Replies to post #2205 on The Rising Influence of Rising Affluence

[DewDiligence]

The message from oil CEOs has been loud and clear: “It’s time to get back to work.”

[DewDiligence]

This is an op-ed piece in the Washington Times…

http://www.washingtontimes.com/news/2011/mar/9/not-above-the-law/

›Obama Attorneys’ Conduct Calls for Court-Ordered Fines

By Maureen Martin
6:47 p.m., Wednesday, March 9, 2011

The legal immorality of the Obama administration and its Department of Justice now stands fully exposed. And even some lawyers are shocked.

To be sure, many people think lawyers are unethical. Otherwise, there wouldn’t be the joke that goes: “What’s the difference between a carp and a lawyer?” Answer: “One’s a scum-sucking bottom feeder, the other’s just a fish.”

But lawyers are officers of the court, meaning they owe the institution a duty of candor. So it’s unethical - even scandalous - for a lawyer to promise a judge he will obey a particular court order and then turn around and immediately violate it. Yet that’s exactly what President Obama’s Department of Justice did in the Florida federal district court case involving the constitutionality of Obamacare.

In January, the plaintiffs in this case - more than two-dozen states and other parties - won a “declaratory judgment” from Florida Judge Roger Vinson that Obamacare is unconstitutional. A declaratory judgment is “the functional equivalent of an injunction,” as Judge Vinson noted in a later opinion. It’s a binding order requiring a party to do or refrain from doing some particular act.

In the proceedings prior to January, the Justice Department had acknowledged to Judge Vinson in writing the equivalence of these two remedies and had “specifically insisted that they would honor” (in Judge Vinson’s words) the declaratory judgment as an injunction - meaning they promised the court they wouldn’t enforce the health care law.

But mere hours after Judge Vinson’s opinion was issued, the Justice Department broke its word and announced that it would ignore the court order and continue to enforce Obamacare.

That breach of promise led to further proceedings before Judge Vinson. This time, the government told Judge Vinson it didn’t have to obey his order because two cases said the order was stayed and ineffective pending appellate review. The Justice Department cited two cases supposedly supporting this claim.

On March 4, Judge Vinson found that these two cases did not support the government’s position and, in fact, contradicted it. The government’s legal scholarship, the judge wrote, “is manifestly incorrect and inconsistent with well established statutory and case law.” That means, in non-lawyerspeak, the government lied about the law and the judge’s decision is not stayed.

Because the government motion also had the effect of delaying final resolution of the case, the judge gave the government a week to appeal his January decision. For seven days, states must continue preparing to enforce Obamacare. But if no appeal is filed by then, states can stop complying.

Despite his polite language, it’s clear that the judge is furious with the government lawyers. And he’s not the only judge who feels this way about Mr. Obama’s Justice Department.

After the oil spill in the Gulf of Mexico in April, Interior Secretary Kenneth Salazar imposed a moratorium on issuance of further deep-water oil-drilling permits. In June, Louisiana Federal Judge Martin Feldman declared the moratorium invalid and ordered Interior to begin issuing permits.

Mr. Salazar responded to this order by issuing a second, identical moratorium. This one expired in October. Since the expiration, Interior still had not issued any deep-water drilling permits. The usual time for issuance of such permits is two weeks, Judge Feldman found.

Upon being hauled back into court, Mr. Obama’s attorneys told the judge that the Interior Department had the power to put a de facto moratorium in place by taking all the time it desired to issue permits.

In February, Judge Feldman said the government was required to issue permits in a “reasonable time” and was engaged in “determined disregard” of his prior order by stalling indefinitely. Meanwhile, the Mideast roils and the United States is being deprived of much-needed oil. The situation is serious enough that the Obama administration is considering releasing oil from the government’s emergency reserve. That hasn’t happened since Hurricane Katrina in 2005.

The government first publicly announced it would abide by Judge Feldman’s order, but still no drilling permits were released. Finally, on Feb. 28, one was issued, allowing an energy firm to resume drilling a well where work was halted by the moratorium. But on Friday, Obama attorneys filed an appeal.

Parties who fail to obey court orders usually are required to pay financial sanctions, in part to compensate the opposing side for the costs of repeated trips to court. The party involved here - the government, meaning us taxpayers - usually would pay these costs. But courts have the power to order individual lawyers to pay the fines in appropriate circumstances.

Given that Mr. Obama and Attorney General Eric H. Holder Jr. are the ones who are acting as if they’re above the law, the courts ought to show them they are not and order them to pay up. Personally.‹

[DewDiligence]

CVX Gets First Post-Ban Approval for Exploratory GoM Well

[The distinction between what’s considered exploratory and what’s considered non-exploratory is not always clear-cut, IMO. In this instance, the well was started in Mar 2010 and halted in Jun 2010 due to the moratorium.]

http://www.bloomberg.com/news/2011-03-24/chevron-wins-u-s-deep-water-drilling-permit-for-gulf.html

›By Katarzyna Klimasinska - Mar 24, 2011 12:08 PM ET

Chevron Corp. (CVX) won approval for the first “completely new exploration” in the deep waters of the Gulf of Mexico after BP Plc’s oil spill last year, a regulator said.

Chevron will drill in Keathley Canyon Block 736 in 6,750 feet (2,057 meters) of water, about 216 miles off the Louisiana coast, the U.S. Bureau of Ocean Energy Management, Regulation and Enforcement said today in a statement.

While Chevron is the fifth company permitted to resume work in the area following the last year’s Deepwater Horizon rig explosion, it’s the first to be allowed to tap a reservoir that has never produced, according to the regulator.

Noble Energy Inc. (NBL), BHP Billiton Ltd. (BHP), ATP Oil & Gas Corp. and Exxon Mobil Corp. (XOM) have received U.S. permits to resume work halted after BP’s April 20 spill.

Chevron, based in San Ramon, California, will use equipment from Marine Well Containment Co. in case of a well blowout, the Bureau of Ocean Energy Management said.

Initial drilling on the well began a year ago, and was suspended on June 9, according to the statement.‹

[DewDiligence]

Small Companies Stay in Deepwater GoM Despite Uncertainty

[That BP was self-insured and thereby did not pressure the finances of insurance companies may be a significant factor in allowing small companies to stay.]

http://online.wsj.com/article/SB10001424052748704658704576275241143679086.html

›APRIL 20, 2011, 4:24 P.M. ET
By RYAN DEZEMBER

HOUSTON—When the staggering costs of BP PLC's deep-water Gulf of Mexico oil spill became clear, investors feared that small, independent oil and natural-gas producers would have to leave the area.

These companies, relatively small by energy-industry standards, didn't have pockets as deep as those of the big oil companies—a necessity in the event of another spill.

But, surprisingly, few companies have abandoned their offshore positions a year after the Deepwater Horizon blast, which killed 11 and unleashed the largest marine oil spill in U.S. history.

Not only will they remain, some small producers vow, but they intend to double down on their bets on deep-water drilling in the U.S. Gulf.

"We're staying," said Al Reese Jr., chief financial officer of ATP Oil & Gas Corp., in an interview.

The Houston-based company, which has a market capitalization of less than $1 billion, last year saw its shares plummet due to its presence in the Gulf's deep water.

But on March 18, when the government said it approved a deep-water drilling permit for ATP, shares jumped, ending the day 4.6% higher.

Fellow oil company W&T Offshore Inc. bought deep-water properties from Royal Dutch Shell PLC and Total SA after the spill. Plains Exploration & Production Co. recently decided to keep its deep-water assets, which it had sought to sell after the spill.

"The Gulf is going to get stronger," W&T Chief Executive Tracy Krohn said in a recent meeting with investors.

Small companies have played a big role in making the Gulf of Mexico one of the world's most productive oil and natural-gas basins. In the 1990s, as production declined in the Gulf's heavily explored shallow waters, scrappy independent companies were among the first to venture out to the outer continental shelf and prove that there were big reserves in depths greater than 1,000 feet.

But the Deepwater Horizon disaster, for which BP expects to pay about $40 billion, raised what were already high stakes.

Only giants with global empires such as BP, Exxon Mobil Corp. and Chevron Corp. could absorb such a hit. Indeed, many independent companies couldn't afford spill bills such as the ones for billions of dollars that BP has tried to make its partners Anadarko Petroleum Corp. and Mitsui Oil Exploration Co. pay for the Deepwater Horizon clean-up.

According to Deloitte LLP, only 10 of the roughly 300 companies operating in the Gulf have a market capitalization of more than $30 billion and about 40% are worth less than $5 billion.

Tudor Pickering Holt & Co. analyst David Pursell said that, while there has been no broad exodus of independent producers, their future in the Gulf's deep waters remains unclear.

"The questions are kind of still unanswered," Mr. Pursell said. "Can these guys get access to [spill] containment equipment? Can they get access to enough insurance?"

Producers said it has been challenging, but they have found affordable insurance, mainly because BP was self-insured and didn't roil the market with massive claims. And the industry has developed a pair of spill-containment cooperatives that have allowed producers to show regulators they can control a runaway well.

One lingering fear: lawmakers setting prohibitively high liability limits. After the Deepwater Horizon disaster, there was talk in Congress about raising oil companies' liability cap under the Oil Pollution Act from $75 million to billions of dollars. That change never happened—but it doesn't mean it never could.

"It's possible to write legislation that effectively keeps all the little independents out of the Gulf," said Bob Zahradnik, director of the Southern Ute tribe's Growth Fund, which owns oil and gas explorer Red Willow Production Co.

Red Willow, formed by the tribe in 1992 to buy back natural-gas leases on its Colorado reservation, dove into the Gulf's deep water in 2006. It now has interests in 21 deep-water leases.

Typically Red Willow, which joins with Houston Energy LLP to locate offshore prospects, bids on production blocks at government auctions and then brings in larger partners to help it to develop the reservoirs.

"There's a niche for people like us," said Mr. Zahradnik, formerly of Exxon Mobil, adding that the company looks for 50-million to 100-million barrel oilfields, which the oil majors consider small fry but which are big game for independents. "I mean, 50 million barrels is $5 billion."

In late February, U.S. regulators approved the first deep-water drilling permit since BP's spill, allowing independent oil company Noble Energy Inc. to drill what began as a Red Willow prospect in about 6,500 feet of water.

Though its interest has been reduced to 20.25% after selling larger stakes to Noble and BP, Red Willow expects the well, on which work began last week, to produce a "flash of cash" that it can reinvest in longer-lasting, less-risky onshore ventures, said Rob Voorhees, Red Willow's president and chief operating officer.

"You spend a lot of money and get a little in return onshore," Mr. Voorhees said. In deep water, however, "we have one well that's going to swing the nature of our business."‹