http://www.chron.com/business/article/U-S-oil-gusher-blows-out-projections-3341919.php

More Information: Bouncing back
After declining to levels not seen since the 1940s, U. S. oil production began rising again in 2009:
More rigs: The number of rigs in U.S. oil fields has more than quadrupled in the past three years to 1,272.
Bright forecast: The U.S. Energy Information Administration hiked its forecast of crude production in 2025 to 6.4 million barrels per day. That’s 1 million barrels more than the U.S. produced in 2010.
Challenging the Saudis: By the EIA’s forecast, the U.S. will challenge Saudi Arabia as the world’s top oil producer, including crude and other forms of oil.

By Simone Sebastian
Updated 11:58 p.m., Sunday, February 19, 2012

The United States’ rapidly declining crude oil supply has made a stunning about-face, shredding federal oil projections and putting energy independence in sight of some analyst forecasts.

After declining to levels not seen since the 1940s, U.S. crude production began rising again in 2009. Drilling rigs have rushed into the nation’s oil fields, suggesting a surge in domestic crude is on the horizon.

The number of rigs in U.S. oil fields has more than quadrupled in the past three years to 1,272, according to the Baker Hughes rig count. Including those in natural gas fields, the United States now has more rigs at work than the entire rest of the world.

“It’s staggering,” said Marshall Adkins, who directs energy research for the financial services firm Raymond James. “If we continue growing anywhere near that pace and keep squeezing demand out of the system, that puts you in a world where we are not importing oil in 10 years.”

There are doubts that energy independence is that close. But many say the booming shale oil fields in Texas and North Dakota and the growth of deep-water drilling in the Gulf of Mexico will allow the nation to cut its reliance on oil imports significantly over the next couple of decades.

Last month, the U.S. Energy Information Administration upgraded its forecast of crude production in 2025 to 6.4 million barrels per day – 1 million barrels more than were pumped in 2010.

Previously, the EIA had projected the U.S. would peak at 6 million barrels in 2022.
“The growth that we’ve seen in shale, that’s one of the biggest changes that’s contributing to our outlook,” said Dana Van-Wagener, a research analyst for the agency. “It’s evolving so quickly. We weren’t anticipating enough growth.”

Crude prices stable

By the EIA’s forecast, the United States will challenge Saudi Arabia as the world’s top oil producer when crude and other forms of liquid petroleum are included. But the U.S. is also the world’s top oil consumer, demanding nearly 20 million barrels a day. So even with an oil boom, the nation still falls far short of its energy demands.

The technology that fueled the national shale gas rush is moving into oil fields. The pairing of fossil fuel production techniques called horizontal drilling and hydraulic fracturing allowed companies to access previously hard-to-reach natural gas trapped in dense shale rock.

The rush has unleashed a flood of natural gas onto the U.S. market, causing price to dive and making some gas wells uneconomical. Companies have started to close natural gas wells and pull rigs out of gas fields.

Meanwhile, crude oil prices have remained high, with the domestic benchmark West Texas Intermediate price rising 93 cents to $103.24 on Friday.

Pumping crude out of shale rock is more expensive and difficult than getting at natural gas, said Eric Potter, program director for energy research at the University of Texas at Austin’s Bureau of Economic Geology.

Oil molecules are larger and harder to squeeze through the cracks created by hydraulic fracturing. But the high price of crude makes it worthwhile for many companies.
“With natural gas prices being as low as they are, your company could go out of business if you don’t manage this carefully,” Potter said. “People are moving quickly to get into these oil plays. It’s a matter of their existence.”

The Eagle Ford Shale in South Texas, the Permian Basin in West Texas, and the Bakken Shale in North Dakota have been hubs of the domestic crude boom. They now make up about 40 percent of the nation’s land-based oil production, noted Adkins, the Raymond James analyst. He projects that proportion will grow to two-thirds by 2015.

Fields underestimated

Adkins says the Energy Information Administration is vastly underestimating the rapid growth of those oil fields. He believes that crude oil production in the United States will reach 9.1 million barrels by 2015, some 45 percent more than the EIA’s forecast.
The reason for the varying projections about the nation’s crude potential is uncertainty about how much oil is underground and whether technological advances will make it reachable.

That also causes debate about future crude oil prices.

Adkins, for example, says the rising production will help reverse the surging price of oil, pushing it down to $90 per barrel next year.

Forecast: $4.09/gallon

Others, however, believe oil prices will continue to rise despite the growing supply coming out of U.S. oil fields. Domestic crude prices are closely tied to the world market.
That makes domestic prices susceptible to the global Brent crude benchmark price, which is on the rise due to foreign conflicts and rapidly growing energy demands in developing countries.

The EIA projects the average world oil price will reach about $145 per barrel in 2035, in current dollars, compared to the 2011 average of $93 per barrel. Meanwhile, the agency forecasts gasoline in America will rise to $4.09 per gallon.

“As far as drilling and production, it’s going to be really good and robust,” said Michelle Michot Foss, chief energy economist for the University of Texas Bureau of Economic Geology. “But consumers will be upset because gasoline prices will continue to be high.”

simone.sebastian@ chron.com twitter.com/SimonesNews

Special thanks to Richard Charter

http://flaglerlive.com/34477/everglades-drilling-castor

FLAGLERLIVE | FEBRUARY 19, 2012

Last Thursday, the U.S. House of Representatives passed a bill that would compel the federal Bureau of Land Management to lease potentially up to half a million acres of federal land in Utah, Colorado and Wyoming to oil companies to “research” and explore oil shale and tar sands development, two largely unproven or prohibitive technologies. A wind production tax credit, meanwhile, failed to pass the House.

Canada is developing tar sands at immense environmental and energy costs: it takes burning a barrel of oil to produce three barrels of oil from tar sands (so marketable production is two barrels for every three produced). Tar sands production in Canada consumes enough energy to heat nearly all the homes in the country. Oil shale has never been produced effectively despite a century of experimenting because, as Elizabeth Kolbert described it in an article on synthetic fuels for The New Yorker, it “involves basically rewriting genealogical history.” That history also involves bleak experiments by Exxon Mobil that resulted in mass layoffs.

Yet the oil shale and tar sands experiment is tied to the Republican leadership’s transportation bill, crafted out of the committee John Mica chairs, and calling for $260 billion in spending over the next 10 years-with some of that revenue supposed to be generated by new oil shale leases. But the non-partisan Congressional Budget Office’s analysis of the transportation bill concludes that only $100,000 can be expected from leasing public land to oil companies for oil shale, and that should the Republican plan be adopted, the Transportation Trust Fund would have a $78 billion deficit in 10 years.

Nevertheless, the House passed the oil shale and tar sands bill on a largely party-line vote of 237-187, including the votes of seven of Florida’s representatives, all of them Republican: Ander Crenshaw, Clifford Stearns, John Mica, Dan Webster, Dennis Ross, Bill Posey and Thomas Rooney.

Seventeen of Florida’s representatives voted against, including 11 Republicans, because the bill is part of a broader plan that opens more future public land and waters to exploration, including the Arctic National Wildlife Refuge, offshore in the Atlantic and the Pacific, and the Gulf of Mexico, and because it does not explicitly protect such places as the Everglades.

During debate over the bill, Kathy Castor, D-Fla., proposed an amendment that would have done just that: it would have prevented drilling within 5 miles of any of the Great Lakes or the Everglades. The amendment failed on a 241-176 vote, with 17 of Florida’s House members, including Mica and Sandy Adams, rejecting it.

Below is the speech Castor delivered when she introduced her amendment. The speech sums up the numbers and the ideological divide over the issue.

The Republican leadership’s transportation package is a dead end. It is being panned by businesses, Democrats and Republicans alike. What we will vote on next is the Republican funding portion of the package and it is a little bit different.
See, this is a special story. In fact, it is a love story, the love story of a breathtaking display of affection of Big Oil by the Republican party. The bill is a special Valentine, a love letter of the Republicans’ undying devotion to Big Oil. No others compare.

The problem is that, with the Republican congressional leaders’ blind passion for Big Oil, they correspondingly demonstrate an animosity to American families and businesses. See, it’s been less than 2 years since the BP Deepwater Horizon disaster, and the Republicans in Congress now propose to drill for oil just about anywhere.

Have safety measures been adopted by this Congress? No. Do they recognize that there are special places across America that are not appropriate for oil drilling? Not really.
For example, the bill would allow drilling right off of the beaches of Florida. Florida’s tourism industry, meanwhile, employs more than 1 million people. Tourism and fishing are multibillion-dollar industries. Drilling closer to our shores puts those jobs at risk.

Yet that’s what the Republicans propose here. And for what? The CBO says that if you drill off the coast of Florida, that will generate $100 million. Billion dollars in industry and tourism and fishing or $100 million?

BP decimated the gulf coast and caused billions of dollars of damage to our economy and our environment. The disaster is estimated to have cost the State of Florida, alone, $2.2 billion and almost 40,000 jobs.

he Republican love letter to Big Oil could be the kiss of death for small businesses, hotels, motels, shrimpers, fishermen, and families that rely on tourism, and that’s just in the State of Florida. This bill puts too many jobs at risk in a misguided, love-struck attempt to allow Big Oil to drill just about anywhere, including unique and sensitive areas all across America.

Republican leadership has made it abundantly clear they are willing to sell America to the highest bidder. Well, I’m here to say America is not for sale.

Is nothing sacred in this country anymore? Is nothing off limits? How about Mount Vernon, George Washington’s home? Would we drill there if Big Oil could make a few bucks? How about Gettysburg National Battlefield? I hear there may be some natural gas nearby. Why not check Grandma and Grandpa’s backyard. You’re already trying to take away their Medicare, so why stop there?

There are places in America that are not for sale and should be protected, and my amendment provides a test. Here’s the test:

I pick two special areas to put to the test in this Congress. My amendment will prevent drilling within 5 miles of any of the Great Lakes or the Everglades.

Now, don’t get me wrong, we must have robust domestic oil production-in fact, that is happening now. We are currently producing in America at higher levels than ever before. We have more domestic production than we import. Last year, U.S. crude oil production reached its highest level since 2003. And the Obama administration has offered and continues to offer millions of acres of public lands and Federal waters for oil and gas exploration and production.

In 2010, the Department of the Interior offered 37 million acres in the Gulf of Mexico for oil and gas exploration, but the oil companies have only tapped 2.4 million acres. So why are we going to open up even more public lands for drilling when we haven’t even used one-fifteenth of what’s available? It’s a love story. It’s a love story.

Last year, although Exxon made $41 billion, BP made over $25 billion, the Republicans saw to it that American taxpayers chipped in another $10 billion from 2002 to 2008.
Well, enough is enough. We are not going to turn the Great Lakes into the “Okay Lakes,” and we’re not going to turn the Everglades into the “Neverglades.” The Great Lakes and Everglades are not just environmental treasures; they are the lifeblood of our local economies. The Great Lakes and Everglades employ many Americans who work in tourism, lodging, fishing, and ecological industries.

I urge my colleagues not to play an enabling role in this tawdry love affair between most Republicans in Congress and Big Oil.

_____________

http://elmwoodpark.suntimes.com/news/10746012-418/voterama-in-congress-for-the-week-ending-feb-17.html

Elm Leaves

Voterama in Congress for the week ending Feb. 17
February 19, 2012 12:52PM

Updated: February 19, 2012 12:52PM

Payroll-Tax Cut: Members extended, 293-132, until Dec. 31 a law allowing workers to contribute 4.2 percent of their pay to Social Security, down from the standard 6.2 percent. A yes vote was to send the Senate a bill that also funds long-term jobless benefits and protects from Medicare cuts. The $100 billion cost of financing the tax cut is to be deficit spending, and the bill’s remaining $50 billion in outlays will be offset by revenue measures. (HR 3630)

Expanded Oil, Gas Drilling: Members voted, 237-187, to nearly triple America’s offshore energy production by 2027, build the Canada-to-Texas Keystone XL oil pipeline, open the Arctic National Wildlife Refuge to drilling and start oil-shale extraction on federal land in Colorado, Wyoming and Utah. A yes vote was to pass HR 3408.

Keystone XL Pipeline: Members refused, 173-254, to require energy products from oil shipped through the Keystone XL pipeline to be sold in the U.S. The amendment was offered to a GOP bill (HR 3408, above) that “deems” the pipeline to have federal approval. A yes vote backed the sell-in-America requirement.

Everglades, Great Lakes: Members defeated, 176-241, a bid by Democrats to bar energy drilling authorized by HR 3408 (above) within five miles of the Florida Everglades or the Great Lakes, which are five freshwater lakes bordering eight states in the Northeast and Midwest. A yes vote backed the drilling prohibition over arguments it was only a political gesture.

California Oil Drilling: Members defeated, 160-267, a bid to strip HR 3408 (above) of its mandate that energy drilling begin on idle platforms offshore from Santa Barbara and Ventura counties in California, areas where drilling has been banned since a 1969 oil spill in Santa Barbara Channel. A yes vote opposed the drilling mandate.

Oil-Spill Economic Harm: Members defeated, 188-236, a bid to require applications for oil and gas drilling leases under HR 3408 (above) to include worst-case projections of economic harm in the event of spills. This would be in addition to forecasts of environmental harm now required by federal regulations. A yes vote was to require economic-impact statements.

Payroll-Tax Cut: Senators voted, 60-36, to send President Obama a bill renewing until Dec. 31 a law allowing workers to contribute 4.2 percent of their pay to Social Security, down from the usual 6.2 percent. A yes vote backed a bill that also funds extended jobless benefits and sustains current Medicare payments to doctors. (HR 3630)

Judge Adalberto Jose Jordan: Voting 94-5, senators confirmed Adalberto Jose Jordan, a federal judge in Florida, to sit on the 11th Circuit U.S. Court of Appeals, which serves Florida, Georgia and Alabama. A yes vote was to confirm Jordan to become the first Cuban-born jurist on the Atlanta-based appellate panel.

Key votes ahead

Congress will be in Presidents Day recess the week of Feb. 20.

Special thanks to Richard Charter

http://weblogs.sun-sentinel.com/news/politics/dcblog/2012/02/us_house_passes_bill_to_allow_1.html

By William Gibson
February 17, 2012 11:31 AM

House Republicans, including seven from Florida, voted late Thursday to end the ban on drilling along Florida’s west coast. But the bill has almost no chance of becoming law. It would open the eastern Gulf of Mexico and the Atlantic, Pacific and Arctic coastline in Alaska to oil rigs. The bill may not even be taken up in the Democratic-controlled Senate. If it does clear Congress, President Obama would veto it because of his objection to the drilling provisions and other items in the bill.

The House action nevertheless asserted Republican attempts to shift energy policy and clear the way for dramatic expansion of offshore oil production, which backers say would make the nation less dependent on foreign sources and create jobs. They also say it would help pay for $260 billion of transportation costs.

Oceana, an environmental group for ocean preservation, called the bill a handout to Big Oil.

The voting revealed divisions among Florida members. Tom Rooney, a Republican from Tequesta, was the only South Florida member to vote for the bill. Also voting “yes” were Republicans John Mica of Winter Park, Dan Webster of Winter Garden, Dennis Ross of Lakeland, Bill Posey of Rockledge, Ander Crenshaw of Jacksonville and Cliff Stearns of Ocala.

Eight South Florida members voted against the bill: Republicans Allen West of Plantation and Mario Diaz-Balart, Ileana Ros-Lehtinen and David Rivera of Miami; plus Democrats Ted Deutch of Boca Raton, Debbie Wasserman Schultz of Weston, Alcee Hastings of Miramar and Frederica Wilson of Miami Gardens. The bill, which passed by 237 to 187, serves mostly to demonstrate opposition to Obama’s policy of limiting offshore drilling, especially in environmentally sensitive areas like the west coast of Florida. The issue likely will play out in this year’s elections.

Special thanks to Richard Charter

http://www.washingtonpost.com/opinions/why-the-us-should-work-with-cuba-on-oil-drilling/2012/02/14/gIQAGLFiKR_story.html

Cuba’s first deepwater oil rig, Scarabeo 9, began drilling last month 70 miles south of Key West, Fla. Cuban officials believe the rig may tap as much as 20 billion barrels of oil. (U.S. officials estimate a quarter to half that amount.) If Cuba’s estimates bear out, this would bring the country’s oil reserves to roughly equal those of the United States. The Spanish oil company Repsol, as well as other international companies with offshore leases from Havana, will drill at depths up to 6,000 feet, as the Cuban government pursues an era of energy independence.

It is vital to the environmental and economic interests of the United States that Cuba get this right.

The Cuban government is overseeing drilling deeper than BP’s Deepwater Horizon well and almost as close to U.S. shores, but without access to most of the resources, technology, equipment and expertise essential to prevent and, if needed, to respond to spills. We are deeply familiar with the two largest oil spills in U.S. history, from the Exxon Valdez in 1989 and following the BP Deepwater Horizon explosion in 2010. In each case, containing and remediating the spill required the mobilization of vast resources from the federal government, the private sector and local communities.

The Deepwater Horizon spill, 5,000 feet below the ocean’s surface, occurred under the watch of experienced U.S. regulators, at a well drilled by one of the world’s largest, most experienced oil companies on one of the world’s most sophisticated drilling rigs. The response effort involved more than 5,000 vessels and is estimated by BP to have cost $42 billion. The International Association of Drilling Contractors estimates that Cuba has access to less than 5 percent of the resources used in combating the Deepwater Horizon disaster.

It is fortunate that a company with a good track record is the first to drill off the Cuba coast. Repsol regularly communicates with U.S. regulators, providing them access to Scarabeo 9 when it was moored in Trinidad, on its way to Cuba. But Repsol is also hampered by this country’s embargo on business with Cuba.
The blowout preventer on Scarabeo, for example, was built in the United States – it constitutes the rig’s maximum 10 percent U.S. content permitted by law. But the company that made it will not commission or maintain it, nor will it supply replacement parts because it does not have a license to operate in Cuba. One hopes that Cuban engineers are as ingenious at jury-rigging a blowout preventer as they are with their old American cars.

Cuban regulators are preparing themselves for the challenge ahead. They have sought guidance from Norwegian counterparts on the implementation of a regulatory regime known as the safety case, where risks are rigorously identified and factored into drilling protocols, and they have sent engineers to Brazil to learn about the deepwater oil industry. They also studied in detail the findings of the Deepwater Horizon commission and its companion technical report, and they have prepared action responses to each of the report’s key recommendations, as we learned on a September visit with these officials.

But these regulators are severely hampered by the embargo. They cannot engage in dialogue or share expertise with their U.S. counterparts. Their engineers can be trained by international companies but cannot attend training in the United States or be certified by any U.S. organization. The Cuban government and Repsol have stated their intention to comply with U.S. rules to the best of their abilities, even though the Cuban government can have no direct contact with our regulators to learn more about those rules.

The U.S. government can, and should, make available the resources that the organizations involved with Scarabeo need to do their job well. It should also be prepared, should something go wrong, to protect the waters and beaches of Florida and the southeast United States from a potential disaster. In the event of an emergency, the U.S. government would likely do that. But the help might well come too late.

The private sector needs considerable time to ready an effective response. Engineers need to understand the rig, well characteristics and marine environment. Companies need to prepare detailed contingency plans and to allocate appropriate equipment. The only capping stack licensed for use in Cuba in the event of a blowout on the ocean floor, for instance, is in Scotland, a week’s trip away, and has no licensed vessel or crew. Certain resources may not be available if summoned at the last minute.

The Commerce and Treasury departments have issued some licenses to spill-response providers and are reviewing others. As welcome as that is, it is not sufficient. The application process and the threat of very significant fines deter many companies from even considering the prospect. The private sector needs a clear signal from the executive branch in order to move forward.

Precedents exist for communication between the U.S. and Cuban governments on common interests. The Coast Guard kept Havana apprised of developments with the Deepwater Horizon spill, at a time when some feared the gushing oil could foul Cuban waters. Cuban and U.S. officials have shared information on drug interdiction, immigration and weather, and the United States exports grain and medical supplies to Cuba. All of this has taken place without an official change in policy since the embargo was imposed in 1962. The Obama administration has the authority – now, without a change in law or regulation – to provide a general license to all qualified U.S. companies that express an interest in helping prevent and respond to a Cuban oil spill.

This is a charged issue, one that many officials might want to avoid in an election year. Some have proposed further restricting access to U.S. technology for companies working with Cuba, in the hopes that this might prevent the Cubans from accessing their oil. It is, however, time to face reality. Providing Repsol and Cuban regulators with access to resources for spill prevention and response will not further the development of Cuba’s oil and gas industry. That’s already under way. What it will do is help protect Key West. It is profoundly in the interest of the United States that we get this right.

_________________________

By William K. Reilly and Megan Reilly Cayten, Friday, February 17, 5:33 PM
William K. Reilly was a co-chairman of the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling and, under President George H.W. Bush, administrator of the Environmental Protection Agency. Megan Reilly Cayten is an energy expert with extensive experience in Latin America and Asia.

Special thanks to Richard Charter

– February 16, 2012

We know that the environmental movement has had an impact on Florida politicians. Because today, when they want to do something bad for the quality of our water, the health of our forests or the integrity of wildlife habitat, they are always sure to say that they want to protect the environment.

Then they go ahead and do the bad thing.

So in the interest of protecting Florida’s natural resources, state Rep. Clay Ford, R-Gulf Breeze, is restricting his bill to open state lands to oil and gas drilling only to the Panhandle. State Sen. Greg Evers, R-Baker is sponsoring similar legislation in the Senate.

Ford is willing to put the Everglades off limits — we can be thankful for small favors — but apparently doesn’t see his home-county Blackwater River State Forest, with its creeks, rivers, wetlands and pitcher plant prairies, and its endangered plant and animal species, as environmentally sensitive.

Of course, on the upside, maybe local tourism promoters can add “oil field tour” to the hunting, fishing, swimming, canoeing, hiking, biking, bird watching and camping they tout the forest for today.

There was a time that even conservative legislators understood that areas like the Blackwater were put aside to preserve remnants of Florida’s natural landscape (which does not include the extensive industrial tree farms many Floridians mistake for natural forests).

Healthy, natural wildlands produce myriad direct benefits for Florida residents, including the many recreational activities. But preserving natural forests, wetlands, watersheds and other habitats preserves both water quality and quantity, air quality and wildlife in a growing state.

These lands were originally protected precisely to be a natural asset that belongs to all the people — including future generations.

Now, with the state rapidly cutting back on services to residents, from education to health care, and the Legislature clearly identifying its role as serving corporations (after all, the Supreme Court says corporations are people), the pace of legislation is increasingly sweeping aside anything that impedes corporate interests, while the interests of state residents get put next in line.

So naturally business lobbies and the Florida Petroleum Council support Evers’ and Fords’ legislation. And if you lose a favorite hunting area or camping spot, or a once-pristine creek is dirtied in what you thought was protected public land, well, so it goes.

Special thanks to Sierra CLub’s Frank Jackalone