Daily Archives: March 8, 2012

Recap: Worldwide Field Development News (Mar 2 – Mar 8, 2012)

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This week the SubseaIQ team added 12 new projects and updated 31 projects. You can see all the updates made over any time period via the Project Update History search. The latest offshore field develoment news and activities are listed below for your convenience.

Africa – West
Afren Confirms High Quality Oil at Okoro East
Mar 7, 2012 – Afren has completed testing at the Okoro East oil discovery, confirming high-quality API oil of 38 to 40 degrees in excellent reservoir sands. Based on the test data the company expects future horizontal production wells at Okoro East to be capable of yielding between 4,500 to 7,000 bopd per well. The company will drill two production wells using existing facilities in the second half of 2012 and up to eight production wells, under a full field development scenario. Three drill stem tests have been performed and completed, said Afren. The purpose of this test was to obtain fluid samples and pressure data in order to establish reservoir connectivity, heterogeneity and quantify permeability and porosity. The tests have confirmed a high quality 38- to 40-degree API oil, multi-Darcy permeabilities and an average porosity of between 30 percent to 35 percent in the subject reservoirs. The pressure data obtained has helped with the company’s structural understanding of the field and supports the pre-drill volumetric estimates (Pmean STOIIP of 157 million barrels). Based on the test data, the company expects future horizontal production wells at Okoro East to be capable of yielding rates between 4,500 bopd to 7,000 bopd per well. The company intends to drill up to two production wells in 2H 2012 using the free well head slots on the existing Okoro platform, which will be tied-back to the Armada Perkasa FPSO. This production information will allow Amni and Afren to finalize development options with up to eight possible production wells under a full field development.
GSF Monitor Set to Spud Gazelle-P3
Mar 7, 2012 – Rialto Energy announced its plans to drill the first two development wells in the Gazelle Field using the GSF Monitor jack-up rig. The phased development of CI-202 is set to begin with the spudding of Gazelle-P3 followed by Gazelle-P4. An additional two development wells are planned after final investment decision. Two infill wells are planned for 2016.
Project Details: Gazelle
Chariot Inks Deal to Drill Tapir South Prospect
Mar 6, 2012 – Chariot Oil and Gas has signed a contract with AP Moller Maersk for a one-well drilling slot using the Maersk Deliverer (UDW semisub) rig offshore Namibia. The operator expects to spud the Tapir South prospect early April. The prospect is part of the Tapir trend and is located in Northern Block 1811A. The well is located 50 miles (80 kilometers) offshore Namibia in 6,915 feet (2,108 meters) of water with a drilling depth of approximately 16,730 feet (5,100 meters). It is expected to take around two months to drill and will be the first well in Chariot’s four-to-five well exploration program that is planned to take place in 2012 and 2013.
S. America – Other & Carib.
BPZ Further Develops Corvina, Albacora Fields
Mar 5, 2012 – BPZ Energy reported that production from the Corvina and Albacora offshore fields has average about 3,920 bopd from Feb. 2012 to date. The 3D seismic survey acquisition on the offshore Block Z-1 has been underway for four weeks and should be completed in the second quarter of 2012 followed by processing and interpretation of the data. Furthermore, work on the new CX-15 platform continues with installation scheduled for the third quarter of 2012. The CX-15 drilling program, which will be the second platform installation at the Corvina field, will target 23 million barrels of proved undeveloped reserves (PUD). The PUD estimates increased in the 2011 reserve report by one million barrels, stated the operator.
Project Details: Corvina
Europe – North Sea
Wintershall Turns On Taps at K18-Golf Field
Mar 8, 2012 – Wintershall has commenced natural gas production from the K18-Golf field in the Dutch North Sea. Wintershall plans to produce around 1 MMcm/d from the tight gas deposit via a subsea well (subsea completion). A second production well next summer is set to maintain plateau between 1 and 1.4 million cubic meters of natural gas per day. The field was connected via a sea bottom pipeline to the K15-FA platform, about 6.2 miles (10 kilometers) further north. The gas will be treated before being sent via the Wintershall-operated WGT pipeline network. Wintershall has a share of 41.7 percent in K18-Golf. The other participating companies are EBN B.V. (40 percent), NAM (15.9 percent), Tullow Oil (2.2 percent) and Oranje-Nassau Energie (0.2 percent). Wintershall was awarded the concession block K18 in 1983. The natural gas field was discovered in 2005.
Premier Oil P&A Bluebell Prospect
Mar 8, 2012 – Premier Oil will plug and abandon the Bluebell exploration well, 15/24c-10, on Block 15/24 in the UK sector of the North Sea. The well reached a total depth of 7,507 feet (2,288 meters). The Paleocene target was encountered on prognosis; the logs showed excellent sand quality but were water wet.
Project Details: Bluebell
Technip to Conduct FEED for Luva Platform
Mar 8, 2012 – Statoil awarded Technip a lump sum FEED contract for the development of the Luva platform. The contract covers the design and planning for procurement, construction and transportation of a Spar hull and the mooring systems as well as the design of the steel catenary risers. The scope of work includes design and planning for procurement, construction and transportation of a Spar hull and mooring systems, as well as design of the steel catenary risers.
Project Details: Luva
Summit to Begin Drilling Operations at Orchid Prospect
Mar 8, 2012 – Summit Petroleum has commenced well operations at the Orchid prospect in the UK sector of the North Sea, with spudding anticipated in the next couple of days. Orchid is a dual target, four-way dip closure at Tertiary and Chalk level with gross prospective resources associated with the entire prospect estimated internally by Valiant to be 30 mmboe (net 9 mmboe). The well is being drilled by the Sedco 711 (mid-water semisub) and is anticipated to take 35-40 days to complete, once drilling commences.
Project Details: Orchid
Faroe Petroleum Completes Drilling Ops at T-Rex, Bolan
Mar 7, 2012 – Faroe Petroleum has discovered oil in both the T-Rex and Bolan exploration prospects in the Norwegian sector of the North Sea, but not in commercial quantities. The 6406/3-9 well, reached a total depth of 13,725 feet (4,183 meters) within shales of the Lange Formation. The well targeted Lower Cretaceous sandstones of the Lange formation (T-Rex) and Lysing formation (Bolan). T-Rex was the primary target and preliminary results based on extensive coring, wireline logs and pressure data have confirmed the presence of oil, but in a thinner than expected reservoir interval, and the well will therefore not be production tested. Fluid samples were successfully recovered in T-Rex. The quality of the oil was in line with fluids seen in the original discovery well 6506/11-2 (drilled by Statoil in 1991). The Bolan prospect in the shallower Lysing formation also encountered an oil column within an inter-bedded sandstone package. A similar extensive data gathering program was performed on the Bolan prospect as with T-Rex. Additional evaluation is required in order to delineate the areal extent of the oil bearing layers, before any decisions in terms of a further appraisal program can be made.
Project Details: T-Rex
Statoil Touts Success at Skrugard Appraisal
Mar 6, 2012 – Statoil is in the process of concluding the drilling of appraisal well 7220/5-1 on the 7220/8-1 (Skrugard) gas/oil discovery. The discovery was proven in 2011 in Middle and Lower Jurassic reservoir rocks. The objectives of the appraisal well were to confirm the previous volume estimate for the Skrugard discovery and to collect reservoir and overburden data for field development planning. Both objectives have been met, said Statoil. Drilled by Transocean Barents (DW semisub), appraisal well 7220/5-1 has proven a gas column of 85 feet (26 meters) overlaying an oil column of about 158 feet (48 meters). Both column heights and reservoir properties came in as expected. This confirms the previous volume estimate for the Skrugard discovery and the total resource estimate for the Skrugard and Havis structures ranging from 400 to 600 million barrels of recoverable oil. Statoil is currently considering several alternative development concepts for the discovery.
Project Details: Skrugard
Lundin Ups Stake at Brynhild Field
Mar 5, 2012 – Lundin Petroleum has entered into an agreement with Talisman Energy Norge AS to acquire an additional 30 percent interest in PL148, which contains the Brynhild field, offshore Norway. Following the acquisition, Lundin Petroleum will hold a 100 percent interest in PL148. The Brynhild field, which is currently under development, is forecasted to produce first oil in late 2013 at a gross plateau production of 12,000 bopd.
Project Details: Brynhild (Nemo)
Lundin, Det norske Reach Agreement for Luno, Draupne Combined Development
Mar 5, 2012 – Lundin Petroleum and partners Wintershall and RWE Dea have reached an agreement for Det norske-operated licenses PL001B, PL028B, PL242. A plan for development and operation for the Luno field was submitted on January 19, 2012 to the Norwegian Ministry of Petroleum and Energy and includes 15 wells drilled from a jackup. First production is expected in the fourth quarter of 2015. In the coordinated development solution, the partially processed fluids from the Draupne field will be transported from the Draupne platform to the Luno platform for stabilization and export of oil and gas. The combined production from the Luno and Draupne fields will be phased in time with Draupne production planned to start in late 2016 and increasing toward a peak rate in late 2018. The Luno platform design capacity will accommodate in excess of 120,000 bopd and up to 175 MMcf/d when Draupne production is combined with that from the Luno field.
Project Details: Luno, Draupne Project
Statoil Contracts EMAS AMC for Fram H Nord
Mar 5, 2012 – EMAS AMC has received a SURF contract for marine installation and pipe lay from Statoil for the Fram H Nord subsea development. The field is situated in the Troll C/Fram area in the northern part of the North Sea. The Fram H Nord subsea development is the third phase of the development of the Fram field which is tied-back to the Troll C Platform. Fram H-Nord will be developed with one satellite well tied-back to the existing infrastructure at Fram Vest A2 template via twin flowlines and a control and service umbilical. The contract scope includes the engineering, procurement, transport and installation of one 10-inch flexible production and one 4-inch gas injection flowline both 3.2 miles (5.3 kilometers) long, as well as all activities necessary for the installation of the following: integrated template structure and manifold; subsea control umbilical; near-by protection structures; tie-ins of all lines to the Fram H Nord and Fram Vest A2 manifolds plus pre-commissioning/testing; trenching and rock dumping of all line systems; and the supply and installation of protection covers over tie-in areas at Fram H Nord and Fram Vest A2 templates. Engineering, procurement and planning activities will commence immediately, and the offshore work is scheduled to commence in the third quarter of 2013.
Project Details: Troll Area
Asia – SouthEast
Premier Successfully Tests Lama Formation in Anoa Field
Mar 5, 2012 – Premier has successfully tested the Lama formation within the Anoa field on the Natuna Sea Block A. The WL-5 development well was deepened to a total depth of 11,012 feet (3,356 meters) to investigate the exploration potential of the Lama formation within the Anoa field. The well encountered about 300 feet (91 meters) of fractured Lama sandstones. The Lama formation was tested over an interval of 10,658 to 10,770 feet (3,249 to 3,283 meters) and flowed gas at a rate of 17 MMcf/d through a 48/64-inch choke. The results of the test will be intergrated with the log and seismic data to determine the ultimate recoverable resource of this deeper reservoir that will be produced through the Anoa facility. Moreover, the jackup West Callisto (400′ ILC) will move to drill the Biawak Besar prospect on Natuna Sea Block A. The results of this well are expected in April 2012.
N. America – US GOM
Petrobras Brings Cascade Online in GOM
Mar 5, 2012 – Petrobras reported that on Feb. 25, 2012, it commenced production at the Cascade field through the Cascade No. 4 well, which was interconnected to the BW Pioneer FPSO. The Cascade 4 production well was drilled and completed in reservoirs of the Lower Tertiary geological period, which is a promising exploratory maritime boundary of the Gulf of Mexico, at a vertical depth of around 26,247 feet (8,000 meters). The BW Pioneer is the first FPSO to produce oil and gas in the U.S. portion of the Gulf of Mexico, and has the capacity to process 80,000 barrels of oil and 500 Mcm/d.
Project Details: The Greater Chinook Area
Australia
Technip to Supply Flexible Pipe for Fletcher, Finucane Development
Mar 5, 2012 – Santos has awarded Technip a flexible pipe supply contract for the Fletcher Finucane oil field development in Western Australia. The contract, which includes project management, engineering and the supply of 19 miles (31 kilometers) of 10.2-inch and 9-inch production flowlines, along with 14 miles (22 kilometers) of 3-inch service lines, will start in April 2012. Delivery is planned for the second semester of 2012.
Project Details: Fletcher/Finucane
BHP Billiton Spuds Tallaganda
Mar 2, 2012 – BHP Billiton has commenced drilling the Tallaganda-1 well at permit WA-351-P offshore Australia. The operator is using the Atwood Eagle (DW semisub) to drill the well. The prospect will test the gas potential of sandstones in the prolific Triassic age, Mungaroo formation, in a well defined horst block as imaged by high quality modern 3D seismic data. The well will be drilled vertically in a water depth of 3,743 feet (1,141 meters) and is expected to take 37 days to drill with a projected total depth of 13,944 feet (4,250 meters).
Project Details: Tallaganda
S. America – Brazil
Petrobras Commences Iracema Well Test
Mar 5, 2012 – Petrobras and partner BG Group have commenced a new well test in the Iracema area of the BM-S-11 concession in the pre-salt Santos Basin. The Cidade de Sao Vicente FPSO was connected to the RJS-647 well in water depths of 7,257 feet (2,212 meters). The FPSO will operate in the area for approximately six months gathering technical information on reservoir behavior and oil flow in the subsea lines amongst other data. During this initial test phase the well is expected to produce at around 10,000 bopd, constrained by facilities. The information gathered will support the development of the final production system in the area, expected to be in operation by the end of 2014 with the installation of the 150,000 bopd capacity FPSO Cidade de Mangaratiba.
Project Details: Iracema
Mediterranean
Noble Energy Preps to Drill Pinnacles
Mar 5, 2012 – Delek Group has reported that Pinnacles No. 1 exploratory well, offshore Israel, is due to start soon and is expected to last about five weeks. According to a report prepared by Netherland, Sewell and Associates (NSAI) the estimated unrisked gross prospective gas resources for the Pinnacles Prospect, as of December 31, 2011, is expected to be 25.7 (low) to 78.2 (high). The operator will use the ENSCO 5006 (DW semisub).

Source

Gulf Locals and Energy Experts Express Concern Over Decreased Gulf of Mexico Offshore Drilling Activity on Jobs, Economy

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WASHINGTON, D.C., March 8, 2012 – Today, the Subcommittee on Energy and Mineral Resources held an oversight hearing on the Fiscal Year 2013 budget for the Bureau of Ocean Energy Management (BOEM) and Bureau of Safety and Environmental Enforcement (BSEE). During the hearing, Committee Members heard testimony from Gulf of Mexico business leaders and energy experts who expressed deep concern over the slowdown in offshore permitting that has negatively impacted Gulf businesses and local economies.

“Production in the Gulf of Mexico is essential to our nation’s energy security – accounting for 29 percent of total U.S. crude production and 12 percent of total U.S. natural gas production. The thousands of businesses throughout the Gulf and nationwide that support this industry still struggle to stay afloat as a result of President Obama’s moratorium and the subsequent permitorium,” said Subcommittee Chairman Lamborn (CO-05). “We will hear from some of these stakeholders in the Gulf of Mexico, as well as review an analysis that shows that the pace of permitting is still well below historical averages.”

Historically low permitting has caused unemployment, economic instability and businesses to leave the Gulf of Mexico.

James Adams, President and CEO of the Offshore Marine Service Association (OMSA), which represents more than 100 firms that operate marine service vessels in the Gulf of Mexico, spoke to how devastating the permitting slowdown has been. “The economic impacts of this permit slow-down or de facto moratorium are diverse and farreaching, affecting individuals and businesses in various industries across the Gulf Coast…businesses are indeed laying off workers, reducing hours and salaries, and limiting new hires as a result of the permit slow-down.” Adams also mentioned the reoccurring theme of businesses moving overseas, “and postponing local expansion puts the regional economy on insecure ground, and the loss of businesses in the oil and gas industry to international markets has potential negative effects on the national economy.”

Brady Como, Ecxecutive Vice President of Delmar Systems, a leading supplier of offshore services in the Gulf, testified that slow permitting activity, “has not only had an impact upon our employees that were laid off, but also has been the driving force for the percentage of our international business outside the Gulf of Mexico more than doubling during that time.” To stay in business, his company has been forced to follow, “rigs leaving the gulf all over the world, from Brazil and Australia, to Trinidad, West Africa and the Mediterranean.” Como reminded Members that, “for every drilling rig that leaves, 200 jobs go with it. That impact is even greater when indirect jobs are considered.”

Benjamin Salsbury, Senior Energy Policy Analyst at SVP FBR capital Markets, confirmed that, “there are just 25 Mobile Offshore Drilling Units or ‘floaters’ and 15 platforms drilling. That is 12% fewer floaters than were operating before the Macondo spill despite crude oil prices more than 25% higher.” Salsbury continued to reiterate what local Gulf businesses already know, “there continues to be a permitting constraint on Deepwater Gulf of Mexico drilling activity.”

Background:

A study put forward by Greater New Orleans, Inc. estimates that of the Gulf businesses they surveyed:

  • 41% said they were not making a profit;
  • 50% said they have laid of employees as a result of the moratorium; and
  • 82% said they have lost personal savings as a result of the permit slowdown.

Printable PDF of this document

Source

NMS Girl Of The Day #26 – Donna Solomons

Online Guy must come clean here and admit a glaring oversight. The fact that it has taken me over a month to feature Donna Solomons as a NMS Girl Of The Day is almost unforgivable.

It’s not that I was unaware of Donna’s great claim to a NMS Girl Of The Day badge. Those claims are obvious. It’s more complacency as I watched with great pride as she dominated voting on The Bounce to earn herself a Bounce Badge and I simply assumed that she already must have been NMS Girl Of The Day.

You know what they say about assumption and how it makes an ass out of you and me. Well this oversight just made an ass out of me.

Thank goodness for the Social Media suggestions where Donna and her fans brought the error of my ways to my attention.

Donna – please accept my humblest apologies. You’re a deserving NMS Girl Of The Day and I just spent the first 15 minutes of my day voting for you. I suggest that you all do the same and VOTE FOR DONNA!

Interestingly Donna has over 140 000 votes already which just goes to show how that smile of hers will win over voters in their droves.

March 8, 2012

NMS Girl Of The Day #26 – Donna Solomons.

ExxonMobil Plans Five-Year Investment of $185 Billion to Develop New Energy Supplies

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March 08, 2012 09:00 AM Eastern Time

NEW YORK–(BUSINESS WIRE)–Exxon Mobil Corporation (NYSE:XOM) plans to invest approximately $185 billion over the next five years to develop new supplies of energy to meet expected growth in demand, Chairman and CEO Rex W. Tillerson said today in a presentation at the New York Stock Exchange.

“During challenging times for the global economy, ExxonMobil continues to invest to deliver the energy needed to underpin economic recovery and growth,” Tillerson said in a presentation to investment analysts.

Tillerson said that even with significant efficiency gains, ExxonMobil expects global energy demand to increase by 30 percent by 2040, compared to 2010 levels. Demand for electricity will make natural gas the fastest growing major energy source and oil and natural gas are expected to meet 60 percent of energy needs over the next three decades.

To help meet that demand, ExxonMobil is anticipating an investment profile of approximately $37 billion per year through the year 2016.

“An unprecedented level of investment will be needed to develop new energy technologies to expand supply of traditional fuels and advance new energy sources,” said Tillerson. “We are developing a diverse portfolio of high-quality opportunities across all resource types and geographies.”

A total of 21 major oil and gas projects will begin production between 2012 and 2014. In 2012 and 2013, the company expects to start up nine major projects and anticipates adding over 1 million net oil-equivalent barrels per day by 2016.

At the meeting the company outlined its major achievements in 2011 and plans for the future. Highlights include:

  • ExxonMobil replaced 107 percent of its 2011 production (116 percent excluding asset sales), increasing proved reserves to 24.9 billion oil equivalent barrels. It was the 18th consecutive year the company replaced more than 100 percent of its production, with proved reserve additions of 1.8 billion oil-equivalent barrels.
  • Nine major upstream projects are expected to start-up in the next two years including four in West Africa, Kashagan Phase 1 in Kazakhstan and the Kearl Oil Sands project in Canada.
  • In the downstream, the company completed a large project at the Thailand refinery, which is expected to increase the supply of lower sulfur motor fuels by more than 50 thousand barrels per day. Additional projects are under way, including new facilities at ExxonMobil’s Singapore refinery and at a joint-venture refinery in Saudi Arabia.
  • A major expansion at the Singapore chemicals facilities is nearing completion. Commissioning and startup activities are expected to continue through 2012 and will provide a world-scale integrated platform with unparalleled feedstock flexibility. The expansion will add 2.6 million tonnes per year of additional capacity and will help meet demand growth in Asia Pacific.

This is the 10th year that ExxonMobil has made an annual presentation to analysts at the New York Stock Exchange.

CAUTIONARY STATEMENT: Projections, expectations, business plans, and other statements of future events or conditions in this release are forward-looking statements. Actual future results, including demand growth and mix; capital expenditures; resource recoveries; production rates and growth; and project plans, schedules, and outcomes could differ materially due to changes in market conditions affecting the oil and gas industry, including long-term oil and gas price levels; the occurrence and duration of economic recessions; future technological developments; political or regulatory developments; reservoir performance; timely completion of development projects; the outcome of commercial negotiations; unexpected technical or operating events; and other factors discussed in Item 1A of ExxonMobil’s most recent Form 10-K and posted in the Investors section of our website. (www.exxonmobil.com)

Proved reserves in this release, for 2009 and later years, are based on current SEC definitions, but for prior years the referenced proved reserve volumes are determined on bases that differ from SEC definitions in effect at the time. Specifically, for years prior to 2009 included in our statement of 18 straight years of at least 100 percent replacement, reserves are determined using the price and cost assumptions we use in managing the business, not the historic prices used in SEC definitions. Reserves determined on ExxonMobil’s pricing basis also include oil sands and equity company reserves for all periods. Prior to 2009, these volumes were excluded from SEC reserves.

“Resources” and “resource base” include quantities of discovered oil and gas that are not yet classified as proved reserves, but that are expected ultimately to be recovered in the future. The term “resource base” is not intended to correspond to SEC definitions such as “probable” or “possible” reserves.

See the “Frequently Used Terms” posted in the Investors section of our website for more information on proved reserves and resources.

About ExxonMobil

ExxonMobil, the largest publicly traded international oil and gas company, uses technology and innovation to help meet the world’s growing energy needs. ExxonMobil holds an industry-leading inventory of resources, is the largest refiner and marketer of petroleum products, and its chemical company is one of the largest in the world. For more information, visit www.exxonmobil.com.

Contacts

ExxonMobil
Media Relations, 972-444-1107

Business Wire

5 Ways Government Could Cut Gasoline Prices Quickly

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By JOHN MERLINE, INVESTOR’S BUSINESS DAILY 
Posted 03/08/2012 08:02 AM ET

When sky-high gasoline pricestalks about today’s sky-high gasoline prices, he almost always laments that there’s little anyone can do in the short term to bring them down.

“There is no silver bullet” is his common refrain, one he used again at his press conference on Tuesday.

But as gasoline prices reach historic highs — they’ve shot up more than 28 cents a gallon in just the past month — the government could make a dent.

That’s because, while the global price of oil determines most of the cost of gasoline, several federal and state government policies artificially add to the cost before it reaches the gas station.

Among them:

Taxes. The most obvious government-imposed costs are state and federal taxes and fees. Combined, these average 45.7 cents a gallon (the federal portion is 18.4 cents). New Yorkers pay the highest rate, at a combined 67.4 cents a gallon. California and Connecticut tie for second at 67 cents. Alaska is lowest at 26.4 cents, according to the Tax Foundation.

The weak dollar. Several analysts note that the Fed‘s devaluation of the dollar has led to higher oil prices, which in turn is adding as much as 56 cents per gallon, according to the congressional Joint Economic Committee.

“From the first day the Fed began engaging in quantitative easing back in early 2008, the impact on gas prices has been profound,” noted Eric Parnell, an economics professor at West Chester University, in a recent blog post. “What is even more irksome is that much of this rise in gasoline prices has occurred during a time when gasoline consumption has been falling. Have the laws of supply and demand been repealed? No, they’ve just been severely distorted by policy action.”

Boutique fuels. Thanks to federal and state rules, there are about 18 separate gasoline markets in the country, each with specific requirements about what can and can’t be in their gasoline, mainly to deal with local air quality issues. But the result is higher gasoline prices.

A Government Accountability Office report found that “the proliferation of special gasoline blends has made it more complicated to supply gasoline and has raised costs.” Refiners also have to switch each season between summer and winter blends, which boosts costs.

Sen. Roy Blunt, R-Mo., has offered up a Boutique Fuel Reduction Act that would give the EPA more flexibility to waive these local fuel rules.

Environmental rules. In addition to creating local blends, refiners must also meet a long list of costly environmental rules. In late 1999, for example, the EPA required refiners to drastically cut the amount of sulfur in gasoline and diesel, which cost the industry almost $5 billion upfront and $1.5 billion each year to meet, according to the agency.

Strict environmental rules also can drive smaller refiners out of business, resulting in less competition, tighter supplies and higher prices.

Four refineries recently closed on the East Coast, for example. “That’s going to make gasoline more expensive in the region,” said John Hofmeister, the former Shell Oil CEO who has since started Citizens for Affordable Energy.

And as early as next year, the EPA could add dramatically to refinery costs, requiring them to meet new standards to reduce greenhouse gas emissions. The petroleum industry figures this “regulatory tsunami” will add 25 cents to each gallon of gasoline and shutter seven more refineries.

Ethanol mandate. January marked the end of a 45-cent federal subsidy for each gallon of ethanol refiners added to gasoline. The subsidy cost taxpayers $6 billion a year, but ending it could end up adding as much as 4.5 cents a gallon, since gasoline now includes 10% ethanol.

Congress also left in place a 2007 law requiring increasing amounts of ethanol (including so-called advanced biofuels) in gasoline, rising to 36 billion gallons by 2022. The ethanol industry argues that expanded use of ethanol cuts pump prices, pointing to a study saying it’s lowered them 25 cents a gallon on average. Others argue that because ethanol provides 30% less energy than gasoline, it’s actually more expensive on a per-mile basis.

“Any time you force the industry to do something they wouldn’t do otherwise, by definition you must be increasing costs somewhere,” said Michigan State University economist Soren Anderson, who studies the fuel industry. “If ethanol really were cheaper, you wouldn’t need the mandate.”

In any case, the law has cost refiners almost $7 million in fines this year after they failed to add 6.6 million gallons of “advanced biofuels” as required. The problem is these advanced biofuels don’t exist commercially, and nobody’s sure when they will, which means even bigger industry fines going forward as the mandated use increases.

Over the long term, meanwhile, federal restrictions on access to domestic supplies of oil cut production and to some degree affect the price of oil down the road. According to the Institute for Energy Research, the U.S. has huge oil reserves, thanks to new finds and advances in drilling technology that let companies retrieve once-inaccessible deposits. The IER estimates that there are 1.4 trillion barrels of “technically recoverable” oil in the U.S., which is more than the proved reserves of all OPEC countries combined.

New pipelines — such as the Keystone XL line that President Obama recently blocked — could help get a glut of oil from the northern U.S. and Canada down to Gulf Coast refiners.

“We can’t fix the world price of oil today,” says Ken Green, an energy expert at the American Enterprise Institute, “but there are things the government does that it could stop doing to lower the cost of gasoline.”

US adds Qods Force general as ‘Narcotics Kingpin’ for heroin, weapons smuggling in Afghanistan

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By Bill RoggioMarch 7, 2012

Today the US Department of the Treasury added an Iranian Qods Force general to the list of Specially Designated Narcotics Traffickers for supporting heroin and opium smuggling in Iran and Afghanistan “as part of a broader scheme to support terrorism.” The Iranian general supported the drug smugglers in order to arm the Taliban in Afghanistan.

General Gholamreza Baghbani, the head of the Islamic Revolutionary Guard Corps – Qods Force’s branch in the Iranian city of Zahedan, “allowed Afghan narcotics traffickers to smuggle opiates through Iran in return for assistance,” Treasury stated in a press release that announced the designation. The “assistance” was given to the Taliban.

“For example, Afghan narcotics traffickers moved weapons to the Taliban on behalf of Baghbani,” Treasury said. “In return, General Baghbani has helped facilitate the smuggling of heroin precursor chemicals through the Iranian border. He also helped facilitate shipments of opium into Iran.”

General Baghbani is not the first Qods Force general to be designated by the US for supporting terrorist activities in Afghanistan, but he is, as Treasury noted, the first to be designated under the Kingpin Act. The US has designated other Iranian Qods Force officers, including General Hossein Musavi and Colonel Hasan Mortezavi, for aiding the Taliban.

General Hossein Musavi is the commander of Qods Force’s Ansar Corps, “whose responsibilities include IRGC-QF activities in Afghanistan,” Treasury stated in the Aug. 3, 2010 designation. “As Ansar Corps Commander, Musavi has provided financial and material support to the Taliban.”

Colonel Hasan Mortezavi is described as a senior Qods Force officer who “provides financial and material support to the Taliban.”

Qods Forces’ Ansar Corps is the command that is assigned to direct operations in Afghanistan. The Ansar Corps is based in Mashad in northeastern Iran. Ansar Corps operates much like the Ramazan Corps, which supports and directs Shia terror groups in Iraq. [See LWJ report, Iran's Ramazan Corps and the ratlines into Iraq.]

Al Qaeda is also known to facilitate travel for its operatives moving into Afghanistan from Mashad. Al Qaeda additionally uses the eastern cities of Tayyebat and Zahedan to funnel its operatives into Afghanistan. [See LWJ report, Return to Jihad].

Several Taliban commanders based in western Afghanistan have stated that they have received weapons, cash, and training from Iranian forces. Taliban commanders and units train inside Iran to conduct attacks against NATO and Afghan forces. In addition, al Qaeda operatives are also known to receive support from the Ansar Corps; Mashad is a transit point for al Qaeda operatives en route to Afghanistan.

US commanders have accused Iran of directly supporting the Taliban. On May 30, 2010, former ISAF commander General Stanley McChrystal said that Iran is training Taliban fighters and providing them with weapons.

“The training that we have seen occurs inside Iran with fighters moving inside Iran,” McChrystal said at a press conference. “The weapons that we have received come from Iran into Afghanistan.”

ISAF has targeted Iranian-supported Taliban commanders in at least 14 raids in western Afghanistan between June 2009 and February 2011, according to Coalition press releases compiled by The Long War Journal. (Note: ISAF inexplicably stopped reporting on raids against Iranian-supported Taliban commanders in early February 2011; LWJ‘s queries to ISAF on this subject have gone unanswered). ISAF officials have directly linked Qods Force to several of the Taliban commanders.

Source

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