How much new US oil? Not a lot.
The energy bill becomes law Monday, but won't spur exploration.
With alternative energy sources decades from supplying US needs, motorists fretting over the cost of their next fill-up are left to wonder if America will ever wean itself from foreign oil.
The long-awaited energy bill was supposed to do much to push up domestic oil and gas production, but as President Bush signs the legislation Monday in New Mexico, it would appear that a dramatic boost in new US fossil-fuel supplies is unlikely.
One reason is that domestic drilling is already proceeding at a rapid clip, spurred on by a market in which oil is selling for more than $60 a barrel. Another is that much of what's known to be in the ground is running out or hard to reach. As for what's not known, the energy bill did not open up a lot of new territory to exploration.
Some say Congress should have done more to encourage production and cut US dependence on imported oil - now almost 60 percent of total consumption. Others say the energy legislation does that, not by opening up huge tracts for drilling onshore and offshore, but by focusing half of the bill's $11.5 billion in subsidies on renewable energy, such as wind and solar power.
"Although it's not going to change the shape of our energy future, it takes some good fundamental steps," says Bill Stevens, executive vice president of the Texas Alliance of Energy Producers, in Abilene. "It spreads the money or incentives around between renewables, hydrogen, nuclear, coal, oil, and gas. And hopefully that will give us a firm basis from which to increase our overall energy production."
Make no mistake about it, American oil companies are exploring, drilling, and extracting as fast as they can. Last year, for instance, the rig count grew by more than 10 percent over 2003. But the impetus is $60-a-barrel oil, not legislation.
Still, as the easy oil runs out, getting to the difficult oil is becoming more expensive. Houston-based Rowan Cos., for instance, is currently drilling a well on the Gulf of Mexico's shallow-water shelf that will reach 32,000 feet to the sub-sea floor. It will take a year to complete and $100 million to construct.
"The technology of oil and gas drilling in the Gulf of Mexico is advancing fast, but the costs in the [hard-to-reach] frontier areas increased substantially," says Paul Kelly, senior vice president at Rowan, a drilling contractor.
Many of the energy bill's economic incentives for drilling are targeted at the central and western Gulf of Mexico, which already supply 25 percent of the nation's oil and 28 percent of its natural gas. The bill provides royalty relief for both oil drilling in deep water and deep gas drilling in the shallow-water shelf.
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