Prominent play on the front of the Metro section in today’s Washington Post, “Virginia leaders express interest in offshore drilling“:

RICHMOND — Never has the political climate in Virginia so favored offshore drilling.

Most Virginia leaders — regardless of their political party — have expressed interest in joining Alaska, Texas, Louisiana and other states in setting up offshore platforms to drill for oil and natural gas.

Gov. Robert F. McDonnell and fellow elected Republicans strongly back the proposal, as do most members of the state’s congressional delegation, including both U.S. senators, who are Democrats.

The Tallahassee Democrat reports, “Drilling report’s conclusions disappoint both sides:

With its chief proponent saying he is in no hurry, the push to open Florida waters to oil and gas drilling inched past another milestone Monday when a House panel was briefed on a report by a Florida think tank.

House Speaker-designate Dean Cannon, R-Winter Park, said he was pleased with the report, which was prepared by the Collins Center and the Century Commission for a Sustainable Florida.

“It was fascinating how much of it jibed with what we’ve been hearing in testimony from the experts,” Cannon said.

Cannon: “I’m pleased with the report.” Newspaper: “Both sides disappointed.”

The report concludes that Gulf of Mexico oil production would produce $80 million to $190 million annually in revenue to the state, creating 2,000 to 5,000 jobs.

A recent article in Newsweek provides the big picture, or deep picture, as the case may be. From “Journey to the Center of the Earth“:

From the window of a helicopter 1,500 feet above the Gulf of Mexico, oil platforms look like Tinkertoys in a swimming pool. Dozens dot the horizon stretching south from New Orleans and continuing out as the water deepens and turns a darker blue. Then, about 50 miles offshore, the platforms stop, and for the next hundred miles there’s nothing. This is the deepwater Gulf of Mexico, where the ocean floor is 8,000 feet down and covered in a heavy layer of muck. Below that is an ancient salt bed several miles thick, and hidden under that, trapped tens of thousands of feet down, there’s oil—billions and billions of barrels of it. And it’s all in U.S. waters.

The article uses Chevron’s Tahiti platform (pictured above) as the base of reporting. Good story, tremendous prospects.

If only …

From The Washington Examiner, “The Obama Moratorium: No offshore drilling while he’s in office”

The Obama administration’s six-month delay in approving new offshore drilling leases in federal waters will become a new three-year ban, Interior Secretary Ken Salazar quietly told reporters last Friday. Which means that no new oil and gas leases will be approved during President Obama’s term even though two –thirds of the American public supports such activity, according to a December 2009 Rasmussen poll.

Sixty percent also believe that gas and oil prices will drop if the government allows offshore drilling, opening up an estimate 14 billion barrels of oil and 55 trillion cubic feet of natural gas

From Slate.com, boiling down Bloomberg, “BP Spends Billions To Hunt for Oil off Brazil“:

BP, the largest oil and gas company in Europe, has finalized a deal to fork over $7 billion in cash for a chunk of Devon Energy Corp.’s assets. BP will buy U.S. deepwater sites in the Gulf of Mexico, sites in Azerbeijan and, most notably, 10 sites off the coast of Brazil, home to some of the largest deepwater oil fields in the world. “This strategic opportunity fits well with BP’s operating strengths and key interests around the world,” BP Chief Executive Officer Tony Hayward told Bloomberg. “As well as giving us a broad portfolio of assets in the exciting Brazilian deepwater, it will strengthen out position in the Gulf of Mexico, enhance our interests in Azerbaijan and enable us to progress the development of Canadian assets.” As part of the deal, Devon will take a 50 percent stake in BP’s Kirby oil sands in Alberta, Canada.

Wall Street Journal editorial, “An Energy Head Fake“:

President Obama used his January State of the Union speech to promise “a new generation of safe, clean nuclear power plants” and “new offshore areas for oil and gas development.” Judging by its recent decisions, we’d say his Cabinet hasn’t received the memo.

Congress’s ban on offshore drilling expired in September 2008, and a Bush Administration plan for leasing the energy-rich Outer Continental Shelf was due to begin this year. Yet within a month of taking office, Interior Secretary Ken Salazar halted leasing by extending the public comment period by six months. When that period ended last September, Interior said it would take “several weeks” to analyze the results. It has yet to release a summary.

• Deseret News, “Grouse decision could dampen oil drilling“
• Heritage Foundation, The Foundry blog, “Government Picks Wind as Winner, Oil and Natural Gas as Losers“
• Oil and Gas Journal, “Salazar defends proposed increased costs for producers“

The Environmental Protection Agency will propose new, more stringent rules for ground-level ozone emissions on Thursday. The agency summarized the expected action in an e-mail advisory to stakeholders this afternoon.

BACKGROUND: Today, EPA proposed to strengthen the national ambient air quality standards (NAAQS) for ground-level ozone, the main component of smog. The proposed revisions are based on scientific evidence about ozone and its effects on human health and the environment. EPA is also proposing to establish a distinct cumulative, seasonal “secondary” standard, designed to protect sensitive vegetation and ecosystems, including forests, parks, wildlife refuges and wilderness areas.

EPA is reconsidering the 2008 ozone standards to ensure that two of the nation’s most important air quality standards are clearly grounded in science, protect public health with an adequate margin of safety, and protect the environment.

Manufacturers were very active in commenting on the Bush Administration’s regulatory imposition in 2008 of a new, more onerous standard of 0.075 parts per million, objecting to the lack of scientific rationale or quality information justifying rules adding significant compliance costs — not just for industry but for any emitter. As the NAM’s Bryan Brendle testified in 2007, “EPA’s benefits estimates range from $2.5-$33 billion per year and the cost estimates range from $10-$22 billion per year. EPA’s estimated costs for the proposed rule are so high as to make it among the most expensive federal regulation ever issued.”

Now, before those rules can be implemented, the EPA’s new leadership seeks to raise those costs. What’s the logic? Not expensive enough?

That’s tomorrow. Today, Secretary of Interior Ken Salazar announced guidance for the Bureau of Land Management that will make it even more difficult to access energy resources on federal lands. This ”reformed oil and gas leasing policy“, Salazar said, would “improve protections for land, water, and wildlife and reduce potential conflicts that can lead to costly and time-consuming protests and litigation of leases.” No leases, no litigation, one supposes is the theory, but neither is there any progress toward national energy security.

Jack Gerard of the American Petroleum Institute commented on Interior’s action today at EnergyTomorrow.org in a post, “New Regulatory Hurdles for Oil and Gas“:

This troubling trend of hobbling companies’ ability to develop much-needed domestic energy supplies will not create certainty for investors, as Salazar suggested. Instead it will make America more dependent on foreign energy and continue to constrain government budgets.

About 9.2 million Americans rely on the oil and gas industry for their jobs. By imposing these unnecessary additional hurdles, American jobs will be threatened along with the economic opportunities afforded by oil and gas development.

Governor-elect Bob McDonnell of Virginia has already taken a strong stance in support of the state’s workers, consumers and manufacturers by pushing the Department of Interior to expedite development of natural gas and oil resources on the Outer Continental Shelf (OCS). Writing that “Virginia is eager to get started,” McDonnell on Dec. 23 sent a letter to Secretary of Interior Ken Salazar asking that the state remain on the current five-year OCS leasing plan and that federal administrative process move forward immediately with Lease Sale 220, an area more than 50 miles off the coast of Virginia estimated to contain 130 million barrels of oil and 1.14 trillion cubic feet of natural gas.

From the governor-elect’s letter:

Any effort to remove or delay Virginia’s participation in the lease sale would significantly hamper our efforts to create jobs, eliminate much-needed new revenue, and undermine support for President Obama’s stated commitment to make the United States more energy secure.

The opportunity to explore and develop oil and natural gas resources off the coast of Virginia, miles out of sight from our beaches in an environmentally sound manner, is timely for both our nation and our Commonwealth. Like every other state, Virginia is struggling with the high unemployment that accompanies the current tough economic environment. Some parts of our state have an unemployment rate as high as 19 percent. Additionally, America needs secure and diverse energy sources that do not leave us dependent on foreign governments adverse to our national interests.

Governor-elect McDonnell makes his Administration’s goals — upon which he specifically, prominently campaigned  – quite clear to Secretary Interior and the public.

Offshore energy exploration and production will be a priority in my administration. I would like to work with you and the President to make Virginia an international leader in offshore energy exploration and production on the Atlantic coast. It is important for both our Commonwealth and our country. We also intend to aggressively pursue offshore renewable energy sources such as wind farms, and will be asking for your assistance at that appropriate time.

That’s welcome leadership on behalf of smart energy policy and economic growth.

See also news coverage:

• Wall Street Journal blog, “Drill, Baby, Drill: Does Virginia’s Gov-Elect’s Call For Offshore Drilling Add Up?“
• Washington Business Journal, “Bob McDonnell urges offshore drilling for Virginia“
• Richmond Times Dispatch, “Hasten offshore lease sale, McDonnell urges White House“

Speaking at the Great Plains Energy Expo and Showcase in Bismarck, N.D., on Monday, Secretary of Interior Ken Salazar:

I don’t want you to be scared, those of you here who are supportive of coal and oil and natural gas…The fact remains that oil, gas and coal are a very important part of our energy portfolio and will remain a part of the energy portfolio in the future.

That’s from The Bismarck Tribune’s story, “Salazar says N.D. coal is part of U.S. energy future.” The quote doesn’t appear in the Secretary’s prepared text.

The keynote speaker at the expo sponsored by Sen. Byron Dorgan (D-ND) was Harold Hamm, chairman and CEO of Continental Resources, an independent oil company heavily invested in North Dakota. From AP:

BISMARCK, N.D. (AP) — Billionaire Enid oilman Harold Hamm said Monday North Dakota’s oil reserves could be double the federal government’s estimates….Hamm said U.S. Geological Survey’s estimate of 4.2 billion barrels of oil in the Bakken shale formation could be “100 percent off.”

“I think we’re going to be twice that,” said Hamm, chairman and chief executive officer of Continental Resources, an independent oil and gas company based in Enid. His company was one of the first to tap the Bakken formation in North Dakota’s oil patch 20 years ago. Hamm also said the underlying Three Forks-Sanish formation could hold as much oil as the Bakken.

The Bakken Formation is a shale formation, the crude oil of which has become available through advances in seismic exploration, directional drilling and hydrofracturing. Its development has pushed North Dakota into a new status as the fourth most productive oil state in the country, surpassing Louisiana.

See also Forbes, “Billionaire Harold Hamm’s New Play“: “Oklahoma billionaire Harold Hamm is rushing back into the North Dakota Bakken with an ambitious new drilling program after pulling back from the oil shale just a year ago.”

Interior Secretary Ken Salazar made a desert splash yesterday with an announcement made in tandem with Senator Majority Leader Harry Reid. From “Secretary Salazar, Senator Reid Announce ‘Fast-Track’ Initiatives for Solar Energy Development on Western Lands“:

LAS VEGAS, Nevada – Under initiatives announced today by Secretary of the Interior Ken Salazar and U.S. Senator Harry Reid (D-NV), federal agencies will work with western leaders to designate tracts of U.S. public lands in the West as prime zones for utility-scale solar energy development, fund environmental studies, open new solar energy permitting offices and speed reviews of industry proposals.

“President Obama’s comprehensive energy strategy calls for rapid development of renewable energy, especially on America’s public lands,” said Secretary Salazar.  “This environmentally-sensitive plan will identify appropriate Interior-managed lands that have excellent solar energy potential and limited conflicts with wildlife, other natural resources or land users.  The two dozen areas we are evaluating could generate nearly 100,000 megawatts of solar electricity.  With coordinated environmental studies, good land-use planning and zoning and priority processing, we can accelerate responsible solar energy production that will help build a clean-energy economy for the 21st century.”

Excellent idea. Let’s do it! And can we do the same for new nuclear power plants? After all, with coordinated environmental studies, good land-use planning and zoning and priority processing, we can accelerate responsible nuclear energy production that will help build a clean-energy economy for the 21st century.

(100,000 megawatts? That seems like a quite a goal. A nuclear power plant on average can produce about 1,000 megawatts. Should we really believe that solar technology, investment and transmission capacity can be ramped up so quickly as to produce the equivalent of 100 nuclear power plants?)

The Department of Interior holds another of its meetings on Outer Continental Shelf energy development in Anchorage today, the third of four. On Thursday, it’s San Francisco. (Details.) Secretary Ken Salazar and his staff did a nice job selecting the sites for the public hearings, ensuring a good cross-section of opinion; the other meetings were in Atlantic City, N.J., and New Orleans.

A few timely news reports come our way from the American Energy Alliance:

From Jim McTague at Barrons, “Sensible Drilling: Gone With the Wind?,” sharply critical of Secretary Salazar for overselling wind and underselling fossil fuels:

“America’s own oil and natural-gas supplies are limited,” he pronounced in a speech on April 2. “We sit on 3% of the world’s oil reserves. We consume 25% of its oil. Our dependence on foreign oil is a national security problem, an environmental security problem and an economic security problem.”

Rightly or wrongly, oil men don’t trust Salazar. They believe he means to extend the moratorium on oil and gas exploration indefinitely. He certainly does go out of his way to make the worse case for fossil fuels. Take the 3% number: “It is as old as Moses,” says Michael McKenna, president of MWR Strategies in Virginia, a lobbying and public- relations firm. McKenna represents several drillers.

THE NUMBER DOESN’T ACCOUNT for recent oil and gas discoveries. Salazar in his speech conveniently ignored a study by the U.S. Geological Survey that estimates a total of 1.5 trillion barrels of oil in place in 17 oil-shale zones in the Eocene Green River Formation in the Piceance Basin, which is located in northwestern Colorado.

Meanwhile, energy opponents are warning about past disasters:

San Luis Obispo Tribune (4/12) reports, “The county relies heavily on tourism, and residents routinely cite quality of life and the environment as top reasons for living here, the letter says. While the county’s coast has no offshore oil drilling, it had a “front row seat” to the 1969 oil spill off Santa Barbara, which the letter calls “a major offshore oil disaster.” In addition, the letter goes on, San Luis Obispo County had “extensive experience dealing with the calamitous aftermath of oil company negligence and equipment failure resulting in the massive cleanups in the Guadalupe Dunes and Oil Field and the town of Avila Beach.” Supervisors concede that extraction technology has improved, as have oil transport and delivery. Nonetheless, they write, “substantial risks remain, and these risks far outweigh the benefits.” The letter says the board supports “a comprehensive energy plan” that includes developing “clean, renewable energy in an environmentally balanced manner.”

You would think elected officials would be more in tune with an ongoing disaster in California — the state’s economy, i.e., “California rated low as a place to do business“:

California’s economic outlook ranks 43rd nationally, according to a new report from the American Legislative Exchange Council, the Washington, D.C.-based nonprofit group that includes state lawmakers and private-sector policy advocates.

At the Atlantic City hearing on offshore energy development, Interior Secretary Ken Salazar made an exuberant claim about the potential of wind energy.

The idea that wind energy has the potential to replace most of our coal-burning power today is a very real possibility. It is not technology that is pie-in-the sky; it is here and now.

When the chinook winds come blasting across the Colorado plains it may seem that way, but it’s not. Wind generation is rapidly increasing, and that’s a good thing, but it cannot replace coal as a source of baseload power generation.

Wyoming Governor Dave Freudenthal, a fellow Democrat, took sharp issue with the Secretary’s comments yesterday. From the Casper Star-Tribune:

“Ain’t going to happen,” Freudenthal told reporters at an impromptu new conference Wednesday that mostly focused on other topics.

Freudenthal said Salazar’s comments were a “dumb thing to say,” and may provide a teachable moment in which the new interior secretary will learn the wisdom of “not making gratuitous statements.”

Freudenthal added that the importance of coal in the nation’s energy mix is a reality, despite any creative hypotheticals by those in the Beltway.

“That potential (for wind energy to replace coal) is never going to be realized,” said Freudenthal, adding that Salazar’s comment was out of step with other messages from the Obama Administration.

From the Energy Information Administration, “Electric Power Monthly,” March 2009 edition, “Net Generation Shares by Energy Source: Total (All Sectors), Year-to-Date through December, 2008.”

Interior Secretary Ken Salazar continued the series of public hearings on developing the U.S. Outer Continental Shelf energy resources at Tulane yesterday, and representing manufacturers and NAM was Virginia Sawyer of the Louisiana Association of Business and Industry.

Almost 77 percent of the natural gas consumed in Louisiana is for industrial production, she testified, noting that the industrial sector employs 154,000 Louisianans in jobs that pay well above the state average. Let’s foster those jobs:

While tens of thousands of jobs may be created by the development of alternative electricity sources, hundreds of thousands of jobs in Louisiana and along the Gulf coast will be negatively affected if OCS oil and gas production is not aggressively continued. Orderly development of energy should be as fuel-neutral as possible.

From the Dow-Jones report of the hearing, held at Tulane University:

HOUSTON -(Dow Jones)- Louisiana representatives encouraged U.S. Interior Secretary Ken Salazar to authorize more offshore drilling for oil and gas at a regional meeting held in New Orleans Wednesday.

The representatives asked Salazar not to forget the importance of the oil and gas industry in the U.S. economy as a source of jobs and tax dollars.

“Lifting the ban on energy development on the outer continental shelf will create 1.2 million jobs across the country and $2.2 trillion in tax revenue,” said U.S. Rep. Joseph Cao, R-La. “These numbers represent more than four stimulus packages combined.”

Sen. Mary Landrieu (D-LA) also strenuously warned against tax provisions in the Obama and Congressional budgets that could burden the energy sector and called for expanded development of domestic energy resources. From her testimony:

I come today to urge you to look very hard at the proposed tax increases that would diminish the muscle and power of this industry that has served this country so well for so long.

Excellent, clear statement.

Video of the hearing is available here. Next week, Anchorage and San Francisco.

Associated Press, “Salazar: Eastern wind could equal coal for power“:

“The idea that wind energy has the potential to replace most of our coal-burning power today is a very real possibility,” he said. “It is not technology that is pie-in-the sky; it is here and now.”

Washington Post, music review, Neil Young’s “Fork in the Road”:

Atavistic riffing redolent of the proto-grunge half of “Rust Never Sleeps” abounds, along with loads of woozy guitar solos and dashed-off lyrics. “Her engine’s runnin’ and her fuel is clean/She only uses it ’cause she’s a machine/She don’t need it, though, just to cruise around town,” Young boasts, extolling the virtues of his beloved “LincVolt,” over the sludgy blues-rock of “Fuel Line.”