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Changes in the Face of
Energy – Senate Passes Energy Bill Opening Doors for Oil and Gas Exploration
and Development.
Overwhelming Support for
Energy Bill Ends Four Years of Political Stalemates
By:
Ann-Marie Fleming
August 2005
As oil and gas companies pursue
exploration and development opportunities, the energy bill voted in favor
74-26 by the Senate, opens up possibilities for government support to
increase supplies and discovery efforts.
In an attempt to encourage and support
drilling in high risk areas, the bill outlines more than $3 billion over the
next 10 years to the oil and gas industry in the form of direct spending and
tax breaks, with an additional $1 billion in government subsidies.
This bodes well for companies like Eden Energy
Corporation, who are preparing to drill several wildcat wells in Eastern
Nevada, where part of its 261,000 acre lease holdings encompasses a giant 53
mile long, 7 mile wide linear anticline, it calls the Noah.
The bill expands the Strategic Petroleum
Reserve, increasing it from 300 million barrels to 1 billion barrels. In
addition, components of the energy bill are directed towards boosting the
supply of natural gas and expansion of pipelines. Already moving in this
direction is Petrol Oil and Gas Inc., who have been increasing their natural
gas reserves through the development and production of Coal Bed Methane (CBM),
taking advantage of an unconventional, yet proven method, for increasing gas
supplies.
As described by Paul Branagan, Petrol
Oil and Gas CEO, "This
energy bill will go a long way in supporting increased natural gas
exploration and production within the US. With domestic energy demand on the
rise, natural gas is the one source that is produced almost entirely within
the US and is to some extent shielded from fluctuations in the foreign
energy markets and production cartels. Furthermore unconventional gas, that
is Coal Bed Methane (CBM), tight sands and shales, play an ever increasing
role in maintaining the delicate balance between supply and demand, however
they require additional capital and technology to unlock those vast domestic
resources. Three years ago Petrol began acquiring acreage and production in
unconventional gas, principally areas of CBM. We currently have proven
reserves of about 12.7 billion cubic feet and produce about 3.0 million
cubic feet a day. Although we have a significant development plan in place,
the incentives offered by this new energy bill is certainly a catalyst to
accelerate our entire development process. We thank the Congress for having
the vision and prudence in providing clear incentives to energy producers
like Petrol to move forward in maintaining supply and averting what everyone
fears is a new domestic energy shortfall.”
The bill represents an attempt by
Congress to enable an increase in domestic energy production, to address the
rising cost of fuel and to help establish energy independence as we work
towards a reduction in the reliance on foreign oil. According to Lynn
Blystone, CEO of Tri-Valley Corporation, “In our country the responsibility
for replacing and increasing the reserves of the nation is left to the
private sector and that means investors. For the last 20 years the business
return opportunity has been so low that most investors have stayed away and
thereby the reserves and production has declined alarmingly. If Congress
wants to do something about the energy situation they are going to have to
pay attention to what it takes to attract investment into finding new
supply. They are going to have to provide incentives to oil and gas
companies as well as investors, since 85% of the new wildcat areas are
drilled by independents like Tri-Valley and those independents are financed
by individual investors.”
The energy bill is now on its way to
President Bush for his signature, to put an end to years of stalemates over
a national energy policy and to mark the beginning of a new plan towards
resolving current and future energy needs.
Ann-Marie Fleming
Ann-Marie Fleming
completed her MBA in
the
United
States
, where she attended
Webster
University.
She also holds an Honors B.A from the
University
of
Toronto.
She has over fifteen years of experience spanning the brokerage, banking,
and mortgage industries within the United States
and Canada.
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