Vitter questions Ex-Im Bank loans to Petrobras, Ecopetrol

US Sen. David Vitter (R-La.) has raised questions about the Export-Import Bank of the United States making loans totaling billions of dollars to Brazil and Colombia’s national oil companies while the Obama administration seemingly discourages access to and development of domestic resources.

“Domestic energy policy cannot be based on crippling access, stifling permitting, and increasing taxes on production – as [US President Barack] Obama has recently proposed – while at the same time loaning billions to foreign government-owned entities to produce abroad,” Vitter said on Apr. 30. “These loans may well create numerous jobs domestically for US businesses to sell product overseas. However, there is no doubt that domestic production creates domestic jobs that cannot be shipped overseas.”

Vitter first mentioned this to Ex-Im Bank President Fred Hochberg in a Mar. 17 letter when he referred to an August 2009 letter he wrote Obama about a $2 billion loan to Petrobras which produced a response from the Ex-Im Bank suggesting there would be a significant return on the investment from interest on the loan as well as an increase in the growth of US manufactured products used by Brazil’s offshore industry.

Noting in his Apr. 29 letter to Hochberg that the bank subsequently approved a $1 billion loan to Ecopetrol, Colombia’s national oil company, Vitter said: “I was very specific about the information I requested from Ex-Im more than a month ago. I requested the particulars of the return on investment the American taxpayer can expect from these loans as well as the US businesses intended to benefit from the financing arrangements. Is it safe to assume that Ex-Im does preliminary analysis before issuing loans that evaluates the return on these loans to the US government and US businesses? Is it also safe to assume that Ex-Im should readily be able to provide that information to Congress upon request?”

The senator noted that while the Ex-Im Bank is an independent federal agency, it also is congressionally authorized and responsible to the US taxpayer. “I would appreciate a full accounting of the return on these ‘investments’ Ex-Im has been making as we develop domestic energy policy in a period when [gasoline] prices are above $4/gal and American families and businesses suffer,” he said. “These loans may well create numerous jobs domestically for US businesses to sell product overseas. However, there is no doubt that domestic production creates domestic jobs that cannot be shipped overseas.”

BOEMRE monitors Cuban offshore

US Bureau of Ocean Energy Management, Regulation, and Enforcement Director Michael R. Bromwich quietly included Cuba as he emphasized working with other countries in developing better offshore oil and gas regulations.

Working with Cuba’s regime poses a challenge since the United States does not recognize it. Repsol YPF SA, which is leading a consortium planning to drill its first well off the island nation’s coast, is another matter. The Spanish multinational reached out to BOEMRE some months ago to discuss its plans to drill off Cuba, Bromwich said told reporters on Apr. 12. Talks are continuing, he added.

“The places to be drilled are close to Florida’s coast, and in the loop current, so we will be watching them closely,” noted US Interior Secretary Ken Salazar, who also participated in the briefing at the Interior Department's headquarters.

Petroleum ministers in Mexico and Brazil told him that the Apr. 20, 2010, Macondo well accident and crude oil spill shocked the world, and that they were very interested in implementing more effective regulations, he continued.

“Most companies operating in the US deepwater operate globally, so the new standards we are requiring can be implemented worldwide,” Salazar said. That apparently could be the case in Cuba.

Obama’s Clean Fuels Partnership gives NGVs a boost

Natural gas vehicle proponents were elated when US President Barack Obama announced formation of a National Clean Fuels Partnership Apr. 1 in Landover, Md. The president may have spoken more about hybrids and electric vehicles, but NGVs still made it into his remarks.

“If we’re serious about making the transition from gas-guzzlers to hybrids, then we’ve got to show automakers and truck manufacturers that there’s a real market,” he said. “They're not going to build them if they don't think anybody’s going to buy them. We need to show them that if they manufacture fuel-efficient cars and trucks, people will buy them. We need to put our money where our mouth is.”

UPS, FedEx, AT&T, Verizon, PepsiCo, and other large businesses already have developed large fleets that run on fuels besides diesel and gasoline, Obama noted. “That’s why we’re launching a National Clean Fleets Partnership,” he said. “If you’re a business that needs to transport goods, then I’m challenging you to replace your old fleet with a clean energy fleet that’s not only good for your bottom line, but good for our economy, good for our country, and good for our planet. And if you accept this challenge and you join our Clean Fleets Partnership, we’re going to make a number of tools available – from technical assistance to cutting-edge research and development – that will help you make the transition to a clean energy fleet.”

Obama said that he has heard repeatedly from owners of vehicles which run on petroleum alternatives that refueling infrastructure is critical. “We don’t have the distribution platforms right now. That’s something we’ve really got to work on,” he observed.

Oil and gas industry groups applauded the president’s remarks. “We welcome the president’s focus on natural gas as an option for transportation fuels and hope to see administration policies and programs that will encourage, rather than discourage, the production and distribution of this important domestic resource,” said Bob Greco, the American Petroleum Institute’s downstream operations director. “We also need sensible policies that preserve a robust U.S. refining industry to supply fuels for the existing vehicle fleet for years to come. We hope that the president is signaling a true shift for clear, effective policies that make use of our domestic resources while preserving this important industry.”

“In making his announcement at a UPS facility today, the president selected a company that has a fleet of more than 1,100 natural gas delivery trucks,” said Tom Amontee, executive vice president at America’s Natural Gas Alliance. “[NGVs] outperform conventional fuels with a significantly higher octane rating, better fuel efficiency and lower operating costs - all while offering dramatic reductions in emissions. With the price of natural gas nearing half that of traditional gasoline, greater use of [NGVs] is a smart business decision as well.”

When Christopher A. Smith, who heads the US Department of Energy’s Fossil Energy Office, addressed an American Gas Association Natural Gas Roundtable luncheon on Feb. 22, he noted that Colombia, where he spent three years, has 300,000 NGVs on the road. “The technology is there,” he said, adding that it’s also much more advanced than the technology for electric vehicles.