Offshore Oil Drilling and the Oil Rig Disaster in the Gulf

[RiversideGator]

Start drilling:   

April 30, 2008
Start Drilling
By Robert Samuelson

WASHINGTON -- What to do about oil? First it went from $60 to $80 a barrel, then from $80 to $100 and now to $120. Perhaps we can persuade OPEC to raise production, as some senators suggest; but this seems unlikely. The truth is that we're almost powerless to influence today's prices. We are because we didn't take sensible actions 10 or 20 years ago. If we persist, we will be even worse off in a decade or two. The first thing to do: Start drilling.

It may surprise Americans to discover that the United States is the third-largest oil producer, behind Saudi Arabia and Russia. We could be producing more, but Congress has put large areas of potential supply off-limits. These include the Atlantic and Pacific coasts and parts of Alaska and the Gulf of Mexico. By government estimates, these areas may contain 25-30 billion barrels of oil (against about 30 billion of proven U.S. reserves today) and 80 trillion cubic feet or more of natural gas (compared with about 200 tcf of proven reserves).

What keeps these areas closed are exaggerated environmental fears, strong prejudice against oil companies and sheer stupidity. Americans favor both "energy independence" and cheap fuel. They deplore imports -- who wants to pay foreigners? -- but oppose more production in the United States. Got it? The result is a "no-pain energy agenda that sounds appealing but has no basis in reality," writes Robert Bryce in "Gusher of Lies: The Dangerous Delusions of 'Energy Independence.'"

Unsurprisingly, all three major presidential candidates tout "energy independence." This reflects either ignorance (unlikely) or pandering (probable). The United States now imports about 60 percent of its oil, up from 42 percent in 1990. We'll import lots more for the foreseeable future. The world uses 86 million barrels of oil a day, up from 67 mbd in 1990. The basic cause of exploding prices is that advancing demand has virtually exhausted the world's surplus production capacity, says analyst Douglas MacIntyre of the Energy Information Administration. The result: Any unexpected rise in demand or threat to supply triggers higher prices.

The best we can do is to try to influence the global balance of supply and demand. Increase our supply. Restrain our demand. With luck, this might widen the worldwide surplus of production capacity. Producers would have less power to exact ever-higher prices, because there would be more competition among them to sell. OPEC loses some leverage; its members cheat. Congress took a small step last year by increasing fuel economy standards for new cars and light trucks from 25 to 35 miles per gallon by 2020. (And yes, we need a gradually rising fuel tax to create a strong market for more-efficient vehicles.)

Increasing production also is important. Output from older fields, including Alaska's North Slope, is declining. Although production from restricted areas won't make the U.S. self-sufficient, it might stabilize output or even reduce imports. No one knows exactly what's in these areas, because the exploratory work is old. Estimates indicate that production from the Arctic National Wildlife Refuge might equal almost 5 percent of present U.S. oil use.

Members of Congress complain loudly about high oil profits ($40.6 billion for ExxonMobil last year) but frustrate those companies from using those profits to explore and produce in the United States. Getting access to oil elsewhere is increasingly difficult. Governments own three-quarters or more of proven reserves. Higher prices perversely discourage other countries from approving new projects. Flush with oil revenues, countries have less need to expand production. Undersupply and high prices then feed on each other.

But it's hard for the United States to complain that other countries limit access to their reserves when we're doing the same. If higher U.S. production reduced world prices, other countries might expand production. What they couldn't get from prices they'd try to get from greater sales.

On environmental grounds, the alternatives to more drilling are usually worse. Subsidies to ethanol made from corn have increased food prices and used scarce water, with few benefits. If oil is imported, it's vulnerable to tanker spills. By contrast, local production is probably safer. There were 4,000 platforms operating in the Gulf of Mexico when hurricanes Katrina and Rita hit. Despite extensive damage, there were no major spills, says Robbie Diamond of Securing America's Future Energy, an advocacy group.

Perhaps oil prices will drop when some long-delayed projects begin production or if demand slackens. But the basic problem will remain. Though dependent on foreign oil, we might conceivably curb the power of foreign producers. But this is not a task of a month or a year. It is a task of decades; new production projects take that long. If we don't start now, our future dependence and its dangers will grow. Count on it.

http://www.realclearpolitics.com/articles/2008/04/start_drilling.html

[Midway ®]

By H. JOSEF HEBERT, Associated Press Writer Tue Apr 29, 3:59 PM ET

WASHINGTON - President Bush put politics ahead of the facts Tuesday as he sought to blame Congress for high energy prices, saying foreign suppliers are pumping just about all the oil they can and accusing lawmakers of blocking new refineries.

Bush renewed his call for drilling in an Arctic wildlife refuge, but his own Energy Department says that would have little impact on gasoline prices.

THE SPIN:

Asked what he is doing to try to get Saudi Arabia to pump more oil, Bush didn't answer directly. "We've got to understand there's not a lot of excess capacity in the world right now," he said. Blaming "the lack of refinery capacity" for high energy prices, he said Congress has rejected his proposal to use shuttered military bases for refinery sites.

FACT:

Global oil supplies are tight, in part because OPEC nations including Saudi Arabia are refusing to open their spigots. But Saudi Arabia has considerable additional production capacity. It's pumping a little over 8.5 million barrels a day, compared to about 9.5 million barrels a day two years ago and has acknowledged the ability to produce as much as 11 million barrels a day.

On refineries, Congress has ignored Bush's proposal to use closed military bases. But the oil companies haven't shown much interest in building refineries either and have dismissed suggestions that military bases might be of use. They note, for example, that few bases are near pipelines needed to bring crude in and move finished product out.

When top executives of the country's five largest oil companies earlier this month were asked at a House hearing whether they wanted to build a new refinery, each said no.

While no new refinery has been built in more than 30 years, companies have been adding on to existing refineries. The Energy Information Administration estimates an additional 800,000 barrels a day of production will be added to existing refineries in the next three years. A joint venture between Shell Oil Co. and the Saudi Arabian oil company is expected to double capacity at a Port Arthur, Texas, refinery.

Even the industry's refinery expansion plans have been scaled back over the last few years because companies anticipate less demand for gasoline since the government now requires a huge expansion of ethanol as a motor fuel. They ask: Why should refiners make more gasoline if ethanol is to be used?

THE SPIN:

Bush has long called for opening the Arctic National Wildlife Refuge in Alaska to oil development, and on Tuesday he chastised Congress for repeatedly blocking the proposal.

"If Congress is interested, they can send the right signal by saying we are going to explore for oil and gas in U.S. territories, starting with ANWR," said Bush, adding that opening the Alaska refuge to oil companies "likely will mean lower gas prices."

FACT:

Strongly opposed by environmentalists, most Democrats and a few moderate Republicans, drilling in the Arctic refuge indeed has been blocked, as the president complained.

Energy experts believe ANWR's likely 11 billion barrels of oil â€" pumped at just under 1 million barrels a day â€" would send a signal of increased U.S. interest in domestic energy production. However, in the long run, it likely would not significantly impact oil or gasoline prices. And it likely would have little impact on today's prices.

In 2005, the Energy Information Administration estimated that it would take about 10 years before oil would flow from ANWR if drilling were approved. By 2025, it said, the additional oil would have only a slight impact on global oil prices and cause a decline in gasoline prices of less than a penny a gallon, using constant 2003 dollars. Oil imports would drop from an expected 68 percent of U.S. demand to 64 percent, the EIA said.

THE SPIN:

Bush said "it is in our national interest" to continue pumping oil into the government's Strategic Petroleum Reserve â€" about 70,000 barrels a day â€" "in case there is a major disruption of crude oil around the world."

FACT:

While some Democrats argue that halting the SPR fill would lower prices, most energy experts agree with the president that it likely would not. But the assertion that continued deliveries to SPR, which already holds 701 million barrels, is needed as a safeguard against a possible supply interruption may be a stretch.

"We have today a three-month supply of oil for emergencies," noted Sen. Kay Bailey Hutchison, R-Texas, who would like to see the deliveries stop. And that would assume a total cutoff of oil imports, an unlikely occurrence even if there are major supply disruptions. In the meantime, said Hutchison, "over the next four months we will deposit over 8 million barrels into the SPR at a very high price."

THE SPIN:

The president said Congress was "demanding emissions cuts that would shut down coal plants" and criticized lawmakers for hindering the expansion of nuclear power.

FACT:

His remarks about coal were an apparent reference to climate legislation that would cap carbon dioxide emissions to address global warming. While such caps would significantly affect coal-burning power plants, the legislation also envisions having emission allowances, many of which would be used by utilities to keep coal plants running, though electricity prices would increase. And the emission limits also would spur development of carbon capture technologies from power plants.

On the nuclear issue, Congress has provided the industry loan guarantees, a streamlining of reactor permitting and other measures, all aimed at spurring construction of power reactors. It has shown little interest in a Bush plan to resume nuclear waste reprocessing, or in pressing ahead with the Yucca Mountain underground waste dump in Nevada.

[JeffreyS]

We should start more drilling domestically and we should also use the 70s speed limit reduction to 55mph to conserve.(or a WWII war effort 45mph limit we are at war.) We could turn gas prices around almost over night. Why are we lacking leadership on this?  It's almost like our president's family is in the oil business, oh yeah my bad.

[Midway ®]

I reiterate from above:

THE SPIN:

Bush has long called for opening the Arctic National Wildlife Refuge in Alaska to oil development, and on Tuesday he chastised Congress for repeatedly blocking the proposal.

"If Congress is interested, they can send the right signal by saying we are going to explore for oil and gas in U.S. territories, starting with ANWR," said Bush, adding that opening the Alaska refuge to oil companies "likely will mean lower gas prices."

FACT:

Strongly opposed by environmentalists, most Democrats and a few moderate Republicans, drilling in the Arctic refuge indeed has been blocked, as the president complained.

Energy experts believe ANWR's likely 11 billion barrels of oil â€" pumped at just under 1 million barrels a day â€" would send a signal of increased U.S. interest in domestic energy production. However, in the long run, it likely would not significantly impact oil or gasoline prices. And it likely would have little impact on today's prices.

In 2005, the Energy Information Administration estimated that it would take about 10 years before oil would flow from ANWR if drilling were approved. By 2025, it said, the additional oil would have only a slight impact on global oil prices and cause a decline in gasoline prices of less than a penny a gallon, using constant 2003 dollars. Oil imports would drop from an expected 68 percent of U.S. demand to 64 percent, the EIA said.

But, on the other hand, our domestic oil companies would make a lot more money from ANWR oil, especially if the Government let them extract it royalty free. I know that could NEVER happen, but its just a thought.

But, then I'm thinking, what could be the reason for the Bush administration's breathing life into that falsehood? 

[RiversideGator]

So, you favor drilling in ANWR then?

[Midway ®]

Tell me a bedtime story; you know, the one about how drilling oil wells in ANWR will bring down the price of gasoline, so I can dream about driving in my big, shiny new SUV allll around Jacksonville!!!!

[gatorback]

Start drilling:   

Where???

[RiversideGator]

Tell me a bedtime story; you know, the one about how drilling oil wells in ANWR will bring down the price of gasoline, so I can dream about driving in my big, shiny new SUV allll around Jacksonville!!!!

So, in your dreams, does the law of supply and demand apply?

[Midway ®]

My answer is thus:

THE SPIN:

Bush has long called for opening the Arctic National Wildlife Refuge in Alaska to oil development, and on Tuesday he chastised Congress for repeatedly blocking the proposal.

"If Congress is interested, they can send the right signal by saying we are going to explore for oil and gas in U.S. territories, starting with ANWR," said Bush, adding that opening the Alaska refuge to oil companies "likely will mean lower gas prices."

FACT:

Strongly opposed by environmentalists, most Democrats and a few moderate Republicans, drilling in the Arctic refuge indeed has been blocked, as the president complained.

Energy experts believe ANWR's likely 11 billion barrels of oil â€" pumped at just under 1 million barrels a day â€" would send a signal of increased U.S. interest in domestic energy production. However, in the long run, it likely would not significantly impact oil or gasoline prices. And it likely would have little impact on today's prices.

In 2005, the Energy Information Administration estimated that it would take about 10 years before oil would flow from ANWR if drilling were approved. By 2025, it said, the additional oil would have only a slight impact on global oil prices and cause a decline in gasoline prices of less than a penny a gallon, using constant 2003 dollars. Oil imports would drop from an expected 68 percent of U.S. demand to 64 percent, the EIA said.

So, as I was saying, tell me a bedtime story, Riversidegator.

[Charleston native]

Midway, the problem with your last quote is what you use as supposed fact.

The fact is that ANWR has more oil reserves than was previously estimated, which puts that "fact" of yours in limbo. Other industry experts have said that oil can be obtained and placed in the market place sooner than 10 years.

Regardless, the drilling would lower prices in the short term (by forcing competition on OPEC companies to lower prices) and in the long term (by increasing supply).

BTW, ANWR is just a piece of the pie. North Dakota is said to have a vast supply as well as off the shores of Florida.

[Midway ®]

Ok, now your talking.

The basic flaw in your premise that you can drill your way out of the oil problem is defective at its core.

The resource is finite, and as such conservation is a much more important piece of the puzzle.

Just as you complain (and rightly so) that corn is being diverted for fuel and we are burning our food, we are doing the same thing with oil. I am not sure if you are aware, but oil is a very important chemical feedstock used for the production of an incredibly large array of products that are vital to the modern way of life, many of which have absolutely no substitute. we are taking this finite resource which is akin to food for industry, and using it all as fuel as well. 

Now, there is a good case for the use of petroleum as fuel, but these is also a compelling case for conservation of this commodity so that it may also be used in industrial processes where the is no substitute.

While any suggestion of conservation is met here with derision, I believe that is borne of the failure to appreciate the finite nature of the resource, and its industrial uses other than as a fuel. If you were to look around your room, probably 60% of what you see would be made of petroleum. You are probably not aware that your laundry detergent is most likely made from oil in the form of linear alkyl benzene.

[Charleston native]

Actually, I'm very aware of the many various products that are produced with oil, and I agree that the resource is finite. But unless somebody actually has the physical ability to descend into the entire depths of our planet with a measuring cup and measure how finite this resource is, each and every projection that speculates when we'll run out of fuel will be wrong.

Realistically, because this resource helps us with so much of our energy needs, limiting it will only continue to hurt our checkbooks. It must be made plentiful to decrease financial burdens.

Then in the meantime, a long term plan must be created to produce cleaner alternative technology that will rival or even surpass oil's usefulness. Resultingly, we will have an energy source ready whenever the oil tap runs out.

[RiversideGator]

My answer is thus:

THE SPIN:

Bush has long called for opening the Arctic National Wildlife Refuge in Alaska to oil development, and on Tuesday he chastised Congress for repeatedly blocking the proposal.

"If Congress is interested, they can send the right signal by saying we are going to explore for oil and gas in U.S. territories, starting with ANWR," said Bush, adding that opening the Alaska refuge to oil companies "likely will mean lower gas prices."

FACT:

Strongly opposed by environmentalists, most Democrats and a few moderate Republicans, drilling in the Arctic refuge indeed has been blocked, as the president complained.

Energy experts believe ANWR's likely 11 billion barrels of oil â€" pumped at just under 1 million barrels a day â€" would send a signal of increased U.S. interest in domestic energy production. However, in the long run, it likely would not significantly impact oil or gasoline prices. And it likely would have little impact on today's prices.

In 2005, the Energy Information Administration estimated that it would take about 10 years before oil would flow from ANWR if drilling were approved. By 2025, it said, the additional oil would have only a slight impact on global oil prices and cause a decline in gasoline prices of less than a penny a gallon, using constant 2003 dollars. Oil imports would drop from an expected 68 percent of U.S. demand to 64 percent, the EIA said.

So, as I was saying, tell me a bedtime story, Riversidegator.

Except I am not talking only about ANWR.  There are billions of barrels of oil out there off the coasts of the US and other places which are now off-limits due to government.  Open up the areas that are feasible for drilling and you will see increases in supply.  Demand is already dropping now in the States as supplies slowly increase.  Imagine adding in these new fields (over a period of years) and you can see how prices would moderate.  After all, this isnt nuclear physics.   

[RiversideGator]

Ok, now your talking.

The basic flaw in your premise that you can drill your way out of the oil problem is defective at its core.

The resource is finite, and as such conservation is a much more important piece of the puzzle.

Just as you complain (and rightly so) that corn is being diverted for fuel and we are burning our food, we are doing the same thing with oil. I am not sure if you are aware, but oil is a very important chemical feedstock used for the production of an incredibly large array of products that are vital to the modern way of life, many of which have absolutely no substitute. we are taking this finite resource which is akin to food for industry, and using it all as fuel as well. 

Now, there is a good case for the use of petroleum as fuel, but these is also a compelling case for conservation of this commodity so that it may also be used in industrial processes where the is no substitute.

While any suggestion of conservation is met here with derision, I believe that is borne of the failure to appreciate the finite nature of the resource, and its industrial uses other than as a fuel. If you were to look around your room, probably 60% of what you see would be made of petroleum. You are probably not aware that your laundry detergent is most likely made from oil in the form of linear alkyl benzene.

Who is opposed to conservation?  I favor electrified mass transit here in Jax and better intercity rail service in America.  I would also totally support electrified cars should battery technology advance to make them workable.  Tie these into a nuclear power generator and then you would be cooking with grease.   

In the meantime however, oil is the lifeblood of our economy and to pretend otherwise is folly.  So, prepare for the future without oil but exploit the oil we have at our fingertips now.  Technology will catch up eventually.

[Midway ®]

I'm still waiting for an answer on what to do with nuclear waste. And keep in mind that its not just spent fuel. its all of the water, parts and anything else that comes into contact with the radiation from the reactor, lots of stuff. And this stuff cannot be reprocessed.

And don't give that stuff that Yucca mountain is being held up by Greenpeace either. there are all kinds of incredible engineering problems there.

There are 33 known geologic faults at Yucca Mountain, here's a brief sample:

GEOLOGIC SETTING OF THE PROPOSED HIGH-LEVEL RADIOACTIVE WASTE REPOSITORY, YUCCA MOUNTAIN, NEVADA
POTTER, Christopher J., U.S.G.S, MS 939, Denver Federal Center, Denver, CO 80225-0046, cpotter@usgs.gov, DAY, Warren C., U.S.G.S, MS 964, Denver Federal Center, Denver, CO 80225-0046, and SWEETKIND, Donald S., U.S.G.S, MS 973, Denver Federal Center, Denver, CO 80225-0046

Yucca Mountain (YM), in southern Nevada, is the proposed site of the nation’s sole high-level radioactive waste repository and lies within the middle to upper Miocene southwestern Nevada volcanic field (SWNVF) in the Walker Lane tectonic zone near the SW margin of the Basin and Range province. Rocks of the SWNVF were erupted from the Timber Mountain caldera complex; they unconformably overlie an older Tertiary nonmarine section, which in turn overlies a highly deformed Paleozoic and Proterozoic section along a profound angular unconformity. The Paintbrush Group dominates the near-surface stratigraphy at YM, comprising two thick, mainly densely welded rhyolite tuffs â€" the 12.8-Ma Topopah Spring Tuff and the 12.7-Ma Tiva Canyon Tuff â€" and a thinner intervening interval of nonwelded and bedded tuffs. The Tiva Canyon is the most extensively exposed bedrock unit at YM, whereas the underlying Topopah Spring includes the "repository host horizon," which would be excavated for waste storage. The proposed repository volume (in north-central YM) is in the structurally simplest part of YM: a 4-km-wide fault block of gently E-dipping strata. This "central block" is one of several 1- to 4-km-wide blocks that are delineated by moderately to steeply W-dipping, block-bounding normal faults. Within the central block, intrablock faults are commonly short and discontinuous, except for one prominent 7-km-long fault. Block margins are more intensely deformed, particularly in the hanging-walls of block-bounding faults. The mesoscale fracture network in the tuffs is strongly controlled by lithologic properties of the volcanic stratigraphy (degree of welding, lithophysae development, etc.), and locally the fracture network has a strong influence on the nature of intrablock faulting. In the southern part of YM, the intensity of deformation increases markedly, and block-bounding faults commonly are linked by northwest-striking relay faults. Block-bounding faults were active at Yucca Mountain during and after eruption of the Paintbrush Group, and significant motion on those faults postdated the 11.6-Ma Rainier Mesa Tuff. Roughly half of the stratal tilting in the repository-site area occurred after 11.6 Ma. In addition, 0 to 4 m of Quaternary displacement are associated with each block-bounding fault.

You know, I'm not even going to get into the whole discussion that you just want to dig everything up and use it to power your SUV so you can drive your pampered little a** around town is style and to hell with the next generation, because then you'll say that I'm being mean to you and picking on you. So I'm not going to say that.

Terrific strides could have been made in the last 8 years to foster energy independence. That opportunity was lost because the leadership of this country had no desire to do so. Instead they pursued a ruinous middle east policy that has just served to simultaneously drive up the cost of oil and devalue the dollar. 

Again, you are going for the simplistic quick fix. Quick fixes, especially simple ones, don't work.

And BTW, didn't I see you ranting about "Amtrak Subsidies" somewhere? So much for better intercity rail service.