How to really fix the problem of deep water drilling? Stop consuming it

Posted: June 5th, 2010 by: h2

If you don’t like the cost of deep water drilling, if you don’t like what you are seeing on your TVs, if you are shocked by the massive environmental costs of this BP Deepwater Horizon blowout, then push your representatives to establish far more powerful regulations on it. And by all means, do your part as well, stop driving so much. Less demand translates directly to less need to do deep water drilling. At least for now.

The real problem, of course, is that most currently producing large fields are in a state of decline, forcing oil companies to go offshore to get new sources of oil. Drill baby Drill simply allows a tiny bit more high risk offshore drilling to take place. Remember, initial estimates of the recoverable reserves in the Macondo reservoir (the one that is spewing out oil into the Gulf of Mexico now, that is) put them at about 50 million barrels. That’s 2.5 days supply for the USA, give or take, or about 0.6 days supply for the planet.

BP spokesman Jon Pack said it’s still possible there will be oil produced in the area. The reservoir may have held about 50 million barrels of crude, he said.

Once global production goes into serious decline, an event slated to being around 2012 or so by the US military panel who just put out their report on this, no amount of new oil fields put online will be able to overcome the existing 5-7% yearly decline rates of currently producing fields. Do the math. 5% decline, the current conservative estimate, out of about 75 million barrels per day petroleum (the rest of the 85 or so million barrels per day is other liquids, including, oddly enough, stuff like ethanol I believe. So 5% of 75 million is 3.75 million barrels per day of new production, or increased production (read that as: pump out the oil faster) from existing fields.

Saudi Arabia claims 12 million barrels per day (bpd), is actually pumping I think around 8 or 9, which expert commentators believe is the actual real amount they can pump realistically except for short bursts of more heavy oil production. So in 3 years we need to add, now, as we speak, one new Saudi Arabia of production. That simply is not going to happen. And that’s at the lower 5% number. The higher, 7%, makes it closer to 2 years a new Saudi Arabia.

Let me put this clearly: no such oil pools have been discovered, and it takes decades in most cases to bring online oil fields after discovery. Discoveries peaked about 40 years ago, and have been declining ever since. This is the basic reality of global oil production peaks, and it’s why peak oil is called peak oil. No amount of politics can do anything more than add a very small bump to the downward trajectory of the production numbers. So I really suggest Fox news and the Republican party begin preparing their loyal support base for this reality, the blame game isn’t going to go over well and it just makes you sound stupid if you say things that have nothing to do with reality.

The true cost of drilling

While we’re shocked by the spill in the Gulf, the sad fact is in the third world, big oil spills constantly, and often fails to properly clean it up.

What the industry dreads more than anything else is being made fully accountable to developing countries for the mess it has made and the oil it has spilt in the forests, creeks, seas and deserts of the world.

There are more than 2,000 major spillage sites in the Niger delta that have never been cleaned up; there are vast areas of the Colombian, Ecuadorian and Peruvian Amazon that have been devastated by spillages, the dumping of toxic materials and blowouts. Rivers and wells in Venezuela, Angola, Chad, Gabon, Equatorial Guinea, Uganda and Sudan have been badly polluted. Occidental, BP, Chevron, Shell and most other oil companies together face hundreds of outstanding lawsuits. Ecuador alone is seeking $30bn from Texaco.

The only reason oil costs $70-$100 a barrel today, and not $200, is because the industry has managed to pass on the real costs of extracting the oil. If the developing world applied the same pressure on the companies as Obama and the US senators are now doing, and if the industry were forced to really clean up the myriad messes it causes, the price would jump and the switch to clean energy would be swift.

If the billions of dollars of annual subsidies and the many tax breaks the industry gets were withdrawn, and the cost of protecting oil companies in developing countries were added, then most of the world’s oil would almost certainly be left in the ground.

The real cost of cheap oil

And there you have it. I’m not sure people understand just how precarious our current consumption levels, and the economy that depends on them, are. There is no guarantee that we have some inalienable right to shop at WalMart buying garbage made in China, shipped in huge container ships, running toxic bunker oil.

[Updated Monday, June 7]
James Howard Kunstler just posted his weekly rant, which had this nice little comment, which puts it about as clearly as you can hope to do:

The obvious remedy for the oil-and-car problem would be to live in walkable towns and neighborhoods served by the kind of public transit that people are not ashamed to ride in. But it may be too late for that. We’re going to be a much poorer society from now on. We squandered the financial resources for that transition on too many other things. We’re stuck with our investments in houses and their commercial accessories, built where they were built, and no Jolly Green Giant is going to pick them up and move them closer together in an artful way that adds up to real towns. A reorganization of American life will occur, but now it will be on much less deliberate terms, a much messier and more destructive operation, a default to the smaller scale by extreme necessity, with a lot of losses along the way. The Deepwater Horizon incident only hastens the process.

Kunstler isn’t always that great, but he does sometimes pull out a good set of words when he’s feeling inspired by something or other. As always, ignore his comment threads, they are unmoderated mostly, and pretty much useless in terms of worthwhile statements that add to the discussion.

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