Saturday, June 11, 2011

Positive Energy Sector News Flourishes Amid Administration Stranglehold

With the news moving in the positive direction slowly for the energy sector, it is interesting to note that it is the oil and gas wing of the industry which continues to show the best results.

The great energy irony of recent years is that governments have thrown hundreds of billions of dollars at wind, solar, ethanol and other alternative fuels, yet the major breakthroughs have taken place in the traditional oil and natural gas business. Hydraulic fracturing in shale, horizontal drilling and new seismic techniques are only the best known examples.

Yes, domestic oil and gas drilling will survive and flourish after the Deepwater Horizon explosion because it was a terrible tragedy brought about due to bad management decisions and human error. Yet, The Interior Department is still issuing very few permits, only 15 for new wells since it lifted its moratorium in October so it is the industry proving success despite zero support from Team Obama.

On Wednesday, ExxonMobil announced three major American energy discoveries in the Gulf of Mexico. Projected at over 700 million barrels of recoverable oil equivalent, this discovery is one of the largest in the last decade. This find translates into 14 billion gallons of gasoline and approximately 2 ½ months of current U.S oil production. Chairman Hastings remarked, “This is the exact reason why Republicans have been pressuring the Department of the Interior to issue offshore permits—America has abundant oil and natural gas reserves, we simply need to allow the hardworking men and women in the energy industry to do their job. This is opportune timing for a major oil discovery as Iranian controlled OPEC announced [this week] that they would not increase oil production. America can become less dependent on dangerous sources of foreign energy if we safely and responsibly develop the resources we know we have here at home. Today is a perfect example of that.”

As an editorial in the Times-Picayune stated:
Critics of deepwater drilling have raised concerns about a repeat of the Deepwater Horizon disaster as new permits have been approved recently -- and there's nothing Louisianians want to avoid more than another such catastrophe.

Exxon has a solid record of deepwater exploration in the Gulf, where the company has drilled 36 wells ranging from 4,000 feet to 8,700 feet in the past decade. In addition, Exxon is among the founders of a consortium formed to rapidly respond to future spills in deep water.

President Obama in May announced several policies intended to increase domestic oil production, including in the Gulf of Mexico. The administration needs to deliver on promises to hold a lease sale in the Gulf this year and to also continue improving the efficiency of regulators reviewing drilling permits.

Nothing will increase oil production and economic development in our region more than safely restoring this vital and needed industry back to full force -- as Exxon's new find proves.

With dismal economic reports and the unemployment rate ticking back up, one would thing that the Obama administration would want to been seen creating jobs and supporting small businesses all along the Gulf coast. Instead of increasing bureaucracy and exploiting a tragedy with political ideology, common sense begs to be utilized.

And, let's drill in Alaska, too.

On Thursday, House Natural Resources Committee Chairman Hastings joined Alaska Governor Sean Parnell and Subcommittee on Indian and Alaska Native Affairs Chairman Don Young (AK) for a day-long tour that included visits to the National Petroleum Reserve-Alaska (NPR-A), the Trans Alaskan Pipeline System (TAPS), the Native village of Kaktovik, and a discussion of the Arctic Outer Continental Shelf (OCS) of Alaska. That day, Chairman Hastings unveiled a discussion draft of the National Petroleum Reserve Alaska Access Act, a bill to cut through bureaucratic red tape and unlock the full potential of energy resources in the National Petroleum Reserve-Alaska (NPR-A). The Subcommittee on Energy and Mineral Resources will hold a legislative hearing on the bill next Thursday, June 16th.

“The problem facing oil and natural gas developers is not lack of resources to curb our foreign dependence, but a lack of clear policy. There are few more egregious examples of bureaucratic red tape stifling development of our domestic resources than what is happening in the NPR-A. It can and should be the policy of this government to develop the resources in our NPR-A quickly, efficiently and responsibly. This will reduce our foreign dependence, create jobs and keep our revenue here at home,” said Energy and Mineral Resources Subcommittee Chairman Doug Lamborn (CO-05).

•Specifically, the National Petroleum Reserve Alaska Access Act will:

◦Clearly state and affirm that the NPR-A is explicitly designated for the purpose of providing oil and natural gas resources to the United States.

◦Require that annual lease sales be held in the NPR-A in areas with the most oil and natural gas resources. President Obama called for annual NPR-A lease sales in his weekly address on May 14th.

◦Streamline the permitting process to ensure lease sales actually lead to energy being produced and transported out of the NPR-A and delivered to the continental U.S.

◦Set firm timelines for infrastructure permits to be approved to ensure that bureaucratic delays do not prevent oil and natural gas resources from being transported out of the NPR-A. It establishes a 60 day timeframe to approve infrastructure permits for leases where the Secretary has already issued a permit to drill and a 6 month timeframe to approve infrastructure permits for all other existing and future Federal leases.

◦Require the Secretary of the Interior to prepare a right-of-way plan detailing how existing and future leases will be within 25 miles of an approved road or pipeline.

◦Require an updated comprehensive assessment, in consultation with the State of Alaska and the American Association of Petroleum Geologists, of all oil and natural gas resources in the NPR-A. The current data for available resources is based on conservative estimates and may not reflect NPR-A’s true potential.

Sounds like a plan to me.

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