“The U.S. has huge amounts of untapped oil, but pesky politicians and environmentalists won't let us get it.” That’s the indignant cry we hear over morning coffee these days.
So, George Bush proposes we roll-back the ban on off-shore drilling to ease oil prices.
Ease oil prices? When? Not today and not tomorrow…maybe never.
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 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. Leasing would begin no sooner than 2012, and production would not be expected to start before 2017….Because oil prices are determined on the international market, however, any impact on average wellhead prices is expected to be insignificant.”
According to the Energy Information Administration, lifting the bans might boost the nation's oil production by 1 or 2 million barrels a day by sometime next decade. Places like the Atlantic coast, thought to be rich in natural gas, lack drilling platforms, pipelines, terminals, storage facilities, and other energy infrastructure.
“Although a significant volume of undiscovered, technically recoverable oil and natural gas resources is added in the OCS access case, conversion of those resources to production would require both time and money. In addition, the average field size in the Pacific and Atlantic regions tends to be smaller than the average in the Gulf of Mexico, implying that a significant portion of the additional resource would not be economically attractive to develop at the reference case prices.”
What about ANWR? (Arctic National Wildlife Refuge) How much oil is there?
95% Probability 5.7 billion bbls = .5 mbpd
Mean (Expected)10.3 billion bbls = .9 mbpd
5% Probability 16.0 billion bbls = 1.9 mbpd
Seven to 12 years are estimated to be required from the time of approval to explore and develop ANWR to the first production of oil.
From first production to peak will take 3 to 4 more years where the production rate peaks at .9 million barrels per day.
EIA estimates that if Alaska's Arctic National Wildlife Refuge were opened for drilling tomorrow, oil wouldn't flow at full tilt at .9 mbpd until 2025.
By 2030, the US is projected to consume 22.8 mbpd. Today, we consume 21 mbpd.
22.8 mbpd divided by 24 hours = .95 mbph
.9 mbpd is 95% of one daily hour US demand
Conclusion: ANWR would power the US for 57 minutes/day, the rest would have to be imported.
EIA, best case scenario would reduce oil prices by $.30 to $.50 per barrel
Reduce oil imports from 68% to 65%. Today, we import 60% of our oil.
Not to mention, 2 million barrels a day would need to be balanced against steep production declines expected in many non-OPEC areas like Russia, Mexico and the North Sea over the next several years.
US oil production has been in terminal decline since 1971 from a height of 9.6 mbpd to barely 5 mbpd in 2008. Even the discovery of oil in Alaska in the 1980’s was unable to reverse this decline.
We cannot drill our way out of this oil crisis. Since 2000, oil companies working in the U.S. have doubled the number of wells drilled per year.
Although increased drilling has added new oil to the nation's supply, it has not done so fast enough to offset the terminal decline of existing fields.
We are going to have to import more of our oil. Period.