From the Minot Daily News, “Moving Up“:

North Dakota’s oil production is climbing so fast that it’s expected to move to the sixth top-producing state in the country by end of the year, says the president of the North Dakota Petroleum Council.

“It’s unbelievable to all of us in the industry. We are growing at about 6,000 barrels a day per month. In April, we broke the all-time record of 148,000 barrels in North Dakota which was from 1984,” said Ron Ness, Bismarck, president of the N.D. Petroleum Council.

Eventually overtaking Oklahoma as energy producer? Wow. Time for a revival of “Oklahoma” set near Parshall….”Dodge Dakota with a Fringe on Top.”

Of course, the Bakken formation will only provide enough oil to run the U.S. economy for four minutes and seven seconds, so why do we bother?

Meanwhile, offshore, the oil industry is being cautious about the lifting of the federal moratorium on energy development on the Outer Continental Shelf, obviously and prudently. The topic came up in a conference call with bloggers last Friday with Red Cavaney, president and CEO of the American Petroleum Institute.

As you all know, in our industry, with such long time horizons and such heavy upfront capital expenditures before anything does happen, shall we say, you know, a temporary period like this really isn’t sufficient, either for the federal government or anybody else to lay the groundwork to get us to a point where people could actually bid on a lease or do something concrete. So we’re hopeful that people will begin progress.

One of the industry’s first challenges is educating the public about everything that’s involved in the moratorium and the obstacles faced by the industry in developing the natural gas and oil, Cavaney said.

The troubles of Wall Street have pushed most of the Hurricane Ike developments off the front page and first 15 minutes on network, but obviously much is happening, especially as it affects the U.S. energy industry and energy consumers (everyone, that is).

The American Petroleum Institute is closely following developments. Two podcasts of note:

• Oil and Natural Gas Industry Response to Hurricane Ike: API President and CEO Red Cavaney summarizes the oil and natural gas industry’s recovery efforts following Hurricane Ike.
• Hurricane Ike: Picking Up the Pieces: September 15, 2008 – Jane Van Ryan talks with Debbie Hastings of the Texas Oil and Gas Association and Commander Chuck Polk of the United States Coast Guard about damage caused by Hurricane Ike to Houston and surrounding areas.

Oil is still bouncing around $100 a barrel. This AFP take emphasizes the current jump in price, but would anyone have though even $102 was possible before Ike struck Texas and Louisiana? “LONDON (AFP) — Oil prices rose sharply for a second day running Thursday, bouncing above 102 dollars, as the US currency fell after major central banks further boosted liquidity on financial markets.”
 

Finally…

A Sculpture Down by the Sea   [Jay Nordlinger]

In my Impromptus yesterday, I recalled my only visit to Galveston, two years ago. I said I had been moved by the memorial to the storm victims — the victims of the Great Storm of 1900, which killed more than 6,000 people. This memorial was sculpted by David W. Moore, depicting a family: father, mother, and child.

Anyway, several readers wrote me to say that the memorial did not survive Ike, over the weekend. I’m glad I saw it. I’m glad there are pictures. It’s not every work of art that sort of gets under your skin, as this one did. 

09/16 10:42 AM

Red Cavaney, the president and CEO of the American Petroleum Institute, sent a letter to House Speaker Nancy Pelosi last Friday outlining API’s objections to the energy bill. It’s a point-by-point summary, starting with:

The U.S. oil and natural gas industry has grave concerns about the potential impact your proposed legislation would have on American consumers. Based on the outline that was released yesterday, the legislation would do very little to inrease U.S. supplies of oil and natural gas and, in fact, may well result in less domestic production and increased dependence on foreign oil. By denying states a fair share of revenues, including royalty payments, the Dmeocratic leadership bill removeds an important incentive for states to open up to drilling. New, punitive taxes and higher fees targeting the oil and natural gas industry could push investment oerseas, reducing U.S. production, U.S. jobs and U.S. revenues. API opposes this bill.

Detailed objections on specific provisions follow.

Given the confusion prompted by the varied suits against the Department of Interior regarding its efforts to protect the polar bear — is that vague enough? — allow us to link to our legal department’s description of the litigation from the business associations, including the NAM: American Petroleum Institute v. Kempthorne

American Petroleum Institute v. Kempthorne
(U.S. District Court for the District of Columbia) — Environmental
Whether polar bear regulation should deny Alaskan industry greenhouse gas emissions exemption that applies to other states.

On May 15, the Department of the Interior issued an Interim Final Special Rule designating the polar bear as threatened under the Endangered Species Act, based on its determination that global climate change, resulting from increased concentrations of greenhouse gases in the atmosphere, threatens to injure the bears’ habitat by reducing polar ice. As part of this rule, the Department provided an exemption for greenhouse gas emissions, since they are part of a worldwide phenomenon than cannot be traced to particular activities in particular locations affecting the bears.

This exemption applies to greenhouse gas emissions in all states except Alaska. On August 27, the NAM joined with the American Petroleum Institute, the U.S. Chamber of Commerce, the National Mining Association and the American Iron and Steel Institute in filing a complaint challenging the Department’s omission of Alaska from the exemption. Manufacturing and other business operations in Alaska that may produce greenhouse gases should not be treated differently than those of companies in the other 49 states. This “Alaska Gap” exposes Alaskan operations to increased permitting burdens and/or the risk of enforcement by government authorities and citizen suits.

Our lawsuit challenges the Alaska Gap as arbitrary and capricious, since the best scientific data in the rulemaking record do not demonstrate enough of a connection between specific actions resulting in emissions and an effect on the polar bear.

The NAM supports the exemption for all states from permitting for greenhouse gas emissions that might affect polar bear habitat, not just every one but Alaska. The NAM is not challenging the decision to designate the polar bear as a threatened species.

Related Documents:
NAM complaint (8/27/2008)

API’s news release is here.

Jonathan Adler, a Case Western Reserve law professor, comments at the Volokh Conspiracy, noting first that the suit challenges the differential treatment of the states. Adler: ”Not having read the briefs (yet), this seems to me like a more fruitful avenue of attack than a frontal challenge to the listing itself. Overturning a listing decision is quite difficult, and I don’t expect any of the lawsuits to be successful on that front.”

 P.S. The Alaska Gap? Do they sell mukluks?

A correction in The Washington Post:

Correction to This Article
An Aug. 31 A-section article incorrectly said that the American Petroleum Institute and four other business groups seek to challenge the listing of the polar bear as a threatened species. The groups are trying to enjoin the federal government from implementing a rule they call the “Alaska Gap,” which subjects projects in Alaska to extra scrutiny. The federal government issued the rule in May in conjunction with the announcement of the polar bear’s protected status.

Yes, just because Alaska sues and several trade associations sue, doesn’t mean we’re suing together.

The suit in which the NAM is participating is available here: American Petroleum Institute v. Kempthorne. API issued a news release, stating it sued “because it believes the U.S. Interior Department’s determination that the Endangered Species Act is ‘not the right tool to set U.S. climate policy’ makes sense, and that the interim final rule issued by the Department needs to be expanded to include Alaska as the Act is implemented. API member companies are not challenging the listing of the polar bear as a threatened species.”

Seems pretty clear.

P.S. The Post’s online style is admirable: It put the correction right at the top of the original article.

From the AP, “Industry groups file lawsuit over polar bear rule“:

WASHINGTON (AP) — Five industry groups have sued the Interior Department over a rule to protect the polar bear that they say unfairly singles out business operations in Alaska for their contribution to global warming.

Groups representing the oil and gas, mining, and manufacturing industries asked a federal judge Wednesday to ensure that laws designed to protect the bear, which was recently designated a threatened species, are not used to block projects that release heat-trapping gases in the state.

The American Petroleum Institute was joined by the U.S. Chamber of Commerce, the National Mining Association, the National Association of Manufacturers and the American Iron and Steel Institute in the lawsuit, which explicitly challenges three words — except in Alaska — that appear in a 62-page rule issued in May.

A copy of the suit, American Petroleum Institute v. Kempthorne, is available here.

API’s statement is here, and it’s a very useful pre-corrective:

The oil and natural gas industry is committed to the conservation of the polar bear and other marine mammals. Companies active in Arctic region energy exploration implement polar bear mitigation and avoidance programs, and they provide funding and logistical support for important polar bear studies carried out in the United States and in Canada. API filed a lawsuit in the U.S. District Court for the District of Columbia yesterday because it believes the U.S. Interior Department’s determination that the Endangered Species Act is “not the right tool to set U.S. climate policy‟ makes sense, and that the interim final rule issued by the Department needs to be expanded to include Alaska as the Act is implemented. API member companies are not challenging the listing of the polar bear as a threatened species. 

The American Petroleum Institute has released a letter to the U.S. Senate that expresses opposition to the “Gang of Ten” proposal, calling it a case of “light on new production/heavy on new taxes.”

The proposal’s approach to access to federal oil and natural gas resources is far too limited in its scope. And, it is unfortunately paired with the imposition of at least $30 billion in new taxes on the oil and natural gas industry that would have the effect of limiting needed oil and gas investment. A lesson learned well in the 1970-80 period. These measures create an environment that will virtually assure a future with less, not more, domestic production.

While this new proposal would expand access in the waters of the Outer Continental Shelf, it unfortunately limits any expansion over current law to the eastern Gulf of Mexico and waters off four Atlantic Coast states in the South. Even in these areas, development in federal waters less than 50 miles offshore would be banned - despite the fact that offshore facilities would need to be 12 or fewer miles from shore to be visible from land. Leasing in the North Atlantic and off the Pacific Coast would be banned and plentiful hydrocarbon resources in Alaska would remain off limits. Significant regulatory burdens on new development would remain in place. The imposition of $30 billion in clearly discriminatory new taxes, to pay for federal investment in alternatives and renewables, ignores the fact that the industry already provides more than 70 percent of all North American investment in research and development in emerging energy technologies.

Senate Majority Leader Harry Reid discusses the Gang of 10 proposal in an interview in the Reno Gazette Journal. It’s a little confusing. Except for this statement, which is a clear assertion:  ”There isn’t a person in the world, I’m not talking about politicians, I’m talking about oil people, will tell you that drilling will lower the price of oil.”

The American Petroleum Institute sponsored a bloggers conference call earlier this week to publicize the release of the Energy IQ Survey, but the discussions with API’s President and CO Red Cavaney and Chief Economist John Felmy covered the full range of oil and natural topics being discussed by policymakers these days.

The transcript of the call is available here and you can listen to the discussion here. There’s a lot of good information on the canards upon which the “use it or lose it” promoters rely to claim America should not access the domestic energy resources now locked up by federal bans.

We found another portion of the discussion especially interesting, as Cavaney talked about the argument: “Opening Area X, Y, or Z will do nothing to affect current gas prices, so we shouldn’t do it.”

But by that logic, there’s no point in investing in alternative energy either, because it will take a long time to bring these new sources of electricity online.

Cavaney’s remarks start at the 50-minute mark:

To bring almost all of those alternative energy sources on, they’re going to encounter some of the very same permitting problems and not-in-my-backyard problems that you encounter in the oil business.

For example, if you’re going to build wind farms, they’re typically – first of all, they’ve got to be permitted in remote areas, so they have to go through some of the same kind of problems that we do when we’re out in remote areas. But equally as important, they’ve got to get the energy from where it’s produced to where it’s going to be consumed, which means they need to get right-of-ways, first of all, granted. And then, they need to get the permits to go through that. So when we think of those alternative energies, we think of them like flipping a switch and it’s on and it happens. But they’re going to be on the same queue that we’re in, going through permitting, having to go back out to the public, and also running into some of the problems with the capacity to produce the equipment and the material that is needed to get them from here to there.

The nuclear industry is seeing this in spades. And also, we’re seeing that in many cases with some of the large utilities that are trying to do things, same kinds of issues we’ve just talked about.

And Felmy points out the logical flaw in replying to arguments about the need for domestic oil supplies with “more alternative energy!”

[The] disconnect is really profound, because we hear constant discussions that we want to spend money on alternatives to help the gasoline market. Well, that’s a huge disconnect because most of the alternatives they’re talking about are electricity. We do not have a fleet of electric cars and we will not have a fleet of electric cars for a significant amount of time. And so, this whole argument is just a huge disconnect. And I share with you – I agree with you in terms of how can we bring this stuff on, and then Red’s points in terms of infrastructure of any type are a challenge.

We’ll be waiting to see if these diversionary arguments appear on the House and Senate floor over the next few days. Our bet: Sure they will. So thanks to Cavaney and Felmy for bringing a few facts to the fore.

The American Petroleum Institute has just released its second annual Energy IQ Survey, a national public opinion survey conducted by Harris International. As you might imagine, the public is paying a lot more attention to energy policy today than back in pre-$2 gas days, but there are still some misconceptions:

When asked how much more energy the U.S. will need in the next 20 years, 53 percent of respondents answered correctly that we will need between 16 and 20 percent more energy.
 

While the International Energy Agency projects that more than 80 percent of global energy demand in 2030 will be met by fossil fuels such as oil, natural gas and coal, only 12 percent of respondents chose this answer. The majority believed it would be 60 percent or less.

There’s a nifty test-you-own-knowledge survey machine at the web site.

The Institute for Energy Research has been working assiduously exploring the facts and fiction about energy exploration.  Lately any politicians have been repeating loudly the slogan, ”We can’t drill our way out of this problem,” while at the same time saying, “We should drill in the Naval Petroleum Reserve Alaska” not ANWR. What the heck is the NPR-A? The Institute does the comparisons in the paper, “Alaska’s Northern Coastal Plain: NPR-A, Prudhoe Bay and ANWR“:

Q: Would it be faster and/or more environmentally sound to drill in NPR-A instead of ANWR’s 1002 Area?

A: No.  While both NPR-A and ANWR’s 1002 Area were set aside specifically for their oil and gas resources, NPR-A oil is spread out over its entire 23 million acre expanse.  The 10.4 billion barrels in ANWR’s 1002 area, on the other hand, is concentrated in one relatively small area and, as such, can be produced with far less surface disturbance.  Also, 21st century technologies enable companies to produce energy safely, as they have been doing in Prudhoe Bay for more than three decades.

Q: Why isn’t oil being produced in the NPR-A today?

A: Lawsuits filed by environmental organizations such as Earthjustice, the Sierra Club, and the Natural Resources Defense Council have stalled production in NPR-A.  In addition, a U.S. Corps of Engineers permit has not yet been granted to install a critical pipeline.  

Wonder if the NRDC might retire its lawsuit. Probably not. The polar bear is its fundraising mascot.

Finally, Investors’ Business Daily debunked the major diversionary tactics in this very good editorial from July 3, “Energy Myths.”

The White House has announced that President Bush will make a statement at 1:30 today in the Rose Garden. The news is big and welcome: He will announce that his is lifting the executive order that prohibits drilling on the Outer Contintental Shelf.

The AP has a story: The executive order was signed by President George H.W. Bush in 1990.

The New York Times covered the first President Bush’s prohibition — then only for 10 years — on OCS drilling in this story, June 27th, 1990, “Bush Cuts Back Areas off Coasts Open for Drilling.” The Times quotes a statement from the American Petroleum Institute:

The American Petroleum Institute, a trade group of major oil companies, estimated that as a result of the policy the country will lose about two million barrels of oil a day, about a fourth of current domestic production.

In a statement made public today, the institute complained: ”These decisions on offshore oil and natural gas leasing are harmful to our country and economy. They will lead to decreased domestic production, more imports , more dependency on OPEC, more tanker traffic, and the export of jobs and investment overseas.”

”Locking up these energy-rich lands at a time when our dependency on foreign energy is escalating,” the statement said, ”is a serious mistake.”

API was right, wasn’t it?

UPDATE (11:48 a.m.): In this June 18 news release, the National Association of Manufacturers called on President Bush to lift the executive moratorium.