Responses to some common misconceptions about oil and gas drilling and the industry, courtesy of Mary Ellen Denomy, a CPA, an APA (A ccredited Petroleum Accountant), CMM (Certified Mineral Manager), CFDA (Certified Fraud Deterrent Analyst) and CFFA (Certified Forensic Financial Analyst) …all of which makes her a hyper-qualified accountant and someone who really understands the oil and gas industry.
Myth: Gas prices are high so we need more drilling to bring them down.
Fact: You
have to look at this historically. We have more permits today and more
wells in production in Colorado than ever before, yet we’re paying
record prices. Drilling more is not the answer.
Myth: We have to reduce our dependence on foreign oil.
Fact: The
companies th at are doing the drilling will get the best dollar
possible for the oil being produced in Colorado. They have no interest
in selling to us when they can ship the oil to China and sell it for
$140 a barrel. Local production does not mean local consumption.
As an example, people in Florida pay the same price for oranges that we do even though our oranges are shipped across the country. Floridians pay the same price that the orange companies can get for oranges anywhere else in the world.
Myth: Oil companies are not making record profits or that their return on investment is not as big as we say.
Fact: According
to their own presentations to stockholders and investors and their own
financial statements, the oil and gas companies that drill in Colorado
are making record profits.
And their ROIs are enviable in any industry. The cost to take oil and natural gas out of the ground has not changed in ten years ($1.81 mcfl for natural gas and $10 a barrel for oil). Yet the prices are skyrocketing. Ten years ago, when it cost $10 to get a barrel out of the ground and the price was $20 a barrel–oil companies made $10 a barrel. Now that the price is $140 a barrel, the same company is making 13 times the profit.
Myth: The additional drilling is good for Colorado because it brings jobs.
Fact: Drilling
does create jobs but those jobs are not being done by Coloradans who
have been part and are staying in our communities. We are enticing
people from elsewhere to come here earn money and spend it in other
places. The additional drilling (and the additional workers) create an
economic detriment to the local communities because the communities do
not have the money to accommodate the extra people who are using local
services like schools, roads, health care, etc. Ask any local mayor if
the boom has been good for their town and every mayor will say no.
Myth: The market will correct for high oil and gas prices.
Fact: Oil
and gas is a limited resource. Once it’s gone, it’s gone. What matters
is not whether we drill more or less–there is a finite amount of
drilling that can be done. What matters is that we make sure it’s done
right and that we get our fair share. Coloradans have been undervalued.
Why shouldn’t we get at least as much from the oil and gas industry as
Wyoming or New Mexico or Alaska?
THE FACTS
Colorado is in the middle of the largest oil and gas boom in history. Since 1990, oil and gas drilling has increased by 500%. [1]
Colorado’s oil and gas producers are raking in record profits. [11][12][13]
Colorado has the friendliest environment for oil and gas drilling in the entire world, on par with Qatar, Malaysia, Romania and Thailand. [2]
There are currently more than 37,000 wells in Colorado. If the current growth of drilling continues, Colorado could have as many as 120,000 wells in the next 30 years.. [3]
Current regulations allow for gas wells to be located as close as 150 feet from a home. [4]
Oil and gas companies don’t have to disclose the chemicals they’re using in their operations…chemicals that have been know to leak into the local creeks and streams that feed our water supplies. [5] There have been close to 1,000 spills reported since 2002. [15]
Oil and gas development is the most significant human-caused source of ozone forming compounds in several major gas-producing western Colorado counties. [6]
Oil and gas prices are not affected by environmental protections - they are created because of speculation on Wall Street and the exportation of oil and gas from Colorado. [8]
Oil and gas development has a significant effect on Colorado’s wildlife. [10]
Great post. This is exactly why they want to drill, sell it to others in curencies that are worth more and while the prices are so high...
it's a scam. What else is new?
my inability to spell today for one. I have lost count now, from currencies to Leiberman. Its an "off day" here...LOL
We both seem to be having a problems with spelling
our problem is refineries. We do not have enough of them. You are welcome to go look and there are "many" listed however most DO not refine gasoline you have to check eac indiviudal one. We sell crude oil. your car does not run on crude.
Of course they haven't really made much of an effort to increase the number of refineries either.
And natural gas is the largest industry in co not crude oil though bouth types of companies are called oil, didja know?
I know a little about this because of a friends who is a cashier at an oil refinery and while it is listed as an oil refinery it is actually natural gas.
Now keep in mind a cashier does not run a register they spend the entire day mesuring the amount of gase throughout the land.
Also most of the cities builet around these places would not exist with out them. Colorado has very little to offer it residents but tourism and oil and gas. There are not enough native sons in Co to be the human power for these plants so of course people move in. Oh wait they do have a lumber industry. Wow, whats worse?
Top three insudtries in Co
1)mining which inclides oil and gas
2)utilities
3)construction
Thanks for all the info!
Very informative. I feel for the Coloradoans, on account of the possible side effects of the water they drink.
Hmmm... thought provoting. I hope you are well, my friend.
Oh, thanks for the hope. I pray you do the same.
Thank you!