The responses filtering in from the oil and gas industry on Obama’s announcement today on offshore drilling are rather curious.
President Obama’s move to announce the first new offshore oil and gas lease sale in the Atlantic Ocean in more than two decades comes even as the administration rolls back access in offshore Alaska. The give and take to the oil and gas industry appears part of a balancing act as the Obama administration is attempting to win Republican support for a climate bill even as it assures environmentalists of its determination to protect US coasts.
But is it going to be enough? One longtime industry observer put it this way: the administration is giving Republicans the doughnut hole, not the doughnut. Some of the most prospective areas are closer in along the Florida coast, and those will remain off limits. And offshore Alaska has been a place the industry has been counting on to grow supplies, with the assertion they can protect the environment while growing production.
The pace of major mergers and acquisitions in the oil and gas sector has picked up in recent months. Think ExxonMobil buying XTO, BP buying a package of assets from Devon, and so on. But behind the scenes numerous smaller deals are being done, as the industry restructures following the economic downturn.
One of these little deals is being pursued by Chevron, the US oil company, which is marketing for potential sale its shares in the Colonial Pipeline Company. Chevron’s slice represents 23.44 per cent of total shares. In the words of Don Campbell, Chevron spokesman:
This sale is consistent with our ongoing effort to divest assets that no longer support our growth. We believe there is significant market interest in this asset given Colonial’s size, market access, steady cash flows and expansion potential.
Behind closed doors at the International Energy Forum in Cancun, Mexico, delegates of the world’s biggest energy consuming and producing nations are discussing how to avoid the massive price volatility of 2008.
The Opec oil cartel already has a very clear view on this issue. The US is not so sure about market intervention – on oil, at least.
As FT ES predicted last week, in the wake of the healthcare act’s passage, a loosening of restrictions on US offshore drilling is likely to play a crucial part in Washington’s evolving climate bill. However, its effect on votes is by no means certain.
The New York Times reports the White House has already been briefing legislators about the plans, and President Obama is due to make a formal announcement later on Wednesday. The story confirms expectations that the long-standing moratorium on exploration will be lifted from an area extending from the northern tip of Delaware to the central coast of Florida:
For Chevron, the ruling of an international arbitration tribunal Tuesday in its favour is a major win. The company has been trying to claim it has been unfairly treated by the Ecuador courts for some time – a claim Ecuador’s judiciary vehemently denies. The tribunal’s finding that the US oil company should be awarded $700m in a claim against Ecuador stemming from allegations that country failed to pay for millions of barrels of oil supplied in the 1990s, gives Chevron ammunition for its bigger fight.
The commercial arbitration is separate from – and secondary to – the arbitration Chevron has sought to resolve a $27bn claim by indigenous people who charge that Texaco (which Chevron bought in 2001) left an environmental disaster in its wake when it withdrew from the country. But it appears to support Chevron’s underlying claim, which is that the company is being unfairly treated by the court system generally.
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Gregor Macdonald has updated his Big Mac index of oil; covering the last 10 years of crude prices as measured in McDonald’s Big Mac burgers. It’s basically a way of stripping out the effect of US dollar fluctuations, which are an increasingly strong driver of oil prices.
The findings, in short: oil still costs more in terms of food – and the equation has been rather resilient since 2007:
One of the investigations following the ‘climategate’ emails scandal has concluded that the CRU did not tamper with scientific information – but stressed that climate scientists should routinely disclose their data and methodology.
The committee said the focus on Professor Phil Jones, the director of the CRU who has stood aside pending reviews into the matter, was ‘largely misplaced’, adding:
Whilst we are concerned that the disclosed e-mails suggest a blunt refusal to share scientific data and methodologies with others, we can sympathise with Professor Jones, who must have found it frustrating to handle requests for data that he knew—or perceived—were motivated by a desire simply to undermine his work.