Next to baseball, grousing about high gasoline prices has become the national pastime . But, I learned in a recent trip to the Gulf of Mexico there is an upside to oil companies making bigger profits. They now have money to invest in deep water drilling.
The Gulf is a rich source of oil. We've been drilling there since World War II. There are currently about 4,000 oil platforms producing crude. But, analysts say the so-called easy oil -- beneath water depths of 1000 feet -- is starting to dry up. So, oil companies are searching in far deeper waters. The U.S. Department of the Interior's Mineral Management Service estimates there is up to 60 billion barrels of oil beneath the Gulf.
Today, nearly all integrated oil companies -- including Chevron, Shell Oil, British Petroleum, and ExxonMobile -- are drilling in deep waters. But, drilling in water depths of 4,000 to 5,000 feet is difficult and expensive.
For my "Deep Oil" series, I visited Chevron's Tahiti Field, which is expected to yield up to 500 million barrels of oil. Chevron drilled its first exploratory well beneath 4,300 feet of water and into the Tahiti Field in 2002. For the past year, the company has been spending $250,000 a day leasing a rig to drill production wells. It costs another $250,000 a day to staff and run the rig. Chevron estimates it will spend more than $2 billion at Tahiti before the field even produces a single drop of oil.
The cost of getting oil from deeper fields might seem prohibitive, especially when some of the market for that oil might disappear. After all, U.S. leaders -- including President Bush -- continue to discuss ways to reduce America's dependence on oil. Bush even used his Recent State of the Union address to promote ethanol and renewable fuels.
Though alternative sources of energy will become increasingly important, experts say those fuels aren't likely to dramatically reduce the demand for oil any time soon. In fact, the Mineral Management Service thinks the U.S. will continue to count on fossil fuels for 80 percent of its energy needs for the next 25 to 50 years.
So, it looks like the Gulf of Mexico should play an increasingly larger role in meeting our energy needs.
What are your thoughts about deep water oil drilling? Are ventures like the Tahiti Field worth the cost?
Comments
We don't use oil to make electricity, so nuclear has no meaningful impact on oil consumption. The real problem is the price of gasoline and what it does to the economy. Can't command and control the economy if you can't command and control gasoline, oil, and the Middle East. Let gasoline go to $4, $5, $6 per gallon and let the consumer figure it out w/o Federal mileage standards.
Don makes some good points. In reporting "Deep Oil," both Chevron and Oppenheimer & Co. analyst Fadel Gheit stressed the U.S. becoming more energy independent. Developing oil reserves here is one way. Renewable fuels is another.
To your point regarding nuclear energy: there is movement afoot by some utilities to build new reactors. Chicago-based Exelon is looking at possible sites in Texas. Recently published reports say other utilities are looking at other sites in the South.
One stumbling block in nuclear energy is the lack of a federal repository for waste. The government has identified a site in Nevada, but it is still years from opening. Some utilities are hesitant to build more sites because they will have to store spent fuel rods on their own property.
Unless we want an even more terrorist funding we must stop pouring so much money into Muslim countries. While much of that money is well used a portion finds its way into promoting fanatic views and weapons to further those views.
Why are we so blind to drilling on our own shores?
Why are we so blind to building nuclear power plants what will really cut our use of oil and our carbon dioxide emissions?