I am glad that so many in the energy debate have picked up on one of the two messages from my previous post (see "EIA to McCain: Drop offshore [drilling]").
But in listening to the radio and TV debates, I realize that some people have the impression that U.S. Energy Information Administration said offshore drilling might eventually lower oil prices. It did not. It found that allowing offshore drilling would have no significant effect on prices as far out into the future as the analysis projected.
Why should it lower prices? Offshore drilling is projected by EIA to deliver less extra annual oil production in 2030 than Saudi Arabia announced it would add this year, an announcement that had no significant impact whatsoever on oil prices. (In fact, oil prices actually went up -- see yesterday's AP story, "Oil prices rise despite Saudi vow to pump more.")
It is worth nothing that the EIA report Impacts of Increased Access to Oil and Natural Gas Resources in the Lower 48 Federal Outer Continental Shelf is quite analytically substantive and made relatively optimistic assumptions:
Assumptions about exploration, development, and production of economical fields (drilling schedules, costs, platform selection, reserves-to-production ratios, etc.) in the OCS access case are based on data for fields in the western Gulf of Mexico that are of similar water depth and size. Exploration and development on the OCS in the Pacific, the Atlantic, and the eastern Gulf are assumed to proceed at rates similar to those seen in the early development of the Gulf region. In addition, it is assumed that local infrastructure issues and other potential non-Federal impediments will be resolved after Federal access restrictions have been lifted.
And still, the study's bottom line is
... annual crude oil production in 2030 is projected to be 7 percent higher -- 2.4 million barrels per day in the OCS access case compared with 2.2 million barrels per day in the reference case. Because oil prices are determined on the international market, however, any impact on average wellhead prices is expected to be insignificant.
Sorry drilling advocates, but 200,000 barrels of oil a day extra in a global market two decades from now is just a drop in the bucket. Heck, Saudi Arabia announcing last week it would add 200,000 barrels of oil a day (on top of the 300,000 barrels a day they had recently said they would add) didn't even change prices, so what with the same amount do 20 years from now?
This post was created for ClimateProgress.org, a project of the Center for American Progress Action Fund.
Oil: enough energy to melt glaciers!
Comments
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amazingdrx Posted 4:02 pm
24 Jun 2008
And tell please, why the obvious way to cut oil prices in half, closure of the enron loophole, seems to be experiencing a virtual news blackout?
Even though Barack and a congressional commitee are talking all about it.
Maybe you know some hedge fund managers to ask about it yourself? Your own hedge fund managers maybe? Hehey.
http://amazngdrx.blogharbor.com/blog
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Sam Wells Posted 3:03 am
25 Jun 2008
So whoever said prices would be lower [due to increased domestic OCS drilling] are crazy. For a short-term national strategy, I did say that it made sense to push for some offshore drilling in the Gulf of Mexico. It won't solve any problems but won't add to any either, and we could benefit from the natural gas. My understanding is that most of the oil is deep, off the continental shelf, and most of the gas is closer in, on the continental shelf (less than 200 feet or so).
If you look at the map of MMS zones and leases, the East/Florida Zone is where most of the prohibition applies. So you have some inshore natural gas and some offshore oil in what looks like a huge area. I suspect that the fields are not quite as large as one would expect, given such a large size however. I have heard about a decades-old gas field off Panama City and some oil on the deepwater oil in the Alabama Zone in about 2,000 feet of water or more. Cuba has found a large oil field in their waters right off Key West and I think those are the three hot spots. It is not like a thousand rigs will be visible off the Florida coast, a stupid media trick.
What the EIA numbers say is that as existing fields accessed by offshore rigs become depleted, more fields have to be tapped or the Gulf will literally run out of oil. It almost sounds like you take personal glee in that prospect. -sam
Onward through the fog
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Wolverine Posted 4:53 am
25 Jun 2008
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Sam Wells Posted 6:14 am
25 Jun 2008
This is nothing compared to the massive, million-barrel spills of Santa Barbara (1969), Ixtoc (1979), and the tanker ship Exxon Valdez (1989).
Are there huge risks? Well yes but so is driving down the highway, which results in some pretty good oil spills too. But I think you're way off base to say the offshore drilling is inherently dirty.
Onward through the fog
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Wolverine Posted 5:48 am
26 Jun 2008
And 15,000 barrels of oil spilled is "low"? I think someone should dump that amount on YOUR home, and you'd change your perspective to a far more rational and moral one.
In addition to those issues and to the inevitable spills that will occur from both the drilling rigs and from ships, all offshore drilling causes ecological damage from dumping "drill cuttings" -- the solids that are brought to the surface in drilling an oil well -- into the ocean.
Finally, I don't have the time, but I'm reasonably certain that all offshore oil rigs leak some amount of oil. I consider this a spill, even if the immoral jerks in the industry and other supporters don't or just consider it minimal. Again, anyone who thinks like that should be forced to drink the amount they consider minimal.
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