Scare tactics and misinformation

Death and destruction -- and fear -- sells. It sells magazines and movies and news.

Because of this, our news sources have become sensationalistic. I catch news trailers that are downright scary. "Is poison lurking in your fridge? Tune in tonight."

Yikes! What if I eat it before the 10 p.m. news program starts?

The same thing has happened with media coverage of our petroleum industry. Scare tactics make for devoted listeners/watchers/readers -- but really, are we posting the news or misinforming (and scaring) our public?

Take yesterday's accident offshore Louisiana. I got word in the morning that an oil rig had exploded, ala Deepwater Horizon; and my heart sank.

No! Please don't say it's true -- I thought of our already embattled offshore industry, laid off because of the moratorium, still mourning the losses of the Deepwater Horizon crew. I thought of the book-throwing environmentalists who use fear and misinformation to enact change. I thought of the drilling moratorium, the Rally for Jobs campaign by the API, the Save US Jobs campaign by the AEA, the National Taxpayers Union's campaign to support domestic energy companies.

I can't tell a lie -- I also thought about my job as a petroleum writer.

Initial media reports coming out of the major sources were scary, really very frightening.

When I got wind of the story, there was no official report, so I dug a little, just as a good journalist should. I called multiple offices in the US Coast Guard until I found the right one. I asked my source there what was going on.

Thinking back, he never said "rig." He called the facility the "Vermillion 380," which I automatically connected as a block, not a rig. I asked him about it, but he wasn't sure. (Mind you, this was VERY early on...)

Right off, I knew the initial reports were wrong, and I posted what I knew about the accident, facility and company.

I called Mariner. I called the BOEM. I checked websites and waited for more information. I updated my site when I found out more.

I breathed a sigh of relief when I learned that all offshore personnel were rescued and safe. I breathed another sigh of relief when I learned that there was no oil leaking into the Gulf.

I hoped that our media would quickly change it's tune -- stop connecting the Vermillion 380 accident with the Deepwater Horizon accident. Stop scaring our public into believing that offshore drilling is unsafe.

Yes, everyone wants to know that our waters are safe, but misinforming the public to win more readers or viewers is just wrong.

Even last night, when I watched the news about the Mariner accident, journalists continued to call the production platform a rig ... which is the word used to describe a drilling rig. "Rig" is not used in the industry to denote production facilities, and production facilities, for the most part, do not drill (although some do house drilling equipment or they may host a drilling rig via cantilever).

This morning, I was saddened by a statement released by the United Steelworkers supporting the fed's moratorium on drilling, connecting the Vermillion 380 production platform accident to a need to increase safety in offshore drilling.

Now, should our industry always strive to increase safety, protect the environment and strengthen ethics? Yes. HSES is such an important part of our industry, and it should and will remain so.

And I agree, our authorities really should make sure that our practices are safe. But are they doing that, or are they saving face? What's taking so long, and why have only four drilling permits been issued in the last four months (even in shallow waters)?

While images of a smoking production platform keeps people on the channel, what the media is not doing is informing its audience about the amount of petroleum the US consumes, how much we import, where we import it from, and what we'll have to do to support our society in the future -- and how much that will cost -- should oil and natural gas exploration and production in the Gulf of Mexico get shut down.

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Phaedra Friend Troy is the content director for PennEnergy.com, an all-energy website that provides oil and gas, power and infrastructure news, analysis, reports and more. Sign up for a free daily enewsletter today.

Shale exploration and development heats up US onshore job market

While the drilling moratorium has hit the US petroleum industry hard, especially when you think about the thousands of oil and gas professionals who have been shelved during this tumultuous time. Fortunately, the shale exploration and development is booming across the US, and the job market is just as hot.



I've always heard that when one door closes, another opens -- and true to form with regard to the petroleum industry, shale has blown open all sorts of employment and economic doors.



Although geologists have known that the US sat atop various shale plays for decades, extracting these hydrocarbons has historically proven extremely difficult. Shale is by definition trapped in finely grained sedimentary rock, which has until recently stumped both the exploration and production side things.



With myriad improvements in technologies, the oil and gas industry has recently been able to tap these domestic resources. Improvements in horizontal and direction drilling, as well as developments in hydraulic fracturing have enabled operators to ramp up onshore oil and gas production through these shale plays.



With the number of rigs soaring in multiple states due to shale drilling, field development and even pipeline construction has soared in recent months due to increased activity in the US shale plays. And increased activity in the shale plays equals more jobs for US oil and gas professionals.



The Marcellus Shale play in Pennsylvania alone is adding tens of thousands of jobs to the state, and there are so many oilfield workers tapped for North Dakota's Bakken Shale play that housing has become an issue. Furthermore, these jobs extend beyond the petroleum industry. Increase revenue, royalties and leasing payments, as well and indirect employment is also boosted by this petroleum rush.



In fact, states across the nation are seeing economic spikes from shale activities.



"The game-changing development of natural gas supplies in shale regions has great potential to improve the economic well-being of communities across the United States, while providing access to a clean domestic energy source,” said Regina Hopper, America’s Natural Gas Alliance (ANGA) president and CEO.



Interested in finding a job in the shale industry? Visit PennEnergyJOBS to find your next career.

HSES efforts pick up in the energy industry -- Good news will prevail

It's a common knowledge in the news industry: Death and destruction sells newspapers, multiplies page views, nabs viewers. As a regular writer for the web, my analytical tools further confirm that bad news is good news for page views.

Akin to rubber-necking, people just like to watch a ship sinking... whether it's gossiping about the latest Hollywood doomed marriage or a tragic accident, it's human nature to converge on the scene.

We've certainly seen this phenomenon demonstrated in the oil and gas industry as of late. The world can't get enough about the oil spill in the Gulf, and subsequent oil leaks in the shallow waters offshore Louisiana, at a port in China and from a pipeline in Michigan have certainly gotten the attention of many a PennEnergy reader.

The excitement of hurricane season can sometimes land more eyes than an oil and gas discovery. (And as I wrote yesterday, this season is forecast to be an "extremely active" one.)

While HSES (Health Safety Environment and Security) opportunities abound, recent accidents have solidified the industry's commitment to safety and the environment.

I recently spoke with a woman whose husband works as an HSE consultant. She said he's swamped with jobs right now. As soon as he gets home from a gig, he's flying out again -- all over the world. After the Macondo oil spill, companies are eager to double- and triple-check their facilities and HSES practices, and his consultancy has seen the jump in clients because of it.

Dedicated preventative and proactive health and safety efforts will help to ensure these types of accidents never occur again.

A four-company consortium consisting of ConocoPhillips, ExxonMobil, Shell and Chevron recently pledged $1 billion to develop and maintain a deepwater oil spill containment system that can be deployed within hours should any other accident occur in the US Gulf of Mexico.

And good news is around the corner with the recent accidents. China is working to clean the spill at its Dalian port, and Enbridge Energy Partners has cleaned a substantial amount of the oil that spilled from its Lakehead system in Michigan.

Wild Well Control managed to wrangle and cap the new oil spill in the Gulf of Mexico more than a week before the well was supposed to be capped.

Oil and gas operators and offshore drilling contractors have been diligent in shutting-in production that may be in the path of a storm, as well as quickly working to evacuate offshore staff should a hurricane threaten to travel near facilities.

In the deepwaters of the GOM, not only has BP commenced the static kill procedure, pumping concrete into the Macondo well, but the US government reported that nearly three-fourths of the oil that spilled from the deepwater accident has been cleaned, contained or dispersed.

Steady crude prices support new exploration and production ventures

Although not as high as it once reached, the price of crude has been steadily trading in the mid-$70 range for about a year now, supporting new exploration and production investments worldwide.

When a barrel of crude hit $100 and above, that price helped to support more expensive exploration and development projects, including oil sands, ultra-deepwater, EOR and unconventional plays. When companies are making more money, they can spend more money; and budgets reflect this.

But when the price of oil plummeted, so did investments in new or technologically advanced projects. Companies worldwide contracted, delaying projects and laying off employees.

While the market has not fully recovered, the steady price of oil in the $75/barrel range certainly helps encourage development dollars to be spent. OPEC has kept production curtailed effectively to support a more manageable (than $30/barrel or $50/barrel) price for a barrel of crude.

As the ramp-up begins, we see major acquisitions and industry moves taking place across the board. Oil services companies are merging (, major producers are acquiring interest in new projects, and the employee marketplace is heating up.

Hot opportunities for both companies and investors have very clearly emerged. Major dollars are being spent in the US onshore shale plays, and the Canadian oil sands market is certainly heating up.

Major international companies, such as India's Reliance, Royal Dutch Shell and Norway's Statoil have committed billions of dollars to shale in the US. Experts have predicted that the massive natural gas resources of the shale plays in the US may very well turn the typically regional commodity into a global one, like oil is today.

China's Synopec recently agreed to pay $4.65 billion to acquire a stake in ConocoPhillips Syncrude development in Canada, while French major Total is spending $1.1 billion to acquire a slice of Canadian oil sands. At the close of 2009, South Korea's KNOC agreed to pay $3.9 billion for Canada's Harvest Energy.

Additionally, new oil provinces are garnering attention, with companies turning toward the Atlantic Margin for exploration opportunities. The first drilling offshore Greenland in more than a decade is currently under way, with Cairn Energy spudding its first well offshore Greenland earlier this month.

Also, exploration offshore the Falkland Islands has gotten the attention of many, with the first two wells in this South Atlantic region discovering hydrocarbons. Desire Petroleum found gas at its Liz prospect, and Rockhopper Exploration discovered oil at Sea Lion. Presently, Rockhopper is readying to spud another well, this time in the Ernest prospect; and Falklands Oil & Gas (LON:FOGL) is looking, along with its partner BHP Billliton, to hire a deepwater rig to drill in the area.

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Phaedra Friend Troy is the content director for PennEnergy.com, an all-energy website that provides oil and gas, power and infrastructure news, analysis, reports and more. Sign up for a free daily enewsletter today.

If the legal system, industry and Americans are against deepwater drilling suspensions, who is for them?

I'm not one to talk politics, truly. I vote, and I am very proud to be an American and profoundly grateful to our men and women who have served our country in war and peace, as soldiers and government officials. Difficult decisions are being made every day about the future of our country, and I have always had trust that those decisions were being made with the utmost consideration and using every resource available.

That does not seem to be the case when we consider our energy sector. I am flabbergasted that the DOI and BOEM have instituted another deepwater drilling moratorium, after two courts threw out the first one.

I am concerned that a course of action has been plotted, and no considerations are being made along the way.

I am completely supportive of green energy. Bring on the wind, waves and sun! But I am also aware the our country's infrastructure, utilities and transmission lines are not currently able to support such a change. Additionally, coal and oil both support so much of our current economy, it is unreasonable to force a switch when the country cannot support it.

On that note, on June 30, the DOI declared a deepwater drilling moratorium. After collecting and canvassing some of the leading experts in the field, Interior Secretary Salazar went against their esteemed opinions and shut down deepwater drilling in the waters offshore the US.

This has so many more ramifications than the 33 drilling rigs that were operating in the US Gulf of Mexico. The drilling moratorium severely affects so many coastal communities and economies, families' livelihoods dependent on the petroleum industry in the Gulf.

Additionally, it discourages any future investments in the US oil and gas sector by companies, because the government does not support it. In other words, companies will choose to spend their exploration and development budgets in countries that are more supportive of petroleum developments.

(This can very clearly be seen in the first two deepwater offshore rigs being moved from US waters to Egypt and West Africa.) 

Calling the moratorium a 'second manmade disaster,' Louisiana's Governor Jindal has come out loudly against the drilling shut-down, as well as other government representatives from the Gulf Coast.

Furthermore, two courts threw-out the drilling moratorium.

Yet, Salazar and his staff re-instituted it, this time under the nomenclature of a "drilling suspension" that focuses on the BOPs rather than the water depth. The placement of the BOPs on the ocean floor or on floating facilities is largely determined by water depth, and the staff at the DOI should be completely aware of that.

As the chairman of the NOIA said, "If it looks like a moratorium, acts like a moratorium, and the effect is the same as a moratorium, it is a moratorium."

Even the American public, which is watching the oil spill in the Gulf of Mexico unfold with a very heavy heart, is against the deepwater drilling suspensions.

According to a report from Bloomberg, 73 percent of Americans say the ban is unnecessary, calling the oil spill a "freak accident." While 44 percent of the American public thinks BP is to blame for the oil spill, another 19 percent think the cause of the accident should be pinned on lax federal regulations and oversight.

What does this say?

The US government is going against industry experts, the legal system and everyday Americans by declaring another drilling ban.

Furthermore, is this ban somehow a way to point the blame in another direction -- away from the now-defunct MMS, as well as the powers that run it?

Weather delays offshore operations, strains onshore expectations

Major advancements in technologies have allowed the oil, gas and renewable energy sectors to expand offshore, but good ol' Mother Nature continues to keep the industry grounded.

Serious weather not only affects offshore drilling and installations, but it also can shut-in production and affect refineries and transmission. Power lines are regularly snapped from serious storms, and an unbelievable heat wave has ramped up temperatures and strained the power grid in the northeastern US.

The 2010 Atlantic hurricane season is heating up with the first two storms rolling through the Gulf of Mexico. Hurricane Alex hit last week as a Category 2, and a tropical depression is now threatening to become Tropical Storm Bonnie.

These storms have shut-in production and stalled efforts at the blown-out Macondo well.
While we usually look to the Gulf of Mexico to produce hurricanes this time of year, adverse weather has been tearing through another part of the world, as well.

Investors and industry insiders who have been eagerly awaiting the results of the Falkland Oil & Gas Limited (LON:FOGL) drilling at the Toroa prospect in the South Atlantic will have to wait some more.

While results from the well were expected this week, adverse weather has delayed the drilling operations on the Toroa F61/5-1 exploration well. Expected to take 35 days, the exploration well was spud on May 31.

Targeting a total depth of 2,700 meters, FOGL reported that drilling is not yet complete because of adverse weather and "minor operational issues."

Stay tuned to PennEnergy and its daily Global Offshore Weather Reports powered by ImpactWeather to learn the latest information about weather systems worldwide.

Petroleum industry steps-up as 2010 Atlantic hurricane season kicks off

I can't help it: Hurricanes are exciting. I have lived on the US Gulf Coast my whole life -- from South Texas to New Orleans to Houston. I know that hurricanes can cause major damage; I've lived through them.

Nonetheless, just as the wind picks up outside my door, my sense of excitement has been lifted with the first major storm of the hurricane season.

Making landfall in northern Mexico as a Category 2 storm Wednesday night, Hurricane Alex raged through the Gulf Mexico, leaving little damage to offshore oil and gas installations in the US Gulf in its wake-- a testament to the safety and improved design measures enacted over the last several years by the petroleum industry.

Kicking HSE efforts into high gear, multiple oil and gas companies evacuated offshore production platforms, while drilling companies brought staff to safety onshore. Additionally, the BOE reported that more than a quarter of the oil production and nearly 15 percent of the natural gas production was shut-in in preparation for the storm passing.

In less than 24 hours, oil companies have already started assessing their facilities, restaffing offshore platforms and moving toward restarting production. In its efforts to step up safety and oversight, the BOE plans to inspect all facilities in the path of the storm.

Even the oil spill measures far east of the storm were affected by adverse weather, high waves and strong winds. While oil spill containment efforts plowed on in the face of the severe weather, oil spill clean-up processes were curtailed. Oil skimmers and controlled burns were halted, and onshore clean-up efforts were stymied by the weather -- although they are expected to ramp back up with the storm's passage.

One down, 22 to go. The 2010 Atlantic hurricane season is expected to be "extremely active," with up to 23 named storms, 14 hurricanes and seven major hurricanes (Category 3, 4 or 5) predicted.

I hope and pray in the face of all the negative press surrounding the offshore petroleum industry in the US Gulf, that the operators, service companies and drillers escape this hurricane season without major damages -- not only for the companies' sakes, but also for the country's sake.

The industry may not be able to withstand another blow to oil and gas exploration and production in the US Gulf. With opportunities abounding abroad, my fingers are crossed hoping that companies continue their efforts in the waters of the Gulf of Mexico.