Leases Canceled and Oil Companies Lie

archesCliff posted yesterday the breaking news that Obama’s new Interior Secretary Ken Salazar had nullified the BLM’s illegal sale of leases to drill for gas and oil near Utah’s national parks.

The response from the oil industry was predictable:

But Kathleen Sgamma, director of government affairs for the Independent Petroleum Association of Mountain States, a nonprofit association that represents independent natural gas and oil producers in the Intermountain West, said her group had “grave concerns” over the direction the new administration was taking.

“This is going to make it more difficult to develop the natural gas resources we need for our nation’s energy security,” she said. [emphasis added]

So what about this?

Drillers cutting back in Utah’s biggest gas field

SALT LAKE CITY (AP) — The frenzied pace of drilling in Utah’s biggest gas field, the Uinta Basin, has seen a big decline with falling petroleum prices and tight bank credit.

The number of rigs at work statewide is down to 23, half of the number as last August, according to figures the Utah Division of Oil, Gas and Mining plans to release Wednesday.

Also, the number of gas wells completed in January was 63, down from 84 for the same month last year.

Most of Utah’s drilling activity takes place near Vernal in the Uinta Basin, where one player, Colorado-based Gasco Energy, says it called off an expensive experiment to do horizontal drilling, which can dramatically boost production.

Gasco cited declining prices for Rocky Mountain natural gas, which is hard to pipe out of the region.

You bet the oil companies want to tie up these leases, whether they develop them or not. Look at the thousands of leases for off-shore drilling they now own but have never developed. And still, they want more of those too. And they want to rip up the delicate Utah landscape for oilshale as well!

The oil companies are not interested in our security so much as their own profits. With oil prices so low, there will be no new development. The oil companies try to make themselves look like patriots in this debacle. Let’s not be deceived. It’s only about money.

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  1. #1 by Richard Warnick on February 5, 2009 - 12:56 pm

    Did you see the quote from Senator Orrin Hatch in this morning’s Salt Lake Tribune?

    “The argument that these leases have been canceled to protect our national parks is a fairy tale conjured up to win public support for what is actually a very dangerous anti-oil agenda.”

    VERY DANGEROUS. It’s almost as if Hatch thinks conservationists have links to terrorists or something.

    • #2 by Becky on February 5, 2009 - 1:05 pm

      Great link, Richard. I followed it back to its source and guess who is one of the principals behind the group? Our own Utah Rep. Aaron “nuclear power” Tilton.

  2. #3 by Richard Warnick on February 5, 2009 - 1:13 pm

    I blogged about this a year ago. It’s an “astroturf” industry front group called Americans for American Energy.

    Where do they get the chutzpah to accuse conservation groups of a land grab? We own the land now, it’s the petroleum industry that’s grabbing it!

  3. #4 by Shane Smith on February 5, 2009 - 4:02 pm

    Wait….

    Becky, are you suggesting that oil companies might be less than honest about their motivation for drilling?

    Are these the same companies that are posting record profits?

    Those profits are in patriot dollars I will have you know!

  4. #5 by Leo Brown on February 5, 2009 - 7:09 pm

    The record profits are disappearing fast with the fall in the price of oil. At current prices, it is difficult to justify new exploration. But if I could predict the future price of oil on a given date, I could make a fortune.

    Of course, oil companies want to maximize their profits. That is their purpose. That does not make them evil. It does mean that we need to balance their interests with the interests of environmentalists, who are not evil either.

  5. #6 by Uncle Rico on February 5, 2009 - 7:40 pm

    Orrin Hatch is a tool. Hasn’t he figured out yet that the majority of Americans are no longer buying off on the GOP’s old stand-by: the politics of fear?

  6. #7 by Shane Smith on February 5, 2009 - 7:45 pm

    “Of course, oil companies want to maximize their profits. That is their purpose. That does not make them evil”

    No, it doesn’t. But lying and misleading in order do so? Well, that is a little bit evil, isn’t it?

    “Economy a shambles? World in a recession? Even oil prices dropping like a stone?

    Didn’t matter. ExxonMobil, the world’s largest publicly traded oil company, still managed to set a record as the most profitable American corporation ever last year, the New York Times reports. The total for 2008: $45.2 billion, up from $40.6 billion the previous year.”

    I want financial security too. But if I claim that everyone should pay me lots of money in order to make the country secure, that is kinda dishonest.

    Interestingly, if the wind and solar companies made the same claim, it would both be closer to true, and people would be more likely to call it a lie.

    So lets see, which concerns me more, the idea that we might do our own research and development, creating jobs as we go, in order to make our energy, OR that we should give money to companies with record profits. That can’t be bothered to spend that money to improve their own companies and that supports a system that will eventually mean getting even more oil from countries that actually do make the world more dangerous.

    Or maybe they are reinvesting the money. Buying politicians can’t be cheap.

  7. #8 by Larry Bergan on February 5, 2009 - 9:57 pm

    Did Orrin really say:

    “The argument that these leases have been canceled to protect our national parks is a fairy tale conjured up to win public support for what is actually a very dangerous anti-oil agenda.”

    Hatch is smart enough not to attack DeChristopher directly, but isn’t this like saying:

    ‘SO, you think you saved your little treasures in Utah, huh, DeChristopher?’

    I’ve always thought Hatch was sent to Utah to procure our oil, (shale, whatever), but I have no way of proving it. All I know is that Reagan, Hatch and Watt all showed up at the same time. Why did he come here from Pittsburgh? Did something say “This Is The Place” to him?

  8. #9 by Shane Smith on February 5, 2009 - 9:59 pm

    “Hatch is smart enough not to attack DeChristopher directly, but isn’t this like saying:
    ‘SO, you think you saved your little treasures in Utah, huh, DeChristopher?’”

    Actually, it is more like saying “i’ll get you my pretty and your little dog too!”

  9. #10 by Larry Bergan on February 5, 2009 - 10:42 pm

    Shane:

    We all know what happened to the wicked witch, and it looks like whole Reagan shebang is melting, but the flying monkey’s are still everywhere on cable news, and voraciously eating over-the-air radio and television, as usual.

    However, the DeChristopher event is a victory by ANY measure. They can try to take that victory away, but it will be much harder now. When was the last time you heard that word, (VICTORY), in association with any good cause?

  10. #11 by Larry Bergan on February 5, 2009 - 11:19 pm

    Richard W:

    Don’t we have an urgent need for a fake organization task force. They can start by flagging any organization with the words Americans, citizens, mothers or families for… (whatever.) Move on from there to investigate any organization with the words foundation, institute, endowment, ect…

    I’m being totally serious. Misperception is a huge problem in our country today because the fake groups get covered on television and the real ones get ignored.

  11. #12 by Richard Warnick on February 6, 2009 - 7:00 am

    Larry–

    Simple rule of thumb. If they can afford to run ads on TV (other than PSAs at 3 am), it’s probably not a genuine grassroots group. The Reality Coalition, with its multi-million dollar ad campaign exposing the “clean coal” myth, might be an exception.

    Of course, on the Web, there are no rules.

  12. #13 by Leo Brown on February 6, 2009 - 7:54 am

    I don’t think ExxonMobil was one of the companies bidding on these leases.

    Profits in oil aren’t so easy these days.

    Signaling that Big Oil’s heyday is over for now, ConocoPhillips posted an enormous fourth-quarter loss Wednesday as the energy giant was stung by $34 billion in asset writedowns and plunging crude prices.

    See this link.

    Flying J is in chapter 11, though still operating.

    Lying is evil, but let’s not paint everyone in the oil industry as a liar or rolling in money. That would be to distort the truth as well.

  13. #14 by Cliff Lyon on February 6, 2009 - 8:30 am

    Leo,

    In the interest of full disclosure, is it possible you have some financial or professional exposure to Oil & Gas?

    Cuz it sure smells like it.:)

  14. #15 by Leo Brown on February 6, 2009 - 9:26 am

    I have both exposure to oil and the environment. I drive a hybrid, but it requires gas. I walk to work much of the time. I fly a fair amount on commercial airliners. I heat my house with natural gas. I am concerned about clear air. About five years ago I figured oil stocks, which had languished for years, were a good investment and made diversified investments accordingly, including some big oil stocks. I also invested in non-energy natural resource stocks. Oil and natural resources make up a modest fraction of my total portfolio. Sometimes oil stocks move with the Dow, sometimes they move against the Dow. I sold some at the top. I should have sold more. Flying J is privately held, and I have none of their stock.

    Personally, my profession is in biotech with very little contact with oil and gas. One small customer is primarily focused on synthetic fuel from biomass. Some years ago with another employer I had a few oil companies as customers (analytical chemistry and oil core imaging). At the time, oil prices were depressed. Oil is a boom and bust business.

    My professional degrees are in chemistry.

    I have one son in oil exploration with a major oil firm. I have two sons in finance where energy and natural resources are a big part of the equation, but where their interests are not necessarily aligned with those of the oil companies.

    The number one crisis facing the country is the current state of the economy. Related to that is our dependence on foreign oil. This should be high on the national agenda. Bashing big oil may be fun, but it doesn’t offer a solution. I am not opposed to a windfall profits tax on oil. I am just saying, those windfall profits are no longer there for many oil companies, and you should be aware of that.

    I voted for Obama as a moderate, and like the President, I don’t propose the abandonment of capitalism.

    Anybody out there not using oil products?

  15. #16 by Shane Smith on February 6, 2009 - 9:36 am

    Leo, I agree, painting everyone in oil and gas as liars is misleading. But the statement made here, about companies that just finished with record profits and now paint themselves as “defending america” for trying to grab public land are pretty disgusting.

    “The number one crisis facing the country is the current state of the economy. Related to that is our dependence on foreign oil.”

    That is true, but I have to rank that dependence down below several other larger causes. Still that is no reason to ignore the problem.

    The question for me remains, is it better to invest in technology to create new energy sources or to continue as we have been, changing only where we drill?

    No matter where and how we drill, we do not have enough oil here in our own borders to last. Even just for ourselves. But if we create tech that can power a new type of energy industry, we can power not just ourselves but maybe export either the tech or energy or both. Several european countries are doing exactly this, and doing it well.

  16. #17 by Leo Brown on February 6, 2009 - 11:30 am

    France, for example, opted for nuclear power in a big way, but that isn’t popular on this site.

  17. #18 by Shane Smith on February 6, 2009 - 11:34 am

    Well I can’t speak to others opinions on nuclear energy, but I do find it disturbing that nuclear power generates waste that is deadly for longer than there have been human beings on earth, and we have no way to deal with that waste, so lets make more.

    Perhaps I am wrong on that?

  18. #19 by Cliff Lyon on February 6, 2009 - 11:36 am

    Hi Leo,

    I love the unassuming passive aggressive thing:

    I voted for Obama as a moderate, and like the President, I don’t propose the abandonment of capitalism.

    Anybody out there not using oil products?

    Why not abandon capitalism? Since you brought it up. I know your religion says greed is bad. Now the Republicans have had a chance to test the theory so we know greed is also bad for society.

    Perhaps there is a better way.

  19. #20 by cav on February 6, 2009 - 12:01 pm

    “Why not abandon capitalizm?”

    Rich Banker remodeling project might taper off? Privated jet fuel earnings might tank? Denial and the status quo are dependent on it?

    Nah, I see no reason to abandon ‘Crap’-italizm. ..except that it’s abandoning us!

  20. #21 by Ken Bingham on February 6, 2009 - 12:12 pm

    Cliff

    Greed may be a part of capitalism, but envy is the very basis of soc#ial@ism. When people covet what others have they will either work to get it themselves, or let envy and hate rule the day and take what they have not earned via the power of government. I say the former is far better for society than the latter.

  21. #22 by jdberger on February 6, 2009 - 1:21 pm

    Well I can’t speak to others opinions on nuclear energy, but I do find it disturbing that nuclear power generates waste that is deadly for longer than there have been human beings on earth, and we have no way to deal with that waste, so lets make more.

    And how long is CO2 deadly, Shane? CO? O? All are poisons – just like the radioactive wastes generated by nuclear power.

    Sure, solar and wind are wonderful, but how do STORE the energy? Lead? Acid? Lithium? All poisons.

    Nuclear is NOW. Nuclear is “shovel ready” to borrow a phrase from the hopey-changey guy. Nuclear is infrastructure and jobs and cheaper energy and no emissions.

    All you have to do is get past “Silkwood”.

  22. #23 by Shane Smith on February 6, 2009 - 1:56 pm

    jd, you have some misconceptions.

    While CO2 is dangerous in too large a quantity, it is necessary in balance. Our problem is not that CO2 “is” but that we are making more than the planet uses. If all CO2 magically disappeared, we would be in big trouble. In fact we would be dead.

    If all nuclear waste disappeared, we would be better off.

    “Sure, solar and wind are wonderful, but how do STORE the energy? Lead? Acid? Lithium? All poisons.”

    Again you mischaracterize the problem. See above.

    How ever even if you were right there, the answer is most likely hydrogen for fuel cells.

    So you are wrong twice.

    Nuclear is not only deadly long term and we still don’t have a solution for what waste we already have. It isn’t shovel ready, because we have no way to deal with the negative output. That IS emissions. The most deadly kind ever.

    Lastly, “cheaper energy”…… Cheaper than what?

    According to the Nuclear Energy Information Service, “Since 1950, nuclear power has received over $97,000,000,000 in direct and indirect subsidies from the federal government, such as deferred taxes, artificially low limits on liability in case of nuclear accidents, and fuel fabrication write-offs. No other industry has enjoyed such privilege.” That is more than 30 times the amount that all alternative energy generations have received. Ever. Combined.

    If your power bill reflected the tax payer dollars that go into nuclear power, you wouldn’t be impressed. Solar is around $4 a watt to build personal and about $1.5 for large installations. Wind around $5.40 for personal and about $1.6 for installations last I looked into it.

    If you remove the tax payer burden, nuclear is well over $10 per watt.

    What is your definition of cheap exactly?

    “All you have to do is get past “Silkwood”.”

    Yeah just that minor inconvenient factor of some of the most horrible waste on the planet getting turned out into your drinking water. If we could just get past that and the terrible safety record and the huge cost and security issues, hey nuclear is a great idea, isn’t it?

  23. #24 by jdberger on February 6, 2009 - 2:19 pm

    Terrible safety record? Really? Nuclear has an impressive safety record.

    I’ve done the price comparison of nuclear v. “alternative” energy with Richard. Feel free to look it up. Nuclear is cheaper. Further, “alternatives” like solar and wind are worthless when it’s cloudy/dark and still.

    Fuel cells are great. Let me know when we have a large scale working version and then we’ll discuss the enviromental impact of all that water vapor. It’s a greenhouse gas, too.

    I agree that it would be all bunnies and jelly-beans if there wasn’t any nuclear waste. But energy production creates waste products. Battery manufacturers are huge polluters. It takes large amounts of energy to isolate hydrogen, compress and transport it. Windmills kill birds. etc.

    Nuclear plants are safe, have a commonality of design and are a proven technology. The others are still in their infancy. How long are you willing to wait?

  24. #25 by James Farmer on February 6, 2009 - 2:42 pm

    jd:

    I agree that nuclear power should be considered again in the US. However, your play on CO2, water vapor, etc., trivializes the importance of the discussion and makes you appear an idiot which, obviously, you are not.

  25. #26 by Shane Smith on February 6, 2009 - 2:48 pm

    “Nuclear has an impressive safety record.”

    Except for little things like making 150,000 square kilometers uninhabitable and minor issues like that. Sure.

    And that is just the accidents. The waste that is still being “not stored” anywhere that keeps getting shunted to Utah cause we are a bunch of morons who don’t mind that stuff in our backyard is a whole other issue.

    “I’ve done the price comparison of nuclear v. “alternative” energy with Richard. Feel free to look it up.”

    Well lets see, economists and number crunchers who actually do this for a living say you are wrong, but you, random man on the internet with no proof, I will accept your numbers instead. Let me go look those up……

    “Let me know when we have a large scale working version and then we’ll discuss the enviromental impact of all that water vapor. It’s a greenhouse gas, too.”

    Ok, that is officially the dumbest comment i have read today. You win. I give up.

  26. #27 by jdberger on February 6, 2009 - 3:47 pm

    James,

    I was responding to Mr. Smith’s simplistic comment with an assertion that was equally absurd to illustrate the inanity of his complaint. See “Beach Blanket Babylon” for similar styles of commentary. :)

    The problem with Nuclear v. solar/wind/alt-energy is that the debate is polarizing.

    The Right (me) angles for nuclear in the same dogmatic way that the Left (Mr. Smith) touts alt-energy.

    I haven’t made it clear in this discussion, but I’m all in favor of solar. I’m also cognizant of its limitations. Wind is wonderful – but has some nasty side effects. A mix and match approach is needed and quickly. Nuclear holds the line while other technologies are developed.

    If alt-energy was the sure winner promoted by Mr. Smith, wouldn’t there be a river of VC funding it? There isn’t and it isn’t (yet).

    Finally, Mr. Smith – there is a direct correlation between water vapor and temperature increases due to greenhouse effects. You’re assertion that my comment is “stupid” says much more about you than it does me.

  27. #28 by cav on February 6, 2009 - 4:51 pm

    ‘Shovel-ready’ in this instance, means to bury the infinitley toxic shit. And while you’re at it just keep on a diggin’.

  28. #29 by Shane smith on February 6, 2009 - 5:27 pm

    Never questioned water vapor having greenhouse properties, I do question the intelligence of someone who feels radioactive waste is ok, but water vapor is bad.

    Perhaps you would be willing to spend a week with a small box of each and tell us which one has which effects?

    I am sure nuclear has more VC that alternative energy. You got me there.

    Still waiting to hear how billions of tax dollars for nuclear don’t make it more expensive. Maybe tax dollars are not a cost in the same way radioactive waste isn’t a pollution?

    Do please explain how I am the stupid one after those comments. I am enjoying this.

    Tell me, is the sky pink in your world?

  29. #30 by Leo Brown on February 6, 2009 - 9:17 pm

    Cliff,

    Neither capitalism nor socialism has succeeded in eliminating greed or envy (or lust, gluttony, sloth, wrath, and pride for that matter).

    I consider questions of where to draw the line between energy needs and the environmental concerns and between private control, local government control, and federal control as reasonable ones. We could nationalize the oil companies and still have these questions. My own view is that certain sensitive tracts should be off limits, and I didn’t like the Bush administration’s last minute moves on this. I think most people would agree, but obviously not some of the people directly affected. I wouldn’t demonize either side, which may fall under the sin of wrath.

    A few other points:

    If nothing is sacred, then the environment isn’t sacred.

    When an oil company buys a lease, they are essentially buying an option to drill; they aren’t guaranteeing they will drill. They might not drill if economic conditions are unfavorable. Even if they drill, odds are it will drill a dry hole, and the government can, in principle, change the rules of the game at any time.

    I don’t think Utah is sitting on a lot of oil by world standards, which is a good thing for Utah environmentalists.

    The Nature Conservancy is a private approach to keeping lands out of the hands of developers.

  30. #31 by jdberger on February 6, 2009 - 10:34 pm

    Your comparison is pretty disengenuous, Mr. Smith.

    How about comparing the volume of “waste” generated for equal amounts of energy produced over time?

    Radioactive waste is bad in significant quantities, just like large quantities of waste products from other energy generation…even the huge amounts of otherwise innocuous water vapor that would be created by adopting hydrogen fuel cells wholesale.

    Finally, this evening, the sky was very pink, Mr. Smith. However calling me names may boost your ego – but it undermines your argument.

  31. #32 by Shane Smith on February 6, 2009 - 10:48 pm

    How about we point out that most current fell cell designs actually emit water and not vapor?

    How about we look at your other name calling posts on this blog site?

    How about we all laugh at you using “disengenuous” (sic) after referring to water as dangerous and radioactive waste as not?

    How about you get back to us on the VC money and the real cost of nuclear despite actual experts giving numbers that say you are a liar?

    How about I am done playing with the troll now. Go to bed, the grown ups have matters of import to discuss…….

  32. #33 by jdberger on February 6, 2009 - 11:13 pm

    You want numbers from MIT or the WSJ, Mr. Smith?

    Maybe the Royal Acadamy of Engineering?

    A UK Royal Academy of Engineering report in 2004 looked at electricity generation costs from new plants in the UK. In particular it aimed to develop “a robust approach to compare directly the costs of intermittent generation with more dependable sources of generation”. This meant adding the cost of standby capacity for wind, as well as carbon values up to £30 (€45.44) per tonne CO2 for coal and gas. Wind power was calculated to be more than twice as expensive as nuclear power. Without a carbon tax, the cost of production through coal, nuclear and gas ranged £0.022–0.026/kWh and coal gasification was £0.032/kWh. When carbon tax was added (up to £0.025) coal came close to onshore wind (including back-up power) at £0.054/kWh — offshore wind is £0.072/kWh — nuclear power remained at £0.023/kWh either way, as it produces negligible amounts of CO2. (Nuclear figures included estimated decommissioning costs.)

    You claim to be a fan of science. You’ve started 3 top posts touting the “return to science”. Unfortunately, you appear to completely ignore any scientific opinion that conflicts with your dogma.

    Mr. Smith, twice you’ve claimed that I’ve suggested that nuclear waste isn’t dangerous. It makes me wonder if you have a reading disability. Please re-read the post directly above your last one – the first sentence in the penultimate paragraph. You can move your lips if it helps with comprehension.

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