Half-Steps on Drilling Obama Endorses More Offshore Drilling – or Did He?

Sen. Barack Obama’s limited, qualified reversal on offshore oil drilling may be a hopeful sign of energy realism on his part. Still, it’s far too early to tell how meaningful it will be in the effort to unlock huge deposits of oil and natural gas below American waters.

Obama continues to say – as recently as Monday in Lansing, Mich., for example – that more offshore drilling is a bad idea. But he also says he may be willing to accept expansion as part of a compromise package that includes other energy policies he favors.

Some such compromise may indeed be the only way to expand offshore drilling. But it depends on the other elements of the deal, since Obama is also pushing policies that could hurt energy production.

For example, the presumptive Democratic presidential nominee said “we can and should increase our domestic production of oil and natural gas. But” – and this is a big but – “we should start by telling the oil companies to drill on the 68 million acres [of federal land] they currently have access to but haven’t touched.”

The implication is that every acre of public land leased for oil or natural gas is a gusher in waiting – as productive as the Clampett family homestead in Bugtussle, Tenn. And that energy companies are somehow hoarding precious public resources by not covering every available acre with drilling platforms or surface wells.

Until those acres are drilled, the argument goes, no new lands should be open for leasing.

Yet as Marc Smith, executive director of the Independent Petroleum Association of Mountain States, explains it, acquiring a lease “is the first step in a long, expensive process that may lead to exploration activity.”

How long? “If all goes well,” he told us, “it might take four to six years to begin production.” Since the vast majority of federal leases last 10 years, a company might enjoy four or five years of production before the lease expires.

Smith should know, as independents drill 90 percent of U.S. wells.

Delays can arise from a host of causes, including litigation, difficulty in obtaining permits, seasonal drilling bans to protect wildlife, and lack of existing pipelines or other transmission infrastructure.

Offshore producers face different obstacles. U.S. News & World Report says an offshore drilling rig costs $700 million to build. U.S. companies are competing with producers in Brazil, West Africa and South Asia for a limited supply of specialized equipment.

So it’s simply not possible to drill every leased acre at once. The argument that existing leases should be exhausted before new ones are offered also implies that all leases are created equal, when of course they aren’t. Companies will deploy their resources where they believe they can get the greatest returns. Official estimates say some 18 billion barrels of oil not now available is beneath federal waters; potentially a 50-year supply of natural gas under federal lands remains off-limits, too.

Until the transition to renewable sources of energy is complete, those essential resources remain the lifeblood of our civilization. They can and should be developed responsibly.

Originally published by Rocky Mountain News.

(c) 2008 Rocky Mountain News. Provided by ProQuest Information and Learning. All rights Reserved.