The Weekly Wrap: July 30, 2010

Drilling on the Hill. The U.S. House of Representatives opened debate today on new legislation intended to reform regulation of offshore drilling in U.S. waters. The bill includes safety measures and penalties, and — more controversially — would lift the liability cap on future oil spills and block companies with poor safety records (read: BP) from getting future offshore leases. Unsurprisingly, House Democrats and Republicans are at loggerheads over the bill, while the Senate unveiled its own energy bill, minus carbon emissions provisions, earlier this week. The House bill is expected to be approved later today, but neither bill seems likely to make it to the White House before the summer recess begins on August 6.

BP’s relief well and static kill on schedule. Coast Guard Adm. Thad Allen has announced that the sealing of the Macondo well is set to be complete within two weeks. On Monday, BP will try a "static top kill" maneuver, where it will pump heavy drilling fluid through the old Macondo blowout preventer, likely followed with cement. If it works, crews will be able to finish the relief well and pump the same fluid and cement into it. But the upside for now is that the end of the oil spill finally appears in sight.

BP rebuffs Chinese suitor. China’s Sinopec told reporters today that BP rejected its bid for some of BP’s assets. Sinopec officials declined to name the assets in question, but reports indicate that they could have included oil fields in Latin America, Vietnam, or BP’s stake in Argentina’s Pan American Energy. BP announced that it was putting $30 billion worth of assets up for sale this week, and Sinopec has been looking to expand its holdings. Analysts cited strategic reasons for the snub, but others expect that Sinopec will be back to bid higher.

Hayward defends his reputation. After announcing his departure this week, BP CEO Tony Hayward told the Wall Street Journal that he "did everything possible" in handling the Deepwater Horizon disaster, though he admitted that some of his comments had been misguided. Hayward says he was confident BP would bounce back after the oil spill, but believed that the company would face fewer obstacles without him. While his comments have drawn criticism from U.S. legislators and activists, he has earned the sympathy of many in the U.K. who feel that American criticism towards BP was unfairly focused on him. Hayward is set to depart in October, leaving the task of rehabilitating BP’s reputation in the United States to his successor, Bob Dudley.

Australia projected to rival Qatar in LNG exports. The research firm Sanford C. Bernstein predicted this week that Australia will become a major exporter of liquefied natural gas over the next five years, driven by continued strong demand from Asian markets. According to the report, Australia is expected to account for 60 percent of new LNG production capacity, which could see it rival Qatar as the world leader in LNG exports. Gas companies have been rushing to develop both onshore and offshore reserves in Australia, while the country has worked to strengthen diplomatic ties with its Pacific neighbors, particularly China, over the past decade.

Tullow moves ahead in Uganda. British exploration and development firm Tullow Oil is set to begin developing Uganda’s offshore oil reserves in Lake Albert.  The fields are estimated to hold over 2 billion barrels of oil, some of the largest in East Africa.  Having acquired half of the oil reserves this week, Tullow is now expected to sell two-thirds of the reserves to France’s Total and China’s CNOOC. The development of the Lake Albert oil blocks, along with a large onshore gas field, is expected to turn Uganda into a major African exporter of fossil fuels, strengthening its economic and political position in the region. It will also continue to boost Tullow’s profile within the industry, following on the company’s announcement of a major discovery in Ghana earlier this week.