Offshore drilling: a few useful facts

Hat tip: Climate Progress and Jerome's dKos Diary.

The U.S. Energy Information Administration (EIA) recently did a detailed study of the likely outcome of offshore drilling for their Annual Energy Outlook 2007, “Impacts of Increased Access to Oil and Natural Gas Resources in the Lower 48 Federal Outer Continental Shelf (OCS).” The sobering conclusion:

The projections in the OCS access case indicate that access to the Pacific, Atlantic, and eastern Gulf regions would not have a significant impact on domestic crude oil and natural gas production or prices before 2030.

And the impact of the projected 7% (!) increase in lower-48 oil production that might result in 2030 thanks to opening the OCS is … wait for it …

… any impact on average wellhead prices is expected to be insignificant.

Also be sure to check out Andrew Leonard's piece on offshore drilling too.

I am amused.

Look at the graphs of production and you will see that in all cases at the history/projection line, they reverse very very settp declines into very very steep increases. Where are they getting that?

Now, imagine in your mind that instead of reversing those very very steep declines, the declines continue. There is a pretty good reason to think that the declines will continue as there are no particular projects going on that would reverse the declines. You will pretty clearly see that in both the cases of natural gas and crude, by the time the outer shelf production comes online, it is *not* a 7% difference, it's a *100%* difference. Simply put, it'll be the only oil and natural gas we make. I'd call that pretty bleeding significant.

The government eventually opened up the Naval Petroleum Reserve at Tea Pot Dome, Wyoming for development. The remaining blocks containing potential hydrocarbons offshore and in the Rocky Mtns. might be offered in the future, block by block, so as to give the American people access to hydrocarbons and better prices for the lands the oil companies who might bid to lease from the Federal government and might pay production royalties for, in addition to creating jobs, and payroll taxes. It would not be harmful to open some lands, nor in the public's interest to flood the market with leases up for bid all at once as this wouold cause the public to lose fair market value for mineral leases within its public lands.

Ah, but significant to whom? Perhaps the company with access to that oil, but that is what the motivation here is (beyond the political pandering).

Note the relative amounts of "undiscovered" oil and gas which will be "unleashed" by removing restrictions:

And, as reported by Grist

Amy Myers Jaffe, energy studies fellow at the James Baker Institute for Public Policy of Rice University, testified that the country needs to diversify its fuel sources, noting that in the '70s, the United States stopped relying on oil for electricity and home heating. The same needs to be done for automobiles, she said, which use the bulk of the oil consumed in the country today. And in order to diversify, companies are going to have to invest in research and development, she said, citing a report that found that the five largest oil companies spend very little on R&D each year -- less than half of what General Motors or Microsoft does, she said.

Myers Jaffe also rebutted the folks who are lobbying for the government to allow oil and gas drilling in new offshore areas and places like the Arctic National Wildlife Refuge, noting that oil companies aren't spending money on exploration in the places they're already allowed to drill.

According to the USGS (Assessment of Undiscovered Technically Recoverable Oil and Gas Resources of the Nation's Outer Continental Shelf. 2006 Update), one third of the undiscovered offshore oil is in Alaska:

Also, the average discovery rate in the Gulf of Mexico is 3.2 new proven fields per year with a median field size of 0.3 MMBO so I doubt that this 44.92 Gb of yet-to-be-find will generate significant flow rates.

"Now, imagine in your mind that instead of reversing those very very steep declines, the declines continue. There is a pretty good reason to think that the declines will continue as there are no particular projects going on that would reverse the declines. You will pretty clearly see that in both the cases of natural gas and crude, by the time the outer shelf production comes online, it is *not* a 7% difference, it's a *100%* difference. Simply put, it'll be the only oil and natural gas we make. I'd call that pretty bleeding significant."

Which is why the focus should not be on drilling at all. But on producing a meaningful supply of alternative energies by 2030.

If alternatives worth mentioning existed then I would be inclined to agree with you. As they don't however, the flat spot on the decline curve that opening up for drilling now would make 10 years out just may be the breathing room the makes the difference between life and death.

It isn't like we have anything better to do with the drill rigs.

It isn't like we have anything better to do with the drill rigs.

Other than working over the existing well stock, and drilling sidetracks or infills in existing patterns. Otherwise you'd be looking at an extra 5-10% decline per year.

Fear not! My 11 year old son is working on a nuclear-powered car battery that will hold a charge for one hundred years... And if that fails (he's a little short on the plutonium to run some tests), there's always the Big Fella in the sky to save the day!

Regards, Matt B
Smiling though gritted teeth.

Actually, there is such a thing as a nuclear-powered battery:

Unfortunately, there's not much chance of buying one at your local Wal-Mart just yet.

"any impact on average wellhead prices is expected to be insignificant."

That is incredibly short-sighted thinking. It completely misses the reality that the more dear oil becomes, the more important each additional marginal barrel of oil becomes.

This is like saying, "we don't have enough food now, so we won't try to grow anymore becasue it won't completely solve the problem of hunger." Or, "If we can't save everybody, then we shouldn't save anybody."

Its insane, really.

actually this is more like them saying "this isn't really going to save anybody, so let's not waste our resources on it, let's use our resorces on something that will save at least a few of us: Renewable Energy"

By your logic we should stop using any oil immediately because this would bring 100% focus on alteratives and solve the problem faster.

Meanwhile, are you going to eat your children?

pretty sure that's not what he said... he said we should stop drilling, not stop using oil... literacy has it's perks, look into it...

The models which see little price difference from opening up all of Alaska and offshore to drilling are assuming a larger amount of oil from other sources than will be available.

First, we have the decline in oil production which will be far along by 2020.

Then we have the far bigger decline in net exports.

Combine those two and ANWR and US offshore drilling become a far larger fraction of what we'll have available in 2020-2030.

Of course it would have no effect on prices or aggregate supply. That was never the point. The point is: a decent-size offshore find, in the realm of 1 billion barrels recoverable at low cost/high EROI, would have a BIG EFFECT on the profitability of the US oil company that found it.

I have to disagree that 250kbbl/day for 12 years would be insignificant. That EIA graph is pure fantasy. It would require California and the Eastern GOM just to flatten the curve. The rise shown just isn't going to happen. Somebody upthread claimed the new areas could double offshore production in 2030. I thinks that's a pessimistic take on existing areas, but I can't see the new areas being less than 25 or 30% by then. Which we flippin' need to eg run the diesel worktrains for the electrification projects.

Exactly my analysis.
It may in fact lead to a degraded environment, and a negative impact for most people.
But for the "developer", big financial plus. That is why we have lobbyists and politicians for sale to the highest bidder.

I found this at Jerome's diary above. Interesting, methinks.

CA-46: Debbie Cook on Bush-McCain-Rohrabacher Offshore Drilling Lunacy

Democratic Congressional Candidate Debbie Cook's statement on proposals to lift the ban on offshore oil drilling:

"There has been a lot of talk in the last couple of days about lifting the ban on drilling for oil along the coast. Dana Rohrabacher, John McCain and today President Bush have joined in a chorus of "drill, drill, drill," as if that will solve our energy problems.

"Time is not on our side, and continuing to divert our attention away from the real problem is a disservice to our citizens and a failure of leadership.

"World oil production has been flat for three years. America's oil refineries are configured to refine light sweet crude and are currently operating at 88% capacity and paying a premium for this short supply. There is no point for the Middle East, the only region that may have spare capacity, to increase production of heavy sour crudes until new refineries are built or existing refineries have been modified.

"Three fourths of the world's oil and gas wells have already been drilled in North America. Our continent is so heavily explored that it looks like swiss cheese. Eighty percent of the oil available on the Outer Continental Shelf is already open to leasing and drilling. Will opening the remaining 20 percent make any difference when it takes 5-10 years to bring any new oil discoveries to market?

"Perhaps we should just call the President's bluff, sell off the leases and then get on with the real work ahead of us, leaving fossil fuels before they leave us.

"The world economy depends upon the flow of oil, not the oil that remains in the ground. The fact is, more than 50 nations are now past their peak in oil production: Mexico, Norway, UK, USA, Russia, perhaps even Saudi Arabia to name a few. If you use ExxonMobil's estimate for the decline rate from these existing wells (-6%), then from now until 2017, we need to find and develop 37 million barrels per day of additional crude production just to stay even with what we consume today. That assumes no growth in demand for oil. That is the equivalent of finding FOUR Saudi Arabias. Does anyone think we have overlooked resources of that size and quality?

"George Bush and Dana Rohrabacher's failure to understand the fundamental economics and geology of oil and gas production is matched only by their failures as leaders.

"The true solution to our energy problems starts with conservation efforts, and investment in alternative and sustainable energy sources, which will create new American industries and jobs and jumpstart the sluggish economy."

No chance for that woman to get elected. She just doesn’t have the requisite imbecility gene that allows one to tell the voters what they want to hear while ignoring the consequences. To bad.

for christmas, I'm going to ask santa not to get me any presents, but to make this woman the president of the US

Im there. No presents this year.

Don't underestimate me. I will give my opponent a run for his money and raise awareness in the process. Want to help?

Following that link you had I found this:

oil companies have millions of acres of land with supposed oil deposits and untapped wells already under their control, but they're not rushing to drill or explore them. Why? Because tracts that show up as "untapped oil reserves" are more profitable if they remain untapped. They inflate the stock price, the result of which goes directly into the execs' wallets. And the corporations use them as an asset without having to actually see whether or not there is any oil in the deposits.

Is this true? Is this sort of data listed somewhere publicaly, so I just go look at it?

Also known as "the shell game" or "3 card monte."

I was thinking the same thing. Where is this 68 million acres of unexplored leased area and WHY?


Schwarzenegger Against Bush On Oil Drilling

"...Offshore oil drilling threatens America/s $60 billion coastal economy, and we certainly don't need to lift the moratoria to allow new leases when the oil companies hold 68 million acres of undeveloped leases," [Barbara]Boxer said.

I'm starting to get the feeling that it won't be too much longer before MS starts detailing a lot of what you guys and gals talk about here. Which is fine by me.

Regards, Matt B
Frustrated fence-sitter (though, think now there's a foot in the PO boat).

The true solution to our energy problems starts with conservation efforts, and investment in alternative and sustainable energy sources, which will create new American industries and jobs and jumpstart the sluggish economy."

Does anyone else believe we can find an alternative that doesn't already exist that will fill the void left by declining oil production?? I don't believe this statmement on it face value..

Dearth of Deep-Sea Drilling Ships Hinders Offshore Oil Search

Drill here, drill now -- Pay less.

I suppose we could always discover a large find like Brazil did. Actually Brazil discovered two oil finds, totalling over 30 billion barrels if I recall correctly.

I find these government reports to be full of political gibberish and pandering and not much fact. The IBD did their own analysis and found that there are about 118 billion barrels that could be tapped if drilling were opened. As to the refrain that it will do no good NOW, that's just stupidity trying to convince the ignorant to buy a failed policy of the Democrats. If Bill Clinton had signed the ANWR drill bill in 1995, there would be another 1 million barrels of oil per day in the market.

A good source of independent data is the Institute of Energy Research. They have a real interesting chart in the article here


which debunks the Democrats claim that there are plenty of place to drill. The big drop off in offshore leases is when the current law was enacted.

If reducing CO2 is your worship, then nuclear is your savior.

Link your article correctly...

Proven reserves stand at about 25 billion barrels in the USA. Anything else is pure speculation. Even ANWR.

More drilling is not the answer. We all know that...because what happens when we drilled everywhere in 50 years???

Cheers for that. And if Republicans had listened to oil experts like Boone Pickens they'd know drilling won't amount to a hill of beans worth of difference.

The Investor's Business Daily? Get real.

Institute for Energy Research???? Independent????

The Institute for Energy Research (IER), founded in 1989 from a predecessor non-profit organisation, advocates positions on environmental issues which happen to suit the energy industry: climate change denial, claims that conventional energy sources are virtually limitless, and the deregulation of utilities.

It is a member of the Sustainable Development Network. The IER's President was formerly Director of Public Relations Policy at Enron.


IER analyzes public policy related to oil, gas, coal, and electricity. According to IER's mission statement, it "articulates free-market positions that respect private property rights and promote efficient outcomes for energy consumers and producers."

IER President Robert Bradley is a Cato Institute scholar and received the 2002 Julian Simon Award from CEI. One of Bradley's areas of concentration is "global warming alarmism." IER does not publish reports, but sells publications Bradley has written for other organizations, such as the Cato Institute. These publications include "Climate Alarmism Reconsidered" (Institute of Economic Affairs, 2003) and "Renewable Energy: Not Cheap, Not 'Green'" (Cato, 1997).


Institute for Energy Research has received $212,000 from ExxonMobil since 1998.

Finally, do you think that low oil prices from the mid-80's through the 90s had absolutely nothing to do with low exploration efforts?

Anybody know what seismic dataset these guys are using? I thought that with the ban came an end to any seismic. If I remember correctly that was in the 70's. It would be nice to get out there with some big 3d and see what's really out there.

Looking through the EIA's Offshore Development Policy in the United States I don't see anything about restriction on exploration, unless perhaps it violated the clause in the Endangered Species Act concerning "harassment." As much as the companies spend to lease these blocks, you'd figure they'd have some freedom in their actions:

MMS collects about $6 billion dollars on average in revenue each year from the individuals and companies that lease offshore lands for natural gas and oil development.

Yea - but who would go through the expense of sending a 3D seismic ship out there if drilling is banned. I have never heard of a 3D ship working out there. I'm just sayin' if these datasets are from the 70's then there is possibly much more oil out there. You could still pick some good spots from the 2D data - and those would be the leases to buy. But with a modern survey- and directional drilling- I'm sure there is more to be had.

Your last comment seems a little overly optimistic/hopeful.

Looking at available data/statistics/trends, it would be just as easy for anyone to say 'I'm sure there isn't more to be had'.

No there isn't - if this dataset they are using is from the 70's then there is much more oil to find. 3D has proven to be much more effective in finding deposits. They keep on finding plays in the GOM don't they? Why don't we just shoot this region and find out what's out there? The Georgia coast looks like the perfect place.

Just to sum it up- the data is from the 70's- the old school days with dynamite sources and analog recording. Lets get out there and do it for real!

Don't we have people who consistently are presenting rapidly declining oil production projections ?

Also, many people here have not previously thought much of EIA projections when the numbers disagreed with the declining scenarios.

How about the EIA projection to 2030 that if the right climate change bills are passed that there would be massive nuclear power available ?

There also the EIA projections for ANWR

Bush is proposing opening ANWR and the continental shelf and allowing shale development.

I do not see why the doom and gloomers (who want the doom to not be so bad) on oil would not want to see the attempt made to make the declines less sharp. Unless all doom and gloomers want choices that will increase the doom and gloom.

So are all EIA projections and statistics to be believed ?
Do those who believe their will be decline believe that all attempts to increase supply and reduce demand should be made ? If not then why ?

According to your link on EIA projections, the ANWR will contribute about 1 million barrels per day to US production after 2018, but the real surprise is for the onshore production.

The EIA says that by 2030 onshore production will remain almost the same as today due to use of CO2 injection in old fields. This is very much wishful thinking as many older fields may not have the proper strata for CO2 to work, and secondly what about the huge infrastructure and operational cost of getting this CO2 gas to the proper fields? Always a rosy picture from the EIA!

Also, many people here have not previously thought much of EIA projections when the numbers disagreed with the declining scenarios.

That's the best part of this. The study is from the eternal optimists, the bunch who projected future production based on what the demand was predicted to be -- and who uses CERA data for the estimates for other countries.

So if the EIA are optimists, what does that make Bush, McCain, and the Republicans who have been pounding the drill, drill, drilling will save us drum?

Extra shallow politicians?

Ironic that such shallow people are discussing how we need to lay up to 28k feet of pipe. 3.5 billion USD to get 125 kbpd out of Tahiti. This is what you might call dribs and drabs.

MMS Offshore Home, for the curious. Also a must read for newbs: The Illusion of Vast Undeveloped U.S. Oil Resources


Bush & Co. are merely stealing Obama's chant:

"Yes we can ..."

Yes we can keep repeating the unsustainable practices that got us here in the first place. If we don't drill over here then we'll have to drill over there. Ask not what your oilmen can do for our country, ask what more the country can do for them. Tipper canoes and Gore is up the creek without a paddle too. History will judge me as having been on the right. This is loose change we can believe in.

If one really understands peak oil issues or economics, one realizes we don't want to be pumping as fast as possible. In economic terms, future oil will be more valuable than near term oil. In peak oil terms, higher production at peak will lead to a faster decline. Finally, in human terms let me quote the Saudi King, “lets leave some for the kids”.

Viva La NOCs.

There is also the question of opportunity costs. Rather than invest capital in a marginal project with short term benefits (although not marginal in terms of profits for oil companies) we should be investing in renewable energy with long term benefits.

Only the government could come up with the phrase "technically recoverable undiscovered oil".

I'm disappointed they didn't provide API and sulfur content.

I read one of their publications where they added "reserve growth" to "technically recoverable undiscovered oil".

I recall recently reading a conservative news site about the USGS estimating that the Bakken (sp?) field in NoDak had less recoverable oil than previously estimated. The opinion on the site seemed to be that the USGS had been "infiltrated by communists" and were "working to ensure an Obama victory". I bet that if the EIA results get "legs" in the next few weeks, we're going to be seeing some similarly delusional accusations about the EIA being subverted by communists/democrats/Martians, whatever.

The story as I understand is that somebody put out a WAG of 500 billion original oil in place, and then dropped dead. The USGS finished the study and released a figure of 4.3 billion technically recoverable. That probably means 50 billion OOIP, 'cause this is a tough play. So the wingnuts are ranting about the two missing zeros without realizing that one of the zeros was missing even in the original fantasy.

Ah, Jerome, thank you. Your sanity and clarity is refreshing. I've been mind numbed by the disinformation on CSPAN lately.

"Drill here, drill now -- Pay less."

Grey Horse;
When you're done spouting off bumper sticker slogans, you might want to actually learn something before you start posting on this board. I really love these guys who've been comin' round to The Oil Drum for a couple of weeks and they suddenly think they're experts in oil field geology.

SubKommander Dred

Jokes on him, you can't get away with spouting that stuff around people who know better. The numbers just don't stand up.

"So are all EIA projections and statistics to be believed ?"
It is my impression that while the EIA's projections have been exceedingly (some may say delusionally) optimistic with regards to how much future oil output will be, I have found their statistical data (specifically their weekly number crunching) of "This Week in Petroleum" to be fascinating reading. Indeed, I would say my Wednesday is not complete until I pulled off hard copies of the text file and the summary from the EIA site. I guess I'm what you call a TWIP junky now. Perhaps there is a 12 step program for me out there somewhere...

SubKommander Dred

I do not understand the Democrats resistence on the issue of increased drilling. They are certainly correct in stating the fact the U.S. cannot drill its way out of the problem but they completely miss the mark thinking conservation and alternative fuels are going to save us. Even if all vehicles switched over to some alternative to petro we still need the half of barrel not going into transit. Further, we need time to phase out the current fleet of vehicles. Even if everyone wanted a Prius, Toyota cannot make enough and the Prius still uses gasoline. Conservation by definition means you are still using the resource and the resource must come from somewhere. Increased drilling will not significantly reduce dependence on foreign oil sources nor will it serve to lower prices should demand continue to rise but it will help the U.S. in the balance of payments. If we take a conservative number, say 500k b/d from ANWR and another 500k from the OCS we have a million barrels of oil potentially valued at well over $200/b by the time it begins to be extracted. Over the course of a year that is 365Mb potentially worth $70B. That is $70B the Fed won't have to print which will dampen inflation, even if just a fractional amount.

And I don't understand the desire to drill every last drop of oil to simply extend the "party" for another couple of years.

i understand it

some people only care about themselves
some people want instant gratification

good one, leduck.

and unfortunately spot on.

I do not understand the Democrats resistence on the issue of increased drilling.

I can't speak for Democrats, but the oil is more valuable in place. We are better off achieving whatever efficiency gains we can and THEN using the oil we need to use. If we extract it now we will be using it at current efficiency levels and therefore wasting some portion of it. Secondly, treating the oil in place as a panacea will distract industry and investors from working on making any efficiency gains at all. If we could magically bring gas prices back down to $2.50/gallon then the general populace would not be pushing for research and investment into alternatives. Thus it would just postpone the crisis without getting us any nearer to solving it.

Gail the Actuary has argued here that it may not be possible to build a custom pipeline at a later date, and that extracting oil from northern Alaska may only be viable so long as the present pipeline is in good enough condition to carry it.
Use it or loose it.
It also doesn't seem very sensible to me to disregard it's potential contribution on the grounds it won't solve everything. Admittedly it would not be a very sensible use to fuel SUV's with it, but on the time scale to develop it oil prices should have risen enough to make that improbable in the extreme.
It means that a little time is bought for adaption, and since most alternatives such as solar and nuclear are either still being developed or take some time to build then it could help a lot in preventing disaster and keeping people fed.

extracting oil from northern Alaska may only be viable so long as the present pipeline is in good enough condition to carry it.

That is a decent argument for producing just enough to keep the pipeline viable, but it doesn't really address the efficiency argument.

It also doesn't seem very sensible to me to disregard it's potential contribution on the grounds it won't solve everything.

Which, of course, I never said nor implied. I said work on efficiency and alternatives first. Then we can make the best use of whatever oil we still have.

Admittedly it would not be a very sensible use to fuel SUV's with it, but on the time scale to develop it oil prices should have risen enough to make that improbable in the extreme.

I disagree. I think that fueling SUV's is exactly what would happen with it (or more accurately, with the existing oil that the ANWR oil is supposed to replace).

It means that a little time is bought for adaption, and since most alternatives such as solar and nuclear are either still being developed or take some time to build then it could help a lot in preventing disaster and keeping people fed.

Again, this is at best an argument for producing a trickle, just enough to prevent disaster. I don't believe that it will be possible for production to be limited once it is begun. Therefore we should delay production as long as possible before we make our last gasp attempt at using oil as a fuel.

The time span to produce anything would be at least 7 years, from Alaska or the coastal regions. SUV's will be an historical footnote long before that.

Have you considered that for a large portion of the year the area could be navigable without ice breakers by the point in time that we develop it? It would not come on stream for another decade, by then Santa will have a houseboat.

It seems that there exists a significant contingent of the body politic that has had the self preservation instinct successfully excised.

As has been pointed out here, in the intervening 7-10 years, the SUV will almost certainly become a museum piece.

This whole debate is insane. The opposition to capacity expansion by liberals, opposition to conservation by republicans and opposition to alternatives by NIMBY groups. Essentially, while there are things that we *could* do, what we ARE going to talk and talk and talk... And die in our millions.

This thread has showed some excellent debate and I have been a long enough reader of the oil drum to make such a statement. However, to drill or not to drill offshore or in ANWR isn't much of a question. The oil companies, if not accepted wholly peak oil production, have, through the bumpy ride of the market with tight supply sending oil ever higher, realize that what they still have gets more and more profitable. Similarly, any rights that they can secure now under the guise of our "crisis" is likewise profitable, regardless of how much oil is actually there in the rights they already have. Even if they don't have 20 percent of offshore rights (thanks silverfish) that's still a sizable chunk, epically if there is the possibility of some easier, large finds in that chunk. Oil companies will still continue business as usual by exploiting the biggest, easiest to get at resources, regardless of location. This includes offshore. To do anything else would be foolish, from their standpoint.

Similarly, anyone who has spent a fair amount of time looking at the situation (other regular readers) realizes that oil prices will never come down, long term. Never. Sure as we, the world, start to fully realize the extent of the crisis truly upon us, oil will only become more of a valuable commodity. Simmons ringing his "10 cents a cup" or "15 cents a cup" bell sounds off here.

As a side note, my own analysis will put oil into the 250 realm soon and wildly undulate further up and down for some time to come. Gas will soon very well cost 12 plus dollars a gallon. The upside is that if one could secure a car like a prius (excellent point, f2tornado), and driving a car was to be considered a secure activity, a car that gets 75 miles to the gallon at 12 dollars a gallon will feel like a car that gets 25 miles to the gallon at 4 dollars per. Suddenly 12 dollar a gallon gas doesn't feel so bad. Will there be enough such cars to go around? Highly unlikely.

Because of this, we have no choice but to use less, but less will still need to come from somewhere to help mitigate future pain. Offshore drilling and ANWR will be pushed through, hopefully soon enough to mitigate the crisis the main stream media thinks we're in right now but will really be felt when we are off the undulating plateau in a few short years. I sure hope KSA isn't really at peak as I believe from what I've read. Soon there will be no more hiding and we need all the time we can get. As I see it, the pity is as America struggles to get out the depression it's facing right now, oil will keep raising its ugly head. While I'd like to believe saving hydrocarbons for future generations would be beneficial, if the infrastructure isn't in place to pump/ship/refine due to social upheaval (the doomer view) then what's the point? To me, it's not 12 dollar a gallon gas that worries me, it's how fast we get there that's the problem. We need as gradual a process as possible for the inevitable hand off to localized economies where we all can, at the least, survive. Future generations will no doubt miss out on flat screen televisions, plastic bottles and all the other amenities oil affords us, but only by our current Americanized reckoning. Else what moral sentiments we have for our children should be focused on the gradual slide down the now oil-slick ride to an oil-free bottom.

(And yes, I understand pumping more now means less later. I said the slope was slick, didn't I? Markets move fast. Once we cross the Rubicon and the world obviously starts downward, conventional, unconventional or otherwise, the price for this commodity will fluctuate quickly upwards. We are already seeing the beginnings of this. I may have only gotten a B out of Macroeconomics, but I do know that much.)

Member for
6 hours 1 min

Lurking... have you been?


One does not have to be a card carrying member in order to read at the library.
Lighten up (on your FF consumption) :-)

Superb post, Chrysippus. Hope you post more often.

I recommend that we apply the anti drilling logic to alternatives. Since none of them taken separately will will solve the problem, non of them should be carried out. That is the hypocrisy of the anti oil people.

Then they raise the sacred environmental defense but refuse to address the problem of when we start cutting down remaining forests for firewood to stay alive, and start shoving our crap back into the rivers because there is no more fuel for the sewage plants.

We need to be more open-minded and cease being ruled by narrow concepts. Otherwise, we will ALL hang separately.I know its difficult to see the WHOLE picture, but unless we understand this, we are sunk. Our shortsightedness will kill us.

Oh the hypocrisy of the anti oil people.


May I suggest that you are barking in front of the wrong fire hydrant?
Here at TOD we worship oil.
We're not "anti-oil".

We understand how vital oil is to our nonsustainable way of life.

We understand that we followed a policy of drill, drill and drill some more here in the states until the flow peaked in the lower 48 back in 1971. There was blood. We understand how after we ran out of cheap oil here, we marched our armies "over there" to get more oil. We understand that we followed a policy of drill, drill and drill some more over there in the Middle East states until the flow peaked and they started pumping out lots of water and hardly any oil in the cut.

Our shortsightedness will kill us.

Our shortsightedness is what got us into this mess in the first place.
Hubbert warned us in 1956.
But we laughed.
Jimy Carter warned us in 1975.
But we laughed.
Matt Simmons (and Matt Savinar aka temperamental chimp) warned us in 1999.
But we laughed.

It was a great party with lots of laughs. But now the party is over and we need to start working on cleaning up the mess rather than hunting in the upstairs mini-fridge for the last two bottles of beer.

I recommend that we apply the anti drilling logic to alternatives. Since none of them taken separately will will solve the problem, non of them should be carried out. That is the hypocrisy of the anti oil people.

The fundamental flaw in your logic is the assumption you make that the goal is to continue BAU. Some who oppose drilling do so because they want to see a move to a sustainable system. The have already accepted that their is no solution (separately or in total). So, please, don't assume hypocrisy - instead ask yourself, "do I understand what they are arguing?" That's a safer place to start.

Matt Simmons (and Matt Savinar aka temperamental chimp) warned us in 1999.

'99? I imagine Savinar was probably merrily attending keggers and the like. As for Simmons, from 2000:

Since petroleum is still the only energy that creates transportation fuel, it should continue to grow well into the middle of the 21st century.

Revisiting Limits to Growth : Could the Club of Rome Been Correct

The thing is, exploration and extraction of OCS & ANWR oil is going to be hugely expensive. We also need to build out renewables, and that is going to be hugely expensive. We also need to make huge investments in energy efficiency, like Alan's EOT, and that is going to be hugely expensive.

Where is all of the investment capital going to come from? I very much doubt that we have the money to do any one of these things, let alone all three. Each of these three things represents a big slice of the US GDP pie. Everything else that presently gets a slice of that GDP pie is going to have to see their slice shrunk to make room for these. That is not going to be easy to do, seeing how it will be very painful for just about everyone.

Agreed! Where indeed will the capital come from? When the reality finally hits home that as a country we are bankrupt, and we start the slide down the deflationary path, we will be lucky if anyone will have access to gas. Our worldwide financial system is imploding and will shown for the empty husk it is very shortly!

Agreed! Where indeed will the capital come from? When the reality finally hits home that as a country we are bankrupt, and we start the slide down the deflationary path, we will be lucky if anyone will have access to gas. Our worldwide financial system is imploding and will shown for the empty husk it is very shortly!

The key is that we have reached the point where we as a society must find a way to make the best investments possible, not simply throw our capital at everything. At best, more drilling is a palliative during a timeframe at least ten years in the future. The capital used to obtain that oil will be gone forever and the opportunity cost will be gone forever. Renewables are not a guaranteed answer to some reasonable level of existence ten or twenty years hence, but the continued reliance on the next big "hit" from fossil fuels will just increase the proabability that the future will not include a reasonable facsimile of a reasonably comfortable or adequate existence.

We have pissed away our opportunities for decades. And now we are being asked to further piss away our future with just one more hit from the fossil fuel needle. The Exxons of the world cannot handle the truth and cannot be trusted to make the necessary investments to give our descendants a chance at a reasonable future. They just invest in what they know with a few crumbs here and there for green washing.

If the oil companies could lease the sun, we would have solved the energy problem a long time ago.

The reason that we do and always have used fossil fuels is that they are the least capital intensive path to energy. not drilling will free up capital... maybe. In practice, the drill rigs will still be used, but instead of producing a high probablity 1 mb/d in anwr, they will produce a measley trickle from previously played out wellsites and microscopic new finds. You'll still spend the capital, but you won't get the oil.

The drilling that is under discussion is not for 1 more hit of BAU, it is a lifeline to prevent an apocalyptic crash while we conserve and alternative to the best of our ability.

Alternatives involve orders of magnitude more capital investment AND the feedstocks all have continual ongoing costs.

Not that it matters, effectively, we're finished, time to break out the compound bow and football pads.

In the general course of events, the capital would come from those nice crunchy exxon profits.

A couple of points:

First, oil is fungible meaning that OCS and ANWR aren't mandated to be sold within the US. It is possible that another country would pay more so the oil would be sent some place else. It could be argued that this would, at least, keep the price of oil lower due to increased supply although I doubt it.

Second, all of this is an attempt to maintain BAU which is brain dead.


But now the party is over and we need to start working on cleaning up the mess rather than hunting in the upstairs mini-fridge for the last two bottles of beer.

The above comment made me think of a possible legislative compromise on the whole offshore drilling issue. When the party is over and you have to clean up but your drunk friends just want to hunt for the last two bottles of beer, offer them one if they will help clean up.

Or in other words, save SOME for the kids by not opening ALL the remaining areas for drilling, and condition any legislative approval of opening ANY of the remaining areas on also expanding government investment in renewables and conservation. Heck, you could even charge the oil companies more than usual for the rights to drill, and use that money to fund some of the investment.

Much as we hate to admit it, we will probably need the dregs of the oil in a little while, and the real problem with "drill, drill, drill" (besides making sure it is done as carefully as possible for the environment) is if we do that INSTEAD of doing anything else. If we drill in ADDITION to doing other things, then we are getting closer to sustainability.

what a novel idea, this would definitely help solve the problem, too bad americans vote presidents in who can't understand an idea this complex.

Saving some and using some is two things at once... not doable by the bush administration, it's either one or the other, and it's the one their oil buddies say they should do in the end.

dave4: I really, really wish we could save some for the kids. Perhaps my shove out of lurking is due to my own child due any day now. However, I see that we have no alternative, we will pursue pumping flat out just to make the decline percentage lesser now than later, as there is no alternative to keep the "American" way of life going until people accept a lower ::percieved:: quality of life. The loss of Mexico's exports to America in a few years needs to be made up somehow, just to cite the loss of an input source so vital and close to home so soon.

As a commercialized nation state, the prospect of "renewable" energy ever filling the stopgap as far as transportation via cars is untenable. Over a long enough time line, there will be no oil (gasoline) for us, the masses. Consequently, rail will again be huge. There will be no more natural gas to heat our homes. Consequently, wood heating will also be huge. I've seen mention about a "Manhattan project" needed to make some form of BAU workable. Let's hope the Gov will put the idle hands into rail rebuilding, except it will be Americans, not immigrating Chinese that address rail construction and tree farming for heat. This will perhaps be the new "New Deal" for our second great depression that's very likely coming.

Todd: Very good point about where and how oil is sold. In all probability, we will get to where "What's mine is mine!" and resource nationalism is rampant. Can America survive on only what America produces? Sustainability for a nation state will be defined by such stoic possibilities as the island mentality becomes a matter of attrition. Those who export oil are will eventually accept the loss of revenue from exports to those who think they can demand by threat. Demand will always exist, as the world gets more and more of the thirst Americans enjoy. It's clear we cannot afford to browbeat nations by force, as evidenced in Iraq. Three trillion for a "secure" 2-3 million barrels a day on an open market is unacceptable. While such military actions are deplorable, it's quite clear our stick gets shorter the more bees' nests we poke it into. The honey is there, but is it cost effective? I would say no, especially now. If anything, our invasion and occupation has jumped the gun.

As was so acutely mentioned by WNC Observer, show me the money, because America, she don't got it anymore and the world is figuring that out. They, the OPEC nations, have been accumulating wreath. Their ability to pump, refine and utilize current reserves will dictate their level of comfort. So will it too be for us.

So it will be with all fossil fuels. dave4 makes a good point, that we must pursue other alternatives while ferreting out whatever dregs are left. But what other feasible alternatives exist or will exist that can realistically replace gas? Electric cars? Even if we were able to churn out the hundreds of millions of cars to make it happen, do you think the grid will support it? Expand the grid? Where's the copper going to come from? Solar cells? They've been "right around the corner" since Carter. Ethanol? If we try to plow all biomass into fuel, we'll starve, regardless if it's a net energy loss or not. Hydrogen? Propane? Alge farting out methane in gigantic quantities? I don't think so. Hence the siren song of the 70s will come back to haunt us with little learned in the meantime: Conservation, conservation, conservation.

Will it be enough? Will conservation and a serious pursuit of all energy be enough to prevent widespread hardship that puts our lives, much less our lifestyles, at risk? I hope so.

I'll chime in on dave4's desire to save some for the kids. I have an 8 yo daughter who wants to be a horse vet when she grows up. I'd like to beleive there will be enough extra income around by then so folks are buying those four legged money disposal machines.

But the question goes back to basics we keep slapping around: when do we reach the PO tipping point? Thanks to the secrecy of Saudi et al regarding their provable deliverability we might hit a real economic brick wall before she graduates high school. Or maybe not.

I now we won't drill our way out of PO (been a petroleum geologist for over 30 yrs) and we can't switch to alternatives quickly enough to avoid serious pain. In the short term I see only significant demand destruction as the only way to reduce the deficet in the short term. Short of that scary possibility it seems the only chance we have for a soft landing is a combination off all out efforts to increase production, increase efficiency, push alternatives to the hilt and impose serious financial incentives to not waste what energy we have now.

Wouldn't worry about your daughter, horse vets will be in *high* demand as they come back into vogue as cost effective farm equipment/transportation.

Here's an idea: Grant the leases to drill in the offshore areas, and use the lease money to fund a series of "x prizes" ($100 million maybe?) for the first company to sell 100,000 DOT approved PHEVs on the US market, the first company to build 1 GW of installed solar power, the first company to build 10 gw of installed wind power, the large cap corporation with the highest telecommuting percentage for 1 year, the first company to install 100kb/d of celulosic ethanol production, the first company to build 100 kb/d of coal liquefaction, etcetera.

I'm with you fordprefect. I have little confidence in the gvo't actually getting the work done but they can certainly provide incentive.

On another matter, reading bertween the lines, it seems you may think the gov't doesn't currently lease offshore tracts to the oil industry. I've noted other comments around here that seem to share that view. There has nver been a ban against offshore drilling in the Gulf of Mexico. They haven't offered leases in other areas of the OCS for 25 years but life goes on in the GOM. Besides the many billions of$'s the feds have received from the GOM in royalty payments from production they've also gotten billions of $'s in lease bonuses in recent years. The OCS already provides a big pot for the feds to share.

Yeah, I know that the government currently leases a lot of offshore drilling territory. However that revenue is already earmarked and spent, so there's little to be said about it. We can however consider what to do with new revenue from new leases to much greater effect.

I also have almost no confidence in government to get the work of peak oil mitigation done. Particularly given the democrat bent toward non-viable methodologies and the republican bent toward denial of the problem. I am constantly reminded of "without fuel they were nothing, their leaders talked... and talked... and talked."

I am not much in favor of outright subsidies because they rarely accomplish desirable results, distorting the marketplace toward politically favored causes very frequently produces either corruption or a process whereby large quantities of resources are applied to nonviable paths.

The "x prize" model has been shown to be very very effective at producing a silk purse with only a sows ear. It's the only method I know of to get a billion dollars of research done for a 10 million dollar investment.

I would be very interested to see if it can be applied to industrial processes. Imagine what could be done with Exxon, Shell, BP, Aramco, and all the other oil companies competing to see which company can build out alternatives the fastest! Provide the right prize and you'd have every oil company in the world instituting a crash project to put new production online first... and here's the beautiful part, the winner wins, but ALL THE OTHERS still finish their projects because you make sure to only offer the prize on ventures that are profitable anyway! So for say... 1/2 the cost of 1, 100KBPD CTL plant, you get 10 or 20 of them online! Better, the company that builds the MOST CTL plants in a year doesn't pay taxes the following year!

We see the potential pretty much the same fordprefect. But I'll make one small adjustment to your "earmark" statement. Not a big point but true none the less: OCS income goes into the General Fund just like income taxes. And thus it's lke some folks saying they want to hold X amount back from their taxes because they don't want to fund a particular expendature. Most of the gov't funding is from the GF. OSC income is there for whatever they decide to spend it on.

Back to a more important point I've seen expressed elsewhere. The exploration and production units of Big Oil are no more capable of developing alternatives than McDonalds. Yes...they have a great cash flow right now that could be invested in alts. But so does Google, Walmart and Microsoft. Twenty years ago Big Oil pretty much gave up on research in the E&P sector...shut down their researcg labs for the most part. Since that time the great tech advances I've seen in the oil patch have been driven by the service companies. And the actual drilling operations both onshore/offshore and domestic/international are conducted by service company personnel/consultants. Last year I drilled sevral wells off the coast of west Africa for Exxon. Of the 120 hands on the drillship only two were Exxon employees. If you went into the offices of any large oil company today you would see many "inhouse" personnel from the service companies.

I'm making a great living in the oil patch right now. Also did quit well in the mid 80's when oil went to $10/bbl. Which leads to another point that's somewhat off thread. All the oils are making great cash flows today off of their existing production. But what's true today has been true since I started over 30 years ago: a company's profitability is based on their succes rate...not the price of oil/gas. I made a much better return on investment for a client at $10/bbl then I could likely make today. Those wells back then cost around $30,000 to drill(times were really bad for drillers back then) and complete. The same well would cost over $600,000. Oil is high now but it's not $200/bbl yet ($10/bbl X 20 = $200/bbl).

But I digress. I'm all for pushing alts. Have been for over 20 years. Unfortunately the gov't never felt the pressure to push them when energy was cheap and we had the time. I was all in favor of Prez Carter's idea to start bumping gas taxes up to force a change in auto marketing. I even voted for the peanut farmer...we engineers tend to stick together. But the opportunity was wasted over the last 3 decades. We can still add a lot of production from the US but it won't change the arrival of PO...just delay it. From a purely logical point: we began heading to PO the day Col. Drake drilled that first oil well back in the late 1800's.

To be honest if we woke up tomorrow and saw both Exxon and Microsoft each funding a new alt startup company I'd throw my investment $'s towards Mr. Gates. Remember: I have worked with the Exxon organization. (snicker)

The soaring oil prices are affecting the costs of everything from food to gas. There are also significant issues on local and global environmental impact. While there are many issues, we need to look at our next leader and determine which will have the best course of action going forward…..I recently watch the two video in Pollclash about this issue, Obama and McCain talk about this…