Lifting the Ban on Off-shore Drilling:The Facts

MonteQuest

“The U.S. has huge amounts of untapped oil, but pesky politicians and environmentalists won't let us get it.” That’s the indignant cry we hear over morning coffee these days.

So, George Bush proposes we roll-back the ban on off-shore drilling to ease oil prices.

Ease oil prices? When? Not today and not tomorrow…maybe never.

The U.S. Energy Information Administration (EIA) recently did a detailed study of the likely outcome of offshore drilling for their Annual Energy Outlook 2007, “Impacts of Increased Access to Oil and Natural Gas Resources in the Lower 48 Federal Outer Continental Shelf (OCS).”

http://www.eia.doe.gov/oiaf/aeo/otheranalysis/ongr.html

The conclusion:

“The projections in the OCS access case indicate that access to the Pacific, Atlantic, and eastern Gulf regions would not have a significant impact on domestic crude oil and natural gas production or prices before 2030. Leasing would begin no sooner than 2012, and production would not be expected to start before 2017….Because oil prices are determined on the international market, however, any impact on average wellhead prices is expected to be insignificant.”

According to the Energy Information Administration, lifting the bans might boost the nation's oil production by 1 or 2 million barrels a day by sometime next decade. Places like the Atlantic coast, thought to be rich in natural gas, lack drilling platforms, pipelines, terminals, storage facilities, and other energy infrastructure.

“Although a significant volume of undiscovered, technically recoverable oil and natural gas resources is added in the OCS access case, conversion of those resources to production would require both time and money. In addition, the average field size in the Pacific and Atlantic regions tends to be smaller than the average in the Gulf of Mexico, implying that a significant portion of the additional resource would not be economically attractive to develop at the reference case prices.”

What about ANWR? (Arctic National Wildlife Refuge) How much oil is there?

 95% Probability 5.7 billion bbls = .5 mbpd
 Mean (Expected)10.3 billion bbls = .9 mbpd
 5% Probability 16.0 billion bbls = 1.9 mbpd

 Seven to 12 years are estimated to be required from the time of approval to explore and develop ANWR to the first production of oil.

 From first production to peak will take 3 to 4 more years where the production rate peaks at .9 million barrels per day.

 EIA estimates that if Alaska's Arctic National Wildlife Refuge were opened for drilling tomorrow, oil wouldn't flow at full tilt at .9 mbpd until 2025.


By 2030, the US is projected to consume 22.8 mbpd. Today, we consume 21 mbpd.
22.8 mbpd divided by 24 hours = .95 mbph

 .9 mbpd is 95% of one daily hour US demand

 Conclusion: ANWR would power the US for 57 minutes/day, the rest would have to be imported.
 EIA, best case scenario would reduce oil prices by $.30 to $.50 per barrel

 Reduce oil imports from 68% to 65%. Today, we import 60% of our oil.

Not to mention, 2 million barrels a day would need to be balanced against steep production declines expected in many non-OPEC areas like Russia, Mexico and the North Sea over the next several years.

US oil production has been in terminal decline since 1971 from a height of 9.6 mbpd to barely 5 mbpd in 2008. Even the discovery of oil in Alaska in the 1980’s was unable to reverse this decline.

We cannot drill our way out of this oil crisis. Since 2000, oil companies working in the U.S. have doubled the number of wells drilled per year.

Although increased drilling has added new oil to the nation's supply, it has not done so fast enough to offset the terminal decline of existing fields.

We are going to have to import more of our oil. Period.
_________________
A Saudi saying, "My father rode a camel. I drive a car. My son flies a jet-plane. His son will ride a camel."
Live in Arizona? Check out: http://sustainablearizona.org and read my blog.

biofuel13

Wow! Spectacular post. Thanks a ton for the great info!

joeltrout · Light Sweet Crude Joined: Sep 19, 2007 Posts: 1317

Yes but some is better than none even if it takes several years. Right now and in the coming decade we have no alternative. That scares me.

joeltrout

MonteQuest

dinopello

The political fact is that as long as you have politicians, TV personalities and what not beating the drum, you will have a significant number, perhaps the majority of people who will believe that the cause of their problems are the restrictions on drilling. I think the best we can hope for is that our government is not subsidizing the exploitation.

syrac818 · Heavy Crude Joined: Jun 01, 2005 Posts: 113

Over the past couple of years, I haven't really enjoyed most of Monte's post. Just relentlessly doomer, with the annoying doomer catch phrases and one liners attached.

But this is an excellent, excellent post. Totally breaks down the facts of a fairly convoluted issue that's at the top of the top of the headlines. Really appreciate your work on this - thanks.

MonteQuest

Electric_Economy_2025 · Heavy Crude Joined: Apr 01, 2008 Posts: 143

Hogan

This is exactly why the US and other countries will self-destruct. Refusal to voluntarily power down. Instead, full throttle off the cliff.
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Now why didn't I think of that?

phaster · Heavy Crude Joined: Jul 15, 2007 Posts: 175

kinda amazes me that politicians and the american public don't understand there are two sides to the peak oil equation which on one side there is supply and on the other side there is demand.

Democratics like obama think that conservation is the key and are against lifing the ban by congress of drilling for oil on the US continental shelf, and republicans seem to be of the mind that opening up the US continental shelf will solve the problem of high gas prices faced by US consumers...

Am I the only one who thinks both the traditional political party propganda by republicans and democratics is BS! By that I mean so called political leaders are basically too chicken crap to actually lead and too beholding to entrenched business interestes like oil producers, auto manufactures, tree hugging environmentalists, etc. to see that the problem of high gas prices is related to our own personal consumer choices...

Guess what I'm ranting about is I want the democratics to be more willing to let oil exploration happen off the coast, and republicans to stop bitching about how CAFE standards are going to put auto companies out of business.

Saw Obama on the evening news this evening and his position was basically he was against off shore drilling, in the meantime McCain was for drilling off the continental shelf. What I want one or both these presumptive nominee(s) to propose is allowing drilling off the continental shelf in exchange for increasing the lame CAFE standards of 35 mpg by 2020

http://www.autoblog.com/2007/12/19/president-bush-signs-energy-bill-into-law/

to something more challanging say CAFE standards of 45 mpg by 2015, I figure something like this would help solve several different problems, like peak oil and global warming.
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"I'm 100% sure that unsustainable conspicuous consumption of natural basic resources will eventually lead to a proverbial hell on earth for those people who get stuck with the mismanagement mess of mankind not being stewards of the environment!"

Dezakin · Light Sweet Crude Joined: Feb 09, 2005 Posts: 1360

Dezakin · Light Sweet Crude Joined: Feb 09, 2005 Posts: 1360

AgentR

The ban does have one interesting advantage as is. The longer we hold it untapped; the more valuable it becomes.

Eventually though... Granny NewEnglander is gonna throw a fit when she can't heat her home, and well, that'll be the end of THOSE bans, whether they make any difference or not.
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Yes, we are. As we are.
And so shall we remain; Until the end.

mefistofeles · Heavy Crude Joined: Mar 21, 2005 Posts: 195

Aaron