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Archive for August, 2008


We have heard so much misinformation about oil, drilling, and renewable energy, all designed to mislead and confuse the American people. Sadly this misinformation and disinformation is coming from our elected leaders and the news media, to serve their political and ideological agendas. What is best for the nation seems to have fallen out of the equation.

To help sift through disinformation, I have put together a primer on the oil / renewable energy debate. I hope it helps clear things up.

What is the Strategic Petroleum Reserve?

“The U.S. Strategic Petroleum Reserve is the largest stockpile of government-owned emergency crude oil in the world. Established in the aftermath of the 1973-74 oil embargo, the SPR provides the President with a powerful response option should a disruption in commercial oil supplies threaten the U.S. economy. It also allows the United States to meet part of its International Energy Agency obligation to maintain emergency oil stocks, and it provides a national defense fuel reserve.” Source: U.S. Department of Energy website

How Much is in it?**

706,400,000 barrels

How much oil does the U.S. consume in a day?**

20,000,000 barrels

How much oil does the world consume in a day?**

79,000,000 barrels

How many days supply does our reserve mean to us?**

35 days, U.S. consumption – 9 days, world consumption

Have we stopped filling the SPR?**

Yes, for now

** Statistics and answers either taken from or derived from the information at the Energy Information Administration.

Do those politicians who point to releasing the SPR as a means of lowering gas prices know anything?

Yes and no. Releasing a 9 day supply of crude into the world oil supply will lower prices for one to two weeks and then the SPR would be gone.

Just how much oil is in that 68 million acres of leased land for exploration?

No one really knows, however the land is leased for a ten year period. The lease holders do geological surveys and sink test wells. If oil is not found in commercially large enough quantities, the oil drilling exploration companies look elsewhere – no sense in drilling.

Who is Big Oil?

Generally “Big Oil” is considered to be Exxon, Shell, BP, Chevron, Conoco Phillips, and Total S.A. Only Exxon, Chevron, and Conoco Phillips are headquartered in the USA and are considered to be American Oil Companies. Shell is actually Royal Dutch Shell of the Netherlands with offices in London, and BP is British Petroleum. Total S.A. is a French company, headquartered in Paris. All are heavily multi-national.

Does Big Oil own the leases for the 68 Million Acres of Government land?

Some but not all. The “don’t drill lobby” and the “don’t drill politicians” keep referring to 68 million acres that “Big Oil” will not drill on – that they should drill there first. It is often said by these folks, that “Big Oil” is hoarding the land waiting for oil to go up further in price. “Big Oil” does not own the bulk of the leases.

Who holds the leases on that 68 million acres?

According to the American Petroleum Institute, it is estimated that 300-400 entities hold leases in the Rocky Mountain states. These entities include large and small companies, investment groups, etc. Each entity is bound by the same “use it or lose it” provision that exists in current law.

There are 121 lease holders in US offshore areas. They consist of large and small companies, partnerships, consortia, etc. which purchased leases and are bound by the same leasing law as mentioned above.

Just how much oil is there for us to tap, if we were to drill everywhere?

A Bureau of Land Management study, incorporating data from the, the Energy Information Administration (EIA), the U.S. Geological Survey (USGS) and the Minerals Management Service (MMS), The Study , indicates that this country has undiscovered oil resources of 139 billion barrels of which 86 billion barrels are offshore under the outer continental shelf.

Where does natural gas come from?

We have to drill for that too. Often it is found in the same fields as crude oil.

How much natural gas are we sitting on, if we drill?

A Bureau of Land Management study in cooperation with the U.S. Geological survey, and the Energy Information Administration, indicates that we are sitting on a 49 year supply of this clean energy.

How is electricity produced and what fuel is used? – How much electricity comes from renewable energy?

This country’s electricity generating capacity is different in the winter and the summer, due to weather related needs for certain generation fuels to heat homes, etc. The most current information from the EIA is 2006 data, with the next report on 2007 due in October 2008.

This report reveals that the source of energy for the maximum capacity period, the winter, is broken down as follows:

Energy Source

by Fuel

Net Winter

Megawatt

Capacity

Percent

of Mix

Planned Mix

Through 2011

Coal 315,163 30.8% 31.2%
Petroleum 62,565 6.1% 6.0%
Natural Gas 416,745 40.8% 40.7%
Other Gases 2,197 0.2% 0.7%
Nuclear 101,718 9.9% 9.8%
Hydroelectric Conventional 77,393 7.6% 7.5%
Other Renewables* 24,285 2.4% 2.3%
Pumped Storage 21,374 2.1% 3.0%
Other 908 0.1% 0.1%
Total 1,022,347 Rounding–1.3%

*Other Renewables = wood, black liquor, wood waste, solid waste, landfill gas, sludge waste, agriculture byproducts, biomass, geothermal, solar thermal, solar photovoltaic, wind.

Source: Energy Information Administration / Electric Power Annual 2006

Note that while the report only goes out five years to 2011 much has happened to the energy debate in 2008, yet the new realities may not be reflected until the report of 2008, produced in October 2009. However, we can derive from this report that we are not ready to drive this nation’s power needs with renewable energy, and will not be ready for many years to come. This source of energy will have to move from 2.3% of our electricity capacity to 39% to replace the 37% of our energy capacity from coal and petroleum, in order to be the dominant provider of energy for electricity generation.

What about ANWR?

Check out this blog with a fine analysis of drilling in ANWR.

What does this all mean?

  • It means that we have politicians blowing smoke up our collective butts for the sake of their own agendas.
  • It means that the nation is playing second fiddle to special interests.
  • It means that we need to drill now and everywhere to maximize our energy capability in the world.
  • It means that we need to plow the royalties from drilling into a fast tracked renewable energy program along with growth of nuclear, natural gas, and especially clean coal.
  • It means that if we are to regain our status as the stand alone most powerful nation in the world, economically, militarily, and politically, then we had better maximize every bit of energy available to us.

Energy drives economies and the world political order. The nation that has plentiful and low priced energy will lead the world for the 21st century in standard of living, trade, and security. We need to be that nation.

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