The Baker Hughes rotary rig count published last Friday shows an increase of 17 land rigs in the US over the previous week. Though the total count of 1,041 is a far cry from the 1,990 rigs that were working in the same area a year ago, the trend upward is still good news. Unfortunately, the offshore count is moving in the opposite direction. Rigzone reports just under 58% utilization in the Gulf of Mexico (GoM), down from 59% last month. At 58% utilization, the GoM is hurting. This time last year, utilization rates hovered around 83%. Exploration and production activity has dropped significantly, and recent clamoring in Washington could ensure that it continues to fall off. An article in the “Los Angeles Times” reported on Monday, October 12, that scientists from the National Oceanic and Atmospheric Administration are urging the Interior Department to drastically reduce plans to open the West coast and areas offshore Alaska to drilling. According to the article, NOAA is urging the Minerals Management Service (MMS) to consider ocean ecosystems, coastal communities, and other environmental factors when finalizing a leasing plan.” Does no one take exception to NOAA’s implication that the usual approach the MMS takes is to throw caution to the wind, encouraging offshore production at the cost of marine life and the environment? Allegations of this type are damaging, and all the more so when they come from a seemingly reputable source. While this influential national agency throws its weight around, things are heating up in the Senate, where the green energy bill is still being debated. One of the fence-sitters in the Republican party, Lindsey Graham, has decamped to join the Democrats. According to a Reuters article by Andy Sullivan, Graham co-authored an article in “The New York Times” with Senator John Kerry stating that the two men believed they can pick up sufficient support to pass a wide-ranging bill to limit carbon emissions and establish a clean-energy future for America. While Graham and Kerry continue to push for ratification of the bill, the article says, “many lawmakers worry that the bill would hurt the struggling US economy, raise energy costs, hurt coal-producing regions and weaken energy-intensive industries like steel manufacturing.” In the meantime, Graham and Kerry suggest companies should get annual permits (to be sold within a fixed minimum and maximum price) for every ton of carbon pollution they put into the atmosphere and be given the right to sell any they don’t need. Countries that don’t limit pollution should face trade sanctions, they say, not bothering to take into account, of course, that by restricting the import of inexpensive goods, the US is driving up the cost of living even as domestic energy becomes more expensive to generate and more costly to purchase. The “incentive” put forward by the Senators in their argument also is a bit dubious. In short, they imply that if Congress sets the limits, the bill will avoid a much more strict set of guidelines that will most likely be imposed by the Obama administration. So it looks like more of the same from Washington – one step forward and two steps back. To my ears, at least, the latest version of the bill sounds like the same old song.
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