By Virginia Chamlee | 01.27.12 | 4:52 pm

The U.S. Department of the Interior announced yesterday morning that it will begin selling leases to allow offshore oil drilling in 38 million acres in the central Gulf of Mexico. Environmental groups say the move is troubling, as regulatory oversight and environmental problems related to the catastrophic 2010 gulf oil spill haven’t yet been fully remedied.

President Obama made the announcement during an appearance in Las Vegas, where he expanded on the energy blueprint laid out in his State of the Union address on Tuesday night.
The announcement came despite a National Academy of Engineering report released last month that revealed that deepwater drilling is one “of the most complex and most risky ventures conducted by commercial enterprises.”

The report also said that the Deepwater Horizon disaster raises “questions about the industry’s overall safety preparedness, the ability to handle the complexities of the deep-water operations, and industry oversight to approve and monitor well plans and operational practices and personnel competency and training.”

The environmental law firm Earthjustice filed suit against the federal government last year, alleging that federal regulators conducted an “irrationally optimistic risk assessment” for Shell’s plan to drill for oil in deep gulf waters near the site of BP’s devastating spill. The suit, filed on behalf of the Sierra Club, the Gulf Restoration Network and the Florida Wildlife Federation, is currently awaiting oral arguments.

In a press release sent out today, Earthjustice attorney David Guest argued that the Interior Department’s announcement flies in the face of logic.

“The federal government is acting as if the BP disaster never happened,” Guest said. “The Interior Department is supposed to be looking out for the public. Instead, they are pandering to drilling companies and putting Gulf Coast communities at risk.”

Special thanks to Richard Charter

http://thehill.com/blogs/e2-wire/e2-wire/206407-obamas-offshore-drilling-pledge-re-states-existing-plan

By Ben Geman – 01/25/12 08:54 AM ET

President Obama’s State of the Union speech endorsed expanded offshore oil-and-gas drilling but didn’t alter existing administration plans that energy companies and Republicans complain are too narrow.

Obama, in his speech, called for continued increases in U.S. oil production. “Over the last three years, we’ve opened millions of new acres for oil and gas exploration, and tonight, I’m directing my administration to open more than 75 percent of our potential offshore oil-and-gas resources,” Obama said in the Capitol.

The “75 percent” comment, however, is a nod to the Interior Department’s draft 2012-2017 offshore leasing plan, unveiled late last year. An administration official confirmed that Obama’s comment is a reference to the Interior plan released last November.

That plan, which does not require congressional approval, envisions a suite of new oil-and-gas lease sales in resource-rich areas in the western and central Gulf of Mexico and, in the later years, off Alaska’s northern coast.

But the plan does not include leasing off the Atlantic Coast or in the eastern Gulf of Mexico – regions the administration pulled from consideration in the wake of the 2010 BP oil spill. (Leasing in the eastern Gulf would have required legislation to remove the moratoria in place there.)

Republicans and oil companies are pushing plans that would require vastly expanded leasing compared to the Interior proposal.

Advocates of wider drilling also say that testing and exploration in untapped areas, such as Virginia’s coast, will yield expanded resource estimates.

The House approved legislation last May that would mandate much wider leasing than the administration envisions, including areas off the Atlantic and Pacific coasts.

House Natural Resources Committee Chairman Doc Hastings (R-Wash.), the author of the House-passed measure, knocked Obama’s comments on drilling, arguing the “lofty rhetoric” is at odds with the White House record on energy.

Hastings, in a statement, said, “An accurate description of President Obama’s energy policies would include: reinstating an offshore drilling ban off the Atlantic and Pacific coasts.”

He knocked other White House policies he alleges hinder job creation and energy security, including rejection of the Keystone XL oil sands pipeline.

Obama’s speech, in addition to the offshore drilling comments, touted expanded onshore natural-gas production while reiterating his call for repealing oil-industry tax breaks.

The tax proposal drew an attack from the American Petroleum Institute, an industry trade group. “Advocating greater energy production but penalizing those who provide that energy is not a sound energy policy, but a contradiction,” said Jack Gerard, the group’s CEO, in response to Obama’s speech.

Interior Department officials, when rolling out the draft offshore plan last November, said it strikes the right balance.

“The proposed program will promote safe and responsible domestic energy production by offering substantial acreage for lease in regions with known potential for oil and gas development,” Interior said when announcing the plan.
Obama, in his Tuesday speech, touted tougher offshore drilling rules that Interior imposed after the 2010 BP spill. “I will not back down from making sure an oil company can contain the kind of oil spill we saw in the Gulf two years ago,” he said.

Special thanks to Richard Charter

http://www.pressdemocrat.com/article/20120125/ARTICLES/120129672

Richard Charter has spent nearly three decades working to protect the Sonoma County coastline and beyond from interests such as offshore oil and gas drilling. (The Press Democrat/ Christopher Chung, 2005))

By GUY KOVNER
THE PRESS DEMOCRAT
Published: Wednesday, January 25, 2012 at 4:14 p.m.
Last Modified: Wednesday, January 25, 2012 at 4:14 p.m.

Environmentalists scrambled Wednesday to determine if President Obama’s reference to offshore oil drilling in his State of the Union speech posed a new prospect for oil rigs along the North Coast.

It didn’t, but activists said the reference underscores the need to achieve permanent protection from oil and gas drilling for the rugged coast that supports the region’s fishing and tourism industries.

“Our coast has become a political football – and we are in overtime,” said Richard Charter of Bodega Bay, a veteran anti-drilling advocate.

Obama’s statement that he will open “more than 75 percent of our potential offshore oil and gas resources” essentially affirmed the Department of Interior’s five-year oil and gas leasing program announced in November.

The plan calls for 15 potential lease sales in 2012-17 period, 12 in the Gulf of Mexico and three off the coast of Alaska.

The Pacific Coast was not included, the plan said, in deference to a 2006 agreement by the governors of California, Oregon and Washington opposing energy development off their coasts.

But after 2017, “all bets are off for California,” said Charter, a senior fellow with The Ocean Foundation, a nonprofit environmental group.

The oil industry, in an effort to rebound from the gulf oil spill of 2010, has mounted an aggressive promotional campaign featuring posters on Washington, D.C. subway cars and on television, Charter said.

A bill by Rep. Lynn Woolsey’s, D-Petaluma, to double the size of two marine sanctuaries would permanently ban drilling off the Sonoma coast and up to Point Arena in Mendocino County.

“It’s my highest priority,” said Woolsey, who is retiring this year. “It just has to happen.”

Woolsey said she was surprised by Obama’s comment, and said it amplifies the Interior Department’s plan.

In his speech, Obama noted that U.S. crude oil production was “the highest that it’s been in eight years” and that reliance on foreign oil was the lowest in 16 years.

Offshore oil production increased by more than one-third, from 446 million barrels in 2008 to more than 600 million barrels in 2010, the Interior Department said.

By excluding California, the five-year lease plan left an estimated 10.5 billion barrels of oil “off limits to U.S. customers,” said Catherine Reheis-Boyd, president of the Western States Petroleum Association.

Dependence on foreign oil is down partly because the recession reduced oil consumption, she said.

Obama’s recognition of the benefits of a secure oil supply “is a little bit at odds” with his decision to reject the Keystone XL pipeline bringing Canadian crude oil into the U.S., Reheis-Boyd said.

You can reach Staff Writer Guy Kovner at 521-5457 or guy.kovner@pressdemocrat.com.

Special thanks to Richard Charter

Posted by Brad Plumer at 12:38 PM ET, 01/23/2012

The U.S. Energy Information Administration just released its Annual Energy Outlook 2012 report, and three things stick out: The United States is dramatically curbing its oil imports, carbon emissions are flatlining and we have less shale gas than once thought. Here’s a rundown:

1) The United States is reducing its dependence on foreign oil. According to EIA forecasts (which, do note, are far from perfect), Americans will likely continue restraining their gasoline consumption, thanks, in part, to the Obama administration’s new fuel-economy standards for cars and lights trucks. Meanwhile, oil and gas production in places such as North Dakota has been booming, thanks to higher prices and new drilling technology. Put those together, the EIA calculates, and the United States is set to import just 36 percent of its petroleum by 2035, down from 60 percent in 2005.

2) U.S. global-warming pollution is flat-lining. Carbon-dioxide emissions plummeted after the financial crisis in 2008, and the EIA expects that greenhouse-gas pollution from the energy sector won’t recover back to 2005 levels anytime soon, as the chart below shows. The reasons? New vehicle fuel-economy standards; cheap natural gas that’s displacing dirtier coal-fired places; state-level laws that mandate renewable energy; and new environmental regulations on power plants from the EPA.
Granted, U.S. emissions aren’t on pace to decline – remember, at the Copenhagen climate talks, the White House pledged to reduce U.S. carbon emissions 17 percent from 2005 levels by 2020, and the EIA doesn’t think we’re anywhere near on pace to do that (Congress would most likely need to step in with new climate policies). Still, after decades of greenhouse-gas increases, there does seem to be a break from historical trends, assuming the EIA forecast holds up:

3) We have less shale gas than once thought. Remember all those old predictionsabout how the United States had a 100-year supply of natural gas, thanks to new fracking technology that can extract energy from shale rock? Lately, those first-draft euphoric estimates have been facing downward revisions, and now even the EIA report is climbing aboard the sobriety wagon.
Back in 2011, the EIA estimated that the Marcellus Shale, which stretches across Pennsylvania, New York and West Virginia, had 410 trillion cubic feet of recoverable gas – enough to meet all our gas needs for the next 20 years or so. Then, last August, the U.S. Geological Survey slashed that estimate by 80 percent. As I reported at the time, the final EIA revision was likely to be somewhat less stark, and it was – the EIA now believes there’s some 141 trillion cubic feet that’s “technically recoverable” (this means the amount of gas that can be extracted, in theory, using existing technology, though not all of that gas is necessarily worth the economic cost of drilling).

In the end, there’s still plenty of shale gas around the country, and EIA expects production to keep rising, albeit slowly thanks to low prices. By 2021, the report notes, the United States will become a net exporter of gas. But America’s underlying shale resources are a little smaller than many people once thought.

Special thanks to Richard Charter

http://www.nola.com/business/index.ssf/2012/01/shell_oil_president_says_pace.html

Times-Picayune/Nola.com

Shell Oil President says pace of federal permitting is improving
Published: Wednesday, January 25, 2012, 5:33 PM Updated: Wednesday, January 25, 2012, 5:36 PM
By Richard Thompson, The Times-Picayune

Shell Oil president Marvin Odum said Wednesday that he believes the pace of federal permitting for deepwater oil and gas drilling in the U.S. “may have turned a corner” by the end of 2011, in the nearly two years since a temporary moratorium was put in place in the wake of the BP oil spill. Odum, speaking at the annual meeting of the Louisiana Mid-Continent Oil and Gas Association in New Orleans, said Shell now has five floating drilling rigs working in the Gulf of Mexico and will soon add two more.

“We’re working hard to make up for what we lost,” he said. “Shell has always had confidence that we’ll get back to where we need to be.”

A day after President Barack Obama outlined his domestic energy policy in his third State of the Union address — a speech in which he cited projections that developing natural gas could support more than 600,000 jobs by the end of the decade and touted jobs created by federal investments in renewable energy — Odum offered a similarly optimistic outlook for the natural gas industry in Louisiana.

“For the state, we see even more opportunity in technology that turns natural gas into liquid products, like diesel fuel and lubricants,” Odum said, adding that developing such technology would create jobs and give the state an economic boost, but also “fulfill a critical need for domestic, secure supply of transportation fuels for the U.S.”

Odum said Shell has drilled about 350 vertical and horizontal wells in the Haynesville Shale natural gas field the field since 2008, and has reduced its drilling costs by 50 percent and completion costs by 45 percent, which he described as “real tangible costs.”

Last year Shell announced plans to build a 72-office building complex to service its workforce in the area, where it had a working interest in several hundred thousand acres.

The state Department of Natural Resources announced last week that 39 rigs were drilling off Louisiana’s coast, the most since May 2010. That is almost twice the number of rigs that were operating in the area at the start of 2011, but less than the average rig count of about 42 that were working there in the three months prior to the Deepwater Horizon disaster.

Richard Thompson can be reached at rthompson@timespicayune.com or 504.826.3496.

_________________________________

http://oilprice.com/Energy/Crude-Oil/Oil-Majors-Move-Back-to-the-Gulf-of-Mexico.html

Oil Price

Oil Majors Move Back to the Gulf of Mexico
By Energy Digital | Wed, 25 January 2012 23:42 | 0

Over a year since America’s worst oil spill in the Gulf of Mexico, big oil finally gets back to business… with a vengeance.

For the first time since BP’s Deepwater Horizon explosion, leading to America’s worst oil spill in history, the Gulf of Mexico has officially reopened its doors for business. In December’s lease sale, the enormity of pent up demand since permits were halted over a year ago resulted in over $337 million in bids on 191 different tracts from 20 companies.

Despite fierce opposition from environmental groups, the Obama administration remains true to the most critical energy strategies meant to boost economic recovery, lower fuel and energy prices and decrease oil imports. And considering that the Keystone XL pipeline may very well not happen along with the more recent events in Iran, which threaten to block the world’s most important oil portal, where else would the US get its most crucial energy source?

While environmentalists fear a repeat of history, moving back into the Gulf without the proper safety procedures and technologies in place, the White House sees the sale as a major milestone in the area’s recovery process.

December’s lease sales, “the first since the tragic events of Deepwater Horizon, continues the Obama administration’s commitment to a balanced and comprehensive energy plan,” said Secretary of the Interior Ken Salazar, who attended the sale and provided opening remarks. “Offshore drilling will never be risk free, but over the last 19 months we have moved quickly and aggressively with the most significant oil and gas reforms in U.S. history to make it safer and more environmentally responsible. Today’s sale is another step in ensuring the safe and responsible development of the nation’s offshore energy resources.”

Not according to environmental groups like the Natural Resources Defense Council (NRDC) and oceans advocacy group Oceana, who are pushing forward with a lawsuit over the environmental impacts of the Gulf spill. Ocean Senior Campaign Director Jackie Savitz claims there is no new assessment of how a future spill will affect ecosystems or a baseline for how much they’ve already been damaged.

But according to Interior Secretary Ken Salazar, the new five-year program will make available for development more than three-quarters of undiscovered oil and gas resources estimated on the Outer Continental Shelf (OCS), including frontier areas such as the Arctic. In addition to the Gulf, offshore drilling in Alaska will recommence under the supervision of the Department of Interior and the Bureau of Ocean Energy Management, Regulation, and Enforcement (BOEMRE).

“The Best Place in the World to Drill”

Since the administration lifted the moratorium on drilling permits in the region, oil executives are racing to pursue what many are calling the world’s best place to drill, where more deepwater rigs are expected to go into operation this year than were present before the BP spill.

Shell’s deepest rig Perdido, meaning “lost” in Spanish, runs nearly two miles deep-no other well on Earth produces oil in deeper water. That’s good news for the industry, moving quickly to take advantage of the Gulf’s 15 billion barrels of potential oil, according to analysts.

“We are at the point where … depth is not the primary issue anymore,” Marvin Odum, head of Royal Dutch Shell’s drilling unit in the Americas told the Associated Press. “I do not worry that there is something in the Gulf that we cannot develop … if we can find it.”

That’s a frightening mindset, considering the challenges faced in deepwater drilling made clear from the BP disaster and, more recently, last month’s spill from a Chevron deepwater well off the coast of Brazil. While the Gulf remains the most attractive solution for meeting current and future demands, both from oil companies and under the administration, it’s not so clear whether the technologies and environmental regulations are up to par with the speed at which more deepwater operations are about to reoccur.

By. Carin Hall of Energy Digital

Special thanks to Richard Charter