The domestic oil and natural gas resource base in restricted and unrestricted onshore and offshore areas will grow by more than what the Energy Information Administration (EIA) has projected over the next two decades, according to a new study commissioned by the National Association of Regulatory Utility Commissioners (NARUC).

The study estimates that the natural gas resource base will grow to 2,034 Tcf by 2030 — 16.4% more than the 1,748 Tcf projected by the EIA in its Annual Energy Outlook for 2009. It expects the crude oil resource base to reach 229 billion bbl by 2030, or 23.1% above the EIA’s estimate of 186 billion bbl.

Prepared by McLean, VA-based Science Applications International Corp. (SAIC) and Gas Technology Institute (GTI), the study attributes its higher projections to two primary factors: expanded shale gas activity and development successes; and enhanced resource estimates for the currently restricted offshore areas thanks to new technology and successes in the currently available and developed offshore areas.

The study was unveiled at NARUC’s Winter Committee Meetings Monday in Washington, DC. NARUC adopted a resolution in 2007 calling for the study of the impact of the restrictions on energy exploration and production on federal lands, both onshore and within the 200-mile limit from the country’s coastlines. SAIC and Des Plaines, IL-based GTI coordinated the study with the NARUC Moratoria Study Group.

Congress let the long-standing congressional moratorium on drilling in much of the federal Outer Continental Shelf (OCS) expire on Nov. 1, 2008 (see Daily GPI, Sept. 30, 2008). Earlier that year then-President Bush issued an executive order shelving the parallel presidential ban on drilling in federal offshore areas (see Daily GPI, July 15, 2008).

While the two actions lifted much of the restrictions on drilling in the OCS, the federal government has maintained moratoria-like policies by keeping the lease sales in the prior moratoria OCS areas to a minimum. Furthermore, producers have grown increasingly concerned about the Obama administration’s policies restricting onshore development, particularly in the Mountain West.

“By not allowing drilling in the OCS and many restricted onshore areas, the study estimates that 285 Tcf of natural gas will remain off-limits to the American people, enough to meet our needs for more than 12 years at current levels of consumption,” said R. Skip Horvath, president of the Natural Gas Supply Association, which represents gas producers.

If the U.S. continues its moratoria-like policies, the study projects that energy costs to consumers will increase cumulatively by $2.35 trillion through 2030, for an annual average increased cost of 5%. Import costs for crude oil, petroleum products and natural gas are projected to grow cumulatively by $1.6 trillion, for an annual average increased cost of more than 38%. At the same time the gross domestic product is pegged to fall cumulatively by $2.36 trillion through 2030, for an annual average decrease of 0.52%, according to the study.

Moreover, domestic natural gas production would see a projected drop of 46 Tcf through 2030 if the government continues restrictive drilling policies and U.S. oil production would fall by 9.9 billion bbl over the period, while projected liquefied natural gas (LNG) and pipeline imports would decrease by nearly 15.7 Tcf, the study said.

And average natural gas prices would jump 17%; annual average electricity prices would rise 5%; and average motor gasoline prices would likely increase by 3%, it noted.

While relaxing the moratoria-like policies would likely increase the associated environmental effects in the U.S., maintaining moratoria-like policies would lead to increased imports of crude oil and gas imports, which would result in greater domestic and global environmental effects, according to the study.

“The study observes that maintaining the moratoria will cause a shift to overseas fuels production with commensurate effects on the environment: 1) foreign production will increase the environmental effects in other countries where environmental standards are different (often less stringent) than those in the U.S.; and 2) foreign production will impose an unknown increase in environmental effects on domestic and international air and waters due to increased oil and LNG shipping transport,” it noted.

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