Friday, April 02, 2010

Oil and Gas Drilling: Polling Is All That Counts

This week’s announcement that portions of the east coast and the eastern Gulf of Mexico will be put up for oil and gas exploration lease sales reminds me of a speech given by President Obama in the midst of his campaign against John McCain on the very subject of offshore drilling.

Most telling is this observation which I have extracted from the end of the speech preserved for posterity at You Tube:

“When I am President I intend to keep in place the moratorium here in Florida and around the country that prevents oil companies from drilling off of Florida’s coasts. That’s how we can protect our coastline and still make the investments and reduce our dependence on foreign oil and bring down gas prices for good. That may not poll well, and I understand that Senator McCain may have looked at the polls and said eh, people might buy drilling or they might buy a gas tax holiday. My job is not to go with the polls, my job is to tell the American people the truth about what is going to work when it comes to our long term energy future and how we can provide some short term relief to families. That’s what I intend to do as President as well.”

Here is the whole statement.

Tense is important. Obama was speaking in the present tense. That was his job then, not to listen to the polls but to go ahead and tell the American people what they didn’t want to hear. But now, that Obama is President, apparently his job is to listen to the polls.

By his own admission, even if there is a significant discovery of oil and gas in these areas Americans would not benefit from this for a decade at least. The infrastructure just isn’t there to handle production.

And there is even doubt that significant reserves are really there. By its own admission, the Florida commission that investigated Florida’s reserves determined that there were less than 100 million barrels of recoverable reserves in the Florida offshore, barely enough to make a dent in America’s insatiable appetite for fossil fuel.

According to the plan, not only will the eastern Gulf of Mexico be opened up for lease sales, but offshore portions of Virginia and Georgia are also targeted.

Now there is just not a lot of data out there to say whether significant reserves are there. During the ‘70’s seven wells were drilled in the Baltimore Trough area including the COST B-2 well, and they “encountered no significant shows of hydrocarbons.”

Indeed the report by the Delaware Geological Society said that while reservoir rock, sealing rock and structure was present, the oil source was immature terrestrial kerogen. Undercooked, as it were. This means that any hydrocarbon potential in the area will be from deeply buried deposits, well below the “oil window” and likely to be natural gas, if anything is left in the cooking process. Natural gas from depths exceeding 20,000 feet.

You know, this is why oil and gas is so expensive now. New reserves are discovered monthly, but all from deep, deep depths, and all of it expensive to recover.

In short, there is nothing there but best wishes and the prognostications of oil industry giants (and service companies who make money whether there is a drop of oil discovered or not).

No, this is not a call to arms for energy independence. This is a political move to marginalize Republicans and their “Drill Baby, Drill” mentality.

A mentality that, I should point out, does not care at all about energy independence either. It is all politics. So this bone that Obama threw to the Republicans will be sniffed and thrown back at him, just like the bones that he threw to them during the debate on healthcare reform.

If there is going to be any offshore drilling that Republicans will be in favor of, it will be because it is their idea, their effort. It is disaster to Republicans if someone digs a successful natural gas well in the Virginia federal offshore area, and Republicans can't take the credit for making that possible.



Anonymous said...

So Hal, in your brilliance, sometimes, I am a little dull in trying to let it all sink in.

I get the part of this not being favorable to the Republicans when it is all said and done.

However in the short or long term, is this a smart move for the President at the cost of it not being good for the Republicans???

Hal said...

The President has gotten his base reled up, true. What are they going to do, primary him? We all knew Obama was a moderate. Some of us knew that the only job he had as a candidate was to get elected. Now he has to pay attention to the polls. But you watch. Watch when and if they actually hold a lease sale, rather than just talk about holding one. Then watch if any oil company bids. Then watch to see if they actually spud a well. This acreage is economically marginal.

My best guess is that there is more political capitol in saying we will drill off the east coast than there is capitol willing to invest in that endeavor.

Fenway Fran said...

Hal is definitely on to something here. My money's on his prediction.