Frank-Dodd Act puts US oil companies at a disadvantage

Another fine example of  "we need to pass it to see what's in it."

Frank-Dodd was supposed to be a reform of the financial services industry.  You know, and do stuff like protect consumers from predatory lending and all that other liberal pap.  But hiding rotten little easter eggs in legislation has been the hallmark of the 111th Congress.

The bill signed into law yesterday by Obama amends the Exchange Act so that the SEC now requires publicly traded firms listed on US exchanges to disclose any information on payments made to foreign or the US federal government for the commercial development of oil, gas or mineral resources.

This story appears in Rig Zone: 

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Since SEC-listed companies are mostly American companies and only a few foreign companies, it would put U.S.-based firms at a competitive disadvantage, said API spokesperson Misty McGowen.

"It would not capture payments being made by national oil companies from other countries, and the level of detail required to be reported would allow competitors access to proprietary information when bidding, which they could use to their advantage in contract negotiations," said API spokesperson Misty McGowen.

API does support transparency in disclosure of payments, "but we don't think this level of disclosure is the right way to do things." McGowen said API supports and participates in the Extractive Industries Transparency Initiative, a multi-lateral, international initiative to promote transparency in oil and gas payments.

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The intention, echoed through Senator Lugar's Energy Security through Transparency Act (SB 1700) is designed to reduce international corruption in making multi-billion dollar oil, gas and minerals exploration deals. That's a noble idea, but it has little support from the international community, especially among countries (like China) who desperately need to exploit the energy resources of impoverished nations (like Cuba) and have no problem shelling out major coin to corrupt authoritarians. It's a problem, but it's a problem that's been around since the rise of the merchant class.

But to have the US go it alone is sheer stupidity. This places companies like Texaco, Chevron, and Diamond Offshore at a significant competitive disadvantage. Detailed knowledge of transactions between oil companies and those they negotiate leases with would allow competitors to discover or deduce proprietary information, and use it against them. And, some of the competitors are nationalized oil companies, like Mexico's nearly broke Pemex, Brazil's PetroBras and others around the globe.

Isn't a deepwater drilling moratorium and a nearly permanent ban on shallow water drilling anywhere but the Gulf of Mexico enough? Does this cabal want to harm the energy sector, or just kill it outright, negating the need for Cap and Tax?

Gimme some feedback in the comments.

Oil Platforms in the Gulf of Mexico - Worth the Risk?

A lot is being written and said about offshore oil drilling and safety. Is it worth the risk? As a resident of the Gulf Coast, I've pretty much accepted the fact that oil and natural gas are important enough to the nation's economy and national security to warrant taking some risk. And, over the last three decades or so, there have been some instances. But when you look at the sheer number of assets in the Gulf, the number of incidents pales in comparison to what's being produced.

The map below shows the complete plot of all oil and gas drilling and production platforms in the Gulf of Mexico. Not all of these are active, but every point represents a well, drilling rig, production platform or capped well.  There are approximately 4,300 points on the map.  If we included all locations drilled since recordkeeping began in the early 1970's, there would be approximately 6,600 locations.

Click the map image for a larger version.

From 1979 through the Deepwater Horizon incident, the Gulf of Mexico has witnessed five major oil spill events.

IXTOC, 1979
The first was the Ixtoc blowout, which is believed to be the largest accidental spill in history.  The well blew in June 1979 and wasn't capped until March, 1980.  Between ten and thirty thousand barrels of crude oil were lost each day over the eight month period.  Estimates vary widely, but as much as 4.8 million barrels were lost.

BURMA AGATE, 1979
Later the same year, the Burma Agate collided with a freighter near Galveston, Texas on November 1, 1979. The ship exploded,  killing 31 crew members, and spilled an estimated 2.6 million gallons of oil into the Gulf of Mexico. The ship and oil continued to burn until January, 1980.

MEGA BORG, 1990

The gulf stayed relatively incident free until 1990, when the Norwegian megatanker was transferring oil to smaller ships (called "lighters"). The megatanker suffered an explosion in its pump room, caught fire, and either spilled or burned 4.2 million gallons of oil for about a week. The fire was so large and so intense, firefighters could do little more than pump seawater onto the fire.

TAMPA BAY FUEL OIL SPILL, 1993
Early on the morning of August 10, three barges carrying fuel oil and jet fuel collided in Tampa Bay, collectively spilling an estimated 14 million gallons of petroleum products.  State and federal responders mobilized rapidly to contain the material, and their response (plus some help from Mother Nature in the form of favorable tides) mitigated much of the potential damage.

 

HURRICANES KATRINA AND RITA, 2005
US Coast Guard estimated that approximately seven to ten million gallons of oil and petroleum distillates were spilled during Hurricanes Katrina and Rita.  The losses were from various sources, including pipelines, storage tanks, drilling rigs, production platforms and industrial plants.

Creating one of the most famous images of the storms' havoc, Katrina ripped the Ocean Warwick platform from her seabed moorings, and ran her aground at Dauphin Island, just south of Mobile, Alabama.  The owners had hoped to salvage the rig and repair it.  But Hurricane Rita's storm surge (which reflooded New Orleans) hammered her again and she was scrapped in place the following year.

Those are pretty nasty events. But 31 years, anywhere between 4,400 and 6,600 platforms or wells, and only five major accidents? I'm thinking that offshore oil and gas production is about as safe as say, flying on a commercial jet.

Is it worth the risk to fly?

Extra Point: The red-tinted polygon on the map shows an estimate of the current size and location of the Deepwater Horizon spill.

A Culture of Substance Abuse and Promiscuity

The Obama regime plans to split up the Minerals Management Service, creating two agencies. The plan has yet to be fully developed, but regime officials familiar with the policy change told the AP that one agency would be responsible for safety and regulatory inspections and enforcement, while the other would be responsible for managing leases and collecting the billions in lease royalties.

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Currently, the Minerals Management Service, an arm of the Interior Department, is responsible for collecting more than $10 billion a year from oil and gas drilling and with enforcing laws and regulations that apply to drilling operations.

Some critics have said the two roles are in conflict and are one reason the agency has long been accused of being too cozy with the oil and natural gas industry.

An internal investigation in 2008 described a "culture of substance abuse and promiscuity" by workers at the agency. The investigation by Interior's inspector general found workers at the MMS royalty collection office in Denver partied, had sex with and used drugs with energy company representatives. Workers also accepted gifts, ski trips and golf outings, the report by Inspector General Earl E. Devaney said.

The Associated Press: APNewsBreak: Salazar urges splitting energy agency

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Extra Point: No one is saying which agency gets the drugs and which one gets the promiscuity.