Archive for March 17th, 2011
Applications for federal permits to drill on public and American Indian lands are expected to increase by close to 50 percent, U.S. Interior Secretary Ken Salazar said Tuesday… Salazar said the federal Bureau of Land Management, which he oversees, will process more than 7,200 applications for Indian and public-land permits — up from 5,000 in 2010.
-Casper Star Tribune (Wyoming), March 16, 2011
Back on February 25, I blogged about a number of House Democrats who called on President Obama to tap into the Strategic Petroleum Reserve as a response to elevated crude oil prices. Based on the past behavior of Washington lawmakers regarding high oil prices, I predicted:
Next up from the politicians? I’d guess bashing “Big Oil,” threats of a windfall profits tax, and blaming commodity traders.
Meanwhile, the nation continues to remain ill-prepared for the real energy crisis that’s coming down the pipeline.
Sure enough, several Senate Democrats are going after “Big Oil” as the price of crude oil sits just above $100 a barrel today. From FOX News’ Jim Angle yesterday:
With oil and gasoline prices high and constantly threatening to go higher, the blame game is in full swing.
Several Democratic senators pointed to a new reason Wednesday — they’re blaming the oil companies, accusing them of just sitting on federal leases and making no effort to produce oil and gas from them.
“There are a total of 38 million acres under lease but the industry is only producing 6.5 million,” Sen. Robert Menendez, D-N.J., said. “So you have 60 million acres that are unused that are already leased to companies across the country. That means that less than 25 percent of acres leased on federal lands and water are actually producing. The bill we are here to discuss would require that oil companies holding oil and gas leases developed those leases in diligent manor.”
Sen. Chuck Schumer, D-N.Y., joined the criticism.
“Just as misbehaving children are sometimes going to hoard toys they are not playing with, companies are sitting on land they aren’t using. It’s time to act like adults. Oil companies should use what they have or allow others to do so.”
So the Democrats want to pass a law that would require oil companies to use their leases or forfeit them.
Erik Milito, the Director of Upstream and Industry Operations for the American Petroleum Institute (API), the national trade association that represents all aspects of America’s oil and natural gas industry, responded to the Democratic lawmakers in API’s blog Energy Tomorrow. Milito wrote yesterday:
When it comes to crafting a sensible energy policy, once again politics carry the day. This notion of “use it or lose it” is a stale, invalid argument and a political distraction to rising gasoline prices combined with the fact that we’re not doing enough in the Gulf to use our own resources and put Americans back to work. Let’s get back on track with some facts:
The administration itself is preventing the industry from developing these leases because it is not issuing permits to drill or conduct seismic studies of these leases. They want the industry to develop the leases it already possesses, but they won’t grant the permits to do so.
Companies pay millions of dollars to acquire these leases (each lease costs at least $250,000 and some have gone for more than $100,000,000), further fees for renting the leases and the leases have a finite term. If a company does not produce oil or gas from a lease then they are required to return it to the government. In other words “use it or lose it” is already the law.
These are very successful and sophisticated companies that are engaged in this business and it makes no logical sense for companies to pay millions of dollars to purchase leases, sit on them for 10 years, and then give them back to the government. They make money by supplying the American economy with the energy it needs to grow, not from sitting on assets. The level of capital expenditures by the industry to develop these leases demonstrates their commitment to find oil and gas. For example, the industry spent more than $37 billion (with a B) in capital expenditures to develop deep water Gulf leases issued between 1996 and 2000. In addition they paid more than $4 billion (with a B) in bonus bids to obtain those leases in the first place. With that level of investment, it is hard to argue that the industry is not working hard to develop the leases it owns.
Finally, these arguments simply ignore the basics of the oil and natural gas industry. Companies purchase leases for the right to explore for the resources. You don’t know if a lease actually contains oil or natural gas until you move forward and drill an exploratory well. Companies purchase a large portfolio of leases to give them the greatest opportunity to find oil and natural gas. They work hard to survey and study all of their leases with the hope that they can narrow the list down to a subset that have the best likelihood of actually containing oil or natural gas. However, it is not uncommon for a company to spend $100 million to drill a well and find no oil or natural gas. In fact, companies drill more wells that have no oil or natural gas than wells that actually do.
With one election just concluded, the positioning for the next one has started, but it’s time to stop the stupid and start getting smart on creating jobs, growing our economy and increasing our energy security.
So, in a nutshell, Milito pointed out:
• It makes no sense for oil companies to sit on leases when they could be bringing product to market- especially at today’s prices
• The billions of dollars spent by the oil and natural gas industry to develop leases demonstrates their commitment to finding oil and gas
• Having a lease doesn’t necessarily mean oil and gas are there. Leases are purchased for the right to explore for these resources.
• The federal government is stonewalling permits to develop leases
• “Use it or lose it” is already the law
I think someone might have just aired out the room of smoke and covered the mirrors.
Next up by the politicians? More attacks on “Big Oil,” threats of a windfall profits tax, and blaming commodity traders.
Oh, did I mention the nation continues to be ill-prepared for the real energy crisis that’s coming down the pipeline?
Angle, Jim. “Democrats, Republicans and Oil Producers Play the Blame Game on Energy Prices.” FOX News. 16 Mar. 2011. (http://www.foxnews.com/politics/2011/03/16/democrats-republicans-oil-producers-play-blame-game-energy-prices/#content). 17 Mar. 2011.
Milito, Erik. “The ‘Use It or Lose It’ Deception”. Energy Tomorrow. 16 Mar. 2011. (http://blog.energytomorrow.org/2011/03/the-use-it-or-lose-it-deception.html). 17 Mar. 2011.
Should Americans be worried about the radiation threat from Japan’s crippled Fukushima Dai-ichi nuclear power plant?
U.S. President Barack Obama isn’t. On Tuesday, Obama told a Pittsburgh television station that he’s not worried about radiation from the damaged nuclear power plant reaching the United States. CBS affiliate KDKA-TV Channel 2 political editor Jon Delano asked the President, “Are you at all worried about radiation from Japan reaching American shores?” Obama’s reply?:
No. I’ve been assured that it… any nuclear release dissipates by the time it gets even to Hawaii, much less to the mainland of the United States.
Experts quoted in the mainstream media seem to agree with this assessment. From ABC News’ Ned Potter this morning:
To those of us here who might worry, nuclear engineers and meteorologists said the U.S., including Alaska and Hawaii, is safe.
“These releases from the plant, because they’re not elevated, because they’re not getting up high in the atmosphere, they won’t travel very far,” said Kathryn Higley, director of the department of nuclear engineering at Oregon State University. “There are so many factors in our favor. Rain will knock it down. There are 5,000 miles of ocean between us and Japan. It will be diluted, it will mix with sea spray, long before it gets remotely close to us.”
One computer model suggested the radiation won’t travel very far from Japan. Potter wrote:
But Jeff Masters, a former meteorologist at the National Weather Service who now works at Wunderground.com, ran a computer model and concluded that radiation would not get very far.
“Ground-level releases of radioactivity are typically not able to be transported long distances in significant quantities, since most of the material settles to the ground a few kilometers from the source,” he wrote.
“Given that the radioactivity has to travel 3,000 miles to reach Anchorage, Alaska, and 5,000 miles to reach California, a very large amount of dilution will occur, along with potential loss due to rain-out.
“Any radiation at current levels of emission that might reach these places may not even be detectable,” he said, “much less be a threat to human health.”
And if the worst-case scenario takes place, where radioactive particles are carried by upper-level winds to American shores? From the piece:
In that case, “we will get some fallout on the West Coast 2-3 days after its release in Japan,” said Edward Morse, a nuclear engineer at the University of California, Berkeley, in an e-mail to ABC News. “The levels will not be threatening to life and health but they will be observable.”
“If any radiation were to make it here, it would be merely background levels,”said Jere Jenkins, the director of Radiation Laboratories at Purdue University in West Lafayette, Ind. “Nothing for people on the West Coast or people in the United States to be concerned about.”
Higley said she has been spending a lot of time over the last few days urging calm.
“We have monitoring capability here in the U.S. that is extraordinarily sensitive. We can detect radiation that is like a hundred-thousandth of what you get from a regular X-ray, and we don’t expect to see even that.
“For the stuff to travel, it has to be picked up by the wind,” she said, “higher-level winds that have global distribution. And that’s just not happening. This is a little like a campfire — the smoke is all near the ground.”
Despite these assurances, some are still concerned about the threat. Jim Meyers and Ashley Martella wrote Tuesday on the news site Newsmax.com:
If a radiation cloud from Japan’s damaged nuclear reactors eventually reaches the western United States, it could pose a threat to American crops and the people who eat them, nationally known neurosurgeon Russell Blaylock, M.D., tells Newsmax.
Dr. Blaylock also says the radiation could pose a cancer risk, and explains steps to take to protect against the damaging effects of radiation exposure.
Blaylock is a health practitioner, lecturer, and editor of Newsmax.com’s “Blaylock Wellness Report.” His books include “Nuclear Sunrise,” which examines the threat nuclear radiation poses…
Prevailing winds in the area of the stricken Japanese reactors have been heading east into the Pacific, toward the Western Hemisphere. Dr. Blaylock was asked about the threat to Americans if radiation from the reactors eventually does reach Hawaii or the West Coast of America.
“Most of the health risks are not going to be due to acute radiation poisoning,” he tells Newsmax. “It’s going to be a risk of increased cancer.
“When we look at Chernobyl, most of West Germany was heavily contaminated. Norway, Sweden. Hungary was terribly contaminated. The radiation was taken up into the plants. The food was radioactive. They took the milk and turned it into cheese. The cheese was radioactive.
“That’s the big danger, the crops in this country being contaminated, the milk in particular, with Strontium 90. That radiation is incorporated into the bones and stays for a lifetime.”
Last night, the New York Times’ William J. Broad reported on a U.N. forecast projecting the radiation plume could reach Southern California by Friday. Broad wrote:
A United Nations forecast of the possible movement of the radioactive plume coming from crippled Japanese reactors shows it churning across the Pacific, and touching the Aleutian Islands on Thursday before hitting Southern California late Friday.
Health and nuclear experts emphasize that radiation in the plume will be diluted as it travels and, at worst, would have extremely minor health consequences in the United States, even if hints of it are ultimately detectable. In a similar way, radiation from the Chernobyl disaster in 1986 spread around the globe and reached the West Coast of the United States in 10 days, its levels measurable but minuscule.
The projection, by the Comprehensive Test Ban Treaty Organization, an arm of the United Nations in Vienna, gives no information about actual radiation levels but only shows how a radioactive plume would probably move and disperse.
The forecast, calculated Tuesday, is based on patterns of Pacific winds at that time and the predicted path is likely to change as weather patterns shift.
On Sunday, the United States Nuclear Regulatory Commission said it expected that no “harmful levels of radioactivity” would travel from Japan to the United States “given the thousands of miles between the two countries.”
You can view an interactive map of the Comprehensive Test Ban Treaty Organization’s forecast on the New York Times website here.
“Obama: Radiation from Japan won’t reach Hawaii.” CBS News. 15 Mar. 2011. (http://www.cbsnews.com/video/watch/?id=7359774n). 17. Mar. 2011.
Potter, Ned. “Japan’s Nuclear Crisis: United States Safe From Radiation, Say Engineers.” ABC News. 17 Mar. 2011. (http://abcnews.go.com/Technology/japan-nuclear-plant-radiation-united-states-risk-engineers/story?id=13150089&page=1). 17 Mar. 2011.
Martella, Ashley and Meyers, Jim. “Dr. Blaylock: Japanese Radiation Could Pose Risk to US.” Newsmax.com. 15 Mar. 2011. (http://www.newsmax.com/Headline/blaylock-radiation-us-japan/2011/03/15/id/389474). 17 Mar. 2011.
Broad, William J. “Scientists Project Path of Radiation Plume.” New York Times. 16 Mar. 2011. (http://www.nytimes.com/2011/03/17/science/17plume.html?hp). 17 Mar. 2011.
Christopher E. Hill, Editor
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