The Election Issue Of All Election Issues: Drilling Ban Expires Oct 1

15 Responses to “The Election Issue Of All Election Issues: Drilling Ban Expires Oct 1”

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1. 2slugbaits on August 1st, 2008 5:42 pm
   

   Even if you support opening up ANWR and offshore drilling, you should at least let your readers know that it will be many years down the road before any of that oil reaches the world market, and when it does it will have a small effect on the price at the pump. If you don’t point this out upfront, then a lot of people are going to be very disappointed when they don’t see supplies increasing and they don’t see prices respond as much as they were led to believe.
2. Jenn Sierra on August 1st, 2008 5:49 pm
   

   Not true, 2slugbaits…that’s simply Democrat rhetoric. Did you notice how the worldwide price of oil plummeted when Bush lifted the Presidential ban on drilling recently? It’ll plummet even more when Congress lifts its ban. The price of oil, unlike most commodities, is no longer controlled by supply and demand - it’s controlled by foreign governments who want to destroy the U.S..

   Plus - bone up on your technology. As soon as the ban is lifted, we’ll start drilling in places where we already know there’s oil…private U.S. companies will start investing in refineries…we’ll be back in business in no time.
3. 2slugbaits on August 2nd, 2008 2:12 pm
   

   I’m sorry Jenn Sierra, but you’re wrong. To begin with, there are no available offshore drilling rigs in world invenories right now. None. Zero. Nada. There is a lag time of several years and almost all of those currently in the pipeline are going to Chinese customers. Second, the price of oil is no different than any other commodity. It is controlled by supply and demand curves. More importantly, I don’t know if you have any formal training in economics, but there are actually two oil markets; the flow market and a separate market for stock supplies. The flow market is the one that determines the price at the pump. The market for stock supplies is the futures market. Third, if you actually understood economics, then you would know that it is the relationship between prices for stock inventories and prices for flows that explains the recent drop in oil prices. Bush’s lifting the ban had absolutely nothing to do with the price.

   As to refineries, those take decades to build. We will not be building new refineries. It’s more likely that we will continue to improve the efficiency of existing refineries and supplement with increased imports of refined crude.

   As to the likely impact of opening up offshore drilling and ANWR, you can easily do the math. For example, ANWR is estimated to have about 18B barrels according to the Dept of Energy. At current consumption levels of 85.6M barrels/day, that works out to about 7 months worth of additional oil. That’s something, but it isn’t much. Given worldwide reserves of 1.1T barrels and price elasticity estimates and US Geological Survey mean estimates of PEAK ANWR production of 2M barrels per day, this reduces the price at the pump by about 12 cents per gallon. But here’s the kicker…it takes 20 years to reach that peak. Between now and then you’re talking about only a few hundred thousand barrels per day, which is just statistical noise. It’s a similar story with offshore drilling. And the experience with well Jack No. 2 in the Gulf, which was supposed to be the oil industries salvation, ought to serve as a warning about counting your chickens before they’re hatched.

   Did you also believe that nonsense about a 90 day gas tax holiday lowering the price at the pump even though not a single economist (including those who supported McCain and Hillary Clinton) agreed. Of course, most voters are not economists.
4. Jenn Sierra on August 2nd, 2008 2:31 pm
   

   No, I did not support the gas-tax holiday. No, I’m not an economist, but I do know when a group with an ulterior motive is trying to confuse the public, to achieve their own goals.

   The current ban on drilling is crippling the American economy, and certain members of Congress are doing this intentionally for their own profit. We have enough oil in the U.S. to last many decades, and it is not up to me - it is up to private oil companies to find it and refine it so that they can make a profit, and so that Americans can prosper.

   I grew up in the oil industry. It simply doesn’t take that many “years” to find oil and start drilling…particularly when we already know where the oil is. What does take years is fighting battles in court with environmentalists, who simply don’t want the U.S. to drill - anywhere.

   Just as when President Bush recently lifted the presidential ban on drilling, and the price of oil and gas automatically began going downm, worldwide. If Congress has the guts not to renew the ban on drilling that is coming up at the end of September, this will automatically send a message around the world - it will have an affect that is favorable to the U.S. in all of the markets you mentioned.

   This is simple common sense.
5. 2slugbaits on August 2nd, 2008 3:22 pm
   

   Jenn Sierra,

   It’s possible to make a good argument that opening up offshore drilling today might make some difference 10-20 years from now and even though the impact will be fairly small, it won’t be zero either. So some improvement is better than no improvement. Then it becomes a question of alternatives investment. My point is that it is possible for McCain to make an honest and intellectually coherent case for opening up offshore drilling. For example, drilling for natural gas makes a lot more sense and one of the by-products of drilling for natural gas in the Gulf is co-production of crude oil. But that’s not the argument that McCain is making. He is making a dishonest argument. As I said before, one of the long poles in the tent is the availability of offshore oil rigging equipment, and there simply are no rigs available anywhere in the world. I don’t mean that supplies for oil rigs are tight…I mean that there are literally zero rigs currently available. Zero. If oil companies put in an order today, it would be 3 years before first delivery. And just because you start drilling doesn’t mean you immediately hit a gusher. Statistically the odds are that you’ll hit a deadend. Again, look at Jack #2 in the Gulf.

   John McCain is lying to you. You’re being played for a sucker. Until a few weeks ago McCain was also opposed to offshore drilling and ANWR. It was only after Rick Davis told him that it would play well with a certain demographic who were not professionally trained that McCain started talking about opening up ANWR and the offshore.

   BTW, McCain has flip-flopped a bit on this. To one audience he tells them that the Federal government should take charge and allow it even if states oppose it. When he talks to other groups he says it’s a matter of states’ rights and the states that want it should be allowed to override the Federal ban. So he’s all over the ballpark on the issue…a sure sign that he’s lying.
6. Jenn Sierra on August 2nd, 2008 4:00 pm
   

   2slugbaits…as I said, my opinion on this is based on the fact that I grew up in the oil industry. It has nothing to do with the RINO I’ll be holding my nose and voting for in November.

   And the idea that we shouldn’t drill in the U.S. because there are no drill rigs in the whole world? That’s the silliest thing I’ve heard all day.
7. DaveC1 on August 4th, 2008 5:49 pm
   

   A few thoughts from a long time oil industry worker that will not be popular:

   Both the Democratic and Republican parties are totally clueless about energy: I am more annoyed with the Republicans at the moment because they are running around yelling their myths louder then the volume with which the Democrats are merely speaking their myths. I am also really annoyed when Bush, a former oil man, who should know better, runs around yelling some of these myths the loudest.

   Republican myth - We should drill offshore. We aren’t drilling offshore. The Democrats won’t let us drill offshore. We need to drill offshore now.

   Facts - We are drilling offshore as fast as we can and we are drilling in the best places. Every drilling rig in the world is drilling. There is a multi-year backlog of identified drill sites waiting on a rig to drill them. Rigs are being built as fast they can be built. The best areas of the Gulf of Mexico, offshore Louisiana and Texas are the proven development areas where we are working. Any diversion of drilling rigs to new exploration areas will reduce US production for a few years, not increase it. Why? Because exploration wells have a low success ratio and if successful they then take several years waiting on a production platform, pipeline, etc., before they can produce. Those rigs could have been drilling development wells. Diverting them will not send a “signal to the markets”. When did Republicans start thinking that markets don’t work?

   Republican myth – More drilling in the US will reduce the price of oil and gasoline.

   Facts – Oil is an 85 million barrel a day global market. Every rig in the world is drilling where the industry believes there is the most oil or gas to be found at the lowest cost. We can find oil cheaper overseas, even through the terms of production sharing contracts, taxes, and royalties are much less attractive overseas than in the US. In other words, an average well drilled in many places around the world will produce several times as many barrels of reserves per dollar spent drilling than one in the US. This feeds more oil production into the global market to feed the 85 million barrel a day demand. Increasing drilling in the US will reduce global production for several years, increasing prices.

   Republican myth - There are wonderful places to drill offshore in the US.

   Facts – Only offshore Florida in the Gulf of Mexico and offshore California appear interesting. The Southeast Coast is an unexplored frontier region that could eventually be shown to be interesting. The public in both of the interesting states in question have never expressed any consensus for drilling. Although there is no major environmental reason not to drill in either area, the public may not want to deal with the infrastructure required: They will have shore bases, gas plants, pipelines, workboats, helicopters, heavy truck traffic, refineries, chemical plants, a few minor spills, trash washing up on the beaches, etc. Since
   Florida is an exploration areas, it will not produce much for ten years, won’t reach peak production for over twenty years, and may not turn out to be very good. It should be noted that offshore California has some developed fields and infrastructure, so there could be some increase there within five years.

   As a long term approach, opening these areas to drilling is a good idea. Actually, if most of the oil and gas production comes ten or twenty years out, that is good thing. The oil will be worth a lot more. It’s just that nobody should be running around pretending that this has anything to do with todays high prices.

   Democrats - I have a pretty good list of stupid Democrat energy myths I can explain in detail later. They include:
   Use it or lose it,
   Windfall profits tax,
   Retail and wholesale gasoline price gouging, and
   Blame Exxon for the problem.
8. Jenn Sierra on August 4th, 2008 6:39 pm
   

   “We” are not drilling offshore right now, because there is currently a congressional ban on drilling offshore. The Chinese are drilling off our shores and so are several other countries…”we” are not.

   And anyone who has ever been around oil wells knows that the rigs are built on-site…and it takes about a year (or less) to start producing oil…unless the company has to go to court against the local environmentalists.

   Don’t believe lifting a ban on drilling will force down the price of gas? Get off your computer, and go for a drive, past your local gas station. The price of oil and gas have been steadily dropping since Bush lifted the presidential ban a couple of weeks ago. The prices dropped over this last weekend, too.

   Sorry, socialsts…your reign of economic terror is coming to an end.
9. DaveC1 on August 4th, 2008 7:08 pm
   

   Rigs drill. Platforms produce. Rigs are towed to the location. Platforms are built in a yard and are transported to the location on a barge(s) and installed on locatation. There are 200 rigs drilling the the Gulf of Mexico offshore Louisana and Texas. US Operators have been drilling an producing in the Gulf for for 40 years. Never stopped. Stood on a few personally.

   If you can find some rigs in the world that aren’t drilling, please advise ASAP; we’ll all get rich very quickly, just on finder’s fees alone.
10. Jenn Sierra on August 4th, 2008 7:29 pm
    

    That doesn’t even make sense, Dave, and I think you know it.
11. DaveC1 on August 4th, 2008 7:54 pm
    

    http://www.offshore-mag.com/display_article/332233/9/ARCHI/none/none/1/Gulf-of-Mexico-operators-push-the-boundaries-of-deepwater-development/

    Link to Offshore magazine (published by PennWell) article showing that, in fact, “we” are drilling up a storm in the Gulf of Mexico and have been for many years.
12. Jenn Sierra on August 4th, 2008 8:58 pm
    

    Here are some “fast facts,” about the MMS and Congressional Moratorium on off-shore drilling. In a nut-shell, the MMS is currently leasing the 15% of the OCS that is not under moratoriam to international oil companies.

    I was encouraged to read, however, here, that three of the top bidders for these leases have maintained headquarters in Texas and Oklahoma while they’ve been making billions dealing with communist countries. Perhaps if we give them more places to explore and drill here, they’ll be encouraged to bring more of their business back home.
13. DaveC1 on August 4th, 2008 10:04 pm
    

    There is no valid environmental reason not to open the entire OCS to drilling. The public in all of the states not currently open to drilling have historically opposed it. George Bush, Jeb Bush and the people of Florida were always dead set against it. Now that they appear to be realizing that we need the oil, public sentiment is shifting. Bottom line is the Federal Government has not allowed drilling in the past offshore states that didn’t want drilling. If, in fact, some of these states decide they want to have drilling off of their coasts, the Federal Government has no business not allowing it.

    I still say it won’t do much for gasoline prices in the short run, but that’s no reason not to get moving in the right direction. Whenever we do get some production, we can use it.

    I’m afraid that the big oil companies have no loyalty whatsoever to the US; they are all multi-national and do most of their drilling overseas these days. The deal with some pretty unsavory characters around the world. Fortunately, most of the wells in the US are drilled by second-tier companies who are mostly American, such as Anadarko, Apache, Devon, etc.

    The liberals love to bash Exxon, but actually it’s those larger independents who drill most of the wells in the US. They are the ones who will probably wind up being hit the hardest by any windfall profits tax the liberals cook up.

    My favorite stupid Democrat energy myth is “use it or lose it” They blame the oil companies for high prices and appear to want to take our acreage away. This is the way is explain the issue to the liberals:

    You have to lease large tracts of acreage to explore effectively. You shoot seismic over a wide area, process, evaluate, study, develop prospects. Then you go back and shoot detail seismic maybe even some 3D on the prospects to identify drill sites. Then you drill a wildcat well and if you are real lucky you find something other than salt water. Then you plan the development, find a rig (good luck), drill development wells, etc.

    All this takes time. The fact that we aren’t drilling on any given tract doesn’t mean that it is not part of a larger exploration area. When we find a good prospect (and a rig) we drill it.

    We paid for those leases and they are subject to contracts (leases) we and the government signed. Now they want to take away our acreage position?

    I don’t normally go around accusing liberals of acting like commies, but this sounds like confiscation of our property.

    If the government takes back our acreage, it will be back to square one for a new company to start the exploration cycle all over again in that area.

    The market works. As soon as we can get more rigs we will drill even faster. The US active rig count is approaching 2000. A few years ago it was below 1000. Believe it or not, we are finding oil and gas with those rigs.

    BTW: Oil didn’t drop because of President Bush lifting the executive ban on OCS drilling. The price of oil dropped because markets work.
14. TXPoet on August 5th, 2008 10:07 am
    

    I hope everyone bothers to read through all the minutia that others have put here telling us that we will fail no matter what we try. The fact is that too many are spouting rhetoric and not facts.
    Money Magazine explains <a href=”“>Exxon’s profit. Less than 3% of Exxon’s profits are from the sale of gasoline. The bulk of their profits deals with drilling and exploration. Pundits refer to “know oil reserves”. Know oil reserves means active fields, America has untold reserves such as the shale fields which are not counted as a “known oil reserve” and before someone jumps in about how it costs too much to drill and produce there I would refer you to Alberta Canada and to China both of which are successfully drilling in shale and sand fields.
    Any change in drilling status for potential “known reserves” will reduce costs because it decreases the threat by foreign governments which are attempting to use the withholding of oil as a weapon of war. Yes we need to continue our expansion of alternative solutions; we also need to build massive amounts of mass transit. We are 50 years behind Europe in mass transit and each project we try to reinvent the wheel.
    As for who owns off-shore oil it is the American people not the oil companies. The oil companies obtain leases to explore and find the oil. The royalties on all oil pumped are paid into government coffers. The acreage doesn’t belong to the oil companies. It is that attitude that enables the left to portray them as robber-barons and dangerous.
    In some of the analysis of the oil industry I notice a distinct lack of optimism and hope also a lack of suggestions. The facts are that we need to locate all of our oil reserves to better formulate a plan for the future. We also need to develop every alternative method of energy that we can and think up a few more. We need to push for more and better mass transit now, not later. We also should suspend oil from the commodities markets.
15. Charles on August 17th, 2008 10:09 am
    

    Dont fall for Pelosi scam on “limited” offshore drilling. Just let the ban expire and then talk about ANWAR if she wants to negotiate a complete energy plan!!

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