Florida Skips Offshore Oil Binge but Still Pays

June 12, 2010

By DAMIEN CAVE

KEY LARGO, Fla. — When rigs first started drilling for oil off Louisiana’s coast in the 1940s, Floridians scanned their shoreline, with its resorts and talcum-white beaches, and said, No thanks. Go ahead and drill, they told other Gulf Coast states; we’ll stick with tourism.

Now that invisible wall separating Florida from its neighbors has been breached. The spreading BP oil spill has already reached the Panhandle, and if it rides currents to the renowned reefs and fishing holes on both Florida coasts, the Sunshine State could become a vacation destination with the rules of a museum: Look, but don’t touch.

All because other states decided to rely on oil and gas, angry Floridians say; all because, in the water, there are no borders — only currents that can carry catastrophes hundreds of miles.

“There’s nothing we can do,” said Mike McLaughlin, 42, while stretching tanned shark skin on a dock here in the Keys. “We’re just sitting here, waiting for it all to disappear.”

Many Floridians, of course, say they are heartbroken for Louisiana, and they still reserve their most caustic criticism for BP and government regulators.

But with oil continuing to gush from a well off Louisiana, Florida has grown angrier at its oil-friendly neighbors. Gov. Charlie Crist said in an interview last week that “there’s a certain level of frustration” with the fact that Florida gets little if any financial benefit from offshore drilling, even though it shares the environmental risks.

On docks and beaches, many Floridians are less measured, and compare Louisiana to a neighbor with a bonfire that has set their block ablaze.

To some extent, it is a conflict set up by history. Louisiana and Florida may share the Gulf of Mexico, but they are essentially oil opposites.

Ever since World War II, when tar balls washed ashore across the gulf after German U-boats sank Allied oil tankers, Florida officials have held drilling at bay with state laws and lobbying in Washington to protect their state’s bustling tourism industry.

Louisiana, meanwhile, is an oil state through and through that discovered its first commercial deposits in 1901 and started drilling offshore in 1947.

State officials have never looked back, and the resulting divide between the two states is now economic as well as cultural: oil and gas contribute about $65 billion a year to the Louisiana economy, according to the state’s oil and gas association, while in Florida, tourism accounts for about $60 billion.

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Water worries threaten U.S. push for natural gas

October 1, 2009

Thu Oct 1, 2009 8:26am EDT

By Jon Hurdle

PAVILLION, Wyoming (Reuters) – Louis Meeks, a burly 59-year-old alfalfa farmer, fills a metal trough with water from his well and watches an oily sheen form on the surface which gives off a faint odor of paint.

He points to small bubbles that appear in the water, and a thin ring of foam around the edge.

Meeks is convinced that energy companies drilling for natural gas in this central Wyoming farming community have poisoned his water and ruined his health.

A recent report by the Environmental Protection Agency suggests he just might have a case — and that the multi-billion dollar industry may have a problem on its hands. EPA tests found his well contained what it termed 14 “contaminants of concern.”

It tested 39 wells in the Pavillion area this year, and said in August that 11 were contaminated. The agency did not identify the cause but said gas drilling was a possibility.

What’s happened to the water supply in Pavillion could have repercussions for the nation’s energy policies. As a clean-burning fuel with giant reserves in the United States, natural gas is central to plans for reducing U.S. dependence on foreign oil.

But aggressive development is drawing new scrutiny from residents who live near gas fields, even in energy-intensive states such as Wyoming, where one in five jobs are linked to the oil and gas industry which contributed more than $15 billion the state economy in 2007.

People living near gas drilling facilities in states including Pennsylvania, Colorado, New Mexico and Wyoming have complained that their water has turned cloudy, foul-smelling, or even black as a result of chemicals used in a drilling technique called hydraulic fracturing, or “fracking.”

The industry contends drilling chemicals are heavily diluted and injected safely into gas reservoirs thousands of feet beneath aquifers, so they will never seep into drinking water supplies.

“There has never been a documented case of fracking that’s contaminated wells or groundwater,” said Randy Teeuwen, a spokesman for EnCana Corp (ECA), Canada’s second-largest energy company, which operates 248 wells in the Pavillion and nearby Muddy Ridge fields.

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Arch Coal Attracts Soros as Peabody Lures Citadel

November 24, 2008

By Arijit Ghosh and Christopher Martin

Nov. 24 (Bloomberg) — Billionaire investor George Soros, Citadel Investment Group LLC and T. Rowe Price Group Inc. are snapping up coal mining shares, taking advantage of the cheapest valuations in five years as demand for electricity rises.

Soros bought 2.9 million Arch Coal Inc. (ACI) shares last quarter for a 2 percent stake in the second-largest U.S. coal producer, filings with the Securities and Exchange Commission show. Citadel, the Chicago-based hedge fund, and Invesco Ltd. in Atlanta bought 3.5 million shares of Peabody Energy Corp. (BTU), the biggest miner. T. Rowe reported purchasing stock in Peabody, Arch, Consol Energy Inc. (CNX) and Indonesia’s PT Bumi Resources.

While coal, the cheapest fuel for power, is up 88 percent in Pennsylvania, shares of the companies that mine the mineral have slumped along with the rest of the commodities industry. Now, investors are betting that Peabody, which traded at 3.7 times projected 2009 earnings as of Nov. 21, and Arch at 2.5 times are cheap because coal use will increase. The valuations were at more than a 54 percent discount to the MSCI World/Energy Index.

“Coal is the best commodity to get into right now,” said Daniel Rice, manager of BlackRock Advisors Inc.’s $1.5 billion Global Resources Fund in Boston, which is among the largest holders of Peabody and Arch. “It’s a lot less sensitive to downturns because it’s needed for basic power generation, and demand is growing.”

Crude oil in New York has dropped 43 percent this year compared with a 6.1 percent decline in Australian coal prices.

Consol surged $4.08, or 20 percent, to $24.88 in New York Stock Exchange composite trading. Peabody climbed $2.82, or 15 percent, to $21.57 and Arch Coal rose $1.40, or 11 percent, to $13.70.

Electricity Demand

Demand for electricity in major economies, where coal is used to generate 52 percent of power, will increase 3.3 percent by 2010, according to a UBS AG report on Nov. 17. Global coal use will rise 2 percent a year through 2030, led by China and India, the Paris-based International Energy Agency said Nov. 6.

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Massive Arctic ice shelf breaks away

September 3, 2008

Wed Sep 3, 2008 11:39am EDT

By David Ljunggren

OTTAWA (Reuters) – A huge 19 square mile (55 square km) ice shelf in Canada’s northern Arctic broke away last month and the remaining shelves have shrunk at a “massive and disturbing” rate, the latest sign of accelerating climate change in the remote region, scientists said on Tuesday.

They said the Markham Ice Shelf, one of just five remaining ice shelves in the Canadian Arctic, split away from Ellesmere Island in early August. They also said two large chunks totaling 47 square miles had broken off the nearby Serson Ice Shelf, reducing it in size by 60 percent.

“The changes … were massive and disturbing,” said Warwick Vincent, director of the Centre for Northern Studies at Laval University in Quebec.

Temperatures in large parts of the Arctic have risen far faster than the global average in recent decades, a development that experts say is linked to global warming.

“These substantial calving events underscore the rapidity of changes taking place in the Arctic,” said Derek Mueller, an Arctic ice shelf specialist at Trent University in Ontario.

“These changes are irreversible under the present climate and indicate that the environmental conditions that have kept these ice shelves in balance for thousands of years are no longer present,” he said in an e-mailed statement from the research team sent late on Tuesday.

Mueller said the total amount of ice lost from the shelves along Ellesmere Island this summer totaled 83 square miles — more than three times the area of Manhattan island.

The figure is more than 10 times the amount of ice shelf cover that scientists estimated on July 30 would vanish from around the island this summer.

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Continental Resources shares up on 2nd Bakken Shale well results

July 10, 2008

Thu Jul 10, 2008

By Chakradhar Adusumilli

BANGALORE, July 10 (Reuters) – Shares of Continental Resources Inc (CLR) rose as much as 20 percent to a life high, a day after the company said its second crude oil well in the Bakken Shale area of North Dakota reported a higher flow rate than its first.

The oil and gas explorer’s flow rate for the second well was about 58 percent higher than the first, which flowed at an average rate of 693 barrels of crude oil equivalent per day in its initial week of production in May.

The second well, Mathistad 1-35H, began production on July 4 and flowed at an average rate of 1,095 barrels of crude oil equivalent per day, with 90 percent of production being crude oil and 10 percent natural gas.

Natixis Bleichroeder analyst Curtis Trimble said the latest results from the Three Forks/Sanish formation increased the productive profile of the Bakken Shale area.

“Future wells will be closer to the 600 to 1000 barrel a day level versus previous wells that were averaging about 450 barrels a day,” Trimble said by phone.

The analyst, who maintained his “hold” rating, raised his price target on the company to $78 from $75 a share, citing higher estimated commodity prices.

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Energy’s easiest fix: Use less

July 3, 2008

While calls for more oil drilling dominate the headlines, experts say taking simple steps to use less could save twice as much.

By Steve Hargreaves, CNNMoney.com staff writer
Last Updated: July 3, 2008: 11:06 AM EDT

NEW YORK (CNNMoney.com) — Want to help the country save a quick million barrels of oil a day? Drive 5% less. Slow down. Inflate your tires.

Those three steps would reduce U.S. oil consumption by 1.3 million barrels a day immediately, according to the Alliance to Save Energy, a conservation group running an efficiency campaign backed not only by environmental groups but also the auto and oil industries.

That’s nearly twice the estimated daily oil production that could come from drilling in the Alaska’s Arctic National Wildlife Refuge, according to the government’s Energy Information Administration.

According to Julius Pretterebner, a vehicles and alternative-fuels expert at Cambridge Energy Research Associates, a consultancy that does a lot of work for the oil companies, how fast people drive and how quickly they accelerate is responsible for 10% to 30% of fuel consumption.

“It’s significant, and it’s the only thing we can do in the short term,” said Deron Lovaas, vehicles campaign director at the Natural Resources Defense Council, which partners with the Alliance to Save Energy on an effort to educate drivers on efficiency.

The United States consumes 20 million barrels of oil a day, nearly 10 million of which goes to making gasoline. The world gobbles up 85 million barrels of oil in all.

Rather than focusing on reducing demand for oil, the debate over the soaring cost of energy in recent weeks has been about boosting supply and more regulation of “speculators.”

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Dearth of Ships Delays Drilling of Offshore Oil

June 19, 2008

By JAD MOUAWAD and MARTIN FACKLER
New York Times

As President Bush calls for repealing a ban on drilling off most of the coast of the United States, a shortage of ships used for deep-water offshore drilling promises to impede any rapid turnaround in oil exploration and supply.

In recent years, this global shortage of drill-ships has created a critical bottleneck, frustrating energy company executives and constraining their ability to exploit known reserves or find new ones. Slow growth in oil supplies, at a time of soaring demand, has been a major factor in the spike of oil and gasoline prices.

Mr. Bush called on Congress Wednesday to end a longstanding federal ban on offshore drilling and open the Arctic National Wildlife Refuge for oil exploration, arguing that the steps were needed to lower gasoline prices and bolster national security. But even as oil trades at more than $135 a barrel — up from $68 a year ago — the world’s existing drill-ships are booked solid for the next five years. Some oil companies have been forced to postpone exploration while waiting for a drilling rig, executives and analysts said.

Demand is so high that shipbuilders, the biggest of whom are in Asia, have raised prices since last year by as much as $100 million a vessel to about half a billion dollars.

“The crunch on rigs is everywhere,” said Alberto Guimaraes, a senior executive at Petrobras, the Brazilian oil company that has discovered some of the most promising offshore oil but has been unable to get at it.

“Almost 100 percent of the oil companies are constrained in their investment program because there is no rig available,” he said.

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