A slowdown in offshore energy development in the year since the 2010 Gulf spill has cost the U.S. a projected 57.9 million barrels of oil, according to the American Petroleum Institute.
The figures are drawn from the short-term energy forecasts released by the government’s Energy Information Administration on April 8, 2010, before the Macondo blowout, and on June 7, 2011. They cover oil produced from the Gulf of Mexico.
API President Jack Gerard said the declines in projected Gulf of Mexico production partly result from a slowdown in permitting offshore oil and gas projects following the spill. The government imposed a five-month moratorium on most deep-water drilling, and the pace of shallow-water permits was slower after the spill as both regulators and industry responded to new safety and environmental rules.
The numbers show “the policies imposed by the administration, and, now, the snails’ pace permitting” of offshore projects have caused the U.S. to forgo developing valuable domestic oil, Gerard said in an interview.
The Obama administration announced yesterday that it was selling 30 million barrels of crude from the United States’ emergency stockpile, the Strategic Petroleum Reserve.
“The raiding of the Strategic Petroleum Reserve is an admission supply does matter, but 30 million barrels won’t even replace what we lost from the president’s moratorium and permitorium in the Gulf of Mexico,” Gerard said. “The president’s decision yesterday has only replaced half of what he has destroyed with other policies.”
Energy analysts have pointed out that while some of the differences among EIA forecasts can be chalked up to disruptions in Gulf activity after the spill, some of those changes may be natural fluctuations in forecasting.
And the Interior Department has noted that even with post-spill disruptions, oil production from federal waters in the Gulf of Mexico held steady at around 50 million barrels per month from October 2009 to October 2010, even when crude was still gushing out of BP’s failed Macondo well.
According to the Interior Department, oil production from the outer continental shelf has increased by more than a third, from 446 million barrels in 2008 to more than 600 million barrels estimated in 2010. That may reflect declines in offshore activity in 2009 attributed to the poor U.S. economy.
Still, Gerard said President Barack Obama’s move was short-sighted. He accused White House of “selling the family jewels because he refuses to allow the family to work.”
Gerard and other oil industry leaders argue that instead of tapping the SPR — which may provide short-term declines in the price of oil and, later, gasoline — the U.S. should expand its development of oil reserves nationwide and green light the Keystone XL pipeline that would transport oil sands crude from Canada to the Gulf Coast. That, Gerard insists, would provide real, long-term relief.
We need to be thinking “longer term,” Gerard said. The SPR release is “going to have a short-term impact, but ultimately, the market will absorb it and we’ll go back to the equilibrium established by the global marketplace.”
“If we’re serious, let’s think long term” and bring additional domestic production online, Gerard said.
The Energy Information Administration’s pre-Macondo energy forecast predicted that 1.62 million barrels per day would be produced in May 2011 — but the most recent forecast puts the number at 1.53 million (down 900,000 barrels daily from the original estimate).
There are bigger gaps between the April 2010 and June 2011 forecasts in the last quarter of 2010, after the drilling ban was lifted but before any halted or new deep-water drilling resumed. (The deep-water drilling ban did not halt production.) It wasn’t until this February that the oil and gas companies had equipment that could satisfy a new requirement that they be able to quickly contain runaway underwater wells.
According to the API’s calculations, the 57.9 million barrels of oil that might have been produced in the Gulf from May 2010 to May this year could have been worth $5.1 billion and generated $639 million in royalties for the federal treasury.
Twice the amount that this administration just released from the SPR.