Further to our post below on “Energy 101,” there’s a hearing at this hour down at the Senate Energy and Natural Resources Committee on the topic of oil and gas leases on the Outer Continental Shelf. Remember that until the energy bill passed in the last hours of the 109th Congress, some 85% of all natural gas reserves were subject to a federal moratorium.
One of the witnesses at today’s hearing is NAM Board Member Larry Nichols, CEO of Devon Energy. Among other points, Larry will note the enormous investment required in exploring for energy. In his prepared statement, there’s this:
“The new technologies are expensive. Drill ships that use satellite and thruster positioning because of ultra deep water conditions cost one half million dollars a day — more than twice as much as just a few years ago. We’re also contracting for new high-technology moored semi-submersible rigs that can operate in 10,000 feet of water.
This means that we have single well investments of $100-million or more, field development costs that may exceed $1.5 billion, and project costs in excess of $2.5-billion. Again, most of these costs may be incurred years or even a decade before any revenue is obtained, even if a project is assumed to be commercial.”
Nichols is a guy who knows this business inside and out, has spent many, many years in it. He’s doing yeoman’s work educating Congress as to the ways of this exploration business. He also adds that it’s only through exploration that we are able to find new fields of energy and the dimensions of the fields that are known. Without this exploration, we are at a disadvantage, often oblivious to the enormous stores that sit in our own waters.
Let’s hope Congress is listening today and let’s hope they continue to open up our own resources to our own use. American manufacturers sure could use it.
Here’s a link to Larry Nichols’ testimony.
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