http://www.keysnet.com/2011/05/27/343690/bahamian-oil-firm-ready-to-drill.html

Crude oil prices rise, but gas prices down as demand lowers

By David Goodhue
dgoodhue@keysreporter.com
Posted – Friday, May 27, 2011 11:58 AM EDT

In the wake of news that a deep-water oil-drilling rig will likely be operating off the coast of Cuba close to Key West by the late summer or early fall, the head of a petroleum investment firm announced that drilling in the Bahamas could begin next year.

Paul Crevello, chief executive officer of the Bahamas Petroleum Company, said this month that seismic experts are surveying the prospective wells, which span about 1,155 square miles of sea floor of the southern Bahamas. He said that information about the potential oil reserves that BPC and the seismic companies it hired have gathered so far indicates that drilling is “imminent.”

“These results and newly signed agreements confirm that the company is progressing well with its exploration program and is expecting to be drilling in 2012,” Crevello said in a May 16 statement to investors.

Original seismic interpretations of recent surveys show multiple underwater structures with four-way closures up to 75 miles long and three miles high, Crevello said. He said that the structures have never been breached and the reservoir and seal remain intact.

“What is most exciting is the scale and the size of the structures we have been able to map… .,” Crevello said. “The structures identified are similar to supergiant structures of the Mexican fields in the southern Gulf of Mexico and the Middle East.”

Crevello said some of the fields BPC is leasing in its agreement with the Bahamas could have yields as high as 500 million barrels of oil.

BPC already has an agreement with Norway’s StatOilHydro to be the operators of three of BPC’s offshore licenses in the Cay Sal area of the Bahamas, about 120 miles east of where Spanish oil company Repsol plans to start drilling off Cuba in September.

That project, which involves a giant, semi-submersible rig built in China and Singapore, has raised the concern of several U.S. lawmakers, including Rep. Ileana Ros-Lehtinen (R) and Democratic Sen. Bill Nelson. Each vowed to try to stop the project through diplomatic pressure and legislation punishing companies and individuals doing business with the Cuban government and its energy programs. [See the related story on Page 5.]

Gas prices down for now

Meanwhile, as talk about offshore drilling heats up, gas prices in the U.S. have dropped slightly this week. Economists and industry watchers expect fluctuation as summer nears, but they also say drivers may see some continued relief.

“Where they go after that is very hard to say,” said Frederick Joutz, an economics professor at George Washington University in Washington, D.C. “There are supply issues and geopolitical events that could raise the price once again.”

According to AAA, the national average price for a gallon of regular gasoline on Wednesday was $3.81, down from $3.92 a week ago and $3.86 a month ago. Discount prices in the Upper Keys were about $3.72 a gallon at press time.

But the price of gasoline is linked with the price of oil, which went up above $100 a barrel again at the beginning of the week after forecasts for the price of Brent crude from the North Sea were higher than expected from investment firms Goldman Sachs and JP Morgan.

Still, Jessica Brady, a spokeswoman with AAA South, does not expect the forecasts to impact gasoline prices in the coming months. Where oil closes at the end of the week on the New York Mercantile Exchange is a more predictable indicator, she said.

Brady said gas prices are coming down because world economic growth has slowed and fuel demand is down. Also, the U.S. dollar is strengthening a bit against the Euro. Oil is priced in dollars, and it goes higher the more the dollar weakens because of international investors holding other world currencies.

Mark Isaac, an economics professor at Florida State University, said drivers shouldn’t get comfortable with the lower prices — or expect prices to come down much more. The price of oil is always one disaster away from skyrocketing, he said.

“As usual, there are political and regular economic factors at play. Right now, the politics is pretty quiet — Libya is at a stalemate — so that’s factored in. But politics can turn on a dime on one day’s headline, as we’ve seen,” Isaac said.

Florida Senator Nelson is exerting effort to try to move along restoration of the Gulf of Mexico and help those affected. Here’s a standard response letter he sends out that contains a lot of info on his good works in this regard. Too bad our other senator is simply watching. DV

Dear Mrs. Quirolo:

Thank you for contacting me regarding ongoing plans for restoration of the Gulf Coast one year after the Deepwater Horizon oil spill. As you may know, I have opposed drilling off Florida for a long time now. There just isn’t enough oil in the eastern Gulf to justify risking our shores, our natural resources, and the many industries that rely on our coasts and waters and the military testing and training area off the Gulf.

Shortly after the spill, I introduced legislation that would lift the cap on oil companies’ liability in spills from $75 million to $10 billion. More recently, I introduced S.862, the Gulf of Mexico Recovery, Restoration, and Resiliency Act, which would dedicate 100% of the Clean Water Act penalties assessed to BP for ecosystem restoration and research, job and workforce development, and tourism promotion. It also would create a Citizens Advisory Committee and a Scientific Advisory Committee to provide input on the direction of Gulf restoration activities.

I just introduced S.983, which would prevent oil companies like BP from deducting the cost of oil spill recovery efforts. Last year, BP announced that they’d use nearly $12 billion in tax savings to offset clean-up costs associated with the Deepwater Horizon oil spill in the Gulf of Mexico. I introduced this legislation because we should not allow oil companies to shift the cost of their mistakes to the average taxpayer.

I’ve been monitoring closely the work of the Gulf Coast Claims Facility (GCCF), which BP established and funded to handle claims of economic damage due to the spill. At a recent Senate committee hearing, I questioned the head of the GCCF—Kenneth Feinberg—about the process for reviewing and settling claims. When he was appointed to the post, Feinberg promised the process would be open, quick, and independent of BP. But we’ve since learned there’s very little independence. And I’ve been hearing from way too many people who say they can’t get their claims paid in a timely fashion. I wrote the Administration to demand an investigation into the GCCF and its methods, and I won’t rest until this process becomes more transparent and efficient. Meantime, if you or someone you know is having difficulty with a claim, please call my Orlando office toll-free at 888-671-4091.

It is my hope and my belief that by the passage of time, the hard work and dedication of individuals, and the power of Mother Nature, the Gulf Coast will recover. Please do not hesitate to contact my office again.

Sincerely,
Senator Bill Nelson

P.S. From time to time, I compile electronic news briefs highlighting key issues and hot topics of particular importance to Floridians. If you’d like to receive these e-briefs, visit my Web site and sign up for them at http://billnelson.senate.gov/news/ebriefs.cfm

http://www.offshore-mag.com/index/article-display/8176386843/articles/offshore/regional-reports/us-gulf-of-mexico/2011/May/court-enters_judgment.html?cmpid=EnlOSWeeklyMay312011

Published: May 24, 2011
Offshore staff
HOUSTON – The US Department of the Interior “acted unlawfully by unreasonably delaying action” on permit requests from ATP Oil & Gas Corp. according to the Final Judgment issued by the US District Court in the Eastern District of Louisiana.

The suit that resulted in this judgment concerned two permits that were submitted by ATP, but not acted on within 30 days. The permits were approved, but not until more than five months after the federal GoM drilling moratorium was lifted.

In its judgment, the Court said, “Court wrote that, “The thirty-day timeline is reasonable, in part because the government has failed to establish that the individual permit applications pending in this case individually require more (or less) care. The Court has repeatedly acknowledged that some delays are understandable in a more regulated environment, but that now, over a year after the Deepwater Horizon tragedy, delays must reach some end.

Without evidence showing otherwise, a thirty-day timeline derived from the statute and past practices remains reasonable. And as this Court has previously explained, thirty days seems to have Congress’s acknowledgment as reasonable within the statutory plan.”
The originating court action was by ATP and also Ensco Offshore Co.

Special thanks to Richard Charter.

http://www.pnj.com/article/20110506/NEWS01/105060334/Budget-sinks-aquatic-preserve-protectors?odyssey=tab|topnews|text|FRONTPAGE

Gulf Breeze resident Robert Turpin’s earliest childhood memories include harvesting scallops in a cove near Fort McRee with his family. He has longed for the day he could introduce that ritual to his daughters. But that day may never come.

A program to restore the scallop fishery in Pensacola area waters may cease on July 1 if the Northwest Florida Aquatic Preserve office on Garcon Point is closed.

That office and five others across the state, operating under the Department of Environmental Protection, were not funded in the state budget set for approval by lawmakers today. The budget goes into effect July 1.

“I won’t be able to expose my kids to scalloping unless we’re managing and trying to improve the scallop fisheries,” said Turpin, 50, a marine biologist.

Turpin, other residents and fellow scientists worry what will happen to the entire 76,000 acres of underwater lands in the Northwest Florida preserves and the sea life the lands nurture without the watchful eye of the aquatic preserve staff, especially as the impacts of the BP oil spill still are being assessed.

“The aquatic preserve’s staff are the silent soldiers protecting our natural resources,” said Heather Reed, a marine biologist and the City of Gulf Breeze project manager for the Deadman’s Island Restoration Project.

The aquatic office, with a staff of three and an annual budget of $178,281, is responsible for the restoration and preservation of salt marshes, seagrass beds, oyster beds and shoreline stabilization and water quality monitoring of the submerged land from Perdido Key to St. Andrews Bay.

These resources are directly tied to the quality of the environment and viability of the economy of Northwest Florida, in terms of the seafood industry, tourism, recreation and the quality of life, Turpin said. Restoring, monitoring and preserving these resources is more critical than ever in the oil spill’s wake, he said.

DEP would not allow the aquatic preserve staff to be interviewed for this story.

Turpin, Reed and Vernon Compton, who works closely with the staff as director of the Gulf Coastal Plain Ecosystem Partnership of the Nature Conservancy, said staff members were key players in pointing out to BP’s Unified Command the environmentally sensitive areas of the Panhandle that needed the most protection last year during the disaster.

Special thanks to the Gulf Restoration Network.

http://www.nj.com/news/index.ssf/2011/05/concerns_for_njs_water_as_del.html

Published: Monday, May 30, 2011, 11:51 PM Updated: Tuesday, May 31, 2011, 5:23 AM
By Seth Augenstein/The Star-Ledger

New Jersey is downstream from a bitter battle over natural gas development in Pennsylvania that involves a controversial drilling practice.

During that process, called fracking, a mix of water, sand and chemicals is pumped more than a mile underground, causing explosions that unlock the pockets of natural gas.

But the practice is at the center of a dispute over natural gas development in Pennsylvania. The chemicals going underground could have a severe impact on water quality for more than 2.8 million residents in New Jersey, environmentalists warn.

“We’re going to get the bad end of this, and no one realizes it,” said Tracy Carluccio, deputy director of the Delaware Riverkeeper Network, an environmental group.

Gas companies have been tapping wells across Pennsylvania using the process, which is also known as hydraulic fracturing, for several years. But now the gas industry is staking out northeastern Pennsylvania – the closest this natural gas rush has come to New Jersey – and the watershed of the Delaware River, one of the Garden State’s major sources of water.

Doug O’Malley, field director of Environment New Jersey, says it’s a wake-up call.

“We suddenly realized that this isn’t drilling in the arctic – this is drilling along the Delaware. I can’t think of a larger threat to our drinking water,” he said.
The perceived dangers have sparked response from the public. As the Delaware River Basin Commission, a regulatory agency with members from the four states along the river and the federal government, continues to draft regulations for gas drilling in its watershed, about 58,000 comments flooded into the agency before an April 15 deadline – more than 10 times that of other high-profile public issues in recent memory, a commission official said.

A natural gas rush

The pressure to drill is high, according to John Plonski, the New Jersey Department of Environmental Protection’s assistant commissioner for water-resource management and the state’s voting member on the commission.

“We know there’s going to be a rush on drilling in northeastern Pennsylvania once the regulations are passed,” he said. “Pennsylvania and New York and New Jersey have never experienced an oil or gas rush like this before.”

As many as 18,000 wells might be fracked in the basin over the next 30 years, said Clarke Rupert, a commission spokesman. Gas companies have already leased Pennsylvania land and are waiting for the rules of when and how to begin drilling, Rupert said. He added the commission’s role is to regulate the industry while protecting the watershed.

Industry groups say the technique is safe and has been newly refined to unearth the energy equivalent of 87 billion barrels of oil underneath the Marcellus Shale, an arc of underground rock from West Virginia and Ohio up to Pennsylvania and New York.

The natural gas industry says the resource is the nation’s clean alternative to coal and oil and the chemicals used are too deep to affect the water table.
The Marcellus Shale Coalition, which represents the drillers, says the wastewater that comes back up is either re-used or cleaned before being released into the environment.

“Hydraulic fracturing is one of the most tightly regulated technologies in one of the most tightly regulated industries,” said Travis Windle, spokesman for the Marcellus coalition.

“As a host of environmental regulators across the country have affirmed, fracturing has never impacted groundwater over the past 60 years. That’s not an accident.”

Pennsylvania just last month tightened the guidelines for how to treat the leftover fluids that come back up after fracking. The new standards require facilities to treat the byproduct to drinking-water standards, according to the Pennsylvania Department of Environmental Protection.

Still, environmentalists on this side of the border warn Pennsylvania’s standards are not going to do enough to protect water for millions of New Jersey taps.

“New Jersey residents will be affected,” said Carluccio. “Anything that happens upstream affects that water.”

Politicians respond

The fracking debate has intensified since the commission’s comment period ended. New York Attorney General Eric T. Schneiderman threatened on April 18 to sue the federal government if it does not pledge to conduct a full safety investigation into the natural gas industry’s effects on the Delaware. The next day, a fracking well run by Chesapeake Energy in Bradford County, Pa., broke and leaked fluids with chemicals into a nearby tributary of the Susquehanna River.

The effects of the accident have been running downriver. The federal Environmental Protection Agency immediately began an investigation into the fracking process at the site. And on May 2, the Maryland attorney general notified Chesapeake and its affiliates it intended to sue over the incident, claiming that “tens of thousands of gallons of fracking fluids” had leaked into the Susquehanna River watershed – and were endangering the health of Maryland citizens downstream.

“Companies cannot expose citizens to dangerous chemicals that pose serious health risks to the environment and to public health,” said Douglas F. Gansler, the Maryland attorney general.

Water quality has been affected elsewhere, according to some experts. Conrad Volz, the former director of the Center for Healthy Environments and Communities at the University of Pittsburgh, said he has documented the fallout from fracking.

Volz said his team conducted studies in western Pennsylvania and found elevated levels of barium, benzene, strontium, petroleum byproducts and bromides were all being released from a wastewater treatment facility into a creek.

“I think New Jersey should learn from our problems here in Pennsylvania,” said Volz, who testified before the U.S. Senate on fracking a few weeks ago.
“This is one of the issues of our time – I fully believe that.”

Most recently, the Proceedings of the National Academy of Sciences published a Duke University study documenting “systematic evidence” of methane contamination of drinking water sources in northeastern Pennsylvania and upstate New York, due to fracking. Some people have reported lighting their water on fire from the flammable fumes from their taps – but the National Academy study was the first confirmation of methane contamination.

However, the study found no contamination from fracking fluids in wells near gas wells.

‘Minimal’ effects

Some experts say the concerns are overstated. Terry Engelder, a professor of geosciences and a fracking expert based at Pennsylvania State University, said the industry recycles the fluids it uses, and keeps the ones that remain in the ground at a safe depth that won’t have serious health or environmental impacts.

“It certainly is minimal,” he said.

David Yoxtheimer, a geologist at the Marcellus Center for Outreach and Research at Penn State University, said the wastewater standards for natural gas in Pennsylvania were among the most stringent in the nation. He also said disposal of 90 percent of the fracking fluid a mile deep in the rock shale was no different from than the deep-well injection of toxic waste products from other industries because the fluids don’t have any way to get out of the deep rock beneath the water table.

“There’s really no driving force to get it up to the water table,” Yoxtheimer said.

New Jersey legislators are also getting involved. Five proposed bills in the Legislature would regulate or even ban fracking in the Garden State.

Sen. Linda R. Greenstein (D-Middlesex), a sponsor of a proposed fracking ban, said sponsors were sending an early message to the natural gas industry that New Jersey was going to protect its water, first and foremost.

“I think we wanted to make a strong statement – before it even hits New Jersey,” she said. “We didn’t want to play around the edges on this.”

Special thanks to Richard Charter