Replies to This Discussion

Permalink Reply by Skip Peel - Mineral Consultant on March 16, 2020 at 11:58

My Sec. Mnuchin remark was made with my tongue firmly planted in my cheek.  And I agree fully with your list of administration failures, misstatements and lack of urgency.  Good to hear your portfolio is in good shape.  So now you can loose sleep over something else like having to wait until November, actually January, for relief.

Repeat after me, "No Bailout!", "No Bailout!", "No Bailout!".  I'm disappointed as hell and I'm not going to take it anymore!!!!!!!  Let the Zombies die!

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Permalink Reply by Rock Man on March 16, 2020 at 4:39

This traces back to the gas flaring situation in places like the Permian basin - the volumes of gas being burned off is HUGE (600 million cubic feet per day? Or more).

Lots of potential revenue going up in smoke. And releasing whatever to the atmosphere.

But from a producers standpoint, if there is no flaring - there is no oil production since they go hand in hand.

Another complicated conundrum facing the world today. With no easy "fix" at hand.

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Permalink Reply by Skip Peel - Mineral Consultant on March 16, 2020 at 4:46

Rock Man, any salt caverns in the Permian we could leach and create storage?  A Strategic Natural Gas Reserve, so to speak.  Yes, not cheap, but a way to reduce emissions and save gas for the future benefit of producers and end users. 

The best way to reduce flaring IMO is to reduce drilling.  I think a shake out would accomplish that.

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Permalink Reply by Rock Man on March 16, 2020 at 4:58

Salt present in Permian but probably not the best place to do "cavern creation". Plus even if this was an option, the lack of pipelines to move gas to storage will be the issue.

Mid Continent (e.g. Kansas) or Michigan are two good options .

Gas marketers already use similar types of caverns in Michigan to store gas in warm weather for cold weather usage.

Gas is a tough set of molecules to "store".

ANOTHER OPTION - was popular in California years ago: Store produced gas on site in tanks (compressed gas) for pick up by truck / tanker for transport to drop off point. This was very expensive as one could imagine and net to producer was low. Plus a safety factor involved.

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Permalink Reply by Skip Peel - Mineral Consultant on March 16, 2020 at 5:08

That's a shame.  We have a number of gas storage caverns across north LA.  The cost is not inconsequential but building pipelines to a Permian basin storage cavern should be less expensive than building to the Gulf Coast.  As with many actions that will address emissions and climate degradation, the economics may not work on a market basis so the government may have to take a hand.  Money better spent IMO than a bail out of companies that may not survive another half decade even with subsidies.  The energy cost for renewables will be lower than hydrocarbons in most of the country by then.  For the industry to survive there needs to be management of hydrocarbon usage and environmental impacts.  There are ways to do it but they are slipping away as Nero fiddles.

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Permalink Reply by Rock Man on March 16, 2020 at 5:32

Darwinism in the oil patch strikes again! 

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Permalink Reply by Jesse Joyner on March 16, 2020 at 5:42

One should not attempt to "stuff" logic or climate do-gooder concern into so-called sausage making. With many politicians, signing off on regulation/legislation is simply about how to grease the dirty hands of crony lobbyists. It's not about what's right or what's good for the country or how to save Mother Earth from overheating. No. People should not fool themselves into thinking that Superman's "justice and the American way" will be squeezed out the other end of the sausage-making machine.

Greed, not what's good for our environment, motivates many of those in Congress. They seem to be deaf, dumb, and blind to what they were taught in Sunday school via holy scripture. Their oath of allegiance to uphold our Constitution and to do what's good for the majority of our citizens, has been corrupted by them being hellbent on putting more and more money into their personal checking accounts so as to counterbalance how the Crash of 2020 will be diminishing their investment portfolios. 

Finally, one must also remember that domestic production of oil & gas is a national security issue. Like what happened back when Chrysler was bailed out in 1980, the Pentagon will lobby to save our energy independence from foreign dependency, just like it'd whispered in the ears of Congressmen to save our armored-tank-making assembly lines at the automaker. Greed makes for strange bedfellows. Yes, indeed. There's all kind of tasty boudin to be had in D.C. One type of blood sausage don't fit every appetite.   

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Permalink Reply by Steve P on March 17, 2020 at 8:24

so many issues, so little time.

Just a few comments.  The federal government has designated "critical supplies" that it requires be manufactured either in the US or one of our NATO partners, even if the products cost more.  The idea is that we don't want to be depending on ... China ... for essential weapons supplies during a time of crisis.  To me, this makes perfect sense, even if we pay US automakers build armored tanks.  We could surely get them cheaper if they were built in China.  Who on this website thinks that is a good idea? 

In fact, I think Congress should use some new regulatory scheme to get the FDA to require companies that sell prescription drugs in the US to have some capability to manufacture those made in either the US or a NATO member.  Currently, 98% of all prescription tablets used in the US are made in either China or India. Off point to this discussion, but I also believe that energy security is also important to the US.  

So, it is in the United States' interest to maintain domestic oil and gas operations.  Do we need to do that wisely?  Of course?  Will lobbyists be involved in that decision making?  Inevitable.  But today, there is too much lobbyist and foundation money on both sides of the issues in Congress.  This isn't a new problem, it has been going on in DC for decades.

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Permalink Reply by Skip Peel - Mineral Consultant on March 17, 2020 at 9:01

Energy security, energy independence, whatever it is called will not change because the economic reserves do not cease to exist.  They simply are under the control of companies that can afford to slow drilling when prices fall and maintain an equilibrium when balancing supply with demand.  Manufacturing somewhere other than China?  Sure but most will not be in the US for obvious cost reasons unless that manufacturing is done by the government, not the private sector.  The bottom line specific to our current situation is a failure to prepare and a failure to react promptly.  Both lessons will hopefully be learned well and the country will be ready for the next pandemic.  Further on the topic of national preparedness in the health care field, antibiotic resistance is on the rise.  Are elected officials addressing that threat?  The answer is always yes but the reality is always not sufficiently.  Leadership takes looking long term and making decisions and taking actions that some may criticize because they live in the moment and can't fathom the kinds of national emergencies a federal government should be preparing to meet.  Of course some of them - politicians - are the first to complain when we are caught short.

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