Posted by
Andrews on Friday, August 01, 2008 1:50:22 PM
I keep hearing politicians and Obama supporters telling me about all the leases that oil companies have on which they are not drilling. What they never seem to mention is whether or not there is actually oil under those leases.
You see, oil companies don't explore as an altruistic action. They look for places they think oil is likely, and then they take out a lease
BEFORE EXPLORING. Not only is it cheaper before oil is found, it also keeps a competitor from exploiting their research and leasing the land out from under them. But guess what, sometimes they are wrong. And those leases, extensive as they are, don't contain any oil, or not enough to make it economically viable to drill.
Other times, they do find oil, but local politicians, or federal ones, pass ordinances making it impossible to drill. Just because you have a lease doesn't mean you can drill.
And then there are leases that are for remote locations lacking the infrastructure to support drilling and transportation, which is the same reason Canadian oil sands were not being exploited, and why many areas still aren't.
So, in short, asking why oil companies want to drill elsewhere is like asking the owner of a junkyard why he wants to buy a car, after all his junkyard is just full of cars!
UPDATE
Actually, there is a perfect analogy. Anyone who gets those stock tips from the Motley Fool and others may have seen one about
Saskatchewan oil sand developers. There are a few firms which have taken out leases on thousands and thousands of acres of Saskatchewan oil sands. Of course, right now they are producing nothing, but they have the elases.
So, why no production? Are they evil like the oil companies, at least in the minds of Obama and the Democrats? Are they just holding those oil sands off market to make money?
Since these companies have no other profit making ventures, are millions in the hole and have no profits, I doubt it. More likely, it is because Saskatchewan has yet to build up the infrastructure neighboring Alberta did. Until that infrastructure was there, Alberta had no oil sand industry either, though there were extensive lease holdings there as well.
So, if it makes sense for oil sand companies to hold leases yet not exploit them, is it not possible that it is in the oil industry as well? Or are we so taken with paranoid fantasies of evil oil companies run by Blofeld-like villains that we can no longer take a realistic look at the oil industry?