Tag: Ken Salazar

President Should Accept Responsibility for Lack of Domestic Energy

The Associated Petroleum Industry held a conference call with reporters this morning in anticipation of President Obama’s speech on energy. The API’s top policy expert on upstream operations, Erik Milito, discussed the many policy and regulatory decisions by the Obama Administration that have prevented domestic energy development, especially offshore oil and natural gas.

Milito was justifiably tough on Tuesday’s report from the Department of Interior on “unused oil and gas leases.” From his prepared statement:

Yesterday, the President’ point person for oil and natural gas development, Secretary Salazar, released a politically motivated and deeply flawed report on so-called idle leases. Among other things, it lists offshore leases that do not yet have approved exploration or development plans as “inactive,” regardless of whether there is exploration or pre-production activity going on such as seismic or technical reviews of the geography. This preparation work is necessary to determine whether natural resources exist on a lease and how to produce any oil and natural gas safely.

The Administration’s report assumes that oil and natural gas are spread uniformly across a lease acreage, suggesting that 70 percent of idled leases equates to 70 percent idled resources – as if finding oil were no more difficult than sticking a pipe in the ground. (continue reading…)

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How to Kill My Company: A Drilling Moratorium and Lost Jobs

“How to kill my company” is the headline in today’s hard copy Washington Post for column by Randy Stilley, president and chief executive of Seahawk Drilling, which owned and operated 20 jackup rigs in the Gulf of Mexico. The online headline is the less provocative but no less true, “A preventable bankruptcy in the Gulf of Mexico.”

Last month, Seahawk Drilling declared Chapter 11 bankruptcy and announced the sale of its assets to shallow-water driller Hercules Offshore. This devastating decision was the culmination of a long period in which we found our customers unable to secure permits for work in the Gulf of Mexico despite the fact that both our industry and our company have excellent safety records. In the 11 months after the Deepwater Horizon accident, it became clear that Seahawk’s greatest rival was no longer our industry competitors but the U.S. government. (continue reading…)

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Alaska’s Senators Debunk ‘Use It or Lose It’ Distraction on Energy

Sens. Lisa Murkowski (R-AK) and Mark Begich (D-AK) released a joint statement on Wednesday blasting the introduction of S. 600, the “Use It or Lose It” bill. They’re exactly right. From “Sens. Murkowski and Begich Opposed to ‘Use it or Lose it’: Unwarranted Fees on Energy Companies Will Result in Less Production, More Imports, and Higher Prices.”

Murkowski, the ranking member of the Senate Energy and Natural Resources Committee, said the bill was an attempt to shift blame for rising gasoline prices to energy producers.

“While I don’t accept my colleagues’ analysis, I am glad to see them acknowledge that increasing domestic oil production will help address rising energy prices,” Murkowski said. “Unfortunately, their bill is misguided. Our laws already reflect a use-it-or-lose-it policy; that’s why we have lease terms and a range of lease fees. It is the current administration’s intentional slowdown of the permitting process that is stopping millions of acres onshore and offshore from producing the energy we need. In Alaska, ConocoPhillips and Shell have both seen work on promising oil projects blocked by government obstruction. To hold them responsible – and force them to pay for delays that are not their fault – is simply absurd.”

Sen. Begich: (continue reading…)

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‘Use It or Lose It’ Meant to Distract from Real Energy Debate at

President Obama used his recent news conference on energy to dust off his discredited campaign claim that energy companies are sitting on leases.

“There is more we can do, however. For example, right now, the industry holds leases on tens of millions of acres — both offshore and on land — where they aren’t producing a thing,” the President said, announcing he had asked the Department of Interior “to determine just how many of these leases are going undeveloped.”

“People deserve to know that the energy they depend on is being developed in a timely manner,” President Obama continued.

On Wednesday, three Senate Democrats reinforced the President’s misdirection by introducing S. 600, a bill to promote the diligent development of Federal oil and gas leases. At a news conference, chief sponsor Sen. Robert Menendez (D-NJ) dubbed the measure the “Use It or Lose It” bill. From the news release, “Senators Demand Oil Companies ‘Use It or Lose It’ on Drilling Leases“:

Under current law, oil companies can lease possible oil reserves on Federal land regardless of whether they are producing oil on that land or even have plans to produce oil there. In some cases, oil companies are leasing – but failing to develop – federal land in order to book more reserves on their balance sheet and inflate their stock price. In others, oil companies are attempting to prevent competitors from producing on those acres.

One can appreciate the President and Senators’ motivation to deflect the public’s attention from the Administration’s failure to promote domestic energy development. Unfortunately, in this display of message discipline, the message is bunk.

Erik Milito at the American Petroleum Institute explained the realities of oil and gas leasing at EnergyTomorrow.org, the API’s blog, in a post appropriately titled, “The ‘Use It or Lose It’ Deception“:

The administration itself is preventing the industry from developing these leases because it is not issuing permits to drill or conduct seismic studies of these leases. They want the industry to develop the leases it already possesses, but they won’t grant the permits to do so.

Companies pay millions of dollars to acquire these leases (each lease costs at least $250,000 and some have gone for more than $100,000,000), further fees for renting the leases and the leases have a finite term. If a company does not produce oil or gas from a lease then they are required to return it to the government. In other words “use it or lose it” is already the law.

These are very successful and sophisticated companies that are engaged in this business and it makes no logical sense for companies to pay millions of dollars to purchase leases, sit on them for 10 years, and then give them back to the government. They make money by supplying the American economy with the energy it needs to grow, not from sitting on assets.

The fact that the companies invest billions of dollars to develop these leases demonstrates their commitment to finding oil and gas, Milito explains. And the argument ignores the basic reality of the oil and natural gas industry, that companies purchase leases in order to explore for resources, and one cannot ascertain if they will produce until exploratory wells are drilled.

The President knows these facts, and if he wants a detailed accounting of the leases, he should instruct Secretary Salazar to hit the “print” command to produce a list. This month’s revival of the “use or lose it” canard is meant to evade the serious discussion — the accountability — about the critically needed development of America’s abundant domestic energy resources. It’s transparent politics.

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If Jobs are the Priority, What’s Environmental Justice?

President Obama made headlines by meeting with CEOs earlier this week, offering a hint of an Administration becoming friendlier toward business and pursuing a “path that will lead to economic success.” Attendees regarded the discussions as a positive exchange about jobs and the economy.

Yet at the same time, the White House was hosting its “White House Forum on Environmental Justice” with an implicit anti-business bias and calls for economic redistribution. Private-sector jobs were not really an issue.

Five cabinet secretaries participated, and the Administration officials were for the most part recondite, vague or bureaucratically uplifting in their comments. From the multi-agency news release:

“Low-income and minority communities often shoulder an unacceptable amount of pollution in this country, diminishing their economic potential and threatening the health of millions of American families,” said Nancy Sutley, Chair of the White House Council on Environmental Quality. “The White House Forum underlines the commitment across the Administration to integrating environmental justice into the missions of Federal agencies, and ensuring this really is a country of equal opportunity for all.”

The trouble with “environmental justice” is that it means whatever the activists and grievance groups want it to mean. For some, it’s compensation because their ethnic groups or communities were exposed to pollution, for others it’s elevating their particular environmental cause over others, as the claim, “Environmental justice is climate justice.” It might be federal direction of local urban planning, more funding for mass transit and bicycles or promoting “green jobs.”

Interior Secretary Ken Salazar said he was troubled because he didn’t see enough minorities at Yellowstone National Park, so apparently “environmental justice” also means subsidies for travel budgets to visit Wyoming. (Audio clip)

And if the low-income and minority communities shoulder an unacceptable burden of pollution, of course it’s business that causes that pollution. “Environmental justice” then becomes a bludgeon with which to beat up the private sector.

In the hour or so of the afternoon discussions we listened to Wednesday, we heard class- and race-based pleas for federal money and programs, along with unsubtle accusations of racism. One attendee railed that after Hurricane Katrina, “The recovery process has been so racist in design, in every area,” and, “They’re trying to kill us.”

This isn’t necessarily surprising rhetoric to have come the “environmental justice” crowd, but it’s alarming to hear at the White House. And it’s just weird to hear Janet Napolitano, Secretary of Homeland Security, describe her department’s focus on environmental justice and climate adaptation. (Audio, our transcript): (continue reading…)

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Unserious About Energy Independence

From President Obama’s remarks, cited at the White House Blog in a Feb. 5, 2009, post, “Serious about energy independence“:

Washington may not be ready to get serious about energy independence, but I am. And so are you. And so are the American people.

Inaction is not an option that is acceptable to me and it’s certainly not acceptable to the American people – not on energy, not on the economy, and not at this critical moment.

Department of Interior news release, Dec. 1, 2010, “Key Modifications Based on Ongoing Reforms, Unparalleled Safety and Environmental Standards, and Rigorous Scientific Review“:

[The] area in the Eastern Gulf of Mexico that remains under a congressional moratorium, and the Mid and South Atlantic planning areas are no longer under consideration for potential development through 2017.

Statement, Jack Gerard, President and CEO, American Petroleum Institute, Dec. 1, 2010, “Extension of offshore ban to halt job creation, economic growth“:

This decision shuts the door on new development off our nation’s coasts and effectively ensures that new American jobs will not be realized. It will stifle investment, deny billions in revenue for critical government services and increase our dependence on foreign energy sources.

The oil and natural gas industry is committed to safe and environmentally responsible operations, and both the industry and regulators have added new safeguards to ensure such operations.This reversal on new lease sales off America’s coasts comes on top of a de facto moratorium, which has all but stopped new drilling in the Gulf of Mexico.

Virginia Governor Bob McDonnell, Dec. 1, “Statement of Governor Bob McDonnell on Obama Administration Decision to Block Offshore Energy Development Efforts in Virginia“:

I am extremely disappointed that the Obama Administration has unilaterally blocked environmentally responsible, and economically crucial, offshore energy exploration and development in Virginia, along the Atlantic Coast and throughout other broad swaths of offshore territory nationwide. This is an irresponsible and short-sighted decision. It demonstrates a complete lack of confidence in the entrepreneurial spirit of American industry and its ability to fix the problems experienced in the Gulf spill, and no confidence in the ability of the U.S. government to better plan for and react to offshore emergencies. …
(continue reading…)

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Lousiana Senators Unhappy with Salazar, Administration on Drilling

From Sen.  Mary Landrieu (D-LA), a statement reacting to the visit to Louisiana Monday by Secretary of Interior Ken Salazar, “Landrieu ‘Disappointed’ with Salazar’s Lack of Specifics to Get People Back to Work in Gulf“:

I am extremely disappointed that Secretary Salazar’s presentation today failed to provide regulatory certainty and a clear path for speeding up the process of issuing drilling permits. Our industry leaders are skeptical and have every right to be. They received a commitment to the tiered permitting process, which is a start, but the Gulf Coast needs much more clarity and specificity to move forward.

The holding of Jack Lew’s nomination was just one strategy, and unfortunately that option was coming to an end. I was assured a clear path forward was imminent, and I hope it still is.  However, there are many other tools at our disposal, and our delegation will use every one to send the message that it is harmful to our economy and our national security to keep this industry in the dark and on the sidelines. We now have this administration’s attention, but the fight is not over. I will keep the pressure on President Obama, Secretary Salazar and the rest of this administration until people in the Gulf get back to work.

Sen. David Vitter (R-LA) issued a statement, as well, “Says Salazar must address ‘permit logjam’“:

All of us from Louisiana hoped to hear some new policy, some permitting breakthrough, maybe a handful of new permits approved. But we heard none of that – absolutely nothing.

I told the secretary that this permit logjam had to change – this vital industry is virtually shut down. And I highlighted, along with industry representatives, the key issues that the Obama administration has to address to put people back to work.

Earlier posts.

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Disappointment over Interior’s Meeting on Gulf Drilling

Jim Noe, executive director of the Shallow Water Energy Security Coalition, issued a statement after the members met in Louisiana with Interior Secretary Ken Salazar, Assistant Secretary Tom Strickland, and Director Michael Bromwich of the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE). The group appreciated the meeting. However, …

[We] are disappointed that the federal government gave us no commitments at this meeting. While candid discussions are important to frame the issues, unfortunately the time for discussion has passed for many of our most expert and productive drillers in the Gulf. For them, the continual slowdown in permitting has gone situation critical, leaving them with the uncomfortable choice between economic ruin or leaving the Gulf entirely for other regions of the world. In either case, American workers, businesses, and consumers are paying the price.

As our industry’s track record demonstrates, shallow-water drillers remain committed to the highest standards of safe and responsible drilling practices and design. However, the continued radical uncertainty over what is sufficient to meet new government pronouncements has slowed activities in the Gulf’s shallow waters to a trickle, diminishing both the security and economic vitality of the United States.

Suffice to say, we are ready to get back to work. We hope that today signals the long awaited point where action at the Interior Department will match the rhetorical commitment to let Gulf Coast communities get back to work providing clean and secure fuels. The thousands of workers whose livelihoods depend on the Gulf of Mexico’s shallow-water industry are counting on it.

Interior issued a news release, “Salazar, Bromwich Encouraged by Progress of Operators to Comply with Higher Offshore Oil and Gas Standards.” There’s really no news in the statement, although we do learn that BOEMRE is encouraging people to study petroleum engineering.

And once again — see our post this morning — Interior can’t manage to refer to the energy coalition by its name. C’mon. Now you’re just being rude.

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Drilling IS Energy Security

In government and journalism it’s usually considered bad form to paraphrase another group’s name in a news release or article. You’re supposed to refer to the group at least once by the name it chooses to call itself and then shortening is OK. (Shortening for headlines is understandable, however.)

This old rule of civility came to mind this morning as we read the media advisory from the Department of Interior about Secretary Ken Salazar’s visit to Lousiana to meet with people affected by the Obama Administration’s drilling moratorium. From the advisory, headlined, “Salazar to Meet with Shallow Water Drilling Coalition in Louisiana“:

HOUMA, LA - On Monday, November 22 Secretary of the Interior Ken Salazar, Assistant Secretary Tom Strickland, and Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) Director Michael R. Bromwich will meet with representatives of the shallow water drilling coalition. Following the meeting, Secretary Salazar will hold a brief media availability to discuss ongoing efforts to improve the safety of offshore drilling.

The group calls itself the Shallow Water Energy Security Coalition.  From its info page:

Our nation’s jobs and energy security remain at risk due to a regulatory blockade that is being imposed by the Obama administration on America’s energy producers. Unless regulators start issuing permits and plans for safe oil and gas drilling, we cannot produce the energy America needs.

Unfortunately, the federal officials at the Department of the Interior and the Bureau of Ocean Energy Management (BOEM) has imposed a “one size fits all” approach to permitting that ignores the strong track record of the shallow water drilling industry. The recent history of shallow water permitting in the U.S. Gulf of Mexico is a cautionary tale for those who profess optimism about the end of the deepwater drilling moratorium. Although the moratorium on shallow water drilling was lifted in May 2010, permit approvals have been nominal.

Obviously the coalition promotes drilling, but its arguments also represent legitimate advocacy for energy security.

It’s understandable that Interior staff are cranky about the Secretary being maneuvered into this meeting by Sen. Mary Landrieu (D-LA), but it’s only polite to refer to the organization you’re meeting with by its real name.

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Sen. Landrieu Gets a Commitment from Salazar on Drilling

Sen. Mary Landrieu (D-LA) removed her hold, thus allowing the Senate to confirm Jacob Lew to be director of the Office of Management and Budget on Thursday. From Landrieu’s office, “Landrieu Receives Commitment from Sec. Salazar, Drops Hold of OMB Nominee Jack Lew“:

“Tonight I received a commitment from Interior Secretary Ken Salazar to provide certainty and regulatory clarity to an industry that has operated in the dark for months with shifting rules. The Secretary will come to Louisiana on Monday to meet with industry and express the Administration’s support for the oil and gas industry. He will outline the path forward so that permits will be issued and the people of Louisiana can get back to work in this vital industry. Given this commitment, I released my hold, so that Jack Lew can get to work balancing the federal budget and putting this country back on a path of fiscal discipline.”

Hope she’s right.

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