Sunday, May 15, 2011

Think We'll Be Drilling for More Oil Any Time Soon?

President Obama, until recently, maintained that oil companies have plenty of capacity onshore and offshore. So there's no need to sell new leases while a bunch of current leases aren't producing anything.

Then he read the polls and figured it was time to fool your local newspapers again:
Amid growing public unhappiness over gas prices, President Barack Obama is directing his administration to ramp up U.S. oil production by extending existing leases in the Gulf of Mexico and off Alaska’s coast and holding more frequent lease sales in a federal petroleum reserve in Alaska....
Answering the call of Republicans and Democrats from Gulf Coast states, Obama said in his weekly radio and Internet address that he would extend all Gulf leases that were affected by a temporary moratorium on drilling imposed after last year’s BP oil spill. That would give companies additional time to begin drilling.
The administration had been granting extensions case by case, but senior administration officials said the Interior Department would institute a blanket one-year extension.
New safety requirements put in place since the BP spill also have delayed drilling in Alaska, so Obama said he would extend lease terms there for a year as well. An oil lease typically runs 10 years.
Lease sales in the western and central Gulf of Mexico that were postponed last year will be held by the middle of next year, the same time period required by the House. A sale off the Virginia coast still would not happen until 2017 at the earliest. But Obama said he would speed up environmental reviews so that seismic studies to determine how much oil and gas lies off the Atlantic Coast can begin.
To further expedite drilling off the Alaskan coast, where such plans by Shell Oil Co. have been delayed by an air pollution permit, Obama said he would create an interagency task force to coordinate the necessary approvals. He also will hold annual lease sales in the vast National Petroleum Reserve on Alaska’s North Slope...
Woo-hoo! Drill, baby, drill!

Um, not so fast.

Just because the government permits you to look for oil on land you've leased doesn't mean you can just stick a derrick in the ground at any random point and start sucking up millions of barrels of light sweet crude. Oil isn't spread equally beneath the ground, or somehow pre-deposited to the plots the government decides to lease to the oil companies. Before an oil company can drill, it must conduct seismic and geological tests to find the oil. This requires time and money - lots of money.

Let's just say the tests of a field show there's oil that can be economically recovered. That means the lease owner can get to work and start drilling, right?


A lot of those supposedly "idle" leases spend years waiting on environmental and other permitting reviews or lawsuits. The industry pays the government for leases that may or may not be valuable at auction, and it then pays royalties on any oil that is eventually produced.

Have a look at the story I linked to at the top of this page. There's all kinds of stuff in there about selling leases to the oil companies. But there's not one single word about speeding up the permitting process.

In any case, why should President Obama be upset that those stupid old oil companies aren't drilling on land they've leased? Seems to me that someone as green as he claims to be would just love to lease land out in the knowledge that the renters aren't going to destroy the earth by digging holes in it. Isn't that every landlord's dream—to have a tenant who pays rent and never moves in?

Now, this past week, the (Republican-controlled) House of Representatives voted to speed up the permitting process. If you still think the Obama administration wants to drill for more oil, click here to see what it thinks of speeding up the permitting process. Then tell me you really believe the (Democrat-controlled) Senate will pass that permitting bill.

You are not going to see any new drilling any time soon.

No comments:

Post a Comment