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Oil leaders, GOP allies, downplay administration’s seismic plans

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House Natural Resources Committee chairman Rep. Doc Hastings, R-Wash, leads a committee hearing. (AP Photo/Kevin Wolf)

Posted on March 28, 2012 at 11:37 am
by Jennifer A. Dlouhy

The Obama administration’s announcement that it may allow seismic studies potentially paving the way for offshore drilling along the East Coast is political posturing designed to distract voters concerned about high gasoline prices, oil industry leaders and Republican lawmakers said today.

The administration’s move “continues the president’s election-year political ploy of giving speeches and talking about drilling after having spent the first three years in office blocking, delaying and driving up the cost of producing energy in America,” said Rep. Doc Hastings, R-Wash. “The president is focused on trying to talk his way out of what he’s done, rather than taking real steps to boost American energy production.”

At issue is Interior Secretary Ken Salazar’s announcement in Norfolk, Va., this morning that the government is assessing the environmental effects of allowing seismic surveys along the mid- and south-Atlantic that could help locate hidden pockets of oil and gas. If ultimately approved, the studies by private geological research companies also could help guide decisions about where to place renewable energy projects off the coast.

The Interior Department is issuing a draft environmental impact statement that assesses the consequences of seismic research on marine life in the area. The Obama administration had planned to release a similar document in 2010, before the Gulf of Mexico oil spill.

If the draft environmental assessment is finalized after public comments and hearings, the Bureau of Ocean Energy Management could give companies permits to conduct the studies off the coasts of eight East Coast states.

Salazar said that if the geological research turned up promising results, that could open the door to offshore drilling in the area within five years, even though the administration currently has ruled out that kind of exploration before 2017. A government plan for selling offshore drilling leases from 2012 to 2017 does not include any auctions of Atlantic territory.

“If the information that is developed allows us to move forward in a quicker time frame, we can always come in with an amendment,” Salazar said. “We’re not prejudging that at this point in time. My view is … we need to develop information so we can make those wise decisions.”

Industry officials noted that under federal laws, it could take years for the government to revise the 2012-2017 leasing plan, even if federal officials decided to pursue Atlantic drilling.

Erik Milito, upstream director for the American Petroleum Institute, said the administration is repackaging old news and old plans to make it appear it is making real progress to encourage more domestic energy development.

“This is political rhetoric to make it appear the administration is doing something on gas prices, but in reality it is little more than an empty gesture,” Milito said.

Randall Luthi, the president of the National Ocean Industries Association, likened the administration’s announcement to giving the industry “a canoe with no oars, since there are no lease sales planned anywhere off the East Coast.”

If allowed to conduct seismic surveys, geological research firms would ultimately give the resulting information to the government and sell it to companies eager to analyze the data.

But Milito questioned whether seismic companies would pursue the work, given that some of their best customers — oil companies — wouldn’t be able to use it to plan offshore drilling for years, if at all.

“Without an Atlantic coast lease sale in their five-year plan, the administration’s wishful thinking on seismic research has no ultimate purpose,” Milito said. “The White House has banned lease sales in the Atlantic for at least the next five years, discouraging the investment and job creation, and ultimately production, which would make seismic exploration valuable.”

Still, at least six companies already have told the government they want to conduct seismic research along the East Coast.

“We have gotten significant expressions of interest from companies in contracting for these seismic surveys,” said Tommy Beaudreau, the director of the Bureau of Ocean Energy Management. “I am confident that, assuming the process continues on the track we anticipate, that there will be significant interest next year in conducting these surveys.”

Geological research uses seismic waves to map what lies underground or beneath the ocean floor. The shock waves — which some environmental advocates say may harm marine life — map the density of subterranean material and can gives clues about possible oil and gas.

Seismic studies also help identify geologic hazards and archaeological resources in the seabed — information useful in determining the placement of renewable energy infrastructure as well as oil and gas equipment.

The existing seismic surveys of the Atlantic coast are decades old, and in the years since, “there have been enormous technological advances,” Salazar noted.

“We do need to have seismic moving forward so we can really understand what the resource potential is,” Salazar added.

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ICYMI: Green Islamic fund initiative launched

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The Shams Tower Solar project, developed by Enviromena Power Systems, is an example of a CEDC highlighted project in the Middle East.
Enviromena Power Systems

Shari’ah compliant investment securities, sukuks, are to be made available for renewable energy projects such as photovoltaics. A Green Sukuk Working Group has been established to identify such investment opportunities.

The Climate Bonds Initiative, the Clean Energy Business Council (CEBC) of the Middle East and North Africa, and the Gulf Bond and Sukuk Association have launched a Green Sukuk Working Group. This working group will identify green energy projects that fall under Shari’ah-suitable categories for potential investors. A sukuk is a financial certificate, similar to a bond, that complies with Islamic religious law. The law does not allow interest payments.

The non-govermental organisation, CEBC, represents the private sector involved in the clean energy industry across the MENA region and is actively involved in the promotion of photovoltaic projects in the region. Working with the CEBC, the initiative seeks to develop financial products that comply with Islamic shariah law. “We’re looking closely at a couple of prospective bond issuances,” says initiative chairman and co-founder Sean Kidney.

The initiative aims to channel its market expertise to develop best practices and promote the issuance of sukuk for financing of climate change investments and projects, photovoltaic projects being a component. Aaron Bielenberg of the CEBC states, “There are a significant and growing number of projects, for example in renewable energy in the Middle East, that are ideally suited to sukuk investors. This group will help investors more easily identify Shari’ah compliant, clean energy investment opportunities.”

Nick Silver of the Climate Bonds Initiative says that there is an urgent need to mobilise the finance for renewable energy and climate adaption projects in the region. “Green sukuk is ideally suited for the financing of many of these investments,” Silver adds.

The Climate Bonds Initiative receives its funding on a per-project basis, from foundations and banks, and has yet to obtain financing for the green sukuk plan. “If you look at current projects across the region, and if a fraction of those were to be financed with green sukuks, then you’re talking about $10 to $15 billion,” says Nasser Saidi, CEBC chairman. “The time is right for a green sukuk.”

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President Obama’s Domestic Energy State Of Delusion

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Larry Bell, Contributor

President Barack Obama’s administration has claimed a number of remarkable accomplishments that will reduce dependence upon foreign oil and secure future energy security. Statements leading up to and during his January 24 State of the Union address take credit for highest levels of natural gas production in more than 30 years, record oil production in eight years, reduction of oil imports by an average of 1.1 million barrels per day, and making the U.S. a net energy exporter.

To hear him tell it, these achievements, to the extent they really exist, are appropriately attributable to his foresight and actions, rather to than to an entrepreneurial energy industry. Speaking at a January 17 meeting of his Jobs and Competitive Council he complained about lack of recognition of this fact, stating, “Folks are acting as if that [natural gas boon] just sprung out of thin air and is one more example of the dynamism of the marketplace.” Yup, under his leadership, government did it.

Furthermore, his masterworks have but only begun. Next he will open up 75% of our potential offshore oil and gas resources for development, and approve enough renewable energy projects on federal land to power three million homes.

Of course there is obviously a small catch. He will need a little more time, another four years beyond this one, to really solve everything. But before we cast those 2012 ballots to allow that to happen, let’s review the veracity of his many claims thanks to lots of fact checking help from the Institute for Energy Research (EIR) and Politifact.com.

First, he’s right about natural gas production being at record high levels and oil up very slightly, but he apparently forgot to mention that is occurring on private and state-owned lands, not on federal lands that presidents have control over.In fact the U.S. Energy Information Administration (EIA) has reported that both natural gas and oil production have declined on federal lands since the beginning of the Obama administration.

As for domestic oil, it is also true that production has reached slightly highest levels since 2003, but yields on federal lands have fallen 43% over the past 9 years, and have done so most rapidly under Obama’s watch. While total levels have been quite stable, EIA’s estimated production for 2012 is only about 13% higher than for the lowest year over an eight-year period (about 2,055,646,000 barrels, compared with 2,073,453,000 barrels in 2003). In January 2009 when President Obama was inaugurated, the U.S. produced 5,154,000 barrels of oil per day. By November 2011 (the last month for data), the U.S. was producing 5,874,000 barrels per day.This 700,000 increase occurred once again on private and state lands. Not only is the Obama administration making it more difficult to produce energy on federal lands, his minions are also leasing out less lands than in the past. Due to actions that limit offshore areas where oil can be produced and cancel other leases, production on federal lands will most likely continue to fall.  Yet fortunately, the most recent EIA “Short-Term Energy Outlook” published in January forecasts increases in total crude oil production in 2012 and 2013 thanks to increases in onshore production in the lower 48, which overshadows decreases in Alaska and the Gulf of Mexico.

Has the president, as he bragged, caused the amount of oil we are importing to be reduced? Very likely, the answer is a clear “yes”. More than half of this reduction is because of the ongoing recession along with much higher fuel prices which have caused consumers to drive less. But has the U.S., as Obama stated, become a net energy exporter? He didn’t provide any information source to back up that claim, and it contradicts EIA data that shows this to be far off the reality mark. In 2010 the U.S. imported 21 quadrillion of the 98 quadrillion Btus of energy used.

And what about that bold new proposal to make more than 75% of undiscovered oil and gas resources off our shores available for development, while putting in place common-sense safety requirements to prevent a disaster like the BP oil spill from happening again? For historical perspective, let’s remember that when Obama was elected, nearly 100% of the offshore areas were available for exploration and development. Since then his administration has imposed severe limitations. One case in point is that despite bi-partisan support from the Virginia delegation, including Democratic senators, exploration off Virginia’s coast has been prohibited.

Do you happen to remember when the Obama administration imposed a nearly year-long deep water drilling moratorium following the BP oil spill that blocked U.S. access to an estimated 7.5 billion barrels of oil and nearly 60 trillion cubic feet of natural gas? And when that very same administration also invested more than $2 billion in trade credits with Brazil’s state-owned oil company Petrobras to finance offshore exploration in their Tupi oil field in the Santos Basin near Rio de Janeiro? (Investor’s Business Daily has recently reported that an Ex-Im bank source informed them that the amount could go way higher, “in the neighborhood of $20 billion”.) Do you happen to recall that March 19, 2010 White House press conference when the president pledged that America would become one of their best customers?

Well, it seems they got a better offer. Ten months later Brazil snubbed Obama’s generosity with our money and opted to sell its oil to another country. China bought up a 40% stake in Repsol-YPF’s Brazil unit which has dibs on drilling in the offshore Santos Basin where the biggest deepwater discoveries are occurring, along with a 30% stake in Galp Energia, a Portuguese company that has also acquired rights there. Meanwhile, some of those embargoed out-of-business deep water rigs we had planned to use sailed off into the sunset to Brazil.

Having been jilted by Brazil, one might imagine that the president might be more appreciative of our neighbor to the north. Yet shortly before his State of the Union address he single-handedly rejected issuing a Keystone XL pipeline permit that does great injury to Canada as well as to American energy consumers, businesses and job opportunities. A scant one month earlier his administration imposed onerous regulations on the American economy through EPA standards that will have little or no measurable effect on health from targeted emissions.

While extolling virtues of natural gas and cheering his administration’s accomplishments, the president continues to call for higher taxes and restrictions on those industries we depend upon to produce it.  Included are proposed windfall profit taxes, use-it or lose-it land fees, and agency foot-dragging on leases awaiting federal permits.  At the same time, he stumps unrelentingly for taxpayer handouts and other special benefits for Solyndra-style green energy companies that can’t compete in free markets, and most likely, never will.

This is a president who promoted alarmism about a scarcity of American oil resources, mistakenly declaring in June 2010 that “We consume more than 20% of the world’s oil, but have less than 2% of the world’s oil reserves.” In reality, the Institute for Energy Research founded by fellow Forbes contributor Robert Bradley has reported, based upon government data, that North America land areas contain twice the combined proven reserves of all OPEC nations, and enough natural gas to provide for America’s electricity needs at current usage rates for the more than 500 years.

A continuation of current White House agendas will only ensure that the administration’s energy scarcity narrative is realized. Moreover, as IER President Thomas Pile observes , “If the state of the union is actually stronger, it comes despite the policies of President Obama and not because of them.”

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