Why aren't oil execs drilling in the U.S.?
This week, oil executives have been telling Congress they can't drill in the U.S. because their hands are tied. But Bob Moon reports the same execs have been making excuses not to use existing permits for domestic drilling.
Oil workers drill in Illinois (Scott Olson/Getty Images)
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Renita Jablonski: When one goes up, the other goes down. Oil rallied towards $133 a barrel this morning on a weaker dollar. Also, there are concerns about stagnating production in Russia and other countries outside of OPEC.
This week in Congress, executives from big oil companies have been telling lawmakers the fastest way to reduce prices for oil and gas is to allow more oil drilling in the U.S. But as Marketplace's Bob Moon reports, oil companies aren't even tapping the domestic petroleum reserves they already have.
Moon: Oil execs spent the past couple of days claiming their hands are tied when it comes to drilling for more oil here at home, and it's up to Congress to change that.
Peter Robertson: Open up more federal lands and allow us to responsibly produce more American oil and natural gas.
Chevron Vice Chairman Peter Robertson chided lawmakers for "limiting development without good reason."
But at the Center for American Progress, energy expert Daniel Weiss says those same execs have been making excuses for years that they can't keep up with the government drilling permits they already have. By some estimates, 75 to 80 percent of existing leases are untapped.
Daniel Weiss: Why would they want us to open up new areas if they don't even have the infrastructure capacity to explore and develop existing leases? I think it's about something more fundamental: greed.
Some lawmakers are pointing back at the oil companies, complaining they can sit on a lease for 30 years or more without producing a drop. All the while, the idle holdings can still be used to inflate their theoretical reserves -- and boost their stock prices.
In Los Angeles, I'm Bob Moon for Marketplace.
Comments
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From OH, 06/02/2009
"75 percent of the oil commpanies leases" doesn't take into consideration how much acreage the leased land has, it probably means the 75 percent of the leases that are very small.
From Bothell, WA, 05/24/2008
I am sorry but I do not believe the 75% to 80% untapped is a accurate estimate. Either the estimate is way off or those oil are prohibitive expensive to drill. Besides, if Oil company is tapped out on the capacity, why don't we just open the ANWR to them. They won't have resource to drill there anyway. There will be no environmental impact and eleminate the excuse from them permenantly. Truely, I think this estimate is totally off.
Most likely the 75% percent are the percentage of oil still in the ground. once you drill a hole, you have to suck out of the oil slowly. It is not surprising there are still 75% still on the ground.
From Nucla, CO, 05/23/2008
Please don't make the assumption that the presence of a lease means that there is economically recoverable amounts of oil or gas under that lease. Leases are usually obtained on the premise that there is a reasonable belief, based on a number of factors, that oil or gas might be discovered. Many other considerations will determine when or if that lease is actually drilled. If oil or gas is discovered, then the issue becomes if it can be extracted and be economic within the regulatory and environmental framework of the lease area. Holding a lease for a long time may just indicate that the holding costs are lower than the perceived geologic potential. But that is a horse of a different color.
From Mountain View, WY, 05/23/2008
In the 90s I worked for Chevron in New Orleans.
Exploration plays were being rejected if they were judged to be "uneconomic" based on the expected cost/barrel produced.
With oil at over $100/barrel, shouldn't Chevron et al be drilling those prospects that were "marginal" in the 90s?
The business answer is "no."
Exploiting these reserves would lower the price of oil thus making the oil companies work harder for the same return. Definitely not in shareholder interest.
From Boulder, CO, 05/23/2008
This is a very pertinent story that needs more exposure. Many people blame the lack of oil drilling and production on the environmentalists. This story points out that it is the actions of the oil companies that are limiting the amount of petroleum and gasoline available to consumers.
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