Four months ago, the tragic accident on the Deepwater Horizon set oil and gas drilling operations across the Gulf of Mexico on a different course, as lawmakers revisited longstanding debates about environmental safety and economic security. It is far too early to declare that crisis over, but it is important to note that a major milestone has been passed with the successful sealing of the BP well. Drilling of a relief well is also nearing completion.

Reasonable people would hope to see similar progress in restoring economic vitality to the region. However, the moratorium on deep water drilling in the region has still not been reversed. This, despite a growing chorus of criticism, mounting confusion over the parameters of the ban, and extensive evidence that a halt to so many drilling operations is, in effect, a job killer.

Next month, CEA will participate in series of rallies around the country aimed at highlighting the large volumes of jobs the domestic oil and gas industry supports. Our message?  A time of historically high unemployment is not the time to unnecessarily tighten the screws on an industry that supports more than nine million American jobs.

Recently, the Labor Department reported a nationwide unemployment rate of 9.5%, along with scant private sector job creation. About 15 million Americans are out of work. By hosting rallies from Texas to Ohio, Illinois, Colorado and New Mexico, CEA hopes to impress upon lawmakers and the general public how vital a strong domestic oil industry is to our national economy.

As the Obama Administration continues to defend its six-month ban of drilling in the Gulf, industry analysts say the ban’s effect may be more devastating than originally believed. This report says that while the ban only applies officially to deep water drilling, many shallow water rigs are not operating because they cannot obtain permits. Some deep water rigs have already left the region and many more are preparing to do so as a result of all the uncertainty. By one measure, the current restrictions on Gulf drilling account for the loss of 137,000 jobs. We could also detail the massive loss of tax revenue and domestic oil and gas production, but right now, we’re talking about the loss of jobs, which is devastating in and of itself.

Last spring’s tragic accident will not – and should not — be soon forgotten. We’ve repeatedly called on the oil industry to uphold the highest safety standards going forward: We cannot defend the oil and gas industry without doing our part to ensure that industry is a steward of the environment in which it operates. As we at CEA call for an easing of the restrictions that have put so many jobs in jeopardy, we also know that we cannot become complacent about the way in which we operate.

Likewise, we cannot become complacent about a drilling ban that is set to expire just a few months from now. A few months is enough time to cause extensive economic damage, especially if some rigs leave the Gulf for good. We also have no way of knowing whether the Administration will indeed end the ban in November as planned, or whether it will continue with longer-term restrictions and informal delays that could make production and exploration in the Gulf more challenging for years to come. We do not know and we cannot afford to wait. Check our web site for more information about the job rallies in September here.

WASHINGTON, August 16, 2010 — Raising taxes on the U.S. oil and natural gas industry could significantly reduce domestic oil and gas production next year and cut it by as much as 10 percent in 2017, a new API-sponsored study by Wood Mackenzie concludes.

“The study illustrates a fundamental rule of economics: tax something more, get less of it,” said API president and CEO Jack Gerard.  “But more important than the lost production is the loss of thousands of jobs that would follow.  Advocates of higher taxes should understand who would really be hurt.”

The study looks at what could happen by eliminating two tax incentives: intangible drilling cost expensing and the domestic production activities (section 199) deduction.

“The incentives have increased U.S. energy production and jobs, and other industries enjoy the same or similar incentives,” Gerard continued.  “Proposals to eliminate them for oil and gas alone would discriminate against an industry that already pays federal income tax at an effective rate more than 70 percent higher than the other S&P Industrials.”

The study estimates the adverse impacts of tax increases would be worse for natural gas, a clean-burning resource the nation will increasingly rely on to help reduce greenhouse gas emissions.  “Total resources not produced could reach as high as 27 Tcf of gas and 700 mmbbls of oil over the next ten years,” the study concludes.  “Almost half of the gas plays we consider to have future development potential are at risk under the proposed tax changes.  The gas plays that become sub-economic are not only great in number, but represent more than 10% of the gas that will be produced over the next ten years.”

See the Wood MacKenzie study “Evaluation of Proposed Tax Changes on the US Oil & Gas Industry” here.

Since the Deepwater Horizon incident and the subsequent offshore drilling moratorium in the Gulf of Mexico (GoM), folks in the oil and gas industry have been talking about the ramifications to operations.

Though no one knows yet what will change for GoM operations, an obvious focus will be (and should be) safety, and industry organizations already are working on ways for improvement. In July 2010, the Houston Advanced Research Center hosted a technology workshop to identify research and technology needs. The Research Partnership to Secure Energy for America held a panel discussion at the forum to address deepwater development needs moving forward.

Tom Williams, managing director at Nautilus International LLC, said risk actually will increase when drilling eventually resumes. Williams gave several reasons for his prediction. First, stopping in the middle of operations likely will make it difficult to jump back in once activity resumes. Second, he expects an increase in tanker traffic.

Finally, exporting the best rigs and the loss of experienced drilling staff to active locations internationally will make it difficult to bring the highest quality equipment and personnel back to the GoM. “The best rigs and responsible drillers will get work and go elsewhere,” Williams said. “We’ll end up with ‘junkier’ rigs (they’ll still meet regulations, but they’ll be less capable).” Further, recruitment of new people will stop since the best and brightest likely will not apply for uncertain jobs, he added.

Williams also noted that employees (returning and new) will require additional training and certification. “As with the baseball offseason, players need a spring training to get back in shape,” he said. “From a safety standpoint, we can’t afford to have spring training.”

Taking into account lessons learned from occurrences similar to the event in the GoM, Greg Anderson, international board director and consulting and training president for Moody International, said the 1988 Piper Alpha tragedy in the North Sea focused attention on the impact of people’s behavior as a contributing factor in accidents.

“Whether Piper Alpha or any other incident, large or small, over 97% of the time human behavior plays a significant role,” Anderson said. “A key focus area needs to be how does a company or industry create a culture of safety where people ‘believe in’ versus ‘comply with’ safety.”

According to Anderson, “A culture of compliance only works under 1) constant supervision; and 2) absolute adherence to policies and procedures.” To create a culture of safety and compliance, he recommended addressing the “human element” by teaching people to:
•    Take personal responsibility for their safety and the safety of those around them;
•    Assess risk and reduce hazards associated with a task; and
•    Communicate better.

Although safety procedures can have a direct impact on employees working on the rigs (both onshore and offshore), it is evident from the Deepwater Horizon incident that those effects can ripple throughout the company and all the way to the top.

In the wake of the event in the GoM, companies, operators, and more importantly, individuals should lead by example and hold one another accountable for keeping up with the highest safety standards and practices. Safety legislation and regulations can only go so far. Ultimately, employees choosing to work safely without taking shortcuts and rewarding and tolerating the same behavior in others will drive a culture of safety.   To view the actual blog, click here.

If you’ve ever sat in rush hour traffic wishing that you could push a button and have Chitty Chitty Bang Bang whisk you away to the highway in the sky, your wish may no longer be that far fetched. Though they might need to come up with a better name, the Transition Roadable Aircraft, a highway worthy airplane developed by Massachusetts-based Terrafugia was recently granted a critical exemption from a weight limit requirement by the Federal Aviation Administration. This exemption puts Terrafugia one step closer to full production of their light sport/road ready aircraft.

The developers of the flying car (or is it a driving plane?) say that switching from plane to car mode is as simple as putting down your top on your convertible.  And with a quick 20 hours of lightweight aircraft pilot training you too will be able to move from sky to road. In fact, the company is so confident of its ability to secure final FAA approval that they are already taking deposits on preorders for the nearly $200,000 car. It might be a hefty price to pay to beat the traffic, but at least the Terrafugia will pay you back with a nice 35 mpg on the highway.

But really, do we want to trade cars on the road for cars in the sky, even if they are fuel efficient? While flying cars may be here sooner then we think, the real next generation of energy efficient flying cars are just beginning to be imagined. The Yee car designed out of the South China University of Technology takes it a critical step further with their solar powered flying plane. Right now it’s just a sketch on paper, but until recently that’s all any flying car was.

Everyone has an opinion about the spread of technology that in recent years has enabled us to connect just about any time and anywhere: At the same time it has provided the freedom to work from home, often at odd hours, it has brought the burden of never being able to fully leave work – or the world – behind.

But one thing about the information revolution that is not a matter of a debate: This constant worldwide connectivity consumes a lot of energy. By most estimates, computer data centers that connect all of the world’s computers are fairly energy-intensive. While this source of energy use is often overlooked in discussions about conservation, it is a massive amount, on par with the airline industry.

Many technologies have sought to make the data centers or so-called computer server farms more efficient. CEA recently wrote about one approach involving cow manure. Now, a company in Finland has come up with a particularly elegant solution. It is using the water warmed while cooling computer servers to heat nearby homes. The company, Academica, has set up a data center in downtown Helsinki and partnered with a local energy company to use water extracted from the Baltic Sea to cool the servers. As the water warms, heat will be extracted. The company says it will be able to produce enough heat in this way to warm 500 homes or about 1,000 apartments. And since it began operating the data center this summer, it has been contracted to build another one, about ten times larger, to provide heat to thousands of additional city residents.

This news of Academica’s success comes as companies all over the world are making progress in minimizing the footprint of from high-tech operations. One new study finds that several major tech companies like Cisco Systems and Intel have achieved massive emissions reductions in recent years, equivalent to removing nine coal-fired power plants. The progress comes both from high-tech advances like server virtualization, that essentially pack a lot more computing power into each individual server, as well as some good, old fashioned conservation measures like sealing drafty windows.

Unfortunately, the fact that such major reductions in consumption can be achieved in such a short time frame underscore that there is a lot of inefficiency in this sector. While data centers will continue to benefit from all sorts of conservation measures, the approach recently adopted in Helsinki – like the cow power we recently described – reminds us of the importance of thinking outside of the box and looking for ways to reuse our waste.

In some places in the world, wind power is enjoying record growth. Not so here in the U.S., where the amount of capacity added in the second quarter was down 71% from the second quarter of 2009.

In its mid-year market report, the American Wind Energy Association said that two new facilities were brought online in the first half of 2010, versus five in the first half of 2009 and seven in the first half of 2008. The association says that the wind sector is still following a boom-and-bust cycle that roughly follows the course of what it describes as “on again, off again federal incentives.”

And, while most industries are somewhat cyclical, the current bust the wind industry is seeing is worrisome for a number of reasons. First, it is the deepest bust seen in about two years and it followed a particularly steep course down from the prior boom. In addition, the latest “boom” period of wind installation, in the fourth quarter of 2009, was about comparable to the amount of capacity added in late 2008. Like the stock market which rises and falls day to day and month to month but only progresses if it reaches new highs over time, a strong domestic wind sector should ideally be reaching new peaks, even if it suffers cyclical downturns.

This apparent leveling off of growth in the wind sector here is in stark contrast to Europe and China. AWEA is projecting total installations in 2010 will be 25% to 40% below 2009 levels and it says it is concerned the U.S. wind industry is losing the clean energy race to other countries.

Last month, a group of House lawmakers passed a bill that could help level the playing field. The Clean Energy Technology Manufacturing and Export Assistance Act would create a fund to boost the competitiveness of the U.S. clean energy industry, both at home and abroad. A key provision of the bill would support the development of a national export strategy and promote policies that would reduce production costs: a potentially positive step that would help the U.S. catch up with the rest of the world.

This report shows just how much catching up there is to do. It cites a U.S. Senate report showing that the U.S. clean tech industry exported about $7.7 billion in products and services last year, compared with China’s $22.7 billion and Germany’s $19.6 billion.

August 4, 2010   A recent study released by IHS Global Insight entitled The Economic Impact of the Gulf of Mexico Offshore Oil and Natural Gas Industry and the Role of the Independents examines the economic significance of the Gulf of Mexico offshore oil and gas industry—today and in the future.  It does so in terms of jobs, economic value and government revenue.  Among other things, the study indicates that the oil and gas industry accounts for about 400,000 jobs, $70 billion in economic value and $20 billion in federal and state revenue and projects those numbers to increase significantly in the future.

Please click here to view the study.

Interested in discovering ways to use renewable energy around your home? The U.S. Department of Energy maintains a wealth of information on what you can do with renewable energy. Check out these tips:

• Use a clothesline rather than a clothes dryer – a simple way to use solar energy and reduce costs!
• Pump water using a small wind turbine
• Heat and cool your home using a geothermal or ground-source heat pump
• Have flowing water on your property? Use a microhydropower system to generate your own electricity
• In winter, heat areas of your home using wood or biobased pellets

To learn more about using renewable energy, visit the Renewable Energy section of EnergySavers.gov, a consumer-geared website of the U.S. Department of Energy.