#1 While Effectively Preventing Us From Ever Drilling a Single New Well.
08-13-2008, 07:58 PM
- Join Date
- Aug 2005
Idle Leases - Or Addled Minds?
Senator Jeff Bingaman, Congressman Nick Rahall, House Speaker Nancy Pelosi and other members of Congress who oppose producing more American oil are in a bind.
They know voters are hurting from high gas prices and overwhelmingly want the government to allow more American oil production.
But they can’t side with the American people and risk upsetting their left-wing base.
So they needed a way to make us think they support more drilling –
while effectively preventing us from ever drilling a single new well.
They think they’ve found a solution: a proposed “use it or lose it” law on federal leases for energy exploration. Bingaman, Rahall and fellow drilling opponents accuse the oil industry of “sitting on” 68 million acres of “non-producing” leased land. They want to force energy companies to “use” this leased land within ten years – or lose all exploration and drilling rights.
America can only hope the proposed law is Bingaman and Rahall’s clumsy attempt at political jujitsu. The alternative is that the politicians in charge of committees that determine US energy policy are confused and ludicrously disconnected from reality.
First, lease agreements already require that leased land be used in a timely manner. The 1992 Comprehensive Energy Policy Act requires energy companies to comply with lease provisions, and explore expeditiously, or risk forfeiture of the lease. So the Bingaman-Rahall “solution” effectively duplicates current law.
Second, and more disturbingly, Bingaman and Rahall’s groundless accusation and proposed legislation rely on the absurd assumption that every acre of land leased by the government contains oil. Obviously, that’s not the case.
The truth is, finding oil is a long, complex, cumbersome, expensive process. It starts with an idea – about what kinds of geologic structures are likely to hold this vital resource. Based on that idea, companies purchase leases: agreements that allow them to test their ideas, and hopefully find and produce oil and gas from leased properties.
Then geologists look at existing data and conduct seismic, magnetic and geophysical tests of the leased areas. They create detailed 3-D computer models of what subsurface rock formations look like, and whether there might be any “traps” that could hold petroleum.
Most of the time, all this painstaking, expensive initial analysis concludes that the likelihood is too small to justify drilling an exploratory well, since the cost of a single well can run $1-5 million onshore, and $25-100 million in deep offshore waters.
Only one of three onshore wells finds oil or gas in sufficient quantities to produce it profitably; in deep water, only one in five wells is commercial. Thus, only a small percentage of the leased acres end up producing oil.
This is important because it means most of those 68 million acres Bingaman and Rahall want to force oil companies to drill actually don’t have enough oil to make it worth drilling. Either they know that, and are trying to deceive us; or they don’t know it, because they haven’t done their homework.
Third, if a commercial discovery is made, more wells must be drilled, to delineate the shape and extent of the deposit. Production facilities and pipelines must be designed, built, brought to the site and installed. Only after oil or gas is actually flowing does the lease become “producing.”
In one example, Shell Oil and its partners leased an area in 7800 feet of water 200 miles off the Texas coast. They spent five years exploring and evaluating the area, punched several “dry holes,” and finally drilled a discovery well in 2002. Three appraisal wells (at $100 million apiece) confirmed a major field, and in 2006 the company ordered a huge floating platform and pipeline system that will initiate production in 2010. Total investment: $3+ billion.
That’s hardly “sitting on their leases.” But those leases will be “non-producing” until 2010. Clearly, a “use it or lose it” law will do nothing to change these hard realities.
Further complications often stymie energy companies from obtaining and using leased land.
Every step in the process must be preceded by environmental studies, oil spill response plans, onsite inspections, and permits.
The process takes years, and every step is subject to delays, challenges – and litigation.
08-15-2008, 07:28 AM
It is far worse that this, Moo.
In the vast majority of the areas that Pelosi et al are talking about, the oil companies have ALREADY determined there is not enough oil to go after.
They have already done their geological surveys.
The idiots on the left say drill it or lose it and are "FIGHTING" to make sure the companies drill in these areas or forfeit the right to drill. THIS IS ALREADY the law. It is in the oil companies interest to rush these into production IF there is oil there. Once the lease expires - they LOSE all of the money they gave the govt. Yet the idiots - the mindless morons eat this crap up and spew it out as if it were sent from on high.
Meanwhile the traitors on the left REFUSE to let us drill where the oil actually is.
In the Green River formation ALONE there is enough oil to meet the ENTIRE demand of the United States for over 100 YEARS.
08-16-2008, 03:23 PM
- Join Date
- May 2008
Exxon has already cut back 30% on their proposed exploration budget for 2009 in the US because of the crazies in the Democ. Congress and the Env. The hatred of these Democrats is unbelievable. The oil industry provides more tax dollars into the treasury than any other industry and these fools want to destroy it by taxing it to death. The evil American oil companies are making big profits. I guess these loons would rather hand these profits over to the camel jockey's.
It is my understanding that the lease payments to the Feds are due each and every year; at least that was the way it was done many years ago when my Uncle was involved in oil leases in AK. If that is the case, why would the Congress want to cut off a revenue source? Morons.
Last edited by lacarnut; 08-16-2008 at 03:28 PM.
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