I live less than 15 minutes away from one of the most gorgeous beaches on the Atlantic Ocean. As you can see in the picture above, the view from that beach can be breathtaking. Other than a few passing ships and an occasional shrimping boat the view from my beach is usually marked by a spectacular sunrise and a seemingly endless ocean of blue.
Laundry list of concerns
That view and those of many other Atlantic beaches, however, might not be the same for long. The Obama administration is continuing to explore the possibility of allowing oil and gas development in the Atlantic. This move is part of Obama's "all of the above" energy policy and it cleared another hurdle last week after the Interior Department released its environmental impact review.
That review lays out the safeguards for contractors that could conduct seismic surveys that would test potential energy sources that lie beneath the Atlantic. However, there still are a number of concerns here as development would open up the door for a myriad of potential environmental problems.
One of the concerns, for example, is that the seismic surveys alone pose a risk to sea life as the companies looking to run these tests would use air gun testing. According to the Sierra Club, these tests could kill or injure thousands of sea animals.
Don't expect drilling rigs overnight
Other concerns include the potential for spills once development gets under way. This is actually one of the issues holding up the development in Alaska's Arctic. Royal Dutch Shell (NYSE:RDS-A) (NYSE:RDS-B) spent almost $6 billion and so far has just drilled two unfinished wells in 2012. Shell wasn't able to finish drilling into potential oil-bearing zones because a unique spill containment system wasn't ready. Shell was planning to resume drilling again this year but put its 2014 drilling program there on hold after a legal challenge set back its plans.
Joining the company with long delayed drilling plans is ConocoPhillips (NYSE:COP), which was supposed to begin drilling this year. ConocoPhillips continues to site regulatory uncertainties as the reason why it has yet to begin drilling on the acreage it leased in the Arctic. In addition to that there is a long-standing legal uncertainty surrounding the 2008 government auction where ConocoPhillips bought its leases to drill in the Arctic.
Why bother drilling
One of the reasons why Royal Dutch Shell and ConocoPhillips are interested in the Arctic is because it's believed to hold 30% of the world's undiscovered natural gas as well as 13% of its undiscovered oil. That amounts to upwards of 400 billion barrels of oil equivalent, or ten times the total oil and gas that the industry has produced out of the prolific North Sea. It's simply a massive potential resources base.
The potential energy resources in the Atlantic, however, are estimated to be much smaller than that. According to a 2012 study by the U.S. Bureau of Ocean Energy Management, there might be as much as 3.3 billion barrels of oil and another 31.28 trillion cubic feet of natural gas. If that much oil and gas is down there it would represent approximately 4% of the total estimated recoverable oil and 8% of the estimated recoverable natural gas resources in U.S. federal waters. While that isn't all that much considering the size of recent onshore finds, it would help reduce our dependence on foreign oil.
We are one step closer to the industry beginning to drill for oil and gas off of the East Coast. However, if we've learned anything from Alaska, even signed leases doesn't mean drilling is soon to follow. All that being said, as much as I love the view from my beach the the "all of the above" approach that the President is pursuing, if done responsibly, is the proper course for our country as its puts energy independence one step closer to becoming a reality.
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