New Hampshire And Drilling Off-Shore -- October 17, 2018

Gulf of Mexico: in Argus today. Note how closely the oil sector holds things to their chests, as they say.

President Donald Trump's administration has reduced royalty rates for an existing offshore oil and gas lease as it tries to spur more production in the Gulf of Mexico.

The administration this summer quietly cut royalty rates to 8.07 percent from 18.75 percent for a shallow-water well off Louisiana being proposed by independent driller Topco Offshore. It marks the first time the US has approved what is known as "special case" royalty relief for an offshore project in the past decade.

"The Bureau of Safety and Environmental Enforcement (BSEE) has reviewed Topco's application and concluded that the project is uneconomic without royalty relief," Gulf regional director Lars Herbst said in a 14 June letter approving royalty relief.

Argus obtained the letter this week under the Freedom of Information Act.

Offshore operators are seeking similar treatment on other leases. The royalty relief mechanism offers an avenue to support offshore development after US interior secretary Ryan Zinke earlier this year rejected calls by industry to cut royalty rates on new leases to 12.5pc, down from the existing rate of 18.75pc for most leases.

Offshore operators say existing royalty rates are hindering development, particularly as the industry competes for investment dollars against shale resources and offshore development abroad. The US Gulf as of last week had only 22 active drilling rigs, according to Baker Hughes data. That is two more than last year but just a third of the peak number of active rigs in 2014, when crude prices exceeded $100/bl.

Generally speaking, royalty rates in North Dakota run between 12 percent and 20% with 18.75% as a very common number, at least based on what I heard while growing up in Williston. If accurate, that royalty rate of 8% is incredibly low. One wonders how "they" came to the "0.07" add-on. Perhaps that covers administrative costs of filling out federal bureaucratic paperwork. LOL.

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Metaphors, "Fake News", and New Hampshire

In "fake news" today, a headline story is that the US will likely not press forward on demands that New Hampshire allow off-shore drilling. LOL.

I'm reading a great, great book on metaphors and "recruitment" issues: The God Problem, Howard Bloom, c. 2016. It explains a lot, especially the power of metaphor. And that's all "off-shore drilling and New Hampshire" is -- a metaphor. And a fund-raising issue for the political parties.

But the great thing about these "fake stories" -- it makes a very difficult book like The God Problem more interesting, more timely, and more compelling.

In addition, it gives one a chance to look at history, US history in this case. Deep in the recesses of my mind, I vaguely remember stories how New Hampshire ended up with a coastline (and I also remember vaguely how the state of Maine came to be) -- and it is fortunate we have some really little states that came out of the 13 colonies -- it guarantees that North Dakota will always have two US senators -- just like California, and Texas. LOL. But I digress.

The New Hampshire seacoast -- a short coast with a long story, Yankee, July 8, 2016.

New Hampshire’s coast is only 13 miles long, the shortest of all 23 states bordering an ocean. Even if you toss in the Isles of Shoals, a group of islands about 8 miles off the Rye shore, half of which belong to New Hampshire, their combined 5 miles of oceanfront boosts New Hampshire’s lump sum only to 18 miles—a drop in the bucket compared with Maine’s 228 miles, Massa-chusetts’ 192 miles, or even Rhode Island’s 40. (And we’re talking just “general coastline” here. If you take these states’ many islands, bays, and so on into account, their “tidal shorelines” encompass hundreds more miles.) Yet, lest you imagine New Hampshire’s petite landfall as one contiguous sandy swath, I can attest that it’s not.

My hunch is that before it's all over, the Native Americans will claim that coastline as their own, and someday they will get it back, along with the sacred burial grounds and sacred beaches:

Native Americans called this shoreline region “Winnicunnet,” meaning, “beautiful place of pines.” According to Dow, this coast was “an unbroken wilderness trodden only by savages” who “lay basking in the sun upon the sands, or launched their frail canoes and shot out fearlessly over the billows.” In 1974, archaeologists from the University of New Hampshire excavated a mile or so inland along the Hampton River and found bones, shells, tools, stone weapons, and clay pots—evidence that led them to surmise that this coast has been inhabited for at least 4,000 years.

That article goes on and on and on ... and doesn't explain how a small, otherwise inconsequential colony got that coast line.

Let's press on.

This article explains it as well as any. Blame it on the English. Makes sense. Nothing to see here.