Critical 48-hour testing in progress

Friday, July 16, 2010

By Jaquetta White

Business writer

For the first time in the nearly three months since the Deepwater Horizon rig exploded and sank off the Louisiana coast, no oil was leaking from the blown-out Macondo well into the Gulf of Mexico on Thursday afternoon, BP said.

The well was successfully “shut in” at 2:25 p.m. so that BP could begin a critical six- to 48-hour observation period that will determine whether the well is strong enough to continue holding the oil inside of it for up to a month until it can be permanently sealed with cement.

Echoing the sentiment of Gulf Coast residents, BP Vice President Kent Wells said it felt “very good” to no longer see oil spewing into the sea, but he cautioned that scientists and engineers were still in the very early stages of testing the well and said results would not be known for several hours or possibly days.

“I’m very pleased that there’s no oil going into the Gulf of Mexico. In fact, I’m very excited there’s no oil going in the Gulf of Mexico,” Wells said. “Where I’m holding back my emotion is we’re just starting the test, and I don’t want to sort of create a false sense of excitement.”

BP is now conducting a “well integrity test” on the blown-out well to determine whether it is intact. The longer the test goes, the more promising the results are likely to be. The test began when the well was shut in.

The integrity test involves measuring the pressure inside the well. If pressure rises and holds at 8,000 to 9,000 pounds per square inch, the well could remain closed. If it is lower than that, however, it will be reopened, and oil would again be sucked to vessels on the surface. The low pressure readings would indicate to scientists that oil is escaping through one or more fissures in the well.

“We will be monitoring the pressures carefully, and every six hours we’ll consult between our engineers and scientists and government scientists and make decisions to continue forward with the test,” Wells said. “Or, if at any point we feel the test needs to be suspended, we will do that.”

BP officials reported no results of the test Thursday night. But BP Chief Operating Officer Doug Suttles told CNN there did not appear to be any leaks in the system or other immediate complications.

“We don’t have any leaks. We don’t have any oil coming out that we know of,” Suttles said. “Hopefully we’ll continue it for the next 48 hours, which puts us well into Saturday afternoon.”

Question mark over well

The condition of the well has been unknown since the Deepwater Horizon rig exploded and sank April 20, killing 11 people and setting the stage for the protracted disaster. Concern about possible damage to the well was heightened after the failure of “top kill,” a previous attempt at stopping the oil flow by pumping heavy mud into the top of the well. Oil failed to overcome the flow of oil, raising the specter that it was escaping the well somehow.

Scientists estimate that the well produces 35,000 to 60,000 barrels of oil per day.

So far, controlling the leak subsea has meant simply collecting as much oil as possible and sucking it to vessels on the surface.

Before the shut-in attempt began last week, oil was being pulled from the well and onto the Discoverer Enterprise drill ship and Q4000 platform on the surface. The former collected oil for refinement, while the latter flared it off on site. Together, the vessels managed to collect about 23,000 barrels of oil per day. The Discoverer Enterprise, which was attached to an ill-fitting containment cap jammed on top of the well, was disconnected Saturday to make room for the shut-in system. A floating platform called the Helix Producer was also collecting oil at the site until the shut-in process began.

The well integrity test commenced after a two days of delays.

BP originally planned to begin the test Tuesday, but retired Coast Guard Adm. Thad Allen announced late that day that testing was delayed by 24 hours in response to concerns about the procedure from a team of scientists including Energy Secretary Steven Chu. The scientists will be involved in reading and interpreting the pressure data as they become available.

The scientific team’s worries were put to rest Wednesday, and BP crews were given the green light to proceed with the well shut-in and integrity test. But the test was delayed again Wednesday evening after engineers discovered a leak in the “choke line” of a new blowout preventer placed on top of the well. The choke line was to be the last of five points closed in before the test began.

The leaking system was removed overnight Wednesday and replaced Thursday morning with a backup choke line that was already on site, Wells said.

Possibly stopped for good

If the well integrity test follows the best-case scenario, oil would never leak from the Macondo well again, and it would remain shut until a relief well could pump it with mud and seal it with cement, a procedure that would permanently shut the well down. BP crews have temporarily halted drilling of the relief well until the integrity test is complete.

The well has been drilled to about 17,840 feet. The plan is to intercept the Macondo well at about 18,000 feet.

If the integrity test results in the reopening of the well, BP would continue with a previous plan that called for the collection of oil by surface ships until the relief well is complete.

As many as four ships, with the capacity to collect 80,000 barrels of oil and to disconnect quickly in the case of a hurricane, would be used in that process.

“Over the next several hours we will continue to collect data and work with the federal science team to analyze this information and perform additional seismic mapping runs in the hopes of gaining a better understanding on the condition of the well bore and options for temporary shut-in of the well during a hurricane,” Allen said. “It remains likely that we will return to the containment process using this new stacking cap connected to the risers to attempt to collect up to 80,000 barrels of oil per day until the relief well is completed.”

Original Article

The people of Louisiana are speaking loudly and clearly as to what they want in response to the oil spill. Louisianans are the ones bearing the brunt of the environmental and economic damage from Deepwater Horizon, yet they overwhelmingly support continued offshore oil and gas production in the Gulf of Mexico.[1] Even Louisiana fishermen and shrimpers harmed by the spill see the merits of continued offshore energy production.[2]

The federal government should follow Louisiana’s example and focus on adding reasonable safety measures for offshore drilling within the context of a robust pro-domestic production policy. Most importantly, the Obama Administration and Congress should abandon ongoing efforts to parlay the spill into a moratorium on offshore energy.

Good and Bad Ideas from the Feds

The right and the wrong approach to formulating a post-spill drilling policy can be seen in the Department of the Interior’s May 27 report, “Increased Safety Measures for Energy Development on the Outer Continental Shelf.”[3] This report was conducted pursuant to President Obama’s request for a 30-day review to determine “what, if any, additional precautions and technologies should be required to improve safety of oil and gas exploration and production operations on the outer continental shelf.”

Among the sensible recommendations in the report are improved requirements for blowout preventers, the devices designed to stop the flow of oil from an offshore well that failed in the case of Deepwater Horizon. These include both improvements in the blowout preventers themselves as well as more robust testing and inspection procedures. The report also suggests tougher requirements for offshore well designs.

It is still too soon to enact a detailed bill, as there are many questions about the spill that are not yet answered. But such specific reforms, based on what is learned, make sense in order to reduce the likelihood of a repeat spill. No doubt, the substantive and process reforms will add at least somewhat to the cost of future offshore drilling, but if done with an eye toward keeping those costs as low as possible consistent with improved safety, there should be no objection.

However, the report did not stop with these sensible recommendations. It also included a blanket six-month moratorium on all ongoing deepwater drilling activity, with deepwater broadly defined as anything over 500 feet. The report conceded that such a moratorium would halt ongoing activity on 33 permitted wells but did not explain why this activity posed a similar risk to Deepwater Horizon. The report claims that “the recommendations contained in this report have been peer-reviewed by seven experts identified by the National Academy of Engineering.”

This was false. A majority of those seven experts immediately informed Louisiana Governor Bobby Jindal and its two U.S. Senators that the blanket moratorium was added later and went far beyond anything they had agreed to. “We believe the report does not justify the moratorium as written and that the moratorium as changed will not contribute measurably to increased safety and will have immediate and long term economic effects,” they said.[4]

The Defeat of the Moratorium in Federal Court

Fortunately, a federal district court issued a preliminary injunction blocking the moratorium.[5] In doing so, Judge Martin Feldman pointed out the lack of expert agreement or any other support within the report. He concluded that “the Court is unable to divine or fathom a relationship between the findings and the immense scope of the moratorium” and added that “the report patently lacks any analysis of the asserted fear or threat of irreparable injury or safety hazards posed by the thirty-three permitted rigs also reached by the moratorium.”[6]

The court took into consideration the significant harm to the smaller oil companies who filed the lawsuit and their employees. Judge Feldman concluded that “the effect on employment, jobs, loss of domestic energy supplies caused by the moratorium as the plaintiffs (and other suppliers, and the rigs themselves) lose business, and the movement of the rigs to other sites around the world will clearly ripple throughout the economy in this region.”[7]

The Obama Administration immediately appealed the decision. Those appeals have not been successful, but the government’s litigation is ongoing. The Administration has also come out with a new moratorium that it believes will be upheld. This revised moratorium has been criticized as being very nearly if not as stringent as the original one.[8] Legal challenges are expected.

The Administration’s actions have created uncertainty regarding the possibility of renewed drilling—a chilling effect. Oil rig operators must hold off on operations until it is clear they will have the permission to finish the job.[9] The impact on employment is already significant and may be long term, as some companies are considering relocating their rigs to other parts of the world where governments are not as hostile to energy production.[10] Indeed, Don Briggs, president of the Louisiana Oil and Gas Association, estimates that up to 32,000 jobs could be lost.[11]

Legislation on the Way

Some in Congress are also trying to crack down on offshore oil drilling. Rather than focus on reasonable reforms designed to allow continued offshore energy production but make it safer, several bills are designed to shut the door on offshore production. For example, H.R. 5626, the Blowout Prevention Act of 2010 would create impossibly high and unnecessary requirements before obtaining a federal permit—a de facto ban on new offshore drilling. It requires operators of offshore wells to essentially prove that there is no chance whatsoever of a leak—both that the blowout preventer is failsafe and that in event of a failure the leak will be promptly stopped. This is a burden of proof that could never be met and would preclude the issuance of any more offshore permits.

Similarly, several bills have been introduced to change the liability provisions applicable to BP and other companies involved in offshore drilling. While some changes to the liability limits in the 1990 Oil Pollution Act make sense, some of these bills, such as S. 3305, the Big Oil Bailout Prevention Liability Act of 2010, go too far. They seek to raise liability to levels so high as to make offshore activity prohibitively expensive, especially for smaller operators who would no longer be able to afford insurance.

The Effects of an Offshore Drilling Ban

A complete shutdown of offshore oil and gas production would have a devastating economic impact. According to a Heritage analysis, such as shutdown would reduce gross domestic product by $5.5 trillion by 2035, cost each family of four an average of $2,381 annually, and reduce job growth by more than a million jobs by 2015 and 1.5 million by 2030.[12]

Nor would such a policy necessarily reduce environmental risks. Every barrel of petroleum not produced nearby must be transported great distances via tanker, where the risk of oil spills is greater than that from offshore wells.[13]

Compounding the Problem

The Deepwater Horizon spill is the first significant spill from a well in American waters since 1969. In the meantime, offshore oil production has become a significant source of domestic energy and jobs. Fully a third of American oil comes from offshore, and the potential for additional growth is great.[14] The U.S. can and should respond to the spill but in ways that do not jeopardize the benefits of tapping America’s offshore energy.

Original Article

The Deepwater Horizon spill is already a tragedy—for the 11 workers killed, for the fisherman and others who have lost their jobs, and for the damaged environment of the Gulf. Washington should not compound the tragedy by imposing an unnecessary and costly offshore ban.

Ben Lieberman is Senior Policy Analyst in Energy and the Environment in the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation.

By Vickie Welborn • vwelborn@gannett.com • July 15, 2010

When the Walker family sued three oil and gas companies in 2007, the Haynesville Shale was not the household phrase it is today. That didn’t happen until the spring of 2008.

However, the outcome of the ongoing legal battle has the potential, an attorney says, to impact area property owners who are disputing the number of wells being drilled in Haynesville Shale units.

The Walkers’ lawsuit is similar to, but distinctly different from, a class action lawsuit filed earlier this year by a separate group of landowners who want the state and the bigger players in the Haynesville Shale development to comply with existing law when it comes to how many natural gas wells will be drilled per unit.

That lawsuit, filed by a number of attorneys, including Ryan Gatti of Bossier City, challenges the authority of state conservation Commissioner Jim Welch to force pool landowners, and thus mineral owners, into large units. The plaintiffs contend his actions are not in line with a state law that defines a drilling unit as the “maximum area which may be efficiently and economically drained by one well.”

The Walkers, including Shreveport geologist Andrew Walker of Walker Petroleum, contend in their separate lawsuits that Welsh does not have the legal authority to approve multiple or alternate wells within drilling units. Their claim against J-W Operating Co., Grigsby Petroleum, Inc., Matador Production Co. and the state conservation office is based on drilling activity in formations that do not include the Haynesville Shale.

Until last week, the Walkers had been unsuccessful in advancing their argument. However, an East Baton Rouge Parish district judge last week ruled against the defendants, who had been trying to have the case dismissed on summary judgment, and ordered a trial. No date has yet been set.

“They tried to show a couple of things, one that the suit wasn’t timely or that it had already been ruled on. The judge decided it was not the case and that it should go to trial,” said Shreveport attorney Charles Tutt, who represents the plaintiffs.

(2 of 2)

A trial, Tutt emphasized, will not determine the ultimate outcome of the case. But if the decision is in his clients’ favor and upheld on appeal, it could set a precedent like any other court decision.

“… The flood gates are now open,” Andrew Walker said in his Fair Drilling blog. “Every property owner in the state who has been ill-affected by the drilling of an alternate unit well (or the establishment of a unit that cannot be drained by one well) can now challenge these wells and their units without facing these hurdles we have overcome. Some may want to fight individually while others may want to join the class action suit.”

The Walkers — James Tigner Walker and wife Barbara Rigby Walker, and their children Alison W. Medinis, Caryn W. Donnelly, Claire W. Kettelkamp and Andrew Tigner Walker — acquired property in 1995 in DeSoto Parish. At the time, there were no producing wells on the property, only two shallow shut-in wells. They anticipated no other.

Between 1995 and 2005, 13 alternate wells were approved by the state for the property.

The Walkers then began to contest the right of the producers to drill “unnecessary” and “alternate” wells.” Since 2005, 13 more wells have been approved.

Shortly afterward, the Walkers filed their first lawsuit and request for a jury trial to present evidence that the state “does not have the right to approve more than one well per mandatory drilling unit and that its authority to mandate units is limited to the area that can economically and efficiently be drained by one well” pursuit to state law.

The defendants have argued nothing illegal is going on. The state’s conservation office cites another law that allows for multiple wells in a unit.

In court depositions taken in April, three top conservation officials stated, in part, that alternate wells have been approved because it was a procedure that was in place prior to their employment.

Original Article

SAN FRANCISCO (MarketWatch) — Crude-oil futures lost 0.6% on Thursday, as investors turned more pessimistic about the global economy after the day’s barrage of economic reports. August crude was off 42 cents to $76.62 a barrel. Natural gas prices soared, however, as an inventories report met expectations and more warm weather is predicted. August natural gas rose 28 cents, or 6.5%, to $4.59 per million British thermal units, natural gas biggest one-day rise in seven months

Original Article

Experts are so focused on analyzing the BP spill that they’re overlooking the next big thing.

By JOHN DEUTCH

Even energy experts tend to forget the enormous impact unanticipated events can have on markets and public policy. Today there are two developments that have the potential to cause dramatic change: the existence of enormous reserves of natural gas and the BP spill.

As recently as two years ago, we had no idea that there were vast natural gas resources in unconventional reservoirs like coal seams, tight sand and shales in the United States and elsewhere. That’s the positive surprise. On the negative side, the severity of the oil spill in the Gulf of Mexico could well turn the global public against oil and natural gas exploration.

If the past is any guide, accidents in the energy sector profoundly affect this country’s energy outlook. Reactor incidents at the nuclear power stations at Three Mile Island in Harrisburg, Pa., in 1979 and in Chernobyl, Ukraine, in 1986 interrupted nuclear power plant construction in the U.S. and Europe for two decades. The 1973 oil embargo by OPEC and the 1978-79 oil crisis caused by the fall of the Shah in Iran permanently changed expectations about the security of the oil supply and the long-term price trend.

The BP spill will certainly lead to a major review of the risks involved in offshore drilling. Re-examining operating practices and regulations will likely take more than a year, during which time new deepwater operations will be curtailed. The danger is that public attitudes and government policy will lead to an extended period of reduced investment and licensing.

Some observers will characterize the blowout as an exceptional case due to chance or negligence. Others will see it as evidence of general inattention. Few will recall the facilities in the Gulf survived Hurricane Katrina in 2006, an unusually stressing event, without appreciable problems.

Yet even as we endlessly debate U.S. energy and climate policy in the wake of the BP gusher, we aren’t spending enough time considering what’s on the horizon—particularly natural gas’s transition from a dwindling to an abundant resource. According to the Energy Information Agency (EIA), natural gas could become a much more important fuel for the U.S. in the coming decades.

In its 2010 International Energy Outlook, the EIA predicts growth in natural gas production principally from shale in Latin America, China, Australia, North Africa and the former Soviet Union. Global unconventional gas production is projected to increase to 7.9 trillion cubic feet in 2035 (1/3 of total natural gas production) from its 2008 level of 3.5 trillion cubic feet (about 1/6 of total production). The 2010 EIA projection of world-wide production of unconventional gas increases at 5.2% per year between 2008 and 2035, compared to 1.4% for total gas production.

What will this mean? In the short run, natural gas will displace coal in the electricity sector. This will significantly lower carbon emissions. In terms of renewable energy, low-cost natural gas will make hybrid solar plants that use both sunlight and natural gas to make electricity more economically attractive.

As oil gets more expensive and natural gas cheaper, there will also be an enormous incentive to use far more natural gas in the transportation sector. Compressed natural gas can power buses, medium-duty trucks and light-duty vehicles that operate in urban environments close to fueling stations.

But the U.S. is far behind the rest of the world in using this source of energy for transportation. As of 2009, Pakistan led the world with 2.4 million vehicles fueled by compressed natural gas and over 3,000 fueling stations. By comparison, the U.S. had about 100,000 such vehicles and 1,300 stations, consuming 0.1% of the 12 million barrels of oil per day devoted to transportation.

The penetration of natural gas into the U.S. market will be determined by the cost of kits to convert gasoline-fueled vehicles to natural gas. That cost should decline sharply with scale, new vehicle offerings, the availability of fueling stations, and, of course, continuation of the favorable cost of natural gas compared to motor gasoline.

Even 10% penetration in the next decade or two would displace 1.2 million barrels of oil per day. This may not be decisive, but it certainly could have as big of an impact as other proposals to reduce import dependence, like gasohol (a mixture of motor gasoline and ethanol from corn).

Natural gas can also be transformed into liquid fuels, such as methanol, for transportation or industrial use at a production cost that I estimate to be approximately $45-$60 per barrel of product. This is expensive, but lower than the likely price of crude oil and the anticipated cost of synthetic liquids from coal or shale (plus it has less carbon emissions).

The continued expansion of gas pipelines around the world, as well as the expanding trade of liquefied natural gas, indicate a movement toward a global market for natural gas similar to oil, and ultimately with a single world price. A global price implies major changes in patterns of gas trade between the North American market, where gas is priced to coal, and the Asian market, where gas is priced to oil. Because coal is cheaper than oil on an energy efficient basis, this means that current natural gas prices in North America are $4 per thousand cubic feet compared to $10 per thousand cubic feet in Asia.

That’s where things seem to be heading now, but our thinking should remain agile. There undoubtedly will be other energy surprises that will disrupt conventional thinking.

Political instability or military conflict in the Persian Gulf could create a lengthy supply disruption, while a resolution with Iran could lead to welcome additions to world supply. An extended global economic downturn would reduce demand but also reduce energy investment critical for the future. Unexpected advances in photovoltaics, batteries or biofuels likely will change the affordability of new technologies.

The U.S. should have a comprehensive, long-term energy strategy. But when unforeseen events arise, we should adjust as necessary to take advantage of unexpected opportunity.

Original Article

July 15 (Bloomberg) — U.S. Senate Democrats may revoke some incentives for energy companies such as Exxon Mobil Corp. and Chevron Corp. in legislation to be debated this month.

“Current oil industry tax breaks are on the table,” Finance Committee Chairman Max Baucus, a Montana Democrat, told reporters in Washington today. Baucus said he couldn’t give a specific estimate of the proposed new costs to the oil industry because party members are still debating which tax incentives to eliminate.

Senate Majority Leader Harry Reid, a Nevada Democrat, is preparing an energy bill that overhauls offshore drilling regulation, boosts alternatives to fossil fuels, curbs energy consumption and cuts carbon dioxide pollution from power plants. Democrats are looking for energy-related changes to the tax code to raise money for some of these new proposals, Baucus said.

“I’m not saying they ought to be enacted,” Baucus said. Still, the tax changes are likely to be part of this month’s energy debate “one way or another.”

Reid has said he plans to bring the energy legislation to the Senate floor the week of July 26.

Baucus said he expects the changes to bring in less revenue for the federal government than the $45 billion in President Barack Obama’s budget proposal released in February.

Obama’s Goal

Obama proposed raising $36.5 billion from fiscal 2011 to 2020 by ending tax credits and deductions for domestic oil and gas production, and $8.5 billion more by revising the so-called dual-capacity policy so that oil companies can’t get credit for taxes they pay overseas.

Oil and gas producers will oppose the effort to revoke the industry’s tax breaks, Bill Bush, a spokesman for the Washington-based American Petroleum Institute, said in an e- mail. Raising taxes on the oil and gas industry “is not a recipe for putting people back to work or for spurring domestic energy production,” Bush said.

“It is bad energy policy and bad economic policy,” he said.

Senator Bernard Sanders, a Vermont independent, last month tried unsuccessfully to repeal $35 billion of oil and gas industry tax breaks. The proposed repeal, offered as an amendment to a bill extending unemployment benefits, failed in a 35-61 vote.

Original Article

Legislation inspired by the BP spill includes environmental and worker safety measures and a conservation fee to go toward parks and other protected areas.

Reporting from Washington —

Far-reaching legislation that would impose new environmental safeguards on offshore drilling, repeal oil-industry-friendly provisions of energy policy and hit producers with a new tax to fund conservation programs gained ground in Congress on Thursday.

Acting as BP at least temporarily halted the flow of oil from its blown-out well, two House committees advanced legislation from a pile of oil-spill-related bills.

One bill, approved by the Natural Resources Committee on a largely party-line vote, would strip the oil industry of royalty relief for deep-water drilling. It would repeal a provision of the 2005 Energy Policy Act that exempted projects, including the Deepwater Horizon drilling, from detailed environmental analysis. It would also bar companies with poor environmental and safety records from bidding on future offshore oil and gas leases.

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The bill would provide $900 million a year, about triple the amount provided this year, to purchase land for national parks, forests and wildlife refuges and to help states fund parks and recreation projects. The money would come from a $2-per-barrel “conservation fee” on the domestic production of oil.

Another bill, approved with bipartisan support by the Energy and Commerce Committee, would impose new standards on blowout preventers and new requirements for safe well design and cementing, among other things.

The legislation grows out of the committee investigation into what Chairman Henry A. Waxman (D-Beverly Hills) called “a series of reckless decisions” by BP that led to the explosion of the Deepwater Horizon that left 11 people dead and started the worst offshore oil spill in U.S. history.

“Under this legislation, neither BP nor any other company would be able to make these same mistakes again,” Waxman said.

A staff report to committee members said BP had made numerous decisions that “increased the risk of a well control problem, while neglecting additional safety precautions” before the explosion.

“BP chose a well design that had only two barriers to prevent flow of dangerous gases instead of using a design that had multiple barriers; BP ignored the advice of its contractor, Halliburton, and chose a cement sealing approach for the well that was predicted to fail; BP failed to conduct a key test to evaluate the sufficiency of the cementing job; BP failed to fully circulate well fluids to facilitate better cementing; and BP did not install a key piece of equipment at the wellhead prior to the explosion,” the staff said in a report. “All of these decisions saved time and money for BP, but increased risks.”

The legislative drive came as a group of senators asked the Senate Judiciary Committee to investigate potential conflicts of interest with judges who will oversee spill cases, including the federal judge who struck down a drilling moratorium.

Also, California Democratic Sens. Barbara Boxer and Dianne Feinstein called on the Senate Foreign Relations Committee to investigate whether BP lobbied for the release of terrorist Abdel Basset Ali Megrahi, convicted in the 1988 bombing of a Pan Am jet over Lockerbie, Scotland, that killed 270, in an effort to gain favor with Libya to drill off its coast.

In the House Natural Resources Committee, Republicans and the oil industry accused the Democratic majority of acting in haste before the causes of the rig explosion were known. “Reforms are clearly needed, but Congress shouldn’t get ahead of the facts,” said the panel’s top Republican, Doc Hastings of Washington state.

The American Petroleum Institute said the bill would “penalize the entire oil industry” for the Deepwater Horizon spill and “threaten American jobs, the nation’s economy and its energy security.”

The provision to bar a company from bidding on offshore leases

would apply to any company whose record indicated five times the industry average for willful or repeated worker safety violations at its oil and gas facilities, if more than 10 fatalities occurred at any of its facilities, or if it incurred fines of $10 million or more under the Clean Air or Clean Water acts within the preceding seven years.

A BP spokesman declined to comment.

Hastings objected to the conservation funding, saying it had “no place in a bill intended to focus on the gulf oil spill.”

The Santa Monica Mountains National Recreation Area is among the parks that could benefit from the increase in conservation funding.

UPDATE: OPEC Sees Plenty Of Oil, Moderate Demand In 2011

http://online.wsj.com/article/BT-CO-20100715-705356.html

LONDON (Dow Jones)–The Organization of Petroleum Exporting Countries said Thursday it expects moderate global oil demand growth next year, in an indication the oil cartel will probably keep its big existing supply cuts in place well into a third straight year.

The group, in its monthly oil market report, forecast 2011 world oil demand to grow by 1 million barrels a day, up just 100,000 barrels a day from 2010. “The oil market is set to remain well-supplied, especially in light of the ongoing increase in crude oil production capacity,” the group said.

Underscoring that sentiment, OPEC said the overhang in the U.S. of unused oil–at a five-year peak of 87 million barrels, as of end-June–would be more than sufficient to supply the additional volumes required to sate consumption in 2011.

OPEC’s 12 members accounts for about 40% of the 86 million barrels consumed globally daily.

The International Energy Agency earlier this week projected world oil consumption to rise by 1.3 million barrels a day next year.

On paper, OPEC announced supply cuts totaling 4.2 million barrels a day in late 2008 during the height of the economic recession to keep crude prices supported.

However, the group’s quota-bound members, which excludes Iraq, have usually pumped well above their output-quota targets for over the past year to glean more oil revenue. That trend continues, with OPEC saying those members collectively pumped on average 26.85 million barrels a day in June–about two million barrels a day above their production target.

Those extra barrels have kept oil inventory brimming and haven’t prompted traders, focused on the rosy outlook for emerging market oil demand, to drive prices lower. Front-month oil futures in New York traded Thursday at 1105 GMT up about 40 cents at $77.80 a barrel, at the upper end of many OPEC members’ preferred trading range of $70-80 a barrel.

With oil pumping capacity shut-in due to self-imposed cuts, OPEC’s spare capacity stands at a total of around 5.5 million barrels a day, ample cushion both to plug any substantial unexpected supply disruption and to keep a brake on oil prices.

Most of that capacity is held by OPEC price-moderate Saudi Arabia, which typically accounts for about a third of the group’s crude production.

OPEC kept its forecast for global oil demand growth this year unchanged at 900,000 barrels a day and forecast non-OPEC supply to increase by just 300,000 barrels a day in 2011, compared with growth of 700,000 barrels a day projected for this year.

BP Likely To Face 7 Year Offshore Drilling Ban In America Due To Gulf Of Mexico Oil Spill

http://uktodaynews.com/7172/bp-likely-to-face-7-year-offshore-drilling-ban-in-america-due-to-gulf-of-mexico-oil-spill/

The U.S Congressional Committee has agreed that it would ban BP from drilling by the U.S. offshore for at least 7 years. The ban does not specify BP, but rather the new law stated that it would be banning any company that has seen 10 or more death in the past 7 years. As of BP’s case, the oil rig explosion in April, killed 11 workers of the Deepwater Horizon oil rig.

Gulf Oil Spill

According to reports, the draft legislation states that the deaths might occur during drilling, production, and refining, or when it has broken the U.S Environmental and Health Laws. Although the proposal kept forward by the committee has not become a law, if it is accepted as a law then it would be a big blow towards the BP oil wells in the Gulf of Mexico.

Mr. Solovyov, Oil equity analyst at the SG securities, stated that as much as 10% of BP’s current oil production comes from the Gulf of Mexico. And if there had to be no Political issue against the company after the oil spill, the production capacity would have increased by the years ahead.

Sources say that certain people in the US feel that this move will definitely teach BP a lesson, after USA recorded it’s worst ever oil spill with the Gulf of Mexico spill this year.

Original Article

LAFAYETTE — Organizers of a planned rally at the Cajundome next week to protest the federal moratorium on oil-and-gas drilling in the Gulf of Mexico are predicting a massive turnout.

“We are gearing up for 18,000,” said Louisiana Oil and Gas Association President Don Briggs, who has been helping organize the “Rally for Economic Survival” on Wednesday.

The event is aimed at the Obama administration’s efforts to temporarily block deep-water drilling in the wake of the Deepwater Horizon rig explosion.

Scheduled speakers include Gov. Bobby Jindal, former Shell Oil Company president John Hoffmeister, Lafayette City-Parish President Joey Durel and Plaquemines Parish President Billy Nungesser.

Briggs said he doubts the rally will have a direct impact on the Obama administration’s stance on the moratorium, but he hopes national news coverage will inform people outside of the state about the harsh impact of the drilling ban on the state’s economy.

“A lot of jobs are going to be lost. Not just a few, but thousands,” Briggs said.

He said many Americans outside of Louisiana might view the drilling moratorium as an appropriate response to the catastrophe because they are unaware of the economic fallout here.

“We are going to put a face on these jobs, put a face on these people,” Briggs said.

Several national news outlets have expressed an interest in covering the event, including CNN and C-SPAN, Briggs said.

The goal is to present “one unified voice saying, ‘Hey, guys, you’re killing us down here,’” said Bruce Conque, vice president of marketing and governmental relations for the Greater Lafayette Chamber of Commerce.

The chamber is working with the Louisiana Oil and Gas Association in organizing the event.

Conque said the high attendance estimates for the rally are based in part on commitments from scores of businesses, political leaders and civic groups from throughout southwest Louisiana who have pledged a show of force.

Some businesses are “shutting down and telling their employees to please attend the rally,” Conque said.

He said much is at stake in an area where the economy is strongly tied to the oil-and-gas industry, either directly through the oil-field service sector or indirectly through the oil-fueled paychecks that support local businesses.

“About one-third of our economy is related to the oil-and-gas industry,” Conque said of Lafayette.

Briggs said that oil-and-gas companies have already begun moving rigs out of the Gulf to other areas of the world and will continue to do so if the moratorium is not lifted.

The “Rally for Economic Survival” is scheduled to run from 11 a.m. to 1 p.m. on Wednesday at the Cajundome, with brief performances by country music artist Sammy Kershaw before and after the rally.

For more information, visit http://www.rallyforeconomicsurvival.com.

Original Article