Saturday, July 19, 2008

Mr. Bush, A Novice Checker Player, In A Global Petroleum Chess Tournament

Why do I constantly poke fun of Mr. Bush? Because it IS so easy, since he provides so much fodder. Fodders sufficient enough for everyone from late night comedians to staid risk managers. Once again, he does not disappoint. With mere months to go before his ignominious exit from the White House as, in Nancy Pelosi’s words, a “total failure,” Mr. Bush is again grasping at offshore oil drilling to secure some sort of a legacy.

In this vain attempt, he is now accusing the Congressional Democrats of impeding in tapping the vast offshore oil reserve. Now this is amusing to people who know since the ones who have been resisting offshore drilling for a while are Florida Republicans, led by his own brother, Jeb Bush.

Now, Jeb has been saying the right things about offshore drilling for sometime now, which is to balance the need for drilling with the need to protect the coastline. Jeb’s idea, co-sponsored and floated in 2006, is a sound idea of imposing a 100-mile buffer around the coastal states while allowing for drilling offshore. Apparently, George W. Bush doesn’t seem too concerned about the environment at all.

George W. Bush also doesn’t seem too concerned about the actual logistical implementation of offshore drilling. “The sooner Congress lifts the ban, the sooner we can get these resources from the ocean floor to the gas pump,'' Bush said today in his weekly radio address. His statement seems to imply that we can obtain oil from offshore drilling as soon as a year, once the Democrats in Congress stop dragging their feet.

Perhaps someone should remind him that just because the ban is lifted today, it does not mean that drilling can commence right away. Typically, it would take at least three to five years to ensure proper safeguards are taken for environmental and economic feasibility studies, including impact of drilling on ocean pollution, shipping lanes, and fishing. Moreover, it would take a survey ship and a drilling rig several years to identify the location of a rich enough pocket of oil. Further complicating the process is that fact that the oil appears to be located in the deeper portion of the De Soto Canyon. According to Minerals Management Service, “For the oil resources, the vast majority of this increase occurred in the deepwater areas of the Gulf of Mexico,” that, it their estimation, could be “located in waters that are water in excess of 3000 meters (10,000 feet) deep and to subsea depths in excess of 9600 meters (31,700 feet).”

What this means is that deep-sea drilling rigs are required to access the potential 17.8 billion barrels of oil. This is where Bush is a novice checkers player in a global championship chess tournament. If Bush were a chess player, he would have lined up all remaining deep-sea rigs before Brazil did. Now, with the backlog of rigs worldwide, whatever Congress decides to do will be moot.
(Source: New York Times)

Now, if Bush were a chess player, he would simply declare the Gulf of Mexico, from 200 to 500 miles off the coastal U.S. as off limits to any drilling of oil and gas and declare U.S. sovereign rights to all resources in the area, including oil, gas, and fishing. The 17.8 billion barrels of oil in the area seems mighty valuable now but it will be even more valuable 10, 20, or 30 years from now.

Now, that’s playing chess. Perhaps, Obama will play this out correctly, come the New Year.

Ed Kim
Practical Risk Manager

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