July 9 Colorado Energy Roundup: government won’t appeal in Colowyo case, true costs of wind energy revealed

Perhaps the most pressing energy and jobs-related issue in Colorado right now is the legal battle over the Colowyo Mine in the northwest part of the state:

The U.S. Department of the Interior has decided not to pursue an appeal of a federal court ruling that threatened to close Colowyo coal mine in Northwest Colorado.

According to a statement from Department of the Interior spokeswoman Jessica Kershaw, “We are not appealing the court’s decision, but are on track to address the deficiencies in the Colowyo permit within the 120-day period.”

“We are disappointed that the government did not appeal the federal district court’s decision. Colowyo Mine remains confident that the U.S. Department of Interior and Office of Surface Mining are making every effort to complete the required environmental review within the 120-day period ordered by the court,” Tri-State’s Senior Manager of Corporate Communications and Public Affiars Lee Boughey wrote in an email. “These efforts help ensure compliance with the judge’s order while supporting the 220 employees of Colowyo Mine and communities across northwest Colorado.”

The legal decision in May that tripped off the permitting kerfuffle that endangers the operation of the Colowyo Mine stemmed from a lawsuit brought by WildEarth Guardians that the mine’s 2007 permit did not follow the Office of Surface Mining Reclamation and Enforcement requirements as well as National Environmental Policy Act rules.

Bipartisan efforts have poured in from across Colorado, as politicians, the business community, and legal experts recognize the importance and high stakes involved in the threat to the mine from a procedural and regulatory environment standpoint:

Gov. John Hickenlooper, U.S. Senators Cory Gardner and Michael Bennet, and [Rep. Scott] Tipton all joined Craig City Council and Moffat County Commissioners in addressing Jewell regarding the situation at Colowyo.

On July 2, the Denver Metro Chamber of Commerce, the Metro Denver Economic Development Corporation, the Colorado Competitive Council and the Colorado Energy Coalition sent a co-authored letter to Jewell voicing their concerns.

According to the letter, “this precedent could pose a threat to any activity on federal lands that performed an environmental analysis under the National Environmental Policy Act in order to obtain federal leases and permits. That could stretch from energy development and mining, to agricultural grazing and ski resorts becoming vulnerable to retroactive legal challenges.”

Tri-State’s Boughey noted that the government’s appeal isn’t necessary, however:

The ColoWyo appeal isn’t dependent on any other party’s decision to appeal or not appeal Jackson’s decision, Boughey said.

“We believe the court made several significant errors, including misreading the Surface Mining Control and Reclamation Act. This prejudices not only Colowyo but other mining operations, and sets a precedent that should raise concerns for the U.S. energy industry and other activities on federal land,” he said.

In essence, Tri-State and ColoWyo officials don’t think the federal Office of Surface Mining should be looking at power plant operations.

“The court’s requirement that the agency analyze emissions from power plants inappropriately expands National Environmental Policy Act analyses for mining plans beyond what is prescribed under the law,” Boughey said.

The Independence Institute will continue to monitor the developments in the Colowyo legal battle.

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Meanwhile, the WildEarth Guardians continue their crusade against all natural resource extraction, as the Denver Post’s Vincent Carroll recently illustrated:

Jeremy Nichols may not be the official stand-up comic of green activism, but he seems to be auditioning for the role. How else to explain his risible claim in a recent Denver Post report on the struggling economy in northwest Colorado that WildEarth Guardians isn’t trying to shut down the Colowyo coal mine and throw 220 people out of work?

“We want to have an honest discussion about the impact of coal and find a way to come together to figure out the next step,” Nichols, the group’s spokesman, maintained.

Why, of course. A group militantly opposed to fossil-fuel production files a lawsuit challenging the validity of a coal mine plan approved years ago — but does so only to provoke an “honest discussion.” Please.

WildEarth Guardians is opposed to all fossil-fuel extraction in the West, and makes no bones about it. In the winter 2013-14 edition of Wild Heart, Nichols outlined the group’s position on those other big fossil fuels, oil and natural gas.

“As communities in Colorado and elsewhere have learned well,” Nichols wrote, “it’s not enough to make oil and gas development cleaner or safer. For the sake of our health, our quality of life, and our future, it simply has to be stopped.”

“In some cases,” Nichols explained, “we can stop it cold … . In other cases, we can raise the cost of drilling to make it economically infeasible.”

The Colowyo Mine is still operating for now, but WildEarth’s apparent regulatory sabotage certainly seems consistent with its efforts to “stop it cold” when it comes to natural resources. Not to mention throwing 220 people out of work and disrupting the economy of an entire region.

Some “honest discussion.”

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The price of a barrel of oil began to decline sharply in late 2014, prompting fears that the crashing crude market would tank the nation’s nascent energy resurgence, but despite falling numbers, 2015 still looks to be a year of production highs:

The amount of crude oil produced across the United States fell in May compared to April — but federal forecasters say 2015’s overall production is still “on track” to be the highest in 45 years.

The Energy Information Administration (EIA) on Tuesday released its monthly short-term energy outlook, noting that crude oil production fell in May by about 50,000 barrels of oil per day compared with April.

In Colorado, oil production from the Niobrara field north of Denver, part of the larger Denver-Julesburg Basin, is expected to drop about 17,000 barrels per day in July compared to June, the EIA said.

The number of drilling rigs running in the state has dropped from 72 at the start of 2015 to 39 at the end of June as oil and gas companies have cut back on spending.

But, as we know from basic economics about supply and demand, lower oil prices mean lower gas prices, and that is driving demand back up to pre-recession levels:

But the on the consumer side, a better economy and low gasoline prices are expected to boost the amount of gasoline used in the U.S. by an estimated 170,000 barrels per day over 2014, the report said.

“U.S. gasoline demand will likely top 9 million barrels per day this year for the first time since 2007, which reflects record highway travel,” Sieminski said.

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There’s no doubt that readers of the Independence Institute’s Energy Policy Center blog and op-eds are familiar with the argument that electricity derived from wind energy is more costly than other forms of generation–namely coal and natural gas–when one accounts for the massive amount of Federal subsidies, incentives, and state and local renewable mandates and other handouts.

A new study from Utah State University once again confirms that conclusion–”when you take into account the true costs of wind, it’s around 48 per cent more expensive than the industry’s official estimates”:

“In this study, we refer to the ‘true cost’ of wind as the price tag consumers and society as a whole pay both to purchase wind-generated electricity and to subsidize the wind energy industry through taxes and government debt,” said Ryan Yonk Ph.D., one of the report’s authors and a founder of Strata Policy. “After examining all of these cost factors and carefully reviewing existing cost estimates, we were able to better understand how much higher the cost is for Americans.”

The peer-reviewed report accounted for the following factors:

The federal Production Tax Credit (PTC), a crucial subsidy for wind producers, has distorted the energy market by artificially lowering the cost of expensive technologies and directing taxpayer money to the wind industry.

States have enacted Renewable Portfolio Standards (RPS) that require utilities to purchase electricity produced from renewable sources, which drives up the cost of electricity for consumers.

Because wind resources are often located far from existing transmission lines, expanding the grid is expensive, and the costs are passed on to taxpayers and consumers.

Conventional generators must be kept on call as backup to meet demand when wind is unable to do so, driving up the cost of electricity for consumers.

“Innovation is a wonderful thing and renewable energy is no exception. Wind power has experienced tremendous growth since the 1990’s, but it has largely been a response to generous federal subsidies,” Yonk stated.

But Utah State University researchers aren’t the only ones pulling back the curtain on the true cost of wind. A new study from the Institute for Energy Research demonstrates that a real comparison between existing power plants and new power plant sources shows that wind power once again comes up short in the low cost department:

Today, the Institute for Energy Research released a first-of-its-kind study calculating the levelized cost of electricity from existing generation sources. Our study shows that on average, electricity from new wind resources is nearly four times more expensive than from existing nuclear and nearly three times more expensive than from existing coal. These are dramatic increases in the cost of generating electricity. This means that the premature closures of existing plants will unavoidably increase electricity rates for American families.

Almost all measures of the cost of electricity only assess building new plants–until now. Using data from the Energy Information Administration and the Federal Energy Regulatory Commission, we offer useful comparison between existing plants and new plants.

America’s electricity generation landscape is rapidly changing. Federal and state policies threaten to shutter more than 111 GW of existing coal and nuclear generation, while large amounts of renewables, such as wind, are forced on the grid. To understand the impacts of these policies, it is critical to understand the cost difference between existing and new sources of generation.

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A link to the complete study can be found on the Institute’s release page.

Weld County has Saudis running scared

November 22, 2011 by Amy · Comments Off
Filed under: Archive, New Energy Economy 

In the state that claims the New Energy Economy, it isn’t renewable energy that has Middle East oil suppliers worried about lack of U.S. demand. Dan Kish, senior vice president for policy at the Institute for Energy Research, told Amy Oliver in an interview on KFKA that the recent announcement (Anadarko Petroleum) of up to 1.5 billion BOE (barrels of oil equivalent) along with advanced technology to extract liquid fossil fuels from the Wattenberg Field, have the Saudis worried that America will become fossil fuel independent.

Kish cited a speech from Khalid Al-Falih, president and CEO of Saudi Aramco. Al-Falih told a Saudi audience in Riyadh Monday:

There is a new emphasis in the industry on unconventional liquids, and shale gas technologies are also being applied to shale oil.

Some are even talking about an era of ‘energy independence’ for the Americas, based on the immense conventional and unconventional hydrocarbon resources located there. While that might be stretching the point, it is clear that the abundance of resources and the more ‘balanced’ geographical distribution of unconventionals have reduced the much-hyped concerns over ‘energy security’, which once served as the undercurrent driving energy policies and dominated the global energy debate.

Previously, the Saudis could just produce more barrels of oil to force a decrease in global prices and thus, fend off development of the higher priced, more unconventional sources of liquid fossil fuels including natural gas and oil shale. Improved technology such as hydraulic fracturing and horizontal drilling have made extraction much more cost effective with less of a surface footprint.

Furthermore, an article from Financial Post, which covered Al-Falih’s speech, reported he has little faith in the green movement such as Colorado’s New Energy Economy being able to dramatically change American need for fossil fuel:

[The] Saudis would be cheering on the green groups…they don’t hold out much hope for renewable energies… Calling them ‘green bubbles,’ Al-Falih says governments should stop focusing on unproven and expensive energy mix, as there is frankly no appetite for massive investments in expensive, ill-thought-out energy policies and pet projects.

The Saudis have already seen a drop in oil exports to the U.S. from 11.2 percent (of total imported oil) five years ago to the current 9.3 percent.

The one thing that the New Energy Economy has in common with the Wattenberg Field, is Colorado. The Wattenberg Field and the energy rich Niobrara formation are centered in northeastern Colorado. Much of Colorado’s oil and gas drilling activity is centered in Weld County. According to Kish, Weld County has the Saudis running scared.

At a time of economic struggle Weld County welcomes drilling in more than 17,500 active wells, which could translate into an additional $50,000,000 annually in revenue to the county and municipalities according to Weld County Commissioner Sean Conway.

Hey Boulder! How’s that New Energy Economy working for you? By the way, Weld County has no debt either.