Department of Interior approves ANWR O&G leasing plan

[BWALKER77]

That you get the highest price when you have multiple high dollar interested parties bidding against each other vs offering the leases when none of the deep pockets have any interest at all and the freakin' state of Alaska picks up over half of them in what sorta appears to be a matter of principle.

Except with Democrats in control those lease sales will be shut down.
I hunted outside ANWR in the Brooks Range when I was 15. They were talking about opening ANWR then. I'm 44 now and it's just being opened up for lease now.

 

[Irrelevant]

Except with Democrats in control those lease sales will be shut down.
I hunted outside ANWR in the Brooks Range when I was 15. They were talking about opening ANWR them. I'm 44 now and it's just being out up for lease now.

Do you actually think D's are going to control things for more than 8 years at best? I don't. The pendulum with keep swinging. It wasn't now or never.

 

[SAJ-99]

Then you shouldn't worry about the area being developed.

I’m mostly worry about having to foot the bill for development that doesn’t make economic sense.

 

[BWALKER77]

BP is trying to bolster its green energy street cred after the deep water horizon debacle.

 

[BWALKER77]

Do you actually think D's are going to control things for more than 8 years at best? I don't. The pendulum with keep swinging. It wasn't now or never.

After the other day, I'd say it's very possible.

 

[BWALKER77]

I’m mostly worry about having to foot the bill for development that doesn’t make economic sense.

How would that work?

 

[SAJ-99]

How would that work?

Taxes. I’m sure you have heard of them. Maybe not directly but later. The cut to royalties for production during COVID has already stressed budgets of many states. Those states go knocking on the door of the federal govt, which is you and me. Like we discussed before (and I think we’re in agreement?), Alaska’s economic policy of O&G cos funding checks to its citizens is untenable and probably even counter productive.

 

[SAJ-99]

Except with Democrats in control those lease sales will be shut down.
I hunted outside ANWR in the Brooks Range when I was 15. They were talking about opening ANWR then. I'm 44 now and it's just being opened up for lease now.

I admit that I am not terribly familiar with the lease process, but if Dems shut down the leases don’t they have to pay AK (the bidder/buyer) the lease value? For AK it seems like a heads-we-win, tails-we-get-our-money-back situation.

 

[BWALKER77]

Taxes. I’m sure you have heard of them. Maybe not directly but later. The cut to royalties for production during COVID has already stressed budgets of many states. Those states go knocking on the door of the federal govt, which is you and me. Like we discussed before (and I think we’re in agreement?), Alaska’s economic policy of O&G cos funding checks to its citizens is untenable and probably even counter productive.

Company not making money and thus not paying taxes doeant equate to you footing the bill until government gets involved.
As such your beef is with government and not the oil companies.

 

[SAJ-99]

Company not making money and thus not paying taxes doeant equate to you footing the bill until government gets involved.
As such your beef is with government and not the oil companies.

I never said I had a beef with the oil companies. I know where the fault lies. The transAlaksa pipeline was built because it was in the national interest. As pointed out, Fracking has eliminated the need for further drilling in the region, at least for now. Apparently the only groups that cared enough to bid are the state of Alaska and a couple of small drillers. I’m just pointing out that maybe the oil industry is having an epiphany.

 

[shootbrownelk]

So facts are irrelevant? You literally have a O&G employee telling you it doesn't make economic sense, trust me, he's just getting started, he's got more facts/stats/graphs. You were provided three different sources explicitly pointing out how we, the US Tax Payer, are actually hurting from it. O&G executives make millions and we pick up the reclamation costs. And all you can counter with is "Drill baby Drill"?

"Drill Baby Drill" is Darth Vader Cheney's famous line.

 

[AlaskaHunter]

Alaska breakeven prices $10 to $20/b above shale

"Crude oil output in Alaska has fallen from about 2.01 million b/d in 1988, when it was tied with Texas as the top US oil producing state, to a projected 475,000 b/d this year, according to the US Energy Information Administration. Alaska is currently in sixth place in oil production, behind: Texas, North Dakota, New Mexico, Oklahoma, and Colorado, according to the EIA.

This is largely due to Alaska's remoteness and severe weather conditions causing high breakeven prices, currently at about $55/b Brent equivalent for onshore and $65/b Brent equivalent for offshore, according to S&P Global Platts Analytics. US shale, by comparison, has breakeven prices of about $45/b Brent equivalent, according to Platts Analytics."

View attachment 150716

That surprises me...I expected the break even price to be even higher for Alaska crude since it must be piped 800 miles to Valdez, then tanked 2000- 3000+ miles to Washington and California for refining.

Oil accounts for ~85% of Alaska's economy, and with cruise ships cancelled due to COVID, tourism impact on the state's economy does not look good for the next year or so.

 

[AvidIndoorsman]

I never said I had a beef with the oil companies. I know where the fault lies. The transAlaksa pipeline was built because it was in the national interest. As pointed out, Fracking has eliminated the need for further drilling in the region, at least for now. Apparently the only groups that cared enough to bid are the state of Alaska and a couple of small drillers. I’m just pointing out that maybe the oil industry is having an epiphany.

@BWALKER77

IMHO best things for our industry
1. Avoid bad press, the industry has a huge PR problem
2. Increase prices of oil, to make current operations + future operations in our existing footprints more economic

ANWR doesn't further either of those goals. I get why folks like Murkowski wanted this to happen, but I think our industry largely opposed Trump on this one. E&Ps don't want to develop ANWR and they don't want it leased, hence no bids.

 

[BWALKER77]

@BWALKER77

IMHO best things for our industry
1. Avoid bad press, the industry has a huge PR problem
2. Increase prices of oil, to make current operations + future operations in our existing footprints more economic

ANWR doesn't further either of those goals. I get why folks like Murkowski wanted this to happen, but I think our industry largely opposed Trump on this one. E&Ps don't want to develop ANWR and they don't want it leased, hence no bids.

But one day ANWR will be drilled. Fracking wells/fields have short life spans and at some point we will have depleted enough of the shale oil plays that AK oil comes back into play on an economics basis. Same story with nat gas. There is a glut of it now, but this wont always be the case.
As such we should lock up the leases now before they can be withdrawn.

 

[BuzzH]

But none day ANWR will be drilled. Fracking wells have shirt life spans and at some point we will have depleted enough of the shale oil plays that AK oil comes back into play on a economics basis. Same story with nat gas. There is a glut of it now, but this wont always be the case.
As such we should lock up the leases now before they can be withdrawn.

Anyone considered how the recent lock-downs, working from home, decrease in travel, etc. becoming the norm will decrease oil demand?

Also, as electric vehicles become more viable, it would seem to me that depending on an increase in demand for your oil may not be the best move.

I look for demand to stay lower than pre-covid, how much? Cant know.

 

[BWALKER77]

Anyone considered how the recent lock-downs, working from home, decrease in travel, etc. becoming the norm will decrease oil demand?

Also, as electric vehicles become more viable, it would seem to me that depending on an increase in demand for your oil may not be the best move.

I look for demand to stay lower than pre-covid, much? Cant know.

Yes, some loss or flattening of demand is likely to occur IMO.
Electric vehicles not so much. People just arent buying them in large numbers. Will this change? Perhaps in some areas of the country.

 

[AvidIndoorsman]

That surprises me...I expected the break even price to be even higher for Alaska crude since it must be piped 800 miles to Valdez, then tanked 2000- 3000+ miles to Washington and California for refining.

Oil accounts for ~85% of Alaska's economy, and with cruise ships cancelled due to COVID, tourism impact on the state's economy does not look good for the next year or so.

We are 2 days out from the 120th anniversary of Spindletop, no idea what the industry will look like in another 120 years.

2018 analysis - WTI was ~$70 at the time

https://www.eia.gov/outlooks/aeo/anwr.php

"Additional assumptions drive the projection of crude oil production from the coastal plain of ANWR:

• The first lease sale is assumed to take place in 2021. Congress ordered two lease sales in ANWR—the first within four years of the enactment of the law, and the second within seven years. This time allows for the development of a BLM leasing program, which includes approval of an Environmental Impact Statement, as well as the collection and analysis of additional seismic data.
• The first production from ANWR occurs at least 10 years after the first lease sale (i.e., 2031). This 10-year timeline is needed for exploration, appraisal, permitting, and development and assumes no protracted legal battle in approving the BLM’s draft Environmental Impact Statement, the BLM’s approval to collect seismic data, or the BLM’s approval of a specific lease-development proposal."

 

[Irrelevant]

But one day ANWR will be drilled. Fracking wells/fields have short life spans and at some point we will have depleted enough of the shale oil plays that AK oil comes back into play on an economics basis. Same story with nat gas. There is a glut of it now, but this wont always be the case.
As such we should lock up the leases now before they can be withdrawn.

My counter would be, the oil is not going away, it'll always be there. Lease withdrawals can be always be withdrawn themselves.

 

[AlaskaHunter]

My counter would be, the oil is not going away, it'll always be there. Lease withdrawals can be always be withdrawn themselves.

There is also the "not in my backyard" syndrome. Congress banned marine oil development off Florida this session, with the
Protecting and Securing Florida’s Coastline Act and the Coastal and Marine Economies Protection Act – to permanently ban oil and gas drilling off Florida’s coastlines.

 

[BWALKER77]

My counter would be, the oil is not going away, it'll always be there. Lease withdrawals can be always be withdrawn themselves.

My argument would be that although the oil might not be going anywhere the ability to exploit it might. Then we will be back to depending on mid east oil again.