Here's the Drill 

The sticky truths about offshore oil

"The worst thing we can do as a nation is taking the easy way out ... If you start opening up offshore drilling, then you are buying time and you are not addressing the fundamental problem with fossil fuels.'" —Sen. Lindsey Graham (R–S.C.), June 3, 2005 (The Sun News)

"... the coast of South Carolina is a cash cow. Out there in American-controlled waters is a lot of oil and gas. So let's go get it." —Sen. Lindsey Graham, Aug. 5, 2008 (The Post and Courier)

It's flat-out painful, paying 50 bucks to fill up your car — especially one that a year ago wasn't considered a "gas guzzler." And while air pollution, contaminated drinking water, or the notion that polar bears are huddling together on melting icebergs might get a few people worked up, the skyrocketing cost of gasoline is an issue no politician can ignore. In response to the growing concern of the people, our elected officials are talking about ways to bring the price of a gas down, or at least create the illusion that they're making an effort.

With Sen. Graham's reversal of his stance on offshore drilling, he joins several S.C. politicians who have recently come out in favor of bringing the oil industry to our coast. Lt. Gov. André Bauer (R–S.C.), U.S. Sen. Jim DeMint (R–S.C.), and Republican Party Chairman Katon Dawson all recently endorsed a "Drill Here, Drill Now, Pay Less" plan, and DeMint is pushing drilling as he traverses the state this week on his American Energy Freedom tour. Lately, presumptive Republican presidential nominee John McCain has been calling heavily for new oil exploration, while his Democratic counterpart, Barack Obama, said last week that he would consider limited offshore drilling after vowing to keep the ban in June.

Currently, domestic, offshore oil production occurs only in Alaska, Alabama, Louisiana, and Texas. When President George W. Bush lifted the executive moratorium on drilling the Outer Continental Shelf (OCS) last month — a ban that had been in place since 1981 — oil prices dropped $9 a barrel. Now only a Congressional ban remains as an obstacle to states' ability to approve drilling.

Drilling advocates argue that opening up the OCS would serve to immediately lower prices. Much of the money made in the oil industry is through speculation — trading on the theory that prices will drop or increase — and the psychological value of increasing domestic production could indeed provide temporary relief. But some argue that speculation trading itself is what has led to our skyrocketing prices.

Approving drilling now would mean that oil reaches our gas tanks in a decade, under the best estimates, and the small quantity relative to global production would do little to alleviate prices. (The OCS contains an estimated 59 billion barrels of oil, but 41 billion gallons are already available for leasing.) Still, advocates argue, anything that reduces American dependence on foreign oil is worth pursuing.

That pursuit becomes sticky, however, when weighed with drilling's definable risks to the environment and public health.

Under the Surface

Last week at the North Charleston Rotary Club, Sen. Graham argued that the fact that no oil rigs in the Gulf of Mexico leaked during Hurricane Katrina proves it can be done without environmental risk, according to The Post and Courier. Last month Fox News commentator and former presidential candidate Mike Huckabee made the same statement on national television.

But according to the Mineral Management Service (MMS) of the U.S. Department of the Interior, 435,330 gallons of oil spilled from platforms and rigs as a combined result of Hurricanes Katrina and Rita, while an additional 306,054 leaked from the 457 damaged pipelines connecting those platforms and rigs to shore. Factoring in the estimated seven million gallons that leaked from onshore facilities during the storms, the 2005 Gulf Coast disaster is the second largest oil spill in U.S. history, after the Exxon Valdez. A similar event off the far more developed coast of S.C. would mean big trouble for tourism and fisheries. And you'd probably want to cancel next year's oyster roasts, too.

Graham's office attributes his "no leak" statement to the post-Katrina MMS report, which stated that "the volume of oil spilled and impacts to shore from the offshore infrastructure were categorized as minor." (The U.S. Coast Guard regards any spill over 100,000 gallons as "major.") Rep. Henry Brown (R–S.C.) responded to questions with the same statement from the MMS report, adding that Hurricanes Katrina and Rita were "truly once-in-a-life-time events."

A wreck fish swims amongst lophelia coral off the coast of South Carolina. The deep-water habitat remains one of the largest untouched in the world
  • A wreck fish swims amongst lophelia coral off the coast of South Carolina. The deep-water habitat remains one of the largest untouched in the world

In addition to an extraction site, offshore oil production also requires onshore facilities like refineries and storage tanks. The MMS report states, "Onshore impacts from localized tank failures resulting from flooding were more significant ...." The Coast Guard estimates that 7.1 million gallons spilled as a result of the storms, including 3.78 million gallons from one facility in Cox Bay, La.

Oil production's environmental impacts aren't limited to natural disasters, either.

"You can't get around running right through some type of habitat to accomplish this, so you end up having some type of impact as you're coming up and making landfall," says Roger Pugliese, the senior fishery biologist with the South Atlantic Fishery Management Council (SAFMC), the government organization responsible for managing offshore fisheries. "In our area, as sensitive as estuarian habitats are, that's an area of concern."

SAFMC issued a report in June 2005 that recommends offshore drilling be prohibited on or near coral reefs and live, hard-bottom, ocean habitat areas. In addition to the immediate impact of drilling, dredging, and trenching around a rig site, Pugliese explains that the chronic turbidity, mud, and release of benzenes, hydrocarbons, and gases at drill sites causes the "direct mortality and displacement of any of the species there."

Drilling also affects air quality. According to the Coastal Conservation League, a single drill platform creates the same amount of pollution as 7,000 cars driving 50 miles a day.

Off the S.C. coast, the Blake Plateau is the most likely place oil companies would explore if the ban is lifted. It's an area that Pugliese calls "virtually pristine," and "one of the most extensive, untouched, deep water coral habitats in the world." Hundreds of species are likely to exist there that haven't yet been discovered, and Gov. Mark Sanford has sought to include the area in the proposed Atlantic Coast Deep Sea Corals National Monument, a third of which lies off the coast of South Carolina. He's referred to the reef as on par with Yosemite Valley. Not surprisingly, Sanford opposes deep sea drilling, putting him at odds with his fellow Republicans nationally and in Columbia.

A Moot Point?

Before chairing the Department of Geology at the College of Charleston, Mitchell Colgan worked for the Shell Oil Company, searching for oil deposits off the coast of Alaska. According to Colgan, the Blake Plateau lacks some of the components for oil to form, primarily anoxic basins where organic matter can be transformed into oil; he explains that the area does not have depressions deep enough to allow organic materials to "cook." He adds that the shallow waters extending nearly 100 miles off our coast would make it a particularly easy place to drill; that is, if oil was present.

"The geology of North America is really well known, so we know where the potential areas of gas and oil are," Colgan says. "South Carolina isn't one of those places. After you start looking at the numbers, the whole argument about exploration becomes extremely bogus."

Before Shell, ConocoPhillips, and OXY USA relinquished the last eight oil and natural gas leases in the Atlantic in November 2000, 51 exploratory oil wells were dug. If oil was abundant and present, Colgan argues, they'd still be there.

"Oil companies do not chase ghosts — it costs too much when nothing is there," he says. "Oil exploration is a science, and if the geology looked good, then there would have been seismic ships off our coast looking for oil, and oil companies wanting to explore. Their absence from the area says it all — there is no oil."

But oil companies are pushing hard for the moratorium to be lifted. Charlie Rowton, a spokesman for ConocoPhillips, says that "if more federal acreage was made available, under prudent environmental standards, ConocoPhillips would likely invest even greater amounts in the search for oil and natural gas in the U.S." Rowton claims that opening restricted areas would reduce American dependence on imports, increase energy and economic security, and "reduce upward pressure" on gas prices.

click to enlarge map.jpg

S.C. Sen. Robert Ford (D–Dist. 42) believes drilling would lower fuel costs. Last month, Ford became one of the first local Democrats to support offshore drilling, declaring that he'd author legislation to open the state's coast next spring.

"All I know is, whenever I watch Discovery, is they say off the coast of South Carolina, I don't know how far out, there's millions of barrels of oil," Ford says. "(The geologists) could be environmentalists — they might have been born-again, as far as being Greenpeace advocates."

Ford adds that "while the other members of the General Assembly are doing their jet skiing and polo and horseback riding and whatever they're doing during the summer months," he sees his constituents suffering from high gas prices.

"All I know is, if there's oil out there, we want to find it. And if we find it, we're going to drill for it. And if we drill for it, we're going to make it right for everybody," he says.

As Al Gore, former vice president and Nobel Prize winner, once put it, drilling off our coast is not unlike a drunk curing a hangover with one more drink. The MMS estimates that the South Atlantic offshore region from South Carolina to the middle part of Florida contains 410 million barrels of oil. At the nation's current consumption rate of 20.68 million barrels every day, tapping that entire resource would power the U.S. for 20 days.

Politic-oil Pull

Between espousing the virtues of freeing Americans from a Middle East-controlled commodity and helping working-class citizens feeling the "pinch at the pump," politicians have an easily popular platform to stand on when defending offshore drilling. Sen. Ford argues that "the bottom line is we've got to be free of these Third World countries dictating policy and making our lives miserable any time that they can because they've got the power over our oil."

The U.S. produces about a quarter of the oil we use domestically (just over five million barrels daily), and we use 25 percent of the total world supply. To supplement that, in 2007 we imported an average of 1.9 million barrels (42 gallons in a barrel) per day from Canada (our largest foreign source), 1.5 million from Mexico, and 1.4 million from Saudi Arabia. But the Middle East holds 66 percent of all known reserves, while North America holds only 5 percent. It's difficult to imagine an oil-dependent future without some reliance on a supply from the Middle East.

That conundrum is at the heart of the current energy debate in the U.S. On the one hand, politicians like Rep. Brown argue that going after the "root of the problem" lies in increasing domestic supply, while opponents like Sen. Barbara Boxer (D–Calif.) call lifting the moratorium a "huge gift" for oil companies, one that "threatens our coast, our economy, and our jobs, while not doing one single thing to lower gas prices."

Over the last five years, the number of domestic drilling permits has increased dramatically, from 3,802 in 2002 to 7,561 last year. In the eight years of Bush's presidency, the number of drilling permits issued has increased 361 percent, while the average price of a gallon of gasoline has jumped — from $1.41 when Bush took office to somewhere around $3.88.

"Even if increased domestic drilling activity could affect the price of gasoline, there is yet no justification to open additional federal lands because oil and gas companies have shown that they cannot keep pace with the rate of drilling permits that the federal government is handing out," a June 2008 report by the U.S. House Committee on Natural Resources states. "The fact is that the nation simply cannot drill its way to lower prices at the pump."

That report points out that while 91.5 million acres of federal land and water are currently leased by oil and gas companies, only 23.5 are actually in production.

"Oil and gas companies would not buy leases to this land without believing oil and gas can be produced there," the report states. In addition, the Mineral Management Service estimates that 79 percent of oil on the Outer Continental Shelf is currently open for leasing.

Hamilton Davis, a project manager for the Coastal Conservation League, attributes that lack of production to simple economics.

"We've gone after our easy-to-get, cheap oil, and what we're left with are reserves that require more energy and money [to extract]. They're waiting on gas prices to get to a point where it makes it economically viable to pump it out of the ground," Davis says. "Until we have five, six, or seven dollar gasoline, it doesn't make sense. They're simply taking advantage of the fact that we've got $4 gasoline and we're in an election year to try and get this moratorium lifted, so they can put these leases on the books and they're reflected on Wall Street that they have these reserves under their control."

That sort of speculation, or trading oil on paper, has led Congress to look at bills like HR 6604, which would have ordered tougher oversight of oil-futures speculation. Despite 61 Republicans crossing party lines to vote for HR 6604, it failed to garner the necessary two-thirds majority in the U.S. House last week. Before that vote, the CEOs of 12 major U.S. airlines sent a joint letter to their customers, calling on them to support legislation curbing oil speculation, claiming that a barrel of oil may trade 20 or more times before it is ever delivered and used. Rep. Brown, who voted "no" on HR 6604, says the jury is still out on the role that speculation plays when it comes to the price of oil. According to Brown, "expert after expert, industry after industry, and poll after poll" have said we need more supply.

When Congress left for their August recess, a group of Republicans stayed behind to protest House Speaker Nancy Pelosi's (D–Calif.) decision not to bring offshore drilling to a vote. Brown participated, issuing a public statement claiming that Democrats were out of touch with the demands and desires of their constituents.

Last week, U.S. Rep. James Clyburn (D), one of the few South Carolina politicians to take a public stance against drilling in recent weeks, responded with an attack on the GOP's approach to curtailing gas prices in a statement on the House floor.

"(Republicans) have stood in the way of comprehensive legislation that would increase supply, reduce prices, protect consumers, and transition America to a clean, renewable energy-independent future," Clyburn said. He denounced Republicans for blocking bills that would have drawn oil from U.S. strategic reserves, "Use it or Lose it" legislation that would have required oil companies to drill on their existing leases, or surrender them, and others, like HR 6604, that would curb speculation and repeal taxpayer subsidies to oil companies.

For their part, the bulk of Republicans (those who voted against HR 6604) are awaiting a federal report due this fall on the impact of speculation on oil prices. Numerous bills have been authored to help drilling, including the Main Street U.S.A. Energy Security Act of 2008, which would facilitate the construction of new refineries, and HR 6108, authored by Rep. Sue Myrick (R–N.C.), which would lift the moratorium. HR 6108 already has 105 co-sponsors.

The most popular legislation introduced thus far appears to be the Gang of 10 compromise, an energy proposal that calls for more nuclear, renewables, and domestic drilling. Days after the Gang of 10 measure, sponsored by five Democrats and five Republicans (including Sen. Graham), Barack Obama publicly said that he would support limited offshore drilling.

If the U.S. Congress were to lift their moratorium this fall, the S.C. Statehouse could then vote on approving drilling when they reconvene next spring. If given the go, the state would likely need to set up regulations on how refineries, storage facilities, and rigs would be located and regulated. The proposed exploration is over 50 miles offshore — out of site of our beaches — but it would require miles of pipeline to transport oil or natural gas to shore. By the time any Atlantic oil reaches a Charleston fuel pump, $4 gas could be a distant memory.

According to geologist Mitchell Colgan, if you take our current rate of consumption into account, the entire Outer Continental Shelf contains only an estimated 16-month supply of oil. "There's oil out there, but the equation has to look at the fact that we're running out," he says. "This is a fool's game. Even if we extracted all of the oil, it still doesn't fundamentally change our problem."

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