Energy Pro: Florida Is Not A Big Oil State. So Why Drill?

Aug 17, 2015

When you think of oil production in the U.S., it's perhaps along with images of oil wells in Texas or North Dakota, maybe Alaska. It's not something associated with travel logs of Florida.

Yet, there is oil drilling in the Sunshine State -- about 2 million barrels a year. And that is truly a drop in the bucket compared to the total amount of oil consumed in this country on a daily basis.

Still, the folks at Kanter Real Estate have applied for the rights to drill an exploratory well on their 20,000 acres in southwest Broward County. They didn't do so without stirring up local angst.

Conservationists undoubtedly jumped at the thought of drilling in the Everglades. But so have governments. Leaders in Miramar, Pembroke Pines and Sunrise oppose the idea. Broward County commissioners have asked the state to tighten current laws governing drilling.

Edward Glab is the Director of the Global Energy Forum at Florida International University. He's spent 35 years in the energy industry with companies such as Exxon.

He says there's not enough oil to take the risk of spills in an already damaged ecosystem.

Southwest Broward County, is it sitting on some large reserve of oil we don't know about?

I doubt it very much. If you look at the data gathered by the U.S. Geological Survey, as well as the U.S. Department of Energy Information Administration, the last time they looked at potential Florida reserves, they were about 38 million barrels. How much is that? It's less than 1/10 of 1 percent of total US reserves. So the potential in Florida to produce a significant amount of oil is simply not there.

How far do we have to dig?

It's pretty deep, I believe around 11 or 12,000 feet to find the oil. At least the Energy Information Agency maps do not show any exploitable shale in the state of Florida. That's because of the millions of years of geological development in Florida which has been different than much of the United States.

I wonder if the technology will allow us to dig deeper to possibly find more oil under Florida?

It's possible certainly. I would not rule that out. But historically this has not been the focal point of oil exploration. We don't have the geological data. We don't have the seismic work that we need. That's why we're doing a lot of that seismic work off in the Atlantic, to make that determination. Keep in mind, the deeper you drill, the more expensive it becomes. And, with the price of oil at under $50 a barrel your long term outlook needs to be pretty bullish in order to spend millions of dollars to drill for oil in Florida.

There are a lot of densities and colors and qualities of oil that we extract. What sort of oil comes out of Florida?   

To be honest, I tried to find something about the API specific gravity of the Florida oil, whether or not it was sweet or sour. Sour oil has a lot of sulfur in it. Oil can be so thick that it won't flow unless you heat it or inject some sort of lighter product into it, or can be so thin that you can basically take it and pour it into the crank case of your car and run your engine without damaging it.  So basically the thinner it is the more profitable?  That depends.

For example, 40 percent of U.S. refining capacity is along the Gulf Coast region, Texas and Louisiana mostly, but they process mostly heavy crude oil. So if you configure a refinery in a way to use heavier oil, it can be just as profitable as a refinery that uses the lighter oil. Although historically the lighter oil has been more valuable than the heavier oil because you have to use more energy to process heavier oil than lighter oil.

Environmentalists say this is a terrible idea. It's in the Everglades and there's too much risk. What do you think about that?

I agree. If you do a risk-benefit analysis in terms of the amount of oil you can find here and then look at the complicated ecosystems, because there are many different ecosystems that are interdependent in the Everglades, and if you look at it as a cradle of life for the Gulf, you have to ask if it's worthwhile to take that risk -- is the juice worth the squeeze. Personally I would say we really don't need to do this.

Think about other delicate ecosystems we've figured out how to drill -- think about Louisiana. That’s a state with a lot of swamp and a very delicate ecosystem. Is that not comparable?  

Of course, and you saw what happened during the BP spill in that delicate ecosystem. Much of that, if it recovers, will take generations. Look at the great Alaskan spill that goes back to 1989. It's been about 99 percent cleaned up but there are still areas, beaches where you can dig your hand down into the sand and still find vestiges of oil. Yes, over time mechanical cleanup by human beings, nature does the rest of the work, but it will take generations.

Have you seen battles between municipalities and those who want to drill? What will happen here?

It has happened in the past that various local governments, state governments have decided they don't want a certain industry in their state or in certain counties in the state. Keep in mind that almost all of the oil that has been produced in Florida has been produced in the Panhandle. It has not been produced in the Everglades. As long as we keep whatever we do [with drilling] ... far away from the Everglades.

Thinking about this company exploring the idea of drilling in Florida, why drill in Florida? Why consider it if there's not much to drill out?  

Well, because there are individuals who hold leases and they see dollar signs. I mean it's pretty simple, they want to make money and they think they can make money by doing it.

At the same time, the state and the counties and the municipalities also have a right to zone areas and to determine what kinds of activities you can undertake in certain places. That includes in rural areas and ecological sensitive areas, and not just what they can build next door to you in a big city.

If you look at the risk-benefit again, look at the delicate ecology, keep in mind that since the arrival urbanization and agriculture in Florida, we've already lost to urban development and agriculture over 50 percent of the Everglades.

And then if you look at what the agricultural development has done to the Everglades in terms of fertilizer pollution and if you look at some of the things the Army Corps of Engineers did during the years that were not the wisest things in the world, the Everglades are at great risk.

What we're doing now is to restore this very valuable ecosystem in South Florida. And I don't think we need to be putting at risk the Everglades for a couple of barrels of oil that frankly we don't need.

The U.S. is the largest oil producer in the world. There's lots of oil in Alaska, there's lots of oil yet in Texas and Oklahoma and California. We can find it in many places where the risk to the environment is far less than it is here in Florida. So, I say, stay out of the Everglades.