Sunday, June 15, 2008

Political Debate About U.S. Off Shore Natural Gas Exploration Just Getting Started

TAMPA - Mike Wyckoff is an unlikely proponent of something Florida politicians and environmentalists have been trying to prevent for decades: The exploration and production of oil and natural gas in the waters off Florida's Gulf Coast.

A 27-year resident of Madeira Beach, the real estate broker lives 150 yards from the beach and manages 16 beachfront properties.

But as $4-a-gallon gas squeezes many consumers and household budgets, Wyckoff says it's time to lift the ban on oil and gas drilling in the eastern Gulf of Mexico, a move that could boost supplies and lower prices.

Wyckoff acknowledges the obvious risk. A major oil spill could ruin Florida's beaches and ground the state's tourism industry. The $65 billion-a-year industry employs nearly 1 million people.

"There's a risk and a reward," Wyckoff said. "At this point, maybe the risk is worth the potential reward."

Hovering around $134 a barrel, crude oil prices have doubled over the past year. In the Tampa Bay area, pump prices have reached budget-busting levels, averaging $3.96 a gallon, according to AAA. Nationally, gas prices are averaging $4.06 a gallon, or 33 percent higher than this time last year.

The tipping point on the debate over drilling off Florida's Gulf Coast may be near, as record high oil and gasoline prices force consumers and policymakers to question decades-old moratoriums against drilling on federal lands and in territorial waters of the United States.

"There is certainly a renewed look at the nation's offshore policy," said Dan Naatz, vice president of federal resources for the Independent Petroleum Association of America. "Attitudes are starting to change and people are starting to look at this in a new light given the current price environment."

Experts Unsure How Much Is There

No one knows for sure how much oil might be found in the waters off Florida's Gulf Coast because geologists have been prevented by federal regulators from gauging the region's oil resources with modern-day seismic technology. The best estimate offered by the U.S. Minerals Management Service is 3.88 billion barrels of oil within 125 miles of Florida's Gulf coastline. That's enough oil to meet U.S. demand for 176 days. The United States consumes about 22 million barrels of oil daily.

But that estimate is based on data from the 1970s. If the industry were allowed to explore the eastern Gulf today, the 1970s estimate probably would be significantly eclipsed by the new research, Naatz contends.

"The initial resource estimates for the western-central Gulf of Mexico were significantly smaller than what's already been produced," Naatz said. "The more you explore, the greater the resource."

A measure to allow oil and gas exploration as close as 50 miles off the U.S. coastline, including Florida's Gulf Coast, was narrowly defeated by a congressional subcommittee this week. But House Republicans said they plan to bring the proposal again when the full House Appropriations Committee meets next week.

The measure's author, Rep. John Peterson of Pennsylvania, said the debate in Congress is far from over and promised to keep raising the issue.

"There is no valid reason for Congress to continue keeping Americans from the energy resources they own and are in dire need of," Peterson said.

More than a quarter of the nation's oil production - nearly 2 million barrels a day - comes from the western Gulf of Mexico.

The eastern Gulf could be just as prolific, Naatz said. "The geology doesn't stop at the boundary line," he said.

In arguing for oil exploration of Florida's coast, drilling proponents often point to a China-Cuba partnership that allows the Chinese to drill for oil just 50 miles off Key West.

But U.S. Sen. Mel Martinez, R-Fla., argued Thursday on the Senate Floor that there is no proof that China and Cuba are planning to drill for oil anywhere offshore.

"China is not drilling off the coast of Cuba," Martinez said. "Reports to the contrary are simply false. They're akin to urban legend."

Jorge Pinon, a senior energy fellow at the University of Miami, said Cuba has awarded offshore leases to six oil companies - none of them Chinese.

Cuba's plans for offshore oil production may be in question, but the debate over oil exploration in the United States rages on.

Activists Say Drilling Would Hurt Tourism

Environmental groups say drilling off the coast of Florida would threaten the state's pristine beaches and its $65-billion-a-year tourism industry.

"These are really special ecosystems," said Holly Binns, a spokeswoman for Environment Florida. "One oil spill could devastate the ecology and the economy of the Florida coastline for decades."

Binns said opening the waters off the Florida Gulf Coast and the East and West Coasts to drilling won't cause pump prices to fall because it will take seven to 10 years before those supplies could be added to the supply chain. Lifting the moratoriums on offshore drilling, Binns said, would only further enrich U.S. oil companies.

"The oil industry and their allies in Congress see this as an opportunity to open up the few areas that remain off limits to them for very good reason," Binns said.

Drilling proponents are using high gas prices "to scare the public into thinking coastal drilling offers a real solution to our dependency on oil," said U.S. Sen. Bill Nelson, D-Fla.

Nelson said there isn't enough oil and gas in the areas off-limits to producers to lower prices.

Instead, Congress should "reign in unregulated oil trading" and focus on conservation and renewable energy technologies.

But drilling proponents disagree, saying if Congress allowed the industry to tap America's offshore oil and gas reserves, energy markets would react and drive down oil prices.

"Anywhere between $20 and $45 a barrel would drop off the price if the U.S. government announced that they would be issuing leases," said Jim King, a Republican candidate for the 5th Congressional District of Florida, which includes, Pasco, Polk and Hernando counties.

King, who favors drilling off Florida's Gulf Coast, said most of the people he has encountered while campaigning would welcome oil and gas drilling off Florida's coast.

About 85 percent of the offshore territory of the United States is off-limits to drilling. That includes the entire East and West Coasts, Florida's Gulf Coast and the waters off northern Alaska.

These restricted areas hold about 86 billion barrels of oil and 420 trillion cubic feet of natural gas, 10 times more oil and 20 times more natural gas than Americans consume in a year. Alaska's Arctic National Wildlife Refuge holds an estimated 10.6 billion barrels of recoverable oil. North Dakota's Bakken oil field, an area not off-limits to producers, is a recent discovery that might contain up to 3.65 billion barrels of unconventional oil.

Jeff Miller, a warehouse manager at an auto body parts business in Plant City, said the United States should be doing more to increase oil production at home.

"The whole continent is floating on oil," Miller said. "We're not getting it because they're afraid of the environmentalists."

Sales are down at the family-run business Miller manages. Customers aren't spending as much on auto parts because of the skyrocketing cost of oil and gasoline, he said.

Bottom line, says Miller: If there's oil off the Florida coast, the United States should go get it.

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