Oil & Gas Pro

LOST a loser for energy industry. Law of the Sea treaty would impede drilling.

The Obama administration has announced that it will seek early Senate action on ratification of the long stalled United Nation's Law of the Sea Treaty (LOST).

In fact, an accord the Clinton administration viewed as the greatest environmental treaty in history would be used to implede, weaken and imperil America's energy sector.

LOST's International Seabed Authority (ISA) entity would form an intity to be known as "the Enterprise". Under LOST, this Orwellian-named organization is charged with distributing the wealth of the "international commons" to the less-developed nations.

LOST would govern not only 70% of of the world's surface that is covered by international waters, but the reach of the accord extends to other waters, including inland ones, that migrate into the planet;s oceans. In other words, activities far from the seas can be embroiled in the treaty-including the U.S. harbors, bays and rivers.

Of course, such interior and coastal waterways are where much of America's oil and gas industry refines and stores its products and converts feedstocks into chemicals.

LOST will entail unprecedented, and probably devastating, burdens on the oil and gas industry and related companies.

To read the full story:

http://www.chron.com/disp/story.mpl/editorial/outlook/6407613.html

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Oil & Gas ProPermalink Reply by Pipeliner on May 6, 2009 at 17:14
Here is the English version of the United Nations treaty:

http://www.un.org/Depts/los/convention_agreements/convention_overvi...

Oil & Gas ProPermalink Reply by Pipeliner on May 7, 2009 at 12:24
Jim,

Bill Clinton signed this treaty in 1994 but could not get the Senate to ratify it. Bush was wrong to even consider such a flawed treaty.

I am sure you read the article on May 5 in your copy of The Houston Chronicle. As it was dead center on page B11 of the Editorial section, this must make it an "editorial" not a blog-site or news item. Are all editorials "blogs"?

Should Obama sign it and get his "rubber-stamp" Senate to ratify it, it will become his "baby", win, lose or draw.

If and when it is ratified Uncle Sugar will get to pay 25% of LOST's budget and costs, as we now pay about the same per centage of the United Nations' upkeep.

Knowing how pro-America the U,N, is and honest (remember "Oil for Food") surely the United Nations will not try to use this treaty against us if the Senate ratifys it.

Here is a news item about it:

http://www.foxnews.com/politics/2009/03/12/lost-found-senate-moves-...

For those that will not believe Fox News, here is an article from The New York Times on May 7, 2009:

http://www.nytimes.com/gwire/2009/05/07/07greenwire-sen-kerry-looks...

landownerPermalink Reply by intrepid on May 7, 2009 at 4:24
Looks like this went back to Clinton. Therefore, it's got to be a bad thing, right.

Anyway, it probably should fail again.

Oil & Gas ProPermalink Reply by The_Baron on May 7, 2009 at 4:42
Th US Senate has been holding out on ratifying this for some time. The main stumbling block is the fact we give up our sovergn right to determine our teritorial waters to an international organization.

landownerPermalink Reply by intrepid on May 7, 2009 at 4:54
With a Democrat controlled Senate which follows Obama's attitude of appeasement we may not have much hope of this treaty being rejected.

landownerPermalink Reply by P.G. on May 7, 2009 at 7:58
What's the reasoning for such a thing?

landownerPermalink Reply by intrepid on May 7, 2009 at 8:45
Here is some additional news on how Obama supports the gas industry:

WASHINGTON — President Barack Obama wants to end $26 billion in oil and gas industry tax breaks, calling them “unjustifiable loopholes” in the tax system that other companies do not get.

Obama’s proposed fiscal 2010 budget, details of which were released today, also more clearly spells out his intention to shut down a proposed nuclear waste dump at Yucca Mountain in Nevada and calls for ending a government subsidy that helps utilities license and plan for new nuclear power plants.

The oil and gas industry tax breaks have often been targeted by congressional Democrats in recent years, but they have not been able to muster enough votes to rescind them. Most Republicans and the Bush administration vigorously defended the tax benefits, saying they’re needed to boost domestic oil and gas development.

In the budget statement, Obama said the tax breaks, which are expected to save the oil and gas industry more than $26 billion over the next 10 years, are “unjustifiable loopholes … costly to the American taxpayer and do little to incentivize production or reduce energy prices.”

Excerpted from:
http://www.chron.com/disp/story.mpl/business/6412784.html

landownerPermalink Reply by intrepid on May 7, 2009 at 8:49
Obama wants to give billions to Chrysler and not require that it be paid back but wants to gut the tax breaks that help the oil and gas industry. Explain that please.

landownerPermalink Reply by RAY on May 7, 2009 at 9:52
How much "profit" did Exxon make last year?
Permalink Reply by Todd M. Baker on May 9, 2009 at 18:43
RAY: Please check out the profits on dollars invested for a company like GOOGLE, that does little for you. Exxon makes a lot of money because it invests a lot of money. It makes a lot of money because it one of the largest companies in the world, has hundreds of thousands of employees. It makes a lot of money and it puts alot of those profits into YOUR retirement account and the retirement accounts of an awful lot of people, democrates included.

You should get away from the "Big guys are bad guys" unless you include the governments of the world in your rhetoric. Governments which have never made a dime because they have no money.

Our beloved government just gave billions to companies that can't make a profit, but you and others like you think companies that make profits are bad. Go figure.

Todd M. Baker

Oil & Gas ProPermalink Reply by Pipeliner on May 10, 2009 at 11:34
From Forbes Magazine:
The Majors
What's Happening to Exxon's Cash?
Christopher Helman, 04.30.09, 06:55 PM EDT
In the last year, the oil and gas Goliath shed $15 billion. Lucky shareholders.


HOUSTON -- The big question in the oil patch is shifting from, "What will ExxonMobil do with all its cash?" to "How long is Exxon's cash going to last?"

A year ago, the oil and gas Goliath boasted $40 billion in cash on its balance sheet. That's shrunk to a measly $25 billion, without any acquisitions or takeovers. This seeming hemorrhage prompted analysts on Thursday's first-quarter conference call to query Exxon's ( XOM - news - people ) investor relations crew on whether the company was comfortable with its "burn rate." Come on, it's not like we're talking about a dot-com start-up her

So where's $15 billion gone? Right where it belongs: to shareholders. Last year, Exxon paid out $8 billion in dividends and bought in $32 billion in shares--more than all its major competitors combined. The largess continued in the first quarter. Cash flow from operations was $9.1 billion (versus $21.4 billion a year ago). Exxon ate that up with $5.8 billion in capital spending, $2 billion in dividends and $7 billion to repurchase 107 million shares, or 1.9% of its outstanding market cap.

In five years, Exxon has reduced shares outstanding by 25%. That means each share has more than 30% more proved reserves underlying it than five years ago and nearly 20% more daily production of oil and gas.

You can't fault Exxon for investing in itself. Last year's return on capital employed was 34%. Compare that with the roughly 0% interest that cash earns these days.

At this "burn rate" of about $6 billion a quarter Exxon will eat up its cash horde in about a year and a half, or even sooner. David Rosenthal, vice president of investor relations, said on the conference call that Exxon has not historically carried large cash balances. He said 2009 capital spending should come in around $29 billion but insisted that figure "is not a cap."

Even zero cash on the balance sheet would not preclude Exxon from financing any purchase it pleases. As one of a waning handful of AAA-rated companies, it can raise as much capital as it needs.

And though we haven't been hearing much about windfall profits taxes lately, there's another good thing about getting rid of cash--it leaves less for bureaucrats to seize.

landownerPermalink Reply by P.G. on May 8, 2009 at 3:01
Seems comical that Obama is suddenly concerned about what is costly to taxpayers, as a motivation to do away with the loopholes, huh?

Do we really need government to subsidize energy production? Probably not. Profits from higher prices will eventually do that. The taxpayers will still end up paying for it in one form or another. The problem with doing away with subsidies will be increasing cycles of shortages as the free market becomes the regulator of supply.

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