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This Week in Energy: Sequester Day - What it Means for the Energy Sector

This Week in Energy: Sequester Day - What it Means for the Energy Sector

Happy Sequester Day—but don’t’ expect any celebration from the energy industry; Forbes outs California as home to the two dirtiest cities in the US; China gets its hands on more North American oil assets; oil and gas salaries weather economic slump; and an exclusive interview with scientist Dr. Dave Summers ….

Washington, DC has ground to a virtual standstill over budget cuts, but finally Sequester Day has arrived, and everyone’s wondering what it all means for energy as automatic, across-the-board spending cuts take effect. Clean energy proponents are preaching a gloom and doom message: the sequestration process will halt the growth in renewable energy and clean technology sectors.

Outgoing Interior Secretary Ken Salazar told industry leaders on 26 February that “the potentially devastating impact of budget reductions under sequestration could slow our economy and hurt energy sector workers and businesses.”

For fossil fuels, it doesn’t look good, either: The immediate effect will be a delay in the development of oil and gas projects on federal lands due to program cuts at the Department of the Interior. According to Salazar, we’re talking about 300 fewer onshore oil and gas leases issued in western states, and delays for some of the 550 offshore oil and gas projects in the Gulf of Mexico.

And the winner is…. California!  California is home not only to the two dirtiest cities in America, according to Forbes, but it is home to eight of the twenty dirtiest cities in America.  Fresno, California, or rather the Fresno-Madera metro area, was named the dirtiest city in America by Forbes, where 500,000 residents enjoy contaminated groundwater and are subject to the fifth worst particle pollution in the nation, says the American Lung Association. Number two on the list is oil capital Bakersfield, California, where 800,000 residents are exposed to the worst air pollution and particle pollution in the nation. Other cities on the dirty list include Philadelphia, Bridgeport, Modesto, Riverside, New Haven, San Jose, Stockton, Milwaukee, New York City, Sacramento, Houston, Baton Rouge, Akron, Louisville, Los Angeles, Baltimore, Cleveland, and St. Louis.

China on a North American oil asset roll …China obtained another chunk of North American oil and gas holdings this week, as state-owned Sinopec moved to purchase half of Oklahoma-based Chesapeake Energy’s oil and gas holdings for $1 billion. This follows a flurry of deals that in total put $17 billion of North American oil in the hands of Chinese state-owned oil companies. Chinese CNOOC’s $15 billion takeover of Canada’s Nexen earlier this month was the largest purchase ever of a North American oil company by a foreign state-owned company. 

Are oil and gas industry employees exempt from economic decline? Economic slump and Sequester Day aside, it would appear so, according to the 2013 Oil & Gas Global Salary Guide. Base salaries in the oil and gas industry rose 8.5% in 2012, with Australia, Norway, Canada, Netherlands, and New Zealand paying the highest wages. With oil priced about $80 bbl, wages are likely to stay on the rise. The full oil and gas salary guide can be found here.

We also had the pleasure this week to speak with Dr. Dave Summers, scientist, prolific writer and author of Waterjetting Technology, co-founder of The Oil Drum and a favorite blogger for Bit Tooth Energy. Among other things, Dr. Summers discusses:

•    Why new drilling techniques aren’t enough to put peak oil off
•    Why the shale revolution will not lead to energy independence
•    Why the potential of nuclear energy isn’t being realized
•    Why nuclear fusion remains a fantasy in our lifetimes and beyond

The full interview can be found here

Also, if you haven’t had a chance to benefit yet from our Premium Newsletter, this week we identify opportunities at the elusive end of the East African oil chain—Eritrea and Ethiopia. We also discuss a unique opportunity to grab on to the momentum of the next big thing for the oil and gas industry (and beyond): M2M technology.

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10 Oil & Gas Trends that Will Change the Way You Invest

The special report will examine key geopolitical trends that will shape (and reshape) the exploration and production playing field over the next two years, as well as sector trends, such as developments in the sub-sea oil and gas area and the hunger for infrastructure to get new oil and gas to market.

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Editor, Oilprice.com

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