The Obama administration was in a New Orleans federal court Wednesday, defending the government’s moratorium on deep-water drilling in the Gulf of Mexico, imposed in the wake of the BP spill.

While the legal battle over the six-month ban is waged in court, it has fostered a political debate over what it means for the oil and gas industry. And workers fear the moratorium will force their jobs overseas.

‘Big Feeling Of Uncertainty’

Deep in South Louisiana, about as far south as you can drive down Highway 1, is the equivalent of a small industrial city embedded in the marshes of Bayou Lafourche.

This is Port Fourchon, the epicenter of drilling operations in the Gulf of Mexico. Every day, equipment, supplies and offshore workers come and go from this sea and airport.

A Chevron helicopter lands, and a handful of workers tumble out with their bags and head for the highway back home.

The moratorium is a touchy subject around here. Most workers are reluctant to talk publicly. Some say their companies have asked them not to speak with reporters.

So far two drilling rigs have moved out of the Gulf, but 30 others are now idle.

“There’s just this big, big feeling of uncertainty,” says Heather Swann, captain of a boat out of Port Fourchon.

Her boat takes groceries, equipment and supplies like drilling mud and cement out to rigs in the Gulf.

“The offshore oil fleet, there was always a little bit of security to that. The U.S. needs oil, there’s domestic oil, there’s going to be rigs and drilling and production, and you’re going to have a job for a long time. But right now we’ve been getting a lot of questions from our company about who’s got passports, where are you in your licensing?” Swann says. She thinks those questions mean some jobs are likely to move overseas.

Jeanette Tanguis of Houma, La., holds a poster supporting deep-water drilling.

Enlarge Thomas Pierce/NPR

Jeanette Tanguis, of Houma, La., holds a poster she created for a rally against the deep-water drilling moratorium in June. Her husband was offshore working on a rig at the time, and e-mailed to say she and her son should go.

Jeanette Tanguis of Houma, La., holds a poster supporting deep-water drilling.

Thomas Pierce/NPR

Jeanette Tanguis, of Houma, La., holds a poster she created for a rally against the deep-water drilling moratorium in June. Her husband was offshore working on a rig at the time, and e-mailed to say she and her son should go.

The uncertainty has rippled through the oil services industry, and puts some workers in a difficult position as they consider what the moratorium can achieve.

Lavonne Martin of Baton Rouge works for a company that provides offshore medical care.

“As an environmentalist, as a fisherman, as someone who loves our Louisiana coast, I understand it. … However, as somebody who, you know, makes a living working in the oil industry, I’m very concerned about it and what the future … economic impact may be,” Martin says.

At The Kitchen Table

The mass layoffs that some predicted haven’t materialized yet, but that hasn’t eased the tension in the homes of rig workers.

Every afternoon, a little before 4 p.m., Jeanette Tanguis sits down at her kitchen table in Houma, La., to have an online chat with her husband, who is off in the Gulf.

“He’s slow, he just woke up. He’s usually sitting there with his coffee and one eye open,” she says.

Ken Tanguis is getting ready to work the night shift as a mechanic on an idled ultradeep-water rig.

“You could probably eat off the floors of the drill floor right now because they’ve all been just doing: keep busy, keep it clean, work, because they’re not drilling. It’s frustrating for them because they want to be working and they’re not,” Jeanette Tanguis says.

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An oil platform waits to be towed into the Gulf of Mexico at Port Fourchon in Louisiana on May 4.

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With Drilling Stopped, La. Workers Fear Job Losses

Some Experts Call Oil Drilling Moratorium Misguided June 19, 2010

It’s also hard on an oil field wife. Jeanette Tanguis says she and her husband have put off looking for a new house and are anxiously awaiting news about the contract for his rig. She says her friends and neighbors are doing the same.

“We’re not … just poor oil field trash. We’re families that want to work. We don’t want government assistance,” she says.

Joey Smith owns a company that makes hydraulic cranes and other heavy equipment used offshore. He says the whole industry is being punished for mistakes made on just one rig.

“Why not do it for everything then? If an aircraft went down, shut it down … a coal mine, any sort of disaster like that. If it’s a problem, shut ‘em all down. … That’s kind of the feeling in the oil field of it. What’s good for one is good for another.”

Jeanette Tanguis says the Deepwater Horizon explosion did expose problems at the federal Minerals Management Service (recently renamed the Bureau of Ocean Energy Management, Regulation and Enforcement), but the moratorium is too much. She says most rig workers pride themselves on safety because their lives are at stake — something she thinks about every day when she signs off with her husband.

“I always tell him … I love him and have a good night, work safely,” she says. “Thirty-three years, he hasn’t gotten hurt yet.”

Original Article

Officials in rural southern Louisiana Assumption Parish on Thursday were making preparations to begin capping an oil and natural gas well that blew out early Wednesday. Louisiana State Police spokesman Bryan Zeringue said the blowout of the well, owned by Texas independent Mantle Oil & Gas, occurred at about 3:30 am CDT Wednesday. He said a well-services company was putting equipment in place to cap the well Thursday afternoon. The blowout occured while drilling operations had been shut for the night, so there was no one at the site at the time of the incident, Zeringue said. The Assumption Parish government said in a notice on its website that the capping of the well was expected to take from five to 10 days. Zeringue said there was no estimate on the amount of oil and gas that had escaped from the well.

In an Aug. 8 column (“Fracking puts state at risk for another disaster”), Flow for Water Coalition’s Jim Olson lodges claims about hydraulic fracturing, a tightly regulated 60-year-old technology that’s been safely used to stimulate oil and gas production across the nation more than a million times.

Fracturing is not new and is not “exempt from federal water laws,” as Olson claims. Shale gas development is regulated under the federal Clean Water Act, Safe Drinking Water Act, the Community “Right to Know” Act, the Superfund law and by the Occupational Safety and Health Administration (OSHA).

While Olson claims that “Most states, like Michigan, have not evaluated the impacts” of this technology, your readers should know Harold Fitch, director of the Geological Survey (OGS) office at Michigan’s Department of Environmental Quality — which regulates every aspect of oil and gas production, including fracturing — has said that “there is no indication that hydraulic fracturing has ever caused damage to ground water or other resources in Michigan.” Fitch notes that “OGS has never received a complaint or allegation that hydraulic fracturing has impacted groundwater in any way.”

Fitch also says, “Hydraulic fracturing has been utilized extensively for many years in Michigan, in both deep formations and in the relatively shallow Antrim Shale formation. There are about 9,900 Antrim wells in Michigan producing natural gas at depths of 500 to 2000 feet. Hydraulic fracturing has been used in virtually every Antrim well.”

Fracturing fluids are made up of more than 99.5% water and sand.A small percentage of fluids used to reduce friction and kill bacteria that are commonly found under one’s kitchen sink, are added. Not only is a list of these fluids mandated by federal law to be available at every well site, many organizations — including Energy In Depth — list them online.

The “real blunder” would be for Michigan, which has a long and clear record of tightly regulating oil and gas production, to advance “an immediate moratorium” on responsible energy production, as Olson advocates.

Read more: Natural gas moratorium would be serious mistake | freep.com | Detroit Free Press http://www.freep.com/article/20100812/OPINION04/8120384/1072/Opinion/Natural-gas-moratorium-would-be-serious-mistake#ixzz0wULGe1nb

Original Article

The International Energy Agency raised its forecast for Gulf of Mexico oil production loss to as much as 100,000 barrels a day in 2011 because of BP Plc’s crude spill and subsequent deepwater drilling ban.

The Macondo spill will curb Gulf output by 60,000 barrels a day this year, Paris-based IEA said today in its monthly report. The agency has doubled its estimate from last month, when it also said the reduction may increase to 100,000 barrels to 300,000 barrels a day in 2015.

The new “volume is based on the assumption that a handful of identified projects will be delayed by 6‐12 months,” the IEA said without providing an update on 2015 guidance. “Having said that, relative to total offshore Gulf of Mexico production, the impact is still relatively small.”

President Barack Obama’s commission, which is investigating BP’s oil spill, the world’s largest accidental leak, has asked the administration if a temporary ban on deep-water drilling should be lifted for certain rigs. The six-month moratorium has been criticized by the industry and some lawmakers because of lost business and rising unemployment in the Gulf coast states.

Marathon Oil Corp., the fourth-largest U.S. energy producer, was the latest of Gulf oil producers starting a new project after it announced July 19 the first pumping at its deepwater Droshky project. The pumping may peak at about 51,000 barrels of crude equivalent a day, the company said in November.

Original Article

It was the village of South Mansfield’s turn Wednesday to be on the receiving end of a windfall payout following the state Mineral and Energy Board’s monthly lease sale.

The tiny municipality near Mansfield’s southern corporate limits earned $354,975 for leasing 25.6 acres. The amount triples the village’s general fund budget.

“We’re so overwhelmed we don’t know what we’re going to do,” Mayor Euricka Mayweather said. But she can offer one promise: “We’re going to spend it wisely. “» We’re not going to waste any of it.”

Classic Petroleum, which bids on behalf of Chesapeake Energy, bid $13,850 an acre for the acreage, which includes streets, rights of way and assorted tracts of village-owned land. The village had set a minimum bid of $4,000 an acre.

In June, the equally small village of Grand Cane received $392,677 for leasing acreage within its corporate limits. The windfall will allow village leaders to do improvement projects on a wish list.

South Mansfield officials were not prepared for such a big payout so they have no plans yet for the unexpected funds. “It will go to a good cause,” Mayweather said.

The Mineral Board collected more than $3.7 million in bonuses, bringing the calendar year total to $8.3 million. The 26 leases that were awarded covered more than 6,898 acres out of 39 nominated tracts covering 25,806 acres. Eleven of the tracts were in north Louisiana and 15 in the southern parishes.

The city of Shreveport and the Sabine Parish Police Jury were the only other area governing agencies to receive cash bonuses at this week’s lease sale. Shreveport got $151,066, or $5,732 an acre, for 26.3 acres leased by Classic for Chesapeake.

The Sabine Police Jury received $21,000, or $6,000 an acre, for 3.5 acres of streets and alleyways in the La Plaza Subdivision. Comstock Oil and Gas-Louisiana, LLC, was the bidder.

No bids were offered for land submitted by the town of Ringgold in Bienville Parish.

The Louisiana Department of Transportation and Development leased almost 56 acres in DeSoto Parish, earning a cash bonus of $83,962, or $1,500 an acre. Samson Contour Energy was the bidder.

Original Article

Oil prices lost more ground Thursday as discouraging global economic news reinforced concerns about slowing consumer demand for energy products.

Benchmark crude for September delivery fell $2.28 to settle at $75.74 on the New York Mercantile Exchange. Prices declined for a third straight day.

Gasoline pump prices have remained fairly stable as priorities shift from summer vacations to fall routines like back-to-school shopping. The national average for a gallon of unleaded gasoline was $2.776 on Thursday, about a penny higher than a week ago and 13.1 cents higher than a year ago, according to AAA, Wright Express and Oil Price Information Service.

Oil prices have retreated almost 8 percent in the past week with signs of slower growth in the U.S., China and the U.K.

The news didn’t improve Thursday as the Labor Department said last week’s applications for jobless benefits reached the highest level in almost six months.

In addition, stocks fell on disappointing earnings from Cicso Systems Inc., Sara Lee Corp. and retailer Kohl’s Corp. The Dow Jones Industrial Average closed down almost 59 points. The NASDAQ and the S&P 500 were lower as well.

Oil traders are worried that slower economic growth will mean consumers will buy less gasoline, natural gas and other energy products.

“The mood right now is a little bit of uncertainty and very slow growth, and if that’s the case your energy products are going to take it on the chin,” Lind-Waldock senior market strategist Rich Ilczyszyn said. “I think global demand is the main driver in the energies right now.”

He said factors that could turn prices higher include weather, such as a hurricane shutting down Gulf of Mexico production, or a negative global political development.

The Energy Department said natural gas stockpiles continued to expand last week and remain nearly 8 percent above the five-year average.

With fall about a month away, Cameron Hanover energy consultancy said it does not expect natural gas prices to strengthen much in the near future.

Weather patterns over the next 10 weeks “will tell us a good deal about what kind of winter we should expect,” the analysts wrote.

In other Nymex trading in September contracts, natural gas lost 3 cents to settle at $4.296 per 1,000 cubic feet; heating oil fell 7.37 cents to settle at $2.0015 a gallon and gasoline dropped 4.28 cents to settle at $1.9548 a gallon.

In London, Brent crude gave up $2.12 to settle at $75.52 a barrel on the ICE Futures exchange.

Original Article

Virginia cannot risk the kind of economic calamity the Gulf Coast is experiencing as a result of the BP oil spill, the leaders of two environmental groups in the state said Thursday.

President Barack Obama suspended planned exploratory gas and oil drilling off Virginia’s coast shortly after the April spill in the Gulf of Mexico, but Mike Tidwell of the Chesapeake Climate Action Network and J.R. Tolbert of the Virginia Sierra Club said that doesn’t go far enough. They favor a permanent ban.

Tidwell and Tolbert were joined on a news teleconference by former Navy Capt. Joe Bouchard of Virginia Beach, who said drilling platforms off the state’s coast also would interfere with military training exercises.

“The industry claims ‘we have a great working relationship with the military and we don’t interfere with their activities.’ You can’t believe that for a minute,” said Bouchard, a former member of the Virginia House of Delegates.

The push to make Virginia the first East Coast state to explore offshore oil and gas resources has been led by Gov. Bob McDonnell. That hasn’t changed.

“The governor supports a comprehensive approach to Virginia’s energy needs,” McDonnell spokesman Tucker Martin said in an e-mail Thursday. “He is a proponent of offshore energy exploration and development that is environmentally responsible and economically viable. That includes oil, natural gas and wind.”

Tidwell and Tolbert touted wind as a viable alternative to drilling in the Atlantic. Tidwell said enough offshore wind could be harvested to power 3.6 million electric cars and 750,000 homes.

Tolbert said that beats risking an oil spill like the one in the Gulf, which he said has put 300,000 jobs in jeopardy and wrecked the region’s tourism industry. BP PLC’s Deepwater Horizon oil well spewed more than 200 million gallons of oil into the Gulf before it was successfully capped last month.

Bouchard said the spill reached three of the four Navy training areas in the Gulf, but exercises in two of those areas have been limited to aviation since the 2005 base realignment process. The spill did make a portion of the Panama City operations area unavailable for surface and underwater vessel exercises, he said.

“That should stand as a very clear warning to those of us here in Virginia,” Bouchard said.

He said sailing through oil spills also can ruin expensive and sensitive equipment on Navy ships.

Original Article

Transportation Secretary Paul Mattox wants natural gas drilling companies to anticipate and pay for the wear and tear they’re causing West Virginia’s country roads, many of which have “more or less evolved from a mere wagon trail.”

But at least one industry official complains the new rules – issued in an Aug. 4 memo and reaching gas companies this week – are vague, unreasonable and potentially too expensive for some to bear.

“These go well above and beyond what is necessary to safeguard roadways in the state, and we are assessing our response,” said Charlie Burd, executive director of the Independent Oil and Gas Association of West Virginia.

Gas companies have no choice but to rely on rural roads as they rush to tap the rich Marcellus shale reserves. But residents are frustrated by both the volume of traffic and damage, Mattox wrote, and so are county road crews whose budgets are geared toward regular maintenance, not major repairs and construction.

His memo requires gas project planners to meet with local highway supervisors and agree on various obligations for widening, paving and drainage – before, during and after a drilling job.

Companies would have to post road-repair bonds ranging from $50,000 to $100,000 per mile, depending on whether the road is topped with gravel, tar and chip, or pavement. Those amounts could increase if bridges are in the agreed-upon truck routes.

“Let’s say you were 10 miles off the main highway to a well site. That’s a million-dollar bond. The bond’s more than three times as much as the well,” Burd said. “This has the potential of being catastrophic in nature to conventional wells, and it could be very harmful to Marcellus wells.”

Burd also complained the rules are unclear about things such as who must purchase right of way, who’s responsible for the physical completion of the work and whether that work must comply with state purchasing laws if it’s done by the gas companies.

Marcellus shale underlies Ohio, West Virginia, Pennsylvania and New York, and drilling is in high gear in both Pennsylvania and northern West Virginia. The gas is locked in tightly compacted rock a mile underground, and freeing it requires unconventional horizontal drilling technologies and vast amounts of water.

That means traffic in the form of trucks carrying large equipment and water on roads not built to withstand the weight or damage.

The Pennsylvania Department of Transportation is also considering whether to increase bond limits for its roads.

The current requirements – $6,000 per mile for an unpaved road, $12,500 per mile for a hard-surface road – do not protect taxpayers, given the far-higher cost of repairing roads today, said Elam Herr, the assistant executive director of the Pennsylvania State Association of Township Supervisors.

Despite the many reports of damaged roads, Herr said many municipal officials say gas companies are generally working diligently to ensure roads are fixed and passable.

When drilling first started in remote Wetzel County, retiree Ray Renaud put a time-lapse camera in his window and counted as many as 50 trucks an hour passing his home near New Martinsville. Chesapeake Energy has responded well to complaints, he said, providing warning trucks and repairing one damaged road last fall. By spring, however, traffic had again destroyed the road.

“I moved here for the serenity of the country. Fifty trucks an hour and living in an industrial zone is not serenity,” said Renaud, an emergency medical technician who also worries about safety and accidents.

In 2003, lawmakers approved legislation that allowed overweight coal trucks to travel on designated routes in southern West Virginia. Hauling companies were required to buy permits, with the money used to maintain the roads and bridges along the routes.

Corky DeMarco, executive director of the West Virginia Oil and Gas Association, acknowledged his industry also has to address the concerns of citizens and state officials.

Although gas industry leaders had been attending informal talks about roads in meetings hosted by a handful of state legislators, DeMarco said they did sit down with Mattox or the DOT to craft the rules they were given.

Though many details have to be worked out, he said companies are “generally open and receptive” to Mattox’s requirements. Bonding, for example, could become “an accounting nightmare” for some companies.

The upside of the DOT plan, however, is that everyone will understand what’s expected before a project begins.

“This is like the old Fram oil filter commercial: You either pay me now or pay me later,” DeMarco said. “We’re going to be paying one way or another. What’s going to cost us less in the long run? I think working with the highways department and doing the plan beforehand.”

Original Article