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January 2011 Issue

Oil and Gas Production on the OCS:
Fundamentally Safe, or Just 'Lucky'?

By Randall Luthi
National Ocean Industries Association

On April 20, 2010, an explosion rocked the Deepwater Horizon drilling rig, resulting in the loss of 11 lives and the largest offshore oil spill in U.S. history. The impacts of the spill were profound on many levels.

Before the flow of oil ceased, thousands of miles of the Gulf of Mexico were closed to fishing and recreational activity, hundreds of vessels were used in response and cleanup, and all energy exploration (including seismic testing) essentially ground to a halt.

The spill caused serious economic impacts as thousands of industry and nonindustry jobs were lost, tourists avoided travel to the gulf and billions of dollars were spent on cleanup and economic damages.

There were major political impacts as well—support for offshore drilling weakened among the American public and Congress held at least 35 hearings on the subject. Future oil and gas lease sales in the Gulf of Mexico were cancelled or deferred, Notices to Lessees were issued to operators and two exploration moratoria were officially imposed, though the first of these was eventually deemed illegal.

On July 15, about three months after the explosion, a temporary containment cap placed on the Macondo well successfully stanched the flow of oil into the waters of the Gulf of Mexico. On September 19, through the use of a relief well, Macondo was declared 'dead' and no longer a threat to the environment. The well was permanently sealed on November 8, with a final cap bearing a star adornment that commemorates the 'Deepwater Horizon 11.'

While the oil was stopped, the consequences of the spill and moratoria continued and are still felt today. Industry struggles to understand what is expected of them as they apply for seismic and exploration permits. The Bureau of Ocean Energy Management, Regulation and Enforcement (BOEM) apparently faces personnel shortages to enable review and approval of exploration permits in both shallow and deep water, while attempting to craft additional safety and environmental standards. Additionally, while the visible signs of oil have dissipated, scientists disagree on the existence of hidden deepwater oil.

Offshore Oil's Safety Record
Some have opined that the oil and gas industry was 'lucky' not to have had more catastrophic spills. Both industry and federal regulators are searching for the 'new normal' as the need for new exploration and development becomes more apparent.

The important issue should be whether it is safe for exploration to continue on the Outer Continental Shelf (OCS). The short answer is yes.

While one accident is too many and one involving the loss of lives is never acceptable, industry has performed a self-critique of its procedures and has identified increased measures that can ensure a safer environment. These recommendations are based upon a generation of safe drilling. In U.S. waters in the Gulf of Mexico, prior to April 20, more than 46,000 wells had been drilled since 1949 without causing major pollution incident. That is an incredible safety record.

A study by the National Academy of Sciences in 2003 found that only about one percent of all petroleum discharged in the oceans is a result of oil and gas exploration and production activities. Even if you add the discharge from the Macondo well, that percentage does not change appreciably.

In 2008, four hurricanes tracked through the gulf. At times, nearly 100 percent of all oil and gas production was shut down due to the storms. Approximately 150 structures were damaged or destroyed, but there was no loss of life and no significant discharge of oil or gas on the OCS.

The oil and gas industry has a lower injury rate than do veterinary services, grocery stores, libraries and the child care services. Overall, the oil and gas industry has one of the lowest rates of fatalities of all industries.

I understand that this stellar safety record is viewed differently after the Deepwater Horizon, but the overall record is not this good because the industry has been 'lucky.' It is this good because thousands of dedicated workers have made it so. And they continue to do so.

Task Forces
This summer, industry task forces established by the National Ocean Industries Association, American Petroleum Institute, International Association of Drilling Contractors, Independent Petroleum Association of America and the U.S. Oil and Gas Association met to review the current state of containment and response capability.

Dozens of industry experts examined how containment of a deepwater spill could be improved, and the group critiqued the latest in response capabilities. From this examination, scores of recommendations have been forwarded to the federal regulators, the Presidential Oil Spill Commission and Congress.

Among the recommendations was the development of 'deployment-ready' containment systems, and indeed, industry has come forward with a comprehensive containment program that will allow the construction and storage of containment vessels that could be available in days—instead of weeks—should another deepwater spill occur. Additional recommendations include increasing research and development into oil sensing and tracking capability, enhancing storage in connection with mechanical recovery, and making sure response plans are robust and timely.

These actions do not come from an industry that is merely lucky. They come from an industry with dedicated employees who care deeply about providing energy to our nation safely and responsibly.

Those who regulate industry are also dedicated and care just as deeply about providing safe and responsible energy to our nation. BOEM is vital to assuring the American public that it is safe to go back in the water. And despite allegations of being too 'cozy' with industry in the past, its role should not be that of a dictatorial agency issuing new mandates and requirements without coordination with those who will actually implement them. Coordination and communication is needed to get the job done right, and does not equate to a cozy relationship.

Together, industry and federal regulators can ensure that the necessary safety procedures are in place and enforced to eliminate, to the degree possible, any possibility of a future accident like the Deepwater Horizon.

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