Fox Touts GOP Drilling Bill By Vastly Overstating Offshore Oil Resources

In news reports on a House Republican proposal that would require the Obama administration to open new areas to offshore drilling, Fox News correspondent William La Jeunesse claimed that “97 percent of America's offshore oil remains off-limits.” In fact, the areas already open to drilling contain the “vast majority” of estimated offshore oil resources, according to the Energy Information Administration.

Fox Baselessly Claims “Almost 98 Percent Of America's Offshore Oil” Remains “Off-Limits To Drilling”

Fox Correspondent: “97 Percent Of America's Offshore Oil Remains Off-Limits.” From the May 11 edition of Fox News' Happening Now:

WILLIAM LA JEUNESSE: Well Jenna, despite that very old platform you're looking at, 97 percent of America's offshore oil remains off-limits despite the lifting of that 27-year old ban three years ago by a Democratically controlled Congress.

Basically, what is stopping us from going after billions of the barrels of oil off California and elsewhere is the president's desire not to do it. [Fox News, Happening Now, 5/11/11] “98 Percent Of America's Offshore Oil” Is “Off-Limits.” From a May 11 article by La Jeunesse:

With almost 98 percent of America's offshore oil off-limits to drilling, and sustained gas prices nearing $4 a gallon, congressional Republicans say only one thing is keeping America from tapping into its offshore resources -- President Obama.

On Wednesday, Congress will consider a bill to void that. The House is expected to pass H.R. 1231, a bill titled, “Reversing President Obama's Offshore Moratorium Act” . [, 5/11/11]

EIA: The “Vast Majority” Of Estimated Offshore Oil Resources Are In Areas Already Accessible

EIA Director: “Vast Majority” Of Estimated Oil Resources Are In Areas Where “Leasing Has Been Available For Many Years.” From the March 17 Congressional testimony of Richard Newell, administrator of the Energy Information Administration, which “collects, analyzes, and disseminates independent and impartial energy information” :

Given that OCS [Outer Continental Shelf] areas not under any leasing moratorium are estimated to account for over 95 percent of the total mean estimate of technically recoverable OCS resources, perhaps the most significant Federal OCS development issues relate to those areas that are already open to Federal oil and gas leasing. One such issue revolves around when newly available offshore areas, particularly in the Pacific and Atlantic, will be made available to oil and gas producers in future Federal lease sales. Areas where OCS leasing has been available for many years--including the Western Gulf, most of the Central Gulf, and Alaska--hold the vast majority of estimated technically recoverable OCS oil resources. [Energy Information Administration, 3/17/11, emphasis added]

EIA: Offshore Areas Protected From Drilling “Are Estimated To Hold Roughly 20 Percent” Of Total Offshore Oil Resources. While noting that the estimates are subject to uncertainty, EIA stated in its 2009 Annual Energy Outlook that the offshore areas that have been restricted are estimated to hold around 20 percent of total technically recoverable offshore oil:

Estimates from the MMS [Mineral Management Service] of undiscovered resources in the OCS are the starting point for EIA's estimate of the OCS technically recoverable resource. Adding the mean MMS estimate of undiscovered technically recoverable resources to proved reserves and inferred resources in known deposits, the remaining technically recoverable resource (as of January 1, 2007) in the OCS is estimated to be 93 billion barrels of crude oil and 456 trillion cubic feet of natural gas (Table 8). The OCS areas that were until recently under moratoria in the Atlantic, Pacific, and Eastern/Central Gulf of Mexico are estimated to hold roughly 20 percent (18 billion barrels) of the total OCS technically recoverable oil--10 billion barrels in the Pacific and nearly 4 billion barrels each in the Eastern/Central Gulf of Mexico and Atlantic OCS. [Energy Information Administration, March 2009]

High Oil Price Would Have Larger Impact On U.S. Oil Production Than Expanded Offshore Drilling. In its 2011 Annual Energy Outlook, EIA modeled a scenario in which “leases in the Pacific, Atlantic, Eastern Gulf of Mexico, and Alaska OCS regions are not available until after 2035.” EIA estimated that such restrictions would result “in a 6 percent decrease in total domestic crude oil production” in 2035. [Energy Information Administration, 4/26/11]

  • By contrast, EIA estimated that a low oil price ($50/barrel) would result in a 27 percent decrease and a high oil price ($200/barrel) would result in a 20 percent increase in U.S. crude oil production by 2035. [Energy Information Administration, 4/26/11]

EIA: Areas Currently Off-Limits “May Not Be As Economically Attractive” To Oil Companies. From EIA's Annual Energy Outlook 2009:

Assuming that leasing actually goes forward on the schedule contemplated by the previous Administration, the leases must then be bid on and awarded, and the wining bidders must develop exploration and development plans and have them approved before any wells can be drilled. Thus, conversion of the newly available OCS resources to production will require considerable time, in addition to financial investment. Further, because the expected average field size in the Pacific and Atlantic OCS is smaller than the average field size in the Gulf of Mexico, a portion of the additional OCS resources may not be as economically attractive as available resources in the Gulf. [Energy Information Administration, March 2009]

Expanding Offshore Drilling Won't Solve High Gasoline Prices

EIA: Restrictions On Offshore Drilling Only Increase Gas Prices 3 Cents By 2030. EIA estimated that the difference between a scenario in which the Atlantic, Pacific and Eastern/Central Gulf of Mexico are open to offshore drilling and a scenario in which they remain off-limits is 3 cents per gallon of gasoline in 2030:

With limited access to the lower 48 OCS, U.S. dependence on imports increases, and there is a small increase in world oil prices. Oil import dependence in 2030 is 43.4 percent in the OCS limited case, as compared with 40.9 percent in the reference case, and the total annual cost of imported liquid fuels in 2030 is $403.4 billion, 7.1 percent higher than the projection of $376.6 billion in the reference case. The average price of imported low-sulfur crude oil in 2030 (in 2007 dollars) is $1.34 per barrel higher, and the average U.S. price of motor gasoline price is 3 cents per gallon higher, than in the reference case. [Energy Information Administration, March 2009]

Newell: Expanding Drilling In Federal Areas Is Not Expected To Have A Large Impact On Prices. From Newell's March 17 testimony:

In the short-term, oil markets react to many competing factors in a global context, and it is extremely difficult to disentangle the near-term impact of mid-to-long-term developments in the context of oil markets that see typical daily price movements in the range of 1-2 percent, and much higher fluctuations at times. Long term, we do not project additional volumes of oil that could flow from greater access to oil resources on Federal lands to have a large impact on prices given the globally integrated nature of the world oil market and the more significant long-term compared to short-term responsiveness of oil demand and supply to price movements. Given the increasing importance of OPEC supply in the global oil supply-demand balance, another key issue is how OPEC production would respond to any increase in non-OPEC supply, potentially offsetting any direct price effect.

In the longer-term, greater domestic crude oil production no matter the cause - increased development on Federal lands, higher resource potential in current known fields, or wider application of advanced technology - would impact local economic activity, net oil imports, and the associated U.S. international trade balance resulting from oil imports. [Energy Information Administration, 3/17/11]