October 25, 2021

I.H.T. Special Report | Oil & Money: Virginia Tries to Circumvent Obama to Allow Energy Drilling

Mr. Domenech, Virginia’s secretary of natural resources, is undeterred. He and the state’s Republican governor, Bob McDonnell, have teamed up with Virginia’s two Democratic senators to try to do an end run around the president and put Virginia’s coast on the energy map through an act of Congress.

The state is trying to restore a lease sale for energy exploration that was canceled in 2010 after the BP oil spill in the Gulf of Mexico. Its efforts have made Virginia the new epicenter of a campaign by energy companies to gain a toehold in the potentially vast resources hidden beneath the Atlantic.

“The administration not only took away our sale, but they didn’t reinstate it into the next five-year plan. They booted us off to 2017,” Mr. Domenech said. “That’s what made us start pursuing other avenues in Congress.”

Oil companies and government officials think there is oil and natural gas off the East Coast. Exploration, however, has been blocked for more than 30 years after a devastating spill off the coast of California turned public opinion against offshore drilling.

That political environment changed over the last decade as oil prices soared and the American public and politicians weighed their fears of offshore drilling against the geopolitical threat of being dependent on oil from hostile nations or unstable regions.

Now seven companies, including Global Geo Services of Houston and WesternGeco, a subsidiary of Schlumberger, have applied for permission to conduct seismic studies along the East Coast from New Jersey all the way to Florida. Efforts are focusing on Virginia because the public, politicians in both parties and energy companies all favor opening the waters to drilling.

To proceed, the would-be explorers will need to bypass the vocal opposition of those who say that even the preliminary survey work would harm endangered whales, and of the Navy, which uses the waters off Virginia as training grounds for its base in Norfolk.

“It’s an important frontier, and it’s right next to a large market,” said Joe Gagliardi, vice president for marine programs at Ion Geophysical, a company in Houston that has applied to spend six months conducting two-dimensional seismic surveys from New Jersey to Florida. “The Eastern Seaboard market is huge.”

The Bureau of Ocean Energy Management estimates that there are 3.3 billion barrels of recoverable oil on the Atlantic’s outer continental shelf and 31.3 trillion cubic feet, or 886.3 million cubic meters, of natural gas. The estimates are based on two-dimensional seismic surveys that were done in the early 1980s.

While they are careful to say that they have no idea what energy resources might be hidden beneath the Atlantic, energy executives say they believe that the bureau’s estimates are low, noting the industry’s history in the gulf.

“Initial estimates in the gulf were five billion barrels of oil,” said Andy Radford, senior policy adviser at the American Petroleum Institute. “We’ve already produced over 20 billion, and current estimates are that there are 48 billion more.”

There are other indicators that drilling there could lead to big discoveries.

“We know there are oil seeps all along the East Coast of the U.S.,” Mr. Gagliardi said. “Naturally the earth is leaking oil on a daily basis. There’s a natural petroleum system out there.”

The Eastern Seaboard of the United States was once connected to the coast of West Africa before the continent split in two and the pieces drifted apart, creating the Atlantic Ocean. Nigeria alone has more than 37 billion barrels of proven reserves, much of it off the coast in deep water.

Tullow Oil, a company working on the same theory, struck oil last year off the coast of French Guiana. The company, which is based in London, said it had begun exploring in the area because it thought the geology mirrored its earlier successful discoveries across the ocean off the coast of West Africa.

“I personally believe that the East Coast of the U.S. does have the ability to be the prolific economic basin,” Mr. Gagliardi said. “However, there’s such a huge data gap that even the government doesn’t know the potential of the East Coast.”

Article source: http://www.nytimes.com/2012/11/14/business/energy-environment/after-years-of-waiting-virginia-wants-to-make-its-name-in-oil.html?partner=rss&emc=rss

Oil Chiefs Lash Out Against Tax Proposal

 Rex W. Tillerson, chief executive of Exxon Mobil, called the proposed tax changes “misinformed and discriminatory” as well as “counterproductive.” He added: “By undermining U.S. competitiveness, they would discourage future investment in energy projects in the United States and therefore undercut job creation and economic growth.” 

His remarks came at a hearing of the Senate Finance Committee on a proposal from Democratic senators to end tax subsidies for five oil companies: BP, Exxon Mobil, Shell, Chevron and Conoco Phillips. Except for BP, which saw its profit fall because of the costs of the gulf oil spill, the companies’ first-quarter profits rose sharply, with Exxon reporting a 69 percent rise in quarterly profits.

The proposal, from Senators Robert Menendez of New Jersey, Sherrod Brown of Ohio and Claire McCaskill of Missouri, would use the money saved to reduce the federal deficit. In announcing the legislation, Mr. Menendez said earlier this week that “we simply can’t afford to keep giving away billions in taxpayer handouts to oil companies that are doing nothing to help lower prices.”

A group of Democrats from the Finance Committee wrote to the oil executives earlier this week, effectively urging them to unilaterally renounce the subsidies, an action that seemed unlikely.  “We urge you to take this opportunity to publicly admit that, given your companies’ prodigious profits, you no longer need taxpayer subsidies,” the letter said.

The now-intertwined issues of gas prices and the federal deficit have taken on such angry undertones that the hearing was expected to be something of a showdown.

 By linking the two volatile issues, senior Democrats said earlier that they hoped to press Republicans to back the measure or explain their refusal to taxpayers facing the increasing burden of high gas prices. 

But many Republicans, along with Democratic senators from energy-producing states, appear sure to oppose the plan, and Democrats will probably have difficulty obtaining the 60 votes needed to overcome a filibuster. One oil-state Democrat, Mary L. Landrieu of Louisiana, said this week that oil and gas subsidies account for less than 13 percent of all United States energy subsidies.

The ranking Republican on the committee, Senator Orrin Hatch of Utah, suggested that Democrats were playing a cynical game, seeking to blame oil companies while, he asserted, intending to raise gasoline prices in order to reduce consumption.

“So while the American people ask Congress to do something about high gas prices,” he said, “the response of Democrats is to rail against oil executives, to mask the fact that their policy is actually to make the price at the pump more painful.”

He called the hearing a “dog and pony show” and displayed a blown-up picture of a dog riding a pony, to make the point that the hearing was just a chance for Democrats to score political points, without doing anything about high gas prices or a sensible energy policy.

Marvin E. Odum, president of Shell Oil Company, argued Thursday that high oil prices result not from oil companies’ greed but from an ever-changing confluence of political, economic and climatic factors. “No one person, organization or industry can ‘set’ the price for crude oil,” he planned to say, according to advance remarks. The resumption of world economic growth, and the weakness of the dollar — the currency used in oil transactions — were now driving up prices, he said.

Senate Democrats, however, were not the only ones adding to pressure on the oil companies. President Obama said in his weekly address that while he had no problem with any company reaping the rewards of success, “I do have a problem with the unwarranted taxpayer subsidies we’ve been handing out to oil and gas companies — to the tune of $4 billion a year. When oil companies are making huge profits and you’re struggling at the pump, and we’re scouring the federal budget for spending we can afford to do without, these tax giveaways aren’t right. They aren’t smart. And we need to end them.”

The hearing, which started at 9 a.m. Eastern time, can be viewed on the committee’s Web site.

John M. Broder contributed reporting.

Article source: http://feeds.nytimes.com/click.phdo?i=db6688b9e99f87132f62d2e1813b14b8