DRILLING DELAY WILL BOOST RELIANCE ON OIL IMPORTS
http://www.washingtontimes.com/news/2010/jul/8/drilling-delay-to-boost-oil-imports/
President Obama’s moratorium on deep-water drilling could have the unintended effect of increasing U.S. dependence on oil imports — thus raising the risk of a more common type of oil spill from tankers, energy analysts say.
The six-month moratorium already has thrown thousands of oil workers in the Gulf region out of work and jeopardized the outlook for tapping the most promising prospects for oil discoveries in the U.S. since the 1970s.
But the repercussions from the work stoppage have only begun. Soon, an expected decrease in U.S. oil production will lead to increased imports to replace some of the 1 million barrels a day of oil produced in the Gulf, just as the nation had begun to make progress in reversing its rising dependence on foreign oil.
Last year, a jump in production, largely from deep-water wells in the Gulf, propelled U.S. oil production to more than 5 million barrels a day for the first time since 2004, reducing daily imports to between 8.8 million and 10 million barrels from a peak of about 12 million barrels in 2008, according to Platts energy information service.
But after such a promising beginning, various analysts say, an increase in the nation’s $300-billion-a-year oil-import habit now seems inevitable. A U.S. district court struck down the moratorium last month, and the Obama administration was unsuccessful Thursday in its bid to have an appellate court reinstate the drilling suspension.
“The United States can import more oil from overseas” as it ramps down production in the Gulf, said Kenneth P. Green, an analyst at the American Enterprise Institute. But he added that “this option would only increase the risk of oil spills from tankers,” which historically have been the main vehicle for oil spills in U.S. waterways.
Risks to the environment might be multiplied by an increase in imports because other countries – including Cuba, Mexico and Venezuela – are stepping up their exploration activities in the Gulf of Mexico even as the U.S. withdraws, he said.
These countries require fewer environmental protections than the U.S., as was exhibited after Mexico’s Ixtoc 1 spill in 1979, the second-worst spill in history. It took Mexico nine months to stop the gusher of oil in shallow waters off its Gulf coast, and the nation later refused to take responsibility for environmental damages in the U.S.
“Going down the list of the world’s petro-countries, I can’t find a single one that is adopting anything approaching a tough new stance against offshore oil drilling” like the one in the U.S., said Steve LeVine, author of “The Oil and the Glory,” a book about the geopolitics of energy.
“On the contrary, some, like Australia, seem to regard the spill as an opportunity to attract more interest in their fields,” he said.
Australia “not only ruled out the suspension of offshore exploration, but it opened up bidding on 31 drilling areas in waters twice the depth of the BP’s leaking Macondo well” last month, he said.
Even as drilling operations in the U.S. were grinding to a halt, Russian Prime Minister Vladimir Putin signed a $1 billion deal allowing Chevron to join with Russia’s Rosneft oil company to drill for oil in the Black Sea.
Outside the U.S., “it’s business as usual – which means the typical headlong rush to development,” Mr. LeVine said.
Imports from other nations are expected to fill the growing gap from lost production in the Gulf of Mexico, according to a study just released by the Energy Policy Research Foundation.
The Energy Information Administration estimates that U.S. production will fall by 76,000 barrels a day next year because of the moratorium.
The U.S. International Energy Agency estimates that the U.S. could lose up to 300,000 barrels a day of production by 2015 as a result of “tighter legislation” in response to the spill, costing the U.S. economy about $1.3 billion a year in output.
Ironically, the shift to more imported oil would increase the risk of the most common types of spills – those from oil tankers. Before the Macondo blowout, the biggest oil spill in U.S. history was the Exxon Valdez tanker accident off the coast of Alaska in 1989.
“Spills caused by loss of well control are extremely rare, particularly in U.S. waters,” says the Energy Policy Research Foundation study. “Historically, tankers have been responsible for four times the amount of oil in U.S. waters” than exploration activities.
Tanker accidents caused most of the world’s 10 largest oil spills, the study found, and each incident released a comparable amount of oil to incidents involving wellhead blowouts.
Rather than resume drilling or increase imports, environmentalists argue that the U.S. should respond to the disaster by cutting consumption of oil, in particular by passing climate-change legislation that would encourage conservation by making energy use more expensive.
“Ultimately, U.S. vulnerability because of oil consumption is only going to be addressed through large efforts on the consumption side,” said Michael Levi, a senior fellow at the Council on Foreign Relations.
But the Energy Policy Research Foundation study said that major cuts in oil consumption through conservation or switching to renewable fuels are not as likely to occur as an increase in imports, which has always been the response to production shortfalls in the U.S.
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