Ocean Spending DA

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Ocean exploration is costly, difficult, and boring
Carlyle 13
[Ryan, Bachelors Science Chemical Engineering, Subsea Hydraulics Engineer, Why
Don't We Spend More On Exploring The Oceans, Rather Than On Space
Exploration?, 1/31/2013, http://www.forbes.com/sites/quora/2013/01/31/why-dontwe-spend-more-on-exploring-the-oceans-rather-than-on-space-exploration/, ABS]
Im one hundred and twenty miles offshore in the Gulf of Mexico right now, working
on installing seafloor equipment for an oil project. No one spends more time
exploring the deepest oceans than the oil industry. In the last twenty years, there
has been a veritable explosion of deepwater exploration, with extensive subsea
surveys for pipelines and anchors and oil well infrastructure. We have fantastic
subsea robots that let us see and work down to 10,000 ft depth as well as a host
of seismic imaging systems to see below the seafloor, sonar, Doppler current
sensors, monitoring buoys, and so forth. The equipment to explore the oceans
exists today and is in routine use for energy exploration. For example: So as
someone whose job deals with exploring the ocean deeps see my answer to
Careers: What kinds of problems does a subsea hydraulics engineer solve? I can
tell you that the ocean is excruciatingly boring. The vast majority of the seafloor
once you get >50 miles offshore is barren, featureless mud. On face, this is pretty
similar to the empty expanses of outer space, but in space you can see all the way
through the nothing, letting you identify targets for probes or telescopes. The goals
of space exploration are visible from the Earth, so we can dream and imagine
reaching into the heavens. But in the deep oceans, visibility is less than 100 feet
and travel speed is measured in single-digit knots. A simple seafloor survey to run a
100 mile pipeline costs a cool $50 million. The oceans are vast, boring, and
difficult/expensive to explore so why bother? Sure, there are beautiful and
interesting features like geothermal vents and coral reefs. But throughout most of
the ocean these are few and far between. This is a pretty normal view from a
subsea robot: Despite the difficulty, there is actually a lot of scientific exploration
going on in the oceans. Heres a pretty good public website for a science ROV
mission offshore Oregon: 2009 Pacific Northwest Expedition To reinforce my point
about it being boring, heres a blog entry from that team where they talk about how
boring the sea floor is: 2009 Pacific Northwest Expedition What IS really interesting
in the deep ocean is the exotic life. You see some crazy animals that are often not
well-known to science. Something floats by the camera 5000 ft down, and you say
what the hell was that? and no one knows. Usually its just some variety of
jellyfish, but occasionally we find giant* isopods: Unfortunately, deep-sea creatures
rarely survive the trip to surface. Their bodies are acclimated to the high pressures
(hundreds of atmospheres), and the decompression is usually fatal. Our ability to
understand these animals is very limited, and their only connection to the surface
biosphere is through a few food chain connections (like sperm whales) that can
survive diving to these depths. Were fundamentally quite disconnected from deep
ocean life. Also, there is no hope of ever establishing human habitation more than
about 1000 ft deep. The pressures are too great, and no engineering or materials
conceivable today would allow us to build livable-sized spaces on the deep sea floor.
The two times humans have reached the deepest part of the ocean, it required a

foot-thick flawless metal sphere with barely enough internal space to sit down. As
far as I can tell, seafloor living is all but impossible a habitable moon base would
be vastly easier to engineer than a seafloor colony. See my answer to International
Space Station: Given the actual space station ISS, would it be cheaper to build the
equivalent at 3-4-5 miles deep underwater? Why? To recap: we dont spend more
time/money exploring the ocean because its expensive, difficult, and uninspiring.
We stare up at the stars and dream of reaching them, but few people look off the
side of a boat and wish they could go down there.

NOAAs budget is small and something as simple as sending a

person to deep sea can cost 1/3 of the budget plan requires
massive budget increases
Conathan 13

[Michael, Director of Ocean Policy at the Center for American Progress, June 18,
2013, Rockets Top Submarines: Space Exploration Dollars Dwarf Ocean Spending,
http://www.americanprogress.org/issues/green/news/2013/06/18/66956/rockets-topsubmarines-space-exploration-dollars-dwarf-ocean-spending/, ABS]
Star Trek would have us believe that space is the final frontier, but with apologies
to the armies of Trekkies, their oracle might be a tad off base. Though we know little
about outer space, we still have plenty of frontiers to explore here on our home
planet. And theyre losing the race of discovery. Hollywood giant James Cameron,
director of mega-blockbusters such as Titanic and Avatar, brought this message
to Capitol Hill last week, along with the single-seat submersible that he used to
become the third human to journey to the deepest point of the worlds oceansthe
Marianas Trench. By contrast, more than 500 people have journeyed into space
including Sen. Bill Nelson (D-FL), who sits on the committee before which Cameron
testifiedand 12 people have actually set foot on the surface of the moon. All it
takes is a quick comparison of the budgets for NASA and the National Oceanic and
Atmospheric Administration, or NOAA, to understand why space exploration is
outpacing its ocean counterpart by such a wide margin. In fiscal year 2013 NASAs
annual exploration budget was roughly $3.8 billion. That same year, total funding
for everything NOAA doesfishery management, weather and climate forecasting,
ocean research and management, among many other programswas about $5
billion, and NOAAs Office of Exploration and Research received just $23.7 million.
Something is wrong with this picture. Space travel is certainly expensive. But as
Cameron proved with his dive that cost approximately $8 million, deep-sea
exploration is pricey as well. And thats not the only similarity between space and
ocean travel: Both are dark, cold, and completely inhospitable to human life. Yet
space travel excites Americans imaginations in a way ocean exploration never has.
To put this in terms Cameron may be familiar with, just think of how stories are told
on screens both big and small: Space dominates, with Star Trek, Star Wars,
Battlestar Galactica, Buck Rogers in the 25th Century, and 2001 A Space
Odyssey. Then there are B-movies such as Plan Nine From Outer Space and
everything ever mocked on Mystery Science Theater 2000. There are even
parodies: Spaceballs, Galaxy Quest, and Mars Attacks! And lets not forget
Camerons own contributions: Aliens and Avatar. When it comes to the ocean,
we have 20,000 Leagues Under the Sea, SpongeBob SquarePants, and
Camerons somewhat lesser-known film The Abyss. And thats about it. This

imbalance in pop culture is illustrative of what plays out in real life. We rejoiced
along with the NASA mission-control room when the Mars rover landed on the red
planet late last year. One particularly exuberant scientist, known as Mohawk Guy
for his audacious hairdo, became a minor celebrity and even fielded his share of
spontaneous marriage proposals. But when Cameron bottomed out in the
Challenger Deep more than 36,000 feet below the surface of the sea, it was met
with resounding indifference from all but the dorkiest of ocean nerds such as
myself. Part of this incongruity comes from access. No matter where we live, we can
go outside on a clear night, look up into the sky, and wonder about whats out there.
Were presented with a spectacular vista of stars, planets, meteorites, and even the
occasional comet or aurora. We have all been wishing on stars since we were
children. Only the lucky few can gaze out at the ocean from their doorstep, and
even those who do cannot see all that lies beneath the waves. As a result, the facts
about ocean exploration are pretty bleak. Humans have laid eyes on less than 5
percent of the ocean, and we have better maps of the surface of Mars than we do of
Americas exclusive economic zonethe undersea territory reaching out 200 miles
from our shores. Sure, space is sexy. But the oceans are too. To those intrigued by
the quest for alien life, consider this: Scientists estimate that we still have not
discovered 91 percent of the species that live in our oceans. And some of them look
pretty outlandish. Go ahead and Google the deepsea hatchetfish, frill shark, or
Bathynomus giganteus. In a time of shrinking budgets and increased scrutiny on
the return for our investments, we should be taking a long, hard look at how we are
prioritizing our exploration dollars. If the goal of government spending is to spur
growth in the private sector, entrepreneurs are far more likely to find inspiration
down in the depths of the ocean than up in the heavens. The ocean already
provides us with about half the oxygen we breathe, our single largest source of
protein, a wealth of mineral resources, key ingredients for pharmaceuticals, and
marine biotechnology. Of course space exportation does have benefits beyond the
cool factor of putting people on the moon and astronaut-bards playing David
Bowie covers in space. Inventions created to facilitate space travel have become
ubiquitous in our livescell-phone cameras, scratch-resistant lenses, and waterfiltration systems, just to name a fewand research conducted in outer space has
led to breakthroughs here on earth in the technological and medical fields. Yet
despite far-fetched plans to mine asteroids for rare metals, the only tangible goods
brought back from space to date remain a few piles of moon rocks. The deep
seabed is a much more likely source of so-called rare-earth metals than distant
asteroids. Earlier this year the United Nations published its first plan for
management of mineral resources beneath the high seas that are outside the
jurisdiction of any individual country. The United States has not been able to
participate in negotiations around this policy because we are not among the 185
nations that have ratified the U.N. Convention on the Law of the Sea, which governs
such activity. With or without the United States on board, the potential for economic
development in the most remote places on the planet is vast and about to leap to
the next level. Earlier this year Japan announced that it has discovered a massive
supply of rare earth both within its exclusive economic zone and in international
waters. This follows reports in 2011 that China sent at least one exploratory mission
to the seabed beneath international waters in the Pacific Ocean. There is a real
opportunity for our nation to lead in this area, but we must invest and join the rest
of the world in creating the governance structure for these activities. Toward the
end of last weeks hearing, Sen. Mark Begich (D-AK), who chairs the Subcommittee

on Oceans, Atmosphere, Fisheries, and Coast Guard, hypothetically asked where we

would be today if we had spent half as much money exploring the oceans as we
have spent exploring space. Given the current financial climate in Congress, we
wont find the answer to his question on Capitol Hill. But there may be another
way. Cameron is currently in preproduction on the second and third Avatar films.
He says the former will be set on an ocean planet. No one except he and his fellow
producers at 20th Century Fox really know how much the first installment of the
movie series cost, but estimates peg it at approximately $250 millionor 10 times
the total funding for NOAAs Ocean Exploration program. Since the original Avatar
grossed more than $2 billion at the box office worldwide, if NASA isnt willing to
hand over a bit of its riches to help their oceanic co-explorers, maybe Cameron and
his studio partners can chip a percent or two off the gross from Avatar 2 to help fill
the gap. Come to think of it, if the key to exploring the oceans hinges either on
Hollywood giving up profits or Congress increasing spending, maybe we are more
likely to mine asteroids after all.

Offshore Drilling
Offshore drilling for exploration comes with a high cost and
lots of risk
SCHAEFER 12

[KEITH, editor and publisher of the Oil & Gas Investments Bulletin, MARCH 14,
2012, Investing in Offshore Drilling & Deepwater Exploration, http://oilandgasinvestments.com/2012/investing/offshore-drilling-exploration-investing/, ABS]
Offshore drilling is the most complex and expensive way of accessing oil and gas
reserves, particularly when it comes to deep water and ultra-deep water exploration
activities. While presenting the industry with its biggest challenges, deep water
exploration and development yields the greatest potential rewards and healthy
profit margins to the oil service companies involved. The rising complexity and
costs of such endeavours demands huge capital investments, long term
commitments, higher efficiencies and a growing reliance on technology in order to
reduce uncertainties. The market fundamentals for oil service companies remain
solid, oil prices are stubbornly holding their ground above $100 per barrel in a tough
macroeconomic environment. The resiliency of high oil prices is fuelling increasing
exploration and production spending by operators as the industry pushes further
offshore into ever-deeper water. By 2020, offshore oil production is expected to
account for 34% of the global output up from 25% in 1990. Offshore drilling
companies are seeing a significant increase in tenders and requests from
customers, particularly for the ultra-deep water rigs which are commanding higher
daily rates for its units. The brightening outlook mirrored by record backlog orders
and rising rates encouraged the industry to focus on adding new equipment in all
market segments in a bid to provide the most versatile fleets of mobile offshore
drilling units. Jack-up rigs are mobile, self-elevating drilling platforms that are towed
by tugboats to the drill site with water depth of up to 400 feet. Jack-Ups are
equipped with tubular structure legs that are lowered to the sea floor where jacking
elevates the hull above the water surface before drilling operations begin. Semisubmersible rigs operate in a semi-submerged position with the lower hull ballasted
down below the waterline. The rig consists of a deck which contains working areas,
equipment and living quarters that is able to carry drilling operations in deep and
ultra-deep waters of up to 10,000 feet in water depth. Drill Ships are self-propelled
ships equipped for drilling in water depths in which jack-up rigs are incapable of
working. They can drill in deep and ultra-deep waters in up to 12,000 feet of water
depth. Rising oil prices have also spurred a construction boom in drilling rigs; the
cost for a drilling ship easily surpasses $600M per unit where it is leased at
$500k/day or more on 2 or 3 year contracts. The Jack-up market is seeing increased
demand in Mexico, the North Sea, the Middle East and Asia while the floaters
market which includes ultra-deep water rigs has been improving markedly in Brazil,
Africa and the Gulf of Mexico. Theres always a bull market somewhere. There is
more truth to this than most investors realize. And right now one of the biggest if
not THE biggest bull markets in the entire Energy Patch is quietly taking shape.
Im referring to the technological revolution in oil & gas the technologies, for
example, that can increase yields by 4 to 7 times launch huge new discovery
fields or even extend the lives of older fields. It is exactly these kinds of
innovations that are creating triple-digit profit opportunities in the Oil & Gas

Investments Bulletin portfolio. To learn more about whats driving these

opportunities in my OGIB personal portfolio and how it all works, keep reading
here. Its one of the hottest picks in the OGIB portfolio A company operating in
the heart of one of North Americas fastest-growing shale oil plays with major
short-term gain potential. And in my newest research, I explain how recent drill
success could see this companys production more than double AND slingshot its
valuation. On top of strong oil prices, successful exploration drilling results continue
to be reported. Last year, 23 discoveries were announced in 12 different countries in
an average water depth of 6,200 feet representing the sixth consecutive year of
20+ announced discoveries. Successful exploration results pave the way for
development drilling over the coming years which is another factor in driving future
demand. For instance, Petrobras (a Brazilian semi-public multinational energy
company) will be renting 26 rigs for the next 15 years in order to develop its deep
water oil field discovered back in 2006. The oildfield known as Tupi holds an
estimated 8 billion barrels of light sweet oil. In contrast to Brazils newly discovered
deep water prospects, the Gulf of Mexico is an established deepwater region which
is also seeing rising activity levels. The industry expects drilling activity to reach
and surpass the pre-Macondo level of about 30 wells by early 2013. Ultra-deepwater
rig demand is expected to increase dramatically through 2016 as exploration
activity drives future development demand growth. Even with the construction
boom, the ultra-deepwater utilization is expected to remain tight in the coming
years. Not surprisingly, deep waters contribution to global oil output is expected to
reach 13% by 2020 up from 0% in 1990. Declining production from large onshore
oilfields has to be replaced somehow and the era of easy to extract cheap oil is
behind us. The following offshore drilling companies provide you with a strong
exposure to the offshore oil services sector and a broad geographic reach since the
world is their playground: Finally, theres no free lunch as investing in any sector
carries its risks. For offshore drilling companies, youll want to keep in mind every
operator faces risks ranging from storm damage to volatile commodity prices.
Offshore drilling accidents, while rare, may result in significant damage or a total
loss of a rig. Capital budgets set by E&P companies are dependent on commodity
prices; a sharp drop in oil prices will result in an oversupply of drill rigs on the
market as capital budgets are scaled down. These companies usually borrow in
order to finance construction of new rigs What happens if prices collapse and
contracts are renewed at much lower day rates? Can the company afford to service
its debt? For dividend paying companies, future dividends depend on 3 variables of
paramount importance: the business outlook, the debt leverage and the contract
coverage.

Offshore Windfarms
Offshore windfarms are hella expensive bro (feel free to break
off the last few paragraphs of this card and not include them
at all)
Institution for Energy Research 13
[IER, Institute for Energy Research, Administration Doubles Down on Expensive
Offshore Wind, JUNE 4, 2013,
http://instituteforenergyresearch.org/analysis/administration-doubles-down-onexpensive-offshore-wind/, ABS]
The Interior Department announced today that the administration will hold the
nations first offshore wind lease sale in late July. The area scheduled for lease
consists of 164,750 acres off the coasts of Rhode Island and Massachusetts. In
response to this announcement, IER published a fact sheet on offshore wind energy
development in the United States:
Offshore Wind Is Very, Very Expensive
According to the Energy Information Administration (EIA), offshore wind is 2.6 times
more expensive as onshore wind power and is 3.4 times more expensive than power
produced by a natural gas combined cycle plant.
On a kilowatt hour basis, offshore wind power is estimated to cost 22.15 cents per
kilowatt hour, while onshore wind is estimated to cost 8.66 cents per kilowatt hour,
and natural gas combined cycle is estimated to cost 6.56 per kilowatt hour.
Overnight capital costs (excludes financing charges) are 2.8 times higher for
offshore wind than onshore wind power. According to EIA, an offshore wind farm is
estimated to cost $6,230 per kilowatt, while those costs for an onshore wind farm
are estimated to be $2,213 per kilowatt.
2.15.13-IER-Web-LevelizedCost-MKM
Cape Wind Shows Just How Expensive Offshore Wind Is
The first offshore wind project to be proposed is Cape Wind, off Cape Cod,
Massachusetts. It was proposed in 2001 as a 468-megawatt wind farm consisting of
130 turbines, each with a maximum capacity of 3.6 megawatts, standing 440 feet
tall in the Nantucket Sound and covering 25 square miles. The project is estimated
to cost $2.5 billion, or over $5,300 per kilowatt.
The original contract specifications with National Grid, the state of Massachusetts
largest electric utility, and Cape Wind is that the cost would start at 18.7 cents per
kilowatt hour and then increase annually by 3.5 percent in a 15-year deal, ending up
more than 40 percent higher than EIAs estimate. The starting price of 18.7 cents
per kilowatt hour is twice what the utility pays for power from fossil fuels and it
would add 1.7 percent to the electricity bill of residential customers. As of June
2013, Cape Wind has not been built.
Offshore Natural Gas Produces More Energy than Offshore Wind Projects

IER produced an analysis comparing the potential energy production from a new
offshore natural gas field versus the potential offshore wind generation from Cape
Wind. The analysis compared the potential energy production from the Manteo
natural gas prospect offshore North Carolina and the Cape Wind farm. Assuming the
Manteo project would produce as much natural gas as Independence Hub, it would
supply 320 trillion Btu of energy annually, while the Cape Wind project would supply
5.4 trillion Btu. Therefore, it would take about 59 Cape Wind developments to equal
the energy output of the Manteo project.
More Examples of Potential Offshore Wind Projects in the United States
NRG Bluewater Wind was granted a federal lease by the Department of Interior last
year to build a 450 megawatt offshore wind farm about 11 nautical miles off the
coast of Delaware. While the lease grants NRG Bluewater Wind Delaware LLC the
exclusive right to submit wind development plans for the area, the company still
does not have investors or buyers for its wind energy and is contemplating selling
the lease. In 2011, NRG called the project financially untenable because of
dwindling federal incentives and its lack of investors.
New York State, which usually is an advocate of green energy, is foregoing an
offshore wind project due to its high cost. The project was to develop offshore wind
farms for Great Lakes Ontario and Erie, whose cost of construction would be
recovered over the next 20 years by selling its generation to the New York Power
Authority. But the New York Power Authority turned the project down due to its
expense. According to the New York Power Authority, a 150-megawatt wind farm
would cost between $1.2 billion and $2.0 billion to build and would cost the
Authority between $60 million and $100 million annually in power purchases,
translating into a per kilowatt cost of $8,000 to over $13,000, much higher than the
estimated cost of an offshore wind farm by the Energy Information Administration
noted above. Other issues cited against the offshore wind farm are lowering values
of shoreline properties, ruining spectacular views, and harming birds and fish.
Interior Department Will Announce Its First Offshore Wind Lease Sale
The Interior Department is expected to announce tomorrow that it will hold its first
offshore wind lease sale in late July. The area for lease consists of 164,750 acres off
the coasts of Rhode Island and Massachusetts. While nine companies are legally,
technically and financially qualified to bid at the auction, it is unclear, however,
how many will bid. Interior had previously moved forward with offshore wind
proposals for 96,000 acres off the coast of Delaware, but found only one company
interested. It struck a deal with Bluewater Wind Delaware last October for a 450megawatt project (see bullet above). According to a notice to be published in the
Federal register tomorrow, wind development in the lease area would not
significantly impact the environment and thus does not yet require a more
stringent environmental impact statement.
Leasing Offshore Wind in the Atlantic While Banning Oil and Natural Gas Production
Is Picking Winners and Losers
Senate Environment and Public Works ranking member David Vitter indicated that
the Interior Departments plan to offer offshore wind leases near the New England
coast amounts to picking winners and losers. Last November, Vitter and Senator
Lamar Alexander sent the Interior Department a letter demanding an economic
comparison of offshore wind and offshore oil and gas lease sales. Vitter and

Alexander wanted a comparison of royalty rates on NRG Bluewater Winds lease off
the coast of Delaware with similarly sized offshore oil and gas leases. They also
wanted to know what the environmental review concluded about bird life. One of
Vitters points was that the federal government receives significant revenue from
offshore oil and gas production in the form of rents, royalties, bonus bids and taxes,
but offshore wind is not expected to produce such revenues.
On May 6, the Interior Department responded to the letter, explaining that it has
adopted acquisition, rental and operating fees for wind projects that are lower than
those it charges for oil and natural gas lease rights offshore because wind energy is
renewable, not depletable as oil and gas resources are, and because of the
difference in maturity of each industry.
According to Interiors response letter, The Cash Bonus and/or Acquisition Fee paid
by NRG for the lease was $0.25 per acre amounting to $24,107.50 for the 96,430
acres. The average bid per acre for the last oil and gas lease sale held on November
28, 2012, in the western Gulf of Mexico, was $205. In other words, the federal
government gets 820 times more money in bonus bids from offshore oil and gas
leasing per acre than they do from leasing offshore wind.

Impacts