Offshore drilling: a good idea?

Maintenance/Repairs
21

We should probably do all those things, but don’t kid yourself that the result will be less expensive energy. The current sources of energy (including the imports) are the cheapest available, that’s why we are using them instead of developing domestic sources and alternatives (the oil industry would have rolled over the environmentalists decades ago if it was in their interest). When the cost per barrel gets to about $2-300 we will have more incentive to develop these other sources. You have just outlined several 100 billion dollars of initiatives, most of which will probably happen in the next few decades and all of which would have to be payed for by U.S. energy consumers.

This is not about a shortage of energy, this is about a shortage of cheap energy. The U.S. energy market will eventually reach a supply/demand equilibrium again, at a significantly higher price point.

22

Something to keep in mind is that many wells in the U.S. have been shut down. The oil is there but they’re not pumping.

In one large field about 20 miles south of me a large number of wells were closed about 15-20 years ago. These wells had the pumping units removed, electric lines pulled, and they were then cemented over and covered with dirt. They’re completely grass and tree covered now and one would never know from driving by there that only a few decades ago pumping units were sitting about a 100 yards apart and working like crazy.

These are small stripper wells and it reached the point it was not considered economically feasible to keep them in operation, especially after lease owners and operators were hit with higher taxes on them. Even with higher oil prices none have been reopened.

High gas prices have really hurt here in Oklahoma due to everything being spread out; mainly due to gas/oil and farming interests. It requires a lot of driving to get anywhere or do anythinng. Out in the NW corner of the state and the Panhandle it’s far worse than it is here. Even a trip to Wal Mart out there is a 50 miles + journey, and that’s one-way.

Addresses in the Panhandle are placed on signs on the highway with the name, say John Doe, as 10 miles N., 4 miles W., 1/2 S., etc. so there is no short hopping out there. SUVs and pickups are a necessity out there because high ground clearance, 4WD, large carrying capacity, etc is required due to the terrain.

23

My great grandfather (or was it my great great grandfather?) kept the mineral rights to the family land in Oklahoma when he sold it. Those mineral rights were divided and passed down through the generations. Once a year or so I get a check for a couple hundred dollars. If one person in my family held all of those mineral rights individually, he or she would be a millionaire.

The point of the story is that I think I know why those pumps are shut down. Imagine the oil underground suspended within a giant sponge, except the sponge is rigid. At first, pumping the oil is easy because the ground is saturated. However, by the time the oil is half gone, the expense of getting to the remaining oil goes up. By the time you get to the last 10% of the oil, the cost of extracting it is really high. So most oil wells will never be fully utilized until the oil is worth enough to justify the lofty expense.

If the oil companies had their way, they would rather drill 10 new oil wells than do the work to fully utilize the wells they already have. So if we were going to force the oil companies to fully utilize any wells drilled in ANWAR and offshore, I could support it. However, what they want is to spoil my local beaches and pristine wilderness only to get a part of the available oil, and that is only because they think it might be a little cheaper than fully utilizing the wells they already have.

24

If the objective is to reduce dependence on middle eastern oil (for safety) and try to lower the price of oil (to help the economy), but without too much regard for the ecology and long term stability, then drill offshore in in the Alaskan oil fields, and build another couple refineries.

I certainly don’t have all of the knowledge needed to fully understand the scope of the problem, but I think that instead of chasing oil (with added ecological risk), we should be moving as fast as possible to building a few dozen nuclear plants. This would dramatically reduce demand for oil, is clean, and far safer than fossil fuels. In tandem, make it a national project to become the ecological leader of the world in vehicle and architecture design.

None of what is proposed here is new and none of it carries much risk. If we do it, oil will settle in to a natural price of $50 BBL rather than a speculative price of $150 BBL. In fact,
like President Regan’s (boy do I miss his leadership) Starwars Defense Initiative, just making the move toward this will crush oil prices because the speculators will move to something else.

We have the brains. We have the means. Do we have the huevos?

25

According to the news show I saw…there is no legislation action needed for the oil companies to drill in these 64 million acres. The legislation action I heard about is to open NEW areas for drilling.

26 
If all these areas were being drilled, U.S. oil production could be boosted by nearly 5 million barrels a day, up from about 8 million barrels a day currently.

That compares to an increase of maybe 2 million barrels a day experts say opening up other coastal areas and the Alaska's Arctic National Wildlife Refuge might yield....

...But fearing oil prices will eventually fall, the industry is leery about making too many investments in the fields it has - many of which are in deepwater areas that can be pricey to develop.

Instead, they're holding out, hoping the government will open areas closer to shore that would be cheaper to work on.*

That makes perfect sense.

27

…we should be moving as fast as possible to building a few dozen nuclear plants. This would dramatically reduce demand for oil, is clean, and far safer than fossil fuels.

Nuclear power is clean? If it’s so clean, may we store the toxic nuclear waste in your house?

28

techchums; I just attended a 3 day petroleum technology conference and had a chance to mix with the brighest oil and gas production brains in the world. Basic economisc teaches us that the lowest price of anything tend to be the marginal cost of producing the next item, unless thaere is a temporary over production. That’s why we have January sales at Walmart, to get rid of the stuff not sold before Christmas.

Since there are no extra stockpiles of oil sitting anywhere around the world, and production capacity and demand are in balance, the floor price of oil will be the marginal production cost in the Arctic, very deep in the Gulf of Mexico, off the coast of Brazil (also very deep), and the Canadian oil sands. The cost of all these is about $80 a barrel, it used to be $50, as you stated.

The actual price of anything is also the anticipated future price, and in the presence on no increase in production (most reserves are in the hands of inefficient foreign state oil companies), and steadily rising demand, the future looks scary indeed. Oil companies would be happy with a guaranteed price of $80 if they had the opportunity to get on with developing more.

Think what would happen to car prices if the US had an import embargo and domestic manufacturers could not make more than 15 million, the lowest figure of the last few years!! You get my drift! During WW II with no car production or imports car prices rose to dizzy heights. Used cars sold for more than the cost new!

The entire OPEC spare capacity is only 1.9 million barrels/day compared to world prosuction of 85 million b/d, or 2.2%. That’s a very slim margin. Non-OPEC producers have NO SPARE CAPACITY! Even a recession in the US will only reduce demand by 200,000 barrels/day, while demand in China, India and other Asian countries is growing at 1,000,000 barrels/day almost every year!

It looks like no one can discipline international investors into paying less for oil than the opportunity cost of $135 or so. So, get used to very high gas prices; it’s the best thing that happened to us for a long time, and will ease our transition into new energy sources.

29

Drill offshore and ANWAR. Not going to make gasoline cheaper but will provide an emergency supply. 70 percent of crude is imported and that means dependence on politically unstable sources. Higher gasoline prices will drive consumers to buy fuel efficient cars and will spur battery development. My opinion future is nuclear and EV’S or hybrids. Hydrogen requires a very expensive fueling system. Canada is our no 1 source of imported oil.

30

Thanks for your comments. Here are some thoughts…
"Basic economisc teaches us that the lowest price of anything tend to be the marginal cost of producing the next item,"
We are paying not the marginal cost of producing the next barrel (about $50) but rather the speculative driven price of oil at $150 per barrel. I think that if the US lead the way to the heavy use of all alternative fuels including nuclear, wind, solar, coal, water, and tidal, that the world demand for fossil fuel would drop fairly significantly, and the remaining oil consumption would plateau at about $50 per barrel. I also think that the fastest to impliment is nuclear and it also has the benefit of being the most efficient. We had balanced oil prices just 3 years ago at that demand level and I believe we can not only move back to that demand level, but we can easily do so. I also think that just taking steps toward such an approach would be reason enough for the speculators to abandon the oil speculation market.

I’m sure there will be someone bringing up the very real problem of nuclear waste so let me address that right now. First, nuclear use is only a first step toward an ecologically and economically sound
energy policy. As new technologies become truly useful, nuclear sources can be diminished. Second, the issue of nuclear waste is far easier to resolve than the issue of killing the earth with carbon pollutants. It is very, very easy to scream about nuclear waste management while totally ignoring the damage caused by fossil fuels, and the even more real danger of a next world war marked by nuclear weapons, or complete economic collapse. I’d rather work on managing nuclear waste than live in a
the kind of world that has a mantra of death to the enemy.

I admittedly do not understand the scope of managing nuclear waste, but it seems France has a plan that works for them, and I’m sure there are other paths. I was told one time that the volume of nuclear waste that would power an individual’s entire life would fit an a 1 lb coffee can. I’ve never heard anyone refute that analogy so I suspect it is about right, and seemingly something we could manage.

31

The problem with nuclear waste is not necessarily the amount created. The problem is that it has a long half life. I can’t remember how long it is, but let’s say it is 1,000 years. That means in 1,000 years, half of it will still remain. In 2,000 years 25% will still remain. in 3,000 years…you get the idea. This stuff will be around for a really long time and will never totally be gone. Nuclear waste storage requires thorough management. Can you honestly say you are willing to commit resources to manage the waste for the at least the next 5,000 years?

32

Everyone is forgetting one very important thing…WE as in US, don’t get to make ANY decisions about oil exploration or production…Everyone is screaming “Drill Offshore!” “Drill Now”! Well go ahead Rosco, get your drill out and go to work…But the FACT is, we don’t decide, the Government does not decide and can not order anyone to drill for oil…For the most part, small wildcat exploration companies do the preliminary test drilling. If the hole is dry, as most of them are, they eat the cost. If they strike oil, they SELL their “discovery” to the highest bidder and someone else makes the big investment and puts the field in production. Or they just sit on it, waiting for market conditions to improve…That’s how the oil business works. Today, the oil companies are making money hand over fist. Why would they want to produce MORE OIL?? So they will be forced to sell it at a cheaper price?? They have been waiting for this day for 50 years and they are going to milk it as hard as they can as long as they can…

33

The OPEC spare capacity in 2002 was 5.8 million barrels/day; a relatively comfortable margin. Growth of demand from China and India had not hit the markets yet. That’s why prices in 2002 were reasonable and close to the marginal cost of production.

Everyting has changed now and although I agree there should be a concerted effort to wean us off oil as much as possible, the rest of the world will keep needing more, unless we give them all our new off-oil inventions.

It’s going to be a very interesting 20 years to come, almost equal to the first industrial revolution.

34

drill offshore and in alaska

niether will reduce gas prices

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Well, today I ate my lunch sitting at a picnic table about 50 feet away from a couple of dozen spent fuel storage containers on a nuke plant site. I would prefer that location to eating outside next to a coal fired plant.

36

Leave the offshore oil for last. Drill it when there isn’t any oil left, after individually owned cars are just part of history. We may not need a lot of oil by then; whenever that will be. There is power everywhere, in unlimited quantities. All we have to do is learn how to use it.

37

If, at my death, my “coffee can” of nucelar waste is 8 inches tall and 5" round, then the waste is contained in about 120 cubic inches. One cubic foot contains 1,728 cubic inches. Hence, the energy waste stored in one cubic foot would have supported the entire life of 14.4 people. At 6 billion current population, the waste would be 417 million cubic feet. A cavern 1 mile long by 1000 feet across by 100 feet high could store 520 million cubic feet of waste. We have several such caverns, or, we could build them. If we built five of these, we could store all nucelar waste generated for the next 150 years.

Those five caverns would give us 150 years of prosperity and little dependence on oil from shakey regions, and plenty of time to develop even safer sources of energy.

So, the amount of created waste is an important consideration. If instead the waste were a 120 cubic feet instead of 120 cubic inches, then the storage problem becomes much harder to resolve.

38

Entering WWII we started to build airplanes and ships. There was no 10 year plan to accomplish - it just got done in a hurry. So no reason to take 10 years to build 20 nuclear reactors

Long-lived auto manufacturers are accustomed to 4-10 years for model change - including changes to electric plug-in cars. Some countries are already beating that limit for electric cars. For WWII the car companies ramped up and delivered military trucks and “cars” in large quantities.

Reduce some of the required safety limits to reduce weight - just get the transfer over to electric
in minimum time. Little cars can get you to work and back and ok for shopping rent a big car for long trips

There is not enough push being given to get there. Perhaps it will take $10/gal gas. OPEC would feel the impact as we reduce gas consumption but China and India will be picking up where we leave off - and prices for gas may not change that much. If we are on electric plug-ins (re-charge at night so electric system can fill in their low load at that time) we won’t worry about the $/gal for cars DGW

39

Those five caverns would give us 150 years of prosperity and little dependence on oil from shakey regions, and plenty of time to develop even safer sources of energy.

So, the amount of created waste is an important consideration. If instead the waste were a 120 cubic feet instead of 120 cubic inches, then the storage problem becomes much harder to resolve.

You’re making a big assumption we’ll be spending that time wisely in developing new technologies…which we won’t. We’ll be squandering the time away and putting very very little money into new developments because it would eat into the profits. I have 150 years of industrial history to back me up.

And let’s not forget about the US Nuclear industry and how totally screwed up it is. The last Nuclear power plant to go on line was Seabrook NH. Initial design cost was $2b for two plants…Final cost…$8b for ONE plant. That’s a 1600% cost increase. Oh yea I want to trust the future of this country in that industry.

40

“Entering WWII we started to build airplanes and ships. There was no 10 year plan to accomplish - it just got done in a hurry. So no reason to take 10 years to build 20 nuclear reactors”

There is a difference between planes and ships vs. nuclear reactors. An accident in a plane could cost up to 10 lives; one in a ship could cost several hundred. Neither is desirable, but at the time WWII was bigger than the problems with manufacturing problems. As you may recall, Liberty ships regularly broke up in the North Atlantic because the steel hulls became brittle at low temperature. The US Navy continued using them for a while until the issue was understood, but the troops were needed in Europe and some chances had to be taken.

Nuclear disasters, OTOH, can be significantly worse. You can kill thousands now and millions later when the cancer risks are taken into account.

I’m all for nuclear energy and wish we’d start building more plants ASAP, but I am also very much for prudent design, construction and inspection to ensure that we are all safe for as long as those plants operate.