Daily Archives: March 5, 2012

API: Oil & Gas industry pays the government nearly $90 million dollars a day

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WASHINGTON, March 2 (UPI) — U.S. President Barack Obama has it backward when he says the government is backing a billion-dollar oil subsidy, the American Petroleum Institute said.

Obama told an audience in New Hampshire that the oil industry was the recipient of $4 billion in subsidies backed by U.S. taxpayer dollars.

“Every time you go to the gas tank or fill up your gas tank, they’re making money. Every time,” the president said. “Now, does anyone really think that Congress should give them another $4 billion this year?”

But Jack Gerard, president and chief executive officer at trade group API, said the president had it wrong.

“The president has it backwards, our industry pays the government nearly $90 million dollars a day — the biggest contributor of government revenue than any other industry in the United States,” said Gerard.

U.S. lawmakers are sniping over domestic energy policies as gasoline prices in most U.S. markets move closer to $4 per gallon. Republican critics of the White House say Obama is blocking domestic energy production, which means higher oil prices.

Analysts, however, said tensions in the Middle East are likely contributors to escalating prices.

The White House states that U.S. dependence on foreign oil has gone down every year since Obama came into office in 2009. The president has said there “are no short-term silver bullets when it comes to gas prices.”

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Removing the disconnect between talk and action on energy policy

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March 2, 2012 | Posted by Ken Cohen

Let’s be clear: The U.S. oil and natural gas industry does not receive special “subsidies” or “preferences.” Such claims simply don’t accord with the facts.

The fact is that what some call “subsidies” are legitimate provisions of the U.S. tax code that treat our industry the same as other industries. The efforts to prevent oil companies from accessing these provisions achieve nothing but raising the tax burden on the companies that find, produce and manufacture the fuels that are the foundation of the U.S. economy.

One example is the Section 199 domestic production activities provision, which exists to support new investment and employment opportunities across U.S. industries. Those who produce or manufacture items in America, including auto makers, software developers, movie producers, and newspaper publishers, qualify for it. Yet critics call this a “subsidy” for those who produce the oil and natural gas used by American consumers – this despite the fact that our industry actually gets a smaller Section 199 deduction than all other qualifying industries.

Another example is the deduction for the costs of drilling the wells to produce domestic oil and natural gas. The U.S. tax code allows companies, no matter the industry, to recover their costs in earning income. So denying or delaying the deduction of our industry’s costs – largely the salary costs of those drilling oil and gas wells – will treat our industry differently than most others. Furthermore, such measures will actually increase the costs of producing oil and natural gas in the U.S.

These are just a couple of examples of what critics are referring to when they erroneously claim that oil and gas companies receive $4 billion per year in special “subsidies” or “preferences.” When these measures are combined with other proposals to increase the industry’s taxes, they amount to an $85 billion tax hike for the U.S. oil and gas industry over the next decade – and untold consequences for U.S. energy security and global competitiveness.

What such proposals will do is increase costs for a company to manufacture a product. It is hard to see how increasing costs on manufacturers helps American consumers.

The reality is that we need to put in place the policies now that will help address our long-term energy needs. Instead of trying to convince people that standard tax provisions are actually special-interest subsidies, our nation would be better served by policies that encourage more energy development so that industry can increase supplies to the market.

We could start by increasing access to America’s own resources.

Currently, about 85 percent of all U.S. offshore areas remain off-limits to oil and gas development. As I’ve mentioned before, a recent study shows that polices that support greater access to resources in the U.S. and Canada would not only increase domestic supplies, but would also create 1.4 million jobs and generate more than $800 billion in government revenue by 2030.

One of those job creators is the Keystone XL pipeline, but that’s not the only reason it should be approved. In Canada, our industry is developing oil sands that are giving us access to one of the world’s largest-known reserves of energy – approximately 170 billion recoverable barrels, or the energy equivalent to fueling today’s North American vehicle fleet for about 35 years.  The energy industry’s innovative techniques and technologies are allowing us to develop these resources in safe and environmentally responsible ways.

If our nation’s leaders were to consider our industry’s contributions to the economy and to government revenue, the conversation could be more constructive. U.S. oil and natural gas companies contribute much more to the U.S. economy than the oil and gas that fuel it. For example, in 2011, ExxonMobil alone contributed $72 billion to the U.S. economy by paying our taxes, producing returns for our shareholders, paying our employees and investing in energy projects around the country. Our $12 billion in U.S. taxes to local, state and federal governments in 2011 exceeded our U.S. operating earnings by more than $2 billion.

I encourage you to compare what’s being said with what’s actually being done when it comes to policies that support domestic energy development. There’s a disconnect between the two.

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Small modular nuclear reactor to be employed at DOE Savannah River Site

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March 5, 2012
Source: U.S. Department of Energy

The U.S. Energy Department and its Savannah River Site (SRS) announced three public-private partnerships to develop deployment plans for small modular nuclear reactor (SMR) technologies at SRS facilities, near Aiken, South Carolina. As part of the Energy Department’s commitment to advancing the next generation of nuclear reactor technologies and breaking down the technical and economic barriers to deployment, these Memorandums of Agreement (MOA) will help leverage Savannah River’s land assets, energy facilities and nuclear expertise to support potential private sector development, testing and licensing of prototype SMR technologies.

The Energy Department, Savannah River Site and Savannah River National Laboratory (SRNL) have entered into three separate agreements with Hyperion Power Generation Inc.; SMR, LLC, a subsidiary of Holtec International; and NuScale Power, LLC. The agreements will help these private companies obtain information on potential SMR reactor siting at Savannah River and provide a framework for developing land use and site services agreements to further these efforts.

“The Obama Administration continues to believe that low-carbon nuclear energy has an important role to play in America’s energy future,” said Secretary Chu. “We are committed to restarting the nation’s nuclear industry and advancing the next generation of these technologies, helping to create new jobs and export opportunities for American workers and businesses.”

The Energy Department has taken a number of steps to help jumpstart America’s nuclear industry and ensure that nuclear power continues to play an important role in the U.S. energy mix. As part of these efforts, the Department has worked to advance small modular reactors, which provide an important opportunity for America’s manufacturing sector to make and sell cutting-edge technology. Small modular reactors have the added advantage of passive safety systems, compact and scalable design and lower capital costs.

“We have a unique combination of nuclear knowledge and laboratory expertise, infrastructure, location and much more to make the Site a natural fit for advancing the small modular reactor technology,” said Dr. Dave Moody, DOE-SR Manager. “We are about reinvigorating SRS assets to impact national needs and influence new missions for the future of the Savannah River Site.”

By strengthening information sharing and access to site facilities and technical expertise, these MOAs will help break down engineering and testing barriers to advanced nuclear reactor research and development while providing these nuclear companies with the resources to support effective deployment plans.

Today’s announcement builds on the Energy Department’s work to develop nuclear power as a vital part of America’s all-of-the-above energy strategy:

• The Energy Department announced $10 million in new research funds earlier this month to solve common challenges across the nuclear industry and improve reactor safety, performance and cost competitiveness.

• In 2010, the Department signed a conditional commitment for $8 billion in loan guarantees to support the Vogtle project, where the Southern Company and Georgia Power are building two new nuclear reactors, helping to create new jobs and export opportunities for American workers and businesses.

• The Energy Department has also supported the Vogtle project and the development of the next generation of nuclear reactors by providing more than $200 million through a cost-share agreement to support the licensing reviews for Westinghouse’s AP1000 reactor design certification. The Vogtle license is the first for new nuclear power plant construction in more than three decades.

• Promoting a sustainable nuclear industry in the U.S. also requires cultivating the next generation of scientists and engineers. Over the past three years, the Department has invested $170 million in research grants at more than 70 universities, supporting R&D into a full spectrum of technologies, from advanced reactor concepts to enhanced safety design.

The Memorandums of Agreement announced today do not constitute a federal funding commitment. The Energy Department envisions private sector funding will be used to develop these technologies and support deployment plans. The agreements, and the officials and offices involved with these activities, are separate and distinct from the Energy Department’s Funding Opportunity Announcement for small modular reactor cost-share projects announced earlier this year.

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USA: Deep Down, Bornemann Team up in Gulf of Mexico Subsea

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Deep Down, Inc. and Bornemann Pumps, Inc. today announced the formation of a strategic alliance to provide high-quality subsea pumping packages and services to the Gulf of Mexico subsea oil and gas industry.

As part of the alliance, Deep Down will manage the overall project management, subsea engineering, local support functions and fabrication of the subsea structures. Bornemann will handle system and process engineering, fabrication of the subsea pumps and hydraulic control modules; both parties will work together on other technical aspects of the projects, as needed.

Ron Smith, Chief Executive Officer of Deep Down, Inc. stated, “We are thrilled to be teaming up with Bornemann Pumps to offer the Gulf of Mexico subsea market a specialized solution. As long as tiebacks and deepwater production continues to increase, the need for subsea boosting is paramount to the success of some of the subsea developments.”

Axel Jäschke, Head of Subsea Division for Bornemann Pumps stated, “We are very excited to have Deep Down as our subsea specialist. Now we can provide commercially attractive and well proven Bornemann technology in a complete package to all of our subsea clients.”

About Deep Down, Inc.

Deep Down, Inc. is an oilfield services company serving the worldwide offshore exploration and production industry. Deep Down’s proven services and technological solutions include distribution system installation support and engineering services, umbilical terminations, loose-tube steel flying leads, buoyant solutions, ROVs and tooling, marine vessel automation, control, and ballast systems. Deep Down supports subsea engineering, installation, commissioning, and maintenance projects through specialized, highly experienced service teams and engineered technological solutions. The company’s primary focus is on more complex deepwater and ultra-deepwater oil production distribution system support services and technologies, used between the platform and the wellhead.

About Bornemann Pumps, Inc.

Since the company’s founding in Germany in 1853, Bornemann has been setting the industry pace in pumping innovations. In 1934, it patented the twin-screw pump with external bearings. Since then Bornemann has achieved and secured a leading position worldwide with its numerous ground-breaking pump developments over the decades. For example, its expertise has resulted in a leadership position of boosting of oil and gas mixtures for onshore, offshore and subsea applications. This method of production results in significant capital cost savings over traditional approaches and simplifies operations.

Bornemann has sales offices and subsidiaries worldwide ensuring there is immediate and professional support throughout all phases of the production process ranging from detailed advice, extending to tailor-made engineering, and finally including reliable maintenance of the installed pumps and systems. Bornemann has the proven expertise and technology to provide a complete system solution. Houston, Texas is the headquarter location of Bornemann’s USA operations.

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Norway: EMAS AMC Wins Fram SURF Deal from Statoil

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EMAS AMC, has been awarded a SURF (Subsea, Umbilical, Risers and Flowlines) contract for marine installation and pipe lay from Statoil valued at approximately US$55 million. The subsea development, Fram H-Nord, is situated in the Troll C/Fram area in the northern part of the North Sea.

“We are very pleased to be awarded this contract from Statoil as it’s a major milestone for EMAS AMC. This demonstrates our abilities as an EPIC SURF player, and our capability for delivering complex projects,” says Svein Haug Regional  Head for EMAS AMC (Europe and Africa).

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” flexible production and one 4” gas injection flowline both 5.3 km long as well as all activities necessary for the installation of the following:

  •   Integrated Template Structure & Manifold
  • Subsea Control Umbilical (5.3 km long)
  • Near-by Protection Structures
  • Tie-ins of all lines to the Fram H Nord and Fram Vest A2 manifolds plus pre- commissioning/testing (RFO)
  • Trenching and rock dumping of all line systems
  • In addition 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.  Vessels from EMAS AMCs modern construction fleet will be utilized. The contract  will be managed out of EMAS AMC’s Oslo office.

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