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Federal energy package has 1,611 sections Key theme is meeting domestic energy needs; bill covers LNG, nuclear power, bicycles, ceiling fans — and studies Larry Persily Petroleum News Juneau Correspondent
Although most of the energy bill deals with encouraging increased production of domestic energy resources — such as granting royalty relief for deep and ultra-deep gas wells in the shallow waters of the Gulf of Mexico — one provision could make it easier for companies looking to import liquefied natural gas into the United States.
That section says federal regulators shall not deny an applicant for a new or expanded LNG receiving terminal, either onshore or offshore, “solely on the basis that the applicant proposes to utilize the terminal exclusively or partially” for receiving its own gas.
Many of the LNG receiving terminals proposed for the United States are intended for the exclusive or mostly exclusive use of the companies developing the projects, rather than the previous regulatory requirements of open access to such facilities.
“This instructs FERC (the Federal Energy Regulatory Commission) to charge ahead with these LNG receiving terminals and not worry that they’re proprietary in nature,” Harold Heinze, chief executive officer of the Alaska Natural Gas Development Authority, told his board members Nov. 17. The new state agency hopes to someday ship Alaska LNG to a West Coast receiving terminal, but first needs to buy gas from North Slope producers, build a pipeline and liquefaction plant, and find a buyer at the other end. The issue is meeting domestic energy needs Ensuring adequate supplies for domestic energy needs is a key theme throughout the 1,611-section bill, including a provision ordering the federal government to increase the nation’s emergency oil stockpile.
The Strategic Petroleum Reserve would grow by 50 percent, to 1 billion barrels, providing a sizable backstop to protect against any disruption in oil imports. At 1 billion barrels, the federally controlled storage facilities could replace about three months of U.S. oil imports.
Universities could find themselves with a lot of work under a provision in the bill that could provide between $1.5 billion and $2 billion over the next decade for research and development on ultra-deepwater oil exploration and unconventional natural gas production. The money is earmarked for universities and energy companies, but does not specify recipients for the study funds.
But the bill isn’t only about fossil fuels. The legislation seeks to encourage the construction of new nuclear power plants by offering a federal tax credit for the first 6,000 megawatts of nuclear power to come online in the United States. There hasn’t been a nuclear plant built in the country in 25 years, and the 6,000-megawatt cap on the tax credits is expected to provide financial assistance for as many as six new plants. Nuclear subsidy 1.85 cents per kilowatt hour The new subsidies for nuclear power are estimated to be worth about $115 million per year. The federal aid would be paid out at the rate of 1.85 cents per kilowatt hour for nuclear power.
Natural gas producers would benefit from their own tax break, giving them quick seven-year depreciation for the so-called “gathering lines” that supply big interstate pipelines.
Not all of the provisions are aimed at giving tax breaks for increased energy production. One section says Congress “encourages the states of Illinois, Michigan, New York, Pennsylvania and Wisconsin to continue to prohibit drilling in the Great Lakes for oil and gas, and the states of Indiana, Minnesota and Ohio to enact a prohibition on such drilling.”
Among the hundreds of pages of billions of dollars of tax incentives are several federally funded studies of energy use, including a requirement for a study “of the energy conservation implications of the widespread adoption of telecommuting by federal employees.” The report on possible office energy savings is due to Congress within six months after the bill is signed into law.
The bill also sets aside $6.2 million to promote bicycle ridership to help cut down on motor fuel consumption.
Bill lacks higher auto efficiency standards Money for bicycle rider programs will not do much, however, to satisfy lawmakers who wanted the bill to include a much more significant effort to reduce fuel consumption — higher fuel efficiency standards for motor vehicles. The measure includes no mandatory boost in car or truck fuel efficiency requirements.
What negotiators accepted was more money — $6 million over the next four years — for the Department of Transportation to continue studying fuel efficiency standards for automakers, called Corporate Average Fuel Economy, or CAFE standards. Researchers are supposed to consider the impact on vehicle safety, weighing it alongside the risk of possibly losing auto industry jobs if higher efficiency standards hurt the industry.
Among the smaller items in the bill is a two-year suspension of U.S. tariffs on imported ceiling fans. The Wall Street Journal reported the easing of tariffs was written into the legislation as a favor for Atlanta-based Home Depot Inc.
Not everyone’s requests made it into the bill. Among those left out was a Senate initiative that would have required large utilities to distribute a minimum amount of their power by 2015 from renewable energy sources, such as windmills and solar panels. Offshore inventory dropped from bill An earlier version of the bill included a provision for a federal inventory of potential offshore oil and gas reserves, but that section was dropped after opposition from coastal state senators.
“We had to write one law for the country,” satisfying a diverse range of regional and ideological opinions, said Senate Energy Committee Chair Pete Domenici, R-N.M. “We can’t do what can’t be done.”
Others were far less complimentary. “The Republican energy bill provides the big energy companies with a political piñata of tax and regulatory subsidies, environmental roadblocks and other special favors for energy producing industries,” said Rep. Edward Markey, D-Mass.
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