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Sachs: Banning offshore drilling not an option
June 24th, 2010
Catholic Online (www.catholic.org)
In the wake of the Deepwater Horizon oil rig disaster, that has sent untold millions of gallons of oil into the Gulf of Mexico, it would appear that an all-out ban on offshore drilling and exploration would seem to be a logical response. This is not an option, according to Goldman Sachs, who says that such a ban would halve U.S. oil production by 2015.
LOS ANGELES, CA (Catholic Online) - "While new project start-ups are not meaningful over the next few years, the ability to continue to drill exploitation and development wells in existing fields is key to maintaining production," Goldman's Global Energy team says.
"As such, a permanent drilling ban would have a material negative impact on our Gulf of Mexico production outlook, with production potentially falling to below 900,000 b/d in 2015 versus our current forecast of just over 1.75 million b/d."
"We currently believe a permanent drilling moratorium is unlikely. As such, we have run a second sensitivity that assumes the current six-month moratorium is extended for essentially an additional six months (12 months in total), with a corresponding delay on both new projects and production maintenance activities at existing fields.
"Assuming a combination of greater caution by operators and greater regulatory scrutiny prohibits a future reacceleration in activity, we estimate deepwater Gulf of Mexico production would average 1.5 million b/d from 2011-2015 versus our current 1.7 million b/d estimate. In effect, the expected plateau would be reduced by about 200,000 b/d, but production would stabilize under the assumptions and not continuously decline."
Goldman's team adds that as "horrible as the disaster is, and as noble as the concept of weaning America off of oil consumption may be, it's hard to see how America will be able to drastically change its ways any time soon. Any oil not produced in the gulf will be shipped in from abroad. In addition, one has to imagine that the offshore industry in nearby states would be devastated by 2015 as well."