2. Active Leases and Production Activity
The MMS reports more than 4,000 active platforms in the OCS areas of the Western and Central Gulf of Mexico. In fact, this activity accounts for about a quarter of our nation’s domestic oil supply and about 15 percent of our natural gas. Even so, oil companies hold undeveloped leases in these areas, so it has been argued that new areas of the OCS should not be opened. This is not a well-reasoned thesis. To begin with, some areas currently under moratorium may contain better targets for oil and gas exploration, so opening them would ultimately provide more supply than if companies were limited to drilling on existing leases. In those areas where leases are currently held, oil company assessment of the acreage may not indicate commercial quantities of oil and gas, meaning the lease will remain undeveloped. In other cases, leased acreage may be currently under study, but drilling, which may happen eventually, has not yet begun. If oil companies were hoarding leased acreage, as has been claimed by some, they would be heavily penalized by shareholders for paying for unused leases, not realizing reserve appreciation, and failing to identify drilling opportunities.
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65,000,000 acres are leased. Most are not active. No equipment is available to drill, no ships are available to move it and there is no more refinery capacity. Now is the time to develop new technologies for a more sustainable energy plan. We all know now speculation is the problem, not the supply. This is a fake arguement to continue the gauging of the American people. The oil companies want the rest to pad their assets. Make no mistake, if they get it they won't drill on it. Why would they?
tjhawknes133,
I suppose it follows then that we should have stopped drilling in 1930. After all, in 1930 we didn't have enough equipment to supply US demand in WWII, let alone present demand.
Drilling rigs and infrastructure are built as demand grows. History proves it. Your argument (and I have heard it many times) is without merit.
To begin, the OCS lease statistics are available from the MMS at http://www.mms.gov/ld/PDFs/OCSstatusMap8e (3).pdf. You are significantly off the mark.
As for your objection, I do not understand why exactly you object. According to your argument, lifting the moratorium will not result in any drilling anyway. So, then, what does it matter if the moratorium is lifted?
Your claims about rigs, ships and refineries are short run arguments. Refinery capacity has been expanding, both internationally and domestically, precisely because demand for refined products has been growing. Rig lease rates have sky-rocketed over the last several years, making it profitable for rig owners to add capacity and they are doing so. (Rigs are not simply lying. As with any industry, unutilized capacity is undesirable.) Also, there is no shortage of tankers. More generally, your argument assumes that no investment in delivery infrastructure will occur, which is simply not borne out by history.
Also, recall that the price of oil was under $10 per barrel in 1998, just ten years ago. You should note that even during that time, these same companies were calling for the moratorium to be lifted in literature prepared by the NPC for the DOE. I hardly see how this can be equated to gauging.
Your statistical link is dead. You still don't address why companies don't drill on the acreage they are already leasing. I don't buy the supply problem arguement. I'm not an economist but it seems to me that if the product is selling this well then why flood the market with more? You are well aware that Exxon made the most money ever in the history of man last year. Just because it may be there it doesn't mean we have to give it to the oil companies. Eventually the oil will run out. Scientists agree the earth is in crisis and it's time to turn our sites on sustainable energy. Since the taxpayers will bail out the mortgage lending industries, there will be little borrowed money to use to jump start new energy industries. I will conceed that oil will continue to be used in the interim. Oil companies ought to have to prove there is no oil on the land already leased before getting more. Incidentally, this is mostly political anyway. A package was offered allowing off-shore drilling 50 miles off-shore using American-made tools and labor, if voters in each states agree and an end to tax subsities. Conservatives rejected the package.