Free Markets, Free People

China Buying Oil Leases Off American Shore?

That’s the word from Mark Tapscott at the Washington Examiner:

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 (OTS) 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 OTS leasing, in a difficult position.

Really? Why does it put the government in a “difficult position”? Oh, you mean the apparent willingness to sell these leases to foreign entities vs. opening them up to domestic American exploration?

The deal also focuses renewed attention on Salazar’s slow-walking of a new plan for approving energy exploration and development in the OTS, 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 OTS to development for domestic U.S. uses, according to Jack Gerard, president of the American Petroleum Institute …

But it apparently isn’t moving too slowly to open up the OTS to foreign competitors.

In the meantime:

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.

Oil isn’t going away anytime soon and its use is critical during any transition to alternate energy sources (which, for the most part are vaporware). Additionally, the charge that the Obama administration is playing fast and loose with US national security will resonate if the public becomes aware that domestic producers have been barred from OTC production but foreign producers are given access.

So the dilemma facing the administration is one of its own ideological making. Its “slow walking” of the plan for domestic producers to explore the OTC is a decision it made to thwart the desires of a majority of the nation to secure those assets for the US’s use. And now it’s going to hand them over to China?

That will not play well in at all in middle America.



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14 Responses to China Buying Oil Leases Off American Shore?

  • It’s not really a “difficult position” if they have integrity.  Just tell China that no, we won’t sign off on it and they can’t drill in those waters.
    Oh, come on.  Stop laughing!

  • There’s no conflict here: this is all part of President Imeme’s heroic efforts to SAVE THE PLANET!  See, the Red Chinese will take the oil so that profiteering American oil companies can’t get to it and then sell it to rabid right-wing American consumers who will turn around and burn it in their nasty ol’ SUV’s, causing global warming and destroying the planet.  The Chinese will carefully extract the oil (no spills or disturbing the caribou, guaranteed!) and then stockpile it in a secure location where it will remain harmlessly until scientists can determine how to convert it back to pixies and unicorns.  Naturally, the Chinese won’t use the oil to fuel their own economy (they have coal plants and nuke plants for that) or sell it to anybody else to make money.

    Yes, a few bitter, gun-clinging, Bible-thumping racists will believe the lies from Rush and Beck and Fox News that this somehow undermines our security, sovereignty, and is bad for our economy, but that’s just propaganda from an increasingly desperate Rethuglican party that daily sees its numbers dwindle.  The enemy is global warming, and we’ve GOT TO DO SOMETHING.

    / sarc

    Seriously, President Imeme and the morons in Congress who go along with this sort of thing are going to have some SERIOUS explaining to do if oil prices spike again and Americans are paying $5 / gallon to the BLOODY CHINESE for oil that we could have gotten ourselves.

    I also think that this is a good demonstration of the stupidity of the argument that dems make when drilling for oil is discussed to the effect that, “Even if we start NOW, we won’t get the oil for TEN YEARS, so what’s the point???” The Chinese don’t seem to look at it that way.  It’s disgusting that we’re looking at communists as examples of good planning, efficiency, and business smarts.

    • Speaking of the Ten-Year plan Doc, have ya ever noticed how we were stupid to drill for oil that would take 10 years to get, but we’re expected to wait on ‘green’ tech that will take 10 years to get here (and what we’re supposed to use in the interim is probably being planned in some committee in Congress that no one gets to attend or hear about, or read, or vote on).
      Also, all of the global warming solutions will be here in 10 years, and the health care plan will be implemented in 10 years, etc.
      Those all seem to be worth waiting 10 years (at least) for, but not more oil.  Nosireebobcattail!

  • After the last few months of successful economic recovery by the Imeme administration, doesn’t China actually OWN the OTS?
    Besides, we don’t want that nasty old oil, let China foolishly continue on that old outmoded path, we’re headed for the new ‘green’ future of energy that will keep us in the forefront of technology and consign China to the Industrial dustbin of history!  We’re going to have GREEN technology!  Yessir!  It’ll be green, and produce millions of jobs, and we’ll be happier, and wiser, and we’ll have stopped global warming too!  If you only believe!  If you don’t believe Tinkerbell will die! you’re probably a right wing wacko racist who wants President Imeme to fail because he’s not white, and you’re probably unable to respond to this post because you won’t let go the death grip you have on your gun and your Bible!

    • I saw an article a couple of days ago (can’t remember where) that indicated that wind turbines are being made in China.

      Green jobs for Red workers!

      As for the Ten Year Plan, yeah, I noticed that.  It’s a way for politicians to do things that they KNOW will be unpopular if not outright destructive and get away with it.

      • I, for one, await the arrival of our Chinese masters, at least they don’t lie about who they really are, and we won’t have to worry about them being born in Hawaii.

  • Can we question his patriotism now?

  • Ummm. Dude, Saatoil can sell a stake in the leases it holds for exploration and development of these fields on the OCS because Staatoil was the highest bidder at the lease sales two years ago for these tracts.  This article is self-refuting.  The fact that this sale is possible is evidence that the government is moving forward with lease sales of various areas of the OCS for exploration and development.  US firms have as much ability to buy these leases as anybody else.  In fact, here you’ll see the list of 668 leases held by Chevron.  Here you can see the press release on the lease sale from three months ago.

    • The issue is, will they approve the sale, or not, to a foreign power that might actually have a strategic global power interest beyond being “the country next to Sweden” as Norway does.
      If you can’t understand the difference between the potential for Norwegian ‘power projection” in the world vs Chinese power projection, gee why am I not surprised.
      And, they can drill the snot out of the Cuban side, without our blessing anyway, and use their straw to drink OUR milkshake.

  • Also, I hate to pick nits but I don’t know how much I’d rely on a guy who can’t figure out that the acronym for Outer Continental Shelf is OCS not OTS.

  • The article isn’t self-refuting, but isn’t very explicit. US firms have bought some of these leases, but currently they are the equivalent of PSL’s before the stadium is completed. They bought the future rights to those areas, but are currently blocked from developing those leases. The point is that it is much more difficult (politically) to tell the Chinese not to exercise the leases before  the Department of the Interior decides exactly what will be allowed in those areas.

    The linked article (now) uses OCS as an abbreviation. OTS (Oil to Shore) is also common term for offshore drilling, so if that was there originally it wasn’t completely out of the blue.

  • Good points Ted, but the Chinese, or really the Norwegians since Statoil will still own the majority of these and still run the projects, are bound by the same rules as are American firms who buy exactly the same rights, are they not?  The only reason the government has to approve the transaction is because of the lease-sale nature of the rights in question.  Part of the contract is that they have to approve any transfer.  Also these leases are designed to encourage quick production from them.  Here is a lovely map of Statoil’s holdings in the Gulf of Mexico that shows which ones are already on line.  There are some areas of the Gulf that are not open for leasing, which oil companies would like to change.  But these leases, which Statoil has now and which may include Chinese, are subject to exactly the same terms as the many leases in which Statoil shares ownership with Chevron.

    • Lovely Retief, but here’s the salient question – where does the oil go? One place it doesn’t go is into the US. And that’s the national security aspect you so carefully avoided. If the idea is to get off foreign oil, why let foreign national companies haul off oil in our OTC?

      • “where does the oil go?”

        Probably to where it makes the most profit, like the oil from Alaska which goes to Japan, etc.