Oil Companies Sitting On 1,000s Of Unused Leases; Glutted Market Means "Drill Baby Drill" Is Bullshit

[hatrack]

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Trump has repeatedly said eliminating barriers to drilling will unlock vast untapped reserves of “liquid gold” and ignite a new era of national prosperity. But most of the drilling leases already granted to companies in the oil-rich Gulf are idle and unused, and they’ll stay that way until the United States’ record-breaking production rates wane and the high costs of drilling offshore drop precipitously. Of the 2,206 active leases in the Gulf, only a fifth are producing oil, according to records from the Bureau of Ocean Energy Management, which regulates offshore drilling. Oil industry executives and analysts say the current number of 448 oil-producing leases is unlikely to grow significantly, even if Trump makes good on promises to expand leasing opportunities and expedite drilling permits.

The market is saturated with oil, making companies reluctant to spend more money drilling because the added product will likely push prices down, cutting into profits. “It’s not the regulations that are getting in the way, it’s the economics,” said Hugh Daigle, a professor of petroleum engineering at the University of Texas in Austin. “It’s true that there are a bunch of undeveloped leases in the Gulf, and it’ll stay that way if we continue to see low or stagnant oil prices.”

Global oil production is expected to grow more than demand over the next two years, likely forcing the price of crude to drop 8 percent in 2025 and another 11 percent next year, according to a January forecast from the U.S. Energy Information Administration, or EIA. The Gulf accounts for 97 percent of all offshore oil and gas production in the U.S. Nearly 12 million acres are under active leases in the Gulf, but only about 2.4 million acres are being used to produce oil and gas, according to BOEM data.

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“It’s simple,” said Brett Hartl, the Center for Biological Diversity’s government affairs director. “The companies make more money when they have to spend less time and effort on permits and environmental regulations and mitigation.” A host of environmental and worker safety rules enacted after the 2010 Deepwater Horizon oil disaster has made obtaining a lease and drilling permit a multi-year process. Companies must demonstrate their operations are prepared to deal with potential blowouts and worst-case-scenario discharges, and all drilling platform designs and materials must undergo certification by independent engineers.

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https://grist.org/energy/trump-wants-more-drilling-but-the-oil-market-is-already-saturated/

[bucolic_frolic]

1. The cheap oil has been extracted long ago

The more drilling, the more cost. Higher drilling costs are only profitable when oil prices are very high. If they don't perpetuate the use of oil as a fuel, the demand won't be there to drive prices higher. Which is why they want to gut alternative energy entirely.

[bronxiteforever]

2. Kick

[Walleye]

3. Mega Americans, believe that any oil drilled out of our ground is "our oil"

I don’t know how they got so misinformed, Sarah Palin, maybe.