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Posts Tagged ‘68 million acres’


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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Added 8/3/08

– also read The Truth About The Oil Debate

– a primer on Oil and Renewable Energy

68 Million Acres and Oil Companies Do Not Drill

If you listen to Harry Reed, Nancy Pelosi, Barack Obama, Democratic strategists on talk shows, or read opinion pieces written in the far left newspapers, like the New York Times, you have heard/read that we do not need to open up new areas for drilling, because the oil companies are sitting on 68 million acres and they have not bothered to drill on those acres.

This is propaganda against drilling. This is a bogus argument based on talking points by the far left to prevent drilling. These people want to eliminate fossil fuels from our energy diet at all cost and they will do this without regard to who is hurt and what it does to our national security and our economy. Renewable energy is simply not ready to fully power this nation, and it will not be ready for 15 years or more. That is why Barack Obama wants to invest $150 Billion in renewable research over the next ten years.

The following is information from the American Petroleum Institute that refutes the Democratic talking points that the oil companies have 68 million leased acres to drill on and that they should drill on these leases first. Update July 31, 2008: 400 companies and not only big oil hold and pay for these leases on shore and 121 companies hold and pay for the leases off shore and again it is not only big oil. Most of these companies are only in the business of exploration, discovery, drilling, and pumping. Their only business is to drill, thus to be accused of intentionally NOT drilling is ludicrous.

Here are questions and answers to why drilling takes place or not on the 68 million acres. The API makes a lot more sense then these reckless individuals who will spout just about anything to prevent drilling.

The facts about non-producing federal leases:

CLAIM: Oil and natural gas companies are given leases by the government and purposely don’t produce from them to increase prices.

FACT: Companies pay billions of dollars for the right to explore on federal lands. If the company does not produce within the lease term, it must give the lease back to the government, and the company does not recover the billions of dollars it may have invested.

CLAIM: Companies let many of their leases sit idle and don’t produce them

FACT: Companies actively develop their leases – but not every lease contains oil or natural gas in commercial quantities. In many cases, the so-called “idle leases” are not idle at all; they are under geologic evaluation or in development and could be an important source of domestic supply. However, this does not mean all leases have the potential to produce. Companies can evaluate leases for several years only to determine that they do not contain oil or natural gas in commercial quantities. The road to bring the oil and natural gas to market — obtaining the lease, evaluation, exploration and production — is a long and complicated one.

CLAIM: If the lease doesn’t contain oil or natural gas, then the company shouldn’t have bought it.

FACT: There are tremendous risks and challenges involved in finding and producing oil and natural gas. There is no guarantee that a lease will even contain hydrocarbons. It is not unusual for a company to spend in excess of $100 million only to drill a dry hole. A company usually has only has limited knowledge of resource potential when it buys a lease. Only after the lease is acquired, will the company be in the position to evaluate it, usually with a very costly seismic survey followed by an exploration well.

CLAIM: There’s absolutely no reason for a company not to produce if it finds oil or gas on the lease.

FACT: If the company finds resources in commercial quantities, it will produce the lease. But there can sometimes be delays – often as long as seven to 10 years – for environmental and engineering studies, to acquire permits, install production facilities (or platforms for offshore leases) and build the necessary infrastructure to bring the resources to market. Litigation, landowner disputes and regulatory hurdles can also delay the process.

CLAIM: The vast majority of federal and gas resources are already available for development.

FACT: In the Lower 48 states, about 85 percent of the Outer Continental Shelf and 67 percent of onshore federal lands are off-limits or facing significant restrictions to development. There is no way, at this stage, to determine exactly the extent of the resources off-limits because many of these areas have not been subject to inventory studies in decades.

CLAIM: Non-producing leases could provide a major source of new supplies.

FACT: Many of these leases will provide a major source of new domestic supply once they are developed. Companies are actively developing the leases, and in addition to paying for the lease, they must also pay rent to the government while they conduct development and exploration efforts. But this process takes time. Reducing the time companies have to develop a lease or increasing the costs imposed by government will not increase supply for American consumers. Nor will denying access to areas of oil and natural gas potential like the Atlantic and Pacific OCS.

CLAIM: Increased domestic drilling activity has not led to lower gasoline prices, and more leases and drilling won’t help either.

FACT: Our nation needs more supplies of all forms of energy, including domestic oil and natural gas, to meet its growing energy demand. Increased drilling has helped the United States offset the natural declines in domestic oil and natural gas production from older fields. Greater drilling activity tends to produce more supply. Fundamental economics suggest that additional supplies put downward pressure on prices.

CLAIM: Companies should be penalized for not producing from their leases.

FACT: Oil and gas companies take all the risk with federal leases. Not only do they pay billions to obtain leases, they pay to hold them while they are spending even more capital to determine if these leases contain resources. Penalties on leaseholders on top of those fees would only discourage U.S. exploration and production, at a time when the United States needs all the energy it can get.

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A commenter pointed out a relevant Business Week article, I suggest it for additional reading. Keep in mind that the article does not address the Return on Investment and the Profit Margins of the Exxon in any depth. Those commenting to that article add some important information. Business Week Article

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