Archive for April, 2014

A National Academy of Sciences report states that fracking sites in Pennsylvania’s Marcellus Shale are releasing on the order of 100 to 1,000 times more methane than the EPA estimates.

via Pennsylvania’s natural gas wells are leaking up to 1,000 times more methane than EPA estimates – Salon.com.

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Little solar house on the prairie.

A little solar house on the prairie.

The wind will still come sweeping down the plain in Oklahoma, but it will be less favorable for utility customers with distributed generation such as small wind turbines and rooftop solar. Oklahoma has passed a bill that provides for a utility surcharge on these types of small generation facilities. The bill passed with no debate in the Oklahoma House of Representatives and by a margin of 83-5 in the Oklahoma Senate. It now heads to the governor’s desk for signature.

This is the issue about which I wrote in the current issue of the International Energy Law Review, a copy of which is available on the Links page of my website.

Read the story here:

Oklahoma House passes solar surcharge bill | News OK.

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Ms. Masters testifies before a U.S. Congressional Committee in 2009

Ms. Masters testifies before a U.S. Congressional Committee in 2009

Blythe Masters, who headed up JP Morgan Global Commodities Group, of which JP Morgan Ventures Energy Corp. (JPMVEC) was a major part, is reported to be under investigation by the feds:

Blythe Masters Is Under Investigation By The Feds.

Masters and her group manipulated power markets in California and, to a lesser extent, Michigan. JPMVEC settled the charges with FERC for $410 million last year. So what was going on? Let’s just take one example of the manipulation strategies used by her group.

In addition to regular bilateral markets, the electricity market has a real time and day ahead market. Under the California Independent System Operator tariff rules in effect during her tenure, bidders in the day ahead market were paid for  “ramp” hours that day at their bid price for hours on each side of their bid. This is intended to reflect a power plant’s need to power up and then power down to supply electricity during the bid hours. JPMVEC knew that CAISO’s software for evaluating bids did so only one day at a time.

During the hours of midnight to 2:00 a.m., demand is very low, and market prices are very, very low. Most people are asleep.

JPMVEC bid -$30/MWh (yes, that’s right, negative thirty dollars — they’re paying CAISO to take their power) for the hour between 11:00 p.m. and midnight on Day 1, and then submitted a bid for $999/MWh for the wee  hours between midnight and 2:00 a.m. on Day 2. Because of its one-day-at-a-time software, CAISO took the midnight to 2:00 a.m. bids as ramp hours, and CAISO paid JPMVEC at its bid price of $999/MWh, even though the market price was just $12/MWh.

Blythe and her crew played this little game between April 1 and June 18, 2011, or about 78 days, and raked in a cool $20 million (net) off CAISO. That comes out to about $256,400 in pure profits every day. And that’s just one of the simpler of JPMVEC’s market schemes.

Like the song says, nice work if you can get it.  And people ask why the banksters are trading electricity. What a stupid question.


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Crude oil leaving the Bakken

Crude oil leaving the Bakken.

On Wednesday, April 9, 2014, the Federal Railroad Administration, a division of the U.S. Department of Transportation, announced that it would issue a proposed rule requiring two-person train crews on crude oil trains and establishing minimum crew size standards. The FRA also said it is moving forward with rules on train securement (i.e., putting on the brakes on unattended trains) and on the movement of hazardous materials.

Speaking of hazmat, the crude oil coming out of the Bakken in North Dakota has a high content of hydrogen sulfide, or H2S, a colorless gas that’s poisonous, corrosive to metals, flammable and highly explosive. Mixed with water, it forms hydrosulfuric acid. You’ve dealt with it already if you’ve refilled the cells in your car battery. If you overfill it and get some of the backwash on your jeans, it’ll eat right through them – and that’s the weak stuff. The H2S in the Bakken crude puts it closer to dynamite on the explosivity scale.

The FRA’s new regulations are in response to accidents such as last year’s tragedy in Lac Megantic, Quebec. A Montreal, Main & Atlantic Railway train with five locomotives was hauling 72 tanker cars of Bakken crude to a refinery in New Brunswick. The engineer on that train was alone, which was not against regulations. When the train stopped on an incline outside Lac Megantic that night, he applied the manual brakes on ten of the 72 freight cars and shut off four of the five locomotives, leaving one running to supply pressure to the main air brakes (i.e., not the manual brakes). The engineer then left for a local hotel to get a night’s rest, leaving the train unattended.

Unfortunately there was a bad piston in the engine left running, which started a fire. The fire department was called, and their first step was to halt the flow of fuel to the fire: they turned off the engine that the engineer had purposefully left running an hour or two earlier. They didn’t know that that engine was needed to supply power to the air brakes, and when they left, they didn’t turn it back on. Without the air brakes, the manual brakes alone couldn’t hold the train on that incline, and it started to roll towards Lac Megantic.

Had there been two engineers on the train, with one of them staying aboard the running locomotive, 47 people in Lac Megantic might still be alive today.

The Association of American Railroads, the rail industry’s trade association, opposes the FRA’s proposed rule. AAR’s President, Mr. Edward R. Hamberger, said the proposed rule was unnecessary because:

“all Class 1 freight railroads already operate crude-oil trains with two-person crews….If a regulation is proposed, then the least that can be expected is that a federal agency should back it up with grounded data that justifies the recommend rule. To date, nothing but rhetoric and empty pronouncements have been offered to validate their claims.”

This wonderful example of corporate-speak deserves some parsing, especially because he’s  poo-pooing another supposedly misguided effort of bumbling bureaucrats to fix something the railroads consider unbroken. Apparently Lac Megantic doesn’t qualify as “grounded data”; that and the other Bakken crude oil train explosions don’t fuel fires; they merely fuel rhetoric and empty pronouncements.

Mr. Hamberger didn’t elaborate on what a “Class 1″ railroad is. Perhaps he didn’t want to because the Montreal, Maine and Atlantic is a Class 2 railroad.

Center of Lac Megantic, Quebec, on fire after runaway crude oil train derailment

Center of Lac Megantic, Quebec, on fire after runaway crude oil train derailment.

Thus, the Association American of Railroads, the trade group for the industry that’s shipping liquid dynamite along the backyards and through more than a few downtowns of North America, believes the 47 persons consigned to the flames in Lac Megantic hadn’t the right to expect anything better because their town lies along the path of a Class 2 railroad. That’s just T.S., Eliot, as they used to say in Queens. Mr. Hamberger doesn’t mind if a crude oil train explosion turns you into a hamburger, so long as it’s not a Class 1 railroad.

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Vladimir Putin

Vladimir Putin

As predicted, Vladimir Putin is now using energy as a weapon, making a thinly-veiled threat to cut off natural gas supplies to Ukraine, and also to much of Europe, unless Ukraine immediately pays its bill. Putin also says he’ll switch to C.O.D. for Ukraine, knowing they won’t be able to meet those terms. Putin says that Ukraine will probably siphon off gas intended for Europe.

BBC News – Putin warns Europe of gas shortages over Ukraine debts.

He’s laying the propaganda groundwork for blaming Ukraine for his upcoming shutoff of natural gas supplies to the rest of Europe if they impose more sanctions or interfere with his plans.

Ukraine should ultimately pay its bills, of course. But maybe Putin should consider the history of his own country (or former country, which he’s trying to recreate). Just think of all those Arctic Ocean convoys carrying war supplies and equipment to Murmansk back in WWII. There were even trucks making the trip over the ice, long before “Ice Truckers” ever made it to cable TV. The U.S. gave the stuff to Putin’s predecessor Uncle Joe (Stalin).

Still, while this may look like Putin is issuing threats from a position of strength, there’s an undercurrent of desperation in his demand that the bill be settled right now, and that he’ll demand payment up front for all natural gas.

He’s really saying he needs foreign exchange, and fast.

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You probably have to be in the electric business to get this one, but here goes:

Join the Resistance

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Goldman Sachs

European Union antitrust regulators have hit Goldman Sachs, the world’s top electric power cablemaker Prysmian, Nexans and eight other cable firms with a total fine of 302 million euros ($416 million) for running a power cable cartel between 1999 and 2009. The EU authority said the companies agreed to share markets and allocate customers among themselves.

Goldman Sachs acquired cable maker Prysmian through one of its PE funds in 2005, but since then disposed of its interest.

The EU stated that “[p]art of [the cartel’s] plan was to allocate important high voltage power cable projects in the European Economic Area…including large infrastructure and renewable energy projects such as offshore wind farms.”

"Just doing God's work..."

“Just doing God’s work…”

Read the story here:

EU regulators fine Goldman Sachs, Prysmian for cable cartel | Reuters.


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Yesterday on the U.S. Senate floor, Senators Lisa Murkowski (R., Alaska) and Mary Landrieu (D., Louisiana) officially elevated the status of discussions of electric grid security from brouhaha to donnybrook. The senators criticized Jon Wellinghoff, FERC’s immediate past chair, for providing “sensational” if not “reckless” comments to the Wall Street Journal on flaws in the security of the grid.

The Sparkspread discussed this issue in its March 13, 2014 entry, specifically referring to a FERC analysis of grid power flows that concluded that disabling just nine substations in different regions could lead to a nationwide blackout that could last for weeks, if not months.

Senator Murkowski also called for an investigation into who leaked this information to the Wall Street Journal.

Wellinghoff fired back, stating that there was no classified information in the report, and that he and other FERC officials briefed hundreds of people in the utility industry across the country.

As the Sparkspread pointed out, the idea of attacks on a nation’s power grid are hardly new. Bombardment of Nazi Germany’s generation infrastructure was considered but ultimately not prioritized during WWII.  Amory and Hunter Lovins detailed the risks in their 1982 book, “Brittle Power,” which can be read on the web. It would be ironic if a detailed review of the FERC report revealed extensive reliance on the Lovins’s work from thirty years ago.  That these unknown persons carried out an attack on a substation shows that they already know about these flaws in grid security. This looks less like a leak and more like an effort to build awareness of the risk within the industry. If the House Republicans accuse Wellinghoff of involvement with Benghazi, we’ll know how serious this is.

Read the story here:

Wellinghoff fires back at ENR leaders on grid security study – Lesser prairie chicken gets ‘threatened’ designation – Obama in Saudi Arabia – POLITICO Morning Energy – POLITICO.com.

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