Sunday, August 21, 2011

Pirates in Gulf of Mexico!

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.

In the past, such glitches were no problem — after all, it's obvious Exxon, which spent $300 million on exploratory wells, hasn't abandoned the operation.

But in the Obama era, which demonizes oil production in American waters by American companies, the bureaucrats came up with this permit technicality to effectively expropriate the entire operation.

Exxon is now fighting the permit action in a federal court in Lake Charles, La., calling it "arbitrary," "capricious" and "an abuse of law." It's also a textbook case of the anti-business climate fostered by the Obama administration which should be bending over backward to help Exxon create jobs and profits.

So let's look at what the Obama administration is trying to accomplish, and what it's costing you as a result.

The Exxon discovery is the biggest in a decade. If put into operation, its billion barrels will be enough to make a dent in America's oil dependency on foreign tyrants. If that isn't a sufficient national security reason, what is?

Exxon's discovery will also create thousands of jobs — at a time of 9.1% unemployment. Already the oil industry supports 9.2 million jobs and 190,000 more will be added if Gulf drilling is allowed to resume — along with a big multiplier effect. Many of those jobs will be in manufacturing — in places like Youngstown, Ohio, which just opened a new steel plant to make drilling pipes.

Oh yes, and if it can simply start up operations, Exxon's discovery will generate $10 billion in taxes and royalties for the heavily indebted U.S. government.

The fact that the Interior Department is using its permit process to bludgeon signals this is really about politics. This administration wants to punish Exxon for its refusal to kowtow to Obama's green agenda, as well as for its high profits ,which are reviled by the left.

It's a sorry spectacle to see Exxon — which willingly endured the risk, put in vast infusions of investment capital, sent out brave men to watery no-man's land to drill, and invested massive amounts in R&D — lose its entire operation over a petty permit dispute.

Exxon believes it can win its case in court, but the effects of such bureaucratic plunder will spread a message — that anyone who succeeds in striking black gold will become a government target.

No comments: