Category Archives: Offshore

The South African Revenue Service (SARS) launched the Special Voluntary Disclosure Programme (SVDP) in October 2016, providing taxpayers with the opportunity to make good on any tax and/or exchange control contraventions of which they may be guilty in relation to offshore investments.

The nine-month window period opened on October 1, 2016 and closes on June 30, 2017, a period chosen to encourage disclosure before the institution of the new international Common Reporting Standards, which require the financial institutions of signatory countries to exchange information about the financial affairs of foreign taxpayers within their jurisdictions. SARS expects the automatic reporting of this information to begin in September this year, with the prospect of additional penalties and interest being imposed on South African taxpayers unless they come clean beforehand.

Its important to note that the SVDP legislation had not been promulgated at the time of writing in November 2016, so it is possible that changes could yet be made although SARS assures us that the draft bill reflects the outcome of the public consultation process and the proposals have been presented to Parliaments Standing Committee on Finance. However, tax assessments based on SVDP disclosures will be concluded only once the final legislative framework has the approval of Parliament.

The specifics

Although the SVDP makes provision for the disclosure of both tax contraventions and exchange control contraventions, not all taxes and not all taxpayers are covered by the programme, so it is important to understand the detail as it applies to your specific circumstances.

The tax SVDP covers receipts and accruals not declared to SARS (as required by the Income Tax Act and Estate Duty Act) from which an asset situated outside South Africa was derived, if the asset was held from March 1, 2010 to February 28, 2015. This wording is important. Amounts could have been sent offshore from earnings not declared to either SARS or the South African Reserve Bank (SARB), in which case those amounts, as well as any income arising from them, could have contravened the tax and exchange control legislation. Alternatively, the amounts may have been declared for tax purposes but taken offshore in contravention of exchange controls. In such cases, the amounts may be in contravention of exchange controls, but only the non-declaration of subsequent earnings gives rise to a tax contravention.

The receipts and accruals could have arisen before March 1, 2010, but will still be covered if they resulted in an asset, such as an investment, being held from March 1, 2010 to February 28, 2015. The draft legislation also makes provision for assets that may have been disposed of before March 1, 2010, in which case the taxpayer is permitted to treat the assets as if they were still held from March 1, 2010 to February 28, 2015. However, this is not permitted if the assets were donated to a trust or disposed of to a trust through a loan account. There are specific requirements for trusts (see below).

The tax required to be paid under the tax SVDP is calculated as follows:

1. Determine the market value in foreign currency of each asset that is subject to the SVDP for each year of assessment that ended on or after March 1, 2010 and before March 1, 2015. For individuals, this would be February 28, 2011, 2013, 2014 and 2015, and February 29, 2012.

2. In respect of each asset, translate the foreign currency into rands at the spot rate on the last business day on or before each year end. You can calculate historical rates by going to http://www.oanda.com.

3. Aggregate the market values in rands of each of the assets as calculated in Step 2 to determine one amount in rands for each year.

4. Determine which of the amounts is the highest across all of the years.

5. Apply a rate of 40 percent to the highest amount determined in Step 4.

6. The amount arrived at in Step 5 must be included in your taxable income in the first year of assessment that ended after March 1, 2014. For individuals, this is the tax year that ended on February 28, 2015.

7. Where the asset was disposed of before March 1, 2010, the value to be included at Step 1 is the assets highest value while it was actually held. SARS may accept a reasonable estimate of this value where it cannot be accurately determined.

Benefits of the SVDP

The primary benefit of the tax SVDP is that the declared receipts and accruals up to the 2014/15 tax year will be regarded as exempt for tax purposes, regardless of when they were earned that is, even if such receipts and accruals were earned before March 1, 2010. No understatement penalty will apply and no interest will arise in respect of periods before the year of inclusion in other words, the 2014/15 tax year for individuals.

It may seem obvious (or it may not) that your responsibilities dont end with the regularisation of your assets. You should declare the income in all subsequent tax returns that is, from the 2015/16 tax year (March 1, 2015 to February 29, 2016).

The downside

There are limitations to the SVDP for example, it covers income tax and estate duty, but employees tax is specifically excluded. Income tax covers several taxes, such as capital gains tax (CGT), dividends tax and donations tax, and these are all covered. Value-added tax is not covered under the SVDP. Neither are contributions to the Unemployment Insurance Fund or the Skills Development Levy.

The tax SVDP may not be made by or on behalf of a trust. Special provisions apply to donors, deceased estates of donors and beneficiaries of discretionary trusts with offshore assets that meet the SVDP requirements and have not vested in a beneficiary. The relevant applicant (donor, deceased estate of a donor, or trust beneficiary) is deemed to have held the asset and received or accrued the income. Such applicants should consider the legislation carefully and obtain expert advice.

The open-ended VDP

It is worth noting that the existing Voluntary Disclosure Programme (VDP), set out in the Tax Administration Act, provides a separate mechanism for taxpayers to declare previously undisclosed tax irregularities. The VDP is open-ended and no end date is contemplated. It is wider than the SVDP in terms of the taxes and taxpayers covered, but potentially more punitive in terms of the tax payable.

There is no limit to how far back the taxes can be calculated, and penalties can be imposed up to 10 percent of the tax understated, with interest running for the full period of non-disclosure. However, if the undeclared taxable income is less than the deemed income under the SVDP (in other words, 40 percent of the highest market value of the assets), the VDP may provide a more cost-effective route. Importantly, the VDP does not cover exchange control contraventions.

If you suspect you might have failed to comply with exchange control regulations, it is important to ascertain exactly what contravention occurred, if any. In certain cases, what might be a contravention if it took place before a certain date might be condoned if it took place later, when exchange controls were relaxed. For example, South African residents who earned income outside South Africa before July 1, 1997 were required to repatriate the earnings to South Africa. With effect from July 1, 1997, such earnings could be left abroad. It is now possible to regularise non-repatriated income earned before July 1, 1997 without incurring any exchange control penalty, provided it is declared to an authorised dealer (one of the big commercial banks) before March 31, 2017 (note that this date may be extended to June 30, 2017 in line with the extension of the SVDP, but dont delay, check with your bank).

Exchange Control Circular No. 6/2016 sets out what exchange control contraventions are subject to the SVDP relief and what contraventions can be regularised by disclosure. It is worth examining this document in detail.

The exchange control SVDP is open to all current and former South African residents, including individuals, sole proprietors, partnerships, deceased estates, insolvent estates, South African trusts, close corporations and companies. It is an opportunity to regularise unauthorised foreign assets held on or before February 29, 2016. It does not apply to bearer instruments. Applications must be made within the SVDP period. Applicants must make full disclosure of all unauthorised foreign assets (excluding bearer instruments) by providing the source of the assets and details of the manner in which the assets were transferred and retained offshore.

Where an exchange control contravention can be regularised only via the SVDP, a levy will be payable based on the market value of the assets on February 29, 2016:

Five percent if the levy is paid from the foreign assets and the assets are repatriated to South Africa; or

10 percent if the levy is paid from the foreign assets and the assets are retained offshore; or

12 percent if the levy is not paid from the foreign assets.

Where the foreign assets are denominated in multiple foreign currencies, the currencies can be converted to United States dollars as at February 29, 2016 (using the conversion rates published on the SARBs website).

It is possible to have a situation where an exchange control contravention can be regularised without incurring any penalty, or an apparent contravention turns out not to have been one for example, when earnings were retained offshore after July 1, 1997. However, a tax liability may exist if such amounts were not declared to SARS, depending on the circumstances. South Africa moved from a sourced-based to a residence-based tax system on March 1, 2001, with the result that offshore income and capital gains accruing to South African residents came into the tax net.

In the case of undeclared taxes, it may be possible to use either the VDP or the SVDP. There does not seem to be anything in the various pieces of legislation to prevent a piecemeal approach. In other words, you can use the SVDP for both tax and exchange control, or you can use the VDP for tax and the SVDP for exchange control. Or you can use the VDP for tax and merely regularise the exchange control contravention by way of declaration if this is applicable to your situation or any other combination.

Where a SARS or an exchange control investigation or audit is pending or under way, the SVDP relief is not available. All other eligible South African taxpayers who hold, or held, offshore investments should assess their position to determine whether all relevant tax and exchange control disclosures have been made. If doubt exists, they should take advice as to what course of action would be best to ensure that all disclosures and payments are in order to avoid significant penalties and possible criminal prosecution.

Going back several years and obtaining all the information to ascertain the best course of action and to support an application can be time-consuming. It is important to act sooner rather than later, so as not to miss the window period. However, it might also be a good idea to make the application only once the tax legislation has been promulgated. Deficiencies in the legislation may come to light, and it is still possible that changes could be made. For example, the tax SVDP does not seem to cater adequately for a situation where an asset was held on March 1, 2010, but disposed of shortly afterwards, before the end of the 2011 tax year. SARSs SVDP guide specifies that such assets should be treated as if they were held during the five-year period that ended on February 28, 2015 for purposes of determining the deemed income inclusion for the tax SVDP. This seems at odds with the legislation, and no doubt other anomalies will surface as applicants prepare their calculations.

USEFUL LINKS

The legislation setting out the tax aspects of the Special Voluntary Disclosure Programme (SVDP) is set out in sections 14 to 18 of the Rates and Monetary Amounts and Amendment of Revenue Laws Bill of 2016 and the Rates and Monetary Amounts and Amendment of Revenue Laws (Administration) Bill of 2016. The legislation can be downloaded from the South African Revenue Service (SARS) website. (Enter the title of the legislation in the search facility.)

The SVDP Guide v1-2 contains useful information about the practical aspects of applying for the relief (which must be done via eFiling) and the information required to be disclosed. It also has helpful links to other documents and information. The guide is available on the SARS website (put SVDP into the search facility).

Exchange Control Circular No. 6/2016 is available on the website of the South African Reserve Bank. (Enter the title in the search facility.)

Kari Lagler is an independent tax consultant and registered tax practitioner. The information in this article is of a general nature, and readers should obtain expert advice for their specific situations.

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Tax on offshore investments: time to come clean - Independent Online

ANNAPOLIS, Md. | Maryland regulators on Thursday approved plans for the nation's first large-scale offshore wind projects, saying the decision will position the state to be a leader in the developing industry.

The Maryland Public Service Commission awarded renewable energy credits on Thursday for two projects off Maryland's Eastern Shore near Ocean City. The PSC says the decision allows US Wind of Baltimore and Skipjack Offshore Energy, a subsidiary of Deepwater Wind, to build a total of 368 megawatts of capacity.

Those projects significantly outrank by size the nation's sole offshore wind farm known as Block Island off Rhode Island. That farm, which is owned by Deepwater Wind, has only five turbines and a 30-megawatt capacity.

US Wind's proposal is to build 62 turbines between 12 and 15 nautical miles offshore to generate 248 megawatts. It will cost an estimated $1.4 billion to build. Skipjack's plan is for 15 turbines between 17 and 21 miles offshore to produce 120 megawatts. It will cost about $720 million to build.

"The approval today of the nation's first large-scale offshore wind projects brings to fruition the General Assembly's efforts to establish Maryland as a regional hub for this burgeoning industry," said W. Kevin Hughes, the commission chairman.

The Maryland General Assembly approved a regulatory framework for offshore wind in 2013, after repeated efforts by then-Gov. Martin O'Malley, a Democrat.

The plan comes at some cost for electricity ratepayers, once electricity is produced by the wind farms. The commission says the impact on utility bills is expected to be less than $1.40 a month for residential customers and less than 1.4 percent on the annual bills of commercial and industrial customers, according to the commission's independent consultant, Levitan & Associates.

US Wind's project is expected to be operational in early 2020.

"This decision cements Maryland as a first-mover we will now be the epicenter of this exciting new industry for decades to come," said Paul Rich, director of project development for US Wind.

Skipjack estimates opening its operation near the end of 2022.

The PSC said the two projects are expected to yield more than $1.8 billion of in-state spending. The agency says the projects are estimated to create nearly 9,700 new direct and indirect jobs and contribute $74 million in state tax revenues over 20 years.

The PSC's decision is contingent on approval by the federal government of the developers' site assessment plans, as well as construction and operations plans.

The plan includes a focus on developing port facilities in the Baltimore area and Ocean City. It calls for developers to invest at least $76 million in a steel fabrication plant in Maryland and at least $39.6 million for upgrades at Baltimore County's Tradepoint Atlantic shipyard, formerly Sparrows Point.

Commissioner Michael Richard said the wind farms will "enables us to meet our clean, renewable energy goals using energy generated within the state while conditioning our approval on holding project developers to their promises of creating jobs and spurring economic growth."

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Maryland regulators OK nation's largest offshore wind plan - Rapid City Journal

Two refugees under Australia's care in Nauru are desperately seeking medical evacuations to Australia to escape a health regime thata government-contracted doctor on the island has admitted is "broken".

The men, respectively suffering debilitating headaches and a severeanal fistula, have been unable to secure medical transfers and are being told their fate is in the hands of the government of Nauru.

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A secret audio recording captures a doctor in Nauru stating the system there is broken.

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A secret audio recording captures a doctor in Nauru stating the system there is broken.

Nawaf*, a refugee,has had the advanced fistula for more than two years and has refused surgery in Nauru because of concerns about infection during recovery, which requires the wound be left open to drain.

"It has become so bad that I have constant bleeding from the affected area, especially when I showerand use the toilet, and I am in severe pain," he wrote in a complaint lodged last year.

Another man, Afghani refugee Khan*, has been advised he requires an MRI not available in Nauru to treat severe occipital headaches, which leave him liable to lose consciousness and collapse.

In a secret recording given to Fairfax Media, a senior medical officer with contractor International Health and Medical Services concedesthe system is failing to provide adequate care for refugees on the island.

"This system here is broken," the doctor tells Khan. The doctor admits he has been unable to attain approval for a medical transfer.

"I've got to be careful, I've got to promise youwhat Ican deliver," he says in the recording. "Iasked all the questions last time: why is this man still here, why hasn't it been done? He's been waiting for sevenmonths at least.

"It's not working, thesystemis not working."

Khan agrees: "The system is broken, but we are suffering."

Asylum seeker advocates gave the patients' medical records to Melbourne GP Susan Ditchfield, who said the two men should be brought toAustralia urgently.

"[Khan]needs more than an MRI ... he needs a neurologist and he needs a cardiologist," she said.

Of Nawaf's fistula, Dr Ditchfield said: "The management of that is really specialised.Unless you get it exactly right, the patient can end up with permanent fecal incontinence.

"There are surgeons who specialise in this sort of surgery, and even in the best of hands it can go badly.It's very unlikely that such a surgeon is working on Nauru.

"These people need assessment in Australia.They are suffering needlessly."

Sandra Bartlett, a former case manager on Nauru, said "Fly Camp" whereNawafis living has "the least facilities and worst conditions" of any settlement on the island, with about 120 men sharing bathrooms.

A spokesperson for the Department of Immigration and Border Protection told Fairfax Media the process for medical referrals in Nauru was under the management of the Republic of Nauru.

In an emailto the Asylum Seeker Resource Centre sent on Friday, the department says Australian Border Force chief medical officer John Brayley acknowledges concerns about Khan's case, butconsideration of medical transfers isa matter for the government of Nauru.

Refugeesseeking offshore transfers for medical purposes must first approach staff at IHMS, which in turn negotiates with Nauru or Papua New Guinea, before a final decision is made by the DIBP.

Peter Rudolph, area medical director at IHMS, told a Senate inquiry in Marchthat while the department acted "rapidly" on very urgent matters, "with regard to semi-urgent cases, yes, there are delays".

Immigration Minister Peter Dutton is only informed of the matter after a decision has been made by thedepartment, the inquiry heard.

* Names have been changed

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'The system here is broken': Secret recording reveals failures of offshore detention regime - The Sydney Morning Herald

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Pembrokeshire offshore wave energy site considered BBC News A feasibility study is to consider plans for an offshore wave energy site off Pembrokeshire. The Pembrokeshire Demonstration Zone study, by Black & Veatch, will take nine months and look at the site's commercial viability. Wave Hub secured nearly 325 ... and more »

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Pembrokeshire offshore wave energy site considered - BBC News

OEG Offshore announced on May 1, 2017, that it would be merging with Cargo Specialist Paragon Industries. OEG Offshore specializes in producing and delivering customized mini containers, dry van containers, offshore baskets, pumps and filters, and a variety of other containment and utility products. The firm was founded in 2010 in Aberdeen, Scotland when Vertec Engineering and Continental Offshore merged in January of the same year.

The merger with Paragon Industries, a manufacturer of Oil Country Tubular Goods (OCTG), line pipe products, and structural pipe piling, will further heighten OEGs position as one of the worlds leading offshore container suppliers. The deal will increase OEGs already extensive fleet by 1400 units and will include new container designs from Paragon. OEGs presence in the Gulf Coast will be further solidified with the addition of some new full-service locations.

We are delighted to align with Leonard and the Paragon team to develop our product range in the US Gulf of Mexico market and believe that with the similar culture and service ethos of OEG and Paragon that we shall achieve a rapid integration of the two companies and provide rapid benefits to our expanded customer base, stated OEG Offshore Chief Executive John Heiton.

Paragon was founded in 1987 by Leonard J Guarisco, Snr., the father of the current President and CEO Leonard J Guarisco, Jr. It has been servicing its clients by moving cargo between land and sea on the Gulf Coast, operating out of its main facility in Morgan City.

Paragon Industries is confident that its merger with OEG Offshore will result in a new, united ability to offer an increased breadth and depth of complementary product offerings and service capabilities to meet our customers requirements. This merger will not only support ongoing working relationships with our existing customer bases but will provide a more efficient and effective enterprise to continue to provide and improve its quality level of service across a broader scope of needs, stated Paragon President & CEO, Leonard J. Guarisco, Jr.

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OEG Offshore Announces Merger with Cargo Specialist Paragon Industries - #OILMANNEWS (blog)

Joseph Baucum , jbaucum@pnj.com Published 8:49 p.m. CT May 11, 2017 | Updated 12 hours ago

The Pensacola City Council has amended the port's lease with Offshore Inland. The amendment sets a provisional deadline to pay more than $269,000 of debt.(Photo: News Journal file photo)

A provisional deadline has been set for a prime tenant of the Port of Pensacola to settle its nearly $270,000 debtwith the city.

The Pensacola City Council on Thursday unanimously approved amending the Warehouse 1 lease agreement between the port and Offshore Inland Marine & Oilfield Services. The amendment mandates the company pay its entire outstanding balance of $269,247 on dockage and wharfage fees to the city by Sept. 30.

If Offshore Inland fails to pay the balance by the due date, the City Council could terminate the lease or renegotiate a new deadline. If the lease is terminated, the company would have to vacate the port and surrender all equipment and personal property to the city within 30 days.

More:Port of Pensacola welcomes visit from tanker, Eagle Sydney

Offshore Inland's original lease for Warehouse 1 dates back to summer 2010. It has usedthe warehouse as an offshore and subsea service center. As part of the process to site new wells and platforms, major oil companies hire specialized ships for services such as surveying and dive support. To conduct the projects, the vessels require a massive amount of equipment.

Those materials are delivered to Offshore Inland'scenter at the port, where the ships can retrieve the items and deposit them after the work has finished. The center also acts as a maintenance and repair facility, where vessels'machinery can be tested, certified and recalibrated.

The company has paid its lease on the warehouse, but its debt stems from outstandingcharges from the ships docking at the port and the cargo moving through the facility.

Amy Miller, port director, said the company's operations accounted for 65 percent of the port's revenue before the collapse of the oil market. Returns on oil typically hovered from $90 to $100 a barrel before the late 2014 crash.

She said a healthy market for the company's work at the port would necessitate a barrel price of at least $70. On Thursday, Brent Crude, the international standard, opened at $50.28 per barrel.

The lease amendment also addresses an additional $363,000 in unpaid dockage and wharfage fees potentially owed by Offshore Inland. The city could forgive aportion of that if the company completes improvements to Warehouse 1.

More:Elebash: Port of Pensacola not a sacred cow

The company funded out-of-pocket upgrades to the site after the city received a $2 million grant in 2013 through the state's Economic Development Transportation Fund. City Administrator Eric Olson said the city stopped the companybecause the upgrades were not conducted in accordance with the city's procedures for bidding out work. The improvements also possibly failed to comply with the terms of the grant.

The city is still in the process of accepting bids from contractors to finish the project. Because it is unclear if the company's work satisfies the stipulations of the grant, it remains to be seen how much of it couldbe reimbursed. Until then, the$363,000 debt will be held in abeyance. The lease amendment states that after the improvements are completed, the city will determine how much of Offshore Inland's expenses will be reimbursed.

"Grants are closely regulated," Olson said. "You have to spend the money in a certain way. So we had to back it up and put the project out to bid. Improvements that have been made will be accounted for, and we'll settle up when it's all completed."

In a separate resolution on Thursday, the City Council also unanimously authorized terminating the Warehouse 9 lease agreement between Offshore Inland and the port.

The company previously partnered with Houston-based pipeline manufacturer DeepFlex to establisha manufacturing site at the warehouse. Mayor Ashton Hayward announced in 2014 that the partnership would generate 200 jobs and $50 million in capital investment.

But the oil market collapse stalled construction on the site. In December 2015, Offshore Inlandsued DeepFlex for breach of contract.The First Judicial Circuit of Florida later granted Offshore Inland to right to reclaim the facility, but ithad to occupy the building by the end of May 2016.

The company was later granted an extension to occupy the building by the end of this month. Olson said the company attempted to find a new partner for the warehouse but was unsuccessful.

Under the terms of the lease termination, the city assumes possession of the warehouse's capital improvements. Offshore Inland retains its equipment and personal property on the premises, but must clear the materials from the site within 15 days of the lease termination. The company must also pay all fees from rent and taxes due under the lease prior to its termination.

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Deadline set for Offshore Inland's $269K debt - Pensacola News Journal

wbur

May 12, 2017Updated 5/13/2017 6:09 AM

The area along the coast of New England is considered the Saudi Arabia of offshore wind. However, the federal tax subsidy designed to jump-start production of ocean wind energy will soon be drying up.

On Thursday, Massachusetts U.S. Sen. Ed Markey introduced a bill to extend the credits for an additional six years.But that effort faces stiff headwinds.

Building offshore wind farms is expensive.Even among industry execs there's a joke that power is produced not by wind, but by government subsidies and tax credits. For example, in northern Europe, where the modern offshore wind industry was pioneered decades ago, it was only this week that plans for the first zero-government-subsidy projects were announced.

Here in the U.S., investors in offshore wind currently get a 30 percent tax credit. That's supposed to help the industry in Massachusetts, where the state is mandating production of 1,600 megawatts of offshore electricity over the next decade-- power for more than a million homes.

Lars Pedersen is head of Copenhagen Offshore Partners. The Danish company wants to build wind farms off the coast of Massachusetts, as it's done for decades in Europe.He says federal tax incentives are important to get the industry started here.

"It's a competition here in Massachusetts between threecompanies," he said. "We will have equal opportunities to tap into tax credits, so certainty about how it's going to phaseout or how it's going to remain, that'sa key component of how we develop our business."

But none of the wind farms now being planned off the New England coast will be built in time to take advantage of the federal tax credit subsidy, which ends in 2019.

Thomas Brostrm is general manager of DONG Energy North America, another Danish company interested in building wind farms off Massachusetts' coast. And while the wind blows strong and steady here, he says subsidies are needed help create the industry supply chain infrastructure-- factories to build blades and turbines.

"That is the missing piece right now," he said, "because you've got great wind speed, shallow water depth, you can deploy the same technology, but the supply chain in many ways sits in Europe, but you can already feel the interest."

Massachusetts invested $113 million and built a marine terminal in New Bedford anticipating the development of the offshore wind industry.The port was to be used to deliver parts and workers to construction sites at sea. Thethree companies competing for wind projects off the coast have all agreed to use the facility, including the twofrom Denmark, where wind farms have lead to a windfall-- billions in investments and thousands of jobs.

"That isn't going to happen overnight in Massachusetts or New England, but part of our goal is to become the Denmark of the North American offshore wind industry," saidStephen Pike, CEO of the Massachusetts Clean Energy Center.

When-- and if the offshore wind industry takes off in Massachusetts depends on lowering the cost of producing and planting turbines in the ocean, and that's where the federal tax credits come in, helping to generate clean energy and jobs at sea and on land.

"You need a lot of local folks with that kind of capabilities, so former fisherman or ex-military people, they are great in workingin offshore environments," Pedersen said. "And these kind of skills you can find here, made in America."

The United States is already the world's leading producer of wind energy on land. Texas is the largest generator among states, but the Trump administration is unlikely to back Markey's call for extending the offshore wind tax credits.

Former Texas Gov. Rick Perry, now the head of the U.S. Department of Energy, has ordered a study of offshore wind, questioning its effect on the reliability of the electric grid, suggesting the intermittent nature of offshore wind could pose a risk to national security.

This segment aired on May 12, 2017.

Bruce Gellerman Reporter Bruce Gellerman is an award-winning journalist and senior correspondent, frequently covering science, business, technology and the environment.

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Markey Seeks To Extend Tax Credits For Offshore Wind04:02 - WBUR

What happened

April was another bad month for offshore drilling stocks. Transocean Ltd. (NYSE:RIG), ENSCO Plc. (NYSE:ESV), Diamond Offshore Drilling Inc. (NYSE:DO), Atwood Oceanic Inc.(NYSE:ATW), and Noble Corporation (NYSE:NE) all held up relatively well through the first third of the month, but then start to fall around April 10.

Those declines never really reversed track, with Transocean, ENSCO, and Diamond Offshore shares each ending the month down nearly 12%, Atwood shares off 15%, and Noble Corp down 21%.

Image source: Getty Images.

It was also another month of oil news moving this part of the market, rather than much of anything material relating to offshore drillers. As the chart below shows, the big declines started near mid-April, and were largely based on rumblings that crude production gains in North America were offsetting the declines in oil reserves:

RIG data by YCharts

If that sounds familiar, it's because it is. Offshore drilling stocks saw big declines in March as well, and largely for the same reason -- concerns that a sharp uptick in North American onshore oil production would continue to weigh on oil prices and further extend an offshore downturn that's already the longest and most severe in the industry's history.

Most offshore drillers reported first-quarter results in early May, with the same sorts of big revenue declines and often losses that have been the norm for nearly two years.

Transocean reported that its revenue fell 20%, and turned in a profit of $0.23 per share -- but only $4 millionwhen adjusted for non-recurring gains. Atwood Oceanics said it lost $29 million on $168 million in revenue, a whopping 43% revenue drop year-over-year. Diamond Offshore saw its profits fall 73% to $0.17 per share. ENSCO reported a net loss of $0.09 per share, compared to a Q1 profit of $0.74 per share a year ago.

And for the most part, the next few quarters are expected to be similarly bad across the offshore drilling industry.

But there's a lot of evidence that the market is starting to improve. For the first time in years, executives are saying that they are starting to get calls from oil and gas producers that are ready to start talks about contracting drilling vessels, and bid activity is ramping up. A number of new drilling contracts were entered into in the first quarter or early in the second quarter.

This has acted as a rising tide, lifting nearly all of these offshore drilling stocks since the start of May:

RIG data by YCharts

But if you're considering investing in any of these offshore drillers, it's important to note that the majority of the new contract awards were either extensions of current agreements, or for deals that will not begin until 2018 at the earliest. In other words, there won't be any financial benefit to those contracts for some time to come, and for the most part, they aren't putting idle vessels back to work.

Add it all up, and the offshore drilling industry is still in for a tough year, and before things get better, the global fleet will need to get smaller.

So before you buy, be sure you're prepared to ride out more volatile days and months for your investments ahead, and with the knowledge that conditions still could get worse before they get better, with minimal new work for idle vessels expected to come up for bidding for the rest of the year.

Jason Hall owns shares of Atwood Oceanics, Diamond Offshore Drilling, Ensco, Noble, and Transocean. The Motley Fool owns shares of and recommends Atwood Oceanics. The Motley Fool has a disclosure policy.

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These 5 Offshore Drilling Stocks Sank 11% or More Last Month: Here's Why (and What You Should Do) - Motley Fool

So, as Maryland makes a play for the offshore wind crown, Virginia thanks to dirty Dominion Global Warming Starts Here! Power does essentially nothing to take advantage of this massive potential. How massive? Check out this fact sheet from Oceana, which finds:

Virginias coastline would modestly allow for the development of 16 gigawatts of offshore wind power in economically recoverable areas. This offshore wind power could generate at least 83 percent of Virginias current electricity generation.

Unfortunately, Dominion Power is doing essentially nothing to develop this potential. See this recent article, for instance, which notes that [t]he relatively shallow waters off the Virginia coast offer some of the best wind power sites in the country, and thatBureau of Ocean Energy Management (BOEM) auction in 2013 for nearly 113,000 acres off the Virginia coast for wind energy projects alone is expected to generate enough electricity to power 700,000 homes. But again, Dominion Power which won the lease is proposing, over the next decade, to develop less than one percent of whats possible on that swath of ocean.

Needless to say, that is completely unacceptable, and our top elected officials and candidates for those jobs need to call out Dominion Power for its deplorable behavior. Refusing any contributions from this rogue, climate-killing, corrupt company would be a good start.

By the way, in addition to losing out to Maryland on the race for the U.S. offshore wind crown, Virginia is also losing out in terms of jobs. As former Virginia Sierra Club head Glen Besa puts it below, Because of Tom Farrell, Bob Blue and #DomVAPower, Virginia is losing thousands of clean energy jobs. And for what? So Dominion can keep throwing billions at more fossil fuel boondoggles like its idiotic, close-to-zero-jobs-created, soon-to-be-stranded assets, proposed fracked gas pipelines? Why do we allow Dominion Power to get away with this crap? Anyone?

P.S. Also according to Glen Besa, aclimate shareholder resolution(which stated thatDominion does not have a GHG reduction goal, and does not provide information on its long-term strategy or plan to decarbonize in ways that are consistent with the Paris Climate Agreement and that, As investors, we are concerned thatDominion is not properly accounting for the risk of its current high investment in carbon-intensive generation) received 48% of the vote very close to a majority atDominions annual shareholder meetings this week in Richmond. In other words, the writing is on the wall for Dominion Power; they either change willingly or they will be forced by their shareholders, the citizens of Virginia, etc. to change.

Read the original:

Home Dominion Power Maryland Races for Offshore Wind Crown; Thanks to Dirty Dominion Power, Virginia... - Blue Virginia (press release) (blog)

In a letter sent to Department of the Interior Secretary Ryan Zinke Thursday, Rep. Alan Lowenthal (D-47), along with more than 100 members of Congress, urged the secretary to keep the Pacific and Atlantic oceans off limits to new offshore drilling operations.

The letter comes as a response to President Donald Trumps April 28 executive order which directs the secretary to review the United States offshore drilling and oil leases, in an effort to create an America-first offshore drilling strategy.

The executive order on offshore drilling basically said: drill baby drill, and while youre at it, make the drilling less safe. Lowenthal, whose district includes Long Beach, said in a statement. However, we have over a hundred members of Congress, from both parties and from across the country, saying that is not the direction we want to go. It is crucial to make an early and strong statement that President Trump and Secretary Zinke should keep the Atlantic and Pacific coasts protected, not go backwards.

Trumps order instructs the secretary to potentially restart the oil and gas lease sale process, which was previously halted until 2022 by former President Obama under the direction of the 1953 Outer Continental Shelf Lands Act.

In the letter, Lowenthal and his colleagues note that fishing and tourism are a $63 billion industry supporting 1.3 million jobs on the east coast and a $26 billion industry supporting 536,000 jobs on the west coast. These industries would be directly threatened by any offshore drilling accidents, the letter argues, citing the 1969 Santa Barbara oil blowout which killed thousands of birds and marine mammals and left much of the Southern California coastline blackened from oil.

We do not believe that new oil and gas exploration or production activity in the Atlantic and Pacific Outer Continental Shelf is compatible with the sustainable coastal economies on which so many of our constituents and communities depend, the letter reads.

However, Trumps executive order argues that drilling off the U.S. coast will reduce reliance on foreign energy and strengthen national security.

Lowenthals letter is a bipartisan effort led by Representatives Niki Tsongas (D-MA), Don Beyer (D-VA), Anthony Brown (D-MD), Frank LoBiondo (R-NJ), Dave Reichert (R-WA) and Mark Sanford (R-SC). Other notable signatories include Representative John Lewis (D-GA), Joseph Kennedy III (D-MA), Maxine Waters (D-43) and Doris Matsui (D-6).

Lowenthal is also part of the House Committee on Natural Resources, which oversees legislation related to fisheries and wildlife, as well as the subcommittees on Coast Guard and Maritime Transportation, Energy and Mineral Resources and Water Resources and Environment, among others.

Here is the original post:

Letter to Department of the Interior Shows Bipartisan Congressional Support Against Offshore Drilling - Long Beach Post