Quest Offshore: Oceana’s Oil & Gas vs Wind Report Has Mistakes

Following Oceana’s recently published report, Quest Offshore Resources, Inc. has issued a response stating that Oceana presented its work in an inaccurate way. The following is the summary of the response: 

In the energy industry there is a tendency to present the future of energy production as an “either or” situation. Many think of specific energy sources as the only possible solution to the future of energy production while ignoring the realities of a large and complicated industry.

Oceana’s “Offshore Energy by the Numbers” had some unfortunate mistakes in regard to our assumptions, math and estimation methods that present our work in an inaccurate way. First and most importantly, our development scheme was presented as being overly aggressive with reserve sizes, the portion of those reserves which the industry would be able to produce and the number of jobs that would be sustained by oil and gas production.

In addition to those mistakes there were also misunderstandings regarding the lifetimes of offshore projects, the offshore regulatory environment, our language around any potential revenue sharing agreements between the federal and state governments, and the reasoning behind our distribution of jobs outside of just the coastal states.

In response to Oceana’s claims, we would like to make the following statements about our study:

• Our total reserve numbers were based on the best available information for the total resources in the region, were based on reasonable and repeatedly observed historical trends in areas that were surveyed at the same time, and were nearly three billion barrels of oil equivalent below the high estimate in the BOEM’s most recent estimation for the region.
• In determining the portion of oil and gas resources that would be produced, large amounts of data were used to evaluate the geology of the region, the types of reserves that would likely be discovered and the potential ability of oil and gas companies to extract those resources.
• Our study methods built historically accurate individual project development timelines, supply chain characteristics, project economics and reasonable industry investment levels into the forecasts, ensuring a realistic picture of development.
• Recalculating the job numbers from our study in the way in which Oceana presented them ignored the vast majority of job potential from oil and gas development by calculating a reduced average for oil and gas positions and showing an impossibly optimistic job outlook for wind energy.
• Oceana did not project wind jobs leaving the states with wind energy resources, while our study took a realistic approach to the development of an industry supply chain. As a result of this, our jobs were more distributed and appeared smaller in state-to-state comparisons.
• At no point in our study did we claim that there were revenue sharing agreements in place between East coast states and the federal government in regard to offshore oil and gas production. We clearly stated that agreements between the states and federal government would have to be made in a similar manner to those on the Gulf Coast in order for this to be accurate.
• The same regulatory environment and restrictions in place for offshore drilling and production in the Gulf of Mexico were included in our estimations.

While our primary intent in this response was to clarify the misunderstandings involving our work, we feel it is necessary to also point out several of the issues in Oceana’s study:

• Approaching energy as an oil and gas vs. renewables situation ignores the ways that oil and gas and renewables can be used together
• Comparing renewable power generation to oil and gas as an “apples to apples” scenario ignores the chemical products created in refining oil, the unstable level of energy production from renewables and the ability to easily store fuel products and natural gas
• The development scenario proposed by Oceana would require more than 50 times the current nameplate capacity of the entire offshore wind energy industry around the world, would be larger than any construction project ever attempted, would require more than 100,000 3.6 MW 90-meter wind turbines and would likely cost trillions of dollars
• The largest currently operating wind farm took 2.25 years to build after the engineering and permitting phases were completed, cost roughly $2.9 billion and has a nameplate capacity of 0.6GW, which would be 1/650^th the size of Oceana’s proposed development
• In order to build a wind power generation capacity as large as the one outlined in the Oceana study, an enormous supply chain would have to be built
• The existing offshore wind farms have been built over decades in regions with aggressively supportive governments and open access to the market, but have still been slow to develop due to the difficulty of integrating offshore wind into the power grid. Very little work has been done on the east coast to prepare for these power-grid related difficulties.
• If wind development on the east coast actually followed this timeline, it would require a large build-up of highly skilled workers in the Atlantic states who would suddenly be out of work at the end of the 10-year construction period
• Wind project economics were never addressed in Oceana’s development plan

A combination of the current energy sources with responsible, reliable and sustainable clean energy is already under way and will likely continue to grow as a share of power generation as advances in technology allow it. However, it is unlikely that there will be a situation where these energy sources can meet all of our energy needs in the near future, and they will never be able to meet all of the chemical needs which are currently satisfied by petroleum products.

As the industry currently stands, in order to make renewable energy work, production sources need to be combined with power generation that can be easily turned on and off in order to cover the gaps of unpredictable energy generation by renewable energy resources.

Full response can be found on Quest Offshore’s website.