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US House Passes Ocean Drilling Bill; Calls for Canadian Model for Oil Shale Development

2 July 2006

Last week the US House of Representatives passed H.R. 4761—the Deep Ocean Energy Resources Act of 2006— by a vote of 232-187. The bill lifts a 25-year ban on oil and natural gas drilling off most of the Pacific and Atlantic coasts and the eastern part of the Gulf of Mexico.

The legislation specifically removes all leasing bans beyond 100 miles and permits leasing 50 to 100 miles offshore unless states protest. It bans all oil and gas drilling within 50 miles of state coasts unless states chose otherwise.

The legislation, which eliminates the requirement for a comprehensive inventory of Outer Continental Shelf (OCS) resources, shares the Federal leasing receipts with the coastal states off which the drilling will occur: 75% for projects out to four marine leagues (13.8 miles, 22.2 kilometers) from the coastline and 50% for projects more than four marine leagues from the coastline.

The bill also calls for the United States to use Canada’s approach to oil sands development as a model for the development of the westeren oil shale. Canadian oil sands producers pay little in royalties until several years into development.

The bill now goes to the Senate for consideration.

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July 2, 2006 in Oil, Oil Shale, Policy | Permalink | Comments (29) | TrackBack (0)

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No way it passes the Senate.

The status quo had allowed oil and gas platforms in the Gulf of Mexico -- impacting Texas, Mississippi, and Alabama completely, and part of Florida.

The majority of House districts do not have coastal property, and therefore like the idea of more energy. However, 38 Senate seats -- ME, NH, MA, RI, CT, NY, NJ, DE, MD, VA, NC, SC, GA, FL, WA, OR, CA, AK, HI -- do border the Atlantic or Pacific. For the most part, they are universally opposed to this legislation. Additionally, the Democratic non-oceanic Senators will likely be inclined to vote against it as well. This bill is dead in the water in the Senate.

Maybe it would survive compramise legislation, but I doubt it -- not on an election year. Voters are NIMBYists, and the GOP doesn't want to risk votes in NJ, RI, NH, ME, VA, NC, SC, GA, FL, or AK. Especially FL, which has come out adamantly against the bill and is a key state for both parties.

This would be a good opportunity for Dems to propose measures that will lead to a structural reduction in *demand* for crude oil. Since it is not economically possible to replace all gasoline with biofuels, that means artificially raising the price of oil or products derived from it to reflect at least a fraction of its the external costs (war, global warming, damage to marine ecosystems). Any extra revenue should be disbursed as an income tax credit - that way, it's not tax-and-spend but rather, revenue neutral aka fiscally responsible.

If the bill passes and should become law, this will mean that nearly the last of our oil will be tapped. Once we finish up this resource, what will be next? I would think that our representatives and senators would be as much concerned to develop wind, solar and wave power as to extracting nearly the last of our oil. What about doing something practical to get Amaricans aware of the fact that they are nearing the end of their rope when it comes to easy oil. Our national reserves are getting lower every day yet we continue to run our large engine cars and SUV's. Doesn't the piper have to be paid one day??? Where is our national responsibility to the oil crisis?

No US car company seems much interested in EV or PHEV developoment but which US auto company will exist after we run ourselves out of oil and become nearly completely dependent upon foreign oil. Sometimes I think our government leaders are not thinking too clearly on this matter or that they are not concerned for the welfare of their own descendents. I wonder what could prevent them from acting in an intellegent and responsible manner. It is becoming like the situation before the fall of Rome. Our laws are weakening us from the inside and it would not take much outside pressure to cause the collapse of our energy empire and therefore of our economy.

We must be diligent as to the proper path to take and, in this case, it should be:
1. Restrictions to the wasteful use of fuels by laws promoting energy efficient vehicles, taxing fuels heavily, taxing large vehicles heavily and laws giving tax breaks and rebates to those manufacturing and purchasing EV's and PHEV's.
2. Laws encouraging renewable energy development of all types.
3. Expedient examination of federal rules regarding recent stoppage of wind farm construction due to possible "radar" interference.


adrianakau@aol.com

"...Peak oilers are those of us that never grew up and/or matured. You'd think that being wrong every single time for the last 151 or more years would count for something but instead it only spurs them on. I am reminded of the prophet walking the sidewalks of the city in worn robes and sandals carrying a sign, old and faded from decades of daly use; "THE END OF THE WORLD IS TOMORROW!" "

Rafael:

Even the Democrats won't do anything that makes gas prices *higher* right now. Besides, I know my government too well. Any additional tax money raised that way would quickly get absorbed into pork projects.

I just don't trust my government enough to allow them to take more of my money.

The so-called Big Oil's empire stretches much farther than our (USA) national shore line and coast line. It stretches all the way to the Middle East and who knows where else. They have a lot of oil left to sell at high prices as long as we are still driving our SUV's, extending our urban sprawl, and only pay lip service and token effort toward the development of renewable energy. In fact, Iraqi oil field, arguably the world's second largest reserve after Saudi, has been little touched for decades in order to maintain oil prices. And since Big Oil is firmly in control of the government, our mass media and who knows what else, don't expect much of any changes such as government promotion of conservation effort, CAFE tightening, etc... forthcoming in the near future. Sadly, in these days of globalism, our national interest takes a back seat to the profitability of these "global" Corporations, or world-wide Empires. How sad it is the the eve of Fourth of July.

Its getting quite silly how far we are going for oil. Whether its invading a foreign nation and fending off its crazed citizens.. Or searching the depths of the ocean.. It seems the time is ripe for the switch to come. Which probably wasn't the case when oil was easy to get and thus cheap.

Roger,

Related to your post about big oil, this weekend, in one of my country's TV channels, there was an interesting news headline:

"Fuel consumption dropped 6% in 2005 (-9% in gasoline and -1% in diesel), but oil imports have climbed.

The forces behind this behaviour were:
- Gradual fleet substitution by more efficient diesel vehicles.
- Consumer retraction due to higher fuel prices.

The increased oil imports are motivated by gasoline exports mainly to United States…."

These exports are good way to keep the efficiency of an existent infrastructure (refineries), incorporate some work and do some dollars. This market behaviour is common to more European States, like Austria, Spain, etc.

I'm glad they are trying to get more oil to us. Especially when companies like GM are making annoucements such as the following:

http://www.autoweek.com/apps/pbcs.dll/article?AID=/20060703/FREE/60703001/1041

"GM to increase HP in mid-size trucks and H3 for 2007"

Roger:
Iraqi oil fields have been damaged, due to injecting heavy fuel oil and failure of well pressure maintenance for 10+ years for crude recovery. This is especially true for Northern Fields around Kirkuk, and around Basrah. More could probably come from Libya, now opening up to renewed investment, and exploration. However, production is a 5-10 yrs off.
_
___How far can horizontally, and vertically can current drilling tech go? The point is that there may be cases where a well can drill out to spot 6+ miles out, and still be above the storm surge line onshore. As for Oil shale, supercritical fluids are being put to use in experimental technology for kerogen production from the ore. The point is if you're going to drill/make fossil energy, it better be done right. In the long term, direct (ie. photovoltaic) and indirect (eg. Hydro) solar energy souces may be the only pernament way to go.

“Big oil in control of the government…”
I remember the time when it was “controlled” by arm producers.
But consider this:
From 10 top oil companies only one is US – Exson-Mobil, it is on the fifth place after way bigger oil companies run by the governments of Saudi and alike. It produces only 2% of world oil. Non of other US companies are in the top 10.

Following this logic, Canada, GB, and Norway shoul be just run by oil companies.

I bet the next candidate to “control” US government is pharmaceutical. Also could be Google.

I wonder how those anti-science GOP house members expect us to follow the 'Canadian model' for shale development. Tar sands and kerogen deposits are very different animals.

Miguel,
You must be from Spain, and of course EU, where it is inspirational to see major drop in oil consumption there, in most EU countries. Spain I heard, is active in expanding the role of solar thermal energy with a large construction project. Northern Europe is determined to be independent from petrol in the next few decades. No such plans here in the USA. In fact, report from the EIA (Energy Information Administration) outline increase oil production project and increase reliance on petrol and fossil fuel. The Bush Adm objected to many states' measure to curb CO2 emission, saying that only federal govt. can regulate fuel efficiency standard, and has Bush done anything, inspite of his acknowledgement that "America is addicted to oil"?

Miguel, you brought up another important point, that is that oil refinery capacity is extremely limited in the USA due to the fact that no new refineries has been built here for a while, while oil consumption has been increasing unchecked, thus forcing gasoline importation from abroad. This is another evidence that Big Oil is creating shortage in order to boost gasoline prices, against our national interest. What happens to the billions of USD in grants and subsidies to the Oil Industry from the US Govt, that allows refinery capacity to be severely in short supply, that we have to import gasoline? Nobody cares about the looming record-high trade deficit? Since a large chunk of it came from petroleum importation, the first logical thing to do is to have an Appollo-like or Sputnik-like program of developing locally-produced renewable energy. But no, not when Bush and his congress is in office.

Allen,
The entire rationale for the Operation Iraqi Liberation (O.I.L.) is to control the release of oil from Iraq. There never was WMD threat,the weapon inspectors were in Iraq right since Desert Storm in 1991. But, if you recall, there was corruption in the Oil for Food program, Saddam was cooperating with China and Russia for more oil deals, thus potential to break the US imposed trade sanction...Big Oil fear that Saddam will open the oil spigot and export oil in large amount and causing large drop in oil prices...

Andrey,
Yes, U R right. H*liburton is both an arm producer and and oil field contractor. H*liburton was behind Lyndon B Johnson political aspiration...and how did Johnson became US President? Have you watched "JFK" by Oliver Stone?
The entire B*sh clan is in cohoot with the S*udi government (one of the biggest *il company as you've alledged), to ensure that S*udi oil will get the best prices, to take control of Ir*qi oil and to control when and how much oil will flow out from there. Why do you suppose that most of the 9*1's terrorists are from S*udi, who are disgusted with their govt. yet decided to choose an US target instead?

And, yes, Canada's conservative government is already controlled by Big Oil, who will exploit the tar sand oil without regard to the envir*nmental cost. GB under Tony Bl*ir is the number one ally of the US in the Iraqi war, even at the strong disapproval of their own citizen. Tony Bl*ir now got the lowest approval rating of any PM, and ditto for B*sh in the US. The people ain't entirely stupid. They just can't do much about it, especially when their electronic votes were rigged by D*e-B*ld, and their punched votes by Jeb B*sh in Fl*rida.

Andrey,
Sorry, I can't post my reply to you regarding pharmaceutical industry, nor about Google, due to spam filter. I'll email my comment to you. Anybody else interested can email me.

Roger-
Schlumberger does more oil business than Haliburton...

China and Russia were not the only countries guilty of "skirting" the embargoes imposed on Iraq for kicking out the inspectors. Look right over at the European Union and you will find a few countries (France for example) were doing the same thing.


Since there is so many smart people here. Could someone tell me where we should drill for oil?

Where it's at.

As RMI would say, the best energy is negawatts, the energy you do not use. Instead of asking where is the best place to drill for oil, perhaps it is best to ask where is the best place we can reduce the usage of oil.


sjc

My daily driver is a 1.9 TDI that gets 47mpg on used frye oil. I'm pretty sure that I am doing my part to reduce oil usage. However, I also realize that we need oil and will for the foreseable future. I am all for conserving where we can, but, Not drilling is Not the answer. Not drilling and Not expanding refining is what has got us where we are now. So if Not in Anwar and Not off the coast.

Someone tell me where?

Halliburton also had a subsidiary in Iran doing energy projects. When it was found out, it shut it down, but only after it was completed, months later. Not everything is what it seems.

Roger,
History may show you that you are mistaken. I have put my own money on this a few years ago, and have added to it since. The other takers were 8 close friends taking opposite views, or other views.
_You aare right about the Oil for Food, but WMD post 1991 did exist. The spigot did not exist. Hussein had damaged his wells during the 80's through sanction years (to 2003). It accelerated post 911, as he demaded more oil from mature fields and kickbacks($$). Not having a way for them to export "black oil" and being not able to refine it led them to inject some back into the ground, further damaging the fields. Add that with antiquated water injection systems and refineries/facilities would had required 5+ years, and tens of billions of dollars to get Iraq up and running.
_Kojo and Kofi are either suspect, or incompetent. There were also this Texas oil guy...David Chalmers, and the Koreagate guy...Tongsun Park, a lobbyist. Then there were debts to Soviet era arms/equiptment, and Chinese fiber optics communication for Hussein's govt/military. Russian and Chinese arms licenses set up too. All those AK's, RPG's, rocket artillery, Dragonovs, etc. were made from factories with licenses from companies in the FSU and PRC.

Thanks, Allen, for fine-tuning the details, but, pray tell, do you know why Saddam grabbed Kuwait in the first place? Because some dark forces have been tying his hands from being able to export the oil that he wanted to export so that he can raise some cash. The Bush Sr. Adm were misleading Saddam into invading Kuwait, by raising no objection when Saddam was hinting his intention at a Kuwait invasion. But, of course, after the invasion, Bush Sr. would jump at the opportunity to further control, or rather restrict Iraqi oil export, in order to maintain oil prices. Even inspite of best intention, the oil prices still fell way low throughout the 90's...Just imagine what would have happened if Bush Sr. did not intervene with the action of Desert Storm and in effect, cutting the flow of oil out of Iraq? Desert Storm was Big Oil's desperate attempt at maintaining oil prices in the 1990's. Now, do we know why Bush Sr. did not rooted out Saddam in 1991 when he had the chance to? Because he did not need to. The oil flow out of Iraq was already cut short by sanction.

Joseph,
The answer is Iraq and Kazakstan, and...many more places...Canada, eh?
But more seriously, have you thought about biomethane and converting your car to run on biomethane? Northern Europe, Germany, and Pakistan are doing it. There are a lot of waste biomass that can be converted to methane for transportation fuel that would do a great service for our environment, rather than more and more drilling. IN fact, there are estimates that biomethane from waste biomass can supply as much as 1/3 of our transportation needs. The number may not be exact, but it is nevertheless encouraging to hear. Why is this done in Sweden, but not done here in the US? Just read my previous postings in this article.

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