|
Vol. 231 No.8 |
|
|
| PRAMOD KULKARNI, EDITOR |
Combative versus collaborative atmosphere
As this editorial comment was being written during the last week of July, BP had effectively capped the Macondo well for more than two weeks. Much of the surface oil slick had dissipated, thanks to a number of factors, including evaporation, consumption by oil-eating bacteria, the churning action of Tropical Storm Bonnie, and skimming operations conducted by BP and the US Coast Guard. While there will be continuing efforts to clean up the beaches and marshes, and compensation claims continue to be paid, the media discussion is now heading toward the winding down of cleanup activity.
While the Gulf of Mexico is rapidly being restored, the Obama administration remains resolute in its efforts to cap deepwater drilling in the Gulf of Mexico. The administration imposed a six-month moratorium on May 28 after the sinking of the Deepwater Horizon rig. The moratorium was originally designated for drilling rigs operating in waters deeper than 500 ft. The administration could have lifted the moratorium a week or so later after the old Minerals Management Service (MMS) had completed rigorous safety inspections on all the rigs working in deep water. The administration refused yet another opportunity to lift the moratorium on June 22 after US District Judge Martin Feldman issued a preliminary injunction, declaring the moratorium to be “arbitrary and capricious.” Instead of obeying the court decree, the administration filed a motion with the 5th Circuit Court of Appeals to suspend Judge Feldman’s injunction. The administration dismissed a third opportunity to lift the moratorium when the appeals court refused to turn over the injunction. Instead, Interior Secretary Ken Salazar issued a new moratorium on the basis of types of rig rather than water depth.
What could be the reason for such stubborn behavior? The most plausible reason would be the midterm congressional elections, which will take place on Nov. 2. If the administration had lifted the moratorium before the elections and any other spill or disaster took place, it would be an electoral disaster for the Democratic Party. If the Democrats hold onto their majority in the House, they will be in a better position to support the lifting of the moratorium. If the Republicans achieve a major victory, they will be able to press hard against the moratorium.
The US Congress is also extracting its pound of flesh from the oil and gas industry. In July, several congressional panels subjected oil and gas executives to hostile questioning to score political points. Now a number of bills are being rushed through before the congressional recess for election campaigning. Republicans were able to stall the carbon cap-and-trade legislation for now, but Senate Majority Leader Harry Reid is pushing an oil spill liability bill that contains a provision that would eliminate all liability caps on damages from oil spills, in effect driving small independents out of the Gulf of Mexico. Other bills are intended to repeal the oil and gas industry’s percentage depletion and expensing of intangible assets and use that money to offer incentives for “green” jobs, force disclosure of chemicals used in fracing, bar BP from bidding on leases, and impose a “build America” mandate that would require drilling vessels to be registered in the US.
The Obama administration and its allies in the Congress have an obvious bias against the so-called “dirty” fossil-fuel oil and gas industry and in favor of “green” energy. On the contrary, the oil and gas industry does not oppose the production of energy from renewable sources such as wind, solar and biomass. In fact, all the major oil companies are engaged in renewable energy research and development programs for eventual commercial production. Statoil has built Hywind, a pilot floating wind turbine off the coast of Norway. Siemens built the rotating turbine and Technip built the floating structure; both companies are established oilfield service companies. Saudi Aramco is building a solar farm in Saudi Arabia. Petrobras is moving ahead on ethanol and biodiesel projects just as it is developing its deepwater presalt prospects. The only difference is that the oil and gas industry believes that such a transition cannot take place overnight.
Our industry is not opposed to strict safety standards and the need for immediate spill containment. The restructuring of MMS into the Bureau of Ocean Energy with the separation of regulatory, leasing and royalty operations is a step in the right direction. Further, four of the leading deepwater Gulf of Mexico operators, Chevron, ConocoPhillips, ExxonMobil and Shell, have announced plans to deploy a rapid response system to capture and contain oil in the event of a potential future well blowout.
The combative atmosphere between the Obama administration and the oil and gas industry is in stark contrast to the collaborative atmosphere that exists in the UK and Norway. Both of these countries have a strong safety regime in place, but the governments are supportive of the oil and gas industry and its role in achieving employment and prosperity. The North Sea is now seeing a revival of oil and gas activity through the arrival of new operators, and service companies are establishing new support infrastructure. In May, Schlumberger inaugurated its WesternGeco Oslo Technology Center in the presence of Terje Riis-Johansen, Norway’s minister of petroleum and energy. In June, Baker Hughes opened its Eco-Centre waste management facility in Peterhead, Scotland, to provide environmentally compliant waste processing services for North Sea facilities. Peterhead city officials were on hand for the inauguration. During a recent trip to Scotland, I met David Anderson, international senior manager for Scottish Development International. Anderson explained how his agency is helping Scottish companies develop international opportunities.
Granted, the UK and Norway are not dealing with the consequences of a major oil spill. But the Obama administration needs to understand that the oil and gas industry has a keen sense of responsibility for its actions and is renewing its commitment to safety and the environment. On July 28, Secretary Salazar paid a visit to three offshore drilling rigs in the Gulf of Mexico to review the new inspection process and additional safety standards for BOPs and well construction. Hopefully, the visit will signal beginning of a more collaborative partnership with the government and quick lifting of the deepwater drilling moratorium. 
|
