Sunday, June 13, 2010

Combating Oil Supply Myths

In which the author disputes “drill baby drill” rationale

It started with this Wall Street Journal article.  My friend posted it to his Facebook page, along with a comment about how the traditionally conservative WSJ admitted the potential extent of the Deepwater Horizon oil disaster.  Specifically, the oil plume could wrap around Florida and slime its way up the entire eastern seaboard.

My friend followed up his comment with this statement:  “How’s that Drill Baby Drill working for them Real Americans now, Sarah?”

Predictably, this ignited a rapid exchange of Facebook comments. Though several people contributed, the bulk of the thread consisted of a volley between me and my friend’s neighbor, Joe.  This is not the first such exchange I’ve had with Joe, and as quick background, Joe appears to be quite politically conservative.

Joe spun the thread off on a tangent thusly:  “I’m not sure if anyone knows this but one of the largest oil reserves in the world is located in North Dakota.  So, does it make sense to drill 100 miles off the coast and thousand [sic] of feet below the sea or do you think that the economic laws of supply & demand would work if we could get at it cheaper & safer right in our own backyard?”

Joe’s position seems to echo Sarah Palin’s, when she claimed that radical environmentalists were truly to blame for the ongoing gulf oil disaster.  Because environmentalists sue oil companies over drilling on land or in shallow waters, the poor profit-starved oil companies are forced to drill deep-water wells instead.  Believe it or not, since this argument doesn’t wear its illogic on its face, this is one of Palin’s more coherent arguments to date.  Of course, it’s still a specious argument.  And the idea, casually put forth by Joe, that some secret magical oil reserve exists on land, just waiting to be tapped, causes further damage.

Why Palin’s Argument Doesn’t Hold Water

First, let’s dispense with the illogic of this position.  The argument suggests that if BP had had access to shallow-water or dry land oil reserves, it never would have drilled the Deepwater Horizon oil rig in the first place.  This implies that either no blow-out would have occurred, or it wouldn’t have been as damaging and as difficult to fix.  These two presumptions make little sense, however, and without them the premise of the argument falls apart.

Deepwater Horizon was pumping oil out of the Tiber oilfield.  Discovered by BP in September, 2009, Tiber is considered a “giant” reserve.  Just five months after the discovery, BP began drilling exploratory wells.  An ING analyst, at the time of the find, called Tiber technically challenging and costly, but with potential for high reward.  (Note that this means BP knew from the outset the problems inherent in drilling Tiber.)  The analyst referred to the discovery of Tiber as “the holy grail.”  Tiber was (and still is) expected to add 7%-10% to BP’s pre-existing reserves.  The day it announced its discovery of Tiber, BP’s stock rose 3%.  In short, BP stood to make big profits by drilling in Tiber, and that is what drew it to this oil field in the first place, not some ridiculous imagined opposition to land drilling by environmentalist extremists.  The point is, given free rein to drill on land anywhere it wanted, BP still would drill in the Gulf.  Why choose just one, when you can make even bigger profits by drilling in both?

Now, admittedly the water pressure almost a mile under the ocean (about 150 atmospheres of pressure) makes the gusher much worse, and much much harder to stop.  Obviously drilling on land or in shallow water removes that exacerbating factor.  But the depth and pressure are merely that:  exacerbating factors.  Depth and pressure had little to do with the cause of the accident.  The real problems are BP’s negligence, and the Minerals Management Service’s completely inept regulation.  BP knew of the technical challenges from the outset, as mentioned above.  It also decided to drill a well almost one mile deeper than the Deepwater Horizon’s rating.  To top it off, BP opted not to employ acoustic switches.  The acoustic devices, required by Brazil and Norway, act as a last-line-of-defense failsafe, something one might consider when drilling at unprecedented depths.  BP wasn’t convinced of the cost-effectiveness of the acoustic switches.

Playing straight man to BP, MMS essentially said, never mind that no one has ever drilled a well this deep before, and never mind the fact that several states depend on the Gulf for their major industries, BP shouldn’t need to conduct an environmental impact study because they pinky-swear that nothing bad will happen.  The bottom line is that human idiocy and greed caused this disaster, not the location of the well.

There is no Secret Panacea Oil Reserve

People like Joe and Sarah Palin like to paint environmental opposition to oil drilling as the ultimate culprit.  The real reason for this, of course, is that oil companies represent incredibly deep pockets for Republican candidates.  Though the extent to which voters like Joe are complicit, as compared to the extent to which they are merely deceived by Glenn Beck et al, remains to be seen.  In any case, more palatable than simply arguing that ‘oil companies should be free to drill baby drill because they pay me to say that,’ is to claim that some magical double secret oil reserve is sitting under sparsely populated land just waiting to save us from foreign oil and deep water drilling disasters.  If only those silly environmentalists would get out of our way, we could solve all of America’s energy needs.  Problem is, like honest politicians and unbiased news reporting, that magic oil field doesn’t exist.

For Palin, it’s ANWR.  For Joe, it’s the Bakken Formation.  Joe’s reference to North Dakota alludes to the Bakken oil reserve, which also sits under parts of Montana and Saskatchewan, Canada.  And an admittedly large amount of oil rests there.

Joe wrote that I should do some research on Bakken.  “Try the US Geologically [sic] Service 08 report.  Just in case you don’t have time, it says it has enough to [sic] crude to fully fuel the American economy for the next 41 years straight @ $16.00/barrel.  And, there’s a reason we’re not extracting it.  I’d be happy to inform you.  IF you’re interested.”  He later stated that Bakken is the world’s largest easily accessible reserve, and that it’s not being tapped, I guess, because of money.  (It’s hard to discern what secret conspiracy he was hinting at.  At first he suggested it was environmentalists blocking the drilling.  Then he wrote, “It’s $!”  I don’t know who he was implying would stand to gain money by blocking the oil drilling, so won’t start guessing here.)

Of course I was interested.  And I did have the time to read the US Geological Service 2008 report on Bakken.  Interesting stuff.  On the face, you may be skeptical that the USGS would predict the price of oil.  The report, of course, contains no such analysis or prediction.  According to Snopes, that bogus ‘41 years at $16 per barrel’ information came from a dodgy source trying to sell an investment newsletter.  And in the same week as this Facebook exchange, I read second reference to hidden American oil reserves that could satisfy America’s oil needs for 41 years.  Joe is not alone.

The USGS report placed the recoverable oil in Bakken at between 3 and 4.3 billion barrels.  While that is indeed a huge amount of oil, keep in mind that we import 3.6 billion barrels every year.  We consume over 7 billion.  In other words, if we could instantly extract all the recoverable oil in Bakken, instead of pumping it out over time, it still would only cover our oil needs for SIX MONTHS.  (All this information can be found at the USGS FAQ page here, and the press release here for the 2008 report.  More useful information can be had here:  And as to the imagined conspiracy, I also found out that we have, in fact, been drilling in Bakken since the 1950s.  In 2008, we recovered 26 million barrels of oil from Bakken.  It’s not hidden, it’s not untapped, and most importantly, it’s not even all that big compared to what we consume.

Clearly Bakken does not represent a silver bullet.  It isn’t even the largest oil field in America, much less in the top 20 sites the world over.  (Prudhoe Bay, Alaska, is the largest US reserve, at roughly 13 billion barrels of recoverable oil.  See this list.)  Neither does ANWR represent an American oil panacea.  In 1998, the USGS offered a prediction, in the form of a Petroleum Assessment, as to the amount of oil under ANWR.  The Assessment has not been proved, and has in fact been disputed by various groups, in large part because the estimates are based mainly on similar geological structures in neighboring areas.  The 1998 estimates are essentially educated guesses based on the oil contained in geologically similar sites.  Even taking the estimates at face value, ANWR could contain between 5 and 15 billion barrels of recoverable oil.  So, at best, two years of American oil consumption.  Never mind that, in 2008, the Department of Energy expressed doubts as to the oil contents of ANWR.

Bawling for increased drilling offers obvious short term political gain, so we can expect the Palins and the Becks to continue hawking this illogical garbage.  And I certainly recognize our dependency on oil; I’m not one to suggest we stop drilling and buying oil.  We need petroleum-based products for our modern lives.  But it would be nice if we could dispense with the imaginary oil reserves and discuss actual energy solutions.  Secret untapped reserves, even if true, would only offer a forestalling of the inevitable.  Oil is finite, yet we consume in perpetuity.  But when conservatives offer this inane argument about drilling in order to ease our oil problems, they do damage.  Instead of discussing the petroleum equivalent of the Easter Bunny, which wastes time and reduces rhetorical tolerance for the energy issue, we need to discuss and research alternatives to oil.  Anything else amounts to putting one’s head in the sand.

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