Senate committee members trade barbs at OCS technology hearing

Nick Snow
OGJ Washington Editor

WASHINGTON, DC, Nov. 20 -- A US Senate Energy and Natural Resources Committee hearing which chairman Jeff Bingaman (D-NM) hoped would “move away from rhetoric and focus on the facts surrounding offshore oil and gas production and its impact on the environment” fell short of his goal.

Committee members Robert Menendez (D-NJ) and Mary L. Landrieu (D-La.) quickly disagreed about whether oil and gas can be produced offshore with minimal environmental impact. Menendez also criticized a witness, Shell Oil Co. Pres. Marvin E. Odum, for painting what the lawmaker considered “an incredibly rosy picture” of offshore production. Landrieu, meanwhile, suggested that another witness, Jeffrey Short, Pacific science director at the Oceana environmental group, omitted benefits of offshore oil and gas activity when cataloguing its risks.

Lisa Murkowski (R-Alas.), the committee’s ranking minority member, used her opening statement to express concern over the direction the Obama administration apparently is heading in its handling of the US Outer Continental Shelf. “It’s now been a year since the offshore moratoriums were lifted,” she said. “In the meantime, this committee voted for greater offshore production to boost our economy and energy security. But many executive actions—and quite a few not taken—are signaling a move in the opposite direction.”

Actions such as the US Environmental Protection Agency’s taking nearly 4 years to consider an air permit for exploration ships in the Arctic; the US Department of the Interior’s revision of a proposed 5-year OCS management plan; and the National Oceanic and Atmospheric Administration’s call for its own set of offshore deferrals, removals, and buffer zones are undermining the regulatory certainty energy companies need to invest in the US, she said.

Murkowski’s assessment seemed to contradict that of Byron L. Dorgan (D-ND), who suggested that the Sept. 30, 2008, expiration of congressional OCS moratoriums reopened most of the US coast, and that buffer zones and other appropriate safeguards need to be formulated to facilitate environmentally sound domestic offshore resource development. Policymakers need to determine “with what environmental stewardship requirements we begin this venture to produce more American energy,” Dorgan suggested.

Buffer zones
Bingaman asked another witness, US Minerals Management Service Director Walter D. Cruickshank, whether the DOI agency with jurisdiction over federal offshore resources felt it might be more qualified than Congress to establish buffer zones. Cruickshank said MMS did not have a position on the question, but added that the agency has required producers to take similar steps to mitigate impacts offshore Baldwin County, Ala., “where there were concerns for the tourism industry,” adding, “We stipulated that any lease within 15 miles [of the shoreline] take steps to minimize visual impacts.”

Specifically, he later said in response to a question from Jeanne Shaheen (D-NH), producers in that area were required to use an existing platform instead of installing a new one and, where this wasn’t possible, to take other steps to reduce visual impacts. When Dorgan asked if MMS might consider buffer zones in other OCS areas, Cruickshank replied: “It’s certainly an option that’s on the table. Among comments we received [during the recently completed public comment period on the proposed 5-year OCS plan] were questions about how buffer zones might be applied.”

Odum and another witness, David Rainey, vice-president and Gulf of Mexico exploration manager for BP America Inc., told the committee that the oil and gas industry has made significant technological advances in finding and producing resources offshore. “Finding environmentally and socially responsible ways to meet the nation’s energy needs is critical to our business success. We are acutely aware of the passion around the potential adverse impacts of offshore oil and gas activities,” the Shell Oil executive said.

He noted that concerns include greenhouse gas emissions from oil and gas combustion, E&P’s environmental footprint and visual impacts, risks of a major oil spill on marine wildlife and sensitive environments and whether spilled oil can be cleaned up (especially in Arctic conditions), discharges into the ocean and air emissions from offshore platforms, noise impacts on marine mammals, and operating in sensitive areas.

Rainey listed three key technologies which enable the safe and reliable production of offshore oil and gas resources: “Seismic imaging allows us to predict the presence of hydrocarbon reservoirs below the sea bed. Drilling allows us to test for the presence of hydrocarbons in the reservoirs,” he said. “When hydrocarbons are present, the well bore connects the reservoir to the surface, where production systems enable us to produce the hydrocarbons, and deliver them safely to the refinery.”

‘Excellent record’
“The industry has an excellent record of exploring for and developing OCS resources,” Odum said. “Advances in technology and science have enabled this in ways that were unimaginable even a few years ago. We can drill safely and efficiently with an ever-smaller environmental footprint in ever-greater water depths farther and farther from shore with minimal stress on the oceans.”

But Short argued that despite many years operating offshore, the oil and gas industry still does not know enough about the marine environment to adequately protect it. “Large oil development proposals are presented and discussed as engineering challenges, without sufficient regard for the complexity of the environment in which they would occur, or the often dubious assumptions implicit in assessments of environmental risks and mitigation technologies,” Oceana’s Pacific science director asserted.

“Oil spill contingency plans are presented as exercises in damage control, taking for granted that not all damage can be controlled, and based on the faulty assumption that the important variables and their interactions are adequately understood, predictable, and manageable. Similarly, the methods used to evaluate mitigation technologies in the field usually do not meet basic scientific principles, so that the results, and hence risk assessments based on them, are inherently questionable,” Short said.

Short said environmental scientists have made stunning discoveries in the last 20 years of the damage oil spills can have on the marine environment. “In truth, our understanding of how oil behaves in the environment, the ways it affects organisms, and how response and mitigation measures actually work in the field is still in its infancy. That fact alone argues for an especially precautionary approach to offshore oil and gas development,” he declared.

A fifth witness, John Amos, president of SkyTruth, a Shepherdstown, W.Va., nonprofit organization he started in 2001 to use satellite imaging, digital mapping, and other remote sensing technologies to investigate environmental issues, said that the Montara well blowout on Aug. 21 off Australia offers several cautionary lessons about modern offshore drilling. The rig and platform were relatively new and the drilling contractor had extensive experience with a full crew present, yet the blowout occurred in calm water, causing an explosion and fire which forced the immediate evacuation of 69 employees, he said.

10-week leak
Amos said that for the next 10 weeks, oil and gas flowed from the damaged well unabated, despite repeated attempts to plug the well. “Australian authorities and the platform operator, PTTEP Australasia, responded primarily by aerial spraying of chemical dispersants on the oil slick, with limited boom-and-skimmer operations to mechanically recover the spilled oil. PTTEP determined that the best way to stop the flow from the damaged well was to drill a relief well that would intercept the damaged well at a point approximately 8,600 ft below the sea floor,” he said in his written testimony.

A second jack up rig was brought from Singapore because the one on site was too badly damaged, but it did not arrive until Sept. 21, he said. It drilled a relief which reached the necessary depth on Oct. 1 but missed the well, requiring its crew to try four more times before intercepting the damaged well on Nov. 1. As it pumped drilling mud into the damaged well to stop the flow of oil and gas through the relief well, the damaged well ignited, engulfing the platform and original rig in flames, Amos said. Estimates of the oil spilled daily range from 400 to 3,000 b/d, “but even at the lowest estimate, the Montara event ranks as the worst production-related spill in Australia’s 40-year history of offshore oil development,” he indicated.

Amos also suggested that while offshore platforms and drilling rigs may be relatively new, pipelines and onshore storage systems may be 30 years old and wearing out. “We do not take a position on whether more offshore oil and gas drilling should be done. Our work is focused on making sure that any work that takes place occurs in the most environmentally sustainable way,” he said. “No form of energy technology is without its benefits and risks. The same technology I showed you today which showed where things are going wrong also can show places where things are being done right.”

Below US standards
The Montara spill off Australia proves that coastal states’ concerns are not stuck in the past, Menendez said. “Is it really so outdated in view of what just happened off the coast of Australia for over 10 weeks when oil spilled and caught fire before being plugged? Am I just being old-fashioned when that same entity is working in US waters?” he asked. But when Dorgan asked Cruickshank if reports that the well would not have met MMS standards were true, the MMS official said that was the case. “The well design was one we would not have approved. They allowed a single barrier, where we would have required multiple barriers, for example,” he explained.

Menendez nevertheless criticized Odum directly. “I think you painted an absurdly rosy picture of offshore resources we have which could be produced and wash over us at dramatically lower prices. The [US Energy Information Administration] has a much different picture,” he told the Shell executive.

“We simply can go back to the facts,” Odum replied. “My point is that 1.4 million b/d of production from the Gulf of Mexico adds a significant piece to US energy supplies. Our resource estimates have grown as we’ve got more experience.”

When she was recognized, Landrieu told Short that most of the spilled oil in satellite photos comes from tankers which ran aground “because organizations like yours don’t encourage safe domestic drilling,” adding, “More comes from boast and ships, and natural seepage represents 63% of the total. Only 1% of the oil in the oceans is from drilling. We could, if we work together and be truthful about what is happening, perhaps eliminate that 1%.”

Short responded that while more oil in the oceans comes from natural seepage, the marine environment has adjusted because it has occurred over centuries. A spill from an offshore platform or pipeline is more of a shock because it’s sudden, he said.

Contact Nick Snow at nicks@pennwell.com.

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