President’s Column – August 2010

Title: Striking a Balance

Author: Jerry Cuzella

Publication: The Outcrop, August 2010, p. 4, 7

The BP Macondo relief well is expected to intercept the original wellbore by mid-August, and cement pumped into the errant well to seal it. Hopefully one chapter of the disaster in the Gulf of Mexico (GOM) will come to an end. But what remains are the environmental damages, clean-up efforts, and socio-economic impacts to the affected coastal areas, and ultimately the causes and assessment of liability. The images of oil soaked pelicans, billowing plumes of crude oil from the ocean floor, and a brownish scum of oil in undulating motion on the ocean’s surface making its way onto the beaches of the eastern gulf, have by now become the manifestation of an environmental disaster of colossal proportion. The environmental impact and consequential damages from the BP Macondo well will take a long time to be fully understood and mitigated; some scars will likely endure for generations to come (e.g. health effects to humans and aquatic life, prolonged toxicity) whereas many aspects of the damage may remain forever indeterminate.

To paraphrase Steve Westwell (BP PLC’s chief of staff) the accident will change the way the industry works not only for BP, but the rest of the energy industry (Paula Dittrick, Oil & Gas Journal, June 22, 2010). The incident will in some way shape the decision making process of oil and gas regulations offshore and onshore from contentious hydraulic-fracturing and drilling procedures to leasing exclusions nationwide. Exploration and production operations in the Rockies although more than 2000 miles from the incident, will not be exempt. Almost 1,000 spills comprised of oil and drilling fluids have been reported in Colorado to regulatory authorities in the past 2.5 years (Burt Hubbard, Denver Post, June 28, 2010). Despite the fact that these spills are nowhere near the scale of the Mocando incident, the issue of spills has hit home with a growing public awareness of the risks of petroleum development on all fronts.

Alarmingly, many of the “clean energy projects,” e.g. biomass, solar, wind farms, geothermal, are stalled or cancelled owing to the environmental review process and resistance from the “Not in My Backyard” (NIMBY) public opposition (Jason Blevins, Denver Post, June 27, 2010). Even these non-petroleum energy source type projects are not without resistance – energy development in all forms seems to be under assault.

If there is a silver lining to this incident, it is that a jargon known to few outside the petroleum industry has penetrated the vocabulary of mainstream media accompanied by diagrams and explanations. Terms such as blowout preventer, pipe rams, casing, and mud weight, to name a few have contributed to a public awareness of the technical complexities involved in drilling operations. The quest for petroleum resources is a challenge that has been met by innovations in science and engineering. Images of remotely operated robotic equipment in a deep sea environment, so hostile that no human being could exist in, have brought to light the level of sophistication and leading-edge technology that is integral in the quest for energy resources.

As oil washes ashore in southern Louisiana where the damage is currently being done to local ecosystems, fishing and tourist economies, and a way of life; the petroleum industry and offshore drilling remain delicately intertwined with the livelihood of its residents. Becoming more and more evident is that shutting down deepwater oil and gas operations would also be detrimental. As the governor of Louisiana stated, the controversial drilling moratorium would result in a kind of second man-made disaster (LA Governor Bobby Jindal, June 25, 2010 Press Release). Similarly in the Rockies, the petroleum industry is also interconnected with the economies of agriculture, tourism, wildlife, and various business enterprises. Impacts from negligent drilling and production operations would unquestionably be harmful to the sensitive western environment as well as the coexisting economies and any suspensions or curtailment of oil and gas operations in the Rockies would have a similar economic impact. So intertwined is oil and gas development with local economies that cessation of drilling would have deleterious effects to communities as well as decreases in royalties and in state and federal tax revenues.

In a recent interview, Christophe de Margerie, the CEO of Total (Sarah Arnott, May 7, 2010, BusinessWeek), stated “damage to the oil industry will not be over when the leak is finally plugged, the last damages paid, and the last sea bird washed clean.” In the final analysis, global energy demands will still be present but the balance will have to be struck, he further states “It is not oil or the environment; it is oil and the environment…” Enduring images of late 19th and early 20th century wells with oil gushing over the crown block now coupled with recent pictures of oil billowing on the sea floor have helped prolong the perception of an industry that has reckless abandon for the environment – invoking public disdain. Industry efforts taken to protect the environment and minimize the impact of oil and gas exploration and development go unnoticed. State and federal regulations have been in place for quite some time to ensure environmental sustainability with industry’s compliance. Nonetheless, there is a balance that can be struck with oil and gas activities and environmental safeguards.

Investigations into the cause of the accident, assessing responsibility, and litigation will continue. August usually signals that the end of the summer is near; schools’ summer recesses will be coming to a close at the end of the month, but unfortunately for the disaster in the GOM it will be quite some time until the curtain falls on this episode. This event is a pivotal point in history and if anything, it will usher in a new era of safety ethics. Unfortunately, it is through failures and disasters that lessons are learned; the BP Macando well, a gusher, will inevitably result in a gusher of new regulations. There are certainly some that are long overdue, while others may be tainted by biased motivation rather than sound reasoning. Hopefully common sense will prevail.


REFERENCES

LA Governor Bobby Jindal, June 25, 2010 Press Release, http://emergency.louisiana.gov/Releases/06102010-moratorium.html.

Sarah Arnott, May 7, 2010, BusinessWeek, http://www.businessweek.com/globalbiz/content/may2010/gb2010057_666873.htm.

 

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