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Dispatches from the Gulf … of Mexico

ExxonMobil hits large Keathley Canyon discovery (Oil and Gas Journal, June 8, 2011). XOM announces the discovery of 700 million barrels equivalent (BOE) of oil and gas in 7,000 feet of water, 250 miles offshore Louisiana.

Shell’s Cardamom to come online (Offshore247.com, June 9, 2011). Shell will bring on 50,000 barrels equivalent per day from its 140 million BOE discovery in 2,700 feet of water offshore Louisiana.

A Gulf Drilling Revival (Wall Street Journal, June 10, 2011; link may require subscription, which can be avoided if you search for article text on Google.)

The great energy irony of recent years is that governments have thrown hundreds of billions of dollars at wind, solar, ethanol and other alternative fuels, yet the major breakthroughs have taken place in the traditional oil and natural gas business. Hydraulic fracturing in shale, horizontal drilling and new seismic techniques are only the best known examples.

NRDC et al challenge Shell’s deepwater permit (Times-Picayune, June 9, 2011). Yes, this is the same Natural Resources Defense Council that was founded by John Bryson, President Obama’s nominee to be the next Secretary of Commerce.

More from the WSJ piece:

Private companies must innovate to survive, and they have the profit incentive to do so, while government cash is usually steered to politically favored companies that may or may not know what they’re doing. If you live off federal grants, you need to work the corridors of power more than the technology. Federal grants for cellulosic ethanol are rife with political earmarks, for example. This is why these columns have argued that the political fad of alternative energy has misallocated scarce capital when the economy can least afford it.

Far more important for safety is the effort that the oil industry is taking to contain future deepwater spills. ConocoPhillips, Exxon, Shell and Chevron have led an effort, since joined by other companies, to form the Marine Well Containment Co. to build a spill containment system that will be permanently placed in the Gulf starting next year.

The companies are attempting to apply the lessons from the BP fiasco, and their expectation is that the system would be able to handle a blowout as if it were a contained well at depths of up to 10,000 feet. The companies have committed $1 billion to the project, and we’re told the cost could reach $1.5 billion. If you believe Big Oil companies are inherently evil, you’ll think this is one more confidence trick. But no rational company or CEO wants to endure the reputational damage that accompanied the BP spill. [Emphasis added.]

From the Times-Picayune, on the Environmental lawsuit against Shell’s exploration plan:

Specifically, the suit challenges a ruling by the Bureau of Ocean Energy Management, Regulation and Enforcement, the new federal offshore regulatory agency, that Shell’s plan to drill in 7,200 feet of water is unlikely to cause significant environmental damage. …

Rep. Jeff Landry, R-New Iberia, said Thursday’s lawsuit shows why Congress needs to enact legislation that would encourage more domestic drilling while limiting the ability of environmental groups to block energy projects in the courts.

“Until environmental groups are put in check against the oil and gas, nuclear, coal, solar, and wind industries — Americans will continue to pay higher energy prices and our economy will not recover,” Landry said.

Cross-posted at SteveMaley.com.

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