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Offshore Drilling Will Take Years To Pay Off

June 18, 2008

WASHINGTON – Opening America’s coastal waters to oil drilling, as John McCain urged in an address Tuesday, is unlikely to provide Americans with more oil for at least seven to 10 years.

That’s the estimate from the American Petroleum Institute, the oil industry trade group. Major environmental groups think the increased supply would be at least that distant before arrival, and say it mostly would benefit Big Oil.

“It would take a decade to bring new leases into production, and then they would only line the coffers of the oil industry,” said Carl Pope, the Sierra Club’s executive director.

Deron Lovaas, senior energy analyst at the Natural Resources Defense Council, noted that even if billions of barrels of oil are available offshore, the U.S. still will control only a fraction of the world’s supply, so energy independence isn’t within reach.

“We are just not blessed in this country with enough resources for this to make a big difference,” Lovaas said.

McCain, speaking Tuesday in Houston, disagreed.

“We have enormous energy reserves of our own,” he said, “and we are gaining the means to use these resources in cleaner, more responsible ways.”

McCain argues that increased offshore drilling would help lessen dependence on foreign oil. U.S. oil imports have doubled since 1973, and petroleum products make up about 40 percent of the U.S. trade deficit.

The Interior Department offered a wide range of estimates of how much oil might be within reach of U.S. offshore drilling in a 2006 report. It estimated that the Outer Continental Shelf could hold 115.4 billion barrels. However, it also estimated that recoverable reserves off U.S. coasts in areas now banned from production probably hold only about 19 billion barrels.

The figures differ widely because the higher number is a broader measure that includes “cumulative production, proved and unproved reserves.”

The world consumes about 86 million barrels a day. The U.S. share of that is about 20.6 million barrels, 60 percent of them from foreign sources.

One thousand million barrels equals 1 billion, so if there are 19 billion barrels in the areas McCain would open to drilling, that’s enough to provide about 920 days, or about 2.5 years, of current U.S. consumption.

Washington lawmakers imposed a ban on offshore drilling in 1981, with exceptions. States can opt out: Drilling is permitted off the western Gulf Coast, but efforts to do so in Virginia, South Carolina and Georgia have fallen short.

McCain would lift the ban as a matter of national policy, but would let coastal states impose bans off their own coasts.

He gained a valuable ally Tuesday when Florida Gov. Charlie Crist reversed his long-standing support for the ban on drilling off the Sunshine State’s coast and applauded McCain. Crist often is mentioned as a potential McCain running mate.

“We have to be sympathetic to the pocketbooks of the people of Florida and what they are paying at the pump for gas, and balance that with what our state might be able to contribute in terms of resources,” Crist said.

South Carolina Gov. Mark Sanford, another potential McCain running mate, doesn’t oppose lifting the national ban so long as his state maintains power over what happens off his coast.

Joel Sawyer, Sanford’s spokesman, said the governor probably would oppose the state moving to permit drilling if the federal ban were lifted. “It’s something the governor would probably not support based on potential danger to our tourism industry and our natural resources,” Sawyer said.

Even if states let drilling proceed, it would take years before new oil would flow.

First, drillers would need to clear regulatory hurdles and overcome environmental concerns.

Even if permission were granted, oil companies would have to find it worthwhile economically to drill; that’s probably not a problem if prices stay high, but could be questionable if they fall again, as they did in the 1980s and ’90s.

If companies found significant amounts of oil, some question whether this country has enough refining capacity to handle the new supply. The nation has slightly fewer refineries than it did in the mid-1980s.

Drilling advocates think the effort is worth it.

John Felmy, the American Petroleum Institute’s chief economist, said that opening coastal waters “could make markets think there will be important changes in the future,” and perhaps send prices lower.

R. Skip Horvath, the president and chief executive officer of the Natural Gas Supply Association, agreed, saying that allowing drilling “would send a strong message that Congress is serious about doing what it can to reduce energy costs.”

Opponents fear environmental damage, especially to beaches that are essential parts of coastal-state economies and cultures. The key reason for a federal moratorium, Pope said, is that “one state could jeopardize beaches in neighboring states with risky offshore drilling.”

A spill off the Virginia coast, for instance, “would impact beaches, marine life and tourism in New Jersey.”

The Rainforest Action Network notes that even without a spill, a single oil rig can dump more than 99,000 tons of drilling fluid and metal cuttings into the ocean.

McCain joins drilling proponents in countering that technology is much cleaner and safer now.

“It’s safe enough these days that not even Hurricanes Katrina and Rita could cause significant spillage from the battered rigs off the coasts of New Orleans and Houston,” McCain said, citing the devastating 2005 storms.

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(Staff writers James Rosen and Lesley Clark contributed to this report.)

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ON THE WEB:

The Interior Department report on oil supplies:

http://www.mms.gov/PDFs/2005EPAct/InventoryRTC.pdf




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