Claiming it was being treated unfairly due to its 2010 blowout in the Gulf of Mexico, BP sued the United States for banning the global petroleum company from bidding on government contracts. The two parties settled this week, just in time to let BP bid on rights to new oil drilling sites in the Gulf of Mexico.
The 2012 ban was imposed in part due to BP lying to Congress about the Deepwater Horizon fiasco in the Gulf. The explosion left 11 people dead, challenged more than 16,000 miles of coastline, and spewed an estimated 4.9 million barrels (210 million gallons) of crude oil into the Gulf of Mexico over a period of 87 days.
Ironically, the Department of Interior’s auction on Wednesday is slated the day after the 47th anniversary of Britain’s worst-ever oil spill, the Supertanker Torrey Canyon spill on the beaches of Cornish. At the time, it was the largest spill on record, affecting up to 70 miles of coastline and 20,000 sea birds. The tanker was carrying 100,000 tons of crude oil.
And the spill is still killing wildlife today.
In a pro-business, 1,000-word essay, the NY Times makes general references to the Deepwater Horizon event, calling it a “disaster” once and a “spill” four times. An explosion is not a spill.
In a rah-rah manner, the authors, Clifford Krauss and Stanley Reed, also claim that U.S. energy independence is around the corner (no source given):
The gulf and onshore shale fields have transformed the United States from a declining oil and gas producer just a few years ago to a fast-growing one that will be able to cut imports and even export oil and gas for years to come.
Let’s see some data to go with that claim.
October of last year, for the first time since 1995, we produced as more crude oil than we imported. Numbers: production averaged 7.7 million barrels per day; imports averaged 7.6 million barrels per day. October. 2013.
The Deepwater Horizon 87-day guestimate of 4.9 million barrels isn’t as much oil as one day’s imports.
Generally speaking, exports happen when you produce more of something than there is demand at home. To have exports be meaningful, we need to more than oil double production, assuming that consumption remains constant.
Our production-consumption gap represents 13 percent of the world’s global oil production. And U.S. consumption dipped with the Great Recession and has not recovered. Will it? Or is this a permanent change in household miles/gallon?
The NYT article is focused on the Gulf of Mexico, where BP is currently producing 190,000 barrels a day. The entire production from the Gulf was only 457 million barrels in 2013; that’s a little more than a million barrels a day.
No, the Gulf isn’t our savior. Any significant (doubling) increase in oil production will have to come from fracking.
But even The Economist, which sounds like a fracking cheerleader, doesn’t project 15 million barrels a day any time soon.
Fracking is controversial, and not necessarily a silver bullet.
Two competing research papers illustrate my point.
Paper number one comes from Texas academics; paper number two was stacked with industry folks on the research team.
- 2012. A Primer on the Economics of Shale Gas Production: Just how Cheap is Shale Gas?
“Our results suggest that shale gas production at current price levels is marginal and the prospect for an energy game changer resulting from the development and production of the US shale gas reserves may be in jeopardy if the value drivers do not improve (i.e., gas prices increase or production costs decline).” - 2012. The Arithmetic of Shale Gas
“Academic and professional assessments of shale gas (also known as frac gas) from vast shale formations in the US have focused on the social costs of shale gas development. Using the economic tools of traditional cost benefit analysis, we demonstrate that for one given year, 2010, the consumer surplus from shale gas is in excess of $100 billion to the US economy.”
The bottom line:
We’ve given BP its get-out-of-jail card, and 2010 has basically been swept under the rug as far as the nation’s allegedly most liberal newspaper is concerned.
First quarter 2013, BP reported $4.2 billion in profit, “beating forecasts.” The company has set aside as much as $42 billion (10 quarters profits) to cover all costs (reparations, penalties, etc.). Its $4.5 billion in fines are payable over five years — and deductible from taxes, probably.
From November 2012 to March 2014, about 16 months, the company was prohibited from getting any new government work. It did not have to forfeit existing contracts. This moratorium on expansion was its equivalent to going to jail for manslaughter.
Sad, that.
Limited liability should not exempt corporate executives from the consequences of criminal behavior. And BP shouldn’t be bidding on contracts in the Gulf next week.
Known for gnawing at complex questions like a terrier with a bone. Digital evangelist, writer, teacher. Transplanted Southerner; teach newbies to ride motorcycles. @kegill (Twitter and Mastodon.social); wiredpen.com