December 3, 2020

Energy Stocks Rebound, Advancing the Markets

The stock market edged higher on Monday as energy stocks got a lift from recovering oil prices.

The energy sector climbed 1 percent, making it the biggest gainer in the Standard Poor’s 500-stock index. Crude oil rose 92 cents, to $89.19 a barrel, on Monday.

The broader market managed only a modest advance as investors focused on the outlook for company profits at the start of a big week for earnings on Wall Street.

About a third of the companies in the S. P. 500 index, including Exxon Mobil and Apple, will report earnings this week. While the reports have been good, concerns remain about the outlook for the rest of the year.

“Most of the companies seem to be coming in ahead of earnings expectations, but the thing that’s still problematic is the revenue line,” said Bill Stone, chief investment strategist at PNC Wealth Management. “To me it’s just symptomatic of the global economy continuing to sputter along.”

Of the companies that have reported earnings, 67 percent have exceeded analysts’ expectations, exceeding the 10-year average of 62 percent, according to S. P. Capital IQ. Analysts expect earnings to rise by 2 percent in the first quarter, down from the 7.7 percent increase in the fourth quarter.

On Monday, Halliburton, the oil services company, gained $2.08, or 5.6 percent, to $39.29 after it said that it lost $18 million in the first quarter, pulled down by $637 million in charges related to its role in the 2010 Gulf of Mexico oil spill. The loss was smaller than analysts had expected.

The Dow Jones industrial average rose 19.66 points, or 0.1 percent, to 14,567.17. The S. P. 500 closed up 7.25 points, or 0.5 percent, higher at 1,562.50.

The stock market is coming off its biggest weekly drop since November. Last week the S. P. 500 and the Dow each lost 2.1 percent, paring their advances after a strong start to the year.

The Nasdaq composite index gained the most of the three major indexes, rising 27.50 points, or 0.9 percent, to 3,233.55. Apple, which reports its earnings after the market close on Tuesday, rose 2.1 percent, or $8.14, to $398.67.

Microsoft rose $1.07, or 3.6 percent, to $30.83, after ValueAct Capital, an activist investor, disclosed that it had acquired a nearly $2 billion stake in the company.

In the bond market, interest rates eased. The price of the 10-year Treasury note rose 3/32, to 102 24/32, while its yield slipped to 1.70 percent from 1.71 percent late Friday.

Article source: http://www.nytimes.com/2013/04/23/business/daily-stock-market-activity.html?partner=rss&emc=rss

Green Column: Deep-Sea Drilling Muddies Political Waters

Now, increasingly, the secrets of the seabed are being looked at by companies drilling for oil and minerals. International geopolitics and the environment are getting more muddled as a result.

“Deep-sea drilling is expensive and hard, and the technology wasn’t there until very recently,” said Sheila Smith, a senior fellow for Japan studies at the Council on Foreign Relations in the United States. Now, major powers are vying for drilling rights in places like the East China Sea, where the tussle is between the two largest energy consumers in Asia: China and Japan. Tensions there flared this week when Japan said China had recently aimed military targeting radar at one of its ships near disputed islands.

The drilling industry continues to move toward deeper waters and new deposits. In the Gulf of Mexico, drilling is now occurring beneath as much as 8,000 to 9,000 feet, or about 2,400 to 2,700 meters, of water, according to Mike Lyons, general counsel of the Louisiana Mid-Continent Oil and Gas Association. The Deepwater Horizon rig, by contrast, was drilling in about 5,000 feet of water in the gulf when it exploded after a blowout nearly three years ago.

Technology has accelerated the move toward deeper waters. “A lot of the drilling now in the Gulf of Mexico is done with drill ships, as opposed to conventional drilling platforms that people have used in the past,” Mr. Lyons said. The ships can inhabit deeper waters and be stabilized over a drill site with the aid of sophisticated computers, he said.

Amy Myers Jaffe, executive director for energy and sustainability at the University of California, Davis, said that the industry’s advances into deeper water had been steady but incremental.

With the increased capability comes increased scrutiny, especially after events like the 2010 Deepwater Horizon accident and a 2011 oil leak off of Brazil, as well as a natural gas leak last year at a North Sea drilling platform about 150 miles, or 240 kilometers, off Aberdeen, Scotland.

Ms. Jaffe said that drillers had perhaps viewed deep-water operations as too routine. “I think that we were a little blasé about how hard it is to do,” she said. “And maybe the industry is now grappling with the difference between 2 percent tolerance and 0 percent tolerance” for mistakes. Zero percent may be the new model, especially in places that have recently experienced public outcries over spills, including Australia, Brazil and the United States, she said.

Shell’s difficulty in drilling in Arctic waters off Alaska further illustrates the technological challenges of operating in new, often adverse settings.

The industry is eager to “get access to these fragile and complicated areas” like the Arctic, said Frederic Hauge, president of the Bellona Foundation, an environmental group based in Oslo. But the risks are immense, he said, adding that in Norway, he felt that companies lacked adequate emergency response plans for their far-afield rigs.

As technology helps propel the industry further offshore, geopolitical difficulties are intruding. Many countries have overlapping maritime boundaries. Lebanon and Israel have disputed claims in the natural-gas-rich eastern Mediterranean Sea. The United States and Mexico have also had differences over rights in the Gulf of Mexico, though they signed a cooperation agreement a year ago on drilling.

In the East China Sea and the South China Sea, disputes continue as China, with its rising energy appetite, clashes with its neighbors over drilling rights and sovereignty claims.

“If these were uncontested regions, I’m sure people would have gone forward already” with drilling, said Ms. Smith of the Council on Foreign Relations.

Should the drilling industry venture into even deeper waters, additional political complications await. The U.N. Convention on the Law of the Sea, signed by more than 150 countries — though not by the United States — gives the International Seabed Authority, based in Jamaica, oversight of mineral exploration in waters that lie beyond a country’s so-called exclusive economic zone, which typically extends 200 nautical miles, or 370 kilometers, from shore.

Adam Cook, a marine biologist with the seabed agency, said that while the group had agreed to 17 exploration contracts with companies, most of those companies were looking for minerals like manganese nodules, which are rock formations. So far, none are after oil or natural gas, and the consensus is that there is “unlikely to be any drilling for oil and gas beyond national jurisdiction in the near future,” Mr. Cook said in an e-mail.

Article source: http://www.nytimes.com/2013/02/07/business/energy-environment/07iht-green07.html?partner=rss&emc=rss

Sasol Plans First Gas to Liquids Plant in U.S.

The company, Sasol, which is based in Johannesburg, has been a pioneer in a technology that has tantalized energy scientists for decades over its potential to produce liquid fuels without using oil, which has historically cost far more than natural gas.

Having already built smaller plants in South Africa and Qatar, Sasol has designed its new Louisiana plant to produce 96,000 barrels of fuel a day using its “gas to liquids,” or G.T.L., technology. It will be the second-largest plant of its kind in the world, after Royal Dutch Shell’s Pearl plant in Qatar, and will cost $11 billion to $14 billion to build.

“By incorporating G.T.L. technology in the USA’s energy mix,” David Constable, Sasol’s chief executive, said in a statement, “states such as Louisiana will be able to advance the country’s energy independence through a diversification of supply.”

The facility will include a gas processing plant, a chemical plant and a refinery. All are required to perform the alchemy of converting natural gas into diesel, jet fuel and other chemical products.

What makes this southwestern corner of Louisiana attractive to Sasol is its proximity to bountiful shale gas fields just north of here and west in Texas. A boom in shale drilling has reduced the price of natural gas in the United States in the last four years by more than two-thirds, encouraging many energy and chemical companies to build and expand manufacturing plants around the Gulf of Mexico to produce a variety of petrochemicals.

Sasol estimated that the plant would create at least 1,200 permanent jobs and 7,000 construction jobs. Production is scheduled to begin in 2018. The state encouraged the project with more than $2 billion worth of tax credits and other incentives.

The company said it would put off previously announced plans to build a separate gas-to-liquids plant in Canada, giving priority to the Louisiana effort. The track record for the technology, conceived by German scientists in the 1920s, is not encouraging, mainly because of a history of construction cost overruns.

Shell’s new Pearl plant in Qatar, built with Qatar Petroleum for $19 billion, was over budget by a factor of three and has had stubborn maintenance concerns. Many other oil companies have looked at the process and declined to make the huge investments necessary.

Only a handful of gas-to-liquid plants operate commercially in Malaysia, South Africa and Qatar, and they collectively produce a bit more than 200,000 barrels of fuels and lubricants a day — the equivalent of less than 1 percent of global diesel demand.

Nevertheless, Shell is considering building its own G.T.L. plant on the Gulf Coast. Sasol and the Malaysian oil company Petronas are building a plant in Uzbekistan, and Sasol is joining Chevron to build one in Nigeria. Rosneft is planning a pilot project in Russia.

Profits have been elusive for the technology. To make it work, natural gas prices must remain low and prices for oil, diesel and jet fuel must remain high for a prolonged period.

Natural gas and diesel prices have historically been very unpredictable, and if enough companies build gas-to-liquids plants or find other uses for natural gas, demand would rise, putting upward pressure on prices.

In the United States, various companies have plans to build natural gas export terminals and promote more use of compressed natural gas for vehicles, as is done in many countries like Pakistan, Iran and Argentina.

“If you didn’t have cost overruns, and if you didn’t have maintenance unscheduled downtime, if everything worked perfectly, then G.T.L. plants look pretty good on paper,” said Don Hertzmark, an international energy consultant who has worked on gas-to-liquids and other natural gas projects for 30 years. “These plants are only economic with very low gas prices.”

Mr. Hertzmark said that, with modest construction cost overruns, companies could make a decent profit on a gas-to-liquids plant. He said that at today’s price for natural gas in the United States, around $3.60 per thousand cubic feet, a company would need a retail price for diesel fuel of more than $4 a gallon — near the average price today — to make the process profitable.

Article source: http://www.nytimes.com/2012/12/04/business/energy-environment/sasol-plans-first-gas-to-liquids-plant-in-us.html?partner=rss&emc=rss

BP to Admit Crimes and Pay $4.5 Billion in Gulf Settlement

The payments include $4 billion related to the criminal charges and $525 million to securities regulators, the company said in a statement. As part of the settlement, BP agreed to plead guilty to 11 felony counts of misconduct or neglect related to the deaths of 11 people in the Deepwater Horizon accident in April 2010, which released millions of barrels of oil into the gulf over the course of the next few months.

The Justice Department also filed criminal charges against three BP employees on Thursday.

The government charged the top BP officers aboard the drilling rig, Robert Kaluza and Donald Vidrine, with manslaughter in connection with each of the men who died, alleging that they were negligent in supervising tests before the well blowout and explosion that destroyed the rig.

Prosecutors also charged BP’s former vice president for exploration in the Gulf of Mexico, David Rainey, with obstruction of Congress and making false statements about the rate at which oil was spilling from the well.

“All of us at BP deeply regret the tragic loss of life caused by the Deepwater Horizon accident as well as the impact of the spill on the Gulf coast region,” Robert Dudley, BP’s chief executive, said in a statement. “From the outset, we stepped up by responding to the spill, paying legitimate claims and funding restoration efforts in the Gulf. We apologize for our role in the accident, and as today’s resolution with the U.S. government further reflects, we have accepted responsibility for our actions.”

While the settlement dispels one dark cloud that has hovered over BP since the spill, others remain. BP is still subject to other claims, including billions of dollars in federal civil claims and claims for damages to natural resources.

In particular, BP noted that the settlement does not resolve what is potentially the largest penalty related to the spill: fines under the Clean Water Act. The potential fine for the spill under the act is $1,100 to $4,300 a barrel spilled. That means the fine could be as much as $21 billion.

In addition to the 11 felonies related to the men killed in the accident, the company agreed to plead guilty to one misdemeanor violation of the Clean Water Act and one misdemeanor violation of the Migratory Bird Treaty Act.

BP also acknowledged that it had provided inaccurate information to the public early on about the rate at which oil was gushing from the well.

The company agreed to plead guilty to one felony count of obstruction of Congress over its statements on that issue. It also agreed to pay a civil penalty of $525 million to the Securities and Exchange Commission, spread over three years, to resolve the agency’s claims that the company made misleading filings to investors about the flow rate.

As part of its resolution of criminal claims with the Department of Justice, BP will pay about $4 billion, spread over five years. That amount includes $1.256 billion in criminal fines, $2.394 billion to the National Fish Wildlife Foundation and $350 million to the National Academy of Sciences.

The criminal fine is one of the largest ever levied by the United States against a corporation, roughly equal to the $1.3 billion fine paid by Pfizer in 2009 for illegally marketing an arthritis drug. BP has repeatedly said it would like to reach a settlement with all claimants if the terms were reasonable. The unresolved issue of the claims has been weighing on BP’s share price.

On Thursday, BP’s American shares were trading at about $40 at midday, roughly unchanged on the day and down about 34 percent since the accident.

“It’s one less thing to be negative on BP about and a minor step in the right direction toward the rehabilitation of BP,” Iain Armstrong, an equity analyst at the investment manager Brewin Dolphin, in London, said. But he added that there were still concerns about remaining claims and that “lawyers might yet have their day at court.”

As part of Thursday’s agreements, BP said it was increasing its reserve for all costs and claims related to the spill to about $42 billion.

Stanley Reed reported from London and Clifford Krauss from Houston. Julia Werdigier contributed reporting from London, John Schwartz from New York and Charlie Savage from Washington.

Article source: http://www.nytimes.com/2012/11/16/business/global/16iht-bp16.html?partner=rss&emc=rss

DealBook: BP to Sell Texas City Refinery to Marathon Petroleum

BP said on Monday that it would sell its refinery in Texas City, Tex., and other assets to Marathon Petroleum for as much as $2.5 billion, as BP neared the completion of an aggressive plan to pare back assets.

The company embarked on a $38 billion divestiture program after the Deepwater Horizon drilling disaster in the Gulf of Mexico in 2010, selling off a slew of properties like offshore holdings in the gulf and tracts of shale in Wyoming. With the closing of the Texas City sale, BP will have sold $35 billion worth of assets.

Under the terms of the deal, Marathon Petroleum will pay $598 million and include inventories worth about $1.2 billion. An “earn-out” provision could lead to an additional $700 million over six years if the facility meets certain performance targets.

As part of the deal, BP will also include some of its retail and logistics network, including four marketing terminals. The company will continue to own and operate facilities in the northern part of the country.

“Today’s announcement is the second major milestone in the strategic refocusing of our U.S. fuels business,” Iain Conn, the head of BP’s global refining and marketing business, said in a statement.

Shares in BP were flat at 436.68 pence on Monday, while shares in Marathon Petroleum leaped 7.5 percent, to $59.

Major oil companies have been pushing to divest their refining businesses, largely to focus on drilling for oil and natural gas in shale formations across the country. Refining is largely seen as a more volatile operation, one that also faces pressure from competitors in China and India.

BP sold its refinery in Carson, Calif., and its Arco retail network to Tesoro in August for $2.5 billion. Marathon Petroleum itself was the product of Marathon Oil spinning off its refining and marketing operations, creating one of the nation’s largest independent refiners.

The Texas City refinery, which BP inherited from its purchase of Amoco in 1998, is one of the biggest refining facilities in the country, with a capacity of 475,000 barrels a day. The 78-year-old plant focuses on natural gas liquids, which have been resurgent during the shale boom. The plant was the site of an explosion in 2005 that killed 15 workers, eventually leading to a record $87 million in fines against BP.

Gary R. Heminger, Marathon Petroleum’s chief executive, said in a statement: “This world-scale refinery and related assets complement our current geographic footprint and align well with our strategic initiative of growing in existing and contiguous markets to enhance our portfolio.”

Article source: http://dealbook.nytimes.com/2012/10/08/bp-to-sell-texas-city-refinery-to-marathon-petroleum/?partner=rss&emc=rss

Oil Spill Moves Toward Nigerian Coast

Royal Dutch Shell confirmed that the deepwater spill occurred on Tuesday during what the company called a “routine transfer” of crude from a floating storage device in the Bonga oil fields 75 miles offshore to a tanker; a leak in one of the transfer lines caused the spill.

The company said that at most about 40,000 barrels had been lost, which would be less than one percent of the oil thought to have spurted from the well beneath the Deepwater Horizon during the catastrophic Gulf of Mexico spill in 2010. The company also said that 50 percent of the oil had already evaporated into the air or been dispersed by wave action.

But Peter Idabor, the head of Nigeria’s National Oil Spill Detection and Response Agency, said the leakage could be three times as large as Shell contends and may be the country’s worst case of oil pollution in 10 years.

“This is potentially a major incident that is likely to affect the environment and the people for a long time,” Mr. Idabor said.

The spill also comes just days after Shell received final permission from the Obama administration to start drilling exploratory wells in the highly ecologically sensitive region of the Arctic, a fact not lost on American critics of the drilling.

“It is a reminder, also, that we have no business drilling for oil in the Arctic waters,” said Bob Deans of the Natural Resources Defense Council, a New York-based environmental advocacy group. “Look at what this oil is doing in Nigeria, then imagine trying to clean it up in waters choked with ice eight months a year, with gale winds and 20-foot seas, in a place a five-day cruise by cutter from the nearest U.S. Coast Guard station, in Kodiak.”

Shell has been blamed for many previous oil spills in the Nigerian Niger Delta, where a majority of the population lives in poverty atop some of the world’s richest reserves of oil and gas.

A United Nations environmental assessment report released in August said Shell’s operations were responsible for the contamination of farmlands and rivers in the Ogoni area of the Delta. Environmentalists say many oil spills go unreported, and they have accused the oil companies of deliberately underreporting those that do become public.

John Amos, the president of SkyTruth, a nonprofit organization based in West Virginia that provides independent information on environmental catastrophes, said that his group’s analysis of photos and satellite images indicated that Shell’s estimate of the size of the spill off the coast of Nigeria on Tuesday was not far off.

“We believe the spill is consistent with the high end of their estimate,” Mr. Amos said.

SkyTruth estimated the size of the slick at 350 square miles.

Nigerian lawmakers said Thursday that if the Bonga spill did indeed occur during a routine loading, that would indicate a weakness in operational standards. “The spill calls for a need to review the standards in the industry,” said Magnus Abbe, the chairman of the Senate committee on petroleum.

Shell said late Thursday that remotely operated underwater vehicles had confirmed that the spill was caused by a leak in a “flexible export line” that linked a tanker to a large floating storage container. David R. Williams, a Shell spokesman, said the company was investigating what caused the leak in the line feeding the tanker, as well as why the leak was not stopped before so much oil had spilled.

Shell has closed down the entire Bonga oil field, a site 75 miles off the coast of Nigeria that normally produces roughly 200,000 barrels of oil and gas a day.

Tony Okonedo, a Shell spokesman in Nigeria, said satellite pictures had shown that the overall area covered by the sheen was less than a hundredth of a millimeter thick in most areas and that the company was deploying considerable resources to combat it.

Among the tools Shell said it was using were five ships with dispersants, infrared equipment to locate areas in the slick where the sheen may be thicker and mapping of sensitive ecological areas on land and sea so booms could be placed strategically.

Musikilu Mojeed reported from Lagos, Nigeria, and Leslie Kaufman from New York.

Article source: http://www.nytimes.com/2011/12/23/science/earth/oil-spill-moves-toward-nigerian-coast.html?partner=rss&emc=rss

News Analysis: Americans Support Offshore Drilling, but Washington Wavers

THE last year and a half has brought a rapid sequence of reversals in the Obama administration’s policy toward oil and gas exploration on public lands and in United States waters.

Since the beginning of 2010, Washington has caromed from a restrictive approach to drilling to a permissive policy closely mirroring that of the Bush administration to a near-total shutdown of offshore drilling after the Deepwater Horizon blowout in the Gulf of Mexico. After that fatal accident, the administration decreed a deepwater drilling moratorium, lifted it six months later, then took five more months before beginning to issue drilling permits.

Throughout that time, the American public’s attitudes toward domestic oil and gas development have been remarkably consistent: Americans are in favor of it, though Democrats and those on the coasts are much less likely than Republicans and those in the South and Southwest to be supportive.

National support for offshore drilling and for domestic oil and gas development generally dipped for a time after the BP disaster — from a strong majority to a bare majority — but quickly rebounded.

A Gallup poll taken immediately after the gulf spill showed that 50 percent of Americans supported offshore drilling while 46 percent opposed it. By March of this year, public support had risen to 60 percent versus 37 percent.

The administration’s offshore drilling policy, like its fervor for domestic production more generally, has gone through rapid changes. In March 2010, President Obama announced that the United States would make vast tracts of the Gulf of Mexico and the Atlantic and Arctic oceans available for leasing by oil and gas companies. After the BP spill began on April 20, 2010, he declared those areas off-limits for at least five years. Then, last month, the president announced that he would permit accelerated development in Alaska, the gulf and along parts of the Atlantic coast.

Administration officials defend the policy changes as reasonable responses to changed circumstances.

Mr. Obama came to office as a proponent of increased domestic oil and gas development, as part of a broader strategy to reduce oil imports. Accordingly, they said, he took steps to accelerate development. He then imposed a sharp cutback after the BP disaster to give regulators and oil companies time to put new safeguards in place.

After the president was satisfied that drilling could resume safely, and in response to public anxiety about high fuel costs, he shifted back to a more pro-development stance, the aides said.

“These spikes in gas prices are often temporary,” Mr. Obama said on May 14 in a radio and Internet address, “and while there are no quick fixes to the problem, there are a few steps we should take that make good sense.”

The public’s support for offshore drilling has tracked changes in the price of gasoline. When gas prices were near record highs in the summer of 2008 and again this spring, support for domestic drilling was highest.

Conversely, unease about the effects of offshore drilling peaked after the BP accident, which killed 11 rig workers and spewed nearly five million barrels of crude into the gulf.

“News of that incident has faded, possibly lessening Americans’ resistance to coastal area drilling,” Gallup said when releasing its poll in March that showed 60 percent of Americans supportive.

The poll found that 49 percent of Americans favor opening the Arctic National Wildlife Refuge for oil exploration, a step the Obama administration strongly opposes. That is the highest level of support for drilling in the Arctic refuge since Gallup first asked the question in 2002.

The nationwide poll of 1,021 adults was conducted by telephone in early March.

“Timing is everything,” said Jack N. Gerard, president of the American Petroleum Institute, the industry’s most prominent lobbying group in Washington. “As the price of gasoline has increased, public attention has turned once again to the question of energy. When they hear their elected officials continue to resist development of American resources, they are appalled.”

The Gallup survey found that men are more likely than women to support drilling offshore and in Alaska and support is much higher among Republicans than Democrats. It also found regional variations, with the strongest backing for aggressive oil exploration in the South and the most significant opposition along the East and West Coasts.

And while the public appears to support exploiting domestic oil and gas resources, there is also skepticism about the economic and environmental costs of America’s continued reliance on oil. A New York Times/CBS News poll taken in March asked how important it was for the United States to develop an alternative to oil as a major source of energy. Fully 94 percent of respondents said it was very or somewhat important to do so.

The Times/CBS News poll was conducted by telephone with 1,266 adults nationwide.

Daniel J. Weiss, a senior fellow in Washington at the Center for American Progress, said that while the public tends to support more domestic oil and gas drilling, they see it as only one egg in a basket of policies to lower energy costs, reduce dependence on foreign oil and clean up the environment.

“Americans generally support an all-of-the-above strategy,” Mr. Weiss said. “They say, ‘Let’s have more offshore drilling, but also higher mileage standards for our cars and trucks. Let’s crack down on the speculators and invest in electric cars, natural gas trucks and biofuels.’ ”

Mr. Gerard said that Mr. Obama’s sporadic and reluctant support for increased domestic production was largely politically driven and not part of a comprehensive energy strategy. But he praised the president for at least appearing responsive to public opinion in calling for more American oil and gas.

“Until the economy gets back on track, until the unemployment rate comes down, and with the price of energy high, I think you’ll see the president focus more and more on the supply side,” he said. “And as pressure continues to mount as we get closer to Election Day, I think you’ll see more of that.”

Article source: http://feeds.nytimes.com/click.phdo?i=c140c8a4bf4ca30af69f06f73c8a074c

News Analysis: Americans Support Offshore Drilling Even if Washington Wavers

Since the beginning of 2010, Washington has caromed from a restrictive approach to drilling to a permissive policy closely mirroring that of the Bush administration to a near-total shutdown of offshore drilling after the Deepwater Horizon blowout in the Gulf of Mexico. After that fatal accident, the administration decreed a deepwater drilling moratorium, lifted it six months later, then took five more months before beginning to issue drilling permits.

Throughout that time, the American public’s attitudes toward domestic oil and gas development have been remarkably consistent: Americans are in favor of it, though Democrats and those on the coasts are much less likely than Republicans and those in the South and Southwest to be supportive.

National support for offshore drilling and for domestic oil and gas development generally dipped for a time after the BP disaster — from a strong majority to a bare majority — but quickly rebounded.

A Gallup poll taken immediately after the gulf spill showed that 50 percent of Americans supported offshore drilling while 46 percent opposed it. By March of this year, public support had risen to 60 percent versus 37 percent.

The administration’s offshore drilling policy, like its fervor for domestic production more generally, has gone through rapid changes. In March 2010, President Obama announced that the United States would make vast tracts of the Gulf of Mexico and the Atlantic and Arctic oceans available for leasing by oil and gas companies. After the BP spill began on April 20, 2010, he declared those areas off-limits for at least five years. Then, last month, the president announced that he would permit accelerated development in Alaska, the gulf and along parts of the Atlantic coast.

Administration officials defend the policy changes as reasonable responses to changed circumstances. Mr. Obama came to office as a proponent of increased domestic oil and gas development, as part of a broader strategy to reduce oil imports. Accordingly, they said, he took steps to accelerate development. He then imposed a sharp cutback after the BP disaster to give regulators and oil companies time to put new safeguards in place.

After the president was satisfied that drilling could resume safely, and in response to public anxiety about high fuel costs, he shifted back to a more pro-development stance, the aides said.

“These spikes in gas prices are often temporary,” Mr. Obama said on May 14 in a radio and Internet address, “and while there are no quick fixes to the problem, there are a few steps we should take that make good sense.”

The public’s support for offshore drilling has tracked changes in the price of gasoline. When gas prices were near record highs in the summer of 2008 and again this spring, support for domestic drilling was highest.

Conversely, unease about the effects of offshore drilling peaked after the BP accident, which killed 11 rig workers and spewed nearly five million barrels of crude into the gulf.

“News of that incident has faded, possibly lessening Americans’ resistance to coastal area drilling,” Gallup said when releasing its poll in March that showed 60 percent of Americans supportive.

The poll found that 49 percent of Americans favor opening the Arctic National Wildlife Refuge for oil exploration, a step the Obama administration strongly opposes. That is the highest level of support for drilling in the Arctic refuge since Gallup first asked the question in 2002.

The nationwide poll of 1,021 adults was conducted by telephone in early March.

“Timing is everything,” said Jack N. Gerard, president of the American Petroleum Institute, the industry’s most prominent lobbying group in Washington. “As the price of gasoline has increased, public attention has turned once again to the question of energy. When they hear their elected officials continue to resist development of American resources, they are appalled.”

The Gallup survey found that men are more likely than women to support drilling offshore and in Alaska and support is much higher among Republicans than Democrats. It also found regional variations, with the strongest backing for aggressive oil exploration in the South and the most significant opposition along the East and West Coasts.

And while the public appears to support exploiting domestic oil and gas resources, there is also skepticism about the economic and environmental costs of America’s continued reliance on oil. A New York Times/CBS News poll taken in March asked how important it was for the United States to develop an alternative to oil as a major source of energy. Fully 94 percent of respondents said it was very or somewhat important to do so.

The Times/CBS News poll was conducted by telephone with 1,266 adults nationwide.

Daniel J. Weiss, a senior fellow in Washington at the Center for American Progress, said that while the public tends to support more domestic oil and gas drilling, they see it as only one egg in a basket of policies to lower energy costs, reduce dependence on foreign oil and clean up the environment.

“Americans generally support an all-of-the-above strategy,” Mr. Weiss said. “They say, ‘Let’s have more offshore drilling, but also higher mileage standards for our cars and trucks. Let’s crack down on the speculators and invest in electric cars, natural gas trucks and biofuels.’ ”

Mr. Gerard said that Mr. Obama’s sporadic and reluctant support for increased domestic production was largely politically driven and not part of a comprehensive energy strategy. But he praised the president for at least appearing responsive to public opinion in calling for more American oil and gas.

“Until the economy gets back on track, until the unemployment rate comes down, and with the price of energy high, I think you’ll see the president focus more and more on the supply side,” he said. “And as pressure continues to mount as we get closer to Election Day, I think you’ll see more of that.”

Article source: http://feeds.nytimes.com/click.phdo?i=01c6a818903f5555dccbafeabff838fc

Oil Hidden in Shale Sets Off a Boom in Texas

Now the region is in the hottest new oil play in the country, with giant oil terminals and sprawling RV parks replacing fields of mesquite. More than a dozen companies plan to drill up to 3,000 wells around here in the next 12 months.

The Texas field, known as the Eagle Ford, is just one of about 20 new onshore oil fields that advocates say could collectively increase the nation’s oil output by 25 percent within a decade — without the dangers of drilling in the deep waters of the Gulf of Mexico or the delicate coastal areas off Alaska.

There is only one catch: the oil from the Eagle Ford and similar fields of tightly packed rock can be extracted only by using hydraulic fracturing, a method that uses a high-pressure mix of water, sand and hazardous chemicals to blast through the rocks to release the oil inside.

The technique, also called fracking, has been widely used in the last decade to unlock vast new fields of natural gas, but drillers only recently figured out how to release large quantities of oil, which flows less easily through rock than gas. As evidence mounts that fracking poses risks to water supplies, the federal government and regulators in various states are considering tighter regulations on it.

The oil industry says any environmental concerns are far outweighed by the economic benefits of pumping previously inaccessible oil from fields that could collectively hold two or three times as much oil as Prudhoe Bay, the Alaskan field that was the last great onshore discovery. The companies estimate that the boom will create more than two million new jobs, directly or indirectly, and bring tens of billions of dollars to the states where the fields are located, which include traditional oil sites like Texas and Oklahoma, industrial stalwarts like Ohio and Michigan and even farm states like Kansas.

“It’s the one thing we have seen in our adult lives that could take us away from imported oil,” said Aubrey McClendon, chief executive of Chesapeake Energy, one of the most aggressive drillers. “What if we have found three of the world’s biggest oil fields in the last three years right here in the U.S.? How transformative could that be for the U.S. economy?”

The oil rush is already transforming this impoverished area of Texas near the Mexican border, doubling real estate values in the last year and filling restaurants and hotels.

“That’s oil money,” said Bert Bell, a truck company manager, pointing to the new pickup truck he bought for his wife after making $525,000 leasing mineral rights around his family’s mobile home. “Oil money just makes life easier.”

Based on the industry’s plans, shale and other “tight rock” fields that now produce about half a million barrels of oil a day will produce up to three million barrels daily by 2020, according to IHS CERA, an energy research firm. Oil companies are investing an estimated $25 billion this year to drill 5,000 new oil wells in tight rock fields, according to Raoul LeBlanc, a senior director at PFC Energy, a consulting firm.

“This is very big and it’s coming on very fast,” said Daniel Yergin, the chairman of IHS CERA. “This is like adding another Venezuela or Kuwait by 2020, except these tight oil fields are in the United States.”

In the most developed shale field, the Bakken field in North Dakota, production has leaped to 400,000 barrels a day today from a trickle four years ago. Experts say it could produce as much as a million barrels a day by the end of the decade.

The Eagle Ford, where the first well was drilled only three years ago, is already producing more than 100,000 barrels a day and could reach 420,000 by 2015, almost as much as Ecuador, according to Bentek Energy, a consultancy.

Article source: http://feeds.nytimes.com/click.phdo?i=9391068e36c2fcecf1a98a9b5a959632

Obama Shifts to Speed Oil and Gas Drilling in U.S.

It was at least a partial concession to his critics, who say he has shackled domestic energy development at a time when consumers are paying near-record prices at the gas pump. The Republican-led House passed three bills in the last 10 days that would significantly expand and accelerate oil development in the United States, saying the administration was driving up gas prices and preventing job creation with anti-drilling policies.

Administration officials said the president’s announcement was designed in part to answer these arguments, signal flexibility and demonstrate Mr. Obama’s commitment to reducing oil imports by boosting domestic production. But in fact the policies announced Saturday would not have an immediate effect on supply or prices, nor would they quickly open any new areas to drilling.

The president’s turn to a domestic pocketbook issue comes after two weeks of intense focus on the killing of Osama bin Laden, terrorism more broadly and the multiple crises in the Middle East.

In his weekly radio and Internet address, the president said the administration would begin to hold annual auctions for oil and gas leases in Alaska’s National Petroleum Reserve, a 23-million-acre tract on the North Slope. The move comes after years of demands for the auctions by industry executives and Alaska’s two senators, Lisa Murkowski, a Republican, and Mark Begich, a Democrat.

The administration will also accelerate a review of the environmental impact of possible drilling off the southern and central Atlantic coast and will consider making some areas available for exploration. The move marks a change from current policy, which puts the entire Atlantic seaboard off limits to drilling until at least 2018.

The president also said he would extend leases already granted for drilling in the Gulf of Mexico and the Arctic Ocean off Alaska that had been frozen after last year’s BP spill. The extension will allow companies time to meet new safety and environmental standards without having to worry about their leases expiring.

The government will also provide incentives for oil companies to more quickly exploit leases they already hold. Tens of millions of acres onshore and offshore are under lease but have not been developed.

The moves come after the House passed a series of bills that would force the administration to move much further and faster to open public lands and waters to oil and gas development. The administration had formally opposed the bills as written, but officials said Friday that the White House might accept some provisions in the bills, like extending the frozen leases in the gulf and in Alaska.

Responding to the shift by the administration, Brendan Buck, a spokesman for Speaker John A. Boehner, said, “The president just conceded what his party on Capitol Hill still denies: more American energy production will lower costs and create jobs. This reversal is striking, since his administration has consistently blocked American-made energy.”

Although Mr. Buck characterized the policy changes as “not terribly substantial,” he added that they should “pave the way for legislation, like the bills the House passed in the past two weeks, to reduce the damage from the restrictions he imposed in the past.”

The president, in his address, said he supported increased domestic oil and gas development, if it was done safely and responsibly. “Last year, America’s oil production reached its highest level since 2003,” he said. “But I believe that we should expand oil production in America, even as we increase safety and environmental standards.”

The Alaskan petroleum reserve was set aside in the 1920s as a source of oil for the Navy. There have been fewer than a dozen lease sales there; the most recent one, in 2010, drew only modest industry interest. The government has lowered its estimate of recoverable oil under that vast tract, and the Obama administration is leaving large areas untouched because of their ecological and wildlife value.

Response from environmental advocates was relatively muted. Eric Myers, Alaska policy director for the National Audubon Society, said that conservationists were willing to see an increase in drilling in the Alaskan petroleum reserve as long as it did not threaten wildlife, waters or sensitive lands.

The more environmentally sensitive Arctic National Wildlife Refuge in Alaska will remain off-limits to oil and gas drillers, administration officials said Friday.

The president noted in his address that the Justice Department had formed a task force to look into potential market manipulation or excessive speculation in oil, and he repeated his call for a repeal of the $4 billion a year in tax incentives the oil industry receives.

“In the last few months, the biggest oil companies made about $4 billion in profits each week,” Mr. Obama said. “And yet, they get $4 billion in taxpayer subsidies each year. Four billion dollars at a time when Americans can barely fill up their tanks. Four billion dollars at a time when we’re trying to reduce our deficit.”

Next week, the Senate will take up a Democratic bill to remove a portion of those subsides, but it is not expected to become law because of united Republican opposition in both chambers of Congress.

Mr. Obama’s last four weekly addresses have been about oil prices, industry profits and alternative energy programs.

Article source: http://feeds.nytimes.com/click.phdo?i=a277cae91aba19ed6179199915cfb4cd