Mr. Speaker, nobody likes these high prices, and I think most folks understand the law of supply and demand. Worldwide, this last year, we pumped 126,000 fewer barrels of oil and we used a million barrels more each day. We have said no to…
Mr. Speaker, nobody likes these high prices, and I think most folks understand the law of supply and demand. Worldwide, this last year, we pumped 126,000 fewer barrels of oil and we used a million barrels more each day.
We have said no to ANWR, we have said no to tar sands, we've said no to oil shale, we've said no to nuclear. Sierra Club, I'm told, has opposed solar in California. This Congress has not extended R&D for renewables. Yet, 85 percent of our offshore sites are off-limits.
I would like to put a letter that I received a copy of from the American Association of Petroleum Geologists into the Record that was sent to the Speaker. They conclude that policies that increase exploration costs, decrease the available time to properly evaluate leases and restrict access to Federal lands in the OCS do not provide the American people with short-term relief from high prices and undermine the goal of increasing stable long-term surpluses.
We can't waive a magic wand and say here it is. If you say 5 years, but you still require some 27 different environmentally-mandated permits that are required, with no shortening of the time that it takes to get those permits approved, you are not succeeding. In effect, what you are doing is telling the companies to go look someplace else. They are not going to look in America. They are going to look someplace else, because they may not have to comply with these same 25 different regulations that you have to comply with in this country. You can't just say 5 years, without shortening that process.
Now, I am sorry that I didn't talk to Mr. DeFazio before I used that chart, but he cited I think a Shell development in Alaska that doesn't have access yet to the pipeline that takes that oil down through to the bottom of Alaska. Without the pipeline permits, they have to cap the wells.
American Association of
Petroleum Geologists,
June 23, 2008.
Hon. Nancy Pelosi,
Speaker, House of Representatives, Washington, DC.
Hon. Steny Hoyer,
Majority Leader, House of Representatives, Washington, DC.
Hon. John Boehner,
Minority Leader, House of Representatives, Washington, DC.
Dear Speaker Pelosi, Majority Leader Hoyer, and Minority
Leader Boehner: Given the on-going debate about access and
leasing activity on federal onshore lands and the Outer
Continental Shelf, I would like to offer some perspective, on
behalf of the American Association of Petroleum Geologists
(AAPG), on the science and process of finding oil and natural
gas.
AAPG, an international geoscience organization, is the
world's largest professional geological society representing
over 33,000 members. The purpose of AAPG is to advance the
science of geology, foster scientific research, promote
technology and advance the well-being of its members. With
members in 116 countries, more than two-thirds of whom work
and reside in the United States, AAPG serves as a voice for
the shared interests of energy geologists and geophysicists
in our profession worldwide.
AAPG strives to increase public awareness of the crucial
role that the geosciences, and particularly petroleum and
energy-related geology, play in our society.
Finding and developing oil and natural gas blends science,
engineering, and economics. It has distinct phases:
exploration, development, and production. And it is risky,
because finding oil and natural gas traps, places where oil
and natural gas migrate and concentrate, buried under
thousands of feet of rock is like finding the proverbial
needle in a haystack. Talent and technology increase our
chances of a discovery, but there are no guarantees.
What is exploration? Well, the grid pattern on a block map
makes it tempting to think of exploration as a process of
simply drilling a well in each grid block to determine
whether it contains oil. But because of the natural variation
in regional geology, one cannot assume oil and natural gas
are evenly distributed across a given lease or region.
Rather, exploration is about unraveling the geologic history
of the rock underneath that grid block, trying to understand
where oil or natural gas may have formed and where it
migrated. If the geology isn't right, you won't find oil
or natural gas.
Legendary geologist Wallace Pratt once observed, ``Where
oil is first found is in the minds of men.'' When preparing a
lease bid, geologists use their knowledge to identify the
specific areas in a region that they believe have the highest
likelihood of containing oil and natural gas traps.
Successful exploration begins with an idea--a hypothesis of
where oil may be found.
Since exploration is about developing and testing ideas,
some acreage available for leasing is never leased. That is
because no one develops a compelling idea of why oil or
natural gas should be there. Similarly, some acreage is
leased and drilled repeatedly with no success. Then, one day,
a geologist develops an idea that works, resulting in new oil
or natural gas production from the same land that others
dismissed as barren.
Once a lease is awarded, geologists begin an intensive
assessment. They collect new geological, geophysical, and
geochemical data to better understand the geology in their
lease area. They use this data to construct a geological
model that best explains where they think oil and natural gas
were generated, where it may have been trapped, and whether
the trap is big enough to warrant drilling.
If there is no evidence of a suitable trap, the explorer
will relinquish the lease and walk away. If they see a trap
that looks interesting, they schedule a drill rig to find out
if they are right. Drilling is the true test of the
geologists' model, and it isn't a decision to be made
lightly. Drilling costs for a single well can range from $0.5
million for shallow onshore wells to over $25 million for
tests in deep water offshore.
As the well is drilling, geologists continually collect and
evaluate data to see whether it conforms to their
expectations based on the geological model. Eventually, they
reach the rock layer where they think the trap is located.
If there is no oil or natural gas when the drill reaches
the trap they were targeting, they've drilled a dry hole. At
this point the explorers will evaluate why the hole is dry:
was there never oil and gas here; how was the geological
model wrong; and can it be improved based on what they know
from the drilled well? Depending on the results of this
analysis, they may tweak the exploration idea and drill
another well or decide the idea failed and relinquish the
lease.
If there is oil and/or natural gas, they've drilled a
discovery. Typically, they will test the well to see what
volumes of oil and/or natural gas flow from it. Sometimes the
flow rates do not justify further expenditures and the well
is abandoned. If the results are promising, they will usually
drill several additional wells to better define the size and
shape of the trap. All of this data improves the geological
model.
Based on this revised geological model, engineers plan how
to develop the new field (e.g., number of production wells to
drill, construction of oil field facilities and pipelines).
Using complex economic tools, they must decide whether the
revenue from the oil and natural gas sales will exceed the
past and continuing expenses to decide whether it is a
commercial discovery.
The process of leasing, evaluating, drilling, and
developing an oil or natural gas field typically takes five
to ten years. Some fields come online sooner. Others are
delayed by permitting or regulatory delays or constraints in
the availability of data acquisition and drilling equipment
and crews. Large projects and those in deep water may require
a decade or more to ramp up to full production.
As you can see, oil and natural gas exploration is not
simple and it is not easy. It requires geological ingenuity,
advanced technologies, and the time to do the job right. It
also requires access to areas where exploration ideas can be
tested--the greater the number of areas available for
exploration, the higher the chance of finding oil and natural
gas traps.
U.S. consumers are burdened by high crude oil prices.
Conservation and efficiency improvements are necessary
responses, but equally important is increasing long-term
supply from stable parts of the world, such as our very own
federal lands and Outer Continental Shelf.
As Congress considers measures to deal with high crude oil
prices, I urge caution. Policies that increase exploration
costs, decrease the available time to properly evaluate
leases, and restrict access to federal lands and the Outer
Continental Shelf do not provide the American people with
short-term relief from high prices and undermine the goal of
increasing stable long-term supplies.
I am happy to further discuss these ideas. Please contact
me through our Geoscience & Energy Office in Washington, D.C.
at 202-684-8225 or 202-355-3415.
Sincerely,
Willard R. (Will) Green,
President.
Mr. Speaker, would the gentleman yield?
If the gentleman would yield, it is my understanding that they haven't been able to conclude the permits that would link those oil discoveries.