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Author Topic: Should oil companies be allowed to lease fedrel land and not drill on it? Back to Topics
michaelphoenix2

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Message Posted: Nov 29, 2012 9:13:31 PM

Should oil companies be allowed to lease federal land and not drill on it?

Simple question. If an oil company has a lease to drill for oil on federal land and refuses to drill on that land in order to simply prevent competitors from drilling on that land should they be allowed to maintain their leases or should they be revoked?
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flyboyUT
Champion Author Utah

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Message Posted: Dec 3, 2012 3:21:45 PM

AC - you just dont understand the depths of litigation and politics along with NEPA games these treehuggers will go to. We had one here go tot a auction of leases adn bid them up to make it cost prohibitive to lease them. He had no intention of ever developing them at all. He just tried to destroy the process wherby companies could bid on leases. WE had lands in Utah where the NEPA had been done and the lands were leased and Obama's minions have canceled the leases. Do you think the companies didnt have some pretty serious investments already made in those leases?

The system is out of wack.

If your preparing a NEPA analysis and document plus a decision for a project adn some treehugger group litigates against you they have nothing to lose in court. The first thing they always ask for is an injunction to stop the project then for 'court costs'. We had a herbicide spray project to kill some brush on a National Forest back in the early 70's. The project was time sensitive in that the spray had to be applied in a narrow window of time in the fall. For years every time the project was getting close this one grouop would go to court and request an injunction and file suit. That winter the case would be adjuticated in favor of the Forest Service. This went on multiple times. The project was continually delayed (which is what they wanted). It kept costing the government hundreds of thousands of dollars in atty fees and lost timber growth. Finally the Foresters prevailed on teh OGC when we demanded that they other side post a bond so we could recoup our costs if they lost again.

The judge finally agreed and the group dropped the case like a hot rock. But in the meantime they had cost years of lost growth and extra work. Time that people could have used to actually do other projects also.

I say again - until you have had to deal with this system you have no idea of the true costs it brings to the economy.

I have no problem at all in analyzing a project and developing a accurate estimation based on science and experience of the effects on all resources of a project. Then using that analysis to develop a decision that entails the best method of gaining the best results for all resources.

But that is not what the treehuggers want. They want to stop development period and they want to do it for selfish personal reasons - one of them is their self enrichment (dollars) at the expense of everyone else.
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AC-302
Champion Author Los Angeles

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Message Posted: Dec 3, 2012 11:57:53 AM

Flyboy - well said, and you're not wrong. My point is that the environmental impact studies done by the "gubment" before the land is leased ought to be enough. It ought to include, say, where you may put a road, and how wide. It ought to include the requirement for mitigation of known or special risks. Perhaps a mitigation plan for risks ought to be included in the bid to lease the land? And if the treehuggers have objections, the time to object is while the land is still in gubment hands, not after it's leased. If an overwhelming reason can be found why the land ought not to be leased out and drilled on - then OK. But if it can't, then drill baby drill. And I'd be OK with 5 years after the last court challenge ends. The land that the DoI releases ought to be basically "production ready", or at least "exploration ready". Why wouldn't that satisfy all the parties involved?
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flyboyUT
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Message Posted: Dec 2, 2012 12:13:23 PM

nstrdnvstr the govt does do NEPA just to lease the land. Then the oil companies have to do NEPA to start the exploration. Then if the initial exploration looks favorable they have to do NEPA again to access the area with a road for drill rigs and to drill an exploratory well. Then if that looks favorable they have to do NEPA again to drill more exploratory wells to define the extent of the find. Then they have to do NEPA again to start production. But dont forget that if all of the above falls in place and it looks like there might be enough oil to economically develop the lease --- then they have to do NEPA again to build the pipeline to move the oil. Ever hear of Keystone?

Now at any point along this path the treehuggers (nod to Jay) can and do attempt to stop and or delay and make progress cost prohibitive using any means at their disposal.

I keep trying to tell most of the posters here - you folks dont have a clue what a burden the NEPA rules and treehuggers are on any industry until you have tried to deal with the system.

Look at the Keystone. Years of expensive 'studies' and delay. The excuse being effects to the Oglalla Aquifer. But we have thousands of miles of pipelines crossing the Oglalla now and we have drilled thousands of oil wells through it already and have pumped millions of barrels of oil from under it already. But the treehuggers are doing everything they can to stop nad delay it. WHY? Its really not about the oil or the pipeline - its some other political adgenda like more taxes or soak teh rich or Glowbull Warming.

They are perverting the laws to meet quasireligious political ends.

[Edited by: flyboyUT at 12/2/2012 12:17:05 PM EST]
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nstrdnvstr
Champion Author Twin Cities

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Message Posted: Dec 2, 2012 11:52:47 AM

flyboy, "AC-302 - five years - when does the clock start? Does it start when it takes years to complete the NEPA to do the surface exploration?

How about the five years starts after the NEPA is completed and all court challenges are ended to allow the company to drill the first exploratory well? "

How about not letting the government lease the land out until the NEPA is done? Then the government could not get that revenue until the land is ready to be used. This would put pressure on the government to get the NEPA done.
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gocatgo
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Message Posted: Dec 2, 2012 11:32:25 AM

That old American adage about do something or get off the pot is so pertinent to this discussion.
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AC-302
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Message Posted: Dec 2, 2012 10:59:28 AM

My point was that there ought to be no court challenges. The government should already have the environmental concerns (studies) figured out, and be dictating what the company ought to be doing to mitigate any risks as part of the lease terms. Knowing that up front ought to be figured into the cost of that lease. A place that doesn't require a lot of controls and has a lot of easy to get at oil, well, that may cost more. Someplace that has oil, but requires a lot of mitigation technology - well, that might not bring such a high lease price. But again, the government ought to know that it's going to disturb desert tortoises, or spotted owls or deer mice or what have you. There are always unexpected problems (think high pressure gas pockets like on Deepwater Horizon). But the technology is there to mitigate most of the risks we know. Even the Deepwater incident, if they had a remotely operated BOP, and had tested it, they'd have probably been good.
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flyboyUT
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Message Posted: Dec 1, 2012 10:10:26 PM

AC-302 - five years - when does the clock start? Does it start when it takes years to complete the NEPA to do the surface exploration?

How about the five years starts after the NEPA is completed adn all court challenges are ended to allow the company to drill the first exploratory well?

Has anyone here ever been involved in actually doing a NEPA project of any magnitude - especially one where and organized group is trying to stop you using any tool they have?

Before you are convinced that oil companies are sitting on leases learn more of what it takes to bring a new oil field online.

YOu wish to put a five year timeline on a new oilfield. Heck it often took between five to ten years just to go through the NEPA process for a small to medium sized timeber sale. I was involved with a natural gas pipeline that crossed the Ranger District I worked on. It took them over ten years of NEPA gobbeldygook before the first shovel of dirt was moved. The total cost was in the neighborhood of 15 million dollars for a 700 mile 36" diameter gas line. Heck it once took FOURTEEN YEARS of NEPA and legal work to get the decision to rebuild a campground!!!!!

Before you get too down on the oil folks - walk a mile in their shoes.

[Edited by: flyboyUT at 12/1/2012 10:15:45 PM EST]
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AC-302
Champion Author Los Angeles

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Message Posted: Dec 1, 2012 10:03:30 PM

You could look at it in that sense, MP3. I see your point. But do you see my point in that if the Feds offer a piece of land for oil lease, they ought to also have done the environmental studies already and already know that the land is OK to drill on. Perhaps one lease comes with certain environmental restrictions or limitations. Cool. The driller bids on it and values it according to the restrictions.

My point is that it ought not to take years and years and years to get the EPA off your back to drill on a federal piece of ground you leased for that purpose. The government should do it's homework before they even allow that piece of land for lease. And sometimes, it really is the EPA (ie - the "gubment") that is blocking drilling. But it is true, sometimes companies lease and lock up a piece of land to keep competitors from developing it. Then they can come back to that and drill when someplace else is out of production.
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wctsteam
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Message Posted: Dec 1, 2012 9:03:57 PM

yes
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michaelphoenix2
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Message Posted: Dec 1, 2012 8:50:07 PM

The point i wanted to make with this post was, was that for a long time oil companies were getting federal leases and just sitting on them for years at a time so that they could maybe someday perhaps start drilling on them. They prevented competitors from drilling on them and locked up those land rights for years. Then when Obama doesn't renew those leases and offers that land to competitors instead he is being blasted for preventing oil drilling when in effect he is doing the opposite.

[Edited by: michaelphoenix2 at 12/1/2012 8:51:21 PM EST]
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AC-302
Champion Author Los Angeles

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Message Posted: Dec 1, 2012 8:44:45 PM

Well, that depends. Does the government want that tract developed? If so, then there ought to be a time limit, albeit a long one (5 years maybe more) to discover, drill and develop. If the strike doesn't play out, then it ought to be enough time to find out and move on. If the tract isn't to be developed (holding in reserve, perhaps?) then it ought not to be leased. But I would say that if the government is going to give a lease on a piece of land, it ought to be with the understanding that a drilling permit will come with that land. The government ought to have it's "stuff" figured out before it offers a lease on a piece of drilling land.
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jacka123
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Message Posted: Nov 30, 2012 4:44:35 PM

I'd say if they are paying for the land the amount the government was asking, then, they can do whatever they want with it.
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teacher_tim
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Message Posted: Nov 30, 2012 2:40:25 PM

Of course, if the lack of drilling is caused by the refusal of the Federal Government to issue the necessary permits, then there may be a problem. The time limit on the lease would start once the permits are issued by the government.

If there is a potential problem, like an endangered species or similar, the oil company would have a reasonable amount of time to make accomodations.
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gocatgo
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Message Posted: Nov 30, 2012 12:35:36 PM

A period of 5 years should be long enough to drill if no action is taken someone else should be given the opportunity.
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BlackGumTree
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Message Posted: Nov 30, 2012 10:04:33 AM

The leases should only be for a short amount of time. If no oil is produced then the land land should be up for bids form anyone. If oil is produced the lease holder should then have the option to extend the lease.

Sitting on a lease should be discouraged. This can be done by making the period of the lease short and open for bids again if not productive or extendable if productive.

If the land is not productive, there should be no compensation unless that was part of the agreement and the lease price is high enough to make it practical. But I think oil companies would back away from such a high lease cost.

[Edited by: BlackGumTree at 11/30/2012 10:08:41 AM EST]
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rumbleseat
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Message Posted: Nov 30, 2012 5:51:10 AM

Should an oil company that drills on a federal land lease and finds no oil be allowed to sue for compensation?
Silly question of course, but it could become legitimate if it became mandatory for companies to drill on all lands they lease.

[Edited by: rumbleseat at 11/30/2012 5:52:13 AM EST]
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e_jeepin
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Message Posted: Nov 30, 2012 1:06:04 AM

yes, some strategies are to sit on it to keep competitors off it. However, the vast majority is to lease a huge area for geological studies and hope that one of the parcels is capable of producing a return for all the money spent searching.

"What is your problem of getting oil companies to give you money for nothing?"

This is how Canada solved their fiscal crisis in the 90's. Release the energy industry into the tundra, regulate it responsibly, tax what they find, count the jobs created.

This is Obamas biggest blunder. Restrict energy and everything else in the economy slows, including tax revenues. Green energy is now ironically further out of reach from most consumers.
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flyboyUT
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Message Posted: Nov 29, 2012 10:43:31 PM

As far as I know the lease is only valid for a finite amount of time and has clauses to extend it if oil is found and developed.

If no attempt is made to develop it and or search for oil the lease expires at the end of a time period. In the meantime the company has paid a fee to lease the land.

What is your problem of getting oil companies to give you money for nothing?
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michaelphoenix2
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Message Posted: Nov 29, 2012 9:26:05 PM

(FYI i know how to spell federal ....didn't notice the typo ...the Edit feature blows hard on this site)
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MiddletownMarty
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Message Posted: Nov 29, 2012 9:18:12 PM

I have no problem with a requirement to demonstrate good faith in locating oil so long as it's part of the lease agreement.
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