About those oil spills

In a previous column which touched on energy policy in general and domestic oil drilling in particular, a point was brought up in comments.

Since the oil companies have failed to develop the oil and gas leases they already hold, and because many of those are easier than offshore drilling, and because oil companies lost dozens of oil platforms in the last few hurricanes, and because those losses polluted the Gulf coastline causing ugly, toxic and expensive problems, pushing for offshore drilling is actually a pretty stupid policy proposal that could well cost McCain Florida.

These are common complaints regarding domestic oil production and I see them frequently. How do we gage these concerns? The first one seems to be a no brainer, and in fact I agree. If there are unused, potentially productive leases, we deserve some answers as to why they aren’t already being devloped, particularly if they are “easier” than accessing reserves under the ocean.

Did we lose dozens of oil platforms in the last few hurricanes? Actually, that’s putting it mildly. According to the government’s Mineral Management Service, we lost a combined total of 113 platforms to Katrina and Rita which were listed as being “destroyed” with quite a few more “damaged.” This was in addition to 457 pipelines damaged, with 101 of them being “large” pipelines. (Defined as ones which are 10″ in diameter or greater.) But to keep this in perspective, what were we to expect? That’s why they call it a natural disaster. Two major hurricanes crashed through the area in a short period of time, and that tends to break things. I can’t even recall how many homes were destroyed in the hurricanes. Shall we stop building houses?

Yes, I understand that it’s not a perfect comparison, as the environmental impact from losing an oil platform is different, larger and more spectacular than losing a house, right? So let’s take a look at that next point – did this damage result in massive spillage of oil causing “ugly, toxic and expensive problems” along the coast? Again, this from the MMS on the extent of the spills.

A South Florida Sun Sentinel Op-Ed of February 12, 2007, states that it is “less than genuine” to write that the Gulf did not experience substantial oil spills during the recent devastating hurricane season. The Op-Ed was titled “No ‘substantial’ spills after Katrina? Not quite accurate.”

The fact is, by using U.S. Coast Guard (USCG) official standards as a guide the statement is not only true, it is remarkable, especially given the intensity and destruction of Hurricanes Katrina and Rita.

They go on to list some fairly remarkable numbers. There were a total of 125 reported incidents of oil spillage from rigs, platforms and pipelines. “Those spills did not occur due to loss of control of the producing wells.” The MMS defines a “major spill” as one where 2,381 or more barrels of oil are lost. None of the incidents qualifed as a “major spill” and in fact, a grand total of only 16,302 barrels were lost from those 125 spills. On top of that, the oil that was lost didn’t come from equipment failures in the rigs. As per the report, “Oil losses were mostly limited to the oil stored on platforms that were damaged or oil contained in individual segments of pipelines that were damaged.”

I will concede that among the lessons learned from the hurrices is that we may want to revisit regulations regarding offshore platforms in terms of how much oils can be “stored” on them at any given time and how secure such storage is. Losing any oil into the ocean is certainly undesirable, but how much of a spill was that in reality?

According to a report on “Oil in the Sea” from the National Academy of Sciences (1995), far more oil enters the ocean from natural, underwater seeps than from offshore production platforms. In fact, the seeps introduce about 1700 barrels of oil a day into U.S. marine waters, which is about 150 times the amount from oil and gas activities.

The last portion of the argument speculates that McCain’s position on domestic oil production may hurt him in Florida. As I’ve said in the past, Floridians traditionally maintained a fairly unified front against offshore drilling, based largely on concerns over potential impacts on tourism and environmental dangers. But when gas hit four dollars a gallon, the tune began to change rapidly. If it hits five dollars, they’ll be loading up rowboats with pick axes and heading out to sea themselves. This may explain why the most recent poll of polls shows McCain enjoying an average lead in the sunshine state.

What frustrates me the most over this debate is when my green oriented friends (and I do consider them friends and allies) who are pushing for renewable energy, treat any mention of domestic oil production or nuclear power as the ultimate evil. Believe it or not, we’re all on the same team! We want clean, renewable energy as a permanent, long term solution too! But we’re not there yet, and frankly, we’d like to keep the lights on and the heat available until we do get there. You won’t find me fighting against any source of clean, green energy. The more the better and sooner rather than later. I look forward to the day when we need absolutely zero fossil fuels to power our nation, but until we get that fully developed and implemented, we still need energy. Oil production and nuclear energy are things we have the ability to do now.

And I don’t oppose reducing demand. I’m doing my part! I’ve replaced all my bulbs with CFBs. I’ve hunted down and shut off every vampire drain in the house. My wife and I both work at home and our car now barely leaves the house three times per week.

Everyone who supports domestic drilling and nuclear as medium term solutions to bridge this gap are not a bunch of cigar chomping Daddy Warbucks figures, praying for a China Syndrome meltdown to draw attention away from the fact that we’re clubbing polar bears to death with the corpses of dead baby harp seals while we munch on a bucket of spotted owl fritters. We’re all actually heading in the same direction toward a common goal. We just have a few differences of opinion on how to get there.

20 Comments

  1. Nice post Jazz.

    I am starting see hints by the more moderate Left who see the need to drill because they have an open mind and realize that a trillion more wind farms aint gonna get you to work in the next could years.

    Some of the more moderate Green Dreams types realize that electric cars are a long way from a reliable reality given a $30,000 dollar price tag.

    Some of the more moderate Green types believe that oil is a short term solution but not a long term solution. Most of the right believe that as well.

    Some of the more moderate Greenies understand that our entire nations infrastructure is built around OIL and that until we can make the long and hopefully not so painful transition to alternatives that oil is in our plans and will continue to be so for many more years to come.

    Many of the Green Dreams people believe as do many of the drill now proponents that oil drilling is not an evil. Its a crutch. And it is this crutch that must be taken away. Many of the drill now people agree.

    The problem is that until you fit the patient with a prosthesis, taking that crutch away seriously hobbles the patient and immobilizes him. Until we can strike a balance between the two then forever will the argument be:

    CAN NOT!!
    CAN TOO!!

  2. Perhaps it's worthwhile to ask the following:
    1. Why are the areas currently covered by the federal moratorium covered? Are they environmentally sensitive?
    2. How do they differ from areas that are already available but not explored?
    3. How messy is drilling a new well?

    Also, according to the EIA, opening up all of the OCS and ANWR will take many years to tap. By law, the leasing process will take 5 years. Assuming the equipment is available, exploration and development will take another 5 years or more. And even then it's not likely to have an appreciable effect on price.

    I'm not saying don't drill. As long as it's done responsibly there are positive benefits apart from price — it will enhance domestic supply, reduce the trade deficit, and provide jobs. But let's try to be realistic about what it will and won't do.

  3. Ricorun, I can agree with all of that in principle. Where we have truly sensitive environmental areas, of course we'd want to steer clear. And oversight should be in place to make sure that improved exploration technology (which is supposed to be far safer and more environmentally sensitive) really fills the bill in those areas. But in terms of “it will take too long” I still think, if you don't start, you'll never finish. We may need that oil even more in five or ten years. If we don't, we can always stop any new drilling and sell off what excess we have.

  4. Jazz: But in terms of “it will take too long” I still think, if you don't start, you'll never finish. We may need that oil even more in five or ten years. If we don't, we can always stop any new drilling and sell off what excess we have.

    I don't think there's any way we'll cure our addiction to oil in 10, or even 20 years. Certainly not the entire world. So I agree that the “it will take too long” argument is specious. On the other hand, so is the “drill here, drill now, pay less” argument.

    By the way, sorry about screwing up the second MMS link on the previous thread. I'm not sure what happened there.

  5. It's ok. It only took about a minute to do a search on the main page to find the article you were referencing. Thanks for pointing us to that resource!

  6. It's a mistake to separate related issues, like McCain does. It helps him politically, no doubt, but it hurts us as a nation.

    Energy, the environment , conservation and climate change, as well as the economy as a whole, are all related and intertwined, and if we do the smart and most economical (in the long term) thing, we'll consider them all at once. The aim shouldn't be to lower gas prices per se; that's a short term view.
    The airm should be to tackle all these problems for the long term. and to see how solving one problem can help solving another.

    We have a unique opportunity now. High prices at the pump have combined with ME unrest while the effects of climate change are at long last recognized and are beginning to be felt. People are beginning to adapt and adjust. As rhese changes happen, we can see more accurately what else is needed. As ridershio on public transport goes up, we assess what's needed to provide such transport, for example.

    Therein lies my suspicion of stop gap measures, as you call them, because the historical record shows that they have a nasty way of becoming permanent fixtures. It happens first by killing off interest, that sense of urgency. Second, new products have a hard time competing with old, established products, because they need time to bring up enough volume to bring down the price.

    Lastly, resources are limited and we have to make choices about where we're going to invest them. It sounds sensible to say 'everthing,' but the elements of everything are in competition with one another and there is no guarantee that the smart thing will win over the dumb thing. So far, it's worked the other way around.
    If the smart thing won, the electric car invented decades ago wouldn't have been destroyed; it would be fully developed , exponentially improved and on the roads.
    ,
    At some point we have to decide if we're going to face up to the future with determination (like the depression of the '30s) or wimp out and drag along until it's too late. to help much of anything.

    When people want to add drilling to the menu, it has to be understood what alternative investment it will replace in the budget. and in time and how that will affect everything else on the table. Oil just can't be the princess served by Cinderellas anymore like it has been so far, not if we want to have a future.

  7. “in terms of “it will take too long” I still think, if you don't start, you'll never finish”

    As I said, an uxiiallary question is: if we start drilling, what are we neglecting to start? We are talking tax breaks and subsidies here. None of these efforts are done by charitable organizations or outfits willing to undertake much risk without pretty certain guarantee of profit.

  8. Jazz I know you and I see 99% eye-to-eye on this. I'm not against opening new areas after we find out why they aren't drilling where they already have leases now, if it can be done in an environmentally safe way and investments into alternative energy is made. I like the idea of a “use 'em or loose 'em” policy on leases so we can sell leases to another company if there is demand.

    Nuclear, it is pretty safe why some people meltdown over the thought I don't know. Newer plan designs from Europe, who've expanded use of nuclear reactors, are even better than any plants online here in the US. Plus there is fusion to develop too. We do need a better location to store the waste. There is a company here in Utah that wants to import Nuclear waste from Italy. I do not agree with that, but they could take in waste from new domestic plants.

  9. This takes us back to the candidates and how they'll respond.

    McCain seems to be pandering more than anything and is continuously playing the, “drill here, drill now, pay less” game that Ricorun put so well. He's plans just sound like more psychological measure *cough* Phil Gramm *cough* than real solid energy policy

    He's running on his “experience” so let's look at it. I asked before, he's got decades in the Senate, what has been his voting record on energy policy? How is his past different than his current stand and why?

    Obama is sounding more realistic about it for now, but how much of that will stick if/when he's elected? He hasn't been in the senate long, but let's also look at that record.

  10. Rambie, you answered your own question regarding nuclear energy. People don't want it because we don't have a reliable, safe way to store the waste. If someone figured out a way to break down the nuclear waste, recycle it, clean it up, whatever needs to happen to make it safe, I would support building more nuclear plants. As it stands now, we don't have the capability to do it which makes nuclear power a non-option in my book.

  11. “People don't want it because we don't have a reliable, safe way to store the waste. “

    We have one. The opposition to nuclear power is 100% political. The waste is safer than waste from other forms of power production and much less than, for example, waste from coal. This has been known for a long time.

    I suggest this as a place for Amanda and other users to start.

    http://www.phyast.pitt.edu/~blc/

    Transport of waste is subject to NIMBYism and you are aware that most objection is to the waste and that (along with the high initial costs of construction, as Chris WWW was kind enough to point readers to on another thread) has nuclear power going nowhere — even with an even better safety inherent in new plant designs, for a form of power already far safer than other sources.

    Oh, well. I would love to be able to fly supersonically, but how much would that cost nowadays? It's not worth it. (Even the somewhat-faster-than-typical-jet Sonic Cruiser went nowhere; Boeing went with the improved-efficiency 7E7 instead.)

    Side note: for those who want to know just how bad supersonic travel costs are and what the pathetic real market is, get this book someday if you can (with the nice Scroogey title — I bought my copy from the aviation bookstore in Toronto):

    Supersonic (Airliner) Non-Sense

    A Case Study in Applied Market Research

    by R.E.G. Davies

    http://www.tomfolio.com/bookdetailssu.asp?b=757

    Chris, I don't think nuke costs are in the same league as a new supersonic airliner — the initial cost for one such plane being the same as for buying a small fleet of ordinary airliners and starting up your own airline from scratch — but you were right, that they currently are nearly prohibitive. So there's another cost example for you, too. (The author is clear that over-land supersonic flights will remain prohibited. The actual market for supersonic airliners is very, very small.)

    Nukes cost too much and waste is a political Achilles heel. So we see coal plants, which greenies detest.

  12. “But let's try to be realistic about what it will and won't do.”

    It's not a magic solution any more than conservation, or instant alternative energy sources, or stem cell magic, etc.

  13. 1. Open all known good reserves, or compromise by opening only the top reserves, to drilling.

    2. Fusion is way off and strangely, you don't hear Obama or many others wanting research into this. Hmmm.

    3. There are new designs that are inherently safer than older designs (which are safer energy generators than other means; nuclear safety has always been a big source of hysteria and delusion — see below for delusional behavior as well as a link or two to modern designs, which are simpler, often smaller, definitely better).

    mothersforpeace.org/resources/maps/chernobylAppliedToDiablo/view

    http://www.eia.doe.gov/cneaf/nuclear/page/analy

    http://www.nrc.gov/reactors/new-licensing/desig

    4. Chris-WWW already noted elsewhere that the up-front costs of nuclear are high.

  14. When people want to add drilling to the menu, it has to be understood what alternative investment it will replace in the budget. and in time and how that will affect everything else on the table. Oil just can't be the princess served by Cinderellas anymore like it has been so far, not if we want to have a future.

    Ahh at last I understand the resistance to drilling. We have to regulate it and finance it. The government has to have its finger in the pie. Without the government doing everything from sonograms to mud analysis and then telling the drillers how to drill to hiring the tool pushers to run the rigs.

    I can see now why the left is opposed. None of them know how to drill oil.

  15. I was a HUGE fan of fusion, and even did some work with the New Jersey plant when I worked for IBM Astro Electronics in the 80's. But it's just been so long and we don't seem to be that much closer to pushing very far past the break even point… I'm not saying we shouldn't keep trying, but at least for now, it just seems like we need another major breakthrough before fusion is on the horizon as a viable energy source. Love to see it if it happens.

  16. The price of new nuclear plants has yet to receive a fair evaluation.

    Back in the ‘60’s and ‘70’s when all the U.S. plants were built, every facility was planned and built like a prototype. No computers (to speak of), CAD software, etc. When you needed to machine one of the hundreds of flanges, you needed a leather apron clad machinist with 30 years experience.

    Today, if a commitment was made to build 800 new plants, they could be built to one design. The components would be a fraction of what their predecessors were, and the completion time could be counted in months instead of years.

    The problem of Not In My BackYard would be handled by discounts. If your community voted to compete for a plant, the homes and businesses within a certain radius of the facility would receive a substantial discount for their power. Towns that didn’t want a nuclear reactor can buy their power at a premium.

    Cheap energy is the key to a growing economy. Primary and secondary industries would flock to the U.S. if their power was provided at an insignificant cost. If you want more good paying jobs than the country can fill, bring on a program to have an overabundance of base load power.

  17. Jazz, I agree, Fusion is years away and does need more research and investment. It's better than fission plants but they are here now and not as dangerous as some make it out to be.

    Breaking our oil habit isn't going to be easy, sorry Neocon, and there will be some pain. The point is to minimize the pain while investing into other energy sources for our future. There is not going to be one magic bullet that solves it all.

  18. jwest, all of the reactors I am aware of that have so far been proposed in the US are of the AP-1000 design — two in Florida, two in Texas, two in Georgia, and two in North/South Carolina. There may be others I'm not aware of with other designs, but that seems to be the preferred one. They're popular in France and China, too. You can't get more cookie-cutter. But they're still expensive. A short article discussing costs (with links for further reading) can be can be found here.

    And from this… “Consider an index of coal, gas, wind, and nuclear power capital costs from Cambridge Energy Research Associates. From 2000 to October 2007, nuclear power plant construction costs—mainly materials, labor, and engineering—have risen by 185 percent. That means a nuclear power plant that cost $4 billion to build in 2000, cost $11.4 billion to build last October.”

    That's the big problem — costs keep going up. Costs are going up the other alternatives as well (for the same reasons), but not nearly as fast as nuclear. But I suppose you could say that's the down side. The up side is that once they're built they're cheap to operate. Uranium has approximately quintupled in price in the last 5 years or so, but it still represents a small percentage of the operating cost. So you basically lock in your price of electricity. I read one article about a pair of nuclear plants built in Georgia in the mid-80s: their total projected cost was $780 million. But by the time they were completed they ended up costing $9 billion. Cost overruns are more the norm than the exception for nuclear plants, but they aren't usually that large. Nonetheless, with the way fossil fuel prices have gone up in the last 20 years, it turned out to be a bargain. The same is true for wind, solar, and geothermal, too, because their fuels are even cheaper.

  19. I guess this entire thread and the post it accompanies was started by my comment to another of Jazz's fine posts. I feel somehow negligent that I was otherwise engaged yesterday and have not contributed to the discussion.

    Jazz, I'll grant that there were no “major spills” from the lost platforms. We were lucky. But you have to admit, that's a lot of expensive equipment lost, cleanup cost (to salvage and re-establish the platforms, if in fact they do) and lost production. There is nothing comparable with land-based pumping. Even huge storms and floods cannot cause this kind of disruption of land based oil production. Furthermore, when there are major spills, the oil industry has shown callous disregard for their responsibility to clean up their messes. The damage is greater, and spread more widely when it is released into the ocean than on land.
    Oilfields simply are not subject to the same risks (especially of hurricanes) as offshore rigs are. So give me a compelling reason why specifically off-shore drilling is in our interest.

    The assertion is made that offshore drilling can be done in an environmentally responsible fashion. In fact, the oil industry as exemplified by Exxon Mobil has a consistent record of fighting against cleaning up their masses.

    “We keep the profits, the public pays the cost of our screw ups” is not acceptable. How about some responsibility for a change?

    If the industry believes its development can be environmentally sound, then let them pledge to pay the full cost of cleaning up oil spilled from their pipelines, from their drilling activities, from their tankers.

    Next, what assurances do we have that the oil companies actually intend to drill offshore in the near future? Oil companies already have both offshore and onshore leases that are not being developed. Can someone direct me to a statement by the oil companies that they are seeking additional offshore leases for immediate development? Has the industry explained why it is not developing its current leases? Are new offshore leases easier to develop than current land-based leases? If we give out new leases, do they pledge to develop them promptly? And cover the cost of insurance?

    Some commenters here are asserting that a failure to approve offshore drilling will drive up the cost of gasoline. It was even characterized as “heartless” not to drill immediately. That's nonsense. It does not appear that increased drilling of existing or new oil leases will significantly affect the cost of gasoline in the near term, or perhaps even long-term. It's a drop in the global bucket.

    Then there's the suggestion that speculators will flee the market  as soon as we announce the new leases, thus reducing prices at the pump. Come on, please. Don't insult your own intelligence, or ours. No investor abandons an investment because an event 6-12 years out may change the market dynamics. How absurd.

    I believe our nation's conditions for granting any new leases should be at a minimum that (1) the industry agrees to develop all existing leases immediately, or relinquish those leases and (2) the industry agrees to prompt payment of all costs associated with oil spills or leaks. They can start by dropping all of their current court actions to avoid the payment of these costs.

    Nuclear energy is extremely problematic at every stage, from the mining of uranium to its shipment and processing to the building of nuclear power plants to the disposal of nuclear waste and to the decommissioning of obsolete plants. Consider ALL the costs, economic and environmental and it's a total loser. There is no reason the public should pay, nor should the environment, for the total true costs of the development and utilization of nuclear energy.

    There is also no reason for the taxpayer to ensure the nuclear industry, as it currently does (Price Anderson Act). We currently assume the risks of nuclear accidents for one simple reason. The “risk experts” in the insurance industry do not believe that nuclear reactors are safe enough to insure, even the “new generation” of plants. Think it's safe enough? Then convince an insurer!

    If utilities cannot secure private insurance for all costs of an accident, they don't have a viable business in nuclear energy. Again, “we get the profit, you take the risk” is not acceptable.

    Finally, the threat of nuclear materials falling into criminal hands, even the poorly guarded low grade waste, is too great to be as careless as we already are. Even a single contaminated glove stolen and used in acts of terrorism could be extremely costly (such a glove could close a post office for months, for example). That's how tough the security has to be. Anyone think we need armed guards at the wind energy farm?

    No one here has presented a rational case for offshore drilling nor for nuclear energy, in my opinion.

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