Tuesday, April 22, 2008

Oil and Gas Exploration off the Carolina Coast

WASHINGTON. 27 February 1991. President Bush's National Energy Strategy calls for increased exploration for oil and natural gas in certain areas of the Outer Continental Shelf (OCS) including the coast of South Carolina.

The National Energy Strategy, a 2l4-page Department of Energy document outlining energy policy for the next five years, claims the OCS, the ocean floor from the coast to the 200-mile limit may contain as much as 26 percent of undiscovered U.S. oil resources.

Large portions of the OCS are currently protected from exploration by a presidential order that will expire in the year 2000. Protected areas include much of California, the Alaskan North Aleutian Basin, portions of the mid-Atlantic, and some parts of the eastern Gulf of Mexico.

On February 21, the Department of the Interior released a draft copy of a 5-year plan outlining the department's strategy for the sale of offshore leases for the years 1992 to 1997. The plan proposes to open thousands of square miles of the OCS to oil and gas exploration.

The Department of the Interior plans two lease sales off the South Carolina coast: one in 1994 and one in 1997. The areas under consideration include roughly 2,000 square miles running from 140 to 180 miles offshore.

In August of 1990, the Senate passed House resolution number 1465, the Oil Pollution Act of 1990. An amendment to this legislation, sponsored by Congressman Walter Jones D-NC, is aimed at delaying Mobil Oil from drilling exploratory wells off the Outer Banks of North Carolina. The law prohibits oil and gas drilling off the coast of North Carolina until October 1, 1991.

Mobil Exploration and Producing U.S. Inc., based in New Orleans, plans to drill an exploratory well 36 miles off the Outer Banks due east of Dare County in 3,100 feet of water. Mobil estimates that 5 trillion cubic feet of natural gas might be found.

Any efforts to explore for oil or natural gas off the South Carolina coast could depend on the fate of Mobil Oil's plans.

Mobil is currently battling with North Carolina state officials, including Governor Jim Martin, who objects to offshore drilling. Governor Martin asked President Bush--.without success--to include North Carolina in the 10-year drilling moratorium.

Environmental groups, including Greenpeace and the Sierra Club, have objected to Mobil's plans because of the chance of an oil spill. Mobil Project Manager James C. Martin said, "The risk of an oil spill from this type of operation is very low." The Department of the Interior carries this statement further saying there is no risk at all associated with drilling for natural gas."

Exploratory wells are drilled from an anchored ship and not from an oil drilling platform. When drilling is complete, the ship can simply raise the anchor and sail away. To alleviate the contamination from a possible spill, Mobil plans to have an oil skimmer on hand 24 hours a day and another emergency vessel standing by in nearby Morehead City.

Offshore oil wells cause fewer oil spills than oil tankers. Nevertheless, the presence of oil wells can cause an increase in the volume of tanker traffic. Mobil says that if they find significant amounts of natural gas or oil they will build a pipeline to carry the product ashore. This will eliminate the need for barges and tankers.

This will not be the first oil well drilled in the waters of North Carolina. In 1965, Mobil drilled three wells in the environmentally sensitive Pamlico and Albermarle sounds. Exxon drilled at Cape Hatteras in 1950.

In 1984, The United Press International reported that Shell Oil Company planned to drill exploratory wells 45 miles southeast of Hilton Head, South Carolina. Shell spokesmen deny any drilling occurred and say that Shell Oil does not currently hold any leases for tracts off the South Carolina coast. Shell Oil does hold leases off North Carolina and Virginia.

According to the American Petroleum Institute, no commercially feasible amounts of oil or natural gas have been found along the Atlantic coast while at least $2 billion has been spent on exploration.

Environmental concerns prompted the Bush administration to block the planned drilling of tracts around the southern tip of Florida. A fight has developed over who will pay back the $100 million spent by oil companies on tracts than cannot be explored.

Companies wishing to drill off South Carolina must submit plans to the Department of the Interior and the South Carolina Coastal Council.

The Minerals Management Service of the Department of the Interior conducts sales of offshore oil leases. The agency provides revenue to the federal government in amounts second only to the Internal Revenue Service. 100 billion dollars has been earned--most of this in the last 10 years.

Revenues from leases of tracts more than six miles offshore go to the federal government. South Carolina can collect 27 percent of leases from tracts from 3 to 6 miles offshore and 100 percent of leases within 3 miles. Because the areas under consideration for lease in the new Interior Department plan are more than 6 miles offshore, no lease monies would be given to South Carolina.

Last June, the Bush administration announced that it would develop a legislative initiative that will provide coastal communities with a larger portion of lease revenue.

The National Energy Strategy seeks to "increase the use [and exploration] of natural gas." The document says that the OCS supplies about 1/4 of the U.S. production of natural gas. Total gas reserves--those that would be feasible to drill given economic considerations--are estimated to be between 44 and 114 trillion cubic feet. The government projects that some of these reserves might be found under the continental shelf off South Carolina.

The Department of the Interior suggests that natural gas is a cheap, abundant, and clean-burning source of energy. Amazingly, natural gas consumption has actually declined over the past two decades while oil imports have increased. This decline is blamed on a variety of factors including the mass of regulations that make exploration and production difficult.

The President's National Energy Strategy has been criticized by some for an emphasis on increased production rather than increased conservation. Certain critics would like to see an increase in the so-called CAFE standards, Car Fuel Efficiency, which require a certain minimum average miles per gallon for automobiles.

The United Press International reports that in the 1940's the chairman of Clemson University's Geology department once promised "to drink all the oil found in South Carolina." To date, that certainly has been possible, but future exploration might make that a lot to swallow.

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