Tag: Ken Salazar

Circumnetting Energy Policy and the Lack Thereof

We catch up on energy news that may have slipped through the tines of the barbecue fork over the last days of summer, at least as Washington, D.C., understands the season.

Jobs …. Just thought we should mention the word.

Los Angeles Times (blog), Sept. 4, “Salazar: Arctic oil drilling must wait“:

Interior Secretary Ken Salazar is making it clear that he’s in no hurry to open the door to new exploratory oil and gas drilling in the offshore Arctic — not, he said, until more is known about the potential pitfalls.

Winding up a two-day trip to Alaska’s North Slope that included a town hall in Barrow, a stop at the National Petroleum Reserve-Alaska, and a flight over the Beaufort and Chukchi seas, Salazar said reports on what caused the Deepwater Horizon blowout in the Gulf of Mexico will have to be in before Shell Alaska can be allowed to commence drilling new wells off Alaska’s northern shores.

Politico, Sept. 3, “More Democrats call for oil drilling investigation“: “House Natural Resources Committee Chairman Nick Rahall (D-W.Va.) on Friday sent Interior Secretary Ken Salazar a letter requesting a slew of documents, saying he is “alarmed” by the disaster aboard the Mariner Energy rig in the Gulf of Mexico. This follows on the heels of the House Energy and Commerce Committee’s request that Mariner brief committee members.”

Bloomberg, Sept. 3, “Crude Futures Seen Falling Next Week as Refineries Do Seasonal Maintenance“: “U.S. crude oil production increased 1.7 percent to 5.6 million barrels a day last week, the highest level since May 2004, the [Energy] department said.”

Houston Chronicle, Sept. 3, “Energy workers speak out“: “More than 5,000 energy sector workers flocked to three Texas rallies Wednesday to protest what they view as an onslaught of punitive measures from Washington that threaten oil and gas jobs and domestic energy supplies.”

And on the nuclear front …

Der Spiegel, Sept. 6, “Merkel’s Government Extends Nuclear Plant Lifespans“: “The German government has agreed to extend the operating lives of the country’s nuclear power plants by up to 14 years. Energy companies will make payments to promote the expansion of renewable energy in return.” (continue reading…)

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Circumnetting the Cabinet

Cabinet officials were on the road last week, making announcements and promoting the Obama Administration’s priorities.

Des Moines Register blog, Aug. 17,Vilsack: Estate tax won’t hurt most farmers“:

U.S. Agriculture Secretary Tom Vilsack today defended proposals to reinstate the estate tax, despite concerns raised at an Iowa State Fair roundtable about the need for more rural capital and incentives for young farmers.

Vilsack, the former Iowa governor, said he thinks the estate tax will be restored. The key is having appropriate exemptions for people who want to pass their farm down to a family member or someone else, he said. He expects to see a large enough exemption to cover the “vast majority” of farms and ranches in the country, he said.

St. Louis Post Dispatch, Aug. 20, “Salazar views Arch designs, says ‘We will get this done.’“:

Salazar called the five designs exciting and said that better use of the Arch grounds and connections to St. Louis and East St. Louis are important goals in even in a recession.

“We will make this one of our highest priorities,” he said. “I cannot find any place in the U.S. that has the frame for an urban park lilke you have here with the Arch and river.”

Tech Daily Dose, Aug. 17, “Broadband Grants Totaling $1.8 Billion Announced“:

(continue reading…)

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No Surprise: Drilling Moratorium Costs Jobs

Big story posted online in advance of Saturday’s Wall Street Journal, “U.S. Saw Drill Ban Killing Many Jobs“:

Senior Obama administration officials concluded the federal moratorium on deepwater oil and gas drilling would cost roughly 23,000 jobs and freeze up to $10.2 billion in oil-industry investment, according to previously undisclosed documents detailing their internal debates….[snip]

The administration hadn’t previously disclosed its estimates of the economic effect of the controversial halt, ordered after the April explosion at a Gulf of Mexico well. The documents doing so were filed in a New Orleans federal court by the Justice Department earlier this week as part of the latest round of litigation over the moratorium.

The moratorium on drilling was represented as one affecting only deep-water operations, but the effect was more encompassing. The Houston Chronicle this week reported on “DISASTER IN THE GULF: Drillers fear sinking in shallow waters“:

A post-oil-spill delay in issuing new federal drilling permits in the shallow waters of the Gulf of Mexico, at first an inconvenience, has suddenly emerged as a real threat to the future of companies in the business, industry executives said Wednesday….[snip]

So far, permitting delays have idled 14 of the 46 available jackups in the Gulf and forced offshore companies to cut several hundred jobs. Each rig employs about 100 workers and supports many additional indirect jobs at supply boat companies, oil field services companies and other businesses.

If the delays continue, 30 rigs could be idled by the end of September, the Chronicle reported.

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Interior Imposes Moratorium Without Economic Analysis

Attorneys for the Department of Interior will be in federal court in New Orleans Wednesday to argue for the dismissal of the suit by Hornbeck Offshore Services Inc. of Covington, La., challening the federal moratorium on deepwater drilling. (New Orleans Times-Picayune, “2 offshore drilling firms to argue the legality of Obama moratorium.”

We recommend this opening statement to Interior’s lawyers: “Your honor, we ask you to dismiss this lawsuit because it has become moot. Secretary of Interior Ken Salazar today ordered the lifting of the moratorium.”

Absent that smart choice, the legal question is whether Interior has the authority to issue a moratorium despite its failure to lay out solid, fact-based case for the action. The Administration has, in effect, embraced the “precautionary principle” — because there’s some slight, slight, slight, slight danger of another catastrophic spill, drillers must affirmatively prove that there is NO risk. And you can’t prove a negative.

U.S. District Court Judge Martin Feldman has previously ordered the lifting of the federal moratorium because of Interior’s ”arbitrary and capricious” case versus the economic harm the halt to drilling inflicted on the Gulf Coast.  But since then, the Administration has analyzed the economic impact and concluded the risks justify the effect on local economies and jobs. Right? There’s been an in-depth, serious analysis?

From “Meet the Press,” Sunday, August 8, David Gregory interview with White House energy and environmental advisor Carol Browner:

MR. GREGORY:  You talk about all the work here being done for safety.  Did the White House do any economic analysis about what a moratorium–what impact it would have on jobs in the Gulf Coast?

MS. BROWNER:  There is, there is an economic analysis being done.  It’ll be ready later…

MR. GREGORY:  But it was never done before the moratorium was put in place? Because those who are down there say, “You know what, the moratorium by the Obama administration is far worse than the spill itself.”

MS. BROWNER:  Here’s what we knew the minute the accident happened:  that if there was another accident of equal size, we didn’t have the equipment to respond.  All the boats, all the resources were being used.  We had a close–over 6,000 vessels, we embedded private citizens into this effort.  It was a massive undertaking, and if another accident were to occur, we would not have had the ability to respond.  And, you know, that formed a basis for putting a pause on drilling while we looked at the safety, while we looked at how we would contain it, ultimately, and then clean it up.

Well, since Interior needs an economic analysis, here’s a solid, even conservative one offered by Joseph R. Mason, the chairman of banking at the E.J. Ourso School of Business, Lousiana State University, at a Senate Small Business Committee on July 27, “The Deepwater Drilling Moratorium: A Second Economic Disaster for Small Businesses?

Mason:

These projections are lower than those presented by other studies because I estimate the period of new production loss to be only six months. However, if we were to extend the loss in new production in our model to the 18 months assumed by other sources, we would see a loss of 36,137 jobs nationally, 24,532 jobs lost in the Gulf region, and 14,156 jobs lost in Louisiana.

His study also examines the loss of earnings and state tax revenues.

Michael Bromwich, the head of the Bureau of Ocean Energy Management Regulation and Enforcement – formerly the Minerals Management Service — last week said the Administration might lift the moratorium early: “I think it’s everybody’s hope that we will feel comfortable enough that the moratorium can be lifted significantly in advance of Nov. 30.”

Wednesday, August 11, would be significantly in advance of Nov. 30.

Coverage …

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Mixed Messages: Summer of Recovery, Jobs-Killing Moratorium

The Obama Administration will seek to reinstate a moratorium on deep water drilling blocked Tuesday by a U.S. District Court judge in an opinion that revealed a shocking lack of substance in the Department of Interior’s arguments for the moratorium. As Judge Martin L.C. Feldman wrote (ruling is here):

On the record now before the Court, the defendants have failed to cogently reflect the decision to issue a blanket, generic, indeed punitive, moratorium with the facts developed during the thirty-day review. The plaintiffs have established a likelihood of successfully showing that the Administration acted arbitrarily and capriciously in issuing the moratorium.

Interior Secretary Ken Salazar responded in a statement, saying: “The decision to impose a moratorium on deepwater drilling was and is the right decision. The moratorium is needed to protect the communities and the environment of the Gulf Coast, and DOJ is therefore appealing today’s court ruling.”

This time Interior will presumably attempt to supply more factual basis for its far-reaching moratorium. The issue will certainly arise this morning when Secretary Salazar testifies at a Senate Appropriations subcommittee hearing on reorganizing the Minerals Management Service.

We’ll be very interested in whether the Administration acknowledges the economic damage the moratorium does to the Gulf Coast economy, which has already — obviously — been terribly harmed by the oil spill. As this Reuters report notes, perhaps 50,000 jobs are threatened by the moratorium. Why exacerbate the damage?

The White House last week kicked off its “Recovery Summer,” a series of public events to showcase the Administration’s leadership in helping to revive the ec0nomy and create jobs. The White House blog declared, “Let the Summer of Recovery begin!

Tough to reconcile the messages here: As we wreck 50,000 jobs, let the Summer of Recovery begin!

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Cape Wind in the Sails/Sales of Offshore Energy

Interesting that The Baltimore Sun considers the Department of Interior’s approval of the Cape Wind project page one news. From “Offshore wind farm wins OK:

The Obama administration’s approval of the nation’s first offshore wind farm near Cape Cod in Massachusetts buoys prospects for similar renewable-energy projects off Maryland’s shore and elsewhere along the Atlantic coast, proponents say.

But it may still be several years — if ever — before turbines are spinning wind into electricity off Ocean City, state officials note.

The Sun’s financial columnist, Jay Hancock, provides more context at his blog, “Wind energy still expensive, relatively rare.”

The Washington Post reports Interior’s approval as the equivalent of a done deal. From “Offshore wind farm near Cape Cod, first in U.S., gets federal approval“:

Ending a nearly decade-long political battle over installing wind turbines in the waters just off Cape Cod, the federal government approved the first offshore wind farm in the United States on Wednesday, a move that could pave the way for significant offshore wind development elsewhere in the nation.

Political battles at an end? Oh, probably not. The legal battles are certainly not. From The Boston Herald, “Angry project foes ready court fights“:

“The fight is far from over, said Audra Parker, executive director of the Alliance to Protect Nantucket Sound. “It will ultimately be decided in a court – and based on facts, not politics.”

And even more important context, or lack thereof:

Yesterday, Salazar and Massachusetts Gov. Deval Patrick admitted that they don’t know what the project will mean for electric ratepayers. They said they don’t know how much the project will cost, even though one-third of the bill will be paid by taxpayers.

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Delaying Oil Leases, Energy Security

From AP, “91,000 acres of oil, gas leases put on hold in Montana, Dakotas“:

BILLINGS – Plans to sell 91,000 acres of oil and gas leases in Montana, North Dakota and South Dakota were put on hold Thursday until federal land managers study how oilfield activities contribute to climate change.

Lease sales scheduled for June and August also are likely to be postponed.

March 31 statement from the White House, Interior Secretary Ken Salazar:

“By responsibly expanding conventional energy development and exploration here at home we can strengthen our energy security, create jobs, and help rebuild our economy,” said Salazar.

Can’t really reconcile the first fact, that of blocked leases, with the second statement, can you? For the sake of intellectual and policy consistency, the Secretary’s statement should read: “By blocking conventional energy development and exploration here at home we can weaken our energy security, prevent the creation of jobs, and continue to prevent the rebuilding of our economy.”

(Hat tip: Say Anything blog.)

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Drilling into Energy Security

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 NewChevron's Tahiti Platformsweek 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

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Brazil, Where Energy Flows (Alberta, Too), In Contrast To…

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.

 

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The Hits Keep Coming, Regulatorily

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.

In the midst of a deep recession, an uncertain recovery and intense global competition, the Obama Administration continues to pile on costly regulations that discourage new investment and employment … at least here in the United States. The rhetoric about jobs is hard to reconcile with this regulatory excess.
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