Petroleum: Possibilities in the Pipeline. (Focus)

Article excerpt

One of the Bush administration's defining goals on energy policy is to reduce U.S. dependence on foreign sources of oil. Despite being the world's second largest producer after Saudi Arabia, the United States now imports 56% of its oil from overseas, with a quarter coming from politically and economically volatile countries in the Middle East, according to the Energy Information Administration (EIA) of the U.S. Department of Energy. As the U.S. economy grows, imports could reach 70% by 2020--a level administration officials worry could have serious implications for national and economic security. In a speech given on 17 May 2001, the day a task force headed by U.S. vice president Dick Cheney released its long-awaited and controversial national energy policy, Bush said, "Overdependence on any one source of energy, especially a foreign source, leaves us open to price shocks and blackmail."

An Elusive Goal

That petroleum is a nonrenewable resource is an undeniable fact. Even so, advances in technology have continually enabled geologists to find new oil and natural gas deposits, and extract them economically from hard-to-reach places. So estimates of the amounts of recoverable petroleum are rising.

Today, these figures are half again as large as they were in 1970, when some experts predicted the United States would be out of crude oil by the year 2000 or shortly thereafter. That prediction can be tossed into the recycling bin. According to 2001 figures from the EIA, 1.016 trillion barrels of recoverable oil are still underground, enough to fuel the world economy well into the next century, if not beyond.

But can the United States actually reduce its foreign dependence by increasing its own domestic output? Not completely, experts say. The United States has only 3% of the worlds recoverable crude oil but consumes nearly 25% of its annual oil production. Roughly two-thirds of the worlds proven crude oil reserves (volumes that are known to exist based on detailed geologic investigations) lie in countries that belong to the Organization of the Petroleum Exporting Countries (OPEC), including Saudi Arabia, Iraq, the United Arab Emirates, Kuwait, Iran, and Venezuela.

About the best that could be hoped for, says William Fisher, a professor of geological sciences at the University of Texas at Austin, is that increased domestic yield could hold foreign imports at bay, or perhaps reduce them "a little bit" as the economy grows. Bill Hederman, vice president of the Energy Group at the Fairfax, Virginia-based ICF Consulting, which provides natural, economic, and physical resource management assistance, suggests that the United States could become independent of "dangerous" foreign suppliers (whom he declined to identify), but only if "all the available tools on supply and demand options are applied." Such tools would include reduced usage, alternative sources, and increased domestic production.

Efforts to narrow the gap between imports and domestic supplies are further challenged by the reality that domestic oil output has been declining for years, from a high of 3.5 billion barrels in 1970 to just 1.9 billion barrels in 2000, according to the EIA. "The U.S. oil industry is very old," says Paul Holtberg, a senior operations researcher with The RAND Corporation in Arlington, Virginia. "There's no question that the resource here has been drilled more heavily than anywhere else in the world." The Trans-Alaska Pipeline System that connects the 89,000-square-mile North Slope to the port town of Valdez is running at less than half its capacity. The East Texas Oil Field, which is the second largest field after Prudhoe Bay in the North Slope, has been online since 1930 and has already given up nearly 98% of its recoverable reserves. Shallow offshore regions of the Gulf of Mexico, dotted with roughly 10,000 wells after half a century of production have, says Holtberg, "been drilled practically to death. …