Two separate reports on the BP rig explosion and oil spill in the Gulf of Mexico last summer cast serious doubt on the fundamental safety of deep water drilling operations. However, they also made it clear that this activity will continue because the oil in those hazardous depths is so badly needed.
The U.S. National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling was highly critical of decisions made by the U.K. oil giant and its contractors, but also highlighted “systemic” problems in the entire deep water oil industry.
A chapter of the commission’s final report, published Wednesday, said:
“The blowout was not the product of a series of aberrational decisions made by rogue industry or government officials that could not have been anticipated or expected to occur again. Rather, the root causes are systemic and, absent significant reform in both industry practices and government policies, might well recur.”
A separate report into the safety of deep water drilling from the U.K. Parliament’s Energy and Climate Change Committee published Thursday also concluded there were major problems affecting the whole industry.
“We are concerned that the offshore oil and gas industry is responding to disasters, rather than anticipating worst-case scenarios and planning for high-consequence, low-probability events.”
The industry’s readiness to respond to a blowout in the U.K.’s main deep water area, West of Shetland, is also lacking, the report said.
“There are serious doubts about the ability of oil spill response equipment to function in the harsh environment of the open Atlantic in the West of Shetland.”
Furthermore, the current $250 million liability cap for an offshore spill could leave the U.K. taxpayer to pick up billions of dollars in costs, the committee said. BP estimates that the Deepwater Horizon spill will eventually cost around $40 billion.
Despite this, the Parliamentary committee said drilling should continue.
“A moratorium on deep water drilling off the west coast of Shetland would undermine the U.K.’s energy security and isn’t necessary,” said Tim Yeo, the Conservative member of Parliament who is chair of the committee.
Whether by coincidence or design, French oil company Total’s announcement Thursday that it had made another “meaningful” gas discovery West of Shetland underlined Yeo’s motivation–U.K. gas resources are dwindling and the government is concerned about the economic and security implications of relying heavily on imports.
The U.S. report concluded that deepwater drilling is “inherently risky”, but nevertheless, “provides the nation with essential supplies of oil and gas.”
Pressure from the oil industry and some politicians this week reopened the Gulf of Mexico to deep water exploration. The Obama administration said Monday that it would clear the path for 13 companies, including Chevron and Royal Dutch Shell, to resume work on a handful of wells that were already approved and under way when a drilling moratorium was imposed in May.
The reason for the continued embrace of deep water drilling, despite its obvious risks, is simple.
In both the U.K. and the U.S., the bulk of undiscovered oil and gas resources are thought to lie in deep water. Their respective governments believe the future of multi-billion dollar domestic oil exploration industries, and the welfare of hydrocarbon-dependent economies in a world where a barrel of oil costs around $90, require that the drill bits keep turning.
