Where is the US economy headed?

Talk about ignorance, okie has won the class dunce award.
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June 01, 2004
Oil & Gas Leasing on Federal Public Lands

This is an interesting article on federal oil & gas leasing:

WASHINGTON (AP) � Nearly three-fourths of the 40 million acres of public land currently leased for oil and gas development in the continental United States isn't producing any oil or gas, federal records show, even as the Bush administration pushes to open more environmentally sensitive public lands for oil and gas development.

An Associated Press computer analysis of Bureau of Land Management records found that 80 percent of federal lands leased for oil and gas production in Wyoming are producing no oil or gas. Neither are 83 percent of the leased acres in Montana, 77 percent in Utah, 71 percent in Colorado, 36 percent in New Mexico and 99 percent in Nevada.

How much exploration has occurred on the nearly 30 million acres of non-producing public land leases is difficult to say. BLM officials could provide no details on the number of exploratory wells drilled on those leases, despite repeated requests for that information over the past two months.

But with so much public land already available for exploration, environmental groups and local landowners are questioning why the Bush administration is pushing to lease still more federal land to the oil and gas industry, particularly in areas that the groups and some lawmakers want protected as federal wilderness areas.


For an alternative take, the oil industry often argues that leasing of public lands is not a big deal because it doesn't mean a public lands area will be drilled. And while this is true it is also true that once leased it is very difficult to provide a public lands area with greater protections.

I don't have a link for the article itself but it was accompanied with these two neat charts:

� The top 100 oil and gas lease holders on federal lands by acres leased

� State by State Breakdown of Active Lease Areas

While this is nicely full of invective, it doesn't really provide any counter-arguments against my position. Just assertions.

Cycloptichorn

So then, just what is your degree in?

I would venture okie got his degree in liberal arts.

Not surprising. Oil is not ubiquitous. It occurs in limited areas, stratigraphic and structural geological traps. Take a class in oil geology and you might have a chance of understanding it. Might is the key word for you guys.

Geology.
I've told you guys that before.

okie, First you say: 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.

A few posts later, you say:

Back to oil companies, it costs money to hold leases, so it is generally not in the best interest of companies to waste dollars on leases that have no potential, or waste time developing something so that a costly lease can pay for itself. Any company that has as its primary goal to sit on leases will go out of business.

I responded with: If the land had no potential for oil, why did those oil companies buy into those leases? DUH!

You responded with: Sheesh, ci, please spare yourself of showing ignorance on this?

So I posted this report:

June 01, 2004
Oil & Gas Leasing on Federal Public Lands

This is an interesting article on federal oil & gas leasing:

WASHINGTON (AP) � Nearly three-fourths of the 40 million acres of public land currently leased for oil and gas development in the continental United States isn't producing any oil or gas, federal records show, even as the Bush administration pushes to open more environmentally sensitive public lands for oil and gas development.

An Associated Press computer analysis of Bureau of Land Management records found that 80 percent of federal lands leased for oil and gas production in Wyoming are producing no oil or gas. Neither are 83 percent of the leased acres in Montana, 77 percent in Utah, 71 percent in Colorado, 36 percent in New Mexico and 99 percent in Nevada.

How much exploration has occurred on the nearly 30 million acres of non-producing public land leases is difficult to say. BLM officials could provide no details on the number of exploratory wells drilled on those leases, despite repeated requests for that information over the past two months.

But with so much public land already available for exploration, environmental groups and local landowners are questioning why the Bush administration is pushing to lease still more federal land to the oil and gas industry, particularly in areas that the groups and some lawmakers want protected as federal wilderness areas.


For an alternative take, the oil industry often argues that leasing of public lands is not a big deal because it doesn't mean a public lands area will be drilled. And while this is true it is also true that once leased it is very difficult to provide a public lands area with greater protections.

I don't have a link for the article itself but it was accompanied with these two neat charts:

� The top 100 oil and gas lease holders on federal lands by acres leased

� State by State Breakdown of Active Lease Areas

okie, Have you caught up with yourself yet?

okie wrote: Not surprising. Oil is not ubiquitous. It occurs in limited areas, stratigraphic and structural geological traps. Take a class in oil geology and you might have a chance of understanding it. Might is the key word for you guys.


Not necessary to take a course in geology, because we have an expert geologist, farmerman, who knows more about geology than you'll ever know.

You see, okie, when I need a physician, I don't study medicine; I go to my physician. Simple concept, isn't it.

ci, your question about why did those oil companies buy into those leases, I will try to answer it this way. I've already answered it, but I will try another way.

Without knowing the circumstances of a specific lease, I can only speculate as to the probable reasons.

A company's lease holdings in an area probably consists of a collection of leases. It depends upon how large each lease is, and this may be quite a bit different from area to area, depending on land ownership patterns, whether it is private land or federal land that is being leased. So a company generally has only preliminary information and evaluations of areas before they go after leases. They typically do not have so much information that they can lease only where the oil is, because they don't know that before more geophysical work and actual drilling is done. Once a collection of leases is obtained, perhaps more geophysical work is done, more specific studies of surrounding well information is done, etc. etc., then they test what is deemed the most prospective spot or spots, which may be located on certain leases within an overall lease package.

Now, just because they have not yet drilled every lease does not indicate to them that there is no oil there. It probably means they think there remains enough potential to hold the lease, but not enough to punch a hole in every lease immediately. Oil and gas exploration is done in a series of steps. To do it any other way is bad management, bad geology, just bad business. After initial phases of evaluation is done, it may be that the company deems the leases to hold only marginal potential, enough to hold, but not enough to spend the money there. They may have found other leases to hold more potential, and so they spend their budgets in other places. It may also mean that they plan to drill the other leases in due time, but are simply drilling other adjoining leases first, in an orderly fashion, that bests collects the pertinent information to help evaluate the remaining leases.

Exploration budgets include land acquisition, geophysical work, and drilling, and all the rest. Obviously a company needs to have an inventory of good lease holdings in order to establish a decent position in oil trends, ahead of actual testing of all lease holdings.

A good example now is the frenzy to tie up good leases in the best trends of the shale plays in different parts of the country. Companies are ill prepared to drill all of the lease areas they might acquire immediately, but a company must acquire a decent collection of leases to ever hope to be a significant player in a new oil play area. All of this has ramifications for production of the oil or gas later, through piplelines or whatever it is. Once they acquire the best land position they deem possible and adviseable, then the process of further evaluation and drilling may take years, many years, for all the reasons stated above and more. To suggest that just because leases exist without yet being drilled is an indication of malfeasance on the part of oil companies is astonishingly ignorant of how the business is conducted.

Now, the question is, how come lease more lands, given the companies already have all these leases wherein they are conducting their evaluations over a period of years. Again, the answer is obvious. Any smart oil company always needs more plays, more lease areas, that have great oil potential, because nobody would ever suggest to quit looking for more and better potentials in which to find oil and gas.

Any company that does that is not moving forward and they will die on the vine. It would simply be bad business. An analogy, an auto maker should never quit researching a better car, upgrading the cars that they have, or doing research on new designs, better designs, etc., and how well they do that will determine their future success.

All of the above that I have written, ci, should be intuitively obvious to virtually anyone.

Obama's planned tax increases will drive business overseas and kill the US economy.

To add a postscript to my above post, ci, it is not only astonishing, but very very sad that we have congressmen so ignorant of business, the oil business, that they would actually not be able to understand some of this very common sense stuff, but would instead try to make good business practice, as practiced by oil companies, a political football. Very sad. And not a very good commentary on the educational system in this country.

One last thought, if all the oil companies had already drilled or tested every lease they now have, I would say that all the companies had pretty well tapped out everything, it would be over, the business would be essentially dying very fast. Only a fool would desire that, or an anti-capitalist.

Bring on the Fair Tax. Elect McCain and get McCain to appoint Huckabee to get it going pronto. We need CHANGE, change from the tired old failed policies of the past, such as the income tax. We see now that we are losing billions because of the system we now have.

okie wrote: Now, just because they have not yet drilled every lease does not indicate to them that there is no oil there. It probably means they think there remains enough potential to hold the lease, but not enough to punch a hole in every lease immediately.

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Doesn't fly; not that long ago, oil was $60/bbl, and it's now over $140/bbl. If that doesn't motivate the oil companies to extract that oil at more than double the value in just a year, hanging onto those leases without gaining on the profit is not only ridiculous but doesn't make any sense.

Sorry, but you don't make any sense. Your geology education hasn't taught you anything about potential gross profit.

What it looks like it to me is that the oil companies are artificially keeping supply lower than it needs to be.

In the mean time, we're exporting our US dollar to the gulf states, South America, and the other oil producing countries that will exacerbate our inflation for the long term while increasing our balance of trade.

Which party is better for our economy in general?



Cycloptichorn

HO2_MAN wrote :

"Obama's planed tax increases will drive business overseas and kill the US economy."

anyone have any suggestions who killed the U.S. dollar ?
can't have been obama , since he isn't the president . i would guess that it must have been someone/something else , or did the U.S. dollar decide to take tumble on it's own - just out of sheer spite ?
hbg

Yes, it took a tumble on its own, because the world was afraid Obama might win the presidency. Or, the conservatives could continue to blame it on Clinton.

If you think it's bad now, just wait until Obama tears all of us a new ass hole.