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Outer Continental Shelf Drilling
written by: FFFAdmin 1

Last Modified: 7.16.2008

The Outer Continental Shelf - Wikipedia

 

 
For years the petroleum industry and environmentalists have been debating over drilling rights in protected areas as Alaska's Arctic National Wildlife Refuge or the Outer Continental Shelf. The petroleum industry, frustrated consumers and economists have argued that these areas may provide an avenue to strengthen domestic oil production thereby lessening our dependency on foreign oil and easing pricing pressures. Conversely, ecologists, scientists and environmentalists remain adamant that these areas are pristine, delicate and should remain exempt from oil exploration and production. Additionally, they argue that this route would only exacerbate our dependency on fossil fuels, a prospect which has no long term future. Since the turn of the century, the debate has intensified as oil prices continue to drift upward and American motorists increasingly feel financially trapped by rising energy costs. These issues have become paramount during the 2008 presidential election, with both candidates taking varying opinions on the debate.

The Outer Continental Shelf

The continental shelf ("the shelf") is the immediate extension from the land to the ocean, which is characterized by shallow ocean depths for many miles until the shelf drops off to the abyssal plain (ocean floor). This shallow segment extends from our beaches and includes the water surrounding the lower 48 states. The shelf also includes Alaskan waters, the Florida Key's and the rocky coasts originating around Maine. More specifically, the Outer Continental Shelf (OCS) refers to the geography extending from the United States that falls under the jurisdiction of the federal government. Typically, individual states control the three mile extension from their shorelines and the federal government regulates the 197 miles beyond that. Beyond the 200 mile marker is considered International waters.

Since 1981 a congressional moratorium has suspended all oil and gas drilling involving the OCS. During the 1990s, President Bush signed a commitment to extend the ban until 2000 and in 1998; President Clinton extended the ban until 2012. Currently, most of the Pacific, Atlantic and Eastern Gulf coasts are protected under the moratorium. At this time there are two prohibitions limiting offshore drilling: the original 1981 congressional mandate and the executive order signed by President Bush in 1990, which is currently set to expire in 2012. Both Congressional and Executive (presidential) abolishment is required to overturn the mandate.

Rationale

Energy issues have become cardinal since concerns over soaring energy prices trouble everyone. Furthermore, economic concerns exist as petroleum constitutes a sizable and growing contingent of the United States trade deficit. Rising energy prices have begun to weaken the American consumer. According to a recent Washington Post-ABC News poll, nearly 80 percent of individuals polled cited soaring pump prices as a financial hardship. In response to these complaints and concerns over a tightening global oil market, politicians have proposed several ideas to address these issues. In June 2008, President Bush urged Congress to lift its long-standing ban on offshore drilling. Concurrently, Republican candidate John McCain was quoted, "We must embark on a national mission to eliminate our dependence on foreign oil." He called for an end to the federal ban on offshore drilling as an aggressive response to high gasoline prices.[1] Advocates argue that inexpensive oil is essential to ensure the economic security of the United States. Since we have undeveloped reserves off our own coast line, it makes little since not to exploit them. In theory, doing so should bolster domestic petroleum production, generate economic activity and ease the energy prices Americans are paying at the pump.

Despite these benefits, staunch opposition to drilling still exists. President Bush's and Senator John McCain's proposals were both met with rejection by Congressional Democrats. Democratic presidential candidate Sen. Barack Obama retorted that, "This is not something that's going to give consumers short-term relief and it is not a long-term solution to our problems with fossil fuels generally and oil in particular." More poignantly, Senate Majority Leader Harry Reid commented, "Despite what President Bush, John McCain and their friends in the oil industry claim, we cannot drill our way out of this problem…" Reid said. “The math is simple: America has just three percent of the world's oil reserves but Americans use a quarter of its oil."[2]

The Reality

During a press release, President Bush said offshore drilling could yield nearly 18 billion barrels of oil over time, although production would take years to start. Bush also said offshore drilling would take pressure off prices over time.[3] In 2007, the Energy Information Administration (EIA) issued a research report titled, "Impacts of Increased Access to Oil and Natural Gas Resources in the Lower 48 Federal Outer Continental Shelf." In the report, the EIA noted the importance of the oil and gas reserves contained in the OCS. Based on estimates by the Minerals Management Service (MMS), the lower 48 OCS holds 18 billion barrels of crude oil and 77 trillion cubic feet of natural gas that is technically available for recovery.[4] By all means this is a vast supply of oil, however two larger problems persist: 1) Substantial time is needed to accurately explore, assess and exploit these deposits AND 2) Tremendous demand for oil products (specifically gasoline) within the United States.

Assuming the OCS opens for drilling and exploration proceeds rapidly, a substantial buffer would exist between the commencement of exploration and the flow of oil. Based on similar oil fields currently in operation along the Gulf of Mexico, assumptions where made about the duration required to adequately explore and develop the oil and gas deposits along the OCS. Due to the greater difficulty associated with these deep water fields, it is projected that unrestricted access to the OCS along the Pacific, Atlantic and eastern Gulf region would not have a significant impact on domestic crude production and pricing until 2030.[5] In other words, oil derived from the OCS will not ease short term oil demands.

Assuming we exclude the energy intensive nations of China and India, there still exists a tremendous demand for petroleum products, specifically gasoline and diesel, within the United States. Domestic production within the United States peaked during the 1970's.[6] As a result we are forced to import nearly 60% of all the oil we use daily. According to estimates by EIA, the United States uses nearly 21 million barrels of oil each day.[7] Assuming unrestricted access to the OCS yields an optimistic 18 billion barrels, the United States would be amply supplied for nearly 2.5 years. In other words, the OCS currently under restriction represents little compared to our current oil demand.

20,687,000 barrels/day x 365 days = 7,550,755,000 barrels/year
18,000,000,000 estimated reserves
18,000,000,000 / 7,550,755,000 = 2.4 years

The reality is the OCS, the Arctic National Wildlife Refuge, the oil shale reserves of the United States and the oil sands of Canada will all need to be exploited to meet expected world wide petroleum demand. According to the EIA, liquid energy consumption is expected to increase from 83 million/day in 2004 to 118 million barrels/day in 2030, of which two-thirds is excepted to be used by the transportation sector.[8] In the long run, a more extensive regiment of alternative fuels and increased conservation will need to be enacted to mitigate this energy crisis.

References
[1]http://www.washingtonpost.com/wp-dyn/content/article/2008/06/16/AR2008061602731_pf.html [2]http://www.boston.com/news/nation/washington/articles/2008/06/18/bush_to_urge_congress_to_allow_offshore_drilling/ [3]http://www.nysun.com/national/bush-urges-congress-to-lift-offshore-drilling-ban/80237/
[4][5]http://www.eia.doe.gov/oiaf/aeo/otheranalysis/ongr.html
[6]http://tonto.eia.doe.gov/dnav/pet/hist/mcrfpus1a.htm
[7]http://www.eia.doe.gov/basics/quickoil.html
[8]http://www.eia.doe.gov/oiaf/ieo/oil.html

Images
[A]http://en.wikipedia.org/wiki/Image:Outer_Continental_Shelf_map.png
[B]http://www.eia.doe.gov/oiaf/aeo/otheranalysis/ongr.html

 

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