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Posts Tagged ‘oil’


Well the title is misleading because we don’t have an official energy policy and have not had anything resembling an energy policy since World War II.  We do have a shadow energy policy that inhibits and/or blocks drilling for oil, drilling for natural gas, mining coal, and the building of nuclear power plants.

The green and environmental movements, now augmented with the global warming crowd, all essentially preach for us to switch to enormously expensive solar and wind.  Solar and wind have zero chance of fulfilling 100% of this nation’s energy needs.  We would be lucky to get 40% of our energy needs from wind and solar in ten years, even if we went all in tomorrow.  The wind and solar infrastructure would have to be incredibly massive covering a state or two for us to eventually reach 100% of our needs.  An additional downside is that we would have to use important farmland, now used for growing food, for this energy production.

World Oil reported in 2006 that the United States has over 1,124 Billion Barrels (1,124,000,000,000) of oil undeveloped and oil in place combined.  For those of you who like big numbers this is more than one trillion.  Currently we use 18,690,000 barrels per day.  This equates to a 165 year supply domestically, without importing one drop.  How about we begin drilling everywhere?

Natural gas is another issue.  In a 2007 report by the Colorado School of Mines this headline appeared
It further stated in the report that
 “When the PGC’s results are combined with the U.S. Department of Energy’s latest available determination of proved gas reserves, 238 Tcf as of year-end 2007, the United States has a total available future supplyof 2,074 Tcf, an increase of 542 Tcf over the previous evaluation.”

What does this mean?  This is just about a 111 year supply of natural gas without importing one cubic foot.

Let’s talk nuclear energy.  We need to talk softly because the naysayers will point to a five hundred year tsunami that severely damaged the external pumping infrastructure of four Japanese nuclear plants of a forty year old design.  They will fear monger about the risk of nuclear power generation – the cleanest form of energy production on the planet.

The Nuclear Regulatory Commission (NRC) simply does not approve totally new licenses and has approved a few for development on existing nuclear plant campuses.  Even when they approved them, the environmental movement uses every possible means to stall the building of a plant with EPA complaints and challenges in court.  You can inscribe the names of the nuclear plants completed and put on line in this country since Three Mile Island, which killed no one, on the head of a pin.  How about we begin drilling everywhere?

If we were smart we would have the NRC approve one state of the art design for an underground nuclear plant that would have to be placed far enough from the oceans and fault lines for safety and have Congress, by law, grant that design to be free from NRC review and authorize this design as an exception to all EPA and other environmental challenges.  This would fast track the building of the 200 new plants needed in this country.

This sounds like an energy policy to me. 

 
 

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Iran, Russia, and The Peoples Republic of China are fermenting unrest throughout the world.  In actuality, Iran is the point of this troubling spear and Russia and China are the enablers.  Both Russia and China have important trade arrangements with Iran.  Oil, again, is the root of the unresolved Iranian nuclear problem.  China obtains most of its oil from Iran and this oil is critically necessary to fuel China’s growing economy and military—China will protect this oil life line fiercely.  Russia has a lucrative trade export arrangement with Iran.  This trade includes conventional arms, among other manufactured goods, making Iran one of its key export partners.

Neither China nor Russia is interested in an embargo of Iran because they depend heavily on Iranian trade.  Thus Iran has been able to buy time and hold off the international community in its effort to develop a nuclear weapon.  Without the strongest support of China and Russia, the international community including the United States is neutralized.   Take note of today’s announcement at the international G20 meeting by the leaders of the U.S., the U.K., and France about sanctions, in that neither Russia nor China was present.

The Europeans are afraid of pushing Iran hard and are more interested in appeasement due to the Strait of Hormuz and Iran’s grip on the world’s oil supply.  Back in March of 2008, I wrote:  Oil, It will destroy us!

“Have you noticed that there is a direct correlation between worldwide tensions and oil?  If you might be wondering why Russia’s Vladimir Putin [now Medvedev and Putin] has started to flex his muscles and become obstinate in the fight against global terror…you should be. If you are wondering why Iran has become so independent and belligerent of late…you should be. Have you looked at our own hemisphere lately? Take a good look at Venezuela and how Chavez is as bold as can be in creating an anti-U.S. socialist state more powerful than Cuba ever was….Well! It is all about oil!

Ask any military strategist and they will tell you that one of the reasons we cannot leave Iraq as we want to, is that we are afraid Iran will…make Iraq a satellite country in its attempt to create a worldwide caliphate (A caliphate is a fundamentalist theocratic form of tyrannical government, that unites all Muslims covering a wide swath of geography in the world, under one rule). This is not a good thing for the west. This could place Iran in a position to directly control 10% of the world’s oil (includes oil equivalent products in the production) and to indirectly control 44% of the world’s oil exports which are shipped through the Strait of Hormuz, by shutting down the Strait or creating the caliphate. In addition, today the group of thugs known as Russia, Iran, Venezuela could conceivably directly control 29% (with Iraq, 32%) of the world’s oil production, and indirectly control exports, when the Strait is included, to bring the overall control to 66% of world oil exports. An Iran controlling Iraq and the Strait of Hormuz would be one very powerful entity–an entity that has a culture and a philosophy directly opposite ours. Iran is a country that does not do well with negotiation, especially when we are in a position to lose and they are in a position to gain. Is it possible to successfully negotiate from weakness? NO! Are we in a position of weakness in such a negotiation? YES!

Considering that since our oil import consumption is at 31% of the world’s oil exports, and the control of 66% of the world’s oil exports by Iran and its new very cash rich friends can be a quick reality, we should be worried and reactive. Yet we are not!…

What do we do?  In the short term we are powerless and our national oil policy has been the problem.  Had we had a robust domestic drilling program for oil and natural gas, we would be in a position to sell China its much needed oil and natural gas.  Instead we allowed China to become dependent on Iran for its economic lifeblood, crude oil, and Iran knows this.

Selling China that oil and natural gas that we have under our land and off shore, and did not go after, would have had far reaching effects internationally:

First it would have made China less dependent on Iran, allowing China to support intense pressure on Iran and have avoided the thwarting of the international community’s efforts to prevent Iran from obtaining a nuclear weapon.  In addition, China could also have put pressure on North Korea to keep that rogue power from selling missile technology and parts to Iran.  These missiles are the delivery vehicle for the nuclear weapons.

Second, by selling China oil, we would have had an opportunity to balance our trade deficit with China.  China would have been an equal trade partner and not our banker/lender.

Instead we chose to be flat out dumb on the use of our abundant untapped offshore and arctic natural resources, oil and natural gas.  It is not too late to work toward making China an equal trade partner, rather than the one sided arrangement we currently have.  It may be too late to solve the Iranian matter, but there will be other international troubles, including North Korea.  China can be instrumental in providing support to manage those matters.  They are a pragmatic country when it comes to protecting their self interests and this can work in our favor.

Our country continues to eschew the leverage oil would bring us as an international policy driver.  Why do we continue to do this?  I know, we want to save the planet, but if we don’t obtain the leverage necessary to control the spread of nuclear weapons we may not have a planet to save.  Right now oil and natural gas are the best tools God has given this nation to keep world peace and we are blind to it.  As a peacemaker, oil and natural gas in the right hands are the keys to world stability.  In the wrong hands they are a flash point.

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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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A recent editorial opinion piece in the New York Times was put forth as just that an opinion. However, it was propaganda for the climate change movement. The writer of the opinion piece either knows the truth and chose to obfuscate it or does not know the truth and if not probably should not be working at a national publication.

I will not reprint the entire piece, because I am sure that copyright or some other rule will be cited by the NY Times to make me regret printing it. Thus I will use sections in quotes and attribute the work to the New York Times Opinion Section as found on their web site July 15, 2008.

If you wish to read the entire short opinion you can find it at: “Drilling’s Lure – Editorial”.

Drilling’s Lure

Published: July 15, 2008 (New York Times – online)

“…Offshore drilling will not bring short-term relief from $4-a-gallon gasoline, nor can it play much more than a marginal role in any long-term strategy for energy independence…” The world is expected to be using 146% of the energy measured in BTU’s in 2030 than today. While $4 per gallon relief may not be in site, we may avoid $10 per gallon by then. “…The oil companies already have access to substantial unexplored resources.” The truth here is that the oil companies have leased land with which to explore for oil. If oil is not found or determined to be underground in commercially viable quantities, they do not drill – I would not drill – you would not drill, because there is no reason to drill.

“…At issue are about 19 billion barrels that, the Interior Department says, lie in federal waters in the Gulf of Mexico and off the Atlantic and Pacific coasts…” At issue here are 86 Billion Barrels of oil in those locales and under Federal land, per the Energy Information Administration.

“…Congress should not give into the pressures of a restless public and a campaign by sacrificing long-term environmental protections for short-term political gain…” The real agenda is in this last sentence, environment at all cost – the U.S. Economy be damned. It is not short term political gain, but a need to secure our economic future, protect national security, and be prepared for the world chaos as oil production diminishes. We have a need to maximize our energy production of fossil fuels while we are bringing on line renewable energy, which at this juncture is simply not ready and will not be ready for 15 to 20 years to fully drive this nation’s energy needs, without crippling our economy further.

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Listening to your Representatives in Congress and the pro drilling and anti-drilling pundits can be very frustrating. I heard this morning on a news show from a Democratic “Strategist” on a major news show that we will now not benefit from drilling for twenty years. Tom Daschle said this morning on Fox News Sunday that we would have no oil until 2030. Is he is actually stating that it would take 22 years to find oil and drill for it? Just last week I was hearing ten years to bring oil to the pumps as gasoline. What changed in the last week? These sides all seem to feel that energy from renewable or from depleting resources is an all or nothing proposition.

Here are some basics to consider to ease the frustration:

  • By 2030 the world’s energy consumption measured in BTU’s will be 146% of what it is today.
  • 86 Billion Barrels of untapped oil appear to be under our feet on shore and under our continental shelf off shore.
  • Our current annual imported oil consumption is about 7.6 Billion Barrels.
  • We have a 49 year supply of natural gas under our feet on shore and under our continental shelf off shore.
  • We have massive resources of coal, and if we can figure out how to use it cleanly, we are the most energy rich country, probably in the universe (a little exaggeration).
  • Growing our energy, unless it is grown on land that can’t grow food very well, means that we have less land to grow food for the world’s population to eat.
  • Growing both food and energy means that both food and energy are subject to weather shortfalls at harvest.
  • Wind is more viable than solar currently. Today’s cost to establish a wind turbine is $2Million per Megawatt. Texas presently holds 27% of the nation’s 16,193 Megawatts of wind turbine capacity. Wind turbine is the more promising of the renewable energy sources in the near future.
  • We currently send $500,000,000,000 ($500 Billion) annually to foreign economies for oil each year and this is expected to grow.
  • The annual U.S. trade deficit has been reported as $856.7 Billion or 6.5% of the economy. This trade deficit is slowly sucking the life blood out of our nation. If we eliminated the $500 billion from the $856.7 Billion – math says that we have a trade deficit of $356.7 Billion. If we drill for and increase the export of natural gas (It can be liquified for transport), we can wipe out the remaining trade deficit with energy alone.
  • As the world’s population grows, more food will be needed. More land will be needed to grow that food – probably arid land will have to be utilized.
  • We will need more water for drinking, for irrigation, and to extract geo-thermal energy .
  • To obtain this much water, we will have to start desalinizing ocean water – this will take an enormous amount of energy.
  • The mere announcement that the U.S. was going to open up drilling for 86 Billion Barrels of oil, would drive a spike through the oil futures speculators. They are smart; they bet on the future of energy consumption against the future of oil availability; they would see the potential of 86 Billion Barrels coming on line; the futures speculation would dissipate and the price of oil would start a decline just on the announcement.
  • The search for oil, both on shore and off shore, would bring jobs. The supply and support chain would require machinists, welders, and other skilled labor. These jobs would pay better than service work. These jobs would revive the Midwest and the Gulf States.

What if we actually elected some forward thinkers, for a change, and established a bipartisan plan to maximize energy production in this nation. We could use use royalties and tax incentives to balance the cost of the energy in an inverse relationship with how clean it is, how water intensive it is, and how much good growing land it uses. If we looked forward, and not with a myopic approach toward one type of energy, to develop every bit of energy we could, we could have a sound thriving economy, export energy to a world with a 146% energy hunger, and provide drinking water and irrigation to feed the world. This seems like a noble venture we could all get behind.

Why can’t we believe in and achieve “Having It All”? The Energy Information Administration Web Site is filled with information – check it out.

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Listening to the arguments and intentional misinformation spewing forth for and against drilling, it has become clear that this struggle is not between today’s low gas prices and high gas prices, but rather a struggle of ideologies. It is about forcing a change in the way we want to live or finding a way to continue to accommodate the way we want to live.

The Democratic Party’s defense of the status quo about not drilling for oil on shore and off shore is that the price at the pump will not come down tomorrow; drilling will not help for ten years – this was said by the same Party ten years ago; oil companies have 68 million acres not as yet drilled; ANWR, a frozen tundra covered in snow and ice so far north in the Arctic that no one will visit it for its scenic beauty, is too pristine to drill in a minuscule portion of that preserve; and on and on for the excuse of the day.

If you carefully examine the quotes on the topic of domestic drilling and pump price from Obama and other Party notables, a different motivation surfaces. These folks look to the high gas prices as a blessing. They seem to believe that high gas prices will finally force the SUV driving, air conditioning loving, home heating, energy wasting public to conserve. This is a “global warming trumps all other positions” manifesto. The elite of the Democratic Party are looking to and hoping for the pain at the pump to last indefinitely, and to use it as medicine to bring the energy loving fools in line. We have heard from Obama about how we must be more like Europe and conserve. Bottom line is that the Democratic Party elites simply do not want us burning oil. There is no attention paid to the ravages our economy has and will suffer at the hands of the foreign oil gods. There is no attention paid to how we have stripped our independence and defense bare as we have become dependent on these foreign oil gods.

The demographics of the Democratic Party have changed from the 50’s and the 60’s, when it was easy to spot a Democrat – he or she was a middle class working person who wanted protection from big business. Today’s Democrat can come from a variety of socio-economic positions. The Party ranges from the 1) secular progressives, usually affluent people who feel there is no moral right or wrong; 2) blue collar workers left over in the Party from the prior positions of the Party – these are the folks Obama referred to as “bitter”; 3) immigrants, both illegal and legal who are looking for a perceived better life; and 4) highly educated individuals who tend to be academics and who are pursuing the “I know what is best for you” agenda – these people truly believe that they are much smarter than the rest of us, therefore they need to tell us how to live our lives.

The Democratic Party hierarchy is filled with the “I know what is best for you folks” crowd, now led by Barack Obama, and this group, many who are also secular progressive, have decided that what is best for its party members and the independents, Republicans, and other assorted groups is to conserve and to go global. They want us to embrace the European lifestyle, have no confrontation with other nations – just let them be and all will be well, eat less, and ride our bicycles instead of driving. They have embraced the as yet unproved theorem that man is causing global warming, and yet they want us to make saving the planet our highest priority and that we must pay any price to accomplish this. Now just for a minute, let’s look at how this position affects the other Democratic Party members and the non-enlightened members of other parties and independents.

The blue collar crowd and immigrants, both legal and illegal, are being pounded by gas prices, food prices, health, and education expenses. To combat the perception that the Party does not care about these groups in its quest for European equalization, the Party has adopted a very socialistic view – let’s “villanize” corporations, especially big oil, the military, and any group that has the audacity to believe in any other policy than they do. The Democratic Party has embraced, even more than its historical positions, the take from the rich and give to the poor approach. Of course, they have to keep redefining the rich to accomplish this. If they do not take this position, then the elites in the Party will find that they will have lost the rank and file due to the policies of the Party – remember the pain of the expense of oil, food, etc. due to the march to save the planet from global warming. Also remember that taking from the rich and giving to the poor deprives this economy of the initiative to succeed and is self defeating in the long run.

This energy struggle is really about using today’s high cost of oil and the future high cost of oil to move this country off oil and toward incredibly expensive renewable energy before it is ready. While the drilling for oil today and tomorrow; and becoming self sufficient for energy will not immediately lower prices, it will mitigate the cost of energy, all types, in the years ahead as the world increases energy demand to 146%, of what it is today, by 2030 – EIA is the source. They do not want the U.S. to drill now and drill here because it interferes with their view of the future. They are not concerned about the impact of immediately moving to expensive renewable energy, before it is ready, done by restricting access to domestic oil and gas. They are not concerned that this method will negatively impact this nation by undermining our economy before we reach the utopia of 100% renewable energy. This premature move will make us dangerously vulnerable to foreign powers; and will make these foreign powers even richer and more powerful than then they have become today due to oil.

This Democratic Party Hidden Energy policy does not take into consideration that hybrid vehicles, and solar arrays are out of the price reach of many of their rank and file, as well as many other Americans due to the pain at the pump and other forces squeezing their wallets. It does not consider that hydrogen vehicles and electric cars are still experimental and when ready will also be priced out of reach for these people. They do not consider that the SUV and pickup owners along with the home heating oil consumers in this country cannot easily exchange their vehicles for the hybrids, or their equipment for solar heating because it is too expensive to do so.

Let’s remember that the Republican Party has offered no real energy solutions or any plan for energy either. The Republicans are not as smarmy as the Democratic elites about energy. If fact, they are pretty transparent about not addressing this problem either. They are just more straight forward about their incompetence.

This country needs a comprehensive energy policy now. It should cover how we transition from fossil fuel to renewable energy. It should cover how drilling here and drilling now will strengthen our economy. It should cover how drilling here and drilling now will add good paying jobs to the economy. It should cover how we develop and initiate renewable energy in an energy matrix that includes all other forms of energy. Unless we choose to become a second tier society, as Europe has chosen, saving our economy does trump the attention paid to global warming. We can do both, but a blended plan is required.

Energy independence early on from oil and natural gas and transitioning through 2030 to mostly renewable energy will keep us from sending more than $500,000,000,000 – yes Five Hundred Billion – to other nations annually to acquire replacement oil for the oil we are currently sitting on. Sending this much money to foreign powers each year has undermined and is undermining our economy, our standard of living, and our security in the world. If Norway, a “clean” nation, can drill off shore for energy independence, and France and Sweden can use nuclear power for their version of energy independence, we can have our own march toward energy independence starting with drilling everywhere and finishing with renewable energy to burn so to speak. If the Democrats and the Republicans representing you in Congress do not want to build a comprehensive national security saving, economy saving, and environment saving energy plan covering the energy transition of this nation through 2030, then you are represented by the wrong person. Think about that in November.

Added June 22, 2008 9:33 PM MST- Arizona

The following is information from the American Petroleum Institute that refutes the claims by most Democratic politicians and Democratic strategists that the oil companies have 68 million leased acres to drill on and that they should drill on these leases first. This refrain from the left to make arguments against drilling falls into the hidden agenda. Here are questions and answers to the leases about why drilling takes place or not. 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.

Added June 24, 2008:

You will hear that it takes 10 years to bring oil to the gas pump – the answer according to the American Petroleum Institute is 7 to 10 years depending on location and infrastructure. Now the rhetoric has been heightened by the left . Tom Daschle on Fox News Sunday, June 22, 2008, stated that oil from new drilling would not be available until 2030. As this is outright intentional misinformation, it supports the argument that the left has a hidden agenda.

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The latest argument being made by some who do not wish to drill for oil domestically both offshore and onshore, is that there are simply not enough ocean going drilling vessels to meet the need.

The U.S. shipbuilding industry, once robust and a world leader, is now nearly gone. A combination of international cost economics and union rules made this industry shrivel up. If it was not for the few military ships being built and refitted, it would have blown away. This is a JOBS opportunity!

Our energy circumstances are calling for drilling both onshore and offshore and a need for ocean going drilling ships. This is a grand opportunity to rebuild the U.S. Shipbuilding industry and create good paying career oriented jobs in the process. These circumstances have placed this opportunity right on our doorstep. Now the question must be asked. What other job opportunities will arise from the search for domestic oil? How many related jobs will be in need of U.S. workers to fill them? The entire supply chain for the drillers and the ship builders, plus the entire delivery chain for both will be, itself, a massive mostly self financed jobs program offering the type of jobs that are the backbone of the American middle class. These jobs would reverberate through the Midwest, especially Ohio, and the Katrina ravaged Gulf Coast. These jobs would require skills to be acquired through training. How about a jobs training program for these and related industries to make these jobs happen? Training means trainers and yet more skilled jobs.

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