[LadyRuby]

So what about our addiction, Mr. Bush? Why are you helping dealers again?

U.S. Royalty Plan to Give Windfall to Oil Companies

$this->bbcode_second_pass_quote('', 'T')he federal government is on the verge of one of the biggest giveaways of oil and gas in American history, worth an estimated $7 billion over five years.

New projections, buried in the Interior Department's just-published budget plan, anticipate that the government will let companies pump about $65 billion worth of oil and natural gas from federal territory over the next five years without paying any royalties to the government.

[Dreamtwister]

Yeah, big shock there. Are they even trying to hide it any more?

[coyote]

I hate the fact that Pombo's quoted in the article, he's one of my least favorite politicians (that's saying a lot). But that's beside the point.
$this->bbcode_second_pass_quote('', 'B')ased on the administration figures, the government will give up more than $7 billion in payments between now and 2011. The companies are expected to get the largess, known as royalty relief, even though the administration assumes that oil prices will remain above $50 a barrel throughout that period.

[DantesPeak]

It was my understanding that the royalty fee was to be paid in kind from GOM oil - that is payment was in the form of oil to be placed in the SPR. The SPR has no formal budget in 2006/2007 except for its regular operations.

If the are not going to be paid in kind, how will they fill the SPR? Per the law passed in later 2005, thw SPR is to be filled to one billion barrels - although there was some descretion as to how fast they need to be filled, or depleted as necessary.

So it's my take that they don't intend to fill the SPR soon. Please correct me if I am wrong about any of this.

[Dreamtwister]

$this->bbcode_second_pass_quote('coyote', 'H')ard to gauge what the public's mood will be like five years from now...

[Ghog]

Maybe I am looking at this the wrong way, but is there any chance they are doing this intentionally to help support a transition to alt energy? After all, more and more of these 'big businesses' are selling us 'alt energy' and speaking of transitioning away from our dependence on oil. Large contracts are being thrown about for research, solar farms and battery developement (obviously to Bush's buddies). Is Bush basically 'paying' US businesses to upgrade the infastructure because he sees how deperately we need to change our ways? The tie-ins make sense; let his oil buddies maintain their monopoly with the next form(s) of energy but 'encourage' them to do it now. Any thoughts?

[kmann]

This legislation was passed during the Clinton years when energy was cheap and incentives were needed to encourage US oil production.

[DantesPeak]

Apparently, to answer my own question, there is no intention to have the oil compnaies pay their royalties in kind to build the SPR. Neither is there any money budgeted to bring up the SPR to the standards per recently passed legislation.

Is the SPR not being increased because it would place too much strain on the oil market - or does the situation in the Middle East look so rosy we don't have to worry about restocking the SPR any longer?

$this->bbcode_second_pass_quote('', 'B')ush budget has no money to buy emergency SPR oil
Mon Feb 6, 2006 1:14 PM ET


WASHINGTON, Feb 6 (Reuters) - Congress is requiring the Bush administration to add almost 300 million barrels to the U.S. emergency oil stockpile, but the White House on Monday did not seek money to buy the crude in its proposed budget for the 2007 spending year sent to Congress.

In sweeping energy legislation signed into law last year, Congress required the administration to boost capacity of the Strategic Petroleum Reserve to 1 billion barrels from its current 727 million barrels.

The stockpile was created by Congress in 1975 after the Arab oil embargo. It currently holds about 684 million barrels of crude in underground caverns at four sites in Texas and Louisiana.

[LadyRuby]

$this->bbcode_second_pass_quote('DantesPeak', 'A')pparently, to answer my own question, there is no intention to have the oil compnaies pay their royalties in kind to build the SPR. Neither is there any money budgeted to bring up the SPR to the standards per recently passed legislation.

Is the SPR not being increased because it would place too much strain on the oil market - or does the situation in the Middle East look so rosy we don't have to worry about restocking the SPR any longer?

$this->bbcode_second_pass_quote('', 'B')ush budget has no money to buy emergency SPR oil
Mon Feb 6, 2006 1:14 PM ET


WASHINGTON, Feb 6 (Reuters) - Congress is requiring the Bush administration to add almost 300 million barrels to the U.S. emergency oil stockpile, but the White House on Monday did not seek money to buy the crude in its proposed budget for the 2007 spending year sent to Congress.

In sweeping energy legislation signed into law last year, Congress required the administration to boost capacity of the Strategic Petroleum Reserve to 1 billion barrels from its current 727 million barrels.

The stockpile was created by Congress in 1975 after the Arab oil embargo. It currently holds about 684 million barrels of crude in underground caverns at four sites in Texas and Louisiana.

[LadyRuby]

I found this article that says that Bodman expects it to be partially refilled in 2006 with royalty-in-kind oil. Although not completely refilled, only to 700 million barrels. Anyone know if it was filled to 727 million before? The boosting to 1 billion is additional capacity beyond what's available now. But interesting they aren't doing anything in their budget this year to help expand capacity. Says they'll expand capacity in 12 years. Why wait so long?

Reuters

$this->bbcode_second_pass_quote('', 'C')ongress is requiring the Bush administration to add almost 300 million barrels to the U.S. emergency oil stockpile, but the White House on Monday did not seek money to buy the crude in its proposed budget for the 2007 spending year sent to Congress.

In sweeping energy legislation signed into law last year, Congress required the administration to boost capacity of the Strategic Petroleum Reserve to 1 billion barrels from its current 727 million barrels.

Energy Secretary Sam Bodman told reporters the oil to expand the reserve would come from so-called "royalty in kind" oil. Under the royalty-in-kind program, energy companies turn over to the government a portion of oil they drill on federal leases in lieu of paying cash royalties.

The stockpile was created by Congress in 1975 after the Arab oil embargo. It currently holds about 684 million barrels of crude in underground caverns at four sites in Texas and Louisiana.

The administration loaned 9.8 million barrels of crude to oil refineries and sold another 11 million barrels last autumn after Hurricane Katrina disrupted supplies.

The administration said it expects to restore the stockpile to 700 million barrels in 2006.

The department says it is on track to select by this August the new storage sites for expanding the emergency reserve, and it will take about 12 years to boost the stockpile to 1 billion barrels.

[aahala]

The highest SPR ever according to this link was 700.7 in August last year:

http://www.fe.doe.gov/programs/reserves ... facts.html

The royalty in kind to add to the inventory and the leases that did not
require royalties at all may both be from the Gulf region, but are
apparently different leases.

[DantesPeak]

Previously discussed on prior hurricane related forums was the fact that the SPR was reduced from about 700 million barrels to 670 with the arrangement that those barrels would be replaced from those who 'borrowed' oil from them.

I haven't seen anything that runs counter to that expectation. However, even last week, there were some members of Congress that want SPR oil released because the price is 'high'. Not sure what they define high as, probably over $60, but this may have lead to the SPR not yet being refilled to 700.

[The_Virginian]

thanks for the SPR tip.