The GOP and McCain/Bush keep insisting that an end to the federal moratorium on (some) offshore drilling is a major solution to America's oil woes, even though Bush's own energy analysts make clear it is not.
That Energy Information Administration analysis is, however, a couple of years old, so I called up the author today and asked if it was being updated. Turns out a new version will be published in a couple of days, but she explained to me that the "answers are not very different" -- no significant impact for the duration of the analysis (through 2030) -- for reasons I will discuss below. First, however, it wasn't until I talked to her and looked closely at the original analysis -- "Impacts of Increased Access to Oil and Natural Gas Resources in the Lower 48 Federal Outer Continental Shelf" -- that I understood what a cruel hoax this whole issue is.
The oil companies already have access to some 34 billion barrels of offshore oil they haven't even developed yet, but ending the federal moratorium on offshore drilling would probably add only another 8 billion barrels (assuming California still blocks drilling off its coast). Who thinks adding under 100,000 barrels a day in supply sometime after 2020 -- some one-thousandth of total supply -- would be more than the proverbial drop in the ocean? Remember the Saudis couldn't stop prices from rising now by announcing that they will add 500,000 barrels of oil a day by the end of this year!
Here is the key data from EIA:
Look closely: As of 2003, oil companies had available for leasing and development 40.92 billion barrels of offshore oil in the Gulf of Mexico. I asked the EIA analyst how much of that (estimated) available oil had been discovered in the last five years. She went to her computer and said "about 7 billion barrels have been found." That leaves about 34 billion still to find and develop.
The federal moratorium only blocks another 18 billion barrels of oil from being developed. But, as you can see, most of that is off of California, which has bipartisan opposition to drilling from Republican Governor Schwarzenegger -- who, unlike McCain, seems serious about his commitment to greenhouse gas reduction -- and the Democratic legislature, which remembers all too well the devastating 1969 oil spill off the coast of Santa Barbara. Indeed, Karen Bass, the newly appointed speaker of the State Assembly, said, "The idea of increasing offshore drilling off the coast of California I think is absurd, and I can't even imagine we would entertain that." Why would they, given the risk to their beautiful coasts and their commitment to reduce statewide greenhouse gas emissions 80 percent by midcentury?
So that only leaves about 8 billion barrels, which is about what the world uses in three months. Not bloody much. And that assumes every other state, including Florida, goes aggressively with offshore drilling, which is exceedingly unlikely.
You may ask why big oil hasn't gotten around to the 34 billion barrels already available to them offshore, given the staggering price for oil? The answer is pretty much the same reason why the EIA analyst told me that ending the federal moratorium is "certainly not going to make a difference in the next 10 years": It ain't easy being non-green offshore.
As she explained, the constraints on offshore drilling have little to do with the price of oil, but a lot to do with timing. Once the leases are available, it is five to 10 years before you get to exploratory drilling. There is a tremendous shortage of drilling rigs and manpower. Plus, offshore drilling is so expensive, you don't want to make any mistakes. So you do a lot of seismic analysis to minimize your chances of a dry well.
And it is probably another five or more years from drilling your exploratory well to getting significant production from the area -- and that assumes you didn't dig a dry well. If you did, then you are probably going to be even more cautious. And all that assumes you have developed a pipeline infrastructure for delivering the oil. But the Atlantic Coast lacks such an infrastructure, so who knows how long it would take to get its oil?
Here are the assumptions EIA makes:
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 here is what EIA projects would happen to offshore oil production if the federal moratorium were eliminated and none of the states block drilling and if exploration and development of resources in those areas begin in 2012:
EIA
Essentially no extra oil beyond the reference case until 2020. And then from 2020 to 2030, the extra oil production averages about 150,000 barrels of oil a day.
But of course that's not going to happen since, as noted, absent the federal moratorium, California is not going to allow drilling off its cost. So we are almost certainly talking under 100,000 barrels a day sometime after 2020. And yet Senator McCain said:
"Tomorrow I'll call for lifting the federal moratorium for states that choose to permit exploration," McCain said. "I think that this and perhaps providing additional incentives for states to permit exploration off their coasts would be very helpful in the short term in resolving our energy crisis."
It is cruel to mislead the public on a subject that matters so much to all Americans. If only we had a politician willing to engage in straight talk on this important issue.
This post was created for ClimateProgress.org, a project of the Center for American Progress Action Fund.
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Comments
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GreenEngineer Posted 4:58 am
11 Jul 2008
This being the case, and given that they already have options for offshore development, why do the oil companies care about opening up more leases? What is the benefit to them, of having legal access to more oil which they don't have the equipment or manpower to develop? Are the proposed new leases easier to get to, or in some other way superior to the ones that they already have sitting around unused?
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Sam Wells Posted 7:04 am
11 Jul 2008
Whoever said that "opening the GOM" would instantly drive up supply, drive down prices, and fix out economy was nuts. Trying to leverage it for a few more basis points (percent volume) is about all we can hope for ... then those fields will mature and die off and we'd better have a full-blown clean power program ready for when it does. That's the Law of Diminishing Returns, baby.
-sam
Onward through the fog
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Laurence Aurbach Posted 7:15 am
11 Jul 2008
The reality? Lower 48 production has decreased more than 10 percent since 2005.
Remember, that is including the effects of Hurricane Katrina, which cut Louisiana's offshore production in half from Sept-Nov 2005. Also, the decline has occurred as the Bush administration has opened large areas to drilling in the central and eastern Gulf of Mexico.
The EIA has a record of excessively optimistic forecasts, and it's likely this chart is the same.
Ped Shed Blog
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birdboy Posted 11:10 am
11 Jul 2008
It can only be symbolic- the sacrifice of environmental concerns for economic ones- to set a precedent for future rape of the land. Their victory is assured when the people give up on preserving nature's beauty for the promise of cheaper gasoline. And the mainstream media still refuses to reveal that we will gain nothing for this sacrifice.
a liberal in redsville
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Des Emery Posted 11:54 am
11 Jul 2008
The Alberta Tarsands just sat there for years. The oil companies all said it was too expensive to bring them into production when the price of gasoline was 'so low.' Guess what? The price has been artificially jacked up (we can't call it "speculation," can we?) so that even OPEC has no control within the industry anymore.
What is the next big source of petroleum? Why, under the Arctic Ocean, with several nations jockeying for their 'fair share' of the resource. The melting of the Arctic ice will open the fields for exploitation soon, so why not begin to practice on other off-shore sources now, even though the volume of production will be somewhat on the insignificant side.
Des Emery
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Jason D Scorse Posted 12:52 pm
11 Jul 2008
I teach environmental economics and blog at http://www.voicesofreason.info.
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randino Posted 10:06 pm
11 Jul 2008
This oil drilling proposal is the Ghost Dance of oil addicted Americans, who hope it will bring back the good old days. They will end up just as disappointed as the native americans were.
Randy Cunningham
Cleveland, OH
Randy Cunningham
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amazingdrx Posted 10:36 pm
11 Jul 2008
Gasoline and diesel in China and other nations where oil companies are state owned, costs less.
This allegedly free "world oil market" has prices set according to government calculations of the effect on trade advantages from low fuel prices in their econmomies.
If the chinese oil company sells gas at a loss, it doesn't matter, they are state owned and don't need to consider profit. The profit to the chinese economy as a whole, versus other competing nations, is the most important consideration.
They boost their trade and manufacturing with lower than cost energy pricing and reap national security benefits through their currency manipulation. Just like the US did to Europe, with our formerly lower than cost energy and ag commodity pricing.
This is why economists are always a few steps behind what is really happening. They ignore key factors like this, namely state ownership of multinationally active mega monopoly corporate power. And governments "owned" by big energy monopoly corporations, like the bushco administration.
It just does not fit their incredibly mathematically complex, but over-simplistic "free" market theories.
http://amazngdrx.blogharbor.com/blog John Schneider, Northern Wisconsin
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remember911 Posted 11:00 pm
10 Sep 2008
We need to stop the fighting among ourselves. We must start drilling for more oil on, in and around our own lands. We then in return need to get going on alternative fuels in a super fast track way. With the help of alternative fuels. We can reduce our thirst for oil. At some point the oil we drill for will be used for certain needs. Jet fuel, roadways, plastics, etc. price will drop. we will never be able to get away from oil completely. We will need it for some products but why not from our own country or Canada. Then by having our own alternative fuels in place, using CNG (temp) price of natural gas will soar think about our home heating.
Natural Gas can also come from Oil Drilling
We need to get some vehicles turned over into electric, self recharging vehicles. When they drive they recharge no plug in at night. Then bio fuel cars and big rigs. Run them on natural oils and alcohol (ethanol) This would create many jobs in America, processing plants could be maintained within state lines, which in turn reduces transportation cost.
Homes that are running heat on heating fuel (comes from oil) would have to be fazed out. Ban those type of furnaces. Homes could be heated with NG,NATURAL OILS,WOOD PELLETS, WOOD.
The sad thing about all this is it is a political issue, Congress will always try to throw things in a bill. It is a this for that and then no one wins. This has been going on for years.
Write your congress person and tell them to start doing there job or they will lose there job just like many Americans. Tell them your views keep them simple as they could get confused easily. Let them know how they vote will make a difference on how you vote. Everyone can contact congress by email.
They need to hear from you.
We The People need to stand up to CONGRESS. We pay there salary and healthcare, etc.
I AM FOR MORE OIL, JUST GET IT GOING. DEFINITELY FOR ALTERNATIVE FUELS, SO WE NEED SO MUCH LESS OIL IN THE FUTURE.
SOLAR, WIND, BIO, BUT WE WILL NEED MORE OIL and NG TO GET THERE.
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