The Case for Offshore Drilling

By June 24, 2008Energy

Larry Kudlow interviewed James Hackett, president & CEO of Anadarko Petroleum, on energy issues last night. As to the benefits of drilling offshore, Hackett explained:

[We’ve] got a world class project that is the deepest producing well in the history of the world. It’s providing clean, natural gas to America, about 1.5 percent of all of our gas supply. Everyday it’s being provided from a football field and a half sized environmental footprint, a two-hour flight away from the shoreline. So it’s not in any visual contact with any human being. These platforms have gone through 200-year hurricanes, back in 2005, without any environmental consequences. It’s a bit of a fiction hoisted on us by people who don’t know better.

And to the assertion that new energy supplies from offshore or Alaska won’t have any immediate effect on prices, Hackett remarks:

Well I think that the price would adjust actually as soon as you started drilling it. There’s a psychology with regard to speculative elements in any commodity market, whether it’s grains, or metals, or oil and gas. If the world really felt that there were plenty of places to go look for oil and gas, the markets would start trading as if that were a reality. Today it’s quite the opposite reality, especially with the geopolitical elements overlaying that. So, every time we say to the world, ‘We want energy security, but we want you to produce it, and we’re not going to do anything,’ the elements in the trading community say, ‘well that means that access is getting tougher.’

The inset photo is of the Blind Faith platform, a Chevron-Anadarko project which will begin producing oil and natural gas in the Gulf this year. USA Today took a look at the promise and challenges of deep-sea production last week in a good story, “Deepwater oil fields are a final frontier,” which notes, “By 2015, Chevron expects deepwater wells to account for one-quarter of offshore oil production vs. 9% today.”

Anadarko summarized its capital projects for the year in a February news release. Wow. Good thing oil companies make money.

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