Wednesday, July 22, 2015

Michael Skelly has a New BFF in Bluescape Resources

Michael Skelly at Clean Line Energy Partners llc has a new BFF! (and it’s not me or anyone in Illinois, Missouri, Iowa, Arkansas, Oklahoma, or Kansas)  Clean Line Energy Partners llc has a new “investor”.  John Wilder at the holding company Bluescape Resources is investing up to $50 million contingent upon regulatory approval.  Interesting. 

For a new investor to enter Clean Line, one can safely surmise National Grid and Ziff Brothers have cut off further funding.  Surely, the current majority investors would have the right of first refusal and could have written a $50 million dollar check and shutout Bluescape rather than lose a percentage of their ownership in CLEP llc.  That in itself is most interesting and Skelly deserves points for spinning lemons into lemon-aid.   Extra points should be given to have the quote from National Grid’s representative welcoming Bluescape’s money aboard the SS Clean Line (sinking ship).   If Clean Line wasn’t a a sinking ship, National Grid would not want additional partners.

Bluescape’s investments are largely in natural gas “plays” or “reserves”  While nothing on the internet says it directly but dances around it, I presume these “plays” are leases or options on natural gas leases requiring fracking.  Seriously, how else do you describe natural gas “plays” or “resource positions” but as potential leases and reserves requiring development (fracking).   Bluescape Resources Company llc also “helps lead Parallel Resource Partners llc”.

Not sure what “helps lead” means exactly, but Parallel is a speculation holding company that specifically invests in natural gas exploration and production companies.  Ironically, Parallel’s corporate office is about 2 blocks down the street from Clean Line.  Small world, ehh. 

Bluescape Resources Company llc also has purchased a $50 million share of a natural gas company called EXCO.  This company actually pumps natural gas. For this $50 million investment, Bluescape is a majority owner with the ability to leverage a new CEO President and COO with Bluescape’s John Wilder as Chairman of the Board. 

So what does Bluescape get with a $50 million investment in Clean Line Energy Partners llc?  2 seats on the board. 

What I don’t understand is why Bluescape has decided to invest in Clean Line.  Bluescape’s investments revolve around natural gas production with “plays”, investments in exploration and investments in natural gas production in EXCO.  What’s odd is none of Bluescape’s investments have anything to do with renewable energy, wind energy, or transmission.  I don’t get it.  There is no synergy here. 

Does Bluescape see Clean Line’s transmission projects as a potential to for natural gas generation? Proposed pipeline projects are struggling almost as much as Clean Line’s transmission projects.  Maybe Bluescape sees transmission as more viable than pipelines and with the EPA’s proposed Clean Power Plan, electricity generation near the source wells might seem more viable.  Maybe.  It’s hard to say what Bluescapes attraction is.

Maybe Bluescape’s contingent investment is more of a bluff move by Clean Line.  Maybe it’s a move by Clean Line to show a new investor still sees Clean Line’s business model is still viable.  Hopefully Clean Line’s new investor will provide one of its board members to testify at the Illinois Commerce Commission for the Grain Belt Express.  It would be interesting to hear Bluescape justify the potential of this investment.  It would also be interesting to hear the board member from Bluescape explain the dynamics of the contingencies for Clean Line to receive the $50 million. 

According to press releases, Bluescape’s investment is contingent on regulatory approval.  Normally “regulatory approval” means a government body must approve the holding company’s investment, but there is no regulator who really gives a damn here.  The Federal Energy Regulatory Commission doesn’t care who invests in Clean Line Energy Partners llc.  The Illinois Commerce Commission, Iowa Utility Board, or the Arkansas Public Utility Commission has no authorization to deny Bluescape’s investment. 

The only regulatory approval here is on Clean Line.  Illinois has denied the Rock Island Clean Line eminent domain.  Missouri and Arkansas has denied Clean Line projects public utility status.  The Tennessee Valley Authority is giving indications that it does not want to buy high priced wind energy wheeled through the Plains & Eastern Clean Line project.  Even New Mexico’s Governor has stated he is tired of frittering away state money on the Western Spirit Clean Line project.    So, what regulatory approval is Bluescape’s investment contingent upon?

When I first heard Clean Line has a new investor, the first reaction was along the lines “Oh crap. Some idiot believes Skelly’s song and dance.”  After researching, I do believe John Wilder is not stupid and does not make foolish investments too easily.    So what’s the motivation for Bluescape?  Maybe the intended message was close to my first reaction.   Maybe Clean Line wants state regulatory commissions to believe this company is legitimate.  More smoke, mirrors, song, dance, and kool-aid for state regulators is the desired reaction.

Could the Bluescape holding company’s investment into Clean Line be a hoax of sorts?  Possibly.  With the repeal of the Public Utilities Holding Company Act (PUHCA) in the 2005 Energy Policy Act, such shenanigans are possible.  Thank Jimmy Glotfelty (Clean Line’s VP with a political science degree for pushing that through when he was at the Department of Energy)  This investment is clearly outside Bluescape’s core. 
Oh, I do hope the matter of Bluescape will be discussed at the Illinois Commerce Commission.  Something is hinky here. 

This blog contains forward focused statements that may or may not be correct.  Much like the forward statements by corporations I cannot guarantee the accuracy but given the odd wording of press releases and subsequent articles based upon press releases attempts have been made to sift through the corporate speak and bull crap to put it in plain English.  If these plain English interpretations are not correct, then associates of Clean Line Energy Partners llc should do a better job explaining.    

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