More Offshore Drilling! But why?
Since the beginning of the Trump Administration, Secretary of the Interior Ryan Zinke and Administrator of the Environmental Protection Agency (EPA) Scott Pruitt have become lightning rods across the nation. With their excessive spending, blatant cronyism, and belligerence — to say the least — there has been no shortage of reasons for outcry. However, their appalling actions have clouded over their equally if not more appalling policies. Clearly, Zinke and Pruitt have mastered the Trump Playbook of Misdirection: While the nation is fixated on their arrogance, they are stripping our environment of all of its protections. And while most of their actions can be traced to an underlying backdoor reasoning, the expansion of offshore drilling regions is particularly puzzling.
Having spent the past 20 years both directly and indirectly involved in the petroleum industry, I immediately questioned this move: Why is the Trump Administration expanding offshore drilling when the future of energy is elsewhere? This question is easily answered by the fact that from the 1980s and through the 1990s, our nation’s only meaningful form of domestic hydrocarbon production came from offshore as a result of the massive declines in production in onshore legacy fields across Texas and Oklahoma, as well as in Alaska. With the only source of growth came from offshore, we honed our technological abilities to drill in deeper waters and more complex formations. Fast forward to the present, and the petroleum industry has witnessed those short jack-up rigs along the shallow Gulf of Mexico waters blossom into marvels of modern engineering. Today’s fifth generation semi-submersible rigs and drillships can drill in waters more than 5,000 feet deep and find single oil fields that are more than 1 billion barrels of oil in size.
Consequently, by 2000, domestic onshore drilling had dwindled to small mom-and-pop oil producers often in the form of “stripper wells”; onshore drilling, in other words, became an afterthought to the growing offshore drilling sector.
The United States also pursued offshore drilling as a way to regain a modicum of energy independence from a heavy-handed OPEC. Essentially, the United States saw two paths towards accomplishing this goal: expanding offshore drilling and opening up more of the Alaskan Arctic. Thanks to these two sources, the United States’ declining production did not fall off a cliff during the 1990s and 2000s. By 2008, the conviction amongst oil and gas professionals and energy-heavy states that the United States must expand offshore drilling and open up ANWR in Alaska reached its zenith, as evidenced by then-Alaskan Governor Sarah Palin chanting “drill, baby, drill” during the run-up to the presidential election.
However, back in the dusty oil fields of West Texas and the forgotten Wildcatter Capitol Fort Worth, a revolution had already begun. Started by George Mitchell and championed by the likes of the late Aubrey McLendon of Chesapeake and Harold Hamm of Continental Resources, a new form of onshore drilling and completing was taking the central plains by storm. The practice of drilling horizontally into thin chunks of natural gas and oil-saturated shale earth upwards of 2 miles in distance and then pumping upwards of 400,000 barrels of a chemically-laden mixture of sand and fresh water created a new paradigm. Unbeknownst to anyone at the time, this new technique — more commonly known as fracking — changed the world.
This shale revolution began in the early 2000s and accelerated sharply in 2010, undeniably altering the geopolitical dynamics of the world stage. After all, for the past 35 years, the oil industry had faced a sharp decrease: The historical peak of U.S. crude oil production was set in November 1970 at 10.04 million barrels; yet, for the next three decades, the industry gradually, painfully declined in production despite increased offshore drilling, more money spent, and our nation’s leader’s best intentions. By November 2005, when the shale revolution was just taking shape, the U.S. oil production was at a paltry 4.86 million barrels, a 51 percent decline. Ten years later, however, production had doubled thanks to shale production: In November 2017, exactly 45 years after the original peak, the United States surpassed the record by producing 10.06 million barrels.
For all of the criticism and negative publicity fracking has received this past decade, it is still a much better alternative to offshore drilling. The benefits vis-à-vis offshore are many. Onshore shale drilling has created significantly more jobs: Where the few studies that predict job growth from increased offshore drilling are sparse, the number of jobs onshore drilling has created is real. Virginia, as an example, might add 2,500 jobs from offshore drilling. Conversely, North Dakota saw an increase of 80,000 jobs from 2010–2015; Oklahoma saw similar expansion during this time. This is just two states!
The arguments are just as cogent environmentally speaking. When a well onshore is damaged, the ability to contain the problem is quick — usually within a few hours. Conversely, when an offshore well has an accident, the damage can be catastrophic. In 2010, the damaged Macondo wellhead leaked an estimated 3.19 million barrels (more than 130 million gallons) of oil into the Gulf of Mexico.
Finally, modern onshore drilling permanently crippled OPEC in less than a decade whereas U.S. offshore drilling had not impact on OPEC for more than 40 years.
In our new shale world order, the roles have been reversed for the betterment of U.S. national security interests. To say that the United States no longer needs to open new offshore regions for exploration and production of new oil fields is an understatement. Opening up these regions benefits very few people, while harming many. The move will also have negligible effect on foreign policy. Any positive efforts from new offshore regions will not show up in terms of meaningful production for many (many) years. The decision will neither meaningfully change gasoline prices nor create much in the way of job growth. In fact, on a list of pros and cons, all I see are cons.
Michael Morford is a Security Fellow with Truman National Security Project. Views expressed are his own.
