Daily Archives: April 2, 2012

Side Effects: Obamacare Adds $17 Trillion to Long-Term Unfunded Government Spending

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Last week, the Senate Budget Committee Republican staff released a report revealing that, over the next 75 years, Obamacare will add an additional $17 trillion in unfunded obligations—i.e., the benefits promised by the federal government that haven’t yet been paid for.

Before Obamacare, federal programs were already responsible for racking up 75-year unfunded obligations of an astounding $65 trillion. According to the report, Medicare accounted for $38 trillion, Medicaid was responsible for over $20 trillion, and Social Security added $7 trillion.

With the enactment of Obamacare, projected federal unfunded obligations have increased by $17 trillion, now totaling $82 trillion. Obamacare’s massive Medicaid expansion and new exchange subsidies are largely to blame.

The number was deduced from the Administration’s own estimates, the report explains:

The $17 trillion figure…is based on the long-term model used by the Office of the Actuary at the Centers of Medicare and Medicaid Service to estimate federal health expenditures over a 75-year period. The assumptions and methodology used to build the model is from [the Centers for Medicare and Medicaid Services] Office of the Actuary. Data on the cost of the Medicaid expansion and the premium subsidies in the 10-year window is from the Administration and the Congressional Budget Office.

Clearly, Obamacare is not just bad health care policy; American taxpayers can’t afford it. As Senator Jeff Sessions (R–AL), ranking member of the Senate Budget Committee, said, “President Obama told the American people that his health law would cost $900 billion over ten years and that it would not add ‘one dime’ to the debt.… This health law adds an entirely new obligation—one we cannot pay for—and puts the entire financing of the United States government in jeopardy.”

Obamacare may have been passed under a cloak of fiscal responsibility, but the facts continue to show otherwise. At a time when $1 trillion-plus deficits have become the norm and the United States faces ever-increasing debt, we simply cannot afford an unpopular government overhaul of health care that exacerbates our financial crisis.

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French Guiana: Shell to Begin Guyane Drilling in Mid 2012

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Northern Petroleum announces plans to commence drilling in mid 2012 on the Guyane permit offshore French Guiana, to follow up on the Zaedyus oil discovery in late 2011 that demonstrated the prospectivity of this licence area off South America. This is a relatively low cost investment for Northern with high upside potential.

In the Zaedyus exploration well, 72 metres of net oil pay was discovered in two turbidite sand systems in the first phase of drilling – successfully proving that the Jubilee play is mirrored across the Atlantic from West Africa.

The second phase of drilling is planned to involve the spudding of a de-lineation well on the discovery, likely to be followed by an exploration well on one of the neighbouring prospects within the area captured by 3D seismic survey. Additional 3D seismic is also planned to be acquired from midyear to further delineate leads on trend and similar to the Zaedyus discovery mapped on 2D seismic along the length of the deepwater margin.

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To undertake these operations Shell, who took over as Operator from Tullow Oil on 1 February 2012, has contracted the Stena DrillMax ICE drillship, which is expected to commence operations midyear subject to government consents.

The partner interests in offshore Guyane are: Shell 45%, Tullow 27.5%,  Total 25%,  Northpet Investments 2.5% (Northern owns a 50% equity interest in Northpet)

Derek Musgrove, Managing Director of Northern stated:

”Northern is pleased that the successful Zaedyus oil discovery is to be quickly followed by a new drilling campaign. This will not only further delineate the discovery structure, but will also move forward to drill some of the similar prospects defined by 3D seismic in order to confirm the wider significant potential of this permit area covering the entire length of the prospective continental shelf edge of Guyane, a distance of about 200 kilometres.”

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ANCAP Reveals Ronda Uruguay II Winners

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Uruguay’s state-owned petroleum company, ANCAP, received 19 offers for offshore oil exploration and production on 8 of the 15 offered blocks. Nine oil companies submitted bids from the eleven oil companies initially qualified for the bidding process.

The eight blocks cover more than 50% of the total offered area and they will be placed for exploration works by the four new players in the Uruguayan offshore: the British companies BP and BG, the French company Total and the Irish company Tullow Oil.

After the assessment of the proposals and the approval by the Uruguayan government ANCAP will sign the contracts with the winning companies on September 2012 as a deadline.

There will be a relevant increasing in quantity and quality of the geological knowledge of the offshore basins, as the work plans represent as a whole: one exploratory well at ultra-deep waters, 33.240 km2 of 3D seismic data, 13.080 km2 de 3D electromagnetic data, 130 samples of sea bed, and 3.000 km of 2D seismic data for the first three years of exploration work.

The ANCAP president Raul Sendic highlighted that “the outcomes of the Round imply relevant investments by the oil companies, and therefore there will be significant advances in knowledge and technology, as well as the development of a new services sector”.

The Industry, Mining and Energy Minister Roberto Kreimerman underlined that “Uruguay has a national energy policy that promotes the development of local resources, and ANCAP is a leader in that process. This successful Round also demonstrates that the Uruguay has technical and human expertise and that the world is recognizing the good image of our country”.

The integration of this new 4 top level oil companies to Petrobras, YPF and GALP means the definitive insertion of Uruguay in the world oil map. The winning companies will assume all the risks and costs generated by the oil operations during the phases of exploration and production. The contract is classified as shared production agreement, and under this format the companies are benefited with part of the available production according to the percentages established by the contract. The term of the contract shall be 30 years, and ANCAP may extend the term up to a maximum of 10 years.

The exploratory period comprises a basic sub-period of 3 years, where the companies will execute the compromised exploratory program. There are two voluntary sub periods that involves the production of one exploratory well each, and the last request to return to Uruguay at least the 30% of the area.

ANCAP will have the option for buying totally or partially oil production of the companies if it is needed for the national oil consumption of Uruguay. ANCAP may be associated for the exploitation of each productive block by a percentage offered by each winning company.

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