Offshore drilling questions - “when?” “how much?” etc.
In 1973, after the OPEC oil embargo caused gasoline shortages, votes in Congress suddenly materialized to approve construction of the delayed Alaskan pipeline. Four years later, crude started to flow from fields proven back in 1968. Result: a slug of oil from Prudhoe Bay helped reduce our imports for eight years, and US oil production increased modestly for five years.
Soon history may repeat itself, but with some key differences. As soon as this week, elected officials in Washington D.C. may be staring at a vote to overturn the 27-year moratorium on offshore drilling plus open up Alaska’s ANWR. Are voters fried enough about $4/gal gasoline to pressure their representatives and senators to support drilling? Maybe. But this time around the offshore really isn’t a cavalry waiting to save the day. Happy motoring has hit the skids.
Here are five quick questions for all those elected officials to ponder before they vote this week:
1. When will the new oil arrive? Brutal truth: maybe in a decade for the early oil, though the EIA’s quote above indicates more like two decades before enough oil arrives to matter. The industry doesn’t have any identified offshore fields like Prudhoe Bay, our all-time largest producer, to come on line quickly. Exploration takes time. Drilling takes time, when you can get a drill. Building infrastructure takes time. Delays are commonplace.
2. How much new oil will arrive then? No one can say conclusively. Think in terms of one to two million barrels per day by 2025-2030. But now the world consumes 86 million a day, the US consumes 20 million, imports 13 million, produces only 7 million (see Figs. 1 and 2). Offshore clearly won’t be a savior.
3. Where are the rigs? The personnel? Deepwater rigs are already reserved several years in advance; in a few years supply may be even tighter as Brazil’s offshore drilling increases; new rigs for offshore waters take years to build. Each rig and crew will cost much more than during previous years, so no price relief there.
4. Can’t we drill the Detroit formation deeper? The nearly all-consuming focus on increasing supply means that cutting demand generally plays a minor role, if any. Back in the mid-70s, we ordered car manufacturers to ramp up efficiency faster than current lawmakers are drilling Detroit. Today, we need No More Mr. Niceguy pounding on the efficiency band wagon.
5. Can Americans handle the truth? You won’t know until you try. But how many of the 60% of Americans who favor drilling offshore really understand the above hard truths? here’s a hopeful message at the end of the energy rainbow. But first, the rain.
Fig. 1: “If all federal lands and waters were opened to oil development, the most probable production profile would look something like this.” From May 26, 2008 article by Roger Blanchard, Peak Oil Review.
Fig. 2: Best-case production profile if all offlimits federal lands were opened to drilling. From article by Dr. Kyriacos Zygourakis, May 5, 2008 Peak Oil Review.
Finally, a quote from Roger Blanchard, author of the May 26 article from which Fig. 1 is copied: “Desperate people do desperate things. As Americans become more desperate for oil, I expect that ANWR and offshore areas will be opened for oil development. It will be like burning the furniture to keep the house warm in mid-January. It will be a desperate move that won’t result in much.”
For years, our slowly sinking energy story has begged for a balanced, science-based energy policy. If drilling our brains out offshore—aka burning the furniture--is really part of the plan, for my kids’ sakes I would like to know what the hell we plan to do after that.
Steve Andrews is a Denver-based co-founder of ASPO-USA.