Overall good line of thought, but a few other things are worth considering. It is vastly underappreciated just how much the EPA has retarded energy development in the US. The retroactive revocation of permits for the
mountaintop coal project, the Keystone XL imbroglio, and the hasty ban on offshore drilling are just a few examples. (Not many know that Deepwater Horizon was out that far because of regulations forbidding drilling closer to the shore).
These areas are inherently dirty and dangerous. It's always easy to do Monday morning quarterbacking, but little recognition of the fact that infrequent domestic oil spills may be preferable to endless foreign oil wars.
Resource extraction in general is demonized by the EPA just as much as the pharmaceutical industry is by the FDA. It is hard to regulate an industry which is respected by the public, because they will get some benefit of the doubt. But if they can be turned into polluters and poisoners, it is easy to justify ever greater state power over the sector.
Computers and the internet are in the exact opposite space: highly respected and almost entirely unregulated. So it's hard for many here to see what the fedguv means (they make App Store approval look like a walk in the park).
But once you're on the insides of those sectors, you start to realize that what is holding back oil in the West (and nuclear power, and drugs, and all non CS sectors) are human factors, not physical ones. That is simultaneous harder and easier to deal with than a genuine scarcity of energy.
How much oil is in off the East Coast passive margin? 20 bboe (which is twice the best estimates of MMS)? That would make it on par with the North Slope in Alaska, an elephant field. That's 3 years or less of US consumption, or about 7 months of global consumption. BFD.
And that comment about the Deepwater Horizon not being able to drill closer to the shore... that's eyepopping. The shallow-water GoM in the Mississippi Delta has been drilled for decades.
I don't want to use an inappropriate tone for HN, but you should really take stock of how you've been misinformed so badly and seek to educate yourself.
And that comment about the Deepwater Horizon not being able
to drill closer to the shore... that's eyepopping. The
shallow-water GoM in the Mississippi Delta has been drilled
for decades.
Shallow water drilling has been disincentivized in favor of deep water drilling for several years in part because of tourism and NIMBYism concerns. People do not want to see drills from the shore. This is well known in the sector. You can find articles on the topic before 2010 by using archive search in Google News.
July 13, 2006
Through financial incentives, the House bill encourages
states to allow offshore drilling. For drilling within 12
miles of their coastlines, the states collect 75% of all
royalties. They get 50% of all royalties for drilling up to
100 miles offshore. Louisiana, whose lawmakers authored the
bill, stands to collect an additional $50 billion over the
next 30 years. South Carolina, with no offshore drilling in
its history, has no idea of the potential payoff. The South
Carolina concern appears to be more turf protection by the
tourism lobby, and that includes Gov. Mark Sanford.
South Carolina's $10 billion tourism industry could be
threatened, according to Sanford, *even though the state
could restrict offshore drilling to a distance more than
100 miles out*. The federal authority is demarcated at 200
miles out, and beyond that is open international waters.
Notice: tourism concerns (and NIMBY issues, not mentioned in this piece) are cited as a reason to move drilling further offshore, in part by giving financial incentives (50% rather than 75% of royalties) for locating drills out of sight. Note also that Louisiana's lawmakers authored the bill. You can dig in more if you wish, but there were a variety of reasons why lawmakers preferred drilling further away from shores. And Republicans were just as culpable:
July 3, 2001
"Floridians have spoken loud and clear, and their voices
have been heard by President Bush," Florida Gov. Jeb Bush
said Monday after Interior Secretary Gale Norton announced
the administration would ask Congress to let oil companies
drill on about 1.5 million more acres in the Gulf of
Mexico. That's just a quarter of the roughly 6 million
acres that the Clinton administration first proposed
opening for leasing in 1997 and that the Bush/Cheney energy
plan had earmarked for drilling.
Speaking from his parents' home in Kennebunkport, Gov. Bush
called the scaled-back proposal a victory for "Florida's
fight to protect our coastline" and told Bush the words
he's going to be hearing a lot for the next few years: not
in my back yard. "Any lease sales that do occur in the 181
area" — a patch of energy-rich ground in the derrick-free
eastern part of the gulf — "will occur off the coast of
Alabama, not Florida," he said.
The newly proposed area extends to 100 miles south of
Mobile and gets no closer than about 200 miles west of
Tampa. That's actually OK with the folks in Alabama — they
already have plenty of drilling platforms out there, as
does most of the Gulf coastline stretching west to Texas.
And now it's OK with the folks — the Republicans, anyway —
in Florida, who are worried about their white sandy beaches
and the mammoth tourism industry that grows on them.
The compromise was made (and somehow you don't expect
Norton to be overruled later in the week) to appease the
state GOPers whom Bush offended late last month when he
came to Florida to strike an environmental pose at the
Everglades National Park with a bunch of Democrats.
...
The plan allows Ari Fleischer to say the president's new
plan is "environmentally sensitive and balanced" (although
that's what they said about the old plan). It allows Jeb
Bush, up for a tough re-election in 2002, to imagine that
his brother's winning the presidency was actually a good
thing for him politically.
Operative phrase: "gets no closer than about 200 miles west of Tampa". A series of bills and regulations like this, some of them simply interpretations, led to an overall incentive to locate platforms further and further away from the coasts, in uncharted waters.
Now, one can claim that tourism was a legitimate reason for these rules. Perhaps. But one must also concede that regulation was a nontrivial factor in forcing these platforms away from the shore.
I have no incentive for further discussion with you, so I'm not sure why I'm bothering to respond.
I'll just say that I'm well aware of the politics and technical issues in the E&P sector as well as domestic and international energy consumption (across all fuel types), and that you are on the border of being completely uninformed on this issue. Frankly, it's sad. You have an opinion, and have used Google to find articles that validate it... and here I am, having read RigZone for years, participating on Oil Drum, having independently given myself an undergrad+ education in petroleum geology, having invested real money in oil companies and reading dozens if not hundreds of 10-Qs and 10-Ks for domestic small to mid cap producers (whose assets span onshore, offshore, UDW, shale, and bitumen). And nothing I can say will jolt you out of your comfortable mindset where there is abundant petroleum for the taking if only DC would step back and let capitalism run its course.
Fracking is still a young-ish technique, and last I knew the recovery rates were less than 5%. I don't think it will get above 10% even with technology improvements. Which is still a boatload of Oil / NG / NGL. It's still just 8 years of global demand at current rates.
These areas are inherently dirty and dangerous. It's always easy to do Monday morning quarterbacking, but little recognition of the fact that infrequent domestic oil spills may be preferable to endless foreign oil wars.
Resource extraction in general is demonized by the EPA just as much as the pharmaceutical industry is by the FDA. It is hard to regulate an industry which is respected by the public, because they will get some benefit of the doubt. But if they can be turned into polluters and poisoners, it is easy to justify ever greater state power over the sector.
Computers and the internet are in the exact opposite space: highly respected and almost entirely unregulated. So it's hard for many here to see what the fedguv means (they make App Store approval look like a walk in the park).
But once you're on the insides of those sectors, you start to realize that what is holding back oil in the West (and nuclear power, and drugs, and all non CS sectors) are human factors, not physical ones. That is simultaneous harder and easier to deal with than a genuine scarcity of energy.