Offshore Drilling: Do We Need It? How Much?

 There’s been a lot of talk about the candidates’ positions on offshore drilling for oil in the past week.  Both candidates used to oppose it.  Now McCain is gung-ho in favor of it.  Obama has indicated a willingness to allow it to a limited extent if necessary for passage of broader energy policy reform.  All of this talk has been in the context of reducing gasoline prices.  But no one is talking about how this fits into the broader context of overall economic and environmental goals.  The following are three inter-related goals and issues:

  1. The stated goal of breaking our dependence on foreign oil.  This is not only a national security issue but a critical economic issue as well.  Our annual $300 billion trade deficit in oil (not to mention our $500 billion trade deficit in manufactured goods) is destroying the value of the dollar and our economy along with it.
  2. Regardless of how you feel about the issue of global warming, it has already been decided that it’s real and that America needs to reduce its carbon emissions by 50% by the year 2050.  The only practical way to do this is by reducing our burning of fossil fuels by  50%.  Yes, it may be technologically feasible to continue burning while removing CO2 from the emissions, but then what?  Where do we store all of the CO2?  It’s unsustainable, much like the problem with nuclear power.  (What do we do with all of the radioactive waste?)  In the final analysis, the only sensible approach is to cut our burning of fuel.  This includes not only oil but natural gas, coal, wood and trash. 
  3. Although the government has no stated population policy, it has an unwritten policy of expanding the U.S. population by about 1% per year, primarily through immigration.  In light of the above two priorities, can this be allowed to continue?

The environmentalist in me cringes at the thought of visiting the beach and seeing a horizon spoiled by oil wells.  (Visit a beach in Texas to see what I mean.)  But, being an engineer, I recognize that there may be a need for offshore drilling.  I decided to calculate just how much if any would be needed, and I’d like to share with you the results. 

Currently, the U.S. consumes about 21 million barrels of oil per day, the vast majority of which is burned for transportation and for stationary applications like power generation, home heating, etc.  Only about 8 million barrels per day is produced domestically, and that’s declining by about 2.3% per year as reserves dry up.  (Our current reserves are only sufficient to meet our domestic needs for ten years or less.)  We currently have over 700 wells in the Gulf of Mexico.  For the purpose of my calculation, I assume that we could conceivably build another 700 wells along the east coast and another 700 wells along the west coast.  I also assumed that each well could produce, on average, 500 barrels per day, a generous figure.  And all of this assumed that there are actually offshore oil fields that could be harvested.  I decided to plug these parameters into a spreadsheet and experiment with assumptions to see what combination of assumptions would enable us to meet these goals.  Here’s my spreadsheet, followed by a summary of conclusions:

Offshore Drilling

Conclusions:

  1. Both goals are achievable.  Of the two above-stated goals, it is the elimination of oil imports that is, by far, the more difficult objective to achieve. 
  2. Achievement of both goals by 2050 is impossible without immediately implementing plans to:
    1.  drill offshore as fast and as much as possible, bringing 100 offshore wells on line by 2018 and 50 more wells every year, reaching a maximum of 1400 wells, 
    2.  reduce our per capita consumption of oil by 3.6% per year and by almost 80% by 2050, and
    3. reduce our population by 0.5% per year from today’s level of about 305 million to 247 million by 2050.  Continuing reductions beyond that will likely be necessary. 
  3. All of these assumptions are extremely aggressive if they are achievable at all. 

This exercise really drove home for me just how dire our situation is.  We can’t meet our goals by simply cutting per capita consumption, not without driving our standard of living down to match that of 3rd world countries.  And it’s simply impossible to drill our way out of our problems, but it’s also impossible to solve our dependency on foreign oil without it.  Achieving both goals is simply imossible without immediate and dramatic changes to our immigration policy and without new programs designed to further reduce our population. 

To solve these probems is going to require action and dedication by our leadership the likes of which this nation has never seen.  By comparison, putting a man on the moon was child’s play.  We have to attack the problems of per capita oil consumption, domestic oil production and overpopulation with a war-like mentality where defeat is not an option.  I really wonder if our democracy is capable of this kind of action, or will we be bogged down in partisan arguments over details and minutia.  Our very quality of life hangs in the balance.

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17 Responses to Offshore Drilling: Do We Need It? How Much?

  1. jeff roensch says:

    we sent $700 billion this year not Our annual $300 billion trade deficit in oil. This is the large cause of the falling $$$$

    The only energy or oil monopoly in this country is a governmental institutionalized monopoly on our country energy market. The legislative branch has been engaging in anti-competitive energy practices from drilling to building new refineries and much more. They are in clear violation of the

    “Sherman Antitrust Act
    This Act expresses our national commitment to a free market economy in which competition free from private and governmental restraints leads to the best results for consumers.” http://www.usdoj.gov/atr/contact/newcase.htm#file

    Clearly the governmental restraint are in violation of a free market economy and is criminal negligence on the part of the liberal politicians who are the real cartel that profit in taxes more then 3 to 1 to the oil companies that actually work for their money and then have to pay taxes on top of that. So when Oil profits go up the tax revenue increase is 3 times that of the oil companies. So who do you think is the real cartel???

    This criminal incompetence of the democrats and legislative politicians anti free market energy economy in allowing American companies to meet American Oil needs is in need of change and with bush opening up offshore drilling it is time that we conservatives take a page from the left wing play book and for us to us the judicial system in upholding our laws and open up drilling.

    Why dose the Senate call for investigations on big oil? Because they are trying to transfer the blame off of them by placing the blame on someone else. By placing the blame on the oil companies and keep people from seeing that government is the true problem they are able to offer false hope in an effort to gain more power and money from taxes while eliminating a free market economy in our country and forcing us to send our money to unfriendly Middle Eastern countries.

  2. Pete,

    As T. Boone Pickens said, “Sure, drill anywhere you want to, but it won’t make any difference in the end.” Peak oil is peak oil is peak oil. We can drill off the inner continental shelf, but the water depth is three miles and it’s called hurricane alley. It’s dangerous, it’s expensive and what will it gain us? We import 70% of our oil and one of our major importers, Mexico, says that they only have two years left to export.

    This is not a new problem. The U.S. hit peak oil in 1970, we have had 38 years to do something and we did. I worked the length of the Alaska Pipeline and anyone who thinks there is plentiful easy oil and we decided instead to go to the Arctic and work on perma-frost at -65 F. needs to have their medication changed.

    You wrote “This exercise really drove home for me just how dire our situation is. We can’t meet our goals by simply cutting per capita consumption, not without driving our standard of living down to match that of 3rd world countries. And it’s simply impossible to drill our way out of our problems.” Well said.

  3. Robert says:

    Pete,

    Have you considered alternative fuels such as ethanol? Just recently I listened to an interview on coast to coast a.m. which interviewed David Blume, the author of a new book titled “Alcohol Can Be a Gas” A summary of the interview would be that we could easily solve all of our energy problems in a very short period of time if we converted to alcohol fuels. David has a website in which he discusses the subject: http://www.permaculture.com I’m always skeptical but the interview certainly peaked my interest in an energy source that is not really being considered as a solution to our current energy problems.

  4. mannfm11 says:

    I think everyone is missing the point. For one, offshore wells produce several thousand barrels a day or they don’t get drilled. It isn’t out of the realm of possibility that they find several 200,000 barrel a day fields and there is nothing to say that we don’t have an elephant field or 2 offshore. Oil prices depend on demand for the last barrel of production, not the first. If there is a peak oil, to ignore that you need to drill is like ignoring that you need to breath while under water and you better get to the top fast. Next, the oil exploration industry pretty much dried up and blew away during the past 30 years due to the bear market in oil. My best guess is that exploration for oil has been hindered almost ever since an adequate supply has been on the market due to who was behind oil, the British crown and the Rockefellers and others of power and wealth. It really hasn’t been until the last 3 years that the world has bumped up against market supply and this was caused by a sudden lurch in Chinese and Asian demand. Prior to this time, we spent a long time in a bear market. The 1970s began with a world supply of oil estimated at 600 billion barrels. My calculations of 60 million barrels per day demand times 365 gives roughly 22 billion barrels a year demand, thus since 1970, we have seen roughly 832 billion barrels used. Of those 38 years, we spent 25 of them in what I would call an economic bear market for oil drilling.

    Then there is the point that if we are out of oil, then we better find out what we can get out of the ground so we can take the next step and get off our butts and move to some other kind of energy. Drilling oil isn’t a money thing, but a survival game.

  5. Pete Murphy says:

    Thanks for all the comments. Jeff, I agree, but there’s plenty of blame to share on both sides of the aisle. Republicans had control of the presidency, house and senate during Bush’s first term but did nothing to increase domestic supplies. Perhaps they wanted to keep supplies tight to drive up the price? But, like I said, the Democrats deserve an equal share (or perhaps a greater share, as you believe) of the blame. Regardless, our government is failing us badly.

    Mike, I agree that offshore drilling on the Atlantic coast would be dangerous due to the frequency of hurricanes. It may be worse on the Pacific coast due to seismic concerns. I have always wondered how a break would be dealt with. If the pipe broke right at the ocean floor, how would the spill be stopped? (Maybe there’s an excess flow valve in the casing below the ocean floor that would stop it automatically. I don’t know.)

    Robert, I don’t know about ethanol. I’ve heard that burning ethanol yields lower carbon emissions, but I’m sure there’s still CO2 being emitted, and CO2 emissions need to be cut dramatically. And even though ethanol has barely made a dent in our demand for oil, it’s already driving food prices higher quickly by diverting a large percentage of our corn crop. (That doesn’t really bother me much, though, because it will just help drive home my point about overpopulation.) Cellulosic ethanol would solve some of that problem. It’s certainly a tool we need to keep in the bag. Anything that reduces the demand for oil will help.

    mannfm11, it sounds like you’re quite knowledgeable about the oil industry. I’m certainly not. But I believe that the oil companies pretty much know where all of the remaining reserves are and are ready to tap them if it’s economically feasible. I think all signs (declining proven reserves, falling output, rising prices, demand outstripping supply) point to the world being near the end of the road for oil. Maybe we’ve got 50 years left. Maybe 100. Regardless, those are very short time frames to work with to avoid a catastrophic collapse of civilization if our energy supplies vanish.

    I think that, if our next president takes the kind of action that’s needed to meet our energy and environmental goals, Americans are going to be shocked at what it means for our current lifestyle.

  6. Pete,

    The Bush presidency didn’t increase domestic production for the same reason that Richard Nixon, Gerald Ford, Jimmy Carter, Ronald Reagan, George H.W. Bush, William Jefferson Clinton and Junior Bush didn’t increase production….WE REACHED PEAK OIL IN 1970.

    As far as wells being drilled that don’t produce oil? I just watched one for $10 Million fail to produce a drop. One rig in the Gulf sustained nearly $2 billion in damage from a hurricane.

    We don’t have 50 years left, we may not have 20.

    As far as ethanol, it’s an energy negative product when all factors are taken into consideration. Please see David Pimentel etal, Cornell University.

    If every acre of crop land in the U.S. were planted to corn ethanol, it would provide approximately 14% of the fuel that we use in autos alone! NO FOOD JUST FUEL!

    Those old boys down in Tennessee have known how to make corn burn with a blue flame for some time now, it not a new concept, just a ridiculous concept that is creating massive subsidies for the anointed few.

    We have known about peak oil since 1949 and suddenly it has become the news that can’t be so. I have friends in nearly every sector of the oil biz, and not one of them believe this nonsense about huge new finds or burning perfectly good drinking alcohol.

    Your comment about the coming shock to our lifestyle may be the understatement of the year. Thanks for all the good work and writing.

  7. Robert says:

    Pete and Mike,

    In David Blumes book he counters the arguments on driving food prices higher and energy negativity. He disputes the findings of David Pimentel in the link provided.

    http://www.mail-archive.com/sustainablelorgbiofuel@sustainablelists.org/msg71532.html

    The two hour radio interview with David Blume can be found on youtube and he does answer all of the questions you are raising.

    Now this is all new to me and this interview was the first time I’d really heard a decent argument for ethanol so I do appreciate any comments on the subject as I’m learning a lot from these discussions.

    Regards,

    Robert

  8. Chad Wetzel says:

    Mike,

    We need more knowledgeable people like you and your friends to spread the word to the 70% of Americans that think drilling is going to solve our energy crisis. I’ve been whole heartedly trying to educate my friends and family that we as a society need to wake up and smell the coffee. If we don’t change our ways an apocalyptic world doesn’t seem that far fetched. Republicans and Democrats need to lose their egos and stop the finger pointing and solve this major crises before it’s too late.

  9. Chad,

    Thanks for the note. You of course are right on the money. A plan to infinitely consume finite resources does have its issues.

    If the entire 31 year production of the Alaska Pipeline were available to us, it would last just 2 years!

    We don’t need to run out of oil, we only need to run short and an apocalyptic state will arrive soon there after. Riots and looting break out when the power goes off, imagine what would happen if the oil went off…even temporarily.

  10. Pete Murphy says:

    Robert, thanks for the very informative reply. Sorry there was a delay in getting it posted. The inclusion of two links bounced it into my “moderation” bin.

    I haven’t had time yet to read the whole article you linked. I’ve heard that ethanol is “energy negative” but have also heard and read claims to the contrary. I tend to believe that it’s not “energy negative.” It’s definitely not as efficient as the ethanol produced from sugar cane, like in Brazil. Sugar cane has a much higer sugar content and much, much better yield per acre than corn. I’m not sure why we’re not making more ethanol from sugar cane, which is commonly grown in places like Texas and Louisiana – perhaps through the southeast. It can’t be grown any further north because the climate isn’t right.

    The fact that Brazil runs their whole economy on ethanol instead of oil seems proof enough that ethanol is viable. We could also run our whole country on ethanol, but our population would have to be a small fraction of what it is now. Ultimately, we keep coming around to the conclusion that, no matter how you look at it, we’re overpopulated.

  11. Pete Murphy says:

    I’d like to retrench here a bit. My support for drilling offshore is rooted in concern for our trade deficit and the stated goal of both presidential candidates to break our dependence on foreign oil. The only way to do that is to drill, while simultaneously taking drastic action to reduce our per capita consumption of oil and reduce our population. Even if we drill offshore, strike oil and erect hundreds of wells, Mike is right: it will add relatively little to our domestic output and will eventually dry up anyway. So it’s just an insurance policy, a stop-gap measure, as we transition to other energy sources, a different life style and a smaller population. My area of concern and expertise is overpopulation (and the importation of the effects of overpopulation) from an economic perspective. I leave the resource and environmental perspectives to good folks like Mike. By bringing this third, economic perspective to the overpopulation discussion table (adding it to environment and resources), I hope to swell the ranks of overpopulation-believers by piling onto the list of concerns.

  12. Pete and Robert,

    Please try and link on to the video produced by Bloomberg Financials titled “Ethanol, The Deadly Brew.” You will see that sugar cane is produced by near slave labor and is a human tragedy that benefits the ethanol producers.

    As with many studies, one can simply leave out the value of one or more inputs to arrive at the desired findings. This has been the case with ethanol.

    As a for instance, if all of the corn in the U.S. were converted to ethanol, it would provide approximately 7% of our auto consumption alone. Auto fuel is responsible for about 40% of our crude use, do the math. There is not enough land in the U.S. to plant any crop that would replace oil. Never minding the impact on food production.

    I will read the link regarding ethanol. I have studied this subject in depth for years and find Pimentel to be and honorable man without an axe to grind. However, I will fairly study the information provided by Robert’s link and report back.

    This is a very fair and balanced presentation. Brazil has enjoys the export $$$$ that Pete refers to and subsizes their ethanol production below cost

  13. Petl, Sorry for the orphan at the end of my comment, hit submit too soon.

  14. Pete Murphy says:

    Mike, regarding the cost of labor to harvest the cane in Brazil, I don’t know but suspect that it really isn’t much of a factor. It’s kind of like the argument that farm owners in the U.S. use to scare us into supporting illegal immigration – that they’d have to dramatically raise wages to have the work done by Americans. If you think about it, raising the wages of tomato pickers from $5 to $20 an hour would only add about a penny or so the $1.00 price of a tomato. So I suspect that Brazil would still be just fine with the cost of their ethanol, even if they quadrupled the wages of the harvesters.

    Mike, I’m curious, what would you propose we use as fuel if neither oil nor ethanol is viable? Not trying to be smart, just want to know if there’s another good alternative out there. There’s a lot of talk about hydrogen and fuel cells, but no one mentions the fact that they plan to produce hydrogen by stripping it from the carbon chains of oil and natural gas. (Breaking down water into its elements is too energy-intensive, I hear.)

    I’m seriously thinking about a wood-burning stove!

    Again, it sounds like we’re all agreed that population reductions are in order.

  15. […] Rogers’ Energy Independence Plan By pure coincidence, as I was replying to comments on Offshore Drilling:  Do We Need It?  How Much?, the mail man arrived with a flyer from my congressman, Mike Rogers, touting “Mike’s […]

  16. Peter Black says:

    One question that arises is ‘where is the offshore oil and how much of it is there’? OK, that’s two questions. However, they are something that the public should know about before making any decision regarding offshore drilling.

    I made a map based upon MMS data (which some folks say is faulty…who knows for sure?) that shows the majority of offshore oil resources lie in the central gulf of mexico and in Alaskan waters, neither of which is in the moratorium. All of the oil in the moratorium amounts to approximately 2.4 years of American consumption at current rates. 80% of the unfound offshore oil is in areas currently available for leasing.

    http://environmentaldefenseblogs.org/climateatlas/2008/08/12/where-is-our-offshore-oil/

    Does anyone have any information that could show more oil in moratorium areas? I’d be happy to check it out…

  17. Pete Murphy says:

    Thanks for stopping by, Peter, and for providing the link to a very informative web site. I agree wholeheartedly that the public should know how much oil is available in any one area and what the environmental risks of drilling might be.

    Our nation’s energy / balance of payments situation is so dire, that we really need an all out assault on three different fronts: reducing per capita consumption, reducing our population and increasing our energy supplies where ever it can be done safely.

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