If America owned and developed the oil and energy reserves we would be able to any and every thin we wanted to do. Petrobos is a Brazilian company with part of it owned by the nation as are other oil companies around the world.
Article Below from Forbes.
Something serious happened this month to the cultural "drill baby drill" meme. In short, March was the month it became irrelevant. A new Department of Interior study debunks the myth that the US is not opening up ample land for oil and gas exploration.
If you want to know why the country is not drilling for oil in the US, ask an oil company.
Drill baby drill was made popular by Alaskan governor and vice presidential candidate Sarah Palin in 2008. It was mostly a political tool to criticize the challenger, Barack Obama, and the "environmental left" of the Democratic Party to drill in the oil rich Arctic National Wildlife Refuge, or ANWR. Drilling there has been off limits since it was signed into law in 1973 by Republican president Richard Nixon.
The storyline that America was abandoning drilling at home was resurrected again in an August 18, 2009 op-ed by The Wall Street Journal. In it, Journal editors criticized President Obama for the Export Import Bank's decision to open a $2 billion credit line to Brazil's federally owned oil company, Petrobras (PBR). The credit facility was made public in April.
Fox News commentator Glenn Beck brought up the Petrobras loan again on June 21, 2010. He added a new element to the story. Billionaire hedge fund manager George Soros had announced investments in Petrobras, so now not only were we abandoning drilling in the US, but we were enriching political friends in their offshore Brazil investments.
The loan, Beck said, and Soros's involvement "certainly doesn't seem to pass the smell test. A billionaire investor dumps money into state-controlled Brazilian oil company and days later administration dumps $2 billion dollars into the same exact company. Now the administration is crippling the American competitors and the biggest winner in this is Petrobras. Mind you, this is a multi-billion dollar company that rakes in tens of billions in profits each year. Why in the world would these guys need a loan? And why are we investing in another country's offshore drilling while banning ours?"
The idea was that the Export Import Bank was giving Petrobras a loan to drill offshore there, while Obama was banning it here. The White House has nothing to do with Ex-Im lending. The loans are designed for foreign companies to buy US goods and services. Bank president Fred Hochberg said that for every $1 billion lent, 7,400 US jobs are created. But more than that, the Ex-Im loan offer was made in 2009 when there was no ban on drilling in the Gulf of Mexico, except for the ban along the Florida Gulf coast, which was signed into law by President George W. Bush.
This March, Brazil was used once again as the lynch pin to lean on Obama for not drilling in the US. Neil Cavuto on Fox Business News discussed the Ex-Im loan on March 22, a day after Obama returned from an official visit to Brazil. There, Obama spoke about helping Brazil tap its deep water oil resources in the Santos Basin off of Rio de Janeiro. He said the US was standing by willing to help develop those resources, and wanted to be "Petrobras's biggest customer." In a world where most US oil imports come from politically unstable countries, getting some oil from Brazil would be low drama by comparison. Nevertheless, Cavuto used Brazil to launch into an attack that the US was not doing enough to drill at home. But we are drilling at home. In terms of the number of rigs out there drilling, we are drilling at least as much if not more than we have under Bush.
When the Journal op-ed writers made their comments about drilling bans, there were no new bans in affect, and surely none to my knowledge that were signed by Obama. So in affect, it was an attempt to pressure the government to open areas that have been banned for generations. On the other hand, when Beck mentioned the ban, he was indeed correct. That's because in the summer of 2010, the US Department of Interior's Bureau of Ocean Energy Management Regulation and Enforcement (BOEMRE) banned around 35 deep water oil rigs from all activities in the Gulf of Mexico following the BP Deepwater Horizon oil spill. It was the worst oil spill in the nation's history. It was the sole reason for the ban. The ban was lifted October 10, 2010, less than a year later.
As of March 28, BOEMRE received 45 deepwater drilling permit applications that are subject to the government's new safety and environmental requirements, including demonstration of subsea containment capability. These include applications to drill new wells, bypasses, and sidetracks. All told, 24 of those permits were returned to the operator with requests for additional information, particularly concerning subsea containment as BOEMRE and the industry wrestle with the new rules.
So far six wells have been permitted, including oil and gas wells leased by Petrobras, Shell, ExxonMobil and Chevron in the Gulf.
Also as of March 28, BOEMRE received 31 deepwater drilling permit applications for water injection wells and drilling from a fixed rig that was allowed under the moratorium. Twenty-eight of those permits were granted.
Andy Lipow, of Lipow Oil Associates in Houston, told Cavuto that it was strange we were funding offshore Brazil while letting the permit process stagnate in the Gulf. "The permit process is going too slow," he told me. "Rigs are leaving the coast because the process is taking too long."
Around five rigs left the Gulf of Mexico for Brazil and elsewhere because of the ban. But they will be back. Moving offshore drilling equipment and personnel from one country to another is relatively easy. And companies like Shell told its rig partner Noble Corp. to pack up and go to the Santos Basin because it was better than sitting around in Gulf waters doing nothing.
Where the Rigs Are
The number of rigs drilling for oil and natural gas in the Gulf of Mexico has been in decline since 1997 for a variety of reasons, including lifting costs — which is the cost of pulling crude out of the ground — oil price, world demand, and better opportunities to drill in other parts of the world, like West Africa, or coastal Brazil. These are trends the White House cannot control.
In 2001, Bush's first year in office, there were 148 rigs in the Gulf of Mexico. By the time he left office in 2008, there were 63. They declined year over year, and in the last two years of the Obama administration, the Gulf rig count has dropped to 31, it's lowest number if more than 40 years. Some wells get depleted. Others are abandoned. Some companies find better deals abroad. That's the business, it seems.
The Gulf of Mexico is one of America's most important oil basins, and our only major offshore drilling operation. Bans to drill off the Pacific and Atlantic Coasts have been in effect for years. Onshore, however, the rig count depends on many factors, including feasibility studies that show the return on investment for producing the well at today's oil prices. With oil prices over $90 a barrel, more rigs are tapping wells in the US.
As of March 26, there are 1,738 rigs tapping new oil and gas wells or actively producing from new wells in the US, according to oil industry service firm Baker Hughes. The number is 294 rigs greater than last year. Since Obama took office, there has been over 1,500 rigs exploring and producing from new wells each month, with the exception of 2009, when the rig count fell to as low as 876 in June 2009 due to the recession. Those rig count numbers are greater than the first few years under Bush, who surely was never scolded publicly for not doing enough for the national oil and gas industry.
Democrats or Republicans do not necessarily drive the oil business. Oil demand and pricing do. Policy incentives and tax breaks do. The American Petroleum Institute wants areas off the Pacific and Atlantic coasts opened for more drilling. Their communications department told me on Thursday they also wanted "more leasing and permitting onshore."
Yet, on March 29, a report requested by Obama was released by the Department of Interior showing that more than two-thirds of the offshore leases in the Gulf of Mexico and more than half of the onshore leases on federal lands remain idle, neither producing nor under active exploration by companies who hold those leases to drill.
"We continue to support safe domestic energy production, and as this report shows, millions of acres that have already been leased to the industry for oil and gas production sit idle," Department of the Interior secretary Ken Salazar said.
In the Gulf of Mexico, 34 million acres with an estimated 11.6 billion barrels of oil have been leased. That means companies can indeed drill in those areas. Only 6.3 million acres are currently being drilled.
On land, 54% of onshore acres under lease, and approved in the last two years, are not undergoing any exploration or development at this time.
There are no easy answers. For starters, Alaska's Chukchi Sea lease in 2008 is still subject to litigation, so few companies want to tap those resources. Nevertheless, the argument that Washington, and President Obama in particular, is not "drill baby drilling" has no statistical merit, judging by the permits coming back after the BP oil spill, the high rig count, and the tens of millions of federal lands open to drilling, but are not being explored.
Maybe the geological tests on those lands showed that the oil and gas deposits were too costly to develop, and that drilling for oil in Brazil was more cost effective, and politically safe. I don't know. The answer will be different if you ask Chevron or Apache.
The fact is, supporting Petrobras through credit guarantees is not akin to abandoning the US oil and gas industry. In fact, it is supportive of it. Argueing that we are not doing enough to drill at home while opening up millions of acres to do just that is like standing on a mountain in Aspen in the winter on a sunny day and complaining that it's not snowing.
"We are very excited about Brazil," says Gary Flaharty, vice president of investor relations at Baker Hughes. The company is one of the biggest oil service firms in Brazil and is working on 18 wells in the Tupi oil field in the Santos Basin. Petrobras is a client. "We moved people out of the Gulf to Brazil temporarily, but they will surely be back. We know there is a lot of potential in the Gulf of Mexico, too," he says.
As for Soros' Petrobras bet; for any impropriety to have occurred, he would have had to buy Petrobras stock before the material fact of the loan offer and sell shortly afterwards. He did not. He held it long enough and faced the same gains or losses as any common shareholder in that period.
In the end, Palin's call for more drilling may have to be redirected, not towards the White House, but towards the oil companies who — according to the DoI's report to the president this month — have ample land being offered them.
(This is part of an ungoing study of oil production and development in the US and the non-Opec nations, mainly Brazil, Russia, India and China.
