One Piece of Offshore Drilling Puzzle Opens - Why?
Monday, July 14, 2008 at 12:11President Bush announced that he will rescind his father's Executive Order banning offshore drilling. After all the political to-and-fro specific to offshore drilling, the article closed with this:
In his statement last month, Bush also renewed his demand that Congress allow drilling in Alaska's Arctic National Wildlife Refuge, clear the way for more refineries and encourage efforts to recover oil from shale in areas such as the Green River Basin of Colorado, Utah and Wyoming.
The White House estimates that there are 18 billion barrels of oil offshore that have not been exploited because of state bans, 10 billion to 12 billion in the Arctic National Wildlife Refuge and 800 billion barrels of recoverable oil in the Green River Basin.
Um, color me ignorant, but why are we going after 18 billion barrels when there are 800 billion barrels in the Green River Basin? I know that oil recovery from shale is somewhat more expensive than is deep-shelf drilling, but doing offshore drilling first means we have to do the whole thing again--and sooner--than we would if we go for the oil shale now. Oh, wait, here's the answer:
Candida Scott, an oil industry researcher at Cambridge Research Associates, said oil needs to be priced at $60 a barrel or more to justify deep-shelf drilling. With oil now selling for $145 a barrel, companies are almost assured of profiting from offshore drilling, Scott said.
But wait - everyone's telling us that the price will DROP if we drill now...so what's the "profit point" for oil shale recovery? That's one thing that hasn't been part of the hype over offshore drilling.
While we're at it, it's somewhat disingenuous for Bush to call upon Congress to "pave the way" for more refineries. The oil companies have been CLOSING refineries for years. It's up to them to either reactivate closed refineries or build new ones. I certainly hope that "clear the way" doesn't mean "relax environmental rules" or "new tax benefits" for oil companies, but I suspect that we'll see a push for those very things.
Before we plunge into offshore drilling, I think we need a very serious discussion about pursuing oil shale recovery first.
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Reader Comments (9)
It's a common refrain from libs that it's useless to drill offshore, ANWAR or you nameitland because it won't provide oil for 10 years. After this suspension of disbelief some thoughts:
1). The libs will have us believe oil five miles offshore in 2000 ft. of water is harder to bring up in ten years that it was to put a man on the moon. I and the American public collectively cough and say bullshit.
2). It won't effect price because again ** it can't be used for ten years**. Knowing a little bit of the pyschology of the energy and chemical markets, I can tell you the the expectation of additional supply does have an impact on present day pricing. The libs who love to target speculators who gasp take future enery contracts and bet on that price based on supply/demand issues is different and seperate from what future oil supplies will be with the addition of new supply. Simply, they believe it effects pricing when speculators do in a shortage but deny or ignore it's possibility when supply goes up.
Nancy Pelosi believes this is the case. Does anyone think Nancy Pelosi is qualified to do anything other than get my coffee?
Um, Thomas, why should we be going after 18 billion barrels when there are 800 billion barrels waiting in oil shale?
I'm not saying "don't explore," and I'm not even saying "don't drill." I AM asking why some are so intent on this particular path when larger yields seem to be readily available elsewhere.
And if we had opened up ANWR and offshore years ago, the flow would be here now. And if we wait, guess what?
I wouldn't want Madam Pelosi to get my coffee. She probably can't understand the difference down at the Circle K between the orange handled pots and the regular ones. Very complex, I tell you.
Wes, how about shale AND drilling? That's what reasonable people are proposing. It doesn't have to be either/or.
Wes;
The reason you go offshore first, then oil shale is for the same reason when you pick an apple off a tree you grab the low hanging apple first then move higher. Or do you climb to the top and pick the highest apple first?
Wes;
Two parter- Who says's you can't do both offshore and oil shale? There is SO MUCH FRIGGIN' money waiting for energy exploriation they both can commence at the same time without one interferring with the other as it relates to capital, materials or intellectual talent accumulation.
The oil companies have (effectively) been saying this for years, as they've allowed the 68 million acres on which they hold oil leases to lie fallow. The mere fact that they're so excited about offshore drilling when they could have been doing inland drilling for YEARS is enough to give me pause and wonder why.
If the answer is that offshore is just more profitable, then I say let them use up the resources they have now first. As an alternative, they can give up those land leases to get the offshore rights; let the government make some money (and clear the deficit) by reselling those rights the oil companies have seen fit not to use.
Oh, and let's see the government get an ongoing royalty from these new leases, instead of a one-shot it's-yours-forever deal.
Wes;
At $145.00/bbl do you really think the oil companies wouldn't be drilling if they didn't think there was oil? Your talking billions of dollars in revenue that no oil company would pass up.I know the equivalent of the 9/11 Truthers are out there that the oil companies secretly meet at Dick Cheney's house to set world wide oil prices but come on man! America imports 70% of our oil. Opec is meeting to set prices but we have NO SAY IN THE BBL/PRICE due to our feeble policy on developing our own oil.
Also, oil leases are bundled together. To get what is potentially promising leases you get some that are not. You do a cursory study to confirm yes/no and move on. The
Wait a second - oil prices fell on mere words? (laugh)
This is why I don't buy the "drilling now means lower prices now" argument. Isn't this an example of the market correcting itself, to some degree?