“Obama Floats Offering First-Ever Drilling Lease in Atlantic” – AP, 27 January 2015

President Obama has introduced a plan that would allow drilling in parts of the Atlantic Coast, while simultaneously putting an end to any drilling in certain areas in Alaska.

The administration’s proposal concentrates on Virginia, North Carolina, South Carolina, and Georgia, and will sell areas 50 miles off the states’ coasts to oil companies beginning in 2021. Oil companies have been denied access to these areas in the Atlantic Ocean for years, particularly since drilling in those areas was banned in 2008. Additionally, the proposal includes leases for regions in the Gulf of Mexico and Alaska coast. Leases will be sold between 2017 and 2022.

Many politicians cited the 2010 BP oil spill in the Gulf of Mexico as a reason not to move forward with the proposal, which remains the biggest oil spill of its kind in the US. Since then, regulations on offshore drilling have not improved; Congress has yet to adopt new laws that would make drilling safer. Many believe that drilling in these regions is a misguided way of developing energy — and acquiring energy independence — in the US.

However, politicians in the Southeastern states are backing Obama’s plan, asserting that the new venture will boost the economy by creating jobs and encouraging investments. Currently, the US is experiencing a flood in oil, which has caused oil and gas prices to significantly drop.

Areas chosen to be leased and sold are subject to change. Oil generation from offshore drilling supplies 16 percent of the US’s oil. In order to find oil and gas deposits under the ocean, firms will have to run seismic imaging surveys; a process that can take years, the firms attach seismic air guns to their boats that they will drag for miles on the ocean surface. The guns then radiate air and sound, which assists in mapping 2D and 3D images of the ocean floor.

(From Associated Press)

Developed and Written by Dr. Subodh Das and Tara Mahadevan

January 28, 2015

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“Marathon Oil to Spend More in US” – 12 December 2013, Wall Street Journal

US-based oil and natural gas company Marathon Oil is planning to sell its business in the North Sea and increase drilling in the US, which — along with a 13% boost in spending and $2.5 billion share-repurchase program in 2014 — will aid the company in growing both its production and shareholder returns. Besides the US, its main exploration activities are in Norway, Guinea, Poland, Angola and Iraqi Kurdistan.

Of the company’s capital spending for 2014 — an estimated $5.9 billion — $3.6 billion will be used for drilling in North America.

The company is set to spend billions in Oklahoma, Texas and North Dakota, the latter two housing some of the largest shale formations in the US. For Texas, Marathon is investing $2.3 billion in the Eagle Ford Shale Formation located in South Texas, which is expected to have at least 400 new wells drilled in the coming months. For North Dakota, the company is investing $1 billion in the Bakken Formation, and $236 million in the Woodford Basin in Oklahoma.

Other US energy companies are also moving their businesses back home. LA-based Occidental Petroleum Corp. is planning to sell some of its Middle East business and increase its presence in West Texas’ Permian Basin. Houston-based Apache Corp. sold some of its natural gas business in Egypt in order to concentrate on North America. Houston-based ConocoPhillips is looking to sell some of its Nigerian and Kazakhstan assets for a move back home, as well.

Around 70% of Marathon Oil’s profits originate from manufacturing oil and natural gas; the company projects that it’s oil and gas output will rise by 4% in 2014.

It is very positive for both the US economy and energy independence that US energy companies are now investing more in US oil and gas properties.

Developed and Written by Dr. Subodh Das and Tara Mahadevan

January 7, 2014

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Copyright 2013. All rights Reserved by Phinix, LLC.

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“Shale-Oil Boom Puts Spotlight on Crude Export Ban” – 1 January 2014, Wall Street Journal

The flood of natural gas might have the US rethinking its ban on crude oil exports, which dates back to the 1970s.

The world’s biggest oil refinery is located in the US, along the Gulf Coast, and is pumping out an oversupply of crude. The abundance of oil is causing prices to crash, forcing producers to look at their other options — i.e. exporting. These last few months, the American Petroleum Institute (API) has been fighting to lift export restrictions, as is Exxon Mobil, the US’s largest energy company. US Energy Secretary Ernest Moniz has more or less agreed, noting that the bans were instituted during the period of an energy dearth, not an abundance.

Arguments on the ban pit environmentalists, producers, consumers and the government all against each other. Proponents contend that removing the ban will boost the US’s trade deficit; opponents want to retain supplies in the US so that we rely less on the Middle East; others worry about the negative effects of increased drilling on the environment and climate.

The US currently exports coal, electricity, gasoline, diesel and natural gas — everything, it seems, but crude. Crude production is on an upswing in the US, largely due to shale formations located in Texas and North Dakota. It’s predicted that these formations will generate around 7.7 million barrels/day in 2014, and, according to the Energy Information Administration (EIA), set to grow by 24% to 9.6 million barrels/day in 2019. The onslaught of oil could drive down prices, ultimately slowing the nation’s energy boom.

The only way Congress is likely to immediately act is if the ban induces layoffs of energy workers. Regardless, any revisions to the law won’t be immediate. But the new year might just be Exxon’s, and other major energy companies’, year.

We believe that US oil companies should be allowed to export crude oil as a tool lower trade deficit, and increase export-related high paying domestic jobs.

See also:
Exxon Presses for Exports

Developed and Written by Dr. Subodh Das and Tara Mahadevan

January 3, 2014

Phinix LLC

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www.phinix.net    skdas@phinix.net

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