P62. Pick Points

Well after being told that we had to “Drill, Baby, Drill,” a Federal appeals court has" Just Said No!” It ruled that permits for off-shore drilling, whether in Alaska or the Gulf, must give greater consideration to environmental impacts of such oil exploration.

The lawsuit was brought by three environmental groups that want to protect the ecosystem and the Native Village of Point Hope, Alaska, a tribe that lives off the wildlife on the Chukchi Sea coast.

It is of particular concern down in Louisiana where it might have significant impact out into the Gulf.

Don Briggs, president of the Louisiana Oil and Gas Association, was dismayed by the court's ruling. "We have so much science to prove that in the Gulf of Mexico, the environment is protected. Wildlife actually flourishes around offshore production facilities," Briggs said. "I believe that this is just politics."

The appeals court ordered the Interior Department, now run by President Barack Obama's appointee Ken Salazar, to analyze the areas to determine environmental risks and potential damage before moving ahead with the program.

However the story is a little different up in Alaska, and in this particular case, since among other things it impacts the subsistence living of the local tribes.

Eskimos living along the coastline worry that drilling noise may disturb migrating bowhead whales, walruses and seals, which they depend on for food. They've also questioned whether Shell is prepared for a potential oil spill in the Beaufort Sea, where moving ice can make a cleanup difficult.

"Americans are looking for a clean energy future, and trading animals and their habitat for massive oil company profits is the way of the past," said Charles Clusen, director of the Alaska project for the Natural Resources Defense Council, in a statement.

The Manifa oilfield in Saudi Arabia has gone through a number of “on again, off again” cycles. While it has the potential to produce over a million barrels of oil a day, the chemical content of the oil is such that it cannot be economically refined by existing facilities. Thus Aramco have planned to build a couple of refineries in Saudi Arabia to allow them to usefully bring the field into production. Well it now looks as though work is going to start again on building some of the on-shore crude handling facilities. (The oilfield is just offshore). Last year plans were announced for a new refinery at Jubail that would process the oil, with initial production scheduled for 2011, and the refinery was supposed to be up and running in 2012. Well it has now slipped to 2013, and will only process 400,000 bd, of the Manifa production, but the work is going forward, though the economic downturn is anticipated to have lowered the overall cost. The other refinery planned to take the remainder of the Manifa oil has been planned to go into Yanbu. The partnership this time is between Aramco and ConocoPhilips, and current plans are for initial bids to be solicited this summer, with contracts awarded before the end of the year. Production is again anticipated for 2013.

Gazprom has just successfully raised $2.25 billion in bonds, and Gazprom Neft (the oil branch) is going to go ahead this week to raise some 10 billion roubles ($299 million) in a domestic sale this week. They may need some of the money to recompense Turkmenistan, who is still claiming that the blast in the gas pipeline the other week, was Gazprom’s fault. Given that Gazprom was hoping to get more gas from Turkmenistan, this is not good for them, since it continues to delay pipeline expansion.

The third summer of drought in California is causing additional tensions in that state as water restrictions are reimposed, at the same time that water supplies to farms are being cut.

"Up to 19 million southern Californians this summer will feel the impact of a new water reality that has been in the making for years, if not decades," said MWD board chairman Timothy Brick in a statement.
In the Central Valley, meanwhile, tens of thousands of farmers, farm workers, and local officials protested federal and state water cuts during a series of marches this march.

Between 70,000 and 80,000 farm workers are out of work this year as a result of water shortages, according to a study from the University of California, Davis. California ordinarily supplies America with half of its fruits and vegetables.

Some 100,000 acres of agricultural land will not be planted.

At the same time the state is praising the success of the re-flooding of Owens Lake as a way of both stopping regional dust storms from the lake bed, and coincidentally providing a wetlands for migrating birds. The only problem?

As it stands, each year the project uses about 60,000 acre-feet of water worth about $54 million -- enough to supply 60,000 families.

There are no easy choices, although, as is noted:

"We're beginning to get to the real cost of water," says Colin Sabol, vice president of marketing for ITT Corporation, the world's largest provider of pumps and water equipment. He notes that US consumers pay on average only one-third of what Germany pays for its water.

Germany "charges a price that allows them to reinvest in their infrastructure," Mr. Sabol says.

Some $250 million in stimulus funds are going to be directed at helping with the problem. Perhaps they could learn from the “grey water” controversy out there. Back in the early 1990’s the State carried out an experiment that allowed homeowners to use grey water (that from showers and dishwashers) for irrigation. The project at the time was a success, with great things predicted. Unfortunately bureaucracy stepped in and made the regulations so complex that the benefits never officially happened and there are only 200 legal systems in the State – maybe this could be changed, since it is estimated that up to 16% of the state consumption could be saved and reused.