Posted on 10/31/2015 5:45:29 PM PDT by UMCRevMom@aol.com
Lawmakers are pushing legislation that could result in the selling off of 266 million barrels of oil from the country’s Strategic Petroleum Reserve (SPR) over the next decade, mostly to fund more government spending.
Legislation for health care, highway funding and financing the government could end up drawing on down on oil supplies meant for emergency situations. If all three bills are signed into law, some 266 million barrels, or nearly 40 percent, of the current 695 million barrel SPR would be sold off in the next decade to raise about $23 billion.
“The 114th Congress has introduced three separate bills that would fund non-energy policy goals by mandating crude oil sales from the Strategic Petroleum Reserve,†according to an analysis by the consulting firm ClearView Energy.
ClearView noted the health care bill, called the 21st Century Cures Act, was the least likely to hit President Barack Obama’s desk despite passing out of the House with a veto-proof majority. On the other hand, the two other bills passing a budget and funding highways are more pressing issues to Republican and Democratic lawmakers. Just those two bills alone would draw down on 186 million barrels.
“Elected officials could face grave political penalties for failing to raise the debt ceiling or fund highway construction, but voters aren’t likely to notice the absence of [200 million barrels] of crude oil from salt caverns they can’t see,†ClearView noted.
“Moreover, swollen global inventories and falling oil production system capacity utilization tend to blunt the edge of geopolitical risk, which probably makes it easier for Congress to drill for dollars in the SPR,†the consulting firm added.
Calls to sell of SPR oil come amid a resurgence of crude oil production in the U.S. thanks to hydraulic fracturing and horizontal drilling. As crude output has boomed, U.S. lawmakers have called for a repeal of the crude oil export ban and other policies to help keep America’s energy boom going.
But a consequence of the fracking boom is the SPR has lost some of its importance. With booming crude production, lawmakers can politically afford to sell strategic oil reserves to fund government programs.
The White House called the budget bill “a responsible agreement that is paid for in a balanced way.â€
Republican leadership negotiated the budget deal behind closed doors with White House officials and Democrats. The budget bill includes about $80 billion in spending increases — about $76 billion of which are offset by spending cuts and revenue increases, according to the Congressional Budget Office.
Some Republican lawmakers are hesitant to support the budget, citing concerns over backroom dealings and that not all spending increases are offset. Some lawmakers were furious about their prized programs being cut, like federal crop insurance.
“Make no mistake, this is not about saving money. It is about eliminating Federal Crop Insurance,†said Texas Republican Rep. K. Michael Conaway said in a statement. “The House Agriculture Committee was not consulted regarding any changes to policies under the jurisdiction of our committee.â€
It’s also unclear where key Republicans stand on selling off oil reserves to fund new government programs. Alaska Sen. Lisa Murkowski 18% has criticized such sales in the past, calling them “short-sighted.†This time around, however, Murkowski has been silent.
“Chairman Murkowski is currently reviewing the budget proposal as it relates to selling off oil from our strategic energy and national security asset – the Strategic Petroleum Reserve,†Michael Tadeo, Murkowski’s spokesman said in an emailed statement to reporters.
“As the budget process advances, we will further evaluate steps needed to update our nation’s energy and natural resources policies,†Tadeo said.
The SPR was created by President Gerald Ford in 1975 to improve America’s energy security should the country face another devastating oil embargo, like the one the Arab’s imposed in 1973 over U.S. support for Israel.
The SPR is the world’s largest supply of emergency crude oil with a capacity to hold 713.5 million barrels of oil.
Current legislative proposals to sell off oil aren’t the first non-emergency drawdowns to occur in recent years. In 2011, Obama sold 30 million barrels to offset potential price increases caused by the Libyan civil war — the sell off had negligible, temporary effect on oil prices.
No, they’re not suckered, they’re complicit.
We should be closing entire departments of the executive branch and using the savings to buy more oil...WHILE IT’S STILL CHEAP!
I’m past getting excited about anything.
Nahhhh, the 'bamster will just give it back to Russia.
Some of the advancements are just a matter of getting someone in the office to okay further investigation of unanticipated pay zones (fun companies to work for, because you get to find oil others missed or overlooked), sometimes, it takes major advancements in technology--both in the oil patch and in other sectors as well--it would be very difficult, if not impossible to drill the horizontal wells we drill today without a small truckload of computers on the drill site.
But I have a book in my office entitled "When the Oil Runs Out", warning of dire situations from oil shortages in the immediate future, published in 1947. I keep it as a reminder that panic is no stranger to humans, and that there is always more. It might be harder to find, more expensive to get, but it is there.
The area where I have worked most of my career (The Williston Basin) had not had oil discovered yet when that book was published (that discovery came in the 1950s), and while we knew there was oil in its now most famous formation (the Bakken), the ability to extract that oil was limited to a few vertical wells which intersected natural fracture systems.
Finally, some intrepid folks in the exploration departments of a few oil companies started looking, then drilling horizontal wells in the Bakken (the first round were failures), then over a decade later, some different folks tried again with a little different plan: Don't drill the shale, but drill the adjacent low permeability reservoir rocks and frac them.
Not long after that was succeeding wildly over in Eastern Montana (Richland County), some very successful wells in North Dakota spurred the expansion of drilling into deeper parts of the Basin in North Dakota, which went from the 8th ranked oil producing state to second.
I had the good fortune to work one of those vertical Bakken wells in 1980, missed out on the first round of horizontal wells in the mid 80s, but started working horizontal wells in 1990.
I was working for a smaller oil company in 2000 when I saw what people were talking about drilling horizontal wells in in the Bakken in a well in Eastern Montana, and the company came back (because that vertical well was successful in another, deeper zone) and twinned the well and we drilled their first Bakken horizontal well in 2001.
From there, things slowly went nuts, and by 2006 we were drilling in North Dakota, the company sold to a larger oil company, and, in short order, that company was bought by one of the Majors.
It was a fascinating time to be working in the oil patch.
Consider we adapted from the days of drafting vertical well logs on velum and lettering with LeRoy sets to working with computers at over ten times the drill rate of the earlier wells, (From 300 ft. per day to 3000 ft. per day in the Paleozoic rocks.), and from driving 70 miles to the nearest phone to satellite communications and internet, there have been a lot of changes along the way.
There will be more in the future, too, some moving forward, others rediscovering the techniques that led to the discovery of oil in today's target formations, but all in all, there is more oil out there and we are always looking for the 'next big play'.
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