Energy Revolution -- "Is This The Tip of the Iceberg?"

Updates

August 14, 2012: in the very last paragraph of the original post, I wrote:

Ask the Japanese about how advantageous nuclear power is when it comes to producing less carbon dioxide.

Today it is being reported:

Prairie Island nuclear plant shut down Unit 1 after operators declared its two backup diesel generators inoperable Tuesday.

Staff determined during routine testing that both generators had exhaust leaks, Xcel Energy media relations spokeswoman Mary Sandok confirmed. That deemed them inoperable, and the plant filed an incident report of the safe shutdown with the Nuclear Regulatory Plant.

And,

... the unusual white steam clouds released throughout the day during the reactor shutdown – are ominous reminders of the fact that the 40-year-old Prairie Island Nuclear Generating Plant operating a half-mile from our homes relies on aging technology.

This sort of puts oil spills in the correct perspective.

Original Post

I linked this article elsewhere, but it's such a great article I thought I would post it again, make some notes. Don sent it to me early this morning: America's energy revolution could add 3.6 million jobs and "add 3% to the GDP."

For investors, I think this article has a lot to offer. 

The article noted:

So far, the economic benefits have been confined to states such as Louisiana, Texas and North Dakota, while the national jobless rate has stayed above 8 percent for 42 straight months in the wake of the worst recession in seven decades.

I find that observation interesting because there are huge oil, natural gas, and coal reserves across the US.  All things being equal, if states other than Texas, Louisiana, and North Dakota, are not participating in the energy revolution, it's related to federal and state government policies, and not to lack of potential. For starters, the following states should all be participating in the energy revolution: Alaska, California, Colorado, Wyoming, Montana, New York, Pennsylvania, Ohio, Nebraska. I probably missed a few.

The article noted:

The report from Citigroup -- "North America, the New Middle East?" -- estimated that the U.S. could become the world's largest producer of crude and natural gas liquids such as propane by 2020, overtaking Russia and Saudi Arabia. 

Companies mentioned in the article, near New Orleans:

• Nucor: new iron-processing plant an hour upstream from New Orleans
• Westlake Chemical Corp
• Potash Corp of Saskatchewan
• Methanex Corp
• Ormet Corp: re-opened an alumina refinery last year, 250 jobs brought back

Data points from the energy revolution:

• US natural gas production will expand to a record this year
• Oil production in the US at highest level since 1999

Michael Feroli, chief US economist for JPMorgan needs to get out and about a bit more:

Oil and gas production account for about 1 percent of gross domestic product, and will have a limited impact on the country's unemployment, he said. 

Energy is dirt-cheap in the US compared to the rest of the world:

This is one of those rare opportunities that every country looks for and few ever get. This abundance of energy gives us an opportunity to rebuild our economy.

An opportunity...if the government gets out of the way.

Other data points

• $138 billion to be invested in natural gas gathering and processing plants
• $88 billion to be invested in > 500 gas-fired utility plants
• new petrochemical and fertilizer projects; benefitting from glut of wet natural gas
• increased rail links from East Coast to gulf and midwest

Other companies mentioned

• Orascom Construction, Cairo-based: $250 million to re-start an ammonia and methanol plant in Beaumont, TX
• Orascom Construction, subsidiary: might build a $1.3 billion fertilizer plant in Iowa; 2,000 construction jobs; 165 permanent positions
• Cheniere Energy's $10 billion gas-export plant at Sabine Pass, Louisiana
• EPD and Enbridge: Seaway reversal project
• MMR, Louisiana-based contractor: will double its workforce of 2,800 in next two years; can't keep up with electricians, pipefitters, and welders (thank goodness we're in a recession)

China consumption: will drive natural gas consumption almost 3% per year through 2017 (I have no idea how they can forecast with such specificity when analysts miss on monthly unemployment numbers).

It could be the tip of the iceberg, the article concludes. Or "morning in America" with the right leadership, and the right attitude.

It's a great article. Go to the link. Spend some time thinking about all that was not said, and all that was said. It's quite remarkable. But only three states (Lousiana, Texas, and one other one whose name escapes me at the moment) are participating in this energy revolution.

By the way, I had to chuckle at this politically-correct statement that was probably added by the editorial staff, and not the journalist:

Lower gas and oil costs have also undermined investment in power sources that produce less carbon dioxide, including wind, solar and nuclear, raising concern that climate change will accelerate. 

I guess they would be referring to the billions spent on Solyndra et al by the federal government before they pretty much filed for bankruptcy en masse.  Ask the Japanese about how advantageous nuclear power is when it comes to producing less carbon dioxide.