THE VINE SEPTEMBER 8, 2008
Climatologists still go back and forth on whether global warming will make the annual hurricane season more violent, though a recent paper in Nature offers up new evidence for a link. But if it's true, and storms in the North Atlantic are getting stronger as the ocean heats up, what does that mean for U.S. oil production in the Gulf of Mexico? Keith Johnson passes along a forecast from Jeff Rubin of CIBC—the analyst who has predicted oil would hit $200-per-barrel by 2010. His verdict? Not good. The region is still feeling wobbly after the blows inflicted by Katrina and Rita three years ago—oil production is 20 percent below its 2005 peak—and a growing hurricane onslaught could make it extremely difficult to get new fields up and running in what's currently one of the few places in the United States with new supply growth:
Even with added capacity from Thunder Horse this year and Shenzi, Tahiti, and other fields in coming years, we estimate that net production will continue to taper off in the face of an over-10% depletion rate from existing offshore wells and less enthusiastic capital spending in the region.
Instead of ramping up production to over 2 million barrels per day as once dreamed by the Departments of the Interior and Energy, Gulf of Mexico production is likely to fall to a low of a million barrels per day by 2013—a third lower than the region’s production prior to the 2005 storm season.
The CIBC report also suggests that even if Congress does decide to open up ANWR for drilling, oil production in Alaska won't be enough to offset the decline in production from the Gulf of Mexico and the lower 48 states in the coming years. "Drill, baby, drill" makes for a catchy refrain, but on its own, it won't even stop oil imports from rising, let alone put the United States on a path toward energy independence.