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USA: API Upstream Director Calls for Expanded Five-Year Offshore Plan

API’s Group Director of Upstream and Industry Operations Erik Milito told reporters yesterday that today’s Central Gulf of Mexico lease sale would help the nation develop its offshore oil and natural gas resources but that there was also a need for a expanded five-year offshore plan if the U.S. goal is a stronger energy future for the nation:

“Every lease sale is important, but more important for our energy future than any individual sale is our nation’s broader energy policy framework. That, unfortunately, has been inadequate. The administration’s proposed five-year offshore leasing plan for 2012 through 2017 is a case in point. It would limit offshore development to where it historically has always been: parts of the Gulf of Mexico and offshore Alaska. It would restrict opportunities when it should be expanding them. It would not help prepare us well for our energy future.”

“With the right policies, we could secure at home much more of the energy supplies future generations of Americans will need. We also could create vast numbers of additional new jobs for Americans – perhaps one million more in seven years – and deliver billions more revenue to our government. Offshore leasing – and expansion of offshore leasing – are key parts of that equation.

“Oil and natural gas development is a long-term endeavor. Offshore development, in particular, takes many years. From the time a five-year offshore plan is issued to when production actually begins can take well over a decade. The proposed Department of the Interior five-year plan is insufficient, and each year we implement it, we will fall further behind what we really should be doing. The administration ought to begin working on a new plan immediately.”

API represents more than 500 oil and natural gas companies, leaders of a technology-driven industry that supplies most of America’s energy, supports 9.2 million U.S. jobs and 7.7 percent of the U.S. economy, delivers more than $86 million a day in revenue to our government, and, since 2000, has invested more than $2 trillion in U.S. capital projects to advance all forms of energy, including alternatives.

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BOEM Seeks Public Opinion on Seismic Survey Activity Offshore Alaska

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The Bureau of Ocean Energy Management (BOEM) announced yesterday that it was seeking public input on issues that should be tackled by the bureau in preparing an Environmental Assessment for proposed seismic data acquisition activity in Arctic areas of the Alaska Outer Continental Shelf (OCS).

ION Geophysical Corporation has applied to conduct an exploratory 2D marine seismic survey during the fall of 2012. The application proposes conducting operations throughout much of the Beaufort Sea Planning Area, with specific transect lines and segments within the Chukchi Sea Planning Area. Data obtained during this survey would be used by geologists and geophysicists to view and interpret large-scale subsurface geologic structural features and evaluate prospects for oil and gas reserves.

The Bureau of Ocean Energy Management (BOEM), an agency under the United States Department of the Interior that manages the exploration and development of the nation’s offshore resources, has also on its website announced ION’s permit application #12-01 and the associated area coverage map. BOEM has also explained the the procedures required for submission of comments, setting the deadline for April 30, 2012. More information can be found at BOEM’s official website.

Below you can see ION’s recent video: Case Study in Challenging

Environments: The Arctic Environment

Uploaded by IONGeophysical on Sep 14, 2011

Top of the world tactics at ION. See the ION approach in action as Joe Gagliardi, Director Arctic Technology & Solutions, tackles the punishing Arctic environment. By combining the capabilities across the company, ION delivers the answers and the technology that allows operators to acquire data further north than ever before and dramatically extends the short working season.

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Obama administration advances plan for seismic research along Atlantic coast

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Posted on March 28, 2012 at 12:01 am by Jennifer A. Dlouhy

The Obama administration will announce Wednesday that it is advancing a plan to allow new seismic research designed to help identify hidden pockets of oil and gas in Atlantic waters along the East Coast.

The move by the Interior Department is the beginning of a long path that eventually could lead to new offshore drilling off the coast from Delaware to Florida.

Senior administration officials who spoke exclusively to the Houston Chronicle confirmed the plan on condition they not be identified ahead of the official announcement.

The plan could mean new work for Houston-based seismic firms, which likely would conduct some of the first such surveys of the region in decades.

The announcement comes as President Barack Obama tries to assuage concerns about rising oil and gasoline prices ahead of the November election, amid Republican criticism that his energy policies have sent costs higher.

The administration had signaled plans to allow Atlantic seismic research before the 2010 Gulf of Mexico oil spill stalled approval of offshore activities.

Interior Secretary Ken Salazar will announce the plan in Norfolk, Va. at Fugro Atlantic, a company that conducts geotechnical and marine research.

Future seismic research in the Atlantic waters could help guide decisions about where to allow drilling leases and equipment that generates renewable energy, such as wind turbines.

But it would be at least five years before the government sold any leases in Atlantic waters. Interior Department plans governing those decisions through 2017 do not include lease sales  in the region.

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.

Energy companies use the data to plan where to buy leases and how to prioritize projects. But they know little about what lies below federal waters along the East Coast. Existing seismic surveys of the area are more than 25 years old and were conducted with now-outdated technology.

Oil industry officials have downplayed the significance of allowing seismic surveys along the Atlantic Coast, noting the government makes no guarantee that it will let them drill. That skepticism also could limit the market for seismic research firms.

But the administration has said that collecting the data for different regions — even if they aren’t targeted immediately for development — is key to understanding their potential. Obama asked the Interior Department to speed up its search for Atlantic resources in May 2011.

Wednesday’s action takes the form of a federally required draft statement on the environmental effects of seismic surveys in the outer continental shelf along the East Coast.

The public will have a chance to weigh in on that draft environmental impact statement during hearings along the East Coast.

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Exxon Settles Lawsuit Over Gulf Offshore Oil Lease Against U.S.

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By Allen Johnson Jr. and Mark Chediak – Jan 6, 2012 11:01 PM CT

Exxon Mobil Corp. (XOM), the largest publicly traded oil company, settled its lawsuit against U.S. Interior Secretary Kenneth Salazar over the government’s decision to cancel offshore leases that may yield “billions of barrels of oil.”

The accord “will allow ExxonMobil to develop this very large, but technically challenging, resource as quickly as possible using a phased approach,” Patrick McGinn, a spokesman for Irving, Texas-based Exxon, said in an e-mail yesterday.

Exxon sued Aug. 12 over a ruling by the department that canceled Gulf of Mexico leases for the so-called Julia Unit. The company and the government entered into settlement agreement on Dec. 30, according to a filing yesterday in U.S. District Court in Lake Charles, Louisiana.

Exxon said in its complaint that it sought a suspension for its Julia leases in 2008 because of drilling complexity. It cited federal regulations that allow oil oil producers to suspend production in their fields, partly “to facilitate proper development of a lease.”

The Interior Department denied the request in 2009, stating that the company“had not demonstrated a commitment to production” according to court papers. Unsuccessful appeals followed.

Suspension of Production

As part of the settlement, the Interior Department granted a suspension of production for the leases from Dec. 13, 2008, to Oct. 31, 2013. The department will grant a second suspension until Aug. 31, 2014, if Exxon and Statoil ASA (STL), a partner in Exxon’s Julia fields, remains in compliance with the terms of the agreement and takes certain steps toward production, according to court documents.

Exxon and Statoil agreed to pay a yearly fee on the original leases of $650 per acre until 87.5 million barrels of oil are produced from the fields. The first fee will be owed for 2011, according to court documents. The minimum royalty rate for the leases was increased to $11 per acre and the yearly rental rate increased to $16 an acre.

“The Julia project will play an important role in meeting America’s energy demand,” McGinn said in the e-mail. “The initial phase of the project is expected to produce more than 175 million barrels of oil through six production wells.”

Melissa Schwartz, a spokeswoman for the Interior Department, said in an e-mailed statement that the proposed settlement affirms the regulatory process, “provides incentives for timely and thorough development of the leases, and secures a fair return on those resources to the U.S. Treasury.”

The case is Exxon Mobil Corp. v. Kenneth Salazar, 11- CV-1474, U.S. District Court, Western District of Louisiana (Lake Charles).

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Obama’s obligation to free up Gulf oil

More oil-drilling permits would bolster economy and decrease deficit

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By Lori LeBlanc
The Washington Times

One year ago last week, President Obama lifted his moratorium on deepwater drilling that five months earlier had halted operations on 33 rigs producing energy in the Gulf of Mexico. Since then, the industry has worked tirelessly to comply with new federal regulations and permitting requirements, while independently developing and implementing operating practices designed to further enhance safety and environmental protection on deepwater rigs. Yet a full year after the moratorium was lifted, federal permitting for drilling in the Gulf continues to greatly lag behind America’s demand – and capacity – for domestic energy development.

Every day, thousands of Americans whose livelihoods depend on a healthy Gulf energy industry feel the impact of the Gulf slowdown through lost wages, delayed jobs and a general sense of unpredictability about the future of an industry they count on to put food on the table. Local, state and federal government budgets also feel the impact through decreased sales tax and royalty revenue. The Gulf energy industry stands ready and waiting to provide jobs to a nation desperately in need of them. It’s high time to put American energy back to work.

In the wake of the Gulf spill, industry and government have collaborated in an unprecedented effort to rethink and re-engineer safety and response procedures and capabilities in the Gulf of Mexico. Workers are ready to get back to work fueling this nation. The rest lies in the hands of the Department of the Interior, whose regulators verify compliance and issue permits for exploration and drilling operations. Unfortunately, this permitting process continues to move at a pace that does not reflect an industry’s capability to invest and create good-paying jobs.

Permits are essential to the industry’s viability. Since the deepwater moratorium was lifted, only 14 permits have been issued for unique new wells allowing operators to drill to full depth for the purpose of production. For such a capital-intensive industry, where each new deepwater drill ship costs about $1 billion and employs hundreds of workers, those 14 permits over an entire year are simply insufficient to meet production demand or even to keep rigs in the Gulf. Of the original 33 rigs affected by the moratorium, 10 have left the Gulf in favor of markets where permitting is more predictable and transparent. Given the time and expense required to move these floating factories, it’s unlikely they’ll return anytime soon.

The most glaring loss, however, is the significant job opportunities forsaken each and every day as the permitting slowdown lingers. A recent study by IHS CERA concluded that a more-efficient and timely permitting process could create more than 200,000 new jobs in the United States, one-third of which would be generated outside the Gulf region in states like California, Florida, Illinois, Pennsylvania and New York. In today’s world, that amounts to a stimulus package in itself – and one that doesn’t require American taxpayers to foot the bill.

In fact, a healthy Gulf industry puts money back into the pockets of American taxpayers via revenue flows to the U.S. Treasury. The offshore industry paid $8.3 billion in royalties and $9.4 billion in new lease bids in 2008. In 2010, those numbers shrank to $4 billion in royalties and $979 million in lease bids. While the numbers for 2011 aren’t in yet, they’re likely on track with 2010 figures. Yet, according to the IHS CERA study, an industry operating under an improved permitting process could generate $12 billion in tax and royalty revenues by 2012.

The last ripple effect of the permitting slowdown may not pinch Americans today, but it has the potential to hit our pocketbooks in the months and years to come. By allowing rigs to depart the Gulf and discouraging the large-scale investment necessary to meet our future energy needs, our government’s lack of urgency to restoring Gulf energy puts us all in a precarious position. If and when we decide to harness the true potential of the Gulf, we may find that the investment and equipment simply isn’t there. This translates to greater reliance on foreign suppliers, less control of our own energy supplies, and living in the hope that unforeseen political developments somewhere overseas don’t push prices at the pump even higher.

The Gulf has a lot to offer Americans: jobs, revenue and a valuable domestic energy supply. A multitude of American workers are motivated to get back to work today. Virtually every American stands to gain by encouraging investment in domestic energy production. It’s time for our government to clear the permitting bottlenecks for Gulf drilling activity and get this nation back to work with American energy.

Lori LeBlanc is the executive director of the Gulf Economic Survival Team.

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Finke: Profit is not a dirty word

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By Ron Finke

Independence, MO —Why do we allow companies to have any profit at all? If a company makes a profit, doesn’t that mean that it charged more than it should have for its products?

This fiscal year ending Sept. 30, our federal government will pay out $2.2 trillion just for safety net and interest expenses, 97 percent of its total intake. The government needs money so shouldn’t we just raise taxes on companies that have excess profits?

Speaking of excess profits, everyone knows that gasoline prices are too high. Exxon Mobil had revenue of $424 billion in the past year and almost $38 billion was left over after interest, taxes and depreciation. What good is that doing society?

Exxon Mobil pays $9.1 billions of that net profit to its shareholders as a dividend, $1.88 per year per share, amounting to 24 percent. Almost half of its shareholders are institutions like pension plans, universities and other foundations. That might be doing some good.

In 2009 , the oil company paid $7.7 billion in U.S. taxes but no federal income tax. Why? It paid more than $15 billion of income tax to other countries where it gets its oil. Worldwide Exxon paid $78.6 billion in total taxes before we see any leftover profit. Nigeria makes out pretty well since it charges up to 85 percent of profit from its Exxon Mobil oil production.

If Exxon could pump more oil in the U.S., our government would get more income and other taxes. Since oil pumped and sold is gone, the behemoth looks for new oil everywhere. A few years ago, it and Norwegian Statoil began exploring in a new, deeper area of the Gulf of Mexico. It can only do that after paying the U.S. government for permits. The Department of the Interior now claims Exxon Mobil abandoned three of its five permits when it requested a short suspension of activity to upgrade its equipment for new safety technology and was a little slow in signing new contracts with Chevron as a new partner.

Oh, did I mention that the finding is estimated to be a billion or more barrels of oil? Or that the exploration had already cost $300 million (that came from profit leftover from previous years and sales)? Exxon is ready to start but our government has stopped Gulf drilling by regulation. The rigs have begun to be moved to Brazil and Africa.

There is a new steel plant in Youngstown, Ohio, already producing drill pipe for our domestic production. Perhaps it could make steel for something else, but I don’t know what.

Exxon Mobil will begin paying about $10 billion in royalties and taxes to the federal government if and when it can get started on the Julia field. In the meantime, it has sued the government over its alleged snatching of the three permits. That should be successful, but lawsuits are anything but cheap. So there goes more of that leftover profit.

I wonder how smaller companies fare in fights with the government. Our U.S. government has lots of lawyers and all the time in the world. Does this type of thing have anything to do with businesses stockpiling money instead of pushing ahead, taking initiative and hiring new workers?

Original Article

Rigged For Failure

Dockwise-announces-HMT-Awards

A year ago, three oil rigs fled the Gulf of Mexico for better opportunities abroad. Now, it’s 10. Make no mistake, the toll is rising on a business environment marked by the Obama administration‘s uncertainty.

It’s a sorry spectacle when rigs, the mighty instruments for extracting oil and gas from miles under the sea floor, are quietly pulling away from U.S. coasts for better business environments oceans away — namely the Republic of Congo, Nigeria, Egypt and Brazil.

“When you have companies that would be spending hundreds of millions of dollars, or in some cases billions of dollars, they need certainty,” Louisiana Oil & Gas Association President Don Briggs told BigGovernment.com. “We don’t have that now, and I don’t expect we will anytime soon.”

The massive planning, capital, project management and luck required to produce energy are uncertain enough.

The climate of government caprice makes it even worse.

The 2010 BP oil spill proved Obama‘s anti-energy production talk was more than rhetoric — it was policy.

It started to create uncertainty when the president arbitrarily demanded $20 bil from BP to set up a cleanup fund for its spill in April last year. After it paid, however, what lingered was the image of a president who could extract what he wanted from any unpopular company.

Then the president issued an arbitrary moratorium on offshore drilling, idling rigs and throwing hundreds of thousands of Americans out of work. When a court ordered him to stop, he played three-card monte with the energy industry with an unannounced but real permit moratorium until another judge stopped him.

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Meanwhile, lease sales hit their lowest level since 1958. Now at this late date, the president finally set an auction for Dec. 14. But the Interior Department nearly tripled the minimum bid price for deepwater leases in the Gulf of Mexico from $37.50 an acre to $100 an acre.

Why the big increase? More regulators, of course.

Meanwhile, even companies that got permits years ago can have them revoked for minor irregularities. This happened to Exxon Mobil, which spent $300 million to make a billion-barrel discovery of oil, only to have its permit pulled on a technicality. It’s now suing.

With such uncertainty, it’s no wonder that oil producers — which create thousands of high-paying jobs — are heading for places like the Congo. The only certainty now is uncertainty. Until that stops, more rigs will flee.

Original Article

Collateral Damage: Lost Gulf Rigs from Obama Obstructionism (10 down, more to go?)

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by Kevin Mooney
August 18, 2011

“The Gulf Spill of 2010 maybe be remembered as much or more for the economic damage it did because of the Obama’s regulatory overreaction than for the environmental damage it wrought. Two wrongs do not make a right.”

Ten oil rigs have left the Gulf of Mexico since the Obama Administration imposed a moratorium on deepwater oil and gas drilling in May 2010 and others could follow soon, a detailed July 2011 report from Sen. David Vitter’s (R-La.) office shows.

The ten rigs named in the document are: Marinas, Discover Americas, Ocean Endeavor, Ocean Confidence, Stena Forth, Clyde Bourdeaux, Ensco 8503, Deep Ocean Clarion, Discover Spirit, and Amirante. The rigs have left the Gulf for locations in Egypt, Congo, French Guiana, Liberia, Nigeria and Brazil.

It gets worse.

Several of the remaining rigs could be relocating soon, according to the report. These include the Paul Romano, the Ocean Monarch and the Saratoga. Moreover, eight other rigs that were planned for the Gulf have been detoured away, Don Briggs, President of the Louisiana Oil and Gas Association (LOGA), points out.

“When you have companies that would be spending hundreds of millions of dollars, or some cases, billions of dollars, they need certainty,” Briggs explained. “We don’t have that now and I don’t expect that we will anytime soon. We will be in a deteriorating position until this changes.”

Briggs has also questioned the necessityof the moratorium that was imposed in response to the explosion of British Petroleum’s (BP) Macondo oil well on April 20 of last year. The accident resulted in the death of 11 workers and caused an estimated five million barrels of crude oil to spill into the Gulf.

The federal regulatory schemes that are now aimed against Louisiana will ultimately work to the disadvantage of industry in other parts of the country, Bonner Cohen, a senior fellow with the National Center for Public Policy Research (NCPPR), has warned.

What you are seeing in Louisiana is only a small piece of larger mosaic being put together by the Obama Administration to make affordable energy as inaccessible as possible,” he said. “From the administration’s war on coal to the serious consideration it is giving to imposing a nationwide regulation of hydraulic fracturing, to its shut down of deepwater drilling in the Gulf of Mexico, to its `endangerment finding” from the EPA [Environmental Protection Agency], the administration is practicing its own form of selected industrial sabotage.

Sen. Vitter has called outtop Obama administration officials for issuing what he views as conflicting and misleading statements on the correct number offshore drilling permits. A U.S. Justice Department motion filed in March stated there are 270 shallow water permit applications and 52 deepwater permit applications pending.

But in testimony before the Senate Energy and Natural Resources Committee this past March, Interior Secretary Ken Salazar said the Interior Department had received only 47 shallow water permit applications over the previous nine months and that only seven deepwater permit applications were pending. Michael Bromwich, director of the Bureau of Ocean Energy Management, Regulation, and Enforcement, told Vitter personallythat only six deepwater permits were pending, and he publicly stated that deepwater permits would be limited because “only a handful of completed applications have been received.”

Vitter has also announced that he will block the nomination of Rebecca Wodder to serve as Assistant Secretary for Fish and Wildlife Parks for the Department of Interior unless expiring Gulf drilling leases are extended for another year.

“Since the moratorium, oil and gas exploration in the Gulf of Mexico has been dramatically curtailed,” Vitter said. “In 2011 alone, more than 300 offshore drilling leases in the Gulf of Mexico are due to expire. If these leases are allowed to expire, they will revert to the federal government, killing jobs and cutting off potential revenue from exploration and production. The U.S. economy will greatly benefit by allowing the offshore energy industry to get to work and stay working.”

Earlier this year, Vitter also blocked the nomination of Dan Ashe to the Interior Department, but lifted it after new deepwater exploratory permits were issued. In addition, Vitter has successfully opposed an almost $20,000 pay raise for Interior Secretary Ken Salazar.

The Gulf Spill of 2010 maybe be remembered as much or more for the economic damage it did because of the Obama’s regulatory overreaction than for the environmental damage it wrought.

Two wrongs do not make a right.

Original Article

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