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Removing restrictions could cut gas costs by $300 billion over next two decades
Allen Baker Petroleum News Contributing Writer
Restrictions on offshore drilling and policies that impair development in the Rocky Mountains should be cleared away, according to the National Petroleum Council, which says such a move would save consumers $300 billion over the next 20 years. That figure is derived from an estimate that gas prices would average 60 cents less per million British thermal units if restrictions were lifted.
Evaluating leasing curbs requires some digging, and it can be politically charged. The report presents the industry’s take. It says that while areas formally off-limits to leasing comprise just 7 percent of the total area in the Green River Basin, for example, the true scope of the restriction is far greater.
“A further 36 percent of the area was available for leasing, but was 'effectively' off-limits to development due to prohibitive conditions of approval, bringing the total area not available to development to 43 percent,” the report says. Delays and permitting hurdles also add to costs.
Altogether, the analysis concludes that 29 percent of the Rocky Mountain resource base, outside of national parks and wilderness areas, is unavailable for extraction.
That amounts to 69 trillion cubic feet, or roughly three years of current North American consumption. Regulatory requirements that limit access affect a further 56 trillion cubic feet of reserves, the study says. Offshore supply barriers Government bans on offshore drilling along the entire Atlantic and Pacific coasts, as well as the eastern Gulf of Mexico, also should be lifted to keep prices in check, the report suggests.
While figures are sketchy because the areas have been off limits for so long, the council estimates 80 trillion cubic feet of recoverable reserves lie in the outer continental shelf in the three areas. The National Petroleum Council figures there are 21tcf off the West Coast, 33 tcf off the East Coast, and 25 tcf in the Gulf off the western coast of Florida.
Ending the offshore drilling bans and reducing the restriction in the Rockies could add 3 billion cubic feet daily to U.S. supply, the council calculates, or somewhere between 4 and 5 percent of consumption. Assuming the industry got all the restrictions lifted, a political improbability, about 200 tcf of extra gas would be available, enough to heat and power the continent for somewhere between seven and 10 years.
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