No matter what the industry every leader is facing new challenges. These are not the same old challenges of yesterday so the same old solutions will not meet today’s challenges.

Market’s are getting smarter. Competitors are getting smaller and employee’s are expecting more than a pay check as the reward for a job.  Customers are expecting instant feedback and customization. Reorganization isn’t the answer. A new mission statement isn’t the answer. Forming teams to solve your problems isn’t the answer. Bringing in the “change experts” isn’t the answer. Hiring a social media guru isn’t the answer.  Leveraging more technology to do more of the same things at less cost isn’t the answer.  So what is the answer?

The answer begins by realizing that very things that used to make you successful are the same things that are holding you back today.

The Solution Is Finding New Answers

A Fast Company article titled “How Your Own Expertise Is Holding You Back” by Mark McNeilly states : “How are entrepreneurs able to create new companies and inventors capable of bringing new products to market? It’s because they avoid accepting the way things are in their industry and instead see what might be. It’s because they have shoshin, or, “beginner’s mind.”

Shoshin is a Zen Buddhist concept that means “having an attitude of openness, eagerness, and lack of preconceptions when studying a subject.” Shunryu Suzuki, the Zen master who wrote the book Zen Mind, Beginner’s Mind, summed up the philosophy well by saying, “In the beginner’s mind there are many possibilities, in the expert’s mind there are few.”

“As Suzuki implies, the expert faces the challenge of knowing too much. She knows what works and what doesn’t. He knows what’s been tried and why it didn’t work. Unfortunately, by accepting these things as givens, they cannot see what is possible. Only someone who views things with a “beginner’s mind” can imagine what could be if the assumptions are challenged.”

If we approach every challenge through the filter of previous solutions gained from past experience and education then we are not likely to find learn anything new needed to create new solutions.

Most leaders believe they made it to the top because of their experience, knowledge and past success. The problem with that assumption is today is no longer a reflection of the past. Everything is new and subsequently it requires a new way to think about everything.

The answers come from what could be rather than what has been.

Read Original Article at The Relationship Economy

It’s time again for my quarterly review of smartphone market share trends around the globe. While I initially considered doing this semi-annually, I’ve been requested to make it a quarterly feature. As always, Q1 2013 data is sourced from Gartner and Kantar Worldpanel reports and complemented with reports from other research houses as and when available.

The chart above shows Gartner’s global smartphone market share data for the last four years. The trend is unmistakable, as legacy platforms like Symbian and Blackberry have been practically wiped out. Android has continued to extend its dominance and now accounts for nearly 75% of smartphone sales. The launch of highly anticipated devices like the Galaxy S4 at the high-end and dropping price points at the low-end should help Android devices consolidate their position over the next two quarters. Meanwhile, as I had predicted, the iPhone’s market share declined to ~18% (compared to ~23% in Q1 2012). The iPhone’s growth slowdown has been driven by increasing cyclicality in sales as its target market has become more saturated. Finally, Blackberry and Windows Phone just managed to grab 3% and 3.5% of Q1 smartphone sales.

Now let’s take a look at the state of the smartphone market in major regional markets:

US: Android Regains Lead Over iPhone

Thanks to the iPhone 5 launch, the iPhone had temporarily surpassed Android smartphone shipments in Q4 2012. As I expected, this trend lasted for just one quarter as Android regained the lead in Q1. Because of the unique pricing structure, the US smartphone market is very different and far more “launch driven” than the rest of the world. As a result, the US is the only remaining smartphone market in the world that can be considered a “duopoly” at this point. However, the nature of the market is also likely to cause a Galaxy S4-driven launch hysteria, giving a boost to the Android platform’s market share until the next iPhone launch. Interestingly, Nokia & Windows Phone seem to have finally gained some traction in the US, breaking past 5% market share for the first time – However, this could also be a temporary, launch driven anomaly.

Europe & Australia: Android Gains, iPhone Declines, Windows Phone Sees Modest Gains

UK: Android Regains Previous Losses

Germany: Android Strengthens Presence

 

France: Android Sees Stronger Growth, iPhone Sees Strong
Decline

Italy: The “Third Platform” Exists?

Spain: The Tale of One Platform

Urban China: Market Remains Remarkable Steady With Android in the Lead

China has consistently been dominated by Android devices, mostly without Google services. However, local Android appstores fill the gap admirably. The chart above shows the state of the smartphone market in Urban China, where Android has consistently held ~70% of the market. If we include data from across the country (from Analysys), the scales tip even more convincingly in favor of Android. Windows Phone’s struggles in China are interesting, given the fact that their presence in other markets is purely driven by first time smartphone buyers. This is probably driven by aggressive pricing of Android devices by Chinese OEMs. This dynamic is beginning to make an impact in markets like China and India, but I expect it to be a global phenomenon soon enough.

Read Original Article at Tech-Thoughts

1. Always strive for simplicity
2. Begin with the end in mind
3. Work smarter, not harder
4. Seek synergies, avoid waste
5. Think reuse before creating
6. Share everything that can be shared
7. Be open-minded to ideas and opportunities

Right now I keep them in a note in Notes, but I would really like to put them on a wall or have them as my background on my devices.

If you are interested in illustrating or visualizing these mantras, please let me know by leaving a comment to this post. I would happily share your illustration or visualization here on my blog.

UPDATE:

Below I will post any incoming illustrations and visualizations of my 7 work mantras below. Enjoy!

Linda Mill

This year the crisis was the looming expiration of the Kyoto Protocol at the end of 2012.  That event officially removed the rationale for these annual charades since the obligations the first world made to support the climate issues of the third world officially expire.  Since the expiration of Kyoto would end the necessity of further conferences, of course, the delegates decided to extend the expiration date to 2020.  This is the great achievement of this conference—an agreement to continue to the debate and meet annually in exotic locations spending other people’s money.

Yes, I know, I am making fun of this event.  But you must admit there are some inconvenient truths that are not spoken in polite climate change company such as:

• The global economic situation is not good and few nations feel rich enough to take on the burden of subsidizing the rest.  The EU has Greece, Spain, Italy, Portugal and Ireland and a few other piglets to worry about.
• The first world stepped up and pledged support for climate improvements but many of the fastest growing emerging economies refused to participate—so China, India and others were worried about climate change when they thought the first world would pay them to fix their own problems, but not worried enough about it to fix them on their own?  Please!
• The US is spending money like a drunken sailor on shore leave with debt and deficits beyond imagination.  Our own fiscal cliff approaches and climate change subsidies to third world countries likely will not be our highest priority.

And then there is the matter of results.  Japan faced a terrible earthquake and tsunami that damaged its nuclear fleet so it turned away from nuclear to natural gas in the form of LNG at least as a bridge fuel.  The Germans over-reacted and began shutting down their nukes and decided to build more coal fired power plants.  Does this sound like an unwavering commitment to emissions reduction to you?

In the US, the shale revolution is increasing supply and driving down prices in a market that is rapidly being transformed from an import energy economy to an export economy.  Low energy prices are a cardinal sin in the environmental community because they encourage more use of fossil fuels and undermine the economics of most favored renewable energy which cannot yet stand on its own without subsidies.   So imagine the shock and awe to discover that the part of the world with the fastest decline in greenhouse gas emissions is none other than the United States of America!

EGADS!  Markets actually work! A command and control economy is not necessary to produce emissions reduction!

 

EGADS!!!  How will we enforce our political correctness if markets rationalize capital investment and make changes so fast we cannot build a coalition against them?

 

EGADS!!!  We didn’t need a cap and trade system of carbon taxes to get this result either!

Markets abhor vacuums even while they profit from uncertainty.  Markets seek equilibrium and will not be denied.  The market forces of self-interest and survival are more powerful and more constructive than any on earth and in today’s anxious global economy rational behavior is working to find its way back to equilibrium and then growth.

The dirty little ‘inconvenient truth’ secret from Doha is the global economy is finding its own way back to balance. That market equilibrium will return us to growth and reduce greenhouse gas emissions at one in the same time because the markets have decided to take matters into their own hands and deprive the politicians in every nation of an excuse to spend other people’s money until the entire world goes over a fiscal cliff.

High energy prices may be good for traders and speculators but they are cancer for economic growth.  The markets have decided that the shale revolution is real and it is going to be used to create an era of low energy prices from adequate supply sufficient to get the global economy growing again.

And for Americans in a funk over the fiscal cliff, government spending excess and huge debt and deficits, the government has largely been a bystander as the markets took charge and the shale revolution scaled on private lands, with private investment, and private initiative.  It is so powerful even a president running for re-election who opposed it took credit for the energy production growth.

The low priced shale energy resolution is here and now!  It may not last forever.  It may not be as powerful in other parts of the world where private property rights are weak or geology less favorable.

Who would have thunk it!  Low price energy is leading us to reduced greenhouse gas emissions, a stronger growth-driven economy, and a more secure energy future.  That is an inconvenient truth worth savoring.

Related articles

• Doha Fails Utterly – Only 37 Countries Agree To Extend Old Kyoto Treaty! “Lots Of Declarations Of Intent” (notrickszone.com)
• U.N conference adopts extension of Kyoto climate accord (news.yahoo.com)
• Rapid transition to a low-carbon economy crucial: Stern report (eco-business.com)
• Gulf News: Middle East needs to pitch in for the world (arwafreelance.com)
• DOHA Climate Change Conference : Interesting developments …. (environmentaleducationuk.wordpress.com)
• UN agrees to extend Kyoto Protocol (abc.net.au)
• Climate change deal agreed at Doha talks (telegraph.co.uk)
• Kyoto extended in UN climate agreement (bigpondnews.com)
• Climate change no longer a priority (thehindubusinessline.com)

The original lawsuit was dismissed by the Federal District court in 2009 as essentially a political lawsuit.  The plaintiffs appealed and the Ninth Circuit took the case. Meanwhile, the U.S. Supreme Court decision in AEP v. Connecticut, 131 S. Ct. 2527, 2535, 180 L. Ed. 2d 435 (2011) , where the legal issue was the same question as in Kivalina of is there a federal common law of public nuisance. Apparently the answer is that there is no federal general common law, but the courts over time have asserted the power to assume there is under a legal principle called “statutory interstices” and have used it to fashion remedies to fit the facts.  The problem with this judicial activism is there is a federal statute that says that the federal common law has been displaced — a concept similar to preemption.

Judge Sidney Thomas, writing for the Ninth Circuit panel in Kivalina, said that the Supreme Court had decided the matter in the AEP case. “We need not engage in complex issue and fact-specific analysis in this case, because we have direct Supreme Court guidance that has already determined that Congress has directly addressed the issue of domestic greenhouse gas emissions from stationary sources and has therefore displaced federal common law.  Further Judge Thomas said that the 1981 decision by the U.S. Supreme Court in Middlesex County Sewerage Authority v. National Sea Clammers Ass’n, 453 U.S. 1, 4 (1981) found  that “under current Supreme Court jurisprudence, if a cause of action is displaced, displacement is extended to all remedies.”  The practical result is that there is no displacement when there is no federal statutory remedy for monetary damages as a result of climate change.

The trial bar is left gasping for air, but the marketplace is spared from endless litigation over climate change. The principal legal theory behind climate change litigation and the endless quest for monetary damages has been debunked by the most arguably liberal Appellate Court in the land and worse, the Kivalina decision appears to further strengthen the preemption defense for defendants in all environmental common law actions, under both federal and state law. This is a victory for common sense worth savoring.

Not even the $7500 Federal tax credit has been enough to get car buyers to buy a Chevy Volt. Toyota Prius is turning from the name of one car into a franchise of several model types in an effort by its corporate parent to leverage its investment and brand eminence in the category and capture the higher mileage ratings to satisfy its CAFÉ obligations.  Honda, meanwhile, signaled its intent to essentially offer a hybrid option for each of its mainline vehicles.

So is the love affair with the PHEV over before it really began?

Yes and no—and that’s a good thing.

The government’s approach to picking energy technology winners has turned into a colossal loser. Buying a car is still a very personal statement about our self-image, status, and persona.  Some cars make a statement we see as consistent with who we think we are.  And some do not.  Prius has been successful commercially because it oozed ‘tech savvy, environmentally responsible, fun to drive, and just hip enough to be well regarded in any company of friends.’  Chevy Volt screamed ‘the government made me do it.’  It is Yugo-like, bloated, plastic remnant from GM’s past with a big battery with a very limited range so I still have to put gas in it probably sense of uncertainty about it. Prius owners rarely have buyers’ remorse. Chevy Volt owners seem to worry about whether it will keep working until the hugely expensive beast is paid off.’

The commercial success of hybrid technology tells us the market is ready for well designed, reasonably priced, good performing electric vehicles.  But pushed beyond hybrids to PHEV involves more cost and more risk than most car buyers think prudent given the evolving state of battery technology.  The result of the government push for PHEV is to make the perfect the enemy of the good.

Johnson Control is buying the assets of A123 because it wants the patents and other intellectual property for future use.  That is a prudent business decision by a firm with deep enough pockets to keep investing in battery technology advances.  So let’s hope they make the most of it.  We need better battery technology not just for vehicles but for energy storage and time shifting of energy use.  But it is going to take a lot more than a Chevy Volt to change the game in vehicle efficiency or energy transformation.

The question is how do we pull the solar energy future out of the ditch and get it back on the road re-positioned to be competitive on its own merits and strengths while changing the counterproductive business model, tax policies, market conditions, regulatory requirements and political meddling that now stand in its way?

The solar power industry continues to struggle to find market equilibrium amidst the chaos and volatility it finds itself.  The news is regularly full of near death experiences which have unfortunately come true for many solar market participants or fears of loom disaster on the horizon including:

• Suntech Cuts Capacity & Costs; Hires UBS To Advise On Convertible Notes
• U.S. Will Place Tariffs on Chinese Solar Panels
• For Solar Panel Makers, a Volley of Trade Cases
• US Anti-Dumping duties and Tariffs Imposed

It was not supposed to be this way.  Solar energy offered the most potential to disintermediate the traditional utility business model with distributed energy alternatives from photovoltaic modules on every roof to concentrated solar thermal options of utility scale.  There was enthusiasm for advances in technology that would improve module efficiency, trackers that would follow the sun and soak up its promise, and there were pioneers who stuck their neck out to invent and perfect new solar technologies to improve performance and efficiency. Yet solar energy seems more today than ever like Sisyphus continuing pushing that rock up the hill only to have it roll back down again.

This nearly perfect storm of unintended consequences from subsidies, feed-in-tariff backfires and political correctness run amok has been compounded by a nearly perfect quest for market dominance by China that sought to achieve its goals in a zero sum game by destroying regional competitors with the backing of its state sponsors eager to expand exports and build capacity to serve its own energy future.

The solar energy industry in the US and EU has been reduced to a leasing and installation franchise of China’s export industry.  We are spending subsidy money to install the least efficient, falling-priced commodity solar modules rather than creating market conditions to incent the evolution to newer, better, more efficient solar technologies. This never made sense except for political correctness.  The unintended consequences of this foolishness is a false sense of solar energy progress which does little to improve the competitive long term position of solar in the energy mix.  We compound this error by our equally foolish policies on regulation that drive up the balance of system costs in the US to more than twice what they are in Germany ( see figure above).

Today, as a consequence, China’s strategy of global market dominance is backfiring.  Excess production capacity and export growth has produced global glut, falling prices, and ferocious regulatory, legal, trade and political fallout for China around the world with anti-dumping duties, countervailing tariffs and other trade restrictions looming to punish China for political expediency rather than fix the market dis-equilibrium mess we created.

Achieving market equilibrium requires some tough love for solar energy and its market participants to create the conditions precedent to allow the market to find balance the old fashioned way—by earning it on the competitive business, technology and sales playing field.

Here are a few suggestions:

1. Empower the market to find equilibrium on its own with Master Limited Partnerships.  The current growth in domestic energy production in oil and gas is being fueled in large part by the genius of the master limited partnership created by the Tax Reform Act of 1986 (TRA) and the Revenue Act of 1987 (IRC) to stimulate oil, gas and natural resource production.  This creative approach has worked spectacularly, minimized government interference, and improved both the allocation of capital where it has the best chances of market success and reducing the gaming of the tax laws by flowing through the income to the parties with skin in the game.  Applying the MLP rules to renewable energy on an equal footing with oil and gas and other natural resource development opportunities levels the playing field and provides a way for the market itself to pull solar, wind and other renewable energy projects out of the ditch on a merits basis not political correctness.
2. End Federal Subsidies and Declare Victory on State Renewable Portfolio Standards. The most effective barrier to market abuse by China is to end gaming of the subsidies system that has fueled it.  Creating artificial demand by renewable portfolio standards may produce good headlines for politicians but it is manipulating the market just as corrosively as anything China has done in its quest for global market share dominance.  To fix the China market manipulation problem we must fix the US and EU market manipulation inducements so that the market can work to find equilibrium.  It is time for the addicted to confess their addiction is a problem they must face squarely in the search for market equilibrium and long term survival and success.
3. Focus National Energy Policy on Creating a Thriving Competitive Market for Energy Innovation without picking the technology winners or losers. Our national energy policy has been broken for a long time.  As a body politic we too must face reality.  We can’t continue to spend money we borrow from China and others to permit our politicians to game the market while pandering to their base.  The government’s one true and most beneficial job is to create the competitive level playing field market conditions that allow all market participants to invest and work hard to provide high quality products and services that customers want to buy because they are a good value not because the government mandates it or subsidies it.

I recognize this may seem like fantasy, but if the proponents of solar energy and other clean energy alternatives really want it to succeed they must get off life support, be free from the addiction to unsustainable subsidies, and given a chance to grow and thrive on their own in a healthy, competitive market environment where innovation and hard work create sustainable market equilibrium.

The EU emissions trading scheme had fallen on hard times as the number of permits issued was large and demand in a falling economy was weak so prices fell.  Some reforms were made and the freebie credits were reined in but the economy was still weak.  While progress was still made in emissions reduction it was not the transformation some had hoped to achieve.

Then the Japan earthquake and tsunami sends Europe into a frenzy over the safety of nuclear power and Germany announced major closures of its nuclear fleet.  The Greens hoped killing off nuclear would give them a two-fer—less nuke and more renewables.

The German government policy is to encourage construction of 10 gigawatts of coal fired generation to displace aging nuclear plants and provide baseload backup for wind and solar power.  Worldwide coal plant construction grew 5.4% over the past year according to BP and now represents about 30% of installed capacity. The trade-off is to reduce the number of free emissions allowances to drive up the carbon credits markets.  To the Greens this is like paying penance for your sins.

But markets are a fickle mistress.  The lust for profits is a basic human business animal spirit.  So a story recently in Bloomberg BusinessWeek caught my eye. It said that European power producers planned to open six times more coal fired generating plants than gas-fired generators by 2015.  The story said profits at coal plants were expected to double repeating an analysis released September 13 by Goldman Sachs.

In the US the situation is reversed as low natural gas prices are accelerating the coal to gas conversion and forcing the retirement of many coal plants as economics and regulatory uncertainty combine into a double whammy for the coal industry.

The difference of course is the EU fear of the Russian gas price volatility and politics.  High gas prices in Europe are the result of politically expedient deals that peg the price of Russian gas imports to the price of oil.  In US markets the growth of domestic energy production of natural gas from shale sources has decoupled prices and driven natural gas down to near record levels.  The markets are correcting the oversupply and gas prices are expected to climb as supply and demand come back into balance.  Goldman Sachs forecasts gas prices will rise 17% by 2015 assuming normal weather.

So what’s the strange bedfellows story?

It seems that carbon credits markets have the same lust for profits as energy companies so some forecasters expect EU carbon credit prices to bounce back from their own record lows and grow by as much as 73% by the end of 2013 according to this Bloomberg report. Coal companies are glad to pay the carbon credit price to get back into robust operation and turn profits again.  Meanwhile, nuclear plants are forced to shut down and renewable projects facing their old nemesis from the black fuels once again have a new challenger for low cost power production.

Who is cheering?  EU utility ratepayers who have been taxed and gouged by politically correct but still artificially high utility rates to pay for the green aspirations of their politicians.  Call it common sense, call it the revenge of markets, call it economic reality—the Europeans just might be onto something!

“We, the U.S. Fish and Wildlife Service (FWS) and the National Marine Fisheries Service (NMFS) (collectively referred to as the ‘‘Services’’ or ‘‘we’’), propose to revise our regulations pertaining to impact analyses conducted for designations of critical habitat under the Endangered Species Act of 1973, as amended (the Act). These changes are being proposed as directed by the President’s February 28, 2012, memorandum, which directed us to take prompt steps to revise our regulations to provide that the economic analysis be completed and made available for public comment at the time of publication of a proposed rule to designate critical habitat.”  —Preamble to FWS–R9–ES–2011–0073, Proposed Federal Rulemaking published August 24, 2012.

If this is all you read about this proposed rules change, you’d think, “OK, no big deal this makes sense. We want the economic impact analysis of Federal rules to be complete—otherwise why bother.  We also want to see that complete analysis before the public comment period so we can actually comment on the estimated cost and impact of proposed rules.”

But according to a newly released Stoel Rives analysis of the impact and implications of the proposed critical habitat rules change, the dirty little secret is  you would be mistaken.

Critical habitat protection has been one of the most controversial and intrusive provisions of the Endangered Species Act (ESA).  The goal of the provision was to avoid doing more harm to endangered species thus giving them an opportunity to sustain themselves.  The ESA says Federal agencies may not take actions that destroy or adversely affect critical habitat.  There is nothing wrong with this goal, but the way it has been applied has resulted in situations where the designation amounts to a virtual taking of private property for a public purpose.

This critical habitat designation provision also creates opportunity for abuse of discretion if Federal agencies or environmental interveners use it to coerce outcomes that undermine the economics of proposed projects.  We often refer to this as NIMBY or other pejoratives, but they are symptoms of a Federal environmental regulatory process that is out of balance.  The review of the real implications of this proposed rules change is a good case study in the creeping process of environmental GOTCHA played out by rulemaking.

To balance the coercive potential of critical habitat designation, the Stoel Rives analysis reminds us that the ESA requires Federal agencies to “consider potential economic, national security, and other relevant impacts”. This includes economic impacts to private landowners and developers.  And in cases where this balancing of interests finds that there are more economic, national security or other benefits from doing so the Federal Agencies “may exclude an area from critical habitat” if those benefits outweigh the benefits of including it in the designation.

See why this is so contentious?

The case law is littered with conflicting decisions in these matters.  And that too creates opportunities for mischief.  Here we can even sympathize with Federal bureaucrats trying to write rules that will apply to all when a decision in one Federal court may be at odds with a decision interpreting the same provision differently in another.  That is what apparently provoked this proposed rulemaking.

Dueling Appeal Court Rulings

The Ninth Circuit Court of Appeals, the most overturned court in the nation, adopted a “baseline approach” to critical habitat designation which allowed the Federal agencies to consider only ‘incremental impacts’ in their economic impact analysis of critical habitat designation.  The practical effect of the ruling in the Western states where it was applicable was to enable the agencies to calculate the cost of a rule using minor additional administrative costs rather than the total regulatory burden.  The result , of course, was much more critical habitat was found to pass the cost benefit test and many more landowners were suing to stop it in Federal court.

In the Tenth Circuit Court of Appeals the same question was litigated and appealed with the opposite result.  The Tenth circuit said the baseline incremental approach used in the Ninth Circuit was unlawful precisely because it ignored the full cost of regulatory burdens in measuring the overall cost and benefits of the critical habitat designation as required by the ESA.

So what?

So the proposed rulemaking seeks to adopt the Ninth Circuit opinion allowing this incremental baseline approach and reject the Tenth circuit opinion.  If this proposed rule is adopted it surely will be litigated to the DC circuit where Federal rules are appealed and perhaps then onto the US Supreme Court.

You may comment on the proposed rule until October 23, 2012 as follows:

1. Federal eRulemaking Portal: http://www.regulations.gov/#!home;tab=search . Search for FWS– R9–ES–2011–0073, which is the docket number for this rulemaking.
2. U.S. mail or hand delivery: Public Comments Processing, Attn: FWS–R9– ES–2011–0073; Division of Policy and Directives Management; U.S. Fish and Wildlife Service; 4401 N. Fairfax Drive, PDM–2042; Arlington, VA 22203. We will post all comments on http://www.regulations.gov.

Federal Lands

More than 96% of the domestic energy production growth from shales has taken place on private lands safely out of the reach of the Federal government bureaucrats and regulators.  That energy production growth is transforming America’s energy future by increasing supply reliability and driving down the price of natural gas from more than $13 per MMBTU to less than $3 per MMBTU in a period of less than five years.

Meanwhile, on public lands production has actually slowed as the Department of Interior and its Bureau of Land Management (BLM) press on with extensive environment studies and new regulations even as the President professes support for an ‘all of the above’ energy strategy.  The Federal government announced proposed rules on fracking on public lands in May 2012 (43 CFR 3160.0-3) and has received more than 2,000 comments on those rules by the September 10, 2012 deadline. Interior Secretary Ken Salazar said in May he hoped to issue a final rule by the end of 2012 likely after the Presidential election.

According to a study by John Dunham and Associates the total cost of the proposed Federal rules will be about $1.5 billion to $1.62 billion a year or about $235,839 per well to satisfy the requirements on chemicals disclosure and certification that the well  is properly isolated to prevent leaks that might contaminate groundwater.  This figure compares to a BLM estimate of $11,833 per well—a difference of more than 20 times.    All that cost for rules that the oil and gas industry and the states of Colorado and Wyoming claim are unnecessary, unreasonable and required E&P firms to take actions that no state currently regulating fracking for oil and natural gas production has required.

The Dunham Study disputes the BLM claim that the proposed regulations are not major changes from existing rules citing the following examples of how the new rules add substantial and costly new requirements for E&P activities on federal and Indian lands:

1. Mandates additional information and meet new requirements than currently required for all well stimulation (completion) activity when applying for a permit to drill (APD).
2. Requires a similar separate application must be filed prior to additional drilling on an existing well.
3. Requires BLM review and verification the additional drilling requirements at each permit stage slowing down the process and driving up the cost of idle equipment and crews.
4. Requires additional cement bond logs be submitted to BLM for review and approval prior to completing the well again idling equipment and crews and driving up costs.
5. Requires reporting specific source of water used in well completion operations.
6. Requires submittal of a detailed engineering design and other information related to well stimulation operations to the BLM for approval.  These detailed studies end up becoming the basis for environmental litigation designed to challenge the review process and thus slow to stop E&P activities.
7. Requires detailed information about how all recovered fluids from well drilling will be captured and disposed consistent with the rules.
8. Requires a successful mechanical integrity test before beginning any well drilling.
9. Requires receipts be supplied to BLM to validate that recovered fluids are disposed of in a proper manner.

Dunham also says that by adding additional requirements for new drilling activities at existing wells many of the current 90,452 wells on Federal leases will find greatly increased costs over time. Dunham calculated its estimates of the cost of these new fracking rules on public lands by examining data from the thirteen state regulatory authorities in the Western states covered by the study.  Dunham found about 12,300 oil wells, and 14,100 gas wells currently in the process of receiving a permit, or permitted but not yet drilled.

As you can imagine, private energy developers are wondering if the shale drilling opportunities on public lands—substantial as they are on the 38 million acres leased by the U.S. Government for energy development —are worth the aggravation.  Now a private study of the implications and costs of the proposed Federal regulations and environmental requirements to gain access to public lands has added up the costs. It is not a good news story.