Oil & Gas Journal - MMS seeks comment on next 5-year OCS plan

The US Minerals Management Service is seeking initial public comment on development of its next 5-year Outer Continental Shelf leasing plan for the Gulf of Mexico.

Emphasizing that development for now would be confined to the plan for 2007 through 2012 and not necessarily extended to additional areas of the OCS itself, MMS said it also is seeking public comment on other economic and environmental issues in federal waters.

Sec. of the Interior Gale Norton said the OCS "contains billions of barrels of oil and trillions of cubic feet of natural gas that can be safely produced."
With our reliance on imports of foreign oil climbing each year, we would be irresponsible if we did not consider how we might develop these abundant domestic resources."
MMS noted that presidential withdrawals or congressional moratoriums have placed more than 85% of the OCS off the Lower 48 states off limits to energy development.
The administration of President George W. Bush supports existing moratoriums in deference to states wanting to determine activities off their coasts, it added.
But MMS also acknowledged that the 2005 energy legislation that Bush signed into law calls for a comprehensive inventory of oil and gas resources on the OCS.
As it drafts its proposal, it said it will seek comment on potential resources on all OCS areas while recognizing "that many of these areas are subject to existing moratoria and will not be fully analyzed for potential leasing."
Norton mentioned the administration's pledge not to propose any new leasing during 2007-12 within 100 miles of Florida's coast in the Eastern gulf planning area.
MMS said it also is asking for public comment on whether existing withdrawals or moratoriums should be modified or expanded and whether Interior should work with Congress to develop gas-only leases.
The American Gas Association said it will recommend expansion of offshore areas available for gas production in order to ease prices for consumers.
"The futures price of natural gas is inching toward $10[/MMbtu] for September deliveries�a clear indication that demand is outpacing production capabilities," AGA Pres. David Parker said.
"Given the projected 40% growth in demand for natural gas by 2025�about two thirds of which will go to generate electricity�many areas of the Outer Continental Shel">Oil & Gas Journal - MMS seeks comment on next 5-year OCS plan: "She added, 'With our reliance on imports of foreign oil climbing each year, we would be irresponsible if we did not consider how we might develop these abundant domestic resources.'
MMS noted that presidential withdrawals or congressional moratoriums have placed more than 85% of the OCS off the Lower 48 states off limits to energy development.
The administration of President George W. Bush supports existing moratoriums in deference to states wanting to determine activities off their coasts, it added.
But MMS also acknowledged that the 2005 energy legislation that Bush signed into law calls for a comprehensive inventory of oil and gas resources on the OCS.
As it drafts its proposal, it said it will seek comment on potential resources on all OCS areas while recognizing 'that many of these areas are subject to existing moratoria and will not be fully analyzed for potential leasing.'
Norton mentioned the administration's pledge not to propose any new leasing during 2007-12 within 100 miles of Florida's coast in the Eastern gulf planning area.
MMS said it also is asking for public comment on whether existing withdrawals or moratoriums should be modified or expanded and whether Interior should work with Congress to develop gas-only leases.
The American Gas Association said it will recommend expansion of offshore areas available for gas production in order to ease prices for consumers.
'The futures price of natural gas is inching toward $10[/MMbtu] for September deliveries�a clear indication that demand is outpacing production capabilities,' AGA Pres. David Parker said.
'Given the projected 40% growth in demand for natural gas by 2025�about two thirds of which will go to generate electricity�many areas of the Outer Continental Shel"

2005 Midwest Region New Plant Start-Ups Expected to Surpass 2004

Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). Last year in the Midwest Region, 41 industrial plants commenced operations, creating 2,793 jobs. Already this year, more than half that many plants and 76 percent as many jobs have been added to the region.
Twenty-three industrial plants have already commenced commercial operation this year in the Midwest, creating 2,129 jobs. Another 31 plants are currently under construction and are scheduled to begin commercial operations by the end of the year. In addition to plants under construction there are another 26 plants in development that could begin operations in 2005. If all the plants projected to be complete in 2005 are actually built, it would mean 80 new industrial plants and more than 6,000 new employees for the Midwest Region.

In 2004, Iowa led the region with sixteen new plant start-ups. Missouri followed with eight, Kansas with five and Minnesota, Nebraska, North Dakota and South Dakota all with less than five new plants. During this same time period Kansas led the region in employees added with 888. Missouri came in second with 797 jobs, while the remaining states all added less than 450 employees each from new industrial plants.

So far this year, Iowa has added eight new plants, Missouri five, Kansas and Minnesota four each, and Nebraska just two. These plants have created 985 new jobs in Iowa and 760 in Missouri. Other employee additions range from 165 in Kansas to 117 in Minnesota and 122 in Nebraska.

CNOOC withdraws bid for Unocal, citing politics

CNOOC has withdrawn its offer for Unocal Corp., citing politics as the reason for ending a bidding contest between itself and Chevron Corp. Unocal shareholders are to vote on Chevron's offer Aug. 10.
The Chinese state oil company's offer prompted opposition from some members of Congress. The Committee on Foreign Investments in the US (CFIUS) was to have reviewed the proposed transaction. The Exon-Florio Amendment to the Defense Production Act of 1950 authorizes the US president, after a CFIUS review, to block acquisition of a US company by a foreign concern on grounds of national security.
An amendment to the energy bill passed at the end of July added 30 days to the normal 90-day review (OGJ Online, July 29, 2005). Chevron recently raised its offer about 5% to $17 billion, excluding the assumption of Unocal debt. Chevron's higher offer was still lower than CNOOC's $67/share offer, or $18.5 billion total, for Unocal (OGJ, June 27, 2005, p. 25).
Chevron agreed to pay $63.01/share of Unocal, up from its original $60/share offer in a complicated deal that is 40% cash and 60% Chevron stock (OGJ, July 25, 2005, page. 30).
On Aug. 2, CNOOC called "unprecedented political opposition" its primary reason for withdrawing its offer and argued that its bid was based purely on commercial grounds. CNOOC also noted that it had initiated a voluntary filing with CFIUS and was committed to taking actions regarding Unocal's US assets to satisfy CFIUS concerns.
On Aug. 1, the proxy voting firm Institutional Shareholder Services said it supported the deal with Chevron. ISS cited regulatory risks associated with CNOOC's bid.
CNOOC"CNOOC has given active consideration to further improving the terms of its offer and would have done so but for the political environment in the US," CNOOC said. "This political environment has made it very difficult for us to accurately assess our chance of success. . . . Accordingly, we are reluctantly abandoning our higher offer to the clear disadvantage of Unocal shareholders and employees."
US Securities and Exchange Commission documents show that CNOOC considered increasing its offer to $69/share for Unocal on July 16. But in return for the higher offer, CNOOC wanted Unocal to lobby on its behalf before Congress.
CNOOC also wanted to abandon a $500 million break-up fee that CNOOC previously agreed to pay Chevron.
Unocal declined both of those requests, citing agreements that Unocal already had with Chevron, SEC documents said.
ReactionAmy Jaffe, energy fellow at Rice University's Baker Institute for Public Policy, said she believed CNOOC was "very unlikely" to successfully acquire Unocal even though CNOOC is a professional oil company that works well with Western partners.
"I think it would have been very uphill for them in the political setting, and they also had this problem that they came in late with their bidding," Jaffe said. "The bid was perceived as government-subsidized. CNOOC was pressing it as a commercial bid, and that probably was their intention."
CNOOC can find other attractive acquisition assets, but the question remains whether the company might make offers for any companies having US assets after the Unocal experience, Jaffe said
Unocal's Asian portfolio made an especially attractive asset package for CNOOC. "There isn't an independent that has a better Asian position than Unocal with the least amount of US assets attached to it," Jaffe said.
Unocal shareholders know that the Chevron offer poses no regulatory problems, but they do not have that certainty with the CNOOC offer, Jaffe said. She questioned whether Unocal shareholders would have wanted to take the risk of accepting the CNOOC offer when there was no certainty that it would be approved by US regulators.
Another factor is that Chinese companies are not accustomed to review by US regulators.
"There was going to be a major evaluation of the CNOOC bid and its practices," Jaffe said, questioning whether CNOOC was willing to have all its activities and strategies publicly examined by US regulators.
"I'm not saying that they had anything to hide, but you have to have a really serious interest," Jaffe said. "There is a high level of transparency for publicly traded Western companies. The Chinese oil industry has yet to undergo that kind of scrutiny."
Some elements of the Chinese energy industry are still considered state secrets, she said.