Week in Oil & Gas: Boxer-Kerry Bill, EPA Emissions Rules, and China's Oil Grab Efforts

Greenhouse gas emissions dominated headlines throughout the week with the introduction of legislation that seeks to reduce greenhouse gas emissions and another government agency jumping into propose its own rules for industrial facilities.

The Senate — via co-sponsors Barbara Boxer, D- Calif., and John Kerry, D-Mass. — introduced its version of legislation aimed at reducing greenhouse gas emissions and creating a new clean energy economy.

The Clean Energy Jobs and America Power Act is a bit beefier than its counterpart passed in the House this summer. The bill toughens up emissions reductions – 20 percent from 2005 levels by 2020. The bill changes how carbon offsets — clean-energy efforts that farmers and businesses can use to meet emissions standards — are managed and shifts jurisdiction over to the president. A new office within the Justice Department will be created to ensure carbon credits actually block gases from the air.

The natural gas industry, which was given the cold shoulder in the House bill, got a little more love this time around — proving lobby efforts work. The Boxer-Kerry bill creates a federal program to encourage investment in low-carbon power generation and provides incentives to utilities that switch from coal to natural gas.

Within two days of the bill’s introduction, the likelihood of its approval before the global climate talks in December looked a little dimmer after President Obama’s top energy advisor Carol Browner said it probably wouldn’t happen by then.

The Environmental Protection Agency also got into the greenhouse gas regulation game and proposed rules to control emissions from refineries, utilities and factories. Facilities that emit at least 25,000 tons a year of heat-trapping gases like carbon dioxide would regulated under the Clean Air Act, according to the proposed rules. The rules are expected to impact up to 14,000 industrial facilities.

Not all of the week’s biggest oil and gas stories came from inside the beltway.

U.K. oil major BP will hand over a larger share of equity to its partner China National Petroleum Corp., in a project to develop the Rumaila oil field in Iraq.

BP cuts its stake from 50 percent to 38 percent. The BP-led group won a bid in June to boost production at the Rumaila field from 1 million barrels per day to about 2.85 million bpd.

This is the first test in Iraq’s effort to increase oil production in the country with help from foreign oil companies. Eight contracts were available during a June auction and only BP and CNPC won a bid, which meant they agreed to receive only $2 a barrel to operate the field in southern Iraq.

Another China-state-owned company set its sights on Africa’s oil preserves – just one more example of the country’s interest in locking up oil reserves. CNOOC is reportedly in negotiations with the Ugandan government about investing with Tullow Oil to develop oil fields there. CNOOC is also in talks with the Nigerian government over a group of oil blocks there.

We can’t forget Chevron’s head hondo — David O’Reilly — announced he will retire at the end of the year. John Watson — a nearly three-decade veteran of the energy giant — has been elected by the board as its next chairman and CEO. Watson inherits a company heralded for its recently approved Gorgon liquefied natural gas project off Western Australia. But the company also faces a $27 billion environmental pollution lawsuit, which has dragged on for 16 years.

Other BNET coverage from the week:

• Exelon Ditches U.S. Chamber Over Climate Policy, Who Will Leave the “Voice of Business” Next?
• CIA Tackles Climate Change and Its Risk to National Security
• Abandoning Ship: Nike Quits Chamber Board Over Climate Change Stance
• Battling the Bulge: Natural Gas Stockpiles Hit Record Numbers As Recession Saps Industrial Demand
• Exxon CEO Tillerson’s Argument For a Carbon Tax
• Full Disclosure: Schlumberger, Hydraulic Fracking and the Public Access Debate