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Politics : Politics of Energy -- Ignore unavailable to you. Want to Upgrade?

To: Road Walker who wrote (323)	6/15/2008 10:10:20 AM
From: Brumar89	Read Replies (1) \| Respond to of 86355

I see that someone on the green side is using 2006 leases that haven't been drilled by June 2008 as a talking point that we shouldn't be leasing offshore acreage anyway as the oil companies don't really want it, they're just pretending to. This is so mindlessly stupid, I don't know where to begin. Its as if people think oil companies have fleets of drilling rigs sitting idle waiting on a lease to be granted and then they immediately float it out there and begin drilling blindly at some randomly chosen spot. Thats not how exploration is done ... not for many many decades anyway. First off, if oil companies were really disinterested in drilling their leases as the bogus talking point tries to show, they wouldn't be spending billions to lease the acreage to begin with: With oil prices staying above $100 a barrel, energy companies on Wednesday put down a record $3.67 billion in winning bids for the right to drill on federal leases off the coasts of Louisiana, Mississippi and Alabama. houmatoday.com interior.gov Now if they don't intend to use these leases, why are they slapping down billions in cash money to acquire them? Second, exploratory drilling doesn't consist of floating a rig out and blindly drilling in hopes of finding something somewhere down there. Drilling is expensive. So first, the geologists will acquire all the seismic info they can and study it and determine where the best prospects are. Before drilling begins they'll have a target they are aiming for - something about the size of your office thousands of feet underground. It takes time to do all the above. Then you can go lease a rig and start drilling. There is just no way an offshore lease issued in 2006 could have an exploratory rig working in June 2008. --------------------------------------------------- '90%' of the solution is oil efficiency. And that's achievable in the near term (~10 years with progress every year). The crisis is now, the solution has to start now. Harping about ANWR is just political posturing. I think imagining we can forego production of oil and simply rely on conservation is political posturing. People who believe this way should sell their cars and rely on bikes if they mean it.

To: Road Walker who wrote (323)	6/23/2008 7:45:14 PM
From: TimF	Read Replies (4) \| Respond to of 86355

Anyone with even the most basic understanding of how oil and natural gas are produced – and this should include many members of Congress – knows that claims of "idle" leases are a diversionary feint. A company bids for and buys a lease because it believes there is a possibility that it may yield enough oil or natural gas to make the cost of the lease, and the costs of exploration and production, commercially viable. The U.S. government received $3.7 billion from company bids in a single lease sale in March 2008. However, until the actual exploration is complete, a company does not know whether the lease will be productive. If, through exploration, it finds there is no oil or natural gas underneath a lease – or that there is not enough to justify the tremendous investment required to bring it to the surface – the company cuts its losses by moving on to more promising leases. Yet it continues to pay rent on the lease, atop a leasing bonus fee. In addition, if the company does not develop the lease within a certain period of time, it must return it to the federal government, forfeiting all its costs. All during this active exploration and evaluation phase, however, the lease is listed as "nonproducing." Obviously, companies want to start producing from active fields as soon as possible. However, there are a number of time-consuming steps to be taken before they can do so: Delineation wells must be drilled to size the field, government permits must be obtained, and complex production facilities must be engineered and installed. All this takes considerable time, and during that time, the lease is also listed as "nonproducing." Because a lease is not producing, critics tag it as "idle" when, in reality, it is typically being actively explored and developed. Multiply these real-world circumstances by hundreds or thousands of leases, and you end up with the seemingly damning but inaccurate figures our critics cite. Our companies have made tremendous strides in developing cutting-edge exploration technology. But they are not magicians. They cannot produce oil or natural gas where it does not exist. A significant percentage of federal leases simply may not contain oil and natural gas, especially in commercial quantities. As I've often said, the first step in our business is called "exploration" for a reason. Exploration is time consuming, very costly and involves a great deal of risk. Importantly, you see neither a drop of usable oil nor a cubic foot of natural gas while it is going on. But it is absolutely essential, and there is nothing "idle" about it. Without the exploration that took place years ago, less domestic oil and natural gas would be available today to meet consumer demand. In reality, a lease is simply a block on a map, with no guarantee that it contains any resources. If all of them did, one could simply pay for the lease, haul in equipment and start pumping oil. But that only happens in fiction. And it happens in the minds of those who use the undeveloped-lease argument as a smokescreen to mask their intent to keep America's vast energy resources locked up underground, despite increasingly strong consumer demand for oil and natural gas. For exploration to take place, our companies need access to the areas – offshore and onshore – that we know have the potential to produce the oil and natural gas consumers will need, if ours is to remain a viable economy in an increasingly competitive global marketplace. online.wsj.com tigerhawk.blogspot.com