The Offshore U.S. Oil And Natural Gas Treasure Trove

January 19, 2018

U.S. Interior Secretary Ryan Zinke recently announced a leasing plan for 2019-2024 that would put more than 90% of the total Outer Continental Shelf (OCS) acreage and over 98% of "undiscovered, technically recoverable" oil/gas resources in federal offshore areas in play for future exploration and development. The plan proposes 47 lease sales, versus the 11 made under the Obama Administration, when 94% of our OCS was off limits to oil/gas leasing and exploration. The benefits of the new offshore energy plan for the U.S. are huge and multi-faceted.

U.S. Oil/Gas Demand Very High Or Rising

Oil/gas will remain an essential component of the U.S. energy portfolio for decades to come. For example, the notion that electric vehicles are going to soon take significant market share from oil is obviously premature: the U.S. has over 250 oil-based cars for every 1 that runs on electricity. As for more efficiency, typically installed as the first choice to reduce greenhouse gas emissions, I've already documented historical evidence that shows how efficiency gains can actually increase, not decrease, fuel consumption because they lower prices. Cutting oil/gas intensity is not the same as cutting oil/gas demand absolutely.

Importantly, the push for more wind and solar will not displace our oil demand because they are strictly sources of electricity, and electricity accounts for just 1% of our oil usage. This is why the U.S. Department of Energy's (DOE) National Energy Modeling System projects that U.S. oil demand will actually rise in the years ahead. As for natural gas, more demand stems from its lower emissions, and gas' ability to backup wind and solar power. DOE says our own natural gas usage will increase 14-16% by 2040, not to mention our surging exports.

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