Offshore Drilling: Fact Vs. Fiction

[Gomer]

A recently released Congressional report produced by the House's Natural Resources Committee, found the following:

• Between 1999 and 2007, the number of drilling permits issued for development of public lands increased by more than 361 percent.

In other words, more drilling does not mean lower gas prices. But if you still believe – as the President apparently does – that high gas prices are a simple matter of supply and demand (and not the result of oil company greed or price manipulation from speculators), then there are already vast tracts of land, leased and ready for drilling, that the oil companies are just sitting on.

According to the Congressional report:

• Onshore, there are 47.5 million acres of federal land leased by oil and gas companies, and yet those companies are only drilling on 13 million acres (34.5 million acres unused)
• Offshore, there are 44 million acres of land leased by oil and gas companies, but they are only drilling on 10.5 million acres (33.5 million acres unused)
• Which means, right now, without having to drill in the Arctic National Wildlife Refuge or off the coast of Florida, there are 68 million acres of federal land – both on and off shore – that are ready for drilling but are sitting idle.
• According to the Bureau of Land Management, since 2004, oil and gas companies have received 28,776 permits to drill on public land, but only 18,954 have actually been used. Which means the oil and gas companies have stockpiled nearly 10,000 permits.

If the oil companies actually went ahead and drilled on all of the land currently available to them, it would generate an additional 4.8 million barrels of oil a day, which would nearly double the amount of oil produced within the United States.

"As for offshore drilling, it's safe enough these days that not even Hurricanes Katrina and Rita could cause significant spillage from the battered rigs off the coasts of New Orleans and Houston,"

Here again are the facts:

• According to the federal agency that regulates offshore drilling, the Minerals Management Service (MMS), hurricanes Rita and Katrina destroyed 113 oil platforms and damaged 457 pipelines.
• The MMS reported that the 2005 hurricanes caused 124 spills resulting in 741,000 gallons of petroleum from offshore rigs, platforms, and pipelines being dumped into the Gulf of Mexico.
• Last year, 3 million gallons of fuel oil were spilled into the Gulf after a double-hulled tanker hit a submerged oil platform that collapsed during Hurricane Rita.

Also, the rigs themselves are an environmental hazard. The Sierra Club,
compiling information from various federal agencies, notes that:

• Routine offshore drilling operations dump thousands of pounds of "drilling muds" (containing heavy metals like cadmium, chromium, arsenic, and lead) into the Gulf of Mexico. The routine pollution can cause severe disruption to marine environments and health and reproductive problems for marine mammals and fish species.
• A single exploratory well dumps approximately 25,000 tons of toxic metals into the ocean.
• A single production platform can have between 50-100 wells and can discharge 90,000 metric tons of drilling fluids, wastes, and metal cuttings into the ocean.
• Offshore drilling releases "toxic brines" that are pockets of water that are trapped in the geologic pockets where gas and oil occur. This toxic brine contains NORMS (naturally occurring radioactive materials), cadmium, lead, and benzene. The petroleum industry admits that up to 1.5 million barrels of toxic brine are discharged into the Gulf every day.

http://cbs4.com/defedecolumn/offshore.drilling.fact.2.752174.html

[RADAR1797]

Link

The Truth About Leasing on the Outer Continental Shelf
Capitol Hill’s opponents of domestic energy production took to the stage yesterday to decry “Big Oil” again, not for its profits, but for “stockpiling” energy leases instead of producing them. In reality, it’s the government that is stockpiling leases.

This group of politicians stated that oil companies hold the rights to millions of acres of federal leases that are not currently producing energy. This is certainly true, but not because of the sinister reasons they would have you believe. The following may help provide the insights these Members of Congress neglect to provide.

The Claim: “Increased domestic drilling activity has not led to lower gasoline costs”

This may sound compelling at first, but “drilling activity” has nothing to do with the price at the pump. Supply - or actual energy production - is what influences the price at the pump. While it’s true that exploratory and development drilling has increased across the board since 2000, the important fact is that actual domestic energy production has fallen to levels not seen since 1947 during the same period.

The Claim: “Energy companies are not using federal lands already open to energy development”

Some lawmakers state that oil companies currently hold millions of acres of leases that are not producing. This is true, but not for the reasons politicians would have you believe. It seems the lawmakers would have us believe that oil and gas exist beneath every acre of every lease the government issues; that obtaining a lease was a virtual guarantee that the lease holder would strike oil and gas, or both. Obviously, that’s false. If it were true, who wouldn’t be on line at the Department of Interior trying to buy an acre or two for themselves?

Unfortunately, there are no guarantees. Oil and gas might be found during the exploration phase of the lease, or it might not. This process, and those that involve satisfying all of the government requirements, defending against frivolous environmental lawsuits, and preparing to drill if energy is found can take a long as a decade.

The Truth & The Laws

Energy companies cannot “stockpile” leases (even the ones that are found to contain no oil or gas) in order to drive up prices:

The Mineral Leasing Act (for onshore production): Section 17(e) stipulates that an oil company must have a producing well within 10 years or surrender the leases. Source: 30 U.S.C. 226(e)
The Outer Continental Shelf Lands Act: (for offshore production): Stipulates that an oil company must produce energy between 5 to 10 years (in the government’s discretion) or surrender the lease. Source: 43 U.S.C. 1337(b)
The Hard Facts:

97 percent of Federal offshore areas are not leased.
94 percent of Federal onshore areas are not leased.
Getting Blood From a Turnip

After the offshore drilling moratorium was implemented in 1982 the Department of Interior could only issue leases for areas that had already been offered/leased before, or those areas with little or no economic energy potential. The exception was when Congress provided incentives to invest in Ultra Deep Waters in 1995 to stimulate production in areas that were previously too deep for our technology to reach.

As the charts to the right illustrate, interest in American energy leasing declined after the moratorium. It remains low for the same reasons. If Congress were to open new areas to production, leasing would increase and so would domestic supplies of energy. Until then, the U.S. will simply be continuing its attempt to squeeze blood from a turnip.

[tjmdotloco]

This is actually from the mms site. maybe one person will go straight to the horse's mouth and verify this article which is apparantly straight from the horses ass.

Estimated Oil Spills As a Result of Hurricanes Katrina and Rita ~ Setting the Record Straight.

notice it says 20 spills. all very minor and less than natural seepage. not my opinion that is in the article. please read the article and not this sites or my opinion.

[MTAtech]

I think the general premise is that prices are rising because of supply shortages and therefore we must drill at a greater rate. If that were true, there would be gas stations running out of gasoline and cars would be forming lines around those stations that had gas. I don't see that happening. The data suggests that oil coming out of the ground is matching demand for oil products.

Sure, if oil companies drilled more than could be fed to the market, prices would fall but why would oil producers oversupply? It's in the producer's interest to match demand and no more. Thus, the reason producers aren't drilling in all these other places is that they don't have to.

[Chuckiechan]

If that were true, there would be gas stations running out of gasoline and cars would be forming lines around those stations that had gas. I don't see that happening.

It's being rationed by price.

BTW, some of the gas stations near me are running out once in awhile. Not all the time, just every now and then.

[MTAtech]

It's being rationed by price.

Demand is only down 5%. Are you suggesting that 5% causes a 2.5 times increase in price?

[The Real Bingo]

Are you suggesting that 5% causes a 2.5 times increase in price?

Other way around. As you probably know, gas is a pretty inelastic commodity, so demand won't decrease at the same rate price increases.

[pickel]

Demand is only down 5%. Are you suggesting that 5% causes a 2.5 times increase in price?

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Warming Jelly Personal Lubricant | K-Y | Walgreens For those in cooler climates

These products will HELP ease the Pain at the Pump.

We're at their mercy. Might as well have some sort of sense of humor. Laughing is GOOD for the soul

[Toadman]

There's rumblings of an announcement from Iraq next week. We'll see:

"Several major oil companies are expected to announce next week contracts to start servicing the Iraqi oil infrastructure."

[MTAtech]

There's rumblings of an announcement from Iraq next week. We'll see:

"Several major oil companies are expected to announce next week contracts to start servicing the Iraqi oil infrastructure."

Isn't 'servicing' another word for screwing? They've been doing the latter since the invasion.

[Toadman]

Big Oil companies built and serviced the infrastructure of Saudi oilfields and they're pretty screwed, arent they?

[Chuckiechan]

Demand is only down 5%. Are you suggesting that 5% causes a 2.5 times increase in price?

Yes.

It's like bidding for the last life jacket...

It interesting to see the "new Democrats" and the "old Democrats". The old Democrats would be crying about the financial burden on the poor.The new Democrats don't care.

They are above the fray... sipping latte's, reading newspapers telling them how "special" they are.

Please, hold your course. Don't change your rhetoric. The middle class understands they get to be a who new class of "victim"...! Hooray! I'll bet they can hardly wait.

[MTAtech]

Big Oil companies built and serviced the infrastructure of Saudi oilfields and they're pretty screwed, arent they?

In Iraq, the big oil cos got no-bid contracts. They're the screwers not the screwees.

Chuck, let go of the new Democrats don't care about the poor nonsense. The Republicans have for decades resisted every effort that would have reduced oil consumption. In my book they have no right to act as if they are the enlightened ones.

Anyone with a brain can see that we have to address long-term energy because long-term problems end up being today's problems.

[Chuckiechan]

Chuck, let go of the new Democrats don't care about the poor nonsense. The Republicans have for decades resisted every effort that would have reduced oil consumption. In my book they have no right to act as if they are the enlightened ones.

So they have been abandoned by both parties? Not quite. At least the Republicans will offer jobs rather than welfare and hand outs.

Obama and his crew are turning a deaf ear to solutions for lowering gas prices. "It's a phony choice", "It hurts polar bears", "More oil doesn't lead to lower prices", "less oil means lower prices"...

You guys are terrible.

But please hold your course, some times America is slow to wake up to a good old fashioned Democrat screwing!

The most economically sour times in my life were Lyndon Johnson's tax increase leading into recession, Nixon's attempt to right the economy with price controls, Carter's hyper inflation and recession. Clinton did ok, only because of all of the dot.com activity going on bringing in revenue to the Treasury. Anyone can shine in good economic times. Bad times separate the true leaders from the simply lucky.

You don't know how good you have it!

[Pexster]

Chuck, you are a master of talking out of both sides of your various orifices. Are you for free markets or not? Do you think it is the federal government's job to lower gasoline prices? For the life of me, I can't find any consistency to your logic; except maybe the lack thereof.

[MTAtech]

The worst economic times I remember were during the stagflation era of Ford, when there was a recession but prices rose anyway. The same thing occurred during the last year of Carter and the first two years of Reagan. Both were caused by sharp increases in the price of oil.

Nixon's price controls were a failure. Holding the price of a good below its market price just leads to shortages and black-markets. Nobody is going to sell you something for less than it's worth.

Johnson had to raise taxes because he didn't want a one billion dollar deficit. Of course, the Vietnam War was the major reason for the need for a tax increase. At least Johnson had the courage to pay for the war upfront, instead of passing its cost along to future generations, like the Bushies are doing with the Iraq War.

Pexster has a good point. Is it the government's job to effect commodity prices?

[Epidemic]

Chuck, you are a master of talking out of both sides of your various orifices. Are you for free markets or not? Do you think it is the federal government's job to lower gasoline prices? For the life of me, I can't find any consistency to your logic; except maybe the lack thereof.

Oil runs the economy, hell it makes money available to pay for welfare and green house gas studies.

Free market might on occasion need a kick in the ass.

We just disagree with your method of complete government direction and ownership.

[The Real Bingo]

The only thing that needs to be done to bring oil prices down is to strengthen the dollar. You're all running around like chickens with your heads cut off trying to find the magic solution: well there it is. It solves more than just oil prices. It makes your food - which is kind of important - cheaper, too.

The Fed doesn't know what the hell to do. They lower rates, and the financial and housing sector still suffers. It just "cushions" the blow - i.e. it prolongs it. No one is happy when their dollar is worth less than shit, and that's why I don't understand the incessant rate cutting. Maybe the economy doesn't grow as fast with a 7.5% rate...but it's not growing worth a damn now...and maybe with higher rates, you can at least take your dollar for a better ride.

[MTAtech]

TRB, aren't oil prices rising world-wide, even in Europe where they use the Euro?

[Epidemic]

TRB, aren't oil prices rising world-wide, even in Europe where they use the Euro?

TRB I second that.

I also add to that one more question, how does one raise the value of the dollar?

domestic oil production I think might be a start.