Feb 01 2011

Symposium Day Two: Looking Beyond the Deepwater Horizon: The Future of Offshore Drilling

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Mobile offshore drilling unit holds position directly over the damaged blowout preventer May 26, 2010, via wikimedia

Environmental Law and Policy Review Symposium – “Looking Beyond the Deepwater Horizon: The Future of Offshore Drilling”

January 29th:

Stacy Linden – Drilling on the Outer Continental Shelf – An Overview

Stacy Linden is the Managing Council for the American Petroleum Institute.

Ms. Linden began the day by speaking on the process that leads to offshore oil drilling commencing.  She first gave an overview of who the American Petroleum Institute (API) was as a standard setting organization.  They consult 6000 people in making standards and have 400 member oil companies.  She stated that the Minerals Management Service (MMS) had adopted a large number of their standards.

She went on to describe the importance of oil and natural gas in the economy and to fulfill our energy needs, such as the fact that even with increasing alternative energy sources, more than half of our energy (including transportation fuel needs) will come from oil and natural gas.  Oil will still dominate transportation energy specifically, estimating that it will still account for over 80% of transportation fuel in 2035.  Ms. Linden painted a rosy picture of how much oil was being brought up, more than estimates in most areas.

Finally, Ms. Linden laid out a timeline of the process used to go from planning a well to leasing the area to getting a well to production.  She emphasized the long time periods that could pass, sometimes as many as 10 years, and that this timeline was increased by protests and litigation.  Below is a list of ongoing litigation Ms. Linden mentioned.  During the open forum questioning she stated that the oil industry had a pretty good safety record but that people liked to hate the oil industry, which is why the public has a stronger reaction to oil disasters than coal disasters.  In regards to the Deepwater Horizon spill she said that we might never know for sure what happened.  ELPR Summary.

A robotic arm of a Remotely Operated Vehicle (ROV) attempts to activate the Deepwater Horizon Blowout Preventor (BOP), Thursday, April 22, 2010, via wikimedia

Joshua Fershee – Planning for the Future (or Not): Rethinking Emergency Response Accountability for Offshore Drilling Disasters

Joshua Fershee is an Associate Professor of Law at the University of North Dakota School of Law specializing in energy law and corporate law.

Professor Fershee spoke about risk management in offshore drilling operations and encouraged a pragmatic, balanced approach to continuing offshore oil development.  He first laid out five main goals we have: economic protection, environmental protection, job creation, low-cost energy, and energy independence.  He pointed out that these goals need to be balanced in risk management strategies because there is no way to completely eliminate risk.  In the BP oil spill, he spoke of the Advance Final Report from BP which showed the disaster was caused by systemic problems, was largely avoidable, and would require serious reforms to mitigate the risk in the future.  Professor Fershee did not agree that the accident was completely avoidable, only that the risks might have been mitigated in some way.

He went on to compare risk management for floods in different cities.  He pointed out the cost lost when there has been a major flood and then the additional cost spent in order to build a levy after the fact.  In these cases, it would save millions – sometimes billions – of dollars to plan ahead and build the levy before the disastrous flood.  The lesson to take from those flood cities and from the Deepwater Horizon is that regulation should provide incentives for risk management practices.  He compared our structure to the regulations on the oil companies in Norway.  In Norway, liability starts as absolute on the oil company without looking at fault, is mitigated for good practices, but increased for exceptionally bad practices.  This was one area Professor Fershee thought our regulations could improve.  In the open forum questions, Professor Fershee said that putting the fault on BP would have eliminated confusion and changed the way the company dealt with their contractors.  ELPR Summary

One set of blowout preventors, broken down into two pieces, for a natural gas well in Northern Italy, Autumn 2005, via wikimedia

Mark Latham – Five Thousand Feet and Below: The Failure to Adequately Regulate Deepwater Drilling Technology

Mark Latham is an Associate Professor of Law at Vermont Law School specializing in environmental issues in corporate transactions and CERCLA.

Professor Latham’s presentation was on the technology associated with offshore oil drilling, specifically the blowout preventer.  He first laid out the two different types of rigs: fixed platforms and floating rigs (MODU).  3D seismic technology is used to map the ocean floor and look for oil deposits.  He said that the key to preventing a blowout like what occurred at Deepwater Horizon is managing the pressure as the oil is brought up.  Drilling mud and cementing the well is both critical in managing this pressure.

Professor Latham then went on to discuss the last line of defense for a rig when the pressure does become unmanageable: the blowout preventer.  Beyond this, there is no other reliable technology to stop the oil flowing once a blowout occurs.  However, as the Professor pointed out, the blowout preventer is not very reliable and has failed many different times in the past including Ixtoc I in 1979.  Furthermore, more than half blowout preventer failures were critical.  The MMS put out a statement in 2000 saying that they “expected” offshore rigs to have backup activation centers for blowout preventers such as acoustic switches.  Since this was not a regulation, very few rigs have this.  Professor Latham concluded by saying that technological complexity leaves a lot of opportunities for something to break and another disaster to occur.  He proposed that the liability cap should be eliminated or renegotiated and the government needs to take a much closer look at the technology involved.  In open forum questioning, Professor Latham explained further that we should require use of best available safety technologies. ELPR Summary

Lillgrund Wind Farm's wind turbines in the Sound near Copenhagen and Malmö, via wikimedia

Joel Eisen – Don’t Drill, Windmill!

Joel Eisen is a Professor of Law at the University of Richmond School of Law specializing in China’s response to climate change and environmental law.

Professor Eisen moved away from talking about offshore drilling and instead spoke about offshore wind farms.  He tied this to the theme by stating that the regulatory process for offshore wind was incredibly similar to that of offshore drilling and we need to start thinking about reorienting our energy policy toward renewable energy sources.  Offshore wind is a great option because, unlike wind farms on the land, it can be much closer to highly populated areas where the demand for energy is highest.  China and Europe are already adding wind power to their grid and the US needs to catch up.

However, there are many obstacles to offshore wind farm.  The case of the proposed Cape Wind farm is an example of exactly how much resistance such a project can face.  Even though the site was far offshore and barely visible, the residents of Nantucket Sound were furious and fought the project at every step.  The state and federal government resisted the project as well and it took 9 years until Secretary Salazar wrote a Record of Decision that would technically allow the project to go forward.  Even now, however, there are obstacles to the project as they attempt to find buyers for the energy that will be produced.  The state has only agreed to buy about half of the project’s energy and the attorney general is preparing to sue to stop even that much.  He concluded that despite these difficulties, we must be preparing and thinking about moving the grid more toward renewable energy.  During open forum questioning he further elaborated that electric cars will also provide more demand for clean energy grid and that compared to the danger from climate change, any effect wind farms had on birds was negligible.  ELPR Summary

For More Information:

National Oil Spill Commission Final Report

Norway’s Petroleum Activities Act

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