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James Stafford

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This Week in Energy - 8th February 2013

Energy development on public lands …. full speed ahead.

Whoever believed that Obama was an enemy of fossil fuels should hit up the Superdome in New Orleans on 20 March, where the government will auction off 38.6 million acres of offshore oil and gas leases in Louisiana, Mississippi and Alabama.

This is the parting gift of Secretary of the Interior Ken Salazar, who has announced in a White House statement that “exploration and development of the Gulf of Mexico’s vital energy resources will continue to help power our nation and drive our economy”. 

The rationale behind the sale is that it could mean the production of nearly one billion barrels of oil and some 4 trillion cubic feet of natural gas.

What’s up for grabs? Everything that has not already been leased in what is called the “Central Gulf of Mexico Planning Area”. More specifically: 7,299 blocks sitting 3-230 miles offshore Louisiana, Mississippi and Alabama.

The 20 March auction will be followed by four more. Here’s what’s already been auctioned off as of last year:

•    20 million acres were up for auction in November 2012, with $134 million bid for 650,000 acres (Western Gulf Lease Sale 229)
•    39 million acres were up for auction in June 2012, with $1.7 billion bid on over 2.4 million acres (Central Gulf Lease Sale 216/222)

Leasing federal land for oil and gas, however, hasn’t been without its controversy. Last year, 77 oil and gas leases in Utah became embroiled in a court case that saw Salazar rescind the leases and energy companies (along with three Utah county governments) appeal the move. The leases had been awarded in 2008 under the Bush administration, and critics claim the undertaking was marred by a fraudulent bidding process. Environmental groups also cried foul. Salazar revoked the leases for review.   

Colorado is also a current flashpoint in this federal land lease program. Protests against the leasing of federal land to the oil and gas industry culminated earlier this week in the removal from the sale list of 20,000 acres in the North Folk Valley in western Colorado.

But the Colorado and Utah leases are onshore, and the offshore offerings at the Superdome won’t be nearly as contentious.

Aside from this shopping list of Gulf leases, the industry will also be eyeing with anticipation Salazar’s replacement - nominee Sally Jewell, friend of the industry and - so far, friend of the environment. She has been quick to let everyone know that she understands the importance of using public land to develop the country’s energy capacity. So far she seems to have straddled both “camps” effectively. And word on the street is that she is above all “pragmatic”.

Upgrade to Premium and find out which sector legendary energy trader Dan Dicker is putting his money in. He expects this sector to perform superbly in 2013. Click here to begin your free 30 day trial.

Obama is billing her as no less than the savior of the energy debate. This is what he has to say: “She knows the link between conservation and good jobs. She knows that there’s no contradiction between being good stewards of the land and our economic progress.”

Her challenge will be to oversee development of federal rules for hydraulic fracturing on public lands. In doing so, she will have to bring together the environmentalists and the industry.

Elsewhere this week, investors should be noting the assassination of an opposition politician who stood against the Islamic-led government. As we note in our Premium Newsletter, this will be a trigger for renewed destabilization, and while the energy industry is sitting tight in the country’s south, other sector foreign investors are already hedging their bets and closing up shop for what is about to come.

This week it was our pleasure to interview Adrian Banica, CEO of Synodon, the forerunner in pipeline leak detection systems (LDS). Among other things, Banica discusses:


•    How remote sensing technology can find the little leaks before they become big leaks—at no extra cost
•    Why North America’s new pipelines aren’t the problem and why the focus should be on aging pipelines that are going to experience a lot more leaks
•    How this technology could bring the industry and environmentalists together
•    How external leak detection can save lives in high-risk areas

You can see the full interview here.

This weeks report comes straight from our Executive Report in Oilprice.com Premium and takes a look at the growing energy investment opportunities in Turkey and the increasing risk to investors in Tanzania.

We also have seven other reports in Premium that I believe will be of great interest to you.
Our intelligence notes have come directly from the cables of ISA Intel – a well positioned corporate & military intelligence company which look at what the Templars are doing in Syria, why more bombings can be expected in Turkey and reports on Myanmar and Tunisia.
There is also an interesting opportunities report on nanotechnology in energy and a company we think has the potential to perform incredibly well over the coming months.
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By. James Stafford

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