OCS INVENTORY SHOWS COSTS OF LEASING AVERSION

Bob Tippee
Editor

Opponents of federal oil and gas leasing off the US resisted the part of last year's energy bill that called for a resource inventory of the Outer Continental Shelf.

Their concern was justified. The inventory, out this month, makes clear how much the US forfeits to its fear of offshore petroleum work.

According to the Minerals Management Service, which conducted the inventory, acreage amounting to 85% of the OCS off the Lower 48 and 3% off Alaska is subject to leasing moratoriums and presidential withdrawals.

The MMS designations for OCS areas that can't be leased describe the locations: North Aleutian Basin; Washington-Oregon; Northern California; Central California; Southern California; Eastern Gulf of Mexico; and North, Mid, and South Atlantic.

The agency's mean estimates for undiscovered, technically recoverable resources in those areas are 18.92 billion bbl of oil and 85.79 tcf of natural gas.

These aren't reserves figures. They don't represent hydrocarbons waiting to be produced. They just give dimension to exploratory potential.

For all of the OCS, MMS estimated the potential at 85.88 billion bbl of oil and 419.88 tcf of gas.

This means the US politically shrinks its oil and gas exploratory target by one-fifth.

What's the cost to energy supply? Because resource numbers are just probabilities, answers can't be definite.

For perspective, however, assume exploration proceeds on OCS acreage now off-limits and turns half the resource into economically recoverable reserves. The volumes would be equal to 44% of current US oil reserves (21.37 billion bbl) and 22% of US gas reserves (192.5 tcf).

Not conservative enough? Pick another discount factor. At one third of the MMS estimates, the forgone potential amounts to 29% of current oil reserves and 15% of gas. At one fourth of the MMS numbers, the percentages are 22% for oil and 11% for gas.

Would it not serve a variety of US interests to increase oil and gas reserves by any of those amounts? Of course it would.

But the US, because of wild misconceptions about the physical effects of drilling and production, won't even test the potential.

(Online Feb. 10, 2006; author's e-mail: bobt@ogjonline.com)


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