[Keith_McClary]

The impact will depend on who ends up paying for economic damage to fishing, tourism, etc.

As I understand it, BP is responsible for cleanup, but damages are limited by law to a mere $75 million. Above that a tax fund pays up to $1 billion.

The nuke power industry also enjoys an liability exemption.

Essentially this is free liability insurance courtesy of the taxpayer. I wonder if anyone would drill these extreme wells or build nuke plants if they had to buy liability insurance, or even if they could get insurance at any price?

There is brave talk of retroactively raising the exemption to $10 billion so BP pays more damages.

But if they do, who will invest in nuke power, knowing their liability exemption could also be retroactively cancelled in the event of a disaster?

[GoghGoner]

From looking at the 2009 GOM oil production data from the MMS:

1) BP is the largest producer and produces 2x more than the next closest competitor which is Shell

2) BP produces 22x more oil from this region than Exxon Mobil.

That second factoid is of interest to me. I have read many articles that Exxon is conservative in their approach and that paid off for them during the recent price collapse. I wonder if they think deepwater GOM is too risky?

[eXpat]

The title says it all...
The World Can't Live Without Deepwater Oil

Regardless of the environmental and political fallout from BP's (BP) Deepwater Horizon drill-rig disaster, the larger context remains straightforward: The world, and the U.S., increasingly depends on oil and gas produced by deepwater offshore wells. As existing onshore fields keep declining, the need to develop these offshore fields and so-called unconventional oil deposits will only increase.

A report issued in April by United States Joint Forces Command (USJFCOM) created a splash by confirming that at least some U.S. military planners have accepted the key premise of "Peak Oil" as a basis for strategic planning. This premise holds that as conventional oil fields are depleted, new sources of oil or new technologies won't fully replace the lost capacity. As a result, global oil production will peak and then slowly decline, even as new production and technologies are brought on-line.

A common misunderstanding of Peak Oil is that its proponents are claiming that "we're running out of oil." More accurately, Peak Oil foresees a point of maximum production, and the possibility that demand for oil will greatly exceed the available supply. In that scenario, the price of oil would rise, perhaps significantly.

The USJFCOM planners anticipate not just price increases but shortages, and thus the possibility of conflict as nations jockey to control remaining oil reserves. Such long-term thinking about the decline of current oil resources isn't new. U.S. government agency reports such as Strategic Significance of America's Oil Shale Resource have been circulating for years.

The USJFCOM report contained a chart (a version of which is presented here) published by the International Energy Agency, an intergovernmental organization that acts as energy policy adviser to its mostly industrial-economy member nations.

The chart's most striking feature is the rapid decline in existing capacities of large, mature fields such as Cantarell in Mexico, which after yielding 11 billion barrels of oil has seen production fall from 2 million barrels per day (BPD) to 770,000 BPD.

http://www.dailyfinance.com/story/the-world-cant-live-without-deepwater-oil/19476896/
Look how clever the writer thinks he is by "refuting" PO with new offshore developments. You are going to have a rough awakening pal!

[MonteQuest]

Is anybody else having trouble understanding how more offshore drilling is an "essential component of legislative efforts to stem global warming"?

I think it's roots lie in the notion that if we can promise consumers a new supply of domestic oil, (irrespective of the time frame or cost) it will reduce the sense of urgency to conserve and will cause more development of new renewable sources of energy that won’t contribute to global warming.

Given our energy needs, in order to sustain economic growth and produce jobs, and keep our businesses competitive, we are going to need to harness traditional sources of fuel even as we ramp up production of new sources of renewable, homegrown energy.

In other words, as I have argued for years on here, when the crunch comes, who does without oil so we can divert that oil to building renewable systems? Remember, renewable energy, until it is on-line and has run long enough to repay the energy required to build it, is a new energy consumer, not a producer.

[Homesteader]

Is anybody else having trouble understanding how more offshore drilling is an "essential component of legislative efforts to stem global warming"?

I think it's roots lie in the notion that if we can promise consumers a new supply of domestic oil, (irrespective of the time frame or cost) it will reduce the sense of urgency to conserve and will cause more development of new renewable sources of energy that won’t contribute to global warming.

Hey MQ, glad to see you back.

IMHO that notion is bass ackwards. The logic that reducing the public's sense of urgency will cause more development of new renewable energy sources is fuzzy beyond fuzzy.

[lper100km]

Quote: “The White House acknowledged on Thursday that the spill could force the president to rethink plans to increase offshore oil drilling, an essential component of legislative efforts to stem global warming.”
It continues: “Administration officials said Obama could change his support for the plan, depending on what was found to have caused the rig blast last week off Louisiana that left 11 workers missing, presumed dead, and led to the huge slick.”

If anyone would take the time to read the source of the quote in the context in which it was written, you would see it is very clear that the intent is to revisit the policies regarding offshore drilling in the wake of the GOM tragedy.

The finger pointing should be aimed at the story editor.

http://www.reuters.com/article/idUSTRE63T4L320100430

[Homesteader]

Well, I still don't get it. . .but that is the case with a lot of stuff going on nowadays.

Not that my getting it or not getting it will change the outcome one whit.

[MonteQuest]

Hey MQ, glad to see you back.

IMHO that notion is bass ackwards. The logic that reducing the public's sense of urgency will cause more development of new renewable energy sources is fuzzy beyond fuzzy.

Thanks! Yeah, a bit fuzzy, but it is what I read. Same psychology is being applied to the economy news with the data spin and fabrication to pacific the masses.

[MonteQuest]

Well, I still don't get it. . .but that is the case with a lot of stuff going on nowadays.

Not that my getting it or not getting it will change the outcome one whit.

Look back at at my first post, I added some more thoughts.

[evilgenius]

I don't suppose this will stifle West Africa (WA) much, which is the most important off-shore development coming. Yes, Brazil too, but even farther out than WA.

Basically, the US uses Venezuela, mostly because of its supply proximity, in order to stop gap short term supply issues. Of course, the Gulf oil does the same thing, but not at a rate that is good enough to regulate supply all by itself. WA is directly across from the oil ports of the Gulf without having to round any Capes. Supply can be regulated from there effectively to the extent that off-shore WA can produce. Once the necessary adjustments are made to procedure, whether they are actually implemented or only promised who knows, then Nigeria and Sao Tome and Principe etc. will gladly allow extraction.

Importantly, though it will happen, this will likely slow down the process of off-shore exploitation. The peak oil curve isn't going to slow down its rate merely because of this delay. Off-shore was intended to come online in time to move the inflection point of the curve out the number of years necessary in order for research on alternatives to bear fruit. Two possibilities immediately rear their heads; bombastic barreling forward with all off-shore development plans in apparent disregard of this, or an increased reliance on the Middle East along with the commensurate political and military developments that go along with that.

I think war is the most likely outcome. With whom TBD.

[sparky]

.
The way I see it , deep water drilling off the U.S. coast has been put on the self for a little while ,
too much political headwinds for now
In about a year when the Indians will have chilled some , there is going to be a committee and a report with suggested " improved safeties "
then drilling will proceed , there really is no choice .

within a dozen of years rigs will drill in Antarctica too

.

[deMolay]

For the sake of argument remove all US offshore drilling in over 500ft of water, as this article suggests. What would be the effect of this on Peak Oil Stats. This could spread to many offshore drilling jurisdictions. http://www.reuters.com/article/idUSTRE64Q4LS20100527

[sparky]

.
Deep sea drilling is breaking new ground ,
now the arctic oil is in play , a british energy company is drilling off Greenland
http://www.cairnenergy.com/media-and-news/news/

the negotiation between the riverine countries to allocate the arctic ocean mining rights is proceeding satisfactorily , soon rigs will start to appear with increasing frequency in the polar offshore
It will probably be a decade or two before antarctica is in play too.

a spill on the ice would be a real bummer by the way , but I guess it's just too bad

[Maddog78]

It's started. Rigs and jobs leaving.

http://ragingdebate.com/economy/rig-and ... bama-ban-1

WASHINGTON — Diamond Offshore announced Friday that its Ocean Endeavor drilling rig will leave the Gulf of Mexico and move to Egyptian waters immediately — making it the first to abandon the United States in the wake of the BP oil spill and a ban on deep-water drilling.

And the Ocean Endeavor's exodus probably won't be the last, according to oil industry officials and Gulf Coast leaders who warn that other companies eager to find work for the now-idled rigs are considering moving them outside the U.S.

Devon Energy Corp. had been leasing the Endeavor to drill in the same region of the Gulf as BP's leaking Macondo well, which has been gushing crude since a lethal blowout April 20.

But Diamond announced Friday it will lease the rig through June 30, 2011, to Cairo-based Burullus Gas Co., which plans to send the Endeavor to Egyptian waters immediately.

Devon is one of three companies that has cited the deep-water drilling ban in trying to ease out of contracts to lease Diamond rigs. Diamond, a drilling company, said it expects to make about $100 million from the deal, including a $31 million early termination fee it recovered from Devon.

Larry Dickerson, CEO of Houston-based Diamond, signaled that other of his company's rigs could be relocated, too.

"As a result of the uncertainties surrounding the offshore drilling moratorium, we are actively seeking international opportunities to keep our rigs fully employed," Dickerson said. "We greatly regret the loss of U.S. jobs that will result from this rig relocation."

snip................

Once the rigs relocate, it could be a minimum of five to 10 years before they return, predicted Rep. Pete Olson, R-Sugar Land.

"We cannot afford to lose these jobs or the energy they provide," Olson said. "President Obama should allow this moratorium to remain lifted and let Americans get back to work."

[dsula]

It's started. Rigs and jobs leaving.

That's actually good news, we're leaving some oil for future generations.