Venezuela, Iran and American National Failure

While President Trump and House Speaker Pelosi bicker about nonsense, two very important parts of the world are on a hair trigger today.

The country with the largest supply of oil reserves, Venezuela, is teetering on the brink of revolution, while the country with the fourth largest oil reserves, Iran, is threatening all out war against Israel over Israeli bombing of Iranian positions in Syria.  Both of these situations could spiral out of control any minute, with profound consequences for the world’s energy supply, American national interests, and indeed our own security.

Both Iran and Venezuela are led by deeply unpopular governments.  In Venezuela, it is the socialist government of Nicolás Maduro.  In Iran, it is the theocratic government of Ali Khamenei.  Khamenei has as his underpinnings the concept of Shiite Islamic Fundamentalism.  Maduro only has his economic system.

Both governments have run their countries into the ground.  Khamenei has spent so much of his country’s wealth on seeking nuclear weapons and financing military adventures – creating Hezbollah in Lebanon, arming Hamas in Gaza, backing Assad in Syria and supporting the Houthi Rebels in Yemen – that the world slapped sanctions on the country.  President Obama, whose foreign policy team was Class D at best, lifted those sanctions in 2015 as part of a multi-party Joint Comprehensive Plan of Action, but President Trump reestablished them in 2018.

Maduro, successor to the socialist revolution of Hugo Chavez, has established government control over the energy sector and many other parts of the Venezuelan economy.  In doing so, he has turned what once was one of the richest countries in South America into such an economic basket case that the average Venezuelan has lost over twenty pounds in the last year from malnutrition and starvation.

In a desperate attempt to stave off national default on Venezuela’s foreign debt, Maduro has given the Russians large ownership interests in his country’s energy industry and raised the possibility of establishing a Russian military base in Venezuela.  That would be the first in the Western Hemisphere and a direct challenge to the Monroe Doctrine.

Khamenei at least can fall back on his religious fanatical supporters.  Large demonstrations broke out last year in many Iranian cities, but the Iranian Revolutionary Guard put them down.  The mullahs use a combination of religious fervor and selective payments to favored political and military supporters to maintain their control.

Maduro has no such religious backing.  That he continues to hold power shows two things.  First, there remains a deep seated sense of class division in Venezuela to the point that many people will accept the catastrophic state of the economy so long as those who formerly were on the top of the economic and social pyramid no longer remain there.  Second, the opposition is so fractured it has been unable to convince the junior officers in the Venezuelan military and the regular soldiers, who after all are the ones that must put down any rebellions, that Maduro is driving the country to ruin and they can provide a better future.  Whatever happens, this does not portend well for the future.  The Venezuelan energy sector is so rundown it will take time, and massive investment, to rehabilitate.

In the Middle East, Iran has been trying to establish a permanent military presence in Syria, right on Israel’s border.  Israel, facing Hezbollah in the North and Hamas in the South, has reached its red line.  It has begun carrying out continuous military raids against Iranian positions in Syria.

Yesterday, Maduro broke off diplomatic relations with the United States.  Also yesterday, Iranian Air Force Commander Brigadier General Azaz Nasirzadeh stated that the Iranian Air Force is “ready and impatient to confront the Zionist regime and eliminate it from the Earth.”  Of course, both Iran’s and Israel’s actions are complicated by the large presence of Russia in Syria, another byproduct of incoherent Obama era foreign policy.

So now we have two grave crises happening simultaneously in different parts of the globe affecting the world’s largest sources of energy.  Attempting to manage this will be an untried President with little respect at home or abroad and with a government partially shut down over a petty squabble between two politicos, each of whom make themselves look smaller by the minute.  Fortunately, we have our shale gas and oil to cushion the economic blow sure to come from such international uncertainty, but we still can’t move the oil and gas where we need it.  Despite an abundance of domestic energy, whole geographic areas of our nation, most notably New York and New England, rely on imports.  If President Trump embargoes all Venezuelan oil, who will pick up the slack?  Putin?

All of this was foreseeable.  That it is happening at the same time may be some bad luck, but anyone looking at the world over the last few years could anticipate these problems occurring.  The fact that as a nation we are where we are is an example of national failure.  Perhaps it partially explains why both political parties revolted against their establishment candidates in 2016, and why they might do so again in 2020.

Questions? Let Dan know.

Daniel Markind of Flaster Greenberg

Daniel Markind is a shareholder at Flaster Greenberg PC with over 35 years of experience as a real estate and corporate transactional attorney. He has represented individuals and companies in the energy industry for over 20 years. Dan is a frequent lecturer on Marcellus Shale and other mineral extraction issues and is regularly asked to speak at conferences, in the media and at other venues regarding energy issues and their legal and political implications.

 

When Governors Face Real World Energy Choices

Hand holding light bulb in front of global show the world's consumption with icons energy sources for renewable, sustainable development. Ecology concept

Last week, New York City area utility Consolidated Edison notified regulators that, as of March 15, it would accept no new natural gas customers in Westchester County due to supply shortages.  It is possible that cutoffs in the City itself may follow.  While this is happening, New York City is requiring customers to switch out of dirtier burning fuel oil.  Most are seeking natural gas.  Already, over 5000 buildings in the City have made the switch.  Meanwhile, as prior commentary in this blog has noted, New York Governor Andrew Cuomo and his administration have stymied all attempts to build a new pipeline that would be capable of supplying the City and other areas, like New England, with plentiful and inexpensive natural gas from the nearby Marcellus Shale region.

Once again we are seeing the Alice in Wonderland effects of New York State environmental incoherence.  It desperately needs energy to grow, and also to improve environmental air quality, but does everything possible to prevent that energy from being available.

New York’s inconsistent energy policies make Amazon’s decision to build massively in Long Island City quite curious.  The metropolitan New York area has numerous advantages, but it simply may not have access to enough energy needed to power the growth it seeks.

The energy dilemma cannot just be wished away.  The implications of not building pipelines and securing our energy future are real and starting to bite.  Without reliable energy supply, regions can’t grow.  Without growth, there will be no jobs for an expanding population.  Intellectual discussions and arguments about the large job opportunities available in the renewable sector are nice, but where are they?  More to the point, where is the consistent supply of energy that will be provided by these renewable sources?

Out west in Oregon, newly reelected Governor Kate Brown, who ran on a progressive, clean energy platform, faces a challenge from her left with a new Clean Energy Jobs bill.  Back in 2007, Oregon set goals for reducing its carbon emissions in 2010, 2020 and 2050.  It met its goals for 2010 but admits it will not do so for 2020.  In fact, the Oregon Global Warming Commission predicts the State will over-pollute in 2020 by 20%.  There is an interim goal for 2035, but lawmakers may choose to ignore that and concentrate on 2050.  This has environmental advocates alarmed.

Ironically, one proven way for the environmental advocates to reduce CO2 emissions is through increased use of natural gas.  They have not been inclined to accept that option, however, putting all their eggs in the basket of renewables.  Governor Brown then likely will face the problem Governor Cuomo faces.  She will run a left-leaning state with a well-meaning yet unrealistic program for achieving goals about which most of us can agree.  Governor Cuomo has chosen one path.  It won him electoral platitudes but now faces future trauma.  It will be interesting to see which way Governor Brown goes.

In Pennsylvania, the long battle over the Mariner East 2 pipeline appears over.  Last week the Public Utility Commission ruled that a landowner group had failed to show that safety concerns necessitated an emergency shutdown of the pipeline.  In typical fashion for this matter, two days later another sinkhole exposed a section of the older Mariner 1 pipeline.  Chester County emergency service officials stressed there was no damage to the pipeline and no danger, but the entire situation continues to be messy and delicate.  It does not help public perception that a horrific gasoline pipeline explosion in central Mexico predated the Mariner 1 sinkhole occurrence by a few days.

Internationally, and ironically, the country with the world’s largest proven oil reserves, Venezuela, falls deeper and deeper into turmoil.  President Nicolas Maduro’s security forces put down another mini-uprising Monday, but nationwide demonstrations have been called for Wednesday, the anniversary of the end of the most recent military dictatorship in 1958.  Venezuela’s oil production has plummeted along with the rest of its economy, and President Maduro has given away large amounts of it to Russia in exchange for needed foreign reserve to service its enormous debt.

Despite starving his nation, Maduro retains the loyalty of large segments of the military command.  Those commanders don’t carry the guns that fire on the starving people, however.  The weapons themselves are in the hands of individual soldiers commanded on the street by junior officers.  It remains a confounding question as to why the opposition, which still exists in Venezuela, has been so unsuccessful in convincing the junior officers that their long term interests do not lie with Maduro and the senior military commanders but with the starving people in the streets.

Of course, should Maduro’s regime eventually fall, it would set in motion the need for some fancy diplomatic footwork and military readiness, something neither the Trump Administration, nor its predecessor, have shown much capability to implement.  Under those circumstances, energy markets would be thrown another huge curve ball.  Both our government and companies retaining any interest in Venezuela, either directly or indirectly, should be planning for these scenarios right now.

For those of you in most of the country, try to stay warm.  I’ll be in Texas in two weeks.  Hopefully the wind chill will be in the positive numbers down there at that time.

Questions? Let Dan know.

Daniel Markind of Flaster Greenberg

Daniel Markind is a shareholder at Flaster Greenberg PC with over 35 years of experience as a real estate and corporate transactional attorney. He has represented individuals and companies in the energy industry for over 20 years. Dan is a frequent lecturer on Marcellus Shale and other mineral extraction issues and is regularly asked to speak at conferences, in the media and at other venues regarding energy issues and their legal and political implications.

 

FINAL FOUR PLUS FORTY: Remembering the year an Ivy League school crashed NCAA basketball’s Big Dance

penn basketball
Photo Credit: The Delco Times

THE JOURNEY BEGINS

From the perspective of 2019, it’s nearly unbelievable that Penn, an Ivy League school which doesn’t give athletic scholarships, reached the Final Four of the NCAA Basketball Tournament in 1979.  At the time though, it wasn’t so far-fetched.  In fact, we almost did it the year before.

In 1978 Penn faced Duke in the Sweet 16.  The tournament only had 32 teams that year, and we’d beaten St. Bonaventure in the first round.  Ranked No. 5 in the nation heading into the 1978 tournament, Duke was the clear favorite to win the East Regional.  With eight minutes left however, Penn led 64-56.  If we could hold on, we’d face Villanova for the regional championship.  The Wildcats had edged Penn 69-68 in December so our path to the Final Four was open.

Enter Duke Center Mike Gminski.  He blocked three consecutive Penn shots, and the Blue Devils came back for an 84-80 victory.  Duke would make the NCAA Final, losing to Kentucky.

The Duke game showed we could play with anyone in the country, and we started 1978-79 with that attitude.  Coach Bob Weinhauer had lost three seniors.  All were replaceable, however, even though forward Keven McDonald (a Big Five Hall of Famer) had been the Quakers’ leading scorer and best player.  Stan Greene was a star defender and fellow guard Tom Crowley was a great shooter.

Among the players returning in 1978-79, senior forward Tony Price was the team’s leading rebounder and scorer.  Price’s future seemed to include a potential NBA career (which he would have, although very briefly).  Crowley, who interned that year in Penn’s Sports Information Department, had no doubt that Price could make up the scoring lost with McDonald’s graduation.  He was right.

The most talented of the Quakers may have been senior point guard Bobby Willis.  Willis was an enigma.  Not a great shooter, he was incredibly quick and athletic.  Against Duke Willis had been unstoppable.  It seemed the only person who could stop Willis was Willis.  He would disappear for long stretches and turn into a non-factor.

Two other seniors, forward Tim Smith and center Matt White rounded out the starting five along with junior guard James “Booney” Salters. Only sophomore guard Kenny Hall, freshman forward Vincent Ross and freshman center Tom Leifsen played much off the bench.  Mostly, Weinhauer kept his rotation to eight players.

I would spend a lot of time watching them.  Television wasn’t what it is today, and Penn had one of the few closed circuit television stations among American universities.  I was the sports director at University Television (UTV).  We would record the games and show them later on tape delay.  Our technology was so primitive we had no remote broadcast capability from outside our studio.  Unlike the reporters for the school newspaper The Daily Pennsylvanian, we had no “beat”, so we didn’t interact with the team every day.  In fact, I never even met some of the players, but I traveled to see them in California, New York, North Carolina, Salt Lake City and other places.  It would be quite a ride.

Before the season began, Penn played an exhibition against the national team of Argentina.  Argentine basketball was in its infancy.  It would be two decades before the country would produce players like Manu Ginobili and Luis Scola.  In 1979, a good college program like Penn could handle them easily, and we did.  The most memorable part of the evening came from one of the referees, Hank Nichols.  Our basketball group sat in the front row of the Penn student section, courtesy of a week of camping out at the ticket office.  We easily could talk to the players and the officials, and we did.  During this game one of the Argentines took the ball, did a 360, a pirouette and tangoed across the court.  “Traveling Hank, he’s traveling,” we pleaded.  “That’s not traveling,” Hank yelled back as he ran down the floor, “that’s a great South American move!”  The exhibition wasn’t televised.  Had it been, you’d have seen the entire front row of the Palestra convulsed in laughter.

We enjoyed the refs.  Besides Nichols, our favorites were Mickey Crowley and Larry Lembo.  They were both good officials, but as important they liked what they were doing.  They also enjoyed that we knew who they were.  Nichols, though, was in a class by himself.  Possibly the greatest referee in college basketball history, he worked a slew of ACC Finals and NCAA Final Fours.  Later he became director of basketball officiating for the entire NCAA.

College basketball itself was very different forty years ago.  There was no shot clock and no three point shot.  Very few games were televised.  When tournament time came, often you would play teams the fans knew nothing about.  But that was months in the future.  As autumn 1978 faded, it was time for the season of promise to begin.

CALIFORNIA

Penn started 5-0, beating two good ACC teams, Virginia and Wake Forest, as well as Big 5 rival LaSalle.  Having finished in the final Top 20 of 1977-1978, Penn fans were frustrated that we weren’t ranked.  The Quakers ended the calendar year of 1978 by traveling to the Cabrillo Classic in San Diego to face Iowa.  The Hawkeyes had an excellent team.  That year they would win the Big 10 and reach No. 11 in the rankings.  If we could beat them, a return to the Top 20 likely would follow.

The game was terrific. It seesawed back and forth, finally going two overtimes before we lost 87-84.

The team was spent.  The next night we faced host San Diego State in the consolation game and got blown out.  The Aztecs’ best players, Kim Goetz and Tony Gwynn, tore us apart.  Being California, the San Diego State band brought something I’d never seen before at a basketball game: a full drum set located on the floor of the arena. Try getting away with that at the Palestra.

Looking back on it, there’s an element of sadness in the 1978 Cabrillo Classic.  Both Goetz and Gwynn, who became one of the greatest baseball players in history, died young.  Iowa’s superb point guard Ronnie Lester tore up his knee the next year.  Lester returned to play in the NCAA tournament as the Hawkeyes reached the 1980 Final Four, and even played six seasons in the NBA.  Unfortunately, the person Magic Johnson called the best player he ever played against in college never achieved the greatness that he probably deserved as his body kept failing him.

While Penn left San Diego disappointed, one of the important games of the season actually was played later the same night after our San Diego State defeat.  In Las Vegas, Temple played UNLV in the finals of UNLV’s Christmas tournament.  The Running Rebels had made the Final Four in 1977 and nobody out West thought Temple would give them a challenge.  The game was televised live in Southern California, with Los Angeles Lakers broadcaster Chick Hearn doing the play by play.

Temple took UNLV apart.  Temple’s star guard Ricky Reed controlled UNLV’s press and the Owls won 89-79.  It wasn’t that close.  Hearn was stunned.  You could hear it in his voice.  Suddenly Temple would get the Top 20 ranking that we so coveted and would keep it the rest of the season.

With no games until after New Year’s, it was up to Los Angeles for my first visit there.  This included sleeping out on the streets of Pasadena to await the Tournament of Roses Parade and scalping into the Rose Bowl.  In typical fashion for the wild year of 1979, there was an earthquake in the middle of the football game.

The Rose Queen that year was a stunning California high school girl named Catherine Gilmour.  Resplendent on her float, she was every Ivy League male college student’s California fantasy girl.  She parlayed that into a relatively successful modeling career, married a millionaire restauranteur and had two children.  Then things started going haywire.  She got divorced, met a grifter who fleeced her out of her money, assaulted her, and finally tried to kill her by having an accomplice place a bomb in her car.  Now in her late 50’s, she carries a loaded gun for protection and refused a government offer to go into witness protection.  And you think your life didn’t turn out as planned…

While the Tournament of Roses went forward, the Mummers Parade in Philadelphia had been canceled on New Year’s Day due to inclement weather.  When it stepped off two days later, I got to see two New Year’s Parades.  The contrast in the pictures I took is startling.  California was sunny and warm, but you can sense the lethargy as the Rose Parade streamed by.  The stars on the floats all had perpetual smiles pasted on their faces in a botoxian stupor while they performed the “Rose Parade Wave,” keeping everything still except their hands.  Philly was cloudy and cold, but you can feel the energy pulsating from the Mummers strutting in their garish costumes.  In California the common people line the streets to watch the stars parade by.  In Philly the stars line the streets to watch the common people parade by.

Back to Penn then for the stretch that would define the season.  We now would get our shot at both newly respected Temple and No. 10 Georgetown.  Win one and we could dream.  Win both…

 TEMPLE AND GEORGETOWN

We brushed aside Harvard and Dartmouth in our first Ivy League games, then focused on No. 18 Temple.  Bobby Willis controlled Ricky Reed and the Quakers prevailed 79-74.  Three more victories followed.  On Saturday afternoon January 20 we took a six game winning streak and an 11-2 record into the Palestra to face Georgetown.

This was Hall of Fame coach John Thompson’s first great Georgetown team.  Patrick Ewing, Alonzo Mourning and Dikembe Mutombo were all in the future, but Thompson, who had backed up Bill Russell at center for the Boston Celtics in the 1960s, already had worked miracles.  As a child, Thompson was told he was uneducable.  He earned a Master’s degree.  Now he had taken a 3-23 team to the Top 10 in seven years.

To make that happen, Thompson stressed discipline and teamwork.  He shielded his players from media contact. Later it would be called “Hoya Paranoia.”  I learned my lesson the day before the game.  We took our camera crew to the Hoyas run-through at the Palestra on Friday afternoon.  Thompson watched from the bleachers.  We walked over and I asked for a quick interview.  Nearly all college coaches were happy to do it since it gave them and their programs publicity.  Not Thompson.  He gave me that stern stare which became his trademark, then stood up, leaned down at me from his 6-foot-10 height and in no uncertain terms told me, “We don’t do that here.”  I didn’t try to talk him out of it.

The game was a classic.  In 50 years of watching basketball at the Palestra, it was the loudest crowd I have ever heard.  Unlike Big 5 games back then, which all were played on 33rd Street and for which the tickets were split, the entire crowd was rooting for Penn.  Marv Albert, broadcasting for NBC, couldn’t even hear his broadcast partner sitting right next to him. He kept saying “I don’t know if you can hear me over this crowd.”

Both teams made runs.  Penn led at halftime 32-29, but Georgetown came out flying in the second half to go up by nine. Tony Price and Booney Salters got Penn close again and the game flowed back and forth from there.  In the last four minutes, Georgetown center Tom Scates threw down a monster dunk to take the lead and the Hoyas held on to win, 78-76.

In defeat, Weinhauer was defiant.  “If they’re number 10,” he snorted, “then we’re 10-A.”  The Quakers had lost the game but learned something very important.  We could ball with the best.

THE IVIES

Mid-January through early March in the Ivy League is dominated by trips to places like Hanover, New Haven, Providence, and Ithaca.  Interrupted sporadically by a Big 5 game, Penn’s Ivy League schedule was defined by long bus rides for weekends away and crowds of 1,500 coming to watch another awful Brown team.  In 1979, the Ivy League highlight probably was another great line by Hank Nichols.  During a timeout late in the Princeton game at the Palestra (which like the one at the Tigers’ Jadwin Gym was decided by just one point), Nichols walked over near us.  “Great game isn’t it, Hank?” we said.  “It sure is boys,” he replied.  “I hope we don’t screw it up at the end.”

Like fine wine, Hank Nichols was priceless.

In 1978-79, the Ivy League race was predicted to be a three-team battle between Penn, Princeton (including future Cleveland Cavaliers coach David Blatt) and Columbia (led by Sixers guard World B. Free’s younger relative Ricky Free).  It turned out to be a runaway, as neither Princeton nor Columbia could keep up with the Quakers.  The most interesting part of Ivy League games often was watching Weinhauer’s unusual coaching style.  He almost never called timeouts, not even when the other team was making a big run, and especially not on the road.  “What are [the players] going to tell me, that [they’re] tired?” he responded when I asked him about it. “You run your ass off in practice. You better not be tired.  And do you know what happens when I call time out? The crowd gets louder, the band plays louder, you can’t hear much during the huddle. Just play through it.”

And so they did, with Weinhauer in his trademark crouch watching from the sidelines.  He looked like a baseball catcher giving signals.  Say this about the man, he had great knees.

Having already clinched the Ivy League championship, on February 24 we faced Columbia in New York City.  Three years earlier, both Penn and Columbia had terrific recruiting classes. The rivalry was expected to dominate the late 1970’s. It didn’t happen. Columbia never could put it together, but this was the last shot for their seniors and they were ready.  This game was played with an intensity one hoped the entire series would have had, and the Lions won 74-72.  That’s not what made the night memorable, however.  At halftime, when the public address announcer gave scores from out of town games, he said this: “At halftime in the ACC, the score is Duke 7, North Carolina nothing.”

WHAT???!!!

Are you sure you have the right sport?

Indeed he did.  Carolina coach Dean Smith instructed his team to hold the ball until Duke came out of its zone defense.  After Duke scored on its first possession, Carolina followed Smith’s orders – for twelve minutes!  More than any other game, this one provided the impetus for adding the shot clock to college basketball.

We wrapped up a 21-5 regular season by beating Yale and Brown and then waited for our NCAA matchup.  In 1979 for the first time, the selection committee would seed the teams.  Before, it wasn’t unusual for Top 10 teams to meet in the first round.  It was all luck of the draw.  Also in 1979 the tournament expanded to 40 teams.  The bottom four seeds in each regional would play in the first round, then the remaining 32 would play single elimination.

With our record, having beaten Temple and played Georgetown and Iowa even, we hoped for a No. 5 or No. 6 seed.  We didn’t get it.  Instead, we were seeded 9the in the East!  That meant a play-in game against Iona, with the winner to face top-seeded North Carolina.  Just for good measure, the games would be in Reynolds Coliseum on the campus of North Carolina State in Raleigh, all of ten miles from Chapel Hill.

DOWN TOBACCO ROAD – PART I

Iona was coached by Jim Valvano and led by its center, Jeff Ruland.  He was gawky, white and huge, which hid his enormous talent.  He would go on to be an NBA All-Star, but his knees betrayed him after six years.  In Philadelphia, he is remembered mostly for being the player the Sixers received when they traded away Moses Malone, perhaps the worst trade in the Sixers’ long history of terrible deals.

Valvano was a fresh-faced smooth talking New Yorker making his first big splash as a coach.  Ironically, we would play him on the campus that would make him immortal – N.C. State’s – as the coach of the 1983 Wolfpack, who pulled off one upset after another to win the national championship.

The first half against Iona was the Bobby Willis show.  Playing the way he was capable, Willis propelled Penn into a big lead, then disappeared.  Iona came all the way back.  It took four free throws from backup center Tom Leifsen (who had shot only 42% from the line during the season) to allow Penn to escape with a 73-69 victory.  We were alive to play UNC on Sunday afternoon.

The Carolina game would be played in the same venue that eight years earlier hosted the most excruciating Penn loss ever.  The 1970-71 Quakers had gone 28-0 and been ranked No. 3. To this day it remains the only Big 5 team to complete a regular season unbeaten. The 1971 Eastern Regional Final, played at Reynolds Coliseum, saw Penn face Villanova, whom we’d beaten three straight times, including 78-70 earlier in the year. The Quakers were so confident that they already had their flight and hotel reservations for the Final Four in Houston the next week.  We didn’t need them.  In a game that remains among the most inexplicable in college basketball history, Villanova destroyed us by the incredible score of 90-47.

Penn coach Dick Harter never got over that loss. Within a few weeks he left for Oregon and later coached Penn State.  Whenever he faced Villanova or anyone connected with that 1971 team, he would try to run up the score or have them do the same to him.  Harter went on to a long and distinguished career as an assistant coach in the NBA.  When he died however in 2012, the obituaries all featured the 1971 disaster.  Harter took that game to his grave.

Now, eight years later, we were back in North Carolina in the same building, trying to write a different script.

Tobacco Road was a different place.  Even today, the South remains the only part of the country that retains large elements of its own culture.  It has its own dialect and accent (the drawl), its own music (country), its own sport (NASCAR) and its own social history.  At dinner Saturday night, we ran into a young southern couple that also was visiting from out-of-town.  They were in Raleigh for the cock fights – not something you saw every day in Philadelphia.

After dinner, we headed to a bar with other Penn people.  They were angry and determined.  The Carolina press had been very dismissive of us.  They even got on our cheerleaders, calling them “Pale and Plump.”  I ended the evening standing next to DP reporter John Eisenberg.  No surfer dude ever stared out at the waves with more intensity than John did looking over the scene at the bar, repeating over and over again, “We’ve got to beat them Danny, we’ve got to beat them.” 

FINER THAN CAROLINA

We did beat them, but it didn’t look that way early.  UNC jumped out to a quick lead, then stole the ball and threatened to break the game open.  We stabilized, however, and sat back in a 2-3 zone almost the entire game.  UNC had seen that before, but we played it exquisitely.  Near halftime we tied the score at 34, only to see Carolina dunk to end the half up 36-34.

NBC was broadcasting the game across the country, so we at UTV weren’t allowed in the press box.  At halftime however I used my press pass from Friday’s game to enter the press room.  Penn Team Manager Pete Levy walked in, called me over and told me “You know Danny, they can hear you.  Our guys are going nuts on the bench listening to you. The Carolina people aren’t saying anything but they can hear you guys yelling and cheering all game.”  Not that we needed much encouragement, but when I got back to my seat I let everybody know.

So the Penn fans were even louder the second half. When Willis missed two free throws, he went back on defense dejected.  As he passed us, we all yelled encouragement.  His demeanor instantly changed.  The disappointment became determination.  We were affecting the game and we knew it.

Penn took the lead for good at 52-50 midway through the second half and held it down the stretch.  Down five, Carolina pressed, forced two turnovers and had a chance to regain the lead, but Dave Colescott missed a wide-open jumper with 40 seconds remaining.  Price grabbed the rebound and threw the length of the court to Salters, who scored and was fouled.

As the minutes wound down, I noticed ACC broadcaster Jim Thacker sitting right behind the basket.  He was expressionless.  During the entire last five minutes, the voice of the ACC sat silently, first looking at the court, then at the scoreboard, and back again. He couldn’t come to grips with what he was seeing.  Carolina was losing, but not playing badly.  We were just … better.

The clock hit three seconds.  Salters was at the line with a one-and-one and a two point Penn lead.  There was no three point shot, so one made free throw would just about ice it. Salters toed the line, dribbled, bent his knees low and swished it.  He turned around and threw his arms in the air.  A few seconds later it was over: Penn 72, UNC 71.

We rushed the court.  How we got there I don’t remember, as we started from the upper deck.  But there we were, celebrating in disbelief. Our mascot Bob Wachter was running and jumping around the court.  After hugging everyone in sight, I couldn’t resist.  I walked over to Thacker and said “Jim, on behalf of Penn, welcome to the Ivy League.”  Then it was on to the locker rooms.

The Carolina locker room was a funeral.  Al Wood sat with his head between his legs.  A manager passed him a stat sheet.  He stared at it, shaking his head. Mike O’Koren lay on a bench with his knees up in the air, staring at the ceiling. The UNC program always had a reputation for class. Now, under the most excruciating circumstances, they proved it. There were no histrionics, no excuses, no finger pointing.

Dean Smith leaned against the wall, cigarette butt in his fingers, surrounded by his media.  Everything was quiet and respectful.  The reporters asked questions in hushed tones.  “What happened Dean?” one asked.  “We played well,” Smith responded. “They played well.  They won.”  That’s what was so incomprehensible to the ACC.  Carolina had played well.  We were better.

Across the hall the scene was much different.  Assistant Coach Bob Staak had brought out the cigars.  The locker room reeked.  “I kept telling the team, we’ve got a secret,” Staak said. “We know how good they are, but they don’t know how good we are.  Now they do!”  Price said he thought UNC was a television show, given how many times they’d been televised that season.  Tim Smith was voted player of the game, but as usual Price led in all the statistical categories.

After just a few minutes the air inside the Penn locker room became too foul, and I left to return for the second game.  As I passed the tunnel leading to the court I saw St. John’s coach Lou Carnesecca, whose team was about to face Duke.  “Come on Louie,” I yelled, “do it for the East!”  Carnesecca smiled, gave me a thumbs up, then turned and watched his team get dismantled.

It was a mismatch. After the first ten minutes St. John’s looked hopelessly outclassed.  Duke seemed completely in control.  With a long drive ahead of us and emotionally drained, we all left to head back to Philly. We didn’t even listen to the Duke game on the radio.  Instead we, and all the other Penn fans, headed north, blaring our horns.  Every time we passed another Penn car on I-95 we rolled down the windows, yelled at them (and they at us), and blasted the horns.

After about 90 minutes, we got curious so we put the game back on the radio.  The announcer said, “the ball goes into Gminski, he turns, shoots, misses, and the game, AND THE SEASON, are over for Duke.”

DUKE LOST??!!!  Somehow, St. John’s came back, and the horns going north got even louder. In ACC history March 11, 1979 is known as Black Sunday.  We forever will be thrilled to have been there to witness it.

DOWN TOBACCO ROAD – PART II

The 1979 Eastern Regionals were held in Greensboro, North Carolina, about 75 miles south of Raleigh.  Our opponent in the Sweet 16 was eighth-ranked Syracuse.  The Orangemen were 26-3 and led by their young, third year head coach Jim Boeheim (yes, THAT’s how long ago this was).  Syracuse featured the “Louie and Bouie Show” (Louie Orr and Roosevelt Bouie) as well as the “40% Jewish Team” of Danny Schayes and Hal Cohen.  Both Schayes and Cohen were Upstate New York legends of sorts, Schayes for being the son of NBA Hall of Famer Dolph Schayes and Cohen because in high school in Canton, New York he once hit – get this – 598 consecutive foul shots.  Both went on to great success, Schayes in the NBA and Cohen as a Syracuse radiologist.

We blew Syracuse out.

Penn’s lead ballooned to 46-29 in the first half and we cruised to an 84-76 triumph.  At one point in the first half, Bobby Willis threw a long, lob pass to Tim Smith streaking downcourt.  Willis overthrew him.  In one motion, Smith leaped up, caught the ball and without looking threw it over his head, off the backboard into the hoop – most likely the greatest single play in Penn history.

“An over the head shot!” I yelled into the microphone (we were allowed to televise this game).  “Timmy Smith just made a reverse layup over his head.”  After the year ended, we at UTV decided to do a 30 minute highlight film of the tapes we still had.  Of course, this play was the intro.  We put the tape into the VCR (if you don’t know what that is kids, just go with it).  Grrriiiinnnd.  The machine picked then, of all times, to malfunction and destroy the tape.  On such moments are great broadcasting careers ended.

With little to do in Greensboro, we settled in on Saturday to watch the Midwest and West Regional Finals.  Undefeated Indiana State beat Arkansas in the first game and UCLA then took on DePaul in the West.  DePaul jumped on UCLA early in Provo, Utah on Brigham Young’s campus.  At halftime, underdog DePaul had raced out to a 51-34 lead. UCLA still had hope though, because DePaul never substituted.  Ray Meyer’s team was so thin, the veteran coach literally played the same five the entire game. They were sure to get winded.

Enter the UCLA pep band.  At halftime, the BYU dance team was performing when the UCLA players took the court.  Immediately the pep band broke into the Bruin fight song, totally disrupting the dance team.  The BYU crowd was outraged.  When DePaul came out the fans gave them a standing ovation, and cheered wildly for the Blue Demons in the second half.  DePaul needed all of the support.  UCLA pressed the whole half, eventually cutting the lead to two points, but couldn’t get over the hump. When freshman Mark Aguirre broke a UCLA trap to lay the ball in with ten seconds left, DePaul had a 95-91 upset.  There have been thousands of NCAA Tournament games, but UCLA probably is the only school that ever lost one because of its pep band.

On Sunday we played St. John’s—which had squeaked by Rutgers on Friday night — for the Eastern Regional championship.  The other three regions featured No. 1 vs. No. 2. The East had No. 9 vs. No. 10. The arena was empty.  Tickets had been bought by Carolina and Duke fans. Without those teams in the game, the ACC faithful decided they had better ways to spend a Sunday afternoon.

That also was the attitude of NBC’s lead announcer, Jim Simpson. I was standing at press row before the game when Simpson complained to his producer.  “Yesterday I saw two absolute superstars (Larry Bird and Sidney Moncrief), today I’m broadcasting a center that went to Choate for chrissake” (Penn’s center Matt White, who was a Connecticut prep school kid).

We hated to admit it, but Simpson wasn’t entirely wrong.  The spark was gone. Both teams were emotionally spent making for an artless, grind-it-out affair.  We led almost the whole game, but in the second half St. Johns made a run to go up by four.  The ever-reliable Smith then hit from the corner to propel a rally. With 23 seconds left and the game tied at 62, St. John’s guard Tom Calabrese fouled Salters, giving him a one and one.

With a spot in the Final Four on the line, Boonie again dribbled, bent his knees all the way down and swished both shots to put Penn up 64-62. One more defensive stop and the Quakers would be headed to Salt Lake City.  St. John’s worked the ball upcourt and Calabrese got off a shot which missed.  Gordon Thomas missed a follow-up but the rebound fell right into the hands of the Redmen’s  Ron Plair.  He was just eight feet from the hoop but shot it seven.  We were going to Utah!

The Penn fans celebrated on the court, but not like in Raleigh. We had another long drive home. While thrilled, this drive was more of an ordeal than the last one.  We all were exhausted.  Spring break was over.  We were heading back to a full week of classes.  It would be a week like no other.

FINAL FOUR WEEK

College athletics are bedeviled by innumerable problems, and legitimate questions exist about whether they truly can co-exist with academics.  But for sheer good feeling and excitement nothing in my seven years on Penn’s campus (including three years of law school) came close to Final Four Week.  The mood was electric.  Staid Ivy Leaguers went crazy over the idea that our basketball team had a chance to win the national championship.

During the week the team held an open practice at the Palestra.  It was attended by more people than went to many Ivy League games.  Smith, who would have the dubious honor of guarding Michigan State All-American Magic Johnson in the semifinal, held court with the press under the basket.  “A lot of people call what he does magic. To me, it’s schoolyard.”  Poor Tim.  In a few days he would learn.

Before leaving for Utah on Thursday, the team held a pep rally with 8,000 fans at Franklin Field. Weinhauer was in his glory. “The Orange are still shoveling snow up in Syracuse,” he yelled as the crowd cheered. Tickets cost just $15 for each game and we saved money by staying at the Salt Lake City YMCA, but the costs of the flights forced many students to stay home.  NBC of course had exclusive broadcast rights, so I’d be watching from the stands.

Penn-Michigan State was Game 1, followed by Indiana State-DePaul.  Newspapers all over the nation were hoping for a Bird/Magic final.  We were hoping to spoil their fun.

For Penn to win, Price and Smith had to have great games. No such luck. Michigan State jumped off to a 4-0 lead before Price drew the Quakers even. During the first few minutes we couldn’t stop the Spartans, but we were matching their ball movement offensively.  Unfortunately we couldn’t shoot.  The 4-4 tie quickly became 13-4.  Despite getting good shots, we were 2-11 from the field.  Weinhauer had to take a timeout. Willis scored to make it 13-6, but five minutes later it was 22-6.  Weinhauer took another timeout.  Price now was on the bench with three fouls, Penn was shooting 3-18 from the field and Michigan State was shooting 8-11 from the field.

It didn’t get any better.  At 30-6, the Michigan State fans were waiving their green and white pompoms yelling, “Just six points.”  Like our basketball team, we fans had no answer.  The halftime score was 50-17 and the final was 101-67. About the only bright spot was the play of seldom-used forward Ted Flick.  Due to all the foul trouble, Flick played 14 minutes.  His blond locks and mustache won the hearts of lots of women watching on television, and he received gobs of fan mail afterwards.  Andy Warhol, thy name is Ted Flick. Smith learned that Magic was more than schoolyard.  Tim finished with the ultimate goose egg stat line: 0 points, 0 rebounds, 5 fouls.

Salters and Price were crushed.  They returned to their hotel room and got under the covers.  Price thought the Michigan State game may have cost him a pro career. Who could blame him?  A good performance in a national semifinal could have been his springboard to the NBA.  We fans sat with our tails between our legs as Indiana State and DePaul played a marvelous second game.  Indiana State won by two when DePaul wasted the last 20 seconds before firing up a wild shot.  We commiserated with some DePaul fans at a bar later over which was the worse way to lose, but it didn’t help much.

And the season wasn’t yet over.  Back then, the NCAA still insisted on a third place game. Perhaps we could regain some level of dignity? Instead, we played worse. No matter how bad the Michigan State game was, our performance in the first half against DePaul topped it. Even with Meyer actually substituting some, we played like we didn’t belong. DePaul raced ahead 46-23 with 4:00 left in the first half.  We were shooting 9-27. It was humiliating. Then, as suddenly as the true Quakers had disappeared, we again became the team that had beaten UNC and Syracuse. By halftime we’d closed to 54-43 and with a minute left in regulation we tied the score. The game went into overtime at 85 and we even took an 89-88 lead, but couldn’t hold on and fell, 96-93.

Almost nobody saw the consolation game, but for the team and the fans there was some redemption.  We had shown what we were capable after the first 16 minutes. Finishing the season on that note certainly was better than after the Michigan State debacle.

We settled in to watch the Magic/Bird Final.  Forty years later, Michigan State/Indiana State remains the most-watched college basketball game in history.  In fact, it wasn’t a very good game.  Michigan State controlled the entire way and won 75-64. The most interesting part was two strange calls that went against Indiana State. Twice ISU players were called for “undercutting” MSU players who were driving to the hoop.  I’ve seen that call maybe five other times in my life. Twice in the NCAA final?  A member of the officiating crew in the NCAA final, of course, was Hank Nichols.

FORTY YEARS LATER

In the forty years since that season, the sport, the country, television and the NCAA tournament have changed immensely.  For the people involved though, it remains an indelible memory.  Some went on to great success, others less so.

After two more NCAA trips, Bob Weinhauer left for Arizona State in 1982.  Like Dick Harter, he never achieved in college the greatness he found at Penn.  Also like Harter, Weinhauer then went to the NBA, where as general manager he won two championships with the Houston Rockets in the 1990’s.

Booney Salters led Penn back to the NCAA tournament in 1980 by hitting a last-second shot to beat Princeton in the Ivy League playoff game.  One of the greatest clutch players in Quakers history, he unfortunately had some rocky business dealings later on.  Hopefully that all is behind him.  In 2014 he was inducted into the Penn Sports Hall of Fame.  His emotional speech expressed so much that is good about Penn.

Bobby Willis worked in New York in the real estate business for many years and now spends time as an adjunct professor at the City University of New York teaching computer science.  He admits to almost having quit basketball during Penn years to focus on technology, which remains his passion.  We’re awfully glad he didn’t.

Tim Smith worked at the Philadelphia District Attorney’s Office for many years.  As with most of his teammates, he spends a lot of time now in the non-profit world.

Ironically, the Penn player who had the best professional career was Matt White, the “center from Choate for chrissake.” Drafted by the Portland Trail Blazers of the NBA, he played overseas for 14 years.  Unfortunately, White also became the team’s most tragic story.  In 2013 his wife Maria began showing signs of schizophrenia.  While White was trying to get her admitted for psychiatric care, Maria grabbed a knife and stabbed him to death in the throat.  As the school remembers the 1979 team, he will be missed.

Any discussion of the 1979 team begins and ends with Tony Price.  Perhaps due to the Michigan State debacle, Price only got a cup of coffee in the NBA with the San Diego Clippers. His son A. J. did better.  After starring at Connecticut, A .J. played five years in the NBA and currently plays in China. Tony now runs the “Paying the Price Foundation” trying to give underprivileged kids the tools they need to make it.  He returns frequently to Penn to give clinics and inspiration, often joined by his Penn teammates.

The DP’s John Eisenberg went on to a long and distinguished sports writing career.  His latest book, “The League,” is about the birth of the NFL.

Of everyone involved directly or peripherally with the Final Four team, perhaps none reached the heights of mascot Bob Wachter. Currently the Chair of the Department of Medicine at the University of California San Francisco, Wachter was voted one of the most influential people in American medicine.

Others dealt with difficulty.  Like San Diego State’s Goetz and Gwynn, Jim Valvano died way too young.  His farewell speech at the 1993 ESPY Awards when his body was wracked by cancer remains a classic.

Lord knows what the future holds for Rose Queen Gilmour.  We only can wish her well.

In 2010, Cornell became the first Ivy League team since Penn to reach the Sweet 16. College athletics is now so interconnected with big money that recently the Pac-12 schools discussed getting a private equity firm to invest in their conference.  If you have enough courage, talk to a professor at a school in a major conference and ask how he/she feels about the money spent on athletics as opposed to academics?  Duck before you wait for the answer.

Without athletic scholarships or television exposure and with high academic standards, it gets harder every year for the Ivy League to imagine another Final Four run.  As each year passes those of us who were there feel a little luckier. We got to be a part of something no other Penn students ever did.  It was 40 years ago, but we’re all still cheering at the Palestra.

Daniel B. Markind is a 1980 graduate of the Wharton School of the University of Pennsylvania and a 1983 graduate of the University of Pennsylvania Law School.

2018, The Year in Review

Year in Review - Marcellus Shale Update by Daniel Markind of Flaster Greenberg PC

2018 began with the United States producing immense amounts of oil and natural gas; pipeline companies struggling to build out the national pipeline system but not being transparent about how they are doing it; Europe, led by Germany, continuing to move toward 100% reliance on renewable energy yet becoming even more dependent on Russian gas as a result; and New York and New England continuing to block energy generation and pipeline construction in their areas so that they, too, had to import gas from Vladimir Putin.

2018 ended with the United States still producing immense amounts of oil and natural gas; pipeline companies still struggling to build out the national pipeline system but not being transparent about how they are doing it; Europe, led by Germany, still continuing to move toward 100% reliance on renewable energy yet becoming more dependent still on Russian gas as a result; and New York and New England still continuing to block energy generation and pipeline construction in their areas so that they, too, may have to continue to import gas from Vladimir Putin.

As the saying goes, the more things change….

Meanwhile, here in Pennsylvania, the biggest news was the reelection of Governor Tom Wolf and the confusion over the time-honored “rule of capture”. Wolf’s reelection, along with Democratic gains in the State House and Senate, mean the severance tax issue will be back on the table come budget season. The Governor almost had his severance tax in 2017 but threw it away in a move that remains inexplicable following agreement from Senate Republicans to support it. The “rule of capture” means that whatever gas flows into the producer’s pipes belong to the producer, subject to paying royalties to the landowner. In the hydraulic fracturing context, the argument is that the gas may have been taken illegally because it emanated from an adjacent landowner’s property. How an adjacent landowner could prove any of this, or more importantly how a gas company could disprove it, remains a mystery. Now, it will be up to the Pennsylvania Supreme Court to make a decision.

In West Virginia, the State Legislature in 2018 voted overwhelmingly to uphold the State’s “marketable product” doctrine for paying royalties. The votes followed a 2017 West Virginia Supreme Court decision in the Leggett case changing the calculation rule, which is unusual but also used in states such as Oklahoma and Kansas. The difference between “at the wellhead” states like Ohio and Pennsylvania and “marketable product” states like West Virginia is that in West Virginia a producer cannot deduct its costs from the overall royalty payments it makes to the landowner until the gas has been reduced to a “marketable product”. Of course, exactly what that means often is a subject of controversy. Regardless, West Virginia made sure it stayed in the “marketable product” group of states, and the overwhelming votes in both houses of the State Legislature shows how popular that concept is.

Ohio ended 2018 leading the region in development of the Utica Shale. The Utica is deeper than the Marcellus. Companies such as Cabot Oil and Gas now actively are exploring the Utica in Ohio. Combined with the Marcellus, the two basins portend an enormous potential for energy production in the Marcellus-Utica Region.

Then there’s New York. Governor Andrew Cuomo won reelection easily in 2018 so we can expect his anti-natural gas policies to continue. The Governor is about to shut the Indian Point nuclear reactor and claims there will be sufficient power from renewable sources – mostly hydroelectric from something called the “Champlain Hudson Power Express” – to make up the shortfall. That hasn’t worked in New England and is unlikely to work in New York. Already New York is importing gas from Russia.

In November, FERC gave Governor Cuomo and unusual setback when it granted the Constitution Pipeline a rare time extension to finish construction. The Constitution remains stalled solely because of Governor Cuomo’s power grab regarding the Section 401 Clean Streams Permit.

New York has refused other pipeline permits and seems determined to follow its renewable idealism regardless of the practical consequences. While the Mueller Commission continues to investigate the possibility of collusion between Vladimir Putin and President Donald Trump, Putin’s best friends in the United States may be Andrew Cuomo and the other New England governors. They insist on ensuring that Russia will continue to have influence over the energy security of the Northeastern United States.

Cuomo’s international energy champion is German Chancellor Angela Merkel. Since 2010 Merkel has pursued her energy policy of “Energiewende”, trying to shift the German economy from nuclear power and fossil fuels to renewable energy. It hasn’t worked. Germany now has the highest energy prices in Europe, is increasingly dependent on Russia for supply (hence “Nord Stream 2”), needs to burn coal for decades in order to make up for the intermittent nature of solar and wind, and actually has to pay foreign governments to offload extra supply from solar and wind sources when they actually are producing because the supply is so uneven it would damage the German power grid.

Merkel and Cuomo are environmental “Idealists”. They are not to be confused with true “Environmentalists”, for whom improvements to the environment are paramount. Environmentalists likely will encourage the switch to natural gas from coal as a bridge to hopefully even cleaner fuels in the future. Idealists like Merkel and Cuomo will fight it at every turn. They will continue to preach and pursue policies that are lovely in the abstract. In real life, however, those policies make our environment dirtier, our economies weaker, and the respective national securities riskier.

Finally to pipelines. As with people like Merkel and Cuomo, pipeline proponents often are their own worst enemies. Energy Transfer Partners has been consistently non-forthcoming in its information regarding construction of the Mariner East 2 and Rover pipelines, but ETP is not alone. Two weeks ago a MarkWest Energy natural gas processing plant in Chartiers Township, Pennsylvania, suffered an accident that killed one person and injured three others. Some press reports stated there was an explosion, others that it was a flash fire. The owners of the pipeline involved, including Marathon Petroleum, won’t clarify publically what happened.

Coming on the heels of other pipeline explosions recently in places like Lawrence, Massachusetts, it would seem in the industry’s best interest to clear up what occurred. Without transparency, new pipeline projects such as Jordan Cove in Oregon and Atlantic Coast in Virginia and North Carolina will face more opposition and trouble.. If Cuomo and Merkel are pursuing self-defeating policies on behalf of their constituents, the pipeline companies are doing the same on behalf of their industry. Hopefully honesty, clarity and transparency will be in greater supply in 2019. That would benefit us all.

Questions? Let Dan know.

Daniel Markind of Flaster Greenberg

Daniel Markind is a shareholder at Flaster Greenberg PC with over 35 years of experience as a real estate and corporate transactional attorney. He has represented individuals and companies in the energy industry for over 20 years. Dan is a frequent lecturer on Marcellus Shale and other mineral extraction issues and is regularly asked to speak at conferences, in the media and at other venues regarding energy issues and their legal and political implications.

Pipelines, Courts and Reports

Storage Tanks and pipelines in the refinery.

Pipeline issues continue to dominate the natural gas news.  Last week, the pipeline industry got some good news, some bad news, and some news potentially so devastating it could threaten the entire industry.

Good news came for Mariner East 2.  First, the Pennsylvania Supreme Court rejected a challenge from the Clean Air Council and some landowners in Delaware and Chester Counties to the utilization by the pipeline builder, Sunoco Logistic, of eminent domain along its 350 mile route.  Later in the week, an Administrative Law Judge for the Pennsylvania State Public Utilities Commission rejected a request from seven citizens in Delaware and Chester Counties to shut down finishing of Mariner East 2 and to stop existing operations on Mariner East 1.

Sunoco Logistics repeated again that it would get Mariner East 2 in service by the end of the year, but not in the form originally intended.  In certain areas, Mariner East 2 only will be 20 inches in diameter, with older pipe being attached to newer pipe.  Sunoco Logistics never has fully explained why this is happening.  Is it because of an operational problem?  A cost cutting move?  A supply issue?  A timing issue?  Especially with the use of older pipe that was never part of the original plans and the use of smaller diameter pipe than was originally proposed, concern with safety should be paramount.  At the very least, the public is entitled to a full explanation from the pipeline company.

Make no mistake, Mariner East 2 is a very important project.  It secures the supply of gas to Marcus Hook, where it either can be exported to help free Western Europe from reliance on Vladimir Putin or it can be moved domestically to ensure our national supply.  It’s for this very reason that the PUC should demand answers.  For years, Mariner East was proposed as a certain type of project.  In the end, Sunoco Logistics is delivering another one, with a slightly different route, less capacity, and older pipe in certain places.  If the PUC doesn’t know why this is, it needs to find out and publicize its findings.

While Sunoco Logistics received its good news on Mariner East 2, Penn East Pipeline, which will go from Northeastern Pennsylvania to Central New Jersey, also got positive court results.  On Friday, US District Court Judge Brian Martinotti ruled that PennEast Pipeline Co. LLC, the owner of the pipeline, can use eminent domain to take properties in New Jersey – although initially, PennEast may only be seeking survey access to those properties as it still needs to address local environmental concerns for which the New Jersey Department of Environmental Protection has still not given State blessing.  The pipeline will go through Hunterdon and Mercer Counties in New Jersey, allowing connection to pipelines that serve New Jersey and potentially the New York City Metropolitan Area.  The New Jersey Attorney General’s Office had no comment.  Since the election of Democrat Phil Murphy in 2017, New Jersey has done an about-face and is not friendly to natural gas development.  As with other opponents, however, Governor Murphy has no real plan to live without it.

There was bad news also.  On Friday a pipeline owned by Mark West exploded in Washington County in Western Pennsylvania, injuring four people, one critically.  It is believed that workers were cleaning the pipeline when vapors caught fire and ignited other combustible material.  No matter how you slice it, pipelines are serious business, and safety should always be, but sometimes is not, given the full attention that it deserves.

More bad news for the pipeline industry came further south.  A panel of judges for the Fourth Circuit vacated certain permits issued by the United States Forest Service to the Atlantic Coast Pipeline that would have allowed the pipeline to be built through the George Washington and Monongahela national forests. Atlantic Coast would run 600 miles from West Virginia through Virginia and into Eastern North Carolina.  Twenty one of those miles would be through national forests.  The Forest Service repeatedly told Dominion Energy, Duke Energy and the Southern Company, co-owners of the pipeline, that the pipeline might violate environmental standards.  In 2017, however, the Forest Service issued permits allowing for the pipeline’s building through these forests.  The Fourth Circuit Panel vacated the permits, stating in effect that the Forest Service isn’t doing its job properly.  The pipeline owners intend to fight the decision, saying the judges are undermining the judgment of seasoned professionals.

Finally, the really devastating news came from California, where the California Public Utilities Commission charged utility Pacific Electric & Gas with falsifying safety and maintenance records.  PE&G in effect admitted the accusation.  Now the utility is facing massive criticism in light of the recent wildfires that were the most destructive in California history.  While there is no evidence tying natural gas pipelines to the wildfires, PE&G’s system is antiquated and poorly maintained.  It also doesn’t have enough inspectors to fulfill its reporting obligations.

Should any evidence arise that ties the pipelines to the fires, and then to PE&G’s malfeasance, the entire industry could be at risk.  Once again, it is up to the industry, and its trade groups like the Marcellus Shale Coalition, to start supporting the industry and not just reflexively opposing all government regulation and involvement.  Like all of our nation’s infrastructure, the pipeline system is antiquated and wearing out.  It needs to be rebuilt, using new materials and state of the art construction techniques, and it needs companies willing to do so.  It also needs government both willing to let them do so and to hold them to the highest standards.  Let’s all focus on that.

Questions? Let Dan know.

Daniel Markind of Flaster Greenberg

Daniel Markind is a shareholder at Flaster Greenberg PC with over 35 years of experience as a real estate and corporate transactional attorney. He has represented individuals and companies in the energy industry for over 20 years. Dan is a frequent lecturer on Marcellus Shale and other mineral extraction issues and is regularly asked to speak at conferences, in the media and at other venues regarding energy issues and their legal and political implications.

 

Russia, Ukraine and Marcellus

russian ships blocking access to ukrainian ports

The simmering dispute over waterway rights between Ukraine and Russia broke into armed conflict this week. Its implications are enormous both for the energy world as a whole and especially for us in the Marcellus Shale region. But some background is required to appreciate the connection.

Briefly, when Vladimir Putin seized the Crimea in 2014 he gained control of the Kerch Strait, which cuts off the sea lanes from Southeastern Ukraine between the Azov Sea and the Black Sea. Until 2014, Russia had controlled the eastern shore of the Kerch Strait but Ukraine had controlled the west. The two countries had reached an agreement in 2003 allowing for shared access of the Kerch Strait and the Azov Sea. However, Russia’s military and political moves in Crimea in 2014 changed that.

Eager to connect the Crimea to the Russian mainland, Putin ordered the building of a 12 mile bridge over the Kerch Strait after the annexation, which he formally opened himself this year in May by driving a truck across it. Russia then placed more armed vessels in the waters around the bridge. The Russians claimed they needed better security. In practice, the extra traffic increased delays to ships trying to access and use the Ukrainian ports on the Azov Sea, increasing the costs of doing business there and undermining the utility of these ports in international trade.

Ukraine responded with a military show of force, but this was overwhelmed by Russian naval power. Russia then used the supports of the bridge, which had been built at a strategic distance, to permit its own warships to blockade the Ukrainian ports. Weaker militarily, Ukraine has few cards left to play and access to its Azov Sea ports is now very much under Russian de facto control.

As I noted in July during the controversy over the Nord Stream II pipeline that Germany is building with Russia and which will bypass Ukraine and Poland, Ukraine currently gets over 2% of its GDP from transfer payments for the trans-shipments of Russian gas and oil to Western Europe. Thanks to Angela Merkel, that transport route may become irrelevant. Nord Stream II brings Putin’s dreams of Russia once again dominating Eastern Europe one step closer. However, more than just Ukraine’s loss of access to its ports and its lost revenue from diverted oil and gas trans-shipments, thanks to this new pipeline Russia can cut off energy supplies to Poland, Ukraine and the Baltic States any time it wishes, without worrying that Western Europe will react harshly as their supplies are also cut off. While economically in the short term this direct pipeline access to Russian gas and oil may be better for Germany, Nord Stream II is a geo-political disaster due to its implications for further expansion of Russian power and influence over former Soviet states, if not more globally.

For these reasons, President Trump was right in calling the Germans out on the new pipeline at the NATO summit in July. However, the President has not been forthcoming with an appropriate condemnation of Russia’s actions, leaving our allies confused and leaving UN Secretary Nikki Haley to act as the lone Voice of America while the President – inexplicably but not unexpectedly – dithers on calling Putin out for what is obviously going on.

Meanwhile, with Putin again showing his aggressive nature, the rest of the West is scrambling.  Cyprus, Israel, Greece and Italy agreed this week to build a $7B pipeline for the Eastern Mediterranean from the Leviathan Field in the Mediterranean Sea. Germany, perhaps belatedly realizing the folly of putting all of its energy eggs in Putin’s basket, now is partnering with Dow Chemical also to build a liquefied natural gas import facility in the German city of Strade, near Hamburg.

Who will supply the gas to feed Western Europe should Russia turn out to be unreliable or if Nord Stream II becomes another pawn on Putin’s chess board to regained Soviet dominance? It could and should be us from right here in the Marcellus. By building out our pipeline system in the US, we can supply Strade and other future European gas import terminals, thereby helping thwart Putin’s aggression, and projecting American “soft power” – which is what critics of an aggressive American foreign policy often demand. At the very least, this will help keep American troops out of harm’s way, but it could also serve as a geopolitical foil to Russia’s attempts to use its energy largesse for political, military, and evident expansion purposes.

Will we have the political will to do it?

In order to do so, the natural gas industry in this country must first recognize the strategic reasons why this is important which, in turn, requires understanding the interconnections between domestic energy policy, international trade, and political, military, and diplomatic events in far away places. Few Americans presently understand how Russian moves in the Azov Sea could eventually end up causing young men and women in Pennsylvania, West Virginia, Ohio and elsewhere to be sent overseas in military uniforms. Fewer still comprehend how the pipeline build out and export terminals in this country can help (1) secure our future militarily while simultaneously (2) creating good jobs for people in our region and (3) decreasing greenhouse gas emissions worldwide. None will understand if they are not told.

Tom Wolf just won reelection handily as Governor of Pennsylvania. He is no friend of the natural gas industry. Unlike his counterparts in New York and Maryland, however, he hasn’t moved to try to shut it down. There will be more pressure on him to do so now that the National Climate Assessment has been released.

Wolf, though, lives in the real world. He must perform for Pennsylvanians. Strange as it sounds, the Governor and the industry need each other. The gas industry has to provide him with the explanation as to why working with the it not only is in Wolf’s own best interests politically but is also in the best interests of all Pennsylvanians, and indeed all Americans. Somehow this message has not gotten through as forcefully as it should.

Further, our newly elected representatives from the Marcellus States in their state legislatures and in the United States Congress must understand – and not be hesitant to educate the public about – the international dynamic. Some, like Chrissy Houlahan of my home district in Southeastern Pennsylvania, are military veterans who have dealt with the intricacies of international relations. Others are untested. It will be up to all of them to work to keep American men and women safe. It will be up to all of us involved with the industry to explain how it can be instrumental – indeed, strategically essential – in doing so.

Meanwhile, Vladimir Putin will be watching, waiting, and planning his next chess move.

Questions? Let Dan know.

Daniel Markind of Flaster Greenberg

Daniel Markind is a shareholder at Flaster Greenberg PC with over 35 years of experience as a real estate and corporate transactional attorney. He has represented individuals and companies in the energy industry for over 20 years. Dan is a frequent lecturer on Marcellus Shale and other mineral extraction issues and is regularly asked to speak at conferences, in the media and at other venues regarding energy issues and their legal and political implications.

Natural Gas’s Dilemma – How to Respond to the National Climate Assessment?

The day the world changed concept

On Black Friday, the Trump Administration released Volume II of the National Climate Assessment. Running 1,600 pages, the report is the second volume of the fourth National Climate Assessment, which was mandated by Congress in the late 1980’s and is required to be prepared every four years by scientists from 13 designated government agencies. It is being referred to as NCA4 Vol. II.

According to initial press headlines, the warnings contained in NCA4 Vol. II are dire. They include:

  • The “earth’s climate is now changing faster than at any point in the history of modern civilization, primarily as a result of human activities.”
  • Average sea levels along the United States coast have increased by about 10 inches since the early 20th century as the oceans have warmed and land ice has melted.
  • More than 100 million people in the United States live in places with poor air quality – and climate change will “worsen existing air pollution levels.”
  • Climate change will “disrupt many areas of life” by affecting trade and exacerbating overseas conflicts.

It is conceivable that the initial press reports will turn out to be exaggerated and that the actual language in NCA4 Vol. II is more nuanced than what has been reported. This Update specifically is being written before full examination of the 1,600 pages can be made, although we will certainly correct any errors or omissions in what the press has written about the Assessment as soon as a more fulsome review of the report is possible.

However, for most members of the public, the press reports may be the only information that they will ever receive about the Assessment because it is unlikely that most people will take the time to pore over 1,600 pages of dense text. They will only remember headlines like those listed above. Whether fair or not, this is the environment that the natural gas industry finds itself in during 2018. It must adapt to that reality. While the industry can, and should, pick apart reports and assessments, including NCA4 Vol. II, to the extent that they contain erroneous data or jump to conclusions unwarranted by the evidence, the industry must realize the impact that the overall public mindset has on national, state, and local energy policy and initiatives.

To that end, the industry needs to recalibrate its message. For too long, what little public relations the industry as a whole has engaged in has concentrated almost only on the economic benefits of natural gas to consumers. While certainly not inaccurate, that overly simple message no longer will carry the day. The economic argument now is framed as: “We all can spend $X for energy which will destroy our planet, or we can spend $X time Y and save our planet. Nobody likes paying higher costs for anything, but if it will save our children’s futures, why shouldn’t we do it?”

It is imperative for the industry now to do two things. First, it must concentrate on the environmental case for natural gas, both over other fossil fuels and until so-called renewable energy becomes more universally available. The natural gas industry has a terrific story to tell, but it needs to tell it. The public does not know what the industry has not told it. America leads the world in greenhouse gas reductions since the fracking revolution. We’re producing massive new quantities of oil and gas, yet our greenhouse gas emissions have dropped over 10% to levels not seen since the 1980’s.

There is no harm in admitting that natural gas may not be the be all and end all of energy use to save the planet, but as a bridge fuel it is unsurpassed. If, as NCA4 Vol II states, we must do something positive fast for the environment to lessen any climate change impacts, there is no better way than to build out the natural gas pipeline infrastructure. This will allow the massive switch from coal to natural gas to occur as quickly as possible.

Second, the industry must point out, gently, that currently there is no feasible alternative. All proposals to power our economy via renewables still are speculative at best. Even if it can be done, we are decades away from a realistic plan to power the world with net neutral sources. Germany is a great example of this. In 2010 it refined its renewable energy policy to limit most, if not all, power projects not involving renewables. Despite this, over the last few ytears, German carbon emissions have increased, not decreased. Now, despreate for energy, Germany is helping the Russians build a new pipeline directly to Germany and it is involved with Dow Chemical to erect a new liquefied natural gas power plant in Strade. Good intentions are one thing. NCA4 Vol. II makes it clear they are not enough.

If the industry truly believes in itself and what it’s doing, it should take up the challenge. Engage on the playing field where the battle is taking place. Target our message to the mindset of the audience, and don’t be afraid to amid there are things we don’t know. Despite NCA4 Vol. II’s warnings, fossil fuels will be with us for decades moer, at least. Wishful thinking about promoting more renewables will not change that stark reality. Until such time as renewables can effectively and completely power our modern economy, we all will benefit from clear headed policies that encourage increased natural gas development, transportation and usage while simultaneously establishing a priority to develop and implement a nationwide renewable energy strategy. Isn’t that really what we all should want?

Questions? Let Dan know.

Daniel Markind of Flaster Greenberg

Daniel Markind is a shareholder at Flaster Greenberg PC with over 35 years of experience as a real estate and corporate transactional attorney. He has represented individuals and companies in the energy industry for over 20 years. Dan is a frequent lecturer on Marcellus Shale and other mineral extraction issues and is regularly asked to speak at conferences, in the media and at other venues regarding energy issues and their legal and political implications.