10:35am

Wed February 16, 2011
Morning news round-up: Energy

Drillers and farmers square off over "force majeure"

Gas companies that have claimed "force majeure" - an unseen event that allows them to extend drilling leases - are getting pushback from landowners, reports Jon Campbell at the Press & Sun-Bulletin:

Chesapeake and other companies have argued that New York's moratorium on high-volumehydrofracking, which has effectively been in place since July 2008 and will continue at least through June of this year, allows them to extend the leases through a force majeure claim. Landowner attorneys disagree, since other drilling and extraction techniques are still permitted by the state Department of Environmental Conservation and non-shale formations are still accessible.

Brian Grove, senior director of corporate development for Chesapeake, said the company has "taken reasonable and legal measures to extend the terms of many of our leases in New York state."

"These measures are based upon the original lease agreements, which can allow for extensions of the original lease term for various reasons," Grove said in a statement. "Chesapeake would much rather be drilling wells and creating value for New Yorkers, especially in the Southern Tier where economic development is much needed and for the whole state where clean energy is much needed.

Federal energy spending
Matthew Wald at the New York Times' Green blog has a good breakdown of all of the energy spending in President Obama's proposed budget:

The budget request calls for $29.5 billion in Energy Department spending, up from $26.4 billion in the last budget Congress approved, for 2010. Congress could rewrite the budget, or it could pass no budget at all and simply vote to continue funding existing programs at some percentage of the prior-year appropriation.

But if the administration had its way, budgets for solar, geothermal, biomass and wind energy would rise sharply. The wind portion is concentrated on offshore generation because, as Energy Secretary Steven Chu said, the technology for onshore wind is already “mature.”

All that spending has Eric Rosenbaum at The Street wondering if deficit hawks shouldn't miss the forest for the "carbon-sequestering trees" when it comes to investing in clean energy:

A recent analyst by FBR Capital Markets of the situation on the Hill noted that the Congressional budget cut request would cut nearly $2 billion from the EPA and $3 billion from the Department of Energy. Even before the new Obama administration budget was released on Monday, FBR Capital Markets wrote, "Although we expect the President to continue lobbying for expanding clean-energy research and manufacturing, we believe that downward spending pressure makes very large new programs, such as electric car grants and natural gas vehicles, unlikely."

With the price of brent crude over $11, unrest in the Middle East and summer driving season not that far away, and after the failure of comprehensive energy legislation last year, the issue isn't going away. Indeed, the divide between the Obama administration and the deficit hawks, and the widespread support among the American public for alternative energy -- even before the $4 price of gasoline summer season begins -- raises the question, Is spending on clean energy just more spending, or is it much-needed innovation?

Offshore wind
As the Innovation Trail's Zack Seward has previously reported, the province of Ontario is putting the kibosh on offshore wind along its Great Lakes shoreline.  Melissa Mahony quotes a statement from Canada's Wind Energy Association in her reaction round-up at SmartPlanet:

Ontario is proving itself a leader in driving a new clean energy future that delivers emission-free power and new jobs for our skilled trade workers. This is an unfortunate decision that surrenders the province’s leadership role in exploring the potential for offshore wind energy in the Great lakes and creates significant uncertainty for investors.

So what's left for offshore wind in the Great Lakes, according to Mahony?

Last summer, The New York Power Authority began considering four proposals for its GLOW Project (Great Lakes Offshore Wind). The project aims to construct wind farms in either or both Lake Erie or Lake Ontario, with 120 to 500 megawatts of total capacity. Further along are Scandia Wind Offshore’s 500-megawatt project for Lake Michigan and Ohio’s plans for a 20-megawatt farm near Cleveland about 6 miles into into Lake Erie.

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