@ci.red-wing.mn.us, marilyn.meinke@ci.red-wing.mn.us

And copy the Mayor and City Administrator too:

dennis.egan@ci.red-wing.mn.us, kay.kuhlmann@ci.red-wing.mn.us

Faux News 9 has a poll — weigh in!

Faux News – Red Wing mayor hired for frac sand lobbying – poll!

On Minnesota Public Radio today:

Red Wing mayor lobbies for silica sand industry

and