Quote:
Originally Posted by freemonkey
Yep, I get that, thedoc.
My question about the US government involvement has partly to do with whether or not the government is ever involved in the drilling, production and/or sales of oil or gas.
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I confess I did not read the article thoroughly. This is just from what I've learned in 30+ years of experience in the industry.
Normally, the federal government nor any state or local government does not have any direct involvement in the drilling, production, and most certainly not the sales of oil or gas on leases on government or private land. The last oil or gas well drilling the government did, outside of the strategic petroleum reserves (oil storage), involved detonating nuclear weapons underground back in the late 1960s and early 1970s out in Western Colorado. That was a dismal failure, being that the natural gas produced was radioactive. The strategic petroleum reserves (read: storage) in Louisiana and Texas and California and maybe other places they do directly control, but the maximum they can produce is less than a million barrels per day, not that much in the 20 million barrel per day domestic consumption.
The government has quite of bit of indirect involvement, being that much of the offshore and quite a bit of the onshore petroleum energy drilling and production is on federal properties. The federal government auctions leases, administers safety and environment regulations, and collects royalties (typically 12.5%). They do not, however, tell the leaseholders how much they can produce. The Minerals Management Service will sometimes show up out of the blue and order an rig shutdown just to prove the safety systems work properly, but those are almost always back in operation within hours.
The oil shale is proving to be productive, but squeezing it out of the rock is costly and self-limiting by the difficulty. In other words, they don't have shale oil wells flowing 20,000 barrels per day like some Saudi Arabian wells; the typical shale oil well would be a few hundred barrels per day at most.