Sunday, July 6, 2008
Back to 1552
"A bill introduced in Congress this week would 'compel' oil and gas companies to produce from federal lands they are leasing. If only it were that easy to find and produce oil. Imagine, an act of Congress could do what geology could not. ... Anyone with even the most basic understanding of how oil and natural gas are produced--and this should include many members of Congress--knows that claims of 'idle' leases are a diversionary feint. ... However, until the actual exploration is complete, a company does not know whether the lease will be productive. ... Obviously, companies want to start producing from active fields as soon as possible. However, there are a number of time-consuming steps to be taken before they can do so: Delineation wells must be drilled to size the field, government permits must be obtained, and complex production facilities must be engineered and installed. All this takes considerable time, and during that time, the lease is also listed as 'nonproducing'. ... As I've often said, the first step in our business is called 'exploration' for a reason. Exploration is time consuming, very costly and involves a great deal of risk. ... In reality, a lease is simply a block on a map, with no guarantee that it contains any resources", Red Cavaney (RC) at the WSJ, 20 June 2008.
RC is president and CEO of the American Petroleum Institute. Bravo RC. Which Congressman with a good knowledge of history will resurrect England's 1552 statute against "engrossing"?, which Wikipedia defines as, "the getting into one's possession, or buying up, large quantities of corn, or other dead victuals, with the intent to sell them again. This must of course be injurious to the public, by putting it in the power of one or two rich men to raise the price of provisions at their own discretion". This seems to be the "thinking" behind Congress recent scapegoat search to explain $143 a barrel oil, see my 13 June 2008 post.