Listening
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- Aug 27, 2011
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FactsPlusLogic: Why Don't They Drill on Existing Oil Leases?
There is plenty of oil in offshore areas already leased to oil companies, so why dont the oil companies just go get that oil rather than ask for new leases. The reason is that the current price of oil is not high enough to make it profitable. It is a great mistake to suppose that all new oil comes at the same price.
The price of recovering an additional barrel of oil includes exploring the geology, leasing the area, drilling test wells, drilling production wells, applying technology to help increase the recovery, and shipping it. The early steps require capital investment that has costs of either borrowing or losing income that would have resulted from investing it elsewhere. Chevron invested $2 billion in a new oil field 190 miles off of Louisiana prior to any oil flowing.
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This thread will be to address the conspiracy theories of people like EdTC. It relates to oil drilling and oil refining.
There is plenty of oil in offshore areas already leased to oil companies, so why dont the oil companies just go get that oil rather than ask for new leases. The reason is that the current price of oil is not high enough to make it profitable. It is a great mistake to suppose that all new oil comes at the same price.
The price of recovering an additional barrel of oil includes exploring the geology, leasing the area, drilling test wells, drilling production wells, applying technology to help increase the recovery, and shipping it. The early steps require capital investment that has costs of either borrowing or losing income that would have resulted from investing it elsewhere. Chevron invested $2 billion in a new oil field 190 miles off of Louisiana prior to any oil flowing.
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This thread will be to address the conspiracy theories of people like EdTC. It relates to oil drilling and oil refining.