04 July 2008

Geologist Say "Use It Or Lose It" Bill Will Increase Prices

After writing my article about how David Obey (D-Wis) was Shielding Democrats From Embarrassment by shutting down the appropriations process so they wouldn't have to vote on provisions to increase drilling here in the U.S. (since most Democrats would vote against more drilling), I was challenged by one of my readers about the facts that the Oil industry already has thousands of leases that they're not using. Other than the obvious, which is, who in their right mind doesn't want to make money, I did a bit of research to find more specifics on this subject.

There's an article written by Nick Snow in the Washington Editor that has an interesting story on this, and on how the American Association of Petroleum Geologist (AAPG) is cautioning congress on the actions they're about to take. Here are some highlights on the letter they wrote:

"As Congress considers measures to deal with high crude oil prices, I urge caution. Policies that increase exploration costs, decrease the available time to properly evaluate leases, and restrict access to federal lands and the Outer Continental Shelf do not provide the American people with short-term relief from high prices and undermine the goal of increasing stable long-term supplies," he said in a June 23 letter to House Speaker Nancy Pelosi (D-Calif.), Majority Leader Steny H. Hoyer (D-Md.), and Minority Leader John Boehner (R-Ohio).

The letter is significant because AAPG and its leaders rarely take public positions on political issues. It is an apparent response to H.R. 6251, which House Natural Resources Committee Chairman Nick J. Rahall (D-W.Va.) introduced on June 12. Formally called the Responsible Federal Oil and Gas Lease Act of 2008, the legislation has become known as the "Use it or lose it" bill because it would require federal oil and gas leaseholders to promptly develop or relinquish their leases. Republicans are concerned that it could reach the House floor this week without hearings or a markup.

H.R. 6251's assumption is flawed, Green suggested in his letter. "The process of leasing, evaluating, drilling and developing an oil or natural gas field typically takes 5-10 years. Some fields come online sooner. Others are delayed by permitting or regulatory delays or constraints in the availability of data acquisition and drilling equipment and crews. Large projects and those in deep water may require a decade or more to ramp up to full production,"

'Intensive assessment'
Geologists begin an intensive assessment once a lease is awarded, he continued. They collect new geological, geophysical, and geochemical data to better understand the lease area's geology. If they see no evidence of a suitable trap, the producer will relinquish the lease. But if they see a trap that looks interesting, the lessee will hire a drilling rig to find out if the geologists are right.

"Drilling is the true test of the geologists' model, and it isn't a decision to be made lightly. Drilling costs for a single well can range from $500,000 for shallow onshore wells to over $25 million for tests in deep water offshore," Green noted.

Access required
"As you can see, oil and natural gas exploration is not simple and it is not easy," Green told the House leaders. "It requires geological ingenuity, advanced technologies, and the time to do the job right. It also requires access to areas where exploration areas can be tested—the greater the number of areas available for exploration, the higher the chance of finding oil and gas traps."


If you want to see the entire article, follow this link. If you really want to learn more about how Oil Drilling works, you should check out Black Gold on TruTV:


You can also help out by signing Newt's Drill Here, Drill Now, Pay Less initiative, and participate in Operation Drill Bit, to Flood Washington with Drill Bits. These initiatives will help remind Congress that they are in Washington to represent "We The People" and should follow our directives.

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