Daily Archives: February 24, 2012
Shell’s Arctic-class drill ship, the Kulluk, is shown as it is towed near Alaska. Shell is moving the Kulluk drilling unit from Dutch Harbor, Alaska, to a Seattle shipyard for ongoing maintenance and planned, technical upgrades. (Photo courtesy of Shell Oil Co.)
Alaska’s North Slope shales may hold as much as 80 trillion cubic feet of gas, or more than half the highest estimate for the Marcellus formation, and as much as 2 billion barrels of oil, the U.S. Geological Survey said.
President Barack Obama’s administration and the state of Alaska are offering more access to oil and natural gas resources on land and in the Arctic waters to help lower dependence on imported fuel and push more crude through a major oil pipeline crossing the state. Royal Dutch Shell Plc plans to start drilling this year in the Chukchi and Beaufort seas, which are off the coast of the North Slope.
“Alaska’s energy resources hold great promise and economic opportunity for the American people,” Interior Secretary Ken Salazar said today in an e-mailed statement.
The geological service, part of the Interior Department, said in a statement that North Slope shale hasn’t been developed because of economic and infrastructure considerations.
The assessment, the first made of North Slope shale resources, is based on success in extracting oil and gas from similar formations, such as the Marcellus Shale in the U.S. East. The agency last year estimated Marcellus may hold as much as 144 trillion cubic feet of gas.
Shale gas and shale oil, produced by horizontal drilling and hydraulic fracturing by injecting water and chemicals underground, led to record natural gas output in the U.S. last year and 33 percent decline in prices in the past 12 months.
- USA: EIA Expects Huge Rise in Natural Gas Production (mb50.wordpress.com)
- ExxonMobil, OMV Petrom Strike Gas Offshore Romania (mb50.wordpress.com)
- Shell ‘hits shale gas’ in China (mb50.wordpress.com)
Obama’s Forrest Gump analysis of rising gas prices.
‘The American people aren’t stupid,” thundered President Obama yesterday in Miami, ridiculing Republicans who are blaming him for rising gasoline prices. Let’s hope he’s right, because not even Forrest Gump could believe the logic of what Mr. Obama is trying to sell.
To wit, that a) gasoline prices are beyond his control, but b) to the extent oil and gas production is rising in America, his energy policies deserve all the credit, and c) higher prices are one more reason to raise taxes on oil and gas drillers while handing even more subsidies to his friends in green energy. Where to begin?
It’s true enough that oil prices can’t be commanded from the Oval Office, so in that sense Mr. Obama’s disavowal of blame is a rare show of humility in the face of market forces. Would that he showed similar modesty in trying to command the tides of home prices, car sales (“cash for clunkers”), or the production of electric batteries.
The oil price surge has several likely sources. One is the turmoil in the Middle East, especially new fears of a supply shock from a conflict with Iran. But it’s worth recalling that Mr. Obama also blamed the last oil-price surge, in spring 2011, on the Libyan uprising. Moammar Gadhafi is now gone and Libyan oil production is coming back on stream, yet oil prices dipped only briefly below $90 a barrel and have been rising since October. Something else must be going on.
Mr. Obama yesterday blamed rising demand from the likes of Brazil and China, and there is something to that as well. But this energy demand is also not new, and if anything Chinese and Brazilian economic growth has been slowing in recent months.
Another suspect—one Mr. Obama doesn’t like to mention—is U.S. monetary policy. Oil is traded in dollars, and its price therefore rises when the value of the dollar falls, all else being equal. The Federal Reserve throughout Mr. Obama’s term has pursued the easiest monetary policy in modern times, expressly to revive the housing market. It has done so with the private support and urging of the White House and through Mr. Obama’s appointees who are now a majority on the Fed’s Board of Governors.
Oil staged its last price surge along with other commodity prices when the Fed revved up its second burst of “quantitative easing” in 2010-2011. Prices stabilized when QE2 ended. But in recent months the Fed has again signaled its commitment to near-zero interest rates first through 2013, and recently through 2014. Commodity prices, including oil, have since begun another surge, and hedge funds have begun to bet on commodity plays again. John Paulson says he’s betting on gold, the ultimate hedge against a falling dollar.
Fed officials and Mr. Obama want to take credit for easy money if stock-market and housing prices rise, but then deny any responsibility if commodity prices rise too, causing food and energy prices to soar for consumers. They can’t have it both ways, as not-so-stupid Americans intuitively understand when they buy groceries or gas. This is the double-edged sword of an economic recovery “built to last” on easy money rather than on sound fiscal and regulatory policies.
As for domestic energy, Mr. Obama rightly points to the rising share of U.S. oil consumption now produced at home. But this trend began in the late Bush Administration, which opened up large new areas on and offshore for oil and gas drilling that are now coming on stream. Mr. Obama sneered at expanded drilling as a candidate in 2008 and for most of his term has done little to expand it.
In early 2010, he proposed to open some new areas to drilling but shut that down after the Gulf oil spill. According to the Greater New Orleans Gulf Permits Index for January 31, over the previous three months the feds issued an average of three deep-water drilling permits a month compared to the historical average of seven. Over the same three months, the feds approved an average of 4.7 shallow-water permits a month, compared to the historical average of 14.7.
Approval of an offshore drilling plan now takes 92 days, 31 more than the historical average. And so far in 2012, an average of 23% of all drilling plans have been approved, compared to the average of 73.4%.
Oh, and don’t forget the Keystone XL pipeline, which would have increased the delivery of oil from Canada and North Dakota’s Bakken Shale to Gulf Coast refineries, replacing oil from Venezuela.
The reality is that most of the increase in U.S. oil and gas production has come despite the Obama Administration. It is flowing from the shale boom, which is the result of private technological advances and investment. Mr. Obama has seen the energy sun rise and is crowing like a rooster that he made it happen.
Mr. Obama yesterday also repeated his proposal that now is the time to raise taxes on oil and gas companies, as if doing so will make them more likely to drill. He must not believe the economic truism that when you tax something you get less of it, including fewer of the new jobs they’ve created.
We’d almost feel sorry for Mr. Obama’s gas-price predicament if it weren’t a case of rough justice. The President has deliberately sought to raise the price of energy throughout the economy via his cap-and-trade agenda. He is now getting his wish, albeit a little too overtly for political comfort. Mr. Obama has also spent three years blaming George W. Bush for every economic ill. If Mr. Obama now feels frustrated by economic events beyond his control, perhaps he should call Mr. Bush for consolation.
- Well, At Least They Aren’t Blaming ‘Speculators’ For Skyrocketing Oil Prices This Time… (businessinsider.com)
The final NMS Girl Of The Week is Sarah Banks.
I’m sure that by now you’re not surprised by the quality of NMS hopefuls we’re providing you for NMS Girl Of The Day. Even if it is almost unbelievable!
February 24, 2012
- Venus Teams With Sports Illustrated Model Chrissy Teigen (blogs.smarter.com)
- Sports Illustrated Swimsuit Covers: Kate Upton and 19 Hottest SI Models of All Time [PHOTOS] (ibtimes.com)
- Kate Upton on cover of Sports Illustrated swimsuit edition (reuters.com)
- 2012 Sports Illustrated Swimsuit Edition (hypebeast.com)
French supermajor Total, operator of Block OML138, announces the start-up of production of the offshore Usan field in Nigeria, in line with the planned schedule. Usan is the second deep offshore development operated by Total in Nigeria, coming on stream less than three years after Akpo.
Discovered in 2002, the Usan field lies around 100 kilometers off the South East Nigerian coast in water depths ranging from 750 to 850 meters. The Usan development comprises a spread moored Floating Production, Storage and Offloading (FPSO) vessel designed to process 180 000 barrels per day and with a crude storage capacity of 2 million barrels. Its size of 320 meters long and 61 meters wide makes it one of the largest vessels of this type in the world. Development involves 42 wells that are connected to the FPSO by a 70 kilometers long subsea network.
Yves-Louis Darricarrère, President Exploration-Production at Total, stated on the occasion:
“I’m particularly proud to announce start-up of this major project together with the concession holder NNPC. This project demonstrates the ability of Total, a key operator of large-scale deep offshore developments in the Gulf of Guinea, to lead ambitious projects that will contribute to increase production for the Group and for the country. Total as operator has introduced a number of technological innovations, among which is a solution that drastically reduces gas flaring and thus minimizes the project’s environmental impact. The development of Usan has involved a record 60% of local content man-hours and thus has contributed to strengthening the know-how of the Nigerian industry in the area of hydrocarbon exploitation in the deep offshore.”
The Usan project has involved an unprecedented level of Nigerian local content, with over 500,000 engineering man-hours and 14 million construction and installation man-hours performed in Nigeria. FPSO construction included an offshore integration of 3,500 tons of locally fabricated structures. In addition, large-scale training and capacity building programs were put in place, raising the skills of the local workforce to the benefit of future projects.
Total’s wholly owned subsidiary Total E&P Nigeria Ltd. operates OML 138 with a 20% interest, while Nigerian National Petroleum Corporation (NNPC) is the concession holder. Total’s partners are Chevron Petroleum Nigeria Ltd. (30%), Esso E&P Nigeria (Offshore East) Ltd. (30%) and Nexen Petroleum Nigeria Ltd. (20%).
Offshore Energy Today Staff, February 24, 2012
- Total starts production at Usan field in Nigeria (marketwatch.com)
- Usan Production Will Mitigate Yemen Loss, Nexen Says (mb50.wordpress.com)
- Geopolitical stakes in Nigeria: Curious role of the IMF (mb50.wordpress.com)
The European Union plans to freeze the assets of the Syrian Central Bank starting next Monday, declared French Foreign Minister Alan Juppe, as quoted by Reuters.
The new sanction will hit Syria right on the next day after the referendum on the new constitution, set for February 26.
- EU likely to adopt further sanctions against Syria (vancouversun.com)
- Syria’s Assad unbowed as sanctions tighten (cbc.ca)