Here is an informative article from MCT/McClatchy newspapers. It takes a look at the history of oil and offshore drilling in a question and answer format to help put the recent oil spill in context.
Answering oil questions
By Mark Washburn and Maria David, McClatchy Newspapers
Oil and humanity have been linked since the dawn of civilization. In ancient times, oil that seeped to the surface of the Earth was collected and used to make ointments, medicines, building materials, adhesives and lamp fuel. In modern times, oil hasbecome a global, multi-billion-dollar industry that serves as the primary energy source for most ofthe world. Its by-products includeplastics, fertilizers, asphalt, cos-metics and hundreds of otherproducts.As the world continues tograpple with the oil spill in the Gulf of Mexico, a greater under-standing of the history of oil andoffshore drilling is in order.
Here are a few questions and answers to help put the Deepwater Horizon disaster in context.
Q: Where does oil come from?
A: Oil began as tiny marine organisms about 50 million years ago, when dinosaurs walked the Earth. As the organisms died, they lined the bottom of ancient seas and were gradually buried in silt. As sediment built up over millions of years, they were under tremendous pressure and heat,which turned them into a waxysubstance called kerogen, rich in carbon and hydrogen. This migrated through porous rock over the ages and collected as deposits of oil and gas. Land masses shifted, sea levels changed and the ancient seabeds wound up under dry land inplaces like Texas and the Middle East. Other oil beds formed deep beneath the seas.
Q: When was the start of the modern oil era?
A: Historians credit “Col.”Edwin Drake with uncorking the oil age. He drilled a well near Titusville, Pa.,about 100 milesnorth of Pittsburgh, in1859 and was able to refine the output into kerosene,widely used in lamps. Until that time, illumination was largely achieved by combining turpentine and whale oils. Production methods improved and by the beginning of the 20th century oil was being pumped in Texas, California, Oklahoma andother states. Oil demand soared with the growth of the automobile industry in the United States throughout the 1900s.
Q: What is the history of offshore drilling?
A: In 1887, a well was drilled near Summerland, Calif., from a wharf that stuck about 300 feet into the Pacific. More beachside derricks followed on the WestCoast, some nearly a quarter mile from shore. But it wasn’t until 1947 when the first fixed oil platform was built out of sight of land, 11 miles off the Louisiana coast. Within two years, there were 11 rigs working in the Gulf of Mexico. Rigs operated in relatively shallow water — 1,500 feet or less —until the last decade, when advances in technology made drilling feasible in waters a mile deep or more.
Q: Why go so deep?
A: Because that’s where the oil is. Production is declining in the shallow waters of the Gulf as those reserves tap out. But massive reservoirs have been discovered in the deep water. Deepwater Horizon was drilling a production well on a huge find, but the well was three miles below the sea floor, which was a mile from the surface. About 25 percent of the nation’s oil production and 20 percent of its natural gas output comes from the Gulf. Some experts think there could be more than 40 billion barrels of undiscovered oil in deep water, which would equal the nation’s oil consumption for about five years.
Q: What special problems does the Gulf of Mexico present to oil and gas prospecting?
A: Mostly, its geology. Seismic tests to sample the Earth’s crust are hampered by salt layers, some 15,000 feet thick,which blur results. Deep test wells can cost more than $100 million to drill, and oil companies like to explore only the most promising areas. In the 1990s, four out of five wells turned out to be dry holes. Now, with modern technology, about three out of five yield oil.
Q: How did the Deepwater Horizon do on such risky wells?
A: It was known as one of the most successful offshore drillers in the Gulf. Commissioned in 2001, the Deepwater Horizon was in the vanguard of new drill ships able to burrow deeper than ever before. In 2009, working for BP, it sank one of the deepest wells in the world, at 31,000 feet (deeper than Mount Everest is tall) into a Gulf formation called the Lower Tertiary Trend. It found what is believed to be a massive deposit of more than 3 billion barrels.
Q: What was the U.S.national policy on offshore drilling before the accident in the Gulf?
A: Only three weeks before the Deepwater Horizon disaster, Interior Secretary Ken Salazar announced an expansion of oil and gas development and exploration on the outer continental shelf. It would have opened up exploration in areas currently off-limits in the eastern Gulf of Mexico, Arctic Ocean, Cook Inlet in Alaska and off the Virginia coast. It would have been the largest expansion of offshore oil and gas territory in three decades. It was presented as a move that would reduce dependence on Arab oil and spur the industry to new hiring. “By responsibly expanding conventional energy development and exploration here at home, we can strengthen our energy security, create jobs and help rebuild our economy,” Salazar said. At that time, the Minerals Management Service estimated there was up to 41.5 billion barrels of undiscovered, economically recoverable oil and up to 207 trillion cubic feet of recoverable natural gas.
Q: Where does it stand now?
A: Deep water wells are in limbo as the Interior Department has ordered companies to quit drilling all new deep water wells— anything in more than 500 feet of water — for now. Companies that have a permit to drill but haven’t started yet are not allowed to proceed. Lease sales off Virginia, in the Arctic and the Gulf have been canceled. Companies already producing oil from deep water units must present a risk assessment study to the Minerals Management Service.
Q: What would the impact of a long-term shutdown of Gulf wells mean?
A: It could deter exploration and production in the Gulf for years to come, and decimate the energy economies of states like Louisiana, Texas and Alaska. Economists and industry experts would expect oil companies to move their expensive rigs to more promising waters off other countries like Brazil. Drilling deep in the Gulf generally doesn’t pay unless oil prices are $80 a barrel or more. Compare that to the cost of drilling in rich oil pools of theMiddle East, where some wells can extract oil for $5 a barrel. When oil prices plunged in 1999, many companies moved deep water activities out of the Gulf. It took five years for major activity to return. Mark Washburn is a reporter and Maria David is a researcher for The Charlotte Observer.