The Atlantic Outer Continental Shelf (OCS) has the greatest renewable energy potential of all the offshore regions, while the Gulf of Mexico (GOM) and Alaska not surprisingly are believed to hold the largest trove of undiscovered technically recoverable resources (UTRR) of oil and natural gas, according to a joint report by two Interior Department agencies that was released last Thursday.
The report, which was prepared by the Minerals Management Service (MMS) and the U.S. Geological Survey (USGS), found that there was a 95% probability of 326.4 Tcf of UTRR gas resources and 66.6 billion bbl of UTRR oil in the OCS, which extends from three miles to at least 200 miles offshore. The most prolific areas for oil and gas are believed to be the GOM, with a 95% probability of at least 218.83 Tcf of UTRR gas resources and 41.21 billion bbl of UTRR oil resources, followed by a 95% probability of a minimum of 48.28 Tcf of UTRR gas in the Alaska OCS and 8.66 billion bbl of UTRR oil, the agencies said.
The least prolific are the Atlantic OCS with a 95% probability of 14.30 Tcf of UTRR natural gas and 1.12 billion bbl of UTRR oil. The Pacific OCS has a 95% probability of a minimum of 13.28 Tcf of UTRR gas and 7.55 billion bbl of UTRR oil, according to the report.
"I don't think there were any surprises [in the report]. There was no new information or recommendations" made with respect to oil and gas development of the OCS, said Cathy Landry, a spokeswoman for the American Petroleum Institute. The oil and gas industry was expecting more from Interior, but got very little in the way of direction or guidance.
The report essentially is a rehash of oil and gas resource information that was prepared by MMS in 2006, and is based on seismic data that is more than 25 years old, leading some to question the accuracy of the results.
"As of the 2006 assessment...mean estimates of the OCS total hydrocarbon endowment were 115.4 billion bbl of oil and 633.6 Tcf of gas (a total of 228.2 billion bbl of oil equivalent [BOE]). More than 18% of this total endowment (mean estimate BOE) has already been produced, and an additional 11% is contained within the various reserves categories, the source of near- and mid-term production," the report said.
"Even after more than 50 years of exploration and development on the OCS, 70% of the mean BOE total endowment is represented by undiscovered resources. More than half of this potential exists in areas of the OCS outside of the Central and Western Gulf of Mexico," notably Alaska and the eastern Gulf, the agencies said.
The agencies estimated that approximately 53% of the total UTRR is economically recoverable on a BOE basis at an oil price of $60/bbl and gas price of $6.41/Mcf. The economically recoverable rate would increase to about 78% with an oil price of $160/bbl and gas price of $17.08/Mcf.
The short time span for completion of the report -- Interior Secretary Ken Salazar gave the agencies 45 days -- made an in-depth evaluation of traditional and renewable OCS resources impossible, they said. The report "does not purport to present new information or fill in existing data gaps."
Salazar called for the MMS-USGS report when he placed a hold on the department's review of the new five-year offshore leasing plan (2010-2015) that was issued in the final days of the Bush administration (see NGI, Feb. 16). In addition to the report, Salazar has scheduled meetings in four different cities this month to hear public comments on OCS development. He said he will use the report as a "starting point" at the meetings, which begin in Atlantic City, NJ, and New Orleans this week.
As for nontraditional sources of energy, the MMS-USGS report said the Atlantic OCS has "the greatest renewable energy potential" relative to other OCS regions in the GOM, Pacific and Alaska.
"In the short term (the next 5-7 years), this is most likely to be from offshore wind power. Substantial wind resources exist offshore the Atlantic Coast, near high-energy demand centers. Strong wind resources also exist offshore California, Oregon, Washington and Hawaii, but it appears that the majority of this resource lies in deep waters where technology constraints are potentially significant," the agencies said.
"Alaska has outstanding ocean renewable energy resource potential. However, because of harsh weather conditions and significant distance from high-energy demand centers, it is not anticipated that these resources will be developed on the Alaska OCS in the short term."
According to the National Renewable Energy Laboratory, the development of shallow water (typically 0-30 meters) wind resources, which are the most likely to be technically and commercially feasible at this time, could provide at least 20% of the electricity needs of almost all coastal states.
"More than three-fourths of the nation's electricity demand comes from coastal states and the wind potential off the coasts of the Lower 48 states actually exceeds our entire U.S. electricity demand," Salazar said Thursday at an energy summit in Washington, DC.
Wave energy also is a "potentially significant" source of OCS renewable energy, but it is in the developmental stage, according to the report. "It does not appear that wave power is likely to become a major contributor to the national energy picture in the near future. Development is most likely to be focused in areas along the Pacific Northwest or off the coast of Hawaii," it said.
The development of tidal energy technology "appears to be moving more quickly than wave energy technology development because its characteristics, such as predictable currents and location in shallow near-shore waters, make it more accessible to development. However tidal projects typically occur close to the coast, within state [offshore] boundaries," the report noted.
"Quantifying the potential offshore renewable energy resource is reasonably straightforward...[But] there is a high degree of uncertainty in estimating the actual extractable or developable amount of energy given the many uncertainties in societal preferences, technological developments, environmental sensitivities, transmission capacity, grid connection availability, and potential space-use conflicts in the ocean environment."
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