Getting Oil From A Stone

IBD ^ | May 29, 2008

[Kaslin]

Energy: Exxon Mobil's CEO says his energy company's "corporate social responsibility" is to produce more energy. While Congress wants to tax oil profits, he wants to spend them to find more oil. What a concept.

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While some companies like British Petroleum run endless ads touting their capitulation to the global warming religion by saying they are "beyond" petroleum, Exxon Mobil has been refreshingly unapologetic about developing the resources beneath our feet and making money doing it.

Speaking to reporters after the annual meeting of Exxon stockholders Wednesday, CEO Rex Tillerson shoved political correctness aside and insisted the science on climate change is not settled and "that to not have a debate on it is irresponsible" and that to "suggest we know everything about these issues is irresponsible."

Also irresponsible is to ignore the growing energy requirements of the U.S. and world economy, hoping they will be met solely by sources such as biofuels which actually harm the environment by leading to cutting down forests and disturbing the soil to plant crops destined for our gas tanks, releasing huge amounts of CO2 in the process.

Tillerson says that "everyone agrees that notwithstanding the growth in all other options for supplying energy, renewables, nuclear, biomass alternatives, you are still going to require substantial fossil fuels to meet energy needs, and two-thirds is going to come from oil and natural gas."

He spoke of Exxon spending $8 billion of its profits on the Kearl oil sands project in Alberta, Canada. This project alone is aimed at recovering between 4.5 and 6.5 billion barrels of oil.

[IronJack]

Then why is domestic production DOWN from 10 years ago?

[2ndDivisionVet]

Didn't one of the crazier, albeit more honest Dems come out for nationalization of the oil companies the other day? It was a black female, IIRC. She first said “socialization”, then took it back and said nationalization...

[ThreePuttinDude]

The one question I have:
Will this genius group of know-it-alls in Washington
understand what is being said, or will this simple
explanation be too much for them to grasp....??

I'm saying the later

[BruceS]

That was Maxine Waters and she never was able to think of the word “nationalization.” After stumbling over “socialization” and the like for a minute she finally said something to the effect of “take over your company.”

Scary.

[DuncanWaring]

That would be Maxine Waters:

http://www.freerepublic.com/focus/f-news/2020305/posts

[taraytarah]

CEO Rex Tillerson shoved political correctness aside and insisted the science on climate change is not settled and "that to not have a debate on it is irresponsible"

Another one on board... :)

[allmost]

Chinese will be drilling in the Gulf of Mexico before American companies. Thank you Congress. We need your politics right now.

[Fresh Wind]

Marxine Waters.

[HoosierHawk]

The oil is trapped in microscopic pores of rock and companies must force pressurized fluid and sand into the earth to break the pores in the rock and recover the oil. The extraction technology and production process also is not cheap.

And one of the "pressurized fluids" being used to extract the oil and natural gas? You guessed it.

Carbon dioxide.

[HardStarboard]

>>>Then why is domestic production DOWN from 10 years ago?<<<

The Congressional Environmental Complex.

much like the much ballyhooed "Military Industrial Complex" of years ago.

[Fox_Mulder77]

According to the Institute for Energy Research, "The United States has 2 trillion barrels of oil shale. This is more than 7 times the amount of crude oil reserves found in Saudi Arabia, and is enough to meet current U.S. demand for over 250 years."

Jeez!!! That's a lot of oil!!

[Kaslin]

Yeah but it would take 20 years to the oil out according to Chuckie Schumer /sarcsm

[kempo]

“Then why is domestic production DOWN from 10 years ago?”
Because our government has not opened any new domestic areas for exploration and drilling for the past 30 years.

[curiosity]

Wow. Just wow. The fact the Congress is preventing shale oil extraction is criminal.

Here's my question to my fellow conservatives? Why the hell are we so preoccupied with ANWAR? If this article is correct, then ANWAR is nothing compared to the shale oil in Utah and Colorado. Why are we wasting political capital on ANWAR small potatoes then?

All ANWAR efforts ought to be redirected at the shale reserves.

[Kenny Bunk]

Then why is domestic production DOWN from 10 years ago?

I believe it because refining capacity is absolutely maxed out, so the oilcos concentrate on the feedstocks they know they can handle easily and cheaply, ignoring heavier, or higher sulfur oils, which require more refining in order to meet environmental standards.

About 15 years ago, there was a plan afoot to build new refineries on phased-out military bases. Never happened. We have not had a new refinery in over 40 years. Although to be fair, existing refineries have dramatically increased their output. It is still not nearly enough to meet domestic demand, which is a disgrace.

Simple fact. If we went to nuclear power for the generation of electricity, used coal to make methanol for fuel instead of burning it in power plants, and increased domestic drilling AND refining, this country could be energy independent. But we have not had a new nuclear plant built ... not 1 ... in over a decade. Oilfields with huge potential go untapped. Furthermore, since the development of strong independent energy policy has been ignored for so long, even the best efforts couldn't turn it around in less than 5-10 years ... a decade of economic hell.

Me? I lay the blame on the GOP, which has refused to lead on energy; refused to inform the public of the facts; and has, in fact, joined in the Global Warming hysteria, which hasn't a scientific leg to stand on ... especially now that we are obviously in a cooling cycle! IMHO, what the GOP has done is used the excuse of "Democrat or Green Opposition" to pass on a profit opportunity to the oilcos, who support them in election campaigns. I do not in the least blame the oilcos. They are playing the game they are supposed to play. But it is supremely ironic that Exxon's president is making the energy speeches that my president should be making.

This is wreaking economic havoc on the country as a whole. If the economy turns south before November, the GOP/Bush Legacy could be 2 decades of Democrat rule and a European-type socialist government at the end of that period.

IMHO, the only reason that the GOP still exists at all, is that we cannot figure out how to safely replace it without handing the country over lock, stock, and barrel, to the left, ala Ross Perot's facilitation of Bill Clinton.

The Energy Debacle illustrates perfectly why the GOP becomes less and less the lesser of two evils.

[KC_for_Freedom]

Actually a more thoughtful plan would be to go after offshore oil and ANWR and use this temporary reserve (10 years) to get oil shale reclamation and nuclear power generation going. We could also develop the electric infrastructure (power transmission lines, etc.) in this time and then we would have an energy plan that would serve the public.

How long have we been waiting for the government (either party) to come up with a comprehensive plan for energy?

[Holicheese]

She spilled the beans fo their plan. That is why they have fought domestic production so hard. Run up prices till the rabble can not afford gas. then sieze the oil industry for the good of the people.
the gov. controls fuel and healthcare.

[Kenny Bunk]

All ANWAR efforts ought to be redirected at the shale reserves.

You have a point, especially since at present, Alaskan oil goes straight to Japan! We haven't the pipelines or the refining capacity to handle it.

But untapped oil reserves abound ... off both coasts of Florida, in the Gulf of Maine, in the Gulf of Mexico ... a huge natural gas field extends through western New York, down through Pennsylvania and Maryland into West Virginia,; Nebraska, Montana, even good old Ohio, have useable reserves of petroleum available without crushing the oil shale, which is a paying proposition at today's prices.

But all this production is useless without a matching increase in refining capacity. No kidding, we are maxed out, operating at close to 90 percent capacity, which doesn't allow for effective maintenance.

What ANWAR does mean, is an economic boost for Alaska, which like my state, desperately needs it.

[popdonnelly]

Either the environmentalists will stop them, or the government will tax them to death. You want energy, you have to curb the government.

[popdonnelly]

“The fact the Congress is preventing shale oil extraction is criminal.”

And an excellent reason to throw the criminals out of Congress, by voting them out.

[curiosity]

You have a point, especially since at present, Alaskan oil goes straight to Japan!

That's irrelevant. Oil is a fungible commodity in a global market, so any significant increase in the supply will bring everyone price relief. Think of it this way: any oil Japan buys from Alaska means that much less oil it buys from other sources, allowing us to buy it.

But untapped oil reserves abound ... off both coasts of Florida, in the Gulf of Maine, in the Gulf of Mexico ...

My understanding is that these reserves, while not tiny, are small relative to global supply and hence wouldn't help all that much. The amounts in shale oil, however, are huge!

[norraad]

Petroleum, from good old latin = Petro + oleum

Rock + oil

[ronnie raygun]

Yet these idiots are continually voted back into office to continue the ruination of America. When the sleeping decide to wake up and do something it will be to late. The insane already control the insane asylum and we helped by falling asleep or not paying close attention to the small changes made over the years that collectively will bring down the greatest and most hated nation in the free world.

[kingattax]

algore and his mindless goons need to be permanently run out of dodge.

[IronJack]

Does oil company greed play into the equation anywhere? Or can we lay the entire mantle of blame on "Congress" and "the GOP?"

I agree completely that Republicans have failed to lead in this area -- and so many others. But let's face it, there is little incentive for the oil companies to drill when they're already profiting beyond anyone's wildest dreams. All new supplies will do is drive price down, and then only after requiring a huge investment. Doesn't make much sense for them to spend billions to lessen their profits ... especially when it's been proven that we'll pay whatever price they demand, however criminal it is.

[G.Love]

Hang in there Rex. Don’t apologize for being an oil company. Your company does more in a single day to keep this economy working than Congress does in an entire term.

How is XOM this week?

[Kenny Bunk]

Does oil company greed play into the equation anywhere?

O sure. But it's not greed to play by insane rules and profit thereby! The oilcos are doing exactly what businessmen are supposed to do.

I secretly (!) think, having slaved in the Babcock and Wilcox bowels of many a powerplant as a yute, that the energy business will become a regulated utility, with privately owned investor companies regulated by a Federal Petroleum Utilities Commission. With our luck Boogaloo Watts will be the first chairman.

I think it's inevitable, especially since the GOP has Foxtrot Uniformed so badly that we will have Obama-type ACORN govmint for 25 years after this screw-up.

Have you noticed that McCain has said NOTHING about domestic energy independence ... beyond saying we won't ruin CA and FL beaches with nasty oil drilling, that is?

I am starting to think of 2008 as the new 1928 and am hunkering down for 25 years of "New Deal," while we scramble around looking for another Eisenhower. Forget about any energy progress with McCain at the helm. He now says the Global Warming rosary every day.

[Nathan Zachary]

"Also irresponsible is to ignore the growing energy requirements of the U.S. and world economy, hoping they will be met solely by sources such as biofuels which actually harm the environment by leading to cutting down forests and disturbing the soil to plant crops destined for our gas tanks, releasing huge amounts of CO2 in the process."

That statement is just as "irresponsible" as the global warming one. It sure doesn't help him gain any credibility.

[Nathan Zachary]

"And one of the "pressurized fluids" being used to extract the oil and natural gas? "

Steam. Athough there is talk of injecting captured co2 from refinery smoke stacks back into the ground in the future- as emission laws begin take effect.

The whole "co2 is a pollutant" claim is stupid however. But, as we can clearly see this fiction has become fact. One of the most abundant elements on earth, -the building blocks of life itself- is now a "pollutant".

Governments have now succeeded in doing what everyone once joked about- taxing the air we breathe.

[Kozak]

Makes me want to buy more Exxon stock.

[Straight Vermonter]

I loved how the other folks sitting behind her were grinning at her stupidity.

[Nathan Zachary]

"That's irrelevant. Oil is a fungible commodity in a global market, so any significant increase in the supply will bring everyone price relief. Think of it this way: any oil Japan buys from Alaska means that much less oil it buys from other sources, allowing us to buy it."

It doesn't matter. Oil is sold at OPEC prices, and any oil coming out of Alaska is simply added to the world oil supply.
The companies drilling that oil in Alaska, or anywhere else for that matter will not sell their oil for cheaper, they are all opec members. It isn't 'American" oil, it's oil company oil. They just pay the State and Feds the required royalties for pumping it out of the ground.

Any new supplies/ suppliers adding to the world oil supply will simply result in other opec members reducing their output in order to prevent a glut of oil from building in the market.

They have clearly stated this tactic this week, and they have stated this months ago as well. They closely monitor how much oil is produced, and keep the supply as tight as possible in order to keep prices as high as possible, citing fears of falling USD values as one of the reasons for doing so.

[Straight Vermonter]

Alaskan oil goes straight to Japan!

That is an urban legend, widely spread on FR. Only about 7% of North Shore oil goes to Asia.

http://ncseonline.org/NLE/CRSreports/natural/nrgen-25.cfm

[Straight Vermonter]

Someone on a GW blog posted a cost analysis of piping the CO2 to the proposed underground storage locations. The anaysis showed between a 50% and 100% increase in the cost of electrical generation, depending upon where the generator was. Ouch!

[Mogollon]

Only about 7% of North Shore oil goes to Asia.

I think that's North Slope oil. North Shore is in the San Francisco area.

[Nathan Zachary]

"Makes me want to buy more Exxon stock."

You should, It's one of he larger companies. It pays good dividends, and will continue to do so for the foreseeable future. Even if or when oil supplies dwindle, it is expanding into bio fuels development in a big way. There is a lot going on in that sector which never makes the news, but is expanding at explosive rates regardless. You can keep track of a lot of that news here:
http://www.biomassmagazine.com/

[Nathan Zachary]

The Aussies are into that in a big way. Total waste of time and money, but it just goes to show how stupid a nation can be when it's sheeple are brainwashed with BS long enough...

They are literaly "cleaning" the air and pumping the co2 they extract back into the earth..... HAHAHAHAHAHAHA!

Thats equivalent to taking one single grain of sand, cleaning it, then tossing it back onto the beach.

I guess it's really true that there isn't much to do in AU.

[Straight Vermonter]

Oops. Think first, type second.

[thackney]

Because a global company like ExxonMobil spends more of its dollars in countries that encourage oil/gas growth rather than keeping many of its most promising reserves unavailable for exploration.

ExxonMobil gets 3/4 of its production from other countries and correspondingly gets 3/4 of its revenues from overseas as well. Not surprisingly, they invest most of their capital overseas.

[thackney]

I believe it because refining capacity is absolutely maxed out

The US could nearly triple our domestic oil production before we reach our refining capacity. The difference is we would be refining our own oil instead foreign oil.

The US produces 5.1 MMBPD of crude oil, but we import another 10 MMBPD to also run through our refineries.

[thackney]

You have a point, especially since at present, Alaskan oil goes straight to Japan!

Wrong!

When first built the pipeline oil could not be exported; that was part of the deal to get the pipeline approved through congress. The ban against exporting Alaskan North Slope was lifted in 1996 yet 100% of Alaskan North Slope oil is kept in America. This has been the case for all but 4 years of the nearly 3 decades of Alaskan oil production. Between 1996-1999 5.5% of North Slope oil was exported to Asian countries. These exports were overwhelmingly supported by the US Congress and by the Clinton Administration to offset an oil glut in California at the time. In June 2000 Alaskan North Slope oil again ceased to be exported, and 100% of Alaskan North Slope production has stayed in America.

You can look at the export history from this area since the ban was lifted.

Exports, US West Coast including Alaska and Hawaii
http://tonto.eia.doe.gov/dnav/pet/hist/mcrexp51a.htm

Here you can see data from the California Energy Commission. They track the amount of oil brought into California from Alaska.

CALIFORNIA CRUDE OIL PRODUCTION AND IMPORTS
http://www.energy.ca.gov/2006publications/CEC-600-2006-006/CEC-600-2006-006.PDF

Here you can see from the Washington Government that 74% of the oil used in Washington State refineries comes from Alaska.

Washington State, Petroleum FAQs
http://qa.cted.wa.gov/portal/alias__CTED/lang__en/tabID__847/DesktopDefault.aspx

Some folks claim Japan is closer, those people haven't looked at a map:

[thackney]

Alaskan oil goes straight to Japan!

That's irrelevant.

It is also a lie.

[thackney]

Only about 7% of North Shore oil goes to Asia.

From 1996 to 2000 about 5.5% of Alaskan North Slope oil went to Japan. It hasn't since.

U.S. Crude Oil Exports to Japan
http://tonto.eia.doe.gov/dnav/pet/hist/mcrexja1m.htm

[thackney]

But all this production is useless without a matching increase in refining capacity. No kidding, we are maxed out, operating at close to 90 percent capacity, which doesn't allow for effective maintenance.

And two thirds of the oil running through US refineries is imported. We could nearly triple our domestic production before reaching the current capacity of our domestic refineries. And on average, upgrades and expansions raise our total capacity by the equivalent on an average sized refinery nearly every year.

[thackney]

But let's face it, there is little incentive for the oil companies to drill when they're already profiting beyond anyone's wildest dreams.

Then why are drilling rigs operating at over a two decade high both domestically and internationaly?

US drilling exceeds 22 year high
http://209.157.64.200/focus/f-news/2022449/posts

[Kenny Bunk]

Thank you.

[Kenny Bunk]

My apologies for adding to the Urban Myth of exports from Alaska to Japan. I stand corrected.

[thackney]

You are welcome. I am amazed how often this is repeated. You are far from alone in believing this was true. The myth started before before the oil was even flowing.

[HoosierHawk]

CO2 is already being used for “frac,” or fracturing rock beds to release oil and natural gas. It’s trucked in though, not piped.