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La. delegation not appeased, calls Noble Energy project approval ‘token’

By GERARD SHIELDS

WASHINGTON — After issuing the first deepwater oil drilling permit this week since the BP Deepwater Horizon rig explosion, Interior Secretary Ken Salazar told a House committee Thursday that more permits are on the way.

That didn’t placate Louisiana members on the House Natural Resource Committee, who criticized Salazar for not moving more quickly. U.S. Rep. John Fleming, R-Minden, called the first permit issued by the department a “token.”

“We have 1,000 jobs of very fine Louisiana citizens lost,” Fleming told Salazar.

U.S. Rep. Jeff Landry, R-New Iberia, criticized Salazar for treating onshore drilling differently than offshore operations. Landry blasted Salazar’s pledge to create a more “robust” department.

The Deepwater Horizon blast that killed 11 men and resulted in a discharge of 4.9 million barrels of oil into the Gulf was the first such accident in 40,000 wells being drilled in the Gulf waters, Landry said.

Landry chided Salazar for bringing the numbers of permits issued to shallow-water operations from the teens monthly before the disaster to single digits.

“That is not robust,” Landry said.

Salazar went before the committee to discuss his budget for next year. The agency is seeking $12.2 billion, equal to its 2010 levels, Salazar said. The budget includes $506.3 million for oversight of the offshore drilling industry, a $119.3 million or 50 percent increase.

The new money would be used to expand the field of inspectors to the rigs, Salazar said. Salazar defended the slower movement of permits, pointing to the need for offshore drilling safety before new permits are granted.

The federal government played a role in the oil rig explosion because its enforcement arm, formerly known as the Minerals Management Service, was not up to the task, he said.

“We want to have oil and gas production in the oceans,” Salazar said. “MMS simply did not have the capacity to do the job … we had to take action that we were protecting people.”

“I am pleased at the progress that industry is making,” Salazar added. “We are now able to move forward.”

The budget proposes to increase fees on oil companies for offshore oil and gas inspections from $10 million to $65 million in 2012 to pay for increased drilling enforcement.

U.S. Rep. John Duncan, R-Tenn., expressed concern over the fees at a time when gas prices across the nation increased by 20 cents a gallon over the last week, he said.

“Some of us are concerned that they will be passed on to the consumers,” Duncan said of the fees.

Salazar also is proposing establishing a $4-per-acre fee on leases that are not in production to spur new development.

The first permit, issued Monday to Noble Energy off the coast of Venice, came because two companies have created containment systems that could handle a blowout similar to the BP disaster, Salazar said.

Salazar said in a committee hearing earlier in the week that he will abide by a New Orleans federal judge’s ruling that the department issue five permits by the end of the month. A rise in permits was welcomed by committee chairman, U.S. Rep. Doc Hastings, R-Wash., who downplayed the issuance of the first permit.

“The people in the Gulf need more than just one token permit,” Hastings said. “One permit will not put thousands of people back to work.”

U.S. Rep. Ed Markey, D-Mass., lauded Salazar.

Markey was BP’s biggest critic after the catastrophe but noted that BP owns half of Noble Energy.

“For those who say this post-spill process has been political, I think the irony of BP holding the largest stake in the well for the permit you approved tells everyone you are not playing politics,” Markey said. “You’re playing it straight.”

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By RYAN TRACY

WASHINGTON—The U.S. Environmental Protection Agency, as part of its review of a natural-gas drilling procedure, is looking at the radioactivity of wastewater used in the process.

Environmental Protection Agency Administrator Lisa Jackson, speaking at a congressional hearing Thursday, defended her agency’s efforts to study the safety of natural-gas drilling and left the door open to further regulatory action on the issue. The process, known as hydraulic fracturing, is used to extract hard-to-reach natural-gas pockets in the ground.

Ms. Jackson suggested that if public water-treatment plants couldn’t adequately treat wastewater from hydraulic fracturing to safe levels—a central concern of critics of extraction method—EPA could impose standards on drillers who send the waste to the plants.

“EPA can at any time set additional standards for what we call pretreatment, for waste that may go to a treatment plant,” Ms. Jackson said.

Hydraulic fracturing involves injecting a mixture of water, sand, and chemicals underground at high pressures to release natural gas from shale deposits. In recent years, new technology has unlocked shale gas that was not previously accessible, leading to a boom of new wells across the country.

Critics say environmental regulators and the industry have failed to ensure the practice is safe, particularly with respect to fracturing fluid contaminating drinking water.

“What we see here are deliberate attempts to shield from the public additional concerns expressed by EPA scientists,” said Rep. Maurice Hinchey (D., N.Y.) said at a congressional hearing on EPA’s budget.

Ms. Jackson pushed back. “We have used a transparent, consensus-based process to scope the study,” she told lawmakers at the hearing. “We don’t want to stifle science.”

She said EPA intends to study the issue and take action to enforce the law if it has evidence of violations and if states, which she called the “primary” enforcers, do not act.

Mr. Hinchey pressed Ms. Jackson on whether the national study should be the EPA’s only effort to study the risks of hydraulic fracturing.

“I will not say the national study should be the only study,” Ms. Jackson said. But she said the process to develop the current study had been “transparent” and “rigorous.”

“I would want my science adviser to understand what additional work is happening so that we’re not being redundant,” Ms. Jackson said of other studies.

The growing pressure to do more on hydraulic fracturing comes as the EPA faces opposition for a raft of other regulatory initiatives related to industrial pollution, greenhouse gases, coal mining, and other sectors.

Some lawmakers at the hearing Thursday defended natural-gas drillers.

“There’s never been a connection proven, in spite of frequent revisiting of the hydraulic-fracturing issue, between the diminution of water quality and modern hydraulic-fracturing techniques,” said Rep. Cynthia Lummis (R., Wyo.), echoing the statement of industry supporters.

Ms. Jackson said many of the “issues” identified by Mr. Hinchey stemmed from the agency’s regional office in Philadelphia and that she would be travelling there Friday to discuss them.

“There is no ‘look the other way’ stand-down” on concerns about natural-gas drilling, she said. “We intend to do our jobs.”

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* Salazar said dept reviewing fracking waste practices

* Reports say radioactive wastewater entering waterways

* Govt actively considering fracking disclosure rules (Adds comments from Salazar on disclosure rules)

By Ayesha Rascoe

WASHINGTON, March 3 (Reuters) – The U.S. government is reviewing waste water practices of natural gas drillers after reports that radioactive water was ending up in public waterways, Interior Secretary Ken Salazar said on Thursday.

Salazar, asked at a House of Representatives committee hearing about reports that radioactive wastewater produced from the drilling practice known as hydraulic fracturing may be ending up in waterways, confirmed that his department is looking into the matter.

Interior is working with the Environmental Protection Agency to examine water quality issues related to waste and hydraulic fracturing, Deputy Interior Secretary David Hayes explained at the hearing of the House Natural Resources committee.

“We are looking to make sure operators on public lands are not using hydraulic fracturing in way that is harmful to environment,” Hayes said.

Fracking injects a mixture of water, sand and chemicals into rock formations at high pressure to force out oil and natural gas.

The spread of the technique to new areas has prompted a backlash from homeowners near shale gas developments who complain the practice has contaminated their drinking water.

Last year, Interior said it was considering developing new rules that would require companies to reveal the chemicals used in hydraulic fracturing on federal lands. [ID:nN30293694]

Expressing support for natural gas development, Salazar said the department was still involved in discussions with the drilling industry and other stakeholders regarding the disclosure issue.

“We’re going to have a huge backlash…from the American public if we continue to inject chemicals and fluids into ground without people knowing what it is that’s being injected,” Salazar told reporters after the hearing.

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By Eric Watkins

LOS ANGELES, Mar. 2 — In the immediate wake of events in Libya, reports began to emerge that looked like doomsday was upon us. Indeed, certain sections of the mainstream media gave the impression that prices would be going through the roof as one oil-producing country after another fell.

Fortunately, saner heads are now prevailing.

“While emotions are running high, journalists and analysts are misreading the situation,” says Fereidun Fesharaki, chairman and chief executive officer of FACTS Global Energy, noting that the market is now hit on a daily basis with questions “from a total collapse of the key oil producing countries to $200/bbl oil.”

For starters, Fesharaki reminds us of the difference between North Africa—where the turbulence has been focused—and the Middle East—which has been relatively quiet. He then goes on to make some bold statements about the unrest and why it will not spread.

“There is zero chance of a threat to key oil producers—Saudi Arabia, Kuwait (which has a challenging parliament), the UAE, and Qatar,” Fesharki says, noting that in these countries, “virtually every local is well off and many are millionaires.”

He says the situation is altogether different from Egypt, Tunisia, Algeria, and Libya, “where huge unemployment and low standards of living have electrified the population against the government.”

To underscore his point, Fesharaki says, “Millionaires do not go to the street and face bullets; the poor, unemployed, educated youths do.”

Without a doubt, Fesharaki does concede that there are grievances in the Middle Eastern countries and that more people will demand rights to express themselves. But he insists that the dimensions of opposition are “vastly different” from what we see in Africa.

“The price [of oil] has risen mostly due to misreading of events in the Middle East and Africa,” says Fesharaki. “Let us not forget the facts and mix up our geography,” he concludes.

Similarly, Bhushan Bahree, senior director of global oil for IHS CERA, is clear in his understanding of the situation now facing us as a result of events taking place in North Africa.

Bahree notes that loss of significant volumes of oil supply from Libya has caused anxiety but “not alarm and dread.”

He says the current situation contrasts with the response to oil supply disruptions in the 1970s, when consumers “became fearful of actual shortages and panicked.”

In his view, the situation is relatively calm due to the development of institutions and international cooperative efforts, led by “clear operational understandings” between members of the International Energy Agency and the Organization of Petroleum Exporting Countries.

Bahree concedes that the world is not completely protected against every oil supply threat, noting that “a disruption in excess of the ability of the mechanisms in place to cope with a physical disruption could still occur.”

But he also insists that the defense mechanisms now in place worked during Venezuelan strikes in 2002 and 2003, the Iraq war in 2003, and Nigerian supply woes related to political troubles.

“Now,” he says, “Saudi Arabia has stepped in smoothly to offset supply losses resulting from the violence and political upheaval in Libya. Others in OPEC, notably in the gulf, may also help. The IEA is standing by to assist, if needed, with more oil.”

In a word, Bahree concludes that, “This is not 1979.”

Bahree and Fesharaki are analysts worth emulating.

They are providing much needed balance in the world of unstable opinion now swirling around events taking place in North Africa and the Middle East.

Their views are a welcome alternative to an otherwise downward spiral of ignorance, doubt and fear.

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Lafayette Parish could gain a new state legislator when district lines are redrawn to reflect population shifts over the past decade, state Senate Secretary Glenn Koepp said Thursday.

Lafayette Parish grew to 221,578 residents, a gain of 31,075, from 2000 to 2010. The city of Lafayette gained 10,366 residents in the past decade, reaching 120,623.

The state House and Senate will convene a special session March 20 through April 13 to redraw districts based on population shifts noted in the 2010 U.S. Census.

“This will more than likely be one of the more challenging reapportionment cycles we’ve gone through,” said state Sen. Mike Michot, R-Lafayette, who is one of the few legislators who was around for the last reapportionment.

Lafayette Parish is poised to gain representation in Baton Rouge, Koepp told a group of news media representatives Thursday in Lafayette.

The question to be decided is whether Lafayette Parish gets a new House district unto itself or if part of the parish is moved into a House district with residents of another parish, he said.

Lafayette Parish most likely won’t gain another senate seat, though.

“A (new) senate district in Lafayette is going to be difficult,” Michot said. “We’re probably fourth or fifth on the list in terms of growth.”

A possible scenario is to include some Lafayette Parish residents in state Sen. Elbert Guillory’s district, Michot said. But that’s a minority district which has to be protected, he said.

Other options would be to bring parts of Lafayette Parish into Sen. Jonathan Perry’s district to the southwest or Sen. Fred Mills’ district to the east, he said.

The Opelousas area lost population, according to the 2010 census. Mayor Don Cravins said he will officially challenge those results.

Guillory’s district could be redrawn to include part of St. Martin Parish to make up for the lost population in St. Landry Parish, Koepp said.

Ideally, each state Senate district will have 116,240 residents and each House district will have 43,174 residents, with a five percent differential. When a district gains or loses population, it has to be redrawn in an attempt to meet that ideal goal.

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He’ll take no donations over $100

By Jan Moller

BATON ROUGE — A Louisiana governor announced Thursday that he wants to be president.

But it wasn’t Bobby Jindal, who has widely been assumed to harbor presidential ambitions since he became the nation’s youngest governor three years ago at 36. Jindal is staying put in the Governor’s Mansion, at least for now, and planning to seek re-election later this year.

Instead it was Buddy Roemer, more than 23 years removed from his last political triumph, who stood before three dozen friends, supporters and media members in a sterile conference room at the Business First Bank and laid out plans for a populist uprising.

The former Democrat-turned-Republican governor said he’s tired of the “institutional corruption” of special interests in the nation’s capital and promised to tackle the ballooning federal deficit as he announced he was forming an exploratory committee.

“Washington, D.C, has become a boom town, and the rest of America is hurting,” he said, ticking off the 2010 health care law and Wall Street regulatory overhaul as bills that were heavily influenced by lobbyists.

For a one-term governor who managed to finish third behind Edwin Edwards and David Duke when seeking re-election in 1991, it will be a hard slog raising money and gaining traction against a field of high-wattage contenders with more name recognition.

It will be made even harder by his central campaign pledge: No donations over $100 will be accepted, and no contributions from political action committees. All contributions will be reported, though federal law doesn’t require disclosure of donations that small. He is counting on online donations for much of his support.

“I know that people will laugh and scoff, particularly the politicians and the political know-it-alls,” Roemer said. “(They’ll say) ‘Roemer can’t win. He won’t take the big money.’ But that’s why I will win.”

A Shreveport native with two degrees from Harvard, Roemer, 67, served four terms in the U.S. House of Representatives before serving as governor from 1988-92, a period that saw an ambitious tax overhaul plan defeated in a statewide referendum and the birth of Louisiana’s gambling industry.

After losing his 1991 re-election bid, Roemer attempted a comeback in 1995 but again finished third in the primary, this time behind Republican Mike Foster and Democrat Cleo Fields.

In recent years he has served as president of the Business First Bank in Baton Rouge that he founded. His last political foray was in 2008 when he campaigned across the country for the Republican presidential nominee, Arizona Sen. John McCain.

Roemer plans to kick off his public campaign Monday with an appearance at the forum hosted by the Iowa Faith and Freedom Coalition in the state that will host the first presidential caucus next January. That will be followed by trips to the early primary states of New Hampshire and South Carolina, though an aide said they are still finalizing plans in those states.

He acknowledged that he will “take some getting used to” on the campaign trail and said he has no specific timetable for deciding if he’ll make it official and declare for the race.

“I thought that I was old enough to know what needs to be done and young enough to get it done,” he said.

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The U.S. Interior Department said this week that it will comply with a federal court’s order that the agency decide on five drilling permit applications — and that’s what it should do. But the department also needs to move more efficiently on dozens of other applications that are pending months after a drilling moratorium officially ended.

On Feb. 17, U.S. District Judge Martin Feldman of New Orleans gave the department 30 days to act on five permits that had been pending for between four and nine months. Judge Feldman called that wait “unreasonable,” agreeing with a challenge brought by driller Ensco Offshore Co.

“The permitting backlog becomes increasingly inexcusable,” the judge said. “Delays of four months and more in the permitting process are unreasonable, unacceptable and unjustified by the evidence.”

Judge Feldman is right.

The government has argued that the moratorium, which officially ended in October, and the slow approval of permits since have been needed to implement new safety standards after the BP oil spill. Gulf Coast residents want to avoid another disaster, indeed. But experts and independent scientists have long laid out how some rigs could have resumed safe drilling without the broad disruption the Obama administration imposed.

On Monday, the administration finally issued the first post-spill drilling permit in deepwater. It also said that there are 57 wells that may soon be allowed to resume work started before the Deepwater Horizon disaster. That’s a lot of activity waiting for government action, and that’s why the department needs to move to resolve more than the five permits involved in Ensco’s legal case.

Interior officials have said the department will need more resources to process permits more rapidly, and the administration and Congress must make sure the agency has enough inspectors and personnel to handle applications efficiently.

But the bottom line, as Judge Feldman ruled, is that the government has not presented enough evidence to justify months of delays on individual permits.

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By Ayesha Rascoe

WASHINGTON (Reuters) – The door could now be open for a “significant” number of new offshore drilling permits, Interior Secretary Ken Salazar said on Wednesday, as the administration comes under increased pressure to tackle surging world oil prices.

The Interior department on Monday issued a permit for a deepwater well co-owned by Noble Energy Inc and BP, the first such permit since a rig explosion unleashed millions of barrels of oil from BP’s Macondo well into the Gulf of Mexico last year.

“There are other deepwater permits that are pending and the ones that will go out the door will hopefully be the templates that will allow us to move forward with an additional, significant number of deepwater permits,” Salazar told a Senate Energy and Natural Resources committee hearing.

After the BP oil spill, the department imposed a temporary ban on exploratory drilling at depths of more than 500 feet. While the moratorium was lifted last October, no new deepwater permits were issued until this week.

The department has faced intense criticism, as well as legal action, over the slow pace of permitting.

Still, Salazar warned that if his department does not receive the funding it has requested permitting may not speed up as much as industry would like.

“If we don’t get the horsepower to be able to process permits under what is now a greater degree of scrutiny, we may never return to the pre-Macondo rate of permitting,” Salazar said after the hearing.

Last month, a federal judge gave the department 30 days to decide whether to approve five other pending permits to drill in the deep waters of the Gulf of Mexico.

Although Salazar said he believes the ruling inappropriately impedes on his administrative authority, the department plans to comply with this order.

Republican lawmakers have sharply criticized the slow approvals, saying it will leave the country more vulnerable to oil price shocks down the road. Lawmakers from both parties have also been asking for a release of oil from the 727-million-barrel Strategic Petroleum Reserve.

Jeff Bingaman, the chairman of the Senate Energy and Natural Resources Committee, called on the Obama administration on Wednesday to be ready to release oil from the Strategic Petroleum Reserve if conditions in Libya deteriorate further.

U.S. oil prices on Wednesday settled at $102.23 a barrel, rising above $100 a barrel for the first time since September 2008 over concerns that the strife in Libya could cut off that country’s oil exports and unrest was spreading to other countries in the Middle East.

U.S. retail gasoline prices soared nearly 20 cents a gallon since last week, the second biggest weekly rise in pump prices ever recorded by the government.

“While I do not think that high oil prices alone are a sufficient justification for tapping the SPR, I do believe that the announcement of an SPR sale would help to moderate escalating prices,” Bingman said on the Senate floor.

Energy Secretary Steven Chu on Wednesday ruled out tapping America’s emergency stockpile to help bring down prices, saying ramped up oil production in other nations, most notably Saudi Arabia, should cool crude costs.

“That’s going to mitigate the price increase,” he told reporters on Capitol Hill. “We’re hoping market forces will take care of this.”

When asked how high prices would have to go before the Strategic Petroleum Reserve is tapped, Chu indicated the Obama administration does not have a predetermined price.

“I think in the history of the United States’ SPR there’s never been a predetermined amount,” he said.

Chu rejected the notion that expanding offshore exploration would help bring down prices in the near term, noting it would take five to 10 years to bring the oil to the market.

Secretary Salazar agreed. “We do not produce enough oil in this country to influence price of oil because it’s set in world markets,” he told the separate Senate hearing.

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