Tear Em Asunder

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Dall Ram

Joined: 10/19/2005 Posts: 6091
Likes: 480


Im not disagreeing, but add context for those not in the O&G biz


there were about 40,000 leases, the Biden admin cut about 30 out leaving the 9k you reference.

Sure some of those leases may have a gusher of oil under them. First, the E&P effort has to line up the investment capital to do the exploration, look at the availability of access and infrastructure etc, and run the gamut of federal permitting to reach an initiation decision. If that's even a go then you drill and estimate reserves, Then you have to develop the field to produce sufficient volumes to make it economic, then you have the transportation costs to refineries. Refining is a whole different business, how the refinery is set up to produce XYZ types of product from light or heavy crude, and what the market demands are in the area served by the refinery. It would cost more for example to send AK oil to the gulf coast refineries which are set up to break heavy crude resulting in a higher price for the product than if the Gulf refinery took a heavy import from somewhere overseas. That's why some tankers from AK go to Asia. One could write volumes on all the decisions necessary from geology, engineering, economics, and marketing etc etc on every step of the way.

So saying that you could go drill a lease "this afternoon", while somewhere probably technically correct, obfuscates the difficulty in all the steps between holding a lease and filling American car tanks with gas. When a political administration limits leases, and makes investors recalcitrant to provide capital for exploration, then future opportunity is dimmed, and the futures markets price the commodity higher as a result. When an Administration limits new leases in a place like the Cook Inlet, (which is not ANWR) its a clear message to Wall Street not to invest. This drives prices higher based on future limits to supply. Fuel prices go up, therefore transportation costs more, fertilizer (primary feedstock is nat gas) costs more, and voila, we're all paying a buck more for every head of lettuce at the grocery store. Biden policies are doing this and his PR team is trying to blame the big bad oil companies as they hoodwink the American public.

(In response to this post by aggieram76)

Posted: 05/13/2022 at 02:45AM



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Current Thread:
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  Wow... you are really an expert now... -- Shiner 05/12/2022 3:00PM
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