“And for the sake of our economy, our security, and the future of our planet, I will set a clear goal as president in 10 years… We will finally end our dependence on oil from the Middle East,” announced the U.S President Barack Obama

By Mostafa Mabrouk, Vice Chirman Assistant for Economic Affairs, Ganope

The Obama administration is proposing to open vast expanses of oil and gas drilling in the Atlantic coastline, the eastern Gulf of Mexico and the north coast of Alaska, much of it for the first time.

Secretary of the Interior Ken Salazar announced that, as part of a comprehensive strategy for strengthening the nation’s energy security and reducing America’s dependence on oil imports, this decision generates revenue from the sale of offshore leases and help win political support for comprehensive energy and climate legislation.

“By responsibly expanding conventional energy development and exploration here at home we can strengthen our energy security, create jobs, and help rebuild our economy,” said Salazar. “Our strategy calls for developing new areas offshore, exploring frontier areas, and protecting places that are too special to drill. We are opening a new chapter for balanced and responsible oil and gas development here at home.”

President Obama said repeatedly during his presidential campaign that he supported the expansion of offshore drilling. He noted in his State of the Union address that weaning the country from imported oil would require “tough decisions about opening new offshore areas for oil and gas development.” It is not known how much potential fuel lies in the areas opened to exploration. According to Interior Department, there could be as much as a three-year supply of recoverable oil and more than two years’ worth of natural gas, at current rates of consumption. But those estimates are based on seismic data that is, in some cases, more than 30 years old. The first lease sale off the coast of Virginia could occur as early as next year in a triangular tract 50 miles off the coast that had already been approved for development but was held up by a court challenge and additional Interior Department review, officials said.

But as a result of the Obama decision, the Interior Department will spend several years conducting geologic and environmental studies along the rest of the southern and central Atlantic Seaboard. If a tract is deemed suitable for development, it will be listed for sale in a competitive bidding system. The next lease sales, if any were authorized by the Interior Department, would not be held before 2012.

“The plan we are proposing calls for four more lease sales in the Gulf of Mexico by 2012 and, in the years beyond, would open up two-thirds of the oil and gas resources in the Eastern Gulf while protecting Florida’s coast and critical military training areas,” said Salazar. “Our efforts to strategically open new areas in the Eastern Gulf would represent the largest expansion of our nation’s available offshore oil and gas supplies in three decades.” The Department of the Interior’s Minerals Management Service estimates that the Gulf of Mexico contains 36-41.5 billion barrels of undiscovered, economically recoverable oil and 161-207 trillion cubic feet of undiscovered, economically recoverable natural gas resources.

Moreover, there will be more oil and gas exploration expansion in frontier areas, such as the Arctic Ocean and areas in the Atlantic Ocean, to gather the information necessary to develop resources in the right places and the right ways. “If we are to responsibly develop resources in frontier areas we must expand exploration activities, gather the science needed, and listen to affected communities,” said Salazar.

According to MMS (Mineral Management Service) estimates, 39-63 billion barrels of economically recoverable oil and 168-294 trillion cubic feet of natural gas are economically recoverable from the eight planning areas under consideration for leasing under the 2012-2017 program. That represents as much as 80% of the undiscovered economically recoverable oil and gas on the U.S. outer continental shelf.

Secretary Salazar declared, “In our quest to secure our energy future, we must not lose the places and values that set our nation apart… Bristol Bay (Southeast Alaska) is a national treasure that we must protect for future generations.” President Obama is withdrawing Bristol Bay from consideration for oil and gas development through 2017.
T. Boone Pickens, Founder and Chairman of BP Capital Management, is principally responsible for the formulation of the energy futures investment strategy said, “It is an addiction (oil imports) that threatens our economy, our environment and our national security. It touches every part of our daily lives and ties our hands as a nation and as a people. The addiction has worsened for decades and now it’s reached a point of crisis.”

He further added, “In additional to putting our security in the hands of potentially unfriendly and unstable foreign nations, we spent $475 billion on foreign oil in 2008 alone”. The global oil production is 85 million barrels daily, out of which 21 million are used in the U.S. A, in order to satisfy the needed daily oil consumption, the U.S imports 12 million barrels a day.

Despite growing demand and an unprecedented increase in prices, oil production has fallen over the last three years. Oil is getting more expensive to produce, harder to find and there just isn’t enough of it to keep up with demand. The simple truth is that cheap and easy oil is gone. But America is focused on another crisis, which is the economy. “That money is taken out of our economy and sent to foreign nations, and it will continue to drain the life from our economy for as long as we fail to stop the bleeding. It will be the greatest transfer of wealth if we stop importing oil,” Salazar said.