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Capital Report


June 2013 Issue

Former MIT Professor Becomes New US Energy
Secretary After Senate Confirmation

The U.S. Senate confirmed Ernest Moniz as the new secretary of Energy in a 97-0 vote. Moniz replaces Steven Chu.

The new Energy secretary was previously a Massachusetts Institute of Technology (MIT) physics professor and served as Energy undersecretary during President Bill Clinton’s administration.

Moniz will manage the clean-energy loan program, among other responsibilities. According to Bloomberg, one of the first issues he will likely tackle will be deciding on approval for building LNG export terminals to countries that lack free-trade deals with the U.S., including Japan. There are currently 20 applications pending approval.

US House Approves Keystone XL Pipeline Construction
The U.S. House Committee on Transportation and Infrastructure passed in May legislation to approve construction of the Keystone XL pipeline.

The Keystone project will create 42,100 jobs, according to State Department estimates, and transport approximately 830,000 barrels of oil per day to U.S. refineries. 

The project’s economic impact will include an estimated $3.3 billion in direct expenditures for construction and materials and $2.1 billion in earnings, according to committee Chairman Bill Shuster (R-Pa.).

Proponents of the pipeline have criticized U.S. President Barack Obama for delaying the project by requiring an application for the pipeline to go through a route via Nebraska. The state approved the reroute earlier this year.

The application to build Keystone XL was first filed in September 2008, and the State Department completed an environmental impact statement in August 2011, which found that the pipeline would have limited adverse environmental impacts. 

Obama Administration Releases National Arctic Strategy
President Barack Obama’s administration published in May the National Strategy for the Arctic Region. Its three main purposes are to advance U.S. security interests, pursue responsible Arctic stewardship and strengthen international cooperation.

Advancing U.S. security interests will entail the evolution of Arctic infrastructure and strategic capabilities, enhancing Arctic domain awareness, preserving freedom of the sea in the Arctic region and providing for future U.S. energy security.

Pursing responsible Arctic stewardship will involve protecting the regional environment and conserving Arctic natural resources; using integrated Arctic management to balance economic development, environmental protection and cultural values; increasing understanding of the Arctic through scientific research and traditional knowledge; and charting the Arctic region.

Strengthening international cooperation will include pursuing arrangements that promote shared Arctic prosperity, protect the Arctic environment and enhance security; working through the Arctic Council to advance U.S. interests in the Arctic; acceding to the Law of the Sea Convention; and cooperating with other interested parties, such as other Arctic states, major shipping states and the shipping industry.

According to the document, the strategy is based on safeguarding peace and stability in the Arctic, making decisions using the best available information, pursuing innovative arrangements, and consulting and coordinating with Alaska natives.

The strategy will serve as a basis for cooperation with other Arctic states and the international community to advance common interests.

US House Passes Bill That Would Implement US-
Mexico Transboundary Hydrocarbons Agreement

The U.S. House Natural Resources Committee approved in May H.R. 1613, the Outer Continental Shelf Transboundary Hydrocarbon Agreements Authorization Act, which would implement the terms of the U.S.-Mexico Transboundary Hydrocarbons Agreement that governs the development of shared oil and natural gas resources along the U.S.-Mexico maritime border in the Gulf of Mexico.

The legislation would lift the current moratorium on drilling along the maritime border and provide new access to an area estimated to contain as much as 172 million barrels of oil and 304 billion cubic feet of natural gas.

The U.S.-Mexico agreement would provide U.S.-qualified leaseholders with legal certainty for the development of transboundary reservoirs along the entire boundary to encourage investment, said Tommy Beaudreau, director of the Bureau of Ocean Energy Management, during the House Natural Resources Committee’s oversight hearing on the bill.

The bilateral agreement provides incentives for Pemex (Mexico City, Mexico) and U.S.-qualified operators to enter into voluntary commercial agreements to unitize transboundary reservoirs and does not change the application of existing laws or alter existing standards, Beaudreau said.

He noted that the agreement would also mitigate the safety and environmental risks that would result from unilateral exploration and development along the boundary.

Water Resources Development Act Would
Authorize Preventive, Rehabilitative Projects

The U.S. Senate passed in May the Water Resources Development Act of 2013. The bill would authorize the Army Corps of Engineers to construct water projects for mitigating storm damage, restoring ecosystems, and reducing erosion on inland and intracoastal waterways. It also would authorize the agency to establish grant programs to assist local and state governments with levee safety and rehabilitation efforts. Furthermore, the bill would authorize the Corps and the Environmental Protection Agency to provide loans or loan guarantees to state and local governments and certain nongovernmental entities to complete water infrastructure projects.

The Congressional Budget Office estimates that implementing S. 601 would cost about $5.7 billion from 2014 to 2018.

Public and private entities would be required to comply with regulations to prevent the spread of invasive species.


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