Department Of Energy Analysis Of Coastal And ANWR Drilling

[jyl]

The US Energy Information Agency is the analytical arm of the US Dept of Energy. EIA is one of the most authoritative sources of data and analysis on the global energy markets.

The EIA recently analyzed the likely impact of increased offshore drilling in the coastal USA.

"Impacts of Increased Access to Oil and Natural Gas Resources in the Lower 48 Federal Outer Continental Shelf"
http://www.eia.doe.gov/oiaf/aeo/otheranalysis/ongr.html

The projections in the OCS access case indicate that access to the Pacific, Atlantic, and eastern Gulf regions would not have a significant impact on domestic crude oil and natural gas production or prices before 2030. Leasing would begin no sooner than 2012, and production would not be expected to start before 2017. Total domestic production of crude oil from 2012 through 2030 in the OCS access case is projected to be 1.6 percent higher than in the reference case, and 3 percent higher in 2030 alone, at 5.6 million barrels per day. For the lower 48 OCS, annual crude oil production in 2030 is projected to be 7 percent higher—2.4 million barrels per day in the OCS access case compared with 2.2 million barrels per day in the reference case (Figure 20). Because oil prices are determined on the international market, however, any impact on average wellhead prices is expected to be insignificant.

The EIA also analyzed the likely impact of ANWR drilling.

"Analysis of Crude Oil Production in the Arctic National Wildlife Refuge"
http://www.eia.doe.gov/oiaf/servicerpt/anwr/pdf/sroiaf(2008)03.pdf

The opening of the ANWR 1002 Area to oil and natural gas development is projected to increase domestic crude oil production starting in 2018. In the mean ANWR oil resource case, additional oil production resulting from the opening of ANWR reaches 780,000 barrels per day in 2027 and then declines to 710,000 barrels per day in 2030. In the low and high ANWR oil resource cases, additional oil production resulting from the opening of ANWR peaks in 2028 at 510,000 and 1.45 million barrels per day, respectively.

With respect to the world oil price impact, projected ANWR oil production constitutes between 0.4 and 1.2 percent of total world oil consumption in 2030, based on the low and high resource cases, respectively. Consequently, ANWR oil production is not projected to have a large impact on world oil prices. Relative to the AEO2008 reference case, ANWR oil production is projected to have its largest oil price reduction impacts as follows: a reduction in low-sulfur, light (LSL) crude oil2 prices of $0.41 per barrel (2006 dollars) in 2026 in the low oil resource case, $0.75 per barrel in 2025 in the mean oil resource case, and $1.44 per barrel in 2027 in the high oil resource case. Assuming that world oil markets continue to work as they do today, theOrganization of Petroleum Exporting Countries (OPEC) could neutralize any potential price impact of ANWR oil production by reducing its oil exports

My view is that drilling off the coasts or in ANWR is basically irrelevant to the price of oil, now or over the next few decades.

Knowing that many Americans are desperate for any way to continue their gas-guzzling habits, and also knowing that most Americans know next to nothing about the oil market, the oil industry and their allied politicians are seizing $4 gas as a club to get the access they want. Similar, in many ways, to the way some politicians used 9/11 as a club to get the war they wanted.

I wouldn't say we should "never" drill in these areas, but I think it would be better to keep the oil in the ground until we really, really need it. E.g. when/if oil is literally running out. Draining those fields in the next couple decades just to keep dumping cheap gasoline down the filler tubes of 13 MPG SUVs doesn't make sense to me.

Especially since, as the DOE understands, it won't make a whit of difference to gasoline prices, because oil is a globally traded commodity.

These reports are inconvenient for the Administration. I suppose some analysts and scientists at the DOE are going to get fired pretty soon.

[legion]

Markets react to rumor, not fact.

Rumor of more oil on the market will do more to reduce prices than the actual supply.

[island_dude]

Originally Posted by legion

Markets react to rumor, not fact.

Rumor of more oil on the market will do more to reduce prices than the actual supply.

I would agree in the short term, but not the long term. The market in the long run is driven by supply and demand. Speculation and political issues can make a dramatic difference in the short run, but ultimately things recenter.

[snowman]

Opening ANWR now will result in the immediate drop in oil futures. How much? Probably as much as 50% of the current price! Reason-- no one really knows how much oil there is in ANWR. No environmental impact will result in drilling ANWR or off coast.

Allowing 5 new refinearys to be built in this country, with reasonable environmental impact, would result in an immediate reduction in the price of oil.

The US has almost 500 years of known oil reserves, not counting even more in coal. There is NO alternative energy solution. Even the ones that are theoretically possible would result in energy that cost the equivalent of $1000 per barrel oil. THis would put most of back in the stone age and leave only a few fortunate types that could drive ANY car, let alone a Porsche.

Perfecting nuclear fusion is currently the only theoretical choice that can change things. Nuclear fusion is not currently achievable, yet it is at least possible. NOTHING else is even possible in theory.

Unless a new source of energy is discovered in theory, it is IMPOSSIBLE to develop it. All the past marvelous discovery's cited were all identified as theoretically possible long before they were developed. There has NEVER been a source of energy that was not at least identified in theory long before it became reality.

Its pretty hard to produce a source of energy, where one can simply drill a hole in the ground, and recover a barrel of oil for $2. Thats the true cost of oil at this time. All other energy sources are 100's of times less efficient and simply not available.

THERE IS NO ALTERNATIVE ENERGY SOURACE AT THIS TIME!

All efforts must be directed at using the oil and coal that we have efficiently. All efforts to develop nuclear fusion, the only hope for an alternative, must be enhanced. Of course, if a new source of energy is identified, extremely unlikely, thats where we must go.

[idontknow]

Originally Posted by snowman

Opening ANWR now will result in the immediate drop in oil futures. How much? Probably as much as 50% of the current price! Reason-- no one really knows how much oil there is in ANWR. No environmental impact will result in drilling ANWR or off coast.

Allowing 5 new refinearys to be built in this country, with reasonable environmental impact, would result in an immediate reduction in the price of oil.

The US has almost 500 years of known oil reserves, not counting even more in coal. There is NO alternative energy solution.

Your 500 years of oil reserves comment got me searching for some reference but I stumbled on this:

America is sitting on top of a super massive 200 billion barrel Oil Field that could potentially make America Energy Independent and until now has largely gone unnoticed. Thanks to new technology the Bakken Formation in North Dakota could boost America’s Oil reserves by an incredible 10 times, giving western economies the trump card against OPEC’s short squeeze on oil supply and making Iranian and Venezuelan threats of disrupted supply irrelevant.

From: http://www.nextenergynews.com/news1/next-energy-news2.13s.html

[nostatic]

Originally Posted by snowman

No environmental impact will result in drilling ANWR or off coast.

now that's some funny stuff...

[snowman]

No, its NOT funny, its a matter of our standard of living, our freedom, war and peace.

[slakjaw]

I wish I could understand why people are so opposed to drilling for oil in this country.

[slakjaw]

Originally Posted by nostatic

now that's some funny stuff...

The freaking moose will scratch their asses on the pipeline. Whats the harm in that.

[nostatic]

"No environmental impact will result from drilling ANWR or off coast"

I don't think that even an oil exec would make such an asinine statement. Now, where the risk/benefit analysis falls is a totally different issue.

[snowman]

Its not an asinine statement, just a FACT.

[ckissick]

Originally Posted by nostatic

"No environmental impact will result from drilling ANWR or off coast"

I don't think that even an oil exec would make such an asinine statement.

I agree. How about this? The environmental impact from drilling ANWR will be minor in the short term and negligible in the long term, provided all environmental controls are utilized.

[ckissick]

Originally Posted by idontknow

Your 500 years of oil reserves comment got me searching for some reference but I stumbled on this:

America is sitting on top of a super massive 200 billion barrel Oil Field that could potentially make America Energy Independent and until now has largely gone unnoticed. Thanks to new technology the Bakken Formation in North Dakota could boost America’s Oil reserves by an incredible 10 times, giving western economies the trump card against OPEC’s short squeeze on oil supply and making Iranian and Venezuelan threats of disrupted supply irrelevant.

From: http://www.nextenergynews.com/news1/next-energy-news2.13s.html

Here's another quote from the same source:

"In the next 30 days the USGS (U.S. Geological Survey) will release a new report giving an accurate resource assessment of the Bakken Oil Formation that covers North Dakota and portions of South Dakota and Montana. With new horizontal drilling technology it is believed that from 175 to 500 billion barrels of recoverable oil are held in this 200,000 square mile reserve that was initially discovered in 1951."

Problem is, the web page is dated Feb 13, 2008. Where's the report? If they did release such a report, why wasn't it major news that would have burst the oil bubble?

[ckissick]

Found the report. 3 to 4.3 billion barrels. Bummer.

http://www.usgs.gov/newsroom/article.asp?ID=1911

[jyl]

The Bakken formation gets mentioned in lots of websites. I've done some reading on it. What is often not mentioned is that the oil there is very difficult to recover. I don't recall the details but basically it is in thin horizontal layers of rock that is not very porous. Formations vary widely in how much of the oil can actually be recovered, in the best ones it is 50% but in many cases it is just a few percent. Apparently in the Bakken formation they have to drill down, then turn and drill horizontally at just the right depth, then inject fluid under pressure to fracture the rock, in order to get enough oil to flow. Wells have been drilled in Bakken with limited results. Still, the formation is being explored, maybe it will amount to something.

[jyl]

The traders and investors in the oil futures market have done their homework. The ones focused on the short term, they know ANWR won't yield meaningful oil for several years. The ones who are thinking out 10 and 20 years, they could care less about ANWR, they are worried about the Saudi megafields. Compared to which, the biggest Alaska fields aren't much.

Originally Posted by snowman

Opening ANWR now will result in the immediate drop in oil futures. How much? Probably as much as 50% of the current price! Reason-- no one really knows how much oil there is in ANWR. No environmental impact will result in drilling ANWR or off coast.

[jyl]

Reports of more oil on the market "now", yes. Rumours of more oil on the market in 2018 and beyond, not so much . . .

Petrobras of Brazil is discovering some very large deep sea fields, there have been three or more announcements this year, these are believed to be appx 16BN barrels. These dwarf reasonable estimates of ANWR's size. You notice that oil price has kept going up? Because everyone knows meaningful oil won't come from those fields for many years.

Originally Posted by legion

Markets react to rumor, not fact.

Rumor of more oil on the market will do more to reduce prices than the actual supply.

[Eric Coffey]

http://z4.invisionfree.com/Popular_Technology/index.php?showtopic=2050&view=findpost&p=4892071

[nostatic]

Originally Posted by ckissick

I agree. How about this? The environmental impact from drilling ANWR will be minor in the short term and negligible in the long term, provided all environmental controls are utilized.

That is a perfectly non-asinine opinion. The devil is in the details of course

[kstar]

Originally Posted by nostatic

That is a perfectly non-asinine opinion. The devil is in the details of course

Forget subtle; significant distinctions are lost on some folks.