US Royalties to Big Oil Give a New ($100 Billion) Meaning to "Black Gold"

Thu, 2006-03-30 08:45Ross Gelbspan
Ross Gelbspan's picture

US Royalties to Big Oil Give a New ($100 Billion) Meaning to "Black Gold"

Incentives for oil and gas companies that drill in the Gulf of Mexico will cost the federal government at least $20 billion over the next 25 years, according to the draft of a Congressional report obtained on Tuesday.

The new estimates, prepared by the Government Accountability Office, also warn that $80 billion in revenue could be lost over the same period if oil and gas companies win a new lawsuit that seeks a further reduction in their royalty payments.

The report, delivered in a private briefing late Monday to House and Senate staff members, startled some of the program's longtime supporters and infuriated some critics.

The report is the first attempt by a government agency to calculate the soaring costs of a 10-year-old program that was created to encourage deepwater drilling when energy prices were low.

 
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At 9:35 p.m. on Saturday, May 30, Greeley, Colorado was struck by a 3.4 magnitude earthquake. Earthquakes are highly unusual in eastern Colorado, raising speculation that it was a “frackquake” — a man-made earthquake stimulated by the disposal of contaminated drilling water in deep injection wells. This disposal technique forces wastewater generated from hydraulic fracturing (fracking) deep into underground rock formations, lubricating layers of rock that would not ordinarily be subject to movement.

Earthquakes are so rare in eastern Colorado that the U.S....

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