A Rebuttal to Environmentalists’ Claims That “Arctic Drilling Revenue Predictions Are ‘Way Off’”

Guest post by David Middleton

Why would anyone care what “environmentalists” have to say about potential Arctic oil revenue?  I only care because their “reasoning” is both fun and easy to ridicule.

Environmentalists Say Arctic Drilling Revenue Predictions ‘Way Off’

IULIA GHEORGHIU | JUNE 19, 2017

Conservation advocates believe opening up the Arctic National Wildlife Refuge, America’s largest swath of wilderness, isn’t likely to be the boon to federal coffers that President Donald Trump expects.

Opening up the wilderness region is a perennial issue; bipartisan bills are introduced each Congress to definitively label the area as “wilderness” while industry groups seek to gain access to a section of land that had been designated for oil and gas exploration. Plans have existed since 1980 to use less than 3 percent of the more than 19 million acres of wilderness refuge for oil and gas exploration — but conservation groups argue even that amount is too much.

It is possible for the House Natural Resources Committee to meet likely revenue targets from the House budget resolution by following Trump’s budget proposal to open up the wildlife refuge for onshore oil and gas exploration, advocates from The Wilderness Society and the Alaska Wilderness League noted on a press call Monday. But the organizations say the federal government is likely to get much less than the Trump budget suggests.

The White House budget calculates opening up the region to oil and gas exploration should bring in a total $3.5 billion in revenue, half of which would be going to the federal government. But Cameron Witten, budget specialist for The Wilderness Society, called the president’s revenue assumptions “way off the mark” because Alaska’s state constitution designates that 90 percent of revenue from public land leasing will go to the state, reducing the federal intake to $350 million.

[…]

Morning Consult

Notes to “Cameron Witten, budget specialist for The Wilderness Society”:

  1. ANWR is Federal acreage.  While the Federal government does generally share minerals revenues with the States, the Alaska constitution isn’t the operative document here.  Alaska generally receives 50% of the revenue from Federal lands and waters within the State and its OCS.
  2. The lease bonus and rental income will only be a tiny fraction of the revenue from ANWR.  The vast majority of the revenue (>99%) will come from royalty payments (usually at least 1/8 of the gross revenue from oil & gas production) and income taxes.
  3. “Maybe next time do a little research”…

Possible Federal Revenue from Oil Development of ANWR and Nearby Areas

June 23, 2008
Salvatore Lazzari
Specialist in Energy and Environmental Economics  Resources, Science, and Industry

[…]

Federal revenues would consist primarily of corporate income taxes on profits earned by oil producers from the production and sale of ANWR oil. As landowner, the federal government would also collect royalties from such production on federal lands, which are included in the estimates. If producers were able to recover 10.3 billion barrels of oil over the life of the properties — the United States Geological Survey has estimated there is a 50-50 chance that the ANWR coastal plain contains at least this amount of oil — and if oil prices are $125/barrel, then the federal government might be able to collect $191 billion in revenues over the production period, estimated to be at least 30 years once production commences. This estimate consists of nearly $132 billion in federal corporate income taxes, and about nearly $59 billion in federal royalties.

[…]

Congressional Research Service 

While oil prices are unlikely to be in the $125/bbl range anytime soon, most companies are basing decisions on $50/bbl with a modest escalation over time.  If 10 billion barrels of oil were produced from ANWR and the Federal government retained a 1/8 royalty, they would make a schistload of money, just from the royalties:

  • $50/bbl * 10,000,000,000 bbl =  $500,000,000,000 (that’s $500 billion).
  • 1/8 * $500,000,000,000 = $62,500,000,000

Now, that $62.5 billion would be paid out over 20-30 years and about half of the revenue would be shared with the State of Alaska; but the opening of ANWR could easily generate at least $3.5 billion/year in total revenue to the Alaskan and Federal governments.  And it would do this for at least 20-30 years.  Within a few years of opening up ANWR Area 1002, it could be producing 1.45 million barrels of oil per day.

  • 1,450,000 bbl/d * $50 = $72,500,000/d
  • $72,500,000/d * 365 d/y =  $26,462,500,000/yr
  • 1/8 * $26,462,500,000/yr =  $3,307,812,500/yr

Opening up ANWR is a no-brainer from every possible angle.  It’s literally right next door to the giant Prudhoe Bay oil fields:

6e930206-53ca-4dfb-8188-8de4b9240127

ANWR Area 1002 is a strip of barren coastal tundra right next door to the Prudhoe Bay complex. It would essentially be a “step-out” development. (Image from: US House Committee on Natural Resources)

 

Opening less than 3% of the Arctic National Wildlife Refuge (ANWR) in Alaska for responsible energy production could create thousands of jobs, generate billions in new revenue and help reduce our dependence on foreign sources of oil.

Small Area = Big Energy Potential

  • The North Slope of ANWR, known as “Area 1002”, was specifically set aside by Congress and President Carter in 1980 for oil and natural development. This area is not designated as Wilderness.
  • A plan developing 500,000 acres—less than three percent of ANWR’s acreage—would provide access to the majority of ANWR’s resources.

Supplying America’s Families and Businesses with American Energy

  • According to U.S. Geological Survey estimates, the North Slope contains an estimated 10.4 billion barrels of oil.
    • This is more than the known oil reserves of entire countries that the U.S. currently imports oil from, including: Mexico, Angola, Azerbaijan, Norway, India, Indonesia, Malaysia, Egypt, Australia and New Zealand, Turkmenistan, and Uzbekistan.
  • At peak production, ANWR could supply up to 1.45 million barrels of oil per day.
    • This is more than the U.S. imports from Saudi Arabia every day.
    • Alternatively, 1.45 million barrels of oil per day is over one quarter of what the U.S. imports from OPEC countries each year.

Reducing the Debt, Generating New Federal Revenue

  • Developing ANWR’s resources could generate approximately $150 billion to $296 billion in new federal revenue – a substantial amount that would help pay down our Nation’s debt.
  • Total government revenue, including leases, royalties, and state local and federal taxes for the life of ANWR field production, could be as much as $440 billion.

[…]

US House of Representatives Committee on Natural Resources

There should be no doubt in anyone’s mind that a successful development of ANWR Area 1002 would generate a schistload of money for the Federal and Alaskan governments… Plus it would extend the life of the Trans Alaska Pipeline System (TAPS) for at least another 20-30 years.

Back to the environmentalists’ opinion about Arctic drilling:

Nevertheless, conservation advocates believe opening up the refuge is unlikely, as it has been a “widely unpopular policy on Capitol Hill” historically…

Bills to open up ANWR have generally been filibustered.  Congress did vote to open it up in 1995; President Clinton vetoed it.  Filibusters and vetoes are generally not required to block “widely unpopular policy on Capitol Hill”.

The environmentalists then resort to the “industry isn’t interested” canard…

Chevron, for one, dropped its plans to drill in Canadian waters in the Arctic Ocean in 2014, amid a steep fall in crude oil prices. During a Morning Consult interview with the company in April, a senior Chevron official appeared ambivalent about prospects for increased access to offshore drilling in the Arctic.

In a statement Monday, Chevron spokeswoman Brenda Cosola said the company supports “increased access to federal and private land for the responsible exploration and development of oil and natural gas resources, including the ANWR coastal plain.”

ConocoPhillips, Shell, ENI, Iona Energy, and other oil companies that have Arctic drilling experience did not respond to requests for comment.

Anyone else shocked that most oil companies “did not respond to requests for comment”?  The steep fall in crude oil prices certainly played a part in the decisions of Shell, Chevron and ConocoPhillips to shelve plans for drilling in the Chukchi and Beaufort Seas.  However, regulatory malfeasance also played a major role:

Shell, in a statement, partly attributed its withdrawal to “the unpredictable federal regulatory environment” for offshore drilling, which the company said “made it difficult to operate efficiently.”

[…]

In October, the Interior Department canceled planned lease sales for parcels in the region, citing “low industry interest,” among other factors.

[…]

U.S. News

The funny thing is that most of these companies requested lease extensions so that they could possibly wait out the price crash and regulatory malfeasance.  These requests were denied and the Obama administration withdrew most of the Beaufort and all of the Chukchi OCS areas from leasing, due in part to “low industry interest.”

The “low industry interest” was on display in the first post-Obama lease sales…

‘Surprising’ Alaska oil-lease sale draws big bids

Alex DeMarban Published December 14, 2016

In the wake of two big oil discoveries in Alaska in the past year, exploration companies brushed aside concerns of low oil prices on Wednesday, bidding heavily in state and federal lease sales that were some of the largest in years.

Officials used words like “outstanding” and “surprising” as the bids were opened in state sales held in the Robert B. Atwood Building in downtown Anchorage early Wednesday morning. High bids totaled $17.8 million on tracts covering 633,000 acres on the North Slope and in the coastal Beaufort Sea.

Later in the day at the nearby federal building — where protesters held signs urging President Barack Obama to leave the oil in the ground — the Bureau of Land Management held what was the largest annual lease sale since 2004, when bids totaled $54 million.

Offering land in the National Petroleum Reserve-Alaska, the agency received 92 bids on 67 tracts, generating $18.8 million for 614,000 acres. The state receives half the revenue from the sale, or $9.4 million.

In its 2015 lease sale, BLM received just six bids worth $789,000.

[…]

ADN

Environmentalists’ opinions notwithstanding, Arctic drilling revenue predictions can only be “way off” if the industry is not allowed to exploit ANWR and the Alaska OCS.

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91 thoughts on “A Rebuttal to Environmentalists’ Claims That “Arctic Drilling Revenue Predictions Are ‘Way Off’”

  1. The green blob wants high energy prices (to encourage “conservation”), and will do nearly anything to meet that goal.

    • Funny thing is, Conservation (Oil remaining in the ground) stays more drilling when the price of oil is lower making it uneconomical to produce the oil. Oil that costs $50 per barrel to produce isn’t recovered during a time that Oil is valued at $25 per barrel

    • Yes they will. They know the masses can’t afford to use energy if the prices are high. That translates into more deaths during heat waves, extreme cold, and famine, which they will blame on climate change. High energy prices also serve to limit resources by limiting the production and transportation of those resources. Scarce resources serve to limit and eventually reduce the population. Reducing the population has always been their ultimate goal. Climate change is just another means to that end. If they can’t ban fossil fuels outright, they at least want to raise prices sky high. What’s not to love about high energy prices if you are a rich, self-hating environmentalist who thinks that humans are a mistake of evolution and would like to see 90% of us go extinct?

  2. Whatever amount goes to the government’s tills is an amount that does not go to support regimes in the Middle East or Venezuela.

  3. Ah, those heady days when the IPCC’s Rajendra Pachauri was making a few extra bucks acting in GEICO commercials…

  4. While I think leasing and drilling is a good idea. I do not think false predictions of revenue do the argument any good. If I understand royalty payments correctly. Any revenue projections need to be $50/bbl(price per barrel) less Cost Of Production COP. Using Canadian tar sands price of production.(because I found the cost but put any figure you want in)
    $50/bbl less $40 cop * 10,000,000,000 bbl = $100,000,000,000 (that’s $100 billion).
    1/8 * $100,000,000,000 = $12,500,000,000
    “While oil prices are unlikely to be in the $125/bbl range anytime soon, most companies are basing decisions on $50/bbl with a modest escalation over time. If 10 billion barrels of oil were produced from ANWR and the Federal government retained a 1/8 royalty, they would make a schistload of money, just from the royalties:

    $50/bbl * 10,000,000,000 bbl = $500,000,000,000 (that’s $500 billion).
    1/8 * $500,000,000,000 = $62,500,000,000”

    • You don’t understand US royalty payments. US royalties are taken off the gross revenue or paid “in kind” (1/8 or 1/6 of the oil). There is no provision for cost recovery. However, certain types of oil & gas plays have occasionally benefited from royalty relief programs.

      International concessions generally take a much larger share than 1/8. However, they take their share after the costs are recovered by the operator.

    • Last time I heard the processing cost for Canadian Oil Sands product it was around $120/bbl. It has been produced at a loss for a number of years. I am not sure you can produce oil from ANWR for that. ANWR is a fracture zone-at least the 1/2 that they-USGS- think oil exists-it is in multiple smaller pools not one contiguous reservoir as Prudhoe Bay Sadlerochit-largest pool being 1 billion bbls-most about 250K bbls-tough to find and will take a lot of wells to produce 1.4MM/day. Interested to hear some real, current estimates. We drilled a lot of wells in that fracture zone with only marginal results.

    • Davis Middleton -Thoseof us in the industry just prefer to use the preferred terminology when referring to the oil sands. You would call your car a tank.
      Jim Carlyle – No you are wrong. Asphalt does contain bitumen, but is not bitumen itself. Bitumen is akin to its cousin crude oil, just in a more solid form

      • Those of us in the industry named David Middleton prefer David, Dave or even Davey to Davis. There is no historical record of Davis being a form of David, at least none that I am aware of.

        The “oil” sands were known as the Athabasca tar sands when I was in college (1976-1980). The currently preferred term is oil sands…

        Oil sands are a loose sand deposit which contain a very viscous form of petroleum known as bitumen. These unconsolidated sandstone deposits comprise primarily of sand, clay and water saturated with bitumen. Oil sands are sometimes referred to as tar sands or bituminous sands.

        OIL SANDS DEPOSITS EXPLAINED

        The exact composition of Alberta’s oil sands can vary greatly, even within the same geological formation. A typical oil sands deposits contains about 10% bitumen, 5% water and 85% solids. However, the bitumen content can be as high as 20% in some sections.

        […]

        Bitumen is a highly viscous, complex hydrocarbon contained within the oil sands deposit. Bitumen is classified as an extra heavy oil, with an API gravity of about 8° and can be almost solid at room temperatures. Alberta bitumen also contains about 4 to 5% sulphur with trace volumes of heavy metals, particularly nickel and vanadium.

        Bitumen can be separated into two organic compounds: asphaltenes and maltenes.

        Asphaltenes have an extremely complex molecular structure, imparting a high viscosity to the oil. Asphaltenes make bitumen sticky and “heavy”, carrying with it nickel, sulphur and vanadium. This reduces the quality of the crude and makes bitumen much harder to process in a conventional refinery. Athabasca bitumen contains about 14 to 18% asphaltenes.

        […]

        http://www.oilsandsmagazine.com/technical/properties

        There is a basis for relating asphaltenes to tar…

        The word “asphaltene” was coined by Boussingault in 1837 when he noticed that the distillation residue of some bitumens had asphalt-like properties. Asphaltenes in the form of asphalt or bitumen products from oil refineries are used as paving materials on roads, shingles for roofs, and waterproof coatings on building foundations.

        https://en.m.wikipedia.org/wiki/Asphaltene

        Most crude oil contains at least some asphaltenes.

        Oil sands vs tar sands? Neither technically accurate, both generally accepted. Bitumous sands would be most accurate. It’s like the Green River oil shale… it’s technically a kerogenous shale and/or marl formation.

      • David Middleton – Thank you for thoroughly explaining my point and saving me the time . Peace

  5. WUWT, find a map of all the oil drilling in the region. Canada has wells right up to the border. The US blocks drilling in “sensitive” areas while liberal Canada drills baby drills.

  6. Exploration Promise
    Exploration for oil and gas in the Canadian Beaufort reached a high point in the late 1970s, when a large number of wells were drilled, primarily in the shallow shelfal waters of the Mackenzie Delta. Generous tax incentives drove companies to explore in this harsh environment on the most rudimentary of seismic data and, despite these issues, exploration success rates were over 50% and a number of plays were opened up. Over a billion barrels of oil were discovered along with many trillions of cubic feet of gas, but there is considerable remaining undiscovered potential according to several authors, including the US and Canadian Geological Surveys.
    http://www.geoexpro.com/articles/2015/04/oil-exploration-in-the-canadian-beaufort

    • Dome Petroleum drilled like crazy but it didn’t work out. Part of the blame belongs to the government and Indian bands who all dithered on the Mackenzie Valley pipeline until oil prices fell so far that it wasn’t viable any more. link

  7. I’ve been promoting opening ANWR for drilling for at least 20+ years. It won’t harm wildlife, but most likely help them/it as it has at prudhoe.. It will keep the AK Pipeline flowing.

    • Oh, but it’s not natural help to the wildlife.
      Oh, but it’s not sustainable, since the oil will run out and pipeline no linger heated.
      Oh, but it won’t help, production would only be a fraction of daily use.
      Oh, but…

      (In my best Green, rationalizing voice)

  8. Obama used the canard of “industrial disinterest” to rationalize his putting the area off limits to drilling. Since industry is indeed very interested in developing the oil fields, the areas should be opened up for drilling since the original rational no longer holds.

    • Everything Obama has said is pure propaganda, no interest in truth or what is good for the country.

  9. It would also be pretty good if America didn’t have any reason to be protecting oil supplies from the Persian/Arabian Gulf. A saving of money, effort, and lives. Reducing dependency on petroleum products from the Gulf should be an explicit strategic aim for the whole world, not just the US. That won’t happen with windmills. We need carbon fuels, from good people, until nuclear takes over. We could have been so much closer by now without green “help”.

    And every Dollar not sent to an oil-producing middle-eastern despot who helps create the next truck-of-peace, is a Dollar that could be spent on things that actually matter in this world, a Dollar not spent on people trying to hasten our entry to the next world.

    • Even if the US didn’t import a drop of Persian Gulf oil, we would still have a strong economic interest in ensuring the free flow of oil from the region. Oil is fungible.

      • Completely agree on that point. However keeping oil prices low makes it harder for the oil states to fund mischief around the world. I’ve read that Saudi Arabia barely has enough money to fund it’s internal budget these days.

    • I agree MH, a substantial portion of the benefits which will accrue to the US, indeed,
      the world citizens will not appear on the books.

      Oil states having to produce oil to survive rather than being able to use it as a
      weapon is exactly the position I want them to enjoy.

  10. David — This is much more your domain than mine, but I vaguely thought that industry interest in drilling ANWR (but not the other lease areas) had fallen off over time. Something about geology problems plus water in the warm months being in places one doesn’t want it and there being insufficient water in the cold months to build extensive ice roads. I could have that all wrong.

    As for the wildlife. AFAICS oil fields are far better neighborhoods for critters than towns. suburbs, or farms. Might be a bit of a compatibility issue between oilfield workers and Polar Bears however.

    • Industry interest in ANWR is as strong as ever. Industry belief that it will ever be opened had fallen off… until November 8, 2016.

      ANWR Area 1002 is essentially an extension of Prudhoe Bay.

      The recent large discoveries on the North Slope are farther from Prudhoe Bay and will be more costly to bring on line than ANWR, yet Federal and State lease sales last December werre the most active in more than a decade.

  11. Chevron was drilling the Kaktovik well when I started working for them. I still wonder what was in that well. It was a tight hole then and it still is today.
    I always had a feeling it was a boomer, but nobody would talk about it.

  12. The only thing that matters here is whether the companies that will be extracting and selling the oil will go for the deal. THAT is the best indicator of whether this will be profitable or not.

    Nothing anyone else says matters.

    • Go for what deal? The Federal lease terms are fairly uniform.

      Companies will bid for the leases. If they establish production, they will pay 1/8 to 1/6 royalties to the Fed’s and then pay income taxes on their profits. It’s essentially the same terms as the Gulf of Mexico and NPR-Alaska.

      • David, it also depends on their belief that the deal won’t change after they have invested a few billion. That is the main problem when dealing with the Feds today (or most State and local governments, for that matter).

      • Obama’s “dynamic regulatory environment” was a major factor in Shell’s and ConocoPhillips’ decisions to scrap their drilling plans in the Chukchi and Beaufort OCS areas.

        The burst of activity in the December State and Federal lease sales is a pretty good indication that the industry is relatively confident that the “deal” will remain predictable, if not improve, for at least the next 4-8 years.

  13. It’s actually oil companies that sponsored most of those fake-paper grants the pseudo scientists who completely took over environmentalism wallpaper their profit margins with.

    Oil companies are heavily BEHIND the climate scare. They may have seemed to take a drubbing in the news, but in actual fact they were the ones PAYING a LARGE proportion of all the GRANTS delivering up ”research” saying we have to get off COAL.

    The environmentalists were shown to be heavily in bed with Oil companies paying their grants in Climategate. Scientists were all happy to be sharing they’d had a ”great meeting” with oil companies.

    What that is code for is ”more pay checks”.

    The reason oil companies do it is their place in the pollution business had them basically financing the founding of all environmental campuses on university properties worldwide.

    They pay the scientists and the scientists make kook claims. It alarms many but when it’s all said and done the scientists’ reputations suffer, far more than the oil companies’.

    Then they oil companies have ALL this research done FOR them regarding what investments in developing energy they have to migrate to.

    Al Gore? Oil man. Occidental oil. Remember murdered Libyan president Khaddaffi from a few years back, when Hillary Clinton gave funds to Al Nusra et all and they took over Libya, murdering him? Guess who IMMEDIATELY GOT the NATIONAL OIL CONTRACTS for THAT COUNTRY after HILLARY HAD him KILLED –

    OCCIDENTAL OIL,
    AL GORE’S oil company. The one his dad worked for.

    These crass decisions based on Democrats simply fleecing the face of the earth, are what ”global markets” is partially about. Turning the entire world into an American colony, basically. I’m not really joking about that, either.

    • Apart from Gore’s family having significant holdings of Occidental stock and Democrat fleecing… 100% nonsense.

      • David

        I think you need to investigate a little, the big oil companies benefit a great deal from regulation and controls, both because of prices being driven up and competition from smaller companies being driven down. Oil is not going away and they know it, they benifit the most from this environment.

      • I’ve been in the oil industry for 36 years, entirely in “smaller companies.” I’ve never seen one scintilla of evidence that “big oil” was manipulating regulations or prices for any reason, much less to stifle competition from “little oil.” “Big oil” and “little oil” generally don’t even play the same game.

        All oil companies benefit from smart, consistent regulations. Onerous, dynamic regulatory environments like the Obama administration are tougher on smaller companies than larger companies. However, no oil companies benefit from bad regulations.

        “Big oil” funds a lot of things. The ExxonMobil Foundation funds anti-malaria programs, STEM education (particularly for women and minorities). They used to fund the Competitive Enterprise Institute until they were threatened with a tobacco-style inquisition.

        To the extent that “big oil” supports AGW nonsense, it’s through the promotion of natural gas (the “gas” in Oil & Gas Industry is natural gas, not gasoline). ExxonMobil and other members of “big oil” support a carbon tax over cap & trade and other schemes because it is the least damaging to their business… They are convinced that carbon will be regulated and are trying to influence the regulation in their favor – Not because they have bought into AGW. They pay lip service to it because they have to. All industries try to influence regulations in their favor.

        However this is 100% batschist crazy, Alex Jones, tinfoil hat, crackhead conspiracy theory nonsense…

        It’s actually oil companies that sponsored most of those fake-paper grants the pseudo scientists who completely took over environmentalism wallpaper their profit margins with.

        Oil companies are heavily BEHIND the climate scare. They may have seemed to take a drubbing in the news, but in actual fact they were the ones PAYING a LARGE proportion of all the GRANTS delivering up ”research” saying we have to get off COAL.

        The environmentalists were shown to be heavily in bed with Oil companies paying their grants in Climategate. Scientists were all happy to be sharing they’d had a ”great meeting” with oil companies.

        […]

      • BSEE’s idiotic new well control rule hurts everyone working the Gulf of Mexico OCS, from the smallest “bottom feeders” (of which there are dozens) up to ExxonMobil. This rule is hurting smaller companies more than “big oil”…

        But the entire industry opposed it…

        Exxon Says ‘$25B Rule’ Will Sink Deepwater Oil Drilling

        by Bloomberg|Joe Carroll|Thursday, April 14, 2016

        (Bloomberg) — The world’s biggest oil explorers are fighting a U.S. plan to toughen offshore drilling rules that Exxon Mobil Corp. said will cost $25 billion over 10 years and render many offshore discoveries worthless.

        The Obama administration is expected to issue the sweeping new regulations Thursday, a person familiar with the decision said, as part of an effort to reduce the number of well blowouts after the explosion aboard the Deepwater Horizon rig in 2010. The government has pegged the rules’ costs at less than $1 billion.

        The changes would arrive amid the worst oil slump in a generation. ConocoPhillips and Chevron Corp. have already abandoned some Gulf prospects because they wouldn’t be profitable at current prices. If the proposals are enacted, exploration outlays in the Gulf will tumble by 70 percent over the next two decades, wiping out as many as 190,000 jobs, according to consulting firm Wood Mackenzie Ltd.

        “The Gulf of Mexico is already in a deep downturn as a result of lower oil prices,” said Robin Shoemaker, an industry analyst at Keybanc Capital Markets Inc. “Oil companies and the service providers are trying to come up with ways to reduce costs so the idea that they can absorb any additional expenses — they’re not in that ballpark at all.”

        […]

        http://www.rigzone.com/news/oil_gas/a/143989/Exxon_Says_25B_Rule_Will_Sink_Deepwater_Oil_Drilling

      • David

        Do Regulations hurt small companies more than large ones?
        Does regulations keep oil prices higher and pretty much every other products prices higher?
        Do the big oil companies donate more money to democrats or republicans and most other large corporations as well?

        These are business choices, it’s cheaper to buy politicians and use the government to keep prices up and competitions down. Companies do whatever is best for the bottom line and that’s the way it should be but to ignore the fact that corporations are buying politicians is foolish. It’s not the corporations fault they are doing what’s best for their shareholders it’s the voters and politicians fault and it’s time we start recognizing what is going on.

        Look I have worked in a different industries for over 30 years and it’s clear as day what is going on. Reagan said it best “government isn’t the solution its the problem” and since he said that it has only gotten worse and worse, it’s to the point where success is derived as much from what contacts you have in government and what influence they have as it is from how innovative and effective a business person you are and that is not right nor over the long term sustainable.

        The government is too big and exerts to much influence on private life, it distorts the markets and makes them inefficient and inflexible, the government was never intended by the founders to have this kind of power and control on the outcome of private activities. Corporations have a moral obligation to their shareholders to generate profits and insure the corporation’s survival through any legal means. Political contributions to politicians that make the system more effective are not illegal and therefore I don’t fault the corporations i fault the politicians who take the money knowing that it is being used to rig the system and I fault the voters for being uninformed and not voting for people who understand that government needs to be limited.

      • Bob boder June 21, 2017 at 11:10 am
        David

        Do Regulations hurt small companies more than large ones?

        As a matter of scale, all additional incurred costs hurt smaller companies more than larger ones.

        However, regulations aren’t that simple. In a totally unregulated environment, companies of any size could recklessly cut corners in order to out-compete prudent operators.

        There isn’t a significant divergence in the positions of “big oil” and “little oil” regarding regulations.

        The constitutional meaning of “regulate” in the Commerce Clause means “to make regular.” Knowing that your competition has to follow the same rules is essential to making commerce regular.

        Does regulations keep oil prices higher and pretty much every other products prices higher?

        Regulations have very little to do with the price of oil. The price of oil is not a function of the cost of production.

        Do the big oil companies donate more money to democrats or republicans and most other large corporations as well?

        Big, medium and small oil companies overwhelmingly contribute to Republicans.

        https://www.opensecrets.org/industries/indus.php?ind=E01

        That said, they will often favor incumbents irrespective of party affiliation because they don’t want to p!$$ off politicians who have the power to harm their business interests.

        These are business choices, it’s cheaper to buy politicians and use the government to keep prices up and competitions down. Companies do whatever is best for the bottom line and that’s the way it should be but to ignore the fact that corporations are buying politicians is foolish. It’s not the corporations fault they are doing what’s best for their shareholders it’s the voters and politicians fault and it’s time we start recognizing what is going on.

        People with business interests contribute to candidates who have positions favorable to their business interests.

        Republicans don’t support the fossil fuel industry because oil and coal companies bought them. Fossil fuel companies support Republicans because they have policy positions favorable to the fossil fuel industry.

        Look I have worked in a different industries for over 30 years and it’s clear as day what is going on. Reagan said it best “government isn’t the solution its the problem” and since he said that it has only gotten worse and worse, it’s to the point where success is derived as much from what contacts you have in government and what influence they have as it is from how innovative and effective a business person you are and that is not right nor over the long term sustainable.

        I agree government is not the solution. It is often overbearing and prone to regulatory malfeasance.

        However, government is the only mechanism to ensure that businesses can operate in a rule of law environment.

        The government is too big and exerts to much influence on private life, it distorts the markets and makes them inefficient and inflexible, the government was never intended by the founders to have this kind of power and control on the outcome of private activities.

        I agree with you 100% on this.

        Corporations have a moral obligation to their shareholders to generate profits and insure the corporation’s survival through any legal means.

        Again, I agree with you 100%.

        Political contributions to politicians that make the system more effective are not illegal and therefore I don’t fault the corporations i fault the politicians who take the money knowing that it is being used to rig the system

        I disagree with the assertion that the system is rigged. And it’s hard to blame the politicians, because they are usually doing what a majority of their constituents wanted them to do.

        and I fault the voters for being uninformed and not voting for people who understand that government needs to be limited.

        I agree with you 100% on this.

      • Something else that needs to be noted David Middleton: the none of what I said to people is even secret.

        What’s odd is that you’re denying it.

        Regardless of your lifestyle habituations – your Alex Jones affiliation, being a crack head – you’re simply wrong, and I can’t imagine what would prompt you to even try to say it in light of the endless revelations about the nature of Big Oil companies’ involvement in funding the AGW scam.

      • Everything you posted apart from the Gore family’s holdings of Occidental stock and the Democrats propensity for fleecing is 100% abject nonsense and you have not provided one scintilla of evidence to back up your bald faced lies about the oil industry.

        In truth, the overwhelming majority of climate-research funding comes from the federal government and left-wing foundations. And while the energy industry funds both sides of the climate debate, the government/foundation monies go only toward research that advances the warming regulatory agenda. With a clear public-policy outcome in mind, the government/foundation gravy train is a much greater threat to scientific integrity.

        Read more at: http://www.nationalreview.com/article/414359/global-warming-follow-money-henry-payne

        Grants from publicly traded companies like ExxonMobil are very transparent…

        ExxonMobil: Grants for Higher Education

        OVERVIEW: ExxonMobil’s philanthropic focus areas are on STEM education (especially for women and girls), health, and biodiversity and conservation. Within that scope, the ExxonMobil Foundation has a partially overlapping emphasis on math and science education, women’s economic empowerment, and efforts to combat malaria.

        IP TAKE: ExxonMobil gives big to higher ed as well as job and skills training (both in the U.S. and internationally) in areas where it has a community presence, but unsolicited requests are rarely accepted or approved.

        […]

        Broadly speaking, ExxonMobil’s core focus is on STEM education (especially for women and girls), health, and biodiversity and conservation. The foundation, meanwhile, currently “has a strategic focus supporting math and science education, for promoting women as catalysts for economic development and ending deaths from malaria.” In a recent year, combined giving from ExxonMobil (the foundation, corporation, and employees and retirees) totaled about $280 million, with $100 million going toward education. Globally, this giving totaled $50 million for higher ed, of which more than $40 million was allocated to institutions in the U.S.

        […]

        ExxonMobil also has an important funding area that it classifies as “other education,” which is dedicated to “vocational and entrepreneurial education, including courses on life skills, business development and micro-enterprise training for women in the developing world.” University and college training programs, along with initiatives related to women’s leadership, were among the main funding recipients in this category.

        At the same time, fundraisers shouldn’t be too quick to rule out its other focus areas as potential grant sources. As part of its antimalarial efforts, for example, this funder emphasizes the critical need for “new approaches and passionate, highly-trained leaders,” both of which are likely to connect in various ways to scholarly research and other work. To that end, since 2011, ExxonMobil has lent its support to “outstanding students from developing and emerging-market countries to pursue global health-focused Master’s degrees at Oxford University,” providing these individuals with “the opportunity to learn about the global burden of disease, epidemiological principles and how to apply classroom lessons to the real world,” as well as professional networking opportunities. In one recent year, over $860,000 also went toward various antimalarial initiatives at Harvard.

        […]

        Lastly, although ExxonMobil’s Environment program receives less funding compared to its education programs, several universities have received awards in recent years in this area, including six-figure sums to research and programs in biodiversity, conservation, and related areas.

        […]

        https://www.insidephilanthropy.com/grants-for-higher-education/exxonmobil-grants-for-higher-education.html

        http://corporate.exxonmobil.com/en/community/worldwide-giving/worldwide-giving-report/overview

        Notably missing: Any reference to climate change research.

        A Google of “ExxonMobil climate change research” yields page-after-page of their funding of “climate science denial”…

      • While ExxonMobil pays “lip service” to the call to reduce GHG emissions, it hardly promotes CAGW alarmism:

        Does Exxon accept more recent peer-reviewed science on the need to leave fossil fuels in the ground?

        No.

        […]

        Has Tillerson questioned or denied mainstream climate science since 2006?

        Yes.

        In settings with stock analysts or other executives, Tillerson has at times reverted back to Exxon’s old narrative that cast doubt on climate science.

        At the company’s 2013 annual shareholder meeting, for instance, Tillerson said: “Notwithstanding all the advancements that have been made in gathering more data, instrumenting the planet so that we understand how climate conditions on the planet are changing, notwithstanding all that data, our ability to project with any degree of certainty the future is continuing to be very limited.

        “If you examine the temperature record of the last decade, it really hadn’t changed,” he went on, referencing a widely discredited theory by contrarian scientists that there had been a hiatus in global warming. “I know you will like to hear that as it don’t comport to some of the views of others, but last 10 years’ temperatures had been relatively flat.”

        At the 2015 annual meeting, Tillerson said it might be better to wait for better science before taking action on climate change. “What if everything we do, it turns out our models are lousy, and we don’t get the effects we predict?” he asked.

        […]

        Does Exxon still fund climate denial?

        Yes.

        In 2007, Exxon pledged in its corporate responsibility report that it would no longer contribute “to several public policy research groups whose position on climate change could divert attention from the important discussion on how the world will secure the energy required for economic growth in an environmentally responsible manner.”

        But over time, it became apparent that the company has not held to its pledge. During the last few years, reports based on Exxon’s public filings have shown that the company continues to support politicians and organizations that sow doubt about climate change and work to halt action on it. That has prompted more than 100 U.S. earth scientists to call for their prestigious professional association, the American Geophysical Union, to stop accepting funding from Exxon.

        The scientists pointed out that the company still supported, for instance, the American Enterprise Institute, whose fellow, Jonah Goldberg, falsely told Fox News in 2014 that it was “utterly fraudulent” that 97 percent of scientists actively doing research into climate change back the theory that it is driven by human activity, mostly fossil fuel use.

        Exxon still funds groups such as the National Black Chamber of Commerce (NBCC) and the American Legislative Exchange Council (ALEC) that deny climate change and lobby against action to address it.

        In recent years, many corporations, including energy companies such as BP and Shell, have dropped ALEC. Some, such as Google, have cited ALEC’s obstructionist stance on climate change, while Exxon has given $1.7 million between 1998 and 2014 and was among the top funders of the annual ALEC conference in July 2016.

        Exxon has also given $1.8 million in campaign contributions since 2007 to more than 100 members of Congress who deny climate change, such as Texas Senators Ted Cruz and John Cornyn.

        What has Exxon done to address climate change under Tillerson?

        There’s been little concrete action, beyond investing in research.

        […]

        Is Exxon’s support of a carbon tax evidence that it is serious about climate change?

        Not likely.

        […]

        The Waxman-Markey bill set its cap in line with climate change treaty negotiations intended to keep global warming below 2 degrees Celsius.

        A carbon tax, by contrast, does not set a cap on emissions, but rather sets a price to penalize carbon dioxide emissions. It also shrinks the market for coal and increases demand for cleaner-burning fuels such as natural gas, of which Exxon has huge holdings. (Waxman-Markey was full of subsidies and loopholes to help keep coal competitive.)

        Exxon’s support of a carbon tax, however, has not gone beyond rhetoric.

        […]

        “As to our advocacy around a carbon tax—I would not support putting a carbon tax in place today because I think we still have a lot of gains to be made through technology and other less intrusive policies on the economy which are showing results,” he said in a speech before The City Club of Cleveland.

        Last year, Exxon refused to sign a letter from other international oil giants, including Royal Dutch Shell and BP, that strongly urged the Paris climate negotiators to push for a global price on carbon.

        […]

        What is Exxon’s view of the Paris climate agreement?

        Since the signing of the global climate accord, the company has put out at least three statements in support of the agreement. The latest one, released on Nov. 4, 2016, called the agreement “an important step forward” and said it “supports the work of the Paris signatories, acknowledges the ambitious goals of this agreement and believes the company has a constructive role to play in developing solutions.”

        https://insideclimatenews.org/news/22122016/rex-tillerson-exxon-climate-change-secretary-state-donald-trump

        Regarding a carbon tax and Paris, ExxonMobil had accepted the fact that governments were going to regulate carbon emissions. Their support of such measures was purely to have a “seat at the table” so that they could have some influence in the process to limit the regulatory damage to their business. Coal companies also supported keeping a seat at the table for the same reason.

  14. I was just noticing tonight, that in spite of all of their computer models and all of their statistics and all of their millions of dollars in consultants fees and all of their exact exact science with unquestionable consensus, the left still can’t accurately predict something as simple as the polling numbers in a lil’ ol’ congressional district In Georgia.

    In fact after shouting from the rooftops for the last 6 weeks that it was one thing, lo and behold, it turns out to be something else completely.

    • WWS. I bet the Democrats knew their polls were way too optimistic for democrat wins. This was also true in the Nov 2016 election.
      They overestimate the level of support for Democrat candidates for two main reasons: 1) To keep the Democrat base energized and contributing $, and 2) To try and discourage Republicans and some independents from voting or contributing to the Republican candidates/party.
      Maybe the fake polls worked in the past, but they don’t seem to be working now. That is the problem with lying all the time–people start to not believe your polls and go and do what they want to do. Questions here, does lying corrupt the liars? Or, do only corrupt people lie? Or is it both?

      • In four races since November, the Democrats have blown a ton of money, with nothing to show for it.
        I wonder how deep Soro’s pockets really are.

      • Paglia, who’s a hard core leftist, recently gave an interview in which she blasted the Democrats for destroying the news industry in this country. She stated that it will take decades for the industry to recover.

  15. Prudhoe Bay has been in operation for a bit more than 10 minutes.
    Could the WWF please advise me of any damage this has caused to the environment or wildlife?

    • A caribou was wandering by last week, and he looked up and saw that pipeline, and he said to himself “OH MY GOD THAT IS NOT PRISTINE!!!” And he lost his concentration and while he stood there in consternation, a pack of wolves tore him to bits.

      ANOTHER VICTIM OF THE EVIL OIL BIDNESS!!!

      • I know people in this industry who actually do pronounce business as “bidness.” LOL!

      • That’s oal bidness.

        Caribou love the pipeline. Any mother caribou will have her baby near it if she can, to reduce the chances of the newborn freezing to the tundra. If they could vote, they’d all be for it.

        So do the bears, who like to walk on it, to keep their feet warm.

        The wolves like it, because caribou numbers have exploded since it was built.

  16. Thanks for the post David. Math is a hard thing for environmentalists. The reason that we should care about what they think and produce is that it can become a talking point and then repeated often enough it becomes “truth”.

  17. When the opening of ANWR was starting to be discussed. All the pictures of polar bears, caribou, etc. that would have their lives devastated were used to stop it from being opened. Then later the story changed to it was so remote with nothing living in it, it would be impossible to drill. Then the story changed ……………

    • These are the ANWR photos that the enviro’s display…

      And these are photos from the Alaska National Wildlife Refuge (ANWR). But they are from the area south of the Brooks Range. ANWR Area 1002 is a narrow strip of barren coastal plain north of the Brooks Range…

      The best that Snopes can manage is to claim that the issue “is far too extensive and complex to cover in detail here” and toss in a few enviro red herrings. They can’t actually refute the facts.

  18. This is a Heritage Foundation backed website. Anything you publish should be immediately discredited.

    • If would care to make a specific argument about something in the post, I will be more than happy to demolish it in detail.

    • Do you have any evidence that Heritage Foundation is publishing lies.
      BTW, the definition of a lie is not “disagrees with a leftist”.

      • Setting aside the fact that the Heritage Foundation is an excellent source of information…

        I’m still trying to figure out which website is backed by the Heritage Foundation. I cited articles from the Congressional Research Service, House Committee on Natural Resources, Alaska Dispatch News, U.S. News, the Arctic Power Board and my own knowledge of BOEM and BLM leasing. I don’t think I cited anything related to the Heritage Foundation.

        Is he claiming that WUWT is backed by the Heritage Foundation?

      • Well he is of course referring to the memo to spread anti-science that Gleick wrote.

        Fake but true.

  19. Assuming the State of Alaska doesn’t go overboard diddling with the taxes on oil producers on the Slope (a very foolish assumption today), there is a LOT of oil and natural gas yet to be produced. Local rumor up here is that NPR-A, offshore, and ANWR individually have as much oil and natural gas as the Prudhoe Bay fields had at the beginning.

    The other option is GTLs, batch shipped thru the existing pipeline to Valdez. Capture and sequester CO2 to pressurize production. Once you get into the GTL batch shipping business, there is a lot of coal north of the Brooks Range available for CTL production via Fischer – Tropsch.

    If we do this right, we will be producing for centuries. Will we? That’s another question entirely. Cheers –

    • NPR-A + ANWR + Chukchi OCS + Beaufort OCS probably do contain more recoverable oil than Prudhoe Bay’s EUR.

      I’m not sure that GTL could be commingled with crude oil in TAPS. If so, that might just be the ticket to recover the ~30 tcf of stranded gas reserves.

    • GTL would have to be transported separately from crude through TAPS, but it could be done…

      Gas to liquids (GTL) and tankers to U.S. West Coast. Build a new facility in the Prudhoe Bay area and use GTL technology to convert natural gas to middle-distillate (diesel-like) liquids. The GTL product could be pumped in segregated batches through the Trans Alaska oil pipeline and then transported by tankers to the U.S. West Coast.

      https://www.netl.doe.gov/publications/proceedings/02/MethaneHydrate/Sherwood_Abstract.pdf

  20. I was just thinking, if a person thinks that CO2 is “pollution”, then this person must be absolutely devastated by the idea of a fart.

    Also, I was thinking: Some people like the idea of a wilderness, because they like the idea of untouched land that they might visit someday, but if lots of people decide to visit this ideal “untouched” land, then does it not then become “touched” by lots of people and no longer “untouched”?

    So, visiting a land, stomping around on it, disturbing the snow, leaving footprints in the snow or dirt, startling the animals is okay, if it’s just to fulfill a wish to VISIT an “untouched” land. But using a small percentage of the area to improve many people’s lives is somehow lowly.

    Okay, nobody go there, and nobody do anything with it. Leave it totally undisturbed, just sitting there, never visited by any human … ever, just existing as a “wilderness” that somehow provides a psychological comfort. Well, that totally goes against any human nature – leisure-oriented or economic-oriented.

    The idea of maintaining land as “wilderness” seems contradictory, no matter which humans are involved. Isn’t there a balance of use?, and how does using 3% disturb a balance, especially if lifestyles that enable levels of comfort to entertain the idea of “wilderness” are maintained or enhanced?

    If you had to survive in the wilderness, then it would not be so romantic. The idea of a wilderness is only attractive, because we can live in comfort outside it to reflect on it. Life’s comforts enable wilderness appreciation. Again, 3% to maintain these comforts or to enhance this appreciation seems so small.

  21. It is difficult today to comprehend why anyone believes that burning long chain carbon based molecules is the future of energy production. Contracts are being currently signed for solar power at $0.03/kwh. Even in the US, with some of the lowest NG prices on the planet, natural gas produced electricity costs $0.046/kwh.

    • Well, for starters…

      Because the $0.03/kWh solar only works when the Sun shines, is actually $0.10 to $0.13/kWh (or much higher) when the subsidies are factored in, is only an initial price with an escalator built in… And it can’t power motor vehicles, especially at night.

      And, no sane person believes that solar power will put a dent in oil and natural gas consumption, not even the US EIA…

      https://www.eia.gov/outlooks/aeo/pdf/0383(2017).pdf

      • Isn’t it remarkable that solar produces the most power just as energy use skyrockets? 3pm electricity is worth much more than 3am electricity. Thus peaker NG electricity production is going away. And we are what, 15 years away from $0.01/kwh solar power? PV panels are following a slow rendition of Moore’s Law. The end of oil, except of course for chemical production, is less than a generation away.

      • jtrobertsj

        Isn’t it remarkable that solar produces the most power just as energy use skyrockets? 3pm electricity is worth much more than 3am electricity.

        Dead wrong. In the US, solar power peaks between 9:30 and 2:30 each day, or vanishes almost entirely during storms, clouds, or haze between those limited hours. Electrical DEMAND peaks much later: beginning at 3:30 and then dropping off after 8:00 pm. Solar cannot contribute this peak, but -instead – cracks the turbines and generators and exhausts since its peak forces the units off-line at noon, then forces a restart at 4:00!

  22. Informative post. Thanks David and thanks warmunists and alternative energy crack-pots. It’s always fun watching your arguments destroyed.

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