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Monday, January 16, 2012
Obama...The High Achiever
Thursday, December 8, 2011
Thursday, December 1, 2011
Gulf Coast Oil Industry’s Recovery Difficult to Grasp
by Pierre Bertrand
Stymied by a six-month drilling moratorium, the climb to recovery appears slow for the oil and natural gas industries in the Gulf of Mexico since the Macondo spill of 2010.
In reality, it’s a little more ambiguous than public perception or data numbers suggest.
Of the 56 drilling rigs in operation in deep water regions of the Gulf before BP Plc’s spill, 36 are back online as of Nov. 18 and are actively drilling new wells for hydrocarbons, according to analysts with Baker Hughes. Twenty rigs have decided to leave the region altogether.
The U.S. Energy Information Administration, whose latest available data dates back to Feb. 3, shows offshore rig counts have progressively dropped throughout the country since 1981. That December, there were 283 offshore oil and natural gas rigs in operation. That number plummeted to 15 operating rigs in July of last year. As of September, there were 32 operating rigs.
Since then, rig numbers have appeared to stay flat. When the Gulf Coast moratorium was lifted last year on Oct. 12, the Bureau of Safety and Environmental Enforcement’s website, which updates the number of approved drilling permits in the Gulf on a daily basis, shows the number of approved unique deepwater wells totaled 56 as of Nov. 29.
The drop in rig counts since the 1980s, especially in the Gulf region, said Jonathan Cogan, a spokesman for the Energy Information Administration, is partly due to the drop in oil prices experienced at that time, and an increasingly pronounced interest in ultra deep-water prospecting. As technology improved to do so, the size of the rigs increased and so did their reach. Added reach meant rigs could dig deeper in the ground and harvest oil from a larger area – thus rig counts started dropping off.
But this is where it gets complicated.
David Smith, a spokesman with the Bureau of Safety and Environmental Enforcement, said comparing the difference between permit and rig numbers pre spill to those post spill will not be an accurate indication of the industry’s revival or decline in the Gulf region.
As part of the new permitting regulations put in place after the Macondo spill, rigs get counted and labeled differently. Where a rig drilling at 1,000 feet was considered a deep-water well before, now its considered at 500 feet. Distinctions are also made for wells that require blowout protectors and those that don’t.
Smith said the environmental enforcement bureau is actively working to devise a system of comparison, which should come out in the next few days.
It’s comparing oranges to apples, and Andy Radford, senior policy advisor for offshore with the American Petroleum Institute, said to get a real sense of the industry’s health, one needs to take a closer look.
“I guess you have to look behind the curtain and look at what they are doing,” Radford said, who added just because a permit allows for drilling, doesn’t mean they are specifically drilling for oil or natural gas.
But the reason why rig counts aren’t climbing back up post moratorium, reported the Financial Times on Nov. 13, is in part due to the drilling permitting process, which has became more stringent.
The Times reported that the 3,654 pages of paperwork and a wait of more than 100 days before a drilling permit is issued have contributed to more than 1 million barrel of oil equivalents lost this year compared to last.
The increased permitting demands have dampened people’s confidence in the region’s industry, according to Andy Radford, senior policy adviser for offshore with the American Petroleum Institute.
Though the permitting process is slowly getting better and faster, companies are almost having to do a cost benefit analysis when seeking drilling permits, segregating the wells for which they are certain to get approval while leaving others untapped, said Radford.
It is common for a company to have to wait 200 days between filing a plan for a well and the time the permit is finally approved, and the current permitting process is causing some companies to lose confidence in the industry, added Radford. Some want the permitting process to go faster to help promote growth, he said.
That could be costly come Dec. 14, when the Department of the Interior opens up more than 21 million acres of Gulf offshore oil leases.
At the heart of the issue is whether the Bureau of Safety and Environmental Enforcement can keep up with incoming permits, and after the moratorium, this sale is likely to be a platform for the industry to expel some of its pent up demand, Radford said.
“That increases uncertainty,” he said. “To make investment decisions, [companies] like certainty and predictability.”
John Filostrat, public affairs officer for BOEM’s Gulf of Mexico Region, said the regions up for sale contain anywhere between 222 to 423 million barrels of oil that can generate an estimated revenue of $5.7 to $9.6 billion.
For BOEM, this sale, though the first since the Macondo spill, is routine and “just getting back to normal business,” Filostat said.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.
Original Article
In reality, it’s a little more ambiguous than public perception or data numbers suggest.
Of the 56 drilling rigs in operation in deep water regions of the Gulf before BP Plc’s spill, 36 are back online as of Nov. 18 and are actively drilling new wells for hydrocarbons, according to analysts with Baker Hughes. Twenty rigs have decided to leave the region altogether.
The U.S. Energy Information Administration, whose latest available data dates back to Feb. 3, shows offshore rig counts have progressively dropped throughout the country since 1981. That December, there were 283 offshore oil and natural gas rigs in operation. That number plummeted to 15 operating rigs in July of last year. As of September, there were 32 operating rigs.
Since then, rig numbers have appeared to stay flat. When the Gulf Coast moratorium was lifted last year on Oct. 12, the Bureau of Safety and Environmental Enforcement’s website, which updates the number of approved drilling permits in the Gulf on a daily basis, shows the number of approved unique deepwater wells totaled 56 as of Nov. 29.
The drop in rig counts since the 1980s, especially in the Gulf region, said Jonathan Cogan, a spokesman for the Energy Information Administration, is partly due to the drop in oil prices experienced at that time, and an increasingly pronounced interest in ultra deep-water prospecting. As technology improved to do so, the size of the rigs increased and so did their reach. Added reach meant rigs could dig deeper in the ground and harvest oil from a larger area – thus rig counts started dropping off.
But this is where it gets complicated.
David Smith, a spokesman with the Bureau of Safety and Environmental Enforcement, said comparing the difference between permit and rig numbers pre spill to those post spill will not be an accurate indication of the industry’s revival or decline in the Gulf region.
As part of the new permitting regulations put in place after the Macondo spill, rigs get counted and labeled differently. Where a rig drilling at 1,000 feet was considered a deep-water well before, now its considered at 500 feet. Distinctions are also made for wells that require blowout protectors and those that don’t.
Smith said the environmental enforcement bureau is actively working to devise a system of comparison, which should come out in the next few days.
It’s comparing oranges to apples, and Andy Radford, senior policy advisor for offshore with the American Petroleum Institute, said to get a real sense of the industry’s health, one needs to take a closer look.
“I guess you have to look behind the curtain and look at what they are doing,” Radford said, who added just because a permit allows for drilling, doesn’t mean they are specifically drilling for oil or natural gas.
But the reason why rig counts aren’t climbing back up post moratorium, reported the Financial Times on Nov. 13, is in part due to the drilling permitting process, which has became more stringent.
The Times reported that the 3,654 pages of paperwork and a wait of more than 100 days before a drilling permit is issued have contributed to more than 1 million barrel of oil equivalents lost this year compared to last.
The increased permitting demands have dampened people’s confidence in the region’s industry, according to Andy Radford, senior policy adviser for offshore with the American Petroleum Institute.
Though the permitting process is slowly getting better and faster, companies are almost having to do a cost benefit analysis when seeking drilling permits, segregating the wells for which they are certain to get approval while leaving others untapped, said Radford.
It is common for a company to have to wait 200 days between filing a plan for a well and the time the permit is finally approved, and the current permitting process is causing some companies to lose confidence in the industry, added Radford. Some want the permitting process to go faster to help promote growth, he said.
That could be costly come Dec. 14, when the Department of the Interior opens up more than 21 million acres of Gulf offshore oil leases.
At the heart of the issue is whether the Bureau of Safety and Environmental Enforcement can keep up with incoming permits, and after the moratorium, this sale is likely to be a platform for the industry to expel some of its pent up demand, Radford said.
“That increases uncertainty,” he said. “To make investment decisions, [companies] like certainty and predictability.”
John Filostrat, public affairs officer for BOEM’s Gulf of Mexico Region, said the regions up for sale contain anywhere between 222 to 423 million barrels of oil that can generate an estimated revenue of $5.7 to $9.6 billion.
For BOEM, this sale, though the first since the Macondo spill, is routine and “just getting back to normal business,” Filostat said.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.
Original Article
China's New fears of a downturn
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Monday, November 28, 2011
U.S. Energy Prices Cheapest in the World: T. Boone Pickens
By Yadullah Hussain
Oil tycoon T.Boone Pickens says that the United States treated Canadians like ‘step children’ by delaying TransCanada’s Keystone XL Pipeline.
“The United States is silly enough to think Canada is a part of the United States because they are both in North America and so they treat the Canadians like step children,” the candid Pickens told CNBC in an interview.
Taking broad swipes at the Obama adminstration’s energy policy, Pickens said there are close to 50 pipelines crossing the Ogalla Aquifer in Nebraska. The ecologically sensitive area was a flashpoint in the green movement’s objection to the $7-billion pipeline. The opposition prompted a State Department order to move the pipeline away from the area, further delaying the project.
“The Ogallala Aquifer extends from midland Texas to South Dakota across eight states. Now can you imagine how many pipelines cross that Aquifer? Hundreds…my ranch sits right in the middle of it in Roberts county, Texas. I have three pipelines across my ranch,” said Pickens.
The entrepreneur, who made his billions via acquisitions of energy companies and runs BP Capital Management, said the U.S. energy sector has a great story to tell: “Natural gas prices in the U.S. is under $4, making it cheaper than European gas which is $13 and at $16-18 in the Middle East. We have the cheapest energy in the world in this country. Our oil is cheaper by $15 a barrel than the global price and our natural gas is cheaper by a fraction. Why isn’t somebody saying we have the cheapest energy in the world? We can bring industry back into the country.”
Original Article
Tuesday, November 22, 2011
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By Ashley Halsey III, Published: November 17
House Republicans on Thursday proposed an expansion of domestic oil production to fund a long-term transportation spending bill, a plan that set the stage for a showdown with Senate Democrats who don’t want highway funding coupled with drilling for new oil.
House Speaker John A. Boehner (Ohio) said he hopes to pass a multi-year surface transportation bill by year’s end that would serve as the centerpiece of a GOP jobs plan. He said expanded drilling could “provide a new revenue stream for infrastructure repair and improvement.”
“Our bill links job creating, energy production and infrastructure together,” Boehner said.
The Republicans had committed in August to finding new funding to augment the rapidly dwindling Highway Trust Fund, the traditional source of surface transportation revenue that relies on the 18.4 cents-per-gallon federal gas tax.
Though details of their plan to raise new revenue through expanded drilling were not released, it was anticipated to take the form of a well-head tax on new wells.
The House proposal drew immediate reaction from Sen. Barbara Boxer (D-Calif.), whose Environment and Public Works Committee approved a surface transportation bill last week.
“The proposal by Republican leadership would mire a very popular surface transportation bill in controversy, and it would directly threaten many thousands of fishing, tourism and recreation-related jobs,” Boxer said. “In addition, I am told by financial experts that this proposal would fall billions short.”
While the Senate has the ability to augment the Highway Trust Fund revenues with money from the General Fund, the House is boxed in by a rule it passed in the opening moments of the Congressional session. That rule stipulated that transportation spending must be limited to trust fund revenues unless new revenue can be found.
There is a $12 billion gap between those trust fund revenues and the almost $80 billion that the Senate bill proposes to spend over two years, a gap that will have to be closed before the bill can win final Senate approval.
Both the Senate bill and the plan under discussion in the House aim to maintain transportation spending near or just above current levels, an amount that experts say is woefully below what’s needed to maintain and restore the national infrastructure.
House Transportation Committee Chairman John L. Mica (R-Fla.) said Thursday that GOP leaders would continue to search for more sources of new revenue. He described the proposal discussed Thursday — but not yet presented in writing — as a “win-win-win for the American people.”
“Americans will win by rebuilding our nation’s infrastructure. Americans will win by putting millions to work. And Americans will win by having lower energy costs,” Mica said.
He said the Republican bill also will streamline the federal approval process for transportation projects and provide more flexibility to state agencies.
Rep. Nick J. Rahall II (W.Va.), the ranking Democrat on Mica’s committee, said the plan was “short on details but long on expectations.”
“It is hard to take a plan that contains few details seriously, but optimistically it appears the tides have turned and Republicans have come around from their previous attempts to slash the transportation budget by one-third,” Rahall said.
He said the GOP plan failed to identify the “real, sustainable revenues” needed to fully fund surface transportation and that funding proposals based on energy expansion have ”been around for decades.”
“It is Speaker Boehner’s birthday today, but it sounds like Big Oil is going to get all of the gifts,” Rahall said. “It is tragic that Republicans have failed to reach across the aisle and work with Democrats to develop a bipartisan approach to address the unprecedented infrastructure needs our nation is facing.”
Boehner said the GOP plan, like the Senate bill, would be free of controversial earmarks for the first time since the 1980s. There were 10 earmarks in the 1982 transportation bill and the number increased to about 2,000 when the last bill passed.
Without the incentive of being able to insert pet projects in a bill, members of Congress have not passed a long-term bill since the last one expired two years ago. Passing short-term extensions has frustrated state transportation officials who rely on long-term federal funding commitments when they begin multi-year projects.
Original Article
By Ashley Halsey III, Published: November 17
House Republicans on Thursday proposed an expansion of domestic oil production to fund a long-term transportation spending bill, a plan that set the stage for a showdown with Senate Democrats who don’t want highway funding coupled with drilling for new oil.
House Speaker John A. Boehner (Ohio) said he hopes to pass a multi-year surface transportation bill by year’s end that would serve as the centerpiece of a GOP jobs plan. He said expanded drilling could “provide a new revenue stream for infrastructure repair and improvement.”
“Our bill links job creating, energy production and infrastructure together,” Boehner said.
The Republicans had committed in August to finding new funding to augment the rapidly dwindling Highway Trust Fund, the traditional source of surface transportation revenue that relies on the 18.4 cents-per-gallon federal gas tax.
Though details of their plan to raise new revenue through expanded drilling were not released, it was anticipated to take the form of a well-head tax on new wells.
The House proposal drew immediate reaction from Sen. Barbara Boxer (D-Calif.), whose Environment and Public Works Committee approved a surface transportation bill last week.
“The proposal by Republican leadership would mire a very popular surface transportation bill in controversy, and it would directly threaten many thousands of fishing, tourism and recreation-related jobs,” Boxer said. “In addition, I am told by financial experts that this proposal would fall billions short.”
While the Senate has the ability to augment the Highway Trust Fund revenues with money from the General Fund, the House is boxed in by a rule it passed in the opening moments of the Congressional session. That rule stipulated that transportation spending must be limited to trust fund revenues unless new revenue can be found.
There is a $12 billion gap between those trust fund revenues and the almost $80 billion that the Senate bill proposes to spend over two years, a gap that will have to be closed before the bill can win final Senate approval.
Both the Senate bill and the plan under discussion in the House aim to maintain transportation spending near or just above current levels, an amount that experts say is woefully below what’s needed to maintain and restore the national infrastructure.
House Transportation Committee Chairman John L. Mica (R-Fla.) said Thursday that GOP leaders would continue to search for more sources of new revenue. He described the proposal discussed Thursday — but not yet presented in writing — as a “win-win-win for the American people.”
“Americans will win by rebuilding our nation’s infrastructure. Americans will win by putting millions to work. And Americans will win by having lower energy costs,” Mica said.
He said the Republican bill also will streamline the federal approval process for transportation projects and provide more flexibility to state agencies.
Rep. Nick J. Rahall II (W.Va.), the ranking Democrat on Mica’s committee, said the plan was “short on details but long on expectations.”
“It is hard to take a plan that contains few details seriously, but optimistically it appears the tides have turned and Republicans have come around from their previous attempts to slash the transportation budget by one-third,” Rahall said.
He said the GOP plan failed to identify the “real, sustainable revenues” needed to fully fund surface transportation and that funding proposals based on energy expansion have ”been around for decades.”
“It is Speaker Boehner’s birthday today, but it sounds like Big Oil is going to get all of the gifts,” Rahall said. “It is tragic that Republicans have failed to reach across the aisle and work with Democrats to develop a bipartisan approach to address the unprecedented infrastructure needs our nation is facing.”
Boehner said the GOP plan, like the Senate bill, would be free of controversial earmarks for the first time since the 1980s. There were 10 earmarks in the 1982 transportation bill and the number increased to about 2,000 when the last bill passed.
Without the incentive of being able to insert pet projects in a bill, members of Congress have not passed a long-term bill since the last one expired two years ago. Passing short-term extensions has frustrated state transportation officials who rely on long-term federal funding commitments when they begin multi-year projects.
Original Article
http://loga.la/oil-gas-news/?p=5962
Wednesday, November 16, 2011
Oil Fields Kept Off-Limits May Be Underestimated, API Says
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By Katarzyna Klimasinska
(Updates with U.S. comment starting in seventh paragraph.)
Nov. 15 (Bloomberg) — President Barack Obama’s administration may be underestimating the amount of oil available in offshore areas closed to drilling, the largest U.S. energy trade group said.
Companies represented by the American Petroleum Institute may find that the Eastern Gulf of Mexico and the waters of the Atlantic and Pacific hold more oil and gas than estimated by the government, provided producers can conduct seismic and exploratory work in the areas, Erik Milito, API group director of upstream and industry operations, said today.
“Historically, the more we work, the more we find,” Milito said during a conference call with reporters. “We need to be able to, one, get out there and do the geological and geophysical activity to allow us to get new information, and two, we need to have actual leasing, so that we can go out there and explore.”
The Interior Department is planning 15 offshore oil-lease sales from 2012 to 2017, excluding along the Atlantic and Pacific coasts. The U.S. plans two auctions, in 2014 and 2016, in areas of the eastern waters of the Gulf that aren’t blocked by a moratorium imposed by Congress.
The administration said the leasing sales will open for development more than 75 percent of the undiscovered and recoverable oil and gas resources on federal offshore lands.
The estimate is based on data from the 1970s, and is inadequate, Milito said.
Beaudreau Speaks
The Bureau of Ocean Energy Management, which is in charge of offshore development, is aiming to add information about the resource potential in the middle and south Atlantic by allowing seismic activity in the area, Tommy Beaudreau, director of the agency, said today at the Platts Energy Podium, an event in Washington. Data about the Atlantic reserves is decades old, he said.
“There’re a number of companies that have expressed interest in conducting those seismic surveys,” Beaudreau said. “Those measures will go forward.”
On the other hand, the data used to evaluate resources and plan lease sales in the Gulf of Mexico is “extremely modern, extremely robust,” he said.
The companies represented by the API include Exxon Mobil Corp., the world’s largest company by market value, and BP Plc, the largest holder of deep-water leases in the Gulf of Mexico.
–Editors: Steve Geimann, Larry Liebert
To contact the reporter on this story: Katarzyna Klimasinska in Washington at kklimasinska@bloomberg.net
Original Article
By Katarzyna Klimasinska
(Updates with U.S. comment starting in seventh paragraph.)
Nov. 15 (Bloomberg) — President Barack Obama’s administration may be underestimating the amount of oil available in offshore areas closed to drilling, the largest U.S. energy trade group said.
Companies represented by the American Petroleum Institute may find that the Eastern Gulf of Mexico and the waters of the Atlantic and Pacific hold more oil and gas than estimated by the government, provided producers can conduct seismic and exploratory work in the areas, Erik Milito, API group director of upstream and industry operations, said today.
“Historically, the more we work, the more we find,” Milito said during a conference call with reporters. “We need to be able to, one, get out there and do the geological and geophysical activity to allow us to get new information, and two, we need to have actual leasing, so that we can go out there and explore.”
The Interior Department is planning 15 offshore oil-lease sales from 2012 to 2017, excluding along the Atlantic and Pacific coasts. The U.S. plans two auctions, in 2014 and 2016, in areas of the eastern waters of the Gulf that aren’t blocked by a moratorium imposed by Congress.
The administration said the leasing sales will open for development more than 75 percent of the undiscovered and recoverable oil and gas resources on federal offshore lands.
The estimate is based on data from the 1970s, and is inadequate, Milito said.
Beaudreau Speaks
The Bureau of Ocean Energy Management, which is in charge of offshore development, is aiming to add information about the resource potential in the middle and south Atlantic by allowing seismic activity in the area, Tommy Beaudreau, director of the agency, said today at the Platts Energy Podium, an event in Washington. Data about the Atlantic reserves is decades old, he said.
“There’re a number of companies that have expressed interest in conducting those seismic surveys,” Beaudreau said. “Those measures will go forward.”
On the other hand, the data used to evaluate resources and plan lease sales in the Gulf of Mexico is “extremely modern, extremely robust,” he said.
The companies represented by the API include Exxon Mobil Corp., the world’s largest company by market value, and BP Plc, the largest holder of deep-water leases in the Gulf of Mexico.
–Editors: Steve Geimann, Larry Liebert
To contact the reporter on this story: Katarzyna Klimasinska in Washington at kklimasinska@bloomberg.net
Original Article
http://loga.la/oil-gas-news/?p=5935
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