-

(AP) – 15 hours ago

NEW YORK (AP) — The nation’s crude oil supplies increased last week, the government said Wednesday.

Crude supplies rose by 1.3 million barrels, or 0.4 percent, to 337.6 million barrels, which is 6.4 percent below year-ago levels, the Energy Department’s Energy Information Administration said in its weekly report.

Analysts expected a decline of 300,000 barrels for the week ended Oct. 7, according to Platts, the energy information arm of McGraw-Hill Cos.

Gasoline supplies fell by 4.1 million barrels, or 1.9 percent, to 209.6 million barrels. That’s 3.9 percent below year-ago levels. Analysts expected gasoline supplies to rise by 100,000 barrels.

Demand for gasoline over the four weeks ended Oct. 7 was 0.7 percent lower than a year earlier, averaging 8.9 million barrels a day.

U.S. refineries ran at 84.2 percent of total capacity on average, 3.5 percentage points down from the prior week. Analysts expected capacity to decrease to 87.07 percent.

Supplies of distillate fuel, which include diesel and heating oil, dropped by 2.9 million barrels to 154 million barrels. Analysts expected distillate stocks to decline by 600,000 barrels.

Original Article

-

By ANGEL GONZALEZ

HOUSTON —The U.S. government broke precedent by issuing citations to contractors Halliburton Co. and Transocean Ltd. in the Deepwater Horizon oil spill, along with rig operator BP PLC.

While now facing greater scrutiny from regulators, contractors in the oil-service industry have considerable liability protection to fight the citations and any subsequent fines, legal experts say. They also have enough market muscle to strengthen liability protection in their contracts with oil companies.

Previously, U.S. regulators have held the rig operator responsible for whatever happens under its watch. The operator hired contractors, who perform drilling, seismic or cementing operations and whose contracts protected them from any liability.

That was upended by the Deepwater Horizon mishap in April 2010, which resulted in 11 deaths, the biggest accidental marine oil spill in history, and tens of billions of dollars in costs. BP said blame also falls on Halliburton, which was in charge of cementing the failed well shut, and Transocean, the drilling contractor that owned the Deepwater Horizon rig. U.S. investigations have widely cast the blame among all three companies.

The citations, issued Wednesday, set a precedent for holding contractors at least partially responsible for such accidents, and may increase the contractors’ exposure to civil suits from anyone claiming damages from the spill, analysts said.

The contractors have pledged to fight the accusations. Halliburton said that it is fully protected against penalties and losses from the Deepwater Horizon incident by its contract with BP. Transocean also said it intends to appeal.

However, if the courts determine that the government has the right to issue a citation to oil-service contractors, there is no contract that will protect them from the fine, according to Larry Nettles, an environmental attorney with Vinson & Elkins, a Houston law firm. “In most jurisdictions the courts do not allow indemnification for fines and penalties, because it defeats the purpose,” which is to punish bad behavior, Mr. Nettles said.

Still the industry is expected to bulk up its contracts even more in the wake of the regulators’ action, legal experts say, to get as much liability protection as possible. The contractors currently have considerable bargaining power to win such new concessions from rig operators on contract protection. Relatively high oil prices have led to a shortage of drilling crews and have put oilfield services at a premium, giving the contractors the upper hand in negotiations.

“When oil prices are high and there’s lots of activity, service contractors can drive a very hard bargain,” said Owen Anderson, a professor of law specializing in energy at the University of Oklahoma.

Original Article

-

by Tom Fowler

In years past, discussions about security in the energy industry usually focused on protecting refineries from terrorist attacks and overseas workers from kidnapping.

Today, the greater threat is the digital theft of competitive information or technical data by outside hackers or unscrupulous employees, speakers at an FBI-sponsored event on energy security said Wednesday.

“The shift from physical security to data security has been a significant one for all of us,” said Russell Cancilla, Vice President and Chief Security Officer at Baker Hughes. “Theft of intellectual property, state-sponsored corporate espionage, those kinds of things have grown exponentially in recent years.”

A few well-known incidents in the energy industry occurred in 2008, when computer systems owned by oil companies including ConocoPhillips, Marathon Oil and Exxon Mobil were reportedly hacked by outside forces seeking oil and gas lease bidding information.

Sections of the U.S. power grid were also probed by outside forces in recent years, although it does not appear any damage was done.

But the energy industry tends to be tight-lipped about such breaches.

Even at Wednesday’s event, the second annual Energy Security Awareness Symposium, sponsored by the Houston FBI office as a way to promote information sharing between industry and government, two speakers asked beforehand they not be identified in any stories about the event; at one point the two reporters at the event were asked to wait outside during a counter-terrorism presentation since not all of the information had been vetted for the public.

Cybercrime costs about $400 billion globally in lost assets and time, according to a recent survey by security software maker Norton.

Financial services, technology and retail firms are the most likely victims of cybercrime, according to a Ponemon Institute survey, with the energy and utilities sector seeing some of the smallest volumes of activity.

But the energy and utilities industries see some of the highest average annual costs due to cybercrimes, according to Ponemon, with an average cost of $19.78 million in 2011. Only the defense industry sees higher cybercrime costs, with an average cost of $19.93 million annually.

Houston has symbolic significance as the heart of the U.S. oil and gas business, said Stephen Morris, special agent in charge of Houston’s FBI office. He cited ongoing concern about “the physical safety” of refineries and chemical plants in the region.

“But,” he added, “the fact that you haven’t heard of any significant events is a testament to what the industry is doing and the constantly evolving practices.”

Cancilla agreed.

“I don’t think there’s a lot of hand-wringing about it here,” he said.

Cancilla said one reason for the growing concerns over digital espionage is the rise of oil-exploration and production firms owned and operated by foreign governments.

In decades past, the governments of developing countries looking to expand their oil and gas production would typically contract the work out to Western oil majors as Exxon Mobil, BP or Shell.

Since the collapse of the former Soviet Union, however, many oil-rich nations have developed national oil companies with capabilities to do more of the work themselves. But those companies still have to turn to Western oil-field services firms such as Baker Hughes, Halliburton or Schlumberger for expertise.

The complexity of the technologies needed to extract oil and gas from increasingly difficult-to-reach locations is making the information held by these service providers even more attractive to thieves.

In the past, Cancilla said, security organizations spent most of their time and effort responding to security breaches. Now, most of the effort is spent on assessing risks, managing risks and maintaining the capability to respond to threats if needed.

“If you’re spending more than 10 to 20 percent of your time responding to situations, then you most likely don’t have the right risk assessment programs in place,” Cancilla said.

Original Article

-

* Delay the latest of many in long-awaited project

* Opponents fear oil will prop up Cuba communism

* Project has raised environmental fears in Florida

By Jeff Franks

HAVANA, Oct 12 (Reuters) – The arrival of a Chinese-built drilling rig set to explore for oil in Cuban waters has been delayed again and is not expected to reach the island until the second half of December, sources close to the project said.

The delay is the latest of many as communist-run Cuba awaits the start of a project it hopes will give a shot in the arm to its struggling economic system.

The massive Scarabeo 9, which set sail from Singapore in late August, had been expected in Cuba by early November, but was slowed by problems not unusual for a newly built rig going to its first drilling operations, people close to the project said this week.

The late December arrival means the first well, to be sunk in 5,600 feet (1,700 metres) of water off Cuba’s northern coast, may not be started until January, the sources said.

They warned that further delays were possible as the rig makes its journey halfway around the world after it was built in Yantai, China, and completed in Singapore. It was said to be currently off the coast of West Africa, although reports about its location varied.

Cuba had hoped to begin exploring for oil in its part of the Gulf of Mexico several years ago, but the project has been put off by construction delays and other issues.

The high-tech rig belongs to Saipem, the offshore unit for Italy’s Eni SpA, and has been contracted by Spain’s Repsol YPFfor the Cuba project, which is the island’s first major exploration offshore.

It will be used to drill at least three wells, two by Repsol in a consortium with Norway’s Statoila unit of India’s ONGC, and another by Malaysia’s Petronas in partnership with Russia’s Gazprom Neft.

After that, plans for the project, which has been cloaked in secrecy, are not clear, but may depend on the success of the first three wells, a diplomatic source said.

If oil is found, it will take at least three years to begin production, said the local manager for one of the companies involved.

BALM FOR CUBAN ECONOMY

Cuban officials have not said much publicly about the offshore exploration, but make it clear in private conversations that oil would help their troubled economy.

Opponents of the Cuban government fear oil will be the salvation of the communist system, which President Raul Castro is trying to preserve with economic reforms. But that will depend in part on how much oil, if any, is found.

Cuba has said it may have 20 billion barrels of oil in its 43,000 square miles (111,370 square km) of the Gulf of Mexico, while the U.S. Geological Survey has estimated 5 billion barrels, the figure more broadly accepted in the oil world.

Cuba oil expert Jorge Pinon, a former president of Amoco Oil in Latin America who is now at Florida International University, said the most likely prospect if oil were found was that it would be a field closer to the USGS estimate.

Owing to the fields and the probability they contain heavier oil, he thinks only 30 percent to 40 percent of the reserves can be produced.

“If they find 5 billion barrels, you take 40 percent of that and it’s 2 billion barrels,” Pinon said.

The contracts with international partners call for Cuba to get 60 percent of the oil, which based on a 25-year reservoir life, would equate to about 131,000 barrels a day.

That amount may or may not assure the survival of the Cuban system, experts said, but would bring solid economic and political benefits, including a better balance sheet for the cash-strapped island and oil independence.

Cuba now gets 92,000 barrels a day from socialist ally Venezuela to help meet internal demand, but Venezuelan President Hugo Chavez is battling cancer, raising questions about how much longer the program will last.

The Cuban wells have raised environmental concerns because they will be about 60 miles (96 km) from Florida, twice as close to the state as drillers are allowed in U.S. waters.

A blowout like BP experienced last year off the coast of Louisiana could douse both Cuba and Florida with oil.

To alleviate concerns, Repsol will follow through on an offer it made to invite U.S. Coast Guard officials to inspect the rig when it reaches Trinidad and Tobago, sources said.

Original Article

-

By Andrew Restuccia and Ben Geman – 10/13/11 06:31 PM ET

Friday’s big story: House Republicans will again shine a spotlight on the $535 million Obama administration loan guarantee to a now-bankrupt California solar panel manufacturer at a hearing Friday.

The House Energy and Commerce Committee’s investigative panel will hear testimony from two Treasury Department officials on the administration’s decision to finalize the loan guarantee to Solyndra in 2009 and restructure the loan agreement in February.

Republicans on the panel allege that the Energy Department violated a 2005 energy law that established the loan guarantee program when it chose to restructure the Solyndra loan in February amid signs that the company was facing financial troubles.

GOP lawmakers argue that the restructuring agreement was illegal because it ensured that investors who provided additional funding to Solyndra would be repaid before the federal government if the company defaulted. They also say that the Energy Department may have violated requirements to consult with Treasury on the restructuring.

Solyndra declared bankruptcy in early September after laying off 1,100 workers and halting its solar panel manufacturing operations. Republicans have pounced on the bankruptcy, alleging that the Obama administration approved the Solyndra loan guarantee for political reasons and bashing the White House’s “green jobs” agenda.

The administration, for its part, has strongly denied any wrongdoing, arguing that there was always some risk associated with the loan guarantee program. Clean-energy investments, administration officials say, are essential for competing with countries like China, which has put billions into low-carbon energy technology.

Treasury official who questioned restructuring will testify: The following Treasury Department officials will testify at Friday’s hearing: Gary Burner, the chief financial officer for Treasury’s Federal Financing Bank, which provided the loan that the Energy Department was backing up; and Gary Grippo, Treasury’s deputy assistant secretary for fiscal operations and policy.

Burner raised questions about the Energy Department’s plan to restructure the loan. Internal emails show that Burner told officials with DOE’s loan programs office in February that they might need approval from the Justice Department before approving the restructuring of the Solyndra loan guarantee.

A separate Treasury official, Assistant Secretary for Financial Markets Mary J. Miller, wrote to a White House Office of Management and Budget official in August of this year stating that Treasury believed the “subordination” of the taxpayer interest in the restructuring agreement was illegal.

Miller also complains in the August email that DOE hadn’t been sharing information with Treasury on Solyndra’s finances and the loan restructuring. Republicans say that is a violation of the 2005 energy law that created the energy loan guarantee program.

The Energy Department rejects Republican allegations that the restructuring agreement was illegal, arguing that the lawmakers are misreading the statute that established the loan guarantee program.

Energy Department spokesman Damien LaVera told The Hill recently that DOE attorneys reviewed the restructuring agreement and determined it was legal.

Republicans rejected Dems’ request for DOE witness: You won’t hear from the Energy Department at Friday’s hearing, much to the chagrin of Democrats on the panel.

Rep. Henry Waxman (Calif.), the top Democrat on the full committee, and Rep. Diana DeGette (Colo.), the top Democrat on the investigative panel, pressed Republicans Wednesday to invite Energy Department officials to the hearing to explain their perspective on the restructuring.

But Republicans rejected the request, noting that they plan to hear from the Energy Department at a separate hearing.

Original Article

-

by Bob Strickland

With the advent of hybrid cars, more and more people are rethinking American energy dependence and choosing alternative energy. While we still have a long way to go toward true energy independence, most of our gasoline and diesel vehicles could be replaced by vehicles fueled by compressed natural gas (CNG).

We need to find ways to reduce our dependence on foreign oil and use our own natural resources in order to ensure energy security for our country. The use of CNG in natural gas vehicles (NGVs) can play an important role in addressing these challenges.

Corporate America continues to look for ways to balance the social, economic and environmental needs of all stakeholders by rethinking the use of alternative energy in its fleets such as taxis, buses, and delivery vehicles.

Economic Benefits to NGV Fleets

Any business with a fleet of vehicles is a good candidate for natural gas vehicles – transit, garbage, laundry supply, and food and beverage trucks are common users of natural gas.

For example in Alabama, the Birmingham Jefferson County Transit Authority operates 50 natural gas buses, 13 natural gas trolleys and 30 para-transit vehicles in the Birmingham metro area.

While there are upfront costs to buying or converting to a natural gas fleet, the fuel costs are considerably lower making them much more affordable over the long run. In the U.S., we are paying more than $3.60 per gallon for gasoline. The price of natural gas ranges from just over $1.00 to around $2.00 per equivalent gallon.

That’s why AT&T, UPS, Verizon, Waste Management and others are switching to natural gas; they can save millions on fuel costs.

Reduced Maintenance Costs & Emissions

Gasoline and diesel engine lives are shortened because of the build-up of carbon. Natural gas engines, on the other hand, have virtually no carbon build-up, so ring wear is reduced and engine life is extended.

Tune-ups and oil changes for natural gas vehicles aren’t needed as frequently because compressed natural gas burns so much cleaner than gasoline or diesel. Some fleet owners report service lives two to three years longer than gasoline or diesel vehicles.

According to Mitchell Pratt, chief operating officer, Clean Energy, their CNG-powered taxis measure near zero emissions at the tailpipe and will reduce greenhouse gases by almost 30 percent when compared to petroleum powered vehicles.

CNG Availability Regionally

At the end of 2010, there were nearly 1,000 natural gas stations in the U.S., and there are efforts underway to build more. There are five regional corridors where public and private entities are working hard to get stations built near intersections of major interstates and highways:

1) Texas Triangle -   Dallas to San Antonio to Houston

2) Colorado Rockies Corridor – Colorado, Wyoming, Utah

3) Southeastern Corridor – Georgia, Florida, Alabama, North Carolina, South Carolina, Kentucky, Tennessee, Florida, Mississippi, Arkansas, Virginia

4) Eastern Corridor – Runs north of Virginia into the New England States

5) I-75 Corridor – Runs along I-75 from the northeastern U.S. down toward the southeastern states

In Alabama, the goal is to have as many as 12 public stations by the end of 2012. We’re building natural gas stations primarily for Alagasco’s fleet for now but will be opening stations to the public as well. This means that if all the planned public stations are open for business, you could drive across Alabama from the Tennessee line all the way to the Florida coast in a natural gas vehicle.

Recently, California’s first CNG-powered Ford Transit Connect taxis have gone into service in the greater Los Angeles area and, since 2001, the number of CNG filling stations in Orange County has tripled to about 30.

CNG & Natural Gas Vehicles Good for Economy

Americans spend about $1 billion each day on foreign oil. While there are numerous benefits to running your fleet on natural gas, we think keeping your dollars in the U.S. is first among them.

Certainly as we produce more NGVs and stations, this will lead to job creation, but consider this: the U.S. spent $30 billion on imported oil in one month alone. If we were not burdened by our dependence on foreign oil, think about what we could have done with that money. We could have hired over 443,000 new teachers. We could have funded highway repairs for more than eight years. We could have built 39,500 new elementary schools.

Since the beginning of this the current economic recession, American citizens and corporations alike are seeking a more balanced and sustainable co-existence. We think natural gas will play a large role in our overall economic recovery and financial independence.

Original Article

-

By Gerard Shields

Advocate Washington bureau

WASHINGTON — Oil industry representatives went before a congressional committee Wednesday to criticize the Obama administration for what they called the intentional stalling of drilling permit approvals in the Gulf of Mexico.

Chris Auer, an owner with a company that helps Gulf rigs shut down, told the House Natural Resources Committee that gaining a permit has grown in length from 42 days prior to the BP Deepwater Horizon disaster last year to 129 days, frustrating companies.

“They’re not asking for a handout; they’re asking for the handcuffs to be removed,” said Auer, owner of Crevalle Management Services in Texas.

The number of permits issued per month has dropped from 71 to 52, a 27 percent decline, said Committee Chairman Doc Hastings, R-Wash.,

Eleven rigs have left the Gulf since the moratorium, which ended a year ago Wednesday, Hastings said.

Statistics were bandied about during the hearing, with Democrats and Republicans each flinging them to make their points.

Oil production in the Gulf has risen from 1.16 million barrels per day to 1.40 million under the Obama administration, said Rep. Ed Markey, D-Mass., the ranking Democrat on the panel.

Markey bristled at the hearing title “Lingering Impact of Offshore Drilling Moratorium.”

“Holding a hearing on the impact of a safety check following an unimaginable oil spill is a little like holding a hearing on the impact of wearing a cast after shattering your leg, without looking at the accident that required the cast,” Markey said.

Committee member Jeff Landry, R-New Iberia, acknowledged that production in the Gulf may be up, but argued that most of the increase is due to larger wells that were on line prior to the Deepwater Horizon disaster.

The drilling permit process is not only causing lost jobs, but affecting a way of life for communities, Landry said.

“It’s a hand-in-glove industry,” Landry said. “It trickles down to every facet of our life down to the gas pump.”

The chief financial officer for ATP Oil and Gas Corp. in Texas, Al Reese Jr., told the committee one of his permits required 3,600 pages.

In the past such permits averaged 30 to 40 pages, Reese said.

“If you have a 3,600-page document, it’s going to take a long time,” Reese said.

Auer told the committee he would like to see more federal workers to issue permits, the standardization of permitting forms and the automation of the permitting process.

Committee member John Fleming, R-Minden, agreed.

“There is no certainty in the process,” Fleming said.

The committee meeting was criticized for being one-sided by the Checks And Balance Project, a liberal think-tank in Denver, Colo., that focuses in part on energy issues.

Matt Garrington, a leader of the nonprofit group, said Reese contributed $1,000 to Hastings’ re-election campaign in April.

The hearings are held to hammer home Republican points, Garrington said.

“They have been doing this dog and pony show over the last year,” Garrington said. “It’s the same thing they keep repeating.”

The panel heard testimony about the detrimental impact of the spill from a representative of the Florida tourism industry.

An LSU biologist also testified about the negative impact that the spill had on the cells of fish in the Louisiana marshlands.

The committee will meet again Thursday, when it is scheduled to hear from the Interior Department’s chief drilling regulator, Michael Bromwich, who will be testifying on a recent government report looking into the accident.

The BP Deepwater Horizon rig exploded on April 20, 2010, killing 11 men and resulting in the discharge of 4.9 million barrels of oil into the Gulf, the largest spill in U.S. history.

Original Article

-

* EIA sees 2011 gas output up 4.16 bcfd from 2010

* 2011 gas consumption seen up 1.24 bcfd from 2010

Oct 12 (Reuters) – The U.S. Energy Information Administration on Wednesday slightly raised its estimate for growth in domestic natural gas production in 2011, expecting output this year to gain 6.7 percent from 2010 levels.

In its October Short-Term Energy Outlook, the EIA said it expected marketed natural gas production to rise by 4.16 billion cubic feet per day in 2011 to a record 65.99 bcf daily, compared with its September forecast of 65.79 bcf daily.

It was the fifth straight month the agency increased its estimate for 2011 gas output.

The EIA said the entire growth in 2011 gas output stemmed from increases in onshore production in the lower 48 U.S. states, which will more than offset a year-on-year decline of nearly 1 bcf per day in Federal Gulf of Mexico production.

Gas production has been growing steadily since 2005, primarily because of the boom in horizontal drilling in onshore unconventional shale formations.

The EIA said it expected production to continue to grow in 2012 but at a slower pace, rising another 1.38 bcf daily, or 2.1 percent, to 67.37 bcf per day.

Domestic gas output this year should easily set an all-time high, eclipsing the previous record, hit in 1973, of 62.05 bcf daily.

The EIA trimmed its forecast for U.S. natural gas consumption growth this year for a third straight month, expecting average demand to rise 1.9 percent from 2010 to about 67.23 bcf per day, versus its prior estimate of 67.29 bcf daily.

Growth in the industrial and electric power sectors should back 2011 consumption gains, with record heat in the third quarter stirring a healthy increase in demand for air-conditioning across much of the nation.

In 2012, the EIA sees total consumption rising another 0.7 percent to 67.69 bcf daily, again backed mostly by continued growth in industrial and electric power demand.

The EIA’s 2012 demand estimate was up only slightly from its previous forecast of 67.67 bcf per day.

The agency recently said changes to its methodology in collecting and reporting consumption data should not significantly change reported annual total consumption volumes, but it did expect significant changes in the seasonality of reported residential and commercial demand volumes.

High liquefied natural gas demand and prices in Asia have coaxed most spot cargoes to the Pacific Basin this year, denting imports in the low-priced U.S. market.

U.S. imports of liquefied natural gas are expected to fall 25 percent to 0.9 bcf per day this year, down from 1.2 bcfd in 2010, the EIA said. Imports in 2012 are expected to fall further, to 0.7 bcfd.

EIA expects Henry Hub natural gas prices NGc1 in 2011 to average $4.15 per million British thermal units, down 5 cents from its previous estimate and 24 cents below last year’s estimated average of $4.39.

In 2012, the EIA sees prices rising 17 cents, or 4.1 percent, to $4.32 per mmBtu.

(Reporting by Joe Silha in New York; Additional reporting by

Edward McAllister in New York; Editing by Dale Hudson)

Original Article