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.

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.

Econguy--
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.

http://www.calitics.com/showDiary.do?diaryId=6227

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."

Dearth of Deep-Sea Drilling Ships Hinders Offshore Oil Search

http://www.nytimes.com/2008/06/19/business/19drillship.html?partner=rssy...

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.

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.

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
http://www.eia.doe.gov/oiaf/servicerpt/anwr/results.html

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 ?

Only the government could come up with the phrase "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.

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

"So are all EIA projections and statistics to be believed ?"
Advanced;
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.

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.)

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.

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.

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.

Todd

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.

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.

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.