Thursday, April 26, 2012

Offshore Oil and Gas - can anything stop the drilling?

Since the BP Deepwater Horizon oil spill in the Gulf of Mexico, offshore oil and gas exploration is zooming along in Latin America, despite the largest oil spill in history and one of the greatest environmental disasters of all time.  With world oil prices remaining high for the last few years, Mexico, Brazil, and even Cuba have made strategic energy policy decisions to take advantage of this reality. 

Brazil, having declared itself virtually energy independent in 2006, is poised to become one of the top five leading oil producers within the next ten years.  With estimates of 20 to 50 billion barrels of oil, the presal deposits discovered off the coast of Brazil in "ultra deepwater" in 2007, have encouraged Brazil to modify its strategic energy plan and invest heavily in the development of the presal. 

Plagued with declining production from its largest oil fields, and recognizing the bloated and inefficient size of it's state-run oil company Pemex, the Mexican government signed an agreement with the United States in February of this year, to regulate oil and gas production along their maritime boarder.  This has set the stage for Mexico to work with international oil companies - like BP and Exxon/Mobil - for the first time in more than 80 years, to jointly develop deepwater drilling projects off the western Gulf of Mexico. 

And now Cuba is getting into the deepwater drilling game.  According to a blog Memorandum from the Council on Foreign Relations, as a result of exploratory drilling done in January of this year by the Spanish oil company Repsol, the Cuban government moving forward to develop their substantial offshore oil and gas deposits, estimated to be in the range of five to twenty billion barrels of oil and eight billion cubic feet of natural gas.  This raises the prospects of another oil spill off the coast of the United States.  Lets not forget that there's suppose to be this embargo of Cuba.  Does that mean the United States will embargo its oil too? 

Now offshore oil and gas drilling discussions are ramping up in Virginia.  Poised to begin test drilling this year, the BP Deepwater Horizon oil spill put this on hold after President Obama called for a top to bottom review of offshore drilling regulations and safety rules.  Recently two public meetings were held on offshore oil and gas drilling in Norfolk.  With domestic oil production on the rise, and the process of hydraulic fracturing opening the floodgates for shale gas  - which has produced a natural gas glut - the question now, is there anything that can stop offshore oil and gas drilling off the coast of Virginia or anywhere off the coast of the United States? 

The short answer appears to be "no".  Since this is the case, can this boom be effectively, safely, and responsibly managed?