China's state-owned energy firm buys U.S. off-shore leases UPDATED!

 

Gas prices here in the U.S. are creeping back up towards the $3-per-gallon mark even as news breaks today that China's state-owned energy firm just closed a deal to buy interests in four development leases on the American Outer Continental Shelf (OCS) in the Gulf of Mexico.

The deal, which requires approval of the U.S. government, is between Norway's Statoil and China National Off-Shore Oil Corporation (CNOOC). This is the same CNOOC that would have bought Unocal four years ago for $18.5 billion but for pressure from Congress, according to The New York Times, quoting an energy industry trade publication.

Because it must be approved by the U.S. government, the Statoil/CNOOC deal puts President Obama and Ken Salazar, his Secretary of the Department of the Interior, which controls OCS leasing, in a difficult position.

If the administration approves the deal, it will be more vulnerable to charges that the White House is being careless with U.S. national security issues in the energy sector, and that it is putting the interests of a foreign power before those of U.S. energy consumers.

If Obama and Salazar reject the deal, it will likely complicate relations with China, the emerging Asian superpower that defense experts predict will be able at will to challenge U.S. legitimate national security interests around the globe in the near future.

The deal also focuses renewed attention on Salazar's slow-walking of a new plan for approving energy exploration and development in the OCS, which includes approximately 1.7 billion acres, and, according to Interior, holds up to 86 billion barrels of recoverable oil and more than 400 trillion cubic feet of natural gas.

The administration is moving much too slowly to open more of the OCS to development for domestic U.S. uses, according to Jack Gerard, president of the American Petroleum Institute, who said recently:

 

“It’s been more than a year since the U.S. Congress and former President Bush lifted the moratoria on leasing new parcels in federal waters off the coasts of the Atlantic and Pacific, yet this administration has slow pedaled efforts to set up a framework to allow leasing on this acreage, even though the majority of Americans support greater development of our domestic resources. Instead, a troubling pattern of delay has emerged when it comes to developing the nation’s federal resources – whether they are offshore in federal waters or onshore.
 
“Americans are already suffering because of the prolonged economic recession, and the recent gasoline price rise—which is being compounded by short-sighted government policies—is only furthering their difficulties.  We urge the administration and Congress to take actions to increase domestic oil and natural gas supplies, which would add new U.S. jobs, provide much-needed revenues to federal, state and local governments and help ensure adequate supplies are available to generate the gasoline and diesel our nation needs.”

The Statoil/CNOOC deal is the latest step in China's extremely aggressive program to develop energy resources wherever possible around the globe in order to feed its massive economic growth. Coal currently accounts for 70 percent of China's energy production, while oil is second at 20 percent, according to the Institute for Energy Research.  

Finding new sources of conventional and renewable energy is critical for China, as its Gross Domestic Product could exceed that of the U.S. within 15 years, according to IER.

The deal will also focus increased attention on Congress as it debates the Waxman-Markey and Boxer-Kerry cap-and-trade anti-global warming proposals that are designed to force the U.S. economy to convert from dependence upon carbon-based conventional fuels like coal, oil and natural gas to renewable alternative energy sources such as biomass, wind and solar.

Critics of the legislation contend the proposals will force conversion to the alternative energy sources before they are sufficiently developed to be able to supply U.S. energy needs, which are expected to double in a few years. 

UPDATE: Bishop says Obama policy aids foreign nations, not U.S.

Rep. Rob Bishop, R-UT, says the Statoil/CNOOC deal is indicative of the Obama administration's failure to protect U.S. consumers from foreign nations seeking to tap into this country's abundant energy resources:

“Unemployment will continue to exceed acceptable levels and the economy will continue to suffer until this administration reverses its anti-energy policy.  China and other foreign countries are gaining access to the abundant natural resources located in the American OCS, meanwhile an energy starved U.S. continues to experience the detrimental effects of Secretary Salazar’s decisions to place special-interests before the American people.  Since taking office this administration has made great strides in helping countries gain access to American energy resources, it’s just too bad the U.S. isn’t one of them.”

Bishop is chairman of the Congressional Western Caucus, which includes a number of representatives from Western states with significant energy and other natural resources.

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