"Snake Oil"

'Snake Oil' - washingtonpost.com

'Snake Oil'
Debunking three 'truths' about offshore drilling

Tuesday, August 12, 2008; Page A12

THE NATURAL Resources Defense Council Action Fund has taken out full-page ads in this newspaper and others to decry offshore drilling for oil as "George W. Bush's Gasoline Price Elixir" that is "100% Snake Oil." The environmental group calls on supporters "to stop the giveaway of our coasts." It is urging visitors to its Web site to send a pre-written letter to their members of Congress that says, "I am not buying the lie . . . that sacrificing the Arctic National Wildlife Refuge and America's coastal waters to oil drilling would make a real difference in gas prices -- either today or twenty years from today!" And the missive adds, "With just three percent of the world's oil reserves, our nation simply doesn't have enough oil to impact the global market or drill our way to lower prices at the pump."

The NRDC's arguments above neatly encapsulate the position taken by environmentalists and other opponents of offshore drilling. And they include a couple of good points. Contrary to the baldly political suggestions regarding lower gasoline prices by President Bush and Sen. John McCain (R-Ariz.), drilling would make no impact on today's pain at the pump because it would be years before any oil flowed from the Outer Continental Shelf. We agree that the Arctic National Wildlife Refuge, with its varied and sensitive ecosystems, should be preserved. In the quest for new sources of energy, there are trade-offs. That pristine area must remain off-limits. But there are three "truths" masquerading as fact among drilling opponents that need to be challenged:
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· Drilling is pointless because the United States has only 3 percent of the world's oil reserves. This is a misleading because it refers only to known oil reserves. According to the Interior Department's Minerals Management Service (MMS), while there are an estimated 18 billion barrels of oil in the off-limits portions of the OCS, those estimates were made using old data from now-outdated seismic equipment. In the case of the Atlantic Ocean, the data were collected before Congress imposed a moratorium on offshore drilling in 1981. In 1987, the MMS estimated that there were 9 billion barrels of oil in the Gulf of Mexico. By 2006, after major advances in seismic technology and deepwater drilling techniques, the MMS resource estimate for that area had ballooned to 45 billion barrels. In short, there could be much more oil under the sea than previously known. The demand for energy is going up, not down. And for a long time, even as alternative sources of energy are developed, more oil will be needed.

· The oil companies aren't using the leases they already have. According to the MMS, there were 7,457 active leases as of June 8. Of those, only 1,877 were classified as "producing." As we pointed out in a previous editorial, the five leases that have made up the Shell Perdido project off Galveston since 1996 are not classified as producing. Only when it starts pumping the equivalent of an estimated 130,000 barrels of oil a day at the end of the decade will it be deemed "active." Since 1996, Shell has paid rent on the leases; filed and had approved numerous reports with the MMS, including an environmentally sensitive resource development plan and an oil spill recovery plan that is subject to unannounced practice runs by the MMS; drilled several wells to explore the area at a cost of hundreds of millions of dollars; and started constructing the necessary infrastructure to bring the oil to market. The notion that oil companies are just sitting on oil leases is a myth. With oil prices still above $100 a barrel, that charge never made sense.

· Drilling is environmentally dangerous. Opposition to offshore drilling goes back to 1969, when 80,000 barrels of oil from an offshore oil well blowout washed up on the beaches of Santa Barbara. In 1971, the Interior Department instituted a host of reporting requirements (such as the resource development and oil spill recovery plans mentioned above) and stringent safety measures. Chief among them is a requirement for each well to have an automatic shut-off valve beneath the ocean floor that can also be operated manually. According to the MMS, between 1993 and 2007, there were 651 spills of all sizes at OCS facilities (in federal waters three miles or more offshore) that released 47,800 barrels of oil. With 7.5 billion barrels of oil produced in that time, that equates to 1 barrel of oil spilled per 156,900 barrels produced. That's not to minimize the danger. But no form of energy is perfect or without trade-offs. Besides, if it is acceptable to drill in the Caspian Sea and in developing countries such as Nigeria where environmental concerns are equally important, it's hard to explain why the United States should rule out drilling off its own coasts.

The strongest argument against drilling is that it could distract the country from a pursuit of alternative sources of energy. There's no question that the administration has been lax on that front. True leadership would emphasize both alternative sources and rational approaches to developing oil and natural gas. No, the United States cannot drill its way to energy independence. But with the roaring economies of China and India gobbling up oil in the two countries' latter-day industrial revolutions, the United States can no longer afford to turn its back on finding all the sources of fuel necessary to maintain its economy and its standard of living. What's required is a long-term, comprehensive plan that includes wind, solar, geothermal, biofuels and nuclear -- and that acknowledges that oil and gas will be instrumental to the U.S. economy for many years to come.