A POTENTIAL FIX?: Does the ocean floor off the coasts of the U.S. hold the key to energy independence?
© ISTOCKPHOTO/CHAD ANDERSON

When Arizona Sen. John McCain accepted the Republican nomination for president, he vowed to cut America's reliance on foreign oil by opening up the nation's Atlantic and Pacific coasts to drilling—drawing cheers from GOP delegates on hand for his party's national convention. "We will drill new oil wells offshore, and we'll drill them now," McCain pledged to his faithful, who gushed with enthusiastic chants of "drill, baby, drill!" The ultimate goal, the candidate said: to "stop sending $700 billion a year (for oil) to countries that don't like us very much."

No one disputes that a lot of oil lies untapped under the rocky floors of the Atlantic and Pacific oceans off the U.S. coasts, in areas where Congress has banned drilling since 1982. But is it enough to free the U.S. from its dependence on foreign suppliers?

The Minerals Management Service (MMS), is the part of the U.S. Department of the Interior responsible for leasing tracts to oil and gas companies and collecting the royalties on them, which amount to around $8 billion a year. The leases are supposed to be awarded through a competitive bidding process, in which the best-qualified company coming in with the highest split of royalties wins. (The Interior Department's inspector general, however, released a scathing report on September 10 charging that 19 current and past officials in the MMS's  Denver-based Royalty in Kind program were both literally and figuratively in bed with energy company execs. The IG report describes "a culture of ethical failure" in which staffers accepted vacations and other pricey gifts from oil companies, rigged contracts, did drugs with one another and had sex with industry reps.

The MMS has estimated that there are around 18 billion barrels in the underwater areas now off-limits to drilling. That's significantly less than in oil fields open for business in the Gulf of Mexico, coastal Alaska and off the coast of southern California, where there are 10.1 billion barrels of known oil reserves as well as an estimated 85.9 billion more.

To put these numbers in perspective: one U.S. barrel of oil equals 42 gallons (159 liters) and, according to the Energy Information Administration (an arm of the U.S. Department of Energy that provides energy data and analysis), the U.S. consumes some 20.8 million barrels of oil a day—almost one quarter of the 87 million used worldwide. That adds up to 7.59 billion barrels a year.

The EIA estimates that by 2030, U.S. oil daily demand will climb to nearly 23 million barrels, with global per-day consumption expected to top 118 million.

But here's the catch: There is a chance that the MMS has miscalculated the amount of offshore oil, because its estimates are based on 30- to 40-year-old data. For example, MMS spokesperson Nicholas Pardi says a 1987 survey of the Gulf of Mexico indicated there was potentially nine billion barrels of oil there, but when the area was resurveyed nine years later (using newer technologies), the number jumped to potential 45 billion barrels.

In other words, says Ian Nathan, a senior research analyst with New York City–based Energy Intelligence Group (a publisher of data and information on the global energy industry), it is possible that areas currently off-limits to drilling might actually contain a lot more—or less, for that matter—petroleum than previously believed.