Global Warming...New Report...and it ain't happy news

I think your recollection is probably reasonable. As I tried to explain in my posts a few pages back, my experience was many years ago and more with minerals, but the same principles I think apply.

There is a certain amount of speculation involved with companies acquiring leases, based upon speculative or incomplete information. After the leases are acquired, a period of further information gathering will take place to supplement the information available prior to leasing. Leasing, by necessity, must be done to tie up the land before other companies lease prospective areas, due to the competitive nature of the business. There is a constant turnover of leases, as the process of evaluating the oil and gas plays progresses. A company's lease position is generally not static. A company may hold many leases that are deemed potential, but not potential enough to drill on all of them now. Results of competitors drilling may determine the leases are not good enough to hold after a period of time, but company's tend to hold onto leases if they think there is enough potential down the road, pending further developments, which includes many factors, including price of oil and gas.

Since lease costs may be minor compared to drilling costs, it is often sensible to obtain a good lease position so that if further developments of price, favorable results nearby, or new interpretations of the geology render the prospects to be considered more favorable than previous. However, no company would hold a lease indefinitely if they thought the lease to be worthless. This does not mean however that a lease is considered prime and worth spending a ton of money to drill immediately.

As I recall, some leases have an up front bonus, then a yearly payment that may be quite a bit less for the rest of the lease term. If a company feels the lease has any potential at all, they may choose to hold onto many leases with only marginal potential. They are worth holding, but not worth drilling right away.

What the Democrats are proposing is silly, either drill the leases or give them up, which short circuits the process and hurts the lease holders as well as the process of finding more oil. It may stimulate drilling of more dry holes than normal, or cost the lease holders more lease monies, neither of which benefit the consumer, the oil companies, or the lease holder.

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Lest we forget. The oil companies have had these leases since BEFORE the ban on further leases which occurred during the first Bush administration.

That means they have held the leases for 18 years or more. If they haven't had the time in 18 years to determine if their existing leases have oil or not, why would giving them more leases result in instant drilling?

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okie wrote:

What the Democrats are proposing is silly, either drill the leases or give them up, which short circuits the process and hurts the lease holders as well as the process of finding more oil. It may stimulate drilling of more dry holes than normal, or cost the lease holders more lease monies, neither of which benefit the consumer, the oil companies, or the lease holder.

Correct!

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And if the concept of drilling on oil leases goes right over the head of some and those same folks are not considering the role of Congress in keeping the oil companies from drilling where the oil is--a reminder here:

http://media.townhall.com/Townhall/Car/b/mrz071608dAPR.jpg

I suppose a crash course in those awful oil speculators that Nancy Pelosi wants to crush won't register with them either. But let's try:

Scapegoating Speculators
by Walter Williams PhD
July 9, 2008

Despite Congress' periodic hauling of weak-kneed oil executives before their committees to charge them with collusion and price-gouging, subsequent federal investigations turn up no evidence to support the charges. Right now oil company executives are getting a bit of a respite as Congress has turned its attention to crude oil speculators, blaming them for high oil prices and calling for tighter control over commodity futures trading.

Let's look at the futures market and for simplicity use corn futures discussed in my May 28th column titled "Futures Market." While corn is different from oil, both obey the laws of supply and demand, just as humans are very different from bricks but both obey the laws of gravity.

Say that today's price of corn is $7 a bushel. I have a hunch that because of Midwest flooding, higher demand due to droughts and war in other parts of the world, that in May 2009, corn will sell for $12 a bushel. I stand to make a lot of money by buying corn now for $7 a bushel, holding it, and in May 2009 selling it for $12 a bushel. If many speculators share my hunch and buy more corn now, today's price, sometimes called the spot price, is going to rise let's say to $10 a bushel.

Higher prices for corn, and everything made from corn, might give rise to consumer complaints. While Congress can't stop the Midwest rain, droughts and wars in far off places, it can scapegoat speculators. Let's say that Congress outlaws the corn futures market, or makes futures trading more costly. Doing so will definitely lower the spot price of corn. The price might return to $7 a bushel, making corn consumption once again "affordable." You might exclaim, "Isn't Congress wonderful?" But what about May 2009?

Suppose the Midwest floods have a significant impact on corn production; there's drought and war in far off places raising the demand for corn exports. What do you predict will be the availability and prices of corn in May 2009 after Congress has outlawed, or made futures trading more difficult?

If you answer less corn and much higher prices, go to the head of the class. By outlawing or impeding futures trading in corn, Congress encouraged Americans to ignore the future. Had Congress not interfered, people would use less corn now, making more available in May 2009. Thus, one of very valuable functions performed by the speculator is the allocation of resources over time.

It makes sense to take the future into account when making consumption decisions today. The futures market, by the way, is no bed of roses. My hunch about corn supply and demand conditions might be dead wrong. Its May 2009 price might be $3 a bushel and I would have to sell at a loss. Futures trading is risky business.

Congressional attacks on speculation do not alter the oil market's fundamental demand and supply conditions. What would lower the long-term price of oil is for Congress to permit exploration for the estimated billions upon billions of barrels of oil domestically available, not to mention the estimated trillion-plus barrels of shale oil in Wyoming, Colorado and Utah.

Some politicians pooh-pooh calls for drilling, saying it would take five or 10 years to recover the oil. I guarantee you we would begin to see a reduction in today's prices even if it took five to 10 years for us to get the first barrel. Put yourself in the place of an OPEC member knowing there would be a greater supply of U.S. oil five or 10 years, hence maybe driving oil prices lower to say $40 a barrel. What will you want to do now while oil is $130 a barrel? You would want to sell as much oil now and OPEC's collective efforts to do so would put downward pressures on current oil prices. Right now the U.S. Congress is OPEC's staunchest ally
GMU EDU LINK

http://media.townhall.com/Townhall/Car/b/mrz072408dAPR.jpg

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parados wrote:

Lest we forget. The oil companies have had these leases since BEFORE the ban on further leases which occurred during the first Bush administration.

That means they have held the leases for 18 years or more. If they haven't had the time in 18 years to determine if their existing leases have oil or not, why would giving them more leases result in instant drilling?

A lease in ANWR would result in quick drilling, because oil companies now know there is a large supply of oil in that one, ten-thousandth part of ANWR they wish to drill in.

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ican711nm wrote:

parados wrote:
Lest we forget. The oil companies have had these leases since BEFORE the ban on further leases which occurred during the first Bush administration.

That means they have held the leases for 18 years or more. If they haven't had the time in 18 years to determine if their existing leases have oil or not, why would giving them more leases result in instant drilling?

A lease in ANWR would result in quick drilling, because oil companies now know there is a large supply of oil in that one, ten-thousandth part of ANWR they wish to drill in.

Really? I'm sure at one point they 'knew' there was oil on the leases they currently own. Or, at least, they SAID they knew.

Cycloptichorn

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Cycloptichorn wrote:

ican711nm wrote:
parados wrote:
Lest we forget. The oil companies have had these leases since BEFORE the ban on further leases which occurred during the first Bush administration.

That means they have held the leases for 18 years or more. If they haven't had the time in 18 years to determine if their existing leases have oil or not, why would giving them more leases result in instant drilling?

A lease in ANWR would result in quick drilling, because oil companies now know there is a large supply of oil in that one, ten-thousandth part of ANWR they wish to drill in.

Really? I'm sure at one point they 'knew' there was oil on the leases they currently own. Or, at least, they SAID they knew.

Cycloptichorn

They originally leased those lands to obtain permission to determine if those lands had adequate oil reserves to warrant drilling. Using their modern electronic oil exploration tools, they obviously have decided without actually drilling that the lands they currently lease do not have adequate oil reserves to warrant the cost of drilling at this time.

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THE DISSENTS OF THE SCIENTIFIC DISSENTERS

Quote:

http://epw.senate.gov/public/index.cfm?FuseAction=Minority.SenateReport#report

179
Nigel Calder, former editor of New Scientist and co-author with Physicist Henrik Svensmark of a new 2007 book entitled The Chilling Stars: A New Theory of Climate Change," expressed his view that the UN rejects science it sees as "politically incorrect," and accused the UN of denying that "climate history and related archeology give solid support to the solar hypothesis." Calder wrote in a February 11, 2007 op-ed in the UK Times, "Twenty years ago, climate research became politicized in favor of one particular hypothesis, which redefined the subject as the study of the effect of greenhouse gases. As a result, the rebellious spirits essential for innovative and trustworthy science are greeted with impediments to their research careers." Calder concluded, "Humility in face of Nature's marvels seems more appropriate than arrogant assertions that we can forecast and even control a climate ruled by the sun and the stars."

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parados wrote:

Lest we forget. The oil companies have had these leases since BEFORE the ban on further leases which occurred during the first Bush administration.

That means they have held the leases for 18 years or more. If they haven't had the time in 18 years to determine if their existing leases have oil or not, why would giving them more leases result in instant drilling?

The facts are fairly clear that the oil companies are generally strongly inclined to drill in both ANWER and some off shore areas on the Atlantic. Pacific, and Gulf coasts currently excluded from development. We can all safely assume they are acting in their perceived self interests, based on the economic tradeoffs involved and the geological data they have as it relates to the likelihood of significant petroleum deposits there. In these areas and even in the continental states they face strong and organized NIMBY pressures that also likely influence their decisions.

Oil prices are high now, but many believe there is a bubble involved here - even though the underlying trend for increased demand remains strong. The experience of the fall of petroleum prices after the crisis in the 1970s stranded a number of innovative energy developments ranging from coal gassification to oil extraction/exploration in marginal fields in a no win situation. I beleive that is causing producers to remain focused on their best opportunities for quality development and avoid marginal or risky plays.

You appear to be advancing some other - as yet unspecified - theory for why the oil companies are not drilling in leased areas. Just what motives do you suggest?

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Cycloptichorn wrote:

ican711nm wrote:
parados wrote:
Lest we forget. The oil companies have had these leases since BEFORE the ban on further leases which occurred during the first Bush administration.

That means they have held the leases for 18 years or more. If they haven't had the time in 18 years to determine if their existing leases have oil or not, why would giving them more leases result in instant drilling?

A lease in ANWR would result in quick drilling, because oil companies now know there is a large supply of oil in that one, ten-thousandth part of ANWR they wish to drill in.

Really? I'm sure at one point they 'knew' there was oil on the leases they currently own. Or, at least, they SAID they knew.

Cycloptichorn

I continue to marvel at liberal ignorance.

Oil leases do not either have super potential or absolutely no potential. There are gradations in between. We could rate them 0 to 10, whereas a 3 might warrant holding a lease, pending further evaluations and developments, and whereas an 8 might warrant drilling. A 10 would warrant more aggressive schedule of drilling. A 0 might warrant dropping the lease when it comes due. A 1 might also, or a 2 might, but perhaps holding a while longer if a competitor is planning a test nearby, which migh t shed more light on the potential.

ANWR would probably be an 8 or higher, with all the untested but favorable parameters of a possible elephant. Oil companies like elephants, which are larger and more prolific reservoirs, rather than investing in wells that are marginal or short term producers.

Foxfyre has accurately tabbed the Dems, that constantly attempt to find a scapegoat, when the guilty party is themselves in the mirror, if they would only look. Demagoguery is as old as politics, and the Dems are really trying to be good at it. It is pretty funny really that they want to drill the less potential areas first. They have little Napolean attitudes wherein they just have this compulsion to give somebody an ultimatum so that they can go beat their chest, in this case it is the oil companies, drill where we want you to drill or else, as if they know better than the oil companies where to drill. Stay out of it, Dems, and leave the oil business to the experts please. Screw up Washington, that should be enough to screw up.

And besides blaming the oil companies, they try to blame speculators.
What a laugh, these people are pathetic. They are acting serious, but when they make their little grandstand speeches in front of the hearings, it is childishly incompetent. It is embarrassing. It demonstrates a total lack of understanding how markets work. and common sense, none.

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georgeob1 wrote:

You appear to be advancing some other - as yet unspecified - theory for why the oil companies are not drilling in leased areas. Just what motives do you suggest?

You are being dignified and appealing to a reasonable debate, but old okie here, I tend to just lay out the insulting truth as I see it. I think it is fairly obvious that Dems habitually distrust business and the market, while thinking the government can always do something better, that government is as pure as the wind driven snow. Dems or liberals tend to scapegoat business as greedy and are alway trying to pull a fast one over everybody, and that possibly businesses are constantly conspiring against consumers. That is the template they place on every issue. I think this template is wrong, and it is wrong in this case as well.

Libs frantically search for another reason that oil companies have not drilled some leases, other than the real and logical reason, that the economics of drilling them just is not as attractive as drilling other leases. Libs think that cannot be true, that somehow government should mandate something, such as drill or drop the leases, as if that is the government's job. If they want to write the stipulations into leases, then fine, but it is clear the lease conditions control what happens, and if they write stupid stipulations into leases, then the companies may not choose to bid on the leases, or if they do, it will cause less efficient evaluation of leases. But of course the Dems can go home and say they did something, and that makes them feel good, even if it was counterproductive, produced no more oil, or did not lower prices, and did not affect the environment.

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Leaving the topic energy/oil aside, not speaking about climate ...

Today, weather statistics have been reported here: the last eight months in Germany have been in a row 1.1°C above the average of the time period between 1950 and 2000.
Everyone will agree here, having actually now (9am) already 25°C.

The last eight month, we (in Germany) had more than 10% more rain than during the average of the above mentioned period.
Many will agree here as well, especially those, who suffered from severe floodings.

That's, of course, just the weather. No news about climate change ...

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Congress approved drilling in ANWR I believe in 1995 and Bill Clinton vetoed that. Had we gotten started then we would have that oil now. If we get started now we will have an increased supply within a few years. If we don't, a few years down the road we will still be in the same uncomfortable (and dangerous) position with the solution still years away.

Acknowledging Walter's effort to bring the thread 'back on topic'. I believe this IS on topic because it is only a free and prosperous nation with sufficient energy supply that can focus on R&D to produce the next energy grid for an increasing population. Again look how long it took to go from foot power to the wheel to the horse and wagon to sailing ships and steam engines and finally to eternal combustion engines and nuclear power. I feel certain we will make the next transition in even less time, but until that transition is made, we will need oil to keep us prosperous and growing and safe and free.

As people who understand markets know, the mere fact that we are actively working on furnishing our own needs for crude oil as well as other ways to achieve energy independence will change the behavior of OPEC and other oil producing nations and the prices will continue downward. McCain, Jeb Bush, and others who resisted opening up access to some of our most plentiful oil sources have changed their mind in the face of crushing fuel prices that hurt many and damage the economy while keeping us dependent on unstable foreign fuel supplies.

I do not understand the mindset of those in Congress who say they love their country and care about people but who continue to try to block the single most significant thing they can do to make things much much better than they are now.

And to block that kind of positive progress because of fuzzy and icongruous as well as some dishonest notions re global warming is frustrating at best, infuriating at worst.

http://media.townhall.com/Townhall/Car/b/GM080731G-ObamaEnerg.jpg

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Walter Hinteler wrote:

Leaving the topic energy/oil aside, not speaking about climate ...

Today, weather statistics have been reported here: the last eight months in Germany have been in a row 1.1°C above the average of the time period between 1950 and 2000.
Everyone will agree here, having actually now (9am) already 25°C.

The last eight month, we (in Germany) had more than 10% more rain than during the average of the above mentioned period.
Many will agree here as well, especially those, who suffered from severe floodings.

That's, of course, just the weather. No news about climate change ...

THE DISSENTS OF THE SCIENTIFIC DISSENTERS

Quote:

http://epw.senate.gov/public/index.cfm?FuseAction=Minority.SenateReport#report

180 & 181 Geologist Dr. Ed Doheny (formerly of Drexel University) also critiqued former Vice President Al Gore's climate science presentation. "[Gore's] got his independent and dependent variables all mixed up," Doheny said according to an October 18, 2007 article in The Daily Pennsylvanian. Doheny also mocked Gore by stating, "I didn't know they gave the Nobel Prize for acting."

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Walter Hinteler wrote:

Leaving the topic energy/oil aside, not speaking about climate ...

Today, weather statistics have been reported here: the last eight months in Germany have been in a row 1.1°C above the average of the time period between 1950 and 2000.
Everyone will agree here, having actually now (9am) already 25°C.

The last eight month, we (in Germany) had more than 10% more rain than during the average of the above mentioned period.
Many will agree here as well, especially those, who suffered from severe floodings.

That's, of course, just the weather. No news about climate change ...

It's probably the adverse side effects of all those goddam 7MW windmills !!

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georgeob1 wrote:

It's probably the adverse side effects of all those goddam 7MW windmills !!

Either that, or the methane gas rising from pitiful dead bodies of birds that the windmills cruelly chopped up to pieces while in flight.

Anyway - I'm starting a party in honor of a long-lost friend, Glitterbag, over at another thread oddly named for "we white people" by a TV comedian of color and relating to Mrs Obama for reasons utterly beyond my understanding; we hope to have beer, wine, barbecue, popcorn, plus potluck - y'all invited Smile

http://www.able2know.org/forums/viewtopic.php?p=3339965#3339965

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georgeob1 wrote:

Walter Hinteler wrote:
Leaving the topic energy/oil aside, not speaking about climate ...

Today, weather statistics have been reported here: the last eight months in Germany have been in a row 1.1°C above the average of the time period between 1950 and 2000.
Everyone will agree here, having actually now (9am) already 25°C.

The last eight month, we (in Germany) had more than 10% more rain than during the average of the above mentioned period.
Many will agree here as well, especially those, who suffered from severe floodings.

That's, of course, just the weather. No news about climate change ...

It's probably the adverse side effects of all those goddam 7MW windmills !!

That may have some humor, but on a serious note, I have wondered when the subject of how large wind farms could deplete enough wind energy to alter the weather in subtle ways. A few turbines here and there, probably no affect, but I have wondered if very large areas with turbines dispersed throughout the areas can deplete or siphon off enough energy, or wind speed to affect possible weather patterns? Has anyone studied this? I am not proposing that an effect does exist, but I am imagining that a small one could exist, maybe. I don't have a good handle on how much energy, percentage wise may be taken out of the wind currents in an area, if a very heavy concentration of turbines is located there.

Same thing with solar. I would imagine an even more insignificant amount of energy would be siphoned off, but if many very large solar farms are built in a wide area, I could imagine some effect upon the temperatures in those areas, although again I am not sure, and it may be so insignificant as to be nothing to consider, but I still have a curiosity.

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That's my concern. The enormous amount of land that will be consumed by construction of enough wind turbines and solar collectors to replace large quantities of oil and coal are a bit mind boggling.

And until we evolve into the next transition of ways to move people, raw materials, and products around the world, oil remains the fuel of freedom, security, and prosperity. Efforts to curb its production I think are extremely short sighted.

http://media.townhall.com/Townhall/Car/b/07-31-08oilsurge.jpg

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okie wrote:

I have wondered when the subject of how large wind farms could deplete enough wind energy to alter the weather in subtle ways. A few turbines here and there, probably no affect, but I have wondered if very large areas with turbines dispersed throughout the areas can deplete or siphon off enough energy, or wind speed to affect possible weather patterns? Has anyone studied this?

There's none, at least accorsding done to studies at the Endowed Chair of Wind Energy, Institute of Aircraft Design at the Faculty of Aerospace Engineering and Geodesy, University Stuttgart and various other wind energy institutes.

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Foxfyre wrote:

That's my concern. The enormous amount of land that will be consumed by construction of enough wind turbines and solar collectors to replace large quantities of oil and coal are a bit mind boggling.

There's normal agricultural business around the fundaments of the turbines - they don't use a lot of land at all: not more than the masts of power lines.

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Global Warming...New Report...and it ain't happy news

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