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?

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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.

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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.

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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.

Note:  An earlier version of the first and third charts above showed oil production as “billions” not “millions,”  we regret the error.  Sharp readers have also noted that the some of the numbers do not appear to match with EIA reports.  For this post we were just charting the data in the White House blog post mentioned.  We didn’t want to change the White House numbers lest we appear to be skewing their analysis to fit our commentary.

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O’Reilly - Oh So Wrong On Exports

Bill O’Reilly was beating the drum again last night about oil exports, once again displaying his lack of rhythm.  Here are his arguments in a nutshell:

Many Republicans want to drill baby drill but what's the point if all the oil goes to China?...You are not making as much money in U.S.A. as you could in China so you are just whipping it out and throwing it over to China. Is that right or wrong?... And we own 12 miles of ocean offshore. That's the U.S. sphere of influence. We own that; it's ours. All the 320 million American citizens. The government doesn't own it. The oil companies don't own it. So they take the stuff out of our land, and they send it to China. Does that make sense to you?

First let’s go back to this chart:

That’s right in 2011 99.7 percent of the crude oil produced or imported into the U.S. was processed here.  We simply do not export crude oil in any significant way.  We do export products manufactured from crude oil, including motor gasoline.  Let’s have a look at that from both the supply and demand side:

Now this might be hard to see because gas exported is quite small compared to gas supplied to U.S. consumers, but where you see spikes in exports corresponds almost exactly to dips in U.S. demand.  In other words the gas we are exporting is not gas taken from U.S. consumers, but rather gas that U.S. consumers aren’t using.  As explained yesterday, this is a good thing.  Having an export market ensures that refiners can operate efficiently and maintain U.S. refining capacity. Contributing both to energy security and keeping our workers working.

There has been a lot of talk recently about the need to boost American manufacturing, well this is what manufacturing looks like.  Taking raw materials and adding economic value to them. In the case of exported petroleum products, the U.S. produces or buys crude oil, refines it at U.S. refineries and then sells finished petroleum products at significantly higher value.   Exporting petroleum products does not increase prices, as John Felmy put it:

…when supplies are available to export – as they are today because of weak U.S. demand – they put downward pressure on the prices of the gasoline and other products we import. Exports also mean jobs for Americans, including good paying U.S. refinery jobs, and a lower trade deficit.  but reducing the supply of the crude oil does.

If O’Reilly really wants to contribute to the gas price debate he should focus on real solutions, not free trade bogeymen.  Back to Felmy for what these solutions look like:

The industry must be allowed to develop at home more of its ample crude oil and natural gas resources. More U.S. barrels on crude markets would help drive down crude costs and reduce gasoline prices. We need policies that ease access to U.S. oil and natural gas resources, which are still very ample. We also need policies that add critical infrastructure, such as building the Keystone XL pipeline, to bring in more of Canada’s vast supplies of oil, and policies that keep regulations and tax policy reasonable.

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