Eliminating the nation’s dependence on foreign oil? Fat chance when the Obama Administration is going to lend billions of dollars to Brazil’s state-owned oil company, Petrobras, to finance exploration of the huge offshore discovery in Brazil’s Tupi oil field in the Santos Basin near Rio de Janeiro. The environmental wackos in the U.S. have to be popping the champagne corks.
In August, the U.S. Export-Import Bank announced it had issued a “preliminary commitment” letter to Petrobras for $2 billion and has discussed with Brazil the possibility of increasing that amount. Ex-Im Bank says it has not decided whether the money will come in the form of a direct loan or loan guarantees. Either way, this corporate foreign aid may strike some Americans as odd, given that the U.S. Treasury seems desperate for cash and Petrobras is one of the largest corporations in the Americas.
The Bush Administration’s five-year plan (2007-2012) to open the outer continental shelf to oil exploration 
included new lease sales in the Gulf of Mexico. However, in 2007, environmentalists went to court to block drilling in Alaska and in April, a federal court ruled in their favor. In May, Interior Secretary Ken Salazar said his department was unsure whether that ruling applied only to Alaska or all offshore drilling. So it asked an appeals court for clarification. Late last month the court said the earlier decision applied only to Alaska, opening the way for the sale of leases in the Gulf. Mr. Salazar said the sales would go forward.
This was progress, however slow. However, it still didn’t allow the U.S. to explore in Alaska or along the East and West Coasts, which could be our equivalent of the Tupi oil fields, which are set to make Brazil a leading oil exporter. Americans are right to wonder why Mr. Obama is underwriting in Brazil what he won’t allow at home.
Deepwater drilling permits came to a halt after the Deepwater Horizon explosion in the Gulf of Mexico on April 20. Interior Secretary Ken Salazar later imposed a moratorium on all deepwater drilling.
At the same time, the Interior Department’s permits for shallow-water drilling in the Gulf of Mexico slowed significantly — a drop of 53 percent compared to a year earlier.
The concern about deepwater and shallow-water permits prompted GNO Inc., an economic development agency serving the 10-parish New Orleans region, and other partnering groups to create a biweekly report called the Gulf Permit Index.
“The concern is that we still have a de facto moratorium,” said Michael Hecht, president and chief executive of GNO Inc.
The first Gulf Permit Index shows a substantial drop in the rate of new shallow-water permits being issued by BOEMRE. The federal agency, formerly the Minerals Management Service, is issuing 3.8 fewer shallow-water drilling permits per month since August than it was the year leading up to the oil spill, accounting for the 53 percent decline.
Meanwhile, no new deepwater permits have been issued since May. Prior to the spill, there was an average of 5.8 issued per month.
On Oct. 12, the Obama administration finally lifted its moratorium on drilling in the Gulf. However, concerns were already being voiced that the administration is keen to maintain a de facto moratorium that could keep future energy exploration from occurring in the area.
Federal regulators are still writing up regulations that will apply to future drilling, and concern exists with regard to them on two fronts. First, it is unclear how onerous new regulations will be. Of deeper concern, say experts, is the prospect that regulation could roll out over many months. Industry operators have indicated that this will make it hard to set budgets for ongoing exploration.
That is also a result that business groups say could happen if the administration continues to pursue several tax increases targeted at the energy industry. The U.S. Chamber of Commerce has recently voiced concern regarding some $38 billion in new taxes on the oil and gas industry proposed in President Obama’s FY2011 budget. Business leaders say those tax increases, if implemented, could threaten millions of jobs, reduce domestic economic output, and create incentives for energy companies to relocate outside the U.S. on a long-term basis.
The lack of new permits is due, at least in part, to the new regulations that companies must meet in order to obtain them. “Operators who play by the rules and clear the higher bar can be allowed to resume,” Salazar said.
These new government regulations include having containment resources available in the event of a blowout, certifying that rigs have working blowout preventers and standards for cementing wells, and that the CEO of a company responsible for a well has complied with all regulations. Companies have applied, but are still waiting for drilling permits.
That has prompted concerns from even the Obama administration’s allies. Sen. Mary Landrieu (D-LA) said the decision to lift the ban, “is a good start, but it must be accompanied by an action plan to get the entire industry in the Gulf of Mexico back to work.”
Landrieu has held up the nomination of Jack Lew, the administration’s nominee to head the Office of Management and Budget, because of the drilling ban’s effect on the Gulf economy.
So once again, what we have is bureaucratic double-speak. The American people are being given the run-around by Obama, the Democratic Party and the environmental extremists who long to see Americans riding bicycles to work. They will, of course, keep their limousines and private jets.
And Brazil will be rolling with American dollars.
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