Category Archives: energy policy

Nola.com: Oil, gas production declining in Gulf of Mexico federal waters, report says

Times-Picayune
 
By Jennifer Larino, NOLA.com | The Times-Picayune 
on July 08, 2014 at 12:40 PM
 
Oil and gas found off the coast of Louisiana and other Gulf Coast states made up almost one quarter of all fossil fuel production on federal lands in 2013, reinforcing the region’s role as a driving force in the U.S. energy industry, according to updated government data. But a closer look at the numbers shows the region’s oil and gas production has been in steady decline for much of the past decade.

A new U.S. Energy Information Administration
report shows federal waters in the Gulf of Mexico in 2013 accounted for 23 percent of the 16.85 trillion British thermal units (Btu) of fossil fuels produced on land and water owned by the federal government. That was more than any other state or region aside from Wyoming, which has seen strong natural gas production in recent years.

The report did not include data on oil and gas production on private lands, which makes up most production in many onshore oil and gas fields, including the Haynesville Shale in northwest Louisiana.

But production in the offshore gulf has also fallen every year since 2003. According to the report, total fossil fuel production in the region is less than half of what it was a decade ago, down 49 percent from 7.57 trillion Btu in 2003 to 3.86 trillion in 2013.

The report notes that the region has seen a sharp decline in natural gas production as older offshore fields dry out and more companies invest in newer gas finds onshore, where hydraulic fracturing has led to a boom production. Natural gas production in the offshore gulf was down 74 percent from 2003 to 2013.

The region’s oil production has declined, though less drastically. The offshore gulf produced about 447 million barrels of oil in 2013, down from a high of 584 million barrels in 2010.

Still, the region accounted for 69 percent of all the crude oil produced on all federal lands and waters last year.

Crude oil production in the Gulf of Mexico could to start to recover in coming years, as companies restart major projects delayed after the 2010 Deepwater Horizon rig explosion. The disaster killed 11 men, unleashed the worst oil disaster in U.S. history and prompted a federal ban on deepwater drilling. The ban lasted several months.

The most recent federal lease sale held in New Orleans, in March, drew more than $872.1 million in high bids on more than 1.7 million offshore acres in the central and eastern Gulf of Mexico. Previous sales under President Barack Obama administration’s 2012-17 leasing program have opened 60 million acres offshore and drawn $1.4 billion in bid revenues.
 

Businessweek.com: Sally Jewell Obama’s Pro-Fracking Climate Czar

Jewell wants the government to continue to raise money from energy producers to pay for sea walls, wetlands restoration, and other measures that will make communities more resilient to climate change. She also wants to reform oil and gas permitting so that industry gets permission faster, while underwriting environmental impact evaluations and inspections Interior can’t afford. And it’s not just for fossil fuels, Jewell says. The U.S. needs the same arrangement-faster permit processing in exchange for fees from industry for safety analysis-from wind and other renewable energy producers.
For offshore oil and gas production, Jewell says, it works. Onshore, it doesn’t. “So we’re criticized for not processing permits fast enough,” she says. “And we have a report from the [U.S. Government Accountability Office] saying we’re not inspecting high-risk wells. And we can’t do that because we don’t have the resources. So we’re working with members of Congress and in the industry to say let’s be rational about matching supply and demand.”
Sally Jewell: Obama's Pro-Fracking Climate CzarPhotograph by Benjamin Rasmussen

Sally Jewell has just seen a ghost. Several, really. As she enters the aisle between two rows of eight-foot-tall shelving units, the U.S. Secretary of the Interior has come face to face with more than a dozen severed tiger heads. She lets out a quiet “ooh,” somewhere between gasp and sigh. The heads are all taxidermied—jaws open, fangs bared, startled eyes, comprising a gallery of silent roars. A U.S. Fish and Wildlife (USFW) officer tells Jewell how few of these cats remain in the wild; such trophies can fetch thousands of dollars on the black market. Jewell listens and, moving down the aisle, reflects on how values take time to change—until they do. When she was little, she recalls, her gram owned a snow leopard coat. Later, when her grandmother learned it was from an endangered species, she donated it to a zoo.

Jewell is touring the National Wildlife Property Repository, a 10,000-square-foot facility outside Denver where items made from protected animals get cataloged. The warehouse calls to mind the conclusion of Raiders of the Lost Ark. Instead of crated artifacts, however, it’s packed with the remains of animals: tortoise shells; a trunk of shawls made from the wool of a Chiru, a Tibetan antelope; bear claws; ivory shards. As the tour continues, Jewell has a suggestion for Steve Oberholtzer, who runs the repository: invite the fashion trade. “When they see this stuff close up,” she says, “the message will get through, and they’ll be more careful about their sources.”

The policing of poachers, smugglers, and exotic pet owners is but one of the federal functions Jewell supervises, and although it keeps 205 agents busy full time, it’s one of the smaller ones. Interior manages more than 500 million acres, one-fifth of all the land in the U.S., on an annual budget of $12 billion. It controls 23 percent of the nation’s energy supply—mostly oil, gas, and coal on federal lands—and last year disbursed $14.2 billion in energy revenue to federal agencies and state, local, and tribal communities. Interior is also the largest wholesaler of water in 17 Western states, a life-and-death matter for thousands of farms and rural communities. And, of course, it runs more than a thousand parks, monuments, and wildlife refuges, natural and cultural attractions estimated in 2011 to contribute, through tourism, $48.7 billion to the economy. In all, the department estimates that its “value added” economic activity and production contributed $200 billion to the U.S. economy during 2013. (Interior appears to prefer this “value added” figure to straight income because it still spends more than it takes in.)

The agencies that comprise Interior are almost comically at odds with one another. The Bureau of Reclamation operates dams that disrupt fisheries. The USFW endeavors to keep fisheries robust. The U.S. Geological Survey studies rising seas’ impact on coastal areas. The Bureau of Ocean Energy Development facilitates deep-sea drilling permits. The department restores Superfund sites, most notably at the Rocky Mountain Arsenal National Wildlife Refuge, where the U.S. military made sarin gas during World War II. On the Rocky Mountain Front, the department promotes fracking, a drilling technique that environmentalists contend is toxic. “One of the best ways to tell if we’re doing something right is when both sides are ticked off at us,” Cecil Andrus, President Jimmy Carter’s Interior secretary, famously told an assistant.

Jewell, 58, seems uniquely qualified to balance these contradictions. The former CEO of Recreational Equipment Inc., a Seattle-based outdoor gear and apparel retailer, she worked previously as a commercial banker, starting at a regional bank assessing the value of oil and gas reserves as debt collateral. “From your résumé, I can see you worked on the Alaska pipeline, and you’re an oil and gas engineer,” Senator Lamar Alexander (R-Tenn.) began, recapping her CV during her April 2013 confirmation hearing. He sought—and got—her mostly nodded affirmation for each point: “And you said you once fracked a well? You were a banker for 20 years? The chief executive officer of a billion-dollar company?” He paused dramatically. “How did you get appointed by this administration?!”

When asked if her values as an outdoorswoman and conservationist conflict with her fossil fuel expertise, Jewell says, “There’s no reconciling to be done.” It’s the day after her repository tour, and she’s sitting in the lobby of a Hampton Inn & Suites in Las Cruces, N.M. “I’m going to be flying home on an airplane. Planes burn fossil fuels. So I don’t think we can afford to be hypocritical,” she says. “I just think we need to open our eyes and understand that these things have tradeoffs. And we need to apply our ingenuity to a future that we didn’t understand in the ’70s and ’80s, when we were really focused solely on fossil fuels.”

Special thanks to Richard Charter.

Aiken Standard: Editorial: Offshore drilling bill isn’t energy solution

http://www.aikenstandard.com/article/20140701/AIK0201/140709996/1018/AIK02/editorial-offshore-drilling-bill-isn-t-energy-solution
Posted: Tuesday, July 1, 2014 12:01 a.m.
 
 
A U.S. House bill approved last week to open up drilling along South Carolina’s coast is thankfully a long-shot, but it’s still troubling that Congress is once again considering such a measure.
 
The bill was supported by nearly all of South Carolina’s delegation, including House Rep. Joe Wilson, who represents Aiken County.
 
However, it was wisely voted down by Republican Mark Sanford of Charleston and Democrat Jim Clyburn of Columbia. It has become a recurring theme that when gas prices go up, members of Congress want to pass bills that sound on the surface like they would lessen the pain at the pump, but ultimately do little.

The bill considered last week – H.R. 4899 – is certainly of the same ilk.

Proponents of the bill say that gas prices could be cheaper by expanding oil production and expediting the permitting process, which could be a boon to our economy and even strengthen our national security.

A smart energy bill could certainly accomplish those goals, but the latest by Congress clearly doesn’t. There are so many conflicting variables affecting oil prices that it’s incredibly short-sighted to cling to the idea of domestic drilling.

We shouldn’t have the mentality that if we can just drill off the coast of South Carolina, or the coasts of Virginia or California, that we could pay less at the pump.

In 2008, we often heard the expression “drill baby drill” in order to lower gas prices that were on average $3.50 to $4 a gallon. The argument was more production would lead to lower prices, but domestic oil production is booming, and prices haven’t gone down.

It’s hard for that argument to hold any validity. From 1991 to 2008, domestic production dropped every year, for a total decline of 33 percent.

Since then, however, daily production has risen 49 percent, according to the U.S. Energy Administration.

Even with greater production, we still pay a global price when it comes to oil. Additionally, oil production globally has not dropped. OPEC countries are putting more oil out, and Iraq is still at about 95 percent of its normal oil production even with recent spikes in violence.

With all those factors in our favor, prices are still up about 20 cents at the pump compared to 2013.

This idea of expanded production has been explored through essentially the same legislation since 2011.

Since that time, U.S. oil production has gone from 5.6 million barrels a day to 8.4 million barrels a day.

We hope that lawmakers will come up with a legitimate energy bill sooner rather than later. It’s clear that we need to be less dependent on foreign oil.

However, we particularly don’t need to risk one of our most precious commodities – South Carolina’s coastline.

In Congress, Sanford has said in the past that he believes any decision on exploration should be left up to the individual states, but explained to The Post and Courier in Charleston that “the specter of (operations) offshore doesn’t fit with the look or feel our tourists know,” he said. Tourism is our state’s biggest economic engine, and we shouldn’t jeopardize that resource. We don’t need the debilitating economic blow that can result from an oil spill.

The bill considered by the House last week doesn’t show leadership on energy policies.
 
The U.S. needs to unlock a smarter energy platform, but offshore shoreline clearly isn’t the answer.
 Special thanks to Richard Charter

The Maritime Executive: Interior releases 5-Year Plan for Offshore Oil & Gas Exploration and Development for 2017–2022



June 13, 2014
First Step in Proposed Offshore Leasing Program
BY MAREX
Secretary of the Interior Sally Jewell and Acting Director of the Bureau of Ocean Energy Management (BOEM) Walter Cruickshank announced the first step in a robust public engagement process to develop the next schedule of potential offshore oil and gas lease sales.

The publication in the Federal Register of a Request for Information (RFI) and Comments on the Preparation of the 2017-2022 Outer Continental Shelf (OCS) Oil and Gas Leasing Program (RFI) is the initial step in the multi-year planning process and does not identify any specific course of action. Per statute and consistent with previous efforts, BOEM will evaluate all of the OCS planning areas during this first stage.

Today’s publication of a RFI begins a 45-day comment period. Substantial public involvement and extensive analysis will accompany all stages of the planning process, which will take up to three years to complete.

“The development of the next Five Year Program will be a thorough and open process that incorporates stakeholder input and uses the best available science to develop a proposed offshore oil and gas program that creates jobs and safely and responsibly meets the energy needs of the nation,” said Secretary Jewell. “Today marks the first step of engaging interested parties across the spectrum to balance the various uses and values inherent in managing the resources of federal offshore waters that belong to all Americans and future generations.”

The OCS Lands Act requires the Secretary of the Interior, through BOEM, to prepare and maintain a schedule of proposed oil and gas lease sales in federal waters, indicating the size, timing and location of auctions that would best meet national energy needs for the five-year period following its approval. In developing the Five Year Program, the Secretary is required to achieve an appropriate balance among the potential for environmental impacts, for discovery of oil and gas, and for adverse effects on the coastal zone.

“In issuing the RFI, BOEM does not propose to schedule sales in particular areas, or make any preliminary decisions on what areas will be included in the schedule,” said BOEM Acting Director Cruickshank. “Rather, the RFI provides an opportunity for interested parties to submit comments and suggestions about the potential for leasing and to identify environmental and other concerns and uses that may be affected by offshore leasing.”

BOEM seeks a wide array of input, including information on the economic, social and environmental values of all OCS resources, as well as the potential impact of oil and gas exploration and development on other resource values of the OCS and the marine, coastal and human environments.

Using the information received, BOEM will prepare a Draft Proposed Program, followed by a Proposed Program and a Proposed Final Program. Throughout the planning process, BOEM consults with all interested parties and seeks additional public comment. Concurrently, BOEM will prepare a Programmatic Environmental Impact Statement (PEIS) required by the National Environmental Policy Act to evaluate the potential environmental impacts of various OCS oil and gas leasing alternatives under the Proposed Program and to help inform decisions on the Proposed Final Program.

The current Five Year Program for 2012-2017, which expires in August 2017, schedules 15 potential lease sales in six planning areas with the greatest resource potential, including more than 75 percent of the estimated undiscovered, technically recoverable oil and gas resources in federal offshore waters. BOEM has held five sales thus far, including annual auctions in the Central and Western Gulf of Mexico and a single sale in the portion of the Eastern Gulf not subject to the Congressional moratorium.

These five auctions offered more than 60 million offshore acres and leased 4.3 million of those, generating more than $2.3 billion in high bids. The sixth lease sale in August 2014 will offer 21 million OCS acres in the Western Gulf of Mexico. Off Alaska, the current Five Year Program includes one potential sale each for the Chukchi Sea, Beaufort Sea and Cook Inlet planning areas.

BOEM currently manages about 6,200 active OCS leases, covering more than 33 million acres – the vast majority in the Gulf of Mexico. Of those, 1,064 are producing leases, covering 5.2 million producing acres – the highest acreage under production since 2008. In 2013, OCS oil and gas leases accounted for about 18 percent of domestic oil production and 5 percent of domestic natural gas production. This production generates billions of dollars in revenue for state and local governments and the U.S. taxpayer, while supporting hundreds of thousands of jobs.
Under the RFI published today, BOEM will accept comments until July 30, 2014 in either of the following ways: On BOEM’s website. Click on the “Open Comment Documents” link and follow instructions to view relevant documents and submit comments. In written form, deliver to: Ms. Kelly Hammerle, Five Year Program Manager; Bureau of Ocean Energy Management; 381 Elden Street – HM-3120; Herndon, Virginia 20170. Additional information on the process of developing the next Five-Year Program as well as on the current Five Year Program can be found here.
Special thanks to Richard Charter

WWNT Radio: Senators Push Administration for Expanded Offshore Drilling in Next 5-Year OCS Leasing Plan

http://www.wwntradio.com/news/news.php/displayType/article/16448/2014/06/senators-push-administration-for-expanded-offshore-drilling-in-next-5year-ocs-leasing-plan
 
25 Jun 2014 3:07 PM
 
(Washington, D.C.) – Today, U.S. Sen. David Vitter (R-La.), top Republican on the Environment and Public Works Committee, along with Sens. Roger Wicker (R-Miss.), Jeff Sessions (R-Ala.), and Tim Scott (R-S.C.) sent a letter to Sally Jewell, Secretary of the Department of Interior, regarding the Department’s oil and gas leasing plan for 2017 through 2022 on the Outer Continental Shelf (OCS).
 
“You now have a final opportunity during the Obama Administration to put forward a plan that will not only generate substantial government revenues, create jobs, and improve the economy of our nation, but also could yield long-term geopolitical benefits through ensuring a decreased reliance on foreign resources,” wrote the Senators. “Given the tremendously positive impacts that opening these waters to new drilling would have, we respectfully advise that now is not the time to play politics with such a decision.”
 
In the letter, the Senators request that Interior’s 5-year leasing plan includes the expansion of offshore access to include areas off the Atlantic Coast, the Eastern Gulf of Mexico, areas off the coast of Southern California, and multiple areas off the Alaska shoreline that the Obama Administration had previously placed off-limits. A recent study concluded that developing oil and gas resources in the Pacific OCS and Eastern Gulf alone would generate more than 200,000 jobs and add $218 billion to the U.S. economy.
 
Since President Obama was elected, Vitter has been urging the Administration to stop putting large portions of the OCS off limits for leasing. The President’s current 5-year leasing plan is only half of what the previous plan was and keeps 85 percent offshore areas closed. At the beginning of this Congress, Vitter
introduced legislation that would force the administration to go back to the previous 5-year leading plan that was scheduled before Obama was elected. Vitter also introduced the Energy Production and Project Delivery Act that increases domestic production, expedites important reviews for major energy projects, and could create millions of jobs.
 
Text of today’s letter is below.
Click here for the PDF version.
 
 
June 25, 2014
 
The Honorable Sally Jewell
Secretary
Department of Interior
1849 C Street NW
Washington, DC 20240
 
Dear Secretary Jewell:
 
Beginning the process of developing the Department of Interior’s (DOI) next 5-year leasing plan is an important step to furthering our nation’s goals of providing a secure, stable source of domestic energy, leading us towards energy independence and improving our hobbled economy.  This latest leasing plan, which will govern oil and gas leasing for 2017-2022 on the Outer Continental Shelf (OCS), should serve as an important step in rectifying the self-inflicted damage done by President Obama’s moratorium on energy development in the Gulf of Mexico, as well as the unnecessary termination of the proposed 2010-2015 leasing program that would have rightfully expanded, rather than restricted, access to our federal offshore resources.
 
As we have pointed out in the past, Section 18 of the Outer Continental Shelf Lands Act (OCSLA) requires that these 5-year leasing plans be designed to “best meet national energy needs for the 5-year period following its approval.”  The Administration clearly failed to follow the intent of the OCSLA in the previous lease plan by placing over 85% of America’s OCS off-limits to energy production and offering the lowest number of offshore lease sales ever offered in the history of the process.  You now have a final opportunity during the Obama Administration to put forward a plan that will not only generate substantial government revenues, create jobs, and improve the economy of our nation as well as states and localities, but could have long-term geopolitical benefits through ensuring a decreased reliance on foreign resources in light of a deteriorating situation in Eastern Europe and the Middle East.
 
The current Obama DOI lease plan, under which you are currently operating, excludes areas of the Outer Continental Shelf (OCS) where expansion had significant bipartisan support.  In response, the House of Representatives has sent a clear signal by passing multiple bipartisan bills that call for opening new offshore areas that the Obama administration placed off-limits in their misguided 2012-2017 lease plan. Further, a bipartisan coalition of governors from Gulf Coast and Mid-Atlantic states have recognized the significant economic and job creation benefits of offshore energy production and have repeatedly encouraged the administration to expand offshore access to states that have been blocked from participating in the process. The administration’s lost opportunity included leasing off the Atlantic Coast, significant acreage in the Eastern Gulf of Mexico, areas off the coast of Southern California, and multiple areas off the Alaska shoreline.  If this new lease plan is to have any credibility, it is imperative that these areas be opened and included in the new plan.
 
Study after study has shown the positive impacts of expanding offshore oil and gas development in regions that this Administration has blocked.  A study by Wood Mackenzie concluded that developing oil and gas resources in the Pacific OCS and Eastern Gulf alone would generate more than 200,000 jobs and add $218 billion to the U.S. economy.  A recent study by Quest Offshore Resources also found that oil and gas development in the Atlantic could generate nearly 280,000 jobs, expanding the U.S. economy by up to $23.5 billion.  To further underscore the incredible economic potential of offshore oil and gas development, previous reports have even found that simply speeding up permitting could create hundreds of thousands of jobs nationally and over 155,000 in our states alone. 
 
The opportunity for offshore oil and natural gas production provides a significantly positive contrast when compared to offshore wind energy production, which the Administration has spent significant resources pushing.  Wind leases net the government $1 to $2 per acre versus $100 per acre for oil and natural gas energy resources in the deepwater.  In addition, there is strong indication that the royalty rate for wind energy is a fraction of the tax credit it receives, meaning the government will end up with a net loss of revenue on each project. Moreover, we are unaware of any operating offshore wind facility at this stage despite significant commitment of resources and time by this Administration.  With the wind energy production tax subsidy slated to expire at the end of 2014, we cannot imagine any circumstances in which an offshore wind farm is competitive and question why the Administration has devoted many resources to promoting the offshore wind industry when the benefits of developing more domestic oil and gas are proven. 
 
A recent analysis by Mark P. Mills, Senior Fellow at the Manhattan Institute, found the following:
 
 * In the 10 states at the epicenter of oil & gas growth, overall statewide employment gains have greatly outpaced the national average.
 * A broad array of small and midsize oil & gas companies are propelling record economic and jobs gains-not just in the oil fields but across the economy.
 * America’s hydrocarbon revolution and its associated job creation are almost entirely the result of drilling & production by more than 20,000 small and midsize businesses, not a handful of “Big Oil” companies. In fact, the typical firm in the oil & gas industry employs fewer than 15 people.
 * The shale oil & gas revolution has been the nation’s biggest single creator of solid, middle-class jobs-throughout the economy, from construction to services to information technology.
 * In recent years, America’s oil & gas boom has added $300-$400 billion annually to the economy.  Without this contribution, GDP growth would have been negative and the nation would have continued to be in recession.
 
Given the tremendously positive impacts that opening these waters to new drilling would have on our struggling economy, the massive job creation an expanded plan would yield, and the foreign policy benefits from expanding domestic fossil fuel production as unrest increases in areas of the world such as the Middle East and Russia, we respectfully advise that now is not the time to play politics with such a decision.  This administration and the DOI should take this opportunity to strengthen both the American economy as well as our geopolitical standing by issuing a 5-year leasing plan that expands offshore access to new areas consistent with our nation’s energy and economic needs.
 
 
Sincerely,
 
David Vitter
U.S. Senator
Louisiana
 
Roger Wicker
U.S. Senator
Mississippi
 
Jeff Sessions
U.S. Senator
Alabama
 
Tim Scott
U.S. Senator
South Carolina
Special thanks to Richard Charter