By John Temple LigonTemple@TheColumbiaStar.com

Auger platform - first, oldest and most successful tension leg platform in Gulf of Mexico. Photo courtesy of Shell Photographic Services

The vote to encourage offshore drilling for oil along all of America's coasts passed in the U.S. House of Representatives last month. The bill now goes to the Senate.

About 30% of American oil production is offshore, as is 20% of the gas. Since most of America's dry land has been pretty well explored, the higher proportion of what's left to be discovered can be assumed to be found offshore, maybe as much as an additional 19 billion barrels of oil and another 86 trillion cubic feet of gas.

Offshore drilling began in 1896 on a jetty near Santa Barbara, California. Santa Barbara was also the closest city to offshore drilling's most recent environmental disaster in 1969, when an undersea well blew out, releasing an 800-square-mile slick and soiling 35 miles of coastline. Since then, there has been no major leak.

According to the National Academy of Sciences, 62% of the oil found in seawater is due to natural seepage, and 32% is the fault of leaks from shipping and run-offs from land. Only 4% can be attributed to spills from oil tankers, and just 1% can be blamed on problems with offshore rigs and pipelines.

Through financial incentives, the House bill encourages states to allow offshore drilling. For drilling within 12 miles of their coastlines, the states collect 75% of all royalties. They get 50% of all royalties for drilling up to 100 miles offshore. Louisiana, whose lawmakers authored the bill, stands to collect an additional $50 billion over the next 30 years. South Carolina, with no offshore drilling in its history, has no idea of the potential payoff. The South Carolina concern appears to be more turf protection by the tourism lobby, and that includes Governor Sanford.

South Carolina's $10 billion tourism industry could be threatened, according to Sanford, even though the state could restrict offshore drilling to a distance more than 100 miles out. The federal authority is is

demarcated at 200 miles out, and beyond that is open international waters.

Even if the bill gets through the Senate intact, and even if South Carolina accommodates oil exploration by allowing offshore drilling between 100 miles and 200 miles out, other economics could slow the process.

Drilling in the Gulf of Mexico is slowing down. In 2001, 148 active rigs were in the Gulf, and now maybe 90 are drilling. The business is more lucrative elsewhere.

The Saudis are offering $160,000 a day for an offshore rig to operate for a four-year contract in the Persian Gulf. Offshore Tunisia is upping the offer to $200,000 a day. And those deals are for shallow water drilling, the rigs with stilts. Larger deep-water floating rigs are collecting $500,000 a day.

In the U.S., federal offshore oil production, most of which is in the Gulf of Mexico, decreased about 20% between 2003 and 2005. But worldwide, the business is not slowing down. It's just moving.

In 2003, only 10 major offshore rigs were completed worldwide. Today, more than 90 are under way, but they probably won't be operating until 2009. A shallow-water rig can cost almost $200 million, and the deep-water models are running about $600 million.

The global economics of the business may prevent offshore drilling as illustrated by the slow-down trends in the Gulf of Mexico in a time of outrageous oil and gas price increases.