A Mea Culpa: It Looks Like I Was Wrong About OCS Oil Availability
When I’m wrong, I own up to it. It’s the right thing to do.
It seems that many of us have been relying on information provided by the Energy Information Administration (EIA) about how much oil is available off of US coasts other than the Gulf of Mexico (where drilling currently takes place) and Alaska.
I, along with many others, have been referring to the 200,000 barrel-a-day potential for just the Outer Continental Shelf (OCS) that EIA estimated in mid-2007. Even then, that excluded Florida, the Great Lakes and other lower-48 coasts, so the defenders of “The One“ I refer to as “Mr. BOOHOO-OUCH” (Barack O-bomba Overseas Hussein “Obambi” Obama – Objectively Unfit Coddler of Haters) were already playing with a stacked deck by ignoring them.
But back to the OCS — Frankly I should have known better, but I trusted the government (that’ll teach me).
First, you must remember that the coastal drilling, before it was banned, occurred during a time when the barrel price of oil was 10% or less of its current level, and at a time when technology wasn’t as efficient or as effective in getting the oil out. For what they could get for their product, all the oil companies could sensibly do was get to the easiest deposits, “knowing” full well (not based on “proof,” but on years of experience elsewhere), that there was plenty more to be had if prices ever got high enough to justify the extra costs involved in getting to it. Intuitively, it wouldn’t have made any sense for the oil companies to do any more than “skim the cream,” so to speak, considering what prices were at the time, while so many other areas of the world had plentiful oil flowing like water.
My gut told me that this was the case, but did I listen? Noooooo. Who was I, one lil’ ol’ blogger, to challenge the “experts” at the mighty EIA?
It turns out that I was wrong to rely on them, and I am sorry that I did so.
You see, it turns out that the EIA estimate is indeed low — we don’t know how low, but clearly very, very low, according to the Institute for Energy Research (IER):
200,000 barrels per day is roughly equal to the daily production rate one new offshore platform in the Gulf of Mexico. The Thunder Horse oil production facility, which will be on line this year, is designed to produce 250,000 barrels per day. The Atlantis oil platform currently producing in the Gulf of Mexico has a production capacity of 200,000 barrels per day.
It’s obvious that the OCS daily production potential is a multiple of the 200,000 EIA used. I’d guess, given 30-plus years of technological improvements and a 10 times or more higher barrel price in real terms, that an absolute minimum obtainable would be 600,000 barrels a day. (I have a call into IER, and will update the post if they are willing to give me a different most-pessimistic minimum.) I would be totally NOT surprised if the right number is over 1 million barrels a day.
It also turns out that the claim being bandied about that we couldn’t get oil from the coasts for at least seven years is incorrect — very, very incorrect.
Of course, it was wrong already, if you include Alaska. President Bush’s recent Executive Order will change that in somewhere between 17 and 53 months — or actually between 16 months and 24 days, and 52 months and 24 days (but who’s counting?). That timeline is based on the reference in this New York Times article to Alaskan coastal oil being obtainable by “2010 to 2012.”
But as to the OCS — Once again, I was wrong, and I am sorry. (This is getting very painful.) From the same link:
A report from Wall Street research house Sanford C. Bernstein says that California actually could start producing new oil within one year if the moratoria were lifted. The California oil is under shallow water and already has been explored.
In other words, there’s still a bit of cream left to skim — which makes sense, because the coastal bans went into effect before all the easy oil had been extracted.
All of this, of course, makes the claim by Obama last week — that “we could save all the oil that they’re talking about getting off drilling, if everybody was just inflating their tires and getting regular tune-ups” — all the more absurd.
The central points from my previous posts (here and here) can now be restated.
The 120,000 barrels a day (see previous posts) that could conceivably be saved if everyone had their tires perfectly inflated and their cars perfectly tuned is:
- 20% or less — possibly a lot less — of what can be obtained on a daily basis from OCS coastal drilling (120 divided by 600). The old figure was 60%.
- 7.6% or less — possibly a lot less — of what can be obtained from OCS coastal drilling AND Alaska coastal drilling (600,000 plus 986,000 from the previous posts; 120 divided by 1,586 is 7.6%). The old figure was 12%.
- Far less than 1% of the now at least 29 million daily barrels that can be obtained from all coasts, shale oil drilling, and tar sands drilling/mining (1,586 million plus 27.3 million from shale and tar, rounded; 120,000 divided by 29 million is 0.41%. The old figure was 0.43%.).
I really should have done a better job at debunking the “The One’s” claim from the outset.
Please forgive me. I will do a better job next time.
Now in the spirit of forgiveness, I’m looking forward to the Barack Obama doing these things:
- Owning up the fact that his tired and out-of-tune claim is wrong. Heck, if he wants to, he can blame the EIA, and say “it was just a big, uhhhhhhhhhhh, misunderstanding.”
- Since that apology is too easy, Obama also must acknowledge that the country is not in a recession, contrary to what he said with only minor qualification (”Barack Obama said Saturday there is ‘little doubt we’ve moved into recession’â€) in July.
Whew. That’s one less “tired” claim from a man, and lots more oil available for mankind. :–>
I believe we are in a recession, the GDP for the first quarter was grew only .06% .
Is it even possible to have growth when fuel prices are so high?
The economy is not growing, its shrinking, it has been for a while.
The pressure of the air in your tires and regular oil changes and tune ups does affect fuel economy, so does purchasing a more fuel efficient vehicle as well as reducing your speed. That all common sense and part of it.
Increasing the supply of domestics oil is also common sense, but no so that we can keep the rate of consumption high, we really need to get more efficient. Drilling to get the price down, that’s just a component. Increasing supply and also reducing consumption, that requires high prices.
We need price regulation, a tier prices and the individual consumer will have to reduce their costs through efficiency, what is lacking in common sense is that high prices is affecting far more than the price to fill up your tank. The cost of everything is related to the fuel, the price will not fall with drilling as the large sweet easy access reserves are already allotted to global demand, what is new is more costly and less plentiful.
We have to reduce consumption and also increase the domestic supply, it for the overall economy not for the price at the pump, that will more than likely stay relatively high, the era of cheap gas is over.
People have options and some are taking them, it will take time for the American consumer to adjust the component cost of living represented by transportation is elastic. Switching to a more fuel efficient vehicle and decreasing the size of your circle.
The over invested are going to inevitably get burned, the home devalued and over financed, the lease on the inefficient vehicle. The shrinking economy will not have the funds to raise you up, that being you will not get raise to accommodate the increases.
There really is no alternatives, the cost are there no matter what, the price of the alternative will merely change the mode and not the costs, they will actually be more expensive.
The thing is for me anyways is that alternative lifestyles are not being offered, rail services and walk able environments, that keep the need for vehicle at a minimum. Many people say they do not want to live that close to were they work, I say I do.
What’s interesting is the psychology of it, people are making fun of people that drive a small car, why its socialization, mines bigger mines faster…
The need for large project that build these types of environs is needed and those that buy into should get the cost benefit and then increase supplies and also hold down prices for those that are willing to pay more of their cost of living to be further out and the inherent cost of transportation.
I personally think energy resources should be regulated, rail powered by nuclear generated electricity for not just commuter lines also a very elaborate systems of inter modal rail services for commodities.
As the population expands then demand is relentless, meeting demand is the breakeven, fuel is the critical component, it can make the function become a loss.
Many that contribute to the well above breakeven the energy companies operate at, were does that money go? It often goes back to those already in excess, then back into what the banks and then were it never really stops these cycles need to be looked at in fine details. As for consumption of fuel its physics, the limits could be set on weight and the vehicles fuel economy will increase. Then also road will need less maintenance its all related.
Comment by Oengus — August 9, 2008 @ 10:13 am
#1,
I believe we are in a recession, the GDP for the first quarter was grew only .06%.
That’s an annualized 0.6% — not impressive, but 10x higher than you indicate.
Second quarter came in at 1.9% (so far, before Aug. and Sept. revisions). That’s not impressive, but not recessionary, and not “shrinking.”
The rest could be the subject of very long posts, but the bottom line is that reasonably priced energy is out there, if we have the will to go get it. That allows time for alternative sources to become viable IF they ever will (that’s not an automatic thing).
You may not think you are, but the fact is that you are calling for a massive amount of government intervention to get people to behave in ways you prefer. Who are you (or I) to dictate that people have to live in close-in areas, use rail services, walk, etc.?
Comment by TBlumer — August 10, 2008 @ 5:21 am
Prices are rising and that’s a function of what? The costs increase so they raise the price then you have shrinkage, people pull back its all negative.
There are droves of people that want alternatives and that will not happen automatically, they have to be instigated, reducing consumption creatively allows those that do not choose the options or alternative to continue in the manner they are already.
If the prices are kept high then the motivation towards the alternative is as well, if and when consumption falls and it should then the supply will increase.
Simply going after more in attempt to lower the price will only repeat the same scenario at a high price, we need to pull back now and divert the capital into capital improvement project that being close in urban redevelopment. That is clean safe and affordable, it takes time to change directions but it really has to happen.
Supply is not meeting demand, that requires intervention and movement in both directions is required. Some are saying that the drilling should be kept for domestic supply and sold cheap, will it effect the global market? We have huge domestic consumption and will a marginal increase in supply change it?
It does not matter until the average consumption is at its lowest possible value we are all in denial…nothing new there. It not so much a matter of global supply, it matter of easy access and the cost to get to it, and who has the rights to it.
Anything added to supply goes on the open market, if its costly to get to then the price or cost have to be recovered, I see no cheap fuel coming.
Its not just government it would be government and industry, we allow the automotive industry to get involved in finance, they need to think outside the box they could be involved in the alternatives…not alternative fuels alternative environs. The auto industry is looking for that monthly payment and so is the petroleum industry. In the past the Rockefellers and the Fords bought up and dismantled the streetcars. They did it while the VHA and FHA financed the suburbs.
Its all energy it is energy from millions of years ago trapped in the earth, if it NG or coal or petroleum or uranium it all has to be regulated, we have to be as efficient as we can be under the laws of physics, look at us we are not.
Comment by Oengus — August 10, 2008 @ 11:28 pm
IER. That’s just precious Tom!
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.
Comment by Eric — August 11, 2008 @ 5:34 pm
#4, and exactly what is wrong with their facts? ……
climate changeAGW (Alarmists Gone Wild) denial, claims that conventional energy sources are virtually limitless, and the deregulation of utilitiesMore importantly, Eric, those claims have proven historically accurate:
HERE
(oh, but THIS time it’s different! – horsecrap, Eric)
IER’s claims, besides being accurate, also suit the economy and human progress, and largely explain why we’re typing on keyboards instead of using quill pens, and using autos and jets instead of stagecoaches and horses.
The question that starts this comment stands. Don’t come back on this unless you have answers.
Comment by TBlumer — August 11, 2008 @ 9:39 pm