Responsible Drilling Alliance
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Responsible Drilling Alliance Newsletter
PIPE DREAMS AND PIPE SHAFTS  
May 24 ,2012
 
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Dear RDA Members and Friends,

Two major articles featuring Williamsport were in the national news last week; USA Today's "Energy Independence Not Just A Pipe Dream" appeared on May 16th. 

The next day, the Columbia Journalism Review critiqued the USA Today story, with a headline proclaiming, "USA Today's oily, gassy rainbow" The CJ review was subtitled: "Detailed cover story a bit too rosy about energy independence": 

http://www.cjr.org/the_observatory/usa_today_energy_independence.php 

 

Hats off to Columbia for immediately sensing a snow job and attempting to respond quickly. But both articles are prime examples of the problem with contemporary journalism in an age of such daunting degrees of specialization. Writers often don't uncover the complexities of the subjects at hand, and therefore miss crucial angles of the debate.

 

Not much else can is expected out of the newspaper version of Cliff Notes, but a serious journalism review has got to do better. In homage to the spirit of the age, here are a few quick bullet points on some stupefying superficiality in both articles.

 

USA Today: "Much of Wall Street and Washington is seized by the hope that the U.S.'s energy future will be as bright as Williamsport's."

 

The new Williamsport energy economy is full of double-edged swords, as we have seen over and over. Good for landlords/rough on our large population of low and fixed income residents. Better for food service and bed making/harder for social services.  Great for tire dealers/costly for rural road drivers. A heavier workload for law enforcement/a bright future for prostitutes. The list goes on and on.

Williamsport's overall energy future is no better than anywhere else in the county; continued dependence on fossil fuels and the multinational corporations that deliver these fuels to us, coupled with increased worldwide demand and future price implications. All this brought to us by producers who will leave no stone unturned and no community un-ravaged in their pursuit of the third wave of fossil fuel.

USA Today: "Most enticing, a team of analysts and economists at Citigroup argues that the U.S. or at least North America, can achieve energy independence by 2020, as more domestic production and doubling down on conservation produces a virtuous cycle."  

In order to be called "virtuous", wouldn't a cycle, have to do a bit better than temporarily pumping up the supply of a water-use-intensive, dirty energy source? Where is the much-needed conversation in this county? Where is the concept that maybe, at best, this burst of extreme energy fossil fuel could actually provide an opportunity to pave the way to a clean energy future, and a chance to conserve the resource this time around instead of the standard practice of industry blowing through it, by encouraging unwise uses like private automobile fuel and massive exports?

Does anyone see an opportunity to capture a fair percentage of revenues for those areas and people unfortunate enough to have been turned upside-down by the development? What about subsidies and legislation that pushes up demand for energy efficiency and renewable energy product manufacturing, technology and infrastructure? How might we use this resource to create a lasting less centralized and foreign-dependent energy system, at the same time creating even more jobs and savings for consumers and businesses by driving renewable energy innovation and technology forward?

Columbia Journalism Review counters USA Today with complex-sounding economic arguments, but misses a key point: the bonanza that shale gas development on a massive landscape provides for high net worth individuals via investing early in the development of incredibly profitable pipeline infrastructure. Here is a subject worthy of serious, time-consuming, investigative journalism. Perhaps CJR could take a look at another news item of last week for a clue on where to proceed as they go about piecing together the puzzle of the rat they rightly smelled in USA Today's puffery.

From a Penn-Virginia Resources press release last week:  "PVR Partners Announces Completion Of Marcellus Shale Midstream Pipeline System Acquisition From Chief and Announces New Board Appointments'  
http://www.pvresource.com/News/Press-Release-Details/2012/PVR-Partners-Announces-Completion-Of-Marcellus-Shale-Midstream-Pipeline-System-Acquisition-From-Chief-and-Announces-New-Board/default.aspx

Natural gas pipeline projects and acquisitions have been popping up all over the news this year. A serious investigation into these deals may reveal clever schemes and astounding returns to investors. The truth of this development may prove to be far more about providing the returns wealthy investors seek (and find even in a low interest rate economy), than the gas industry's patriotic, public sales pitch: energy independence from a clean, abundant domestic source.

For an idea of the kind of returns that outfits like PVR provide as they assure the continuance of our nation's addiction to fossil fuels, check out the 10-year returns to the original investors in PVR's IPO of 10/21/01:
  • 18% compounded annual return
  • 427% total return
  • Current yield on original investment, greater than 40%
(Sourced from a PVR website posting of its presentation on May 24th 2012 at the National Association of Publicly Traded Partnerships Master Limited Partnerships Investor Conference):
http://www.pvrpartners.com/Theme/PennVirginia/files/doc_presentations/NAPTP%20Conference%205-24-12%20Final_v001_o8j098.pdf

There are plenty of other nuggets of interesting information available in that publicly published power point.

USA Today and CJR both miss the crux of the story. The way shale gas development is unfolding across so much of the country, the brand of energy independence currently foisted upon a gullible public is a pipe "dream" for well connected high net worth investors and a future pipe "shaft" for the rest of us.




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Responsible Drilling Alliance Board of Directors
Ralph Kisberg
Robbie Cross
Janie Richardson
Mark Szybist
Barbara Jarmoska
Jennifer Slotterback

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