WTI Surges; A Federal Permitorium Renewed Under Biden -- Tuesday, March 1, 2022

Watching oil move tonight, just has to be more interesting than the speech:

• WTI: up 5.01%; up $5.18; trading at 108.68.
• Brent: up 5.23%; up $5.49; trading at 110.46.

The next thing to watch: the USD and Canadian dollar. At the link, toggle through one week, one month, one year, and two years. The one-year vs two-year is particularly interesting. Others are noticing it, but some of the "facts" are, in fact, not fact. A previous post on the USD and CAD.

Continues to Surge

I'm listening to Rod Stewart in the background, and in a few minutes I will have dinner, about 9:00 p.m. CT. I assume President Biden is delivering the SOTU address, but I haven't turned on television; in fact, with Hulu I don't even know if I could find the televised event. I will watch reruns of Perry Mason while having dinner.

But I was curious: what is oil doing? OMG -- oh, my goodness -- look at this:

• WTI: up 4.34%; up $4.49; last trade after hours: $107.90.
• Brent: up 4.48%; up $4.70; last trade after hours: $109.67.

Advance Copy

SOTU: "green energy bill" will be sold as anti-inflationary and put $500 back in every American pocket every year. There's no way I'm watching the SOTU address. I will be reading Shakespeare. Later: as I mentioned to a reader -- thinking about the SOTU address, I was reminded of the first few lines of a great song:

If I listened long enough to you
I'd find a way to believe that it's all true
Knowing that you lied
Straight-faced while I cried
Still I look to find a reason to believe

No Quartery Federal Lease Sale In North Dakota

From The Bismarck Tribune:

A federal oil lease sale in North Dakota expected to occur during the first quarter of this year will not take place, and the state's lawsuit over the matter looks to be heating up again. 

The federal government has missed the mid-February deadline to publish a notice to hold a lease sale this quarter, the U.S. Justice Department said in a court filing last week in North Dakota's federal leasing suit. 

The holdup has to do with a recent court ruling in Louisiana that blocked the government from using calculations it had made of the social costs of greenhouse gases. 

Those calculations are part of its environmental analysis in federal lease sales. 

The federal Bureau of Land Management had planned a lease sale this quarter with 29 parcels of federal minerals up for grabs in North Dakota and Montana. 

Oil companies seeking to develop federal minerals need to secure a lease and, subsequently, a permit to drill. 

President Joe Biden halted federal leasing upon taking office last year, launching a review of the federal program to examine potential reforms. North Dakota and a number of other oil- and gas-rich states filed lawsuits to try to force leasing to continue. A ruling stemming from one of those suits last summer ordered the government to resume lease sales nationwide.

Pleas for more drilling: Meanwhile, the president is asking US producers to drill more.  

XOM: to sever ties with Russia.

The Apple Page

 News and rumors:

• Apple Lightning Port: will we see a "portless" iPhone? Only way to charge an iPhone, with wireless charging? The EU may force Apple's hand.  
• A really inexpensive iPhone? We should know next week if Apple will drop the price of the current iPhone SE to $199 while introducing a new iPhone SE priced at $399.  
• A two-fer: Apple will halt all sale from online store in Russia. Link here. A "two-fer" is when a company does one thing but benefits for at least two reasons. In this case, Apple couldn't afford the sanctions on Russia to continue online sales; and, Apple will now have more chips available for products for other countries. Win-win for everyone. 

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Everything Else

Calcasieu: first LNG cargo departs from Venture Global's Louisiana LNG export terminal. 

Nord Stream 2 operators: have filed for bankruptcy. Wow, if true, that did not take long. 

Chariots on fire: the cargo ship with 4,000 cars -- VWs, Porsche, Lamborghini -- some/many/most EVs -- has sunk in the Atlantic Ocean off the Azores.

Oil today: I may have missed the high; things were moving quite quickly.

Canadian truckers convoy: newly leaked footage of the Ottawa police chief laying out his strategy to crush the truckers' protest. See if you can spot Pete Buttigieg. 

ISO NE: electricity prices in Massachusetts rose 239% over last January and 150% over December. The New England grid had to burn oil, as well as dung and wood, to make power. This all happened pre-Ukraine. Link here. 

"Misdiagnosis": with Jimmy Carter we had the "cardigan" speech. With Biden, it looks like "misdiagnosis" will be the meme. From Irina Slav: 

"The Keystone Pipeline was not processing oil through the system. That does not solve any problems. That's a misdiagnosis or maybe a misdiagnosis of what needs to happen," Psaki also said."I would also note that on oil leases, what this actually justifies in President Biden's view is the fact that we need to reduce our dependence on foreign oil, on oil in general ... and we need to look at other ways of having energy in our country and others."

Say what? Does that any of that make any sense? "The Keystone Pipeline was not processing oil through the system." Really? Again, the speech-writing team has had months to write a statement to explain why Biden killed the Keystone XL. 

CVX: raises buybacks and says exposure to Russia is limited. By the way, with "buybacks," that's a two-fer for publicly traded corporations. See above.

CVX: flagging further upside in the Permian today. Doesn't look like there's any change to its one million boepd plan, but now suggests productions grows to 1.2 to 1.5 million boepd in three years. Wow. Investment pace: $4 billion / year. Link here. Link here.

Ten-year treasury: yield dropped almost 13 basis points. Was that supposed to happen? At the close, the 10Y treasury yielded 1.711%, down 0.127. Link here.

After the close:

• WTI: up 11%; up $10.26; trading at $105.98.
• Brent: up  9%; up $9.07; trading at $107.04.

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Back to the Bakken

Active rigs:

$105.98	3/1/2022	03/01/2021	03/01/2020	03/01/2019	03/01/2018
Active Rigs	32	15	52	67	59

No new permits. Absolutely nothing from today's daily activity report.

Permitorium: Administration Opposes Bill That Would Encourage Off-Shore Drilling

The Oil & Gas Journal is reporting:

Tighter federal budgets and more pressure to reduce the budget deficit make sharing US Outer Continental Shelf energy revenue with coastal states and communities unaffordable and impractical, an Obama administration official told the Senate Energy and Natural Resources Committee on July 23. Two cosponsors of an OCS revenue-sharing bill countered that it’s essential and long overdue.

“The revenue-sharing provisions of S. 1273 would ultimately reduce the net return to taxpayers in every state from the development of offshore energy resources owned by all Americans, have significant and long-term costs to the federal treasury, and increase the federal deficit,” said Pamela K. Haze, deputy US Interior secretary for budget, finance, performance, and acquisition.

“In addition, the bill does not appear to be targeted to achieve clear conservation or energy policy outcomes,” Haze said, adding, “For these reasons, the administration cannot support the bill.

Several story lines in that article, least of which the one about "achieving clear conservation or energy policy outcomes."  In other words: the permitorium continues.

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Note to the Granddaughters

Leisurely drive down I-40, just south of the Grand Canyon -- Williams, AZ, west of and just outside of Flagstaff. I am driving back from Los Angeles to Dallas.

I'm driving about 55 - 60 mph on the interstate -- wishing the trip would not end. It is impossible to exaggerate how beautiful the scenery is. Elk warnings along the road but have not seen any elk yet. I just missed hitting a road runner (the little bird). Unfortunately, Wiley Coyote did not see me ... just joking.

I'm driving so slowly, I have to move out of the way to let the big rigs pass me -- going uphill!

I took this same trip in the reverse direction a few weeks ago, but drove some of it during the night, so it's nice to see what I missed. Traffic fairly heavy -- gateway to the Grand Canyon, but McDonald's parking lot is not as busy as one would expect during the tourist season. But then, I've not been here before so I don't know how it compares with past years.

In the more remote areas, the least expensive gasoline costs about $3.58/gallon while generally it is running about $4.19 to $4.29/gallon. But the range is quite remarkable. Despite the price, Platts is reporting increased gasoline demand (posted elsewhere a few minutes ago). One can see graphic of gasoline demand here.

I see the price of oil dropped quite a bit today: so much for that Mideast tension. Whatever happened to Syria? The latest news: the ebb and flow has now brought Assad back with the upper hand. President O'Bama given at least five (5) options by his cabinet (DOD and State), which will give him plenty of time to dither. Which, in this case, is very good news. Might as well wait to see which side is winning before committing. Also, we need to see what the Israelis plant to do. That was pretty neat to hear that Israel can take out Iran with submarine-launched missiles. So much for lack of fighter range for Israeli jets to get to Iran and back. Call is the "Keystone phenomenon." If one tactic won't work, try something else (such as CBR now that the Keystone is dead).

New Refinery in North Dakota? File Under: Why There's No Growth in the US -- A Decade To Get a Permit

Okay, maybe nine years. Whatever.

Link to Bismarck Tribune here. 

The Three Affiliated Tribes announced Wednesday that it has been given permit approval to take control of a piece of reservation land to build an oil refinery.

U.S. Secretary of the Interior Ken Salazar joined with tribal leaders at tribal headquarters to announce the permit approval, which brings a refinery one step closer to reality.

Nine years ago the tribe had requested that the Bureau of Indian Affairs, a part of the Department of the Interior, accept the acreage into a trust. The trust will allow the Interior department to own the land while allowing the tribe to control and manage it.

The tribe has wanted to use a 469-acre piece of land near Makoti to build the refinery and produce feed for the tribe’s buffalo herd. Plans call for the refinery to be built on a 190-acre portion of the land. The other land will be used for the buffalo.

The permitting process, which was nearly a decade in the making, opens the door for the construction of a new refinery in more than 30 years.

SecInterior Ken Salazar sounded jubilant in the news story; he should have been dismayed that it took nine years to get a permit.

Data points:

• MHA Nation Clean Fuels Refinery
• $400 million refinery
• capacity of 13,000 bbls/day
• Bakken oil --> diesel, gasoline, propane (I still don't see the "clean fuels" aspect of this, yet)
• refinery site: along US Highway 23, on the edge of the Fort Berthold Indian Reservation
• 800 to 1,000 jobs during construction phase
• about 140 permanent jobs
• nine years to get the permit

What Some Of Us Will Be Talking About On Tuesday; LNG Export Permitorium; Wells Coming Off the Confidential List; OXY USA Reports Another "OXY" Well

Maybe it's just the music I'm listening to, but I'm in a pretty good mood about the stock market.

Disclaimer: this is not an investment site; do not make any investment decisions based on what you read at this blog.

There are hints and early reports that "we" may be in for some earning surprises on the "up" side.

Exhibit #1 (as District Attorney Hamilton Burger, Perry Mason, would say): FedEx In-Play:

FedEx beats by $0.05, beats on revs; guides Q2 EPS below consensus; lowers FY13 EPS below consensus: Reports Q1 (Aug) earnings of $1.45 per share, five centers better than the Capital IQ Consensus Estimate of $1.40; co cut Q1 guidance to $1.37-1.43 from $1.45-1.60 on Sept 4; revenues rose 2.6% year/year to $10.79 bln vs the $10.68 bln consensus. FedEx Express will increase shipping rates by a net average of 3.9% for U.S. domestic, U.S. export and U.S. import services effective January 7, 2013. The full average rate increase of 5.9% will be partially offset by adjusting the fuel price threshold at which the fuel surcharge begins, reducing the fuel surcharge by two percentage points. FedEx Express rev +1% YoY to $6.6 bln as volume fell 5%; constrained by global economic conditions. FedEx Ground +8% as volume grew 5%. FedEx Freight rev +5%.

But the company is very, very downbeat about the full year. Very downbeat. So, we'll see.

So, if the outlook is so downbeat, why am I in a good mood about the stock market? A buying opportunity. And where do I find best buying opportunities? What do I like? High-dividend payers. Energy. Railroads. I think one of the bigger surprises will be the earnings coming out of Bakken-centric companies. Lots of talk about cutting costs. We'll see. The recent reports of Bakken premium to WTI is very, very interesting.

Amazon vs Wal-Mart

Update to Amazon story below, September 20, 2012: I thought I was more explicit in the post below, but I don't see it now; maybe it was in a comment. Whatever. When I wrote the note below, one of the main points was this: Amazon is now targeting Wal-Mart head-on. In today's WSJ, there's a long article, p B4, that says exactly that: Amazon will no longer sell Amazon's Kindle; the story explains why. Growing up, my dad and I saw the "demise" of Sears. Dad often said, and I agreed, no one was going to be able to take down Wal-Mart. I'm not so sure any more.

I like this: now that Amazon agrees to pay state sales tax to California, the company will feel free to place distribution centers in California. They already have one 85 miles outside of San Francisco. Order your Amazon product before you go to work in the morning, and find it on your doorstep when you get home. (By the way, I don't know if you know this: UPS and FedEx deliver items addressed to businesses during normal business hours; to home addresses after 4:00 p.m. if they have the volume to make the choice. Also the "left turn" rule is in effect whenever possible.)

From its website: note the CSC I put in red bold:

Amazon in North America

United States
Corporate Headquarters: Seattle, WA Shared Services Center: Las Vegas, NV Amazon Web Services: Herndon, VA		Fulfillment Centers: Arizona Delaware Indiana Kansas Kentucky Nevada Pennsylvania South Carolina Tennessee Virginia		Customer Service Centers: North Dakota Washington West Virginia

Minnesota, Iowa, the Dakotas, Montana, Nebraska, served by Kansas, I suppose. It would be interesting to see if Amazon puts in a "northern tier" fulfillment center.

I agree with analysts at the linked site: short term, state taxes will affect Amazon's bottom line, but in a very short time, this will end up causing even more competition for local brick and mortar, as Amazon puts in more distribution centers. Think Wal-Mart. The tax break was a nice "gimme" for customers, but it wasn't the primary reason consumers shopped at Amazon. Cost of gasoline, parking, unrewarding shopping experiences, etc., are the reasons folks shop at Amazon. Same day delivery will more than offset the sales tax nuisance. Interestingly, over time, Amazon.com has also morphed into a social networking site. "Amazon" is truly an apt name for this monster retailer.

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It never quits: any opportunity to destroy the oil and gas industry and jobs.  A reader sent me this link. I would have missed it. The Energy Department again delays release of the liquid natural gas export report.

Data points:

• looks like this report will be released after the election; sort of about the same time a decision is made on the Keystone XL; I'm not holding my breath; it's just a report, after all; they can kick this can downt the road for years
• the US won't allow any export of LNG until the report is released
• originally promised the report to be released by late summer
• picking winners and losers: Cheniere Energy's Sabine Pass terminal has been approved; Dominion Resources and Sempra Energy are on hold (as in permitorium)

Go to the link: it's all about the re-election of incumbents. The only jobs incumbents are concerned about are their own.

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Random thought: laying down rigs to cut costs. Lay down ALL your rigs and costs will drop significantly. I don't think NOG has any rigs.

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Oil futures: up slightly today. After today's precipitous drop in a few short minutes that analysts cannot explain, not much recovery today. This suggests that there was a legitimate trading reason for the price of oil to drop. And the only thing that could explain it: the decision to release oil from the SPR. Look for the announcement at the close of the news cycle Friday. [Update: I'm wrong. The Wall Street Journal blames it on the Jewish holiday -- at the very end of the article. Google crude oil's quick fall leaves trail of queries. Or the October WTI option contracts that expired Monday. No talk about the SPR. We'll see.] [Update: about four hours later: now we have the SPR story. You can say you read it here first.]

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Why does this not surprise me? French court wants to see all digital photos of topless Duchess of Cambridge. So do a lot of other folks. I can't make this stuff up.

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RBN Energy: outstanding article on the Permian.

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Wells coming off the confidential list on Tuesday:

• 20173, 836, Petro-Hunt, Fort Berthold 148-95-26A-35-1H, Eagle Nest; t6/12; cum 20K 7/12;
• 21816, 188, OXY USA, State Joe Loh 1-20-17H-143-98, Little Knife, t3/12; cum 7K 7/12; the Little Knife is a nice field; an Anschutz well in this field had an IP of 1,556 in 2010; 
• 21982, drl, CLR, Florida 2-11H, Camp, 
• 22031, 819, CLR, McClintock 1-1H, Pleasant Valley, t6/12; cum 26K 7/12; 
• 22130, TA, WPX/Dakota-3 E&P, Mason 2-11HW, Van Hook, temporarily abandoned while WPX decides what to do with it; probably convert it to a SWD well; the formation was unstable; 
• 22249, drl, Slawson, Magnum 2-36-25H, Baker, 

The Permitorium Continues

Updates

September 3, 2012: EPA grants "relief" to Shell; diesel engines on boat being used in the Arctic won't face fines. Shell still needs the permit to drill "the 4,000 feet."

Original Post

The federal government grants permits to drill one exploratory well in pieces: a permit for 1,400 feet; a permit for 4,000 feet, and so on.

The theater of the absurd.

Royal Dutch Shell Plc said it will be difficult to complete an exploratory well in the Chukchi Sea off Alaska this year even after the company received a permit to begin limited preparatory work.  

Shell will be allowed to drill 1,400 feet under the seabed with the permit granted yesterday by the U.S. Interior Department.  

The company still needs U.S. Coast Guard approval for a spill-containment barge before a permit can be issued to drill about 4,000 feet deeper, into oil reservoirs.  

For the company that spent $4.5 billion to explore the Chukchi and Beaufort seas time is running out -- it takes at least 20 days to complete a well and Shell has to stop drilling in the oil-bearing zone in theChukchi Sea by Sept. 24.  

The company asked for an extension, a request the Interior Department said it is still considering. Completing a well in the Chukchi “will be very, very difficult without the extension,” Pete Slaiby, Shell’s head of Alaska operations, told reporters during a conference call from Anchorage yesterday.

Can you imagine if North Dakota required a permit for the vertical hole, another permit for the curve, a third permit for the horizontal leg, and then a fourth permit for fracking? One could then add a permit for flaring; a permit for putting up porta-potties: one for men; one for women; one for undecided.

Ayn Rand would shrug if she were alive.

The Permitorium Continues: Great News for the Bakken

Link here to Oil and Gas Journal.

US Sens. Lisa Murkowski (R) and Mark Begich (D) and Rep. Don Young (R) said it would place half of the 23.5 million-acre petroleum reserve under special protection, blocking access to vast oil and gas resources and make it hard to connect future offshore production to existing Prudhoe Bay systems.

When he announced the plan on Aug. 13, Salazar said it balanced meeting US energy needs with preserving wildlife and Alaska Native subsistence culture. The proposal also would not preclude construction of a pipeline from offshore oil fields across NPR-A if necessary requirements are met, he added.

Whatever. 

Not That Anybody In Washington (DC) Cares ...

... but at least for the record, the federal government is aware that:

Representatives of the oil and gas industry described federal leasing delays, which they consider unnecessary, on onshore public lands during an Aug. 2 US House Energy and Commerce subcommittee hearing.

Policies enacted after US President Barack Obama took office have made it harder for producers to operate on federal lands, said Kathleen Sgamma, government affairs director for the Western Energy Alliance of Denver, a regional association of independents.

“Producers struggle to navigate additional bureaucratic barriers on federal lands, while many avoid federal lands at all costs because it’s just too difficult to realize any return on investment within a reasonable time frame,” Sgamma said.

I loved the federal government's response:

Federal officials suggested market forces could play as big a role as policies in keeping US onshore oil and gas production on public lands from growing as fast as production on private and state acreage.

I read that response several times, and for the life of me, I cannot figure out what "market forces" could possible differentiate between public land and private land, all things being equal? I can only surmise that Representative Jessie Jackson mailed in that comment.

This may be the most incredible speech I've heard in a long time (except for the president's infamous one-liner).

"Let them eat cake."

It's August. Aren't they all on vacation?

The permitorium continues.

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Speaking of vacations. This is a great story at The Atlantic. No-Vacation Nation: Why Americans Don't Know How To Take a Break. 

The United States has no vacation policy -- and neither do families, judging from surveys of workers' time off. Are we doing it wrong?

[I can't make this stuff up. "The United States has no vacation policy." It doesn't? The Federal government most certainly has a vacation policy: 30 days paid leave. Weekends don't have to count. Holidays don't have to count. With careful planning, one can easily work in 60 days of paid leave every year while serving in the military (see exception below). Fridays after Thanksgiving Thursday are generally "down days." The last weekday of the month is a "down day" for fighter squadrons. One week between Christmas and Ramadan (if it fell in January/February) was always a "down week."]

The United States has no vacation policy -- and neither do families, judging from surveys of workers' time off. Are we doing it wrong? 

Another writer who doesn't "get it." The writer asks if the US is doing something wrong? The most productive nation on earth (well, maybe second, or third, or fourth, but well ahead of France) takes the fewest vacations according to "official" data.

I knew from the time I was in second grade that vacations were too long, left us all too exhausted, and Dad too broke -- maybe there's a reason Americans don't take two-week vacations any more. My hunch is that money Americans used to use to finance vacations is now used to pay federal income taxes, social security taxes, and Medicare taxes -- all of which will be going up next year. But I digress.

But, it is interesting that even those who have money left over after paying taxes, choose not to take vacations even if their company provides the opportunity (see the linked article). I don't know if it was the majority of military personnel, but "most" military personnel I served with purposely did not take all their annual vacation. (I am not including those on 6-month, and 12-month deployments in a combat zone.) Everyone had multiple reasons.

But, "work" for many, not all, is no longer the drudgery that it was in the 18th, 19th, and 20th centuries. For many of us today, work is actually a rewarding endeavor; some folks have trouble dealing with weekends. Some folks are rejuvenated after a nice Friday night - Sunday afternoon getaway and don't need a two-week break in which another two weeks is required to recuperate.

I used to subscribe to The Atlantic; it was one of my favorite magazines, and I will read almost anything if it's good writing, but I have to admit, I'm glad I'm not paying for an annual subscription when I see articles like this.

I Didn't Write This: "All The Above Except Off-Shore -- The Permitorium Continues

I did not write this: "All-Of-The-Above Energy Except When It Involves Off-Shore." Don't "blame" me; I'm just the messenger.

All-of-the-above became President Obama's rallying cry, but his and his administration's actions have not matched the rhetoric. For most observers that became evident when President Obama rejected the opportunity to accelerate the approval process for permitting the construction of the Keystone pipeline to bring oil sands output to the United States. The latest demonstration of this selective rather than all-inclusive embrace of energy supplies came with the unveiling of the latest five-year plan for offshore oil and gas lease sales, the principle driver for drilling and producing activity in the Gulf of Mexico.

After September 10, 2012, one can add redundant federal fracking regulations to the short list (but growing) of things the "all-of-the-above energy" program does not include: Canadian oil, frack-derived oil, off-shore oil. Oh, also coal. And, nuclear energy. I think we've discussed this before.

The "all-the-above energy" program includes Solyndra; GE-wind; $26/gallon Navy biofuel; and algae.

The Permitorium Continues -- Absolutely Nothing To Do With The Bakken

Updates

Later, 1:15 p.m.: The House passes their alternative bill for long-range off-shore drilling; Senate bill is similar. It will be interesting to see if the President vetoes the bill in an election year when most folks perceive they are paying $4.00/gallon of gasoline (or more), and know that the President killed the Keystone XL 1.0. None of this stuff has any effect on the price of oil today, or even the near future, but it sends a message, whether or not these bills are supported.  In addition, it adds fuel to the fire when folks remember the President's remarks: "You did not build it." If the Senate and the House both pass a bill that most Americans think would be good for them in terms of "the gasoline issue" they will know why "you didn't build it." The President killed it.

Original Post

From Rigzone.com:

Hastings and other critics of Obama's proposed plan, which was delivered for Congressional review on June 28, have said Obama's plan would keep 85 percent of America's offshore areas off-limits to energy production.

The U.S. Senate also is seeking to overturn Obama's proposed drilling plan. On Wednesday, six senators – which include Lisa Murkowski (R-AK), Jim Inhofe (R-OK), John Hoeven (R-ND), Mary Landrieu (D-La.), Jim Webb (D-Va.) and Mark Warner (D-Va.) – introduced into the Senate the Offshore Petroleum Expansion Now Act of 2012 into the Senate, also to replace the president's proposed offshore lease sale plan.

The House rejected this plan and substituted its own plan. And even the President's Democratic-led Senate are unhappy with his permitorium, as noted by the bi-partisanship above. Hey, even Senator Hoeven has signed on for an alternative bill. Wow, I'm glad I blog so little about off-shore drilling -- absolutely depressing.

Go to the link for the full, unbiased story.

BP Back in the Gulf -- Nothing To Do With The Bakken

National Journal link here. 

Salazar's initial announcement did not include any mention of whether BP was awarded any leases, but the British oil giant had made clear for months that it intended to get back into deepwater exploration in the Gulf as quickly as possible. BP was not excluded from bidding on any leases, much to the chagrin of environmentalists who say the company should be banned from further drilling until last year's spill has been fully cleaned up.

Former Bureau of Safety and Environmental Enforcement Director Michael Bromwich in October defended the Interior’s decision to include BP in the lease sale.

“They don’t have a deeply flawed record offshore,” he said of BP. “We’ve done analyses over time on the relative safety records of offshore operators and they were in close to the top crew.”

“The question is, do you administer the administrative death penalty based on one incident?," Bromwich told reporters. “And we've concluded, I’ve concluded, that's not appropriate in these circumstances."

I don't have a dog in this fight. I could not care less about BP and the Gulf, but anything with this phrase, "to the chagrin of faux-environmentalists" can't be all bad.

Wow, The Ohio Permitorium

Update

Read this story in light of the story below. Poverty stats stun census bureau; folks just hanging on, and the president kills another shovel-ready 200,000-job opportunity.

Original Post

Just days after killing Keystone XL, the President has killed another shovel-ready, 200,000-job opportunity:

President Obama's United States Department of Agriculture has delayed shale gas drilling in Ohio for up to six months by cancelling a mineral lease auction for Wayne National Forest (WNF). The move was taken in deference to environmentalists, on the pretext of studying the effects of hydraulic fracturing.

“Conditions have changed since the 2006 Forest Plan was developed," announced WNF Supervisor Anne Carey on Tuesday. "The technology used in the Utica & Marcellus Shale formations need to be studied to see if potential effects to the surface are significantly different than those identified in the Forest Plan." The study will take up to six months to complete. The WNF study reportedly "will focus solely on how it could affect forest land," the significance of hydraulic fracturing to united proponents of the delay, "and not how it could affect groundwater."

This is truly incredible. Unprecedented.

The area already has nearly 1,300 oil and gas wells in operation.

The Ohio Oil and Gas Energy Education Program recently estimated that drilling in the Utica shale, which is affected by the suspension of the mineral lease auctions, would produce up 204,500 jobs by 2015.

"The President’s plan is to simply say ‘no’ to new energy production," House Natural Resources Committee chairman Doc Hastings, R-Wash, said to Interior Secretary Ken Salazar during a hearing pertaining to hydraulic fracturing. "It’s a plan that is sending American jobs overseas, forfeiting new revenue, and denying access to American energy that would lessen our dependence on hostile Middle Eastern oil."

Let's see what Chesapeake shares are doing:  down about 1.2 percent.

I assume polling in Ohio suggested that the president could lose the state by a margin of votes equal to the number of environmentalists opposed to drilling.

Update on the Permitorium in the Gulf II -- Nothing To Do With The Bakken

Update

November 16, 2011: House committee recommends opening up a bit of ANWR for drilling. Don't hold your breath. I find it incredible that this was a headline article at RIGZONE -- this is only a proposed bill at the committee level in the House; a long, long way to go to get to the President's desk. Don't hold your breath. 

November 16, 2011: op-ed piece; others agree -- the permitorium continues unabated.

Original Post

Link here.

Is it just me or do all we hear coming out of Washington is "plans"?

Here's another plan.

Oil and gas companies will have far greater access to energy resources in the Gulf of Mexico under a new policy proposal from the U.S. Department of the Interior.

The plan would set a timeline for the sale of oil and gas exploration rights for 15 locations over the course of the next five years. Twelve of these sites would reside in the Gulf of Mexico, while only three would be located in Alaska.

Parse that first sentence in last paragraph: "the plan" -- this is just a plan, no project, no actual work, just a plan; "would set a timeline" -- wow, we can kick this can down the road; "for the sale ... of exploration rights" -- again, no actual drilling; just setting a timeline for selling rights; "over the course of the next five years" -- half a decade. It looks like another "lost decade" in the Gulf.

And, then the kicker was in the first paragraph: this was just a "new" policy "proposal" from a department. Lots of time for the president to sit on it, and wait to make the decision until after 2012 elections. 

North Dakota state holds auctions every three months; doesn't seem like a whole lot of work in setting up a timeline.

Update on the Permitorium in the Gulf

Update

I guess they got the "final" permit. Good to go.

Original Post

Link here.

I'm really not all that interested in this story any more; the story has run its course, but it is interesting that after more than a year after the spill, the first permit for BP has been issued. I guess the politics had to run its course.

I say that because:

This is the 44th plan that has been approved following the completion of a site-specific EA since stronger regulations were implemented in June 2010.

But it appears, that at least for BP, the permitorium continues:

Prior to any drilling under the plan, BP must obtain drilling permits from the Bureau of Safety and Environmental Enforcement (BSEE), which will continue to assess the information that is necessary to allow specific activities.

This is the first EP that BP has had approved since the 2010 Deepwater Horizon explosion and subsequent oil spill.

The Permitorium Continues -- Democrats Want It Lifted

Link here.

US Sen. Mark R. Warner (D-Va.) urged participants at the Southern States Energy Board’s Governors Energy Summit to build support for federal legislation aimed at reviving offshore oil and gas projects that the Obama administration shelved following the Macondo deepwater well accident and crude oil spill. “I don’t believe offshore energy exploration can provide the whole solution to our nation’s economic problems,” Warner said at the Oct. 4 meeting, adding, “But it certainly would help.”

Warner noted that the bill introduced by himself and Virginia’s other US senator, Democrat James A. Webb, would move the Virginia federal Outer Continental Shelf lease sale back into the next 5-year OCS program, reversing Sec. of the Interior Ken Salazar’s decision to omit it from the 2012-17 round. The sale was canceled following the Macondo accident and spill. “The notion that we delay it another 5 years seemed too long,” he said.

And here's why they are concerned: drilling returning to the Gulf. Not exactly.

News reports to the contrary, drilling in the Gulf of Mexico still hasn’t staged a full comeback from the Deepwater Horizon oil spill and subsequent drilling moratorium, according to new research by Quest Offshore Resources, Inc.


Quest’s new analysis shows the number of floating rigs in the Gulf is down 37 percent from its pre-moratorium level. At the moment, just 21 floating rigs are operating in the GOM — and, of those, just 18 are actually drilling wells. Before the moratorium, 33 rigs were operational and 29 of those were actively drilling wells. Thanks to the moratorium, 11 rigs left the Gulf and just one has returned. The loss of those rigs translates into nearly 12,000 jobs lost.

I have no dog in this fight, but with storage tanks overflowing at Cushing, it doesn't look like the US misses that Gulf oil very much. I know folks in the Bakken who are getting oil royalties don't want the permitorium to end.

Crude-By-Rail: Re-Posted for Newbies -- Bakken, North Dakota, USA

Because of so much posting today, so many stand-alone posts, a very important story might have been buried.

Because of that, I am reposting the link and suggesting that folks new to the Bakken take a look at the crude-by-raid phenomenon.  Here's the link on a paradigm shift in shipping oil.

This is even more important now that the US Army Corps of Engineers has instituted a permitorium on new pipelines.

The Permitorium Lives -- Worse Than Ever -- So Much For Shovel-Ready Jobs -- And Folks Wonder Why The Economy Falters

US Army Corps of Engineers shuts down new pipelines in the Marcellus, Pennsylvania. New rules might as well simply say: no more pipelines.

The new U.S. Army Corps of Engineers rules, effective July 1, 2011, replaced federal regulations that expired in June controlling pipeline construction and other surface-water impacts in Pennsylvania. A change in the regulations requires companies to detail all of the streams and wetlands to be crossed by a pipeline project - some of which stretch for hundreds of miles - rather than outlining only the impacts of each stream crossing individually.

Delays caused by the new permit reviews have stranded 128 of the company's drilled and completed Marcellus Shale wells without pipelines and are "costing Pennsylvanians royalty income," [Chesapeake says].

So much for "more jobs" except, I guess, job security for bureaucrats. Although these reports could be written up be college biology students, I suppose.

EPA Drafts New Air Quality Rules Regarding Ice-Breaking Vessel in Alaska

Do folks remember this story? At the time I found the whole story incredible. The EPA was going to shut down an operation in which billions had been spent in the understanding that the oil industry was meeting all requirements, but then, out of nowhere, it seemed the EPA had established new standards.

Now, out of the blue, it appears EPA is about to reverse its decision.

Shell previously received permits from EPA in March and April of 2010, but environmental and other organizations appealed the decision to the agency’s independent Environmental Appeals Board, which overturned them in December.

The permits are required under the Clean Air Act because the Discoverer drillship and supporting vessels are expected to emit more than 250 tons/year of pollutants, which would be limited under the permits, EPA said.

It noted that EPA’s Region 10 office revised the draft permits to address issues raised in the appeal. These include reductions by more than 50% of most key pollutants from levels allowed in the 2010 permits, largely due to a new nitrogen dioxide standard which went into effect after EPA issued the original permits.

“Many years of work have gone into achieving these permits, and the support from Alaska to Washington, DC, has been tremendous,” the Shell spokesman said. “We believe the work we have done to further modify and reduce our air emissions to meet new standards meets the goal of having no impact on the environment or coastal villages.”

Even a positive ruling from the EPA will not be the end of the story. 

The EPA permits assure compliance with air quality regulations, but do not in and of themselves authorize drilling, the air quality regulator emphasized. That decision must come from the US Department of the Interior’s Bureau of Ocean Energy Management, Regulation, and Enforcement.

The permitorium continues. Be sure to read the story linked at the beginning of this post to get the full story. An ice-breaking vessel was at the center of the storm; given enough global warming and delay by the EPA, the ice-breaking vessel may not be needed.

North Dakota Makes The Top Ten List -- Among the Top Global Locations for Oil and Gas Investment Opportunities

Link here.

Eight U.S. states made the top 10 list of most attractive jurisdictions worldwide for oil and gas investment, according to Calgary-based Fraser Institute's Fifth Annual Global Petroleum Survey.

Mississippi, Ohio, Kansas, Oklahoma, Texas, West Virginia, Alabama and North Dakota made the top 10 of the All-Inclusive Composite Index; the Netherlands sector of the North Sea and Hungary also are among the top 10, the global policy think-tank reported.

Only Mississippi, Texas, Oklahoma and Alabama ranked in the top 10 in the 2010 survey, and were also among the top 10 in 2009.

For North Dakota to have made the list is quite impressive -- these are not just among the US states but ALL geographical locations worldwide. Here are the top ten:

• Mississippi
• Ohio
• Kansas
• Oklahoma
• Texas 
• West Virginia
• Netherlands -- North Sea (the windmill capital of the world)
• Alabama
• Hungary -- shale gas?
• North Dakota -- yea!

It's hard to believe Ohio, Kansas and Alabama beat out North Dakota. It would be interesting to know more about what these three states are doing.

Among the least attractive:

The least attractive countries for investment include Venezuela, Ecuador, Bolivia, Iran, Kazakhstan, Uzbekistan, Democratic Republic (Kinshasa), Iraq, Libya and Russia.

I guess a war drops you out of the running -- but even a war (Libya) is not as bad as Russia. Hmmm. 

The Gulf of Mexico plummeted from 11th place last year to 60th place this year, following the leak, then the moratorium, and now the permitorium. 

Based on his public comments, Interior Secretary Ken Salazar is probably hoping to move the Gulf to the top ten this next year. Or not.

Another region that dropped significantly was north shore Alaska. Who woulda thought?

The Permitorium Continues -- Slow Rolling The Industry Through The Courts

Update

June 29, 2011: Just in -- judge rules in favor of the oil industry.

A judge has ruled that the Interior Department must abide by a deadline in the Mineral Leasing Act to either issue or deny oil and gas leases within 60 days of selling them at auction.
U.S. District Judge Nancy Freudenthal ruled from the bench Wednesday in a lawsuit filed by the Western Energy Alliance.

It would be just like the administration to appeal.

Original Post

Link here.

A petroleum industry group and the federal government are scheduled to square off in court Wednesday over delayed oil and gas leases in Wyoming and other states.

The Western Energy Alliance sued Interior Secretary Ken Salazar last year over hundreds of oil and gas leases the government sold but had yet to issue to the companies that bought them.

Elsewhere Mr Salazar has promised to speed up the process.

As someone once commented on this site: "Anyone can make a speech."

Admits To Slow Rolling the Oil Industry -- Promises To Speed Things Up By Yearend -- Update on the Permitorium

Updates

August 6, 2011: folks write me (anonymously) suggesting that I am confused about the permitorium. I generally don't post comments that don't have value-added information, so most of those comments are not posted. But for those who still think there is no permitorium in the Gulf, a US senator says he will hold up Senate nominations until/unless the leases due to expire this year in the Gulf are extended. Yup, the permitorium continues.

US Sen. David Vitter (R-La.) announced that he would block Rebecca Wodder’s nomination to be Assistant US Interior Secretary for Fish and Wildlife and Parks unless the US Department of the Interior extends hundreds of Gulf of Mexico leases due to expire this year.

Vitter said that oil and gas exploration in the gulf has fallen dramatically since US Interior Sec. Ken Salazar imposed a temporary deepwater drilling moratorium following the Macondo well blowout and subsequent crude oil spill in 2010.

Original Post

Link here.

I guess it was true. The administration was slow-rolling the oil industry on granting leases or permits or whatever the case might be. The story changes from day-to-day, and depending on who is talking.

Secretary of the Interior Ken Salazar says things will speed up by year end (2011) implying that the oil industry was correct in saying that for the past year talk of faster permitting has been just that: talk.

The US Bureau of Land Management will accelerate a lease sale within the National Petroleum Reserve-Alaska so that it will take place before the end of 2011, with subsequent lease sales annually, US Sec. of the Interior Ken Salazar said.

Salazar’s announcement came as the US House Natural Resources Committee’s Energy and Minerals Subcommittee held a hearing on a bill to improve access to oil and gas resources within the reserve. Doc Hastings (R-Wash.), the full committee’s chairman and HR 2150’s sponsor, said requiring annual NPR-A lease sales was a good step, but it would not be enough if other federal agencies block and delay permits for the necessary roads, bridges, and pipelines to get the oil and gas out of the reserve.

In his written testimony, Joe Balash, deputy commissioner of Alaska’s Department of Natural Resources, said Alaska considers leasing within NPR-A a logical first step in expanding oil and gas development on federally controlled state land. He said in his written testimony that possibly the most ambitious feature of Hastings’ bill is its call for approved rights-of-way for roads, pipelines, and other surface infrastructure to ensure all leases are within 25 miles of the state’s approved route plans.

But then this:

But Deputy BLM Director Mike Pool said Interior was concerned about several of HR 2150’s provisions, including a requirement that the secretary consult with the US Department of Transportation on all surface disturbance instead of only major roads and pipelines; a requirement that the secretary ensure that other federal permitting agencies meet the bill’s deadlines; and an implication that all requested permits must be issued regardless of a proposed action’s potential impacts or the availability of alternatives.

Sounds like "we" have a long way to go. I guess it's easier to release oil from the strategic petroleum reserve than to issue new permits.  

And then there's this story (safety is important, but the bureaucratic process will slow everything down):

The government is poised to propose new rules that aim to boost the safety of offshore drilling and tighten standards for emergency equipment guarding subsea wells, a top regulator said Wednesday.

The looming rules will build on already broad changes that the Bureau of Ocean Energy Management, Regulation and Enforcement has imposed since last year's Gulf oil spill, agency director Michael Bromwich said in a speech before the World National Oil Companies Congress in London.

For instance, regulators are planning to add teeth to a workplace safety rule they imposed last October requiring oil and gas companies to identify risks at every stage of offshore exploration and take steps to minimize human errors and operational hazards. That rule for the first time is forcing companies in U.S. waters to have safety and environmental management systems like those required in the North Sea.  

Yup, the permitorium continues.