Alaska pipeline may shut down...

Refineries too full to accept North Slope production. Pipline slowdown possable.

At midnight on April 11, a 940-foot tanker maneuvered into the dock at the oil terminal in Valdez, Alaska, carrying an unusual cargo for a returning ship. Sloshing in its tanks were more than 12 million gallons of Alaskan crude, at least a quarter of the cargo the ship had carried away from Valdez two weeks earlier.

The Alaskan Explorer had sailed to a Washington refinery but was forced to return to Alaska with 300,000 barrels because the onshore storage tanks were too full to accept it, confirmed Anil Mathur, CEO of the Alaska Tanker Co., which owns the ship.

"Not the normal course of business," said John Kotula, one of the few outsiders privy to the incident because of his position as manager of the state of Alaska's environmental office in Valdez. The tanker's inability to offload its oil underlines a startling reality: Stocks of crude oil in the U.S. have been for the last two years at historic highs, while Americans are using decreasing amounts of its most important product - gasoline.

But federal statistics show another recent development: West Coast refineries are decreasing their production as the domestic demand for gasoline shrinks."If there is so much crude oil around, why is the price of gasoline so high? Why is the price of heating oil so high?" asked Dan Lawn, an environmental consultant who was in the same job as Kotula for decades before he retired in 2005.

The BP refinery in northern Washington had been shut down due to a February fire when the Alaskan Explorer arrived there on April 6. But that doesn't explain the tanker's return to Valdez with a big load of oil. Refinery spokesman Bill Kidd acknowledged that in normal times, the ship would have offloaded the remainder of its cargo at one of three nearby refineries.

An unusual position: Hauling oil to Valdez - a remote town that still supplies a big portion of the West Coast's oil - is carrying the proverbial coal to Newcastle. It is a sign that the American oil industry is in a very un-accustomed place. Government statistics show gasoline isn't selling the way it used to, and on any given day crude oil could be backed up in storage tanks ranging from Valdez to the San Francisco Bay to Long Beach. "Valdez inventories are pretty high. Our inventories are high. Nobody is taking much crude on the West Coast," Kidd said.

So why aren't gasoline prices pushed downward by the forces of supply and demand? "You've keyed into an interesting puzzle, a paradox," said Richard Newell, professor of energy and environmental economics at Duke University and until last year the head of the federal Energy Information Administration, an arm of the Energy Department that tracks industry statistics.

The answer is the power of the world market. "We are tied to the global market, the global price for oil," said Rayola Dougher, senior economic adviser at the American Petroleum Institute. "We cannot secede."
The profitable oil production industry benefits from the fact that it operates within a global market. Fuel conservation in the United States cannot overcome the rising hydrocarbon demand in emerging markets like China and India, Newell said. The price stays up even where more local market pressures might force it down.

Nationally, the average retail price for all grades of gasoline as of last Monday was $3.93 a gallon, according to the Energy Information Administration - about the same as this time last year but up more than a dollar since April 2010. The highest prices are mostly on the West Coast.

Limited gesture: The Obama administration has proposed better oversight of the commodities market that trades in oil futures, but it is a limited gesture. The markets that set crude prices are different for Scandinavian, West Texas and Arabian oil. "The dynamics in the United States are the opposite of what is occurring at a global level," Newell said. When prices at American gasoline stations go down - or up - it will be for reasons other than U.S. intervention or our improved driving habits, he said.

Lower consumption hasn't brought U.S. prices down or eliminated our dependence on foreign oil. Even though exports are up, the United States still imports around 11 million barrels of crude oil and petroleum products per day, according to the Energy Information Administration.

Consumer demand for gasoline in the U.S. started faltering in 2005 and has been falling "very sharply" since 2007, said Houston-based oil industry analyst Pavel Molchanov of Raymond James & Associates.
"We think (demand) is going to go down in perpetuity," Molchanov said.

People are driving less, because of the economy and the aging of baby boomers, said James Beck, a lead petroleum supply analyst for the Energy Information Administration. Newer cars get better mileage and are replacing the gas-guzzling older ones.

From Ray Metcalfe 907-344-4514 RayinAK@aol.com

So how is it that Parnell's plan will work? Alaskan's need to know.

http://www.chron.com/business/article/U-S-awash-in-oil-but-global-demand-drives-prices-3517269.php

Houston Chronicle

U.S. awash in oil, but global demand drives prices

By Eric Nalder

Toward natural gas: Meanwhile, natural gas is cheap. Buses and commercial vehicles are turning away from oil and toward compressed or liquid natural gas, and the petrochemical industry is replacing oil with natural gas for feedstock, Molchanov said.

Gulf Coast and West Coast refineries consequently are making more product than they can sell locally. They are exporting it, notably to Central and South America, in volumes not seen in half a century, according to the Energy Information Administration.

Some East Coast refineries face possible shutdowns because of falling demand and gasoline imports from Europe, Beck said.

"The surging growth in U.S. oil supply has turned North American crude dynamics upside down," industry analysts Cory Garcia and Stacey Hudson said in a March briefing paper distributed by Raymond James & Associates.

Advanced drilling technologies are sucking new crude oil supplies out of landlocked North Dakota, while a pipeline bottleneck at the key hub in Cushing, Okla., has slowed the path to refineries in Texas and Louisiana. The results are a glut of crude oil in the middle of the country, as well as environmental concerns about the drilling techniques. "Clearly, it will take some time (and pipeline capacity) in order to fully clear this supply glut," Garcia and Hudson wrote.

Nearly full tanks: The storage tanks in Valdez were more than 90 percent full the day the Alaskan Explorer arrived with its odd load, said Michelle Egan, spokeswoman for terminal operator Alyeska. She downplayed the significance of those full tanks, noting that they were not so full a few weeks earlier.
But Egan also acknowledged that Alyeska officials begin worrying when the storage tanks at the terminal are over 90 percent full. Such a glut could force a slowdown of oil production on the North Slope. That would reduce flow in the Trans-Alaska Pipeline, she said, which can result in increased maintenance problems.
The price of gasoline, meanwhile, is still near four bucks a gallon.

"Both the supply side and demand side in the U.S. are moving in a direction that you would think would underpin falling prices," Newell said. "But the global market rules."

Government destroys private sector to sell oil leases.

Open letter sent to newspapers, radio and TV stations:

Government destroys ecosystem and steals your livelihood.
In the 1970’s I had a good life. I lived in Halibut Cove in a house that I had built with my own two hands. I had a wife that love me, four good children who were learning how to fish salmon and crab. I had a shop building to work on my fishing gear and numerous out buildings. I owned a 72’ boat that I had rebuilt to catch king crab and tanners to provide for my family. I had worked on the old Mary M many years even running it to Seattle twice to change the engine and do hull repairs. I had worked extremely had to reach that point. I was creating work by providing jobs for three desk hands and I was earning close to two hundred thousand dollars a year.
In the 1960’s and 1970’s Cook Inlet had a 3.5 million pound to 4.5 million pound king crab quota for the outer district from Cape Douglass, Barren Islands up to Anchor Point. Kachemak Bay had an additional 3.5 million pound quota which kept us busy for two to three months. After that in November 15 they opened the tanner season for another 3-million pound quota. All that crab and shrimp amounted to from 30 to 60-million dollars that went directly into the private sector. This also helped municipalities, grocery stores, fuel distributors and a little trickled down into everyone’s pocket.
Little by little my livelihood was destroyed. The crab because fewer and fewer and Alaska Department of Fish and Game extended the quotas as if they were trying to wipe out the fishery. ADF&G allowed large shrimp draggers to come into the bay and virtually wipe out the shrimp population. Kachemak Bay, once referred to as the most productive bay in the world was eventually closed down to commercial fishing by the Democrat Governor Tony Knowles.
In installed a single sideband marine radio in our house so that I could talk to my wife and pursued the Kodiak king crab and tanner fishery. When I would get home after three months with little to show for it my wife would unload all her problems on me. This went on for two or three years and she eventually took up with one of my employees so I lost my wife and my family.
I ranged further and further from home to make a living eventually running 24 hours south of Kodiak Island to fish out of Nakawalak Bay near Chignik. I set up headquarters in Port Wrangle which had no facilities but offered good shelter from the weather.
My boat was too small and too old to compete in the Baring Sea fishery. I couldn’t get a loan to buy a bigger boat because the politicians in Seattle control who gets loan guarantees from National Marine Fisheries. If you were from Alaska your chances of getting a boat loan were much less than if you from Washington, Oregon or California.

Unbeknownst to me, the oil and contaminated drilling mud from 23 oil wells in the upper Cook Inlet were leaking into the lower inlet polluting the waters and killing plankton, shrimp and crab spat.
Additionally the State of Alaska allowed the oil tankers to pump oily ballast water into Cook Inlet more than twenty years. When the tankers departed the open sea and entered the mouth of Cook Inlet by the Barren Islands they started pumping dirty ballast water from such harbors as Los Angeles, Anacortes and San Francisco. By the time they reached Drift River Terminal and the Texaco refinery in Nikiski their ballast water tanks were empty and ready to take on oil.
If you don’t believe me do the math. One tanker dumps 30 to 50-million gallons of ballast water. A hundred tankers a year will pump out 300 to 500 million gallons of algae contaminated ballast water. Ten years and you have three to five billion gallons of algae and oil contaminated ballast water that sucks up oxygen from the oxygen-rich waters of Cook Inlet and Kodiak.
They eventually constructed a ballast water treatment plant in Nikiski. It didn’t go on line until 1984 but by that time it was too late to save the crab and shrimp fisheries. It was also broke down half the time. The tankers didn’t want to use it because it caused them down time waiting for the ballast water to be removed. It also made the ships draw more water on the run up Cook slowing them down.
The point of this article is the state wanted to get rid of all commercial crab and shrimp fisheries in lower Cook Inlet so that the State and Feds could put oil wells all over Cook Inlet. Then the State of Alaska sued the feds costing taxpayers millions of dollars in a futile attempt to claim the oil rights out to twelve miles offshore. The government had plans to make lower Cook Inlet look like the Gulf of Mexico with a hundred oil wells in every direction but it never happened—probably because there isn’t much oil there.
The result of all this insane oil for seafood tradeoff was that the cities of Homer, Seldovia and Port Graham lost an income of 30-million to 60-million dollars a year that went directly into the pockets of the townspeople. It helped the grocery stores, bars, construction of new houses, fuel distributors, increased jobs and increased taxes to municipalities. Not only was this a hardship inflicted on fishermen, it was a theft of resources from citizens.
The reason the Bearing Sea still has a fishery is there are no oil tankers plying the waters and fewer ship traffic dumping oily ballast water. Nobody seems to understand this and nobody cares. You would think that if you had no job that you would be more cognoscente of the harvest of resources which is driving force of any economy.
Sincerely,
Henry Kroll
“Thanks for opening your heart.” –Bob Shadelson, Attorney, Cook Inlet Keeper.