Gulf of Mexico Production Down, U.S. Oil Imports Up
President Obama gave a press conference today, mostly on the subject of energy.
<<First, we need to continue to boost domestic production of oil and gas.
Last year, American oil production reached its highest level since 2003. Let me repeat that: Our oil production reached its highest level in seven years. Oil production from federal waters in the Gulf of Mexico reached an all-time high. For the first time in more than a decade, imports accounted for less than half of what we consumed.
So any notion that my administration has shut down oil production might make for a good political soundbite, but it doesn't match up with reality.>>
The Institute for Energy Research puts our present petroleum output in context:
<<The President's anti-energy policies are a man-made disaster. Try as he may to deflect responsibility away from his own policies, President Obama can't escape from the simple fact that the actions of his administration have dramatically slowed down domestic energy production. As a consequence, his policies are directly responsible for increasing gas prices.
In 2007, an analysis from the federal government's Energy Information Agency (EIA) predicted that domestic offshore production would be 717.9 million barrels in 2010. As a result of the Obama Administration's policies, it was 600 million. Likewise, the projected onshore production was 132.9 million barrels. Under Obama, it was only 114 million.
Under President Obama's policies, federal land and water production in 2010 was 136.8 million barrels less than was predicted in 2007, or a 16% drop from what was expected.
Oil production on federal lands is expected to dramatically decrease as a consequence of President Obama's anti-energy policies. In 2011, EIA estimates that oil production in the federal Gulf of Mexico will fall by 15 percent. In 2012, it will fall by 26 percent from the 2010 production high water mark.>>
The Obama administration's current policies could easily see GOM production fall by a total of between 400 and 500,000 b/d over the next 2 years for those that are used to thinking about the numbers in those terms.
So the guys in the Bakken had better not let up one bit if they are to offset this loss.
Matter of fact, as total Bakken production increaes, it gets much more difficult to move the dial in those types of unconventional plays.
There will come a point soon whereby just keeping production flat in the Bakken will become a serious challenge.
And it will be impossible if Obama's EPA hounds go after the Bakken producers because of overblown risks related to fracking as they are likely to do.
Of the more than 30 rigs that were operating in the Gulf of Mexico at the time of the Deepwater Horizon spill, at least 7 have left due to lack of permits. Seahawk Drilling declared bankruptcy due to the inability to obtain permits from the Obama administration.
But Obama's biggest untruth related to America's potential to develop our own energy resources. Instead of leveling with the American people, Obama repeated a long-discredited canard that is a favorite on the Left:
"All these actions can increase domestic oil production in the short and medium term. But let's be clear: It is not a long-term solution. Even if we started drilling new wells tomorrow, that oil isn't coming on-line overnight. And even if we tap every single reserve available to us, we can't escape the fact that we only control 2 percent of the world's oil, but we consume over a quarter of the world's oil."
This is Obama's argument for wasting money on subsidies for inefficient sources of energy like wind and solar. But the argument rests on a blatant misrepresentation.
That two percent figure is one that you hear all the time from liberals. It refers to the fact that the United States has only two percent of the world's "proven reserves" of petroleum. This is what a character in a Nabokov novel called a "doughnut truth"--the truth, the whole truth, with a hole in the truth. Here is the hole: there is no universal definition of "proven reserves," and "proven reserves" do not represent what Obama called "every single reserve available to us."
In most countries, Saudi Arabia for example, proven reserves are whatever the government ministry says they are. But in the United States, "proven reserves" is a term of art, defined by the Securities and Exchange Commission. America's "proven reserves" are the sum of the "proven reserves" that our oil companies report, following the SEC's definition, with respect to petroleum located in the United States. Here is the U.S. definition of "proven reserves:"
PROVED RESERVES. The quantities of hydrocarbons estimated with reasonable certainty to be commercially recoverable from known accumulations under current economic conditions, operating methods, AND GOVERNMENT REGULATIONS. Current economic conditions include prices and costs prevailing at the time of the estimate. Estimates of proved reserves do not include reserves appreciation.
Emphasis added, for obvious reasons. Liberals like Barack Obama imply that America only has two percent of the world's petroleum, but that is completely false. We only have two percent of the "proven reserves" that are recoverable under current "government regulations" and at current petroleum prices. We could increase our proven reserves overnight by opening up new areas to exploration and development; ANWR is just one of many examples. And our proven reserves increase every time the price of oil rises.