Why are oil companies so keen to drill in the deep Gulf?

[Xipe Totec]

Rush to drill deeper carries added risks

NEW ORLEANS – The explosion of the Deepwater Horizon oil rig illustrates the energy industry's push to drill ever deeper in search of huge oil deposits, despite the mammoth risks and unique challenges associated with exploration in such a hostile environment.

The lure of the deep is driven by technological advances that make previously inaccessible oil now reachable, and dwindling supplies at shallower depths due to years of exploration. High energy prices and lucrative government incentives have also made it more financially feasible.

"That's where the oil is," said Eric Smith, associate director of Tulane University's Energy Institute. "You can't find any oil any cheaper anywhere else."

(snip)

This expansion of drilling ever deeper was fueled by the 1995 Deep Water Royalty Relief Act, which exempts companies from paying a percentage of royalties to the government on oil and gas found.

http://news.yahoo.com/s/ap/20100512/ap_on_bi_ge/us_gulf_oil_spill_deepwater_drilling

[Skittles]

1. $$$$$$$$$$$$$$$$$$$$$$$$$$

[Xipe Totec]

2. Royalty free $$$$$$$$$$$$$$$

[LARED]

3. This is all you need to know

"That's where the oil is," said Eric Smith, associate director of Tulane University's Energy Institute. "You can't find any oil any cheaper anywhere else."

[Xipe Totec]

4. Check again...

This expansion of drilling ever deeper was fueled by the 1995 Deep Water Royalty Relief Act, which exempts companies from paying a percentage of royalties to the government on oil and gas found.

"Prior to that, the Gulf was becoming a dead sea in terms of exploration activities," said David Dismukes, director of policy analysis at Louisiana State University's Center for Energy Studies. "The relief act stimulated a lot of activity ... and concerns about environmental safety in the Gulf."

[LARED]

6. Well back in 95, gas was 88 cents a gallon

refiners were barely operating and spending no money so perhaps the idea of the stimulus was to get people working and to stimulate the economy.

There are of course unintended consequences on a regular basis with these sort of things. And the bottom line it it's about money.

[Xipe Totec]

9. Why is it that the solution to all our problems is corporate welfare? nt

[unhappycamper]

7. And now the Gulf is becoming a dead sea in terms of wildlife.

:(

[Hannah Bell]

8. policy choice, favoring the corps, every time.

[belpejic]

5. Drill baby drill

This is what happens. While I'm personally devastated over the ecological damage caused by this, I hope those red staters around the gulf (and I'm not only talking about you, Haley Barbour, but also you, Mary Landrieu) enjoy the loss of tourist revenue. My apologies in advance to all of the sane people who live in these states...