BOEM Seeks Comments on Proposed Eastern Gulf Lease Sales

The U.S. Bureau of Ocean Energy Management (BOEM) will open a public comment period and hold four public meetings concerning two proposed oil and gas lease sales in the eastern Gulf of Mexico.

OCS Lease Sales 225 and 226 would include 657,905 acres more than 120 miles off the Alabama and Florida coasts, where there are active leases and known or anticipated hydrocarbon potential, as part of the 2012-17 U.S. Outer Continental Shelf leasing program.

BOEM Director Tommy P. Beaudreau said the agency would use information from submitted comments and the public meetings to determine issues, which would be addressed in an environmental impact statement (EIS). Planning for an EIS does not represent a final decision about the sales’ inclusion in the 2012-17 plan, he noted.

The agency has scheduled public meetings about the proposed lease sales on April 3 in Tallahassee, Fla.; April 4 in Panama City Beach, Fla.; April 5 in Spanish Fort, Ala.; and April 9 at BOEM’s New Orleans offices. Comments will be accepted until May 4.

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The three major players on Alaska’s North Slope are on track to meet a month-end deadline to unite to pursue a natural gas pipeline project.

John Minge, president of BP Exploration Alaska, told The Associated Press "great strides” have been made toward alignment by BP, ConocoPhillips and ExxonMobil Corp.

"We have more alignment today than certainly we had eight months ago, because we’re all working together,” he said, adding later: "We’re actually working together with an aligned view of how Alaska gas can compete in the world marketplace.”

Alignment, to Minge, means being on the same page, interested in the same project: in this case, a liquefied natural gas line that would allow for overseas exports.

In January, Gov. Sean Parnell set a March 31 deadline for alignment of the parties under "an Alaska Gasline Inducement Act framework,” a deadline he has said was born of his frustration with the lack of progress on a line. He said alignment must include work on a large-diameter liquefied natural gas pipeline to tidewater that would allow for overseas exports.

Minge said the companies are pursuing the liquefied natural gas option in a "structured, systematic way,” meaning, determining who would do what, how the issue would be studied and how the companies would share information.

Minge called alignment "a good first step. Without it, (a project) goes nowhere. But there’s a lot of work to do. This will be a major, major, major investment.”

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U.S., U.K. Mull Oil Release

U.S. President Barack Obama and U.K. Prime Minister David Cameron have agreed to keep open discussions about a possible release of oil held in emergency stockpiles, which have been used in the past to reduce prices or compensate for a supply disruption.

Cameron and Obama discussed the topic during a meeting at the White House Wednesday but didn’t come to any conclusions, an official said. The meeting came as oil prices remain very high and the International Energy Agency (IEA) warned sanctions against Iran could remove as much as 1 million barrels a day of oil production from an already tight market.

Western powers will impose the strictest sanctions yet on Iran this summer to pressure the country over its nuclear program. The European Union (EU) has agreed to ban all imports of oil from Iran from July 1, and both the EU and the United States will tightly restrict transactions with Iran’s central bank, further constricting the country’s ability to trade oil.

The IEA estimates the EU ban, combined with action from other countries and financial sanctions, could remove between 800,000 and 1 million barrels a day of Iranian oil from the market. With gasoline prices already at all-time highs in much of Europe, and becoming a hot issue in the U.S. presidential election, many industry analysts have begun to speculate consumer nations could release oil from emergency stocks this summer to blunt the affect of sanctions.

U.S. Deputy Energy Secretary Daniel Poneman said the United States is constantly monitoring whether a release is necessary from its Strategic Petroleum Reserve.

"The president has been very clear, we have every tool available at our disposal,” Poneman said. "We are going to keep consulting with our partners globally and the [IEA] to see what tools we need to be using.”

The executive director of the IEA, Maria van der Hoeven, said an emergency release isn’t imminent.

"There is a tightening market, there is no doubt about that” as oil inventories are below the five-year average, she said. "At this moment there is no need to use [emergency oil stores].”

The last IEA emergency stock release was in June 2011, after the Libyan civil war shut down 1.1 million barrels a day of oil exports.

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Earl’s Pearl of the Day: "A 'No' uttered from the deepest conviction is better than a 'Yes' merely uttered to please, or worse, to avoid trouble.” — Mahatma Gandhi

Saudi Oil Chief Pledges to Offset Shortfalls

Saudi Arabia’s oil minister said Wednesday his country and other oil exporters are ready to offset any shortfalls in supply because of market volatility — an apparent reference to showdowns with Iran over its nuclear program.

"There is ample production and refining capacity … Saudi Arabia and others remain poised to make good any shortfalls — perceived or real — in crude oil supply,” said Ali Al-Naimi.

Al-Naimi made no specific reference to Iran, which is the Organization of the Petroleum Exporting Countries’ (OPEC) second largest oil producer after Saudi Arabia. But the comments come as U.S. and Western partners urge key Iranian oil customers in Asia, such as China and India, to cut back on their imports from the Islamic Republic and turn to other suppliers such as Western ally Saudi Arabia.

There also are fears military action against Iran could severely disrupt global oil supplies. Iran also has threatened to block the Strait of Hormuz at the mouth of the Gulf in retaliation for U.S. and European sanctions targeting its oil exports. The strait is the route for about a fifth of the world’s oil exports.

Iran’s Oil Minister Rostam Ghasemi blasted the policies of "unilateral economic constraints” — a reference to sanctions —he claims, "jeopardizes free trade and continuity of oil supply in the world.”

"Ultimately, all the concerned groups in the oil market … will face various problems,” he said.

Ghasemi added, "energy security may not be achieved through interference in the domestic affairs of countries.”

The West and others fear Iran’s nuclear program could eventually produce atomic weapons. Iran says it only seeks reactors for energy and medical research.

"Volatility is bad for the consumer, bad for producers and bad for the sort of long-term planning required in the energy business,” Al-Naimi added.

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Earl’s Pearl of the Day: "Attitude is more important than aptitude in determining altitude.” — Earl’s Pearls pg. 184

A State-Backed Ad Campaign for ANWR Development?

An Alaska lawmaker is proposing state funding to support advertising campaigns that promote drilling in the Arctic National Wildlife Refuge (ANWR).

Rep. Lance Pruitt (R-Anchorage) is the lead sponsor of HB358, which has attracted seven Republican co-sponsors.

The bill calls for Alaska to fund at least half of out-of-state advertising campaigns promoting drilling in ANWR. The rest of the funding would come from a trade group, which the state commerce department would contract with to run the campaign.

Pruitt said the idea came from a trip he and other legislators took to Washington, D.C., earlier this session and from previous state efforts to promote Alaska tourism and fishing industry through ad campaigns. He said the point is to dispel misinformation about the environmental impact of drilling and of Alaskans’ opinion of development.

The bill cleared the House Labor and Commerce Committee without opposition and awaits a hearing in the House Finance Committee.

It is not clear how much the proposal would cost the state, but the finance committee plans to request a more detailed fiscal note.

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