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Drilling permit slowdown having effect on St. Tammany businesses

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By Debbie Glover
St. Tammany News
Published on Wednesday, February 8, 2012 12:09 AM CST

St. Tammany Parish may seem an unlikely place for the drilling permit slowdown to affect business, but the 2010 BP oil spill and now delays from the permit moratorium and lack of permitting for deep water and shallow wells in the Gulf of Mexico are doing just that..

“Absolutely, St. Tammany has many businesses directly and indirectly connected to the oil industry, and they are affected by the industry slowdown caused by the permitting delays,” said Executive Director Brenda Reine Bertus of St. Tammany Economic Development Foundation.

“Some of the parish’s businesses service rigs, some rehab products used on rigs and many are tucked away in the parish. During the study completed by GNO Inc., it was evident many are simply trying to hold on until things turn around,” she said.

Suppliers of rigs, oil supply boats, caterers and equipment already know how hard hit they are, but this has been confirmed by the release of a study of the impact of decreased drilling permit approvals on businesses conducted by Greater New Orleans Inc.

“Offshore service and supply companies are the core of the oil and gas industry in Louisiana,” said Lizette Terral, president of the New Orleans region for the J.P. Morgan Chase Bank. “These small- and mid-sized companies are dependent on activity in the Gulf for their business, and as a result they have been disproportionally hurt by the ongoing permit slowdown.”

Participants in the survey represented small, medium, and large offshore supply and service companies in numerous industries. Answers provided included details on the revenue, cash reserves, employment, business plans, and personal finances of their respective companies.

Key findings of the study show that 46 percent of businesses have moved all or some of their operations away from the Gulf of Mexico. In addition, 41 percent of businesses are not making a profit. Most, or 76 percent have lost cash reserves, and 27 percent of businesses have lost more than half of their cash reserves.

Half of the businesses have laid off employees, and 39 percent of businesses have retained workers but have reduced their hours and/or salaries.

Worst of all, 82 percent of business owners have lost personal savings as a result of the permit slowdown. Another 13 percent have lost all of their savings.

Small– and mid-sized companies are the hidden victims of the permit moratorium and ensuing slowdown,” said Michael Hecht, president and CEO of GNO, Inc. “While global companies can simply shift their assets, these Louisiana companies — through no fault of their own — have endured significant, and now documented, financial hardships.”

“Through this study, GNO, Inc. has determined that the federal moratorium and the permit slowdown created significant negative “unintended consequences” for local businesses. While larger companies have deep cash reserves and the ability to shift assets outside of the country, Louisiana businesses dependent on the Gulf of Mexico for business have experienced significant financial hardship,” reported GNO, Inc.

“The smaller companies are digging into their personal cash reserves to keep going because many of these job require specialized training. In the 1980’s when there was an industry slowdown, the employees left and were very difficult to replace when business increased,” Bertus said. “They want to keep these specialized employees at all costs. Another problem is that the really small companies can’t just pick up and move elsewhere like larger companies.”

In 2011, the average approval time for a drilling plan was 109 days, compared to the historical average of 61 days. All deep-water plans that include any type of drilling activity must now undergo an environmental assessment (EA) process; for those plans requiring EAs in 2011, the average approval time was 213 days, significantly higher than the overall average approval time. Additionally, in 2011, only 34 percent of plans submitted were approved, compared to the historical 73.4 percent approval rate.

Deep-water permit issuance continues to lag the monthly average observed in the year prior to the oil spill. Only two deep-water permits are being issued per month since November 2011, representing a monthly reduction of 3.8 permits, or 66 percent reduction from the average of 5.8 permits per month. This number also represents a five permit or a 71 percent reduction from the historical average of seven permits per month over the past three years.

Shallow-water permit issuance is also below the historical average. Since November 2011, 2.3 shallow water permits, on average, were issued. That number represents a decrease of 4.8 permits or 68 percent from the monthly average of 7.1 permits per month observed in the year prior to the oil spill. This number also represents a reduction of 12.4 permits or a 84 percent reduction from the historical average of 14.7 permits per month over the past three years, according to the gulf permit index.

A lack of permit approval can be taken as a lack of future business in the industry and many small and mid-size businesses have been hit hard with possible lack of future business as they had known it before the oil spill, thus causing many of them to either relocate or close completely, as the study has shown.

The permitting process has become lengthy and mired in red tape, which has slowed the entire industry, affecting businesses throughout the area, even in St. Tammany.

Source

Shell to Become Operator of Guyane Maritime Permit in French Guiana

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Northern announces that earlier today, Tullow Oil Plc (“Tullow”) in their Interim Management Statement provided the following update on well GM-ES-1, in the Guyane Maritime Permit, in which Northern has a 1.25% interest:

“In French Guiana, the Zaedyus exploration well discovered 72 metres of net oil pay in two turbidite fans. This is the first well in Tullow’s extensive Guyana Basin acreage and successfully proved that the Jubilee play is mirrored across the Atlantic  from West Africa. Currently, a sidetrack is being drilled to  recover reservoir cores with operations expected to complete in mid-November. The partners are working on the 2012 programme and anticipate it to include 3D seismic and the drilling of two wells which is expected to commence in mid-2012 once all the necessary approvals have been obtained.

Shell is expected to take over Operatorship of the block in early 2012, subject to Government and Joint Venture approval.”

The partner interests in the Guyane Maritime licence offshore French Guiana are:

Shell France 45%

Tullow 27.5%

Total 25%

Northpet Investments 2.5% (Northern owns a 50% equity interest in Northpet)

Source

USA: Jordan Cove Files for LNG Export Permit

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Jordan Cove Energy Project last week told the US Federal Energy Regulatory Commission that it is seeking to export domestic liquefied natural gas from its planned terminal on Coos Bay, Oregon.

The company filed an application on Thursday with the US Department of Energy seeking to export up to 1.2 Bcf/d of natural gas to countries with which the US has free trade agreements, it told FERC.

The commission has already approved Jordan Cove to build its southern Oregon terminal to import 1 Bcf/d of LNG. It also cleared the company to build a 230-mile pipeline that would carry the gas to Malin, Oregon, on the California border.

The company told FERC that if it gets the nod from DOE, it will ask the commission to allow it to change the project to export. “Jordan Cove is fully aware that that it will require FERC authorization to modify its plans for the terminal so that it can be used for LNG exports as well as imports.

Jordan Cove is the latest in a string of LNG terminals that have applied to export domestic gas. The trend is being driven by booming US gas production, which has led to low gas prices and slumping LNG imports.

However, the application is the first to come from a US developer on the West Coast, and it is the first US bid to build an export terminal from scratch. Other facilities looking to export, such as the Sabine Pass terminal in Louisiana and the Cove Point terminal in Maryland, are looking to turn existing import terminals into export facilities.

Project Manager Robert Braddock said the West Coast terminal will have an advantage over the other US terminals seeking to export. “The principal difference is we have access to a different range of resources from both Canadian gas and US gas. But equally important is we would have certainly much closer access to the Asian markets,” he said.

Braddock also is not afraid of competition from the north, where Kitimat LNG is planning an export terminal in British Columbia. “We actually presume that Kitimat would be built. We assume that we would be built number two and we think there is plenty of room for two such facilities on the West Coast.”

Jordan Cove will apply to modify its plans at FERC after it receives “significant commitments” for capacity, Braddock said. The company expects to make this filing by the end of the year, he added. At the same time, the company will likely ask DOE to allow LNG exports to non-free trade agreement countries as well, he said.

But Jordan Cove’s exports plans are likely to face opposition from environmentalists, who waged a long battle against the company’s import terminal. Susan Jane Brown, a staff attorney at the Western Environmental Law Center, who represents environmental organizations and landowners, said she is still digesting the news, but that the export plan will likely rankle her clients. “It would be one thing to import a good that would be used domestically. But exporting a domestic product that they have long advocated that we need domestically, it is a bait and switch,” she said.

Original Article

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