Daily Archives: April 21, 2011
by: Amanda Carey
Earlier this week, Michael Bromwich, Director of the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) lashed out at critics of his agency’s dealings with offshore drilling permits since the BP oil spill last year.
It was during a speech at the Center for Strategic and International Studies, and Bromwich was quite put out. “What was destructive, corrosive and not done in good faith was the sniping from certain public officials and industry trade associations,” he said.
“They claimed, and some continue to assert, that we had imposed a ‘de facto’ moratorium or created a ‘permitorium’ that was blocking the issuance of drilling permits,” Bromwich continued. “Not because the applications had failed to meet all the requirements, which was the fact, but supposedly because we had made politically motivated decisions not to issue them. That could not have been further from the truth, but it was repeated often enough that people who should have known better came to believe it.”
In mid-February, the first Gulf of Mexico drilling company declared bankruptcy. And according to the Texas-based Seahawk Drilling’s CEO Randy Stilley, the decision to file for Chapter 11 came after the company’s revenue stream had “been adversely affected by the dramatic slowdown in the issuing of shallow-water permits in the U.S. Gulf of Mexico following the Macondo well blowout.”
At the behest of a bipartisan group of lawmakers and fed-up industry officials, BOEMRE and the Department of Interior issued the first permit for deepwater drilling in the Gulf of Mexico on March 1. Since then, then agency has issued a handful of permits for drilling in the Gulf.
But one industry official isn’t taking Bromwich’s rebuke sitting down. In a statement, Jim Adams, President and CEO of Offshore Marine Service Association, slammed the director, saying “Bromwich should spend less time trying to silence public criticism and more time actually approving drilling permit.”
Adams then asserted that Bromwich should “get his story straight,” noting that Bromwich says permits are not being delayed, but also claims Congress has not provided the sufficient funds the department needs to approve the permits.
“The bureaucratic double-talk would be laughable if thousands of Gulf workers weren’t sitting idle, or if Americans weren’t paying $4 a gallon for gasoline,” said Adams. “There’s a way Bromwich could stop the criticism that seems to bother him so much. He could simply do his job.”
By Sebastian Castaneda Apr 21, 2011
In the wake of US President Barack Obama’s recent tour of Latin America, media reports and commentators claimed that China has been economically outmuscling the United States in the region. The reality, however, is that Beijing’s economic presence has not come at the expense of the United States. Although Washington still maintains an overwhelming edge, its influence is decreasing. This decline will be exacerbated by Obama’s focus on boosting US exports to the region rather than importing more of Latin America’s manufactured goods.
True, China has become a key trading partner in Latin America during the last decade. Sino-Latin American trade has risen from US$12 billion in 2000 to more than $140 billion today (though the region’s trade deficit also rose from $950 million to $32 billion in 2009).
Nevertheless, China’s relations with Latin America need qualifying. In 2008, 90% of the region’s exports to China originated in four South American countries (Argentina, Brazil, Chile, and Peru). The disparity of trade with China explains to some extent the different growth patterns within subregions in Latin America. In 2010, Central America’s economy grew by 4.9% while South America’s expanded by 6.6%.
The current trade dynamic between China and South America is becoming a relationship of economic dependence that benefits Beijing. China is the largest export market for Brazil and Chile, and comes in second with Argentina, Colombia, Peru, and Venezuela. Most exports consist of commodities such as iron ore, copper, copper ores and concentrates, and soya derivatives. In turn, up to 92% of Latin America’s manufactured exports compete directly or indirectly with China’s products, which ultimately results in deindustrialization for Latin America. In 2010, Brazil lost approximately 70,000 jobs in the manufacturing sector and $10 billion in income.
However, Latin America is in no position to reject Chinese “aid”. Such aid boils down to financing for a wide range of projects that comes with strings attached, such as a guarantee of access to certain natural resources, or the condition that Chinese companies undertake the projects. In 2009, China lent Brazil $10 billion in exchange for future oil shipments. In 2010, China advanced $20 billion to Venezuela to pump oil from the Orinoco Belt block and lent $10 billion to Argentina to renovate its aging railway system. Smaller loans have gone to other countries.
In order not to completely undermine the Washington-designed and controlled Inter-American Development Bank (IDB), the largest source of development financing for the region, China has become a donor member. In 2009, when it joined the bank at the height of the financial crisis, China committed $350 million. In late March 2011, the IDB and the Export-Import Bank of China signed a letter of intent to establish an infrastructure investment mechanism to finance public and private sector projects in Latin America. The catch, however, is the use of the yuan as one of the currencies to undertake these investments.
Raising the yuan’s profile in international trade enhances China’s leverage over South America. Among the BRIC nations (Brazil, Russia, India and China), Brazil and Russia supported China’s call in 2009 to replace the dollar as a reserve currency with the International Monetary Fund‘s unit of account SDR (an international reserve asset created by the IMF in 1969 that has the potential to act as a super-sovereign reserve currency). The reality, however, is that the initiative would take years and is complicated by the inconvertibility of the yuan.
In the meantime, China is promoting its currency in bilateral trade. In 2009, Argentina signed a 70 billion yuan ($10 billion) currency-swap agreement. Brazil tentatively agreed in 2009 to trade with China in yuan and reals. And this year, Peru became the first Latin American country where businesspeople can open yuan-denominated bank accounts to settle trade with China.
Fear of China
Despite the strides that China has made in the region, countries remain apprehensive. The WikiLeaks diplomatic cables highlighted the level of suspicion. One Colombian trade representative based in Beijing noted that his country would not be “walked all over” by China “like Africa”. A Mexican official stated that “we don’t want to be China’s next Africa”. And the Brazilian consul general in Shanghai argued that “China’s strategy is very clear: it is doing everything possible to control the supply of commodities.”
China’s negotiation tactics in the region corroborate such apprehension. In 2010, after Argentina imposed anti-dumping measures on Chinese footwear and textile products when the government detected unfair competition, Beijing halted imports of soya oil, Argentina’s main export, in retaliation. Despite Argentine concessions, Beijing has not resumed imports.
In another example, last year, Ecuador suspended negotiations with China’s Eximbank for a $1.7 billion loan after Quito found unacceptable a demand to provide the central bank’s assets as collateral. Ecuador’s president stated that “negotiating with China is worse than the IMF”. The loan was eventually signed, but details are unclear.
Beijing’s actions to secure land for agriculture are also raising concerns in the region. China has 20% of the world’s population but only 11% of its territory is suitable for agriculture. China’s land acquisitions have been more prominent in Africa, but in recent years South America has received attention as well.
In 2010, a Chinese firm’s lease of 320,000 hectares of Argentine land created considerable opposition after the signed deal became public. The implications for local food sovereignty are at the forefront of worries. As a result, in February 2011, Cristina Kirchner, Argentina’s president, announced plans to restrict the acquisition of land by foreigners. In Brazil, lawmakers are also considering amending the law to make it harder for foreigners to acquire land.
South America’s trade with the United States, meanwhile, is more balanced. The approximately $200 billion in annual bilateral trade between the United States and South America relies more on agricultural and manufactured products, rather than on the raw materials that China has extracted from the region. Moreover, the United States remains the single most important source of aid to the region. Throughout the last decade most countries have received economic aid for various health, educational, and environmental programs, but primarily for security initiatives. And even though the amount varies greatly among countries, this economic aid is fundamental for some government programs.
Proposed cuts in the 2012 foreign aid budget could reduce such influence. The $1.98 billion budget is the lowest amount since 2007.
The dynamics of Washington’s engagement with Latin America, in spite of historic grievances, renders the United States a more popular power than China. According to a 2010 Gallup poll, 50% of Latin Americans approve the job performance of the US leadership. In contrast, 28% of the region’s respondents approve of China’s leadership. The leadership of both countries rates a 20% of disapproval. There are no significant differences in response between Central and South America.
More telling, however, are the results of a similar Gallup poll carried out in 2006. Five years ago, US approval ratings stood at 30% while disapproval reached 45%. Regarding China, although 28% approved of its leadership, 22% disapproved. Comparing the 2006 with the 2010 results, it is clear that Washington has gained an advantage in soft power over Beijing, especially given China’s repression of human rights activists.
China’s economic activities in Latin America, especially South America, are not a zero-sum game. Although China’s engagement results in more influence, Beijing’s methods also decrease its effectiveness.
Nevertheless, the self-serving US strategy in the region may be counterproductive. Secretary of State Hillary Clinton articulated Washington’s vision: “Enhancing our competitiveness, accelerating innovation, achieving energy security, and expanding our exports – all of these require robust engagement with Latin America.”
Focusing on only increasing US exports to the region while decreasing aid may push countries to fully embrace China’s type of economic engagement. Washington would be wiser to encourage imports of manufactured goods from Latin America that compete directly with Chinese goods and create good jobs in the region.
Sebastian Castaneda is a graduate student at the University of Hong Kong and a contributor to Foreign Policy in Focus.
Almost immediately after it was announced that President Goodluck Jonathan won Nigeria’s presidential election this past weekend, violence erupted in many northern states. This post-election violence unfortunately tarnishes the nationwide vote that most observers deemed to be an improvement over previous elections, although it is evident that some rigging did occur.
Since the government transferred from military to civilian rule in 1999, each election has been riddled with violations. The 2007 presidential elections were generally considered deeply flawed. Election rigging, electoral fraud, and voter intimidation have been fixtures in Nigerian elections. Much of this was owed to the massively inaccurate voter registration list—which laughably listed Nelson Mandela and Mike Tyson as voters.
This election year, the government made significant attempts to reform the system. Last June, Jonathan appointed a respected academic, Attahiru Jega, to head the Independent National Electoral Commission. Tasked with ensuring that the elections were free and fair, Jega implemented robust reforms and held those seeking to disrupt the process accountable. Despite initial delays in the election process, international observers endorsed the election results, describing them as “generally acceptable.” Jonathan won, quickly surpassing the mandatory 25 percent of the vote in two-thirds of Nigeria’s 36 states. He reportedly received 22.5 million votes, with his nearest rival trailing by 10 million. The U.S. State Department hailed the elections a “positive new beginning for Nigeria.”
While the international community has accepted the results, many in northern Nigeria have not. Nigeria’s religious divisions between North and South will remain a flashpoint for some time. Tensions flared considerably since last September when President Jonathan, a Southern Christian, decided to run as the People’s Democratic Party (PDP) candidate, a choice opponents say violates Nigeria’s zoning system, under which the presidency is supposed to rotate between the North and South.
Rioters have burned churches and mosques and targeted PDP officials and supporters in the North. Both President Jonathan and General Muhammadu Buhari have called for a restoration of peace. Former Ambassador to Nigeria John Campbell sees this escalation of violence as the continuing pattern of bifurcation within the country.
With gubernatorial elections scheduled for this weekend, continued violence is expected. In many areas, curfews have been declared and the Nigerian military is patrolling the streets. Campbell anticipates that the “the gubernatorial elections will be a further indication of whether the country is bifurcating along regional and religious lines.”
Once Nigeria’s elections are over, the Nigerian government should make a determined effort to ease religious and ethnic tensions. This will require working closely with state and local leaders to resolve issues regarding marginalization and discrimination.
As Africa’s most populous country and a major oil supplier, Nigeria is a key U.S. trade partner. It has also proven to be a force for stability in Africa in recent years. In order for Nigeria to sustain its international commitments, democratic governance must improve and energetic efforts must be made to heal the North–South, Christian–Muslim divide.
Author: Morgan Roach
By Andrew Stone
Twenty years ago, China had four diplomatic posts in the South Pacific.
For a newly elected head of government from the region, the first foreign port of call is likely to be the Great Hall of the People, and not Canberra, Washington or the Beehive.
Does this matter? Perhaps less so now that tensions between Taiwan and China have cooled. Previously intense rivalry between the two drove chequebook diplomacy.
Taipei and Beijing spent years wooing small Pacific nations to sign up to their particular China brand. Taiwan got six forum countries on board, but a truce has existed since the election of President Ma Ying-Jeou in 2008.
But even as the political courtship has softened, money in the form of soft loans and grants continues to pour into the region. Beijing has put up cash to lift trade, build schools and bridges, train senior military officers and in the case of Fiji, fence the president’s palace.
China is one of the region’s top three aid donors, after Australia and the US. A study by the Sydney based-Lowy Institute puts its 2009 aid to its recognised forum members at US$209 million (NZ$267m). Australia, the top regional donor, gave US$650 million to the 14 forum countries. New Zealand gave about US$100 million.
United States Secretary of State Hillary Clinton thinks the West needs to be awake to China in the region. Last month she railed against cuts sought by Republicans to the US foreign aid programme, telling senators: “Let’s put aside the humanitarian, do-good side of what we believe in. Let’s just talk straight realpolitik. We are in competition with China.”
She noted a “huge energy find” in Papua New Guinea by the oil giant Exxon Mobil, which has begun drilling for natural gas. Clinton said China was jockeying for influence in the region and seeing how it could “come in behind us and come in under us”.
She claimed China had taken the leaders of small Pacific nations to Beijing and “wined them and dined them”. “We have a lot of support in the Pacific Ocean region. A lot of those small countries have voted with us in the United Nations, they are stalwart American allies, they embrace our values.”
Foreign policy expert Associate Professor Stephen Hoadley of Auckland University agrees.
“I would call the impact of China mildly disruptive,” he says.
Beijing did not consult countries with a history in the region, and its investments could seem out of kilter with small island needs.
Adds Hoadley: “They can be a little bit corrupt, they often engage in under-the-table favours. That’s why the leaders in the Pacific Islands are very happy to have these shonky projects, they get VIP trips to Beijing, they may get other things though that is unconfirmed.”
He says the Chinese Government was not necessarily culpable, though it might be negligent in that it sub-contracted work to companies which used inferior supplies, cut corners, ignored the local workforce and left behind projects of dubious value.
“A lot more consultation would be welcome,” suggests Hoadley.
But does China have any discernable workplan to displace the traditional Western players in the region for its own national security?
China has been part of the region for more than 150 years. Thousands of indentured labourers worked in plantations and phosphate mines in the 19th century, becoming the ancestors of the small but often successful Chinese communities in most Pacific Island states.
New Zealand Foreign Minister Murray McCully does not see any “unwholesome motives” in China’s Pacific strategy. He argues the equation is quite simple. Pacific states have minerals, timber and fish – and China is a hungry buyer.
He told a high level gathering of China watchers last week in Wellington: “China is simply doing in our neighbourhood what it is doing in every neighbourhood around the globe: undertaking a level of engagement designed to secure access to resources on a scale that will meet its future needs, and establishing a presence through which it can make its other interests clear.”
But McCully wants Beijing – and Taipei – to be more transparent with the money they shower on island states and has urged China to ensure its loans do not burden small nations with debt.
Political scientist Jian Yang, who has book coming out about China’s strategy in the Pacific, expects Beijing’s influence in the region to grow, along with other major players including Japan, India and the US.
New Zealand, he argues, has historic, cultural and economic ties to the region which are not easily replaced.
“What is crucial is for New Zealand to continue its dialogue with China and the other powers.”
So far, concludes Yang, New Zealand has done well.
The 2012 natural gas powered Honda Civic, the only consumer natural gas car now available in the U.S. – although in a very limited fashion – will be released in wide distribution starting fall 2011 with the expectation that it will be in showrooms across the country within a year of that. (Civic Natural Gas web site)
Honda’s web site is a bit more cautious than the article above, defining “nationwide” as “…states that have sufficient CNG stations within close proximity to authorized Civic Natural Gas dealers.” But it is a start, especially given the growth (slow, but methodical) of CNG fueling infrastructure across the country.
Honda is changing the CNG Civic’s name from the Civic GX to Civic Natural Gas (“Civic Natural Gas” = CNG, get it?). In gallon equivalents, the CNG’s mileage is rated at 27 MPG city/38 MPG highway/31 MPG combined, but of course the cost of natural gas is significantly lower than regular gasoline, so it’s not exactly an apples-to-apples comparison. The car will be assembled in Indiana. For those interested, the press release is full of all of the auto technophile’s data, from MacPherson struts to compression ratios.
Posted by Robert Hutchinson
MyCelx, experts in produced water treatment both onshore and offshore for discharge to very low discharge limit, the ISO-9001 company certified for oil removal to less than 5 ppm by Lloyd’s Register, signed a contract with Chevron U.S.A. Inc. to design and deliver a produced water treatment system for the Jack/St. Malo floating production facility in deepwater Gulf of Mexico that will remove oil and water soluble organics (WSO) to below 10 parts per million (ppm).
The design requirements for the Jack/St. Malo floating production facility calls for an overboard discharge limit that Is lower than the current EPA limit of 29 ppm, and MyCelx is one of the few companies providing the technology that can guarantee low levels of oil and grease discharge levels in a consistent manner through an economically viable process. The WSOs contained in offshore produced water have proved difficult for conventional technologies to reliably meet the overboard discharge specifications set by the EPA.
“MyCelx system guarantees oil-free water and no sheen discharge into the environment,” said Andy Narayanan, Manager of Operations and Technical Services at MyCelx. “The Jack/St Malo will be implementing MyCelx produced water treatment system specifically designed to handle the difficult WSO’s from deep water drilling operations. We are currently in the process of design discussion with Chevron and Mustang. Current schedule is to deliver the system to Mustang Engineering by May 2011.”
The Jack and St. Malo fields are being developed in the Lower Tertiary trend in deepwater Gulf of Mexico. The fields are estimated to contain total recoverable resources equivalent to more than 500 million barrels of oil. MyCelx produced water treatment system will treat up to 70,000 barrels per day.
MyCelx is the only environmentally sound, patented technology certified for oil removal performance by Lloyd’s Register, UK. Our complete set of turnkey solutions tackle the toughest oil removal challenges in Oil/Gas and Petrochemical, Marine, Manufacturing, Power and Facilities. Fifteen patents, Fortune 100 clients, and hundreds of installations worldwide attest to the fact that MyCelx is a top performer in turnkey hydrocarbon removal.
Updated: April 14, 2011
What is the Eagle Ford Shale?
The Eagle Ford Shale is a hydrocarbon producing formation of significant importance due to its capability of producing both gas and more oil than other traditional shale plays. It contains a much higher carbonate shale percentage, upwards to 70% in south Texas, and becomes shallower and the shale content increases as it moves to the northwest. The high percentage of carbonate makes it more brittle and “fracable”. The shale play trends across Texas from the Mexican border up into East Texas, roughly 50 miles wide and 400 miles long with an average thickness of 250 feet. It is Cretaceous in age resting between the Austin Chalk and the Buda Lime at a depth of approximately 4,000 to 12,000 feet. It is the source rock for the Austin Chalk and the giant East Texas Field. The name has often been misspelled as “Eagleford”. A great picture can be found at the Energy Information Administration (EIA) http://www.eia.gov/oil_gas/rpd/shaleusa9.pdf which shows the structural contours and windows for the oil, wet gas/condensate and dry gas.
History of the Eagle Ford
It is named for the town of Eagle Ford, Texas where it can be seen on the surface as clay soil. Eagle Ford, Texas is approximately 6 miles west of Dallas, Texas. An outcrop of the Eagle Ford Shale can be seen in the Dallas-Fort Worth Metroplex. Wikipedia shows a nice picture of the outcrop of the Austin Chalk and Eagle Ford shale at the following link http://en.wikipedia.org/wiki/File:Austin_Chalk_-Eagle_Ford_Contact.JPG
Petrohawk drilled the first of the Eagle Ford wells in 2008, discovering in the process the Hawkville (Eagle Ford) Field in La Salle County (District 1). The discovery well flowed at a rate of 7.6 million cubic feet of gas per day from a 3,200-foot lateral (first perforation 11,141 feet total vertical depth) with 10 frac stages. Originally, there were 30 plus fields, however, due to field consolidations, the number of fields has been reduced to currently 16 fields located within the Railroad Commission Districts 1 thru 6 and the fields cover 22 counties . The wells in the deeper part of the play deliver a dry gas, but moving northeastward out of District 1 and updip, the wells produce more liquids. One of the fields discovered in District 2 is actually an oil field (Eagleville (Eagle Ford)). The major operators joining Petrohawk in drilling the Eagle Ford Shale Play are Anadarko, Apache, Atlas, EOG, Lewis Petro, Geo Southern, Pioneer, SM Energy and XTO to name just a few.
Thursday 21 April 2011 11.38 BST
Drilling for shale gas will be particularly costly in China due to the country’s water shortage. Photograph: Stringer/Reuters
China has begun trials of a controversial drilling technique to exploit the world’s largest reserves of shale gas, as it attempts to cope with the increasing energy demands of a fast-growing economy while reducing its dependence on coal.
In the past two weeks, engineers have completed the country’s first horizontal shale gas well in Sichuan and government officials have begun drafting a national strategy to identify a trillion cubic metres of exploitable resources by 2020.
Supporters say China has the potential to emulate the United States, where extraction of shale gas has tripled the lifespan of US gas reserves and offered a lower-carbon alternative to coal.
“Shale gas is a game-changer for the US and should do the same for China,” said Ming Sung, Asia representative of the Boston-based Clean Air Task Force and an advocate of closer energy links between the two nations. “This should be one of the centre-pieces for China’s energy strategy. As with any new technology development, we must balance benefits versus potential environmental impacts. The experiences of the US are valuable here.”
The extraction method itself is costly, controversial and challenging. Hydraulic fracturing or “fracking” involves the injection of chemically treated water at high pressure through seams of rock, forcing the gas inside to seep out to where it can be captured. Environmentalists warn that this wastes and contaminates millions of tons of water.
For fuel-hungry, drought-plagued China, this poses a conundrum. The energy potential is enormous. The ministry of land and resources calculates the size of shale gas reserves at 26tn cubic metres – more than 10 times the country’s known holdings of conventional natural gas.
This is a tempting alternative for a country that is eager to improve its energy security in the face of rising oil and coal imports. A global shale gas study released this month by the US Energy Information Administration said China’s technically recoverable shale gas reserves were almost 50% higher than those of the number two nation, the US.
But tapping them will be expensive and difficult for a country that is desperately short of water and – until recently – lacking experience in the key technologies.
Engineers from China National Petroleum Corporation (CNPC) took a major step towards rectifying the latter problem on 23 March, when it opened the shale gas well 3km below the surface at Weiyuan in Sichuan province.
The scale of production is a mere 10,000 cubic metres a day, the equivalent to about 10 tonnes of oil, and the financial returns are unattractive given the low price of gas and the high costs of exploitation – 7% of which are for environmental measures. But the pilot project was deemed a success because it proved the effectiveness of drilling equipment – the final thousand metres of the well being bored in just 34 days.
“The success of this well is valuable for the future of horizontal shale gas technology,” said an industry source. “We expect to reach our targets for exploration and development ahead of schedule.”
Executives at CNPC – China’s biggest energy company – have said they aim to produce 500m cubic metres of shale gas by 2015. With other firms such as Sinopec, Royal Dutch Shell and Chevron lining up to enter the business, the government has begun drawing up a national strategy that is likely to be incorporated into the latest five-year plan. Industry insiders are hopeful that it will include tax incentives and subsidies to develop shale gas reserves.
In an effort to wean the economy off coal, China plans to triple the use of natural gas so that it supplies 10% of the country’s energy needs by 2020. Most of this will come from conventional wells and coal-bed methane, but the share from shale is in fact likely to hit 12% by 2020 and continue rising.
The US appears to be a willing partner. President Barack Obama and his Chinese counterpart Hu Jintao signed a joint shale gas initiative in 2009, covering technology co-operation and assessments of reserves.
Liang Digang of the China Research Institute of Petroleum Exploration and Development said many of the technological barriers identified early on have been overcome.
“When China started looking at shale gas two years ago, we did not know how to do it so we spent money and invited foreign companies to join us. Now can do it by ourselves.”
But experts and industry executives downplayed the prospect of China exploiting shale gas reserves as quickly as the United States because the geology of the two nations is different. They said China’s shale is older and, tonne for tonne, produces less than half the gas of shale in the US. Water shortages will add to the costs. One of China’s two biggest deposits in the country – the Turpan Basin in Xinjiang – is a desert.
In the short term, Liang said the costs were likely to curtail China’s shale gas ambitions.
“We should not put too much stress on this right now, but in the long run, it is necessary to develop shale gas as a supplement to our conventional gas supply. The development of this industry is not for the present, but for the future.