What is Offshore Drilling
One of the most controversial topics dominating the energy discussion is related to opening the remaining protected U.S. coastline to oil exploration. Questions remain regarding the impact of offshore drilling on the economy and the environment. Specifically:
- Those in favor of offshore drilling point toward lower gasoline prices and reduced reliance on foreign oil that would result from domestic drilling and feel strongly that the impact on the environment would be negligible.
- Opponents are equally adamant that the drilling would not noticeably impact the price of gasoline nor appreciably the increase domestic energy supply, and it would have a devastating affect on the surrounding ecosystem.
Worldwide daily consumption of oil generally exceeds 80-85 million barrels thereby driving the petroleum industry to continually search the planet for new reserves. Since the world’s oceans comprise almost 75 percent of the earth’s surface, it stands to reason that much of the world’s future new oil reserves will be discovered underwater.
Underwater exploration, drilling, and transportation of crude oil requires special equipment and processes to first, deal with the inherent challenges of work in lightless and deep areas, and second, to do so without the risk of polluting the environment. This article will focus on the process of exploration of fossil fuels and understanding the various extraction methods of crude oil in the deep ocean environment.
Locating Fossil Fuels
Most of the world’s petroleum lies between 500 and 25,000 feet in depth below ground. Petroleum products are generally believed to have begun as plankton between 10 and 600 million years ago. Over millennia this decaying matter of tiny plants and animals drifted to the bottom of the ocean, was covered with sand and mud, and with the help of heat and pressure evolved into deposits of liquid oil, gas, and petroleum materials. This organic material, settling in traps under thick layers of rock, has taken a number of forms:
- Liquid petroleum (oil)
- Gaseous petroleum (natural gas)
- Petroleum deposits (oil shale or tar sands)
Locating these deposits is the first obvious challenge; geologists have traditionally studied surface features and satellite maps, taken soil and rock samples, and used gravity meters to identify gravitational fluctuations that could indicate a subterranean flow of oil. These options are viable in the exploration of land and relatively shallow water but are ineffective when working at ocean depths of thousands of feet amidst rough seas. There are a number of methods available to deal with this challenge:
- Sniffer equipment, which is used to detect traces of natural gas in seawater, aids in locating seeping deposits.
- Magnetic survey equipment can be used to identify magnetic anomalies that might serve as indicators of underground traps.
- Seismic surveying (referred to as sparking) analyzes information from sending shock waves down through the water to locate possible traps in the ocean floor. Seismic surveying is somewhat controversial with the environmentalists as the shock waves cause what some term “acoustic pollution,” viewed as a threat to the more seismically aware sea life (e.g. blue whales).
Once undersea oil deposits are detected, the survey teams typically note the GPS coordinates, plant a buoy, and apply for a government lease to perform exploratory drilling. Only through exploratory drilling can the true potential of a specific area to provide significant and commercially feasible amounts of petroleum based products be quantified.
Exploratory Off shore Drilling
Exploratory drilling involves the use of a mobile drilling platform (ship-based or towed), where the oil companies typically drill 4 temporary exploratory wells over the area in question, each drilling taking 60 to 90 days to complete. The goal is to obtain a core sample which is used to look for signs of petroleum (termed a show). Once a show occurs, the drilling is terminated and the additional tests are performed to assess the quality and quantity of the sample. If determined is determined to adequate and commercially feasible, then the oil company will drill additional wells to verify the initial findings.
Production Offshore Drilling
Production wells are anticipated to last 10 to 20 years before they are no longer profitable and are fixed directly to the ocean floor using foundations or tethering cables. The design of these structures is critical as the actual platform must remain steady which is not an easy task given the realities of ocean effects particularly amidst storms. With the platform in place, there are a number of factors to consider:
- Coverage area: By using a process termed directional drilling, platforms can reach deposits miles away from the actual drill site.
- Efficiency: Through use of a sub-sea drilling template, high levels of drilling accuracy can be achieved, thereby ensuring the anticipated quantities are obtained.
- Effectiveness: Oil companies have perfected a 3-phased drilling process to ensure the oil and gas is transported to storage in tact without polluting the ocean.
Transport of Oil and Gas
Once a petroleum source is hit, the focus shifts to measures to control the flow of pressurized oil and gas up to the surface. These measures include:
- The use of a production casing, initially closing off the well from the surrounding petroleum reservoir and then perforated at different depths using well-targeted explosives, provides for the surfacing of oil and gas at less than that of a blasting geyser.
- With the gradual decline of natural pressure, injection systems providing water, compressed air, or steam are used to boost the pressure or add heat and allow for the flow the remaining petroleum.
The liquid that is removed from a well is typically a mixture of crude oil, natural gas, water, and sediments. A necessary step before refinement is the removal of unwanted substances from the oil. These production facilities are typically part of the drilling platforms themselves. As most oil refinement takes place onshore (and in some instances on converted tanker ships), the job of the drilling facility is to provide oil and natural gas to storage and treatment plants free of these pollutants.
Closing of a Well
Once a well runs dry or more typically when the costs of further development outweighs the potential future profits, the oil company will plug and abandon a well. Depending on specific geographic, political, and economic factors, the platforms will either be removed from their moorings and relocated (or scrapped) or they will remain and slowly deteriorate from the gradual erosion and corrosion caused by the sea.
How Much Oil is Available?
According to the Energy Information Administration (EIA), the current supply of recoverable crude oil on the off limits portion on the U.S. continental shelf is estimated at 18 billion barrels. Since the U.S. uses 7.5 billion barrels of oil per year, this would equate to slightly more than a 2-year supply assuming the EIA estimate is correct.
How Soon Could the Oil be Available?
Even if the outer continental shelf (OCS) were immediately opened for drilling, EIA studies estimate that it will be at least 10 years before any oil would be available and the amount would not be enough to materially affect world prices. The technicalities in play (i.e. leasing wells, locating the oil, and getting the oil to the surface) suggest that production wouldn’t even begin until 2020 and it would take until 2030 to reach full production, resulting in daily output of 0.2 million barrels per day (as compared to 82.5 million barrels each day worldwide).
Opponents to drilling may have a valid point in questioning the potential impact of 0.2 million barrels per day, but to argue that the time lag itself is a reason not to pursue offshore drilling seems disingenuous. The real question that needs to be answered is, “Does offshore drilling figure as part of an overall U.S. energy strategy?” And, if so, then the time lag to full production suggests starting the preliminary steps as soon as possible. If not, then the implication is that there are replacement strategies that will lessen U.S. reliance of foreign oil and keep energy prices at manageable levels.
What are the Real Cons to Offshore Drilling?
The major environmental objections to offshore drilling include:
- In offshore oil drilling, we are not just digging underground, but also thousands of feet underwater.
- In recovering oil from the ocean floor, other chemicals and toxic substances come up (e.g. mercury, lead and arsenic) and these substances that are often released back into the ocean.
- Seismic waves, used to locate oil, can cause harm to and / or disorient sea mammals.
- The mere infrastructure for drilling wells and transporting the oil can accelerate erosion and inadvertently lose marshlands and other storm buffers on shore.
Are these Objections Valid?
Proponents for offshore drilling will say that technology and stronger government oversight have led to a 99.999 percent safety record since 1975, decreasing from 3.6 million barrels of crude oil spilt in the 1970s to less than 500,000 in the 1990s. In fact, more oil spills into U.S. waters from natural sources and industrial waste than from offshore oil and gas drilling. Toxic chemicals are released at levels too low to be absorbed by fish.
Opponents state that these facts relate to the offshore operations themselves and do not tell the whole story. Marine transportation of the oil accounts for nearly one-third of the oil spills worldwide and the Mineral Management Service estimates there will be at least one oil spill per year of 1,000 barrels or more in the Gulf of Mexico over the next 40 years; and a major spill of over 10,000 barrels every 3 to 4 years. Further, though a 99.999 percent safety record is indeed impressive, that minuscule accident rate of 0.001 percent can represent disaster to those living in the vicinity of the accident.
What is the Likely Outcome?
It is uncertain whether the U.S. will risk its coastline for promises of price relief. Our view is that the answer will lie within an comprehensive strategy and approach where offshore drilling represents only a part of the solution. The numbers themselves do not seem to support offshore drilling as a primary, stand alone initiative.