http://online.wsj.com/article/SB10001424052970204131004577235501591753554.html

FEBRUARY 21, 2012
By TOM FOWLER
The U.S. and Mexico have reached an agreement that would allow oil and gas drilling on more than 1.5 million acres in the Gulf of Mexico, resolving a dispute that has left those areas in limbo for more than a decade.

The agreement signed Monday by U.S. Secretary of State Hillary Clinton and Mexican Foreign Minister Patricia Espinosa in Los Cabos, Mexico, establishes a legal framework for U.S. companies to develop offshore energy projects with Petroleos Mexicanos, the Mexican state oil company known as Pemex, in areas that straddle the two nations’ maritime border. The acreage runs due east from the U.S.-Mexico border to a point more than 200 miles south of the mouth of the Mississippi River, and includes areas where the water is almost 11,000 feet deep.

The agreement also allows U.S. and Mexican safety officials to work together to ensure the projects meet the safety standards of both nations and sets the groundwork for more cooperation to develop uniform safety guidelines for offshore energy development.
The safety agreement is particularly important as Pemex prepares to drill a site near the U.S. maritime border in 9,000 feet of water, nearly twice as deep as the well drilled by the doomed Deepwater Horizon rig in 2010. Officials on both sides of the border have expressed concerns about Pemex’s ability to safely handle such a complex project since it has done relatively few deep-water projects compared with operators in U.S. waters and none as deep as 9,000 feet.

“We’re moving forward with Mexico to make sure we have a common set of safety protocols,” U.S. Secretary of the Interior Ken Salazar said in a conference call.

Mexico, the U.S.’s No. 2 oil supplier behind Canada, has seen its offshore oil production drop for seven straight years and has only about 10 years of proven reserves of crude. The deep-water project is seen as an attempt to reverse that trend.
Houston-based Helix Energy Solutions Group Inc. has discussed providing a system to Pemex to contain a subsea oil leak like the one that occurred following the April 2010 Deepwater Horizon accident off Louisiana, but no firm agreement has yet been reached, according to a spokesman for Helix.

The areas that are part of the agreement may contain as much as 172 million barrels of oil and 304 billion cubic feet of natural gas, according to the U.S. Bureau of Ocean Energy Management.

The bureau included some of the acreage in a lease sale in December, with the understanding nothing would be finalized until the dispute was settled. The area is near successful projects such as Royal Dutch Shell PLC’s Perdido production platform, which is producing about 90,000 barrels of oil equivalent per day.

Special thanks to Richard Charter

9/3/10

http://www.chron.com/business/article/U-S-oil-gusher-blows-out-projections-3341919.php

More Information: Bouncing back
After declining to levels not seen since the 1940s, U. S. oil production began rising again in 2009:
More rigs: The number of rigs in U.S. oil fields has more than quadrupled in the past three years to 1,272.
Bright forecast: The U.S. Energy Information Administration hiked its forecast of crude production in 2025 to 6.4 million barrels per day. That’s 1 million barrels more than the U.S. produced in 2010.
Challenging the Saudis: By the EIA’s forecast, the U.S. will challenge Saudi Arabia as the world’s top oil producer, including crude and other forms of oil.

By Simone Sebastian
Updated 11:58 p.m., Sunday, February 19, 2012

The United States’ rapidly declining crude oil supply has made a stunning about-face, shredding federal oil projections and putting energy independence in sight of some analyst forecasts.

After declining to levels not seen since the 1940s, U.S. crude production began rising again in 2009. Drilling rigs have rushed into the nation’s oil fields, suggesting a surge in domestic crude is on the horizon.

The number of rigs in U.S. oil fields has more than quadrupled in the past three years to 1,272, according to the Baker Hughes rig count. Including those in natural gas fields, the United States now has more rigs at work than the entire rest of the world.

“It’s staggering,” said Marshall Adkins, who directs energy research for the financial services firm Raymond James. “If we continue growing anywhere near that pace and keep squeezing demand out of the system, that puts you in a world where we are not importing oil in 10 years.”

There are doubts that energy independence is that close. But many say the booming shale oil fields in Texas and North Dakota and the growth of deep-water drilling in the Gulf of Mexico will allow the nation to cut its reliance on oil imports significantly over the next couple of decades.

Last month, the U.S. Energy Information Administration upgraded its forecast of crude production in 2025 to 6.4 million barrels per day – 1 million barrels more than were pumped in 2010.

Previously, the EIA had projected the U.S. would peak at 6 million barrels in 2022.
“The growth that we’ve seen in shale, that’s one of the biggest changes that’s contributing to our outlook,” said Dana Van-Wagener, a research analyst for the agency. “It’s evolving so quickly. We weren’t anticipating enough growth.”

Crude prices stable

By the EIA’s forecast, the United States will challenge Saudi Arabia as the world’s top oil producer when crude and other forms of liquid petroleum are included. But the U.S. is also the world’s top oil consumer, demanding nearly 20 million barrels a day. So even with an oil boom, the nation still falls far short of its energy demands.

The technology that fueled the national shale gas rush is moving into oil fields. The pairing of fossil fuel production techniques called horizontal drilling and hydraulic fracturing allowed companies to access previously hard-to-reach natural gas trapped in dense shale rock.

The rush has unleashed a flood of natural gas onto the U.S. market, causing price to dive and making some gas wells uneconomical. Companies have started to close natural gas wells and pull rigs out of gas fields.

Meanwhile, crude oil prices have remained high, with the domestic benchmark West Texas Intermediate price rising 93 cents to $103.24 on Friday.

Pumping crude out of shale rock is more expensive and difficult than getting at natural gas, said Eric Potter, program director for energy research at the University of Texas at Austin’s Bureau of Economic Geology.

Oil molecules are larger and harder to squeeze through the cracks created by hydraulic fracturing. But the high price of crude makes it worthwhile for many companies.
“With natural gas prices being as low as they are, your company could go out of business if you don’t manage this carefully,” Potter said. “People are moving quickly to get into these oil plays. It’s a matter of their existence.”

The Eagle Ford Shale in South Texas, the Permian Basin in West Texas, and the Bakken Shale in North Dakota have been hubs of the domestic crude boom. They now make up about 40 percent of the nation’s land-based oil production, noted Adkins, the Raymond James analyst. He projects that proportion will grow to two-thirds by 2015.

Fields underestimated

Adkins says the Energy Information Administration is vastly underestimating the rapid growth of those oil fields. He believes that crude oil production in the United States will reach 9.1 million barrels by 2015, some 45 percent more than the EIA’s forecast.
The reason for the varying projections about the nation’s crude potential is uncertainty about how much oil is underground and whether technological advances will make it reachable.

That also causes debate about future crude oil prices.

Adkins, for example, says the rising production will help reverse the surging price of oil, pushing it down to $90 per barrel next year.

Forecast: $4.09/gallon

Others, however, believe oil prices will continue to rise despite the growing supply coming out of U.S. oil fields. Domestic crude prices are closely tied to the world market.
That makes domestic prices susceptible to the global Brent crude benchmark price, which is on the rise due to foreign conflicts and rapidly growing energy demands in developing countries.

The EIA projects the average world oil price will reach about $145 per barrel in 2035, in current dollars, compared to the 2011 average of $93 per barrel. Meanwhile, the agency forecasts gasoline in America will rise to $4.09 per gallon.

“As far as drilling and production, it’s going to be really good and robust,” said Michelle Michot Foss, chief energy economist for the University of Texas Bureau of Economic Geology. “But consumers will be upset because gasoline prices will continue to be high.”

simone.sebastian@ chron.com twitter.com/SimonesNews

Special thanks to Richard Charter

http://flaglerlive.com/34477/everglades-drilling-castor

FLAGLERLIVE | FEBRUARY 19, 2012

Last Thursday, the U.S. House of Representatives passed a bill that would compel the federal Bureau of Land Management to lease potentially up to half a million acres of federal land in Utah, Colorado and Wyoming to oil companies to “research” and explore oil shale and tar sands development, two largely unproven or prohibitive technologies. A wind production tax credit, meanwhile, failed to pass the House.

Canada is developing tar sands at immense environmental and energy costs: it takes burning a barrel of oil to produce three barrels of oil from tar sands (so marketable production is two barrels for every three produced). Tar sands production in Canada consumes enough energy to heat nearly all the homes in the country. Oil shale has never been produced effectively despite a century of experimenting because, as Elizabeth Kolbert described it in an article on synthetic fuels for The New Yorker, it “involves basically rewriting genealogical history.” That history also involves bleak experiments by Exxon Mobil that resulted in mass layoffs.

Yet the oil shale and tar sands experiment is tied to the Republican leadership’s transportation bill, crafted out of the committee John Mica chairs, and calling for $260 billion in spending over the next 10 years-with some of that revenue supposed to be generated by new oil shale leases. But the non-partisan Congressional Budget Office’s analysis of the transportation bill concludes that only $100,000 can be expected from leasing public land to oil companies for oil shale, and that should the Republican plan be adopted, the Transportation Trust Fund would have a $78 billion deficit in 10 years.

Nevertheless, the House passed the oil shale and tar sands bill on a largely party-line vote of 237-187, including the votes of seven of Florida’s representatives, all of them Republican: Ander Crenshaw, Clifford Stearns, John Mica, Dan Webster, Dennis Ross, Bill Posey and Thomas Rooney.

Seventeen of Florida’s representatives voted against, including 11 Republicans, because the bill is part of a broader plan that opens more future public land and waters to exploration, including the Arctic National Wildlife Refuge, offshore in the Atlantic and the Pacific, and the Gulf of Mexico, and because it does not explicitly protect such places as the Everglades.

During debate over the bill, Kathy Castor, D-Fla., proposed an amendment that would have done just that: it would have prevented drilling within 5 miles of any of the Great Lakes or the Everglades. The amendment failed on a 241-176 vote, with 17 of Florida’s House members, including Mica and Sandy Adams, rejecting it.

Below is the speech Castor delivered when she introduced her amendment. The speech sums up the numbers and the ideological divide over the issue.

The Republican leadership’s transportation package is a dead end. It is being panned by businesses, Democrats and Republicans alike. What we will vote on next is the Republican funding portion of the package and it is a little bit different.
See, this is a special story. In fact, it is a love story, the love story of a breathtaking display of affection of Big Oil by the Republican party. The bill is a special Valentine, a love letter of the Republicans’ undying devotion to Big Oil. No others compare.

The problem is that, with the Republican congressional leaders’ blind passion for Big Oil, they correspondingly demonstrate an animosity to American families and businesses. See, it’s been less than 2 years since the BP Deepwater Horizon disaster, and the Republicans in Congress now propose to drill for oil just about anywhere.

Have safety measures been adopted by this Congress? No. Do they recognize that there are special places across America that are not appropriate for oil drilling? Not really.
For example, the bill would allow drilling right off of the beaches of Florida. Florida’s tourism industry, meanwhile, employs more than 1 million people. Tourism and fishing are multibillion-dollar industries. Drilling closer to our shores puts those jobs at risk.

Yet that’s what the Republicans propose here. And for what? The CBO says that if you drill off the coast of Florida, that will generate $100 million. Billion dollars in industry and tourism and fishing or $100 million?

BP decimated the gulf coast and caused billions of dollars of damage to our economy and our environment. The disaster is estimated to have cost the State of Florida, alone, $2.2 billion and almost 40,000 jobs.

he Republican love letter to Big Oil could be the kiss of death for small businesses, hotels, motels, shrimpers, fishermen, and families that rely on tourism, and that’s just in the State of Florida. This bill puts too many jobs at risk in a misguided, love-struck attempt to allow Big Oil to drill just about anywhere, including unique and sensitive areas all across America.

Republican leadership has made it abundantly clear they are willing to sell America to the highest bidder. Well, I’m here to say America is not for sale.

Is nothing sacred in this country anymore? Is nothing off limits? How about Mount Vernon, George Washington’s home? Would we drill there if Big Oil could make a few bucks? How about Gettysburg National Battlefield? I hear there may be some natural gas nearby. Why not check Grandma and Grandpa’s backyard. You’re already trying to take away their Medicare, so why stop there?

There are places in America that are not for sale and should be protected, and my amendment provides a test. Here’s the test:

I pick two special areas to put to the test in this Congress. My amendment will prevent drilling within 5 miles of any of the Great Lakes or the Everglades.

Now, don’t get me wrong, we must have robust domestic oil production-in fact, that is happening now. We are currently producing in America at higher levels than ever before. We have more domestic production than we import. Last year, U.S. crude oil production reached its highest level since 2003. And the Obama administration has offered and continues to offer millions of acres of public lands and Federal waters for oil and gas exploration and production.

In 2010, the Department of the Interior offered 37 million acres in the Gulf of Mexico for oil and gas exploration, but the oil companies have only tapped 2.4 million acres. So why are we going to open up even more public lands for drilling when we haven’t even used one-fifteenth of what’s available? It’s a love story. It’s a love story.

Last year, although Exxon made $41 billion, BP made over $25 billion, the Republicans saw to it that American taxpayers chipped in another $10 billion from 2002 to 2008.
Well, enough is enough. We are not going to turn the Great Lakes into the “Okay Lakes,” and we’re not going to turn the Everglades into the “Neverglades.” The Great Lakes and Everglades are not just environmental treasures; they are the lifeblood of our local economies. The Great Lakes and Everglades employ many Americans who work in tourism, lodging, fishing, and ecological industries.

I urge my colleagues not to play an enabling role in this tawdry love affair between most Republicans in Congress and Big Oil.

_____________

http://elmwoodpark.suntimes.com/news/10746012-418/voterama-in-congress-for-the-week-ending-feb-17.html

Elm Leaves

Voterama in Congress for the week ending Feb. 17
February 19, 2012 12:52PM

Updated: February 19, 2012 12:52PM

Payroll-Tax Cut: Members extended, 293-132, until Dec. 31 a law allowing workers to contribute 4.2 percent of their pay to Social Security, down from the standard 6.2 percent. A yes vote was to send the Senate a bill that also funds long-term jobless benefits and protects from Medicare cuts. The $100 billion cost of financing the tax cut is to be deficit spending, and the bill’s remaining $50 billion in outlays will be offset by revenue measures. (HR 3630)

Expanded Oil, Gas Drilling: Members voted, 237-187, to nearly triple America’s offshore energy production by 2027, build the Canada-to-Texas Keystone XL oil pipeline, open the Arctic National Wildlife Refuge to drilling and start oil-shale extraction on federal land in Colorado, Wyoming and Utah. A yes vote was to pass HR 3408.

Keystone XL Pipeline: Members refused, 173-254, to require energy products from oil shipped through the Keystone XL pipeline to be sold in the U.S. The amendment was offered to a GOP bill (HR 3408, above) that “deems” the pipeline to have federal approval. A yes vote backed the sell-in-America requirement.

Everglades, Great Lakes: Members defeated, 176-241, a bid by Democrats to bar energy drilling authorized by HR 3408 (above) within five miles of the Florida Everglades or the Great Lakes, which are five freshwater lakes bordering eight states in the Northeast and Midwest. A yes vote backed the drilling prohibition over arguments it was only a political gesture.

California Oil Drilling: Members defeated, 160-267, a bid to strip HR 3408 (above) of its mandate that energy drilling begin on idle platforms offshore from Santa Barbara and Ventura counties in California, areas where drilling has been banned since a 1969 oil spill in Santa Barbara Channel. A yes vote opposed the drilling mandate.

Oil-Spill Economic Harm: Members defeated, 188-236, a bid to require applications for oil and gas drilling leases under HR 3408 (above) to include worst-case projections of economic harm in the event of spills. This would be in addition to forecasts of environmental harm now required by federal regulations. A yes vote was to require economic-impact statements.

Payroll-Tax Cut: Senators voted, 60-36, to send President Obama a bill renewing until Dec. 31 a law allowing workers to contribute 4.2 percent of their pay to Social Security, down from the usual 6.2 percent. A yes vote backed a bill that also funds extended jobless benefits and sustains current Medicare payments to doctors. (HR 3630)

Judge Adalberto Jose Jordan: Voting 94-5, senators confirmed Adalberto Jose Jordan, a federal judge in Florida, to sit on the 11th Circuit U.S. Court of Appeals, which serves Florida, Georgia and Alabama. A yes vote was to confirm Jordan to become the first Cuban-born jurist on the Atlanta-based appellate panel.

Key votes ahead

Congress will be in Presidents Day recess the week of Feb. 20.

Special thanks to Richard Charter

http://weblogs.sun-sentinel.com/news/politics/dcblog/2012/02/us_house_passes_bill_to_allow_1.html

By William Gibson
February 17, 2012 11:31 AM

House Republicans, including seven from Florida, voted late Thursday to end the ban on drilling along Florida’s west coast. But the bill has almost no chance of becoming law. It would open the eastern Gulf of Mexico and the Atlantic, Pacific and Arctic coastline in Alaska to oil rigs. The bill may not even be taken up in the Democratic-controlled Senate. If it does clear Congress, President Obama would veto it because of his objection to the drilling provisions and other items in the bill.

The House action nevertheless asserted Republican attempts to shift energy policy and clear the way for dramatic expansion of offshore oil production, which backers say would make the nation less dependent on foreign sources and create jobs. They also say it would help pay for $260 billion of transportation costs.

Oceana, an environmental group for ocean preservation, called the bill a handout to Big Oil.

The voting revealed divisions among Florida members. Tom Rooney, a Republican from Tequesta, was the only South Florida member to vote for the bill. Also voting “yes” were Republicans John Mica of Winter Park, Dan Webster of Winter Garden, Dennis Ross of Lakeland, Bill Posey of Rockledge, Ander Crenshaw of Jacksonville and Cliff Stearns of Ocala.

Eight South Florida members voted against the bill: Republicans Allen West of Plantation and Mario Diaz-Balart, Ileana Ros-Lehtinen and David Rivera of Miami; plus Democrats Ted Deutch of Boca Raton, Debbie Wasserman Schultz of Weston, Alcee Hastings of Miramar and Frederica Wilson of Miami Gardens. The bill, which passed by 237 to 187, serves mostly to demonstrate opposition to Obama’s policy of limiting offshore drilling, especially in environmentally sensitive areas like the west coast of Florida. The issue likely will play out in this year’s elections.

Special thanks to Richard Charter