Misconceptions

10/26/09

Concerns about water contamination in New York State

According to the New York Petroleum Council, studies of hydraulic fracturing, a 60-year-old technology crucial to natural gas development and already widely used in New York, strongly suggest that the technology is safe despite recent concerns. The state’s Department of Environmental Conservation says that “no known instances of groundwater contamination have occurred from … hydraulic fracturing projects in New York State.” In fact, no investigation by any state or federal agency has demonstrated that hydraulic fracturing has caused groundwater contamination, despite its use in about one million wells drilled in the United States.

08/20/09

Most of the oil the U.S. imports from foreign countries comes from the Persian Gulf.

According to the Energy Information Agency (EIA), only 12% of the oil consumed in the U.S. in 2008 came from the Persian Gulf.  The largest amount of imported oil to the U.S. comes from Canada. This does not mean that we don’t need to reduce our dependence on other countries for our oil.  We import about 9-10 million barrels of oil per day and only produce domestically 5 million barrels per day.

11/20/08

Water pollution is primarily caused by oil leaks and other oil and gas activity. According to the National Academy of Sciences, offshore oil & gas operations account for the smallest percentage of any oil source in the oceans (2 percent). Natural oil seeps account for 8 percent, atmospheric pollution accounts for 9 percent; industrial & municipal runoffs is 36 percent and ships/marine transportation account for 45 percent. While major leaks are very newsworthy, most water pollution is naturally caused. Water leaches heavy metals from soil during rain runoff; biological organisms are picked up from animal waste; water treatment facilities introduce unnatural chemicals and are often unreliable.

11/13/08

The federal government is allowing oil and natural gas companies to run rampant over lands in the Rocky Mountains and all across the United States. – Oil and natural gas production occupies less than one percent of the 262 million acres of federal land controlled by the Bureau of Land Management (BLM) and the 192 million acres managed by the Forest Service.

11/06/08

The actual oil resources in ANWR are limited that violation of wildlife habitats is unwarranted – The USGS has determined that the Arctic National Wildlife Refuge (ANWR) 10-02 Area (excluding state and native lands) holds between 4.2 and 11.8 billion barrels of oil with a most likely estimate of 7.7 billion barrels. Government studies indicate that if ANWR is developed it could contribute up to 1.0 million barrels of oil per day or a 20 percent increase in the U.S. domestic production. At this production rate, the resource would last more than 20 years. How this is considered limited is difficult to understand. Also, the area designated for oil and gas development is the 10-02 Area on the coastal plain and is classified legally as neither “refuge” nor “wilderness”.

10/31/08

Oil and Gas Companies should return huge profits to the consumer – Recently, we saw higher-than-ever crude and natural gas prices leaving consumers to think that huge profits were being earned by producing companies. When companies report “record profits”, the profits they report is net income (an accounting number) which has nothing to do with actual cash. In reality, America’s oil and gas independents, who drill the majority of the wells in the U.S., spent in excess of 130% of their cashflow last year drilling wells. In other words, the industry borrowed money to drill. With this in mind, implementing a windfall profits tax would further reduce the industry’s ability to spend money since it is a cash tax.

10/16/08

Oil and gas drilling exposes us to pollution and contamination – According to the Department of Energy (DOE), over the past 30 years, the production facility footprints of oil and gas drilling have shrunk dramatically. The size of drilling pads has been reduced by up to 80 percent and new technology has significantly changed the way oil and gas is produced and how wells are drilled. This is especially true for natural gas drilling, where the footprint is not only small, but when a company is finished using a well, it is safely removed with no visible signs of it having been there. The New Mexico Oil and Gas Association has reported that in it’s 90 plus years of operations in new Mexico, and during that time 100,000 wells were drilled, not one drop of water delivered to the consumer for consumption, has ever been polluted or contaminated by oil and gas drilling activities.

10/9/08

Oil Companies that develop oil in the Outer Continental Shelf will sell it on the world market to the highest bidder and the oil will not stay in the U.S. -  The oil discovered and produced in the OCS offshore leased areas will be part of our domestic oil production and as a result we will be able to reduce imports from foreign suppliers. The U.S. currently does not export crude oil, however, we do export some refined products such as gasoline. The large oil companies that own refineries will have a call on their interest in the offshore fields and will ship their oil to their own U.S. refineries. Other smaller oil companies will sell their oil from OCS leases at the current market price to U.S. refiners.

10/2/08

Lifting of the Offshore Drilling Ban will provide quick energy relief. A quarter-century ban on offshore exploration expired this week. It will take a couple years before any oil or natural gas leases are issued. The U.S. Minerals Management Service (MMS) is not expected to offer any federal offshore lease sales until 2011 and these would be limited to Atlantic federal waters. The lifting of the ban still leaves the hydrocarbon-rich eastern Gulf of Mexico off-limits. Also, some sources indicate that congress could change its mind next year and again put the coastal waters off-limits.

9/26/08

“Big Oil” is not using 68 million acres of oil and gas leases. I have addressed this issue or misconception several weeks ago in my e-newsletter (“The Real Story of the 68 Million Acres”), but it seems to have nine lives. There are 5,000 independent oil and natural gas companies in the U.S. that drill 90 percent of the nation’s oil and gas wells. These independent oil and gas companies hold the majority of the nation’s federal oil and gas leases onshore and offshore. There are many reasons why federal leases aren’t currently producing which I listed in my post. Protests and lawsuits that delay development are two of the reasons and these are up 700 percent from 2001 to 2007.

9/17/08

The misconception of the week is “Big Oil” is owned by a small group of industry insiders. Over the entire oil and gas industry, only 1.5 percent of shares of public companies are owned by company executives according to the undersecretary of commerce for economic affairs during President Bill Clinton’s administration. The data show that the ownership of oil and gas shares is broadly middle-class, with the majority of industry shares held by institutional investors, often on the behalf of mutual fund owners, pension funds and individual retirement accounts. Almost 43 percent of oil and natural gas company shares are owned by mutual funds. Twenty-seven percent of the shares are owned by pension funds and 14 percent of shares are held in IRA and other personal retirement accounts.

9/10/08

The misconception of the week is ExxonMobil and the Big Oil Companies control the price of crude oil. According to ExxonMobil’s second-quarter earnings report, ExxonMobil’s total liquids production (crude oil and natural gas liquids) averaged 2.4 million barrels per day or approximately 3% of the world’s total liquid production of 85.8 million barrels per day for the 2nd quarter as reported by the International Energy Information Administration. ExxonMobil is the largest of the six supermajors, but its production is surpassed by several of the largest state-owned petroleum companies. When ranked by oil and gas reserves ExxonMobil is 14th in the world with less than 1% of the total.