Obama Allows Offshore Drilling

I wonder how his followers feel about this: Offshore drilling plan to go ahead: Interior Dept.

WASHINGTON (Reuters) - A proposal issued in the final days of the Bush administration to expand offshore drilling in previously banned areas will move forward under the administration of U.S. President Barack Obama, an Interior Department spokesman told Reuters on Wednesday.

Shortly after being sworn in on Tuesday, Obama ordered all federal agencies and departments to halt pending regulations until they can be reviewed by incoming staff.

Hugh Vickery, a department spokesman, said the department has been notified by the White House that it will be able to proceed with a proposed draft of a five-year plan to lease areas in the Atlantic and Pacific waters for oil and natural gas drilling.

House Passes Tepid Offshore Bill

House OKs bill allowing more offshore oil drilling.

WASHINGTON (CNN) -- The House of Representatives on Tuesday night passed an energy bill clearing the way for more oil drilling off U.S. coasts, but not nearly as much as Republican leaders wanted.

The bill would expand offshore oil drilling, but not to the extent that many Republicans want.

The bill was passed by a vote of 236-189.

Many Republicans opposed the bill because it would allow new oil drilling only between 50 and 100 miles offshore. Republicans generally want to allow new drilling starting 3 miles from shore.

Republicans also objected to provisions repealing tax cuts for the oil industry and what they said was a lack of incentive for states to allow drilling on their land.

House Speaker Nancy Pelosi, a California Democrat, told reporters Tuesday: "The American taxpayers have been ripped off for years on offshore drilling. This bill changes that."

Excuse me? There has been an offshore drilling ban for 26 years. Taxpayers have been ripped off by nonexistant offshore drilling? You really need to have attended Moscow University's Karl Marx department to follow that line of reasoning. Government has been ripping off taxpayers for 200 years so I'm not sure why Pelosi has a problem with oil companies.

Before the vote, Pelosi said the bill presented a choice between "the status quo, which is preferred by Big Oil," and "change for the future to take our country in a new direction."

Fifteen Republicans voted for the largely Democrat-backed bill. Thirteen Democrats voted against it.

The Senate, meanwhile, could vote on various energy proposals, including more offshore drilling, as early as this week.

The House bill would require states to give their permission for drilling on their land. It also would offer incentives for renewable energy, require the government to release oil from its emergency reserve, and force oil companies to drill on federal lands they already lease from the government.

Democratic leaders had previously opposed Republican-led efforts to repeal a 1981 law barring most offshore drilling. But they changed course over the August recess, saying their new plans would allow some expanded drilling. See where U.S. offshore drilling is banned »

But Republicans say the House bill wouldn't expand offshore drilling enough. Before the vote, Rep. Mike Pence, an Indiana Republican, called the bill "a charade," denying it would do what its backers claim.

"This is not 'yes' to drilling. This is 'yes, but,' " he said.

"This is 'yes, but no drilling in Alaska, no drilling in the Eastern Gulf, no drilling inside 50 miles,' " Pence said. "This is 'yes, but no litigation reform that will prevent radical environmental attorneys from tying up leases even before a single shovel of dirt is turned.' "

Democrats and Republicans traded harsh words on the House floor Tuesday in the debate over the bill.

Rep. Anthony Weiner, a New York Democrat, said President Bush's "idea of an energy policy is holding hands with the crown prince of Saudi Arabia, embracing him with a big smooch."

When the Republicans "controlled Congress, [they] passed their own energy bill, signed into law by the president. We got into this mess," Weiner said.

But Rep. Jeb Hensarling, a Texas Republican, shot back that the Democrats' bill is a "sham" and a "fraud."

"This is a bill designed to ensure Democrats' re-election, not designed to ensure affordable energy in America," Hensarling said.

Hensarling also complained about how the bill was brought to the floor: "No amendments, no substitutes, no committee hearings. Is this democracy? No."

The Argument For Offshore Drilling

The New York Sun's Liz Peek: The Argument for Offshore Drilling. (Hat tip: Bill)

Last Friday, the confrontation on this issue turned the House of Representatives into a circus. The Democrats voted to adjourn the session for the August recess, but Republicans refused to depart, continuing to call for a vote on offshore drilling even as the leadership turned off the lights and microphones, plunging the chamber into darkness. C-SPAN, bereft of power, didn't cover the fracas, which went on for several hours. Really, is it any wonder that Congress's approval ratings are so dismal?

Ms. Pelosi's disdain for offshore drilling (and for the American people, it would seem), stems from her view that granting oil companies the opportunity to explore for oil on federal lands is tantamount to a giveaway. She also seems to feel that the effort would, in any event, prove futile.

As to the first concern, it is a puzzle. Who else is going to drill for oil on our offshore lands? Are we to punish the oil industry for reaping huge profits by not allowing them to reinvest in domestic prospects? Is it really better to encourage them to take their cash flow overseas and look for oil in foreign countries than to seek reserves here? Would we rather invite oil companies backed by President Chavez or Prime Minister Putin to drill offshore in America?

Moving on, let us look at the opportunity that exists offshore. The American Petroleum Institute says that because of the leasing ban, the oil industry has not been able to use current technology to estimate reserves on the 85% of the lower 48 outer continental shelves that have been off limits. The U.S. Minerals Management Service estimates that these lands contain 18 billion barrels of oil and 76.5 trillion cubic feet of natural gas. (Including Alaska, the figure jumps to 86 billion barrels of oil and 420 trillion cubic feet of natural gas, representing 60% of the oil and 40% of the natural gas yet to be discovered.)

The API reckons the lower 48 figure to be conservative, since over time initial estimates of recoverable reserves have tended to be understated, and to increase as technology improves. For instance, reserves at Prudhoe Bay in Alaska were initially thought to be 7 to 9 billion barrels; by the end of 2005 the region had produced 15 billion barrels.

Bush Lifts Presidential Ban On Offshore Drilling

Bush to Lift Ban on Oil, Gas Drilling off U.S. Coasts

July 14 (Bloomberg) -- President George W. Bush will lift a presidential moratorium on drilling for oil and natural gas on the U.S. Outer Continental Shelf, setting up a showdown with Congress over a separate ban it put in place in the 1980s.

Bush ``has decided to lift the executive ban on oil exploration in America's Outer Continental Shelf,'' White House spokesman Dana Perino told reporters. ``Congress has not moved forward despite calls from constituents and the continued pressure of record high energy prices.''

Pressure to permit drilling off the Pacific and Atlantic Ocean coastlines and in the Eastern Gulf of Mexico has been building as oil and gasoline prices have surged to records.

Congress has barred drilling since 1983 through an annual Interior Department spending bill. That ban could be lifted if Bush refused to sign the department's fiscal 2009 appropriations measure that is now being debated in both the House and Senate.

Drilling Begins Off Florida Coast

Happy Independence Day. Now Americans can compete with Cuba and China: Companies begin quest for oil, gas off Fla. coast

As petroleum prices soar, 4 companies begin costly quest for oil and gas off Florida's coast

PENSACOLA, Fla. (AP) -- Oil companies once viewed drilling in the deep waters off Florida as cost prohibitive. Politicians feared even the slightest sign of support would be career suicide.

No more. Record crude oil prices are fueling support for oil and natural gas exploration off the nation's shores. In Florida, movement was underway even before President Bush called on Congress last month to lift a federal moratorium that's barred new offshore drilling since 1981.

The early activity here stems from a 2006 Congressional compromise that allows drilling on 8.3 million acres more than 125 miles off the Panhandle -- an area that had been covered by the moratorium, which was enacted out of environmental concerns. In exchange, the state got a no-drilling buffer along the rest of its beaches.

Florida may turn out to be a prelude for other coastal states. If oil or natural gas deposits are found in the newly opened region, experts say it could further the push to explore other once-protected areas everywhere. It also could be a rallying point for critics, who say the new exploration isn't a license to expand exploration.

With gas topping $4 a gallon, recent polls show Americans, Floridians included, more supportive of drilling in protected areas. Some politicians -- including Gov. Charlie Crist -- have switched sides.

"We think the public is way out ahead of the politicians on these issues. People are more open to (offshore drilling) now," said Tom Moskitis, spokesman for the American Gas Association, a trade group.

At the same time, oil companies, driven by the record energy price, are more willing to risk $100 million or more to begin exploring new regions. The Interior Department estimates there could be 18 billion barrels of oil and 77 trillion cubic feet of natural gas beneath the 574 million acres of federal coastal waters that are now off-limits.

Drilling activity off the Florida Panhandle has started and sputtered for decades. Some companies had leases to drill off the Panhandle before the 1981 moratorium. They were grandfathered in when the moratorium passed because they were already actively exploring in their lease areas. They continued their activity off and on into the early 1990s.

In March, four companies -- Australia-based BHP Billiton Petroleum Deepwater Inc., Houston-based Anadarko E&P Co., Shell Offshore Inc. and Italian oil and natural gas company Eni SpA -- purchased leases on 36 Gulf of Mexico tracts under the 2006 compromise.

Jeb Bachmann, an analyst with New Orleans energy consultant Howard Weil, said the four understand the shifting political and financial realities.

"It gives you an indication that some of these companies believe there is some light at the end of the tunnel," Bachmann said. "There is higher pricing and a belief that higher prices are going to ultimately drive some changes."

Democrats For Oil Dependence

Democrats reject Bush's call to lift ban on offshore oil drilling

WASHINGTON - With gasoline topping $4 a gallon, President Bush urged Congress on Wednesday to lift its long-standing ban on offshore oil and gas drilling, saying the United States needs to increase its energy production. Democrats quickly rejected the idea.

UBS Bullish On Offshore Drillers

Transocean should do well today.

UBS bullish on US offshore drilling sector

May 15 (Reuters) - UBS started coverage of the U.S. offshore drilling sector with a positive stance based on a healthy longer-term macroeconomic outlook, strong commodity prices, and increasing demand for offshore rigs over the next several years.

The brokerage, which added the world's largest oil and gas drilling contractor Transocean Inc (RIG) to its strategic stock selections list, said high oil prices will drive increased exploration spending.

"We prefer offshore drillers with deepwater exposure and higher specification jackup rigs to take advantage of rising dayrates in these classes of rigs," analyst David Anderson said in a note to clients.

Investors should favor companies with fewer deepwater contracted rig days and more jackup contracted rig days as dayrates for deepwater rigs are likely to continue to rise through 2011, while average jackup dayrates are likely to fall in 2009, Anderson said.

The analyst said offshore drillers are highly correlated to oil prices, which he believes will remain at very high levels over the next several years.

UBS eyes oil's surge, Chevron, drillers.

Transocean (RIG) drew the distinction as top pick at UBS as it waded into several oil-services firms that specialize in drilling and other technologies for extracting precious fossil fuel [LOL].

After purchasing GlobalSanteFe in recent months, Transocean has emerged as "not only bigger but better," according to the bank.

With the largest fleet of deepwater rigs, Transocean ranks as the largest offshore driller in the world, UBS noted.

"As we are more bullish on deepwater-activity levels well into the next decade, we view Transocean as a core holding in the offshore-drilling sector," it said. "Although near-term integration issues are to be expected, Transocean is one of the best operators in the business and will be one of, if not the primary beneficiary of rising deepwater day rates."

Lehman Boosts Targets For Offshore Drillers

Lehman Boosts Target Prices for Offshore Drillers, Favors Deepwater Companies

NEW YORK (AP) -- Shares of offshore drilling companies rose on Wednesday after a Lehman Brothers analyst raised price targets for several and forecast strong earnings for the sector, citing solid revenue and high demand for rig services.

Angeline Sedita estimated offshore drillers's earnings growth from 2007 to 2009 to range from 30 to 97 percent, with Rowan Cos. on the low end and Diamond Offshore Drilling Inc. on the high end.

Most offshore companies have about 55 to 70 percent of 2009 revenue locked into current contracts, Sedita noted, but there is still potential for substantial growth. Deepwater drillers, which perform drilling operations thousands of feet below the ocean floor, have the greatest potential for a rise in earnings, she said.

"We continue to favor companies with deepwater exposure given our belief of the long-term strength of the market," Sedita wrote, "and that demand will continue to outstrip rig supply, even with new rig construction."

Sedita initiated 2009 profit estimates for several companies, including Noble Corp. and Diamond Offshore, which she called "top picks." Sedita raised Diamond's price target to $125 from $103 and Noble's target to $124 from $98.

Diamond shares rose $4.38, or 4.8 percent, to $96.08 in afternoon trading. Noble shares rose $1.30, or 2.2 percent, to $59.47.

Sedita also raised Ensco International Inc.'s price target to $63 from $60; Pride International Inc.'s target to $43 from $39; and Rowan's target to $45 from $44.

Ensco shares rose $1.10, or 2 percent, to $55.81; Pride shares rose $1.45, or 4.5 percent, to $34.03; Rowan shares rose 67 cents to $36.

Lehman Brothers suspended price targets and ratings for GlobalSantaFe Corp. and TransOcean Inc., which are merging, because the firm is advising the former during the process.

GlobalSantaFe shares rose $2.29, or 3.5 percent, to $67.29; TransOcean shares rose $2.87, or 2.9 percent, to $100.86.