Why aren't we drilling for oil?

[zimmy]

Jim, It is not a question of me being dense. It is a question of reality. Where do we have this oil you are talking about. I don't mean the stuff in those ridiculous chain emails that make claims about the Dakotas having more oil than the middle east or any of that garbage, which have clearly been shown to be fake. We don't have an enormous amount of oil. You can keep saying it, but that doesn't make it true.

[scottw]

Originally Posted by zimmy

Jim, It is not a question of me being dense. It is a question of reality. Where do we have this oil you are talking about.

PREPARED BY THE REPUBLICAN STAFF OF THE SENATE ENERGY AND NATURAL RESOURCES COMMITTEE

America’s Tremendous Oil Potential

The extent of America’s petroleum resources has been mischaracterized for nearly a century. Opponents of greater production routinely claim that an increase in domestic supply could never be sustained because America is “running out of oil.” The truth? Greater domestic oil production is not only possible – it is necessary to help protect America from global supply disruptions, create new jobs, pay down the debt, close our trade gap, reduce energy prices, and expedite the development of next-generation technologies.

Is America “running out of oil”?
• No. Dire predictions have been made since at least 1919, when the head of a federal agency announced that “within the next two to five years the oil fields of this country will reach their maximum production, and from that time on we will face an ever-increasing decline.” Obviously, that was incorrect.
• Some claim the United States “has just 3 percent of the world’s oil reserves, but consumes 25 percent of the world’s oil.” This is highly misleading, because reserves are just one small part of the full picture. America is actually the world’s third-largest oil producer. Our proven oil “reserves” have never exceeded 40 billion barrels, but somehow we’ve produced nearly 200 billion barrels since 1900.
How much oil does America have?
• According to a November 2010 report from the Congressional Research Service, which surveyed existing government estimates, the United States’ technically recoverable oil resource base totals 162.9 billion barrels.
• That’s enough oil to sustain our current rate of production for the next 62 years. If domestic production was increased to replace all imports from the Persian Gulf, our own oil would still last for about 50 years.
• America could also have far more conventional crude oil. We’ve never fully explored our own lands, but whenever we look for oil, we tend to find more. Estimates for offshore oil have now more than quadrupled. Onshore, Alaska’s Prudhoe Bay was originally estimated between 1 and 5 billion barrels, but has already yielded more than 16 billion barrels and is still producing over a half million barrels each day.
Where is America’s oil located?
• America’s oil base consists of 28.4 billion barrels of proven reserves, 48.6 billion barrels of onshore resources (including natural gas liquids), 85.8 billion barrels of offshore resources. In 2010, 31 States produced oil.
• The continental OCS holds a prolific amount of oil. There are roughly 72 billion barrels in the Gulf of Mexico OCS; 13 billion barrels in the Pacific OCS; and another 4 billion barrels in the Atlantic OCS.
• Roughly 40 billion barrels of oil are located in northern Alaska in the National Petroleum Reserve-Alaska; the non-wilderness portion of ANWR; and Alaska’s OCS. All of these resources, however, are currently off-limits.
What about America’s unconventional oil?
• While the U.S. is known as the “Saudi Arabia” of coal, our oil shale deposits may be even greater. The Interior Department estimates we have at least 800 billion barrels of technically recoverable oil shale.
• At current rates of consumption, that is equivalent to a 114-year supply of conventional oil.
What other benefits are associated with American oil production?
• A 2008 study from ICF International concluded that greater domestic oil production would increase government revenues by $547 billion to $1.7 trillion and create 114,000 to 161,000 jobs by 2030.
• A December 2010 study by Wood Mackenzie concluded that greater domestic oil production would likely generate $150 billion in government revenues and create up to 530,000 jobs by 2025.
• New domestic oil production would help protect America from supply disruptions by reducing the need for imported oil. It would also reduce oil prices by increasing supply, adding to global spare capacity, and generating revenues that can be invested in technologies (e.g. alternative vehicles) that reduce oil demand.

[scottw]

The first is the report out of Texas that Chevron and other major oil companies have increased drilling in a very old field. Texas' legendary Permian Basin Field (which stretches from West Texas to New Mexico) was first exploited in 1925, and its reserves started declining decades ago. But recent advances in oil-extraction technologies such as fracking (the high-pressure injection of sand, water, and small amounts of chemicals into rock or other formation to loosen up the oil and separate it from the surrounding rock) are making oil in that old field easier to extract.

In fact, this year alone, Chevron will increase its investment in this one field by $600 million (which represents a third more money than it invested here last year) and drill twice as many wells as last year.

Spurring this new interest in old wells is the high price of oil -- now hovering around $110 a barrel -- due in turn to Obama's virtual moratorium on deep-sea drilling together with the spike in uncertainty in the Middle East (including our kinetic military action in Libya). Besides Chevron, both Exxon and ConocoPhillips are developing new wells (and reopening old ones) in the Permian Basin.

The second piece informs us of a potential new source of oil. As the piece notes, Canada is already our biggest oil supplier, providing us with more than two of the eleven million barrels we use every day. But given the spike in prices and the turmoil in the Middle East, interest is growing in a new proposed pipeline project.

The project, called the "Keystone XL Pipeline," envisions a pipeline from Alberta, Canada all the way down to Texas (where many of our refineries are). It would have connections to other pipelines to other refineries in the U.S. along the way. The Keystone Pipeline would have the capacity to give us yet another 1.1 million barrels a day from our kindly cousins in the Great White North.

So letting this project proceed would seem like an economic and national security no-brainer. Alas, the pipeline has been stalled by the no-brainers in Washington since 2008. Environmentalists have been in heavy opposition to the pipeline, and despite favorable reviews by both the State and Energy Departments, Obama -- the biggest no-brainer in Washington -- has ordered yet more environmental studies.

The environmentalist beef with the project is that the oil the Canadians will ship through the pipeline is be extracted from the reserves in their vast ranges of tar sands. These reserves are huge -- on the order of 175 billion barrels of oil, which makes for more than two-thirds of Saudi Arabia's proven reserves. But the environmentalists fear that the after-products of the tar sand oil extraction will harm the environment.

However, it is both presumptuous and silly for American environmentalists to oppose this joint project to ship Canadian oil. First, it is not as if Canada were a corrupt, third-world dictatorship where the leaders are willing to despoil their own country for some low-end cash. The Canadians have a fine record on environmental protection (as good as our own, in fact). And they have gotten the extraction process for tar-sand oil very ecologically safe. Over 80% of the water used in the extraction process is recycled, and the "trailing ponds" (which contain the remains of the extraction process) are being planted over with trees and shrubbery. And remember: these tar sands are already laden with petrochemicals to begin with!

So a project that would bring an estimated 20,000 new construction jobs and 250,000 long-term jobs overall to a country with an unemployment rate still up around 9%, not to mention bring about $585 million in corporate and other taxes -- and $5 billion in property taxes -- to states most of whom are experiencing financial crises, is being held up by the usual green dreamers. You know the green dreamers: they oppose all sources of energy known to work, and they support only sources of energy proven to be inefficient.

The third article ironically takes us to the Middle East -- and, even more ironically, to Israel, a county that traditionally has been an oil and gas importer. Much to the chagrin of the surrounding states so eager for it to disappear, the scrappy Jewish state is turning out to be a surprise energy powerhouse thanks to its embrace of the fracking technology. I have already noted in an earlier piece elsewhere that Israel has employed fracking to liberate the natural gas in a huge shale field off it shoreline -- an estimated 16 trillion cubic feet of the stuff, or more than a century's worth of supply at Israel's current usage.

The shale fields in Israel also contain lots of oil. Israel's main shale field (about 30 miles southwest of Jerusalem) likely has reserves of oil about 95% of the total proven reserves of...Saudi Arabia! And unlike our own big field in Colorado, there is no aquifer running through it. In terms of shale oil reserves, Israel now ranks third in the world after the U.S. (which has an estimated 1.5 trillion barrels of shale oil) and China (with 355 billion barrels of it), and ahead of Russia.

All this is great news for Israeli security. Israel imports most of its oil by tanker from Russia and the former Russian empire, and in 2006, these supplies were cut off in Israel's war with Hezbollah. And Israel gets most of its natural gas from Egypt, which is considering cutting Israel off.

Look to these sorts of reports to continue...despite what the green dreamers would have you believe.

[RIROCKHOUND]

Take a read through Hubbards Peak, it's an interesting book written by a former oilman and at the very least has some interesting perspectives into the industry

Some reasons in my humble opinion (of my head, some of the numbers might be a bit off but I need to put the kid to bed and won;t be back on to spend an hour looking them up.

1. Environmental impacts, especially with oil shales. basically strip mining. Not including fracting and other potentially harmful impacts with gas and oil wells. I won't even bring up CO2 since you two will just dismiss it as leftist propaganda.

2. technically recoverable and economically recoverable are two different things. Many technically recoverable fields are only feasible at closer to $200 / barrel

3. If Chevron et al., starts drilling on leases in the Dakotas, it will go to world supply. they aren't mandated to sell to US only. capitalism at it's finest.

4. The USGS estimates of the Dakotas is higher than previously estimated, at a mean of ~4Bil. that's roughly 1 year of oil for the US at the current rate of ~10mil barrels/day. so we can have $0.99/gal for a year than back up to $4.00?

5. The recent USGS estimate of ANWAR has dropped considerably, to about 90 days (~1 Bil barrels). this is not voodoo; a lot of the new data came from additional exportation, so that line about 'there is always more than we thought.....'

6. Norway is smaller than MASSACHUSETTS population wide.

7. Fossil fuels are a 1-time use. So we should just use it all up as quickly as we can?

8. Should we really be advocating more offshore drilling after last summer's disaster... damn we have short memories... keep in mind, much of the oil they are mentioning are deeper than the DWH rig was in.

9. Most of us realize it is speculation driven, but a big upswing in the spring is refinery limitations as they change seasons or just refinery back-up So we should just add more refineries... where? I'd I didn't live a mile from one, how about you? have you been to northern NJ?

10. Jim, are you really advocating for state run oil? you lament the gov's ability to run anything, period, and want to put them in charge of this?
You are the only far-right socialist I know. At least when you finally run for office Jim, you'll have your own party...

[scottw]

Originally Posted by RIROCKHOUND

3. If Chevron et al., starts drilling on leases in the Dakotas, it will go to world supply. they aren't mandated to sell to US only. capitalism at it's finest. Zimmy said the stuff about the Dakotas is a"ridiculous chain email"

4. The USGS estimates of the Dakotas is higher than previously estimated, at a mean of ~4Bil. that's roughly 1 year of oil for the US at the current rate of ~10mil barrels/day. so we can have $0.99/gal for a year than back up to $4.00? that's if we only use oil from the Dakotas which only exists in ridiculous chain emails

7. Fossil fuels are a 1-time use. So we should just use it all up as quickly as we can? before China does

8. Should we really be advocating more offshore drilling after last summer's disaster we are...for other countries..I think we're even financing it ... damn we have short memories... keep in mind, much of the oil they are mentioning are deeper than the DWH rig was in.

9. Most of us realize it is speculation driven, but a big upswing in the spring is refinery limitations as they change seasons yeah, 4 dollar plus gas has almost nothing to do with world demand and the troubles in the middle east...it's those damn speculators...who is "most of us" you and Zimmy?... or just refinery back-up So we should just add more refineries where? I'd I didn't live a mile from one, how about you? have you been to northern NJ?

10. Jim, are you really advocating for state run oil? you lament the gov's ability to run anything, period, and want to put them in charge of this?
You are the only far-right socialist I know. At least when you finally run for office Jim, you'll have your own party...

aren't you going to post a clip from a comedy routine to back up your assertions ?

[striperman36]

buy a diesel and run bio.

Oh that's right, new diesels can't run it and any other diesel in the fine state of MA has to be pre-07

[likwid]

Originally Posted by striperman36

buy a diesel and run bio.

Oh that's right, new diesels can't run it and any other diesel in the fine state of MA has to be pre-07

TDi's can run B5
You can buy TDi's in MA.

[Tagger]

You ever watch the history channel on diamonds or "blood Diamonds " ... Diamonds are actually very common ,, There's a huge amount of diamonds making them worth very little . So they control the flow making them valuble . Watch at the end of the year when oil companys have record proffits ,, Just like last time .. Other sources of energy ? They like it just the way it is .. High gas prices will make the economy tank again too..

[mosholu]

Interesting article in the 4/25/11 issue of the New Yorker on North Dakota oil situation.

[Swimmer]

People in brokerages are bidding up the oil contracts against the person across the across the aisle in the same office/agency. They did the same thing years ago in Cailfonia.

[Jim in CT]

RIROCKHOUND -

"Fossil fuels are a 1-time use. So we should just use it all up as quickly as we can? "

Not as "quickly" as we can, but as "best" we can. Furthermore, the revenue we collect from selling it is not a one-time event, it can be recycled through the system again and again. When you buy something at a store, do you think the store manager burns the money you give him? No, wealth gets created, wealth that was not there before. Contrary to what liberals believe, wealth is good.

Better to use up that oil, than to let it sit there gathering dust. The fact is, the world is buying jillions of gallons of oil. Today, much of that money goes to Middle Eastern countries, who use that money to train terroists and brutalize women and gays (which I would think liberals would have a problem with). I'd rather keep that money here. I don't see how any rational person could disagree with that, I just don't.

"Jim, are you really advocating for state run oil? you lament the gov's ability to run anything, period, and want to put them in charge of this?"

I said "I don't know". I am a free-market capitalist, when I believe the system allows for that. The oil industry does not represent, to me, a free market capitalist environment. There are limited players in the game, with enormous barriers to entry. There's nothing to stop them from price-gouging, because we can't do without that oil. So I think we need more regulation.

Oil is not the same as, say, hamburgers. If Burger King and McDonalds raise prices unreasonably, I can very easily eat Subway grinders instead...thus the free market works just fine. Oil is different by nature. We can't live without it, it's a legitimate national security issue (maybe you have heard of the troubles our planet has endured in the Middle East over the years)...

Furthermore, since the oil we have belongs to the citizens of our country (rather than some private entity), you could make a case that we all deserve a share of any revenue.

"You are the only far-right socialist I know."

No, I'm not. Even the most staunch libertarian recognizes that in certain scenarios, the feds have to play a role. I also know how to think for myself. I don't blindly regurgitate the talking points of any one party. I know how to think rationally and solve problems. And my conclusion is...Americans are going to spend a lot of money on oil before alternative fuels are available. We can continue to buy that oil elsewhere, which impoverishes us and enslaves us to sociopaths in the Middle East and that kook in Venezuela. Or we can refine it ourselves, and give our economy a major boost, and maybe use that money to help some people who really need it. I like the latter alternative, it pleases both my capitalism agenda and my Catholic agenda.

What's the harm in at least doing some studies to see how much oil we really have, and what it would take to get at it...

My own paty? I'll call it the "common sense with compassion" party. I've always said that will be my slogan. I'd rather give my money to an American company than to a middle eastern thug. I guess you disagree. I respect that, but I sure don't get it...

[Jim in CT]

Originally Posted by RIROCKHOUND

6. Norway is smaller than MASSACHUSETTS population wide.

...

I'm aware of this. I brought up Norway es evidence that you can aggressively drill for oil, and not destroy the environment. Norway utilizes their oil, and they haven't destroyed their beautiful landscape to do it.