Four years after Macondo, offshore Arctic beckons, speakers warn

Lessons learned from the Macondo deepwater well incident and crude oil spill are in danger of being minimized in a push to develop offshore Arctic oil and gas resources, speakers warned during two separate forums around the anniversary of the offshore well’s Apr. 20, 2010, blowout and explosion that took 11 lives and destroyed the Deepwater Horizon semisubmersible rig.

The global oil and gas industry, government regulators, and local leaders will need to work more closely than ever to avoid the same mistakes, speakers said at an Apr. 17 forum at Resources for the Future (RFF) and an Apr. 21 conference sponsored by the Bipartisan Policy Council (BPC).

“You’re never finished. The goal has continued to move. It’s not static,” observed Christopher A. Smith, principal deputy US energy secretary for fossil energy, who spoke at both events.

“But you can go down to Houston and visit the Deepwater Containment Co., which uses a technology that didn’t exist before the Macondo accident,” Smith said on Apr. 21. “The US Department of the Interior also has done a good job of better defining its regulatory responsibilities and eliminating conflicts of interest. You have to be thoughtful about how you share information, but you also have to keep moving forward.”

Michael R. Bromwich, who oversaw the 2010-11 reorganization of the US Minerals Management Service after the Macondo incident, said during the BPC event: “We’re in a lull right now. Shell’s drilling off Alaska was a series of fiascoes about future activity there. It raised real questions about whether it will continue.”

Shell Offshore Co.’s Beaufort and Chukchi Sea leases raise many questions about both the industry’s capacity work safely and the government’s capacity to regulate Alaska offshore oil and gas activity effectively, said Fran Ulmer, who chairs the US Arctic Commission.

Primary mistakes

“We need to prepare a region that’s both exceedingly valuable and exceedingly vulnerable for what lies ahead,” Ulmer suggested during panel discussions at both events. Ulmer also said that complacency and overconfidence were the biggest mistakes industry and government made before the Macondo incident.

Bromwich agreed. “What struck me after I reported for work in 2010 was how undeveloped prevention, spill response, and containment were,” he said, adding, “The question for regulators is whether we’re ready, given the Arctic’s challenges. If a company apparently can’t deal with a spill there, it’s hard to imaging its being allowed to go forward.”

Bromwich added, “We’re in a much better place now, but we can’t simply rely on changes implemented in 2010-11 without continuing the discussion, review, and activity.”

Other speakers emphasized the importance of developing practices and regulations that effectively address the worst possible problems that could result from oil and gas activity in the Arctic and other frontier regions. “It wasn’t technology, but people, which failed at Macondo,” said Richard A. Sears, a consulting professor at Stanford University’s School of Earth Sciences, at the BPC event. “Training needs to be better. Beyond that, more needs to be invested in determining how to respond.”

Sears said, “The oil companies don’t know how to respond to a major accident in the Arctic. Their managements aren’t asking whether they would be able to survive the consequences financially. Even with a company the size of BP, with the damages it’s going to have to pay after Macondo, I don’t think the Gulf of Mexico will be profitable for it on a life-cycle basis.”

Smith called for greater recognition that there are potential consequences in the Arctic for indigenous peoples who have been there for centuries that go beyond dollars and cents. So did other speakers at RFF’s conference on Apr. 17.

‘Wanted to move on’

Robert B. Gagosian, president of the Consortium for Ocean Leadership, said the group which has operated since 2007 is trying to get new ideas for dealing with an offshore oil spill to address whether new technologies need to be developed for use in more severe conditions.

“I don’t see strong leadership right now,” Gagosian said. “People and groups aren’t working together. My concern is that we’ll be in the same situation 10-20 years from now because so many people wanted to move on.”

Steve Cochran, director of the Environmental Defense Fund’s Mississippi River Delta Restoration Project, stated, “It’s important to remember that penalties matter. They serve to remind operators that mistakes can cost their companies money.”

Leonard Shabman, an RFF senior scholar who previous was a staff economist at the US Water Resources Council, added, “So far, the whole discussion has been about fixing things that are broken, not preventing them from breaking in the first place. We need more data. Without it, people make [stuff] up, and very quickly start operating in a fact-free zone.”

William Y. Brown, the US Bureau of Ocean Energy Management’s chief environmental officer, said the US Department of the Interior agency is “quite involved” in studying Arctic resources. “We would like to see a standing committee within the National Academies of Science conduct research both domestically and internationally,” he indicated.

Mark Fesmire, Alaska regional director for another DOI agency, the US Bureau of Safety and Environmental Enforcement, said it is a co-leader of the US delegation to the Arctic Council studying pollution sources and containment. “I think BSEE has spent several million dollars this year to research Arctic spill response,” he said.

Not yet ready

However, Beth Kerttula, a fellow at Stanford’s Center for Ocean Solutions who formerly served in Alaska’s House of Representatives, said the state is not ready for Arctic offshore oil and gas development. “Alaska now is in the unenviable position of being the only coastal state without a management program,” she told participants at RFF’s conference. “We lost it by only 1 vote in the legislature because the oil industry spent so much money lobbying against it. We need to develop spill prevention capabilities and response mechanisms. We also need a decent port.”

Alaska’s offshore oil and gas potential looked more attractive in 2008 than it does now since major potential resources have been identified on continental shelves on both sides of the Atlantic Ocean, according to David W. Houseknecht, a research geologist at the US Geological Survey in Reston, Va. “Ice conditions and the relatively small understanding of oil and gas development impacts on forms of life there still need to be addressed,” he said at BPC’s event.

“We tend to look at high-consequence risks and probability more now,” said Oliver Moghissi, vice-president of technology at DNV GL North America Oil & Gas who also participated in that conference. “We need to add operator responsibility, regulatory oversight, and better management. Damages from an incident in the offshore Arctic may not be as great as in the [Gulf of Mexico], but the event is much more likely.”

Operators need to have technical competence and experience, the right suppliers and contractors, and good third-party oversight to ensure that risks are controlled and problems are anticipated and managed, Moghissi maintained.

“Our understanding of the subsurface environment and the technology necessary to develop resources is farther advanced than our knowledge of impacts,” Houseknecht said. “It’s becoming more apparent that the Arctic environment is increasingly international forces, including climate change. We’re learning more each year, and increasingly realize how little we actually understand.”

Bromwich said Interior started to promote development of global standards and practices following the Macondo incident, but soon discovered that other countries sometimes resist suggestions that they change their regulatory regimes. The challenge is to help them develop acceptable regulatory structures and get the necessary training for their enforcement officers, he explained, adding, “The problem is that their appetites for resource development often exceed their desires to promote safety and environmental protection.”

Contact Nick Snow at nicks@pennwell.com.

Related Articles

Shell cuts $15 billion in spending for 2015-17

01/30/2015 Royal Dutch Shell PLC has curtailed more than $15 billion in potential spending over the next 3 years, but is not “not overreacting to current low ...

Victoria extends drilling, fracing ban

01/30/2015 The new Victorian Labor government of premier Daniel Andrews has extended the coal seam gas (CSG) exploration and hydraulic fracturing ban in the s...

Chevron’s $35 billion capital budget down 13% from last year

01/30/2015 Chevron Corp. will allocate $35 billion in its capital and exploratory investment program for 2015, including $4 billion of planned expenditures by...

US Senate passes bill approving Keystone XL pipeline project

01/30/2015 The US Senate has passed a bill approving construction of the proposed Keystone XL crude oil pipeline by a 62-36 vote after 3 weeks of debate. Nine...

Oxy cuts capital budget by a third

01/30/2015 In the midst of falling oil prices, Occidental Petroleum Corp., Houston, expects to reduce its total capital spending for 2015 to $5.8 billion from...

MARKET WATCH: NYMEX natural gas prices drop after storage report

01/30/2015 US natural gas closed at its lowest price in more than 2 years on the New York market Jan. 29 following the government’s weekly gas storage report,...

Pennsylvania governor reinstates state forest drilling moratorium

01/29/2015 Pennsylvania Gov. Tom Wolf (D) signed an executive order fully reinstating a 2010 moratorium on new oil and gas leases in state forests and parks. ...

PwC: Low oil prices might drive surge in restructuring in 2015

01/29/2015 Mergers and acquisitions (M&A) in the oil and gas industry hit 10-year highs in terms of deal value and volume in 2014, according to a report f...

DOE could meet 45-day LNG export decision deadline, Senate panel told

01/29/2015 The US Department of Energy would have no trouble meeting a 45-day deadline to reach a national interest determination for proposed LNG export faci...
White Papers

Transforming the Oil and Gas Industry with EPPM

With budgets in the billions, timelines spanning years, and life cycles extending over decades, oil an...
Sponsored by

Asset Decommissioning in Oil & Gas: Transforming Business

Asset intensive organizations like Oil and Gas have their own industry specific challenges when it com...
Sponsored by

Squeezing the Green: How to Cut Petroleum Downstream Costs and Optimize Processing Efficiencies with Enterprise Project Portfolio Management Solutions

As the downstream petroleum industry grapples with change in every sector and at every level, includin...
Sponsored by

7 Steps to Improve Oil & Gas Asset Decommissioning

Global competition and volatile markets are creating a challenging business climate for project based ...
Sponsored by

The impact of aging infrastructure in process manufacturing industries

Process manufacturing companies in the oil and gas, utilities, chemicals and natural resource industri...
Sponsored by

What is System Level Thermo-Fluid Analysis?

This paper will explain some of the fundamentals of System Level Thermo-Fluid Analysis and demonstrate...

Accurate Thermo-Fluid Simulation in Real Time Environments

The crux of any task undertaken in System Level Thermo-Fluid Analysis is striking a balance between ti...

6 ways for Energy, Chemical and Oil and Gas Companies to Avert the Impending Workforce Crisis

As many as half of the skilled workers in energy, chemical and oil & gas industries are quickly he...
Sponsored by
Available Webcasts

On Demand

Global LNG: Adjusting to New Realities

Fri, Mar 20, 2015

Oil & Gas Journal’s March 20, 2015, webcast will look at how global LNG trade will be affected over the next 12-24 months by falling crude oil prices and changing patterns and pressures of demand. Will US LNG production play a role in balancing markets? Or will it add to a growing global oversupply of LNG for markets remote from easier natural gas supply? Will new buyers with marginal credit, smaller requirements, or great need for flexibility begin to look attractive to suppliers? How will high-cost, mega-projects in Australia respond to new construction cost trends?

register:WEBCAST


US Midstream at a Crossroads

Fri, Mar 6, 2015

Oil & Gas Journal’s Mar. 6, 2015, webcast will focus on US midstream companies at an inflection point in their development in response to more than 6 years shale oil and gas production growth. Major infrastructure—gas plants, gathering systems, and takeaway pipelines—have been built. Major fractionation hubs have expanded. Given the radically changed pricing environment since mid-2014, where do processors go from here? What is the fate of large projects caught in mid-development? How to producers and processors cooperate to ensure a sustainable and profitable future? This event will serve to set the discussion table for the annual GPA Convention in San Antonio, Apr. 13-16, 2015.

This event is sponsored by Leidos Engineering.

register:WEBCAST


The Future of US Refining

Fri, Feb 6, 2015

Oil & Gas Journal’s Feb. 6, 2015, webcast will focus on the future of US refining as various forces this year conspire to pull the industry in different directions. Lower oil prices generally reduce feedstock costs, but they have also lowered refiners’ returns, as 2015 begins with refined products priced at lows not seen in years. If lower per-barrel crude prices dampen production of lighter crudes among shale plays, what will happen to refiners’ plans to export more barrels of lighter crudes? And as always, refiners will be affected by government regulations, particularly those that suppress demand, increase costs, or limit access to markets or supply.

register:WEBCAST


Oil & Gas Journal’s Forecast & Review/Worldwide Pipeline Construction 2015

Fri, Jan 30, 2015

The  Forecast & Review/Worldwide Pipeline Construction 2015 Webcast will address Oil & Gas Journal’s outlooks for the oil market and pipeline construction in a year of turbulence. Based on two annual special reports, the webcast will be presented by OGJ Editor Bob Tippee and OGJ Managing Editor-Technology Chris Smith.
The Forecast & Review portion of the webcast will identify forces underlying the collapse in crude oil prices and assess prospects for changes essential to recovery—all in the context of geopolitical pressures buffeting the market.

register:WEBCAST


Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected