The People of America's Oil and Natural Gas Indusry

Energy Today - June 27, 2011

Rayola Dougher

Rayola Dougher
Posted June 27, 2011

FuelFix: API: Forecasted Gulf oil production down in year since spill: A slowdown in offshore energy development in the year since the 2010 Gulf spill has cost the U.S. a projected 57.9 million barrels of oil, according to the American Petroleum Institute. The figures are drawn from the short-term energy forecasts released by the government's Energy Information Administration on April 8, 2010, before the Macondo blowout, and on June 7, 2011. They cover oil produced from the Gulf of Mexico. API President Jack Gerard said the declines in projected Gulf of Mexico production partly result from a slowdown in permitting offshore oil and gas projects following the spill. The government imposed a five-month moratorium on most deep-water drilling, and the pace of shallow-water permits was slower after the spill as both regulators and industry responded to new safety and environmental rules. The Weekly Standard: No Energy in the Executive: "At some point this must end. With a permit, or without." With those words, an exasperated federal judge punctuated his latest decision ordering the Obama administration to process applications to drill for oil and gas offshore. More than a year after the BP Deepwater Horizon oil spill caused the administration temporarily to halt the federal permitting process, Judge Martin Feldman of the Eastern District of Louisiana was prepared to accept no further bureaucratic delay by the federal regulators who continue to bottle up almost all drilling applications. The court's May 10 order would have been remarkable if only for its emphatic rhetoric. But even more noteworthy was the fact that the Obama administration--i.e., the Interior Department, with jurisdiction over offshore drilling--claimed to have ended its moratorium seven months earlier. Yet an unofficial moratorium is seemingly still in place. And Judge Feldman is joined in his frustration by restive congressmen of both parties, especially from the delegations of coastal oil- and gas-producing states. To force an end to the gridlock, the House has begun passing bills imposing deadlines on federal regulators' review of drilling applications.

WSJ: The Facts About Fracking: The U.S. is in the midst of an energy revolution, and we don't mean solar panels or wind turbines. A new gusher of natural gas from shale has the potential to transform U.S. energy production--that is, unless politicians, greens and the industry mess it up. Only a decade ago Texas oil engineers hit upon the idea of combining two established technologies to release natural gas trapped in shale formations. Horizontal drilling--in which wells turn sideways after a certain depth--opens up big new production areas. Producers then use a 60-year-old technique called hydraulic fracturing--in which water, sand and chemicals are injected into the well at high pressure--to loosen the shale and release gas (and increasingly, oil). The resulting boom is transforming America's energy landscape. As recently as 2000, shale gas was 1% of America's gas supplies; today it is 25%. Prior to the shale breakthrough, U.S. natural gas reserves were in decline, prices exceeded $15 per million British thermal units, and investors were building ports to import liquid natural gas. Today, proven reserves are the highest since 1971, prices have fallen close to $4 and ports are being retrofitted for LNG exports.

Additional Resources:

BusinessWeek: Wyo. delegation critical of tapping oil reserves

Construction Equipment Guide: Oil, Gas Drilling Tied to Recovery

LA 36: API President & CEO Jack Gerard's Keynote Address to the Los Angeles World Affairs Council

ABOUT THE AUTHOR

Rayola Dougher is senior economist at The American Petroleum Institute (API), where she analyzes information, manages projects and develops briefing materials on energy markets and oil industry policy issues. She is the author or co-author of economic research studies covering a diverse range of topics including crude oil and petroleum product markets, gasoline taxes, energy conservation and competition in retail markets. In addition to testifying before federal and state legislators, she has participated in numerous newspaper, radio and television interviews on a wide range of issues affecting the oil industry, including crude oil and gasoline prices, industry taxes and earnings, exploration and production, and refining and marketing topics.

Prior to joining API, Rayola worked at the Institute for Energy Analysis where her research focused on carbon dioxide related issues and international energy demand and supply forecasts. Rayola holds a Masters degree in Economic Development and East Asian studies from the American University and a degree in History and Political Science from the State University of New York at Brockport.