Thursday, March 22, 2012

A Natural Solution for Oil Seepage

 

The LA Times had an article yesterday on the effect of oil naturally bubbling up off the coast of California:



"Oil seeping from the ocean floor off Santa Barbara is taking a toll on seabirds that are turning up by the dozens along the Southern California coastline coated in crude oil and tar. The naturally occurring oil bubbles up and afflicts birds every winter, but wildlife rescuers in recent weeks have seen an unusual influx of oiled seabirds stranded on the shore as far south as Orange County…Scientists believe the murre population is growing and expanding south, putting the football-sized birds at greater risk of diving into waters slicked by Southern California's oil leaks, the most significant of which are found in the Santa Barbara Channel near Coal Oil Point, where thousands of gallons of oil seep into the ocean each day...The hypothermic, malnourished birds lose energy fast. So they either die offshore or, in an act of desperation, plant themselves on the beach."


An unfortunate situation, but one with a remedy, as Christopher Helman points out:



"What’s entirely missing from the story is any hint of how this bird killing could be stopped. The solution is simple: allow drilling off the coast. Stick a few wells into that shallow reservoir and within a few years enough oil would be safely recovered that it would no longer leak out to kill birds. I guess that’s such a political non starter in California that the reporter doesn’t even bother mentioning it…Occidental Petroleum has for decades produced oil from a handful of wells in Los Angeles harbor. California should be smart about this and open up the seepage area to drilling…"


View the original article here

Energy Works in Virginia

For the state of Virginia, the oil and natural gas industry currently means:

More than 128,000 statewide jobs provided or supported – with an average salary of $57,281 for non-gas station oil and natural gas employees.$6.5 billion contributed to state labor income.$11.6 billion contributed to the state’s economy.

With sensible energy development and sound tax policies, here’s what the oil and natural gas industry could mean to Virginia:

3,606 additional jobs created by 201516,401 additional jobs created by 2020An average of $77.7 million of new, additional revenue generated by the industry directly to the state every year through 2030. That’s enough to cover more than half of Virginia’s general fund contribution for the University of Virginia every year, without using additional taxpayer dollars.

Energy works in Virginia, with the men and women of the oil and natural gas industry playing a critical role in that state’s economy. See more, here.


View the original article here

Mar 7, supply vessel

by Bill
(Ohio)

looking to get work in South America on a supply boat. Where should I start.? Thanks..Bill estimate_dept@yahoo.com

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Taking the President’s Energy Rhetoric to Task

The more the president talks about energy, the more heat he creates for himself. Here’s the Washington Post’s Fact Checker, weighing his rhetoric about the U.S. consuming 20 percent of the world’s oil while having just 2 percent of its proven reserves:



“ … this is a good example of what we call ‘non sequitur facts’ — two bits of information that actually bear little relationship to each other. The president is trying to make the case that the world has finite oil resources, and the United States — the world’s biggest oil consumer — needs to use less oil in the future. But using ‘oil reserves’ as a key metric gives an incomplete picture of U.S. oil resources.”


The Fact Checker points out that “proven reserves” is a specific term. The oil must have been discovered, confirmed by drilling and be economically recoverable – the latter dependent on the global price of crude.


But guess what? Proven reserves figures change as we drill new wells, discover more oil, hard-to-get oil becomes economically viable and new technologies come on line. That’s how the U.S. could produce something like 200 billion barrels since 1990 – even though its proven reserves peaked at 40 billion barrels in 1970. That’s how, even though U.S. production and consumption will grow, projected proven preserves in 2035 will be 30 percent greater than at the end of 2010 (U.S. Lower 48).


Here’s what the president isn’t telling Americans: There’s approximately 200 billion barrels of undiscovered, technically recoverable American oil that isn’t counted with “proven reserves” – or mentioned in his speeches, a fairly gaping fact omission that’s deliberately misleading.


More Fact Checker:



“Measuring the U.S. consumption against its proven oil reserves makes little sense. Europe, with the exception of Russia, Kazakhstan and Norway, has virtually no oil reserves. Japan, a major consumer, has zero. China’s oil reserves are about half the size of the United States. In fact, in the relative scheme of things, the United States is relatively blessed with proven oil reserves — and, given the U.S. technological advantage, also with potentially large resources of oil yet to be tapped. … (I)n the context of higher gas prices — which is how the president often uses these figures now — it just is not logical to compare consumption to ‘proven oil reserves.’ This is a lowball figure that does not begin to describe the oil known to be within the U.S. borders.”


The United States is energy rich, not energy deficient, as the president makes it sound at a time when U.S. consumers are taking a beating. America has options. There’s oil in remote Alaska, off both coasts and on federal lands. With the right policies and leadership the U.S. could see 100 percent of its liquid fuel needs met domestically and from Canada by 2024.


Meanwhile, columnist Charles Krauthammer picks up on a key bit of illogic in the president’s recent energy riff – that decreasing U.S. demand for crude oil affects global prices but increasing U.S. crude supplies doesn’t. Krauthammer:



“‘The American people aren’t stupid,’ Obama said (Feb. 23), mocking ‘Drill, baby, drill.’ The ‘only solution,’ he averred in yet another major energy speech last week, is that ‘we start using less — that lowers the demand, prices come down.’ Yet five paragraphs later he claimed that regardless of ‘how much oil we produce at home … that’s not going to set the price of gas worldwide.’  So: Decreasing U.S. demand will lower oil prices, but increasing U.S. supply will not? This is ridiculous. Either both do or neither does.”


Krauthammer is spot on here. Given the fact that crude oil accounts for 76 percent of the price Americans pay at the pump, the crude supply is the biggest factor in the energy equation. Decreased crude oil demand at one end of the equation can have an effect, but so can increased crude supply at the other. The president is for the first part but in denial on the second. Sen. Chuck Schumer certainly gets the importance of supply, renewing his call for Saudi Arabia to commit to make up for any lost Iranian production.


Supply matters, and the U.S. can affect supplies – even if the president won’t say it. API President and CEO Jack Gerard, speaking at a House Energy and Commerce subcommittee hearing earlier this month:



“A strategy that confidently deploys resources here at home will send a clear message to global markets that the United States is serious about affecting supply. To the American people it will say help’s on the way.”


View the original article here

Energy Works in Arizona

For the state of Arizona, the oil and natural gas industry currently means:

Nearly 86,000 total jobs provided or supported statewide – with an average salary of $54,052 for non-gas station oil and natural gas employees.$4 billion contributed to labor income.$7.6 billion contributed to the state’s economy.

With sensible energy development and sound tax policies, here’s what the oil and natural gas industry could mean to Arizona:

682 additional jobs created by 2015.1,443 additional jobs by 2020.

Energy works in Arizona, with the men and women of the oil and natural gas industry playing a critical role in that state’s economy. See more, here.


View the original article here

Oil & Gas Development on Federal Lands and Waters

The White House had a post up last week with some numbers on production of oil and natural gas on America’s public lands and offshore waters. They want the facts to “speak for themselves,” so let’s chart their numbers over the past six years:



The White House says:



"We know that production levels will fluctuate from year-to-year based on market conditions and industry decisions."


Of course the same is true for private lands where production levels are up.



"It also reflects the fact that the nation battled a major oil spill in the Gulf of Mexico in 2010."


An interesting point, given that 2010 production is the peak for oil. And it doesn’t explain the projected declines this year and next:




"Still, the overall trends show a clear picture of rising domestic production."


True if you include private lands, but on Federal?  Let’s look at the last three years part of their dataset.



Not sure “rising” means what they think it means.


View the original article here

Throwing Down An Energy Challenge

Let’s talk about a fundamental difference of opinion on the key energy issue of the day.


We say crude oil supply matters – in the context of global-market pricing, which affects fuel prices because the cost of crude accounts for 76 percent of what Americans are paying at the pump. More supply alters the energy equation, exerting downward pressure on crude prices. Energy Economics 101.


The president seems to disagree, saying there’s no “silver bullet,” while suggesting there’s not much that can be done to affect global markets and offer hope to beleaguered consumers. At the same time he tacitly acknowledges market forces work – but only from the side of the equation that reduces demand through efficiency and other measures.


We’re all for greater efficiency, but the president is ignoring the effect on markets of increasing demand. Or is he, because even as he scoffs at the notion of greater development of domestic oil and natural gas resources, there are conversations with the Saudis about increasing their production, talk of releasing oil from the Strategic Petroleum Reserve and pledges to Brazil that we’ll be customers for their offshore oil when it comes on line – all implying that, yes, supply matters.


Here’s one thing that’s absolutely clear. America’s oil and natural gas companies have a positive, pro-development, pro-jobs strategy to produce more energy right here at home. They believe America has energy options, not unending limitations, and they’re ready to accept the challenge of producing more oil and gas. API President and CEO Jack Gerard during a conference call with reporters this week:



“Despite what you may hear, we are an energy-rich nation, the world’s third-largest producer of oil. We have vast resources that we have not even begun to explore. And by safely developing our own resources of oil and natural gas, we can send a strong signal to the markets that America will control its energy future.”    


Here’s what Gerard is talking about:

Changing policies that are limiting offshore energy development to less than 15 percent of available federal areas.Returning the Gulf of Mexico to pre-2010 production levels.Reversing the downward trend of leasing and permitting on federal lands (so that public areas can match production on state and private lands in places like North Dakota and Pennsylvania).Approving the full Keystone XL pipeline, to bring upwards of 800,000 barrels per day of Canadian oil sands crude to U.S. refiners.Curb government’s enthusiasm for new regulatory layers on the development of the country’s ample shale resources.Shelving punitive proposals to raise taxes on a few oil and natural gas companies.

Each of the above would acknowledge what the government’s own data shows, that oil and natural gas are mainstays of this country’s energy present and future – rejecting an off-oil strategy that’s rooted in unreality.


Gerard:



“Sending a clear message to people who buy and sell crude oil that the United States is committed to reasserting itself as one of the world’s major oil producers would immediately put downward pressure on gasoline and other fuel prices.”


Gerard called out the administration on its energy claims:



“The administration says it’s already doing a good enough job promoting oil and natural gas development. Check the numbers, it says. We did, and they show oil and natural gas production on federal lands and waters has lagged behind development on private and state lands.”


And issued a challenge:



“Our industry would not be urging the administration to open the door to more development unless it was prepared to walk through that door, unless it envisioned investing its own capital in more projects that could produce more supply and jobs, just like the development that’s already occurring. … We once again urge the administration to act to promote more domestic resources of oil and natural gas. … If the administration will do these things, our companies will produce more American oil and gas.”


Additional resource: Talking energy with Fox News.


View the original article here

Energy Works in Ohio

 

For the state of Ohio, the oil and natural gas industry currently means:

More than 230,800 statewide jobs provided or supported – with an average salary of $68,256 for non-gas station oil and natural gas employees.$11.4 billion contributed to state labor income.$22.7 billion contributed to the state’s economy.

With sensible energy development and sound tax policies, here’s what the oil and natural gas industry could mean to Ohio:

13,144 additional jobs created by 201515,840 additional jobs created by 2020

Energy works in Ohio, with the men and women of the oil and natural gas industry playing a critical role in that state’s economy. See more, here.


View the original article here

Energy Works in North Dakota

 

For the state of North Dakota, the oil and natural gas industry currently means:

Nearly 37,000 statewide jobs provided or supported – with an average salary of $71,678 for non-gas station oil and natural gas employees.$1.8 billion contributed to state labor income.$3.8 billion contributed to the state’s economy.

With sensible energy development and sound tax policies, here’s what the oil and natural gas industry could mean to North Dakota:

13,144 additional jobs created by 2015.15,840 additional jobs created by 2020.An average of $54 million of new, additional revenue generated by the industry to the state every year through 2030. That’s enough to cover more than one-third of North Dakota’s general fund contribution to the University of North Dakota budget every year, without using additional taxpayer dollars.

Energy works in North Dakota, with the men and women of the oil and natural gas industry playing a critical role in that state’s economy. See more, here.


View the original article here

Forestalling a ‘Regulatory Avalanche’

John Felmy, API’s chief economist, talked to reporters this week about a looming federal “regulatory avalanche” that could impact the production of oil and natural gas from shale – and reduce the president’s State of the Union call for increased domestic production to hot air:



“On the one hand we have President Obama saying he supports natural gas development. … Within weeks of making this statement, the administration has done just the opposite, announcing several plans to further constrain development, reducing opportunities to produce our domestic supply of oil and natural gas and create and support these American jobs. We have reached a point where our industry’s efforts to produce the natural gas the president says he wants are being overwhelmed by an avalanche of acronyms. EPA, DOE, DOI, USDA, DOD, DOT, SEC, HHS – eight federal agencies in all – are looking at hydraulic fracturing.”


Felmy said the chilling effect on decision-making and investment isn’t dependent on concrete regulatory proposals:



“Some of these investigations or studies have no specific timeline, yet information continues to be shared with the press about how further studies and stricter regulation are being prepared. All this adds to a state of uncertainty and generates fear for which there is no evidence.”


Fear = potential delay, which has a tangible effect on energy development and job creation. Felmy:



“Every day that goes by that we don’t develop this resource is another day that someone doesn’t get a job.”


A couple of other takes on the Felmy briefing:


Oil & Gas Journal:



“This is a prospective regulatory avalanche. Right now, there’s no transparency or indication of prospective outcomes,” Felmy continued. “If they don’t coordinate and aren’t transparent, the results could be negative for American energy.” Felmy said API has no quantitative estimate of possible economic consequences because so many federal departments and agencies have entered the federal oil and gas regulatory picture. “We don’t know the actual inner workings, only that all these agencies are involved,” he said. “Some have had regulatory coverage for a long time. Others haven’t. Are they coordinated? Do they have timelines? That’s our main concern.”


The Oklahoman:



“We are calling on Congress to halt the administration drive toward over-regulation of hydraulic fracturing and commercial oil and natural gas production,” he said. Felmy said the industry is ready to work with the administration to ensure the U.S. becomes more energy self-sufficient as safely as possible."


View the original article here

Energy Works in Minnesota

For the state of Minnesota, the oil and natural gas industry currently means:

More than 117,000 jobs – with an average salary of more than $67,000 for non-gas station oil and natural gas employees.$5.8 billion contributed to labor income.$11.1 billion contributed to the economy.

With sensible energy development and sound tax policies, here’s what the oil and gas industry could mean to Minnesota:

796 additional jobs created by 2015.1,675 additional jobs created by 2020, supported by oil and gas industry operations in the state.

Energy works in Minnesota, with the men and women of the oil and natural gas industry playing a critical role in that state’s economy. See more, here.


View the original article here

The President’s ‘Anti-Stimulus’

From the president’s remarks during Monday’s rollout of his 2013 budget:



“The last thing we need is for Washington to stand in the way of America's comeback.”


The president is 100 percent right – and he can put his words into action by dropping his politically motivated obstruction of the Keystone XL pipeline.


The Keystone XL is the largest shovel-ready infrastructure project available to help spur the economic revival everyone wants. The $7 billion, privately financed pipeline would create 20,000 U.S. jobs during its construction phase and up to 500,000 U.S. jobs by 2035 as a big part of a comprehensive strategy to fully utilize Canada’s oil sands resources. Energy to run our economy and jobs. But we need Washington to get out of the way.


President Obama:



“We need to … [end] the subsidies for oil companies … The budget that we’re releasing today is a reflection of shared responsibility. … I want everybody here to go out there and do great.  I want you to make loads of money if you can.  That’s wonderful.  And we expect people to earn it -- study hard, work hard for it.  So we don’t envy the wealthy.  But we do expect everybody to do their fair share …”


Unfortunately, the president’s budget would place Washington squarely in the path of America’s economic comeback by increasing taxes on the country’s energy companies by $41 billion over 10 years.


Although the oil and natural gas industry is its own stimulus, contributing $476 billion to the economy in 2010 and projected by Strategic Energy & Economic Research’s Michael Lynch to spend $145 billion this year on drilling and completing new wells in the U.S., the president would saddle the industry with new taxes – hampering its ability to develop new energy sources and create new jobs.


Instead of standing in the way of the economic lift the industry could provide by threatening tax increases, the president should consider policies that could allow the industry to create 1 million new jobs in just seven years and increase revenue to the government by $127 billion by 2020 – three times the amount his tax hike would raise.


API President and CEO Jack Gerard:



“Increasing our taxes would push oil and natural gas investment overseas and diminish job-creation and economic activity here at home.  After a handful of years, we would see less domestic energy production – particularly of natural gas – more imports, fewer new jobs, and, eventually, depressed tax, royalty and other revenues.  Frankly, the administration should be trying to replicate the success America’s oil and natural gas industry has had in creating jobs and growing the economy primarily through development on private and state lands.  The evidence clearly shows that what we’re doing is working. If the industry’s job-creating investments are a stimulus for the nation, then what the administration is proposing is an anti-stimulus.”


One more point on taxes: The president is wrong about subsidies. The oil and natural gas industry doesn’t receive targeted subsidies from Washington. More on that here.


As for shared responsibility, the fact is America’s oil and natural gas companies pay $86 million every day to the U.S. Treasury in rents, royalties and income taxes. They pay their fair share and more than any other sector:



As Gerard noted to reporters Monday during a conference call, Apple is one of the country’s most profitable corporations, but no one is talking about singling it out for a tax hike – nor should they. That would be punishing the success the president says he favors.


“We want to lock arms with the president,” Gerard said. But it will take policies that help increase domestic oil and natural gas production and the American jobs that go with it “instead of penalizing the best job creator in the country.”


View the original article here

Yes, Supply Matters

U.S. Sen. Chuck Schumer is worried about the impact of the potential loss of Iranian oil on the global crude market. Reuters reports:



The United States should do more to encourage Saudi Arabia to boost its oil production to make up for lost Iranian oil, Senator Charles Schumer said on Sunday, urging renewed diplomacy as a way to ease the run-up in oil prices. … A public promise from Saudi Arabia, the world's top oil exporter, to pump oil at its full capacity would calm oil markets as well as gasoline prices, Schumer, the third-ranking Democrat in the Senate, said in a letter to Secretary of State Hillary Clinton.


Without saying so directly, Schumer’s point is that, yeah, supply matters. Global markets respond positively and negatively to ups and downs in supply – hence Schumer’s push for the Saudis to boost output.


He’s not alone. The administration believes in the power of supply, too. That’s why it released oil from the Strategic Petroleum Reserve last year during the Libyan crisis. There’s talk of another SPR release now, Interior Secretary Ken Salazar says.


It would be great if the United States had its own oil supply options, if America could reach a point where our supply and our energy future were more secure. How about a future where we don’t have to ask others to boost their production, where we’re not presenting ourselves as eager customers for others’ oil – as the president did last year in Brazil:



“We want to work with you.  We want to help with technology and support to develop these oil reserves safely, and when you’re ready to start selling, we want to be one of your best customers.”


Wait! We do have supply options. They start with building the Keystone XL pipeline and strengthening the energy relationship we have with our friend and neighbor Canada. We can increase access to federal lands, onshore and offshore, and get permitting in the Gulf of Mexico back to where it was a couple of years ago. We can continue developing biofuels and other energy technologies.


Put them all together and we could see 100 percent of our liquid fuel needs met domestically and from Canada. Not 50 years from now or 25. By 2024. And research says we’ll see new jobs, economic growth and increased revenues to government along the way.


But it starts with ending the drill-anywhere-but-here mindset that is keeping our resources on the shelf and the United States beholden to global energy politics.


It includes rejecting the view that 1 million barrels of oil per day from the Arctic National Wildlife Refuge (ANWR) is irrelevant because it won’t come online for 10 years – which has helped block ANWR development for more than a decade.


It means discarding the false premise that the United States lacks the resources to exercise greater control over the supply equation.


View the original article here

‘Poisoned’ Politics, the Keystone XL and the National Interest

AppId is over the quota
AppId is over the quota

New York Times op-ed columnist Joe Nocera’s piece on the “poisoned” politics of the Keystone XL pipeline decision is a must read. Better get to it right away, before some of the folks posting comments to  Nocera’s column descend on the Gray Lady with pitchforks and battle axes, demanding that the article be pulled down. Nocera:

Surely, though, what the Keystone decision really represents is the way our poisoned politics damages the country. Environmental concerns notwithstanding, America will be using oil — and lots of it — for the foreseeable future. It is the fundamental means by which we transport ourselves, whether by air, car or truck.

Nocera’s point about oil (and natural gas) is spot on. According to the Energy Information Administration, oil and gas will supply most of our energy past 2030. More Nocera:

And here is Canada, a staunch American ally that has historically sold us virtually all of its crude exports. Over the past two decades, energy companies have invested tens of billions of dollars in the tar sands, so much so that Canada now ranks No. 3 in estimated oil reserves. Along with the natural gas that can now be extracted thanks to hydraulic fracturing — which, of course, all right-thinking environmentalists also oppose — the oil from the Canadian tar sands ought to be viewed as a great gift that has been handed to North America. These two relatively new sources of fossil fuels offer America its first real chance in decades to become, if not energy self-sufficient, at least energy secure, no longer beholden to OPEC. Yet these gifts have been transformed, like everything else, into political footballs.

Next Nocera focuses on the Keystone XL’s opponents:

As it turns out, the environmental movement doesn’t just want to shut down Keystone. Its real goal, as I discovered when I spoke recently to Michael Brune, the executive director of the Sierra Club, is much bigger. “The effort to stop Keystone is part of a broader effort to stop the expansion of the tar sands,” Brune said. “It is based on choking off the ability to find markets for tar sands oil.” This is a ludicrous goal. If it were to succeed, it would be deeply damaging to the national interest of both Canada and the United States. But it has no chance of succeeding. Energy is the single most important industry in Canada. Three-quarters of the Canadian public agree with the Harper government’s diversification strategy. China’s “thirst” for oil is hardly going to be deterred by the Sierra Club. And the Harper government views the continued development of the tar sands as a national strategic priority.

Back to Nocera’s first point. The politics of obstructing the Keystone XL – as well as the underlying opposition to a stronger energy relationship with Canada that fully utilizes its oil sands – is hurting the United States. The toll is in lost jobs and in an energy future that’s less secure, because the oil will come from less stable parts of the world.

Canada, Nocera’s  writes, at least knows where its national interests lie. Unfortunately, under current policy, the United States doesn’t. Here’s former Obama National Security Advisor Gen. James Jones, talking a couple months ago about the Keystone XL impasse:

"If we get to the point where we cannot bring ourselves to do what is in our national interest, then we are clearly in a period of decline, in terms of our global leadership and our ability to compete.”

It’s what worries Joe Nocera. It’s what should worry us all.


View the original article here

Feb 2, Applying for Derrickman Offshore position

by Cedomir Klaric
(Split-Croatia)

I am looking for new employment in offshore.I have seven years offshore experience.I am was working like roustabout,floorhand and last three years my position is derrickman.I posses all survival offshore certificates for work to offshore(BOSIET-OPITO Approved)-valid,offshore medical OGUUK-valid.Currently I am work for Saipem on the Jack up Rig.I am applying for position of Derrickman.

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Hydraulic Fracturing and Regulation

 

Shale oil and natural gas development in the United States has been a clear economic success story during a time when successes have been few.  Our industry has been producing energy, jobs and revenue at a strong clip.  And yet we’ve only begun to realize the benefits of energy from shale.  


The industry is committed to producing this energy safely and responsibly, and in addition to strong industry standards, there are appropriate federal and state regulations in place for oil and natural gas operations, including those that employ hydraulic fracturing.  And many state rules have recently been strengthened. 


So it is a concern that there are now 10 separate federal government agencies looking to study and potentially add new and unnecessary layers of regulations on hydraulic fracturing, the technology on which 70 percent of future gas wells depend. 


Unnecessary layers of federal regulation could increase costs and delays for operators, which could harm new projects, sacrificing thousands of new jobs and depriving government of billions in revenue.


We are strongly encouraging policymakers and elected officials to keep shale energy development moving forward.  So during this election year, we will encourage voters to learn more about energy and about the candidates’ positions on energy policies, and to make energy a ballot box decision in 2012.


The benefits of shale energy development are indisputable.

Just yesterday, a new study in Ohio said development of the Utica Shale could mean 65,000 new jobs in the next two years.In Pennsylvania, development of the Marcellus Shale created 72,000 new jobs from late 2009 to early 2011.   In North Dakota, shale development helped drive down unemployment in the state to the lowest level in the nation, helped produce a state budget surplus of $1 billion, and elevated North Dakota to the nation’s fourth largest oil producer.  In Arkansas, shale development has boosted state revenue by more than $1.5 billion over the last few years. Houston is the first metropolitan area in the United States to regain all of the jobs lost during the recession, an analysis by the Texas Workforce Commission has concluded.  Many of the new jobs likely relate to the oil and natural gas industry and to shale development.A study by former Census officials of U.S. household income in nine geographic regions between 2007 and 2010 found it increasing only in the four-state oil patch region: Louisiana, Texas, Oklahoma and Arkansas – all centers of shale energy development.Nationwide, shale gas development was supporting 600,000 jobs in 2010, according to a December IHS-Global Insight report.Also, natural gas prices have fallen by half from their level three years ago.  That is benefiting families that heat their homes with natural gas, as well as businesses and consumers that buy their electricity from utilities that generate it with natural gas.  Low natural gas prices are also benefiting chemical manufacturers and other businesses that use natural gas a raw material, and they are encouraging businesses to locate new facilities in America rather than overseas.  Dow Chemical, for example, plans to reopen an ethylene production plant near Hahnville, Louisiana, this year and build another one on the Gulf coast by 2017.  It also plans to build a new propylene plant in Texas by 2015.

And there is every reason to believe we could see more of all of these benefits in the future.  The IHS-Global Insight study estimates that the shale gas industry alone could support 1.6 million jobs by 2035, driven by capital investment approaching $2 trillion.


Finally, an analysis from PricewaterhouseCoopers concludes that shale gas development – and more affordable natural gas supplies – could support about one million U.S. manufacturing jobs in 2025.


To realize the full extent of this promise, therefore, we must be thoughtful about any changes to an already robust regulatory structure for hydraulic fracturing.  We don’t need unnecessary or duplicative rules from multiple federal agencies. 


The administration has been advocating more oil and natural gas development.  It has also called for streamlining regulations.  We believe they could do much to achieve both objectives by taking a critical look at what its various agencies are proposing to do on hydraulic fracturing and shale energy development. 


The direction they’re headed in won’t be conducive to the development of energy we know our nation will need and the production of which could provide tremendous additional benefits to our economy. The administration needs to reconsider the wisdom of adding unnecessary layers of federal regulation on this truly game-changing opportunity.  A significant change of course is needed.


View the original article here

We Are the American People, Mr. President

Let’s talk about a fundamental difference of opinion on the key energy issue of the day.


We say crude oil supply matters – in the context of global-market pricing, which affects fuel prices because the cost of crude accounts for 76 percent of what Americans are paying at the pump. More supply alters the energy equation, exerting downward pressure on crude prices. Energy Economics 101.


The president seems to disagree, saying there’s no “silver bullet,” while suggesting there’s not much that can be done to affect global markets and offer hope to beleaguered consumers. At the same time he tacitly acknowledges market forces work – but only from the side of the equation that reduces demand through efficiency and other measures.


We’re all for greater efficiency, but the president is igno... more »


As the president hits the road to talk about energy, he should first listen to what the American people are saying, reflected in two new polls this week.


Start with a Harris Interactive survey that shows 76 percent of voters believe increasing taxes on oil and natural gas companies could cost them more at the fuel pump. For a president who continues to talk about hiking taxes on energy companies that should be a big red flag.


Americans who’re getting slammed by higher fuel costs appear to sense that increasing energy taxes would drive up energy producers’ costs, which – as the Congressional Research Service found last year – could decrease exploration, development and production while elevating prices.


Other details from the Harris poll of 1,009 respondents:


The more the president talks about energy, the more heat he creates for himself. Here’s the Washington Post’s Fact Checker, weighing his rhetoric about the U.S. consuming 20 percent of the world’s oil while having just 2 percent of its proven reserves:



“ … this is a good example of what we call ‘non sequitur facts’ — two bits of information that actually bear little relationship to each other. The president is trying to make the case that the world has finite oil resources, and the United States — the world’s biggest oil consumer — needs to use less oil in the future. But using ‘oil reserves’ as a key metric gives an incomplete picture of U.S. oil resources.”


The Fact Checker points out that “proven reserves” is a specific term. The oil must have been discovered, confirmed by dri... more »


The White House had a post up last week with some numbers on production of oil and natural gas on America’s public lands and offshore waters. They want the facts to “speak for themselves,” so let’s chart their numbers over the past six years:



The White House says:



"We know that production levels will fluctuate from year-to-year based on market conditions and industry decisions."


Of course the same is true for private lands where production levels are up.



"It also reflects the fact that the nation battled a major oil spill in the Gulf of Mexico in 2010."


An interesting point, given that 2010 production is the peak for oil. And it doesn’t explain the projected declines this year and next:




"Still, the overall trends show a clear picture of rising domestic produc... more »


Yesterday President Obama gave a campaign speech centered around energy policy.  In it he said:



“There’s a problem with a strategy that only relies on drilling and that is, America uses more than 20 percent of the world’s oil.  If we drilled every square inch of this country -- so we went to your house and we went to the National Mall and we put up those rigs everywhere -- we’d still have only 2 percent of the world’s known oil reserves.  Let’s say we miss something -- maybe it’s 3 percent instead of two.  We’re using 20; we have two.  Now, you don’t need to be getting an excellent education at Prince George’s Community College to know that we’ve got a math problem here.  I help out Sasha occasionally with her math homework and I know that if you’ve got two and you’ve got 20, there’... more »


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The Folly of Anti-Trade Thinking

In his State of the Union message last month, President Obama staked out the administration’s position on trade, citing new deals with a number of countries around the world and the quest for new trade opportunities:



“We’re also making it easier for American businesses to sell products all over the world. Two years ago, I set a goal of doubling U.S. exports over five years. With the bipartisan trade agreements we signed into law, we’re on track to meet that goal ahead of schedule. And soon, there will be millions of new customers for American goods in Panama, Colombia, and South Korea.  … I will go anywhere in the world to open new markets for American products.”


Some in Congress apparently didn’t get the memo about new markets for American products. There’s an effort afoot to restrict exports of U.S. liquefied natural gas – including a bill that would compel the Interior Department to issue drilling leases for public lands only to those who would keep the gas in the United States and another that would block the Federal Energy Regulatory Commission from approving LNG export terminals through 2025. While the legislative prospects for both are uncertain, they suggest a misunderstanding of trade and the global marketplace.


Energy Secretary Stephen Chu gets it, refusing to be drawn into the “keep in America” wave during a congressional hearing this week:



“Certainly, we don't want to see natural gas prices rise dramatically, [but] there's a flip side we have to consider that it does create American jobs, and if prices are kept moderate it does bring money to United States.”


Besides being poor economics, such restrictions send the wrong message to the entrepreneurs and risk-takers who drive much of the economic growth in this country – specifically that the value of their enterprise could be arbitrarily undermined. Energy, Technology, & Policy blogger Lex Hochner:



“We should also consider the individuals and companies that pioneered the technological revolution that unlocked all of this shale gas in the first place.  They have accomplished nothing short of a natural revolution.  Why?  Because they believed that a free market price awaited their product.  It is a dangerous signal to send hard-working and creative business leaders that the government may at any time step in to destroy the value of their work product.”


Just for argument’s sake, let’s suppose the same thinking was applied to other U.S. exports. For example, what if U.S. agricultural products were restricted to this country, what would that mean? Answer: Lots of unhappy farmers and a gut-punch to the U.S. balance of trade ledger, which in 2011 tallied more than $137 billion in agricultural exports.


Like other marketable commodities, natural gas shouldn’t be artificially and arbitrarily walled off from potential buyers. U.S. grain exports equal jobs and income for American farmers. Likewise, natural gas exports would support American energy jobs and boost the country’s trade balance – even as greater production (enabled by the potential for export) would provide more revenue to governments.


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Center for Offshore Safety Names Director, Former Shell Chief Scientist

The naming of Charlie Williams as the first executive director of the new Center for Offshore Safety marks an important milestone in America's efforts to safely and responsibly develop its vast offshore energy resources.


Williams leads the center after 40 years with Shell, where most recently he was the company's chief scientist for well engineering and production technology. His work included developing high-pressure, high-temperature wells and specializing in drilling and completion equipment for extreme environments, such as deepwater exploration and development. Williams was introduced Wednesday:



"We have assembled the best and the brightest minds to help ensure we develop America's vast resources in the safest manner possible. Our top priority is to develop practices and programs that will help operators perform at their very best in implementing safety and environmental management systems."


The center's governing board includes operators, drilling contractors, service and supply contractors and trade association representatives. The center will help deepwater operators implement advanced safety and environmental oversight management systems, an audit checklist and third-party review systems so operators can measure the effectiveness of those systems against standards developed by API and its members. Williams:



"The role of the (center) is to provide a forum for industry to come together and focus on developing programs, sponsoring activities and sharing good practices aimed at continually learning from and improving industry's safety performance."


Williams said the center faces start-up challenges common to most new organizations, including building a staff and prioritizing its efforts:



"Another unique challenge is finalizing all the audit tools, training auditors, and verifying auditors. This is a very large new effort and one of the first things the center must address.  Although our top goal is a forum supporting continuous learning and improvement of Safety and Environmental Management Systems, auditing of SEMS is both a center and regulatory requirement."


Key to the center is connecting industry efforts to improve safe and responsible offshore operations with the American public. Williams:



"We are committed to communicating with the public and communities regarding the programs and goals of the center. The industry is fully committed to producing oil and gas safely and responsibly.  The creation of the center, the dedication of resources to it, and the broad participation of industry in the center clearly demonstrates this commitment.  The center also demonstrates an enhanced commitment by industry in creating a 100 percent safety focused forum for coming together, learning, and continuously improving safety and environmental management systems and enhancing safety culture."


API President and CEO Jack Gerard welcomed Williams' selection:



"Safe, responsible development of our offshore oil and natural gas is critical for U.S. energy security, and it provides U.S. families and businesses with affordable and reliable energy for our future."


Learn more about the Center, its governance and information on how to become a member at www.centerforoffshoresafety.org.


View the original article here

Energy Works in Colorado

Here’s what the oil and natural gas industry currently means to the state of Colorado:

$20.5 billion contributed to the economy.$10.2 billion contributed to labor income.More than 161,000 jobs provided or supported by the industry – with an average salary for non-gas station oil and natural gas employees of nearly $98,000.

Sound good? This is better – with smart energy development and the right tax policies, the industry could mean this for Colorado:

An additional 61,131 jobs created by 2015 and 88,283 by 2020.An average of $233 million in new, additional revenue for the state, generated by the industry every year through 2030.

That’s enough to pay for the state’s general fund contribution to the operating budgets of 12 of 22 departments every year – without using additional taxpayer dollars.


Energy works in Colorado, with the men and women of the oil and natural gas industry playing critical roles. See more, here.


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Life in the Barnett Shale: Energy, Jobs, Growth

 

Local businessman Tim Osborn says that when he was a schoolboy growing up in North Texas, his hometown probably didn’t have more than 250 people. Today the area is vibrant, with 10 times that number living there. Work is plentiful, housing is booming and there’s room to grow – thanks to the oil and natural gas industry and the energy-rich Barnett Shale.


The area about 30 miles north of Dallas is thriving with oil and natural gas development in the Barnett Shale providing the magnet for other kinds businesses and industries. “The reason it has grown is the oil and gas business,” says Osborn, president of CBA Automation, an electrical and instrumentation contractor. “We have other industries moving here because this is a prospering area.”


Others are doing well, too. Check out this video detailing the oil and natural gas industry’s positive impacts on life in North Texas:


Here’s a slideshow that also helps capture the way of life in the Barnett Shale:



View the original article here

Survey Says, Misinformation on Energy, Keystone XL

Politico reports (subscription required) this week on a new poll that shows a political edge for the president on energy and jobs – based on a memo from pollster/strategist Geoffrey Garin and Hart Research Associates colleague Allan Rivlin. Key points:

On addressing domestic energy, respondents trust President Obama over congressional Republicans 48 percent to 38 percentOn the Keystone XL pipeline, of respondents who said they hadn’t heard the arguments, 43 percent said the president was wrong to reject the pipeline while 32 percent agreed with him. Among independents, the split was 39 percent disagreeing with the president, 34 percent supporting.Of respondents who said they had heard both sides of the pipeline argument, the president was supported by 47 percent, opposed by 36 percent.

Most interesting is the opinion shift represented by points two and three above. Politico:



The best way to get voters to back Obama’s decision: “Involve the risk of a toxic oil spill over an aquifer that provides fresh water and water for farming to one-third of the United States — a concern that is compounded by questions about TransCanada’s safety record and the number of spills that have occurred in the first year of the Keystone One pipeline,” according to the memo.


Politico again:



Garin and Rivlin also argue that there is a “sharp decline in the salience of the proponents’ case” for the pipeline regarding how it impacts U.S. energy security “as voters learn the likelihood of the refined oil being shipped off for export.”


And:



The memo also argues there is “significant mistrust of both the oil industry and the Republicans in Congress,” and their arguments for the pipeline are undermined when voters are informed that the claims of jobs tied to the project “are grossly exaggerated.”


This is not to suggest that Garin conducted a push poll, in which respondents were nudged toward a particular outcome with information, but to say that it’s clear how some are trying to frame the debate over energy and the president’s policies with misinformation. So let’s look at the facts:


Spills – The United States has thousands of miles of pipelines delivering crude oil and refined products. The spill rate has fallen nearly 60 percent since 2001 to less than one per 1,000 miles of pipeline. Pipelines already cross the Ogallala aquifer, a point of concern in the Keystone XL debate that Nebraska research hydrogeologist Jim Goeke discusses in detail here.


TransCanada’s safety record – Keystone XL builder TransCanada currently operates the Keystone pipeline that passes through Nebraska (and the Ogallala aquifer). The company says the pipeline itself hasn’t suffered any leaks. A dozen recorded spills have come from pumping stations and 10 of the 12 measured between 5 and 10 gallons, the company says. The Keystone XL would feature state-of-the-art materials and computerized monitoring that would let the company locate and isolate potential problems within minutes.


Exports – We’ve written about this here and here. The exports argument, whether lobbed by a sitting congressman or activists, shows how little some know about U.S. refining, the global market and balance of trade. Basically, more than 90 percent of the on-road transportation fuel refined in the United States is for use in the United States. The remaining less than 10 percent consists primarily of heavier products that aren’t in high demand here. As for markets and trade, the export of refined U.S. petroleum products helps preserve well-paying U.S. refining jobs and improves the country’s trade balance as we buy crude and then sell higher-value refined products.


Jobs – TransCanada details the 20,000 U.S. jobs the Keystone XL would create during its construction phase, here. The Canadian Energy Research Institute says up to 500,000 U.S. jobs could be created by 2035 through full development of Canada’s oil sands, which includes the Keystone XL’s construction. Working Americans know the value of these jobs. Check this video of Laborers’ International Union of North America General President Terry O’Sullivan talking about the job potential of the Keystone XL.


View the original article here

Oil Supply – Yes We Can

Opponents of increased domestic oil production like to portray the U.S. as being helpless in the face of worldwide events.  This argument sometimes takes this form:



… with only 2% of the world’s oil reserves, we can’t just drill our way to lower gas prices – not when consume 20% of the world’s oil.


Which we dealt with here, and sometimes like this:



…oil prices are dictated by the vast world market, of which U.S. production is just a small fraction.


or this:



This notion that a politician can wave a magic wand and impact the 90-million-barrel-a-day global oil market is preposterous…


While it is good to see supply and demand being mentioned when discussing oil, the U.S. is hardly a feeble little victim unable to affect the market.


In 2010, according to the EIA, the world produced about 87 million barrels of oil today, with 22 countries producing over a million barrels a day.  Let’s look at the top producers:



So even if you consider 11.16% to be a “small fraction” it is also happens to be the third-largest fraction. We are a major-player in the market and our decisions can have an impact.  As the Washington Post put it:



Because oil products are so essential to companies and motorists, incremental changes in the supply-and-demand balance have a relatively large effect on prices.


And right now the market is tight:



…because a series of crises has shaved oil production or boosted demand worldwide. Together they add up to a difference of about 1 million barrels a day in the global oil balance.


So to make an impact the U.S. doesn’t need to supply the entire market, but do our part to fill the gap, but instead the market sees projections that  Gulf of Mexico production on Federal areas will be down 530,000 barrels a day this year.



The market sees 87% of our offshore acreage off-limits, it sees see Federal permits lagging in the areas we are allowed to develop in, both offshore and onshore.  It sees a million barrels a day from ANWR sitting on the sidelines, and it sees the U.S. blocking upwards of 800,000 barrels a day from Canada.


The market sees that the U.S. could secure 100% of its liquid fuel needs by 2024.



And the market sees us taking a pass.


So when you hear folks say that we are helpless on the supply side and have to rely solely on reducing demand tell them that you want a true all-of-the-above energy strategy with both increased production AND increased efficiency.  Otherwise the portrait of the U.S. as being rudderless in a stormy energy sea may prove to be self-fulfilling prophecy.


View the original article here

To the President’s Ear on Energy

As the president hits the road to talk about energy, he should first listen to what the American people are saying, reflected in two new polls this week.


Start with a Harris Interactive survey that shows 76 percent of voters believe increasing taxes on oil and natural gas companies could cost them more at the fuel pump. For a president who continues to talk about hiking taxes on energy companies that should be a big red flag.


Americans who’re getting slammed by higher fuel costs appear to sense that increasing energy taxes would drive up energy producers’ costs, which – as the Congressional Research Service found last year – could decrease exploration, development and production while elevating prices.


Other details from the Harris poll of 1,009 respondents:

81 percent believe more U.S. oil and natural gas development could reduce gasoline prices.90 percent believe a pro-energy development strategy could lead to more U.S. jobs.84 percent believe increasing domestic oil and gas production could enhance our energy security.64 percent believe some in Washington are intentionally delaying domestic oil and natural gas development, potentially hurting the economy and leading to higher consumer energy costs.

Clearly, those are slam-dunk numbers on energy policies the president and his administration have been talking about a lot – while keeping 87 percent of America’s offshore areas off limits, while overseeing declines in Gulf of Mexico production and while presiding over a downward trajectory in leasing and permitting on federal lands.


Then there’s the Pew Research Center’s latest findings, that as fuel prices rise, so does Americans’ support for more oil and natural gas production:



“… support for allowing more offshore oil and gas drilling in U.S. waters, which plummeted during the 2010 Gulf of Mexico oil spill, has recovered to pre-spill levels. Nearly two-thirds (65%) favor allowing increased offshore drilling, up from 57% a year ago and 44% in June 2010, during the Gulf spill.”


That last stat is worth underscoring. While Americans’ support for a variety of energy policies – from improved fuel efficiency to more federal support for mass transit systems – is pretty much where it has been, public support for more offshore oil and natural gas drilling has increased significantly. Pew finds that twice as many Americans (65 percent) support increased offshore drilling as those who oppose more drilling (31 percent).


Again, the Pew poll suggests growing numbers of Americans believe that increasing domestic supplies of oil and natural gas can put downward pressure on the price of crude oil, which accounts for 76 percent of the cost of what they pay at the pump. So, while the president continues to talk as though little can be done about fuel prices, U.S. consumers who’re being punished at the pump aren’t buying it.


A couple of other tidbits from Pew:

Of American voters who know something about hydraulic fracturing and energy from shale, 52 percent are in favor compared to 35 percent opposed. Among independents, support is actually a little stronger than the overall number, 54 percent to 35 percent.Awareness of fracking and producing natural gas from shale is mixed, but Pew found that 63 percent of those surveyed had heard something about the process.

One more note about Pew’s survey. The poll finding that Pew chose to highlight in its public announcement – Americans’ top energy priority – stems from a glaringly false choice foisted on the 1,503 sampled adults who were forced to choose one top priority between alternative sources (wind, solar, hydrogen technology) and expanded oil, natural gas and coal production. Those aren’t mutually exclusive options.


We commend the 5 percent of respondents who selected “both” even though the Pew folks didn’t offer it as a choice, as well as the 4 percent who didn’t know or refused to answer – perhaps, like us, frustrated that some continue to pit energy sources against each other when the truth is America needs all energy options to build a secure future.


View the original article here

The President’s Energy Tax Hikes: Section 199 Deduction

The president’s State of the Union address last month had lots of good stuff in it about domestic oil and natural gas production. Unfortunately, the president’s actions are speaking louder than his words.


His just-released 2013 budget includes proposals to increase taxes on oil and gas companies – more than $86 billion over 10 years – that would take the country in the wrong direction on energy. Research shows higher energy taxes would discourage production, lead to fewer well-paying American jobs and increase our reliance on imports.


Today, let’s take a look at one of his tax-hike proposals – repealing the Section 199 manufacturer’s deduction only for oil and natural gas companies. Benefit to Washington: $11.6 billion over 10 years.


Here’s what the president said back on Jan. 24:



“Let’s remember how we got here.  Long before the recession, jobs and manufacturing began leaving our shores.  Technology made businesses more efficient, but also made some jobs obsolete.”


Indeed, which is why the 2004 “American Jobs Creation Act” included the Section 199 deduction. It was extended to all U.S. manufacturers, to help address the very problem the president identified by benefiting employers who maintain and create well-paying U.S. jobs.


The president went on to talk about tax policies he said would foster more American manufacturing:



“If you’re an American manufacturer, you should get a bigger tax cut.  If you’re a high-tech manufacturer, we should double the tax deduction you get for making your products here.  And if you want to relocate in a community that was hit hard when a factory left town, you should get help financing a new plant, equipment, or training for new workers.”


Too bad the president’s affinity for American manufacturing is more rhetoric than reality – demonstrated by his renewed proposal to eliminate the Section 199 deduction only for American oil and natural gas companies. Talk of tax fairness from the administration is especially hollow here. Under Section 199, a 9 percent deduction is available to all qualifying income from all domestic manufacturers – except that the deduction for the oil and gas industry is limited to 6 percent, and now the president wants to eliminate that.


If the objective, as the president said, is more domestic oil and natural gas production – creating more U.S. energy and more U.S. jobs – then raising taxes on these companies is the wrong way to go. Higher taxes on an industry that already pays more than $86 million a day to the federal treasury and which contributed $476 billion to the economy in 2010 would likely cost jobs, not create them, while undermining efforts to reduce imports.


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In Ohio, the Sounds of the Shale Revolution

In Carrollton, Ohio, it’s all business – the businesses around town and across Carroll County that are experiencing a renaissance because energy-rich deposits of shale that have brought oil and natural gas development to eastern Ohio.


Donna Saur, restaurant owner:



“I moved back home after 16 years of being gone. I needed a job. People starting coming into town, and we started hearing about shale.  I would say we’ve seen a 30 percent increase in business over the last year, which 30 percent is – big.”


Bill Newell, owner of a realty and auction business:



“We’ve seen an increase in our business here through this past year with the oil and gas workers coming.”


Tom Wheaton, Carroll County commissioner:



“It’s the first time we’ve been under 10 percent unemployment in, gosh, several years.”


Check out this video, from the folks at Energy Nation, for the sights and sounds of economic opportunity and growth, spurred by energy from shale:


View the original article here

The President’s Almost None-Of-The-Above Energy Approach

The president spoke about energy again Thursday, saying his all-sources strategy will ensure a prosperous future:



“If we’re going to avoid being at the mercy of these world events, we’ve got to have a sustained, all-of-the-above strategy that develops every available source of American energy.”


The president is right: A sustained strategy that uses all of America’s energy sources is the key to U.S. energy security. API President and CEO Jack Gerard:



“More oil and gas development here at home would benefit the nation. It would increase the security of our energy supplies, create jobs, boost revenue tour government and help put downward pressure on prices at the pump.”


Ah, but the president’s so-called all-of-the-above strategy actually appears to be an almost-none-of-the-above strategy. In a speech in Florida, he dismissed calls for increased domestic oil drilling:



“You know there are no quick fixes to this problem, and you know we can’t just drill our way to lower prices.”


And:



“Anybody who tells you we can drill our way out of this problem doesn’t know what they’re talking about — or just isn’t telling you the truth.”


This administration is talking a big game on energy – even claiming credit for domestic oil and natural gas production increases that stem from decisions made long before it came into office. Indeed, those gains have come in spite of the president’s policies, not because of them. And his rhetoric on drilling suggests ignorance or disdain for analysis that shows, yes, we could see 100 percent of our liquid fuel needs met with North American sources of oil by 2024.


Gerard:



“The administration is restricting where oil and natural gas development may occur, leasing less often, shortening lease terms, going slow on permit approvals and increasing or threatening to increase industry’s development costs through higher taxes, higher royalty fees, higher minimum lease bids and more regulations.”


More Gerard:



“Keeping 85 percent of our offshore areas off limits – per the administration’s latest offshore energy plan – is not a prescription for increased oil and natural gas production. Decreasing oil and gas leasing in the Rockies by 70 percent is not generating jobs and more affordable energy that America’s workers and consumers need. Having 10 federal agencies planning more regulation of hydraulic fracturing … is not keeping affordable supplies of gas flowing to generate electricity, heat homes and supply chemical plants. Rejecting the Keystone XL pipeline is not increasing American access to affordable, secure energy.”


Current energy conditions, globally and domestically, are pulling the veil away from the president’s do-little energy policies. You can’t reject the Keystone XL pipeline, for example, then say the United States is at the mercy of the volatility in global energy markets. You can’t keep U.S. energy on federal lands and offshore off limits and say you’re for increased domestic oil and natural gas production. You can’t say yours is an all-of-the-above strategy when you’re denying multiple opportunities to industries that supply the majority of the energy we currently use.


Gerard:



“The administration’s own projections tell us that we’re still going to rely on oil and natural gas for nearly 60 percent of our energy for the next quarter century. We’re either going to produce that oil and gas in the U.S. with the added benefits of creating over a million new American jobs, strengthening our national security and generating more revenue for our government, or we’re going to depend more on resources from less stable parts of the world.”


View the original article here

Royalties and Fair Shares

 

Great post by the American Enterprise Institute’s Steven Hayward (similar version posted on Powerline), breaking down a recent study of government revenues from oil and natural gas leases on public lands, onshore and off. The study is important because it refutes the claim that energy companies don’t pay their “fair share” for the right to develop federal lands.


Interestingly, as Hayward notes, the IHS-CERA study was requested by the Interior Department’s Bureau of Land Management (BLM) after another government study suggested exactly that. A 2008 report by the Government Accountability Office (GAO) said the federal government wasn’t collecting as much from oil and natural gas production on public lands as it should – ranking 93rd out of 104 fiscal systems around the world and losing between $21 billion and $53 billion in potential revenue. Red meat for the “fair share” theorists!


Only it’s not so. The BLM/IHS-CERA study simply blows away the GAO report. Hayward:



It becomes quickly apparent from the IHS-CERA report that the GAO’s analysis of this extremely complicated arena was superficial and inadequate, and that the government makes out quite well, no matter how you define “fair share” that is supposed to be the guide of oil royalty and tax policy. In fact, if you consider the government take as a proportion of the cash flow from oil and gas projects, the government typically nets more than the oil or gas-producing company does.


Here’s how well:  IHS-CERA found that on average, the federal government gets 64 percent of the cash flow from Gulf of Mexico oil leases. Although there are variances from lease to lease, onshore and offshore, “in no case does the government receive less than half the cash flow,” Hayward writes. He cites natural gas leases in Wyoming, where the government take ranges from 50 percent to 73 percent.



Here’s another chart from Hayward’s post, showing that when oil prices spike as in 2008, so do government revenues, boosted by “signature bonuses,” in which energy companies buy rights to a lease in advance:



Again, the importance here is knocking down the myth that oil and natural gas companies aren’t paying their “fair share” for developing federal leases – just as some argue companies don’t pay their “fair share” of taxes overall despite the fact the industry pays more than $86 million every day to the U.S. Treasury in rents, royalties and income taxes. The fact is, compared to what other governments around the world are collecting, the United States ranks high. IHS-CERA:



A ranking of fiscal terms based on all four variables puts all U.S. federal jurisdictions in the top half of the index, which indicates high government take, low (internal rate of return), low (profit-investment ratio), and highly regressive fiscal terms. The (Gulf of Mexico) shelf appears to be least favorable to investors among the U.S. jurisdictions, ranking in the top 10 percent, with Wyoming gas and the GOM deep water ranking in the top 35–50 percent range.



Hayward:



IHS-CERA’s conclusion is that when compared properly with the royalty and tax systems of 29 other nations, only Venezuela extracts a higher take from oil and gas production than the United States. Nice company we’re in.


View the original article here

The State of Gulf Production

The New Orleans Times-Picayune reports that permitting in the Gulf of Mexico in the year since the administration’s deepwater drilling moratorium ended is slightly lower than it was in the year before the 2010 Macondo accident:



“Feb. 28, 2011, was the date that the Interior Department approved the first permit for an oil company to drill a new well in more than 500 feet of water after it had implemented new safety rules. In the year since then, there have been 61 permits to drill new wells in more than 500 feet of water issued by the Bureau of Ocean Energy Management, Regulation and Enforcement and its successor agency, the Bureau of Safety and Environmental Enforcement. In the same one-year period from Feb. 28, 2009, to Feb. 27, 2010, the government issued 67 such permits.”


The pace of permitting is important – so it’s concerning that, approaching two years since the administration’s drilling ban, the trajectory of permitting is, at best, flat instead of growing.


New resource access is absolutely crucial to America’s energy security. The oil and natural gas industry is ready to invest in new development if given the chance. Currently, it looks like the opportunities are still limited. Check out U.S. Sen. Mary Landrieu trying to make that point with Interior Secretary Ken Salazar during a hearing this week (h/t Ed Morrissey at Hot Air).


Another data set offers more perspective. The Energy Information Administration’s February “Short-Term Energy Outlook” shows that while overall domestic production increased in 2011 (more on this below), federal Gulf production is estimated to be down 21 percent this year from 2010:



“Domestic crude oil production increased by an estimated 110 thousands bbl/d to 5.59 million bbl/d in 2011.  A 380-thousand bbl/d increase in lower-48 onshore production in 2011 was partly offset by a 40-thousand bbl/d decline in Alaska and a 230-thousnd bbl/d decline in output in the Federal Gulf of Mexico (GOM).”


According to EIA, Gulf production was down from 1.55 million barrels per day in 2010 to 1.32 mb/d in 2011 and is estimated to fall to 1.23 mb/d in 2012 – the 21 percent decline.


Now, here’s an even starker figure: EIA forecast in 2010 that Gulf production would reach 1.76 mb/d this year. The difference between that forecast and the most recent estimate for Gulf production this year is a whopping 30 percent.  Here it is in a chart:



The red represents lost oil – lost energy and lost revenue to government. Total lost government revenue (in royalties and corporate tax payments) as a result of the Gulf slowdown from May 2010 until December 2011 is an estimated $5 billion, according to API analysis of EIA data.


Now, about overall domestic production. Steven Hayward at Powerline notes a report in the New York Times’ Greenwire publication that 2011 oil production on federal lands fell by 100 million barrels from 2010. Hayward details what that stat does to the administration’s claim about boosting domestic output:



“The increase in domestic oil production is occurring on private and state land, such as North Dakota. As I’ve noted here before, the explosion in the production of the Bakken field in North Dakota almost stops completely at the Montana border.”


In other words, production has increased in areas not under government control. More domestic oil was produced despite the administration’s policies, not because of them.


View the original article here

Pew: Keystone XL Support at 66 Percent

The Pew Research Center is out with new polling on the Keystone XL pipeline that mirrors earlier, strongly favorable surveys by other public opinion surveys:



In terms of policy proposals currently under consideration in Washington, there is far more support than opposition for building the Keystone XL pipeline that would carry oil from Canada’s oil sands to refineries in Texas. … Among those who have heard at least a little about the Keystone XL pipeline, 66% say the government should approve the pipeline, while just 23% say it should not.


The poll’s splits show that Keystone XL support is broad:



Republicans are far more likely than Democrats or independents to have heard about the pipeline. Among those aware of this issue, 84% of Republicans say the government should build the pipeline, while just 9% say they should not. Independents, by greater than two-to-one (66% to 27%) approve of its construction. Democrats who have heard about the pipeline also are supportive – 49% approve of building the pipeline and 33% disapprove.



Again, Pew is finding what others already have found, that there’s a U.S. consensus for building the Keystone XL – to strengthen our energy relationship with Canada, make our energy future more secure and create jobs.


Earlier this month a Fox News poll found that 67 percent of respondents said the pipeline should be built, while just 25 percent opposed it. Last month a Rasmussen Reports poll put the Keystone XL’s support at 56 percent, while a United Technologies/National Journal Congressional Connection poll had favorability at 64 percent.


Certainly, the momentum of that kind of public support isn’t unnoticed. Montana Gov. Brian Schweitzer tells The Canadian Press the Keystone XL makes too much sense to be stopped by Washington politics:



“Blah, blah, blah, Washington, D.C., politics. If you want to get something a) not done and b) cussed and discussed, send it to Washington, D.C. It’s got to get built.”


We and a strong majority of Americans agree.


View the original article here

Fear Mongering on Exports

Kevin Hall, of McClatchy, writes:



“U.S. demand for oil and refined products - including gasoline - is down sharply from last year, so much that United States has actually become a net exporter of gasoline, unable to consume all that it makes.”


So far so good.



“Exports of U.S. refined product averaged 2.928 million barrels per day over the four weeks ending on Feb. 10, compared to 2.190 million barrels per day for the four weeks ending Feb. 11, 2011, the EIA said. This category is primarily gasoline, but it includes unfinished oils, fuel additives, ethanol and other blending components.”


Um.  No.  This category is not primarily gasoline.  Using the EIA data this is what we see:



Then we get the export fear mongering:



“The export picture suggests that when domestic demand rises, American motorists might be competing with drivers elsewhere for U.S.-made gasoline, which fetches a higher price as an export.”


Hall covers himself with the wiggle words, “suggests” and “might be” but this statement is still incredibly irresponsible given “the export picture” suggests no such thing. And we don’t even have to look elsewhere for proof, as this is made clear in the article! In his lead paragraph Hall makes clear that we are making more refined product than we are consuming and that exports are simply picking up the slack between domestic production and domestic demand.  Hence exports are up, and this is a very good thing:

Flexibility to export product in times of market imbalance helps refiners operate efficiently and maintains U.S. refining capacity. This contributes to U.S. energy security.  Not to mention keeping workers working.Refining enhances the U.S. economy by adding economic value to the raw material: In the case of exported petroleum products, the U.S. produces or buys crude oil, refines it at U.S. refineries and then resells finished petroleum products at significantly higher value.  This increase in value is what GDP measures.In 2011, fuel and other petroleum products were a significant part of U.S. exports (7 percent) as measured in dollars, at $107 billion. This was due in part to reduced domestic fuel demand (because of the lagging economy, increased use of renewables in finished petroleum products and more fuel-efficient cars) and in part because the industry produced at or near record amounts of gasoline and diesel in 2011.

Then article keeps the fear coming:



"To the extent that there is this export market that wasn't there before, it is certainly ... keeping prices higher than they otherwise would be," said [energy analyst John] Kilduff. "Exports were not material. Now they are becoming material."


Actually, the export market has always been there, providing refiners with a market when U.S. demand for various products is low.  But it isn’t keeping prices higher.  The EIA notes that in January 2012  refining costs AND profits made up 6 percent of the cost of a gallon of gas.



So refiners are getting only 20 cents a gallon of gross margin, of which, on average, 15 cents covers costs leaving a 5 cent per gallon profit. And yet we are to believe that taking away 8 percent of their market* would lower prices?


For too long the energy debate has been dominated by this sort of liberty with the facts.  And while it may sell newspapers it sells the American people short, and it isn’t going to lead to policies that get us where we need to go.


*Exports represent just 8 percent of the motor gasoline and ULSD produced in the U.S.


View the original article here

Environmental Experts Boost State Regulation of Fracking

 

The New York Times’ Joe Nocera has a column based on an interview with Fred Krupp, a key member of the Energy Department’s special subcommittee on hydraulic fracturing – key because Krupp’s also president of the Environmental Defense Fund. Nocera writes:



"Unlike others in the environmental movement, [Krupp] and his colleagues at the Environmental Defense Fund don’t want to shut down fracking; rather, their goal is to work with the states where most of the shale gas lies and help devise smart regulations that would make fracking environmentally safer."


Nocera discusses the need to improve the capture of leaked methane from fracked natural gas wells, which certainly is an industry priority. Nocera then asks Krupp whether the federal government should take the regulatory lead, presuming that would foster greater uniformity and tougher enforcement. He writes:



"Krupp frowned. “Given the dysfunction in D.C., a state-by-state approach will be more effective,” he said. “We need to focus on getting the rules right, and complied with, in the 14 states which have 85 percent of the onshore gas reserves.”


We agree. States are best situated to regulate the development of natural gas from shale because they’re closest to drilling operations and they know the geology, hydrology and other physical characteristics that vary from state to state.


In this view Krupp has important company: EPA Administrator Lisa Jackson. Earlier this month Jackson told a campus forum that fracking regulations don’t have to extend beyond the state level – following on an interview last fall in which she said the states are doing a good job regulating hydraulic fracturing and that “we have no data right now that leads us to believe one way or the other that there needs to be specific federal regulation of the fracking process.”


We also agree on the need to get the rules right. Oil and natural gas companies have set high, constantly improving standards and are working with local communities and states to run transparent, responsible operations.


It’s in everyone’s interest to get this right, to respect the environment while tapping America’s vast shale natural gas resources, creating jobs and generating economic growth along the way. The country’s oil and natural gas companies are on it.


View the original article here

For Fair Disclosure

On its face, a federal provision requiring oil and natural gas companies to be transparent about what they pay to foreign governments for energy projects in those countries -- licenses, taxes, royalties and other fees -- sounds like a good idea. And it is. The provision enacted in 2010 was designed to help people in resource-rich countries know what their governments are doing with those resources.


Unfortunately, good intentions don't always ensure fairness. With these disclosure requirements there are unintended consequences that could harm some U.S. oil and natural gas companies' ability to compete in the global market with larger, state-owned rivals. These include:

Reporting rules that require public disclosure of detailed information about payments to foreign governments, potentially pertaining to every single well, raising the possibility that proprietary material could be handed to global competitors.The disclosure requirements only apply to companies listed with the U.S. Securities Exchange Commission, meaning a number of the biggest international oil and natural gas companies -- including foreign state-owned entities that control 78 percent of the world's proven reserves -- are exempted.Because the information is publicly available, competitors bidding on future oil and natural gas projects could access data about U.S.-listed companies with a few mouse clicks.

Of course, trying to deal with the obvious inequities of the disclosure law is perilous. Some activists are assigning bad motives to industry efforts to bring about common-sense fairness. The fact is U.S. oil and natural gas companies are working in a constructive manner to find a sensible path forward that meets the objective of the law, without harming the ability of U.S. companies to compete in the global marketplace.


View the original article here

National Poll: Keystone XL Support Nears 70 Percent

A new Fox News poll shows continued support for building the Keystone XL pipeline. The survey of 1,100 registered voters conducted Feb. 6-9 found 67 percent of respondents said the pipeline should be built, while just 25 percent oppose it.


The numbers are comparable to those in a Rasmussen Reports poll last month, which found the Keystone XL enjoyed a 56-27 percent edge. Interestingly, opposition to the project appears stuck in the mid-20s over the two polls.


Another important point: The Fox survey question on the Keystone XL was pretty fair and balanced:



"A proposed oil pipeline known as the Keystone XL would transport oil from Canada to refineries in the U.S. Supporters of the pipeline say it would bring needed oil to the U.S. ... lowering gasoline prices and creating jobs. Opponents of the pipeline have environmental concerns, including risk of a spill, and also say the pipeline would increase American dependence on oil."


The question accurately reflects the current divide over the pipeline -- which actually is quite lopsided in the project's favor. Clearly, a big majority of Americans favor the pipeline's energy and jobs. Additionally, it can't be said respondents didn't have enough information before answering; just 8 percent said they didn't know enough to respond.


Again, 67 percent is a big number on an issue, especially in an election year: If you're looking for votes, who will you stand with -- the 67 percent or the 25 percent?


View the original article here

A Paucity of Scarcity

Steve Maley calls it The Big Energy Lie, the continued use of reserve estimates by those who want to end the use of hydrocarbons in the United States.  Maley explains:



"Reserves have been around 10 years of production ever since I can remember. That’s because energy companies measure their success by their ability to 'replace production' – that is, if they produce a million barrels, they need to replace it with a million barrels of reserves. It’s like a current inventory.  Or like a checking account. Imagine if you had $3,000 in your checking account. If you spend $1,000 per month, does that mean you will run out of money in 3 months? Only if you stop working. And only if you have no other assets."


To illustrate Maley’s example let’s look at EIA’s estimates for natural gas reserves and consumption from now till 2035.



You will notice steady consumption, and yet reserves actually grow.  Why?  Because current consumption is drawing from current production, while “reserves” as an industry term of art are drawing from a much larger supply.  From the EIA:



Notice two things, the addition of a zero to y-axis, and the steady growth since 2000, with an adjustment for this year.  In short it doesn’t matter what our “reserves” are, in the long run, because they don’t measure all of the resources available for exploration.  When you take those into account:



"EIA estimates that there are 2,214 trillion cubic feet (Tcf) of natural gas that is technically recoverable in the United States.  Of the total, an estimated 273 Tcf are proved reserves, which includes 60 Tcf of shale gas.  At the rate of U.S. natural gas consumption in 2010 of about 24 Tcf per year, 2,214 Tcf of natural gas is enough to last about 92 years."


So 92 years worth of natural gas is technically recoverable using, and this is the important part, today’s technology.  That’s right, we are sitting on 92 years worth of natural gas even with no new discoveries and no new technologies.  So when you see folks say that we might only have a 10 year supply of natural gas or that we need to raise energy taxes to fund immediate adoption of alternative fuels they are … I almost said lying, but really, it is mostly just ignorance.  Though occasionally, it’s politics.  Though you see that most often with oil, not natural gas, as we saw, again, with President Obama this week:



"As a country that has 2 percent of the world's oil reserves, but uses 20 percent of the world's oil -- I'm going to repeat that -- we've got 2 percent of the world oil reserves; we use 20 percent."


Let’s look at those reserves for a bit, in red, with yearly U.S. production in blue:



Again, yearly production steady, reserves go up.  For more, let’s go to the Congressional Research Service with a handy pyramid form:



So, as of 2010, we had 155 billion barrels of oil that were technically recoverable using 2010 technology. Going back to the previous chart, this equals about 70 years of production in the United States.   Not to mention the fact that we don’t have a very good idea about the resources that  87% of our offshore areas contain, because they are off-limits.


So no, we don’t have to jack up energy taxes to pay for an immediate switch to alternative fuels. The Energy Information Administration projects that in 2035 the U.S. will continue to meet over 56% of its demand through oil and gas. While alternatives fuels are important, moving forward we will need a true all of the above strategy, and the industry is doing its part. In fact 1 of every 5 dollars spent on renewables in 2000-2010 came from the oil and gas industry.


As U.S. government numbers show, the U.S. is an energy rich nation.  The only scarcity we have when it comes to energy is in the honesty hydrocarbon opponents bring to the debate.


View the original article here