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Archaic Federal Law Keeps Alaskans From Using Abundant Natural Gas Reserves

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Welcome to The Rattler, a Reason newsletter from me, J.D. Tuccille. If you care about government overreach and tangible threats to everyday liberty, you’re in the right place. Did someone forward this to you? You may freely choose to subscribe right here.

Alaska is an energy behemoth with massive reserves of oil, natural gas, and petroleum. It also, oddly, faces a looming natural gas shortage—not good for a state where half of electricity production depends on the stuff. The problem is that most natural gas deposits are far from population centers and pipelines to transport the gas don’t yet exist and may never be built. So, to get gas to Alaskans, you need to transport it by ship. But federal law requires that only U.S.-flagged liquid natural gas (LNG) carriers be used, and there aren’t any.

Vast Energy Reserves

Alaska really is a powerhouse. According to the U.S. Energy Information Administration, the state’s “proved crude oil reserves—about 3.2 billion barrels at the beginning of 2022—are the fourth-largest in the nation.” It’s “recoverable coal reserves are estimated at 2.8 billion tons, about 1% of the U.S. total.” And, most impressively, Alaska’s “proved natural gas reserves—about 100 trillion cubic feet—rank third among the states.”

With that much natural gas to draw on, it’s no wonder the state gets about half of its total electricity from generators powered by natural gas, with roughly three-quarters of power to the main Railbelt grid coming from gas. Nevertheless, the lights could soon flicker—and a lot of people’s furnaces and stoves sputter—because of lack of access to the vast natural gas reserves.

“Alaska lawmakers are searching for solutions to a looming shortage of natural gas that threatens power and heating for much of the state’s population,” Alaska Public Media reported in February. “The state’s largest gas utility is warning that shortfalls could come as soon as next year – and imports are years off.”

But Not Where It’s Needed

It turns out that the gas Alaskans use comes not from the vast North Slope reserves, but from wells in the Cook Inlet. Most companies say it’s not worth their time to drill there, and so sold their leases to Hilcorp over 10 years ago. Hilcorp is a Texas-based company that specializes in getting the most out of declining oil and gas wells—and the existing Cook Inlet wells are decades old and long past their peak. The company expects to produce about 55 billion cubic feet of gas this year but predicts production will fall to 32 billion cubic feet in 2029.

If few companies want to drill more wells in the Cook Inlet, it makes sense to draw on the natural gas in another part of Alaska, the North Slope. In 2020, federal and state officials approved a pipeline to transport gas from the North Slope to the Kenai Peninsula for local use as well as export. But building another pipeline across rugged Alaska is a massive undertaking and the project has struggled to find backers. It won’t be ready for years, if ever.

That leaves transportation by sea. The gas could be transported from the North Slope by LNG carrier and offloaded in the populated areas where it’s needed. But there’s a hitch.

No Ships for You

A century ago, Congress passed the Merchant Marine Act of 1920 (better known as the Jones Act) to prop up the country’s shipping industry. The law “among other things, requires shipping between U.S. ports be conducted by US-flag ships,” according to Cornell Law Schools’s Legal Information Institute. The ships must also be built here. So, to move natural gas from one part of Alaska to another, you need American LNG carriers. And here we find another shortage.

“LNG carriers have not been built in the United States since before 1980, and no LNG carriers are currently registered under the U.S. flag,” the U.S. Government Accountability Office found in 2015. And while there’s lots of demand for more LNG carriers for the export market, not just for Alaska, “U.S. carriers would cost about two to three times as much as similar carriers built in Korean shipyards and would be more expensive to operate.”

U.S. Customs and Border Protection did make an exception to let foreign LNG carriers transport U.S. natural gas to Puerto Rico earlier this year, but only because the gas was first piped to Mexico before being loaded onto ships. Isolated Alaska doesn’t have that option.

The feds are diligent about prosecuting Jones Act violations, too. In 2017, the U.S. Department of Justice imposed a $10 million penalty on an energy exploration and production company for transporting a drill rig from the Gulf of Mexico to Alaska’s Cook Inlet in a foreign-flagged vessel. That company’s intention was to bring more natural gas to market in Alaska.

Given the law’s strict terms and the government’s enthusiastic enforcement, “it will be perfectly legal for ships from other countries to pick up liquid natural gas from the new production facility in northern Alaska—as long as they don’t stop at any other American ports to unload,” Reason’s Eric Boehm noted in 2020.

When Boehm wrote, the century-old protectionist law contributed to high prices for Alaskans. Now it may actually precipitate a crisis by making it effectively illegal for energy companies to ship abundant natural gas from one part of the state to eager customers in another.

A Law In Need of Repeal or Relief

In 2018, the Cato Institute’s Colin Grabow, Inu Manak, and Daniel J. Ikenson delved into the damage done by the Jones Act in terms of higher costs and distorted markets, even as it fails to keep the domestic shipping industry from withering. The authors called for the law’s repeal. Failing that, they recommended the federal government “grant a permanent exemption of the Jones Act for Alaska, Hawaii, Puerto Rico, and Guam.” These isolated jurisdictions suffer the most from Jones Act protectionism and would benefit from greater leeway for foreign shipping.

Until that happens, Alaskans may suffer from a natural gas shortage while having plenty of the stuff to sell to the rest of the world.

 


– J.D.

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Biden announces massive new climate goals in final weeks, despite looming Trump takeover

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From LifeSiteNews

By Calvin Freiburger

Outgoing President Joe Biden announced a new climate target of reducing American carbon emissions from 61-66% over the next decade, even though President Trump would be able to undo it as soon as next month.

Outgoing President Joe Biden announced December 19 a new climate target of reducing American carbon emissions of more than 60% over the next decade, even though returning President Donald Trump would be able to undo it as soon as next month.

“Today, as the United States continues to accelerate the transition to a clean energy economy, President Biden is announcing a new climate target for the United States: a 61-66 percent reduction in 2035 from 2005 levels in economy-wide net greenhouse gas emissions,” the White House announced, the Washington Free Beacon reports. The new target will be formally submitted to the United Nations Climate Change secretariat.

“President Biden’s new 2035 climate goal is both a reflection of what we’ve already accomplished,” Biden climate adviser John Podesta added, “and what we believe the United States can and should achieve in the future.”

The announcement may be little more than a symbolic gesture in the end, however, as Trump is widely expected to withdraw the United States from the Paris Climate Agreement upon resuming office in January, in the process voiding related climate obligations.

Trump formally pulled out of the Paris accords in August 2017, the first year of his first term, with then-U.S. Ambassador to the United Nations Nikki Haley stating that the administration would be “open to re-engaging in the Paris Agreement if the United States can identify terms that are more favorable to it, its business, its workers, its people, and its taxpayers.”

Such terms were never reached, however, leaving America out until Biden re-committed the nation to the Paris Agreement on the first day of his presidency, obligating U.S. policy to new economic regulations to cut carbon emissions.

In June, the Trump campaign confirmed Trump’s intentions to withdraw from Paris again. At the time, Trump’s team was reportedly mulling a number of non-finalized drafts of executive orders to do so.

Left-wing consternation on the matter is based on certitude in “anthropogenic global warming” (AGW) or “climate change,” the thesis that human activity, rather than natural phenomena, is primarily responsible for Earth’s changing climate and that such trends pose a danger to the planet in the form of rising sea levels and weather instability.

Activists have long claimed there is a “97 percent scientific consensus” in favor of AGW, but that number comes from a distortion of an overview of 11,944 papers from peer-reviewed journals, 66.4 percent of which expressed no opinion on the question; in fact, many of the authors identified with the AGW “consensus” later spoke out to say their positions had been misrepresented.

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Daily Caller

LNG Farce Sums Up Four Years Of Ridiculous Biden Energy Policy

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From the Daily Caller News Foundation

By David Blackmon

That is what happens when “science” isn’t science at all and energy reality is ignored in favor of the prevailing narratives of the political left.

As Congress struggled with yet another chaotic episode of negotiations over another catastrophic continuing resolution, all I could think was how wonderful it would be for everyone if they just shut the government down and brought an end to the Biden administration and its incredibly braindead and destructive energy-policy farce a month early.

What a blessing it would be for the country if President Joe Biden’s Environmental Protection Agency (EPA) were forced to stop “throwing gold bars off the Titanic” 30 days ahead of schedule. What a merry Christmas we could have if we never had to hear silly talking points based on pseudoscience from the likes of Biden’s climate policy adviser John Podesta or Energy Secretary Jennifer Granholm or Biden himself (read, as always, from his ever-present TelePrompTer) again!

What a shame it has been that the rest of us have been forced to take such unserious people seriously for the last four years solely because they had assumed power over the rest of us. As Jerry Garcia and the Grateful Dead spent decades singing: “What a long, strange trip it’s been.”

Speaking of Granholm, she put the perfect coda to this administration’s seemingly endless series of policy scams this week by playing cynical political games with what was advertised as a serious study. It was ostensibly a study so vitally important that it mandated the suspension of permitting for one of the country’s great growth industries while we breathlessly awaited its publication for most of a year.

That, of course, was the Department of Energy’s (DOE) study related to the economic and environmental impacts of continued growth of the U.S. liquified natural gas (LNG) export industry. We were told in January by both Granholm and Biden that the need to conduct this study was so urgent, that it was entirely necessary to suspend permitting for new LNG export infrastructure until it was completed.

The grand plan was transparent: implement the “pause” based on a highly suspect LNG emissions draft study by researchers at Cornell University, and then publish an impactful DOE study that could be used by a President Kamala Harris to implement a permanent ban on new export facilities. It no doubt seemed foolproof at the Biden White House, but schemes like this never turn out to be anywhere near that.

First, the scientific basis for implementing the pause to begin with fell apart when the authors of the draft Cornell study were forced to radically lower their emissions estimates in the final product published in September.

And then, the DOE study findings turned out to be a mixed bag proving no real danger in allowing the industry to resume its growth path.

Faced with a completed study whose findings essentially amount to a big bag of nothing, Granholm decided she could not simply publish it and let it stand on its own merits. Instead, someone at DOE decided it would be a great idea to leak a three-page letter to the New York Times 24 hours before publication of the study in an obvious attempt to punch up the findings.

The problem with Granholm’s letter was, as the Wall Street Journal’s editorial board put it Thursday, “the study’s facts are at war with her conclusions.” After ticking off a list of ways in which Granholm’s letter exaggerates and misleads about the study’s actual findings, the Journal’s editorial added, “Our sources say the Biden National Security Council and career officials at Energy’s National Laboratories disagree with Ms. Granholm’s conclusions.”

There can be little doubt that this reality would have held little sway in a Kamala Harris presidency. Granholm’s and Podesta’s talking points would have almost certainly resulted in making the permitting “pause” a permanent feature of U.S. energy policy. That is what happens when “science” isn’t science at all and energy reality is ignored in favor of the prevailing narratives of the political left.

What a blessing it would have been to put an end to this form of policy madness a month ahead of time. January 20 surely cannot come soon enough.

David Blackmon is an energy writer and consultant based in Texas. He spent 40 years in the oil and gas business, where he specialized in public policy and communications.

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