Tag: MMS

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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Jobs, Yes, But Not THOSE Jobs

Leading up to the State of the Union address…

David Holt, president of the Consumer Energy Alliance, issued a statement reacting to the news that the Interior Department will continue to delay the long-scheduled offshore energy lease sale in areas 50 miles off the Virginia coast:

When the governor of the commonwealth of Virginia asks the federal government to partner with his administration in an effort to convert the abundant reserves of energy off his shores into jobs, revenue and energy security for Virginians, you’d hope to see a sensible process move forward. If news today out of MMS is any indication, the federal government appears ready to delay that critical work for at least another year, meaning additional delays in creating jobs, reducing energy costs and getting the U.S. economy moving again.

The Administration should do more to show that it recognizes the tremendous economic opportunity that safe and responsible offshore energy exploration presents to the citizens of Virginia, and the nation at large.

We’re talking about thousands of high-wage jobs here, and billions in annual revenue that can be raised without imposing a single new tax. When it comes to promoting alternative energy resources offshore, the Administration has compiled an impressive record – and we applaud those efforts. This announcement signals that the Administration may not be looking to maximize our nation’s enormous oil and gas potential offshore with the same enthusiasm.  Those who support a balanced, commonsense national energy strategy look forward to continuing to work with the Administration to create jobs, improve our national and energy security and responsibly allow access to our abundant resources.

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Virginia’s Next Governor Puts Energy, Jobs at Top of Agenda

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:

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Comment Period Ending for More Energy Security via OCS Oil, Gas

In February, Secretary of Ken Salazar extended the public comment period on the Minerals Management Service’s draft five-year program for Outer Continental Shelf oil and natural gas leases. As MMS explained:

The MMS is seeking comment on all aspects of the new program including energy development and economic and environmental issues in the OCS areas. Comments are also requested on the specific subjects of size, timing, and location of sales and on the issues of buffer zones, revenue-sharing, and the use of unitization to limit the number of structures. The public comment period is open until September 21, 2009…

So Monday is the deadline. The NAM has put together an online form that allows you to submit comments to the MMS, making this point:

[A] large-scale expansion of access to the OCS will reduce our dependence on energy imports. It will also serve as a key pillar for a comprehensive energy plan for which manufacturers have been campaigning for several years.

The American Petroleum Institute also has background materials available here on API’s Energy Tomorrow website. You can go directly to the MMS Web site to submit a comment.

We constantly stress the principle of energy security, that is, building U.S. economic resilience by robust development of all our energy resources. And let’s not forget jobs. A recent PricewaterhouseCoopers study found that the oil and natural gas industry supports more than nine million American jobs and contributed $1 trillion to the economy in 2007. More details about the study are available at the Energy Tomorrow posts here and here.

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In Alaska, Support for OCS Energy Resources

Secretary of Interior Ken Salazar continued the Department’s series of four meetings on developing Outer Continental Shelf oil and gas resources with a daylong session in Anchorage on Tuesday. From AP:

[Governor] Palin warned against the country’s dependence on foreign oil coming from “dangerous regimes” that she said don’t like Americans. With production falling on the North Slope, the amount of oil carried in the trans-Alaska pipeline could fall below carrying capacity in the next decade, the governor said.

“Alaska has decades of safely developing our oil and gas,” Palin said. “There are solutions here in Alaska to America’s energy challenges.”

Sens. Lisa Murkowski, R-Alaska, and Mark Begich, D-Alaska, sent Salazar a similar message: Alaska knows how to drill for oil and gas in an environmentally responsible way. [See - Bipartisan support!]

Rep. Don Young, R-Alaska, said Alaska will be left out if it doesn’t act now, especially with China and Russia already staking claims to the North Pole.

“My interest in this is jobs,” Young said.

Gov. Palin (news release) correctly brings energy security back into the focus. How exactly is the United States supposed to free itself from dependence on foreign energy suppliers if the country abandons domestic oil and gas production?

Consider Alaska’s potential alone: The Minerals Management Service estimates that Alaska’s OCS contains 27 billion barrels of oil and 132 trillion cubic feet of natural gas (or a total of 53 billion barrels of oil equivalent). In comparison, total production from the North Slope since 1977 has been 15.5 billion barrels.

The hearings (the last one is tomorrow in San Francisco) help form the public record for the MMS. In January, MMS released its 2010-2015 five-year leasing plan, including proposals to open new offshore areas to oil and natural gas development. Coming into the Department, Secretary Salazar delayed the plan’s implementation (public comments were heavily in favor of energy development), directed Interior scientists to produce more reports on oil and gas potential off the Atlantic and Pacific coasts, and extended the public comment period to September.

In case you couldn’t make it to Anchorage, the American Petroleum Institute has created a website to allow the public to comment on the proposed five-year leasing program. Go here. Lots of good resources and facts.

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The 2006 Energy Legislation Gets Results

A model for future leasing, now that the OCS moratorium has expired:

From the Minerals Management Service:

NEW ORLEANS – The Department of the Interior’s Minerals Management Service (MMS) has proposed that oil and gas Lease Sale 208 for the Central Gulf of Mexico Planning Area be held March 18, 2009. The Notice of Availability of the Proposed Notice of Sale (PNOS) was published in the Federal Register on Friday, October 3.

The proposed sale encompasses approximately 6,200 unleased blocks covering more than 33.5 million acres offshore Louisiana, Mississippi, and Alabama. This area includes 5.8 million acres, known as the 181 South Area, that will be offered for lease for the first time since 1988. “What makes Sale 208 noteworthy is the addition of the 181 South Area,” said MMS director Randall Luthi. “The states of Alabama, Mississippi, Louisiana, and Texas will share in all revenue from leases in this new area.”

The Gulf of Mexico Energy Security Act of 2006 mandated that the 181 South Area, approximately 5.8 million acres located in the southeastern part of the Central Planning Area, be offered for lease, and that the four Gulf producing states share in the revenues. 

According to MMS estimates, the proposed lease sale could result in production of approximately 0.807 to 1.336 billion barrels of oil and 3.365 to 5.405 trillion cubic feet of natural gas. But…

Two steps forward, six steps back, six steps back:

The darkening economic outlook may force lawmakers to delay some public policy priorities, but two House Democrats indicated Tuesday that curbing global warming won’t be one of them.

House Energy and Commerce Committee Chairman John Dingell (D-Mich.) and Energy and Air Quality subcommittee Chairman Rick Boucher (D-Va.) released a 461-page bill that seeks to cut greenhouse gas emissions by roughly 80 percent over the next four decades. Environmental groups welcomed that target, but criticized the bill, which Dingell and Boucher refer to as a “discussion draft,” for delaying dramatic emissions reductions until after 2020.

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Watching the Hurricane, Wondering about Energy

Best single place to keep track of Hurricane’s Ike impact is the Weather Nerd blog from Brendan Loy at Pajama’s Media.  Good compendium of resources and informed commentary, including worrisome observations like:

Even if Ike’s winds were to unexpectedly weaken to Cat. 1 force (or, heck, to tropical storm force), Ike would still be a “major hurricane” in terms of its massive storm surge. The surge, not the category, is the story! This is because of the sheer volume of water Ike is pushing across the Gulf, as I discussed at length yesterday. And that water is already in motion, inexorably bearing down on the gently sloping Texas coast. If coastal residents are taking this storm less seriously than they might because it’s “only” a Category 2, they are making a serious mistake. Eric Berger has an excellent post this morning about the predicted surge, with an updated SLOSH map.

And for the impact on energy, Bloomberg’s story is good:

Sept. 12 (Bloomberg) — Crude oil and gasoline rose as Hurricane Ike headed toward the Texas coast, home to 23 percent of U.S. refining capacity, shutting almost all Gulf of Mexico oil production as it passes.

About 19 percent of U.S. oil processing capacity has been shut before Ike makes landfall today. More than a quarter of U.S. crude production is based in the Gulf Coast region. Evacuations have halted 97 percent of Gulf oil output, the Minerals Management Service said yesterday.

“The big concern is about the products because the refineries aren’t running,” said Tom Bentz, senior energy analyst at BNP Paribas in New York. “It remains to be seen how much damage will occur, but nobody wants to take chances.”

The concentration of energy-producing infrastructure on the Gulf Coast is detrimental to U.S. economic resilience. We need more redundancy and geographically dispersed production and refining capacity — as in a new refinery in South Dakota by Hyperion and an expansion at ConocoPhillips’ Wood River Refinery in southern Illinois. Yes, more of that kind of thing, and less of this:

Oregon and 11 other states are suing the Environmental Protection Agency over greenhouse gas emissions from oil refineries.

The suit, led by New York Attorney General Andrew Cuomo, charges that the EPA violated the federal Clean Air Act by refusing to issue standards, known as new source performance standards, for controlling global warming pollution emissions from oil refineries.

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Post Gustav, Energy Infrastructure OK

Wall Street Journal, “Early Signs Show Gulf’s Energy Facilities Held Up

The weakened Hurricane Gustav hit energy-producing facilities that were more rugged and better prepared to resume operations than they were three years ago during Hurricane Katrina.

Turbulent weather prevented a damage assessment Monday, and industry officials cautioned that in previous hurricanes, initial optimism soured when operators began to test equipment.

Houston Chronicle: “With little damage to oil patch, prices dip“:

The oil and gas industry breathed a tentative sigh of relief Monday after preliminary reports suggested Hurricane Gustav did little damage to energy facilities both onshore and off, helping send oil prices sharply downward.

Early updates from Gulf of Mexico drillers and oil and natural gas producers were “very promising,” with no major damage reported, said Lars Herbst, regional director for Minerals Management Service, the Interior Department office that regulates the offshore oil and gas industry.

MMS has more on its homepage. For regular updates, you can’t go wrong with The Oil Drum.

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