Tag Archives: oil

Gulf damage assessments begin to roll in

It seems there is finally some good news coming out of the Gulf of Mexico.

After 170 days, the leaking oil well — nearly a mile under water — was finally plugged with mud. Officials say it means an end to the long spill. As BP stated in a news release:

“Pumping of heavy drilling mud into the well from vessels on the surface began at 1500 CDT on August 3, 2010 and was stopped after about eight hours of pumping. The well is now being monitored, per the agreed procedure, to ensure it remains static. Further pumping of mud may or may not be required depending on results observed during monitoring…

“A relief well remains the ultimate solution to kill and permanently cement the well. The first relief well, which started May 2, has set its final 9 7/8-inch casing. Operations on the relief wells are suspended during static kill operations. Depending upon weather conditions, mid-August is the current estimate of the most likely date by which the first relief well will intercept the Macondo well annulus, and kill and cement operations commence.”

If the spewing has indeed stopped for good, discussions about the fate of the contamination and restoration of the ecosystem have some real meaning. A report issued this morning by the National Oceanic and Atmospheric Administration starts to put the issue into perspective.
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Will coastal oil drilling take a back seat to wind?

Secretary of Interior Ken Salazar will not advance plans for offshore oil drilling, saying he will promote “a new way forward,” according to an Associated Press story by reporter H. Josef Hebert.

In a press conference today, Salazar criticized the “midnight timetable” for new oil and gas development on the outer continental shelf of the U.S. He said the Bush administration failed to consider the views of states and coastal communities.

Salazar has directed scientists in his agency to produce new reports about oil and gas supplies off the Atlantic and Pacific coasts. He also extended the public comment period until September and says he will hold meetings in the regions where drilling is likely.

Any offshore energy plans should consider renewables, such as wind, he said.

Needless to say, environmentalists were pleased.

Richard Charter of Defenders of Wildlife (PDF 92 kb):

“We will provide comments to the Department explaining that the Bush administration’s plan was the worst five-year offshore drilling plan we’ve ever seen and should be permanently shelved, not just delayed for 180 days.”

House Republicans, in a letter last week to President Obama (PDF 476 kb), voiced their displeasure over the prospect of holding up or canceling plans for offshore drilling:

“As you know, at the height of our nation’s energy crisis last year, the American people spoke with one voice to express their outrage when they saw that not only were we dependent upon foreign oil, but furthermore, that energy resources located within American territory were locked away and could not be developed. Our national vulnerability was on plain display for the American public last summer because we lacked a coherent energy policy to allow for responsible energy exploration and development.”

So does anybody think Salazar’s stance will not be the end of offshore drilling, at least for California and states that have oil but are opposed to drilling?

If you recall, oil industry folks I talked to last summer told me that Washington state would be one of the last places they would drill.

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Arctic geopolitics explored in a U.S. News article

There is nothing like a weekly news magazine to explore the breadth and depth of an issue, as U.S. News and World Report has done in a story titled “Global Warming Triggers an International Race for the Arctic.”

The magazine piece, written by Thomas Omestad, discusses a treasure of oil and minerals, scientific discoveries, commercial potential and possible geopolitical clashes. I recommend it to anyone interested in the confluence of global warming and international intrigue.

A map of this remote area shows how the legendary Northwest Passage could become an important route between the East and West coasts.

After describing some strategic flurries in the Arctic by Russia and Canada, Omestad offers this observation:

The United States, for its part, has not acted with the same urgency. “We are behind when it comes to what is happening with our other Arctic neighbors,” says Republican Sen. Lisa Murkowski of Alaska.

The lagging begins with the Law of the Sea convention. Despite Bush administration support, Senate ratification of the 1982 treaty remains blocked by conservative Republicans fearful that the treaty will give away American sovereignty. The other four Arctic coastal states have adopted the convention and are eligible to file their claims for economic control.

The Pentagon has also appeared slow to focus on the region. The U.S. Coast Guard maintains just two working icebreakers, with another docked until repairs are authorized. The question of expanding the icebreaker force has been left unanswered, while a broader, interagency review of Arctic policy has continued for nearly two years….

I recently cited some sketchy stories about this subject on Watching Our Water Ways. Now this U.S. News article has placed the issue into the appropriate context. If the prescribed dominoes begin to fall, international tensions will no doubt rise in this remote part of the Earth.

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Now for a taste of geopolitics in the Far North

With vast oil reserves waiting to be taken from the Arctic, it is interesting to read about Russia’s saber-rattling and implications for the United States, Canada and other countries that want to claim a piece of what lies below the frozen earth.

I don’t know much about geopolitics in the Arctic — and I may be reading too much into recent news stories I’ve seen — but there may be something going on in the world that we should watch.

The following is from a story written last week by Randy Boswell of Canwest News Service in Canada:

Russian President Dmitry Medvedev directed his top Kremlin officials to develop a comprehensive and assertive strategy to exploit the region’s vast Arctic frontier — including the demarcation of boundaries and the exploiting of polar resources …

Initial reports of Mr. Medvedev’s address to Russia’s national security council suggested he was advocating unilateral action to secure Arctic territory at a time when the five polar nations — including Canada — are collecting geological data for planned sea floor territorial claims under the UN Convention on the Law of the Sea.

Later in the same piece, there is a discussion about Russian aircraft invading Canadian air space in Far North.
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Researcher finds manipulation in oil markets

I continue to be fascinated with the possibility that a few speculative traders could dramatically affect oil prices the way we have seen over the past month.

I’m still learning about futures markets for oil, but now Robert McCullough of McCullough Research has released a statistical analysis of recent changes in prices in the futures and spot markets. McCullough was an investigator who exposed Enron’s energy market manipulation several years ago. (See Portland Tribune article.)

Now, McCullough is working with U.S. Sen. Maria Cantwell, who is doggedly pursuing legislation designed to shed new light on the way oil markets work. Read on for down for Cantwell’s press release or read McCullough’s report (PDF 460 kb) at his Web site.

I have another question that I’ve been pondering: Most people seem to agree that it will take seven to twelve years to bring oil to market from offshore wells. But some supporters say congressional approval would have an immediate impact on oil prices, because the markets would anticipate an increased supply.

If that’s true, wouldn’t a crash program to wean the country off oil with alternative energy supplies have an even greater impact on oil prices, since the markets would anticipate a dramatic and permanent drop in demand? I’m just wondering.

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Should Gore lead the charge for clean energy?

Is former vice president Al Gore too controversial to carry the torch for the clean-energy movement?

Let’s be right up front about this. While Gore is a hero to many environmentalists, he is a toxic figure to many people of the conservative persuasion.

Last week, Gore received a lot of attention when he proposed a crash program to shift from carbon-based fuels to renewable supplies, such as solar and wind. (See Associated Press story by Dina Cappiello.) I was surprised that Gore said nothing about what has gone on before with the help of U.S. Rep. Jay Inslee, D-Bainbridge Island, and his New Apollo Energy Project and others involved in the Apollo Alliance.

Yes, Gore has managed to raise the profile on this issue like nobody before him. But as Michael Gerson says in an opinion column in Sunday’s Kitsap Sun:

Some Republicans and conservatives are prone to an ideologically motivated skepticism. On AM talk radio, where scientific standards are not particularly high, the attitude seems to be: “If Al Gore is upset about carbon, we must need more of it.” Gore’s partisan, conspiratorial anger is annoying, yet not particularly relevant to the science of this issue.

This points, however, to a broader problem. Any legislation ambitious enough to cut carbon emissions significantly and encourage new energy technologies will require a broad political and social consensus. Nothing this complex and expensive gets done on a party-line vote.

Yet many environmental leaders seem unpracticed at coalition building. They tend to be conventionally, if not radically, liberal. They sometimes express a deep distrust for capitalism and hostility to the extractive industries. Their political strategy consists mainly of the election of Democrats. Most Republican environmental efforts are quickly pronounced “too little, too late.”

Gore is well known for his concerns about climate change, which he revealed in his book and later the movie, “An Inconvenient Truth.” Now, he has hitched his ambitions to a crash program of energy conversion, something that Inslee has written about in his own book, “Apollo’s Fire.”

In interviews I’ve seen and heard, Gore gives barely a nod to legislation that others have been pushing. He exhibits more than his usual arrogance in acting like this was his idea alone.

Now, T. Boone Pickens, the multi-billionaire oil man, is muscling in with his own clean-energy initiative, including a potential $53 million ad campaign to promote wind energy and break America from its oil addiction.

Maybe all sides of the energy issue should come together and decide what can be reasonably accomplished with a bipartisan effort. While Al Gore could bring something to the table, I’m not sure whether everyone would welcome him there. And the notion that he should become some kind of “energy czar” for the country might just turn the table upside down.

Hear Gore in his own words on Sunday’s “Meet the Press.”

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Where is the oil hiding, besides offshore locations?

President Bush has lifted the executive moratorium on offshore oil development. Now it is up to Congress to decide whether to shift the decision on offshore drilling to state governments for state-by-state decisions. See Ben Feller’s story for the Associated Press.

Meanwhile, there is a lot of political heat generated over the “use-it-or-lose-it” bill proposed by the Democrats in Congress, who argue that offshore drilling shouldn’t be approved until known onshore reserve areas are explored. The bill won’t go anywhere, because Democrats don’t have enough votes to override a presidential veto. See Andrew Taylor’s story today for the Association Press.

So what about offshore versus onshore drilling?

President Bush’s Department of Interior released a report in May that says onshore public lands are estimated to contain 31 billion barrels of oil and 231 trillion cubic feet of natural gas. I can’t seem to find where the report spells out how many acres are in roadless areas or contain endangered species and so on, but it does say this:

  • Approximately 60 percent (165.9 million acres) of the federal land is inaccessible. Based on resource estimates, these lands contain about 62 percent of the oil (19.0 billion barrels) and 41 percent of the natural gas (94.5 trillion cubic feet).
  • Approximately 23 percent (65.2 million acres) of the federal land is accessible with restrictions on oil and gas operations beyond standard stipulations. Based on resource estimates, these lands contain 30 percent of the oil (9.3 billion barrels) and 49 percent of the gas (112.9 trillion cubic feet).
  • Approximately 17 percent of the federal land (48.0 million acres) is accessible under standard lease terms. Based on resource estimates, these lands contain 8 percent of the oil (2.3 billion barrels) and 10 percent of the gas (23.6 trillion cubic feet).

See the news release OR the report itself.

Meanwhile, the BLM yesterday announced its decision to open for exploration and development about 2.6 million acres of potential oil lands in northern Alaska. The “record of decision” puts off final conclusions about another 600,000 acres north of Teshekpuk Lake, which includes habitat for caribou and migrating birds.

Tom Lonnie, Alaska state director for the Bureau of Land Management, was quoted by Felicity Barringer of the New York Times as saying the decision will allow drilling in an areas that holds some 3.7 billion barrels of oil.

For a reference on the amount of oil these figures represent, the United States goes through about a billion barrels of oil in 50 days. See the Energy Information Administration.

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