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And for big oil, business is a-boomin’.

26 Jan

From Obama’s SOTU address Tuesday night:

“…Nowhere is the promise of innovation greater than in American-made energy. Over the last three years, we’ve opened millions of new acres for oil and gas exploration, and tonight, I’m directing my Administration to open more than 75 percent of our potential offshore oil and gas resources….”

Well, he sure wasn’t just whistling Dixie.  Today, we see that the Obama administration is going to sell off remaining oil and gas leases in the Gulf of Mexico.  What could possibly go wrong?  The Macondo well site is still leaking oil in the Gulf.  No, they don’t show you the plumes of oil on the nightly news because they have a few buffoons running for President that they want you to look at instead.  Oil is still washing ashore along the Gulf coast.  But BP sponsored a new series of ads recently with very nice average-looking people saying things like, “We’d love for y’all to come on down to our Alabama/Louisiana/Mississippi/Florida coasts!  Our beaches are clean, the water sparkling, and we love our guests!  We are open for business.”  Only they pronounce it ‘Bama or Lewsanna or Miss Sippi or Florda for the sake of authenticity.  You are meant to mistake the ads for reality.  Not a particularly difficult con job, these days.

Many of the fisherman are still out of business, as quite a portion of them find that despite being allowed to return to their fishing areas, the catch is showing signs of toxic exposure: lesions, bloody gills and fin rot.  They chuck the fish back into the sea and come home empty-handed.  The catch that is brought in – well, what are they doing with that?  Last I heard, the plan was to sell it to prisons, public schools and military PX’s; sort of your three captive markets right there.  Dead silence about that lately.

Perhaps they have simply quit testing the fish for toxins and sell it to restaurants anyway.  It is how we do things these days.  After radioactivity levels climbed in the Pacific northwest after Fukushima, the EPA did three things: they raised the level of “acceptable” radiation, they took their readings off-line (once the public protested, they put the readings back on-line, but in charts so difficult to decipher that one could spend hours on their website and still have no idea of radiation levels in the area) and they quit testing altogether in some areas.  This is the sort of teen-age answer for everything we get now.  (Once, while driving a friend’s teen-age daughter somewhere, I heard a peculiar noise from the car’s engine.  “Hmmm,” I said aloud, worriedly, “I wonder what that is.”  She said, “Oh, I know how to fix that.”  “Really?” I asked in disbelief.  She shrugged, nodded, and reached over to turn the radio volume up so high that we could no longer hear the noise.  “And there ya go,” she said.)  The Republican plan to correct problems like oil spills and nuclear accidents is to abolish the EPA altogether.  And there ya go.

The oil company errors which led to the BP spill have not been adequately addressed; we see, however, that the Obama administration has pretty much the same teen-age fix that the Republicans do.  Without even knowing exactly what went wrong with the drilling site, or addressing cronyism in the regulatory agency involved (the Minerals Management Service), Obama fast-tracked new leases in the Gulf within months of the spill.  The warnings from independent scientists and geologists regarding possible cracks and seeps sustained in the Gulf sea floor by the sheer number of wells drilled have gone ignored.  Likewise, no-one has addressed the issue of potential and deadly methane seeps.  (It was a methane explosion which caused the drilling platform to explode in the first place.  Methane is extant in every oil reservoir.  Usually the oil and gas companies burn it off as it escapes.  There is probably methane being released along with the oil still bubbling up from the Macondo site, but it is not measured or monitored in any way.)

 

(CNN) — The federal government Thursday announced plans to sell off oil and gas leases on 38 million acres of the Gulf of Mexico seafloor in a new domestic energy push by the Obama administration.

The leases could yield as much as 1 billion barrels of oil and 4 trillion cubic feet of natural gas, the Interior Department estimates. The scheduled sale in June will be the second since the Deepwater Horizon disaster of 2010 when nearly 5 million barrels of crude spewed into the Gulf…

The leases up for sale in June include the remaining, unclaimed areas off Louisiana, Mississippi and Alabama, ranging from as close as three miles from the coast to up to 230 miles offshore. The minimum bid for deepwater leases will be $100 per acre, according to the Interior Department.

The agency is working on plans for a dozen more lease sales through 2017, which it estimates will open up three-quarters of the recoverable oil and gas below the outer Continental Shelf — reserves Obama pledged to open up in his Tuesday night speech.

Supporters say more energy exploration will bring more jobs for Americans still reeling from the steepest economic downturn in decades. But others remain wary of the risks illuminated when the drilling rig Deepwater Horizon blew up and sank in April 2010, killing 11 men aboard and uncorking an undersea gusher that took three months to cap.

“We’ve got oil continuing to wash up. We’ve got ongoing restoration needs down there that haven’t been addressed yet,” said Aaron Viles, a spokesman for the New Orleans-based Gulf Restoration Network.

Viles said that the depths at which drilling is planned are worrisome and that residents of coastal communities should have more input into the decisions.

The BP-owned well that blew up in 2010 was nearly a mile below the surface, at depths that made efforts to cap it extremely difficult. Future drillers have to have arrangements in place to deal with a deep-sea spill, but the new requirements may be a case of “fighting the last war,” Viles said.

“These are complicated systems. They’re going to fail in complicated ways,” Viles told CNN…

http://www.cnn.com/2012/01/26/us/us-gulf-oil/index.html

From a 2008 Scientific American article:

  …In fact, oil companies have yet to take advantage of the nearly 86 billion barrels of offshore oil in areas already available for leasing and development. So why are they chomping at the drill bit to open up the moratorium waters and survey them anew?

Oil company stocks are valued in large part based on how much proved reserves they have,” says Robert Kaufman, an expert on world oil markets and director of Boston University’s Center for Energy and Environmental Studies. Translation: just having more promising leases in hand would be worth billions of dollars….

…Kaufman dismisses as “nonsense” any promises that offshore drilling could make the U.S. “oil independent.” Even if it could somehow insulate itself from the ups and downs of the global oil market, he notes, the U.S. would have to make a huge leap in domestic oil production to replace what it buys from overseas.

“At its peak in production, which occurred in 1970s, the U.S. produced about 10 million [barrels of oil] a day,” Kaufman says. “Now, after 30 years of fairly steady decline, we produce about five million barrels a day,” whereas we consume 20 million barrels daily. “Whoever talks about oil independence has to tell a story about how we close a 15-million-barrel gap.”

http://www.scientificamerican.com/article.cfm?id=can-offshore-drilling-make-us-independent&page=3

Ah, now we get to the bare essentials of the thing.  Oil company stocks go up when they have new leases in hand.  That is the bottom line.  That is the entire point in opening new leases.  It is just another way for oil companies, speculators, and hedge funds to make money on the market.  Hate to break it to you, but the DOW is not the economy.  (Looking at you, Timmeh.)  Speculation in the oil market, based on new leases and such, is what makes gas prices at the pump go up.  And here is a news flash – no-one really knows how much oil is any given reserve.  It’s all guesswork.  Furthermore, it takes at least 5 years to get from the point of leasing to the point of production.  And in case it escaped everyone’s notice (it has), no-one knows how to fix the cracks in the sea floor caused by events like the BP Macondo spill, nor does anyone know just how much tolerance the sea floor has for more drilling sites without splitting wide open.  Fracking causes earthquakes and deep-sea drilling causes….?  Turn up the volume there, will ya?

“So long, and thanks for all the fish,”  –  big oil companies to the world.

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