Energy Roundup: Industry meets Salazar on new drilling panel

Oil and gas industry officials sat down Thursday with Interior Secretary Ken
Salazar about an Obama administration effort to increase the
collaboration between the government and companies, something critics
say was sorely missing before the Gulf of Mexico oil spill.

The meeting was to establish a new Ocean Energy Safety Institute that
would look at industrywide practices regarding drilling safety, spill
containment and response and identifying and funding new offshore
drilling technologies, according to participants. Those technologies
would particularly hone in on enhancing blowout preventers for wells and
spill containment.
 
{mosads}This panel — which would include federal,
industry, academia and other officials — would be housed in the Interior
Department, which would liaison with other agencies, including the Coast
Guard and Energy Department. 
 
“The vision that the regulators
clearly have is that the new institute will have a role in setting
standards that can serve as the basis for regulations (like the API
standards now act),” according to Jim Noe, executive director of the
Shallow Water Energy Security Coalition, who attended the meeting. “The
administration wants to insert the federal government into the process
of the establishing industry best practices. Moreover, the discussion
today underscored that the administration wants to be a deciding force
on technology decisions.” 

But will industry go for it?

But it is unclear how the panel will be funded and whether it would gain industry support.  

Industry
officials want the department to focus on setting up a quick path
toward issuing deepwater drilling permits that were banned for months
following the April 20 blowout of BP’s Macondo well in the Gulf of
Mexico. The concern for those like Noe is also speeding up shallow-water projects not officially under that ban but that nevertheless have largely laid dormant since the spill began.

“Industry is open to
collaborating,” Noe said. “But don’t lose sight of the here and now.
Blue Ribbon panels don’t put workers back to work and keep rigs from
shutting down.”

Salazar late last month announced the first set
of post-Gulf spill safety requirements that prescribes regulations
regarding the design, cementing and casing of wells and the use of
drilling fluids. It would also require that blowout preventers — the
last line of defense before a well ruptures and the mechanism that
failed to prevent the BP spill — have to be independently certified.

BP, Transocean among those involved

According
to an invite sent out Tuesday, senior officials from BP and Transocean —
both companies deeply involved in and responding to the Gulf of Mexico
oil spill — attended the sit down with Salazar. Other officials included
those from Chevron, ExxonMobil, ConocoPhillips, the American Petroleum
Institute, National Ocean Industries Association, International
Association of Drilling Contractors, Anadarko and Diamond Offshore
Drilling, Inc.
 
Among the federal officials joining Salazar were
Bureau of Ocean Energy Management, Regulation and Enforcement Director
Michael Bromwich, Deputy Interior Secretary David Hayes and officials
and staff from the Coast Guard and Energy Department.
 
During the 75-minute meeting, Salazar said the goal should be to have the CEOs from the companies and groups attending Thursday’s meeting reconvene with the
Interior Secretary in mid-November.
 
In the meantime, industry
officials were asked to nominate representatives for the new panel and
to hammer out other details with administration staff.

An Interior Department spokeswoman said about Thursday’s meeting:
“Secretary Salazar, Deputy Secretary Hayes and Director Bromwich met
with industry representatives today to discuss strategies for further
developing and making available blowout containment capabilities moving
forward.” She declined further comment.

So when will drilling actually commence?

Salazar was also clear he wants enforceable mechanisms for spill containment in the deep waters, Noe said.
 
“They’re working on ways to come up with new requirements on spill containment issues and that those new requirements are necessary before the department will issue new permits for new wells in deep waters,” Noe said.
 
While the department is somewhat struggling through the legal and regulatory obstacles in doing just that, “it’s clearly a focus” of the department, Noe said.
 
Departmental officials said they will be working on new requirements over the next several weeks, Noe said.

Brady sits down with Bromwich

Rep. Kevin Brady (R-Texas), who also met Thursday with Bromwich, said afterward that he related industry concerns regarding the pace of new permits for both deepwater and shallow-water oil-and-gas drilling.
 
“They feel like they don’t have from Interior clarification and specific requirements … to submit their applications” to drill, Brady told reporters on a conference call following the meeting with Bromwich. There is “concern that Interior has been dragging its feet,” he said.
 
Bromwich “was interested in hearing that,” Brady said, and “welcomes specific questions regarding specific requirements.”
 
Bromwich did not provide additional clarity as to how quickly new permits would be issued but said it would not be done until new safety requirements are determined, Brady added.
 
“He stands by his earlier statement of trying to process those within weeks,” Brady said. “And again he feels like it’s a safety issue and he is processing them as quickly as possible.”

Brady said Interior staff informed him that there are 11 pending shallow-water drilling permits and no deepwater drilling permits pending yet in the Gulf.

Chevron aims to start ultra-deep Gulf drilling

Chevron announced Thursday it will invest $7.5 billion to develop two of the Gulf of Mexico’s largest unexploited oil fields, The Wall Street Journal reports.
 
“The oil giant’s decision signals that companies are still willing to stake their future on the deep waters of the Gulf’s outer reaches, despite uncertainty about the fallout from BP PLC’s oil spill,” according to the WSJ. 
 
“The newly sanctioned projects — Jack and St. Malo — represent two of the biggest finds of the last decade in the U.S. Gulf, potentially holding 500 million barrels of recoverable oil and gas. Production is expected to begin in 2014, in 7,000 feet of water roughly 280 miles south of New Orleans.” This is located in a region of the Gulf “known as the lower tertiary “where the energy industry has made several large finds in recent years but only one field is currently producing,” the Journal reports.
 
Brady told reporters the Chevron announcement is “very encouraging.”

Johanns warns of lawsuit against proposed TransCanada pipeline

Sen. Mike Johanns (R-Neb.) is warning that Secretary of State Hillary Clinton might be setting up a successful lawsuit against a proposed TransCanada pipeline that would send crude oil from the Alberta oil sands down to Texas. Johanns has gone after comments Clinton made Oct. 15 that suggested the department was “inclined” to approve the pipeline while thousands of comments are still being reviewed by the department.
 
“One would imagine that this decision will be challenged,” Johanns said in a phone interview with E2 Thursday. “And if the net result is the ultimate decisionmaker … had already prejudged this then you have a problem where this would be determined to be arbitrary and capricious.”

Bipartisan Nebraska concern over pipeline

Johanns and fellow Nebraska Sen. Ben Nelson (D) are concerned about the current proposed path of the pipeline through their state. They argue crude oil could leak in a key state aquifer that would spoil the state’s drinking water supply. The argument by the two senators stand out from the criticism of the proposed pipeline from House Democrats and environmental groups given that they generally hold industry-friendly views on domestic oil and gas production.
 
But “they could not have picked more sensitive areas than exactly where they are running this pipe,” Johanns told E2. “This pipe will lay in water. So I don’t know what they were thinking.”

“As much as anything that’s what I’m trying to get at here; you need to come up with some alternatives here,” he added.

Johanns hopes Clinton merely misspoke

Johanns said he is hopeful Clinton might have merely misspoke when she addressed the Commonwealth Club in San Francisco last week and suggested the department was inclined to approve the pipeline. “She was asked about one pipeline and offered thoughts on another,” Johanns said. “If it was comments made under confusion, I understand that. That could happen. We’ve all been in that position.”
 
“She’s got a lot on her plate,” he added.

A State Department spokesperson did not respond to a request for comment Thursday. A spokesman Wednesday said the department is still reviewing “thousands of comments” and should finish the review by the end of the year.

Green groups ramp up TV ads

Environmental groups are continuing their heavy spending in the final weeks before Election Day to protect vulnerable Democrats who supported last year’s House cap-and-trade bill.
 
The Sierra Club on Friday is releasing three new TV ads in Michigan, Arizona and Florida, all with the same angle of either criticizing or defending candidates over their policies regarding oil use.
 
One goes after former GOP Rep. Tim Walberg, who is in a tight race against freshman Democratic Rep. Mark Schauer in Michigan’s 7th district. A second praises Rep. Gabrielle Giffords (D-Ariz.) for backing policies to reduce oil use, while a third contrasts the stances of Rep. Ron Klein (D-Fla.) and his Republican opponent Allen West.
 
The Sierra Club is spending $800,000 collectively on the three ads.
 
“We want voters in each of these districts to know which candidates will fight for what’s best for their constituents and communities and who will side with the interests of Big Oil and their lobbyists,” Cathy Duvall, the Sierra Club’s political director, said in a release.
 
A poll released Thursday by the Detroit Free Press and three TV stations had Schauer up by 6 points, 45 percent to 39 percent. The poll had a margin of error of plus or minus 5 percentage points. An earlier poll this month by The Hill had the two tied at 41 percent.
 
The Cook Political Report similarly lists both the Arizona and Florida races as toss ups. A new poll by the Sunshine State News Service has West leading Klein by 3, 47 to 44 percent, with 9 percent undecided.

LCV, Sierra Club expand anti-Hurt campaign

The League of Conservation Voters and Sierra Club are also expanding the reach of an existing TV ad to help Rep. Tom Perriello (D-Va.) fend off a tough challenge from Republican Robert Hurt.
 
It would expand a six-figure TV buy by another $170,000 to include the Roanoke, Va., market. The TV ad accuses Hurt of a having a conflict of interest in voting in the state Senate to allow a study probing the safety of uranium mining.
 
“The race for Virginia’s 5th district is tightening, and we expanded this TV ad campaign so that Virginians know the truth about Robert Hurt’s favoring corporate special interests over the public interest,” said Tony Massaro, LCV’s senior vice president for political affairs.
 
The Hurt campaign has cried foul, calling the ad “patently false” in charging that Hurt is supporting uranium-mining interests in the state because it would financially benefit both him and his father.
 
Hurt campaign strategist Chris LaCivita told E2 that Hurt got clearance from a state Senate ethics panel chaired by Democrats before he cast a vote on a panel that unanimously approved a feasibility study on uranium mining. Hurt, he said, is also on record as opposing the lifting of the state uranium-mining ban. Both these positions, LaCivita noted, are consistent with Perriello’s views. 


On Tap Friday: Obama stumps for Boxer, Reid
 
President Obama will headline an afternoon rally for Senate Environment and Public Works Chairwoman Barbara Boxer (D-Calif.) at the University of Southern California. It also includes California Democratic gubernatorial nominee Jerry Brown, comedian and actor Jamie Foxx and the band Ozomatli. Obama later will attend a rally with Senate Majority Leader Harry Reid (D-Nev.) in Las Vegas and will spend the night in Sin City after holding a closed-press event at a private residence with Reid.
 
In case you missed E2 yesterday
 
Our posts Thursday included:
 
W.Va. House hopefuls are running on coal
 
Markey presses Pentagon on China’s rare-earth policy
 
Vilsack: EPA ethanol decision ‘momentum builder’ for industry
 
Vilsack calls for ‘fiscally responsible’ ethanol tax credit extension
 
Climate, mileage proposal for heavy trucks coming next week
 
Bennet hammers Buck for ‘extreme’ position on climate change
 
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