Why reserve estimates are an irrelevant statistic – Outer Continental Shelf

The United States Outer Continental Shelf (OCS) has been in the news lately as George Bush and John McCain have both called for the exploration of this area in order to boost petroleum and natural gas production. Proponents of the exploration often cite reserve estimates of roughly 18 billion barrels as a reason to proceed. Sounds like a big number, right?

Not so fast. According to the U.S. Energy Information Administration, when production in the OCS gets fully online in 2030, it will give a boost of about 200,000 barrels/day. This is the equivalent of 1% of today’s U.S. daily consumption, 7% of projected offshore crude oil production in 2030 and 3% of total domestic production. According to the report linked above, the impact on global oil prices would ultimately be insignificant. Natural gas prices would be affected by roughly $.13 per thousand cubic feet as an increase of 18% in offshore production and 3% increase in total domestic production would be achieved in 2030.

The point demonstrated here is that whenever reserve estimates are referenced, it is always better to question at what rate the oil can be produced. We can see with this data that the OCS, along with many other proposed “solutions”, are not a panacea and would realistically have little impact. Without factoring environmental concerns, it can be safe to conclude that it would be better to promote alternative sources of energy and methods for lowering our energy intensity.


3 Responses

  1. […] Just when it seemed that someone within the government was finally going to stop preaching some made-up, quick fixes, Mr. Bodman resorted to the usual rhetoric of pumping up more oil. When there is a finite supply of something, digging it up faster is not going to help matters. Any person who declares that we need to “produce” more oil, shows total obliviousness to the issue of peak oil. Be it his intention or not, Mr. Bodman’s words are cast in the CNN article as an endorsement of the rush to drill in the Outer Continental Shelf, a risky proposition with regards to tourism and environmentalism that will produce very little oil. […]

  2. Re-read the report….that’s per well…..200,000 per well

  3. Thanks for the comment, but I checked into it, and we had it right originally. From the report, direct quotation:

    For the lower 48 OCS, annual crude oil production in 2030 is projected to be 7 percent higher—2.4 million barrels per day in the OCS access case compared with 2.2 million barrels per day in the reference case “

    There you have it, 2.4 million – 2.2 million, and there will be 200,000 per day thanks to the planned expansions in drilling in the OCS.

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