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- Owensboro, Kentucky 42301
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Drill Baby Drill!
Until both houses of Congress recently lifted a quarter-century moratorium, the expansion of oil and natural gas production offshore and in wildlife areas was emerging as a defining issue of the 2008 presidential campaign. The action was sparked by growing public support of expanded drilling and the sense that it would lower retail gasoline prices.
Is accelerated drilling the most prudent plan?
Both presidential candidates now endorse expanded offshore drilling; however, their positions differ:
Republican Party - John McCain Positions
Republican leaders generally align with the energy industry and those who push for unfettered access to the Outer Continental Shelf (OCS), Alaska National Wildlife Refuge (ANWR), and other off-limit areas. (Neither McCain nor Obama support drilling in the ANWR.) During the Republican Party convention, “Drill Baby Drill” became the mantra for those who see the production of our nation’s undeveloped natural resources as a key strategy toward energy independence.
Sen. John McCain once opposed offshore drilling. He now favors lifting the federal moratorium and giving states the right to determine whether to explore off their coasts for oil and gas. He co-sponsored the bill calling for a “cap and trade” system to limit green house gas emissions. He acknowledges, however, that expanded drilling is a short-term action.
Democratic Party - Barack Obama Positions
Democratic leaders tend to side with environmentalists and analysts who challenge the production projections made by drilling proponents. They stress the need for a broader energy plan that would reward efficiency and give a boost to the development and use of alternative and sustainable energy sources.
Sen. Barack Obama previously supported the offshore drilling moratorium that had been in place since 1981. In August 2008, he said he was willing to compromise on the issue if it were part of an overarching strategy to lower energy costs, including conservation and the development of alternative fuels. Obama supports federal incentives to the auto industry to build fuel efficient cars and tax credits for Americans who buy hybrid vehicles.
No matter which candidate wins in the presidential race, drilling restrictions will likely be revisited after the November election. The following issues are at the heart of the debate over expanded drilling in the OCS and ANWR:
Supply and Demand | |||||||||||||
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Some analysts say that with just 3 percent of the world’s known oil reserves, the U.S. doesn’t have enough oil to make an impact on the global market or drill our way to lower prices at the pump. For example, if through expanded drilling, the U.S. could produce an extra million barrels of oil per day, global production would increase by only 1 percent. This might translate into a 3 percent reduction in gasoline prices over the long term – if the Organization of Petroleum Exporting Countries (OPEC) and other producers don’t cut their supplies to increase profits. According to the U.S. Department of Energy, leasing previously off-limit Atlantic, Pacific, Gulf, and Alaskan regions would produce only 7 percent more oil by 2030 and the impact on oil prices would be “insignificant.”
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Improved seismic technology enables officials with the U.S. Interior Department’s Minerals Management Service (MMS) to conclude that there is much more oil and natural gas than previously estimated offshore and in other protected areas. In 1987, MMS estimated that there were 9 million barrels of oil in the Gulf of Mexico. By 2006 with advances in technology and drilling techniques, that estimate increased to 45 billion barrels. Some analysts say that if we tap our offshore, ANWR and other domestic resources, in 10 years we will not need foreign oil. Moreover, advanced drilling techniques now enable producers to recover a larger percent of the reserves. And with higher prices, it can be profitable to re-enter closed-off wells and develop marginal reserves. | ||||||||||||
Response Time | |||||||||||||
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It takes 10 years to develop new oil and gas fields. There will be at least a five-year gap before infrastructure is in place and real production begins. There is a major shortage of drilling rigs, ships needed for deep-water drilling, and refining capacity. Shipbuilders have raised prices $100 million to half a billion per vessel, and drilling costs have reached $600,000 per day, up from $150,000 per day in 2002.
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Many areas are already under lease. Production could begin sooner than officials have estimated. Some shallower California offshore oil reserves are more economical to produce and could be accessed within one year. We have extensive transmission infrastructure and pipelines in place. The U.S. has 150 refineries in 33 states - more than any country. | ||||||||||||
Environmental and Economic Concerns | |||||||||||||
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Some opponents of expanded drilling don’t think there is such a thing as environmentally friendly drilling. They point to a misguided cycle: the burning of fossil fuels affects climate change, which leads to more hurricanes, which causes more oil spills and disrupts inventories, which requires an increase in production…
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Oil and gas is cleaner than ever. Until alternative energy sources can meet the need, we should develop our own resources so as not to be dependent on foreign sources. | ||||||||||||
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Coastal communities with tourism economies depend on pristine waters and beaches and are not as inclined to support expanded offshore drilling. The 1969 drilling rig blowout that dumped 3 million barrels of oil along 35 miles of California coastline led to the OCS drilling moratorium, passed in 1981 under President George H. W. Bush. The 1989 Exxon-Valdez incident, our nation’s worst oil spill, dumped 11 million gallons. Some Alaskans report that they can still see pollution from the spill 20 years later. In 2005, hurricanes Katrina and Rita toppled 115 oil platforms. Even though oil spillage was minor, there was significant pollution from damaged tankers and pipelines. |
The California Minerals Management Service reports that, since the 1969 incident, advanced technology and stricter regulations have resulted in only 850 barrels of oil spilled off the California coast in 40 years. According to the Energy Information Center, since 1975, drilling within 200 miles of the U.S. coast has had a 99.999 percent safety record. From 1993-2007, there was one barrel of oil spilled per 156,900 barrels produced. The U.S. Coast Guard reports that total oil spills in U.S. waters dropped from 3.6 million barrels in the 1970s to less than 500,000 barrels in the 1990s. Spills can occur, but no form of energy development is without trade-offs. | ||||||||||||
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10,000 miles of pipeline canals crisscross the coastal wetlands and have contributed to coastal erosion, removing the natural buffer against storms. Ports and petrochemical plants that follow offshore drilling disrupt the coastal ecosystem. Barges and tankers cause eight times the petroleum spillage than drilling platforms and pipelines. |
Since 1971, the U.S. Department of Interior instituted more stringent safety measures, including an automatic shut-off valve requirement beneath the ocean floor. The effect on ecosystems must not be severe since fish populations and marine life flourish near oil production platforms. | ||||||||||||
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When oil is brought from beneath the ocean floor, chemicals and toxic substances (mercury, lead, benzene, arsenic and more) pollute the water and harm marine life. |
Regulators report that chemical discharges from oil and gas operations are at insignificant levels. A National Research Council report found that natural seepage from the ocean floor, municipal and industrial waste was responsible for much more petroleum in North American oceans than offshore oil and gas drilling. | ||||||||||||
Protected Lands | |||||||||||||
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Environmentalists say that oil and gas development in the Western Arctic Reserve in Northern Alaska threatens millions of shorebirds, other waterfowl, caribou herds, and more. Researchers have discovered fossils of 13 dinosaur species along the Colville River that run through the reserve. The protected Alaska Natural Wildlife Refuge is a relatively small area. There are plenty of other non-protected areas where drilling can occur. |
Alaskans are the ones who would be most affected by increased exploration in the ANWR and they overwhelmingly approve of it. Most Americans will never visit Alaska or these protected areas anyway. Oil and gas production in ANWR would make an impact on less than half of one percent of the refuge. Nonetheless, federal officials estimate that lease bids, royalties and taxes from the production would generate more than $200 billion for the government. Between 250,000 and 735,000 jobs would be created and the production would reduce our dependency on costly imports. The growth of animal herds, such as the Central Arctic caribou, have grown significantly and migrate through production areas. |
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Big Oil Positioning | |||||||||||||
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A strategy that makes expanded drilling the priority simply rewards Big Oil companies whose profits are already excessive. ExxonMobil, the nation’s largest energy company, increased shareholder compensation by 260 percent in five years. Last year, the company cut investments in domestic exploration and production by 11 percent while recording the single largest profit in history. |
“Profit” is not a dirty word. In these good times, energy companies can invest more in risky exploration, research and development. They are asking for the opportunity to invest that money in domestic production.
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Some analysts say that drilling need not be expanded offshore or in protected areas if energy companies would develop the leases they already hold or lease and develop other oil and gas reserves made available by the federal government in the OCS, National Petroleum Reserve in Alaska (NPRA), and other onshore government properties. The U.S. Bureau of Land Management estimates that the NPRA could yield 3 billion barrels of oil and trillions of cubic feet of natural gas. Since 2004, nearly 29,000 permits were issued for drilling on public lands, but less than 19,000 (two-thirds) were drilled. Oil and gas companies have stockpiled nearly 10,000 extra permits that could be used to increase domestic production.
The estimated production capacity of leased, inactive federal land:
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Just because acreage can be leased doesn’t mean it is a good drilling prospect. Oil and gas may not be recoverable or in quantities to recover drilling costs over a reasonable period of time. When oil companies hold onto a nonproducing lease, they | ||||||||||||
Other Energy Options | |||||||||||||
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Options to expanded oil and gas drilling are faster, cheaper, and cleaner: automobile fuel efficiency; renewable energy through solar, wind, geothermal, hydroelectric, biofuels, and more. Some energy options raise economical or environmental concerns: ethanol, oil shale, and coal-to-liquid technologies. Nuclear power frightens. Mountaintop coal removal appalls. However, improved oversight and technological innovation may improve the prospects for some of these options. Oilman T. Boone Pickens proposes a massive conversion to automobiles fueled by natural gas to reduce our dependence on foreign oil and buy time as renewable energy alternatives are developed. Big Oil has not shown leadership. Their 2007 investments in alternative energy sources averaged less than two-tenths of one percent of revenues. An accelerated drilling strategy (offshore and in other previously unprotected areas) could distract our nation from the pursuit of alternative sources of energy.
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Despite the promise of alternative, renewable energy options, the current U.S. economy relies on immense oil and gas inventories. To deal with shortages, threats of shortages, and to wean us off of foreign suppliers, aggressive oil and gas exploration and production is the wisest plan for the short term. The U.S. may not be able to drill its way to energy independence, but it can no longer turn its back on finding and using the sources of fuel necessary to sustain our economy – especially the resources within our own borders. | ||||||||||||
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