Replies to post #701 on The Rising Influence of Rising Affluence

[DewDiligence]

Obama’s Drilling Plan is ‘All Hat, No Cattle’

http://www.forbes.com/2010/03/31/obama-oil-drilling-business-energy-offshore-oil.html

›by Christopher Helman
03.31.10, 07:26 PM EDT

HOUSTON -- Royal Dutch Shell appears to be the biggest winner in Wednesday's much-heralded but underwhelming announcement by President Barack Obama about opening up new offshore areas of the U.S. to oil and gas drilling.

Finally, after three years of wrangling, Royal Dutch Shell ( RDS-A) will be allowed to drill test wells in Alaska's Chukchi Sea. But while the president giveth, he also taketh away. Interior Secretary Ken Salazar said on a conference call Wednesday that the government would cancel another set of leases in the Chukchi and Beaufort seas pending further environmental study. The administration banned altogether any future drilling in Alaska's Bristol Bay.

Shell President Marvin Odum was upbeat about the announcement in a conference call Wednesday afternoon. At least Shell would get to drill something. The company has paid more than $2 billion to the government since 2006 to lease blocks in the Chukchi, and it has invested $3 billion more since then on seismic testing, overhauling drilling ships to meet draconian air standards and environmental testing.

Shell's vice president for Alaska, Pete Slaiby, explained in an interview with Forbes late last year that Shell had invested more than $15 million to install more than 60 sound recorders on the seafloor to study the movements of whales, walruses and seals. It has made agreements with the captains of Eskimo whaling boats to move drilling ships out of hunting grounds during the open-water period so they can hunt Bowhead whales. Even if Shell ever gets the clearance to fully develop its Chukchi leases, the costs of the buildout would top $15 billion.

As for the rest of Obama's oil plan, it is (in Texas parlance) a classic case of all hat, no cattle. Even under the best circumstances it will be a couple years before the feds will auction off new acreage to oil companies offshore Virginia and Florida. Expect environmentalists to try to block the proposals all the way.

Let's break it down. Obama's plan envisions leasing areas off the coast of Virginia. But before that can happen, the Department of the Interior will have to conduct more than a year's worth of environmental impact studies. Only once it's determined that any Atlantic sea creatures 50 miles offshore can withstand the racket of a few drilling rigs will the department even consider scheduling a lease sale.

As for Florida, no leases would even be considered for areas less than 125 miles off Florida's west coast. But this promises to take even longer than the Virginia piece because the area is still off limits under a congressional moratorium. First lawmakers would have to drop that drilling ban; this could mean months of wrangling between Florida politicians, environmentalists and oil companies seeking to convince both parties that their activities won't sully sandy beaches. Again, only after a thorough environmental study would the government schedule a Florida lease sale. Never mind that Cuba has leased its own Caribbean coasts for oil exploration.

"We are skeptical about how quickly this administration will execute the new lease plan," says Whitney Stanco, an analyst with Concept Capital in Washington. She sees the administration's dedication to environmental goals as trumping any real commitment to reducing America's reliance on foreign oil through new drilling.

The administration never even considered opening waters off the West Coast, which, according to government, has at least 10 billion barrels of oil and 18 trillion cubic feet of natural gas. "The Pacific Coast is too special and needs to be protected," said Salazar, adding that there was strong opposition from governors and politicians. So much for reducing America's reliance on foreign oil.‹

[DewDiligence]

EPA Questions Gas Drillers

http://online.wsj.com/article/SB10001424052748704644404575482060132963700.html

›SEPTEMBER 10, 2010
By SIOBHAN HUGHES

WASHINGTON—The Environmental Protection Agency on Thursday asked nine big natural-gas companies and contractors to disclose the chemicals used in a controversial technique for accessing the fuel from vast underground gas fields.

The request, made to companies including Halliburton Co. and Schlumberger Ltd., comes amid a growing public backlash over a relatively new method of gas drilling. The debate is coming to a head as the EPA next week wraps up a series of public hearings in preparation for a study on the effect of the procedure, known as hydraulic fracturing.

"Natural gas is an important part of our nation's energy future, and it's critical that the extraction of this valuable natural resource does not come at the expense of safe water and healthy communities. By sharing information about the chemicals and methods they are using, these companies will help us make a thorough and efficient review of hydraulic fracturing and determine the best path forward," EPA Administrator Lisa Jackson said in a statement.

Halliburton said in a statement that "we will of course fully cooperate."

The EPA said that in addition to the chemical composition of the fluids, it also wants data on the chemicals' effects on human health and the environment, standard operating procedures at their hydraulic fracturing sites and the locations of sites where fracturing has been conducted.

"This information will be used as the basis for gathering further detailed information on a representative selection of sites," the EPA said in a statement.

Residents in areas that sit atop the gas locked in underground rock formations, or shale, fear the chemicals used in the drilling procedure will contaminate drinking water. Companies say that while the chemicals aren't publicly disclosed because they are commercially sensitive, the information is shared with local regulators. Companies also say that no evidence exists showing that the techniques are unsafe.

The EPA asked that the information be provided on a voluntary basis within 30 days, and asked companies to respond within seven days on whether they would comply.

The EPA said it expects companies to cooperate since the data are similar to information that has been provided separately to Congress. The EPA said that if companies do not comply voluntarily, it is "prepared to use its authorities to require the information needed to carry out its study."‹

[DewDiligence]

Pressure Builds to Reveal 'Fracking' Chemicals

http://online.wsj.com/article/SB10001424052748704679204575646942322414092.html

›DECEMBER 1, 2010
By TENNILLE TRACY

The Obama administration is considering a policy that would force natural-gas drillers on federal lands to disclose the chemicals they use during a process known as hydraulic fracturing.

The gas industry's increased use of the process to exploit huge reserves of gas locked in shale formations has raised concerns that the chemicals used could contaminate drinking-water supplies. Those concerns were highlighted when the New York State Assembly passed a bill Monday that bans new hydraulic fracturing in the state until May 2011, to allow time for further study of the oil and natural-gas drilling technique [#msg-57238699].

Interior Secretary Ken Salazar said during a public forum Tuesday that his department was considering a policy to force companies to disclose the chemicals in the fluids. "We have not yet settled on how exactly we are going to move forward with respect to that issue," he said.

The Interior Department's Bureau of Land Management oversees 250 million acres of public land, and 90% of wells drilled on public lands employ hydraulic fracturing, said bureau Deputy Director Marcilynn Burke. Onshore gas wells on lands managed by the bureau account for 11% of the U.S. natural-gas supply, the department said.

Natural-gas companies and drilling operators say fears about fracking chemicals contaminating water supplies are exaggerated. They are reluctant to disclose the chemicals because they say the composition of those fluids are trade secrets.‹