lucian pugliaresi - ciep oil conference - blowout in the gulf

8/8/2019 Lucian Pugliaresi - CIEP Oil Conference - Blowout in the Gulf

1/27

BlowoutintheGulf:Cost,Benefits,andEnergySecurity

(or how to think about the oil spill)

LucianPugliaresi

EnergyPolicyResearchFoundation,Inc.

Washington,DC

Adecadeofuncertainties:Comingtogripswithnewoilmarketrealities

1July 2010

TheHague

ClingendaelInternationalEnergyProgrammeNetherlandsInstituteofInternationalRelations

EnergyPolicyResearchFoundation,Inc.|103131st St,NWWashington,DC20007|202.944.3339|www.eprinc.org


2/27

ActiveGulf

OCS

Oil

and

Gas

Platforms

2EnergyPolicyResearchFoundation,Inc.|103131st St,NWWashington,DC20007|202.944.3339|www.eprinc.org

Source:NOAA


3/27



4/27


5/27

U.S.(Blue)andFederalOCS(GulfCoastinRed,CaliforniainGreen)CrudeProduction

9000

10000

6000

7000

elsperDay

U.S.FieldProductionofCrudeOil

(ThousandBarrelsperDay)

3000

4000

5000

housandB

ar

Federal

Offshore

Gulf

of

Mexico

Field

ProductionofCrudeOil(Thousand

BarrelsperDay)

FederalOffshoreCaliforniaField

1000

2000ProductionofCrudeOil(Thousand

BarrelsperDay)

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009


Source:EIAData


6/27

U.S.Crude

Oil

Disposition

25

U.S.NetIm ortsofCrudeOil

15

andPetroleumProducts

10

m

bd . .

OilImports

5U.S.ProductSuppliedofCrude

OilandPetroleum

Products,MinusNGLsand

LiquidRefinery

Gases

Production

0


Source:EIAData


7/27

EIAForecasted

Net

Imports

Share

of

U.S.

Liquids

Consumption

60

70

40

50

30

% Reference

Lowprice

Highprice

10

0

1990

2000

2010

2020

2030


Source:EIAData


8/27

Deepwater* is a Big Producer

66.5

mb/d

worldwide

from

deepwater

fields,

should

reach

8.5

mb/dby2015.

coun r espro uc ng rom eepwa er e s

U.S.has

100

deepwater

fields,

1.3

mb/d

in

2009

*>400meters

Source: EnergyIntelligenceGroup



9/27

DOIData

on

OCS

Production

and

Spills

TimePeriod OCSOil

Production

Numberof

Spills

BarrelsSpilled

(Thousand

ThousandBarrels

Produced

per

Barrels)

19601969 1,460,000 13 99 15

19701979 3 455 000 32 106 33

19801989 3,387,000 38 7 473

, , ,

20002009 5,450,000 72 18 296


Source: Department of Interior Data


10/27



11/27

LargestTanker

Spills

in

and

near

U.S.

Waters

300

350

ls

150

200

ousandBarre

0

50

100Th

MandoilII

Pacific

Ocean,OR

Exxon

Valdez

Prince

William

Burmah

Agate

Gulfof

Mexico,

TX

Pegasus

(Pegasos)

Northwest

Atlantic

Texaco

Oklahoma

Northwest

Atlantic

Keo

Northwest

Atlantic

Ocean,

MA

Argo

Merchant

Nantucket

Shoals,

MA

Spartan

Lady

Northwest

Atlantic

Gulfstag

Gulfof

Mexico

MegaBorg

Gulfof

Mexico,TX

, ,

eastcoast

,

eastcoast

,

eastcoast

1968 1989 1979 1968 1971 1969 1976 1975 1966 1990


Source: API Data


12/27

LargestMarine

Blowouts

in

U.S.

Waters

100

120

80

Barrels

40Thous

an

0

20

ell21PlatformA CoastofSantaBarbara,CAMainPassBlock41 GulfofMexicoSouthTimbalier GulfofMexicoShipShoal149/199 GulfofMexicoGreenhillTimbalierBay GulfofMexicoHerbertBravo GulfofMexicoShipShoal29 GulfofMexicoBLDSU6 GulfofMexicoBlock60SP0060 GulfofMexicoFredStovallWell9 Gulf

1969 1970 1970 1964 1992 1979 1965 1995 1992 1994


Source: API Data


13/27

TenLargest

Oil

Spills

(in

modern

times)

6.000

7.000

8.000

rrels

BPMacondo 2.454.2MM

bbls 70

days

at

35,000

to

2.000

3.000

4.000

.

ThousandBa 60,000bbl/s

01.000

GulfWar PersianGulfIxtox1 BayofCampeche,MexicoAtlanticEmpress TrinidadandTobego,WestIndiesFerganaValley UzbekistanNowruz PersianGulfABTSummer AngolanCoastCastillodeBellver SaldhanhaBay,SouthAfricaAmocoCadiz FrenchCoastOdyssey OffthecoastofNovaScotiaM/THaven Genoa,

1991 1979 1979 1992 1983 1991 1983 1978 1988 1991


Source: Popular Mechanics


14/27

Worlds Largest Oil Spills

Source:National

Oceanic

and

Atmospheric

Administration,

National

Academy

of

Sciences,

EPRINC

Calculations

,Map

Data

Design and

Configuration

Copyright EPRINC2010.


15/27

April20,2010BlowoutontheMacondoProspect,USGOM

Specific

cause

of

the

blowout

awaits

detailed

..

Anecdotalevidence ointstostructuralinte rit ofthewell

casing(inadequate

seal

of

the

well

bore).

Failureo theBlowoutPreventer BOP toengage.

,

design,orafailuretoinstallanadequatecultureofsafety?



16/27

ObamaAdministration

Response

to

Blowout

HasnamedBritishPetroleumastheresponsibleparty

Im osedamoratorium

on

sensitive

offshore

drillin

re ions

Includesdeepwateroilwells(below500feet) onGOMlower48 AlloffshoreAlaskadrillingatanydepth

RestructuredMineral

Management

Service

(MMS)

andOffshoreDrilling

BPtofund 20billionEscrowAccountforLiabilityClaims



17/27

MoratoriumLost

Production

Forecasts

EIA: 26,000bbl/dinQ42010

70,000bbl/din2011

IEA: 100,000300,000bbl/dby2015shouldregulationstighten

, , ,

bbls/d.Would

encroach

on

OPEC

spare

capacity,

support

prices.

, , ,

400,000bbl/doflostproductionshouldthemoratoriumremaininplace

for

6

12

months.



18/27

AlaskanDepth

Charge

MoratoriumappliestoalloffshoredrillinginAlaska,anydepth.

Shellsex lorator

drillin

ro ram

in

Chukchi

Sea

now

on

hold.

RisksextendbeyondlostChuckhiSeaproductionbecauseofcosts

TAPsthroughputat670,000b/ddecliningat6%peryear. When,

producingfieldsfacepotentialforprematureabandonment.

MoratoriumplacesbaseloadNorthSlopeoutputatrisk.



19/27

IncrementalImport

Penalty

to

U.S.

Economy

16

18

10

12

nually

6

8

$billio

na

ORNLEconomicPenalty $14/bbl

Revenuesat$75/bbl

2

4

0

100,000bbl/d 200,000bbl/d 300,000bbl/d 400,000bbl/d 500,000bbl/d


Source:EPRINCCalculation,ORNLData


20/27

FederalOCS

Oil,

Gas

and

NGL

Sales

Volumes

800

500

600

peryear

OilSalesVolume mmbblperyear

300

400

illionbar

rel

Gas

Sales

Volume

mm

boe

(5,600,000BTU)

NGLSalesVolume mmbblperyear

100

200

0

2001 2002 2003 2004 2005 2006 2007 2008 2009


Source:MMSData


21/27

FederalOCS

Revenues

16000

18000

12000

14000

$ TotalBonuses

6000

8000

10000

Millio o a en s

NGLRoyalty/Revenue

(million

$)

GasRoyalty/Revenue(million$)

OilRoyalty/Revenue(million$)

2000

4000

0

2001 2002 2003 2004 2005 2006 2007 2008 2009


Source:MMSData


22/27

2009MMS

Disbursements

Billion $

States, Counties and Parishes $1.99

U.S. Treasury $5.74

34 American Indian Tribes and Mineral Owners $0.45

Reclamation Fund for Water Projects $1.45

Land and Water Conservation Fund $0.90

Historic Preservation Fund $0.15

Total: $10.68


Source:MMSData


23/27

45

Major Industries of the Gulf Coast of the United States

35

40

25

30

illion

15

20$b

5

10

0

OilandGas Tourism Fisheries Port/Shipping


Source: BusinessWeek


24/27


25/27

Blowout on the Macondo Prospect

Two

views

from

the

operators.

Gettinghitbyameteorisanaccident,everythingelseishumanerror.

@#!&*#!Happens!!!

Oneviewfromthegovernment.

sno

a

we

s oo

ourse ves

n

e

oo

a

sso

impressive,buthowquicklywereload.



26/27

FourThemesforthePresidentialCommission

RegulatoryProgram DontFighttheLastWar,i.e.,safety

culture

ieldshi her

returns

than

re ulator

rescri tions

BuildingPublicTrust confidenceisneededthatindustrycan

respondtoaspill

Commissionneeds

to

understand

BPs

biggest

partner

was

not

Anadarko,itwastheUSG


Moratoriumnotreducingnetrisk?


27/27

WhataretheStakesfortheUnitedStates

OCS,particularlydeepwaterGOM,andAlaskaarehighvalued

assetswith

high

energy

security

benefits

ValuetoFederalandstategovernmentscouldeasilyrangewell

nexcesso on money o . . reasury

U.S.

to

remain

large

oil

importer,

alternate

fuels

are

false

choice.


lucian pugliaresi - ciep oil conference - blowout in the gulf

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