realjohnboy wrote:Off to bed for me. But, Okie, I gently ask and hope you can gently answer a question.
The oil companies already have the rights to drill in what I would regard as a huge area. They have had the rights to do that for years. Why haven't they developed those fields? Why do they want access to more fields when they haven't developed the ones that they already have? Thank you. -rjb-
Are you talking in generalities or about one specific area that you are aware of?
I am going to answer with the assumption that you are speaking in general, I think repeating the Democratic talking point, that large areas of existing leases have not been developed.
The answer is that not all areas have equal potential, and all parts of existing leases are not considered equal potential. Oil is not ubiquitous throughout the earth's crust, it occurs as pools or traps, both structural and stratigraphic. Further, leases are generally granted or procured as a land position by an oil exploration firm in an area, wherein they may not have good enough information to yet pinpoint the best drilling targets, that have the most potential for oil and gas, so they lease more land than they can practically expect will be underlain with oil or gas. But a good land position is necessary in order to have room to develop a prospect. Lease costs may be well spent if compared to the cost of drilling, so a good land position is considered wise from the get go. Of course each area has its own characteristics. If alot of drilling has already been done, perhaps a lease here or there is appropriate if the existing information indicates that to be the case.
Further, once leases are procured, they may do more seismic work, etc., to help pinpoint the best targets, which takes more time. And now, permits through various goverment agencies can forestall activity for months, etc. Then once drilling begins, it will provide further information on the geology and potential, yet more specific in area. If a field is found, it will be limited in extent, and will further provide information on the potential for the rest of the lease. The company may then deem the rest of the lease very high potential, of lesser or marginal potential, or virtually no potential at all. The end result of this whole process is that you end up with large portions of leases that are relatively undrilled or not drilled at all because the company does not rate their chances worth the investment of drilling.
Drilling wells is not cheap, generally it is a minimum of hundreds of thousands of dollars per well, and it may be millions for deeper or offshore wells. Simply punching holes everywhere because they have not been drilled is a very poor way to run an oil company, and if you do, you will go broke very quickly.
Companies may hold leases a period of time, without drilling, for any one of several reasons. It could be budget constraints, a matter of priority, they have better places to spend the budget, maybe they wait for a competitor to drill nearby to see what their results may seem to indicate, or they may wish to procure more geophysical information before drilling, which takes time, so there could be lots of reasons that are various and probably unique to each area. Maybe they think a lease is worth keeping, but not worth drilling right away, maybe they have bigger fish to fry.
I hope this explains it a little.
