June 2012 Archives

 OCS: A Difference of Opinion (Commentary).  Yesterday, the Department of Interior boasted of its "...Plan to Make All Highest-Resource Areas in the US Offshore Available for Oil and Gas Leasing."  However, in the Obama Administration's unique, passive-aggressive way, it smiles and offers development while withdrawing many of the best areas for development.  Is this another sleight of hand designed to "fool most of the people all the time", or "all of the people some of the time?"  After reading the side-by-side notes below, our readers can draw their own conclusions as to whether the Administration's below-stated "all of the above energy strategy" is truth or sophistry.   -dh

WASHINGTON, June 28, 2012 – As part of the Obama administration’s all-of-the-above energy strategy to expand safe and responsible domestic energy production, Secretary of the Interior Ken Salazar (NGP Photo) and Bureau of Ocean Energy Management (BOEM) Director Tommy Beaudreau today announced the release of a proposed final offshore oil and gas leasing program for 2012-2017 that makes all areas with the highest-known resource potential – including frontier areas in the Alaska Arctic – available for oil and gas leasing in order to further reduce America’s dependence on foreign oil.   Consistent with the President’s direction, the Obama administration’s Proposed Final U.S. Outer Continental Shelf Oil and Gas Leasing Program makes available areas focused on the most likely recoverable oil and gas resources that the U.S. Outer Continental Shelf is estimated to hold. It schedules 15 potential lease sales for the five-year period, including 12 in the Gulf of Mexico and three off the coast of Alaska.   “Put simply, this program opens the vast majority of known offshore oil and gas resources for development over the next five years and includes a cautious but forward-looking leasing strategy for the Alaska Arctic,” said Secretary Salazar. “President Obama has made clear his commitment to expanding responsible domestic oil and gas production in America as part of this all-of-the-above energy strategy, and with comprehensive safety standards in place, this plan will help us to continue to grow America’s energy economy and further reduce our dependence on foreign oil, while protecting marine, costal and human health.”   Today’s announcement builds on a series of actions taken by the Obama administration to meet President Obama’s directive to continue to expand safe and responsible production of America’s important domestic resources. Successful offshore lease sales held by the Department of the Interior in the Western and Central Gulf of Mexico in recent months have made available approximately 60 million acres of resource-rich areas for industry leasing that will bring additional domestic resources to market.   The Proposed Final Program is designed to account for the distinct needs of the regions across the OCS, and considers a range of factors, including current and developing information about resource potential, the status of resource development and emergency response infrastructure, recognition of regional interest and concerns, and the need for a balanced approach to the use of the Nation’s shared natural resources. “Offshore oil and gas leasing should not be ‘one size fits all,’” said Director Beaudreau. “For example, the area-wide leasing model that works for the Gulf of Mexico, where there is a long and consistent history of offshore exploration and development, is not suited to the Arctic. Within the Arctic, where significant resource potential exists, there are also substantial environmental challenges, and social and ecological concerns that warrant a different and more targeted approach that will focus leasing to offer the greatest resource potential while minimizing possible conflicts with environmentally sensitive areas and the native Alaskan communities that rely on the ocean for subsistence use.”   The 15 scheduled potential lease sales contained in the plan will occur in six planning areas – the Western and Central Gulf of Mexico, the portion of the Eastern Gulf Of Mexico not currently under Congressional moratorium, and the Chukchi Sea, Beaufort Sea and Cook Inlet Planning Areas offshore Alaska.   In the Central and Western Gulf of Mexico Planning Areas, which have the most abundant proven and estimated oil and gas resources as well as broad industry interest and mature infrastructure, the Proposed Final Program includes annual area-wide sales of all available, unleased acreage, as has been the typical practice in the Central and Western Gulf of Mexico. Additionally, within the portion of the Eastern Gulf of Mexico Planning Area made available for leasing under the Gulf of Mexico Energy Security Act, there are two scheduled sales there.   For offshore Alaska, the Proposed Final Program schedules three potential sales – one each in the Chukchi Sea and Beaufort Sea Planning Areas that span the Alaska Arctic, and one in the Cook Inlet Planning Area off of south-central Alaska.   “We are committed to moving forward with leasing offshore Alaska, and scheduling those sales later in the program allows for further development of scientific information on the oil and gas resource potential in these areas and further study of potential impacts to the environment,” said Deputy Secretary of the Interior David J. Hayes. “We must reconcile energy resource development with the sensitive habitats, unique conditions and important other uses, including subsistence hunting and fishing, that are present in Alaska waters.”   The Proposed Final Program re-affirms existing protections for Arctic coastal areas by continuing to exclude certain areas from leasing, including a 25-mile buffer area near the coast of the Chukchi, as well as two subsistence whaling areas in the Beaufort near Barrow and Kaktovik, Alaska. The program also identifies an additional exclusion area in the Chukchi, near Barrow, that will not be made available for leasing because of input received from Native Alaskan communities and because the area is known to be of particular importance for subsistence hunting and fishing. With respect to all other areas in the Arctic that are open to oil and gas exploration and development in the Proposed Final Program, BOEM will identify targeted areas to offer in the lease sales based on information the agency will gather about industry interest, resource potential, subsistence hunting and fishing, wildlife, and environmental sensitivities.   “We are taking a cautious approach to leasing in the Arctic that accounts for the Arctic’s unique environmental resources and the social, cultural and subsistence needs of Native Alaskan communities, and draws from the best available science as well as any new information that we may learn from activity on current leases,” added Secretary Salazar. “When it comes to domestic production, the President has made clear he is committed to producing more oil and natural gas safely and responsibly. The numbers speak for themselves: every year the President has been in office, domestic oil and gas production is up, imports of foreign oil are down, and currently the nation is producing more oil than any time in the last eight years.”   As is mandated by the OCS Lands Act, the Proposed Final Program has been submitted to Congress. The Secretary may implement the Program in 60 days, however no further action is needed prior to its implementation, and BOEM is on track to hold the first sale under the new program later this year. Earlier this month, BOEM held a lease sale for nearly 39 million acres in the Central Gulf of Mexico, which attracted more than $1.7 billion in high bids for more than 2.4 million acres. That follows on a Western Gulf of Mexico lease sale held in December 2011, in which 21 million acres were offered for lease.   Click on the links below to view the items being released in coordination with the Proposed Final Program. Proposed Final OCS Oil and Gas Leasing Program Programmatic Environment Impact Statement BOEM Fact Sheet: Proposed Final Oil and Gas Leasing Program for 2012-2017 BOEM Fact Sheet: Arctic Map: OCS Oil and Gas Strategy – Lower 48 Continental U.S. Map: OCS Oil and Gas Strategy – Alaska Map: Chukchi Area Analytical Considerations Map: Beaufort Area Analytical Considerations To increase transparency and improve public dialogue as the Five Year Program is implemented, BOEM has developed several new tools, including an alternative and mitigation tracking table and regionally-tailored interactive maps that can be viewed on the Five Year Program website.

WASHINGTON, D.C., June 28, 2012 – House Natural Resources Committee Chairman Doc Hastings (NGP Photo) released the following statement after the Obama Administration issued the 2012-2017 offshore lease plan that closes 85 percent of America’s offshore areas to energy production.    “The Obama Administration has neglected their duty to provide a roadmap for America’s offshore energy future by tossing aside a plan to expand production and failing to produce a plan of their own for three and a half years.  Today, the Obama Administration has announced a bleak future for American energy production by keeping 85 percent of America’s offshore areas under lock and key and refusing to open any new areas to drilling.  This plan re-imposes the drilling moratoria lifted in 2008, hurts job creation and keeps new areas of American energy production sidelined.   “Because of this Administration’s actions, people are worse off today than they were three and a half years ago. Today’s news only hamstrings job creation, energy production and the economy for another five years.  President Obama simply cannot be taken seriously when his energy and job creation rhetoric do not match up with the reality of his actions.  There is far too great of potential to put people back to work, improve the economy and make American more energy independent for President Obama to ignore America’s vast offshore energy resources.   “House Republicans have passed a bipartisan plan to create over a million jobs by opening the offshore areas that contain the most oil and natural gas resources to energy production.  Yet, the Obama Administration opposed the plan and the Democrat-controlled Senate has refused to act on this common sense job creation bill.  It’s extremely disappointing that the Obama Administration continues to have such a narrow vision for American energy production.”   Background: Offshore drilling plans are subject to multiple levels of public comment and review.  This plan is not considered final and enacted into law until it undergoes a mandatory 60-day Congressional review, per Section 18 of the Outer Continental Shelf Leasing Act.   In order to complete all the legally required steps to have a new plan in place by July 1st, President Obama would have had to submit his plan to Congress by May 1st.  This will be the first time the U.S. will not have a plan in place since it became a requirement in the 1970s.   FOR IMMEDIATE RELEASE      CONTACT: ROBERT DILLON (202) 224-6977 JUNE 28, 2012                                                 or MEGAN MOSKOWITZ (202) 224-7875                                     Sen. Murkowski Comments on 2012-2017 Offshore Leasing Plan   WASHINGTON, D.C., June 28, 2012 – U.S. Senator Lisa Murkowski (NGP Photo) today made the following comment on Interior’s five-year offshore oil and natural gas leasing program for 2012-2017:   “The leasing plan released today falls far short of what’s needed to get America’s faltering economy back on track. It removes nearly 90 percent of the acreage previously available for energy exploration.   “While it offers the possibility of two lease sales in the Arctic, it substantially delays them and raises the possibility that they might not happen at all. The final plan unilaterally takes millions of acres in the Arctic off the table, in the form of buffer zones and so-called ‘study areas.’   “The administration also continues to ignore calls for lease sales off the coast of states such as Virginia and South Carolina, despite strong support from those states.   “While the administration resists opening any new acreage, nearly every country bordering our waters is showing no such hesitation. Cuba, Mexico, the Bahamas, Canada and Russia are all moving ahead. It’s time to roll up our sleeves and put Americans back to work producing the energy we need to be competitive. Hesitation and delay will not right our economy.”   In November, Murkowski wrote about America’s failure to keep up with development on its borders in The Wall Street Journal.   ### WASHINGTON, D.C., June 27, 2012 - The Center for Biological Diversity today sent a letter to House Natural Resources Committee Chairman Doc Hastings claiming their organization had only received $553,000 in taxpayer funds resulting from Endangered Species Act (ESA) related attorney fees and court cases. This claim conflicts with data obtained from the Department of Justice (DOJ), which shows over $2 million in taxpayer dollars have been paid out to the Center for Biological Diversity and their attorneys for cases open between 2009-2012.   The Center for Biological Diversity appears to have derived their erroneous number by including only checks made out directly to the Center for Biological Diversity over a select period of years. Attorney fees are typically paid out to the attorney of record. The Center for Biological Diversity is conveniently failing to include the majority of funds that were paid directly to their hired lawyers. Nine of the lawyers who have received payouts are currently employed by the Center for Biological Diversity.   “American taxpayers have a right to know how much of their money is going to pay attorneys and settlement costs for lawsuit-happy organizations that make a living off of suing the federal government. The numbers from the Justice Department speak for themselves,” said Chairman Hastings. “One frequent collector of taxpayer dollars spent a week inventing a way to misconstrue and hide data to make it appear as though they haven’t received millions in taxpayer dollars. The most direct way to have openness and transparency on exactly what funds a group has taken from taxpayers in ESA-related settlement and attorney fees is for them to publicly reveal all of their data for the past two decades.” On March 19, 2012, Chairman Hastings sent a letter to the Environment and Natural Resources Division of the Department of Justice asking for detailed information on how much taxpayer money is being spent on ESA-related litigation and settlements. In response to this request, DOJ ran a search through their Case Management System (“CMS”) and provided the Committee information based on all cases where the ESA was one of the statutes at issue in the litigation.   According to this document from the DOJ containing 276 pages of case information, the Center for Biological Diversity was involved in over 50 individual cases, open between 2009 and 2012, where they were the lead plaintiff. The amount of attorney fees and court costs associated with these cases is $2,286,686.91. Of this amount, $138,114.45 was in court costs and $2,148,572.46 was in attorney fees. These five examples alone of court cases filed by the Center for Biological Diversity where CBD received attorney fee payments between 2009-2012 far exceeds the $553,00 that the Center for Biological Diversity claims to have received:      More Here......................................................

Calgary Herald by Steve Ewart.  David Collyer, president of the Canadian Association of Petroleum Producers, met the Herald's editorial board Monday and was called upon to defend "the industry" after three oil leaks in a month in Alberta raised public concern over the safety of aging pipeline infrastructure.

ADN by Lisa Demer.  With little drama, the Kulluk -- a 29-year-old conical Arctic drilling rig that spent a dozen years mothballed in Canada -- launched for Dutch Harbor, a supply stop on the way to the far north, just before 8 a.m. Seattle time. The Noble Discoverer -- a 1960s-era vessel used as a log carrier before being converted for drilling -- was right behind, said Curtis Smith (NGP Photo), an Anchorage-based Shell spokesman in Seattle for the sendoff.  Dozens of workers stood on the dock watching the ships they had rigged for Arctic work pull away. Seattle office workers had a view.  "It's quite the on-water concert," Smith said. "There are lots of vessels maneuvering in well-planned and well-timed maneuvers." Four Shell vessels are part of Wednesday's flotilla. The U.S. Coast Guard is escorting the Shell ships as far as Port Angeles, Smith said.

CNN by Steve Hargreaves.  The Obama administration will go ahead with more drilling in Arctic waters, though at a pace that allows for more research before additional permits are granted.  The administration will hold new lease sales for oil companies to drill in the Chukchi and Beaufort Seas just north of Alaska, Interior Secretary Ken Salazar said Tuesday in a conference call with reporters.

Peninsula Clarion by Brian Smith.  Two weeks ago, officials agreed to terms on the Tesoro refinery after a dispute about its value landed both sides in Board of Equalization hearings, Borough Assessor Tom Anderson said. The borough and Tesoro previously had a five-year agreement that went through 2010. During that period the highest value the refinery received was $182 million and the lowest was $126 million in 2010.  In 2011, the borough hired an appraiser who valued the refinery at $303 million, which Tesoro disagreed with, Anderson said. Tesoro appeal the assessment and through its own appraisal determined the value at $128 million. The board of equalization decided to set the value at $143 million.

But that’s not the end of the issue. The plaintiffs in the case, which are heavy industries that include coal-burning utilities, will probably ratchet up the stakes by taking the case to the High Court -- a high risk gamble that would threaten to undermine their cause even more. That’s because the U.S. Supreme Court has already come down on the side of EPA here and it would likley uphold a key part of that undertaking, allowing the greenhouse gas rules to start up. 

“The ruling will surely be appealed to the Supreme Court but it is not likely to rule prior to the election,” says Kenneth Reich, an environmental lawyer in Boston who  was chief of environmental enforcement for U.S. Department of Justice. “Therefore, the political attacks on this administration’s approach to greenhouse gas regulation, using EPA rather than Congress to set the rules, will continue.” 

Calgary Herald/CP.  Encana Corp. (TSX:ECA) will invest an additional $600 million this year to significantly increase production of valuable liquids-rich natural gas amid a prolonged downturn in the price of so-called dry gas.

Today, House Natural Resources Committee Chairman Doc Hastings (NGP Photo) delivered the following statement on the House floor, in support of H.R. 2578, The Conservation and Economic Growth Act – a package of 14 public lands bills that will cut federal red tape, boost economic development, protect the environment, and create American jobs.

Welcome, John Hofmeister!

Comment: a couple months ago I was delighted to spend some time in Wicheta Falls with today's RDC keynote speaker, John Hofmeister (NGP Photo).  Today Hofmeister will address an Alaskan audience on the subject of, "Developing Hydrocarbons in an Anti-hydrocarbon Age: Risks & Opportunities".  Hofmeister is Founder and Chief Executive, Citizens for Affordable Energy and Former President, Shell Oil Company.  The meeting will be at the Dena'ina Convention Center, Noon (Doors open at 11:15 am).  While advanced registration has closed, a limited number of seats will be available at the door.  -dh

Alaska Propane

One of our readers, Erik Thede (NGP Photo), writes of this CNN article, "Why are the Chinese investing in Toledo?":  "...I know the Governor and some in the legislature have traveled to China and made some business overtures, . . . but not much is noticeable to the public yet.       Apparently other cities have made more progress, despite the fact that Alaska is relatively close to China, is a substantial trading partner, and seems to be inherently interesting to Chinese people and business . . . perhaps at least partially because of our resources . . . and maybe even because of our "can-do" frontier  mystique.       Unfortunately our business climate, including environmental and tax and perceived anti-development reputation, may be a significant discouragement to mutually beneficial business development.       The result is at least four-fold:          1. The Chinese take their significant development money elsewhere, i.e. to Toledo, Ohio, Irvine CA, SF CA, and many more welcoming mid-western cities.          2. I suspect the Chinese (individuals and business entities) still quietly, opportunistically invest in "low-profile" business resources, like miscellaneous vacant land, small businesses, maybe minority interests in resources, etc. However, the result is sub-optimal as far as Alaska is concerned: Alaska and Alaskans do not benefit from concerted, coordinated, orderly business development.          3. Eventually Alaska's resources will be developed and invested in . . . BUT IF THE DEVELOPMENT IS NOT A WILLING NEGOTIATION ON A RELATIVELY LEVEL PLAYING FIELD . . . BUT COMES AT A TIME OF AMERICAN OR ALASKAN DESPERATION {LIKE WHEN THE OIL PIPELINE IS EMPTY AND WHEN WE ARE TOTALLY BROKE}, then we Alaskans will be at a severe disadvantage . . . and will be forced to "sell our resources low" to pay for our debts that we "bought high." Our Chinese "partners" will have become our Chinese "owners" by simply waiting for the inevitable to happen . . . due to our sloth, foolishness, . . . and due to environmental delusions.          4. And in the meantime, most of our "working-class Alaskans" are forced to survive on minimal "subsistence level wages" with jobs with only a third-world future . . . that is, almost no future.   Note our coverage of the significant Chinese visit to Anchorage in 2010.  When associating Erik's comments with natural resources in general and energy in particular, his message has particular relevance and should not be taken lightly.  -dh

Alaska Journal of Commerce by Tim Bradner.  The Alaska Oil andGas Conservation Commission is considering whether “waste” of a natural gas liquids resource is occurring at the Prudhoe Bay field after the field operator, BP Exploration Alaska Inc., declined to make propane available to a state gas authority for consumer use in the state.  The AOGCC held a hearing on the matter in Anchorage June 19.  Harold Heinze (NGP Photo), the former executive director of the Alaska Natural Gas Development Authority, or ANGDA, filed a citizen petition with the AOGCC earlier this year that asked the commission to probe the issue.  Here is the Heinze testimony for our readers' reference, along with BP's testimony and testimony from Calista Native Corporation and Nels Anderson.  We noted that Jerry McCutcheon also testified and will include a copy here when and if we are able to obtain it.  -dh

 Alaska Dispatch by Alex DeMarban.  Companies poised to purchase, store and distribute that propane have approached BP Alaska about the idea, said Harold Heinze, the former head of ARCO Alaska who requested the investigation as a private citizen. But he said BP doesn't want to talk.

Alaska DNR Multiple Use Comment Period

The Department of Natural Resources (DNR) is seeking public comment on the draft Yukon-Tanana Area Plan(YTAP).  Once adopted, this plan will serve as the basis for the state’s management of more than 9 million acres of land and water in the Interior for the next 15 to 20 years.  The plan includes a Land Classification Order (NC-10-005)) that proposes to designate approximately 9 million acres within the planning area for specific uses, including agriculture, coal, forestry, habitat, minerals, settlement, water resources and general use.  To view or download an electronic version of the draft plan, read about upcoming public meetings, or submit comments, go to http://dnr.alaska.gov/mlw/planning/areaplans/ytap. 

Congressional Action

Yesterday, the House of Representatives passed H.R. 2578, the Conservation and Economic Growth Act, with a bipartisan vote of 232-188.  This bipartisan package removes federal red tape to responsible, local economic development and job growth.  It encourages tourism and recreation, promotes responsible use of our public lands and resources, protects the environment, secures federal lands along the U.S. border and promotes the development of clean, renewable hydropower.

Also yesterday, the House Committee on Natural Resources continued its series of full committee oversight hearings on how to improve and update the Endangered Species Act (ESA).  Today’s hearing focused on ESA litigation and how attorneys’ fees are being used by certain organizations to continue endless lawsuits. Witnesses at the hearing detailed specific cases throughout the country where ESA lawsuits have blocked or delayed important societal activities, including the construction of an elementary school.

GOOD NEWS FOR ALASKA AND ALL AMERICA!

The National Ocean Policy Coalition reports: On Wednesday, the U.S. House Appropriations Subcommittee on Interior and Environment will convened for a mark-up of the Fiscal Year 2013 appropriations bill for Interior and Environment.  This bill provides funding for the Department of the Interior, Environmental Protection Agency, and White House Council on Environmental Quality.   The draft legislation includes the following language regarding the National Ocean Policy:

"LIMITATION ON USE OF FUNDS FOR NATIONAL OCEAN POLICY

SEC. 439. None of the funds made available by this Act may be used to develop, propose, finalize, administer, or implement, the National Ocean Policy developed under Executive Order 13547. Not later than 60 days after the date on which the President’s fiscal year 2014 budget request is submitted to Congress, the President shall submit a report to the Committees on Appropriations of the House of Representatives and the Senate identifying all Federal expenditures in fiscal years 2011 and 2012, by agency, account, and any pertinent subaccounts, for the development, administration, or implementation of the National Ocean Policy developed under Executive Order 13547. The President’s budget submission for fiscal year 2014 shall identify all such funding proposed for the implementation of such Policy."

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