Is Forcing Privately Held Oil Corps into a USPS Model in the Public Interest? - Tilted Forum Project Discussion Community

host · 05-08-2008, 09:12 PM

Aceventura3 provided info in his thread on US Government subsidies for big oil companies. When Walmart decides to build a larger store near an existing one, it is not uncommon for that company to vacate their existing store, move into the new, larger location, and leave the old store empty for many years. Walmart makes leases for their empty stores so restrictive that the buildings remain empty, unleased.

It is in the public interest for petroleum products to be readily available and sold at competitive prices. The major, integrated oil companies in the US, explore for, extract, refine and distribute petroleum products. The following is evidence of their intentional betrayal of the public trust, resulting in intentionally limiting supply of refined products for the purpose of elevating prices paid by the public.

The ongoing Federal Reserve bailout of private leading investment banks demonstrate that there are "no rules"...no true separation of public and private business risk or operations. If you read the following articles, sequenced in a progressive timeline from 2001 to 2005, can't a case be made to take these oil companies' operating assets related to production, distribution, and retail sales of petroleum products, via government powers of eminent domain, and operate them via a quasi public agency, like the US Post Office, selling the products at cost plus current tax revenue that they generate?

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http://www.cbsnews.com/stories/2001/...le296584.shtml
Boosting Big Oil Profits
WASHINGTON, June 14, 2001(CBS) While the Bush administration cites a lack of refineries for energy shortages, internal oil industry documents show that five years ago companies were looking for ways to cut refinery output to boost profits.

It takes about four years to build a large refinery so any substantial additional new capacity from new plants would have had to begin by the mid-1990s, energy experts acknowledge.

Internal documents from some of America's biggest oil companies suggest higher prices at the pump may, in part, be a result of a deliberate strategy to limit domestic gasoline production, reports CBS News Correspondent Bob Orr. Sen. Ron Wyden, D-Ore., who has been investigating oil prices for two years obtained the documents.

"These documents say point blank, look if you really want to boost your profits, you have to reduce refinery capacity," said Sen. Wyden. "This industry went to great lengths to limit refinery capacity, control markets, restrict supply to boost their profits, increase costs to consumers, and then argue we should relax environmental laws."

"Too much capacity also "may have deterred some new capacity investments in the past," the Bush energy plan acknowledges.

Wyden said the documents he obtained - including the internal Texaco and Chevron memos - suggest that oil companies in the '90s "sought to eliminate excess capacity to improve profits.

He said some of the refineries that were closed may have been shuttered "specifically to tighten supply and drive up costs" to consumers, although he provided no specific documentation of this.

But Wyden obtained a confidential 1996 e-mail from Mobil Corp., which has since merged with Exxon, that suggests major oil companies were not reluctant during the 1990s to try to force smaller independents out of business.

A California refinery owned by Powerine Oil Co., had ceased operation in 1995, but was trying to start up again a year later hoping to compete in production of a special, cleaner gasoline required by the state.

This gas was selling at a premium and Powerine's re-entry intthe market could cause the price to drop as much as 3 cents a gallon, a Mobil executive warned in the internal e-mail.

"Needless to say, we would all like to see Powerine stay down," the memo continued. "Full court press is warranted in this case." The refinery remained closed.

Attempts to reach Exxon Mobil spokesmen were unsuccessful."

Read The Documents:
# <a href="http://cbsnews.com/htdocs/pdf/chevron.pdf">Click here</a> to read the Chevron document.

# <a href="http://cbsnews.com/htdocs/pdf/texaco.pdf">Click here</a> to read the Texaco memo.

# <a href="http://cbsnews.com/htdocs/pdf/mobil.pdf">Click here</a> to read the Mobil e-mail.

# <a href="http://cbsnews.com/htdocs/pdf/wyden.pdf">Click here</a> to read the Senator Wyden's report.
One Chevron memo warns the oil industry would never see higher profits, if it didn't reduce the amount of gasoline being refined.

"If the U.S. petroleum industry doesn't reduce its refining capacity, it will never see any substantial increase in refinery margins (profits)," said an internal Chevron document in November 1995.

The memo cited warnings given about refinery profits by a senior analyst from the American Petroleum Institute, the industry trade group, at an industry conference that year.

API spokesman Jim Craig said Thursday, "We don't know about these alleged internal company memos, but the idea that the API would warn member companies on profits is ludicrous."

A year later, an official at Texaco, in a memo marked "highly confidential," called concerns about too much refinery capacty "the most critical factor" facing the refinery industry - resulting in "very poor refining financial results."

The Texaco memo, written in March, 1996, concluded that "significant events" were required to deal with the excess refinery capacity problem and suggested one solution might be to get the government to lift clean air requirements for an oxygenate in gasoline. Removal of the additive would require more gasoline to be used in each gallon of fuel, tightening supplies.

While refinery capacity now has become tight, the oil industry is still pressing for an end to the federal requirement for an oxygenate in gasoline, arguing new blends of gasoline can meet the same clean air requirements.

API says refiners overall are turning out more gasoline than when the memos were written.

"If you look at the Department of Energy's own data, you'll find from 1995 to the current day, industry refinery capacity has increased over a million barrels a day," said Red Cavaney, President of the American Petroleum Institute.

But Wyden charges oil companies could still be producing more. 24 small refineries, some under pressure from Big Oil, have been shut down since 1995.

"The documents suggest that major oil companies pursued efforts to curtail refinery capacity as a strategy for improving profit margins," said Wyden, who released the papers at a news conference Thursday.

Wyden also says the documents show some cooperation between companies that are supposed to be competitors. While he stops short of charging collusion, he is now calling for a full-scale congressional investigation.

Attempts to get a comment from either Texaco or Chevron officials were unsuccessful.

Texaco and Chevron are awaiting government approval to merge, creating the nation's fourth largest oil company.

The need for more refinery capacity has been the focus of President Bush's energy plan. Vice President Dick Cheney frequently has blamed gasoline prices increases on tight supplies caused to a large part, he says, by the fact that no new refinery has been built in 25 years.

In fact, 24 refineries - many of them small independents - have shut down since 1995, according to the Energy Department, accounting for the loss of 831,000 barrels a day of refining capacity. Individual refinery expansions at the same time have added 1 to 2 percent of capacity annually.

At a House hearing on gasoline supplies Thursday, the National Petroleum and Refiners Association said both financial and regulatory constraints make it difficult to build new refineries in the United States...

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http://cwd.grassroots.com/energy/fs/...l+Bill+Lockyer

Letter To California Attorney General Bill Lockyer
Shell Documents Give You Ability To Keep Bakersfield Refinery Open

April 6, 2004

Honorable Bill Lockyer
California Attorney General
1300 I Street #1730
Sacramento, CA 94244-2550

Dear Attorney General Lockyer:

Californians are paying the highest prices for gasoline in the nation, up to 50 cents per gallon more than most other regions. All honest witnesses will acknowledge that the gasoline spikes are not a result of OPEC crude prices or environmental standards, as the oil industry claims, but low inventories and restricted refining capacity maintained by the five oil refiners that control 90% of California's special CARB fuel.

Given this restriction of supply, it's shocking that Shell would announce the closure of yet another refiner responsible for 2% of the state's gasoline supply. That would bring the number of refineries in California making CARB fuel to 12, from 37 in 1983, despite a burgeoning population. Everyone seems to be aware that local refineries can barely meet our needs for CARB gasoline and the lack of refining capacity is recognized as a major factor in the higher pump prices. Closing yet another refinery would undoubtedly cause prices to rise even further.

This market obviously functions like no other. If there were a computer shortage, would any computer maker close computer factories? At last, we believe there is an opportunity for you to act under the state's Unfair Business Competition Law to stop Shell's plan to demolish its refinery and to prevent gasoline prices from spiking once again.

When Shell Oil announced its intentions to close its refinery in Bakersfield by October of 2004 [2003], the company blamed poor profitability and a declining crude supply in the San Juaquin Valley. Shell stated in its press release that the refinery's continued operation is "no longer economically viable" because "there is simply no longer an adequate supply of crude oil to justify the continued operation of this facility." The Seattle Times also reported on March 6th: "Shell will close the plant because it was unprofitable and didn't receive enough oil from the area to keep operating, said James Frazier, a company spokesman.".

New evidence obtained by the Foundation for Taxpayer and Consumer Rights (FTCR) shows Shell has deceived the public with these statements and that it intends to demolish the refinery to keep gasoline off the market, and the price of gasoline high, rather than sell the refinery....

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The Bakersfield Channel - KERO TV (California)
May 12, 2004

by Reporter: Heidi Carter
Shell Has No Plans To Cover Refinery's Loss
KERO Interviews Refinery Manager
BAKERSFIELD, Calif. -- As the closing date approaches, the controversy surrounding the closure of the Shell Refinery on Rosedale Highway continues to heat up, KERO reported.

Consumer Reporter Heidi Carter sat down with the refinery manager, who said the Bakersfield refinery isn't efficient enough to keep open, even though it's making a profit.

Amir Farid said the Rosedale refinery isn't as efficient as Shell's two other California refineries, which is why Shell will close it down at the end of September.

"This refinery is two separate refineries that have been stitched together over time," Farid said. "You also have simply the economy of scale. This is a 70,000-barrel-a-day refinery. Martinez is currently 145,000 and can produce up to 160,000 (barrels a day.)"

Farid said the refinery closing has nothing to do with the current price spikes for gasoline. But the current market is making the refinery profitable.

"Clearly, in the environment today, we are profitable at the moment, but this is a cyclical business," Farid told KERO.

Farid admitted Shell has no current plans to make up for the total loss of supply that will occur when the plant closes.

"There is going to be a gasoline shortfall that we are still working on and potentially can offset some of that from our refinery up in the northwest," Farid said.

Shell only has the capacity to make up about half of the diesel production that will be lost.

Jamie Court, the president of the Foundation for Taxpayer and Consumer Rights, said that closing the refinery is about shorting the market and ultimately keeping gas prices above $2.

Farid said in spite of the current profits, the refinery has a history of losing money.

Court said Shell should put the refinery up for sale, rather than short California consumers by closing it down.

While Shell has not put the refinery up for sale, they have received 14 inquires from companies interested in buying it, but so far no offers have been made.

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Sacramento Bee
May 19, 2004

by Dale Kasler, Bee Staff Writer
Shell denies greed spurs the closure
BAKERSFIELD - In the furious debate over California's gasoline prices, the Shell Oil refinery in Bakersfield - a forlorn mess of pipes and boilers on a state road choking on truck fumes - usually got overlooked. Until Shell decided to close it.

Set for an Oct. 1 shutdown, the refinery produces just a sliver of the state's motor fuel but has been embraced as a cherished resource by economists, elected officials and consumer advocates. They say losing the refinery could be devastating in a market where the balance between supply and demand is extraordinarily delicate.

With the statewide average price of gas at a record $2.31 a gallon Tuesday, one energy economist said prices could jump another 10 percent or more if the refinery closes.

Some consumer advocates say that's no accident. The Foundation for Taxpayer & Consumer Rights, which has unearthed internal company memos showing the refinery has been profitable recently, says Shell is trying to manipulate the market.

"They don't have a good reason for shutting it (except) to drive up the price of gasoline," said Jamie Court, president of the Santa Monica-based foundation. "Shell knows that ... the price will go through the roof."

Shell officials deny that the company is out to do harm. They say the 72-year-old refinery is inefficient and needs $1 billion in new equipment. Discarding it is "best for the consumer," said David Harrington, a spokesman for Shell Oil Products US.

But Shell won't rule out the possibility that prices could go higher as a result. While the company expects to compensate partially by increasing production at other West Coast refineries, Harrington acknowledged Shell's total output of fuel for California will fall. "I don't know what the market's going to look like," he said when asked about the price impact. "Maybe others will bring in cargoes from somewhere" or increase production...

..Shell's decision raises unsettling questions about Kern County's oil-based economy and California's long-term energy future.

The refinery is surrounded by some of the nation's most fertile oil fields. Kern produces more crude oil than Oklahoma and Wyoming combined, and trails only Louisiana, Texas and Alaska. It's responsible for about one-fourth of all the oil used in California.

But it's slowly running dry.

Kern's oil production is falling roughly 1 to 3 percent a year and has dropped more than 20 percent since 1988 - mirroring what's happening in the rest of California's oil fields.

Twenty years ago, California produced 60 percent of its oil; now it's 48 percent and falling.

Shell officials say declines in Kern's oil make it increasingly difficult - and expensive - to feed the Bakersfield refinery. Although Shell is a partner with ExxonMobil Corp. in a major oil-producing venture in Kern County, that business is run separately and the refinery has to scrounge for supplies like anyone else, Harringon said.

"The crude here is declining. That doesn't mean it's going away tomorrow, but it's a finite resource," he said. "There's a point where the cost to acquire (oil) does not make it efficient to run ...an old, cobbled-together, inefficient refinery."

But at a time of record gas prices, the refinery has become a battleground issue for suspicious consumer advocates and elected officials.

U.S. Sen. Barbara Boxer, D-Calif., who has criticized Shell repeatedly, accused the company Tuesday of speeding up the shutdown by two months. Shell denied it, saying it will begin scaling back production after the peak summer driving season ends on Labor Day. Production would come to a complete halt Oct. 1, as scheduled.

According to documents uncovered by Court's group, the refinery earned $4.7 million last year and has made money in four of the past six years. A separate memo from early last month said the Bakersfield site was enjoying the highest profit margin of any Shell refinery in the nation.

Harrington said the memos only provide a "snapshot" of what's going on. The larger story is that the refinery is increasingly uneconomic, and closing it will improve the efficiency of Shell's West Coast operations, he said.

That's because the Bakersfield site has acted as a kind of drain on a much larger, more efficient Shell refinery in Martinez, which runs partly on Kern oil. With Bakersfield out of the picture, more oil will flow to Martinez, Harrington said. "We can squeeze more ... out of Martinez than Bakersfield," he said.

The company also expects to bring more supplies in from its refinery in Anacortes, Wash. But it won't be enough to make up completely for the loss of Bakersfield.

"Will we be making less gasoline? The answer's yes," Harrington said.

Many experts say California needs every drop it can refine.

While high global crude-oil prices are contributing to the latest increases at the pump, California also is suffering from a long-term, fundamental shortage of production capacity at its refineries. That problem is compounded by the state's unique clean-air fuel specifications: Only a handful of refineries outside California can meet those recipes, and that's a key reason why prices spike when in-state production falters.

As a result, even a small refinery like Shell's in Bakersfield - producer of only 2 percent of the state's gasoline and 6 percent of its diesel fuel - can matter. Even though Shell said it will make up part of the shortfall, the effect on prices still could be significant.

"If you're at a peak time (in demand) and you don't have any other place to get supply, it could mean a 10 to 15 percent increase in the price," said Severin Borenstein, director of the University of California Energy Institute.

The Kern facility opened in 1932 as the Mohawk Refinery. It's gone through a succession of owners, including a joint venture between Shell and Chevron. When Chevron merged with Texaco in 2001 and was forced by antitrust regulators to sell its share, Shell became sole owner.

The plant is actually three separate facilities, pulled together by acquisitions over the years. One of the sites is actually three miles away, connected to the main plant by pipelines.

The combined facility processes under 70,000 barrels of oil a day - a minuscule amount in a state that runs through roughly 2 million barrels daily. It's the second smallest of the 13 California refineries that make gasoline (another 11 refineries make other products).

Bakersfield also needs expensive upgrades, like a machine known as a fluid catalytic cracking unit.

"But it was a $1 billion investment and it never got built," said Gregory Cervantes, the refinery's operations manager.

Cervantes, who's worked at the refinery for 25 years, said he's heard rumors of a shutdown for more than 10 years.

"We gave it a hell of a run," he said. "Nobody expected us to be here this long.

"We tried to work out as many of the inefficiencies as we could. You can't do 'em all."

Some experts agree.

"It's a pretty old, inferior piece of equipment," said Phil Verleger Jr., an independent energy consultant from Newport Beach.

By spotlighting the gradual decline in Kern's oil production, Shell created something of an unpleasant buzz in Bakersfield.

No one denies that oil gradually is running out in Kern. Still, most people say the barrel is half full, not half empty.

Kern has at least 20 to 30 years of oil left, said Randall Adams of the state Department of Conservation's oil and gas division. New oil-extraction methods could extend that even further, he said.

Questions about disappearing oil bring a chuckle from folks like Fred Holmes, a genial oilman who runs drilling rigs in the sandy hills of western Kern.

"Why don't we seem more nervous? We've heard this all our lives," the 60-year-old said in a soft twang. "It's not going to decline overnight."

Locals take heart from ChevronTexaco Corp.'s decision to increase capital spending by $100 million in the area this year. "There's still a lot of value in these fields," said spokesman Greg Hardy.

Oil was first discovered in Kern County in 1899 and has been part of the landscape ever since. Oil rigs methodically bob up and down next to subdivisions, golf courses and everywhere else. The sports teams at Bakersfield High School are the Drillers. The city's elite dine at the downtown Petroleum Club.

The oil business here isn't easy street, though, even when crude prices are sky high. Most of Kern's oil, known as "San Joaquin Valley heavy," is thick and sludgy and expensive to extract, while its high sulfur content makes it less desirable to refiners.

So when west Texas crude, the benchmark for U.S. oil, topped $41 on Tuesday, Kern crude was selling for about $35.

The difficult economics seem to have made Kern oil people that much tougher.

"There's still a lot of wildcatters out there, looking, exploring," said Les Clark, who runs an association of independent oil producers in Kern.

"Most folks know oil won't be there forever. But to shut the door today and walk away? That's not the position we're in."

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Sacramento Bee
May 27, 2004

by Dale Kasler - Bee Staff Writer
Lockyer hires consultant to check Shell claim
Attorney General Bill Lockyer hired a petroleum industry consultant Wednesday to assess Shell Oil Co.'s claim it has not been able to sell it's refinery in Bakersfield.

Shell plans to close the aged refinery in October if it isn't sold.

With gasoline at a record $2.37 a gallon in California (and a record $2.29 in Sacramento), economists have said the refinery's closure would force prices even higher. The refinery makes only 2 percent of California's gas and 6 percent of its diesel, but the market is so tight that any loss of supply could have substantial impact on prices, economists say.

On Wednesday, Lockyer hired Dallas-based Turner Mason & Co., a consulting firm that works on mergers and acquisitions and other issues for the petroleum industry. Turner Mason's job will be "to determine if what Shell is saying is true, that (the refinery) is not viable," said Lockyer's spokesman, Tom Dresslar.

If it's determined the plant can be sold, Turner Mason will try to find a buyer, Dresslar said.

The firm is being paid $35,000 through July 31. Under pressure from elected officials, Shell has put the plant up for sale. It said it has received 14 inquiries, but no offers.

Shell spokesman David Harrington said it would cooperate with Turner Mason.

The consultant can look through the refinery's financial information if it signs a confidentiality agreement, Harrington said...

Malcolm Turner, the consulting firm president, couldn't be reached for comment.

Documents unearthed by a consumer advocate group, the Foundation for Taxpayer & Consumer Rights, show the plant made money four of the past six years. But Shell says the long-term outlook is bleak, in part because of the declining availability of crude oil around Bakersfield ..

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Los Angeles Times
June 21, 2004

by Elizabeth Douglass, Times Staff Writer
Shell to Cut Summer Output at Bakersfield Refinery, Papers Say
Shell Oil Co. plans to put the brakes on production at its Bakersfield refinery in July and August, potentially shorting California's fuel supplies during the summertime driving season, according to internal Shell documents.

The planned cutback is the latest development in the controversy over the refinery, which can process up to 70,000 barrels a day of crude oil and makes about 2% of California's gasoline supply and 6% of its diesel. Shell has said it will close the facility Oct. 1 in a move that experts predict will boost pump prices by worsening the chronic imbalance between supply and demand in the state.

The internal documents obtained by The Times, including a refinery output forecast, indicate that Bakersfield will soon be producing far less than its capacity. After relatively high output rates in May and early June, Shell plans to cut crude oil processing about 6% in July and another 6% in August, according to the forecast.

Those two months are when California's fuel demand reaches annual peak levels.

Aamir Farid, general manager of Shell's refineries in Bakersfield and Martinez, said he couldn't confirm that there was a production slowdown in the works.

"If that's the case, there is a good reason for it," he said.

There could be maintenance planned or projections for a shortfall of crude, he added, but "off the top of my head, I don't know what that good reason is.

"We're not playing any games. We're not shutting down early," Farid continued. "We're going to run as we normally run everything. We're not doing anything different through Labor Day, for sure, because we don't want to impact anything during driving season."

Refining industry experts said production at a facility slated for a shutdown wouldn't need to be curtailed until shortly before the closing date, when the owner would begin emptying and cleaning the equipment...

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The Orange County Register (California)
June 22, 2004

by CHRIS KNAP and DIANA McCABE
Group says Shell plots 'peak' repairs;
Documents suggest company already planned summer refinery slowdown
Shell Oil Co. documents released by a Santa Monica consumer group on Monday show that California's second-largest oil refiner plans to throttle back production at its Martinez and Bakersfield refineries in July -- a time of peak demand.

Experts said the cutbacks could amount to 200,000 gallons per day - enough of a shortfall to boost gasoline prices under some circumstances.

A spokesman for Shell Oil said the documents appear to be authentic but stressed that they were revised in early June. "Those are not necessarily the current plans," spokesman Stan Mays said.

Mays didn't disagree that the documents portray a production slowdown in July and August at both refineries in order to rehabilitate refinery units at Martinez - and he said some maintenance is still scheduled.

"There is routine summertime maintenance that is going on. Whatever would be normal for the refinery would be undertaken," Mays said.

Jamie Court, president of the Santa Monica-based Foundation for Taxpayer and Consumer Rights, contends that the documents are very recent because they contain numbers marked "5/25/04 Actual."

"Why are they cutting back in a peak period?" he asked. "Cutting back operations in July and August is a recipe for higher prices."

The documents describe refinery units that would be taken down for cleaning and repairs, cutting production from 96 percent of capacity in June to 87 percent in July. August production would recover somewhat, to 91 percent.

Experts say maintenance on refineries is normally done in the winter, when demand is slack. Unanticipated reductions in the summer might leave an oil company struggling to supply its own stations.

David J. Hackett, president of Stillwater Associates and a former oil company executive, reviewed the Santa Monica group's documents for the Register and said they appear to be a 90-day plan drafted sometime in May.

"They were planning to do some maintenance in July and August," Hackett said. "Refiners don't like to do maintenance in the summer. But it's not unusual."

Hackett said the documents show Shell planning on a slippage in spot gasoline prices --from $1.36 per gallon in June to $1.21 in August.

"They might have thought that they would pump up the price," Hackett said. "Or they might already have plenty of gas in the tank, and they've got it covered. .. 150,000 barrels over a three-week period is not a lot of gas."

Economists consider California's gasoline market a tight oligopoly. Four companies - Chevron/Texaco, Shell, BP/Arco and Valero control 71 percent of the market.

In an interview last week about the economics of oil refining, Severin Borenstein, director of the University of California Energy Institute at Berkeley, said California's largest refiners have "market power" -- meaning a single company's business decisions can have a dramatic effect on gasoline prices.

"If you take product off the market that no one else can replace, it can have a big effect," Borenstein said. "In general, there is a 5 percent increase in price for every 1 percent decrease in quantity."

The controversy over Shell's maintenance plans comes on top of a months-long dispute over Shell's plans to cease operations at the Bakersfield refinery in October.

Shell has said the 1932 refinery, which processes San Joaquin Valley heavy crude, is only marginally profitable in good years and is projected to lose $5.7 million this year.

However, the documents obtained by the consumer group show the refinery earning a projected profit of $11.4 million in May alone. Shell's projected margin at Bakersfield was $11.76 per barrel in May, compared with $16.09 at Martinez.

Court sent the documents to the Federal Trade Commission and the California attorney general, saying a regulatory response is needed to keep gasoline from hitting $3 a gallon before August.

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The Los Angeles Times
July 24, 2004

by Elizabeth Douglass, Times Staff Writer
Refinery Expert Is at Odds With Shell
A state-hired consultant finds that a Bakersfield site the company plans to shut down still is 'economically feasible.'
Shell Oil Co.'s Bakersfield refinery is financially sound and an attractive asset for potential buyers, and the company's decision to close it "flies in the face of common sense," a consultant hired by the state said Friday.

Industry expert Malcolm Turner, retained by Atty. Gen. Bill Lockyer to provide an objective opinion on the refinery's outlook, said his consulting firm disagreed with Shell's reasons for planning to shut down the facility Oct. 1.

The proposed closure of the refinery has generated outrage among politicians and consumers, who have endured gasoline prices that have hovered above $2 a gallon for more than four months.

California's fuel supply and demand are so delicately balanced that any reduction in refining capacity could cause prices to rise further. Shell's plan is being scrutinized by, among others, the Federal Trade Commission, which is investigating whether shuttering the refinery would violate antitrust laws.

Turner, in an interview, said other companies were interested in buying the facility and "would be successful operating it as an independent refinery." Turner, who has worked for Shell in the past, is also helping to identify buyers for the refinery but declined to identify potential purchasers.

"We do conclude, unlike Shell, that the Bakersfield refinery is commercially and economically feasible," Turner said.

Turner stressed that his conclusions were preliminary. But he said they were unlikely to change before his firm, Houston-based Turner, Mason & Co., submitted its report to the state at the end of July.

Shell spokesman Stan Mays said the company hadn't heard about Turner's findings. But he said, "We continue to stand by our conclusion that the small, inefficient, landlocked Bakersfield refinery can no longer compete and is economically unviable going forward."

The company has said it will consider any credible offers for the refinery.

The consultant's opinion is not binding on Shell. Still, it is encouraging news for a bevy of government officials and consumer advocates who have been openly skeptical of Shell's assertions that the facility can't be run profitably and lacks an adequate supply of crude oil.

Lockyer spokesman Tom Dresslar said the attorney general would comment on Turner's report when it was completed. He said Lockyer "remains hopeful that a way can be found to keep open this crucial source of gasoline ¿ so that consumers are spared the inevitable higher prices that a closure will bring."

Market experts consistently cite California refineries' inability to keep up with demand as a key factor in the state's chronically lofty fuel prices, which on Monday averaged $2.186 for a gallon of self-serve regular gasoline, according to the latest Energy Department survey.

Shell's Bakersfield facility is relatively small, producing 2% of the state's gasoline supply and about 6% of its diesel fuel. But there is little doubt that its dismantling would further squeeze supplies and inflate pump prices for motorists.

Critics believe that Shell wants to close its Bakersfield plant to boost profits at its two other California refineries, based in Wilmington and Martinez in the Bay Area.

Shell announced its decision to close the refinery in November and, in the intervening months, has put forth a variety of explanations.

Initially, Shell said there was not enough San Joaquin Valley heavy crude to keep the Bakersfield refinery running. After state officials countered that nearby oil fields remain productive, the company said that Shell's existing oil contracts could no longer feed both the Bakersfield and Martinez refineries, and that Shell would rather use the remaining crude at its Martinez site.

Shell's rationale has been questioned by experts who point out that the oil company could easily import crude oil for its Martinez plant, which is close to the coastline and already uses some imported blends.

The company's stance was also undermined by a surge in California fuel prices, which made the nation's most lucrative fuel market even more so this year.

Internal documents show that Shell's Bakersfield refinery earned almost $25 million in the first five months of 2004, compared with a profit of about $5 million for all of 2003. Profit at Martinez exceeded $91 million from January to May, more than double company projections.

Said Turner, "We've heard their point of view, and they've given us the information they based their decision on ¿ and the information, the arguments and the reasons they used are not persuasive."

Turner's opinion could be hard for Shell to dismiss, given that his firm has decades of experience appraising refineries on behalf of oil companies, including the U.S. division of Royal Dutch/Shell Group. For its part, Shell continues to provide information to several interested bidders, spokesman Mays said.

"We're open to the possibility of a sale, and, barring that, we continue to plan for a safe and orderly closure," he said.

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Sacramento Bee
August 13, 2004

by Dale Kasler, Bee Staff Writer
Report: Shell gives in to state
Company agrees to postpone closing its Bakersfield refinery so buyers can be found.
In a concession to California officials, Shell Oil Co. reportedly has agreed to postpone the shutdown of its Bakersfield refinery. The plant was scheduled to close Oct. 1.

The refinery will stay open indefinitely, giving prospective buyers more time to prepare their bids, according to a report Thursday by New Jersey-based Oil Price Information Service.

State officials and consumer advocates have been badgering Shell for months to keep the plant open or make a stronger effort to sell it, arguing that losing the plant's production would lead to higher fuel prices. The Federal Trade Commission launched an investigation as well.

Shell spokesman David Harrington had no comment. Nor did Tom Dresslar, a spokesman for Attorney General Bill Lockyer. Lockyer had hired a consultant from Texas to study Shell's claims the plant was becoming less economically viable. The consultant reportedly had concluded the plant was viable.

Though it's one of the smallest refineries in California, the facility produces 2 percent of the state's gasoline and 6 percent of its diesel.

Experts say California's gas supply is so flighty that even a tiny drop in production can produce big jumps in prices. Severin Borenstein of the University of California Energy Institute said the plant shutdown could boost prices 10 percent to 15 percent - a prospect that had state officials howling at a time when regular unleaded gas was running at $2-plus a gallon.

Now it appears the refinery is getting at least a temporary reprieve...

"If it's true, it's a big victory for consumers and for regulators," said consumer advocate Jamie Court of the Foundation for Taxpayer and Consumer Rights in Santa Monica. "It looks like Shell's finally conceding it's a very profitable refinery and prospects for sale are good."

Court said he's been told that about a dozen buyers are interested but the Oct. 1 shutdown didn't give them enough time to study the plant's economics. The oil-price service said 30 potential bidders requested information from Shell, and 10 were interested enough to sign confidentiality agreements.

Shell's shutdown plans have been criticized for months. Internal company documents unearthed by Court's organization showed the plant made money four of the past six years, including $4.7 million last year.

But Shell officials said those documents didn't tell the whole story. In fact, they said, the declining availability of crude oil in the fields around Bakersfield, where production has fallen 20 percent since 1988, was turning the refinery into a loser. They also said the plant was aging, inefficient and needed $1 billion in equipment upgrades.

Shell planned to increase production at its East Bay refinery, and import more product from its Anacortes, Wash., refinery. But the company acknowledged it wouldn't be enough to make up for the loss of production at Bakersfield.

Quote:

The Los Angeles Times
September 15, 2004

by Elizabeth Douglass, Times Staff Writer
New Obstacle to Refinery Deal;
Shell is refusing to include key parts in the sale of its Bakersfield facility, sources say.
Several buyers are interested in Shell Oil Co.'s Bakersfield refinery, but an acquisition could be thwarted by the company's refusal to sell on-site storage tanks, pipelines and other key parts of the facility, according to people familiar with the situation.

Shell's reported stance is the latest obstacle to efforts by state officials to save the small refinery, which makes 2% of California's gasoline and 6% of its diesel. If the refinery is shut instead of sold, the lost production could spark increases in California's chronically high fuel prices, state officials said.

A spokesman for the oil company, Stan Mays, declined to be interviewed Tuesday, though he provided written answers to e-mailed questions.

Asked about the sale restrictions, Mays said: "I'm not aware that anyone at Shell has said this."

Shell first decided to shutter the refinery without trying to sell it and then, under pressure from state Atty. Gen. Bill Lockyer and others, earlier this year agreed to entertain offers. The company warned at the time that it intended to keep the refinery's crude oil contracts, reducing the pool of possible buyers to those that could secure a new source of oil for the landlocked facility.

Now, according to the people close to the negotiations with potential purchasers, Shell has put up the additional roadblocks. It has offered to lease the storage tanks and pipelines to a buyer but "at extraordinarily high rates," one source said.

This source called the situation "pretty much unprecedented in a refinery transaction."

What's more, potential buyers have only until the end of today to submit an offer for the refinery under deadlines set by Shell, according to several sources.

Shell declined to confirm the deadline.

Mays, the company spokesman, called the bidding process "robust" and said there were several prospective buyers. Because of confidentiality agreements, he said, "we cannot discuss any terms or conditions that may or may not be imposed."..

...."It seems to me that Shell is again complicating a sale. It's like trying to sell a car without the gas tank," Court said. "Everything that's been done to keep this refinery open in the last six months is moot if Shell's not willing to make a sale real."..

Quote:

The Los Angeles Times
September 23, 2004

by Elizabeth Douglass, Times Staff Writer
Shell Studying Offers for Its Bakersfield Site
Shell Oil Co. said Wednesday that it was evaluating proposals from several companies that want to buy its Bakersfield refinery, a profitable facility the oil company had targeted for closure.

Shell also acknowledged that the company intended to sell the facility without valuable components such as certain pipelines and on-site storage tanks -- conditions the company said "reflect market realities."

Last week, The Times reported the sale restrictions, which people familiar with the situation said were unusually restrictive and would limit interest in the refinery. At the time, Shell said confidentiality agreements prohibited the company from discussing its sale conditions.

State officials and politicians, alarmed by Shell's plan to shutter the refinery, have been pressuring the oil company to sell it. The Bakersfield plant makes 2% of California's gasoline and 6% of its diesel, and officials worry that its closure would worsen the state's chronic supply troubles and lift prices at the pump.

Shell initially made no effort to sell the facility, and repeatedly told lawmakers and others that no one would want it, especially because the company intended to keep the refinery's crude oil contracts. On Wednesday, Shell said more than 70 parties had expressed interest in the Bakersfield refinery, and that 20 signed confidentiality agreements so they could dig deeper into the plant's books.

Several companies submitted bids "stating the price they would pay for the refinery and any additional terms and conditions they would propose," according to a statement released by Shell, the U.S. unit of Anglo-Dutch company Royal Dutch/Shell Group.

The company set no deadline for a sale deal, but pledged to continue negotiations as long as they are "warranted by the progress of our discussions," spokesman Stan Mays said. Mays declined to be interviewed for this story, but provided written answers to questions.

Mays said the sale would include some large storage tanks, but not all of them. Shell said it would negotiate a long-term lease with the buyer for use of the fuel terminal, tanks and pipelines not included in the sale.

If no deal is reached, Shell said it would close down the refinery March 31, or by the end of the year if it couldn't get the necessary waiver from the Environmental Protection Agency to stay open into 2005. Shell originally planned to shut the plant Oct. 1, but postponed the closure to allow more time for negotiations with possible buyers.

"This is a far cry from Shell's statement that no one would want this facility," said Jamie Court, president of the Foundation for Taxpayer and Consumer Rights in Santa Monica. With so much interest, "I don't think Shell can announce that they couldn't finalize a deal without regulators asking why."

Sen. Barbara Boxer (D-Calif.), was less enthusiastic about Shell's latest announcement.

"Whatever Shell says is one thing. What they do is another," she said Wednesday. "And everything they do leads me to believe that they want to avoid the sale of this refinery."...

Quote:

The Bakersfield Californian
December 7, 2004

by Erin Waldner
Refinery granted reprieve;
Shell refinery in Bakersfield, CA reaches pact with EPA to stay open
The Shell Bakersfield Refinery on Rosedale Highway has received a stay of execution.

The company announced Monday it reached an agreement with the U.S. Environmental Protection Agency and the U.S. Justice Department that will allow the refinery to stay open through March 31, 2005.

Had it not reached an agreement, Shell would have had to close the refinery by the end of this month.

Shell Oil Products U.S., part of Shell Oil Co., agreed to reduce an additional 62 tons in annual nitrogen oxide emissions, companywide, by March 31. The original deadline was Dec. 31, 2008.

In return, Shell received permission to come under its original nitrogen oxide emission reduction target for the year by seven tons. Nitrogen oxide is a pollutant.

The agreement between Shell and the EPA must now go through a period of public comment. Court approval is also required. The timeline wasn't known Monday.

Shell said it plans to close the refinery by March 31 if the facility does not sell by then. The company said it is continuing discussions with a short list of bidders.

Industry experts have said the refinery's closure will lead to higher fuel prices. The refinery produces 2 percent of the state's gasoline supply and 6 percent of diesel.

Shell originally planned to close the refinery on Oct. 1, 2004. Under pressure from California Attorney General Bill Lockyer and Sen. Barbara Boxer, D-California, the company agreed to delay the closure to give time for the refinery to sell.

"We're pleased the refinery is going to remain open at least through March of next year," Tom Dresslar, a spokesman for Lockyer, said Monday. "The real prize is a sale agreement that keeps it open over the long term. We continue to have our eye on that prize."..

Quote:

Los Angeles Times
December 16, 2004

by James F. Peltz, Staff Writer
Talks on Shell Refinery Sale Break Down
Shell Oil Co. said Wednesday that talks with the leading bidder for its Bakersfield refinery broke down, reviving the prospect that the plant could shut down next spring and pinch the state's tight gasoline market.

The two sides "could not reach an agreement that offered terms and conditions acceptable to both parties," Lynn Laverty Elsenhans, president of Shell Oil Products US in Houston, said in a statement. If another bidder doesn't offer "an acceptable package, she said, "we will proceed with plans to close the refinery" in March.

Shell last week said it was negotiating exclusively with one suitor, which sources identified as the private investment firm Kelso & Co. in New York.

Shell spokesman Stan Mays declined to say why the talks collapsed or whether Kelso remained interested. Kelso's general counsel, James Connors, declined to comment.

The Bakersfield refinery produces 2% of California's gasoline and 6% of itsdiesel fuel. Shell's plan to shutter it alarmed California Atty. Gen. Bill Lockyer, politicians and consumer advocates who feared that the closure would leave California short of gasoline supplies and raise pump prices.

Under pressure, Shell agreed earlier this year to attempt to arrange a sale that would keep the 500-acre, 72-year-old plant open. A few potential buyers other than Kelso expressed interest.

"We're going to go back to the other final bidders and gauge their interest... and see if it's possible to negotiate a sale," Mays said.

Critics contend that Shell is a reluctant seller because it has made clear its desire to keep ownership of certain storage tanks and other assets integral to running the refinery and leasing those assets back to the new owner.

That makes the property less attractive to bidders, said Jamie Court, president of the Foundation for Taxpayer and Consumer Rights in Santa Monica.

"Shell is acting like someone who's selling their house but refusing to sell the garage that goes with it," he said. "It's incumbent on the attorney general to demand that Shell live by reasonable terms."

Lockyer spokesman Tom Dresslar said Lockyer's office was "going to review the circumstances that led to this apparent failure of the negotiations."

Shell "committed to making a good-faith effort to complete a sale," Dresslar said, "and the attorney general intends to hold them to that promise."

Two other potential buyers were Flying J Inc., a privately held oil company based in Ogden, Utah, and Paramount Petroleum Corp., a Paramount firm that mainly refines oil into asphalt.

Executives with the two companies didn't respond to requests for comment Wednesday. Last week they said they remained interested, especially if the talks with Kelso faltered.

Shell, the U.S. unit of the Anglo-Dutch oil giant Royal Dutch/Shell Group, said it wanted to close the refinery because of dwindling supplies of crude oil in the San Joaquin Valley.

The company also cited the refinery's age and that it wasn't profitable enough. It employs 250 people and can process 70,000 barrels of crude oil a day.

Critics asserted that Shell's motive was to drive up pump prices and profit at Shell's two larger California refineries in Martinez and Wilmington.

In July, the Federal Trade Commission said it was investigating whether Shell's plan to close the Bakersfield refinery would violate antitrust laws by reducing competition.

If the plant closes in March, it could add to what is already a volatile period in California's gasoline market.

That's when refiners switch to summer blends of gas that are more difficult to produce. The result can be supply snags and higher prices.

Part I ..to be continued..

roachboy · 05-09-2008, 12:32 PM

2 questions and i'll get back to you:

1. how emblematic do you take this bakersfield situation to be and why?
2. you have a more or less textbook case of the discrepancy between corporate performance viewed on a global scale versus local dependence on systems of distribution that from the global scale are expendable and/or outmoded. at the ideological level, you have an american system that has not even started to deal with the consequences of the shift in power away from nation-states to trans-national registers and which compounds this problem by also being differentially committed (depending on whether a particular politician is of the democrat or republican wing of the overall consensus-driven formation) to not using regulation to assert interests at the nation-state level.

2 is relevant in this case both in general (add it up, if my writing is clear enough--and i'm not sure it is--and you'll find that it results in a quick outline of total incoherence at the policy/regulatory level across the board--how does the american nation-state assert it's own interests--which are those of maintaining itself as a nation-state--when they are at cross purposes with the interests or requirements of trans-national capital? can it, even in a context as fundamental as energy? so far, "markets" structured around de facto neo-colonial arrangements have enabled the state to avoid dealing with this matter on energy--if it were possible to do anything coherent, particularly while this asshat administration remains in power, political expediency would have already had then doing it, i'd imagine, as it is politically damaging for gas prices to be this high and there to be NO sign that the american state can or will do anything about it...)

given this, the first question comes into play: how emblematic is this situation? why is it emblematic? why do you take this particular case as a jump-off point for a nationalization argument?

all this to the side of the simple reality that there is no way that this administration would ever do such a thing.
and the corporate media seems to have neither the internal interest nor external directives to sell such an idea--you know, in anything like the way it worked to sell the crock of shit that is the iraq war for example...

this for starters.

host · 05-09-2008, 02:09 PM

I ended up posting the "Part II" of this thread's OP, here:

http://www.tfproject.org/tfp/showpos...4&postcount=22 .... except for this part which is actually a summary of the both parts of the OP, except for the part about Chevron deciding to spend $2 billion buying back it's own common stock, at the same time, just a few hundred miles south of it's San Ramone, CA corporate HQ, the city of Long Beach waits to drill new oil wells in a field of proven commercially viable petroleum deposits, because necessary expertise and oil drilling equipment are not available...

Quote:

http://www.washingtonpost.com/wp-dyn...112500956.html
AP Analysis: Firms Crimping Oil Supplies

By JEFF DONN
The Associated Press
Sunday, November 26, 2006; 12:13 AM

Storage tanks at the Flying J oil refinery in Bakersfield, Calif., sit beyond old oil pumping equipment Oct. 12, 2006. The refinery is so full of promise that Flying J has decided to spend several hundred million dollars to nearly double its gasoline output. It hopes to make about $85 million more a year in profit. (AP Photo/Damian Dovarganes) (Damian Dovarganes - AP)

BAKERSFIELD, Calif. -- You'd think it was Texas. Dusty roads course the scrubland toward oil tanks and warehouses. Beefy men talk oil over burritos at lunch. Like grazing herds, oil wells dip nonstop amid the tumbleweed _ or even into the asphalt of a parking lot.

That's why the rumor sounded so wrong here in California's lower San Joaquin Valley, where petroleum has gushed up more riches than the whole gold rush. Why would Shell Oil Co. simply close its Bakersfield refinery? Why scrap a profit maker?

The rumor seemed to make no sense. Yet it was true.

The company says it could make more money on other projects. It denies it intended to squeeze the market, as its critics would claim, to drive up gasoline profits at its other refineries in the region.

Whatever the truth in Bakersfield, <h2>an Associated Press analysis suggests that big oil companies have been crimping supplies in subtler ways across the country for years. And tighter supplies tend to drive up prices.</h2>

The analysis, based on data from the U.S. Energy Information Administration, indicates that the industry slacked off supplying oil and gasoline during the prolonged price boom between early 1999 and last summer, when prices began to fall.

The industry counters that it's been working hard to meet untiring demand. It faults output quotas set by Mideast oil powers, global competition for oil from booming economies like China's, and domestic challenges like depleting wells, clean-air rules, and hurricanes. They do make things harder.

Yet the AP analysis found evidence of at least an underwhelming industry performance in supplying the domestic market, when profits should have made investment capital plentiful:

_During the 1999-2006 price boom, the industry drilled an average of 7 percent fewer new wells monthly than in the seven preceding years of low, stable prices.

_The national supply of unrefined oil, including imports, grew an average of only 6 percent during the high-priced years, down from 14 percent during the previous span.

_The gasoline supply expanded by only 10 percent from 1999 to 2006, down from 15 percent in the earlier period.

The findings support a conclusion already reached by many motorists. Fifty-five percent of Americans believe gas prices are high because oil companies manipulate them, a Pew Research Center poll found in October.

<a href="http://www.washingtonpost.com/wp-dyn/content/article/2006/11/25/AR2006112500956_2.html">Page 2</a>

Even in Bakersfield, which lives off oil, many suspect that the industry goes easy on supply for its own reasons. "They ain't trying: that's more money for them," snorted JaRayle Madden, a construction worker filling up his little sedan recently at a local Shell station.

This fast-growing city of 300,000 shuddered in November 2003, when Shell confirmed it would soon close its local refinery. Plant workers, consumer activists and public officials rose up in resistance, firing off letters and demanding meetings.

The 70-year-old refinery only produced 2 percent of California's gasoline and 6 percent of its diesel fuel. Yet opponents feared its demise would push up prices in the tight markets all along the West Coast.

In these circumstances, surely the plant was worth something to someone, if not to Shell. After losing $57 million mostly in the aftermath of the Sept. 11 terrorist attacks, the refinery was making money again, Shell acknowledged.

Though set back temporarily by the attacks, the oil business has profited handsomely since then. For example, the biggest six refiners _ Shell is only No. 12 nationally but powerful in California _ rang up $400 billion in profits since 2001, according to the consumer group Public Citizen and corporate reports. Even compliance with complex clean-air rules hasn't spoiled business.

The industry also protected profits by not building any new refineries, instead expanding existing ones when it could.

Shell portrayed its Bakersfield refinery as old and unfit. One executive said there was "simply no longer an adequate supply of crude oil" nearby.

Drillers across the country complain of maturing wells that are slowly running low. Gas or liquid is sometimes injected into reservoirs at higher cost to keep up the flow.

"The industry is working very hard," says Joe Sparano, who heads the Western States Petroleum Association representing Shell and other drillers, refiners and marketers.

However, oil reserves are expected to last for decades around Bakersfield and elsewhere, according to industry and government estimates. Fresh national reserves are found each year. To make up for older wells, oil companies regularly drill new ones _ about 9,800 last year. Underground discoveries and technological strides have kept domestic reserves at the same level as in 1999.

With demand growing, though, the United States has imported an expanding share of its oil from abroad _ and quotas kept by Mideast nations do lift its price.

<a href="http://www.washingtonpost.com/wp-dyn/content/article/2006/11/25/AR2006112500956_3.html">Page 3</a>

....Imports were impractical at inland Bakersfield, Shell explained. Lynn Laverty Elsenhans, the head of Shell Oil Products US, said the refinery here just wasn't viable anymore.

"For this reason, we have not expended time or resources in an attempt to find a buyer and do not intend to do so," Elsenhans wrote to U.S. Sen. Barbara Boxer, D-Calif.

Shell's blunt tone began to trouble opponents of the plan. Union officer Ed Huhn, a former refinery worker who was trying to keep the place open, began to wonder if it was folly. "They were trying to discourage anybody from buying it," he says.

Skeptics like U.S. Sen. Ron Wyden, D-Ore., got more vocal. They began to suspect that Shell wanted to shut the refinery to sell pricier gas from its bigger refineries elsewhere in the region. By taking a hit at Bakersfield, maybe Shell could come out ahead.

"They were trying to squeeze the market in every possible way," Wyden insists.

Shell spokesman Stan Mays denies that. He says it's "impossible to speculate" on whether Shell would have profited from closing the plant.

But he indirectly acknowledges that Shell didn't intend to make the refinery attractive for a competitor: "Who's going to want to buy it? We're not going to give crude supply with it."

It turns out that the industry exerts quite a bit of control over supply.

For one thing, it decides to invest in new wells and refining equipment _ or not to. Though reserves have kept pretty steady, the oil industry taps those resources to varying degrees from year to year. The long price run-up first took off as the number of new wells abruptly dropped by a total of 59 percent in 1998-99, federal records show.

One consumer advocate, Mark Cooper, refers to industry-induced supply bottlenecks as "strategic underinvestment." He views references to "discipline" in annual corporate reports as a code word for going easy on supplies.

<a href="http://www.washingtonpost.com/wp-dyn/content/article/2006/11/25/AR2006112500956_4.html">Page 4</a>

AP Analysis: Firms Crimping Oil Supplies

....In Bakersfield, government regulators eventually began to nose around, wondering if Shell hoped to game the market. But the company finally hired an investment banker to scout buyers. In January 2005, it announced a sale to truck-stop operator Flying J, of Ogden, Utah, which also runs a small refining business. The price was kept secret. Shell did nothing wrong, federal regulators later decided.

Since the sale, drillers and refiners have been making profits as never before.

The back-to-back hurricanes along the Gulf Coast in 2005 crippled about a third of the country's oil-output capacity and a fifth of its refining _ but only temporarily. For all its talk of supply challenges, the industry quickly arranged for more imports and avoided outright national shortages. But prices jerked upward.

In Bakersfield, Flying J's 350 refinery workers now process 2.7 million gallons of oil a day _ as much as Shell did _ in the churning nest of boilers, piping and stacks venting six stories above the scrubland.

"It's still a good refinery, good people, a lot of money to be made in the long term," says Andy Wheeler, the engineering manager transplanted from Louisiana. "There's still plenty of oil locally to produce."

The new owner won't discuss current profits but acknowledges making money. With limited oil from Shell, Flying J has kept its boilers busy with crude from other wells, also right here in the valley.

In fact, the refinery is so full of promise that Flying J has decided to spend several hundred million dollars to nearly double its gasoline output. It hopes to make about $85 million more a year in profit.

"Shell, in the last few years of operation, didn't invest any money into the place," says Wheeler, tooling past its giant storage tanks in his shiny SUV.

But the refinery's new bosses, says manager Gene Cotten, are "comfortable enough with the long-term crude supply to make that investment."

Quote:

http://findarticles.com/p/articles/m...4?tag=rel.res1
Flying J plans to double gas output
Deseret News (Salt Lake City), May 9, 2006 by Robert Tuttle Bloomberg News

Flying J Inc., a refinery operator and fuel distributor, said it plans to double gasoline production at the Bakersfield, Calif., plant it bought from Royal Dutch Shell Plc last year.

Ogden-based Flying J has been obtaining permits to expand the refinery's gasoline and diesel output, the company said Friday in an e-mailed statement. The upgrades are scheduled to be completed by the middle of 2008, the statement said.

Shell originally planned to close the refinery, saying the plant was losing money. It sold the facility to Flying J in March 2005. Flying J will spend $500 million to upgrade its refinery, the Los Angeles Times reported last week.

"A move like that, to put that type of investment to revamp this type of refinery speaks volumes," James Cordier, president of Liberty Trading Group in Tampa, Fla., said Friday in a phone interview. "It appears that the industry is of the opinion that high prices will be with us for a while."

Flying J's Bakersfield refinery can process 70,000 barrels of crude oil a day. In addition to gasoline, the upgrades will boost diesel production by 15 percent, the statement said.

In 2004, the U.S. Federal Trade Commission investigated whether Shell's planned closure would violate antitrust rules by reducing competition in California.

Flying J had sales of $7.3 billion in 2004, according to a statement on the company's Web site.

Top grade crude oil reached $125 per bbl today, and I submit for consideration that at least two major oil companies, Shell Oil and Cheron-Texaco, have demonstrated that they are not nearly committed enough to investing in the recovery or refining of oil in the US, not even in the lucrative and high and still growing demand California market, where Chevron is headquartered and where crude oil can still be relatively cheaply drilled for and recovered and transported to the limited local refining operations.

These companies aggravate price and supply in the US, and cause avoidable foreign purchases of both crude and distilled product to be made and shipped from foreign sources, to supplement the lack of availability of these commodities inside the US.

They lobby heavily for US government subsidies, even as they fail to commit themselves earnestly and truthfully to exploring for and refining petroleum in the US. One can only wonder, by the examples I have presented, whether they make similar decisions to avoid investing as much as they are able to in finding and refining more petroleum, outside the US. Big oil has demonstrated that it is not truthful, so it is rational to distrust what they say, vs. what they do.

It is rational to cease depending on them to provide reliable supply to the US market at the best price. It seems to be in the best interests of US voters to press elected officials to seize the domestic assets of these rogue major oil companies, because oil product supply is too important to leave to these demonstrably untrustworthy executives to continue to manage.

The "free" market has failed to operate as anticipated. Rising prices have not resulted in enough of an incentive to expand investment in obtaining and providing an increasing supply.

It cannot get more expensive or unreliable than Shell Oil and Chevron have been observed trying to make the US petroleum market. The investment banks, mortgage companies, and the US banking sector have all been caught in the past year, doing the same fucking thing....undermining the stability and integrity of their own industries for short term gain.

Why would taking their businesses sway from them, in exchange for a legally determined, taxpayer funded compensation, not be a rational reaction to this bullshit?

dc_dux · 05-09-2008, 02:26 PM

Documents from the Cheney energy task force, grudgingly released (but heavily redacted) after a court order as a result of FOIA requests, show "how oil industry lobbyists not only played a pivotal role in developing the administration's national energy strategy, they wrote much of it themselves."

The Cheney Energy Task Force (see the slide show)

Quote:

Among the more significant revelations unearthed from the heavily redacted documents:

* A March 20, 2001 email from the American Petroleum Institute to an Energy Department official provided a draft Executive Order on energy. Two months later, President Bush issued Executive Order 13211, which is nearly identical in structure and impact to the API draft, and nearly verbatim in a key section.

* In March 2001, a Southern Company lobbyist emailed a DOE official suggesting "another issue" for inclusion in the energy plan: so-called reform of the Clean Air Act and related enforcement actions. The suggestion was incorporated into the energy plan, launching the Administration's controversial effort to weaken the Clean Air Act and retreat from high-profile enforcement actions against the nation's largest polluters, including the Southern Company.

http://www.nrdc.org/media/pressreleases/020327.asp

With influence like this, the oil industry can get any model it wants.

host · 05-09-2008, 03:10 PM

Would the US public (and the Iraqis, for that matter...) be better or worse off today if the large international and US major oil corps. and their API trade organization did not exist?

Quote:

http://www.nytimes.com/2005/06/08/po...gewanted=print
June 8, 2005
Bush Aide Softened Greenhouse Gas Links to Global Warming
By ANDREW C. REVKIN

A White House official who once led the oil industry's fight against limits on greenhouse gases has repeatedly edited government climate reports in ways that play down links between such emissions and global warming, according to internal documents.

In handwritten notes on drafts of several reports issued in 2002 and 2003, the official, Philip A. Cooney, removed or adjusted descriptions of climate research that government scientists and their supervisors, including some senior Bush administration officials, had already approved. In many cases, the changes appeared in the final reports.

The dozens of changes, while sometimes as subtle as the insertion of the phrase "significant and fundamental" before the word "uncertainties," tend to produce an air of doubt about findings that most climate experts say are robust.

Mr. Cooney is chief of staff for the White House Council on Environmental Quality, the office that helps devise and promote administration policies on environmental issues.

Before going to the White House in 2001, he was the "climate team leader" <h3>and a lobbyist at the American Petroleum Institute, the largest trade group representing the interests of the oil industry. A lawyer with a bachelor's degree in economics, he has no scientific training.</h3>

The documents were obtained by The New York Times from the Government Accountability Project, a nonprofit legal-assistance group for government whistle-blowers.

The project is representing Rick S. Piltz, who resigned in March as a senior associate in the office that coordinates government climate research. That office, now called the Climate Change Science Program, issued the documents that Mr. Cooney edited.

A White House spokeswoman, Michele St. Martin, said yesterday that Mr. Cooney would not be available to comment. "We don't put Phil Cooney on the record," Ms. St. Martin said. "He's not a cleared spokesman."

In one instance in an October 2002 draft of a regularly published summary of government climate research, "Our Changing Planet," Mr. Cooney amplified the sense of uncertainty by adding the word "extremely" to this sentence: "The attribution of the causes of biological and ecological changes to climate change or variability is extremely difficult."

In a section on the need for research into how warming might change water availability and flooding, he crossed out a paragraph describing the projected reduction of mountain glaciers and snowpack. His note in the margins explained that this was "straying from research strategy into speculative findings/musings."

Other White House officials said the changes made by Mr. Cooney were part of the normal interagency review that takes place on all documents related to global environmental change. Robert Hopkins, a spokesman for the White House Office of Science and Technology Policy, noted that one of the reports Mr. Cooney worked on, the administration's 10-year plan for climate research, was endorsed by the National Academy of Sciences. And Myron Ebell, who has long campaigned against limits on greenhouse gases as director of climate policy at the Competitive Enterprise Institute, a libertarian group, said such editing was necessary for "consistency" in meshing programs with policy.

But critics said that while all administrations routinely vetted government reports, scientific content in such reports should be reviewed by scientists. Climate experts and representatives of environmental groups, when shown examples of the revisions, said they illustrated the significant if largely invisible influence of Mr. Cooney and other White House officials with ties to energy industries that have long fought greenhouse-gas restrictions.

In a memorandum sent last week to the top officials dealing with climate change at a dozen agencies, Mr. Piltz said the White House editing and other actions threatened to taint the government's $1.8 billion-a-year effort to clarify the causes and consequences of climate change.

"Each administration has a policy position on climate change," Mr. Piltz wrote. "But I have not seen a situation like the one that has developed under this administration during the past four years, in which politicization by the White House has fed back directly into the science program in such a way as to undermine the credibility and integrity of the program."

A senior Environmental Protection Agency scientist who works on climate questions said the White House environmental council, where Mr. Cooney works, had offered valuable suggestions on reports from time to time. But the scientist, who spoke on the condition of anonymity because all agency employees are forbidden to speak with reporters without clearance, said the kinds of changes made by Mr. Cooney had damaged morale. "I have colleagues in other agencies who express the same view, that it has somewhat of a chilling effect and has created a sense of frustration," he said. ....

THe Majors All Get The Spoils of War....Is it a Coincidence That Only the Companies With Prominent US Ties Get the Contracts?[/quote]

Quote:

http://www.reuters.com/article/GCA-O...59406020080507
Iraq in advanced talks on sixth oil deal: sources
Wed May 7, 2008 5:56am EDT

DUBAI (Reuters) - Iraq is in advanced talks for an oil service contract with a consortium of Vitol, Anadarko (APC.N: Quote, Profile, Research) and Dome to boost output by 100,000 barrels per day at its Luhais oilfield, industry sources said on Wednesday.

The contract is the sixth in a batch of short-term oil service contracts worth around $500 million each that Iraq wants to sign with international oil companies in June.

Baghdad aims to increase oil output by around 600,000 bpd with the deals, boosting by over a quarter Iraq's current output of around 2.25 million bpd.

"A final round of meetings is expected to be held with the consortium, and all of the companies negotiating these contracts, at the end of this month," said an industry source. "All companies involved are finalizing paperwork to initial the agreements in early June."

The consortium of European oil trader Vitol, U.S. independent oil and gas company Anadarko and Dubai-based Dome has already taken part in two rounds of talks with Iraqi officials in Jordan's capital of Amman for the contract. The Luhais oilfield is in southern Iraq and pumps around 50,000 bpd.

Iraqi Oil Minister Hussain al-Shahristani said last month he wanted the oil service deals the country was negotiating with international oil giants to be signed in June, or Baghdad may drop the deals.

BP (BP.L: Quote, Profile, Research), Royal Dutch Shell (RDSa.L: Quote, Profile, Research) and Exxon Mobil (XOM.N: Quote, Profile, Research) were negotiating a deal each. Shell is negotiating another deal with BHP Billiton (BHP.AX: Quote, Profile, Research), while Chevron (CVX.N: Quote, Profile, Research) and Total (TOTF.PA: Quote, Profile, Research) together are working on a fifth deal.

The service contracts form part of stopgap measures to boost oil production in the absence of a vital oil law. Legislation to set the terms and extent of foreign investment in the country has been stalled in parliament for more than a year.

(Reporting by Simon Webb)

Seaver · 05-09-2008, 04:32 PM

Host, I'm not reading all of that. Honestly, it's a fucking encyclopedia.

That being said... I wouldn't be 100% against this move. The Postal Service started for the greater-good, in order to unite the colonies and provide open communication between states. Gasoline in essence provides much the same.

The big problem is where international investment, which is MAJOR for the oil companies, would sit. In essence the US government would then be purchasing land from foreign countries. This would then require congressional approval for every individual well.

host · 05-09-2008, 04:49 PM

Quote:

Originally Posted by Seaver

.....That being said... I wouldn't be 100% against this move. The Postal Service started for the greater-good, in order to unite the colonies and provide open communication between states. Gasoline in essence provides much the same.

The big problem is where international investment, which is MAJOR for the oil companies, would sit. In essence the US government would then be purchasing land from foreign countries. This would then require congressional approval for every individual well.

There are experienced sources to enlist in making a plan to nationalize assets deemed vital to the US public interest....in the governments of Venezuala, Bolivia, and Peru, and how not to do it, in the Iraqi oil ministry!

Ustwo · 05-09-2008, 06:53 PM

Quote:

Originally Posted by Seaver

Host, I'm not reading all of that. Honestly, it's a fucking encyclopedia.

That being said... I wouldn't be 100% against this move. The Postal Service started for the greater-good, in order to unite the colonies and provide open communication between states.

Having once worked while in school as a grunt for a sub contractor working on the USPS HQ for the Chicago area, I'm going to have to say no.

I did get a real kick out of reading the union complaints though. You see almost no one would be in their cubes, well 2 of these cubes were off to the side and were apparently the union complaint area. So while their cube farm was empty as they were doing whatever it is they do when not working, which was most of the day as far as I could tell, I read threw the stack of complaints.Apparently the biggest issue is everyone is racist against blacks at the USPS this includes union members who's bosses were black, their same race bosses were also racist. I could go on for a while about the fun there.

The only thing that amazed me after working there a summer was that ANY mail gets anywhere. If you look behind the giant sorting machines you can see a few dozen letters covered in dust.

So the USPS does get the job done, its hardly efficient. Glad they are raising postage costs again though.

host · 05-09-2008, 08:35 PM

Ustwo, as a supporter of development of ANWR, would you be surprised at all to learn that Exxon and it's partners are accused of deliberately avoiding development of proven gas and oil fields bordering ANWR....fields that hold massive amounts of natural gas and oil, for the past 31 years?

Quote:

http://www.adn.com/front/story/384213.html
State rejects Exxon's Point Thomson plan

DORMANT FIELD: Oil firm's commitment to drilling "too risky."

By WESLEY LOY
wloy@adn.com

Published: April 23rd, 2008 12:10 AM
Last Modified: April 23rd, 2008 11:51 AM

Exxon Mobil Corp. can't be trusted to keep its latest promise to develop a huge North Slope oil and gas field that's lain dormant since its discovery decades ago, a top state official decided Tuesday.

The decision denying Exxon's proposed development plan means the fate of Point Thomson -- which figures prominently in plans for a proposed natural gas pipeline -- remains bound up in state court.

Exxon, the top leaseholder in the 106,201-acre field, in February offered a $1.3 billion drilling plan in hopes of halting the state's legal effort to break up the field and possibly lease the acreage to other companies.

Exxon managers touted the plan as an "unconditional commitment" to start producing from the field.

But in a 78-page decision issued Tuesday, state Natural Resources Commissioner Tom Irwin sternly rejected Exxon's development plan -- its 23rd over the years -- saying the company and other leaseholders repeatedly broke past commitments and have engaged in "a constant shell game" for more than two decades.

Irwin, who presided over a court-ordered hearing on the plan in March, questioned the credibility of oil company executives who testified and concluded that allowing the companies "another opportunity to delay development of this valuable state resource is too risky."

Exxon and other Point Thomson leaseholders have 20 days to ask Irwin to reconsider. Then the matter moves back into state Superior Court.

Exxon spokesmen asserted Irwin's decision essentially locks the company's drilling rig out of the field, where Exxon vowed to start work on up to five wells and employ 200 people this winter.

"We're surprised and extremely disappointed," Exxon said in a written statement. "We plan to appeal this action and will pursue all alternatives to protect our rights to develop these resources."

Exxon added that it believes Irwin "has no legal basis" to break up the field's leases and that doing so will lead to years more conflict in court.

Steve Rinehart, a spokesman for BP, the second-largest Point Thomson leaseholder, said his company also was disappointed and that Irwin's decision could delay a natural gas pipeline.

Point Thomson is located on the Beaufort Sea coast next to the Arctic National Wildlife Refuge, about 60 miles east of the giant Prudhoe Bay oil field.

It holds an estimated 8 trillion cubic feet of natural gas -- about a quarter of the Slope's known 35 trillion cubic feet. It also holds several hundred million barrels of crude oil and a liquid form of natural gas known as condensate.

Development of the field would mean huge tax and royalty revenues for the state.

Exxon drilling led to discovery of Point Thomson's gas and oil reserves in 1977. But the company hasn't developed the field because of the lack of a gas pipeline and the field's extreme subsurface pressure, which would require tougher, costlier wells to control, Exxon managers say.

Irwin, in his decision, said Exxon and other leaseholders have looked to "warehouse" Point Thomson while concentrating on projects elsewhere in the world.

Because of its rich natural gas reserves, Point Thomson is considered a vital piece of any pipeline plan to ship gas to the Lower 48 or abroad.

Two pipeline proposals are now on the table -- one from Calgary-based TransCanada Corp. and another from a partnership of Conoco Phillips and BP.

Exxon, which isn't part of either pipeline proposal, told the state when it submitted its latest development plan in February that it would pledge its share of Point Thomson gas to a pipeline project so long as it received terms as good as those of other companies with gas to ship.

But Exxon's plan didn't impress Irwin.

He said its $1.3 billion proposal to produce 10,000 barrels a day of gas condensate beginning in 2014 -- a small amount in the context of total North Slope production now averaging 750,000 barrels a day -- was a "modest" step to exploit a hugely valuable field.

Anyway, Irwin wrote, Exxon and other Point Thomson leaseholders can't be trusted to keep their word. He noted, for example, that the latest plan of development has a loophole giving Exxon an out based on "permitting delays."

"Approval of this plan merely serves as an invitation for Exxon Mobil to abandon this project under the guise of permitting delays or denials," Irwin wrote.

Quote:

http://www.adn.com/oil/story/356188.html

Exxon seeks truce in fight for Point Thomson's future
NORTH SLOPE: State wants to cancel drilling leases, but oil companies want to settle.

By WESLEY LOY
wloy@adn.com

(03/26/08 00:04:34)

JUNEAU -- Under pressure from the state to either develop or lose a rich North Slope natural gas field, oil companies led by Exxon Mobil are looking to settle the legal battle for control of the long-dormant deposit.

The companies have filed a five-page proposal in state Superior Court in Anchorage laying out a series of steps in a $1.3 billion plan to tap the Point Thomson field, which hasn't produced any oil and gas despite being discovered more than 30 years ago.

If they break their word and don't complete the steps, which run to 2013, the companies consent to a judge breaking up the Point Thomson unit -- the critical state designation binding together the field's leases.

That would greatly aid the state's effort to evict Exxon and other leaseholders.

To back up their settlement offer, top brass with Exxon, Chevron and BP have sent letters to state Natural Resources Commissioner Tom Irwin.

The development plan "has the full support of Exxon Mobil," wrote Morris Foster, president of Exxon Mobil Production Co.

"Chevron's commitment is unequivocal," added Scott Davis, a vice president with Chevron, the third-largest leaseholder in the field after Exxon and BP.

The settlement offer heightens the high-stakes drama between the oil companies and the state, which could accept the development plan or keep working in court for the right to reclaim the field outright.

State officials Tuesday declined to comment.

MURKOWSKI'S OPENING MOVE

Located next to the Arctic National Wildlife Refuge about 60 miles east of Prudhoe Bay, Point Thomson is believed to hold about a quarter of the North Slope's 35 trillion cubic feet of natural gas plus an estimated 300 million barrels of oil.

<h3>Critics including the state's lawyers have accused Exxon of "warehousing" Point Thomson's taxable treasures while concentrating on its other prospects around the world.</h3>

Exxon has cited the field's extreme subsurface pressure and the lack of a multibillion-dollar natural gas pipeline as reasons why it has gone untapped.

In 2006, then-Gov. Frank Murkowski made the opening play in what has become a tense legal chess match, moving to reclaim the more than 100,000 acres of leased state land at Point Thomson with an eye toward offering it to companies more eager to produce.

Gov. Sarah Palin, who succeeded Murkowski, has taken over the match he started.

Exxon and the other oil companies sued the state in an effort to preserve Point Thomson as a cohesive unit and hang onto the leases, which would expire if the unit is dissolved.

EXXON'S PLEDGE

Exxon made another big move last month, unveiling its $1.3 billion plan to drill five wells starting next winter and produce 10,000 barrels a day of liquid natural gas, known as condensate, by 2014.

It's the 23rd development plan Exxon has offered for Point Thomson over the years.

Exxon executives insist this one is different, saying state officials can trust the leaseholders to carry it out fully.

The proposed settlement they filed in court last week has blanks for oil company and state lawyers to sign, resolving the court case.

So, will the state take the deal?

Richard Todd, the assistant attorney general handling the state's Point Thomson defense, wouldn't comment Tuesday.

Neither would Nan Thompson, a Division of Oil and Gas official who helped preside over a recent court-ordered state hearing on Point Thomson's fate.

Thompson also wouldn't say when Irwin will issue his decision from the hearing, in which oil companies urged him to accept the latest development plan to resolve the dispute.

Quote:

http://www.dog.dnr.state.ak.us/oil/p...son-denial.pdf.

DENIAL OF THE PROPOSED PLANS FOR DEVELOPMENT OF THE
POINT THOMSON UNIT
September 30, 2005
Findings and Decision of the Director, Division of Oil and Gas
Under Delegation of Authority from the
Commissioner, Department of Natural Resources, State Of Alaska

I.
SUMMARY OF DECISION
This is the final Decision of the Alaska Department of Natural Resources, Division of Oil and
Gas (the Division) on the Twenty-second Plan of Development (22
nd
POD) for the Point
Thomson Unit (PTU) submitted by the PTU Operator, Exxon Mobil Corporation (Exxon), on
August 31, 2005. <h3>The Division finds that the PTU Agreement is in default for Exxon’s failure to
submit an acceptable unit plan of development.</h3>
The PTU is underlain by a massive undeveloped gas and gas condensate reservoir that was
discovered nearly 30 years ago, but the PTU oil and gas lessees have determined that production
of the unitized substances is, in their view, not commercially viable. The 22
nd
POD proposes
additional studies to determine if the PTU lessees can design a commercially viable production
project.
The 22
nd
POD states that PTU development is not possible without modifying the current laws
regarding the State’s right to taxes and royalties on oil and gas production and on construction of
a North Slope gas pipeline. The PTU Operator proposed integrating the lessees’ PTU
development obligations into negotiations for a fiscal contract with the State and proposed a two
year delay of the development commitments made by the lessees in connection with an
expansion of the PTU in 2001, both of which would make PTU development uncertain. The
current fiscal contract negotiations may or may not lead to construction of a North Slope gas
pipeline.
The premise that the PTU can only be developed if a North Slope gas pipeline is built is
inappropriate. In addition to dry gas, the unit contains 100s of millions of barrels of hydrocarbon
liquids. These hydrocarbon liquids could be produced using mostly existing oil pipelines
without construction of a North Slope gas pipeline. Therefore, potential PTU development is
not, in fact, limited to dry gas production. In addition, the PTU Agreement, which requires
timely exploration, delineation, development, and production of unitized substances, does not
guarantee the lessees’ commercial success or provide for indefinite extension of the leases.
1. The 22nd POD is disapproved because it does not set out a plan to bring the PTU
into commercial production within a reasonable time frame.
2. Exxon has 90 days to cure the defect in the 22nd POD by submitting a unit plan
that commits to timely development and production of unitized substances.
3. This decision provides notice under Article 21 of the PTU Agreement that Exxon
must initiate development operations within the PTU by October 1, 2007. The
Division will contact Exxon to schedule a hearing on this issue, which will be
held not less than 30 days from the date of this decision.
4. This decision also provides notice under the individual lease agreements that the
PTU leases containing certified wells must commence production in paying
quantities by October 1, 2009.
5. In addition, the Division denies Exxon’s request for a one-year deferral of the
Expansion Agreement commitments. If Exxon does not commence drilling
Point Thomson Unit, Findings and Decision of the Director
Page 2 of 24
Page 3
within the PTU by June 15, 2006, the PTU boundary will contract and the
contracted leases will no longer be held by unitization.
II.
BACKGROUND
The details of the PTU history set out below can be summarized as follows: Some of the PTU
leases were issued over 40 years ago and the unit has been in existence for 28 years. The
Division certified 7 exploration wells within and around the unit area as capable of producing
hydrocarbons in paying quantities, but it has been 20 years since the last well was drilled. The
Thomson Sand Reservoir is known to contain at least 8 trillion cubic feet of gas and 200 million
barrels of gas condensate and oil. The PTU also contains 100s of millions of barrels of oil in the
shallower Brookian reservoirs. The PTU lessees have not yet determined whether they can
commercially produce PTU resources, and they have not committed to timely explore, delineate,
or develop PTU oil, gas, or gas condensate. The unit operator has consistently proposed that
more studies or workshops are needed before putting the PTU into production and, since 1983,
has periodically asserted that production cannot begin until a North Slope gas pipeline is built.
The PTU is located on the North Slope of Alaska. The western unit boundary is approximately 3
miles east of the Badami Unit and 30 miles east of the Prudhoe Bay Unit (PBU), and the eastern
unit boundary lies west of the western boundary of the Arctic National Wildlife Refuge
(ANWR). The southern PTU boundary is onshore, and the northern boundary is offshore in the
Beaufort Sea, adjacent to or near the three-mile territorial sea boundary that separates state from
federal Outer Continental Shelf (OCS) lands. The PTU consists of 45 state oil and gas leases
encompassing approximately 106,200.55 acres. The state owns the entire subsurface estate
within the unit area.
Twenty-five lessees hold working interest ownership in the PTU (PTU Owners), and Exxon is
the designated Unit Operator. Ownership is calculated based on a lessee’s percent of working
interest ownership in each lease multiplied by the lease acreage, as a percentage of the total unit
acreage. On a surface acreage basis, the Major PTU Owners hold 98.9056% of the PTU: Exxon
52.5779%
1
, BP Exploration (Alaska) Inc. (BPXA) 29.1943%, Chevron U.S.A. Inc. (Chevron)
14.3125%, and ConocoPhillips Alaska, Inc. (CPAI) 2.821%. The Minor PTU Owners include
twenty entities that hold the remaining 1.0944% interest in the PTU.
The Division approved the PTU Agreement effective August 1, 1977, with a five-year Initial
Plan of Exploration. The original unit area included 18 state oil and gas leases comprising
approximately 40,768 acres. The PTU Owners drilled 11 wells in and around the unit area
between 1978 and 1983, and the Division certified six of those wells as capable of producing
hydrocarbons in paying quantities under the regulations
2
and the PTU Agreement
3
.
1
Exxon Mobil Corporation holds 43.2361% working interest ownership in the PTU and ExxonMobil Oil
Corporation holds 9.3418%, jointly referred to as Exxon.
2
11 AAC 83.361. Certification of Well Test Results. “For the purposes of 11 AAC 83.301 – 11 AAC 83.395, a
well will be considered capable of producing hydrocarbons in paying quantities, as defined in 11 AAC 83.395,
when so certified by the commissioner following application by the lessee or unit operator. The commissioner will
require the submission of data necessary to make the certification, including all results of the flow test or tests,
supporting geological data, and cost data reasonably necessary to show that the production capability of the well
satisfies the economic requirements of the paying quantities definition.” 11 AAC 83.395. Definitions. “Unless the
context clearly requires a different meaning, in 11 AAC 83.301 – 11 AAC 83.395 and in the applicable unit
agreements, … (4) ‘paying quantities’ means quantities sufficient to yield a return in excess of operating costs, even
Point Thomson Unit, Findings and Decision of the Director
Page 3 of 24
Page 4
On March 26, 1984, the Division approved an application to expand the unit area on condition
that the PTU Owners drill a well on one of the two southern expansion leases by March 31,
1985, and a well on one of the ten northern expansion leases by February 1, 1990. The
expansion added approximately 94,152 acres within 25 leases to the PTU. The PTU Owners
failed to meet both drilling commitments; therefore, the two southern expansion leases and nine
northern expansion leases contracted out of the PTU.
4
In 1998, the Division denied a unit expansion application, which was submitted by Exxon as the
owner of the proposed expansion lease, rather than as the PTU Operator; because it was not
supported by the other PTU Owners. The Division found that adding a lease to a unit where the
owners have demonstrated a lack of cooperation may discourage, rather than encourage, unit
development. The Division’s denial of Exxon’s 1998 PTU expansion application instigated
negotiations between the Division and the PTU Owners to redefine the unit boundary.
Supporting technical data indicated that the Thomson Sand Reservoir extended beyond the
existing unit boundary and that other portions of the unit were not underlain by known
hydrocarbons.
On February 2, 2001, Exxon applied to simultaneously expand and contract the PTU boundary.
On July 31, 2001, the Division and the PTU Owners entered into an agreement in which the
Division approved an expansion of the unit area in return for the PTU Owners’ commitment to
do certain items of work. This agreement also provided that the expansion leases would contract
out of the unit and the PTU Owners would pay the State certain sums of money if the work was
not done. This “Agreement Resolving All Pending Point Thomson Unit Expansion/Contraction
Matters and Proceedings” (Expansion Agreement) identified seven Expansion Areas and one
Work Commitment Area (WCA) outside of the preexisting PTU (All together referred to as
“Expansion Acreage”). The Expansion Agreement included the following work commitments
by the PTU Owners:
1.
WCA Drilling Commitment: Drill a well through the Thomson Sand
interval within the Work Commitment Area by June 15, 2003, or the WCA
acreage would automatically contract out the PTU on that date. Drilling a
new well or deepening the Red Dog #1 Well would have fulfilled the WCA
Drilling Commitment
2.
2006 Development Drilling Commitment: Commence development drilling
in the PTU by June 15, 2006, or all of the Expansion Acreage would
automatically contract out of the unit effective that date, and the PTU
if drilling and equipment costs may never be repaid and the undertaking considered as a whole may ultimately result
in a loss; quantities are insufficient to yield a return in excess of operating costs unless those quantities, not
considering the costs of transportation and marketing, will produce sufficient revenue to induce a prudent operator
to produce those quantities;”
3
PTU Agreement, Article 9, Drilling to Discovery. “Within 6 months after the effective date hereof, the Unit
Operator shall begin to drill an adequate test well at a location approved by the Director, … and thereafter continue
such drilling diligently until the top 100 feet of the Pre-Mississippian formation has been tested or until at a lesser
depth unitized substances shall be discovered which can be produced in paying quantities (to wit: quantities
sufficient to repay the costs of drilling, and producing operations, with a reasonable profit) …”
4
<h3>One of the northern expansion leases remained committed to the PTU because a well drilled on that lease in 1982
was certified as capable of producing in paying quantities</h3>.
Point Thomson Unit, Findings and Decision of the Director
Page 4 of 24....

Seaver · 05-10-2008, 10:59 AM

Quote:

Having once worked while in school as a grunt for a sub contractor working on the USPS HQ for the Chicago area, I'm going to have to say no.

I did get a real kick out of reading the union complaints though. You see almost no one would be in their cubes, well 2 of these cubes were off to the side and were apparently the union complaint area. So while their cube farm was empty as they were doing whatever it is they do when not working, which was most of the day as far as I could tell, I read threw the stack of complaints.Apparently the biggest issue is everyone is racist against blacks at the USPS this includes union members who's bosses were black, their same race bosses were also racist. I could go on for a while about the fun there.

The only thing that amazed me after working there a summer was that ANY mail gets anywhere. If you look behind the giant sorting machines you can see a few dozen letters covered in dust.

So the USPS does get the job done, its hardly efficient. Glad they are raising postage costs again though.

That's a Chicago Union problem. Since moving up here, I've started to learn that. I am physically unable to move coolers onto the back of our truck in order to put frozen product in, because that is a union job. The problem is, the union workers never do it. What happens is frozen goods then sit all night (and weekend) and are of poor quality by the time the customer gets it.

Unions are killing Chicago, that's a different story than this.

Ustwo · 05-10-2008, 11:35 AM

Quote:

Originally Posted by Seaver

That's a Chicago Union problem. Since moving up here, I've started to learn that. I am physically unable to move coolers onto the back of our truck in order to put frozen product in, because that is a union job. The problem is, the union workers never do it. What happens is frozen goods then sit all night (and weekend) and are of poor quality by the time the customer gets it.

Unions are killing Chicago, that's a different story than this.

Welcome to the peoples republic of Illinois.

Now do you REALLY want them to directly be in control of our power?

aceventura3 · 05-12-2008, 08:25 AM

Quote:

Originally Posted by dc_dux

Documents from the Cheney energy task force, grudgingly released (but heavily redacted) after a court order as a result of FOIA requests, show "how oil industry lobbyists not only played a pivotal role in developing the administration's national energy strategy, they wrote much of it themselves."

The Cheney Energy Task Force (see the slide show)

With influence like this, the oil industry can get any model it wants.

Is it common for lobbyists in Washington to draft or be involved in drafting legislation in the area of their expertise? Is the issue the involvement of lobbyists in our legislative process or simply the involvement of lobbyist that you don't agree with being involved with our legislative process?

Personally I think there is a legitimate role for lobbyist and "experts" in our legislative processes. Ultimately it is the responsibility of our elected government officials to do what is right for the nation.

dc_dux · 05-12-2008, 08:29 AM

Quote:

Originally Posted by aceventura3

Is it common for lobbyists in Washington to draft or be involved in drafting legislation in the area of their expertise? Is the issue the involvement of lobbyists in our legislative process or simply the involvement of lobbyist that you don't agree with being involved with our legislative process?

Personally I think there is a legitimate role for lobbyist and "experts" in our legislative processes. Ultimately it is the responsibility of our elected government officials to do what is right for the nation.

Ace...it is far more common for those lobbyists and trade associations (API in this case) that have money to have influence than those public interest associations and environmental groups that dont make political contributions.

I agree that there is a "legitimate role for lobbyist and "experts" in our legislative processes." My issue with the Cheney energy task force is that the only "lobbyists" and "experts" invited to participate were representatives of the oil industry (as many as 40 times according to records released on FOIA requests). Environmental groups were invited to meet with task force staff (not w/Cheney or task force members) once after the public disclosure that they werent included in the process and after the task force report had been drafted.

I dont believe that was "right for the nation."

I would hold any administration to the same standard.

aceventura3 · 05-12-2008, 10:17 AM

Quote:

Originally Posted by dc_dux

Ace...it is far more common for those lobbyists and trade associations (API in this case) that have money to have influence than those public interest associations and environmental groups that dont make political contributions.

I agree that there is a "legitimate role for lobbyist and "experts" in our legislative processes." My issue with the Cheney energy task force is that the only "lobbyists" and "experts" invited to participate were representatives of the oil industry (as many as 40 times according to records released on FOIA requests). Environmental groups were invited to meet with task force staff (not w/Cheney or task force members) once after the public disclosure that they werent included in the process and after the task force report had been drafted.

I dont believe that was "right for the nation."

I would hold any administration to the same standard.

I define what is "right for the nation" by the end result rather than the process. In my mind I can see many circumstances where I would more or less spend more time listening to one group over another group. In this case, it should not surprise anyone that Chaney would spend more time with industry groups over environmentalists. One of the reasons I voted for Bush/Chaney was because I believed they would take a harder stance against environmentalists. I am betting those with the opposite view voted, at least in part, against Bush/Chaney for the same reason. Isn't that the issue for the American public? What are the fundamental beliefs of the people we elect.

I think you are suggesting Chaney did something wrong relative to what we knew he would do. If we elected a more "environmentalist" type President/Vice President I would expect they would give environmentalist groups a more predominant role in making policy. Except for Al Gore, I am not sure why he wasted his 8 years as VP, he could have had a bigger impact on his current concerns over global climate change as VP. I guess it is one of those principle or convictions things. Bush/Chaney are consistent with what they do compared to what they say, Gore was not.

roachboy · 05-12-2008, 10:23 AM

so you're not interested in the general well-being of the citizenry, but rather in electing people who impose your beliefs on the citizenry--presumably because you think your politics are better and smarter than those of others.

and you're not interested in procedural transparency either--which is bizarre given the implication of your preference for smaller government--which is typically accompanied by claims that smaller administrative units are more transparent. instead, you have a stalinist understanding--the end justifies the means.

and you see environmental groups as a problem to boot.
but you trust oil corporations.

the system is designed to prevent ideologues like you from being able to simply impose their fiats on the rest of us--the bush-cheney crew operated like a cabal in this instance, shutting out divergent viewpoints and imposing ideologically (and factionally beneficial) results on the rest of us. it is to prevent this sort of thing that there are checks and balances--which presumably you only care about when there's a democrat in power.

dc_dux · 05-12-2008, 10:36 AM

ace...the oil industry contributions of over $100 million (mostly to repubs) over the last seven years gave them unfettered access to write their own regulations to the Clean Air Act (that will save them $billions while delaying existing regulatory controls over GHG emissions in power plants) and to write their own tax relief provisions in the administration's national energy plan.(including relief from $10 billion in royalty payments). In both cases, the final Bush/Cheney energy plan is almost word-for-word from the API recommendations.

Not a bad return on their investment of $100 million in political contributions.

If you like how that works..thats fine.

I think it stinks like a cow fart!

Ustwo · 05-12-2008, 10:42 AM

Quote:

Originally Posted by dc_dux

ace...the oil industry contributions of over $100 million (mostly to repubs) over the last seven years gave them unfettered access to write their own regulations to the Clean Air Act (that will save them $billions while delaying existing regulatory controls over GHG emissions in power plants) and to write their own tax relief provisions in the administration's national energy plan.(including relief from $10 billion in royalty payments). In both cases, the final Bush/Cheney energy plan is almost word-for-word from the API recommendations.

Not a bad return on their investment of $100 million in political contributions.

If you like how that works..thats fine.

I dont.

So you are saying by your logic that we should also nationalize the trial lawyers as they have given like amounts, almost only to democrats?

Please girlfriend, keep your political grandstanding to a minimum.

dc_dux · 05-12-2008, 10:46 AM

Quote:

Originally Posted by Ustwo

So you are saying by your logic that we should also nationalize the trial lawyers as they have given like amounts, almost only to democrats?

No...thats your logic to divert the discussion from the fact the the oil industry wrote the Bush/Cheney energy plan that is in their best interest and not necessarily in the best interest of the country.

Under my logic, there would be serious campaign finance and lobbying reform and open government reform that would prevent such abuses that benefit either party

aceventura3 · 05-12-2008, 10:50 AM

Quote:

Originally Posted by roachboy

so you're not interested in the general well-being of the citizenry, but rather in electing people who impose your beliefs on the citizenry--presumably because you think your politics are better and smarter than those of others.

Interesting point.

Yes I vote and support politicians who support my views and values. Do you?

Do I consider that imposing my beliefs on others? No. I think our system of governments is set up so that citizens advocate for their point of view. those who think otherwise are mis-informed in my opinion. When I feel imposed upon, I work harder to change things. I think it is a good system, don't you?

Quote:

and you're not interested in procedural transparency either

Don't think I ever said that. If I did, I communicated my view incorrectly. Basically, I don't care who met with whom and for how long. I care about the final product. I either agree with it or I don't. If I disagree with it, I focus on changing it, not trying to find out who was involved in writing it. But that's just me, obviously others see it different.

Quote:

--which is bizarre given the implication of your preference for smaller government--which is typically accompanied by claims that smaller administrative units are more transparent. instead, you have a stalinist understanding--the end justifies the means.

I don't think I ever said that either. I am at a loss. Seems that if you disagree with a point I make you will turn it into some extreme thing with no real basis. I am certainly not a Stalinist.

Quote:

and you see environmental groups as a problem to boot.
but you trust oil corporations.

Never said that either. I just think environmental groups are not 100% credible on 100% of their issues. Neither are oil companies. I understand the agenda of oil companies, I am often confused by what some environmental groups want.

Quote:

the system is designed to prevent ideologues like you from being able to simply impose their fiats on the rest of us--the bush-cheney crew operated like a cabal in this instance, shutting out divergent viewpoints and imposing ideologically (and factionally beneficial) results on the rest of us. it is to prevent this sort of thing that there are checks and balances--which presumably you only care about when there's a democrat in power.

I guess if I choose to serve chocolate ice cream over vanilla ice cream you would find me an ideologue on that as well. If you know my predisposition for chocolate am I shutting out divergent viewpoints for vanilla and imposing that on you? I would assume if you like vanilla you would go somewhere and get vanilla. You have a choice. Just like I do. We make our political choices in the voting booth, right?

Quote:

Originally Posted by dc_dux

ace...the oil industry contributions of over $100 million (mostly to repubs) over the last seven years gave them unfettered access to write their own regulations to the Clean Air Act (that will save them $billions while delaying existing regulatory controls over GHG emissions in power plants) and to write their own tax relief provisions in the administration's national energy plan.(including relief from $10 billion in royalty payments). In both cases, the final Bush/Cheney energy plan is almost word-for-word from the API recommendations.

Not a bad return on their investment of $100 million in political contributions.

If you like how that works..thats fine.

I think it stinks like a cow fart!

I think the real point is if you agree or disagree with the regulations drafted. If you disagree with them, then work to get them changed and get people elected who support your view. I thought your point was a red herring, and I wanted to give you an opportunity to clarify your point. You did.

dc_dux · 05-12-2008, 11:02 AM

Quote:

Originally Posted by aceventura3

I think the real point is if you agree or disagree with the regulations drafted. If you disagree with them, then work to get them changed and get people elected who support your view. I thought you point was a red hearing, and I wanted to give you an opportunity to clarify your point. You did.

ace...every career scientist at EPA disagreed with the rewrite of the CAA regulations, but were overruled by political appointees (from the oil/gas industry). If the industry disagreed with the existing CAA regulations, they should have worked for changing them through the legislative process...that is how it is supposed to work...not in private meetings behind closed doors.

Many career energy policy analysts at DOE and career tax/budget analysts at OMB disagreed with the royalty write-offs in the energy bill but were also overruled by political appointees.

First time I can recall these things happening with such a massive payoff to the affected industries through a secret task force rather than an open legislative process.

aceventura3 · 05-12-2008, 11:14 AM

Quote:

Originally Posted by dc_dux

ace...every career scientist at EPA disagreed with the rewrite of the CAA regulations, but were overruled by political appointees (from the oil/gas industry). If the industry disagreed with the existing CAA regulations, they should have worked for changing them through the legislative process...that is how it is supposed to work...not in private meetings behind closed doors.

Many career energy policy analysts at DOE and career tax/budget analysts at OMB disagreed with the royalty write-offs in the energy bill but were also overruled by political appointees.

First time I can recall that happening with such a massive payoff to the affected industries in my 20+ years working in the national political arena.

Among the bad things in the regulations:

Quote:

Electric utility executives welcomed the initiative because it, among other things, streamlines many CAA regulations. Trade associations including the Edison Electric Institute (EEI), a group of shareholder-owned electric companies, have been lobbying Congress and EPA for several years to devise a program that does just that.

http://pubs.acs.org/subscribe/journa.../cc_skies.html

Who better to help streamline regulations than "insiders"?

What's wrong with this?

Quote:

If enacted, proponents say Clear Skies would reduce SO2 emissions by 73%, from today’s 11 million tons, to a national cap of 4.5 million tons in 2010, and 3 million tons in 2018. Nitrogen oxides emissions would fall by 67%, from 5 million tons to 2.1 million tons in 2008, and to 1.7 million tons in 2018. Mercury emissions, which are not currently controlled, would be cut 69%, from 48 tons to 26 tons in 2010, and 15 tons in 2018.

http://pubs.acs.org/subscribe/journa.../cc_skies.html

I am not saying the regs are perfect, but they are certainly a step forward and not a step back.

dc_dux · 05-12-2008, 11:21 AM

ace...you can cite the American Chemical Society (correction...not a trade association) publication on the so-called Clear Skies Initiative and I can cite environmental group publications....:

Dirty Skies: The Bush Administration's Air Pollution Plan

Clear Skies Proposal Weakens the Clean Air Act

...but whats the point.

You think "environmental groups arent 100% credible", but you dont seem to hold affected industry groups to the same standard.

You think "insiders" are the best to evaluate regs rather than the affected public. I think both should have access and input into the process. They didnt in this case.

..so whats the point.

aceventura3 · 05-12-2008, 11:30 AM

Quote:

Originally Posted by dc_dux

ace...you can cite the American Chemical Society (trade association) publication on the so-called Clear Skies Initiative and I can cite environmental group publications....:

Dirty Skies: The Bush Administration's Air Pollution Plan

Clear Skies Proposal Weakens the Clean Air Act

...but whats the point.

You think "environmental groups arent 100% credible", but you dont seem to hold affected industry groups to the same standard.

You think "insiders" are the best to evaluate regs rather than the affected public.

..so whats the point.

I think I wrote that I don't think either is 100% correct 100% of the time, I however understand the agenda of energy companies and I am often confused by the agenda of environmental groups. There is a difference between what I actually wrote and what you think I wrote.

The point is in the approach you and others take to discussing issues. I think you often bring up points that have no value to the underlying issue. I wonder why you do it. I think it is to confuse the real issue and in the case with the Bush administration it is an effort to demonize the administration. Just my point of view, I know I could be wrong, etc, etc.

dc_dux · 05-12-2008, 11:35 AM

Quote:

Originally Posted by aceventura3

The point is in the approach you and others take to discussing issues. I think you often bring up points that have no value to the underlying issue. I wonder why you do it. I think it is to confuse the real issue and in the case with the Bush administration it is an effort to demonize the administration. Just my point of view, I know I could be wrong, etc, etc.

ace....I am sorry you dont like my approach...but it has served me well and I try to support it with facts.

I could say something about the pot calling the kettle black....with some of your strange analogies and stranger anecdotes that dont transfer to the more general.....or your incessant raising of new extraneous questions that often divert the discussion.

but whats would be the point.

roachboy · 05-12-2008, 11:42 AM

i am bewildered about your apparent assumption that political officials have the expertise adquate to allow them to blow off review processes, ignore their own experts, etc, in the formulation of policy.

i am bewildered by your mode of argumentation, which seems only about superficial factoids buttressed by a faith in corporate actors operating within very specific types of bounded rationalities to be able to step outside that rationality and fashion policy that is somehow not predictated on corporate interest to the exclusion of all others.

i am bewildered by your apparent hostility to environmenal groups, which in the main function to raise political concerns that have to do with what is excluded from corporate internal thinking and imaging of their own performance and the impacts these exclusions have on stakeholders. in this, i am not making any argument that one side is entirely right and one entirely wrong--i just don't get the basis for your dismissal of environmental groups a priori.

i don't really understand anything about where you are coming from politically--you seem unconcerned with democratic process altogether, animated by some quaint faith in the ability of corporate entities to transcend their organizational limitations and act in the best interest of--well who?--themselves, really.

when you are not bothered by the way in which bush/cheney formulated their energy policy and someone reading your posts ask themselves "why is this?" the conclusion is that you don't care about procedural transparency. when you say "i don' care about process, i care about results" it simply reinforces this. it doesn't matter whether you said it or not--the logic is in place throughout what you did say,

the end justifies the means, a disregard for process, a contempt for democratic procedures--all these are typically stalinist. again, it is of no consequence to me whether you like it or not.

and you conflate political ideology with a consumer choice. that one i have so little nice to say about that i'm not going to waste the energy to go beyond this period.

aceventura3 · 05-12-2008, 11:54 AM

Quote:

Originally Posted by dc_dux

ace....I am sorry you dont like my approach...but it has served me well and I try to support it with facts.

It not a question of what I like, I specifically stated that I wondered "why" you do it. I think you have a clear pattern of attacking the Bush administration on a false basis of outrage. Imagine people with Oil industry ties and experience as a CEO dealing with government regulations using that experience or talking with others to develop regulations. That is so, so, so, so, so outrageous. Do you think it is impeachable?

Quote:

I could say something about the pot calling the kettle black....with some of your strange analogies and stranger anecdotes that dont transfer to the more general.....or your incessant raising of new extraneous questions that often divert the discussion.

If the point of an analogy or anecdote is lost, just ask and I will try to clarify.

dc_dux · 05-12-2008, 12:04 PM

Quote:

Originally Posted by aceventura3

It not a question of what I like, I specifically stated that I wondered "why" you do it. I think you have a clear pattern of attacking the Bush administration on a false basis of outrage. Imagine people with Oil industry ties and experience as a CEO dealing with government regulations using that experience or talking with others to develop regulations. That is so, so, so, so, so outrageous. Do you think it is impeachable?

I question Bush policies and practices and back up my concerns with facts.

The facts may not provide a complete picture and I know you often disagree with those facts....but iIMO, it is hard for anyone to deny that they raise legitimate concerns.

I would suggest it is far better to ask questions about ANY administration regarding specific policies and actions than to acquiesce based on a political ideology. (your seemingly "I voted for them, so I trust them" approach)

I would prefer that we stop making this so personal....but I'm not going to let your allegations or assumptions regarding my character and actions go unchallenged.

aceventura3 · 05-12-2008, 12:22 PM

Quote:

Originally Posted by roachboy

i am bewildered about your apparent assumption that political officials have the expertise adquate to allow them to blow off review processes, ignore their own experts, etc, in the formulation of policy.

I don't agree that Chaney "blew off" the review process.

And I actually have more trust in Chaney's combined experience in government and in the private sector over almost any environmentalist who has never had to produce a good or service while dealing with oppressive government regulations.

Quote:

i am bewildered by your mode of argumentation, which seems only about superficial factoids buttressed by a faith in corporate actors operating within very specific types of bounded rationalities to be able to step outside that rationality and fashion policy that is somehow not predictated on corporate interest to the exclusion of all others.

Corporate interests are relatively clear. The interests of some groups are not. But that is not the point. Like I wrote the point is in the final product. Regarding clean air regulations, I think we are better served when those regulations are streamlined and allow for increased efficiency for corporations. Often regulators don't understand the impact they have and the unneeded costs they put into goods and services.

Quote:

i am bewildered by your apparent hostility to environmenal groups, which in the main function to raise political concerns that have to do with what is excluded from corporate internal thinking and imaging of their own performance and the impacts these exclusions have on stakeholders. in this, i am not making any argument that one side is entirely right and one entirely wrong--i just don't get the basis for your dismissal of environmental groups a priori.

Come now. There is a difference between "hostility" and the fact that I don't they they are always right and that I don't always understand their agenda. I think there is a role for environmentalist, I stated that.

Quote:

i don't really understand anything about where you are coming from politically--you seem unconcerned with democratic process altogether, animated by some quaint faith in the ability of corporate entities to transcend their organizational limitations and act in the best interest of--well who?--themselves, really.

I would argue that I have a better understanding of the democratic process than most. I think the process requires work. I think if your point of view is in the minority, you can change that. I think you have an obligation to change it. I don't complain that democracy takes work. I don't get offended when "my guy" doesn't have a seat at the table, if I failed to give "my guy" the power to command a seat at the table.

Quote:

when you are not bothered by the way in which bush/cheney formulated their energy policy and someone reading your posts ask themselves "why is this?"

First I mostly agree with the policy. Second the policy is the issue, not how it was written.

Quote:

the conclusion is that you don't care about procedural transparency.

I never said that. We know who Chaney met with and who he did not meet with. I further argue that we knew who he would meet with prior to his election. He did not hide the fact that he was pro-business. How more open can he be?

Quote:

when you say "i don' care about process, i care about results" it simply reinforces this. it doesn't matter whether you said it or not--the logic is in place throughout what you did say,

Perhaps clarification is in order. First is the final product. If the process was illegal, or fraudulent then I would be among those first in line to say there should be consequences. DC did not state that he thought the process was illegal or fraudulent, he simply stated regarding the process, the facts about who had audience with Chaney and who was forced to meet with staff. He said the people who had audience with Chaney support the Republican party financially and that they are in agreement with the administration.

Quote:

the end justifies the means, a disregard for process, a contempt for democratic procedures--all these are typically stalinist. again, it is of no consequence to me whether you like it or not.

I did not say "the ends justify the means". We are talking about regulations, not some life and death moral question. Given the fact we are talking about regulations, the point is not about the people who put the words on the paper, but the impact of the words on the paper. I can not explain this any clearer.

Quote:

and you conflate political ideology with a consumer choice. that one i have so little nice to say about that i'm not going to waste the energy to go beyond this period.

My political ideology is a choice, so is yours. Are you suggesting otherwise? Is there a political ideology gene or something?

Why do you folks get to a point and say "I am not going to waste any more energy on this" or that. What is the point of that? Why not just stop reading and responding. that is your choice. If you don't respond, I get it. Again, I think it is a red herring. Gee, you folks are confusing to me.

Quote:

Originally Posted by dc_dux

I would suggest it is far better to ask questions about ANY administration regarding specific policies and actions than to acquiesce based on a political ideology. (your seemingly "I voted for them, so I trust them" approach)

I trust them because they do what they say they will do. I would trust a guy like Kucinich as well, he would do what he says he would do, however I would not vote for him.

You mis-state my position, why?

Quote:

I would prefer that we stop making this so personal....but I'm not going to let your allegations or assumptions regarding my character and actions go unchallenged.

I ask specific questions, you make a choice on if you answer those questions or not. You can clarify misunderstandings or misconceptions. You make assumptions about me, you allege things about me or my views, isn't that the nature of an exchange? If I have stepped over a line, I am open to feed back from others or the administrator.

ASU2003 · 05-12-2008, 03:04 PM

I think there are ways to fix the industry without taking it over. It would be more like a public utility type of setup I think you are talking about, and I'm sure prices would go down without their 30% profit margins or whatever (.30 cents at $1, .90 cents at $3, but they don't do anything more).

The problem is that in 2-3 years, prices will just go up again because we sent so much money and so many jobs to China & India. Now they want to use gas to improve things there.

host · 05-12-2008, 06:48 PM

Attention !!! The "free market" is not maximizing US petroleum output or refined products output. It is so glaring a problem, in addition to the documentation I have already posted, that crude oil rich North Dakota is mulling over building a state owned oil refinery to relieve yearly diesel fuel shortages...they cannot persuade private enterprise to build a second refinery in their state, and NATIONALLY...BP-Amoco's screw ups, neglect, deception, and criminality these past few years are shocking....they result in a loss of at least 5 percent of total domestic petroleum output, higher prices in the US, and a US trade deficit $1 billion higher per month than it had to be.

This all comes during what free market theory tells us is a time where high price incentives should influence the private sector to minimize these problems, but they have not:

Quote:

http://www.reuters.com/article/bonds...80123?rpc=401&
By Janet McGurty

<h2>North Dakota legislators mull state oil refinery</h2>
Wed Jan 23, 2008 1:21pm EST

NEW YORK, Jan 23 (Reuters) - North Dakota legislators are studying building the country's only state-run oil refinery to steady fuel prices and boost demand for locally produced crude.

Sandwiched between Minnesota and Montana along the Canadian border, the snowy farming state is the No. 8 U.S. oil producer thanks to advances which have enabled companies to extract crude oil from the giant Bakken Shale formation.

A group of Democratic North Dakota legislators is now looking into a state-run plant to refine oil from the deposit, where companies such as Marathon Oil Corp (MRO.N: Quote, Profile, Research) produce about 130,000 barrels per day of light, sweet oil.

"In 2006, when we started to hit this formation, we had 30,000 barrels per day which had nowhere to go. Both the refinery and the pipelines were full," said Shirley Meyer, a member of the state's house of representatives, adding a study resolution was introduced during the house's last session.

North Dakota currently has just one refinery, Tesoro Petroleum Corp's (TSO.N: Quote, Profile, Research) 58,000 barrel-per-day plant in Mandan, which uses less than half the state's oil output and falls short of meeting the state's roughly 70,000 bpd of fuel demand.

Options to ship the North Dakota crude out of state have been limited by space constraints along the Enbridge pipeline, which has forced producers to discount the selling price for the state's oil.

"That is one of the reasons we formed this committee," said Meyer, adding that refinery could be built as a public-private partnership or be fully-state vested like North Dakota's state-owned bank and mill.

The refinery could also help alleviate occasional shortages of No. 1 diesel, a crucial fuel to farmers in the agricultural state but which buyers had trouble finding in early January. <a href="http://www.reuters.com/article/bondsNews/idUSN2364316120080123?rpc=401&&pageNumber=2&virtualBrandChannel=0">continued....</a>

Quote:

http://www.kfyrtv.com/News_Stories.asp?news=11259
Diesel Fuel Shortage Hurting Farmers | Video
Breanna Borries
10/2/2007

It`s harvest time for some crops, but a lack of diesel fuel to power the trucks and equipment is slowing down some farmers.

Wholesale transporters are having to drive a little further for diesel this harvest season.

That`s because refineries in neighboring states are not up to full capacity. There is enough oil and gasoline, but due to expansion projects, flodding and other problems, diesel production is lower than usual.

And since it`s harvest season, the demand is high.

Farstad oil truckers are having to go as far as Sioux Falls and Twin Cities, and it`s especially difficult for area growers because of the longer waiting periods and more costs all around.

A spokesman for the North Dakota Petroleum Marketers says that the public shouldn`t worry about limited supplies at the pump.

They will notice, like the farmers, that the price has gone up. Predictions are that prices will drop again when the harvest wraps up and winter hits.

North Dakota Agriculture Commissioner Roger Johnson says the eastern part of the state is being hit the hardest because it`s at the end of the pipelines....

http://www.bismarcktribune.com/artic...ate/143112.txt
Hearing discusses fuel concerns

Nov 21, 2007 - 04:03:46 CST
By JAMES MacPHERSON
Associated Press Write

....Mike Rud, president of the North Dakota Petroleum Marketers Association, said fuel dealers have said the tight supplies are as bad as the oil embargo of the 1970s.

"We can't keep taking the crumbs on the end of the pipeline," Rud said.

Rud said as many as eight refineries experienced outages this year, most of which were planned.

Antitrust laws forbid companies to share information on planned refinery shutdowns, but Rud said an independent liaison could be assigned to ensure the shutdowns don't happen at the same time.

"A little coordination is all we are asking for," Rud said.

Energy officials told Dorgan that increased refinery capacity likely would ease the supply pinch in North Dakota.

Tesoro Corp.'s refinery at Mandan is the state's sole oil refinery. Officials there have said about 75 percent of the refinery's production is shipped to Minnesota.

Dorgan called the fuel shortage a cruel irony.

"We produce six times more energy than we use and we can't get it," he said.....

Oil sells for $120 per bbl and natural gas provides 1,000 BTU per CFU. In the US, we are paying

250,000 times $120 ($30 million) and 200,000 times $11.54 ($2,308,000).... an addtional $32.3 million

per day, or nearly$1 billion per month, added to the US trade deficit for three full years, because BP-Amoco couldn't get this done...not only does this delay aggravate the trade deficit and help to devalue the US dollar, the missing petroleum and nat. gas supply contributes to higher costs to drive vehicles, heat homes, and generate power in the US. I read last week that 48 percent of California's power generation is fueled by natural gas:

Quote:

http://www.theglobeandmail.com/servl...Story/Business

Now, after a period of slumping prices, natural gas is hot again. Prices have climbed nearly 50 per

cent in the past year, closing on the New York Mercantile Exchange at $11.54 (U.S.) per million

British thermal units on Friday. A year ago, natural gas prices were below $8 per million BTU...

Quote:

http://www.rigzone.com/news/article.asp?a_id=24067

<img src="http://www.tandtbisso.com/Thunder%20Horse1.jpg" height=700 width=850>

BP CEO: Thunder Horse 2005 Start 'Unlikely'
Benoit Faucon Tuesday, July 26, 2005

.......The world's largest semi-submersible platform, Thunder Horse tilted two weeks ago after the

hurricane passed through the Gulf of Mexico. The U.K. oil major has since righted the structure.

The company said it couldn't say at this stage if there is damage to the platform or what caused it to

tilt.

Thunder Horse is expected to be a significant contributor to North American output when it begins

producing. The platform originally was supposed to hit first oil in late 2005.

Thunder Horse is designed to process up to about 250,000 barrels a day of oil and about 200 million

cubic feet a day of gas.

BP is the operator and 75% shareholder of the platform, while ExxonMobil Corp. (XOM) owns the

remaining 25%.

Quote:

http://www.redorbit.com/news/science...orm/index.html
Troubles Run Deep on Gulf Oil Platform

Posted on: Monday, 28 May 2007, 09:00 CDT

....The workers were surprised to learn that the platform, evacuated before Dennis hit, had not taken

on water from a leak through its hull. Rather, an incorrectly plumbed, 6-inch length of pipe had

allowed water to flow freely among several ballast tanks. That began a chain of events that caused the

platform to tip into the drink.

Now BP is attempting to do what no oil company has done before: essentially rebuild the entire

architecture of an oil field on the sea floor some 6,000 feet beneath the waves.

At $250 million, the job is costlier, and riskier, than putting the equipment on the gulf floor in the

first place. On the frontier of oil exploration, the margin between riches and disaster can be as

small as a 6-inch piece of pipe. Yet for BP, rebuilding the platform is critically important because

the company desperately needs the oil flowing as reserves in formerly rich fields such as Prudhoe Bay

in Alaska dwindle. ....

....For BP, the troubles at Thunder Horse have turned the oil platform into a dual symbol. Like Janus,

the two-faced Roman god that glimpses both the past and the future, Thunder Horse stands as a reminder

of BP's mistake-prone recent track record. Looking forward, though, it holds out the prospect of a

lucrative, rewarding future.

The Thunder Horse mishap followed by nearly four months BP's worst-ever accident on U.S. soil, a

refinery explosion in Texas City, Texas, that killed 15 people. Then, last spring, BP spilled 200,000

barrels of oil onto the Arctic tundra, the first of several pipe leaks that ultimately led BP to

temporarily shut down half of North America's largest oil field. ....

....BP's replacement ratio had a modern-day peak of 191 percent in 2001, meaning BP added almost twice

as much in reserves as it sold. But that number dropped below full replacement in 2004 and 2005 before

climbing above the break-even line again last year, to 113 percent.

By 2006, BP held leases on 650 tracts in Gulf of Mexico water deeper than 1,250 feet. After 15 years

of effort, BP was vying with longtime deep-water player Chevron to become the largest leaseholder in

the deep gulf.

A host of productive exploratory wells followed. Going by names like Atlantis, Neptune, Mad Dog and

Holstein, they are among the gulf's richest finds.

One, at first called Crazy Horse, got a name change after descendants of the Native American warrior

protested. Today it's called Thunder Horse.

The $250 million pipe

At a cost of $1 billion to build, and physically imposing with a top deck that rises 15 stories above

the water's surface, the Thunder Horse platform appears to be invulnerable to the forces of nature and

a wonder of technology. After all, more than 18 major parts on the platform have Serial No. 001 --

meaning they were invented just for this job.

It turns out Thunder Horse is vulnerable to both the power of nature and the shortcomings of modern

technology.

The platform was designed to handle hurricanes as strong as Dennis. But the evacuation for the

hurricane, combined with just the slightest shifting in Dennis' strong winds, set in motion an

unlikely chain of events that caused the platform to tilt. That, in turn, has led to the delay that is

costing BP billions in lost revenue -- and serving for the industry as an example of what can go wrong

at the outer limits of technology.

The platform rests on four hollow, airtight legs that are as wide across as a two-bedroom apartment.

Normally, the legs give the platform buoyancy, and horizontal connecting sections add stability.

After workers evacuated in advance of Hurricane Dennis, though, the misplumbed pipe allowed water to

cascade through ballast and bilge tanks. The force of the flow forced open valves that in turn allowed

the water to gather in the two port-side legs of the platform.

As Thunder Horse's top deck tilted toward the water, ballast pipes that normally pump water out began

taking water in.

The support legs filled with water, and all manner of calamity set in. Some 30 car-size pumps and

motors were ruined. A corroding process started that ran through the platform's 25 miles of electric

cable and wiring like oil being sucked up by a wick.

"There's the $250 million pipe," said Sammy McDaniel, BP's head of Gulf of Mexico operations, a wry

smile on his thin face as he showed a visitor the cleaned-up inside of one of Thunder Horse's large,

hollow legs.

Neither McDaniel nor Bond had set foot on Thunder Horse before the mishap. On the first helicopter

flight in, they agreed to work together, with McDaniel focusing mainly on the platform's operations

and Bond zeroing in on the bottom of the ocean.

"We knew this one was going to be a bear," McDaniel said.

In the weeks after the landing party first boarded Thunder Horse, three days after the storm, the

platform became a hive of frantic activity. With 150 workers living on a ship anchored nearby, working

with lamps on their hard hats until electricity could be restored, McDaniel and Bond led a frantic

cleanup and restart effort.

Work stopped only for hurricanes. After the devastating successive storms, Katrina and Rita, came

through, the workers stayed off the platforms while trying to help their colleagues piece their lives

back together.

BP's corporate brass told the public that it believed Thunder Horse could restart by late August 2006.

Privately, Bond and McDaniel thought they could get the platform back in operation before the end of

2005. Rushing to meet the deadline, workers piled up nearly 4 million man-hours on the cleanup alone.

With start-up approaching, the recovery team in May of 2006 used water to pressure-test the subsea

system of pumps, wellheads, piping and gathering centers that sprawl over an oil field on the ocean

floor that covers an area nearly as wide across as the North Side of Chicago.

Then the unthinkable happened: The system leaked.

"We were this close," said McDaniel, holding a thumb and forefinger close together. "Then, 'Damn! What

went wrong?'"

Sleuthing at 6,000 feet ......

....Cause of the cracks

Perhaps it was just one bad weld, but McDaniel and Bond had to determine if there were any more. They

directed the submarine to another manifold and found a second ruptured weld. Inspection of other welds

in the subsea equipment turned up even more cracks.

Thunder Horse's oil reservoir is nearly 5 miles below the water's surface. At that depth, oil will

gush from the drill pipes at a temperature of 275 degrees Fahrenheit, under a metal-crunching 17,400

pounds per square inch of pressure.

Those conditions can stress even the mixture of high-strength steel and alloy that make up the

half-inch welds on the manifolds and pipes of the Thunder Horse oil fields. But the equipment had gone

through severe tests -- at 125 percent of the worst stresses that the Thunder Horse field might exert.

....

....Now the hunt was on for a new spot of knowledge: What caused the problem?

Lang flew in a team of experts in subsea oil production, welding and metallurgy from around the world

to Houston to determine the cause of the weld failures.

Meanwhile, he directed others to touch base with the manufacturers of every component built into the

sea-floor manifolds. He asked for testing of the anti-corrosion materials and insulation that

enshrouded the subsea pipes. He wanted no clue missed.

"Ultimately you say, 'What if I'm wrong about what caused this? We put our equipment back on the

seabed, and it fails?' " Lang said. "You can't risk that."

Lang also wanted other oil companies to be aware of the dangers. Learning that Shell Oil Co. was due

to submerge manifolds at depths similar to Thunder Horse in the fourth quarter of last year, he made

certain Shell was notified of the possible risks.

Even as the investigation started, though, pressure mounted onboard Thunder Horse.

<h3>BP had commissioned the Balder, one of only two ships in the world capable of lifting the

manifolds and other heavy equipment from the sea floor, to visit the platform in December. After that,

the Balder wouldn't be available again for almost a year.</h3>
<img src="http://hmc.heerema.com/Portals/3/Docs/Corp/Multimedia/Fleet/Balder/Balder_1_sm.jpg">
<h5>Photo of the Balder</h5>

By late September 2006, the manifold investigation team delivered its verdict. The welds, indeed, were

the problem thanks to an unforeseen chemical reaction.

While the manifolds sat idle for a year after the platform tilted, the crushing pressure at the bottom

of the sea forced hydrogen atoms into the mix of steel and high-strength alloy that made up the welds.

The hydrogen caused the metal to become brittle, and when water was forced through the piping during

the restart testing, the welds failed.

Drilling toward Mardi Gras

In the meantime, Bond hadn't been waiting for a verdict. He knew he only had until the end of 2006 to

have all the sea-floor equipment ready to be lifted. That meant sealing wellheads, cutting pipes and

planning logistics. It also meant working around the schedules of the 280 people onboard Thunder

Horse, some of whom continued drilling new holes even as the rest of the sea-floor operation stood

idle.

Drilling, after all, is what Thunder Horse was built to do. ....

......The rebuilding process

Today, Thunder Horse's crews have removed about three-quarters of the equipment that once nestled on

the seabed. They are putting new insulation and anti-corrosion coatings on some, replacing other

pieces entirely.

The most delicate operation -- pulling the pipe up from the seabed without bending it -- is necessary,

Bond said, because it's the only way he can reassemble the equipment that's needed on the oil field.

The deep-sea robots can cut the pipes at the point they connect to the equipment 6,000 feet below the

surface. But robots can't weld.

So Bond must oversee an operation that pulls up the freed pipe and brings it within reach of the

Thunder Horse deck. There workers can weld it back to the huge, heavy pieces of equipment. Then BP

workers must carefully lower the joined pieces back down, all without causing any new problems.

No one says it will be easy. But everyone onboard says it must happen on time. They will need the

Balder for some of work, and demand for that ship is so high that it only comes by every 18 months or

so.

"We've just been going full speed for a long time, and there's no letting up," said McDaniel, the

operations chief.

"What we want to do is prove to ourselves and the world that we're ready," he said. "We just need to

get all this stuff under us, and begin operation."

Leading a reporter on a tour of the complex onboard systems that separate oil, water and gas, McDaniel

pointed to a pipe from the platform that plunges deep into the ocean. By the time Thunder Horse goes

into production, the pipe will connect to Mardi Gras -- a $1 billion pipeline BP is building that one

day will carry half of all the oil pumped from the deep-water gulf."This is the top end of the Mardi

Gras pipeline," McDaniel said. "When the oil leaves here, it's gone."

For BP, and for gas-hungry consumers across the U.S., it can't happen soon enough.

<h3>This is the company that converted the ocean construction ship, "Balder" that "saved" the Thunder Horse drilling/production platform:</h3>
http://hmc.heerema.com/tabid/1492/Default.aspx

Since mazimizing US domestic petroleum production is a matter of US national security, it seems kind of ridiculous that 5 percent of US total petroleum production, the amount that Thunder Horse will produce, could have been delayed at least a year. because there were only two ships capable, in 2006 in the world, of the specialty lifting that BP required at it's well site in the Gulf of Mexico. Our government invests in 12 aircraft carrier groups, why not assign such a critical bottleneck as the design and building of these specialty ships to a NASA modeled program, or purchase this ship builder outright, if future new petroleum development will be in deep near US shores, water?

FRom BP'a website, May 18, 2007:

Quote:

http://web.archive.org/web/200705182...egoryId=900451

9&contentId=7009088

.... BP’s huge Thunder Horse platform deserves a high profile.
Thunder Horse is one of the key discoveries upon which the company will grow its future Gulf of Mexico

production. Designed to process 250,000 barrels of oil per day and 200 million cubic feet per day of

natural gas, Thunder Horse will be the largest producer in the Gulf. The field will be supported by a

network of 25 subsea wells.
World class field

Located 150 miles southeast of New Orleans, the Thunder Horse field is one of the most technologically

complex, in part because of the challenging deepwater environment....

....First production

First oil at the world’s largest floating platform has been rescheduled to the second half of 2008.

The cause of the delay is the need to repair and replace components in the subsea system following a

failure during pre-commissioning checks. The equipment had passed all the normal industry standard

tests and regulatory requirements. But when we conducted more prolonged and rigorous testing, as an

additional safety precaution, a failure occurred on a weld in one of the subsea manifolds.

The subsea equipment had remained in a cold state, with cathodic protection, on the sea bed for some

time following the listing of the platform after its evacuation during the 2005 hurricane season.

Following a thorough investigation, we concluded that these unusual circumstances led to hydrogen

embrittlement of the equipment so that it could not perform its intended high pressure, high

temperature service. We will now retrieve and replace all the subsea components we believe could be at

risk, before starting production in the second half of 2008....

From BP's current website: MORE DELAYS.....

Quote:

http://www.bp.com/genericarticle.do?...tentId=7009088

.... First production

First oil at the world’s largest floating platform has been rescheduled to the end of 2008. The cause

of the delay is the need to repair and replace components in the subsea system following a failure

during pre-commissioning checks. The equipment had passed all the normal industry standard tests and

regulatory requirements. But when we conducted more prolonged and rigorous testing, as an additional

safety precaution, a failure occurred on a weld in one of the subsea manifolds.

The subsea equipment had remained in a cold state, with cathodic protection, on the sea bed for some

time following the listing of the platform after its evacuation during the 2005 hurricane season.

Following a thorough investigation, we concluded that these unusual circumstances led to hydrogen

embrittlement of the equipment so that it could not perform its intended high pressure, high

temperature service. We will now retrieve and replace all the subsea components we believe could be at

risk, before starting production by the end of 2008......

Quote:

Financial Times
August 30, 2006

BP faces two US probes over trading
By Rebecca Bream
Published: August 30 2006 03:00 |
Last updated: August 30 2006 03:00

BP has revealed that it now faces two investigations into its trading activities in the US, adding to

its troubles following the forced shutdown of its Prudhoe Bay field in Alaska.

The oil major yesterday confirmed media reports that it was being probed over its trading of crude oil

and gasoline.

The crude oil inquiry is led by the US Commodity Futures Trading Commission (CFTC), which regulates

futures markets, while the US Department of Justice is looking into some of BP's gasoline trades.

BP said: "There are two investigations and we are fully co-operating [with the authorities]."

It is understood that the CFTC has sent subpoenas to BP and other energy traders in its investigation

of crude oil over-the-counter trades from in 2003 and 2004.

The Department of Justice's separate gasoline investigation has been going on for more than a year,

said people close to BP, and is focused on one day's trading on the New York Mercantile Exchange in

2002.

This is not the first time BP's trading activities have been the subject of investigation by the US

authorities.

In June, BP was accused by the CFTC of attempting to manipulate the market for propane, a gas used by

many households in the US.

BP has denied the propane-related allegations.

In 2003, BP agreed to pay $2.5m (£1.3m) to settle the allegations of improper crude oil trading on

Nymex, although it did not admit to or deny any wrong-doing.

The oil major is already being investigated by several other bodies in the US.

These include grand juries probing a fatal explosion at BP's Texas City refinery in March 2005 and a

serious oil spill at Prudhoe Bay, one of the biggest oil fields in the US, in March this year.

Prudhoe Bay is also only operating at half its normal output after BP admitted earlier this month that

its pipelines there were badly corroded and risked leaking more oil.....

Quote:

http://www.ft.com/cms/s/0/5ec3df8a-3...nclick_check=1
BP faces claims of tampering with data on Alaskan pipeline

By Sheila McNulty in Houston

Published: August 21 2006 03:00 | Last updated: August 21 2006 03:00

US environmental investigators are examining allegations by employees that BP manipulated inspection

data to avoid replacing pipelines at Prudhoe Bay, its 30-year-old Alaskan field, the Financial Times

has learned. BP denies the allegations.

At the same time, in a separate move, Alaska's attorney-general, David Marquez, has issued subpoenas

to BP, as operator and an owner of the field, and its co-owners, "to preserve all documents that may

be relevant to corrosion at Prudhoe Bay", to conduct an investigation.

The parallel investigations into BP's credibility as operator of North America's largest oil field are

yet another blow to the company, which already is under heightened regulatory scrutiny in the US after

major lapses at its Alaskan and Texas operations within the past two years.

Lord Browne, BP's chief executive, might yet be drawn into the growing controversy over whether BP

mismanaged parts of its US operations.....

Quote:

Seattle firm softened warnings about BP's pipeline monitoring
By Steve Miletich and Hal Bernton
Seattle Times staff reporters

Resources
Coffman documents
http://www.pogo.org/p/environment/AlaskanPipeline.html
BP corrosion Web site
http://usresponse.bp.com/go/site/1249/

BP workers use propane torches to burn off oil from an Aug. 6 leak in an oil-transit pipeline at the

Prudhoe Bay oil field on Alaska's North Slope.

Warnings by a Seattle-based engineering firm about problems with BP's monitoring of its Alaska oil

pipelines were significantly toned down after the company complained that the report was "extremely

negative," according to documents now under review by a federal grand jury.

The draft report by Coffman Engineers, published in November 2001, raised concerns about the way BP

was tracking and reporting Prudhoe Bay pipeline corrosion, which this year resulted in oil spills and

forced a partial shutdown of those fields.

But the final Coffman document, in its summary, had a strikingly different tone: It praised BP for a

"comprehensive program of monitoring and inspections" and "steadily improving" trends in internal

pipeline corrosion.

Coffman's 2001 draft report, as well as BP's critique, were made public Friday on the Project on

Government Oversight Web site by Charles Hamel, a former oil broker who is a watchdog of Alaska's oil

industry.

Both final and draft documents have been submitted to a federal grand jury in Anchorage, which is

investigating the circumstances leading to a March oil spill of more than 200,000 gallons of oil from

a west Prudhoe field pipe known as a transit line that carries processed crude to the start of the

trans-Alaska pipeline.....

.....Hamel, in a letter sent Aug. 22 to the federal Office of Pipeline Safety, accused BP of

"whitewashing" away criticism.

The 2001 Coffman report questioned whether BP was making enough use of remote-operated devices that

check for corrosion and other wear. The report described the so-called "smart pigs" as "the only

inspection technique capable of looking at the whole internal and external corrosion picture."

Most of the Coffman comments about "pigging" were eliminated from the final report, published early in

2002.

In the aftermath of last March's spill, BP acknowledged that the transit lines in western Prudhoe Bay

had gone without a smart-pig inspection since 1998, and it has been scrambling to make those

inspections......

Quote:

http://www.redorbit.com/news/busines...age/index.html

Company Confronts a Tarnished Image

Posted on: Tuesday, 8 August 2006, 09:00 CDT

By David Ivanovich, Houston Chronicle

Aug. 8--WASHINGTON -- The forced shutdown of Alaska's huge Prudhoe Bay oil field because of a corroded

pipeline is but the latest in a series of grave operational blunders that have ravaged BP's

reputation.

This same company has been struggling to move beyond the searing images of last year's deadly Texas

City explosion, to calm investors' worries about the massive Thunder Horse platform found listing

after Hurricane Dennis and to overcome the embarrassment of having a former company trader admit he

tried to corner the propane market.

Now, with more than 400,000 barrels of crude from the nation's largest oil field shut in indefinitely,

BP may get to explain to American motorists why prices at the pump are soaring again.

"They cannot afford another black eye," said Oppenheimer & Co. analyst Fadel Gheit. "They have had

their share of mishaps and disasters."

BP America Chairman Bob Malone tried to defuse some of the anticipated outrage, noting in a statement:

"Our priorities moving forward are to assure the safety and integrity of our operating infrastructure,

minimize impact on the environment, continue the cooperative working relationship with the relevant

agencies and restore production as soon as it is safely -- and I reinforce safely -- possible."

But some observers were amazed that BP could have endangered production from the critical field by

allowing the pipeline to deteriorate so badly.

Just five months ago, nearly 270,000 gallons of oil spilled from a corroded pipeline in the same oil

field, a mishap that sparked an investigation and prompted regulators to order inspections of other

lines.

"It takes two leaks before they figure out that corrosion is a significant issue," said David Pursell,

executive vice president at Pickering Energy Partners in Houston. "One time is not enough?"

While BP is the operator of Prudhoe, fellow giants Exxon Mobil Corp. and ConocoPhillips are partners

in the project.

"If I am Rex Tillerson, I'm not sure I want BP to be a partner again, certainly not as an operating

partner," Pursell said of Exxon Mobil's chief executive.

Already, the ranking Democrat on the House Energy and Commerce Committee is calling for congressional

hearings into the pipeline troubles.

"It is appalling that BP let this critical pipeline deteriorate to the point that a major production

shutdown was necessary," Rep. John Dingell, D-Mich., said. "BP must take all steps necessary to repair

or replace problem pipelines quickly, so the American consumer does not pay for BP's laxity."

BP has had its share of troubles in Alaska's oil fields. Four years ago, gas escaped from a previously

shut-in well being restarted, sparking an explosion and fire that seriously injured an oil-field

worker, the Alaska Oil and Gas Commission found.

In July, BP closed 12 natural gas wells in Alaska after whistle-blowers alleged some 50 BP wells might

be leaking.

BP's latest crisis comes a year and a half after the March 2005 explosion at the company's refinery in

Texas City, a blast that killed 15 and injured scores.

Workers there had inadvertently overflowed a vent stack with hydrocarbons during the startup of a

process unit.

Last September, the Occupational Safety and Health Administration fined BP a record $21.4 million for

more than 300 alleged violations.

BP agreed to pay the fine as part of a settlement. But OSHA levied a second, $2.4 million fine against

the company in April for alleged safety violations at a refinery in Ohio. Edwin Foulke Jr., OSHA

assistant secretary, said that BP had "failed to learn from the lessons of Texas City to assure their

workers' safety and health."

BP has appealed that decision but remains on the agency's "Enhanced Enforcement Program" for repeat

violators of safety rules.

The U.S. Chemical Safety and Hazard Investigation Board, which has made a preliminary assessment, has

said that, while worker error likely played a role in the 2005 blast, the process unit had a history

of problems and was not working properly on the day of startup.

Later in 2005, Hurricane Dennis blew through the Gulf of Mexico, roughing up the Thunder Horse

platform

Since that time, BP has been trying to make the necessary repairs. But company officials revealed last

month that tests had discovered leaks in the platform's subsea pipeline joints.

That meant BP would not be able to begin producing oil and gas from either Thunder Horse or the nearby

Atlantis platform before next year.

In June, the federal Commodity Futures Trading Commission accused BP's Houston-based traders and

supervisors of conspiring to corner the propane market and sparking a sharp rise in the price of the

heating fuel.

Regulators contend the traders tried to manipulate the price of propane that flows from storage fields

in Mont Belvieu, in Chambers County, via pipeline to Ohio, Pennsylvania and New York.

One of the traders has pleaded guilty to conspiring to manipulate a commodity price.

<h3>Bottomline.... we could cut spending on defense and national secuirty and use the savings to identify bottlenecks to achieving addtional domestic petroleum production, and launch a "Moon landing" or "Manhattan Project" styled government led effort to double domestic petroleum output. We're only producing 40 percent now of the amount we are consuming. Simply bringing the BP-Amoco 3 years delayed, Thunder Horse project online and developing the proven deposits bordering ANWR could increase US output by 25 percent, from 40 percent currently, to 50 percent of total US consumption. The rest is there. I covered the bottleneck caused by the lack of deepwater construction crane ships in this post, and I documented in a previous post, that the city of Long Beach, Ca wants to drill 60 new oil wells on city owned land this year, but the equipment and expertise are not currently available.</h3> Let us drop the "allegiance to the free market" sentiment. I don't see you protesting the Fed bailing out the investment banks, so what is your protest here, about? I''ve documented how Shell, Chevron, and BP-Amoco have done the opposite, in this era of high prices, of investing in domestic oil production and refining, or acting lawfully and credibly. Each time you pay at the pump, ask yourselves why you close your minds to the points presented on this thread!

ASU2003 · 05-12-2008, 07:11 PM

This may be for the paranoia section, but I feel that we aren't drilling as much as we could because in 50-100 years when the world has run out of oil, and haven't converted to alternative fuel, we will be in control.

I have no doubt that a national, state run operation could face the same problems as BP. It's not like they purposely tilted the Thunder Horse oil platform... Yeah, they wouldn't need to make as much profit, but you know they would spend all of their budget in fear of getting it cut because they didn't use it all. (Their budget would come from the sale of gas instead of all taxpayers though.) Oil would still be traded on the open market since we don't control all of the oil producers, and there is a ever growing demand for the stuff.

I'm fine with out current production amount. Well, as long as it is the same as it has been in previous years. I think it is more of a demand side problem that we need to fix. And the environmentalists are actually happy as well as the oil companies at this recent increase in oil prices. So, I'm not really sure what has happened in the market to make it go up that high (read: housing speculators all moved into oil), but I don't look as crazy riding my bike to work anymore.

aceventura3 · 05-14-2008, 06:39 AM

Quote:

Originally Posted by host

Attention !!! The "free market" is not maximizing US petroleum output or refined products output.

I see you put "free market" in quotes. We know the oil and energy market is not a free market. The world's oil production is mostly controlled by national governments and is heavily regulated.

Quote:

It is so glaring a problem, in addition to the documentation I have already posted, that crude oil rich North Dakota is mulling over building a state owned oil refinery to relieve yearly diesel fuel shortages...they cannot persuade private enterprise to build a second refinery in their state, and NATIONALLY...BP-Amoco's screw ups, neglect, deception, and criminality these past few years are shocking....they result in a loss of at least 5 percent of total domestic petroleum output, higher prices in the US, and a US trade deficit $1 billion higher per month than it had to be.

I know the initial response will be to attack the messenger, but I present it anyway. Peter Robinson is the vice chairman of Chevron.

Quote:

Robertson said there would be plenty of oil available to the United States if the oil companies were allowed to get it: “Eighty-five percent of offshore oil is off-limits.” Responding to objections to offshore drilling by environmentalists and their allies in Congress, Robertson noted that some of the strongest pro-environment nations in Europe — he mentions Denmark, Norway, the United Kingdom — lease offshore locations for oil exploration. The technology has become so good, he said, that during Hurricanes Katrina and Rita, “one thousand offshore wells were destroyed (in the Gulf of Mexico), but not one leaked.” Australia, he said, has allowed offshore drilling for 40 years without any environmental damage.

In addition to the sinking value of the dollar, here is the main problem: According to the Department of Energy, U.S. oil production has fallen approximately 40 percent since 1985, while the consumption of oil has grown by more than 30 percent.

According to government estimates, there is enough oil in areas accessible to America — 112 billion barrels — to power more than 60 million cars for 60 years. The Outer Continental Shelf alone contains an estimated 86 billion barrels of oil and 420 trillion cubic feet of natural gas. Had President Clinton not vetoed exploration in the Arctic National Wildlife Refuge (ANWR) in 1995, when oil was $19 a barrel, America would currently be receiving more than 1 million barrels a day domestically, all of it taken by better technology than existed more than 30 years ago. That was when the Alaskan pipeline was built despite protests from environmentalists who claimed it would destroy the caribou. It didn’t, but the environmentalists are back with the same discredited arguments. Because most of the oil remains “off-limits,” we are becoming more dependent on foreign oil.

http://www.calthomas.com/index.php?news=2266

We can take on the issue of oil refinery capacity next, but first lets resolve the supply question at least agree that oil companies do not control the supply of oil, the market is not free, and that the US government could allow significantly more domestic production.

host · 05-14-2008, 10:16 PM

ace.... Exxon and Chevron have little or no credibility. It's not me saying it, it's commisioner Irwin in the state of Alaska. It's an eyeopener, but your post indicates you've already ignored my last post on this issue. Maybe the visuals will make it easier for you...

Quote:

http://news.yahoo.com/s/nm/20080422/...obil_alaska_dc
Alaska rejects final Exxon plan for giant gas field

By Yereth Rosen Tue Apr 22, 7:45 PM ET

ANCHORAGE (Reuters) - Alaska on Tuesday rejected Exxon Mobil Corp's (XOM.N) latest plan for the giant Point Thomson natural gas field on the North Slope despite industry warnings of another lengthy setback to development of an Alaska gas pipeline.
ADVERTISEMENT

Exxon said it will appeal the decision, which terminates the Point Thomson development unit and could lead to the cancellation of the field leases. A spokeswoman said the energy company plans to "pursue all alternatives to protect our rights to develop these resources."

Chevron Corp (CVX.N), which holds a 25 percent stake in Point Thomson, vowed to sue over the decision.

"We are shocked and very disappointed by this decision," Scott Davis, the Chevron executive overseeing its Alaska business, said in a statement. "With this decision the state has taken a giant step backward in bringing North Slope gas to market."

Point Thomson, discovered in 1977, is thought to hold at least 8 trillion cubic feet of natural gas reserves and 200 million barrels of liquids and would be a vital source of supply for any Alaska natural gas pipeline project.

The state has accused the oil companies of deliberately delaying development of Point Thomson. The majors reject that charge, saying the giant gas field cannot be put into production until a pipeline is constructed to ship Alaska gas to the rest of the United States.

Field operator Exxon owns about 36 percent of Point Thomson, and BP Plc (BP.L) owns 32 percent of the field.

The Alaska Department of Natural Resources ruling said Exxon's failure to develop the field under 22 previously submitted development plans compromised the credibility of its latest proposal.

"The history of this unit and the evidence offered by the Appellants have convinced me that approving the (development plan) will not result in timely development of these valuable state lands," DNR Commissioner Tom Irwin wrote.

Alaska Gov. Sarah Palin, a strong critic of the oil industry, welcomed the decision.

"I support the commissioner's decision because I want development and Alaskans are ready to see real progress at Point Thomson, finally, after 30 years," she said in a statement.

Alaska and the companies have been sparring over Point Thomson since late 2005 when the state made the first step to break up the field unit and possibly cancel the leases.

The state so far has been successful in early legal battles. Officials concede that a lengthy period of litigation may ensue.

BP and ConocoPhillips both hold stakes in Point Thomson and have been spearheading efforts to build a $30 billion Alaska natural gas pipeline.

Plans for that project still are moving forward, according to BP Alaska spokesman Steve Reinhardt. Still, he cautioned that doubts about the availability of Point Thomson gas could delay or even kill the pipeline.

If the companies are unable to develop Point Thomson, they also will miss out on adding the reserves from the field to their reserve base. All the companies involved have struggled in recently to add oil and gas to keep up with their production, prompting questions about their long-term growth prospects.

Exxon has 20 calendar days to appeal the DNR's decision. Following an unsuccessful appeal with the DNR, Exxon would have recourse to state courts under Alaska law.

The Appeal:

Quote:

http://www.theusdaily.com/articles/v...dx=3&id=391976
News: Page (1) of 1 - 05/13/08

Exxon wants over $800 mln if Alaska leases lost
By Yereth Rosen

A sign displays prices at a gas station in Washington July 27, 2006. REUTERS/Yuri Gripas

ANCHORAGE, Alaska (Reuters)

.....Exxon raised the specter of a financial claim at the same time the company and its Point Thomson partners -- BP <BP.L>, Chevron <CVX.N> and ConocoPhillips <COP.N> -- formally asked state Natural Resources Commissioner Tom Irwin to reconsider his rejection of the latest Point Thomson development plan.

The documents were filed Monday, the deadline for the reconsideration request.

Exxon said in a letter with the state Department of Natural Resources (DNR) that its group would be entitled to compensation for investments made in the field and damages from further delay....

.... Irwin's April 22 decision to reject the 23rd Point Thomson development plan was the latest official action taken by the state to revoke leases at the field where state leaders say oil company inaction justifies repossession of that state property.

The unit, created in 1977 and containing leases that date back to the 1960s, holds 8 trillion to 9 trillion cubic feet of natural gas and hundreds of millions of barrels of condensates and oil, according to state officials.

No well has been drilled at Point Thomson since 1982. State officials consider Exxon, the operator of the unit, and the other Point Thomson partners to be in gross violation of lease obligations.

While the natural gas cannot be commercialized without a highly expensive and yet-to-be-built gas pipeline, state officials have long maintained that Point Thomson's liquids can be produced.

State efforts to revoke the leases started in 2005, when the partners reneged on a 2001 pledge to drill development wells.

In their 23rd development plan, the Point Thomson partners pledge a $1.3 billion investment to start production of 10,000 barrels a day by 2014.......

Quote:

http://www.agiweb.org/legis105/anwrhear.html
American Geological Institute
Government Affairs Program
Another Legislative Drive to Open ANWR? (8-10-98)

...Congress tagged 1.5 million acres of arctic coastal plain for further reserch into its wildlife and petroleum resources. Representatives of the USGS, led by Acting Director Tom Casadevall, testified on the petroleum reserves estimated to be in-place, technically recoverable, and economically recoverable. Kenneth Boyd, a geologist with the state of Alaska, commented on the data available to him from the USGS study. At the end of the hearing, Committee Chair Frank Murkowski (R-AK) announced his plans to draft a bill calling for a seismic survey to be conducted in ANWR and for the USGS to have the "resources necessary to assess the country's jewels".

Excitement over ANWR was recently stirred up after the USGS released its updated estimated reserves of the area, which were made public at the annual meeting of the American Association of Petroleum Geologists in Salt Lake City on May 17th. Information surrounding the history and activity of ANWR evaluation is given in a June 1998 AGI update and a July 1998 Geotimes article. The USGS increased its estimate on the mean reserves from 898 million barrels of oil in their 1995 assessment to 7.7 billion barrels of oil in the May 1998 report. The other major difference from their 1995 report is the shift in geographical location of the major reserves from the eastern part of ANWR in the 1995 study to the western part in the most recent study. With declining production of Prudhoe Bay, oil companies are looking for replacement reserves to keep the capcacity necessary to maintain the Trans-Alaska Pipeline System. ....

<img src="http://pubs.usgs.gov/fs/fs-0028-01/image1.gif">

<img src="http://pubs.usgs.gov/fs/fs-0028-01/image2.gif">
<h5>Figure 2. Map of the ANWR 1002 area. Dashed line labeled Marsh Creek anticline marks approximate boundary between undeformed area (where rocks are generally horizontal) and deformed area (where rocks are folded and faulted). Boundary is defined by Marsh Creek anticline along western half of dashed line and by other geological elements along eastern half of dashed line. Exploration wells are coded to show whether information from them was available for the 1987 USGS assessment of in-place petroleum resources. Dashed red line shows the offshore extent of the entire assessment area. Source: USGS</h5>

....Compared to the USGS's 1987 evaluation, the mean estimate of in-place reserves increased from 13.8 BBO to 20.7 BBO. The May 1998 study places 85% of the reserves in the undeformed western region of the 1002 area and is less optimistic for the eastern half of ANWR. Murkowski presented the USGS's view of the eastern part as being overly pessimistic. In 1986, the Kaktovik Inupiat Corporation in partnership with British Petroleum and Chevron drilled the only well ever inside ANWR. This well was located in the deformed eastern part of the ANWR 1002 area. Although the results are being held confidential by industry as proprietary information, Murkowski inferred that the eastern part must be rich in oil because those companies have continued financial investment in this part of ANWR. While acknowledging that the USGS study was not able to include the data from that well, Dr. David Houseknecht, the USGS energy program coordinator who was accompanying Dr. Casadevall, reiterated that the study was based on all data available which which indicated a questionable presence of Ellesmerian reservoir rock in the east.

Mr. Kenneth Boyd, Director of the Alaska Division of Oil and Gas was called to testify about the USGS findings. He reviewed the factsheet available to the public and not the full report which will be finalized within the next two to three months as assured by Dr. Houseknecht. Mr. Boyd made the following general observations from the USGS fact sheet:

1. "the estimates for finding recoverable oil are quite high, and in fact, have been increased from previous assessments;
2. "these scientists believe the bulk of the undiscovered oil resides in the northwest part of the 1002 area rather than to the east as was assessed in previous studies;
3. "more oil has been allocated to the younger (Brookian) reservoirs in stratigraphic traps; less oil has been allocated to the deeper Ellesmerian reservoirs in structural traps;
4. "the assumed 512 million barrel commercially developable field size for ANWR is probably too conservative for the undeformed, western part; smaller accumulations are likely to be economic, especially if infrastructure is established in the Point Thomson, Sourdough and Flaxman areas."

Boyd stressed that the improved visualization that 3D seismic surveys bring to exploration and production has led to a decrease in development risk and a reduction of environmental impacts. He commented that legislation from the past few years has been partly responsible for the good business climate (likely referring to a law, P.L.104-58, passed by the 104th Congress allowing Alaska to export oil to the foreign market). He testified that the threshold size for an economic field continues to shrink with greater technological innovation, such as 3D seismic, directional drilling, coiled tubing drilling, and through-tubing rotary drilling. Mr. Boyd cited favorable development costs for fields of 120-365 million barrels compared to the USGS assigned 512 million barrels for a stand-alone field to be commercial.

Boyd addressed the application of 3D seismic to unitization and royalty issues. He referred to how British Petroleum's Sourdough field abuts the northwest corner of ANWR (see fig. 2). Murkowski expressed concern about the potential drainage of "taxpayers oil" by British Petroleum if their field extends into ANWR. This appeared to be a main factor in Murkowski's decision to introduce a bill allowing a 3D survey within ANWR. With that reasoning, the federal purse would benefit from Sourdough royalties. The well spacing and associated drainage areas on the North Slope are generally small due to the higher viscosity of the oil. Therefore, if the reserves associated with Sourdough are the only consideration for a survey, one question to ask would be, "Are the potential lost reserves in excess of the cost of a 3D survey?" Boyd's written testimony expounds on the clarity a 3D survey would lend to the deformed areas of ANWR that the 2D seismic cannot resolve. However, the deformed areas are in the east in contrast to the Sourdough well being in the west.....

Quote:

http://www.adn.com/money/story/389829.html

Oil production from Sourdough wells might impel feds to lease in ANWR
ADJACENT: Reservoir seems to extend beneath the refuge.

By KAY CASHMAN
Petroleum News

(04/28/08 23:02:06)

Although Exxon Mobil's most recent plan of development for the Point Thomson natural gas and oil field did not include a commitment to produce the Sourdough oil discovery there, whenever the field is developed the plan will almost certainly include a Sourdough plan. That's because geologists think Sourdough's reservoir stretches under the Arctic National Wildlife Refuge just to the east.

Since the 100 million-barrel Sourdough discovery announcement in 1997, state officials have said developing the prospect could be the first step to opening ANWR to oil and gas exploration and development. ANWR's coastal plain is considered the nation's best onshore prospect for huge oil discoveries, but Congress has kept it closed to oil companies because of the area's environmental sensitivity.

Oil produced from Sourdough would be the first oil drained from the ANWR coastal plain, and possibly prompt Congress to allow a lease sale that would, at the very least, allow access to western ANWR reservoirs by drainage, and possibly directional drilling, from adjacent state land.

Most of those reservoirs, including Sourdough, are in the defunct Point Thomson unit, although the Sourdough wells were drilled and paid for by BP and Chevron, not Exxon and other unit owners.

If, for example, Sourdough were developed and produced on the state side and the feds don't hold a lease sale for their side of the reservoir, legal experts say the federal government probably couldn't claim any revenue from federal oil drained from Sourdough's state leases.

In his April 22 rejection of Exxon's plan of Point Thomson development, Tom Irwin, state commissioner of natural resources, made it clear that the Palin administration, like those that preceded it, wants a commitment to produce Point Thomson's "considerable oil reserves," including the discoveries at Sourdough and Flaxman adjacent to ANWR. (Other wells along the border in Point Thomson also might hold oil, but not all well results have been made public.) If the state ultimately prevails in court and takes back Exxon and other oil company's leases at Point Thomson, the state could sell leases to the field again.

BP and Chevron received permission to drill Sourdough from Point Thomson operator Exxon in the early 1990s. BP subsequently drilled two wells in the prospect, which lies in the southeast corner of the Point Thomson unit, adjacent to the Staines River that runs along the border between ANWR and Point Thomson.

ANWR's coastal-plain area is roughly a half mile from the Sourdough discovery well.

RULE OF CAPTURE

In 1997, David Johnston, then chairman of the Alaska Oil and Gas Conservation Commission, said the federal government would not be able to claim correlative rights if Sourdough was developed -- correlative rights would give the feds taxes and royalties on ANWR oil pumped from Sourdough.

These rights, which the commission enforces, do "not protect against drainage," he said. The rule of capture would prevail.

What correlative rights do is ensure adjacent landowners have "the opportunity to extract their fair share of the resource," Johnston said. If a landowner does not wish to drill on his side of the property line, that's his choice.

"The federal government does not have to lease this land. Nobody is compelling them to lease it." But if the feds do not lease the coastal plain area adjacent to Sourdough, then the "rule of capture applies," he said.

The rule of capture is the same federal law that applies to the ownership of a wild horse that roams across several property lines -- whoever captures it, owns it, Johnston said.

Attorneys interviewed by Petroleum News agreed, as did a 2003 article in Duke University School of Law's Alaska Law Review, which said, "The owner of the drained land has no legal remedy, but may protect his rights by drilling a well of his own in order to capture the same resource."

But Johnston and Robert Corbisier, author of the law review article, said there was also a possibility of the state oil and gas commission making Sourdough an oil field unit, and including ANWR acreage in the unit -- something the agency might have to do under its legal mandate to prevent the waste of oil and gas resources.

aceventura3 · 05-15-2008, 06:34 AM

Quote:

Originally Posted by host

ace.... Exxon and Chevron have little or no credibility. It's not me saying it, it's commisioner Irwin in the state of Alaska. It's an eyeopener, but your post indicates you've already ignored my last post on this issue. Maybe the visuals will make it easier for you...The Appeal:

"Exxon and Chevron have no credibility", o.k., how can I take anyone seriously when they make that kind of a statement.

I understand disagreeing on issues, interpretations of facts, etc. I know people can lie, exaggerate, politically, grand stand, etc., but to say that they have no credibility basically means that no one should do business with them, including Irwin. Perhaps he would have more trust in foreign controlled oil companies. Personally I would never do business, would not even think about doing business with a person or firm who I thought had no credibility. Please clarify - was Irwin being untruthful? Is that what you believe? What should the consequences be of having that belief?

host · 05-15-2008, 11:17 AM

Quote:

Originally Posted by aceventura3

"Exxon and Chevron have no credibility", o.k., how can I take anyone seriously when they make that kind of a statement.

I understand disagreeing on issues, interpretations of facts, etc. I know people can lie, exaggerate, politically, grand stand, etc., but to say that they have no credibility basically means that no one should do business with them, including Irwin. Perhaps he would have more trust in foreign controlled oil companies. Personally I would never do business, would not even think about doing business with a person or firm who I thought had no credibility. Please clarify - was Irwin being untruthful? Is that what you believe? What should the consequences be of having that belief?

ace, considering this:

ace, this is displayed in the first quote box in my last post:

Quote:

...Chevron Corp (CVX.N), which holds a 25 percent stake in Point Thomson, vowed to sue over the decision.

"We are shocked and very disappointed by this decision," Scott Davis, the Chevron executive overseeing its Alaska business, said in a statement. "With this decision the state has taken a giant step backward in bringing North Slope gas to market."

Point Thomson, discovered in 1977, is thought to hold at least 8 trillion cubic feet of natural gas reserves and 200 million barrels of liquids and would be a vital source of supply for any Alaska natural gas pipeline project.

The state has accused the oil companies of deliberately delaying development of Point Thomson. The majors reject that charge, saying the giant gas field cannot be put into production until a pipeline is constructed to ship Alaska gas to the rest of the United States.

Field operator Exxon owns about 36 percent of Point Thomson, and BP Plc (BP.L) owns 32 percent of the field.

<h2>The Alaska Department of Natural Resources ruling said Exxon's failure to develop the field under 22 previously submitted development plans compromised the credibility of its latest proposal.</21>

"The history of this unit and the evidence offered by the Appellants have convinced me that approving the (development plan) will not result in timely development of these valuable state lands," DNR Commissioner Tom Irwin wrote....

....The state so far has been successful in early legal battles. Officials concede that a lengthy period of litigation may ensue.....

ace, this is displayed in the second quote box in my last post:

Quote:

.........Exxon raised the specter of a financial claim at the same time the company and its Point Thomson partners -- BP , Chevron and ConocoPhillips -- formally asked state Natural Resources Commissioner Tom Irwin to reconsider his rejection of the latest Point Thomson development plan.......

........ Irwin's April 22 decision to reject the 23rd Point Thomson development plan was the latest official action taken by the state to revoke leases at the field where state leaders say oil company inaction justifies repossession of that state property.

The unit, created in 1977 and containing leases that date back to the 1960s, holds 8 trillion to 9 trillion cubic feet of natural gas and hundreds of millions of barrels of condensates and oil, according to state officials.

<h2>No well has been drilled at Point Thomson since 1982. State officials consider Exxon, the operator of the unit, and the other Point Thomson partners to be in gross violation of lease obligations.</h2>

While the natural gas cannot be commercialized without a highly expensive and yet-to-be-built gas pipeline, state officials have long maintained that Point Thomson's liquids can be produced......

ace, this is displayed in the fourth quote box in my last post:

Quote:

...If, for example, Sourdough were developed and produced on the state side and the feds don't hold a lease sale for their side of the reservoir, legal experts say the federal government probably couldn't claim any revenue from federal oil drained from Sourdough's state leases.

<h2>In his April 22 rejection of Exxon's plan of Point Thomson development, Tom Irwin, state commissioner of natural resources, made it clear that the Palin administration, like those that preceded it, wants a commitment to produce Point Thomson's "considerable oil reserves," including the discoveries at Sourdough and Flaxman adjacent to ANWR.</h2> (Other wells along the border in Point Thomson also might hold oil, but not all well results have been made public.) If the state ultimately prevails in court and takes back Exxon and other oil company's leases at Point Thomson, the state could sell leases to the field again.

BP and Chevron received permission to drill Sourdough from Point Thomson operator Exxon in the early 1990s. BP subsequently drilled two wells in the prospect, which lies in the southeast corner of the Point Thomson unit, adjacent to the Staines River that runs along the border between ANWR and Point Thomson.

ANWR's coastal-plain area is roughly a half mile from the Sourdough discovery well....

Can you see why I suspect that you either aren't seriously interested in discussing the crux of the thread...that the major oil companies are demonstrably uncommitted to investing in, exploring for, and extracting, refining, and distributing as much petroleum product as they could reasonably accomplish, if they made doing so a top priority....and if that is so, it is up to the US government, as the Alaskan state government is doing....to intervene and get production ramped up?

Or....can you sincerely post that you don't understand what Alaskan commissioner Tom Irwin is saying, doing, and WHY?

Do you understand that the oil companies' record of non-performance, next door to ANWR, in proven petroleum fileds, is an indication that "opening" ANWR to petroleum exploration is mostly a politcal game, and not what Cal Thomas's article describes it as?

aceventura3 · 05-15-2008, 12:05 PM

This is not complicated in my opinion.

Exxon says they needed a pipeline to cost effectively pump the gas and oil. Generally, when the market price of oil and gas is low, the company has no incentive to develop more costly undeveloped properties. When the price of oil and gas goes up, higher cost properties can become cost effective.

If Alaska wanted the property developed years ago, they could have allowed for the pipeline. They did not do this.

Alaska also had the opportunity to take the action they are taking now years ago. They did not do this.

Exxon's past actions are consistent with general business practices. They will want to control a potential resource for as long as possible and practical even if they have no immediate plans of developing the property. A common response to that is to force action, as Alaska is currently doing. Now, the state has leverage and can force development with no conditions. This is just business. There is nothing heroic being done on the part of Irwin. He is just lighting a fire under Exxon's ass. Sometimes you have to do that, no big deal.

Exxon is currently acting consistent with what you or anyone should expect. If you think they lack credibility it is because you attribute motives to their actions that don't exist. Exxon wants to make money, with oil at $125 they will be able to do it at Point Thomson at $50 perhaps they could not.

Quote:

Exxon drilling led to discovery of Point Thomson's gas and oil reserves in 1977. But the company hasn't developed the field because of the lack of a gas pipeline and the field's extreme subsurface pressure, which would require tougher, costlier wells to control, Exxon managers say.

Irwin, in his decision, said Exxon and other leaseholders have looked to "warehouse" Point Thomson while concentrating on projects elsewhere in the world.

Quote:

Exxon, the top leaseholder in the 106,201-acre field, in February offered a $1.3 billion drilling plan in hopes of halting the state's legal effort to break up the field and possibly lease the acreage to other companies.

Exxon managers touted the plan as an "unconditional commitment" to start producing from the field.

http://www.adn.com/oil/story/384213.html

Your post here was a nice try, but failed to prove your point in my view.

05-09-2008, 12:32 PM	#2 (permalink)
roachboy Super Moderator Location: essex ma	2 questions and i'll get back to you: 1. how emblematic do you take this bakersfield situation to be and why? 2. you have a more or less textbook case of the discrepancy between corporate performance viewed on a global scale versus local dependence on systems of distribution that from the global scale are expendable and/or outmoded. at the ideological level, you have an american system that has not even started to deal with the consequences of the shift in power away from nation-states to trans-national registers and which compounds this problem by also being differentially committed (depending on whether a particular politician is of the democrat or republican wing of the overall consensus-driven formation) to not using regulation to assert interests at the nation-state level. 2 is relevant in this case both in general (add it up, if my writing is clear enough--and i'm not sure it is--and you'll find that it results in a quick outline of total incoherence at the policy/regulatory level across the board--how does the american nation-state assert it's own interests--which are those of maintaining itself as a nation-state--when they are at cross purposes with the interests or requirements of trans-national capital? can it, even in a context as fundamental as energy? so far, "markets" structured around de facto neo-colonial arrangements have enabled the state to avoid dealing with this matter on energy--if it were possible to do anything coherent, particularly while this asshat administration remains in power, political expediency would have already had then doing it, i'd imagine, as it is politically damaging for gas prices to be this high and there to be NO sign that the american state can or will do anything about it...) given this, the first question comes into play: how emblematic is this situation? why is it emblematic? why do you take this particular case as a jump-off point for a nationalization argument? all this to the side of the simple reality that there is no way that this administration would ever do such a thing. and the corporate media seems to have neither the internal interest nor external directives to sell such an idea--you know, in anything like the way it worked to sell the crock of shit that is the iraq war for example... this for starters. __________________ a gramophone its corrugated trumpet silver handle spinning dog. such faithfulness it hear it make you sick. -kamau brathwaite Last edited by roachboy; 05-09-2008 at 12:34 PM..

05-09-2008, 04:32 PM	#6 (permalink)
Seaver Junkie Location: Fort Worth, TX	Host, I'm not reading all of that. Honestly, it's a fucking encyclopedia. That being said... I wouldn't be 100% against this move. The Postal Service started for the greater-good, in order to unite the colonies and provide open communication between states. Gasoline in essence provides much the same. The big problem is where international investment, which is MAJOR for the oil companies, would sit. In essence the US government would then be purchasing land from foreign countries. This would then require congressional approval for every individual well. __________________ "Smite the rocks with the rod of knowledge, and fountains of unstinted wealth will gush forth." - Ashbel Smith as he laid the first cornerstone of the University of Texas

05-12-2008, 10:23 AM	#15 (permalink)
roachboy Super Moderator Location: essex ma	so you're not interested in the general well-being of the citizenry, but rather in electing people who impose your beliefs on the citizenry--presumably because you think your politics are better and smarter than those of others. and you're not interested in procedural transparency either--which is bizarre given the implication of your preference for smaller government--which is typically accompanied by claims that smaller administrative units are more transparent. instead, you have a stalinist understanding--the end justifies the means. and you see environmental groups as a problem to boot. but you trust oil corporations. the system is designed to prevent ideologues like you from being able to simply impose their fiats on the rest of us--the bush-cheney crew operated like a cabal in this instance, shutting out divergent viewpoints and imposing ideologically (and factionally beneficial) results on the rest of us. it is to prevent this sort of thing that there are checks and balances--which presumably you only care about when there's a democrat in power. __________________ a gramophone its corrugated trumpet silver handle spinning dog. such faithfulness it hear it make you sick. -kamau brathwaite Last edited by roachboy; 05-12-2008 at 10:26 AM..

05-12-2008, 10:36 AM	#16 (permalink)
dc_dux Location: Washington DC	ace...the oil industry contributions of over $100 million (mostly to repubs) over the last seven years gave them unfettered access to write their own regulations to the Clean Air Act (that will save them $billions while delaying existing regulatory controls over GHG emissions in power plants) and to write their own tax relief provisions in the administration's national energy plan.(including relief from $10 billion in royalty payments). In both cases, the final Bush/Cheney energy plan is almost word-for-word from the API recommendations. Not a bad return on their investment of $100 million in political contributions. If you like how that works..thats fine. I think it stinks like a cow fart! __________________ "The perfect is the enemy of the good." ~ Voltaire Last edited by dc_dux; 05-12-2008 at 10:41 AM..

05-12-2008, 11:21 AM	#22 (permalink)
dc_dux Location: Washington DC	ace...you can cite the American Chemical Society (correction...not a trade association) publication on the so-called Clear Skies Initiative and I can cite environmental group publications....: Dirty Skies: The Bush Administration's Air Pollution Plan Clear Skies Proposal Weakens the Clean Air Act ...but whats the point. You think "environmental groups arent 100% credible", but you dont seem to hold affected industry groups to the same standard. You think "insiders" are the best to evaluate regs rather than the affected public. I think both should have access and input into the process. They didnt in this case. ..so whats the point. __________________ "The perfect is the enemy of the good." ~ Voltaire Last edited by dc_dux; 05-12-2008 at 11:28 AM..

05-12-2008, 11:42 AM	#25 (permalink)
roachboy Super Moderator Location: essex ma	i am bewildered about your apparent assumption that political officials have the expertise adquate to allow them to blow off review processes, ignore their own experts, etc, in the formulation of policy. i am bewildered by your mode of argumentation, which seems only about superficial factoids buttressed by a faith in corporate actors operating within very specific types of bounded rationalities to be able to step outside that rationality and fashion policy that is somehow not predictated on corporate interest to the exclusion of all others. i am bewildered by your apparent hostility to environmenal groups, which in the main function to raise political concerns that have to do with what is excluded from corporate internal thinking and imaging of their own performance and the impacts these exclusions have on stakeholders. in this, i am not making any argument that one side is entirely right and one entirely wrong--i just don't get the basis for your dismissal of environmental groups a priori. i don't really understand anything about where you are coming from politically--you seem unconcerned with democratic process altogether, animated by some quaint faith in the ability of corporate entities to transcend their organizational limitations and act in the best interest of--well who?--themselves, really. when you are not bothered by the way in which bush/cheney formulated their energy policy and someone reading your posts ask themselves "why is this?" the conclusion is that you don't care about procedural transparency. when you say "i don' care about process, i care about results" it simply reinforces this. it doesn't matter whether you said it or not--the logic is in place throughout what you did say, the end justifies the means, a disregard for process, a contempt for democratic procedures--all these are typically stalinist. again, it is of no consequence to me whether you like it or not. and you conflate political ideology with a consumer choice. that one i have so little nice to say about that i'm not going to waste the energy to go beyond this period. __________________ a gramophone its corrugated trumpet silver handle spinning dog. such faithfulness it hear it make you sick. -kamau brathwaite

05-12-2008, 03:04 PM	#29 (permalink)
ASU2003 immoral minority Location: Back in Ohio	I think there are ways to fix the industry without taking it over. It would be more like a public utility type of setup I think you are talking about, and I'm sure prices would go down without their 30% profit margins or whatever (.30 cents at $1, .90 cents at $3, but they don't do anything more). The problem is that in 2-3 years, prices will just go up again because we sent so much money and so many jobs to China & India. Now they want to use gas to improve things there.

05-12-2008, 07:11 PM	#31 (permalink)
ASU2003 immoral minority Location: Back in Ohio	This may be for the paranoia section, but I feel that we aren't drilling as much as we could because in 50-100 years when the world has run out of oil, and haven't converted to alternative fuel, we will be in control. I have no doubt that a national, state run operation could face the same problems as BP. It's not like they purposely tilted the Thunder Horse oil platform... Yeah, they wouldn't need to make as much profit, but you know they would spend all of their budget in fear of getting it cut because they didn't use it all. (Their budget would come from the sale of gas instead of all taxpayers though.) Oil would still be traded on the open market since we don't control all of the oil producers, and there is a ever growing demand for the stuff. I'm fine with out current production amount. Well, as long as it is the same as it has been in previous years. I think it is more of a demand side problem that we need to fix. And the environmentalists are actually happy as well as the oil companies at this recent increase in oil prices. So, I'm not really sure what has happened in the market to make it go up that high (read: housing speculators all moved into oil), but I don't look as crazy riding my bike to work anymore.