Daily Archives: October 7, 2011
The first successful oil well in Louisiana was drilled in Jennings in late 1901, spawning an industry that dominated the state for decades. The strike came about nine months after the massive Spindletop find in nearby Beaumont, Texas, set off oil fever throughout the Southwest.
A group of Jefferson Davis Parish businessmen went to Beaumont to recruit oilman W. Scott Heyward to drill a well at the site of a natural gas seep. The plan was to quit after drilling 1,000 feet. But undeterred by nervous investors, Heyward kept going until he was down to his last piece of drill pipe at 1,700 feet. Soon a four-inch geyser spewed from the well and Jennings was in full production by 1902.
By the late 1920s, the oil rush turned to south Louisiana. Tens of thousands of workers descended on the area from across the country, digging pipelines, erecting rigs and servicing wells.
After fevered drilling in west and north Louisiana, the shallow marshes of South Louisiana became the center of the nation’s oil production in the 1930s. Oil production on land and in state-controlled waters peaked in 1969. The state is the sixth largest producer today.
To get to the oil fields, canals were dredged through the marshes. Today, those canals are seen as a huge environmental blunder, as the spoil banks interrupt the natural flow of the water and the canals channel grass-killing salt water inland.
- Devon sees great potential with Tuscaloosa Shale oil play in Louisiana (mb50.wordpress.com)
- Louisiana official reports activity on third possible shale play (mb50.wordpress.com)
- 1902: Oil is discovered in Louisiana (mb50.wordpress.com)
- C. G. Glasscock Drilling Company offshore mobile drilling platform “Mr. Gus II” (mb50.wordpress.com)
Oil workers of the government-run Petrobras celebrate on the P-50 rig after it started producing off Brazil’s south Atlantic coast. (Photo: Patricia Santos, Associated Press)
Petroleo Brasileiro SA, Brazil’s state-controlled oil company, will finish 2011 at the lower range of its production target after a “global bottleneck” delayed rig deliveries, said its chief executive officer.
Petrobras will be within 2.5 percent of its 2.1 million barrel-a-day target for domestic crude production, CEO Jose Sergio Gabrielli said today in an interview at the Global Economic Symposium in Kiel, Germany. Rio de Janeiro-based Petrobras received seven of the 13 drilling rigs it expected this year from international suppliers, he said.
“The ramp up takes time and it very much depends on the drilling capacity we have, and drilling capacity requires drilling rigs,” Gabrielli said. “It’s a global bottleneck.”
Petrobras plans to more than double Brazilian oil production over the next decade as it develops the largest discoveries in the western hemisphere since Mexico discovered the Cantarell field in 1976. Gabrielli said Petrobras is prioritizing Brazilian-built rigs and platforms to decrease dependence on foreign suppliers.
More stringent safety measures by Brazil’s oil regulator also hurt production growth, Gabrielli said.
Petrobras gained 3.8 percent to 18.90 reais at 3:17 p.m. New York time in Sao Paulo trading. The stock has dropped 31 percent this year, more than the 24 percent fall in Brazil’s benchmark Bovespa index.
‘Move to Brazil’
Oil companies from Europe and China are seeking to enter or expand operations in Brazil, and recent announcements that Anadarko Petroleum Corp. and Exxon Mobil Corp. are selling assets in the Latin American country doesn’t indicate an exodus of foreign producers, Gabrielli said.
“I don’t think there is a pattern of companies trying to move out of Brazil,” he said. “To the contrary, there are a lot of companies that want to move to Brazil now.”
The U.K.’s BG Group Plc and France’s Total SA want to expand operations in Brazil and Chinese companies want to enter the market, Gabrielli said. Gabrielli didn’t specify which Chinese companies are eyeing Brazil.
OGX Petroleo & Gas Participacoes SA, the oil company controlled by billionaire Eike Batista, is considering the purchase of Brazilian blocks from Anadarko because it is unknown when Brazil will sell new exploration areas, Chief Executive Officer Paulo Mendonca said today.
Anadarko, the largest U.S. independent oil and natural-gas company by market value, wants to sell all its blocks in Brazil, a director at the nation’s crude regulator said Oct. 4. Brazilian oil deals are accelerating as the government postpones selling new areas.
Royal Dutch Shell Plc and Chevron Corp. sold stakes in Brazilian fields in the past month and Exxon, the world’s biggest oil company, wants to divest a 25 percent stake in an offshore Brazilian prospect after drilling two wells that failed to find crude.
- Modec Receives FPSO Order from Petrobras, Brazil (mb50.wordpress.com)
- Westshore Shipbrokers: Ultra-Deepwater, What is Next for the Shipowner? (Brazil) (mb50.wordpress.com)
- Brazil: Dresser Rand to Equip 8 FPSOs with Compression Equipmen (mb50.wordpress.com)
- Deep water Brazil: To venture where no driller has gone before (mb50.wordpress.com)
- Tanzania: Petrobras Vessel Attacked By Pirates (gcaptain.com)
Even as the Obama administration postures on behalf of deficit reduction and job creation, it continues to advance policies that undermine energy production in the Gulf region and lower federal revenue, Sen. David Vitter (R-La.) has pointed out in his correspondence with top officials in Washington D.C.
Most recently, in a letter addressed to Interior Secretary Ken Salazar and Bureau of Ocean Energy Management Regulation and Enforcement (BOEMRE) Director Michael Bromwich, warned of a severe revenue fall off attached to declining energy lease sales.
“Under the Obama administration’s management, revenue from our offshore lease sale program has gone from $10 billion to nothing in just three years,” Vitter said. “Revenue cannot be generated from sales that do not happen, and jobs cannot be created on leases that private industry cannot acquire. We’re in a severe fiscal crisis and we’re facing significant economic challenges related to job creation, yet the administration continues to neglect our offshore resources.”
In fiscal year (FY) 2008 revenue from bonus bids on offshore leases was approximately $10 billion, but for FY 2011 that amount is down to $0, according to Vitter’s letter. “Revenue cannot be generated from lease sales that do not occur, and jobs cannot be created on leases that private industry cannot acquire,” he continued.
Unless, the administration reverses course, Vitter anticipates “long-term economic impacts that include lose jobs, lost royalties and lost rental fees.” Companies will be reticent to own a lease if they cannot be reasonably certain that exploration plans or permits will be approved, he added.
Daniel Kish, senior vice-president of policy with the Institute for Energy Research (IER), sees an “opportunity cost” for the Gulf region that may not be recaptured anytime soon.
“The Obama administration has virtually put a stop to energy development in federal waters,” Kish said. “This is like planting seeds, if the government won’t allow to the seeds to be planted now, they are preventing future production. We are talking about a lost generation of economic activity.”
In September, President Obama rolled out a new deficit reduction plan built around income tax increases for higher income Americans.
“We can’t just cut our way out of this hole,” Obama said during a speech at the White House. “It’s going to take a balanced approach. If we’re going to make spending cuts … then it’s only right that we ask everyone to pay their fair share.” Obama also said that would veto any deficit reduction plan that includes only spending cuts and no tax increases.
“When you include the $1 trillion in cuts I’ve already signed into law, these would be among the biggest cuts in spending in our history,” Obama continued. “But they’ve got to be part of a larger plan that’s balanced –- a plan that asks the most fortunate among us to pay their fair share, just like everybody else. And that’s why this plan eliminates tax loopholes that primarily go to the wealthiest taxpayers and biggest corporations –- tax breaks that small businesses and middle-class families don’t get.”
But the slow pace of permits for oil drilling also contributes to the deficit, Vitter explained in a previous letter to administration officials. The right mix of policies could unleash America’s abundant supply of domestic energy resources, which would in turn boost revenue into the federal treasury, Vitter argued.
“I share the frustration of Louisianians and Gulf Coast residents with the disparity between the president’s rhetoric and the Interior Department’s actions,” Vitter said. “The administration’s policies have led to massive deficits and job losses, especially in Louisiana, and it’s time for the president to stop lecturing about job creation and allow our energy industry workers to get back to work.”
Without a higher volume of additional permits, the number of active oil rigs will continue to decline in the Gulf, Vitter warned in one of his earlier letters. The 2011 permitting rate is well below the historical average, Vitter observed.
As of early September, “there were 19 floating units operating in the Gulf, up from four in the third quarter of 2010, but down from the average of 28 recorded in the 2007-2009 period,” he wrote.
Up to 20 oil rigs could leave the Gulf, in addition to 11 that have already left, since the administration’s moratorium on deepwater oil and gas drilling went into effect in May 2010, according to a new report.
If U.S. companies were permitted to drill with fewer regulatory hurdles, they could boost government revenues by $800 billion and generate over a million new jobs by 2030, according to API.
But even with a change in administration heading into 2013, the Gulf region is not likely to experience a robust recovery in the short term, Kish, the IER policy expert, warns.
“It will take time to correct these policies,” Kish said. “The Obama administration has shifted the entire ground on which the Gulf of Mexico operates.”
by Kevin Mooney
- Collateral Damage: Lost Gulf Rigs from Obama Obstructionism (10 down, more to go?) (mb50.wordpress.com)
- Louisiana Remains on the Receiving End of Washington D.C.’s Worst Regulations (mb50.wordpress.com)
- Is Mexican Gulf Energy Production Recovering? (mb50.wordpress.com)
- No Drilling, No Jobs, No Money (papundits.wordpress.com)
- Obama’s Real Energy Policy (mb50.wordpress.com)
- Obama’s Interior Chokehold on America (mb50.wordpress.com)
- Vitter to block Interior nominee (politico.com)
- Exxonmobil Battles U.s. Over Gulf Oil Discovery (mb50.wordpress.com)