Guest “WTF is she talking about?” by David Middleton
This post is the first sequel to: Democrat Senators Demand That Oil Companies Increase Production.
As I write this post (the morning of March 7, 2022), West Texas Intermediate (WTI) is right around $120/bbl. It actually topped $130/bbl over the weekend. This morning, I paid $3.999/gal for regular unleaded gasoline in Houston, Texas. While I make my living finding oil & gas and high oil prices are good for the bottom line right now. These prices are likely to be unsustainable and could trigger a recession and subsequent oil price crash.
The Brandon maladministration is increasingly facing questions about why they aren’t taking measures to increase domestic oil production. This is a typically moronic Democrat political hack response to the questions:
Q We also know, you know, the President, as recently as yesterday, talked about increasing domestic manufacturing to bring down prices on inflated items like goods. So why not apply the same logic to energy and increase domestic production here?
MS. PSAKI: Well, there are 9,000 approved oil leases that the oil companies are not tapping into currently. So I would ask them that question.
Q Is there nothing that the administration can do to get those providers back to pre-pandemic levels?
MS. PSAKI: Do you think the oil companies don’t have enough money to drill on the places that have been pre-approved?
Q Just asking.
MS. PSAKI: I would — I would point that question to them. And we can talk about it more tomorrow when you learn more.
Press Briefing by Press Secretary Jen Psaki, March 3rd, 2022
First off, WTF IS Ms. Psaki referring to here?
MS. PSAKI: Well, there are 9,000 approved oil leases that the oil companies are not tapping into currently. So I would ask them that question.
As an employee of “them,” I would try to answer that question. However, the “9,000 approved oil leases that the oil companies are not tapping into” bit is a non sequitur, if not totally wrong. Ms. Psaki was asked, “Is there nothing that the administration can do to get those providers back to pre-pandemic levels?” Well, Permian Basin oil production has already exceeded pre-shamdemic levels. Her response was idiotic. The number of “approved oil leases” (presumably Federal mineral leases) is not an answer to that question. The only thing that “the administration” could do to increase oil production, would be to get the hell out of the way. From cancelling the Keystone XL pipeline, to refusing to hold Federal leases sales, to threatening to refuse to approve drilling permits, they have been getting in the way as often as they can.
I will focus on Federal oil & gas leases in the Gulf of Mexico, because that’s the area I have worked since 1988, I have easy access to detailed lease & production data and the GOM accounts for about two thirds of the oil production from Federal acreage.
If Ms. Psaki is referring to tracts that are open for leasing, there are 10,638 open tracts in the Central Gulf of Mexico planning area.
According to Lexco OWL, approximately:
- 38% of those Central GOM tracts have never been leased in the history of Gulf of Mexico US lease sales… A pretty good indication that those tracts are not prospective.
- 28% of the tracts are deepwater leases that were drilled. These wells were either dry holes or failed to find economically recoverable hydrocarbons and were subsequently relinquished.
- 15% of the tracts are shelf leases that used to be productive… Old fields that have been plugged, abandoned and the infrastructure has been removed due to BSEE’s Idle Iron rule.
81% of the currently open leases in the Central GOM have never been leased, leased and unsuccessfully drilled or are abandoned oil & gas fields. This doesn’t mean that none of them are prospective. A lot of oil & gas gets discovered in old fields. There’s an old adage, “The best place to look for oil, is where it’s already been found.” That said, most of these leases have been recycled many times through annual leases sales over the past 50+ years. The prospects of large discoveries on currently open Central GOM acreage are fairly slim. And, until they resume holding lease sales, as they are legally required to do, the open acreage is about as useful as mammary glands on a bull.
If Ms. Psaki was referring to leases currently held by oil companies, there are 1,771 active leases in the Central Gulf of Mexico planning area.
About 40% of the currently active leases are either held by production or held by a production unit. About 2% of the leases have been extended beyond primary term by active operations, suspension of operations (SOO) or suspension of production (SOP). It takes a long time to finalize the work to the point the prospect is drillable, file all of the necessary plans and permits and sanction development.
About 45% are primary term leases (generally 5 years on the shelf and 10 years in deepwater). The vast majority of these leases had been previously leased and then relinquished. Just because we bid on a block, doesn’t mean there’ll be an economically drillable prospect on it during the primary lease term. Some of these leases will probably get drilled, some will expire and get recycled through future lease sales (if there are any).
Over 300 “pre-approved” leases are currently being unlawfully blocked by a corrupt Obama judge. These tracts received bids in the November 2020 lease sale. None of these leases have been awarded.
Regarding onshore production…
About 26 million Federal acres were under lease to oil and gas developers at the end of FY 2018. Of that, about 12.8 million acres are producing oil and gas in economic quantities. This activity came from over 96,000 wells on about 24,000 producing oil and gas leases.
Bureau of Land Management
About half of the leased acreage is “producing oil and gas in economic quantities.” The other half would consist of leases no longer producing economic quantities of oil & gas, prospects that haven’t been drilled yet and “trend”, “play” or “protection” acreage. Oil companies will often bid on whatever is open in hot plays and trends, with the notion of possibly working up drillable prospects. They will also lease acreage around good prospects and new discoveries to prevent other companies from “corner shooting.” Most of these sorts of leases will usually expire undrilled.
Rare is the occasion that an oil company bids on a “ready to drill” prospect. After leases are awarded, companies will start spending money on additional geophysical data, reprocessing existing data and performing the detailed geological and engineering work required to bring the prospect to a drillable stage. Even then, it will only get drilled if it is still economically attractive and can be budgeted by the oil company, provided the Federal government approves all of the required permits. So far, the only thing the Brandon maladministration hasn’t been doing to hamstring US oil production is in drilling permit approvals. So far, they haven’t been blocking or slow-walking drilling permits on existing Federal oil and gas leases. I just pulled up the BSEE APD (application for permit to drill) data for the Gulf of Mexico. In 2017, BSEE approved 820 APD’s. In 2021, they approved 794 APD’s. This isn’t surprising because they haven’t been blocking permits. It would be blatantly illegal if they did. Under President Trump, BOEM held at least 2 GOM lease sales every year, as required by law. Under Brandon, we’ve only had 1 GOM lease sale. We only had that sale because a Federal judge ordered them to hold it. That sale is currently in limbo because another Federal judge blocked it… Because climate change… 🤬
So Jen, exactly which leases are “oil companies are not tapping into”?
- Are you so ignorant that you think an “oil lease” has oil & gas just because it’s an “oil lease”?
- Are you so dumb that you think we can just “tap into it” because it’s an “oil lease”?
Yes, those were rhetorical questions…
“Oil leases” are the mineral rights to geographical tracts of land/seafloor. They don’t have oil because the government designates them as “oil leases.” In the Central GOM, on the shelf, a standard “oil lease” is a 3 mile by 3 mile square tract, covering 5,000 acres. Standard deepwater leases are a bit larger, covering 5,760 acres… However, they’re all just square tracts of acreage. Well, not all… Some leases along the edges of the protraction areas are smaller polygons. The geology of the Gulf of Mexico and the oil that migrated into its geological traps didn’t pay attention to the future leasing plans of the US government.
The Digital Wildcatter summed it up nicely here…
A funny thing happened on the way to saving the climate…
Offshore Energy
COAL | NATURAL GAS | OIL 18 Nov 2021 | 22:09 UTC
Carbon capture plays prominent role in latest Gulf lease auctionAuthor Brandon Mulder
Editor Richard Rubin
Commodity Coal, Natural Gas, OilCarbon capture and storage played a large role in Lease Sale 257, which recorded a bumper crop of bids from oil and gas producers Nov. 17 for drilling rights in the US Gulf of Mexico.
Of the 317 bids the Bureau of Ocean Energy Management received – the highest since 2014 – about 140 of them were for tracts located in shallow waters of the Texas and Louisiana coast, inexpensive areas with depleted oil and gas reserves.
“The oil and gas reserves in those areas are pretty much tapped out at this point, so it’s hard for me to imagine a company going in there with the idea of producing more oil and gas,” said Hugh Daigle, a petroleum researcher and professor at the University of Texas. “This is probably a CCS push.
The largest bidder for shallow-water tracts was ExxonMobil, which placed bids on 94 tracts worth $158,000 apiece, according to BOEM data. The company’s tracts are clustered in the Brazos Area, the Galveston Area and the High Island Area – locations in close proximity to the company’s announced $100 billion CCS hub that will be located in southeast Texas.
ExxonMobil didn’t confirm whether the 94 tracts it placed bids on will be used for CCS. In a Nov. 18 statement to S&P Global Platts, the company said it “will work with the Department of the Interior on plans for the blocks once they are awarded.”
[…]
“This is the first big lease sale in the Gulf of Mexico that has come after a lot of these companies have made various carbon commitments,” Daigle said. “And in light of that, it’s probably not surprising that you’re starting to see some of these leasing decisions being driven not just by oil and gas production, but by other economic interests of the company.”
[…]
S&P Global Platts
So… A corrupt Obama judge unlawfully blocked the November lease sale, the first sale in which CCS appears to have played a significant role, because it didn’t adequately address climate change.
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The BBC went live to Sleepy Joe this afternoon. I think he was saying much the same as Psaki. Can’t be sure though. I don’t pay too much attention when Sleepy comes on.
While VP Cackling Kameltoe Harris was making a fool of herself criticizing heavy trucks for polluting, WH spokesperson Jen “Red Star” Psaki was defending shutting down the XL Pipeline by saying the same amount of oil was still being moved from the source to the refineries ON TRUCKS and DIESEL POWERED TRAINS!!!
When the relative safety of pipelines to avoid crashes of tanker trucks and derailments of tanker trains spilling oil was made, she said that comparison was IRRELEVANT!!!
They are not “tone deaf,” this is INTENTIONAL sabotage of the fossil fuel industry and the energy sector overall to try to please the RADICAL ENVIRONMENTAL WACKOS who have them by the throat and dictate energy policy.
I think you have completely misunderstood the relationship between the “environmental wacko’s” and the Biden regime – it’s a sick relationship but both sides may be consenting adults. The Biden regime appear to be willing and eager submissive’s to the demands of their Green abusive partner.
Excerpt from EQT CEO Toby Rice letter to Jennifer Granholm, U.S. Secretary of Energy:
https://www.eqt.com/wp-content/uploads/2022/02/Letter-to-Secretary-Granholm-vF2-2.16.22-1.pdf
“…The problem is very straight forward: the pipelines heading to New England are full, and as a result, we cannot physically flow that gas needed to meet growing demand without more infrastructure. That’s it.
And the way to solve this problem is equally straight forward: allow the completion of pipeline projects such as those in the table noted above, many of which are substantially complete, and let us provide the natural gas … while also reducing New England’s emissions.
The True Impact of the Infrastructure “Cancelation” Movement
What we are seeing play out in New England is the result of a symbolic attempt to address climate change by canceling pipelines, thereby isolating itself from domestic supply. I say symbolic” for a few reasons. At the time, it was argued that the natural gas that the pipelines would deliver was not necessary, and that lower emissions alternatives were all that was needed. In reality, though, since canceling the first natural gas pipeline that would have accessed New England, the consumption of natural gas by the region has increased, not decreased. The consequence has been that New England has had to look to foreign natural gas to meet its energy needs.
New England is the only region remaining in the United States that is importing LNG from foreign sources. Rather than relying on natural gas sourced from Appalachia with some of the lowest methane emissions and smallest carbon footprints on the planet, New England instead has to source foreign supply shipped from over 2,000 miles away. Not only has the cancellation movement resulted in New England’s natural gas being the least responsibly-sourced with the highest emissions in the United States, it has also caused the region to be subject to international LNG pricing. This is the reason New Englanders are paying five times more for natural gas than their neighbors…”
David,
This is one of your best articles ever. It defines and then explains every aspect of the current fiasco and its causes clearly enough for even the room temperature IQ Leftist St Greta worshipers to understand. I am sharing a link to it on several blogs and websites that deal with politics and the environment….You are becoming legendary in the fight for Truth, Justice, and….you know, “the Thing.”
Full disclosure, my father was one of the early wildcatters. He was born in 1900 and was a combat pilot in the Army Signal Corps after our entry into World War I….I was an Air Force pilot in the Vietnam war.
After “The World War”, he started his own oil company and eventually drilled a well with Will Rogers and Wiley Post. The photo my mother kept in a bureau drawer of my father and Will Rogers and Wiley Post arms around each other with the gusher in the background in the Tulsa and Oklahoma City news papers labeled him “The Wildcatter from Texas.” It was “mostly true” since he was living in Texas at the time, but he was originally from Illinois.
Thank you for staying in the fight in spite of the constant threat of facing ruin at the hands of the “Cancel Culture” and the Deep State destroying everyone who goes against the narrative.
I find it interesting that climate alarmists and their ‘camp followers’ claim that the ‘existential problem’ we are facing is almost exclusively the result of CO2 emissions from deriving energy from the combustion of fossil fuels. Their solution is to suppress production, without a viable alternative, in order to reduce anthropogenic CO2.
So, the brain trust’s solution to high prices, resulting from their actions to reduce the supply of fossil fuels, is to ask Iran and Venezuela to make up for the shortfall. If that is successful, just as much CO2 will be generated (Actually a little more, taking into account transportation.) as would have been, had no action been taken to throttle domestic production. In other words, they will have done nothing to accomplish their actual goal, and perhaps made the situation slightly worse. At the same time, they have brought on inflation we haven’t seen in 40 years, contributed to unprecedented supply line issues, encouraged an aggressive nuclear power to invade a sovereign nation and made almost 2 million people refugees, and brought us to the brink of WWIII.
One has to be exceptionally stupid to not realize that the policies are not only not accomplishing what was supposedly intended, but are reducing the quality of life for all of the world. The alternative explanation is that it is a malicious attempt to destroy the world as we know it. Rhetorically, just who might be behind that since the current president doesn’t appear bright enough to carry it out on his own. None Dare Call It Treason!
For some additional context:
https://townhall.com/tipsheet/katiepavlich/2022/03/09/biden-claimed-his-climate-agenda-isnt-hurting-domestic-oil-production-here-are-the-facts-n2604276
Jen Psaki should not be denied service in any Virginia area restaurants.
Instead, she should be served all her food cold.
Putin probably had a hand in the shutting down (attacks) of the two largest oil fields in Libya this week while groped around for oil with the Saudis and Maduro. Between Putin and Psaki, Americans don’t stand a chance. See the WSJ story on Biden ignoring American and Canadian oil players.
…while Biden groped around for oil
…and sniffed it’s hair
So this is where debate skills lead you–diversionary tactics in a global crisis. Hopeless.
The lease holders need to say something about the low chances of finding oil on those sites. That might win them federal stimulus funds in the cause of not finding anything but looking busy, which is the main game in DC anyway.
I come from the same stable as David Middleton. Back in the seventies when I was active in North Sea exploration I formed the opinion that whenever a politician got up to speak on anything to do with energy it was as the braying of an ass. They sounded ever so knowledgeable and yet talked complete gobbledygook. As a corollary I started to assume that when a politician spoke on a matter on which did not consider myself very knowledgeable that he/she might also still be talking nonsense. I have yet to see a major falsification of that assumption
I have yet to see many minor falsifications of that assumption, let alone any major ones. It seems to be a requirement for the job that you have no relevant skills or experience, just the ability to talk loudly enough to drown out those who do.
The same is true of journalists.
You have to envy Ukraine one thing. A president worthy of the trust and support of his nation. The decrepit whingeing old creep in the White House is unfit to lick his boots. Let him lick the boots of the crazy ayatollahs and Nicolas Maduro as he whinges and cringes to save his Green New Deal.
The Oligarch loving green coterie in Downing street are not much better.
Worthy? Obama managed to get a $12.5M mansion out of his time as president, Zelenski’s Miami mansion is worth over $34M and not far from the president of Kazakhstan’s Miami mansion. Obama must be kicking himself for getting the right job in the wrong country. You failed to extend the oligarch loving to cover the extensive Ukraine oligarchs.
Would Obama or Biden hop onto the first transport out of town as soon as the first bombs started falling?
Nope – lose too many votes. They’d wait until their position was almost surrounded then allow themselves to be persuaded “in the best interests of the country.” I’m hoping we never find out just how far Zelenski will travel down that road.
So, David, is there a news organization that would bring in a working geologist as a press conference ringer to ask Jen Psaki a pointed question, and then factually destroy her answer?
And why not you? 🙂
Pretty sure, I couldn’t resist saying, “Jen, you ignorant ****!” and dropping a few f-bombs.
Psnarki has a rather large hat size.
In the absence of significant pushback as in banning Russian oil imports, ineptitude will prevail in an administration more concerned with posturing, deflection, and outdated Party/lobbyist agenda lists.
Believe it or not, David, $3.999/gal is “cheap” for gas. Up here in my BC town, the cheapest gas today is $6.507 per US gallon ($1.719/litre).
$1.719/L — how much is that per drop?
They don’t produce energy.
But they want to control energy.
Tyranny on full display.
Don’t produce anything but want to control everything? Government 101.
Thanks for the thorough analysis of her statement.
My next question that I would like to have an answer for when talking to others like her:
Are there places in the US where oil producers already had active rigs that were shut down by the Biden admin, and where they could extract oil from again on reasonably short notice (after gathering manpower, equipment, etc.)? That is, could oil producers “flip a switch” (figuratively) and get more production online in short order if they were allowed to do so?
My research suggests that parts of ANWR are in that situation. Is there a thorough analysis of that location and others that I can point to?
The short answer is no… But your point is valid.
The long answer would be yes, but the question would be somewhat different.
I’ll try to find time to write up a post with the long answer.
You know it’s bad when Biden minions can’t acknowledge Tesla or American and Canadian oil producers in the face of a land war in Europe. Just how much did the unions and enviros buy off this Party anyway?
PREDICTION:
The sophists, propagandists, and climate crackpots along with the Brandon MalAdministration will now proceed to claim that skyrocketing worldwide hydrocarbon prices justify massive investment in more pinwheels and sunshine (i.e., unreliable, intermittent, expensive, subsidized wind and solar generation)—
IN OTHER WORDS— EXACTLY WHAT GOT EUROPE IN A MESS IN THE FIRST PLACE !!!!
Not to niggle but an Oil and Gas lease is an exclusive option to drill that will continue if production is obtained. Leases generally require a sharing of production obtained. There is no obligation to drill a well or well.
The lease gives the Oil company security to invest the sums needed to evaluate, permit, drill, and develop the lands.
Regarding Federal offshore leases… There absolutely is an obligation to drill a well.
There is no penalty for failure to drill.
Without drilling or production a lease will is ineligible to be extended beyond the primary term.
Extension of the lease is a reward for success.
By definition a Royalty is a share of production.
The penalty is that you lose the lease.
Royalties are “sharing” in the same way that “taxes” and “tariffs” are “sharing.”
Saw the “9,000 unused leases” comment from some knob and thought “Do any of them have oil that can be gotten?” I’d have asked them but I deleted my Twitter account after being locked out over a 9 year old tweet, not that such bellends would answer truthfully, if at all.
Brandon has now shifted to 9,000 permits… Might be the topic of my next post. Between November 2020 and January 2021, operators of Federal onshore oil and gas leases in New Mexico, Colorado, Wyoming, etc. filed thousands of permit applications, which were quickly approved. Some operators stockpiled up to 10 years worth of permits because Brandon said he would halt all permitting on Federal leases.
https://www.api.org/news-policy-and-issues/blog/2022/03/04/the-red-herring-of-unused-leases
API lays it out here also
I was originally going to call it a “red herring”, but I couldn’t find the picture of the referee making a “red herring” call, so I went with non sequitur… 😉
API definitely laid it out very succinctly.
In the API article there is – –
My question is about the term “unproductive”.
I think he means ‘potentially productive’
What say you?
Unproductive just means the lease isn’t currently producing. The primary terms of the leases prevents us from locking up acreage for extended periods of time.
How many wells are there where a good supply of oil was found, but it was capped or plugged and has been left to sit? Such wells should be the first priority. We know where one huge one is, the one the Deepwater Horizon was in the process of doing a quick and bad job of plugging when it blew up. Start by figuring out how to tap that well. Then locate others in the gulf and on land that have been abandoned. How about a lost well bounty? Pay to find plugged and abandoned wells that were drilled ages ago by companies that don’t exist today. Open them up and if they’re good, start pumping. Finding lost underwater wells would help the environment by sealing up the leaking ones as part of the process of putting them into production.
“Pump, baby, pump!” has to come after “Drill, baby, drill!” when the drilling finds oil.
Biden could get around to approving oil exploration in the Arctic desert part of ANWR that Carter set aside for that. There’s nothing out there but rocks, moss, and lichen, possibly some insects. It’s not the forested mountains with rivers and caribou the antis like to claim it is.
None really. You don’t plug a well that is producing any material amount of oil. Oil and gas drilling is high in upfront capital low in ongoing variable cost. Generally when you drill a well you produce it as fast as the formation allows (without harming the formation) to maximize your return on capital. When production declines to the point where you aren’t covering variable cost you plug and abandon it. You’re not going to spend more capital to unplug a well that could barely cover its variable cost.
The only way to materially increase production is more leases, more seismic, more more new drilling, more pipelines to that new drilling, etc. This takes money, people and time. Hard to get all of the above while politicians are talking about banning lease sales, banning fracking and jawboning capital providers not to fund drilling. Harder, anyway.
‘Now those critics are in desperate need of help and the only people that can save them are the ones they have been demonizing for the last 10 years.’ Spoiled brats. Children who were never told ‘no’ and who were never taught self-control or to respect others. Sorry, America, you did this to yourself.
As a career oil and gas veteran it’s refreshing to glimpse some reality in a discussion about this issue. I don’t know what’s more frightening that Psaki/Biden have literally no one who understands these issue at even a basic level anywhere near them, or that they understand reality and are such shameless spewers of misinformation.
It seems all Biden actually cares about is shifting blame for problems, not solving them. This is not likely to work when in fact *you are the problem*. And I don’t mean Biden himself so much as the Democrats war on oil and gas that has been going on for decades. There’s really only one thing that makes it hard to lease, permit, frack, pipe and oil well that would otherwise be economic – Democrat politicians. There are reason why there are 7 rigs running in California and 300+ in Texas right now. Subsurface geology may have something to do with it but surface politics have an enormous impact. You can look at data that show California was once a top oil producing state but it basically sat out the last 20 years of the shale/fracking boom due to Democrats.