Offshore Drilling: Worth the Oil, or False Hope?

Offshore Drilling: Background Info

The term offshore drilling refers to the extracting of oil from fields that lie beneath the ocean floor, anywhere from a few hundred feet to 200 miles off the coast. The first offshore well was drilled in 1887 from a wooden wharf off Summerland, California; technology improvements have made it possible to drill in deeper water and farther from shore ever since. Today, some 4,000 platforms operate in the U.S. federal waters in the Gulf of Mexico, primarily off the coastlines of Louisiana and Texas, and off the coast of Alaska, producing approximately 565 million barrels of oil per year, according to the U.S. Energy Information Administration's overview of offshore activity. U.S. offshore oil production of 565 million barrels per year equates to roughly 1.5 million barrels per day; contrast that figure with U.S. current oil consumption of 21 million barrels per day.

Offshore Drilling: What’s the Fuss

The debate about offshore drilling stems from questions over how much oil potentially could be recovered from underwater fields versus the time and cost, both in dollars and environmental impact, related to that process. Common misperceptions notwithstanding, the debate does NOT stem from notions that offshore drilling could eliminate U.S. need for foreign oil (at current consumption, the U.S. uses 8 billion barrels of oil per year; conventionally recoverable oil from offshore drilling is thought to be 18 billion barrels total ever—not per year). The debate does NOT stem from notions that offshore drilling would guarantee lower fuel prices (oil is a global commodity, and U.S. production is not big enough to influence global prices).

Credit: David McNew/Getty Images

Offshore Drilling: Environmental Risks

Environmental risks associated with offshore drilling include discharges or spills of toxic materials, interference with marine life, damage to coastal habitats, and effects on the economic base of coastal communities. Recent research suggests that transporting the oil poses greater threats than the drilling process itself. In Louisiana, the 10,000 miles of canals dug to transport oil and lay pipelines contribute to coastal erosion because the canals crisscross the state’s coastal wetlands. While technology improvements have lessened the occurrence of oil spills in the last 40 years, the Minerals Management Service, a bureau in the U.S. Department of the Interior that manages the nation's natural gas, oil and other mineral resources on the outer continental shelf, projects about one oil spill per year of at least 1,000 barrels in the Gulf of Mexico over the next 40 years. Every three to four years, it says, a spill of at least 10,000 barrels can be expected. Those spills could potentially hit the beaches of western Florida, Alabama, Louisiana, and Texas.

Offshore Drilling: The Moratorium

Rights to U.S. offshore areas are shared between the states and the federal government according to various acts passed over the years. Specifically, the states have jurisdiction over any natural resources within 3.45 miles of their coastline (except Texas and the west coast of Florida where the jurisdiction extends to 10.35 miles), and the U.S. has rights up to 200 miles off the coastline. Offshore drilling has been banned in various areas thought to be particularly environmentally sensitive over the years. An offshore oil moratorium that had been in effect since 1981 expired October 1, 2008. With the lifting of the ban, areas in the Gulf of Mexico can be opened up for drilling by the federal government. Additionally, areas off the coasts of California, Virginia, North Carolina, South Carolina and Georgia can be opened up if those states approve. According to an Nov. 12, 2008, MMS press release, the agency has already begun the process for approving leases off the coast of Virginia. However, offshore drilling in new areas won't deliver a drop of oil for ten years, according to numbers cited by the Bush administration last year. In fact, the U.S. Energy Information Administration recently did a detailed study of the likely outcome of offshore drilling for their Annual Energy Outlook 2007, and concluded that increased access would not have a significant impact on domestic crude oil production or prices before 2030.

Credit: Kim Steele/Getty Images

Offshore Drilling: False Hope

It’s too soon to tell what the real impact of the moratorium being lifted will be, especially in light of the new Obama administration. But the psychological impact of knowing there is more oil available to be drilled may be a negative for Americans’ energy-mindedness. “Thinking that there is more oil to be drilled offshore gives people a false sense of hope that there’s actually enough oil out there to make us energy independent,” says Jonathan Dorn, staff researcher at the Earth Policy Institute. “Nothing could be farther from the truth. The DOE data shows that there’s an insignificant amount of proven oil reserves, plus it will take five or 10 years to drill the oil given the existing backlog in the offshore fleet and other factors.” A similar view is shared by Sierra Club executive director Carl Pope: “All the debate about drilling this year accomplished nothing other than serving as a distraction from real energy solutions. Every time Congress tries to implement real clean energy solutions, the oil industry and its allies demand a ransom. Once the politically-charged election season is over we will be able to revisit this issue as part of a comprehensive energy bill that moves us away from dependence on oil and invests in clean energy solutions.”

Offshore Drilling: Facts and Figures

Credit: Karen Kasmauski/Getty Images

• Offshore drilling currently accounts for 30 percent of total U.S. oil production.
• The United States currently produces approximately 1.5 millions barrels of oil per day from offshore drilling, and consumes nearly 21 million barrels of oil per day.
• The United States currently consumes nearly 8 billion barrels of oil per year.
• The Minerals Management Service estimated there were 76 billion barrels of “remaining undiscovered technically recoverable” oil in U.S. offshore regions, but this estimate represents the “potential hydrocarbons of an area that can be produced using current technology, without any consideration to economic feasibility.” Of this 76 billion barrels, 18 billion are considered “conventionally recoverable.” Source: U.S. Energy Information Administration Overview report.
• One barrel equals 42 million gallons of crude oil.
• Of the crude oil consumed in the U.S., 66 percent is imported.
• U.S. oil production currently occurs onshore in the lower 48 states (2.9 million barrels per day), offshore (1.4 million barrels per day primarily in the Gulf of Mexico, plus 0.7 million barrels per day off Alaska).
• Lifting the moratoria on drilling in the Outer Continental Shelf (OCS) would reduce the price of a gallon of gasoline by at most a few cents—and this would not be seen for at least another decade.
• Oil is traded as a global commodity and its price is set on the world market. The Organization of Petroleum Exporting Countries (OPEC) could simply reduce exports to negate even the nominal potential price reduction.

Offshore Drilling: Further Reading

Offshore Drilling Graph Speaks for Itself R.I.P. Offshore Oil Drilling Moratorium: What Could We Have Done Better? Offshore Oil Drilling Will Still Not Lower Gasoline Prices Coastal Drilling is Backward Thinking Drilling for Oil is Not the Answer How Offshore Drilling Works