• 2 hours WTI At 7-Month High On Supply Optimism, Kurdistan Referendum
  • 9 hours Permian Still Holds 60-70 Billion Barrels Of Recoverable Oil
  • 14 hours Petrobras Creditors Agree To $6.22 Billion Debt Swap
  • 18 hours Cracks Emerge In OPEC-Russia Oil Output Cut Pact
  • 22 hours Iran Calls On OPEC To Sway Libya, Nigeria To Join Cut
  • 23 hours Chevron To Invest $4B In Permian Production
  • 1 day U.S.-Backed Forces Retake Syrian Conoco Gas Plant From ISIS
  • 1 day Iraq Says Shell May Not Quit Majnoon Oilfield
  • 4 days Nigerian Oil Output Below 1.8 Million BPD Quota
  • 4 days Colorado Landfills Contain Radioactive Substances From Oil Sector
  • 4 days Phillips 66 Partners To Buy Phillips 66 Assets In $2.4B Deal
  • 4 days Japan Court Slams Tepco With Fukushima Damages Bill
  • 4 days Oil Spills From Pipeline After Syria Army Retakes Oil Field From ISIS
  • 4 days Total Joins Chevron In Gulf Of Mexico Development
  • 4 days Goldman Chief Urges Riyadh To Get Vision 2030 Going
  • 4 days OPEC Talks End Without Recommendation On Output Cut Extension
  • 4 days Jamaican Refinery Expansion Stalls Due To Venezuela’s Financial Woes
  • 5 days India In Talks to Acquire 20 Percent Of UAE Oilfield
  • 5 days The Real Cause Of Peak Gasoline Demand
  • 5 days Hundreds Of Vertical Oil Wells Damaged By Horizontal Fracking
  • 5 days Oil Exempt In Fresh Sanctions On North Korea
  • 5 days Sudan, South Sudan Sign Deal To Boost Oil Output
  • 5 days Peruvian Villagers Shut Down 50 Oil Wells In Protest
  • 5 days Bay Area Sues Big Oil For Billions
  • 5 days Lukoil Looks To Sell Italian Refinery As Crimea Sanctions Intensify
  • 6 days Kurdistan’s Biggest Source Of Oil Funds
  • 6 days Oil Prices On Track For Largest Q3 Gain Since 2004
  • 6 days Reliance Plans To Boost Capacity Of World’s Biggest Oil Refinery
  • 6 days Saudi Aramco May Unveil Financials In Early 2018
  • 6 days Has The EIA Been Overestimating Oil Production?
  • 6 days Taiwan Cuts Off Fossil Fuels To North Korea
  • 6 days Clash In Oil-Rich South Sudan Region Kills At Least 25
  • 6 days Lebanon Passes Oil Taxation Law Ahead Of First Licensing Auction
  • 7 days India’s Oil Majors To Lift Borrowing To Cover Dividends, Capex
  • 7 days Gulf Keystone Plans Further Oil Output Increase In Kurdistan
  • 7 days Venezuela’s Crisis Deepens As Hurricane Approaches
  • 7 days Tension Rises In Oil-Rich Kurdistan
  • 7 days Petrobras To Issue $2B New Bonds, Exchange Shorter-Term Debt
  • 8 days Kuwait Faces New Oil Leak Near Ras al-Zour
  • 8 days Sonatrach Aims To Reform Algiers Energy Laws
Alt Text

Cheap Oil Or A Weak Dollar: Pick One

When the price of oil…

Alt Text

Trump Aims For Arctic Oil And Gas

The White House is attempting…

Where would we be without offshore oil?

As oil continues to pour into the Gulf of Mexico, I thought it might be helpful to review how we got where we are today.

The graph below shows total U.S. consumption of petroleum products (in red) and oil production from U.S. fields (in green). Consumption has been growing pretty steadily since 1981 while production has been declining. About 3-1/2 million barrels per day of the gap between these two lines is made up by refinery process gain, natural gas plant liquids, and other liquids. But most of the gap must be met by U.S. imports. Each year that our consumption grows and production declines, imports have to go up. Those rising U.S. oil imports could be the single most important factor determining the price of oil, global trade imbalances, and geopolitics today.

Crude Petroleum & Petroleum Products
em>Consumption (in red) represents total U.S. product supplied for crude petroleum and petroleum products, annually, in million barrels per day, from EIA. Production (in green) represents U.S. field production of crude oil from EIA.

The next graph shows that although total U.S. production has been falling, U.S. offshore field production (in blue) has been rising, so that offshore oil now represents a third of our total field production. Without offshore oil, the decline in U.S. production would have been even more dramatic. Production from the Gulf of Mexico represents about 3/4 of total U.S. offshore production.

US Offshore Production
em>U.S. production (in green) same as in previous graph. U.S. offshore production (in blue) calculated as sum of federal offshore Gulf of Mexico field production, federal offshore California field production, and state offshore field production, from EIA

BP was apparently about to announce they'd hit a gusher in the Gulf of Mexico. Somehow that's not quite as favorable a news release under the present circumstances. Here's one plan to stop oil from pouring out from a well that's under 5000 feet of water:

Industry scientists say the permanent solution is to close the entire well. To do that, they must drill another hole-- through 13,000 feet of rock a mile under the ocean's floor-- that will intercept the leaking well. They can then pump in cement to try to plug the leaks.

Not your run-of-the-mill repair job. So why in the world were we trying to get oil out of the ground under such inherently difficult-to-control circumstances?

The answer, I'm afraid, is because that's where the U.S.'s remaining oil is to be found.

Maybe you have a notion that if we just did X, we could get by without oil produced from offshore sources. To that my response is, looks to me like we'll need both offshore oil and X to get through the next decade.

BP Oil Spill
em>Satellite image of the BP spill. Source: EPA; (hat tip: Environmental Economics). 

By. James Hamilton of Econbrowser
Econbrowser analyse current economic conditions and policy.
Reproduced from Econobrowser.com




Back to homepage


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News