Climate Denial Crock of the Week

The irony of “Drill Baby Drill”.
We’re told that if crazy environmentalists get out of the way, and allow unlimited exploration for oil, that prices will drop, and gasoline will be cheaper.
What is not well explained was the opposite side of that coin.  Extraction of exotic oil from shale, deep sea drilling, and risky areas like the arctic depends on reliably high prices. Now those prices have collapsed, in part due to flow of non-traditional oil sources, as well some as larger movements in petropolitics I’ve posted on recently – and massive projects have to be, at least temporarily, shelved.

Until prices go back up.

Salt Lake Tribune:

The nation of about 56,000 had imagined its oil and mineral production would turn every citizen into a millionaire. Instead, Greenland continues to rely on an annual $586 million subsidy from Denmark to stay afloat, a sum that’s equivalent to almost half its gross domestic product. Talk of severing ties from its former colonial master has also faded as Greenlanders see little prospect of achieving economic independence anytime soon.

“Now we know what is realistic and what isn’t, and we should not expect any revenue or pseudo-figure flowing into our budget from this and that,” Uldum said. “That’s simply not realistic. We’ll conduct a responsible economic policy.”

Less than a decade ago, the combination of a hotter planet melting the ice around Greenland and a booming Chinese economy driving up commodities prices looked destined to turn the world’s largest island into an Arctic El Dorado.

But none of the companies awarded licenses was able to make any commercial finds, even before the oil price dropped to a level that would make production unprofitable. And while global warming has melted some of the ice, the result has also been to make exploration more hazardous as icebergs the size of multi- story buildings break free from the island, threatening to sink any exploration vessels that might cross their path.

Here, Fox News shows its usual doctrinaire lack of awareness.

Reuters:

Chevron Corp (CVX.N) is putting a plan to drill for oil in the Beaufort Sea in Canada’s Arctic on hold indefinitely because of what it called “economic uncertainty in the industry” as oil prices fall.

In a letter to Canada’s National Energy Board on Wednesday, the company withdrew from a hearing on Arctic drilling rules because it has walked away from plans to drill in the EL 481 block, 250 kilometers (155 miles) northwest of Tuktoyaktuk, Northwest Territories.

The drilling project is the largest yet put on hold after oil prices dropped by nearly half over the last six months, even as a long list of oil companies cut their budgets for 2015 because of the price drop.

NewsinEnglish.no:

Many environmentalists and boosters of alternative, renewable energy have speculated that the recent fall in oil prices will be good for the environment because oil companies won’t be able to justify the high costs of developing remote, often deep-water offshore Arctic fields at current prices. They’ve cut in half just since last summer while costs keep rising, and many projects may literally be put on ice because they’d be unprofitable.

Above break-even at USD 60 a barrel
DN cited a new study for Petro Arctic by analysts at Rystad Energy, however, that indicates the disputed fields in the 23rd licensing round can be profitable at an oil price of USD 60 per barrel. That’s still quite a bit above current prices, but other industry analysts note they can rise as fast as they fell. The fields up for grabs, part of the area that became Norwegian territory as part of an historic agreement with the Russian government in 2011, are believed to hold huge quantities of oil and gas worth several hundred billion kroner. That’s why the industry remains keen to vie for them in a licensing round that’s been called one of the most promising and important in recent years.

Tord Lien, the government minister in charge of oil and energy from the Progress Party, has said he’s confident the licensing round will proceed “in the near future.” As he told foreign correspondents in Oslo late last year, he believes oil companies will remain interested in tapping into Norway’s offshore oil and gas fields despite the fall in oil prices.

 

Stateside, the oil price crash is now cutting into the very shale production that is purportedly responsible for the lower prices themselves.

Grand Forks Herald:

WILLISTON, N.D., Jan 12 (Reuters) – The number of drilling rigs operating in North Dakota’s oil fields fell to 159 on Monday, the lowest level since November 2010 and the latest reaction to falling crude oil prices, according to state data.

Overnight the state lost eight rigs, a steep one-day drop not seen for years in the No. 2 U.S. oil producer.

Rigs are typically contracted by oil producers to bore through the earth and create horizontal wells. The rigs then move on, and the wells are hydraulically fractured, or “fracked.”

The number, which is tracked closely throughout North Dakota, comes after Continental Resources Inc, Oasis Petroleum Inc and other companies slashed planned spending for 2015, openly admitting they planned to use few rigs this year.

The rig count is widely seen as a key barometer of an oil field’s health and longevity. More rigs means more wells are being drilled and more oil can be produced. A slip in the number implies flat or falling production.