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Offshore Drilling Backed as Remedy for Oil Prices
Push for U.S. Exploration Gains Traction, but Big Political Hurdles Remain

By Steven Mufson
Washington Post Staff Writer
Monday, July 14, 2008

On Jan. 28, 1969, a blowout on a Unocal rig six miles off the coast of California spilled 3 million gallons of oil into the waters off Santa Barbara. The blackened beaches and oil-soaked birds and seals became icons for the environmental movement and eventually brought oil exploration off the Atlantic and Pacific coasts of the United States to a halt.

Now, President Bush, Republicans in Congress and big oil companies want to reopen those waters to oil and gas exploration. In his radio address Saturday, Bush said that "technological advances have allowed us to explore oil offshore in ways that protect the environment" and that outer continental shelf areas now off limits "could produce enough oil to match America's current production for almost 10 years."

The issue has become a dividing line for the presidential candidates. Sen. John McCain (R-Ariz.) reversed his position last month and endorsed expanded offshore drilling, while Sen. Barack Obama (D-Ill.) wants to maintain the moratorium on offshore drilling, which he says would do nothing to immediately lower gasoline prices. In the past week, congressional Republicans have issued a blizzard of statements pushing for action before summer recess, and some Democrats may be leaning their way.

Polls show that Americans, pressed by high gasoline prices, may be open to offshore drilling. In a May Gallup poll, 57 percent of people surveyed were willing to allow drilling in coastal and wilderness areas currently off limits, if it had the potential to reduce high gas prices.

But prying open U.S. waters for oil and gas drilling remains a daunting political task. Real estate developers and tourism industries oppose drilling offshore. Environmentalists are battling against it. Most Democrats in Congress oppose it, too. And for years, Florida politicians, including the president's brother, former Florida governor Jeb Bush (R), have fought against drilling.

Two years ago, a massive drive to expand offshore drilling ended with a compromise that opened an additional 8.3-million-acre area in the Gulf of Mexico known as Lease 181 and gave a chunk of the federal revenue to state governments.

Senate Minority Leader Mitch McConnell (R-Ky.) has introduced an energy bill with 43 Republican co-sponsors that would, among other things, open up the outer continental shelf starting 50 miles from shore for oil and gas exploration. McConnell says 85 percent of the outer continental shelf is currently off limits.

Although the drilling would be in federal waters, state governments would have to give approval for exploration and production off their shores. McConnell's legislation would give states an incentive to allow drilling by giving them a 37.5 percent share of federal royalties.

Republicans have tried to link offshore drilling to the surge in gasoline prices.

"The American people are saying loud and clear -- there is no ambiguity about it -- they want us to do something about it, and they understand the laws of supply and demand," McConnell said last week. He said he was negotiating with Senate Majority Leader Harry M. Reid (Nev.) in an effort to find common ground.

Top Senate Democrats this week said compromise was possible, but House Majority Leader Steny H. Hoyer (D-Md.) issued a release saying that there are already 68 million acres of public lands and waters open for drilling. The area is equal, he said, to Maine, New Hampshire, Vermont, Massachusetts, Connecticut, Rhode Island, New York, New Jersey, Delaware and about two-thirds of Maryland, combined.

The debate over offshore drilling has been muddied by a variety of claims about how much oil and gas might lie under the sea, what it would take to get hold of it and what the impact would be.

McCain told reporters last month that "we have untapped oil reserves of at least 21 billion barrels in the United States." In fact, the U.S. Geological Survey estimates that there are "undiscovered conventionally recoverable resources" of 17.8 billion barrels. That's not the same thing as "reserves." In the oil business, "reserves" refers to oil that has been found and "proven," whereas "resources" refers to promising geological structures where the presence of oil remains uncertain.

In the eastern Gulf of Mexico, those "resources" are likely to represent actual oil because the geology is an extension of the western Gulf of Mexico, where oil has been drilled for years. There is less certainty about what may lie off the Atlantic coast.

If, in fact, there are 17.8 billion barrels of oil offshore, that would equal half the reserves of Nigeria or about 60 percent of proven U.S. reserves. It could substantially reduce U.S. imports for a decade or two or sustain U.S. production when other fields decline.

But developing those resources would take time. A report last year by the Energy Department's Energy Information Administration said that "access to the Pacific, Atlantic, and eastern Gulf regions would not have a significant impact on domestic crude oil and natural gas production or prices before 2030. Leasing would begin no sooner than 2012, and production would not be expected to start before 2017." It added, "Because oil prices are determined on the international market, however, any impact on average wellhead prices is expected to be insignificant."

Drilling proponents say that drilling today is much more sophisticated than it was in 1969. Oil companies and their supporters boast about how their platforms and pipelines withstood the hurricanes of 2005. "I think people are reassured that not a drop of oil was spilled during Katrina or Rita," McConnell said. "Those rigs in the Gulf, there was not a single incident of spillage that anyone reported."

Although the overwhelming majority of safety valves did in fact work during the hurricanes, the Minerals Management Service of the Interior Department reported that there were five spills, each between 1,000 and 2,000 barrels. Altogether, 125 small spills totaled 16,302 barrels, almost a quarter as big as the Santa Barbara spill. (The MMS says that over the past 20 years, less than 0.001 percent of oil produced in U.S. waters has been spilled.)

Foes of offshore drilling argue that the oil industry isn't taking advantage of lease areas already available on federal lands and waters. Democratic Sens. Russ Feingold (Wis.), Christopher J. Dodd (Conn.) and Robert Menendez (N.J.) have introduced "use it or lose it" legislation.

"For years, oil companies have been sitting on millions of acres -- doing nothing to develop them for drilling -- while hardworking Americans grapple with skyrocketing prices at the pump," Dodd said in a statement.

But oil companies say they need time to line up rigs and crews. G.L. Kirkland, head of exploration and production at Chevron, said that 498 of Chevron's 796 leases are considered "undeveloped," but that plans for drilling are moving ahead. He noted that oil companies pay rent to the federal government on undeveloped leases and lose undeveloped leases after 10 years.

Many oil companies and Bush administration officials say that it is hypocritical to pressure other countries to open new exploration areas, especially offshore, when the United States refuses to drill in its own waters. Indeed, many of the world's hottest oil prospects are off the shores of West Africa, Thailand, Australia, Brazil, the Persian Gulf and the Arctic Circle.

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