Oil major Shell announced it drilled into a discovery in the Gulf of Mexico that is estimated to hold as much as 100 million barrels of oil equivalent. Shell made the discovery while drilling in its Vicksburg exploratory well in deep waters near an area thought to contain five times the amount of the recent find. That's good news for a U.S. economy looking to buffer itself against turmoil overseas. The recent crisis in Egypt helped pushed oil prices to record levels for the year. It's bad news, however, in the era of the low-carbon economy.
Shell said the oil find in the deep waters of the Gulf of Mexico measured more than 500 feet thick, a sizable amount by industry standards. The company said the find, located about 75 miles offshore, adds to the 500 million barrels of oil equivalent appraised at the company's nearby Appomattox discovery.
"The results of the Vicksburg well strengthen our existing deepwater Gulf of Mexico exploration portfolio and should contribute to the nearby Appomattox discovery," upstream director Mark Shuster said.
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U.S. lawmakers say more discoveries in the Gulf of Mexico like these would complement onshore gains from lucrative oil fields in North Dakota and Texas. Legislation drafted in part by U.S. Rep. Jeff Duncan, S.C., would open up more areas in the Gulf of Mexico by advancing a transboundary maritime agreement with the Mexican government. He said the 172 million barrels of oil and 304 billion cubic feet of natural gas in the offshore area would go a long way toward shielding the U.S. economy from overseas shocks like the Libyan civil war in 2011 and ongoing crises in Egypt.
"We need a common-sense, all-of-the-above approach to energy, and that is exactly what House Republicans have done," he said.
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The U.S. Energy Department said oil, coal and natural gas provided 87 percent of the energy for the country during the last decade and were the dominant forms of energy for more than 100 years. Legislators like Duncan say Obama's clean energy agenda announced from Georgetown University in June is nothing more than a war on those very resources, especially coal. With domestic production of oil and natural gas on the rise, coal's role in the energy mix has declined. Nevertheless, oil, coal and natural gas are expected to dominate the U.S. energy sector for the foreseeable future. Duncan says Obama's low-carbon dream can't translate into reality because most of the nation's energy comes from oil, natural gas and coal, resources the president is accused of over-regulating.
The United States, meanwhile, is losing out on the clean energy race against its European and Chinese rivals. While the European Union considers how to one-up its 2020 climate goals, the United States lacks a similar set of formal benchmarks altogether. So long as discoveries like Shell's give fodder to congressional legislators, a "common-sense" U.S. energy policy doesn't make much sense at all when weighed against competing agendas.
By. Daniel J. Graeber of Oilprice.com