Drill Deep or No?

[Pangloss]

Currently there's a halt on all offshore drilling at "deep water" sites (not just new sites, but existing production). The original halt on sites over 500 feet deep was stopped by a lawsuit that continues, but a judge refused to support a moratorium, so the administration issued a second moratorium banning new activity by floating platforms, which is not yet being fought in court (some say it will be more difficult for the industry to attack legally). Is the moratorium necessary? I think this is a good question, and I haven't been able to fully decide, though I'm leaning toward "no" and I'm going to throw that opinion out there to spark discussion.

 

My reasoning is that although I completely agree with the concerns being expressed about the industry not taking sufficient precautions (and the government not implementing its own rules of oversight!), we actually don't know that the damage caused by the Deepwater Horizon spill is going to be all that great. It's clearly sufficient to disrupt the local economy, but money generally fixes problems like that, so the more important question is whether it is sufficient to permanently disrupt the ecology, and I don't think that question has a clear answer at all. Since the spill was cut off most of the oil has disappeared, and nobody really has a clear understanding of whether it will even cause any more problems. For all we know the fish and clams and whatnot could be edible again in months, and what has been predicted to be a disaster that will be years in recovery could just as easily be only months in recovery -- nobody knows.

 

What we do know is that the economy of the gulf region is severely affected by a stop in deep water drilling.

 

Over the six months of the deep-water drilling moratorium, Gulf states will lose an estimated $2.1 billion in economic productivity, 8,169 jobs, $487 million in wages, and $98 million in state tax revenues, according to Joseph Mason, a Louisiana State University professor of finance and a private business consultant. "Spillover effects" will cost other states $600 million, 3,877 jobs, and $219 million in wages, his study says. The US government could lose $219 million in tax revenue. "These losses are dramatic in both the context of local economies ... and on a national scale," Professor Mason writes.

 

Still, he notes that his numbers are more conservative than others, including those used by the state of Louisiana. The state assumes a stoppage lasting 12 to 18 months. The Obama administration insists BP will pay and has forced the company to set aside $20 billion.

 

The cutoff has also resulted in a small but significant decrease in domestic oil production.

 

The Louisiana Mid-Continent Oil and Gas Association reports that the equivalent of 80,000 barrels of oil a day will not go to market due to the moratorium – a shortfall that will be picked up by increasing imports. But 80,000 barrels a day represents less than 1 percent of the 11.7 million barrels of oil the United States already imports daily, according to the Energy Information Administration's website. The EIA reported in mid-June that "to date, energy production and shipments in the Gulf have not been significantly affected by the spill."

 

I realize that although these numbers are large, they're a drop in the bucket of the economy as a whole. But they're not so small when you look at the economy of the gulf region, already slammed by the vast impact that the spill has had on general commerce. In some ways the spill has been a lot worse than Katrina, because of its ongoing nature and the likely long-term impact on public perception (e.g. seafood).

 

Lifting the moratorium would not mean ending corrective action, and it would not mean restarting new drilling. Existing sites could be continued while oversight agencies seek to demand and implement updates to emergency plans and new contingency planning that take into account the problems at Deepwater.

 

What do you all think?

 

 

(Edit: Link to the above quotes.)

http://www.csmonitor.com/USA/Politics/2010/0727/Offshore-drilling-moratorium-good-for-the-Gulf-bad-for-the-economy

[Moontanman]

Drill Baby Drill! I don't see how we can stop now, going cold turkey off of oil will kill our economy and in turn our civilization but I think that drilling in deep water or any where really should be subject to regulations and fees that then go into exploring alternate energy. No matter if you think there is lots of oil left or just a few years eventually it will either destroy the environment or run out. What we need is to make it necessary to explore alternate energy but mean while can we really afford to run out of oil simply because we don't want to take the necessary steps to make it safe?

[Sisyphus]

Well, first of all, I think laws enacted as a reaction to a specific event tend to be ill-conceived in general, and political and emotional rather than pragmatic and principled. The prime example is the response to 9/11 (everything from starting wars to banning shampoo bottles on airplanes), but pretty much whenever anything bad happens, politicians either feel they have to do something so as to not look helpless, or even worse they use it as an excuse to do something. That is not how or why decisions should be made.

 

So, with that word of caution, there is still legitimate debate over whether we should be drilling in deep water. I don't have sufficient technical expertise to evaluate risk, or, for that matter, ecological damage. I do think it's likely, based on comparisons with other oil spills, that the damage will be beyond what I would consider acceptable. So, provisionally granting that, the next question becomes, how likely is something like that to happen again in X timeframe, given industry practices and the various institutional flaws the Deepwater Horizon incident brought to light? Was it a total fluke? Or was it a total fluke that it hasn't happened more often? How do the risks and projected damage compare with whatever alternatives would take the place of deep water drilling? I think a limited moratorium, until risks can be properly reevaluated (since it seems they weren't properly assessed in the first place), is a not unreasonable course of action. I also think we should be exploring ways to gradually ween ourselves off such practices (rather than chanting "drill baby drill"), but that an outright permanent ban would be very premature.

[Mr Skeptic]

I vote for the "drill baby drill" option, but I am in no hurry. I don't mind if we are a bit slow to exploit our own oil reserves and end up being one of the few countries with oil when it starts running out. Still, a moratorium seems like an overreaction to me, and making BP pay for it (the moratorium) seems rather rude. I think a more interesting solution would be to temporarily place some rabid environmentalists as safety inspectors, rather than the moratorium.

[navigator]

What I don't understand is why the numerous violations and penalties were ignored for so long.

 

BP had 760 safety violations in the past five years and paid $373 million in fines, Sullivan said. By contrast, Sunoco and ConocoPhillips each had eight safety violations and ExxonMobil just one, Sullivan said.

 

 

There are other reports of BP not performing tests, using a sub-par BOP and casing strings, ignoring warning signs for months leading up to the leak, meanwhile the Interior Department exempted BP from performing an analysis of deep water drilling in the GOM. Back in June, the EPA told BP to reduce the amounts of Corexit and find a better dispersant within 24 hours. The way BP routinely brushed it off and continued using Corexit in untested methods and amounts suggests it was not the first time BP abjected the EPA's authority. The Deep water Horizon just left the Tiber field after capping a 33k' well, set a record for the GOM. Confidence was flying high and pockets were getting full, problem was they were behind schedule and it was costing BP half million $ a day at the Macondo site. It looks to me like BP had control of the reigns while the DOI was snookered looking the otherway, at the royalties.

 

But I think the problem is more than just lack of oversight. For one, there are only 60 inspectors for over 4,000 sites.

 

WASHINGTON — Oil and natural gas drilling technology is moving so fast that government inspectors can't keep up, Frank Rusco, director of natural resources and the environment for the Government Accountability Office, told Congress on Thursday.

 

"The knowledge required to understand the technology in the deep Gulf has to evolve as the technology evolves," he said. The Interior Department "has been challenged in keeping abreast of technology and having enough of the right expert staff on hand."

 

The department has "not kept pace with the oil industry," he said in testimony to the House subcommittee on energy and mineral resources.

 

Rusco said the Minerals Management Service — the Interior Department agency responsible for regulating drilling operations — has not provided its inspectors with proper training or up-to-date inspection tools.

 

He said inspectors are often forced to document inspection results on paper, despite agency efforts to provide employees with mobile computing technology. Mobile tools would let inspectors quickly reference technical information and upload inspection findings while still in the field, giving the Minerals Management Service almost immediate access to the information.

 

"We do have concerns about a systemwide and pervasive problem of keeping up with technology," said Rusco of the GAO, which is the investigative arm of Congress.

 

Mary Kendall, acting inspector general of the Department of Interior, told the panel that training programs, developed between 1984 and 1991, "have not kept pace with the technological advancements occurring within the industry."

 

She also said the agency has trouble competing with industry wages when recruiting new inspectors. High turnover rates mean inspectors mostly receive on-the-job training, she said, and the total number of inspectors in the Gulf of Mexico is extremely low — about 60 inspectors for 4,000 oil production facilities, compared with 10 inspectors for 23 facilities on the West Coast.

 

Rep. John Sarbanes, D-Md., said the oil industry sees the agency as a joke, which hampers its effectiveness. "We've got to figure out how to make the agency more relevant so the industry actually cares when they show up for their inspection," he said.

 

Rep. Bill Cassidy, R-La., told Robert Abbey, acting director of the Minerals Management Service, that it "seems like the guys on the rig are miles ahead of the actual inspectors." Abbey acknowledged the gap as well as the agency's need for more inspectors.

 

"The MMS does have capable engineers employed," Abbey replied. "We are very fortunate to have good engineers working within this organization. ... Do we have enough of that expertise? No."

 

Rusco said another reason for inspectors' ineffectiveness is the Interior Department's focus on drilling and production, rather than inspections.

 

The Obama administration is reorganizing the agency into three separate entities so that its focus on collecting royalties from oil and natural gas producers is separate from safety inspections.

 

 

And then theres that.

[jackson33]

Last I've heard only 3-5 Drilling Rigs have left the US Coast and I'm not sure the second moratorium has caused any problems, hasn't been ruled on. Personally I feel, the first ruling "you can't retract permits, without due cause individually, not for all". I understand free floating involves a great many operations, however each had been permitted and their is no reason to believe BP's problems was caused from the Rig. Note; While I do personally feel the RIG was in part at fault, it was due to ill advised actions putting out the aftermath fire, not the free floating element....

 

It's my understanding the Gulf region produces about 20% of US crude usage and refines a great deal more, and Alaska produces another 25% alone, many from off shore wells. To put this in some perspective the US in 2009 imported 66% of it's annual needs (7.14 Billion Barrels) at a cost of 390 Billion Dollar deficit to an already bloated import/export deficit, then not counting the jobs being lost in the US from these imports.

 

As for the bridge from fossil to alternative fuels and not recognizing all the controversy, it's going to take a great deal of "personal income", time and energy to achieve. Most anybody, with a few extra dollars can buy green products, today. In fact, I think next year Ford will be selling a conventional Model for the same price as a Hybrid model, for the same price. The Gas only model will handle a 4K pound load, the Hybrid 2K pound, not including any convenience involved on maybe inconveniences and cost (plugging in and cost).

 

Here are a couple problems, as I see them; We can ban all exploration/drilling/extraction of crude oil from anyplace we are authorized to ban and just pay the price, with import and job cost. The bad thing is we import from a good many Counties or compete for those imports, that will be exploring/drilling and extracting from Gulf Water and with angle/slant drilling possible be buying our own reserves, if not already, in not the too distant future (been awhile since I've researched this). Not to mention Venezuela, Saudi Arabia and not really a friendly Mexico today.

 

Now here is the biggest problem; India, China, Africa (via Russian Interest) are not going to quit using fossil fuels anytime soon, I don't care about treaties or anything else and their is not much the US can do other than what they have proposed for the industrialized Nations and supply the money for green energy to third world nations. This will never happen and the US is already paying a very high cost, simply for not using their own reserves. IMO, for the long term stability of the International World and then the US, would be keep the cost of crude low, allowing to go high CAUSES international problems (remember the corn price/ethanol international comments) and allows all developing Nations to increase productivity, followed by interest in their OWN green energy...

 

“Petroleum” includes crude oil and refined petroleum products like gasoline. Most (88%) of the imports were crude oil. About 66% of the crude oil processed in U.S. refineries was imported.

 

The top five source countries of U.S. petroleum imports are Canada, Saudi Arabia, Mexico, Venezuela, and Nigeria. Their respective rankings vary depending on whether you consider total/gross petroleum imports or net petroleum imports (gross imports minus exports).[/Quote]

 

http://www.eia.doe.gov/ask/crudeoil_faqs.asp

[CharonY]

For what it's worth, China is pretty much taking a lead in the use of renewable energies. Less for ecological but rather due to economical reasons, obviously.