As the intense debate about the offshore drilling moratorium continues following the tragic Gulf of Mexico incident, I’ve been reading a report on the future of deepwater oil and natural gas production published by the Cambridge Energy Research Associates. The facts contained in CERA’s report are important reading for anyone considering the appropriate policy response to the Deepwater Horizon accident.
Deepwater resources have grown over the past decade to become “one of the most important pillars of global oil supply growth,” the report says. Here are some of CERA’s statistics:
- U.S. Gulf of Mexico production accounts for 30 percent of all U.S. crude oil production (1.6 million barrels a day out of a total 5.3 million barrels per day). The Gulf of Mexico is one of three top deepwater areas in the world (along with West Africa and Brazil).
- Because of deepwater activity in the Gulf of Mexico, last year the United States grew its domestic oil production for the first time since 1991. Rising deepwater production also was a factor behind a drop in U.S. oil imports.
- Globally, deepwater production capacity has more than tripled since 2000. If deepwater production — more than 5 million barrels a day — was viewed as its own “country,” it would exceed the production of every other country except Saudi Arabia, Russia and the United States. That rate has the potential to rise to 10 million barrels a day by 2015, CERA said.
And here’s one fact in CERA’s report that even I found surprising: In 2008, the total amount of oil and natural gas discovered in deep water globally exceeded the volume found onshore and in shallow water combined.
There have been 14,000 deepwater wells globally; ExxonMobil alone has drilled 262 wells in water depths of 2,500 feet or more. As I’ve noted in earlier posts, ExxonMobil’s experience is that when proper procedures are followed, accidents such as the Deepwater Horizon do not occur.
Given the scale and potential of deepwater oil and gas to meeting the world’s energy needs, it’s critical that we understand what happened at the Deepwater Horizon. We don’t yet know all the facts surrounding this incident. What we do know, however, is that when you properly design wells for the range of risk anticipated; follow established procedures; build in layers of redundancy; properly inspect and maintain equipment; train operators; conduct tests and drills; and focus on safe operations and risk management, tragic incidents like this one should not occur.
Those are facts that should not be forgotten in the current debate because safe and environmentally responsible development of the world’s deepwater resources is so important to our economic prosperity and energy security.
Wile these are interesting facts and figures, I am afraid that they will be overshadowed by the magnitude of the BP incident and the failure of BP’s response thusfar. Needless to say the government has utterly failed in its response efforts as they have been hindered by politicians who meddle for the media exposure and then rush to find something else to keep them in the public eye.
Instead of attacking BP and other drillers, we should be looking at the impact on our national security and moving to a solution, not finger pointing!
Energy Drives Everything – So why don’t we have a national energy policy?
While I found a recent article on Oil Alternatives interesting, I would have to agree somewhat with a statement in the article by Mr. Esser about not running out of oil. We probably will never run out of oil; we instead, will run out of funds to pay for the oil that we want to use. I think that oil prices could become prohibitively high, resulting in forced conservation. By the way, that may not be as bad as we think. People generally do not change voluntarily. That being said, I feel that a cohesive program – read: energy policy, energy strategy and active pursuit of the same, is lacking. Why? Because politically it would be suicide to actually require people to make a sacrifice and therefore this leads to indecision, lack of action and a lot of hand wringing. We fail to see the transparent vulnerabilities that confront us on the energy issue. Transparent vulnerabilities are so obvious that they are easily overlooked; they are the ones we:
see when they are pointed out;
recognize when we are made aware… read more »
…of them;
often fail to acknowledge — leading to potentially significant consequences when the vulnerability is realized.
Time matters most when decisions are irreversible
Risk and time are opposite sides of the same coin; for if there were no tomorrow, there would be no risk. Time, therefore becomes a transparent vulnerability that we more often than not do not account for in our identification of vulnerabilities. Time transforms risk. The nature of risk is shaped by our time horizon. In order to achieve corporate goals and objectives time horizons are established – a five year goal; vision 2015, etc., are often seen in corporate mission, vision and value statements.
To act or not to act – is that the question?
Once we act, we forfeit the option of waiting until new information is made available. As a result, not acting has value. The impact of variables, too numerous to be easily identifiable; transparent vulnerabilities, too obvious to be seen; and outliers, the actions of the markets that we operate in; all affect our ability to act decisively.
An action can be a right action or it can be a wrong action. A decision not to act can result in the right action with positive consequences or it can be the wrong action with negative consequences; or visa versa.
With oil and any alternatives to oil, we may have passed the point of being able to take proactive action and could be forced into a constantly reactive state.