In the Pipeline: 2/14/11

Part One: Obama never let the Gulf crisis go to waste; despite lifting the moratorium, no permits have been issued, effectively shutting down oil and gas production in the Gulf The Hill (2/13/11) reports: Sen. Mary Landrieu (D-La.) slammed what she called a “de facto moratorium” on drilling in the Gulf of Mexico late Saturday night amid news that a major shallow-water driller filed for bankruptcy. Landrieu, an outspoken critic of the Obama administration’s offshore drilling policies, blamed the Interior Department’s “excruciatingly slow release of oil and gas permits” for the company’s hard times. “How many more rigs have to leave and how many more businesses have to close before it realizes the havoc the de facto moratorium is wrecking on the Gulf Coast? When these businesses close, people lose good paying jobs, our communities erode and our unique culture disappears,” Landrieu said in a statement…The Obama administration imposed a moratorium on deepwater drilling in the Gulf of Mexico in the aftermath of last year’s massive oil spill. The moratorium has since been lifted, but Landrieu and other drill-state lawmakers say drillers are operating under a “de facto moratorium” because no deepwater drilling permits have been issued.

Part Two: Obama’s war on affordable and reliable energy claims new casualty and along with it: tax revenue and jobs. Wall Street Journal (2/12/11) reports: Seahawk was “forced to seek strategic alternatives only after an unprecedented decline in the issuance of offshore drilling permits following the Macondo blowout,” Mr. Stilley said, referring to the BP well that blew out on April 20, killing 11 workers and triggering the worst offshore oil spill in U.S. history…Seahawk Drilling Inc., one of the largest operators of shallow-water rigs in the Gulf of Mexico, on Friday said it would seek bankruptcy protection and sell its assets to a competitor, blaming the Obama administration for a crippling regulatory environment in the aftermath of the BP PLC oil spill…Seahawk’s assets will be acquired by Hercules Offshore Inc., in a cash and stock deal worth about $100 million. The cash component will be $25 million but could be upped another $20 million if needed to pay Seahawk’s debt. Hercules will also provide the seller 22.3 million shares of common stock, valued at $3.36 per share. The number of shares would be reduced, however, if more cash is required…The deal is subject to bankruptcy court approval…The deal represents the second significant consolidation among U.S. rig contractors in a week, following Ensco PLC’s acquisition of Pride International on Feb. 7

It’s hard to be caustic when the subject matter is so somber — Oil companies look to other parts of the world for work Financial Times (2/11/11) reports: When Michael Bromwich, head of permitting for the Gulf of Mexico, comes to Texas oil country on Friday, the message the industry hopes to deliver is that deepwater drilling will continue – with or without the US…Last year Chevron, a lead investor in the Gulf, said it acquired acreage in nine major deepwater areas. This year it will drill in deepwater off China, Australia, West Africa, the UK, Brazil, and, if permitted, the Gulf. Bobby Ryan, Chevron’s vice president for Global Exploration, explains: “Deepwater is a major component of our exploration program. The only place we are not drilling is the Gulf of Mexico.”… Indeed, he says that every day he gets a drilling report from the Gulf. The email reports no exploration wells are being drilled and no development wells are being drilled. He deletes it: “I never thought I’d reach a point in my career when I’d see that for the Gulf of Mexico.”

Valentines Day: China will spend the next year trying to figure out how much love they can get from Europe in the form of solar subsidies Bloomberg (2/14/11) reports: China, the world’s biggest electricity consumer, is figuring out how to capture a larger share of the solar-energy market without losing money…The government will spend at least a year studying Europe’s system of paying above-market prices for solar power before deciding if there’s a better way to spur clean-energy plants across China, said Wu Dacheng, an adviser to national power regulators. The delay has stalled projects planned on Chinese soil by developers such as First Solar Inc. of the U.S.…“We need to learn from European countries like Germany” that pay subsidized rates to spark solar-panel installations, Wu, vice chairman of the Solar Photovoltaic Committee of China’s Renewable Energy Society, said in an interview….Europe, which attracted more than $65 billion in solar plant investment in 2010, is providing lessons for China. Germany, the largest panel market, together with Spain and France carried out four unscheduled subsidy cuts in 2010, trying to slow a torrent of projects by developers and speculators.

Follow the money: Small wind rapidly expanded in 2009, but in 2008 Congress expanded tax credits for these bite-sized turbines MSNBC (2/11/11) reports: “Small wind” is getting big. The market for these pint-sized windmills grew 13 percent in the United States in 2009, the latest year for which figures are available, to $82.4 million. With that boost, the total capacity of small turbines in the U.S. now exceeds 100 megawatts. That accounts for 3 percent of wind energy here, which might not seem like much, but over half that capacity has been built in just the last three years….Small tower turbines have been stippling Midwest horizons for at least 80 years. Interchangeably called “small wind” and “residential wind,” the category covers tower- and roof-mounted turbines with the capacity to generate anywhere below 100 kilowatts of energy. They’re usually used to help power a home, a farm, or, in some cases, a corporate campus. The modern small-wind craze, however, traces back to October 2008, when Congress expanded tax credits for the turbines—first as part of the Emergency Economic Stabilization Act and later as part of the American Recovery and Reinvestment Act. The laws allow consumers to write off 30 percent of the total purchasing and installation costs of any small-wind turbine—tax credits that had been previously capped at $2,000

We love Mike Johanns, but at some point you have to wonder: what in the world is he thinking about? E&E News (2/11/11) reports: Thirty House members from both parties yesterday urged Secretary of State Hillary Rodham Clinton to sign off on a controversial $7 billion pipeline that is poised to nearly double U.S. imports of crude from the Canadian oil sands…The Keystone XL pipeline remains under review at the State Department amid intense lobbying efforts by both the oil industry, which touts the project’s job-creation value as well as its role in diminishing imports from the Middle East, and environmentalists who decry the increased emissions from the production of oil sands crude…Members of Congress on both sides of the aisle are choosing sides on the pipeline in growing numbers, with yesterday’s letter arriving as the latest volley from Capitol Hill…”As the price at the pump continues to climb, America needs to look to reliable oil producing countries that do not force us to compromise our ideals and national security,” the group of 30 wrote. “Canada is already our largest supplier of oil, a responsible and reliable partner in energy, and a friendly and democratic government that shares the values and ideals of the United States.”

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