There is no "war on the oil and gas industry" by the Obama administration, Interior Secretary Ken Salazar told the American Petroleum Institute's board Thursday, saying instead he needs the industry's help in "an honest accounting" of US natural resources under the Outer Continental Shelf. Salazar, citing the expense of gathering seismic data for offshore resources, asked for more assistance from the petroleum industry in gathering an inventory of available resources in the OCS."Our data about oil and gas resources is either out of date or doesn't exist," he said in remarks at the trade group's Washington headquarters, according to a transcript released by the Interior Department. "In the Atlantic, our limited seismic data is two or three decades old. This is a challenge we need your help to address."
| I can think of a way you could update that information, and it wouldn't cost the government a penny ... |
Salazar also said the Obama administration may be "changing how things have been done before," especially in regards to royalty payments and taxes. "We are going to take another look at royalty rates," Salazar said. "It means that tax breaks that are no longer needed, and which the American people can't afford, will disappear...but this is not, as some have suggested, a war on the oil and (natural) gas industry."
Salazar defended his decision last month to cancel the sale of 77 leases near national parks in Utah, saying the Department of Interior will hold 40 onshore federal oil and gas lease sales, even though the sales were crafted by the previous Bush administration.
Salazar added that he supports research and development on oil shale, "but that a 5% royalty rate for commercial production is simply too low."
Salazar said he would also free up significant portions of the OCS as well as federal lands onshore for solar, wind and wave energy projects.
"We appreciate having had the opportunity to be with the secretary today and hear his views on energy development," said Karen Matusic, an API spokeswoman, who said the mood of the meeting was friendly. "He recognizes the important role of oil and natural gas in meeting the nation's economic and energy goals, and we look forward to working with him."
If you follow the energy sector, you will realize just how dumb this all is. In December Colorado gutted the exploration industry by introducing new rules which extended the drilling approval period from 5-6 days to 65 days and pushed up costs. As a consequence if you take a drive down I-70 there are trucks with drilling equipment lined up on the side of the highway to head out of the state. Now they are by-passing UTAH as well. For all the talk about nat gas gluts and low oil, industry insiders will tell you that it needs at least $8 to justify the cost of drilling a new well. Decline rates can run to 75% after just one year and new tight shale deposits need a lot more drilling than conventional plays.
On the offshore angle, given the massive costs of running a fleet of seismic source and gathering ships and thereafter the processing particularly of 4D imaging, why would the industry expend the monies necessary just to hand information to this bunch of idiots when they are reducing the incentive to drill in the first place. Its unbelievably dumb. Just ask someone in the actual industry.
Add on top of that the fact that Cantarell, the world second largest field after Ghawar is in rapid decline and the latest Pemex figures have been rejected as way too optimistic. After Canada, Pemex is the second most important supply of crude to the US and Cantarell is Mexico's largest field by far. There is a time bomb ticking away in energy and few are paying attention. If you want to learn anything about energy click on this website and listen to the Matt Simmons interview. It's 45 minutes long. Simmons is the author of "Twilight in the Desert" which showed what a fraud the OPEC reserves are. You will need a serious drink close by when you listen to Simmons.