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Light at the End of the Trans-Alaska Pipeline

[fa icon="calendar'] Aug 23, 2016 11:10:26 AM / by Carol Pierson Holding

By: Carol Pierson Holding

Trans-Alaska Oil PipelineWriting recently for the Wall Street Journal, Thomas Barrett, President of Alyeska which owns and manages the Trans-Alaska Pipeline, bemoans the pipeline’s deterioration due to falling oil production and urges that oil drilling sites be opened in Alaskan seas to increase the oil load and save the pipeline.

But first, Barrett celebrates this amazing scientific and engineering feat. Completed in 1977 for over $8 billion, the Trans-Alaska Pipeline runs for 800 miles, carrying oil from its source in the North Slope to the port of Valdez. The complexity is mind-boggling: hot oil, maintained at a steady 140 degrees
through external temperatures as low as 60 degrees below zero, is pushed along by eleven pumping stations through pipe wrapped in 4 inches of fiberglass insulation, about half of it buried and half carried above the tundra on 78,000 support structures. The tundra’s temperature is further stabilized through 124,000 heat releasing pipes.

All this while balancing the demands of the pipeline’s powerful owners, primarily BP and Exxon Mobil.

For years, pipeline managers have claimed the pipeline needs more oil. After peaking in 1988 at over 2 million barrels/day, oil production in the North Slope declined, resulting in lower throughput, which leads to cooling oil, which over time results in build-up of sludge and other substances harmful to the pipeline. Barrett’s recommendation is to increase output by opening new oil drilling sites in the Chuchki and Beaufort seas and Cook Inlet near Valdez.

So far, the Interior Department has refused to sell these off-shore oil Alaskan leases, yet conservative forces and Alyeska managers continue to push.

According to Barrett, the only other option is to shut down the pipeline. The pipeline currently carries just a fourth of its maximum capacity, and its load will continue to decline, reducing revenue while requiring costly repairs. And it’s not just repairs caused by low oil flow. Pipeline President Barrett is still catching up on maintenance long-delayed by former Presidents, all but one drawn from member companies whose primary interest was to minimize costs and giving Alyeska poor ratings for environmental performance by ratings company CSRHub.

In addition, the pipeline is now almost forty years old. Insulation is eroding. Pipe seals are breaking. It seems it might be time to retire it anyway.

Climate activist Bill McKibben would agree. In an article in this month’s New Republic, McKibben argues for a “far more stringent effort” to control climate change than the plans agreed to after last year’s Paris Climate Summit. McKibben points to a state-by-state plan developed by American scientists led by Mark Z. Jacobson at Stanford to transition rapidly to renewable energy from sun, wind and water, at the rate of 80-85% by 2030 and 100% by 2050. In Alaska, that would mean shifting to onshore and offshore wind for 70% of energy requirements and another 20% from hydroelectric.

The pipeline solution seems simple, doesn’t it? Instead of investing in oil pipeline maintenance, allow the North Slope oil to run out and the pipeline to degrade, then shut it down, however much it hurts to abandon that miracle of American know how. Invest instead in wind turbines.

One expensive problem remains. When the pipeline was originally built, the agreement reached with native tribes and environmentalists required that upon shutdown, all hazardous pipe, pumps, support structures, etc. must be removed and the land and vegetation restored along the pipeline as well the roads built to assemble it. The cost of disassembly could exceed the pipeline’s original cost.

What incentive does Alyeska have to make good on its promise? Oil and gas is a major source of tax revenue for Alaska and enforcement is notoriously lax. And how would you establish fines for leaving toxic pipe to erode along a 420 mile swath of tundra whose land value is virtually nil but, without which, an entire society’s source of subsistence is destroyed? Where one-third of the world’s soil-bound carbon is stored, then released whenever permafrost melts, adding to climate change?

In the past, regulators have succeeded in extracting even larger clean-up costs from the oil companies. But public outrage has played a huge part, and it may be harder to rouse activists on behalf of an old pipeline and the tundra below. If Alyeska’s owners cannot be pushed into living up to their agreement to dissemble the pipeline, then the task will fall to some combination of state and Federal agencies, and, eventually, American taxpayers. The biggest question is not how, but when.

Photo courtesy of Arthur Chapman via Flickr CC.



Carol2Carol Pierson Holding is President and Founder, Holding Associates. Carol serves as Guest Blogger for CSRHub. Her firm has focused on the intersection of brand and social responsibility, working with Cisco Systems, Wilmington Trust, Bankrate.com, the US EPA, Yale University’s School of Environmental Sciences, and various non-profits. Before founding Holding Associates, Carol worked in executive management positions at Siegel & Gale, McCann Erickson, and Citibank. She is a Board Member of AMREF (African Medical and Research Foundation). Carol received her AB from Smith College and her MBA from Harvard University.

CSRHub provides access to corporate social responsibility and sustainability ratings and rankings information on 16,495+ companies from 135 industries in 133 countries. Managers, researchers and activists use CSRHub to benchmark company performance, learn how stakeholders evaluate company CSR practices and seek ways to change the world.

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[fa icon="comment"] 0 Comments posted in Exxon Mobil, North Slope, Valdez, Uncategorized, oil leases, Trans Alaska Pipeline, Alyeska, Beaufort, BP, Chuchki, Thomas Barrett

How Fossil Fuel Divestment Will Hurt Fossil Fuel Stock Prices

[fa icon="calendar'] Jan 21, 2015 9:33:25 AM / by Carol Pierson Holding

By: Carol Pierson Holding

If anyone needed more proof that economics trumps sustainability: low gas prices are causing a plunge in electric vehicle and hybrid sales.

Ban Fracking Tax Carbon

The same phenomenon is happening in the divestment movement. Moral outrage pushed 83 churches, universities and non-profits to divest $50 billion before the September climate march. This is a blip for an industry valued at $5 trillion, whose top investor Blackrock owns $146 billion in fossil fuel investments and where a single company Exxon Mobil is valued at $425 billion, and Shell and Chevron at $268 billion and $248 billion respectively.

These numbers are staggering, and the pace of the divestment movement in relative monetary terms is glacial, despite its many moral and symbolic victories. Even if as Bloomberg’s New Energy Finance says this divestment movement has more rapid growth and quicker scaling than any of its predecessors, does it have a chance of affecting fossil fuel company behavior?

Only when it starts to affect the stock price.

Tim Dickinson argues eloquently in this issue of Rolling Stone that divesting has become the smart move for the financially savvy, and not because of divestment pressure. Prompted by the recent 50% drop in the price of oil, now hovering below $45 per barrel —

“From late June to early January, across the world, the 10 oil firms with the largest proven reserves collectively lost roughly 20 percent of their market value.  …Goldman Sachs warned that nearly $1 trillion in planned oil-field investments would be unprofitable – even if oil were to stabilize at $70 per barrel. The industry is already scaling back the hunt for high-cost sources of new oil. Chevron has shelved drilling in the Canadian Arctic, and Hercules Offshore, a significant driller in the Gulf of Mexico, has idled four rigs and laid off more than 300 workers. Plunging profits are also putting the brakes on fracking.”

And that’s only the beginning. Countries around the world are putting limits on carbon emissions, so much so that Governor of the Bank of England Mark Carney warned that "the vast majority of reserves are unburnable." The argument that fossil fuel companies’ reserves will become “stranded assets” has long been a hopeful prediction from activists, but the message has a different tone when it comes from a powerful central banker whose main concern is not sustainability but stability.

Another concerned guardian of the status quo has similar fears. Bevis Longstreth, who served as commissioner of the SEC under Ronald Reagan and later chaired the Finance Committee of the Rockefeller Brothers Foundation, blasts the oil companies: "There is no good reason for this vast expenditure of stockholder wealth. It is wasted capital, an offense against stockholders in terms financial alone."

But my favorite argument for divesting comes from a report generated by Oxford University’s Stranded Assets Programme. The authors bring up the very real reputational risk that a divestment movement creates, which they label “Organisational Stigma,” or “disapproval, even ‘disgust’ at an organisation’s activities, values or behaviour” and tie it directly to stock price: “Even when divestment outflows are small or short term and do not directly affect future cash flows (as is true with fossil fuel divestment), if they trigger a change in market norms that close off channels of previously available money (i.e., the ability to sell stock), then a downward pressure on the stock price of a targeted firm may be large and permanent.”

Add to that the growing perception that the fossil fuel companies’ decisions about where to invest are considered irrational, and you've created a very serious threat to fossil fuel companies' stock price and the managers whose pay and bonuses depends on that price. And that’s the most likely route to real change.

Photo courtesy of Carol Pierson Holding 


Carol Pierson HoldingCarol Pierson Holding writes on environmental issues and social responsibility for policy and news publications, including the Carnegie Council’s Policy Innovations, Harvard Business Review, San Francisco Chronicle, India Time, The Huffington Post and many other web sites. Her articles on corporate social responsibility can be found on CSRHub.com, a website that provides sustainability ratings data on 13,000+ companies worldwide. Carol holds degrees from Smith College and Harvard University.

CSRHub provides access to corporate social responsibility and sustainability ratings and information on 13,000+ companies from 135 industries in 127 countries. By aggregating and normalizing the information from 370 data sources, CSRHub has created a broad, consistent rating system and a searchable database that links millions of rating elements back to their source. Managers, researchers and activists use CSRHub to benchmark company performance, learn how stakeholders evaluate company CSR practices and seek ways to change the world.

 

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[fa icon="comment"] 0 Comments posted in Bevis Longstreth, BlackRock, Bloomberg New Energy Finance, Exxon Mobil, Fossil Fuel Divestment, Shell, Uncategorized, Mark Carney, oil reserves, organisational stigma, Rolling Stone, Tim Dickinson, oil prices, Oxford University Stranded Assets Programme, stranded assets, Carol Pierson Holding, Chevron, Hercules Offshore

No Spark in Obama’s Energy Debate

[fa icon="calendar'] Oct 9, 2012 10:47:54 AM / by Carol Pierson Holding

By Carol Pierson Holding

Last week’s Presidential debate was supposed to showcase the differences betweenclimate change President Obama and his challenger, Mitt Romney. But between Romney’s radical move to the center and Obama’s lackluster performance, the two seemed to agree more than they disagreed.

Both answered Jim Lehrer’s first question “How would you create new jobs?” with the same priorities: job training and creating energy independence. In fact, both agreed to boost oil and gas production. But Obama added a plug for his alternative energy policies. “We've got to look at the energy sources of the future, like wind and solar and biofuels, and make those investments,” he said, referring to his largely successful subsidies for alternatives to fossil fuels.

From that point on, Romney turned oil and gas into a symbol of patriotism and the path to prosperity, using the word “energy” three times more than Obama and positioning new energy sources as expensive failures.

Obama failed to cite the reason his policies are so desperately needed, that climate change may in fact be the greatest threat to our national security. Instead, Obama looked like a spendthrift or worse, out of touch with American middle-class concerns. Even though, according to Bloomberg, 70% of Americans now believe in climate change. Even though, according to CSRHub ratings, safeguarding the environment is increasingly a priority for business.

Romney called out gas prices that have doubled and the rise in electricity prices, citing the crushing burden on middle-class families.

Ignoring the facts, Romney criticized Obama for not opening Federal lands for exploration. He promised to double the number of permits and open coasts and Alaska to fossil fuel companies.

Obama mentioned solar, wind and geothermal only once. Without bringing up climate change, and without a rebuttal, Romney pressed on.

Romney promised to “bring that pipeline in from Canada“ and to help “people in the coal industry…crushed by (Obama’s) policies.”

As if thumbing his nose at environmental science, he smiled right into the camera and said, “I like coal.”

His rationale for these policies? “I want to get America and North America energy independent so we can create those jobs.”

So when Obama brought up cutting the $4 billion in “corporate welfare” that the US pays every year to behemoths like ExxonMobil, he sounded like a spoilsport.

Romney argued that Obama’s facts were wrong – the oil subsides are actually $2.8 billion – and that those subsidies are inviolate. “That's been in place for a hundred years,” he said, as though oil subsidies were deeply entrenched in our Democracy.

But what really stuck in my mind was Romney’s brilliant repositioning of the new energy subsidies. By comparing a $2.8 billion cut to oil and gas against the $90 billion in “breaks for the green energy world,” he made support for alternative energy sources seem hugely expensive and frivolous in comparison to far cheaper oil subsidies. He repeated twice that green energy investment is “about 50 years' worth of what oil and gas receives.”

Still not satisfied, Romney linked the $90 billion to Solyndra and the other “50%” of green investments that had failed. In fact, those investments have lost just $3 billion, or 3%, but Obama said nothing, so it stood as fact.

But the real shame is that Obama lost the opportunity to pull out numbers that make everything else pale in comparison. NOAA reports that 2011 saw a record 14 extreme climate disasters that cost over $1 billion each for total losses of $55.3 billion and 660 lives. Future projections are even grimmer: US News cites projections of 100 million deaths globally from climate change in just 18 years. In the US, 2% of America’s annual GDP, or some $300 billion, will evaporate.

Yet Romney plans to eviscerate the EPA and a number of other programs aimed at reducing the effects of climate change. He’s a believer that climate change is real, yet will do nothing to mitigate the effects. A New York Times article cites Romney’s intent to take a weed whacker to environmental regulations going back 40 years – taking down even those declared “unambiguously correct” by the Supreme Court.

Climate change may not be popular, but people do want to hear about clean tech and green jobs. These are exciting, entrepreneurial opportunities for job creation. Where were they in Obama’s debate?

At heart, climate change is a moral issue. The hardest hit will be our future generations. And yet Romney stole that argument too. Using the word “moral” three times, Romney pointed to the deficit: “(It’s) not moral for my generation to keep spending massively more than we take in, knowing those burdens are going to be passed on to the next generation.” Shouldn’t that be Obama’s argument for addressing climate change?

Photo courtesy of marcn via Flickr.


Carol Pierson Holding writes on environmental issues and social responsibility for policy and news publications, including the Carnegie Council's Policy Innovations, Harvard Business Review, San Francisco Chronicle, India Time, The Huffington Post and many other web sites. Her articles on corporate social responsibility can be found on CSRHub.com, a website that provides sustainability ratings data on 5,000 companies worldwide. Carol holds degrees from Smith College and Harvard University.

CSRHub provides access to corporate social responsibility and sustainability ratings and information on nearly 5,000 companies from 135 industries in 65 countries. By aggregating and normalizing the information from over 170 data sources, CSRHub has created a broad, consistent rating system and a searchable database that links millions of rating elements back to their source. Managers, researchers and activists use CSRHub to benchmark company performance, learn how stakeholders evaluate company CSR practices and seek ways to change the world.

 

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[fa icon="comment"] 5 Comments posted in Bloomberg, climate change, CSRHub ratings, Exxon Mobil, President Obama, Uncategorized, wind, Romney, solar, biofuels, Carol Pierson Holding, clean tech, coal, green jobs

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