Oil Industry Awaits Bush Decision

OFFSHORE EXPLORATION

IT'S getting tougher to drill for oil offshore the United States. The oil industry may be about to learn just how tough. President Bush said last week that he is days away from issuing a long-awaited, long-postponed decision that will weigh environmental concerns against energy needs in shaping the future of the outer continental shelf (OCS).

It's not an easy decision. US oil production is at a 26-year low. Imported oil met over half of US needs in May. Last year oil imports cost $50 billion, compared to a total trade deficit of $107 billion. From a fifth to a third of remaining US hydrocarbon reserves are believed to lie offshore.

Environmentalists argue that weatherproofing millions of homes and mandating higher automobile fuel efficiency would eliminate the need for billions of barrels of oil that might be found in environmentally sensitive areas, justifying closing them to oil exploration.

Whatever action Mr. Bush finally advocates, Rep. Barbara Boxer, (D) California, has already proposed an alternative plan. Her National Ocean Protection Act of 1990 would exclude the oil industry from much of the OCS forever (see map). The bill has 70 co-sponsors. ``I hope the president embraces it,'' she says.

Meanwhile, action by Congress, individual states, and federal agencies has already locked up various offshore expanses as many as three ways (see sidebar).

A number of government officials and oil industry executives believe that tanker accidents are causing a misplaced reaction against drilling. The ongoing Mega Borg incident off Texas is the latest mishap to refresh public shock over 1989's Alaska oil spill.

An official at the National Ocean Industries Association takes a different view. ``We had our problems before the Exxon Valdez,'' says Carl Schmid, a spokesman for NOIA.

He notes that before the Valdez spill, Bush had already formed a high-level task force to look at the issue of drilling off California and Florida. The president, who founded an offshore drilling company in the 1950s, also was challenged on the issue of offshore drilling during the election campaign.

But in this election year, Mr. Schmid adds, ``the environmental community is doing their best to equate'' tanker accidents and offshore drilling. ``It's a good political issue to run on.''

Although both tankers and exploratory drilling involve ``oceans and oil,'' connecting them is ``based on intuitive notions rather than fact,'' says Ralph Ainger, an official at the Minerals Management Service. The MMS conducts lease sales at which oil companies acquire drilling rights on offshore acreage.

Oil companies have drilled more than 8,000 exploratory wells in US waters without a blowout. Oil produced offshore is brought to land by pipeline, a practice with an excellent safety record.

But a broader look at the offshore oil industry turns up a few prominent blemishes. Ixtoc No. 1, an exploratory well drilled by Mexico, blew out in 1979 in the Gulf of Mexico. Not capped for 10 months, the well gushed more than 3.1 million barrels of oil, creating the world's biggest spill.

A decade earlier, a Unocal Corporation well (for development, not exploration) blew out during drilling offshore California, causing the infamous Santa Barbara oil spill. However, Mr. Ainger says that spill is the only one that resulted from drilling in US waters.

``We developed a lot of regulations because of that,'' he says. ``I don't think it's reasonable to expect that the same set of circumstances could exist today.'' A spokesman for Unocal says that ``today's regulations are probably 100 times stricter.''

Proponents of drilling say the risk of pollution will actually increase if restrictions on offshore exploration cause the US to buy more tanker-borne imported oil.

``That's just all talk,'' Ms. Boxer says. She says that there is so little oil offshore that producing it wouldn't significantly lessen tanker traffic. Rather, there would just be more oil platforms for tankers to run into, as has happened some 900 times, she says. The best answer would be to become as energy efficient as West Europeans. That would cut US energy use in half, ending imports altogether, she says.

`TANKERS are much more worrisome than offshore wells,'' says Donna Moffitt, director of the outer continental shelf office in North Carolina's department of administration in Raleigh. The question was raised for the first time in that state when Mobil proposed drilling the first well off its coast.

The target is a geologic structure that may hold 5 trillion cubic feet (Tcf) of natural gas. That is the energy equivalent of 1,100 Mega Borg-sized loads of crude oil.

The permitting process has been delayed so that the MMS can give North Carolina a report on the possible impact of the well on the state's $2 billion fishing industry, $1 billion coastal tourism industry, and economic growth pattern. ``What the state really wanted to know is: `Where is North Carolina going to be 20 years from now?' '' Ainger says.

A second draft of the report was presented on June 1, with the final due in September. One conclusion: The state's chance of experiencing an oil spill is 19 times greater from existing tanker traffic than from exploratory drilling, Ms. Moffitt says. ``The risk of a blow-out is so low as to be virtually non-existent,'' while routine pollution would be ``localized, short-term, and reversible.''

Mobil hopes to get a permit to drill its North Carolina well in November and to start drilling in May 1991. But Rep. Walter Jones (D), whose district includes most of the state's coast, has proposed the Outer Banks Protection Act. The bill would delay further oil activity off North Carolina until October 1991.

``It's virtually a crap shoot,'' says Moffitt about Mobil's chances of ever drilling the well. ``It's hard to know where to put your money.''