Oil Slick Stuff

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Make em pay!!! :mad:
Meaning of 1995 law debated as high stakes royalties case proceeds
Ben Geman, Greenwire senior reporter
Litigation that could decide whether oil-and-gas producers can forgo tens of billions of dollars in federal royalty payments is winding its way through the federal court system.
The Justice Department plans to file its latest brief today in Kerr-McGee Oil and Gas Corp. v. U.S. Department of the Interior with the 5th U.S. Circuit Court of Appeals.
At issue: whether a 1995 law that waives royalties on deepwater Gulf of Mexico production allows Interior to impose "price thresholds" that suspend the incentive when oil and natural gas prices exceed certain limits.
The law, written when oil prices were far lower, created incentives for costly deepwater projects by allowing companies to produce large volumes of oil and gas royalty-free.
Kerr-McGee sued Interior in 2006, claiming the department does not have authority under the 1995 law to include price thresholds in leases issued between 1996 and 2000.
The case revolved around leases from 1996, 1997 and 2000. Deepwater gulf leases issued in 1998 and 1999 already lack the price triggers, which Interior calls a mistaken omission, although the department has reached voluntary agreements with some companies that will require future payments on production from the 1998-1999 leases.
While Kerr-McGee is contesting payment of royalties on eight leases issued in 1996, 1997 and 2000, the stakes are far higher.
If the courts decide price thresholds are not allowed for any deepwater gulf leases issued between 1996 and 2000, producers could avoid $53 billion in royalties over 25 years, according to a June analysis by the Government Accountability Office, although the levels of forgone royalties vary depending on prices.
Round one in the case went to Kerr-McGee -- which was purchased by Anadarko Petroleum Corp. in 2006 -- when a federal district court judge ruled last fall that Interior's Minerals Management Service cannot condition "royalty relief" on oil and natural gas prices.
The Bush administration has appealed the case.
Two briefs filed thus far before the appeals court are, in effect, a detailed argument about the interplay between two key sections of the 1995 law.
The briefs address Section 303, which broadly allows Interior to sell leases that allow royalty relief and "vary" the suspension of royalties based on energy prices, and Section 304, which lays out the amount of royalty-free production allowed from leases sold for the first five years after the law's enactment at various deep water depths.
Kerr-McGee's brief says Section 304 should be read to require royalty relief for these volumes on leases sold during these five years, which range from 17.5 million barrels of oil equivalent to 87.5 million barrels, regardless of prices.
The company says Congress "unconditionally" allowed owners of these leases to produce these volumes royalty-free. "Interior's Price Threshold Requirement reduces Kerr-McGee's royalty suspensions below the minimum volumes that Congress guaranteed for Section 304 Leases," according to the brief filed late last month.
But administration attorneys say the law plainly allows Interior to suspend royalty waivers when prices reach certain limits and that this was the clear understanding of lawmakers who crafted and passed the act.
"There is no indication that Congress intended to remove the authority for price thresholds for all leases Interior issued from 1996 to 2000, a measure that would be unnecessary to achieve the congressional goal of spurring production and would result in an unanticipated windfall to the industry," states the administration's opening brief filed in June.
Currently, deepwater royalty waivers no longer apply when oil prices exceed about $36-$37 per barrel and natural gas prices exceed roughly $4.60 per million British thermal units. Both commodities are currently trading well above these levels.
In its brief, the administration alleges that the district court judge incorrectly relied on an earlier court case in the 5th Circuit about other aspects of the royalty waiver program -- Santa Fe Snyder Corp. v. Norton -- in concluding that "price thresholds" are not authorized on the 1996-2000 leases.
The Santa Fe case was a successful challenge to MMS rules that had required the amount of royalty-free production allowed in a given "geologic field" to be shared among the leases in that area. The 2004 5th Circuit decision also said MMS rules wrongly disallowed royalty relief for new leases in fields where energy production had already occurred before the mid-1990s law that launched the incentive program.
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The Tennessean
Offshore drilling is years off at best
Economic benefits may not pan out
By RAJU CHEBIUM
Gannett News Service
WASHINGTON — Even if Congress were to lift its 27-year offshore drilling ban tomorrow, it would take energy companies several years to explore for oil and natural gas off much of the U.S. coast, experts say.
Companies may not drill at all if they don't believe there are enough oil and gas deposits to justify the huge upfront costs involved in setting up drill platforms, laying underwater pipelines and creating other infrastructure, the experts say.
That means the economic benefits of drilling — increased supply of oil and natural gas, lower prices at the gas pump, smaller utility bills and potentially thousands of new energy-related jobs — are years away from materializing, if at all.
Andy Radford, a policy adviser with the American Petroleum Institute, a Washington-based lobbying group, estimated that it could take at least two to 10 years to produce oil or natural gas off the Jersey Shore once companies win federal offshore drilling leases.
"We have to walk before we can run in this case. We don't want to give people the sense that this is going to happen overnight," Radford said.
In July, President Bush lifted an 18-year drilling ban instituted by his father, saying America must increase its domestic supply of fuel. Bush urged Congress to end its drilling moratorium. Both bans forbid drilling in federal waters off the East and West coasts, and a portion of the eastern Gulf of Mexico.
Most congressional Democrats support the ban, saying they want to protect American beaches and coastal ecosystems from potential oil spills and other hazards. They want the U.S. to step up investment in renewable energy sources such as solar and wind and reduce dependence on fossil fuels.
Process will take years
Setting aside the political debate, which will flare up once Congress returns in September, the path from lifting the moratorium to producing oil and gas is strewn with legal and environmental requirements that would take years to meet.
First the proposed leases must be included in a five-year plan of the U.S. Interior Department's Minerals Management Service.
Because the plan expires in 2012, new leases can't be considered until after that year, unless Congress says otherwise, Chris Oynes, head of the MMS offshore drilling office, said Friday.
Before the leases can be auctioned, the government has to conduct environmental studies to ensure that opening up the areas wouldn't result in ecological disaster. That process could take two years, Oynes said.
Then, companies probably would conduct new seismic surveys, because the last ones were done before 1981, to determine the size and location of oil and gas deposits. They would then have to get their production plans and other operational details, such as an oil-spill mitigation plan, approved by the government before they could begin work.
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I know, I know already!! Should have an immediate effect "DROP" if it will hold is to be seen.:D
 
"This year, gasoline climbed over $4 a gallon, and the traffic death toll -- according to one study -- appears headed to the lowest levels since" President Kennedy "moved into the White House" in 1961, AP reports. "The number is being pulled down by a change in Americans' driving habits, which is fueled largely by record high gasoline prices, according to the Transportation Research Institute at the University of Michigan."
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http://www.govexec.com/dailyfed/ebird.htm
 
Gas prices continue decline

The nationwide price at the pump falls to $3.672 a gallon, down nearly a penny.

By Kenneth Musante, CNNMoney.com staff writer
August 26, 2008: 6:46 AM EDT

NEW YORK (CNNMoney.com) -- Gasoline prices fell slightly Tuesday, bringing the total decline in the nationwide average to more than 10% since mid-July, according to a daily survey of gas station credit card swipes.
The price of regular unleaded gasoline fell nearly a penny to $3.672 from $3.681 a gallon a day before, according to AAA and the Oil Price Information Service.
Gasoline prices have fallen more than 44 cents since hitting an average high of $4.114 a gallon on July 17th.
The decline in gas prices has followed a sharp drop in the price of crude oil.
Crude on the open market has fallen more than 20% since hitting a high of $147.27 in July as investors worried that high fuel prices were causing people to cut back on consumption.[more] http://money.cnn.com/2008/08/26/news/economy/fuel/index.htm?postversion=2008082606
 
Oil falls as dollar strengthens

Crude tumbles after Germany report shows drop in consumer confidence, bolstering dollar and raising worries of falling European demand.

By Kenneth Musante, CNNMoney.com staff writer
Last Updated: August 26, 2008: 8:20 AM EDT

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NEW YORK (CNNMoney.com) -- Oil prices fell Tuesday after a disappointing reading on the German economy drove the U.S. dollar higher and renewed worries over declining European demand.
U.S. crude for October delivery fell 54 cents to $114.57 a barrel in electronic trading. Prices had dropped more than $3 a barrel earlier.
Oil is traded in dollars, so if the dollar becomes more valuable, oil becomes more expensive for foreign investors.
The dollar rose to a six-month high against the euro after research firm GfK reduced its forecast for German consumer sentiment in August. A second report measuring business confidence, also showed August declines.
Europe demand: Declines in European economies also raised worries that demand for crude products could wane as businesses cut back on operations and consumers reign in their spending.
Worries about falling demand have brought oil prices down nearly $34 a barrel since hitting a record high of $147.27 in July.
Investors have been concerned about falling demand in the United States as gasoline prices remain above $3 a gallon on average. However they have been turning their attention over seas in recent weeks on signs that the economic problems that had plagued the U.S. were spreading elsewhere.
"Declining demand as a result of prices has been noted in quite a few places," said Damian Kennaby, principal at Purvin & Gertz in London.
Hurricane Gustav: The strengthening dollar managed to overcome concerns about Hurricane Gustav, which appeared to be headed into the Gulf of Mexico.
The storm had sent crude prices higher earlier in the session, but crude fell again after the German reports were released.
The storm was on track to hit Cuba and parts of Haiti over the next few days, according to the National Hurricane Center, but may not enter the Gulf until the weekend.
BP pipeline: Concern about supply disruption in Eastern Europe also eased Tuesday as a BP-led consortium started delivering crude oil into a newly restarted pipeline through Georgia.
The pipeline, which can shuttle up to 1 million barrels of crude a day between Turkey and the Caspian Sea, had been shut down for several weeks due to a fire earlier this month. http://money.cnn.com/2008/08/26/markets/oil/index.htm?postversion=2008082608
 
Oil rises as hurricane threatens Gulf

Worries about strengthening storm overcome stronger dollar and weaker European demand.

By Kenneth Musante, CNNMoney.com staff writer
Last Updated: August 26, 2008: 10:13 AM EDT

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NEW YORK (CNNMoney.com) -- Oil prices pushed higher Tuesday as Hurricane Gustav threatened the oil infrastructure in the Gulf of Mexico.
U.S. crude for October delivery rose $2.37 to $116.48 a barrel in electronic trading.
Concern about the storm countered a stronger dollar, which had sent oil tumbling more than $3 a barrel earlier.
Hurricane Gustav, which appeared to be headed into the Gulf of Mexico, gained strength Tuesday.
The storm, currently a category 1 hurricane with winds up to 85 miles per hour, was on track to hit Cuba and parts of Haiti over the next few days, according to the National Hurricane Center, and could enter the Gulf on Sunday.
Gustav is still too far off to tell what kind of impact it will have on the United States or Mexico, according to Dennis Feltgen, meteorologist with the National Weather Service, but wind speeds could reach up to 130 miles per hour by Sunday.
"A lot could change between now and then, but it could be a [category 3] just in time for the Labor Day weekend," said Feltgen.
Dollar: Oil price gains were limited by a stronger dollar, despite the storm threat.
The dollar rose to a six-month high against the euro after research firm GfK reduced its forecast for German consumer sentiment in August. A second report measuring business confidence also showed August declines.
Oil is traded in dollars, so if the dollar becomes more valuable, oil becomes more expensive for foreign investors.
The market tried to go lower, but "it just can't do it because of the continuing weather situation," said Phil Flynn, senior market analyst with Alaron Trading in Chicago.
"Now we're basically on storm watch," he said.
Exaggerated volatility: The approach of Labor Day weekend added to oil's price swings Tuesday. [more]
http://money.cnn.com/2008/08/26/markets/oil/index.htm?postversion=2008082610
 
This one's coming for the central gulf and it's going to be bad. 85MPH already this morning, it's going to pass over the warmest waters, and it's taking it's time moving, which means time for strengthening. :worried:

Corepuncher and a couple others here are meteorologists, be sure to check threads for updates.
 
I hope they get the chance to do it....instead of it shooting up because a hurricane devastates the gulf coast again.
OPEC to Try Curbing Oil Price Fall in September
AFX News Limited 8/25/2008
URL: http://www.rigzone.com/news/article.asp?a_id=65836

Iran's oil minister said on Monday he expects OPEC to work on preventing the falling trend in crude prices and also to study oversupply in the market when it meets in September, oil ministry news website SHANA said.

Iran is traditionally a price hawk and has been at the forefront of rejecting calls for more output from consumers such as the United States, even when prices surged to a record $147 a barrel, a level from which they have now tumbled.

Iran has previously said the market was oversupplied by about 1 million barrels per day (bpd).

"It seems that OPEC's member states are intending to prevent the declining trend in oil prices," Oil Minister Gholamhossein Nozari was quoted as saying about the September meeting of the Organization of the Petroleum Exporting Countries.

"OPEC is examining the oil price trend, the issue of oversupply in the market and price controls," he said, adding that these topics would be discussed at the meeting.

Oil prices are now trading at around $115 a barrel, finding some support from tensions between the West and Russia over Georgia. Iran's nuclear row with the West has provided support for oil prices this year.

OPEC ministers next meet on September 9 in Vienna.

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So you think they want to Drill Drill Drill with those big profits? Invest in new oil and gas exploration and development and alternative energy technology? Nah. They just want to tie it all up in leases and sit on it, drive the price of oil up to make huge profits, then repurchase their own shares and product and repeat the process. Get the picture? See why pressure needs to be brought to bear for a complete energy package...no royalty relief beyond a certain oil price threshold, no lifting of bans until exploration is done on areas currently under lease to determine reserves on those areas, etc.
Anadarko's Board Nods $5B Share Repurchase Program
[United States] -- Anadarko announced that its Board of Directors has authorized a share repurchase program of up to $5 billion. At the current trading price, this amount represents approximately 18 percent of the Company's outstanding common shares.
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One benefit is that S&P should see a pop since oils and financials are the biggest share of it.
 
DRILL, DRILL, DRILL!! I love it!!!:D

Where to Drill First

Those who favor outsourcing our energy production generally argue that there is no point in opening up domestic drilling, since it would take many years before oil actually begins to flow. In some cases, it will indeed take a considerable time, although this problem is mostly self-inflicted: the delay will result more from regulatory hurdles and litigation than from the time it takes to build platforms, pipelines, and so on.
But there are areas where, if Congress acts to remove existing bans on drilling, oil could be flowing in a matter of months, not years. Foremost on this list is oil off the coast of California. We asked Dan Kish, Senior Vice President, Policy, at the Institute for Energy Research to comment. This is what he told us:
For oil, California is the quickest relief. Existing platforms there would allow access to some of the leases companies paid $1.1 billion for in 1981, but have been precluded from developing for 26 years. California is the nation's largest consumer of gasoline, so it could go directly to their extensive refinery network, also. The estimates are that 10 billion barrels exist off the coast of California, and tankers full of imported oil and Alaska North Slope oil go through those protected waters every day. Santa Barbara is also home to one of the largest oil seep trends ever observed, and in one small area 100 bbls per day seep to the surface, except around an existing producing platform that releases the pressure causing the seeps. 100% of the oil on the beaches in Santa Barbara county, and 50% of the oil on the beaches of LA County are caused by Santa Barbara's seeps. The local group Stop Oil Seeps advocates drilling there to improve the environment.
​
Off California, oil could be flowing in less than a year. For us to send hundreds of billions of dollars overseas, so that Venezuelans, Nigerians, Russians, Saudis, Canadians and Mexicans can do the high-paying jobs that hundreds of thousands of Americans would be delighted to do, is insane.
http://www.powerlineblog.com/archives2/2008/08/021242.php
 
Note that's EXISTING PLATFORMS in existing leases...and some of these are already drilled, CAPPED wells. NOT new unexplored regions where reserves are unknown. Totally different from what I'm talking about in my post. Oil companies have no intention of using their huge profits for new exploration and production in the near future...they are repurchasing shares, buying oil, and leasing waterbottoms to sit on. New exploration has decreased, not increased, during this period of enormous profits.
nnuut said:
Where to Drill First
... For oil, California is the quickest relief. Existing platforms there would allow access to some of the leases companies paid $1.1 billion for in 1981, but have been precluded from developing for 26 years...
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Santa Barbara is where the last BIG MESS oil spill occured that led to the Federal ban on coastline drilling. Even if you get Federal approval, there is almost no chance of local approval. Took a Looonnnggg time to clean that up. You'd have a better chance with the natural gas they found in downtown LA, at least some locals are interested in selling their property. But that one isn't going to happen either, too risky.
 
Don't get excited, I didn't write this stuff. Some people just can't accept that others have their right to their own opinions! I just ran accross this article, I haven't been searching the net trying to find articles that agree with what I think. It may be time to do just that?

"For oil, California is the quickest relief. Existing platforms there would allow access to some of the leases companies paid $1.1 billion for in 1981, but have been precluded from developing for 26 years."

Just who precluded the drilling? The Oil Companies or the US and California Governments? The latter two I suspect. When they open up drilling they WILL permit drilling in these areas.

OF COURSE YOU KNOW THIS MEANS WAR!!!:nuts:
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nnuut said:
"For oil, California is the quickest relief. Existing platforms there would allow access to some of the leases companies paid $1.1 billion for in 1981, but have been precluded from developing for 26 years."

Just who precluded the drilling? The Oil Companies or the US and California Governments? The latter two I suspect. When they open up drilling they WILL permit drilling in these areas.

OF COURSE YOU KNOW THIS MEANS WAR!!!:nuts:​

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Already drilled. They're capped. Just need to be developed/produced. And the companies were REFUNDED for the suspended leases. So IF the ban is lifted, and IF the existing wells are produced...that oil already belongs to TAXPAYERS and the oil companies holding the leases should get only the costs of production, yes? Think again. They'll get to sell the oil, just as if they were never refunded their lease costs.
 
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[SIZE=+1]Yes, We Can Drill Our Way out of This Mess [/SIZE]
25 July 2008 | J.D. Longstreet

Posted on Friday, July 25, 2008 1:49:16 PM by K-oneTexas

Yes, We Can Drill Our Way out of This Mess


by J.D. Longstreet
You know what is frustrating? Having a problem and having the answer to that problem within reach but being prevented, by the government, from utilizing that answer to solve the problem. And it happens to be right where we Americans find ourselves today.

We don't have enough oil. Well, actually we do have enough oil, only the government won't let us get at it. You see, we currently have a bunch of intellectual midgets in charge of the U.S. government and they are driving our country to ruin… and seemingly loving every minute of it!

If you think the American economy is bad now, you ain't seen nothin’ yet! And, listen up, citizens of the world! If America goes down… you go down, too.

Oil is the fuel that powers the American engine of democracy. It drives everything about this republic. The business of America is business. We're a capitalist society. If business suffers, America suffers. Businesses closing down because of high fuel costs means there will be Americans out of jobs. Americans out of jobs means higher unemployment rates and a bigger drain on the U.S. treasury, which means, inevitably, higher taxes for all of us, which means more small businesses will have to close their doors because they cannot afford to do business, which means more Americans out of jobs… and the cycle continues. No matter how you dissect it, the business of America is business. Without it, we will implode and fairly quickly.

We are on the edge of the precipice these days and we have no leadership in Washington we can count on to do what is truly needed. Since the inception of the 110th Congress, America seems to be grinding to a halt. Their emotion-based decisions and feel-good tendencies look good on paper (to some) but are totally worthless when there is an attempt at implementation. Common sense has no place in a world of "make believe" such as the liberals are busy constructing.

Those of us who live out here in the real world can't survive on the good intentions of a Congress so out of touch with reality as the one we have now.

Out here in the real world, we need oil. We know we already have sources of oil on lands owned by the people of America to satisfy those needs and yet the… er… leaders… in D.C. deny us that oil, thereby forcing us to purchase the oil we need from nations that despise us and "soak" us for every penny they can squeeze out of us for a barrel of oil. The fault for the awful prices at the gas pump and fuel to heat our homes can be laid directly at the feet of the U.S. Congress. See, they are going to save us from ourselves. They are going to save the world from as yet unproven man-made global warming, which (in my opinion) is another scam dreamed up by an international cabal of con men.

The U.S. needs oil, a fact of life as we know it. Without it, America will implode. We won't be able to produce and transport food from the farm to our tables. Many medicines depend on petroleum. Take a look at the labels in the clothing you are wearing: chances are very good that the fabric is made, at least partly, with a petroleum product - even the shoes on your feet.

Financially, I will venture to say America will have a recession on a scale much larger than anything Americans living today have ever experienced. It will be crippling nationally and personally. Have you looked at your 401K lately? I looked at mine and I shuddered.

We have the oil we need and plenty of it. The oil is off the Atlantic and Pacific coasts, on the outer continental shelf, in ANWR, in shale rock in our western states and in tar sands, but our "leaders" have put drilling off shore and in federally controlled lands off-limits. Sen. Orin Hatch, Republican of Utah, is quoted as saying,"We have as much oil in oil shale in Utah, Wyoming and Colorado as the rest of the world's oil combined." Estimates on the amount of oil in that rock go as high as 2 trillion barrels. Some say that is more oil than we have used since the first well was punched in the Pennsylvania soil in 1859!

Unfortunately, our government has succumbed to the global warming hoax. They are going to save us from ourselves by taking us, and our standard of living, backward in time to an era prior to the American Civil War.

American citizens need to rattle cages in Washington, D.C. until we drive the message home.

Yes, we can drill our way out of this mess, but we have to start now.http://www.freerepublic.com/focus/f-gop/2051266/posts
 
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