Don't Expect Much From Increased US Oil Drilling - CSM

[hatrack]

EDIT

Make no mistake about it, American oil companies are exploring, drilling, and extracting as fast as they can. Last year, for instance, the rig count grew by more than 10 percent over 2003. But the impetus is $60-a-barrel oil, not legislation. Still, as the easy oil runs out, getting to the difficult oil is becoming more expensive. Houston-based Rowan Cos., for instance, is currently drilling a well on the Gulf of Mexico's shallow-water shelf that will reach 32,000 feet to the sub-sea floor. It will take a year to complete and $100 million to construct.

"The technology of oil and gas drilling in the Gulf of Mexico is advancing fast, but the costs in the frontier areas increased substantially," says Paul Kelly, senior vice president at Rowan, a drilling contractor. Many of the energy bill's economic incentives for drilling are targeted at the central and western Gulf of Mexico, which already supply 25 percent of the nation's oil and 28 percent of its natural gas. The bill provides royalty relief for both oil drilling in deep water and deep gas drilling in the shallow-water shelf.

EDIT

In addition to encouraging unconventional drilling, the new energy bill includes a few provisions to loosen constraints on conventional drilling. The land-use permitting process has been streamlined, hydraulic fracturing of wells has been exempted from the Safe Drinking Water Act (except for diesel fuels), and the regulation of storm-water discharges during the construction of facilities has been limited. But in the end, industry experts say, incentives for increased production are minimal.

Others in the industry believe the government should butt out altogether. "I don't like the government in private business," says Jeff Johnson, CEO of Cano Petroleum Inc., an oil and gas production company based in Fort Worth, Texas. "Your Microsofts of the world, your ExxonMobiles, your Ford Motor companies - none of these was built with government subsidies." His enhanced oil recovery company has four old fields in Oklahoma and Texas that currently produce between 400 and 450 barrels of oil a day. With the help of new technology, he expects those same wells to yield 10,000 barrels of oil a day in the next three to five years.

EDIT

Yeah, you let us know how that works out for you, Mr. Johnson. :eyes:

http://www.csmonitor.com/2005/0808/p01s01-uspo.html

[phantom power]

1. well, he only means "butt out of regulations"...

He certainly doesn't mean "butt out of tax breaks". That would be unfair.

[hatrack]

2. Yeah, I noticed that companies aren't lining up to hand the money back

Are they, now?

[Dogmudgeon]

3. "...none of these was built with government subsidies..."

What does he call military, federal, state, and municipal contracts?

It sounds like Dick Cheney in the debates, bragging about how he never needed government money. As if!

--p!