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Page added on May 19, 2014
Secret Trade Memo Calling For More Fracking and Drilling
The European Union is pressing the Obama administration to expand U.S. fracking, offshore oil drilling and natural gas exploration under the terms of a secret negotiation text obtained by The Huffington Post.
The controversial document is an early draft of energy policies that EU negotiators hope to see adopted under the Transatlantic Trade and Investment Partnership (TTIP) trade deal, which is currently being negotiated. The text was shared with American officials in September. The Office of the U.S. Trade Representative declined to comment on the document.
Environmental groups fear the broad language proposed for the deal would eliminate key restrictions on the export of crude oil and natural gas, fossil fuels that contribute to climate change. The document marks the first major bone of contention in the EU deal, amid an outcry from environmentalists over leaked terms of the Trans-Pacific Partnership, a separate pact that the U.S. and 11 Pacific nations are also negotiating.
“Exports of energy goods to the other Party shall be deemed automatically to comply with any conditions and tests foreseen in the Parties’ respective legislation for the granting of export licenses,” the memo reads, defining “energy goods” as “coal, crude oil, oil products, natural gas, whether liquefied or not, and electrical energy.”
The U.S. government treats trade negotiation texts as classified information. Previous leaks concerning the EU deal have focused on lighter topics, including whether American cheesemakers can call their products “feta” or “parmesan.”
By encouraging more crude oil and natural gas exports to the EU — a massive economic force that uses a tremendous amount of global energy — the proposal could spur more domestic oil and gas drilling and discourage the development of green energy in the EU, dealing a significant blow to efforts to avert climate change. Some environmental and citizens groups also object to the fracking process itself — in which a high-pressure mixture of chemicals, water, and sand is injected into rock formations to release natural gas — because of concerns that it might affect groundwater supplies.
“Encouraging trade in dirty fossil fuels would mean more dangerous fracking here in the U.S. and would push more climate-disrupting fuels into the European Union,” Ilana Solomon, director of the Responsible Trade Program at Sierra Club, told HuffPost. “The oil and gas industry is the only winner in this situation.”
The U.S. banned crude oil exports in 1975, and imposes a host of restrictions on the export of natural gas for both economic and national security reasons. But the president can issue special licenses to exempt some crude oil exports from the ban, and Energy Secretary Ernest Moniz said this month that he wants to consider relaxing it.
There has also been an increasing push to loosen constraints on natural gas exports from the U.S. to Europe, particularly as the conflict between Russia and the Ukraine has grown, highlighting Europe’s dependency on Russian energy. Although burning natural gas produces lower emissions than oil or coal, the energy-intensive storage and shipping process — liquefying the gas and then sending it in fuel-burning vessels — eliminates many of its advantages. And critics of gas say that increasing exports would only increase reliance on fossil fuels, rather than speeding the transition to renewables. It would also likely increase energy prices in the U.S., although the effects of the deal would not come to fruition for several years.
Free trade agreements frequently bind all of their participants to a specific regulatory regime, hindering the deployment of future regulations in response to new problems. Trade pacts are enforced by international courts, which can issue economic sanctions against countries that violate the deals. The proposed EU language would run counter to existing environmental standards that limit the development of the fossil fuel industry.
“It expands a trend in trade negotiations of removing policy decisions from national and local governments and enshrining those policy decisions in international trade laws,” said Sarah Burt, an attorney with the environmentalist legal organization Earthjustice, who has seen the document. Those negotiations, said Burt, happen outside of the public eye and are an “opaque process where trade and economics are elevated above any other values.”
Read the full document here.
25 Comments on "Secret Trade Memo Calling For More Fracking and Drilling"
Plantagenet on Mon, 19th May 2014 10:43 am
Good to see the Obama administration secretly negotiating to expand fracking and legalize oil and NG exports.
Northwest Resident on Mon, 19th May 2014 10:53 am
“By encouraging more crude oil and natural gas exports to the EU … the proposal could spur more domestic oil and gas drilling…”.
It seems to me that the only way the oil companies are going to squeeze “more crude oil and natural gas” from American shale is to be able to sell it for more than they are currently getting.
Are the Europeans willing to pay significantly more for oil and NG? If yes, that opens up more sources of NG and oil here in the US. But it also increases the amount that we in the USA will have to pay for oil and NG. And that, in turn, will result in another wave of demand destruction in America because as Steven Kopits said, the “marginal consumer” in America is barely able to afford the “marginal barrel of oil” as it is. Driving the price of oil/NG up for the American consumer will lead directly to more layoffs, less consumption across the board, declining tax revenues and increased social program payouts (food stamps, unemployment ins, free medical, etc..).
When it comes to oil and NG these days, there is no step that TPTB can take without putting their foot in a pile of bullshit. Every inch of the way it is damned if you do and damned if you don’t. There are NO solutions, just lesser or greater evils. The system is totally, irreparably broken. How much longer can they keep the creaky machine screeching forward, that is the only question.
Northwest Resident on Mon, 19th May 2014 11:09 am
Plantagenet — Of course, there is always the possibility that this “secret negotiation text obtained by The Huffington Post” was intentionally leaked for propaganda and/or misdirection purposes. The armies of dedicated Obama-haters — almost exclusively middle aged to old white men — are some of the stupidest and craziest bastards on planet earth. The possibility that this “leaked” info is intended to manipulate and control that herd of morons is much more likely than that they are actually seriously considering oil and NG exports to Europe. Why? Because the Obama hating herd of morons need to be controlled — that is smart — but the prospects of exporting oil/NG to Europe are so stupendously investment and infrastructure intensive that only morons (refer to Obama-hating herd) believe that is even worth considering.
rockman on Mon, 19th May 2014 2:35 pm
Rather humorous IMHO. First, if true it’s amazing how little the folks in the EU understand about US oil/NG development. For one thing the US gov’t doesn’t frac or drill for oil/NG. The US gov’t even have a say in frac’ng (so far)… the states have that sole authority at the moment. The US doesn’t have a national oil company. There are hundreds of US oil companies and they decide how much they drill…not the gov’t.
But President Obama has done what he could to help expand hydrocarbon production in N. America: has offered over 150 million acres of offshore leases to the oil patch, has signed more Deep Water drill permits then any other POTUS, expedited the approval process for the southern leg of Keystone XL which now has the capacity to move 600,000 bopd directly to the Texas coast where every ounce can be exported into the international market place since it wasn’t produced in the US, has overseen a huge expansion of coal exports of which the majority goes to the EU, has continued spending tens of $billions every year maintaining a military presence in the Middle East from which a significant amount of EU oil originates.
Between demand destruction and domestic increases the US is currently pulling about 800 million bbls LESS per year from the international market place. Additionally we of what we do import a significant portion now comes from Canada which the EU currently has no significant access to. And then there 3+ million bbls per day of refined products we ship to the EU and other international markets while we keep any pollution here for ourselves.
Just MHO but I would say the US has already done pretty good by our EU cousins. So the question becomes: what has the EU done to help the US with regards to energy?
shortonoil on Mon, 19th May 2014 4:28 pm
“Between demand destruction and domestic increases the US is currently pulling about 800 million bbls LESS per year from the international market place.”
At least half of that 800 mb/yr is condensate; maybe there is a big demand for plastic pipe in the EU? But the Obama administration is going to run into a lot of resistance from the refining industry. The $10/b price reduction from having an over stock of hydro-carbons along the Gulf Coast is worth $76 billion per year to them in raw material cost savings. It is doubtful they will go along easily with this trade agreement? Exporting our shale production would put dozens of Texas refineries at a very big disadvantage to their European counter parts. If exports were allowed, WTI prices would rise, and the US oil industry which is now being driven by finished products exports would suffer. Low crude prices, relative to world prices, is an advantage they are not going to give up easily!
http://www.thehillsgroup.org
Plantagenet on Mon, 19th May 2014 6:34 pm
@Northwest Resident
Your claim that “stupid…crazy…white men” are responsible for the Obama administration negotiating to expand fracking in order to send more US oil and gas to the EU doesn’t make any sense.
The Obama administration is multi-ethnic and multi-racial—-there is no way their actions are the responsibility of “white men…craziest bastards…” as you so inelegantly put it.
Northwest Resident on Mon, 19th May 2014 8:49 pm
Plant — I definitely did not claim that stupid crazy white men are responsible for the Obama admin negotiating to expand fracking … blah blah blah.
I did speculate that the secret negotiation text obtained by The Huffington Post might be a ruse to trick or otherwise manipulate the dedicated Obama haters who are “almost exclusively middle aged to old white men”.
And why would they bother to do that?
No idea. One thing we do know and that is this — America becoming an exporter of oil/gas/NG to Europe is so far away in terms of billions invested and infrastructure developed that it isn’t close to realistic. And if America does start exporting to Europe then the price is going to be much higher for American consumers.
So if it isn’t a realistic possibility, why would they be “secretly negotiating” about it?
Again, no idea. Who are they trying to trick, influence or manipulate? I don’t know — somebody, most likely. I threw the dedicated Obama haters being primarily old white stupid men in there to offend you, Plant, to be honest, the same way that your frequent accusations and silly quips about Obama offend others. It was a cheap shot, just to get your attention and let you know how it feels.
Plantagenet on Mon, 19th May 2014 9:50 pm
Hi Northwest Resident:
How do you imagine that what you call “stupid…crazy…white men..” gained access to the secret negotiations that the Obama administration is conducting with the EU?
Isn’t it more likely that the leaks are coming from the Obama administration itself, since they are the ones who actually have access to the secret documents?
GregT on Mon, 19th May 2014 10:34 pm
Plant,
I’m guessing that reading comprehension isn’t one of your strong points?
Northwest Resident on Mon, 19th May 2014 10:51 pm
I’m disconnecting from this conversation, Plant. I’m here to discuss and speculate on peak oil related issues. You want to go full retard on political issues. I’ll pass. I wish you would too, and drop the political commentary. It’s annoying.
rockman on Mon, 19th May 2014 10:57 pm
First, it isn’t a “secret trade memo” but a classified draft of trade agreements which, if approved by all parties, would be made public like all other trade agreements…just a question of timing.
But again I’ll point out what should be understood as the absurdity of the entire thought process. But not that much logical thought seems to have been applied. Consider this statement:”While European access to the US shale gas revolution is currently constrained by American licensing procedures, a successful conclusion of ongoing ambitious trade talks aimed at creating a transatlantic free trade area would also hasten European access to American gas.” There are no US restrictions to shipping LNG to Europe. Every export license that has been applied for, such as Chenier signing a long term supply contract two years ago, has been approved.
And exactly where does LNG export licensing sit today: Sempra Energy just nabbed a license to export NG marking the sixth such approval handed down by the Obama administration. The Energy Department granted Sempra’s request for a 20-year license to export up to 1.7 billion cubic feet of natural gas per day to countries that do not have free-trade agreements with the United States. [Did you catch that: countries that DON’T HAVE FREE TRADE AGREEMENTS with the US. IOW if there are FTA’s in place no US gov’t approval is required.]
So how much NG can we export to countries today just to countries that don’t have a FTA with the US? “The Energy Department has now authorized companies to export about 13 percent of current daily production to countries that don’t have a FTA with the US. IOW that 13% doesn’t include the NG companies are free export to other countries that have a FTA with the US.
What’s been lacking are LNG export terminals. And while that requires a gov’t permit none have been rejected. The ones applied for are going through the normal (and typically bureaucratically slow) process. Heck…it can take anywhere from 2 to 4 years to get gov’t approval to drill just one well in the GOM. Welcome to the waiting line. LOL.
But more to the point: the US is net NG importer. We only produce 93% of the NG we consume. If we export 1 bcf of NG to Europe we have to import an extra 1 bcf. Either that or US consumers have 1 bcf of NG available to them. There’s already concerns that we might not have enough NG in storage to meet peak demand next winter. Export NG to the EU? Heck, they better hope New England doesn’t run short and then outbids EU buyers for LNG spot cargoes that would have gone to them. With all the chatter about licenses for LNG export terminals no one is talking about the plans for LNG IMPORT TEMINALS in the US. Like the one in Maine just approved by the gov’t: the Downeast LNG IMPORT TERMINAL has just received approval from FERC to deliver about 500 million cubic feet per day of imported natural gas to the New England region. And where would that LNG come from? The same producers that are currently shipping LNG to Europe.
The US, EU and a number of Asian countries (like China and Japan) import a lot of NG. Last winter England lost half of its LNG imports to Asia by being outbid by those countries. And if the day comes when folks in New England are shivering in their homes in and utilities go to rolling blackouts I wonder how the competition between US and European LNG buyers will shake out?
Plantagenet on Mon, 19th May 2014 11:36 pm
US LNG buyers buy mostly US LNG. EU LNG buyers buy mostly Russian LNG.
There really isn’t any competition there right now.
This secret trade draft calls for the US to sell US NG to the EU. At that point there might be competition,but only if the Obama administration is dumb enough to go along with the EU plan.
GregT on Tue, 20th May 2014 12:45 am
Your sense of logic Plant, defies all sense of logic. If there is any point worth consideration in what you are trying to say above, you have failed miserably in your attempt at making it.
Perk Earl on Tue, 20th May 2014 2:06 am
“…if America does start exporting to Europe then the price is going to be much higher for American consumers.”
You may have nailed it, because the companies doing the fracking may (behind closed doors) be in support of NG exportation to the EU for that very reason.
From the politicians standpoint, it would be advantageous because it would reduce EU reliance on Russian NG, and the higher price would spur fracking on a grander scale. On the surface to the American (‘energy predicament’ non-informed) voter, this would appear to be a win-win scenario, i.e. until they get their post deal heating bills. But by then the politicians that supported this nonsense will have either been elected or not – case closed. Remember politicians are interested in supporting corporations (that fund their elections) and getting elected, not anything to do with helping the people. It’s an oligarchy.
If so, what would seem short-sighted is a higher NG price will hurt consumers and the economy because it will reduce non-discretionary spending but worse of all US NG long term supply will be substantially reduced. You know how it is though, short term goals always seems to win out over long term considerations.
rockman on Tue, 20th May 2014 7:27 am
Plant – Not just in the future but US consumers have been competing for LNG with EU buyers for years. Most US NG imports come from Canada via pipelines. But where do our LNG imports come from? In 2010: Norway: 6%; Yemen: 7%; Nigeria: 10%; Qatar: 10%; Egypt: 17%. I’ll do the math for everyone: as far back as 3 years ago half of US LNG imports have come from the same countries that supply most of the LNG to Europe. And why ship all the way across the Atlantic to the US? Because US buyers were willing to pay more. The dynamics of US consumers outbidding EU consumers isn’t theoretical…it’s been happening for years. And now they are going to build an LNG import terminal in Maine (MAINE!!! LOL) that will be designed to import 180 bcf per year. And that NG won’t be coming half way around the world from Malaysia when 80%+ of global LNG exports originate just a short sale across the Atlantic.
As always trade dynamics aren’t that difficult to appreciate if you just follow the money. England didn’t lose half their LNG imports to Asia last year due to politics. It was all about pricing. The US is a net NG importer…that makes us a competitor with every other NG importer on the planet.
Northwest Resident on Tue, 20th May 2014 9:36 am
rockman — I suspect that Plantagenet will read your informative post and his “take-away” will be something like “If Obammy would just stop imposing his socialist communist Marxist Islamic ideals on Congress, then the U.S. could afford to pay even more for LNG, which would give us a “glut” and enable us to export that LNG to Europe for a profit.”
rockman on Tue, 20th May 2014 10:27 am
NR – We can begin selling LNG at a profit to the EU this month…no new export terminals needed. Almost half of our LNG imports come from the Caribbean. All we need to do is continue buying it from Trinidad/Tobago and sell it to the EU for more than we pay for it. Or save the shipping cost and sell them the LNG we import from Egypt…our biggest supplier of LNG. Then it’s just a very short haul across the Med to Italy.
I think some folks think there’s a shortage of LNG in the world. There isn’t. The EU can buy all the LNG from the Persian Gulf they want…all they have to do is meet the price. Which makes me wonder if some folks are misunderstanding what the EU leaders are actually requesting: they aren’t asking the US to just sell them LNG. They can buy all they need from other countries…if they pay the current price. They want the US gov’t (which doesn’t sell any LNG…US companies do) to sell them LNG below the global market price.
Do you think most folks understand this?
Northwest Resident on Tue, 20th May 2014 10:44 am
rockman — No, I don’t think most folks understand what you just described, me included. Why would the EU be asking the US government to “make a deal” that enables them to buy LNG below the global market price? Is it because they have been buying LNG from Russia at “below global market price” and they want the gravy train to keep on rolling? Or is there another reason that they would have the audacity to try to get their LNG at below market price?
synapsid on Tue, 20th May 2014 3:31 pm
Plant,
The EU does not get most of its LNG from Russia, far as I know. The EU does get much of its pipelined NG from Russia.
Northwest Resident on Tue, 20th May 2014 3:34 pm
“The Russian Federation supplies a significant volume of fossil fuels and is the largest exporter of oil and natural gas to the European Union. In 2007, the European Union imported from Russia 185 million tonnes of crude oil, which accounted for 32.6% of total oil import, and 100.7 million tonnes of oil equivalent of natural gas, which accounted 38.7% of total gas import.”
So, about a third comes from Russia.
rockman on Tue, 20th May 2014 9:20 pm
NR – “Why would the EU be asking the US government to “make a deal” that enables them to buy LNG below the global market price?” And thus the absurdity of the entire conversation. To first appreciate it do you understand that the US has zero surplus NG to export? IOW WE don’t even produce enough NG to satisfy our own demand. And LNG? According to EIA stats the US has imported 1 TRILLION cubic feet of LNG since Jan 2010. And during the same period we exported 170 bcf of LNG. IOW we imported almost 7X as much LNG as we imported. LNG imports have decreased but in 2013 we still imported 97 bcf of LNG.
Again a good reason to be confused by the entire ridiculous conversation: the US in both net NG and LNG importer. Thus the only way the US can supply the EU with LNG is to buy it from the countries that are shipping to us and then sell it to the EU for less. Otherwise the EU could just buy the LNG from our suppliers by paying the same market price we would.
So yes: it makes no sense. Again let me emphasize who the US is buying LNG from: Nigeria, Yemen, Qatar and wait for it…wait for it…AND FREAKING NORWAY. The US is importing LNG from Europe. If the US wants to help the EU buy more LNG all we have to do is ban LNG imports from those countries. Of course that alone won’t do it because if they could afford the price of that LNG they would have already been buy in it. Thus the US would have to buy that LNG at the price it has been paying and then sell it to European consumers for less.
So your confusion is easily explained: the idea of the US shipping LNG to the EU makes no sense when you look at the actual numbers. I appreciate that my numbers must seem to be incorrect since if they are true then the comments of some EU and US politicians would be insane.
rockman on Tue, 20th May 2014 9:24 pm
Dang: “IOW we imported almost 7X as much LNG as we imported.” Meant to say as much as we exported.
Northwest Resident on Tue, 20th May 2014 9:59 pm
rockman — Thanks for explaining all that, again. The whole idea of America becoming an NG supplier to Europe is just so remote, but the MSM and others keep pushing it as if it were a near-term reality. Then this “leaked” secret crap from the Obama admin. What’s the point, if not to spread the bullshit a little bit thicker and fool a few more people? Who are they trying to influence, and toward what end? I’m sure we’ll never know for sure.
beamofthewave on Tue, 20th May 2014 10:08 pm
trying to scare putin imo
Northwest Resident on Tue, 20th May 2014 10:57 pm
beamofthewave — Good speculation. That might be it. But is Putin dumb enough to fall for it, that is the question. My speculation is that this leak was intended to reinforce the perception of the investors in America and around the world that America has plenty of NG, enough to export. That illusion reinforces the other illusion that the fracking miracle is giving us unprecedented oil gluts and energy independence. TPTB apparently feel that they MUST keep investors invested in energy/oil securities. And, if Obama has any other job these days, none is more important than his job of portraying BAU and all is normal, things are going great.