West Coast 2013March Update

West Coast – March 2013 Policy Update

West Coast 2013March Update

Table Of Contents

West Coast – March 2013 Policy Update.................................................................................................1Table Of Contents................................................................................................................................2

Natural Gas Terminals Neg......................................................................................................................3SQ Solves NG Exports..........................................................................................................................4SQ Solves NG Supply............................................................................................................................5Plan Doesn’t Solve Exports..................................................................................................................6Building NG Terminals = Long Timeframe............................................................................................7AT: Economy Advantage......................................................................................................................8AT: Manufacturing Advantage...........................................................................................................10AT: Warming Advantage....................................................................................................................11AT: Chinese Shale Advantage............................................................................................................12AT: Algerian Gas Exports Advantage..................................................................................................13AT: Coal Displacement Advantage.....................................................................................................14AT: Price Volatility Advantage............................................................................................................15NG Exports Spur Production..............................................................................................................16Natural Gas Production Bad – Warming............................................................................................17Natural Gas Production Bad – Earthquakes.......................................................................................18Natural Gas Production Bad – Water Shortages................................................................................20NG Exports Increases NG Prices.........................................................................................................21High NG Prices Bad – Coal.................................................................................................................23High NG Prices Bad – Fertilizer Industry............................................................................................25High NG Prices Bad – Steel Industry..................................................................................................27High NG Prices Bad – Chemical Industry............................................................................................28NG Exports Bad – Manufacturing......................................................................................................29NG Exports Bad – Warming...............................................................................................................30NG Exports Bad – Qatar.....................................................................................................................32NG Exports Bad – Russia....................................................................................................................33NG Exports Bad – Australia................................................................................................................34Approve Terminals CP 1NC................................................................................................................35Approve Terminals CP – Solvency......................................................................................................37Approve Terminals CP – Politics Net-Benefit.....................................................................................38Politics Link – Exports Unpopular......................................................................................................39EPA DA 1NC 1/2.................................................................................................................................40EPA DA 1NC 2/2.................................................................................................................................41Spot Pricing DA 1NC 1/2....................................................................................................................43Spot Pricing DA 1NC 2/2....................................................................................................................45Spot Pricing DA – Uniqueness – Yes Oil Pricing..................................................................................47Spot Pricing DA – Link – Exports Cause Spot Pricing..........................................................................48

West Coast 2013March Update

Natural Gas Terminals Neg

West Coast 2013March Update

SQ Solves NG Exports

Obama will approve natural gas exports nowKaren Boman, Rigzone Staff, 11-2-2012, “Romney, Obama Seen Favoring U.S. LNG Exports,” Rig Zone, http://rigzone.com/news/oil_gas/a/121794/Romney_Obama_Seen_Favoring_US_LNG_Exports, da 3-1-2013Despite the delay, the Obama administration appears to be generally supportive of approving a reasonable amount of U.S. LNG export terminals, said Benjamin Salisbury, policy analyst with Washington, D.C.-based FBR Capital Markets.¶ "The Obama administration appears to be generally supportive of a reasonable amount of LNG export approvals," FBR Capital Markets & Co. analysis Benjamin Salisbury told Rigzone in an interview. "We don't see his potential reelection as negative."¶ Michael Butler, CEO of Seattle-based Cascadia Capital, sees a Romney presidency as more favorable for U.S. LNG export projects. However, an “Obama presidency wouldn't be so debilitating for natural gas," Butler told Rigzone.¶ Obama, who initially was a big supporter of green energy and clean energy, is now trying to take credit for the surge in U.S. natural gas supply after the Solyndra meltdown and flight of investment dollars from renewable energy projects to the natural gas sector, Butler noted.¶ "He wasn't willing to come over to this point of view, but the reality is starting to face him," Butler commented . ¶ Both President Obama and

Romney have made several comments supporting natural gas in general, said Bill Cooper, President of the Center for Liquefied Natural Gas.¶

Status quo will result in LNG export approvalKaren Boman, Rigzone Staff, 11-2-2012, “Romney, Obama Seen Favoring U.S. LNG Exports,” Rig Zone, http://rigzone.com/news/oil_gas/a/121794/Romney_Obama_Seen_Favoring_US_LNG_Exports, da 3-1-2013Regardless of who occupies the Oval office, the outlook remains favorable for DOE to approve additional export authority to non-FTA countries, said Tim VandenBerg, senior vice president at Washington Analysis Corp.¶ "There is a general

belief that a handful of terminals will be approved," VandenBerg told Rigzone. "We know that with each approval the DOE will raise the bar, due to domestic price/supply concerns, and eventually there will be a hiatus in approvals.¶ Where DOE will draw that line is very uncertain," VandenBerg

said. "Likewise, it's not clear in what order DOE will process the applications it has received."¶ Cooper noted that DOE's stated policy is that a competitive LNG export marketplace should be allowed to flourish in the United States with minimum regulatory impediments . ¶ "When we look at domestic needs and whether LNG exports will adversely impact consumers, all the studies show an ample supply of gas in the United States to meet current growing demand for residential, manufacturing, power generation and transportation while allowing some

LNG exports," Cooper commented. "There has been no credible evidence introduced by opponents to show otherwise."¶ The timing of when DOE will move forward with making decisions on the list of LNG export applications is uncertain, and may be similar regardless of which candidate is elected president, Cooper noted.

Some terminals have already been approved – more on the wayShaun Goho, lecturer on law @ Harvard, 1-2-2013, “In U.S., the Lure of Export May Further Fuel Natural Gas Boom,” environment 360, http://e360.yale.edu/feature/in_us_the_lure_of_export_may_further_fuel_natural_gas_boom/2605/, da 3-1-2013Yet this round of battles had barely ended before another one began. This time, the push is not to build terminals to import LNG, but instead to export it. Shale gas production has increased so rapidly that not only is there enough gas — there is too much . Within a couple of years, the market has flipped from impending shortages to a massive glut. As a result, prices have plummeted and storage capacity has nearly been overwhelmed. In April 2012, the U.S. Department of Energy gave the green light to a facility in Louisiana that would be the first to convert natural gas to liquid natural gas and then export it. At least 15 more plants similar to that one have been proposed. For the time being, however, the others are on hold, pending the completion of a

Department of Energy economic analysis, expected this year.

West Coast 2013March Update

SQ Solves NG Supply

Exports aren’t necessary – status quo natural gas production is boomingRobert Pirog, Specialist in Energy Economics at the Congressional Research Service, and Michael Ratner, Specialist in Energy Policy at the CRS, 11-6-2012, “Natural Gas in the U.S. Economy: Opportunities for Growth,” http://www.fas.org/sgp/crs/misc/R42814.pdf, da 3/1/2013Due to the growth in natural gas production, primarily from shale gas, the United States is benefitting from some of the lowest prices for natural gas in the world and faces the question of how to best use this resource. Different segments of the U.S. economy have different perspectives on the role natural gas can play. Suppliers, which have become the victims of their own production success, are facing low prices that are forecast to remain low. Some companies that have traditionally produced only natural gas have even turned their attention to oil in order to improve their financial situation. Smaller companies are having a difficult time continuing operations and larger companies, including international companies, have bought into many shale gas assets.

Prices have remained low even as consumption has increased , in part, because producers have raised production to meet the demand and because companies have improved efficiency and extraction techniques. Some companies, many with large production operations, have applied for permits to export natural gas. This has raised concerns from consumers of natural gas that domestic prices will rise. The debate regarding exports is ongoing.

Natural gas production is high and will keep increasingHard Assets Investor, 2-4-2013, “Natural Gas Production Jumps To Fresh Record High, Prices Capped Below $4,” http://seekingalpha.com/article/1155491-natural-gas-production-jumps-to-fresh-record-high-prices-capped-below-4?source=google_news, da 3-1-2013Natural gas output hit a record for a third-straight month. U.S. natural gas production climbed to a record high for a third-straight

month in November, according to the Energy Information Administration. Output hit 73.88 bcf/d, an increase of 0.4 bcf/d from the previous

month. On a year-over-year basis, production was up 1.42 bcf/d, or 2%, from a year ago. Associated natural gas -- gas that is a byproduct

of drilling for crude oil and other liquids -- continues to grow swiftly. Barring a slowdown in oil drilling, natural gas output is likely to trend higher, capping prices below $4.

Natural gas production will stay high, despite regulationsPeter Kelly-Detwiler, Forbes contributor, 11-7-2012, “In Obama's Second Term, Shale Gas Production Not Likely to Slow Down,” http://www.forbes.com/sites/peterdetwiler/2012/11/07/in-obamas-second-term-shale-gas-production-not-likely-to-slow-down/print/, da 3-1-2013Regardless of the final regulatory outcome, gas production is likely to soar , especially as gas use grows in transportation, industry, and

electric generation. And don’t forget the significant potential for LNG exports, as numerous license requests have already been tendered. The Marcellus area, and Pennsylvania in particular, should continue to see rapid growth. A new study from ASDReports announced today suggests that production could increase more than seven-fold from 2011 levels, from just over 1,000 billion cubic feet equivalent (bcfe) in 2011 to almost 5,000 bcfe in 2015, before finally leveling off at over 7,600 bcfe in 2020. Just in the eastern US, the shale gas reserves are enormous. The US Geological Survey has pegged Marcellus at an estimated recoverable total of 84 trillion cubic feet (TCF). In October, it released its first estimates for the neighboring (in Ohio) or underlying (in Pennsylvania and New York) Utica shales of 38 TCF, plus 940 million barrels of unconventional oil resources and 208 million barrels of unconventional liquids. The current dominant players, such as Chesapeake, Range Resources, Talisman Energy,

and Cabot Oil and Gas have locked up a good deal of the acreage, but they may be joined by others. The drilling will continue, and the conversation will go on as to how to produce domestic shale gas in the most efficiently, clean, and safe manner . The stuff is there, and it’s not going away.

West Coast 2013March Update

Plan Doesn’t Solve Exports

Terminal investments aren’t enough to cause LNG exports – US will be outcompeted on the global marketMichael Levi, senior fellow for energy @ CFR, June 2012, “A Strategy for U.S. Natural Gas Exports,” Hamilton Project, http://www.hamiltonproject.org/papers/a_strategy_for_u.s._natural_gas_exports/, da 3-1-2013It is far from clear that all or even most of this export volume would be used even if it were approved . A recent MIT study looked at nine scenarios for U.S. and world natural gas markets; none of them led to the emergence of significant U.S. natural gas exports, in large part because other lower cost producers undercut prices offered by the United States in distant markets (MIT 2011). Other forces, discussed in Chapter 2, could also lead global natural gas prices to converge even without U.S. exports, removing opportunities for economically attractive U.S. LNG sales. Indeed, most analysts anticipate that less LNG will be exported than currently pending permits would allow, even if all of those were approved . (They also expect to see more permit

applications, since the plans behind many of the pending ones are expected to eventually fizzle.) For example, Citigroup analysts foresee up to 5 billion cubic feet a day of LNG exports by the end of the decade, barring regulatory barriers (Morse et al. 2012). UK gas producer BG has

projected up to six billion cubic feet a day by then (Gismatullin 2012), the same volume that Deloitte (2011) analysts have focused their modeling on. Given this consistent view among market analysts on the maximum likely volume of LNG exports from the United States, the main analysis in this paper focuses on the possibility of up to six billion cubic feet of daily exports. This is approximately half the capacity currently awaiting approval and almost ten percent of current U.S. natural gas production. I consider the possibility of significantly greater or lesser

exports in Chapter 6; the qualitative conclusions do not change, though the specific costs and benefits of allowing LNG exports do. To provide some context, Figure 2 shows natural gas consumption and LNG trade by region.

Building terminals is irrelevant – takes too long and can’t compete globallyClifford Krauss, 1-4-2013, “Exports of American Natural Gas May Fall Short of High Hopes,” NYT, http://www.nytimes.com/2013/01/05/business/energy-environment/exports-of-us-gas-may-fall-short-of-high-hopes.html?pagewanted=all, da 3-1-2013Now, the same companies that had such high hopes for imports are proposing to salvage those white elephants by spending billions more to convert them into terminals to export some of the nation’s extra gas to Asia and Europe, where gas is roughly

triple the American price. Just like last time, some of the costly ventures could turn out to be poor investments . Countries around the world are importing drilling expertise and equipment in hopes of cracking open their own gas reserves through the same techniques of hydraulic fracturing and horizontal drilling that unleashed shale gas production

in the United States. Demand for American gas — which would be shipped in a condensed form called liquefied natural gas, or L.N.G. — could easily taper off by the time the new export terminals really get going , some energy specialists say. “It will be easier to export the technology for extracting shale gas than

exporting actual gas,” said Jay Hakes, former administrator of the Energy Department’s Energy Information Administration. “I know the pitch about our price differentials will justify the high costs of L.N.G. We will see. Gas by pipeline is a good deal. L.N.G.? Not so clear.” Even the

terminal operators acknowledge that probably only a lucky few companies will export gas because it can cost $7 billion or more to build a terminal, and then only after a rigorous federal regulatory permitting process. The exploratory process to find a suitable site for a new terminal alone can take a year and cost $100 million, operators say, and financing can be secured only once long-

term purchase agreements — 20 years or more — are reached with foreign buyers. “It’s a monumental effort to put a deal together like this, and you need well-heeled partners,” said Mark A. Snell,

president of Sempra Energy, which is based in San Diego and is applying for permits to turn around a Hackberry, La., import terminal for export. “There are only a handful of people who can do this kind of thing.”

No international demand for US gas exports, even if terminals are builtShaun Goho, lecturer on law @ Harvard, 1-2-2013, “In U.S., the Lure of Export May Further Fuel Natural Gas Boom,” environment 360, http://e360.yale.edu/feature/in_us_the_lure_of_export_may_further_fuel_natural_gas_boom/2605/, da 3-1-2013Third, demand for American LNG in Europe and Asia might not end up being as large as expected. Europe and Asia both contain significant shale gas reserves. At the moment, both regions lag far behind North America in the exploitation of this resource. In Western Europe, because of political opposition, this situation is likely to continue for

some time, although the UK recently gave the go-ahead to shale gas extraction. China, however, is moving forward rapidly with plans to exploit is shale gas resources. Such increases in foreign shale gas production will reduce demand for American LNG exports. At the same time, other gas-producing countries, such as Australia, have their own LNG export plans, which could reduce demand for U.S. exports, particularly if their gas can be made available at lower cost.

West Coast 2013March Update

Building NG Terminals = Long Timeframe

Building LNG export facilities takes years Reuters, 8-18-2012, “Qatar Petroleum JV seeks US LNG permit,” Arabian Business, www.arabianbusiness.com/qatar-petroleum-jv-seeks-us-lng-permit-470247.html, da 3-1-2013Golden Pass Products, a joint venture of Exxon Mobil Corp and Qatar Petroleum, is seeking US authorities' permission to export liquefied natural gas from a terminal near the Texas-Louisiana border, the Wall Street

Journal said, quoting an executive.¶ Exxon and its partner would spend $10bn to convert a new terminal near Port

Arthur, Texas, into a facility capable of exporting 15.6 million tons of LNG per year, the newspaper said. It was built to import natural gas, it said.¶ According to the joint venture application, the LNG would be exported to countries with which the United States has a free-trade treaty, the Journal said.¶ The regulatory approval could take several years to pass and the facilities could take about five years to build, the Journal said, quoting Bill Davis, project executive for Golden Pass Products.

Exporting LNG will take decades Constance Gustke, 6-20-2012, “Domestic Critics Slow Potential LNG Export Boom,” CNBC, www.cnbc.com/id/47279981, da 3-1-2013Natural Gas Some experts say the regulatory slowdown is almost certain to dampen pricing. “It isn’t feasible for eight projects to hit the market fast,” says Charles Ebinger, director of the Brookings Institution Energy Security Initiative. “So there is less market impact.” Guy Caruso, a senior adviser in energy and national security at the nonpartisan Center for Strategic and International Studies, estimates it could take five to 10 more years to achieve even modest amounts of natural gas exports.

LNG exports take decades to materializeJoe Romm, American Progress fellow, PhD physics @ MIT, 8-16-2012, “Exporting Liquefied Natural Gas (LNG) Is Still Bad For The Climate — And A Very Poor Long-Term Investment,” Think Progress, http://thinkprogress.org/climate/2012/08/16/699601/exporting-liquefied-natural-gas-lng-bad-for-climate-poor-long-term-investment/?mobile=nc, da 3-1-2013The NY Times piece actually makes this odd argument on behalf of LNG exports: “It will take years before any export terminals are up and running — in the meantime, producers and regulators should strengthen safeguards so that gas is extracted safely.” But this is yet another reason why LNG exports make no sense. Why would we want to start massive exports of natural gas around the end of this decade, with costly new infrastructure that until mid-century?

West Coast 2013March Update

AT: Economy Advantage

Natural gas exports don’t have a substantial effect on jobs or the economyWashington Post, 12-7-2012, “Natural gas exports: A boon to the economy,” http://www.washingtonpost.com/opinions/natural-gas-exports-a-boon-to-the-economy/2012/12/07/9cc3e4e0-3ff7-11e2-bca3-aadc9b7e29c5_story.html, da 3-1-2013A new Energy Department study on increasing U.S. natural gas exports proves this timeless lesson again, as it shows how bewildering the opposition to exporting the fuel is. Analysts examined a range of scenarios , with varying assumptions about

supply and demand here and worldwide. In every case, exporting natural gas produced net economic benefits. In fact, the study found that the more the country exports, the higher the gain. With exports, gross domestic product in 2020 could be up to $47 billion higher. ¶

Critics point out that exporting natural gas might increase domestic prices for the fuel somewhat, which could raise the cost of electricity and other goods. Yet the report noted that higher natural

gas prices would also mean more foreign money coming into the country. Besides, the report noted, international competition seriously limits how much the United States might be able to export and therefore how high prices could rise. No matter the increase, Americans will pay much less than most foreigners for natural gas, giving domestic businesses a competitive advantage, since liquefying and transporting the fuel overseas adds a lot to the price.¶ Critics,

nevertheless, worry that export revenue would go to energy companies at the expense of manufacturing, which can be sensitive to energy prices. But the report figures that the most vulnerable sliver of the manufacturing sector accounts for only one-half of 1 percent of total U.S. employment. Employment in energy-intensive industries would decline no more than 1 percent — “less than normal rates of turnover of employees in the relevant industries” — under any scenario.

Natural gas isn’t key to the economyMichael Levi, senior fellow for energy at Council on Foreign Relations, July/Aug 2012, “THINK AGAIN: THE AMERICAN ENERGY BOOM,” Foreign Policy, Issue 194, p55THE U.S. OIL and gas boom has come at an auspicious time. With record numbers of Americans out of work, hydrocarbon production is helping create much-needed jobs in communities from Pennsylvania to North Dakota. Shale gas production alone

accounted for an estimated 600,000 U.S. jobs as of 2010, according to the consultancy IHS CERA. It's much harder, though, to extrapolate into the future. In a deeply depressed economy, new development can put people to work without reducing employment elsewhere. That's why boom states have benefited massively in recent years. The same is not true, though, in a more normal economy.

Unemployment rates are typically determined by fundamental factors such as the ease of hiring and firing and the match between skills that employers need and that workers have . The oil and gas boom won't change these much . That's why we should be skeptical about rosy projections of millions of new jobs. Wood

MacKenzie, for example, claims that the energy boom could deliver as many as 1.1 million jobs by 2020 ,

while Citigroup forecasts a whopping 3.6 million. Unless the U.S. economy remains deep in the doldrums for another decade, these will mostly come at the expense of jobs elsewhere. That hardly means all the new oil and gas coming online is worthless. In the near term, it can support hundreds of thousands of workers who would otherwise

be unemployed. In the long term, it should deliver a boost to the overall U.S. economy, raising gdp by as much as three percentage points, according to my colleague, Citigroup's Daniel Ahn. But we can't drill our way out of America's job crisis. The numbers just don't add up.

Link goes one way – exporting natural gas hurts the economy more than it can help itDlouhy, 12-6-2012, “Manufacturers pushing hard against LNG exports,” Fuel Fix, http://fuelfix.com/blog/2012/12/06/manufacturers-pushing-hard-against-lng-exports/, da 3-1-2013Manufacturers say the study used outdated 2011 projections of demand for natural gas and that the report dismissed the effects on their sector while ignoring the positive contribution they have on the U.S. economy. “The report does not compare the economic benefits of exporting natural gas versus using it as a domestic jobs creator ,” said Paul Cicio, president of the Industrial Energy Consumers of America. “If we use these resources domestically, it will maximize economic growth and job creation for this country.” Because natural gas prices aren’t set on a global market — and the cost in some Asian and European

markets can be three to five times higher than in the U.S. — American manufacturers have competitive cost advantage when it comes to the fossil fuel and producing energy-intensive goods. Biltz stressed that if a single cubic foot of natural gas is exported, it gives the U.S. a one-time impact on the GDP. But, he added: “If you take that same cubic foot and you roll it through manufacturing , whether it’s steel or chemicals or pulp and paper or rubber, this has as much as a 20x impact when you roll it through the whole GDP of the country ,” Biltz said. “And you get export products at the end of that value chain too.” Dow’s chairman and CEO, Andrew Liveris, said in a statement late Thursday that the report ignores that “manufacturing is the largest

West Coast 2013March Update

user of natural gas in the U.S. and creates more jobs and more value to the U.S. economy from natural gas than any other sector.” He added:

West Coast 2013March Update

AT: Manufacturing Advantage

Manufacturing sector is resilientErik Skie, Manufacturing and Distribution Managing Partner at CliftonLarsonAllen, 9-6-2012, “Survey Shows Resilient Manufacturing Sector Is Adapting to New Environment,” www.cliftonlarsonallen.com/Manufacturing/Survey-Shows-Resilient-Manufacturing-Sector-Is-Adapting-to-New-Environment.aspx, da 3-1-2013The dynamic shifts in this industry are almost unparalleled in any other sector of our economy. Interestingly,

though, in a recent survey of almost 400 small to mid-sized manufacturers across the country, most have returned to financial stability after the Great Recession and are focused on future opportunities.¶ Stiff competition has produced a U.S. manufacturing base that is innovative, adaptable, and resilient in the face of adversity . Since August 2009, the Institute of Supply Chain Management’s (ISM) Manufacturing Production Index (PMI), a measure of manufacturing activity in the United States, has shown expansion for 33 of the past 35 months.

Natural gas isn’t key to manufacturingBrad Plumer, 5-21-2012, “Will cheap shale gas revive U.S. manufacturing? Not so fast,” Washington Post, http://www.washingtonpost.com/blogs/ezra-klein/post/will-cheap-natural-gas-revive-us-manufacturing/2012/05/21/gIQAOORZfU_blog.html, da 3-1-2013It’s hard to think of an extravagant prediction that hasn’t been made about America’s recent natural-gas boom. Let’s see: Cheap natural gas will wipe out coal. It will make the U.S. energy independent. And, oh yes, it will create one million manufacturing jobs and revitalize the Midwest. Someone has to make these pipes. (Keith Srakocic - AP) That last claim comes via a recent report from PricewaterhouseCoopers. But over at the Council on Foreign Relations, Michael Levi casts a more skeptical eye on arguments that the age of cheap natural gas from shale will really lead to a dramatic revival of U.S. manufacturing. There are reasons to think the overall impact will be fairly muted. Energy costs are still a small factor for many manufacturers. Levi points to a 2009 paper (pdf) by Joseph Aldy and William Pizer finding that “only one tenth of U.S. manufacturing involved energy costs exceeding five percent of the total value of shipments.” Aldy and Pizer estimated that a carbon tax, which raises energy prices, would affect manufacturing employment slightly — less than 3 percent — in the most energy-intensive industries like aluminum, cement, glass, and steel. The flipside is that lower energy costs, thanks to cheap natural gas, would have a similarly marginal impact.

Energy costs don’t change manufacturing competitivenessMichael Levi, senior fellow for energy at Council on Foreign Relations, 5-16-2012, “Energy and U.S. Manufacturing: Five Things to Think About," CFR, http://blogs.cfr.org/levi/2012/05/16/energy-and-u-s-manufacturing-five-things-to-think-about/, da 3-1-2013The boom in U.S. oil and gas production has sparked talk of a manufacturing renaissance. I mentioned that somewhat skeptically last week in the context of a much broader piece on the excitement surrounding surging U.S. oil and gas output. I want to drill down on five important issues here. Some

of this thinking is preliminary, so as always, feedback is most welcome.¶ Energy is of marginal importance to most manufacturing . ¶ Most U.S. manufacturing is not energy intensive . Joe Aldy and Billy Pizer reported in a 2009 paper that only one tenth of U.S. manufacturing involved energy costs exceeding five percent of the total value of shipments . These industries –

the most prominent of which are iron and steel, primary aluminum, bulk cement, chemicals, paper, and glass – are what we are talking about when we discuss the potential for an energy-driven manufacturing boom. The size of these sectors would need to grow enormously to have revolutionary consequences for the fate of the U.S. manufacturing sector. Avoiding substantial decline, though, could be more feasible.¶ Manufacturing growth tied to cheap natural gas is mostly a chemicals story.¶ Take a look at the sweep of major energy-intensive industries, and you’ll find that most are still quite insensitive to energy prices. IHS-CERA, which is not shy about extolling the benefits of the “shale gale” (a term it coined), surveyed these areas in an ANGA-funded study on shale jobs late last year and came to some striking conclusions.

West Coast 2013March Update

AT: Warming Advantage

Exports just make warming worse – LNG exports take too much energyJoe Romm, American Progress fellow, PhD physics @ MIT, 8-16-2012, “Exporting Liquefied Natural Gas (LNG) Is Still Bad For The Climate — And A Very Poor Long-Term Investment,” Think Progress, http://thinkprogress.org/climate/2012/08/16/699601/exporting-liquefied-natural-gas-lng-bad-for-climate-poor-long-term-investment/?mobile=nc, da 3-1-2013And as we’ve seen, LNG shipped from the U.S. is much worse from a GHG perspective than regular gas , so by the time a lot of new LNG terminals are up and running in this country , it seems likely that LNG-fired plants overseas will be have a higher GHG intensity than the average plant in the electric generation system needed to be anywhere near a non-catastrophic emissions path.¶ We do not want to build a global energy system around natural gas (see IEA’s “Golden Age of Gas Scenario” Leads to More Than 6°F Warming and Out-of-Control Climate Change). At the time, the UK Guardian‘s story put it well:¶ At such a level, global warming could run out of control, deserts would take over in southern Africa, Australia and the western US, and sea level rises could engulf small island states.

No emissions benefit from exporting natural gasJoe Romm, American Progress fellow, PhD physics @ MIT, 8-16-2012, “Exporting Liquefied Natural Gas (LNG) Is Still Bad For The Climate — And A Very Poor Long-Term Investment,” Think Progress, http://thinkprogress.org/climate/2012/08/16/699601/exporting-liquefied-natural-gas-lng-bad-for-climate-poor-long-term-investment/?mobile=nc, da 3-1-2013The extra emissions from LNG all but eliminate whatever small, short-term benefit there might be of building billion-dollar export terminals and other LNG infrastructure, which in any case will last many decades, long after a sustainable electric grid will not benefit one jot from replacing coal with gas .¶ Asserting any net

benefit requires assuming the new gas replaces only coal — and isn’t used for, say, natural gas vehicles, which, as noted, are worse for the climate or that it doesn’t replace new renewables. If even a modest fraction of the imported LNG displaces renewables, it renders the entire

expenditure for LNG counterproductive from day one. Remember, a major 2012 study on “technology warming potentials” (TWPs) found that a big switch from coal to gas would only reduce TWP by about 25% over the first three decades (see “Natural Gas Is A Bridge To Nowhere Absent A Carbon Price AND Strong Standards To Reduce

Methane Leakage“). And that is based on “EPA’s latest estimate of the amount of CH4 released because of leaks and venting in the natural gas network between production wells and the local distribution

network” of 2.4%. Many experts believe the leakage rate is higher than 2.4%, particularly for shale gas. Also, recent air sampling by NOAA over Colorado found 4% methane leakage, more than double industry claims.¶ A different 2012 study by climatologist Ken Caldeira and tech guru Nathan Myhrvold finds basically no benefit in the switch whatsoever — see You Can’t Slow Projected Warming With Gas, You Need ‘Rapid and Massive Deployment’ of Zero-Carbon Power. That study takes into account the near-term impact of the construction of new infrastructure.

Exports would only net increase emissionsEnergy Information Administration, January 2012, “Effect of Increased Natural Gas Exports on Domestic Energy Markets as requested by the Office of Fossil Energy,” http://www.eia.gov/analysis/requests/fe/pdf/fe_lng.pdf, da 3-1-2013While lower domestic natural gas deliveries resulting from added exports reduce natural gas related CO2 emissions, the increased use of coal in the electric sector generally results in a net increase in overall CO2 emissions . The exceptions occur in environments when renewables are better able to compete against natural gas and coal. However, when also accounting for emissions related to natural gas used in the liquefaction process, additional exports increase CO2 levels under all cases and export scenarios, particularly in the earlier years of the projection period. Table 2 displays the cumulative CO2 emissions levels from 2015 to 2035

in all cases and scenarios, with the change relative to the associated baseline case.

West Coast 2013March Update

AT: Chinese Shale Advantage

China is massively expanding shale now – the aff isn’t key to the transitionShaun Goho, lecturer on law @ Harvard, 1-2-2013, “In U.S., the Lure of Export May Further Fuel Natural Gas Boom,” environment 360, http://e360.yale.edu/feature/in_us_the_lure_of_export_may_further_fuel_natural_gas_boom/2605/, da 3-1-2013Third, demand for American LNG in Europe and Asia might not end up being as large as expected. Europe and Asia both contain significant shale gas reserves. At the moment, both regions lag far behind North America in the exploitation of this resource. In Western Europe, because of political opposition, this situation is likely to continue for

some time, although the UK recently gave the go-ahead to shale gas extraction. China, however, is moving forward rapidly with plans to exploit is shale gas resources. Such increases in foreign shale gas production will reduce demand for American LNG exports. At the same time, other gas-producing countries, such as Australia, have their own LNG export plans, which could reduce demand for U.S. exports, particularly if their gas can be made available at lower cost.

China is already expanding shale – they don’t need importsOil and Gas Eurasia, 1-9-2013, “China’s Shale Gas Reserves Sustainable for Nearly 200 Years,” http://www.oilandgaseurasia.com/news/china%E2%80%99s-shale-gas-reserves-sustainable-nearly-200-years, da 3-1-2013ChinaScope Financial reports that over the past year, shale gas has become a new focus in China’s energy sector . According to the preliminary

evaluation by the Ministry of Land and Resources, China’s recoverable continental shale gas reserves (excluding reserves in Qinghai and Tibet) at the end of 2011 reached 25 trillion cubic meters, equivalent to the volume of conventional

natural gas reserves. Experts said that if the shale gas reserves are fully explored, it can be used for nearly 200 years based on the current natural gas consumption. According to the nation’s shale gas development plan released earlier,

China’s shale gas output is expected to reach 100 billion cubic meters by 2020. As a result, the world’s second largest economy would greatly reduce its imports of natural gas and reliance on liquefied natural gas as well as change the current high dependence on imported oil and gas.

They don’t need US help, they’ll just buy the tech or get pipelines in AsiaClifford Krauss, 1-4-2013, “Exports of American Natural Gas May Fall Short of High Hopes,” NYT, http://www.nytimes.com/2013/01/05/business/energy-environment/exports-of-us-gas-may-fall-short-of-high-hopes.html?pagewanted=all, da 3-1-2013But analysts say that the price spread could quickly shrink as a host of factors converge. Gas prices in the United States will face upward pressure as exports rise , electric utilities switch to gas-fired plants from coal, and companies use more natural gas in manufacturing and for fleet vehicles. “With rising U.S. gas prices, U.S. L.N.G. could be priced out of the market ,” said Noel Tomnay, head of global gas research at the consultancy Wood Mackenzie. “Even without

L.N.G. exports, the price of gas will go up.” The indexing of Asian and European gas to oil prices is beginning to erode . At the same time, huge natural gas pipelines are being built around Asia to supply China, while new gas finds around Australia, East Africa and the eastern Mediterranean are likely to flood the markets with more L.N.G . Russia, a major global gas producer, is also moving aggressively to protect its markets .

And the cost of shipping and processing liquefied gas will cut into American suppliers’ competitiveness . Nikos Tsafos,

a gas analyst at PFC Energy, said if the current gas price of slightly less than $3.30 per thousand cubic feet rose to $6, “by the time it gets to Asia, it’s double that price and that means there is no arbitrage.” The biggest threat, over the long term, is the spread of the American shale boom overseas. The United States has a big lead; shale drilling has been slow to get started in Europe, South Africa and South America because of environmental

concerns, water shortages and political obstacles. But China, which potentially has more shale resources than the United States, is poised for development. And

Poland, Britain and Argentina are moving forward with more shale drilling.

West Coast 2013March Update

AT: Algerian Gas Exports Advantage

Collapse of Algerian gas exports to Europe is inevitableHakim Darbouche, Algerian gas expert, March 2011, “Algeria’s shifting gas export strategy,” Oxford Energy, http://www.oxfordenergy.org/wpcms/wp-content/uploads/2011/03/NG48.pdf, da 3-1-2013In principle, there is absolutely nothing wrong. or indeed atypical, with revising or deferring policy objectives, especially in the gas industry. But in the case of Algeria’s gas export policy it is rather the implicit consequences and challenges of this shortfall that are the main cause of concern.

If Sonatrach is unable to fully utilise export infrastructure in which large amounts of public capital have been injected, how is it going to justify the resulting sub-optimal returns from those

investments? 1f the gas supply crunch in Algeria is indicative of the impending depletion of the country’s hydrocarbon reserves, what are the likely implications for the Algerian economy, which remains structurally dependent on hydrocarbons? Until the coming to market of new gas supply in 2014-15, the main driver of Algeria’s gas

marketing strategy will be the maximisation of the value of exports even if that comes at the expense of market share. In any case, Sonatrach will find it almost impossible to maintain market share in Europe in the short-term . The trouble with this strategy is that it will be played out in a buyer’s-market context, so Sonatrach’s room for manoeuvre may be more limited than it would otherwise be, and the

emergence of major new LNG suppliers could mean that regaining market share subsequently is likely to be more challenging than perhaps initially anticipated.

Algeria is stable – external factors aren’t spilling overThomas Whittle, 12-28-2012, “Algeria stable in reform process amid turbulent region,” NZ Week, http://www.nzweek.com/world/algeria-stable-in-reform-process-amid-turbulent-region-39786/, da 3-1-2013Stability has continued to mark Algeria all along 2012, amid a turbulent region shaken by repercussions of the Arab Spring. The North African nation has organized in calm two elections , including the installation of a new elected parliament and that of municipal and provincial assemblies, as part of the reform process launched by

President Abdelaziz Bouteflika. Yet, this country of 35 million people is still suffering a couple of socio-economic difficulties that trigger time to time protest movements, which remained relatively “unapparent” in 2012 comparing to last year. On May 10, Algeria held the parliamentary election, which saw two government-allied parties, namely the National Liberation Front (FLN) and the National Democratic Rally (RND), gain the absolute majority of 462 seats in the new parliament, while provoking upset of defeated parties, including the Islamist Alliance of Green

Algeria. Some 500 foreign monitors, including those from the EU, had supervised the election, and given a relatively high approval. The European Union (EU) observer mission’s report said the May 10 election took place within “calm and orderly” atmosphere, hailing “cooperation and assistance” given by Algerian authorities to the observers during the process. However, the report deplored “manipulation of candidates” during the election, which led to “a

splitting up of polls” and ultimately unfairly favored the predominant parties, including the winning FLN. However, the election took place amid popular apathy. The government said the turnout hit 42.9 percent. Bachir Medjahed, a political analyst, told Xinhua that the elections turnout was not high, adding that “half of the electorate did not vote, and this highlights the extent of apathy among the populations who know in advance that such vote won’t bring change to their daily life.” FLN and RND managed further to win major seats in municipal and provincial assemblies, as part of the double local elections of Nov. 29. The next major political rendezvous in Algeria are the revision of the constitution due on 2013, and then the Presidential Election in 2014. In this regard, Medjahed indicated that “these elections are part of the approach of the political reforms engaged by President Bouteflika.” Another political event marking Algeria in 2012 was the government reshuffle of September, as a new Prime minister, in the name of Abdelmalek Sellal, has been appointed. When he took office, Sellal said that the priority of his new cabinet is to continue the implementation of President Bouteflika’ s political reforms. “There’s a roadmap meant to continue tasks of development and reforms in Algeria, including the revision of the Constitution,” he said. On the economic side, the new technocrat Prime minister

stressed in his inauguration speech that national economy should ” be given a new impetus,” given that Algeria enjoys important means to deal with challenges imposed by international economic transition. In fact, the government is still unable to face the problems related to the lack of houses and unemployment, in addition to low quality services at public hospitals and administrations. In

2011, amid the fever of the Arab Spring that swept on the region, the government in Algeria initiated a bunch of decisions to absorb public anger, through providing wage hikes in all sectors, granting low interest rate loans to youngsters to help them creating their own business, and also attributing new houses for citizens living in precarious houses and shanty towns.

Eventually, the scale of protest movements dropped significantly through 2012 . The North African nation earmarked 286 billion U.S. dollars for the latest five-year development program

(2010-2014).

Terrorism doesn’t hurt Algerian gas supplyFox Business, 2011, “Algeria Oil Always Reliable Despite Terrorism, Staff Demands-Min,” http://m.foxbusiness.com/quickPage.html?page=32811&content=49050016&pageNum=-1, da 3-1-2013Algeria's oil and gas supply has always proved reliable despite past terrorism, while the country is addressing oil workers' demands through negotiations, the country's energy minister said Sunday.¶ The statements come after political turmoil in Libya led to oil disruptions,

leading some experts to wonder about similar risks elsewhere in the Middle East and North Africa.¶ But in an interview, Youcef Yousfi said that neither oil and gas supplies nor exploration efforts were disrupted by a wave of terrorism in the 1990s.¶ "Europe never

lacked Algerian natural gas and the global market never lacked crude oil coming from Algeria," he said. Some "pipelines were momentarily targeted by sabotage attempts, but it was swiftly repaired and there were no disruptions," the minister said.

West Coast 2013March Update

AT: Coal Displacement Advantage

Natural gas isn’t key to coal displacement Shakeb Afsah, President and CEO of CO2 Scorecard, and Kendyl Salcito, Policy Communications Specialist for the CO2 Scorecard, 8-7-2012, “Shale Gas And The Overhyping Of Its CO2 Reductions,” Think Progress, http://thinkprogress.org/climate/2012/08/07/651821/shale-gas-and-the-fairy-tale-of-its-co2-reductions/, da 3-1-2013Natural gas doesn’t account for all of the reductions in coal - and petroleum-fueled electricity, but we take industry experts at their word that low shale gas prices helped fuel the shift . To quantify the price effect, we need an empirical estimate of the short-run elasticity of fuel substitution, which is provided by a

recent EIA analysis (EIA 2012B). The analysis estimates that a 1% increase in the ratio of the delivered fuel price of coal to the delivered price of natural gas to power plants leads to an average 0.14% increase in the fuel input ratio of natural gas to coal. Short-run elasticity is appropriate

for the analysis because most of the switch from coal to gas is expected to utilize the existing capacity of gas-fired units (Kaplan 2010; see data notes 1 & 2). During the shale gas boom, the price of coal increased 109% relative to the price of natural gas (Exhibit-3). This relative price effect would increase the ratio of gas to coal use by around 15% if the EIA’s methodology and elasticities are used (supplemental Exhibit-S1). That 15% translates to an increase in the predicted fuel input ratio of gas to coal from 0.31 to 0.36 over those five years.

This is equivalent to a shift of around 728,790 billion BTU shift in energy generation from coal to natural gas (Appendix-1 and data note #3). Natural gas power plants need on average 8,185 BTU to generate one KWh of electricity (EIA 2011). Therefore, 728,790 billion BTU will translate

into an average displacement of around 89 million MWh of electricity from coal to natural gas. This quantity, it turns out,

accounts for just around 35% of the total electricity generation shed by coal . If the replacement is entirely through natural gas combined cycle units this number will

increase to 37% (data note #4).

Other factors outweigh natural gas for coal displacementShakeb Afsah, President and CEO of CO2 Scorecard, and Kendyl Salcito, Policy Communications Specialist for the CO2 Scorecard, 8-7-2012, “Shale Gas And The Overhyping Of Its CO2 Reductions,” Think Progress, http://thinkprogress.org/climate/2012/08/07/651821/shale-gas-and-the-fairy-tale-of-its-co2-reductions/, da 3-1-2013Stephen Lacey of Climate Progress (Lacey 2012) and David Roberts of Grist (Roberts 2012A) have put forth seven factors that are together shutting down coal generation—two are the respective prices of coal and

gas, as calculated above. The remaining 167 million MWh (65%) that coal lost during the period of the shale gas boom was due to Roberts’ and Lacey’s other five factors— (1) regulations, (2)

energy efficiency/demand management, (3) improving cost-competitiveness of renewables, (4) recession and

(5) NGO campaigns. Where the low price of natural gas failed to fill the void left by coal , the other five factors show their significance. Renewables filled in about 120 million MWh of the coal generation gap—with wind

accounting for around 82 million (Appendix-3). These non-carbon sources typically don’t have much price advantage over coal, yet they account for 46% of its replacement. This gives some indication of the impacts of clean energy programs like production and investment tax credit (PTC & ITC), state level Renewable Portfolio

Standards (RPS) and the increasing cost competiveness of wind. Nuclear supplied around 2 million MWh. Gas stepped in to fill up the remaining 48 million MWh

(~19%) of power shed by coal—but it’s not appropriate to say it “displaced” coal; rather it “replaced” coal which was “displaced” by other non-price factors (Exhibit-4). That 48 million MWh of electricity was not going to be generated by coal, regardless of the price differential with gas. If gas were not excessively cheap, it is quite likely that some of this 48 million MWh would have come from renewables.

Coal collapse inevitable nowShakeb Afsah, President and CEO of CO2 Scorecard, and Kendyl Salcito, Policy Communications Specialist for the CO2 Scorecard, 8-7-2012, “Shale Gas And The Overhyping Of Its CO2 Reductions,” Think Progress, http://thinkprogress.org/climate/2012/08/07/651821/shale-gas-and-the-fairy-tale-of-its-co2-reductions/, da 3-1-2013In the future we expect the price of natural gas to increase (Fordney 2012 and Finger 2012) but we will continue to see a decline in coal generation. A big part of that trend will reflect the impact of USEPA’s regulation and the aging stock of coal-fired generation units, as more than 80% of coal units are forty years or older (Exhibit 5), and many will simply fade

away. Industry experts have already written off coal (Tierney 2012), and recently Michael Liebreich of Bloomberg New Energy Finance called it a “…sunset for traditional, old-style, inefficient coal plants” (Roberts 2012B). Just last week, their predictions got affirmed by the EIA (EIA 2012C). In some sense the demise of coal may be on auto-pilot now.

West Coast 2013March Update

AT: Price Volatility Advantage

No risk of natural gas price spikesAngel Gonzales, 3-8-2012, “Apache CEO: Natural gas prices seen as stable,” Market Watch, http://www.marketwatch.com/story/apache-ceo-natural-gas-prices-seen-as-stable-2012-03-08, da 3-1-2013Chief Executive Steve Farris said Thursday that low natural gas prices are here to stay, providing a good opportunity for utilities

and the transportation sector to adopt the fuel. "The bad thing" about low natural gas prices is that "producers don't make as much money. On the flip side, we have a long-term stable price future for natural gas ," Farris said at the IHS Cambridge Energy Research Associates conference here. Natural gas prices are trading below $2.50 per million British thermal units, at a decade low. But right before the financial crisis they traded above $13 per mmBtu. But Farris added that "we're not going to have that type of volatility we had in the past" due to the ample supplies unleashed by hydraulic fracturing of shale formations in the U.S.

New supply means no natural gas volatilityDirk McDermott, 7-30-2010, “The Natural Gas Era?” Green Tech Media, http://www.greentechmedia.com/articles/read/the-natural-gas-era/, da 3-1-2013On the demand side of the equation, natural gas usage will be driven by prices and price stability. These new reserves have flattened the supply curve, bringing with them a new level of reduced volatility. Prices will still

be volatile, but perhaps at levels much lower than has historically been the case. Additionally, production profiles lend themselves to long-term price contracts, muting volatility issues to some degree.

Exports don’t solve price spikesEnergy for America, project of the American Energy Alliance and the Institute for Energy Research, 2-1-2013, “LOW NATURAL GAS PRICES FORECAST FOR 2013,” http://www.energyforamerica.org/2013/02/01/low-natural-gas-prices-forecast-for-2013/, da 3-1-2013One way to make gas drilling more profitable would be to allow natural gas producers to sell to more people by permitting exports. Currently the President and Department of Energy have been holding up for months the permit allows for natural gas exports for supposed ongoing studies. Whereas natural gas prices are at all-time lows in America, Asia and Europe are willing to pay several times what Americans do to fulfill their energy needs. Given that opening up exports will have only marginal affects on domestic prices, which will be compensated for by the economic gains from trade, this would be a great avenue to make domestic production more profitable, while keeping costs low for consumers and creating more American jobs. That should be a win-win an anybody’s book.

West Coast 2013March Update

NG Exports Spur Production

Exports increase domestic production, decreases domestic consumptionEnergy Information Administration, January 2012, “Effect of Increased Natural Gas Exports on Domestic Energy Markets as requested by the Office of Fossil Energy,” www.eia.gov/analysis/requests/fe/pdf/fe_lng.pdf, da 3-1-2013Natural gas supply and consumption¶ In the AEO2011 Reference case, total domestic natural gas production grows from 22.4 trillion cubic feet (Tcf) in 2015 to 26.3 Tcf in 2035, averaging 24.2 Tcf for the 2015-2035 period. U.S. net imports of natural gas decline from 11 percent of total supply in 2015 to 1 percent in 2035, with lower net imports from Canada and higher net exports to Mexico. The industrial sector consumes an average of 8.1 Tcf of natural gas (34.2% of delivered volumes) between 2015 and 2035, with 7.1 Tcf, 4.8 Tcf, and 3.6 Tcf consumed in the electric power, residential, and commercial sectors respectively.¶ Under the scenarios

specified for this analysis, increased natural gas exports lead to higher domestic natural gas prices, which lead to reduced domestic consumption, and increased domestic production and pipeline imports from Canada (Figure 5). Lower domestic consumption dampens the degree to which supplies must increase to satisfy the additional natural gas exports. Accordingly, in order to accommodate the increased exports in each of the four export scenarios, the mix of production, consumption, and imports changes relative to the associated

baseline case. In all of the export scenarios across all four baseline cases, a majority of the additional natural gas needed for export is provided by increased domestic production , with a minor contribution from increased pipeline imports from Canada. The remaining portion of the increased export volumes is offset by decreases in consumption resulting from the higher prices associated with the increased exports.¶ The absolute value of the sum of changes in consumption (delivered volumes), production, and imports (represented by the total bar in Figure 5) approximately6 equals the average change in exports. Under Reference case conditions, about 63 percent, on average, of the increase in exports in each of the four scenarios is accounted for by increased production, with most of the remainder from decreased consumption from 2015 to 2035. The percentage of exports accounted for by increased production is slightly lower in the earlier years and slightly higher in the later years. While this same basic relationship between added exports and increased production is similar under the other cases, the percentage of added exports accounted for by increased production is somewhat less under a Low Shale EUR environment and more under a High Economic Growth environment.¶ One seeming anomaly that can be seen in Figure 5 is in the 2025 to 2035 timeframe: the decrease in consumption is somewhat lower in the rapid export penetration relative to the slow export penetration scenarios. This is largely attributed to slightly lower prices in the later years of the rapid export penetration scenarios relative

to the slow penetration scenarios.¶ Supply¶ Increases in natural gas production that contribute to additional natural gas exports

from the relative baseline scenario come predominately from shale sources. On average, across all cases and export scenarios, the shares of the increase in total domestic production coming from shale gas, tight gas, coalbed, and other sources are 72 percent, 13 percent, 8 percent, and 7 percent, respectively. Most of the export scenarios are also accompanied by a slight increase in pipeline imports from Canada. Under the Low Shale EUR case (which just applies to domestic shale), imports from Canada contribute to a greater degree than in other cases.

Natural gas exports would expand shale productionNathan Matthews, Associate Attorney, Sierra Club Environmental Law Program, 4-18-2012, “SIERRA CLUB’S MOTION TO INTERVENE OUT OF TIME, PROTEST, AND COMMENTS,” Sierra Club, http://content.sierraclub.org/sites/default/files/documents/SC%20Mtn%20to%20Intervene%204-18-12.pdf, da 3-1-2013LNG export will have significant adverse environmental effects, including inducement of harmful shale gas extraction and “fracking.” Under NEPA, DOE/FE cannot approve Sabine Pass’s application without acknowledging and studying these effects. Under the Natural Gas Act, DOE/FE cannot approve the application unless (after NEPA review) DOE/FE determines that the application is consistent with the public interest—a determination that must consider

environmental impacts. Neither DOE/FE nor FERC has adequately acknowledged or examined these impacts. Nonetheless, the available evidence indicates that these effects are severe enough to rebut any presumption that LNG exports are in the public interest. Sierra Club therefore files this protest pursuant to 10 C.F.R. § 590.304. A. Legal Framework DOE/FE has significant substantive and procedural obligations to fulfill under the Natural Gas Act and NEPA before it can authorize Sabine Pass’s export proposal.

LNG exports will spur more damaging shale productionNathan Matthews, Associate Attorney, Sierra Club Environmental Law Program, 4-18-2012, “SIERRA CLUB’S MOTION TO INTERVENE OUT OF TIME, PROTEST, AND COMMENTS,” Sierra Club, http://content.sierraclub.org/sites/default/files/documents/SC%20Mtn%20to%20Intervene%204-18-12.pdf, da 3-1-2013As explained above, the proposed exports will induce additional natural gas production. Natural gas production—from both conventional and unconventional sources—is a significant air pollution source , can disrupt ecosystems and

watersheds, leads to industrialization of entire landscapes, and presents challenging waste disposal issues. These impacts were recently highlighted by a Subcommittee of the DOE’s Secretary of Energy’s Advisory Board, which identified “a real risk of serious environmental consequences” resulting from continued expansion of shale gas production. DOE, Secretary of Energy’s Advisory Board, Shale Gas Production Subcommittee

Second 90‐Day Report (Nov. 18, 2011) at 10.19 Although some states and federal agencies are taking steps to limit these harms, these efforts are uncertain and, even if fully implemented, will not eliminate the environmental harms.

West Coast 2013March Update

Natural Gas Production Bad – Warming

Expanding natural gas production causes methane leaks that cause warming Eric Pooley, senior VP @ Environmental Defense Fund, 8-10-2012, Env. Defense Fund, http://blogs.edf.org/energyexchange/2012/08/10/natural-gas-a-briefing-paper-for-candidates/, da 3-1-2013In the absence of responsible natural gas oversight, increased reliance on the resource could result in a future in which the U.S. emits as much or more climate disrupting pollution as it does with our current energy mix. This outcome is possible if enough uncombusted natural gas is allowed to leak into the atmosphere from well sites, gas processing plants, pipelines and distribution systems. Though it burns cleaner than

coal, uncombusted natural gas is extremely damaging to the climate: It is mostly made up of methane, a greenhouse gas far more potent than carbon dioxide. (For the first 20 years after it is emitted, a pound of methane is 72 times more potent as a heat-trapping emission than a pound of carbon dioxide . Over 100 years, a pound of methane is 25 times more potent as a greenhouse gas than a pound of carbon dioxide.) Small amounts of natural gas are lost into the air as it makes its way from

the wells and through the processing and pipeline system that brings it to consumers; the cumulative impact of those leaks is highly significant. The potential for damaging methane leakage will only grow if, as expected, the use of natural gas expands in the coming years.

That means we can’t adapt to warmingEric Pooley, senior VP @ Environmental Defense Fund, 8-10-2012, Env. Defense Fund, http://blogs.edf.org/energyexchange/2012/08/10/natural-gas-a-briefing-paper-for-candidates/, da 3-1-2013However, the shorter time frames affected by methane emissions are also crucially important because they increase the risk of undesirable climate outcomes in the near future. Accelerated rates of warming mean ecosystems and humans have less time to adapt to climate change. Given the dire need for concerted global action on

climate change, current energy policy should, at a minimum, abide by a "Do No Harm" policy: no policy should contribute to increased climate forcing on any time frame.

Fracking causes methane leaks that cause runaway warmingDominic Frongillo, deputy town supervisor of Caroline, Tompkins County, and founder of Elected Officials to Protect New York, 8-15-2012, “Wrong Time to Push Fracking,” Times Union, http://www.timesunion.com/opinion/article/Wrong-time-to-push-fracking-3788647.php, da 3-1-2013Far from being a climate solution, fracking may be a disaster. Research indicates the methane leakage may mean that fracking is worse for the climate than coal and oil, particularly in the short term . Gas from fracking is mostly methane, a dangerous greenhouse gas that is up to 105 times more powerful at trapping heat in the atmosphere than carbon dioxide over 20 years. A recent United Nations Environment Program report shows that it is more urgent to reduce methane than CO2, given that methane is so much more powerful, has quicker climate impacts, and will trigger runaway climate change sooner. In February, the journal Nature reported on one of the first studies to look at methane emissions from fracking, a Colorado study led by researchers at the National Oceanic and Atmospheric Administration. The study found 4 percent of gas drilled in fracking is venting directly into the atmosphere — even greater than the high-end estimate of the Cornell study and twice what was reported by the industry.

West Coast 2013March Update

Natural Gas Production Bad – Earthquakes

Natural Gas fracking injections cause earthquakesBill Hanna, 8-6-2012, “UT study finds earthquakes occur more frequently near injection wells,” Star-Telegram, http://www.star-telegram.com/2012/08/06/4158348/ut-study-finds-earthquakes-occur.html, da 3-1-2013A University of Texas study has found that seismic activity in the Barnett Shale occurred far more frequently than previously reported and that most took place near high-volume injection wells. The study by

Cliff Frohlich, senior research scientist at UT's Institute for Geophysics, was released today and is being published in Proceedings of the National Academy of Sciences. Frohlich's report doesn't find any link between hydraulic fracturing (fracking) and earthquakes. But it is the latest study to raise questions about whether injection wells, where wastewater from fracking and production is pumped back into the ground, cause increased seismic activity. A June report by the National Research Council also said there were higher earthquake risks near injection wells. The UT study reviewed data from temporary seismographs placed in the Barnett Shale under the USArray program between November 2009 and September 2011. "I analyzed these data and located 67 earthquakes, more than eight times as many as reported by the National Earthquake Information Center," Frohlich said in his report. Most of the epicenters were "within 3.2 km of one or more injection wells," Frohlich said. "These included wells near Dallas-Fort Worth and Cleburne, where earthquakes near injection wells were reported by the media in 2008 and 2009, as well as wells in six other locations , including several where no earthquakes have been reported previously. This suggests injection-triggered earthquakes are more common than is generally recognized." The injection wells nearest to the earthquakes had maximum monthly injection rates exceeding 150,000 barrels of water per month. Frohlich said.

Fracking causes earthquakesJoanna Foster, freelance science journalist, 8-7-2012, “Near Injection Wells, Many Quakes Go Unfelt,” New York Times, http://green.blogs.nytimes.com/2012/08/07/near-fracking-wells-the-many-quakes-that-go-unfelt/, da 3-1-2013A series of small earthquakes made Halloween of 2008 an unusually scary one for people in the Dallas-Fort Worth area. While

it has long been theorized that underground injections of fluids from oil and gas development operations could decrease friction and cause faults to slip, the quakes occurred in an area where people weren’t accustomed to tremors, renewing calls for research into the geological consequences of the booming

natural gas industry in Texas. In a new study, one of the researchers who studied the Dallas quake analyzes seismic activity in the Barnett Shale area in

northwestern Texas from November 2009 to September 2011. In the paper, published online on Monday in the Proceedings of the National Academies of Science, Cliff Frohlich, associate director and senior research scientist at the Institute for Geophysics at the University of Texas at Austin, found that earthquakes are far more common in the area than has been officially reported.

Hydraulic fracking wastewater disposal causes earthquakesDavid Biello, associate editor for environment and energy at Scientific American, 6-22-2012, “Fracking’s Biggest Problem May Be What to Do with Wastewater” Scientific American, http://blogs.scientificamerican.com/observations/2012/06/22/frackings-biggest-problem-may-be-what-to-do-with-wastewater, da 3-1-2013Of all the troubles with fracking, the biggest—and growing—challenge seems to be what to do with all those millions of gallons of water contaminated with frack chemicals, leached minerals and salts.

Fracking, or hydraulic fracturing, is the process of drilling sideways into subterranean shale and blasting it open with millions of gallons of water to release natural gas . The process has spread from Texas to Arkansas to Pennsylvania

and criticism on the water front, thus far, has tended to focus on whether industry discloses the kinds of chemicals it uses mixed up in those millions of gallons of H2O. Now the sustainability think tank Pacific Institute, in a report released on June 21 on water issues of fracking, says fracking’s water woes aren’t confined to just the precise chemicals involved but extend to ensuring wells don’t permit aquifer contamination or whether freshwater is plentiful enough to support the industrial process. There are also the human health and environmental

concerns about wastewater spills. Then there’s the hundreds of millions of gallons of wastewater. The most common

West Coast 2013March Update

means of disposal—pumping the water underground—can cause earthquakes by raising the subsurface pressure—a greater risk than that from fracking in the first place.

West Coast 2013March Update

Natural Gas Production Bad – Water Shortages

Fracking causes water pollutionMary Boland, 8-9-2012, “Fracking isn't all it's cracked up to be,” Post Independent, http://www.postindependent.com/article/20120809/VALLEYNEWS/120809895, da 3-1-2013Then there is the fact that for every new shale well, millions of gallons of water laced with poisonous chemicals are pumped into the ground under explosive pressure. Furthermore the whole process requires what the Sierra Club describes as “a vast industrial architecture” to drill, process and move the gas from the wells to consumers. That “architecture” not only uses vast amounts of energy but is extremely disruptive to the human communities in its vicinity. The Sierra article is titled “Fractured Lives” and details what has happened to Washington County, Penn. This previously bucolic landscape of productive farms and woodlands is now blighted with all the following: “Drilling rigs, dark green condensate tanks, fields of iron conduits lumped with hissing valves, and long, flat rectangles carved into hilltops like overgrown swimming pools, brimming with umber wastewater. Tall metal methane flaring stacks periodically fill the night with fiery glares and jet engine roars. Roadbeds of crushed rock, guarded by ‘No Trespassing' signs, lie like fresh sutures across hayfields, deer trails and backyards, admitting fleets of tanker trucks to the wellheads ...” But much worse is the evidence of truly life-destroying chemical contamination of the air, water and soil. Farmers complain of stillborn and deformed calves, many residents have had their well water turn murky and undrinkable, and homeowners near the massive gas compressor stations are suffering respiratory ailments.

Fracking trades off with water use for agriculture and hurts bio-dInternational Energy Agency, 5-29-2012, “Golden Rules for a Golden Age of Gas,” World Energy Outlook Special Report on Unconventional Gas, http://www.worldenergyoutlook.org/media/weowebsite/2012/goldenrules/WEO2012_GoldenRulesReport.pdf, da 3-1-2013In areas of water-scarcity, the extraction of water for drilling and hydraulic fracturing (or even the production of

water, in the case of coalbed methane) can have broad and serious environmental effects. It can lower the water table, affect biodiversity and harm the local ecosystem . It can also reduce the availability of water for use by local communities and in other productive activities, such as agriculture. Limited availability of water for hydraulic fracturing could become a significant constraint on the development of tight gas and shale gas in some water-stressed areas. In China, for example, the Tarim Basin in the Xinjiang Uyghur Autonomous Region holds some of the country’s largest shale gas deposits, but also suffers from severe water scarcity. Although not on the same scale, in terms of either resource endowment or water stress, a number of other prospective deposits occur in regions that are already experiencing intense competition for water resources. The development of China’s shale gas industry has to date focused on the Sichuan basin, in part because water is much more abundant in this region.

Expanded fracking trades off with water for other uses like agricultureJim Malewitz, 8-10-2012, “Farmers, Frackers and Scarce Water,” Pes States, http://www.pewstates.org/projects/stateline/headlines/farmers-frackers-and-scarce-water-85899410542, da 3-1-2013“We’ve had dry years, and we’ve had hot years,” says Tom Giessel, who grows wheat, corn and sorghum in Pawnee County, Kansas. “Now we’re experiencing both.” As drought continues to grip Kansas and much of the country, water is only getting harder to find in Pawnee, one of 102 Kansas counties under a federal disaster declaration. So perhaps it’s not surprising that Giessel would be suspicious of any competition for his land’s lifeblood — and right

now, the most conspicuous competitors are oil and gas drillers, who are moving into Kansas and reviving the state's long-dormant energy industry. Thanks to advances in technology — largely the advent of horizontal hydraulic fracturing, or fracking — drillers are able to tap oil reserves once thought to be unreachable. But the new technique requires water, lots of it . And Giessel, who is also a

trained geologist, is concerned about the long term impact of drillers on water supplies. He worries that under a new state water banking system, small-time farmers in need of extra water won’t be able to compete with deep-pocketed energy companies. “Water’s going to flow towards the money," he says. Under the still-developing system, one of several major overhauls pushed through this year by Governor Sam Brownback, water rights holders can bank their reserves and sell them to the highest bidder. State regulators say the change will help move water where it's needed. For well-resourced farmers or municipalities, it means they can make some extra money selling off excess water. But Giessel isn't cheering the change, which was supported by energy companies. "I think water's

one of those things that should be not-for-profit," he says. "But I'm a different duck than some of the others." As oil and gas development continues largely unabated, the water-intensive industry’s impact on local resources is increasingly coming into question , particularly in drilling hotbeds stricken by the crop-shriveling drought

now covering close to two-thirds of the continental U.S. In much of the West, water supplies have long been dwindling due to population expansion and climate change. This year’s drought, coupled with an uptick in drilling, is what Jason Bane, of the nonprofit Western Resource Advocates, calls a perfect storm. “[Drought] is changing the way people are looking at things,” says Bane, whose group is advocating for more study of fracking’s effect on available water.

West Coast 2013March Update

NG Exports Increases NG Prices

Natural gas exports would massively increase domestic natural gas pricesSen. Ron Wyden, D-Ore., serves on the Senate Energy and Natural Resources Committee and Rep. Ed Markey, D-Mass., ranking member of the House Natural Resources Committee, 6-21-2012, “Opposing view: Call a timeout on gas exports,” USA Today, http://www.usatoday.com/news/opinion/story/2012-06-20/gas-exports-Wyden-Markey/55721898/1, da 3-1-2103If we open up the United States' new natural gas supply to the world market, the same market forces that govern the cost of oil around the globe will take hold of natural gas . In other words, the cost of natural gas for American consumers will skyrocket and the United States will sacrifice a once-in-a-lifetime competitive advantage.¶ A U.S. Energy Information Administration study noted that exports of 12 billion cubic feet of natural gas a day could raise U.S. prices by up to 54%. There are already applications to export 18 billion cubic feet a day.¶ Safely tapping the America's natural gas reserves will reduce U.S. dependence on foreign oil and bring jobs back to America. Americans shouldn't be in a rush to give up these advantages. We have called for a "timeout" on the rush to export America's natural gas, so that we can fully evaluate and understand the economic consequences of exporting this resource before export terminals are built, not after.¶ It's time to look past the immediate payday and think this through.

Exports increase domestic natural gas pricesEnergy Information Administration, January 2012, “Effect of Increased Natural Gas Exports on Domestic Energy Markets as requested by the Office of Fossil Energy,” http://www.eia.gov/analysis/requests/fe/pdf/fe_lng.pdf, da 3-1-2013Export scenarios – wellhead price changes under the Reference case.¶ Increased exports of natural gas lead to increased wellhead prices in all cases and scenarios. The basic pattern is evident in considering how prices would

change under the Reference case (Figure 3):¶ • The pattern of price increases reflects both the ultimate level of exports and the rate at which increased exports are phased in. In the low/slow scenario (which phases in 6 Bcf/d of exports over six years), wellhead price impacts peak at about 14% ($0.70/Mcf) in 2022. However, the wellhead price differential falls below 10 percent by about 2026.¶ • In contrast, rapid increases in export levels lead to large initial price increases that would moderate somewhat in a few years. In the high/rapid scenario (which phases in 12 Bcf/d of exports over four years), wellhead prices are about 36 percent higher ($1.58/Mcf) in 2018 than in the no-additional-exports scenario. But the differential falls below 20 percent by about 2026. The sharp projected price increases during the phase-in period reflect what would be needed to balance the market through changes in production, consumption, and import levels in a compressed timeframe.¶ • Slower increases in export levels lead to more gradual price increases but eventually produce higher average prices, especially during the decade between 2025 and 2035. The differential between wellhead prices in the high/slow scenario and the no-additional-exports scenario peaks in 2026 at about 28 percent ($1.53/Mcf), and prices remain higher than in the high/rapid scenario. The lower prices in the early years of the scenarios with slow export growth leads to more domestic investment in additional natural gas burning equipment, which increases demand somewhat in later years, relative to rapid export growth scenarios.¶ Export scenarios—wellhead price changes under alternative baseline cases¶ The effect of increasing exports on natural gas prices varies somewhat under alternative baseline case assumptions about resource availability and economic growth. However, the basic patterns remain the same: higher export levels would lead to higher prices, rapid increases in exports would lead to sharp price increases, and slower export increases would lead to slower but more lasting price increases. But the relative size of the price increases changes with changing assumptions (Figure 4).

Exports cause higher domestic pricesRobert Landicho, J.D. Candidate UC Berkeley, 8-16-2012, “Should America Export Natural Gas? The Debate Rages On” Berkeley Law Blog, http://thenetwork.berkeleylawblogs.org/2012/08/16/should-america-export-natural-gas-%E2%80%93-the-debate-rages-on/, da 3-1-2013Currently, experts are debating whether America should export natural gas to nations like South Korea and China. In January 2012, the EIA released a study analyzing the effect of increased LNG exports on domestic energy markets , concluding that

exporting LNG would raise the price of natural gas domestically while increasing production . Proponents of increased exports (and lower regulatory hurdles) argue that exporting natural gas is vital to stabilizing the price of natural gas in the United States and to stimulating the economy in the long run. Opponents point to the EIA study, arguing that higher domestic prices for

West Coast 2013March Update

natural gas will slow the economy. Environmental groups such as the Sierra Club also oppose LNG exports, arguing that

increasing natural gas exports will have negative environmental impacts due to the controversial “hydraulic fracturing” process used to extract gas from shale.

West Coast 2013March Update

High NG Prices Bad – Coal

High natural gas prices would spur a shift back to coal productionJJ Butler, indep. Stock analyst, 9-4-2012, “Waiting On Coal: Dynamics And Theory,” Seeking Alpha, http://seekingalpha.com/article/843621-waiting-on-coal-dynamics-and-theory, da 3-1-2013If coal demand returns modestly, the sector would soar from the current depressed valuations. The industry is capital constrained, which would delay a supply response and bring forth a stronger-for-longer cycle. The thermal coal market has been crushed by the natural gas (The United States Natural Gas ETF, LP: UNG) supply glut. Until this glut is rectified, coal prices will continue to be depressed. To this point, natural gas has shown no indication a decline in production has begun. The fall shoulder season looks to be difficult with Marcellus production higher by 82% over 2011, with another 500 mcfd backlog being brought on line in September. Perhaps most coal-to-gas switching is permanent. Until natural gas production shows signs a meaningful decline in production is to occur, most U.S. coal stocks are not investable. Investors ought to continue to monitor associated gas production and the backlog of wells in light of the natural gas rig count. While speculators wait for a possible cyclical rebound in the U.S coal market, the secular decline must be observed. New power generation is largely natural gas and even wind. Coal plant retirements are going to be an industry problem, especially in light of tepid demand growth.

Low natural gas prices collapse US coalMeg Handley, 8-21-2012, “3 Energy Issues No One's Talking About,” US News, http://www.usnews.com/news/articles/2012/08/21/3-energy-issues-no-ones-talking-about?page=2, da 3-1-2013The coal industry. Though it might seem like a business from a bygone era, coal mining and its use to produce energy are still key issues for many states, including some that could go either way come the November election.¶ That isn't lost upon Mitt Romney, who visited eastern Ohio in a campaign stop last week. Surrounded by some 75 miners, the Republican challenger pledged his support for the industry and dinged the Obama administration's tight regulation of coal plants.¶ But regulation of coal plants isn't the only thing that's squeezing the industry. Plentiful natural gas reserves have made the United States the largest natural gas producer in the world, according to the Institute for Energy Research, and that's made deposits of the resource in Texas, Alaska, and Wyoming increasingly attractive.¶ "Neither candidate's position [on the future of the coal industry]

has been terribly well defined," says Mike Lynch, president and director of global petroleum service at Strategic Energy & Economic Research. "The big challenge right now is that coal is being clobbered by cheap natural gas not so much by regulation, and neither [Romney] nor Obama has addressed that."¶ Although coal is relatively cheap, it hasn't been able to compete with the flood of cheap natural gas recently. Coal is also harder to transport, dirtier, and the modern plants needed to produce electricity from coal are costly. A recent report also shows that carbon-dioxide emissions from the energy sector dropped to their lowest levels in 20 years, a feat many experts credit to the increased use of natural gas.¶ As a result, natural gas has been creeping up on coal's market share of energy production, which is bad news for jobs supported by the coal industry in some swing states.¶ "Natural gas prices have shocked everyone," Lynch continues. "I don't think either candidate knows what they're going to do about coal mining."

NG prices are the key internal link to the coal industry – they’re collapsing now Mark Drajem and Julie Johnsson, 8-21-2012, “Coal Plants’ Victory Over EPA Is Muted by Low Gas Prices,” Bloomberg, http://www.bloomberg.com/news/2012-08-22/coal-plants-victory-over-epa-is-muted-by-low-gas-prices.html, da 3-1-2013Southern Co. (SO), Edison International (EIX) and rival power companies won a legal fight with the Environmental Protection Agency, gaining more time and leeway to cut pollution from burning coal. The bigger challenges from cheap natural gas may make it a muted victory.¶ “This really is a black eye for the EPA,” James Lucier, managing director at Capital Alpha Partners LLC in Washington, said in an interview. “But for the industry, the critical factor overall has been the low price of natural gas,” which is “the great destroyer.” ¶ The U.S. Court of Appeals in Washington yesterday struck down the EPA’s cross-state air pollution rule, saying the agency illegally usurped state authority for air-pollution programs and imposed caps on

West Coast 2013March Update

sulfur dioxide and nitrogen oxide lower than necessary to clean up the air in neighboring states.¶ While Edison and American Electric Power Co. (AEP) say that gave them a needed reprieve, the trouble is that other EPA requirements are looming and cheap natural gas is making coal- fired electricity generation increasingly uncompetitive.

West Coast 2013March Update

High NG Prices Bad – Fertilizer Industry

Lower NG prices revitalize the domestic fertilizer industryJennifer DeWitt, VP groOrganic, 7-18-2012, “Natural gas prices sent most fertilizer production overseas,” http://m.qctimes.com/news/local/natural-gas-prices-sent-most-fertilizer-production-overseas/article_ac1798b4-d153-11e1-8b79-001a4bcf887a.html, da 3-1-2013But at the same time, she said the demand for nitrogen has not declined, resulting in a significant rise in imported nitrogen.¶ “The fertilizer business comes down to one thing — people need to eat,” Mathers said. “Fertilizer is not a discretionary purchase.”¶ Conservative figures put the fertilizer business at a $15 billion industry in the United States alone, she said, adding that “farmers have the option of getting nitrogen from anywhere in the world.”¶ Still, Asbridge said it is “highly unusual” to see foreign-based companies invest in fertilizer operations on U.S. soil.¶ “That’s not counting the Canadians; there are a lot of those here,” he said.¶ “Right

now, we import about half the nitrogen we use in the U.S., so to come in and build a domestic plant is not that much of a

risk,” he said. “The only risk they’re taking is what might happen to the natural gas prices here.”

Low natural gas prices are key to domestic fertilizer productionJennifer DeWitt, VP groOrganic, 7-18-2012, “Natural gas prices sent most fertilizer production overseas,” http://m.qctimes.com/news/local/natural-gas-prices-sent-most-fertilizer-production-overseas/article_ac1798b4-d153-11e1-8b79-001a4bcf887a.html, da 3-1-2013The $1.3 billion fertilizer plant being proposed by Egypt-based Orascom Construction Industries would be the first new U.S. nitrogen plant built in decades and comes at a time when domestic production — but not demand — has dropped dramatically, industry

experts said.¶ “We have not built a new nitrogen plant since the early 1970s, and most those still operating are 1960s

vintage,” said David Asbridge, president and senior economist of NPK Fertilizer Advisory Service, headquartered in Chesterfield, Mo.¶ “We were self sufficient in the U.S. up until about the year 2000. Then natural gas prices took a huge jump … and killed about 40 percent of our capacity. We couldn’t compete with the cheap natural gas in the Middle East.”¶ Kathy Mathers, vice president of public affairs for The Fertilizer Institute, said the cost of natural gas represents 70 percent to 90 percent of the cost of producing nitrogen. Natural gas is the heat source in the chemical process that produces nitrogen.¶ But when U.S. natural gas prices spiked beginning about five years ago, she said it drove many domestic producers to shut down portions of their operations.¶ “For plants that were either low margin or no

margin — what companies did was shutter those plants or dismantle them and send them to places like China,” she said.¶ She

estimated the loss in U.S. nitrogen capacity at as much as 50 percent between 2000 and 2008.¶

Domestic fertilizer production key to food security and the economyUri Friedman, ed. at Foreign Policy, 8-29-2012, “GOP: U.S. must end its addiction to foreign fertilizer,” http://blog.foreignpolicy.com/posts/2012/08/29/gop_calls_for_ending_dependence_on_foreign_fertilizer, da 3-1-2013But the Washington Post's Brad Plumer spots another one today. In a section on natural resources, the platform declares:¶ Our dependence on foreign imports of fertilizer could threaten our food supply, and we support the development of domestic production of fertilizer.¶ It's not entirely clear how fertilizer wiggled its way into the party platform, but the topic does fit into larger discussions on both sides of the aisle about how the United States can realize the elusive goal of energy independence (in fact, U.S. officials have been warning about fertilizer dependence since at least 1978). Nitrogen fertilizer production requires natural gas, and we're producing less and less of the crop nutrient at home. As Ford West, the president of the Fertilizer Institute,

informed Congess in 2009:¶ [S]ince 2000, the U.S. nitrogen industry has closed 26 nitrogen fertilizer production facilities, due primarily to the high cost of natural gas. Currently, only 29 nitrogen plants are still operating in the U.S. and

presently 55 percent of the U.S. farmer's nitrogen fertilizer is imported.¶ U.S. farmers are becoming increasingly dependent on foreign sources of fertilizers from places that offer cheap natural gas like the Middle East, China, Russia and Venezuela.¶ The Romney campaign, in fact, mentions the ways in which more robust domestic fertilizer

West Coast 2013March Update

manufacturing can spur job growth several time in the energy policy white paper that it released last week (earlier this month, the Ohio-based plant fertilizer producer Scotts Miracle-Gro donated $200,000 to the Restore Our Future Super PAC that supports Romney).¶ Still, don't expect the platform shout-out to presage a new campaign talking point. Something tells me setting the goal of achieving fertilizer independence by 2020 might be difficult to work into a stump speech.

West Coast 2013March Update

High NG Prices Bad – Steel Industry

Low natural gas prices are key to the steel industryIHS Global Insight, leading economic analysis and forecasting firm, December 2011, “The Economic and Employment Contributions of Shale Gas in the United States,” http;//anga.us/media/235626/shale-gas-economic-impact-dec-2011.pdf, da 3-1-2013Steel: Steel production can be classified by the type of furnace technology and by the mix of input material.¶ In the US two methods are used:¶ o Basic Oxygen Furnace (BOF): This process uses 25-35% of scrap steel to make new steel. BOFs¶ make up

approximately 40% of today's US steelmaking.¶ o Electric Arc Furnace (EAF): This process uses virtually 100% used steel to make new steel. EAFs¶ make up about 60% of today's US steelmaking.¶ The small fraction that electricity represents of the total cost of steel production makes

the impact of¶ reduced electricity prices negligible. Analogous to the case of chemicals, the bulk of the cost is concentrated¶ in the feedstock. Scrap material represents 73% of the entire cost but, unlike ethylene production,¶ natural gas prices have no relation to the price of the steel

to be recycled. Cheaper electricity¶ will have only a small positive effect on this industry in terms of profitability and competitiveness.¶ Energy from electricity or natural gas makes up a higher proportion of the value of iron ore processed¶ from taconite in the Great Lakes region. Given that the price for iron ore is essentially a global price, domestic¶ producers of iron ore pellets are benefitting from higher margins due to lower electricity and natural¶ gas prices. With these incrementally higher margins, domestic iron ore pellet production is likely¶ higher than it would otherwise be.¶ The steel industry is expected to be reactivated with the improvement of auto manufacturing and an increase¶ in construction activity. Moreover, the development of shale gas has given a considerable boost¶ to the steel industry by increasing the demand for steel pipes. Used for drilling, production,

transportation,¶ and distribution, steel pipes are essential to the natural gas industry, and the large infrastructure¶ investments already announced could have quite a significant impact on the steel industry.

Low natural gas prices boost the steel industryPricewaterhouse Coopers, December 2011, “Shale Gas: A renaissance in US Manufacturing,” http://www.pwc.com/en_US/us/industrial-products/assets/pwc-shale-gas-us-manufacturing-renaissance.pdf, da 3-1-2013These types of announcements are likely to become more common, with more companies outside the chemicals and metals industries planning new capital expenditures in the United States to take advantage of lower costs resulting from shale gas. An affordable, reliable supply of natural gas can also lead to changes in manufacturing processes. Several domestic steel companies have indicated interest in using natural gas to produce direct reduced iron (DRI). Direct reduction can involve using natural gas to reduce iron ore pellets, which are then converted into steel via electric arc furnace. Nucor20 and US Steel21 are examples of steel companies that have already made investments in DRI or are considering such investments.

Steel industry is key to the economy and hegemonyHarley Shaiken, Prof @ Berkeley, 3-22-2002, Detroit News, http://www.detnews.com/2002/editorial/0203/25/a11-446451.htm, da 3-1-2013But because an advanced industrial economy needs a vibrant steel industry , not just a source of steel products, the U.S. steel industry needs some temporary resuscitation and long-term structural support to survive . More than 30 firms have gone bankrupt since 1998 -- and far more would likely have fallen over the edge without President George W. Bush's recent modest measures. The hard lesson of this debacle might well have been that it's easier to see an industry like steel implode than to rebuild it

when it's needed. Why does America need a steel industry? Steel executives want to keep their companies afloat and the steelworkers union wants to preserve members' jobs. But beyond their immediate concerns, an important, long-term public interest is involved. First, steel provides critical linkages throughout manufacturing. A healthy steel industry can spur innovations in downstream industries such as autos . These

industries would¶ enjoy earlier access to new processes and products. U.S. steel firms, for example, are spearheading an international consortium on advanced vehicle concepts. It doesn't help that three of the largest U.S. firms involved are in bankruptcy. Second, steel remains an important source of well-paid, middle-class jobs. While more than 70,000 jobs are threatened at bankrupt steel producers, an additional 250,000 jobs at suppliers and firms dependent on steelworker spending are impacted, according to Professor Robert Blecker at American University. A collapsing steel industry cuts a wide swath of destruction through ¶ communities. Finally, a domestic industry provides more stable sources of supply , which is pivotal in a national security crisis. Steel is genuinely a strategic industry unless we are thinking about aluminum aircraft carriers and mahogany tanks.

West Coast 2013March Update

High NG Prices Bad – Chemical Industry

Low natural gas prices boost chemical manufacturingIHS Global Insight, leading economic analysis and forecasting firm, December 2011, “The Economic and Employment Contributions of Shale Gas in the United States,” http;//anga.us/media/235626/shale-gas-economic-impact-dec-2011.pdf, da 3-1-2013Finally, low and stable gas prices benefit a wide range of domestic manufacturing industries, particularly those that are dependent on gas as a feedstock and/or energy source. As a result of their confidence in an extended period of low natural gas prices, chemicals producers have already signaled their intentions to increase capacity. For example, Royal Dutch Shell, The Williams Companies, LyondellBasell, and Westlake Chemical Corporation have announced expansions to their existing assets. Chevron Phillips Chemical Company LLC (a joint venture between Chevron and ConocoPhillips) and ExxonMobil Corporation have announced major future capital investment plans. Dow Chemical Company has made actual investments and has announced additional investments. Qualitatively,

low gas prices will spur increased investment and jobs in the chemicals industry. Other manufacturing industries will experience a general increase in profitability and international competitiveness that will allow for an incremental but broad general increase in US manufacturing.

Low natural gas prices boost the chemical industryIHS Global Insight, leading economic analysis and forecasting firm, December 2011, “The Economic and Employment Contributions of Shale Gas in the United States,” http;//anga.us/media/235626/shale-gas-economic-impact-dec-2011.pdf, da 3-1-2013In summary, the shale gas industry makes a significant contribution to the US economy both in terms of direct employment, the many and diverse connections it has with supplier industries, and the amount of spending that this direct and indirect activity supports throughout the economy. As the production of shale gas expands over the next 25 years, the industry's economic contribution will expand significantly. By 2035, over 1.6 million

jobs will be supported by the shale gas industry, which will contribute an additional $200 billion in government revenues. In the short term, lower gas prices will generate net GDP and employment growth, and, in the longer term, will positively impact overall manufacturing profitability and competitiveness in the United States, especially in the chemicals industry.

Chemical industry is key to the econAJ Lenz, National Technical Information Service, The Chemical Industry Executive Report, 2006, da 3-1-2013 http://.ist.psu.edu%2Fviewdoc%2Fdownload%3Fdoi%3D10.1.1.24.9538%26rep%3Drep1%26type%3DpdfThe U.S. chemical industry is vital to the U.S. economy. It produces 1.9 percent of U.S. gross domestic product (GDP). It is the nation's number one exporter. It supplies more than $1 out of every $10 of U.S. exports and consistently runs large international trade surpluses. It is a high-tech, research and development (R&D) oriented industry that is awarded about

one out of every eight U.S. patents. It employs over one million people at wages well above the U.S. manufacturing average, and it produces

over 70,000 different products. Most importantly, chemicals is a "keystone" industry -- one critical to the global competitiveness of other U.S. industries. Because so many modern products depend on chemicals, the international competitiveness of other U.S. industries requires a high-tech, globally competitive U.S. chemical industry that can supply new products at prices that give U.S. producers an edge.

West Coast 2013March Update

NG Exports Bad – Manufacturing

Natural gas exports collapse the US manufacturing renaissanceEd Markey, Ranking Member, House Natural Resources Committee, 4-18-2012, “Exporting Gas = Exporting Jobs,” National Journal, http://energy.nationaljournal.com/2012/04/what-should-us-policy-be-on-en.php, da 3-1-2013But ask an American manufacturer of steel, plastics, fertilizer, chemicals or other products about “gas prices” and they’ll flash a smile. That’s because they’re thinking about natural gas prices, which are hovering at 10-year lows. That’s because, unlike oil, natural gas is a domestic market, and America sets her own price. Right now, America’s natural gas is about six times as cheap as it is in Asia and four times as cheap as Europe. That is a competitive advantage for U.S. companies, leading to an American manufacturing renaissance. Nearly 500,000 manufacturing jobs have returned to the U.S. in the last two years and cheap natural gas is a major reason why. What’s the number one way this progress could be stopped? By exporting America’s natural gas.

Exporting natural gas would wreck US manufacturingGeorge Biltz, VP Energy and Climate Change at Dow, 4-19-2012, “Manufacturing Key to Natural Gas Value” National Journal, http://energy.nationaljournal.com/2012/04/what-should-us-policy-be-on-en.php, da 3-1-2013While the nation struggles to find solutions to the current economic crisis, there has been a sharp focus on the country's newly abundant supply of natural gas as a potential cure---and rightly so. However, those that advocate unlimited natural gas exports are taking a short-sighted approach, missing the tremendous opportunity to leverage domestic natural gas to spur a manufacturing Renaissance in the U.S. Already the prospect of advantaged and abundant U.S. gas has sparked domestic investment in many manufacturing industries, such as petrochemicals, fertilizers, glass, aluminum and steel. These investments will convert natural gas to products for export that deliver up to eight-times greater value than simply exporting the gas itself because American manufacturers use natural gas both as a fuel source and as a raw material to create high-value products. This initial use of natural gas begins a chain reaction that stimulates investment, creates jobs and strengthens the economy well beyond what gas production and export alone can achieve.

Manufacturing is key to competitivenessU.S. Department of Commerce, January 2012, “The Competitiveness and Innovative Capacity of the United States,” http://www.commerce.gov/sites/default/files/documents/2012/january/competes_010511_0.pdf, da 3-1-2013A flourishing manufacturing sector in the United States is crucial to its future competitive strength. Throughout its history, manufacturing has been a source of prosperity, innovation , and pride for the United States. Manufacturing pays higher than average wages, provides the bulk of U.S. exports, contributes sub ‐stantially to U.S. R&D, and protects national security.¶ Manufacturing remains a vital part of the U.S. economy. In 2009, manufacturing made up 11.2 percent of gross domestic product (GDP) 1 and 9.1 percent of total U.S.

employment, 2 directly employing almost 12 million workers. This sector also has indirect employment effects on other sectors of the U.S. economy when it purchases inputs for production such as raw materials (such as from the agricul‐ tural and mining sectors), buildings (from the construction and real estate sec‐ tors), and services (including warehousing and

transportation; professional, scientific, and technical services; and financial services). In these ways, manufac‐ turing supports millions of additional supply chain jobs across the economy.¶ In addition, many of the jobs provided by this sector are high quality. Total hourly compensation in the manufacturing sector is, on average, 22 percent higher than that in the services sector and about 91 percent of factory workers have em‐ ployer‐provided benefits compared to about 71 percent of workers across all pri‐ vate sector firms.

West Coast 2013March Update

NG Exports Bad – Warming

Exporting natural gas causes massive warming impactsJoe Romm, American Progress fellow, PhD physics @ MIT, 8-16-2012, “Exporting Liquefied Natural Gas (LNG) Is Still Bad For The Climate — And A Very Poor Long-Term Investment,” Think Progress, http://thinkprogress.org/climate/2012/08/16/699601/exporting-liquefied-natural-gas-lng-bad-for-climate-poor-long-term-investment/?mobile=nc, da 3-1-2013So spending vast sums of money to export natural gas from this country is a bad idea for the climate. A new paper published last week by Brooking’s

Hamilton Project, “A Strategy for U.S. Natural Gas Exports,” asserts a different conclusion, primarily because it ignores all of the issues discussed above. Indeed, the paper rather amazingly asserts “Natural gas, though, has the same climate consequences whether it is burned in the United

States, Europe, or Asia,” which would be true for exported U.S. gas only if we could use magic to take the U.S. shale gas and put it into European or Asian gas-fired power plants. In the real world, it takes a massive amount of energy and greenhouse gas emissions to get gas from here to those markets, as is well known in the climate policy arena. BOTTOM LINE: Investing

billions of dollars in new shale gas infrastructure for domestic use is, at best, of limited value for a short period of time if we put in place both a CO2 price and regulations to minimize methane leakage. Exporting gas vitiates even that limited value and so investing

billions in LNG infrastructure is, at best, a waste of resources better utilized for deploying truly low-carbon energy. At worst, it helps accelerates the world past the 2°C warming threshold into Terra incognita — a planet of amplifying feedbacks and multiple simultaneous catastrophic impacts.

Exporting natural gas increases emissions and causes warmingJoe Romm, American Progress fellow, PhD physics @ MIT, 8-16-2012, “Exporting Liquefied Natural Gas (LNG) Is Still Bad For The Climate — And A Very Poor Long-Term Investment,” Think Progress, http://thinkprogress.org/climate/2012/08/16/699601/exporting-liquefied-natural-gas-lng-bad-for-climate-poor-long-term-investment/?mobile=nc, da 3-1-2013LNG Value ChainBut if avoiding catastrophic climate change is your goal , then spending huge sums on even conventional natural gas infrastructure is not the answer , as a recent International Energy Agency report made clear: The specific emissions from a gas-fired power plant will be higher than average global CO2 intensity in electricity generation by 2025 , raising questions around the long-term viability of some gas infrastructure

investment if climate change objectives are to be met. And liquefying natural gas is an energy intensive and leaky process. When you factor in shipping overseas, you get an energy penalty of 20% or more . The extra greenhouse gas emissions can equal 30% or more of combustion emissions , according to a 2009 Reference Report by the Joint Research Centreof the European Commission, Liquefied Natural Gas for Europe – Some Important Issues for

Consideration. Such extra emissions all but eliminate whatever small, short-term benefit there might be of building billion-dollar

export terminals and other LNG infrastructure , which in any case will last many decades, long after the electric grid will not benefit from replacing coal with gas. Furthermore, the U.S.

Energy Information Administration concluded in a 2012 report on natural gas exports done for DOE’s Office of Fossil Energy that such exports would also increase domestic greenhouse gas emissions : [W]hen also accounting for emissions related to natural gas used in the

liquefaction process, additional exports increase CO2 levels under all cases and export scenarios, particularly in the earlier years of the projection period . Asserting any net benefit for the importer requires assuming the new gas replaces only coal — and isn’t used for, say, natural gas vehicles, which are worse for the

climate or that it doesn’t replace new renewables. If even a modest fraction of the imported LNG displaces renewables, it renders the entire expenditure for LNG counterproductive from day one.

Exporting LNG makes emissions much worseJoe Romm, American Progress fellow, PhD physics @ MIT, 8-16-2012, “Exporting Liquefied Natural Gas (LNG) Is Still Bad For The Climate — And A Very Poor Long-Term Investment,” Think Progress, http://thinkprogress.org/climate/2012/08/16/699601/exporting-liquefied-natural-gas-lng-bad-for-climate-poor-long-term-investment/?mobile=nc, da 3-1-2013It is head-scratching to say the least to claim that exports would reduce greenhouse gas (GHG) emissions when the Times

acknowledges that blocking exports would leave this fossil fuel in the ground! Burning natural gas releases GHGs. We need to slash global GHGs 50% in four decades merely to have a shot at keeping total warming anywhere near 2°C (3.6°F), a point beyond which risks to human civilization multiply exponentially.¶ Worse,

natural gas extraction is leaky, and natural gas is mostly methane, a highly potent GHG (with some one hundred times the global warming potential of carbon dioxide over a 20-year period ). Most of the new

West Coast 2013March Update

natural gas in this country comes from hydraulic fracturing, which is widely thought to be leakier than conventional

gas extraction.¶ Worst of all, cooling natural gas to about −162°C (−260°F) and shipping it overseas for use in distant countries is costly and energy-intensive:

West Coast 2013March Update

NG Exports Bad – Qatar

Natural gas exports undermine Qatar’s energy revenueGuy Chazan, 4-23-2012, “Shale gas: Terminal decline no longer,” Financial Times, http://www.ft.com/intl/cms/s/0/a5053c50-8d2b-11e1-9798-00144feab49a.html#axzz24gUAEV6x, da 3-1-2013With shale causing an unexpected supply glut in the US, Cheniere, which began life as a small oil explorer, took a radical decision: instead of importing LNG, it

would export it. The volte-face highlights both the scale of a revolution that has transformed America’s energy outlook and how the repercussions of that boom are beginning to be felt far beyond the US. Cheniere is one of a number of companies that plan to export surplus US gas – and at much

lower prices than those set by other producers. For global energy markets, that is a change of potentially huge proportions. “This is going to have big implications for traditional exporters of gas,” says Fatih Birol, chief economist

at the International Energy Agency, the west’s industry monitor. “All of them are worried. They have a competitor entering the market that produces gas at much lower cost.” This development could recast a world gas trade long dominated by a handful of energy superpowers – countries including Russia, Qatar and Algeria. The pipelines that connect Russia’s west Siberian fields with consumers in Europe and the LNG tankers that ply their way from the Gulf and south-east Asia to Japan have created a network of dependency that has evolved over generations.

Natural gas revenue is key to Qatar’s soft power – key to regional mediation effortsLawrence Rubin, Research Fellow with the Dubai Initiative, Prof @ Georgia Tech, December 2010, “A Typology of Soft Powers in Middle East Politics,” DSG, http://www.dsg.ae/en/Publication/Pdf_En/DI_WP05_Final.pdf, da 3-1-2013Described as a “rising star” that “punches above its class,” Qatar’s diplomatic initiatives and independent foreign policy stances represent a different type of soft power. Qatar has hosted conferences, and in some cases negotiated

agreements, in Sudan, Palestine, Lebanon and Yemen. Qatar’s good relations with many diverse camps, backed by considerable financial resources, form the basis of Qatar’s soft power . Qatar’s foreign relations make it an important mediator and channel for communication between adversaries . Qatar has maintained good relations with many camps hostile to each other in the Middle East, including Israel, Iran, Hamas, Hezbollah, Syria and Saudi Arabia. Qatar’s diverse foreign relations may be best symbolized by its hosting of two powerful entities, possessing vastly different types of power: al-Jazeera and US Central Operations Command

(CENTCOM). Qatar’s financial resources support its diplomatic initiatives . Although the country was not endowed with a robust population or land mass,

Qatar does possesses the world’s third largest natural gas reserves , and its citizens enjoy one of the highest per capita incomes in the world, in

addition to significant oil reserves.26 Qatar’s diplomatic initiatives include mediation efforts in Palestine, Sudan, Lebanon, and Yemen. One of the most noteworthy diplomatic achievements at the time was Qatar’s role in negotiating a political agreement in Lebanon in 2008 that earned widespread praise for Qatari Emir Sheikh Hamad bin Khalifa Al Thani.27 This success came after Qatar’s large donations to reconstruction efforts in Lebanon after the Israel-Hezbollah war in 2006.

Qatari soft power key to solve AfghanistanRegan Doherty, 1-18-2012, “Tiny Qatar wielding powerful political punch,” Reuters, http://www.reuters.com/article/2012/01/18/us-qatar-diplomacy-idUSTRE80H13M20120118, da 3-1-2013The United States and Afghanistan are holding talks to seal an agreement for Taliban insurgents to open a political office in Qatar, and negotiating the possible transfer to the Gulf state of five former senior Taliban officials who have been held for years at Guantanamo Bay military prison. Such steps would mark a milestone for the administration of U.S. President Barack Obama, which is working on making Afghanistan secure ahead of its planned extrication from a long and costly war . Analysts say rivalry with Saudi Arabia has been an important element

of Qatari foreign policy over the past decade. Open debates on the Doha-based and -financed Al Jazeera satellite channel that included criticism of Riyadh have not helped, though relations have warmed recently. Being the locus of a potential resolution to the Afghan war could immeasurably boost Qatar's status , Roberts said. "Qatar's appearance as a moderate, powerful - but not too powerful - country and a good balancer has likely contributed to the decision to host the Taliban and been encouraged by the United States, of this we are certain," said Michael Stephens, Doha-based researcher at RUSI. He said

countries like Saudi Arabia and Turkey, which were put forward by Afghan President Hamid Karzai as options for the Taliban office, were too focused on their own self-interest. "Qatar has no such problems. It intervenes where it sees fit without too much regard for upsetting others, because its policy is simply to engage with everyone it can as often as it can." A Qatari role in diplomacy over Afghanistan will mark the third time in less than a year the Saudis have had to take a back seat to major Qatari diplomatic initiatives, after Libya and Syria. Qatari Prime Minister Sheikh Hamad bin Jassim al-Thani has become the dominant figure at Arab League discussions about Syria. Qatar's Emir has suggested sending Arab troops to halt the bloodshed, the first Arab leader to propose such a move.

West Coast 2013March Update

NG Exports Bad – Russia

Natural gas exports crush the Russian economyWalter Russell Mead, Prof @ Bard, 4-25-2012, “North American Shale Gas Gives Russia Serious Headache,” American Interest, http://blogs.the-american-interest.com/wrm/2012/04/25/north-american-shale-gas-gives-russia-serious-headache/, da 3-1-2013North America’s shale gas boom is chipping away at the market for gas producers like Russia . What’s more, if the United States becomes a gas exporter, Russia’s customers (especially in Europe) could decide to cancel expensive contracts with Gazprom in favor of cheaper American natural gas. Here’s the story from the FT: “If the US starts exporting LNG to Europe and

Asia, it gives [customers there] an argument to renegotiate their prices with Gazprom and Qatar, and they will do it,” says Jean Abiteboul, head of Cheniere supply & marketing. Gazprom supplied 27 percent of Europe’s natural gas in 2011. While American gas is trading below $2 per MMBTU (million British thermal units), Gazprom’s prices are tied to crude oil

markets, and its long-term contracts charge customers roughly $13 per MMBTU, says the FT. European customers would love to reduce their dependence on Gazprom and start to import American gas. Already Gazprom has had to make concessions to its three biggest customers, and others are increasingly dissatisfied with their contracts. Worse, from Russia’s point of view: evidence that western and central Europe contain substantial shale gas reserves of their own. Fracking is unpopular in thickly populated, eco-friendly Europe, but so are high gas prices.

All this ought to give Russia serious heartburn . Eroding Gazprom’s dominance of the European energy market would be a major check on Russian economic growth and political influence .

That’s key to Russian political stability Stephen Buryk, IR @ Lehigh, 2010, “Russia’s Natural Gas: The strategy and the state behind it,” http://jsaw.lib.lehigh.edu/campbell/buryk_stephen.pdf, da 3-1-2013The dilemmas caused by the Kremlin‘s use of gas as a tool of foreign policy are not limited to outside Russia‘s borders. No one can doubt the short-term effectiveness of the Kremlin‘s strategy.

Its consolidation of the oil and gas sector and creation of national champions, vertically integrated state conglomerates created to

stand toe to toe with Western competitors, have returned stability to a country that was in a state of chaos during the 1990s. However, governance under the concept of ―Sovereign Democracy‖, the political ideology that favors a strong executive and the ―strategic management‖ of natural resources,

has come at a cost.4 Russia‘s social institutions are weak, its politics are corrupt, and its economy is one-dimensional. The Kremlin relies on authoritarian control and capricious regulations to ensure absolute control over resources and to create stable political outcomes. This fusion of the state and the economy has resulted in an overreliance on energy revenues, which are subject to fluctuations in price , as the prime basis of economic prosperity and political stability. Thus, Russia‘s strength has also become its weakness.

US exports would undermine Russian gas dominanceGuy Chazan, 4-23-2012, “Shale gas: Terminal decline no longer,” Financial Times, http://www.ft.com/intl/cms/s/0/a5053c50-8d2b-11e1-9798-00144feab49a.html#axzz24gUAEV6x, da 3-1-2013With shale causing an unexpected supply glut in the US, Cheniere, which began life as a small oil explorer, took a radical decision: instead of importing LNG, it

would export it. The volte-face highlights both the scale of a revolution that has transformed America’s energy outlook and how the repercussions of that boom are beginning to be felt far beyond the US. Cheniere is one of a number of companies that plan to export surplus US gas – and at much

lower prices than those set by other producers. For global energy markets, that is a change of potentially huge proportions. “This is going to have big implications for traditional exporters of gas,” says Fatih Birol, chief economist

at the International Energy Agency, the west’s industry monitor. “All of them are worried. They have a competitor entering the market that produces gas at much lower cost.” This development could recast a world gas trade long dominated by a handful of energy superpowers – countries including Russia, Qatar and Algeria. The pipelines that connect Russia’s west Siberian fields with consumers in Europe and the LNG tankers that ply their way from the Gulf and south-east Asia to Japan have created a network of dependency that has evolved over generations.

West Coast 2013March Update

NG Exports Bad – Australia

US natural gas exports wreck the Australian LNG sectorMatt Chambers, 3-22-2012, “Shale Rise Threatens LNG Export,” The Australian, http://www.theaustralian.com.au/business/mining-energy/shale-rise-threatens-lng-exports/story-e6frg9df-1226306628133, da 3-1-2013"The largest threat to the Australian LNG sector in terms of both export competition and price is from shale gas," BREE analyst Alan Copeland said.¶ "Despite being distant from the growing Asian market, LNG exports from the US may be price-competitive with other suppliers into Asia because of low cost of feed gas and relatively low capital costs."¶ US gas prices have slumped to about $US2 a gigajoule because of the rapid expansion of domestic

shale-gas production during the past decade.¶ "Even allowing for liquefaction and transport costs, US LNG exports at this domestic price would be highly profitable, given the current Japanese import price of around $US16 to $US17," Mr Copeland said.¶ Boosting the economics of the US export trade, transportation costs for US gas will fall in 2014 when an expansion of the Panama Canal allows LNG tankers to pass through. Australia's pipeline of projects already in construction is underpinned by long-term contracts that link to

international oil prices, which means US shale gas exports should not affect them if the contracts hold up.¶ But a host of new Australian projects yet to be ticked off could come under pressure and may find it hard to secure new contracts.¶ "You would have to assume if you were trying to line up Kogas (which is involved in Canadian LNG) or another Asian importer for a long-term contract that they would be looking at the US situation," Mr Copeland said.

That’s key to Asian stability Baogang He, Prof @ Huazhong Normal, 2011, “A Critical Overview of Australian, Chinese, and American Perceptions of Trilateralism,” Deakin, http://www.deakin.edu.au/arts-ed/shss/events/fulbright/baogang-he.pdf, da 3-1-2013Adam Cobb, while also focused on Australia’s economic position, suggests a rather different approach. He argues that Australia should adopt a policy of “security through energy” and “seek to use its position as a supplier of diminishing energy products to become to the Asia Pacific in the twenty-first century what Switzerland was to Europe’s financial scene in the mid-twentieth century: indispensable.”42 Rather than building institutions or acting to promote norms of economic openness, he sees Australia’s role as encouraging a balance of power in the region and securing its position by increasing its trade in energy to draw the US, India, Japan and South Korea into relying more on Australian resources. This approach, however, seems to downplay the differences between Switzerland’s traditional neutrality and Australia’s history of allying itself with a “great and powerful friend.” Pan, however, remains somewhat cautious about Australia’s ability to play a mediating role between the two major powers.43

Global nuclear war Jonathan Landay, 3-10-2000, “Top administration officials warn stakes for U.S. are high in Asian conflicts,” Knight Ridder, p. npThe 3,700-mile arc that begins at the heavily fortified border between North and South Korea and ends on the glacier where Indian and Pakistani troops skirmish almost every day has earned the dubious title of most dangerous part of the world. Few if any experts think China and Taiwan, North Korea and South Korea, or India and Pakistan are spoiling to fight. But even a minor miscalculation by any of them could destabilize Asia, jolt the global economy and even start a nuclear war. India, Pakistan and China all have nuclear weapons, and North Korea may have a few, too. Asia lacks the kinds of organizations, negotiations and diplomatic relationships that helped keep an uneasy peace for five decades in Cold

War Europe. "Nowhere else on Earth are the stakes as high and relationships so fragile, " said Bates Gill, director of northeast Asian policy studies at the

Brookings Institution, a Washington think tank. "We see the convergence of great power interest overlaid with lingering confrontations with no institutionalized security mechanism in place. There are elements for potential disaster." In an effort to cool

the region's tempers, President Clinton, Defense Secretary William S. Cohen and National Security Adviser Samuel R. Berger all will hopscotch Asia's capitals this month. For America, the stakes could hardly be higher. There are 100,000 U.S. troops in Asia committed to defending Taiwan,

Japan and South Korea, and the United States would instantly become embroiled if Beijing moved against Taiwan or North Korea attacked South Korea. While Washington has no defense commitments to either India

or Pakistan, a conflict between the two could end the global taboo against using nuclear weapons and demolish the already shaky international nonproliferation regime . In addition, globalization has made a stable Asia with its massive markets, cheap labor, exports and

resources – indispensable to the U.S. economy. Numerous U.S. firms and millions of American jobs depend on trade with Asia that totaled $600 billion last year, according to the Commerce Department.

West Coast 2013March Update

Approve Terminals CP 1NC

The United States Department of Energy and Federal Energy Regulatory Commission should approve applications to export natural gas.

Solves 100% of the case – private industry will invest to build LNG terminals if the USFG approves it – federal transportation infrastructure funding is unnecessaryMichael Levi, senior fellow for energy @ CFR, June 2012, “A Strategy for U.S. Natural Gas Exports,” Hamilton Project, http://www.hamiltonproject.org/papers/a_strategy_for_u.s._natural_gas_exports/, da 3-1-2013Yet the United States does not export natural gas to those markets. Many have thus argued that it is leaving money on the table. The potential profits from exports have prompted several companies to apply for permits to export liquefied natural gas (LNG) without restriction. In March 2011, the U.S. Department of Energy (DOE) approved the first such permit, for Cheniere Energy, and in April 2012, the Federal Energy Regulatory Committee (FERC) approved Cheniere’s Sabine Pass, Louisiana facility. As of May 2012, another eight projects had applied to the DOE for similar permits, and four more had applied for permits to export LNG to countries with which the United States has free trade agreements (DOE 2012). The DOE has signaled that it will begin making decisions on these applications after receiving the results of a contractor study on the possible impacts of LNG exports in late summer 2012. The DOE can be expected to solicit input from several agencies, including the Departments

of State and Commerce, the Environmental Protection Agency, and the Office of the U.S. Trade Representative, as well as from the National Economic Council, the National Security Council, and the Council on Environmental Quality in making its ultimate decisions. Indeed, if currently

anticipated price differences hold up, and fully free trade in natural gas is allowed, several developers will likely attempt to build LNG export terminals. A wide range of analysts have claimed that as many as six billion cubic feet of daily exports by the end of the decade is plausible. That trade could expand U.S. gas production substantially and, in principle, net U.S. producers, exporters, and their suppliers north of $10 billion a year. 2 Gas exports could help narrow the U.S. current account deficit, shake up geopolitics, and give the United

States new leverage in trade negotiations. This has led many people to advocate for a U.S. policy that allows—or even encourages—natural gas exports.

There’s already an economic incentive for exports – CP removes the only barrierPeter Kelly-Detwiler, Contributor Forbes, 11-8-2012, “U.S. Natural Gas Exports Poised For Takeoff,” Forbes, http://www.forbes.com/sites/peterdetwiler/2012/11/08/us-natural-gas-exports-poised-for-take-off/, da 3-1-2013The process of condensing natural gas into a liquid at -160 degrees Celsius reduces its volume by a factor 600, and makes it

economic to ship. But the industry is enormously capital-intensive and costs are considerable: A “typical” investment includes an outlay of one to two billion dollars for liquefaction facilities, over two hundred million per vessel for LNG tankers, and half a billion to a billion dollars for receiving terminals. Yet even with those costs, the economic incentive is there. Currently, the North America pays just over $3 per mmBtu, while the Japanese spot market price hovers around $13 . In part

that’s because Asian gas prices are linked to oil. According to Reuters, long-term contract shipments to Japan would likely be priced at less than $10 per mmBtu. That’s a powerful market differential. Investments in supplying LNG to hungry Asian markets may yield payback periods of under five years for the first players into the game, Woods MacKenzie notes.

Approving exports will stay completely under the radar – neither side wants a fight and lobbyists won’t touch itAyesha Rascoe and Emily Stephenson, 6-27-2012, “As Congress looks away, U.S. tiptoes toward exporting a gas bounty,” Reuters, http://www.reuters.com/article/2012/06/27/us-usa-lng-exports-idUSBRE85Q05820120627, da 3-1-2013In a bitterly divided U.S. political environment, there's at least one thing Republicans and Democrats can agree on: Avoid a public showdown on natural gas exports , arguably the most important energy policy decision in recent memory. While fluctuating gasoline prices, the Keystone

pipeline and the fight over fracking steal headlines, the question of how much of the newfound U.S. shale gas bounty should be shared with the rest of the world goes largely without comment or coverage -- despite

holding far wider and longer-lasting consequences. The reason is clear: unlike the relatively simple, black-and-white issues that politicians often favor and voters connect to, liquefied natural gas (LNG) is deep, deep

gray. It affects a tangled web of constituents, from Big Oil to international allies such as Japan, pits free-trade orthodoxy against the domestic economy, and requires an awkward explanation of why allowing some exports -- inevitably raising U.S. energy prices in the short term,

even if at the margin -- may ultimately be better for the country in the long run. All the same, this U.S. president or the next will have to make a tricky decision, and its consequences may only become clear years from now: How much U.S. gas should be sold to other countries if it means

West Coast 2013March Updateboosting prices for consumers at home? "Right now I don't think this issue is getting anywhere near the attention it deserves," said Democratic congressman Edward Markey, one of a small number of politicians actively seeking to rein in energy exports. "Keystone and Solyndra are

election-year political sideshows," he said, referring to the bankruptcy of a government-funded solar panel maker. "This is the main event." But lobbyists on both sides of the issue say it suits them best to keep the subject out of the headlines . The gas producers that stand to benefit from higher selling prices see no upside from a public brawl, while many manufacturers who could benefit from continuing low prices shy away

from anti-export statements. With Congress unlikely to weigh in, the decision falls to a small, obscure unit of the Energy Department, the Office of Natural Gas Regulatory Activities.

West Coast 2013March Update

Approve Terminals CP – Solvency

US should approve export terminalsMichael Levi, senior fellow for energy @ CFR, June 2012, “A Strategy for U.S. Natural Gas Exports,” Hamilton Project, http://www.hamiltonproject.org/papers/a_strategy_for_u.s._natural_gas_exports/, da 3-1-2013A surge in low-cost U.S. natural gas production has prompted a flurry of proposals to export liquefied natural gas (LNG). A string of permit applications are now pending at the Department of Energy (DOE), and more can be expected; lawmakers are also debating the wisdom of allowing LNG exports. This paper proposes a framework for assessing the merits of allowing LNG exports along six dimensions: macroeconomic (including output, jobs, and balance of trade), distributional, oil security, climate change, foreign and trade policy, and local environment. Evaluating the possibility of exports along all six dimensions, it finds that the likely benefits of allowing exports outweigh the costs of explicitly constraining them, provided that appropriate environmental protections are in place. It thus proposes that the DOE and the Federal Energy Regulatory Commission (FERC) approve applications to export natural gas. It also proposes steps that the United States should take to leverage potential exports in order to promote its broader trade and foreign policy agendas.

The US should approve export terminalsMichael Levi, senior fellow for energy @ CFR, June 2012, “A Strategy for U.S. Natural Gas Exports,” Hamilton Project, http://www.hamiltonproject.org/papers/a_strategy_for_u.s._natural_gas_exports/, da 3-1-2013In light of this analysis, I propose that the United States allow LNG exports. In conjunction with this, the U.S. should take other steps to mitigate potential downsides and leverage these exports to its advantage. The United States should approve applications to export LNG from the United States, several of which are currently pending, and more of which can be expected in the future. This does not mean that the U.S. government should encourage exports per se; it should simply allow them to occur if properly regulated markets steer the economy in that direction.

Approving exports massively boosts productionClifford Krauss, 1-4-2013, “Exports of American Natural Gas May Fall Short of High Hopes,” NYT, http://www.nytimes.com/2013/01/05/business/energy-environment/exports-of-us-gas-may-fall-short-of-high-hopes.html?pagewanted=all, da 3-1-2013At least 15 proposed terminal projects have filed regulatory applications to export gas, and if all were approved, they could export more than 25 billion cubic feet a day, equivalent to more than a third of domestically consumed natural gas. Environmental advocates say that kind of surge in demand would produce a frenzy of shale drilling dependent on hydraulic fracturing of hard rocks, an industrial method they say endangers local water supplies and pollutes the air. Dow Chemical, a big user of natural gas, and some other manufacturers express concerns that an export boom could threaten to raise natural gas prices for factories and consumers and, ultimately, kill jobs.

West Coast 2013March Update

Approve Terminals CP – Politics Net-Benefit

Approving exports is bipartisanDavid Skolnick, 1-25-2013, “Reps. Ryan, Johnson call for approval of natural-gas exports,” Vindy, http://www.vindy.com/news/2013/jan/25/ryan-johnson-call-for-approval-of-natura/, da 3-1-2013U.S. Reps. Tim Ryan and Bill Johnson are calling on Energy Secretary Steven Chu to approve natural-gas export permits to countries that don’t have free-trade agreements with

the United States. Ryan, of Niles, D-13th, and Johnson, of Marietta, R-6th, are among 109 members of Congress to sign the letter. “By opening up this resource to world markets, we can help ensure its continued production that will support and create jobs here in eastern Ohio,” Johnson said. “And we can accomplish this with common-sense policies that also protect the interests of America’s manufacturers who depend on reliable, affordable access to natural gas. When more people are working, the economy expands and everyone benefits.” Natural gas has provided Northeast Ohio with a “great opportunity to provide jobs and continued economic development,” Ryan said. “Our workers can provide the trucking, construction and other support services needed to take advantage of the state’s abundant gas supply,” he said. “These are the kinds of investments needed to ensure that our energy future is stable, and our workers find good-paying jobs.” In the letter, the congressional members

wrote that the growth of the natural-gas industry “is being held back by a lack of demand.” Other countries have “abundant shale-gas

reserves,” the letter reads. “However, we do have significant advantages that will take competitors many years to overcome” such as superior technology and an existing infrastructure. “These advantages won’t last forever,” they wrote.

Strong bipart support and powerful lobbies support the CPZack Colman, 1-25-2013, “More than 100 in House press administration to allow gas exports,” The Hill, http://thehill.com/blogs/e2-wire/e2-wire/279309-lawmakers-press-energy-department-to-expand-lng-exports, da 3-1-2013A bipartisan group that includes more than 100 members of the House sent a letter to Energy Secretary Steven Chu on Thursday

pressing him to move forward with liquefied natural gas (LNG) exports. The lawmakers want Chu to move on the more than one dozen gas export applications under Energy Department review. They urged the Obama

administration to capitalize on "significant advantages" of the United States "that will take many competitors years to overcome." The lawmakers were referring to hydraulic fracturing, or fracking, as well as U.S. pipeline infrastructure and investment culture. Fracking

has been credited with driving the domestic shale oil-and-gas boom. It involves injecting a high-pressure mixture of water, chemicals and sand into tight rock formations to tap hydrocarbons. Drillers in the United States were the first to perfect the process, though many others — such as China and Poland — are now attempting to do the same. In all, 89 Republicans and 21 Democrats signed the letter, which had been in the works for about a week. Ohio Reps. Bill Johnson (R) and Tim Ryan (D) spearheaded the effort. The lawmakers also addressed the misgivings some legislators and manufacturers have about exports’ impact on domestic natural gas prices. But they pointed to an Energy Department-commissioned study that said LNG exports would yield a net economic benefit. They noted the study also said LNG processing and shipping costs would cool interest from would-be exporters, negating the gold-rush sort of frenzy some export skeptics anticipate. A pair of senior Democrats — Sen. Ron Wyden (D-Ore.) and Rep. Edward Markey (D-Mass.) — has aired qualms about the study. They worry expanding LNG exports too rapidly would raise domestic energy prices, undercutting manufacturers’ newfound competitiveness in the process. The head of Royal Dutch Shell — the world’s largest supplier of liquefied natural gas — echoed that sentiment in a Friday interview with Bloomberg TV at the World Economic Forum in Davos, Switzerland. “Exports will happen. But I hope that the U.S. will actually keep most of the gas back because it will help them to industrialize parts of the U.S. more,” said Shell CEO Peter Voser, who added his firm is considering constructing a U.S. export terminal. The

comment touches on a rift between manufacturers on the nation’s gas-exporting future. Several business groups that wield considerable Washington clout want to expand exports, calling it an economic boon. The U.S. Chamber of Commerce, American Petroleum Institute and National Association of Manufacturers are just a few of the organizations urging the White House to allow more sales overseas.

The CP doesn’t require congressional actionMichael Levi, senior fellow for energy @ CFR, June 2012, “A Strategy for U.S. Natural Gas Exports,” Hamilton Project, http://www.hamiltonproject.org/papers/a_strategy_for_u.s._natural_gas_exports/, da 3-1-2013I thus propose that, to facilitate potential natural gas exports, the DOE should approve applications for LNG exports to non-FTA

countries that are pending before it, barring specific concerns about individual applications that are not related to the broader wisdom of allowing LNG exports. In doing so, the DOE is required to find that allowing exports is in the “public interest .” The framework outlined in this paper provides one way of presenting such an assessment. The FERC must also approve modifications to terminals in order for exports to be allowed (Ebinger et al. 2012). I propose that it approve any applications to operate export terminals that have been approved by the DOE , barring problems with

individual applications that are unrelated to the broader wisdom of allowing LNG exports. Implementing these steps will not require any new staffing, funding, or action by Congress, which has already put in place the legislative framework needed to approve and monitor LNG exports. Congress need only refrain from placing new statutory restrictions on LNG exports.

West Coast 2013March Update

Politics Link – Exports Unpopular

Natural gas exports are unpopular – lots of political pressure to opposePam Radtke Russell, CQ Staff, 10-6-2012, “Natural Gas Export Race Raises Flags for Lawmakers,” Congressional Q., http://public.cq.com/docs/weeklyreport/weeklyreport-000004163407.html, da 3-1-2013Already, more than 15 companies have applied for permission to begin shipping natural gas to lucrative international markets. If all the applications were approved, exports would account for about 40 percent of the nation’s current production — a prospect that has triggered calls by lawmakers to restrict or even prohibit natural gas exports.¶ Economists and policy experts say the marketplace will resolve concerns about rising natural gas prices if the lawmakers and regulators can just keep their hands off. “We ought to let it play out,” says Charles

Ebinger of the Brookings Institution, lead author of a recent study on liquefied natural gas (LNG) exports.¶ “U.S. policymakers,” his study concludes, “should refrain from introducing legislation or regulations that would either promote or limit additional exports of LNG from the United

States.Ӧ But with some studies projecting that natural gas exports could increase domestic prices by as much as 11 percent on average, lawmakers are facing political pressures to intervene . As the consulting firm ClearView Energy Partners observed in a recent

report, LNG exporting is an issue with two wrong sides for politicians seeking re-election. A politician endorsing exports could be accused of raising costs on manufacturers and households if prices spike , while an opponent of exports could be portrayed as hostile

to developing domestic oil and gas resources.

Supporting exports costs political capitalPam Radtke Russell, CQ Staff, 10-6-2012, “Natural Gas Export Race Raises Flags for Lawmakers,” Congressional Q., http://public.cq.com/docs/weeklyreport/weeklyreport-000004163407.html, da 3-1-2013At the same time, lawmakers supportive of environmental causes face pressure to oppose LNG exports. Many environmental groups are wary of the drilling technique known as hydraulic fracturing, or “fracking,” which is responsible for the surge in domestic production.¶ A recent study by the James Baker Institute for

Public Policy at Rice University suggests that the concerns about LNG exports may be overstated. Kenneth B. Medlock III, the study’s author, says the United States will ultimately export just 1.2 billion cubic feet of natural gas a day — less than the 2.2 billion cubic feet already allowed

under the first, and so far only, permit granted, at Sabine Pass Terminal near Port Arthur, Texas.¶ “A lot of political capital gets spent on something that won’t mean a lot in the end,” Medlock says.¶ ‘De

Facto Moratorium’¶ The issue of LNG exports is so contentious that in September the Obama administration delayed a crucial macroeconomic study until after the election . Though the Energy Department says the delay is simply intended to give an outside contractor time to complete the study, Bill Cooper of the Center for

Liquefied Natural Gas calls the delay a “de facto moratorium” on LNG export terminals.

Plan causes political backlash – momentum against natural gas exportsKaren Boman, Rigzone Staff, 11-2-2012, “Romney, Obama Seen Favoring U.S. LNG Exports,” Rig Zone, http://rigzone.com/news/oil_gas/a/121794/Romney_Obama_Seen_Favoring_US_LNG_Exports, da 3-1-2013However, some U.S. politicians and environmentalist groups have called for the U.S. Department of Energy (DOE) to delay approving U.S. LNG exports over concerns that more LNG exports would result in more hydraulic fracturing.¶ Congressman Ed

Markey (D-Mass.) has also spoken out against LNG exports, saying that LNG exports would raise domestic gas prices. A preliminary analysis by the U.S. Energy Information Administration (EIA) indicated exports would raise domestic gas prices, peaking by 14 percent

or $.70 per million cubic feet (Mcf) if 1 billion cubic feet per day (Bcf/d) is added from 2015 to 2021, or 6 Bcf/d.¶ Markey earlier this year introduced legislation that would prohibit the Federal Energy

Regulatory Commission (FERC) from approving LNG export facility applications until 2025. http://www.rigzone.com/news/article.asp?a_id=115173¶ Additionally, large industrial consumers of gas have warned that LNG exports would take away supply that could be used as a feedstock in the manufacturing and chemical sectors.¶ "We continue to see the existing law as highly favorable to LNG exports but expect political sentiment to further trend against exports," according to an Oct. 2 FBR analysts' note .¶ While FBR maintains its expectation of 6-8 Bcf/d of low-hanging fruit for export approvals in the foreseeable

future, growing risks of project delays exist from litigants seeking to slow down the process.

West Coast 2013March Update

EPA DA 1NC 1/2

The EPA will be aggressive at enforcing regulations nowKimberly A. Strassel, 1-24-2013, “The Real Obama Climate Deal,” WSJ, http://tinyurl.com/ag7rmn2, da 3-1-2013In other words, with the election over, all pretense is gone. Democrats won't waste political capital on a doomed cap-and-trade bill. Yet they'll get their carbon program all the same, by deputizing the EPA to impose sweeping new rules and using their Senate majority to block any GOP effort to check the agency's power grab . The further upside? Brute regulation is not only certain and efficient, it allows vulnerable Democrats to foist any blame on a lame-duck administration. Mrs. Boxer has spent years on climate, and she wouldn't be surrendering her legislative ambitions without clear assurances the White House has her covered. Her words were a signal that the Obama EPA is about to re-energize the regulatory machine that it put on ice during the election. Republicans who hoped Lisa Jackson's resignation signaled a more humble EPA approach should instead prepare for an agency with a new and turbocharged mission .

EPA is being assertive because of Obama’s clear signal against fossil fuelsPhil Kerpen, Pres. American Commitment, 6-6-2011, “End the EPA Power Grab Completely,” National Journal, http://energy.nationaljournal.com/2011/06/should-epa-delay-its-airpollut.php#2006821, da 3-1-2013The day after the election President Obama said: “Cap and trade was just one way of skinning the cat; it was not the only way. It was a means, not an end. And

I’m going to be looking for other means to address this problem.” Obama’s words were a green light for the EPA to pretend cap-and-

trade emissions levels are law and regulate away. In fact, the abatement schedule from the failed Waxman-Markey bill was written into the president FY2012 budget request for the EPA. Beyond the greenhouse gas regulations, the other elements of the regulatory train wreck only pretend to be about mercury and other traditional air pollutants. They are actually all about driving up the price of coal and oil and forcing Americans to use less energy. Consider the justification given by the Center for American Progress (CAP) for the mercury rule, listed under greenhouse gas

reductions in its blueprint for the president to disregard Congress and move forward in defiance of the American people: “Despite the rule being directed at toxics—and not greenhouse gas emissions—the new pollution-control requirements could lead to many old inefficient plants being shut down rather than attempt to achieve compliance.” CAP is run by Obama transition team chairman John Podesta, and employed Carol Browner both before and after her stint as the White House climate czar, where she was the strategic lead on this issue. As I show in my new book, under Article I, Section 1 of the U.S. Constitution, the power to make these decisions resides in Congress, not the EPA. If the EPA refuses to recognize that fact and back off, the political consequences could be severe for members of Congress who refuse to do their job and stand up to the

EPA, as well as for Obama himself. It is likely the perception of that political downside that is driving EPA backing off on Boiler MACT and now

greenhouse gas NSPS. But if the White House really wants to avoid the political consequences for themselves and their allies, they need to call off the power grab completely and send a clear public signal that none of these regulations will ever move forward without

the express authorization of Congress.

Supporting natural gas exports would reverse the signalMarc N. Weiss, Dir. Sierra Club, 1-28-2013, “President Obama’s Climate Legacy,” http://www.sierraclubfoundation.org/node/101, da 3-1-2013The Sierra Club has outlined five key actions that the Obama administration must take to curb the country’s carbon emissions and address climate disruption. Like most Americans, we have very little

confidence in Congress’ ability to pass anything meaningful. But that’s the great thing about this campaign. None of the specific actions we’re asking the President to take require Congressional approval. The actions include: Hold fossil fuel corporations accountable for their pollution. This means adopting and enforcing coal pollution protections and setting water pollution standards that will end mountaintop removal mining, enacting standards for natural gas “fracking,” and

finalizing clean fuel standards for vehicles. Reject proposals to import dirty fuels and stop the rush of fossil fuel exports. This means stoppings Keystone XL and other tar sands infrastructure, halting expansion of liquefied natural gas export facilities, and new coal and oil export terminals, and

increasing US-backed international finance of renewable energy and energy efficiency. Double down on clean energy. This means opening innovative financing avenues for energy efficiency and renewable energy and facilitating environmentally responsible leasing and deployment of clean energy generation and technologies on public lands and in public waters. Protect communities from future climate disasters. This means releasing national climate resilience plans that help create strong and sustainable communities and holding EPA and FEMA accountable for ensuring equal, appropriate and just federal emergency and disaster response, including better equipping state and local officials to develop and support communities. Protect America's lands, air, water and wildlife from fossil fuel development. This means stopping the rush to expand oil and gas drilling, coal mining, and dirty fuels development in the Arctic Refuge, national parks, and on our public lands, and ensuring that lands and wildlife can adapt to climate disruption by protecting large-scale landscapes. We are, as a nation, slowly beginning to succeed against climate disruption. The amount of carbon released into the atmosphere in 2012 was down to the level of 1992 - twenty years ago. President Obama deserves credit for improving vehicle efficiency standards, creating incentives for clean energy, and passing historic clean air protections. Now

we must do everything we can to ensure that President Obama and the federal agencies he leads roll up their sleeves and increase the momentum. We cannot afford to lose a minute in this fight. It’s time that we finally establish our American climate legacy and send a signal to other nations that the US will lead on climate.

West Coast 2013March Update

EPA DA 1NC 2/2

The EPA will perceive the plan as a signal to stop aggressive enforcementWilliam L. Andreen, Law Prof @ Alabama, 2007, “Motivating Enforcement,” 24 Pace Envtl. L. Rev. 67, http://digitalcommons.pace.edu/pelr/vol24/iss1/4, da 3-1-2013In a recent article, Professor Joel Mintz perceptively observed that one generally unrecognized characteristic of EPA enforcement is "its high sensitivity to staff-level perceptions and concerns." 128 He quotes a former EPA regional official as saying: The people [at the EPA] who work on enforcement are very sensitive to signals about what they are doing. Because enforcement has always been.., controversial and contentious, it is ... critical that the people working on it have entirely clear signals that enforcement is important , . . . and that the people who do the work will be supported. Those signals have to come from the top. 129

Ambiguous signals from the top can easily be read by the staff as a kind of coded message expressing reluctance about, perhaps even

hostility towards, enforcement. Hence, as a senior EPA enforcement official recently recounted: The current [Bush] administration would typically say[:] "Oh, I want you to enforce, but can you please check in with us before you do any

major new cases, e.g., concentrated animal feeding operations (CAFOs)." That was taken by the staff as a directive not to enforce .... [Former EPA Administrator Christine Todd] Whitman also sent her political staffers out to check on particular cases. That also chilled enforcement. 130 The

consequence, of course, was a severe downturn in EPA enforcement from 2002 to 2003.131 While one would expect enforcement personnel to scrutinize the language and action of the agency's political appointees, it is a little surprising that it appears so easy at times for the agency's top brass to intentionally or even unintentionally slow down EPA enforcement .

Aggressive EPA would block KeystoneLisa Song, 1-31-2013, “Obama's Climate Vow Elevates EPA Role in Keystone XL Review,” Bloomberg, http://tinyurl.com/ay4ujlm, da 3-1-2013Because the Canada-to-Nebraska oil pipeline crosses an international border, the State Department, not the EPA, will decide whether to give the project the federal permit it needs. But the EPA will weigh in during the review, and its opinion will carry new weight now that the Obama administration has vowed to make climate change a national priority. The EPA's position will become clearer when the State Department releases its Supplemental Environmental Impact Statement (SEIS) for the project,

which it is expected to do any day now. Under the Clean Air Act, the EPA is required to review and comment publicly on the SEIS, and the agency has not been shy about criticizing earlier drafts. "The EPA

actually could assert a fair amount of power depending on , basically, how much they want to stick their necks out,"

said Jim Murphy, senior counsel at the National Wildlife Federation , which opposes the pipeline. "The level of scrutiny this is going to get is pretty intense . With each iteration this goes through, the number of eyes increases." In 2010, the EPA gave the first draft its lowest rating of "inadequate," in part because the State Department failed to estimate the increased greenhouse emissions that would result from producing and burning

the thick Canadian crude oil that would be shipped through the pipeline . In 2011, the EPA said a second draft showed improvement, but criticized it for underestimating the

project's climate impacts. "We will be carefully reviewing the Final EIS to determine if it fully reflects our agreements and that measures to mitigate adverse environmental impacts are fully evaluated," EPA assistant administrator Cynthia Giles wrote in a memo. Oil extracted from Canada's tar sands region has an average carbon footprint that's 20 percent higher than conventional oil —a point that

environmentalists have repeatedly emphasized as they push for the Obama administration to reject the project. "In terms of the future of climate change, [the use of] more and more exotic fossil fuels is a disaster," said David Driesen, a law professor at Syracuse University. Driesen is an environmental law expert who has followed the Keystone XL debate from afar. He has also represented then-Senators Barack Obama and Hillary Clinton in Clean Air Act litigation. "This is really a good opportunity early on in [Obama's second term] to send a strong signal that he's very serious about addressing climate ." If the EPA says the pipeline is "really bad for the climate," that will make it harder for Obama to let the State Department approve the project , Driesen

said. "Especially after the second inaugural address where he pledged to take [climate change] seriously ."

Game overRaymond T. Pierrehumbert, Geophysics Prof @ Chicago, 11-2-2011, “Keystone XL: Game over?,” Climate Scientist, http://www.realclimate.org/index.php/archives/2011/11/keystone-xl-game-over/, da 3-1-2013Jim Hansen has said that if the Athabasca Oil Sands are tapped, it’s “essentially game over” for any hope of achieving a stable climate. The same news article quotes Bill McKibben as saying that the pipeline represents “the fuse to biggest carbon bomb on the planet.” Others say the pipeline is no big deal, and that the brouhaha is sidetracking us from thinking about bigger climate issues. David Keith, energy and climate pundit at Calgary University, expresses that sentiment here, and Andy Revkin says “it’s a distraction from core

issues and opportunities on energy and largely insignificant if your concern is averting a disruptive buildup of carbon dioxide in the atmosphere”. There’s something to be said in favor of each point of view, but on the whole, I think Bill McKibben has the better of the argument, with some

important qualifications. Let’s do the arithmetic. There is no shortage of environmental threats associated with the Keystone XL pipeline. Notably, the route goes

through the environmentally sensitive Sandhills region of Nebraska, a decision opposed even by some supporters of the pipeline. One could also keep in mind the vast areas of Alberta that are churned up by the oil sands mining process itself. But here I will take up only the climate impact

of the pipeline and associated oil sands exploitation. For that, it is important to first get a feel for what constitutes an “important” amount of carbon. That part is relatively easy. The kind of climate we wind up with is

West Coast 2013March Update

largely determined by the total amount of carbon we emit into the atmosphere as CO2 in the time before we finally kick the fossil fuel habit (by choice or by virtue of simply running out). The link between cumulative carbon and climate was discussed at RealClimate here when the papers on the subject first came out in Nature. A good introduction to the work can be found

in this National Research Council report on Climate Stabilization targets, of which I was a co-author. Here’s all you ever really need to know about CO2 emissions and climate:

West Coast 2013March Update

Spot Pricing DA 1NC 1/2

Natural gas prices are overwhelmingly linked to oil prices nowMatthew Hulbert, Senior Research Fellow @ Netherlands Institute for International Relations, 8-5-2012, “Why America Can Make or Break A New Global Gas World,” Forbes, http://www.forbes.com/sites/matthewhulbert/2012/08/05/why-america-can-make-or-break-a-new-global-gas-world, da 3-1-2013The fact this price war is already being fought out on a daily basis in the Atlantic and Pacific basin is generally poorly

understood by analysts, as is the ‘vital supply side relationship’ between Russia and Qatar that will determine how these two worlds start to play out. Truth be told, the overall result remains uncertain, not because fundamentals don’t look promising, but

because countervailing political pressures to keep gas as a regional affair, rather than ‘global marriage’ remain formidable. Overall liquidity is the core tool available to counteract Russia (et al) by making sure shale options are globally developed and LNG trains set in motion to enhance fringe supply. In large part that means the US, but given that 90% of gas is still traded on a regional, pipeline basis across the world, most producers will still look to long term contracts to get fields developed, infrastructure built, pipes welded, and even LNG tankers filled. This historical legacy isn’t going to instantly lose contemporary resonance: hence the real question isn’t whether long-term bilateral

supply contracts will be struck. They will. But what’s used as the pricing reference point within them: spot market prices based on supply-

demand fundamentals should be the increasingly logical answer. The deeper gas markets get, the more credible independent benchmarks become.

US natural gas exports cause a switch to gas spot pricingMatthew Hulbert, Senior Research Fellow @ Netherlands Institute for International Relations, 8-5-2012, “Why America Can Make or Break A New Global Gas World,” Forbes, http://www.forbes.com/sites/matthewhulbert/2012/08/05/why-america-can-make-or-break-a-new-global-gas-world, da 3-1-2013The same debate is raging in the US. Despite the phenomenal breakthroughs in American shale developments, the front runner of the revolution now risks becoming a victim of its own success in terms of Henry Hub prices dropping so low, that full cycle economics for US shale gas plays have become negative. Unless prices organically firm, or US producers learn the dark art of supply restraint, current output levels will be difficult to maintain or enhance for American consumers. Companies will fold; fields will be mothballed, with Chesapeake providing the best ‘poster boy’ example of how precarious shale gas economics have

become. The quick fix option to get Henry Hub back at a sustainable $4-7/MMbtu level (and by far the most lucrative for some

of the mid-cap players involved), is to sign up international LNG contracts. That’s exactly what’s being done, with some of the larger IOCs (Royal Dutch Shell, BP and ExxonMobil) also aggressively pushing for LNG exports to capitalise on huge spreads, not to mention preventing further write-downs on shale assets. It’s not like Chinese champions working on US plays would have any ideological

opposition to such a prospect. In total, FERC has around 125bcm/y of LNG applications currently awaiting approval – even on a ‘bad day’ 40-50bcm exports should be very feasible by 2020 . That would make the US the third largest LNG player in the world. It’s also going to be the crucial factor over the next five years to decide where gas markets are heading. America will be decisive for future pricing models, whether they shift to gas (rather than oil) fundamentals. US LNG could be the straw that breaks oil indexation back.

Link happens fast – it’s all about perceptionMargaret Ryan, Vice President, Double Forte Management Consulting Services, 8-27-2012, “Experts Say US LNG Export Volumes Could be Limited,” AOL Energy, http://energy.aol.com/2012/08/27/experts-say-us-lng-export-volumes-could-be-limited/?icid=apb2#page2, da 3-1-2013Philip Hanser, Principal, The Brattle Group, said LNG exports require so much up-front capital investment – an estimated $5 billion in the case of Sabine Pass, just to add liquefaction to an existing LNG ship terminal – that the market for US exports is small and the window to act is already closing.¶ "Non-US supply competition is

robust," Hanser said. Producer nations like Canada, Russia, Qatar, and Nigeria will protect their market shares and "will react even before we do anything," he said . ¶ Hanser said US producers could export 6-12 Bcf/d without

boosting domestic prices enough to trigger a political reaction, but he agreed with Medlock that the actual market for US LNG would be smaller.¶ He said US

West Coast 2013March Update

exports would push the rest of the world away from oil indexing and toward market-based prices, eliminating the wide differentials that undergird US export potential.

West Coast 2013March Update

Spot Pricing DA 1NC 2/2

Spot pricing tanks the Algerian economyInternational Monetary Fund, 2-1-2012, “IMF Study Examines Changing Patterns in Global Gas Markets,” February 1, 2012, www.imf.org/external/pubs/ft/survey/so/2012/int020112a.htm, da 3-1-2013If gas prices become decoupled from oil prices in Europe, as we’ve already seen happen in North America, traditional gas suppliers such as Algeria could face pressure to sell at prices that reflect a whole slew of factors—the total

supply, the new gas deregulation laws, environmental concerns, and the cost of other energy sources—rather than just the evolution of spot oil prices. And this will make it more difficult for gas exporters to forecast revenues from natural gas , since these factors will affect the price in different ways. It will become necessary to take different scenarios for prices and quantities more explicitly into account, including for macroeconomic and

financial projections. De Bock: Well, the large-scale production of unconventional gas in Europe is probably not imminent. This is partly because of the controversy over the possible environmental effects from the technologies used to extract it. However, the recent European legislation to liberalize the gas market—as well as further

political unrest in the Middle East and North Africa—could boost efforts to develop a European shale gas industry or a spot market for natural gas. IMF Survey online: What is your advice to policymakers in countries like Algeria? Countries like Algeria—where natural gas comprises about 49 percent of the exports and oil accounts for another 49 percent—will be economically vulnerable to prolonged periods of low hydrocarbon prices and demand . We believe it is dangerous for countries to rely on a limited basket of exports. So countries that do should strive to diversify by developing a broader industrial and export base, particularly by investing earnings from oil and gas in sectors that will generate tradable income.

Key to counterterrorism operationsSoufan Group, international strategic consultancy, 7-13-2012, “TSG IntelBrief: Algeria: The Rising Storm of Turmoil,” http://soufangroup.com/briefs/details/?Article_Id=337, da 3-1-2013• While the Algerian government has greatly weakened the ability of al Qaeda in the Islamic Maghreb (AQIM) to

operate in Algiers and other major cities, the worsening situation on the borders with Mali and Libya could very well offer AQIM the room to regroup, restrengthen, and refocus. • Algeria is heavily dependent on its oil

and natural gas sector, which is vulnerable to two factors beyond the government's ability to influence: instability in the south

and east as well as the economic downturn in the European Union. Reduced revenues will only worsen Algeria's internal stability, along with its ability to finance much-needed counterinsurgency and counterterrorism operations. As of mid-July 2012, recent reporting on the Algerian government's efforts against al Qaeda in the Islamic

Maghreb (AQIM) has highlighted marked success against the terrorist group. This achievement is reflected in AQIM's diminished numbers and its inability to conduct attacks in the capital of Algiers and other major cities. What remains less understood, however, are the chronic effects of the unique and shifting topography of instability both inside Algeria and its unstable neighbors to the east and south; Algeria's economic dependency on its oil and natural gas exports; and how both of these facts are interrelated with Algeria's position as the third largest natural gas supplier to the European Union (as well as a significant supplier of crude oil to the United States). Further, recent reporting also does not properly highlight the geostrategic reality that, while AQIM might indeed need high-casualty and high-profile attacks to attract publicity and therefore regain its notoriety, it really only needs to feed off the instability in the south and east in order to disrupt oil and gas production and therefore regain its status as a major threat to the country.

Turns the case – causes natural gas volatilityEuropean Energy Review, 12-4-2011, “Pricing Mechanisms for Natural Gas Factsheet,” http://www.europeanenergyreview.eu/data/docs/Viewpoints/081120 Factsheet - Pricing mechanism for natural gas in Europe.pdf, da 3-1-2013The long-term comparison of the oil-indexed German Border Price (GBP) with the spot price of the most important

gas trading hubs in North America (Henry Hub) and the UK (National Balancing Point) reveals that gas prices in the US and the UK continue to correlate with oil-indexed prices, even in the absence of any contractual peg. This usually

occurs during periods when demand and supply are balanced. However, the short-term volatility of gas prices is significantly higher on spot markets. This volatility creates arbitrage opportunities for gas traders and

West Coast 2013March Update

speculators, but fails to lower prices for end consumers . On a joule-for-joule basis, the price of natural gas does not exceed 70 percent of the price of oil. This discount is explained by the superior properties of oil as a commodity. It is the fuel of choice in

the transportation sector and can be stored and transported much easier than gas. However, the gas price discount to oil prices is most likely to disappear. Liquefied natural gas (LNG) leads to a convergence of the commodity properties of oil and gas. In both cases, we are dealing with liquids that are shipped by tankers and poured into special tanks for storage. Gas-toliquids (GTL) are potentially capable of turning into a universal motor fuel that will replace oil. And gas has lower carbon emissions per

thermal unit than oil or coal. In the long term, this development will strengthen the oil-gas tandem. In the short term, LNG is helping to make the world’s gas markets truly global. In the absence of competition from cheaper pipeline gas, Asian markets are attracting ever-greater volumes of relatively expensive LNG, which, in turn, are starting to serve as the price target for both sides of the Atlantic.

West Coast 2013March Update

Spot Pricing DA – Uniqueness – Yes Oil Pricing

Natural gas will stay oil linkedRamya Venugopal, 10-22-2012, “BG Group says U.S. policy uncertainty delays LNG supply growth,” Reuters, http://uk.reuters.com/article/2012/10/22/uk-bg-lng-supply-idUKBRE89L0GH20121022, da 3-1-2013As a seller of LNG, BG expects Asia to continue to be a strong source of demand growth."Asia is a fast growing market still," Houston said. "If you look at global gas demand, globally gas demand is growing at about 2.6 percent, China is growing at about 11 percent." But he expects oil-linked prices, which have pushed Asian LNG prices well above Europe and the United States, to stay.

Natural gas will stay oil-indexed nowKjersti Hegde, Gas Sales Coordinator at TOTAL E&P NORGE AS, and Eirik Fjeldstad, Senior Portfolio Manager at Bergen Energi, 9-1-2010, “The future of European Long-Term Natural Gas Contracts,” http://www.bergen-energi.com/arch/_img/9548380.pdf, da 3-1-2013This report is a response to the question “what is the future of the European¶ long-term natural gas contracts”? This is a question important question in today’s¶ market, and has already been discussed at length both in the business-and the¶ academic world. Based on the information

collected in this report, the following¶ major findings have been identified:¶ Current oversupply is not expected to last¶ Demand for gas is currently recovering, as the economies of large, European¶ countries are improving faster than first forecasted. Most scenarios are expecting¶

the demand to continue increasing, and that the market will become tight in, or¶ before, 2015.¶ Pressure on the oil-indexation is temporary¶ The current pressure on the long-term contracts is expected to continue until¶ the long-term contract prices and spot prices are trading at similar levels again.

Gas contracts not being decoupled from oil yetKjersti Hegde, Gas Sales Coordinator at TOTAL E&P NORGE AS, and Eirik Fjeldstad, Senior Portfolio Manager at Bergen Energi, 9-1-2010, “The future of European Long-Term Natural Gas Contracts,” http://www.bergen-energi.com/arch/_img/9548380.pdf, da 3-1-2013The current slump in demand for gas is not expected to last. Observers¶ indicate that the supply-demand balance would change at 2015, where the current¶ contracted gas is unable to cover expected demand (Eurogas, 2010). Currently,¶ European gas production

accounts for 55% of supplies to the European gas¶ market. In 2030, the EU gas market will need around 70% from regions outside¶ Europe (Eurogas, 2010). The estimated increase in global demand for gas will¶ further intensify the competition for global gas reserves , and this could create a¶ basis for a continuation of the long-term contracts. ¶ In the British gas market, despite efforts from regulators,

governments and¶ some market players, the majority of UK’s North Sea contracts remain oil¶ indexed. Furthermore, recent initiatives to sign new oil indexed contracts came¶ from European large buyers ( Finon, 2009).

West Coast 2013March Update

Spot Pricing DA – Link – Exports Cause Spot Pricing

US natural gas exports breaks the link with oil prices and causes a shift to spot pricingMatthew Hulbert, Senior Research Fellow @ Netherlands Institute for International Relations, 8-5-2012, “Why America Can Make or Break A New Global Gas World,” Forbes, http://www.forbes.com/sites/matthewhulbert/2012/08/05/why-america-can-make-or-break-a-new-global-gas-world, da 3-1-2013The mere prospect of North American LNG hitting the market is creating major pricing problem for producer states trying to stick to old formulas in Asia – and not just regards Russia and Qatar. Australia is facing serious cost inflation with coal bed plays looking more costly than originally thought. International players are still investing in Canbarra, just in case LNG supplies don’t come good elsewhere, but given that Australian LNG docks into Asian ports for around $17-18/MMbtu any softening or prices could leave current (and

prospective) LNG projects in the red. That might sound problematic for future supply prospects, but it’s also extremely interesting

when we consider how recent US supply agreements to Asia are being brokered: Henry Hub is the underlying price point. Chenerie’s Sabine Pass output will be sold into South Korea at $8-10/MMBtu. The ‘general’ formula is to set a minimal $3/MMBtu (i.e. Henry Hub) capacity leasing charge as default payment if gas isn’t lifted, with a 115% mark up to bridge differentials on actual deliveries over a 20 year period (3.5mt/y). India outfit, Gail, brokered a very similar deal, while European off-takers from Sabine Pass, most notably BG Group (5.5mt/y) and Gas Natural (3.5mt/y) and Fenosa have pegged leasing charges even lower at $2.25-2.5/MMBtu. It’s not entirely clear what price system Execlerate has in mid to build floating LNG plants off the Gulf Coast or Conocco’s 10mt/y Freeport LNG project being sold into Japan, but expect them to be far better terms than traditional contracts dished up in Asia.

Although bigger American beasts might not be as generous as Cheniere have been on terms, if US developments such as Cove Point, Lake Charles or Jordan Cove retain even notional links to underlying Henry Hub prices (plus mark-ups), then traditional oil indexation pricing methods could be in deep trouble .

US LNG exports are the key to pricing methodsMatthew Hulbert, Senior Research Fellow @ Netherlands Institute for International Relations, 8-5-2012, “Why America Can Make or Break A New Global Gas World,” Forbes, http://www.forbes.com/sites/matthewhulbert/2012/08/05/why-america-can-make-or-break-a-new-global-gas-world, da 3-1-2013Russia, the biggest gas producer in the world, undoubtedly has a clear preference for maintaining the status quo; despite sitting on

vast oversupply of cheap domestic gas, the US is having a tortuous debate over how much LNG it intends to put onto global markets; prospective shale developments in Europe, Asia and Latin America, and indeed conventional plays in Central Asia and Africa, are hampered

by environmental or political concerns. If we genuinely want to shift towards a globalised gas world, the underlying formula is the same anywhere you look. The more gas we have internationally available, the more likely gas becomes like its liquid cousin, oil, as a globally traded, fungible good. Parochial thinking, by contrast, will inevitably keep markets where they are: local at worst, regional at best.

US natural gas exports dictate the marketDr. Shamil Yenikeyeff, Research Fellow @ Oxford, 10-16-2012, “Will Domestic Politics in the US and Russia Shape European Gas Markets?,” Huffington Post, http://www.huffingtonpost.co.uk/intelligence-squared/gas-markets-will-us-russia-affect-europe-market_b_1969537.html, da 3-1-2013The North American shale gas revolution has led the gas independence of the United States and forced

liquefied natural gas (LNG) cargos to move elsewhere. The US success has had a serious impact on commercial drivers and consumer-producer relations in traditional markets and in Europe , in particular. It has forced countries

to start exploring new ways of following the American "shale gas" footsteps.¶ The new abundance has undermined the oil-linked gas price formula used by Gazprom in its long-term contracts. The US could further change the global energy game if it opts to export its gas or use more gas instead of oil. This could lead to an increase in oil exports from North America which could also cause shock-waves in the global oil market.