Exxon Fights Regulatory Pirates

IBD Editorials ^ | August 19, 2011 | Staff

[Kaslin]

Oil: During the Age of Exploration, seafarers carefully guarded their maps of discovery to ward off plunderers. Incredibly, Exxon faces a similar kind of piracy against its big Gulf oil discovery, as regulators snatch at its permit.

Make no mistake about it: American oil companies are operating in a great age of exploration comparable to the uncharted waters that Henry the Navigator, Christopher Columbus and Ferdinand Magellan sailed.

Five hundred years after the Caribbean was explored, oil is being discovered in unheard-of quantities, 230 miles into the Gulf of Mexico in waters so deep its retrieval would have been impossible even five years ago.

ExxonMobil, and its Norwegian partner Statoil made the biggest discovery of all — a field worth a billion barrels of oil — 7,000 feet below sea level in its "Julia" field in 2007.

Exxon tried to keep its discovery secret to keep marauders away. Sadly, the pirates in this instance are U.S. regulators — and their aim is to stop them.

That's right: Instead of marvel at the continuing treasures of the New World, or hail the human ingenuity that made retrieval of so much oil possible, or simply quantify how this discovery will boost U.S. energy security, Interior Department bureaucrats moved instead to snatch Exxon's permits and shut the whole thing down.

Employing an extreme technicality, these regulators claimed that Exxon's request in 2008 for a short suspension of activity to upgrade and make safer its drilling operation amounted to an abandonment of three of its five permits, simply because Exxon hadn't signed a contract with another partner, Chevron, by the time the suspension was completed.

[WOBBLY BOB]

“Obama Orders Review of Business-Stifling Regulations, But Admits the Review May Produce New Regulations”

http://www.cnsnews.com/news/article/obama-orders-review-business-stifling-re

[muawiyah]

230 miles? http://www.gc.noaa.gov/gcil_maritime.html strongly suggests that this is in the area known as “THE HIGH SEAS” ~ so is this a new territorial claim by the United States, and roughly akin to the Russian claim of the North Pole!

[WOBBLY BOB]

all your oil are belong to us!

[unixfox]

We have a government AND a president that is hell bent on destroying this once great country. They talk about jobs on one hand but on the other hand want to destroy the very companies that provide them.

When is enough, enough? When do we tell these asswipes we don't care what they say anymore?

It's time to tell them to go STRAIGHT TO HELL!

[Raider Sam]

This article is not factually accurate. Exxon’s permit was up in 2008, and they applied for a 5 year extension, which would let them keep the lease without producing in the 5 years based on their intention to produce after that.

In early 2009, the MMS rejected their plan of production saying that Exxon failed to show specifics in their presentation of their production plan.

Now, in the past, those extensions have been given out pretty much at will, and the denial of the extension was right about the time of Obama’s inauguration, so you could say it was political, but there is no evidence to back that up.

[Raider Sam]

Its just in the US jurisdiction for leases. Basically, if you draw a horizontal line from the tip of Texas, anything north of that is leased by the US. From the La coast, we can go around 300 miles.

[haroldeveryman]

“If put into operation, its billion barrels will be enough to make a dent in America’s oil dependency on foreign tyrants.”

I’ll bet that that’s the root of Obama’s rage. Exxon- Unfair to foreign tyrants! Maybe Exxon would hang onto their lease if they incorporate in Brazil. Or better yet, Exxon could just dump their Norwegian partner and team up with Hugo Chavez. (First they have to make sure that Obama isn’t half Norwegian).

[Captain7seas]

The U.S. jurisdiction is claimed out to 200 nm from the coast in the EEZ. The Exclusive Economic Zone is based on the 1982 Law of the Sea Treaty. This has NEVER been ratified, so how is the feds claim of jurisdiction legit?

[Noob1999]

This issue is just totally disgusting!

Exxon pays big time lease gambols; invests $300M, then finds potential revenue if it uses super-unproved drilling techniques; BP problems happen, dampening all deep water drilling, and curtailing all permitting:

and EXXON is told that it is going to lose it’s already paid for lease, because it wants to develop the uncharted technology carefully to ensure it’s not going to create environmental problems?

How F’ed up can this government be??

[Raider Sam]

My guess is that it is legit because no other country has challenged it, as far as selling oil lease blocks is concerned.