Environmental regulations and safety strategies for oil and gas production

Regulating Oil and Gas Drilling and Transport

The American economy runs on energy produced from oil, coal, natural gas, hydroelectric power, nuclear power and renewable sources like solar and wind energies. In fact according to a report in the Congressional Research Service, oil provides the United States with 40% of its total energy needs. It is used in myriad ways, providing "…fuel for the transportation, industrial, and residential sectors" (Ramseur, 2012). Because of the great need for energy to fuel the American economy, oil in "vast quantities" enters the country and moves through the country by ships and by pipelines, Ramseur explains in the Congressional Research Service. Hence, it is inevitable that some spills will occur, and they certainly do occur, notwithstanding the attempts by the industry to conduct its business safely.

The U.S. Energy Information Administration (EIA) reports that the U.S. consumed 6.87 billion barrels (about 18.83 million barrels a day) in 2011, and that was a slight reduction from the 7.0 billion barrels consumed in 2010 (www.eia.gov). As for the amount of natural gas consumed in the U.S. annually, the EIA reports that Americans used approximately 24.38 trillion cubic feet in 2011 (www.eia.gov). There is no doubt that until such time as renewable sources provide far more energy for the nation, oil and natural gas in particular will be in great demand.

This paper reviews current environmental problems associated with oil and gas production and offers strategies for safer ways to regulate oil and gas production.

Thesis: Because of the risky strategies energy corporations take in retrieving oil and natural gas -- and due to the leaks, spills, blowouts, tankers running around and other errors and disasters associated with oil extraction and transport -- major new environmental regulations must be put on place regarding the drilling for oil. Moreover, current tactics for producing natural gas from existing wells -- a process known as "fracking" -- are not safe, do not protect the environment, have the potentiality of bringing harm residents and communities, and should be strictly regulated.

Supportive Argument #1 -- History and Impacts of Oil Spills

Far too many human and mechanical errors in the oil-producing and in the transport of oil are made each year -- which leads a concerned, alert citizen to ask for tighter regulations on this important industry. There were (not counting the BP Gulf disaster) 6,500 "spills, leaks, fires or explosions nationwide" involving oil and gas exploration and transport in the United States in 2010 -- according to research by CBS News. These incidents happened in 33 states that are oil and gas producing states; the 6,500 accidents in 2010 boil down to 18 every day (CBS News). The tally for those 6,500 accidents totaled "…at least 34 million gallons of crude oil and other toxic chemicals" that entered the environment -- "…triple the size of the 1989 Exxon Valdez spill" (CBS News).

In July of 2010, about a million gallons of crude oil spilled from a pipeline near Marshall, Michigan into rivers and streams. The oil company responsible for that disaster is still cleaning up the mess, CBS News reports.

When asked for a response to the CBS News report, the American Petroleum Institute (API) of course vigorously defended their record, asserting that the industry has a "…strong safety record while providing the energy America needs." The API went on to state that "…proportionally, if the amount of oil used in the U.S. each year was equivalent to the amount of water in a backyard swimming pool, the amount spilled would be less than half of a teaspoon." The goal of the API is to reduce the amount spilled down to "zero incidents" (CBS News).

That Michigan oil spill occurred in the Talmadge Creek, which flows into the Kalamazoo River; the oil company responsible for the incident is the Enbridge Energy Partners. In 2011 a big spill polluted the Yellowstone River near Billings, Montana; that incident occurred to an ExxonMobil pipeline which ruptured and cause more than 42,000 gallons of oil to cascade into the Yellowstone River (Ramseur, 19).

In 1967 one of the first major oil spills to receive international attention -- the Torrey Canyon spill offshore from England -- resulted in international laws regarding what agency is responsible when a vessel from a foreign nation causes environmental damage to a sovereign nation. The Torrey Canyon spill -- "119,328 tonnes of crude oil" from a 300-meter long supertanker -- "…imperiled a beautiful and popular tourist region" and the winds took much of the crude oil across the English Channel to France (Barkham, 2010).

The initial sad part of this story, Barkham writes in The Guardian, was that "…no one knew what to do," and there was "buck-passing" by several multinational companies that were implicated in the disaster. The ongoing sad legacy of this massive spill, Barkham writes, is that it is not "just a history lesson, it is living proof that big oil spills plague ecosystems for decades." Indeed, forty-three years after the vessel spilled its load of crude oil, that oil "is still killing wildlife on a daily basis" (Barkham, p. 2).

British Petroleum (BP) which owned the Deepwater Horizon rig, had chartered the vessel but did not own it (it sailed under a Liberian registration), "…disclaimed any responsibility for the oil pollution" (Barkham, p. 2). The use of detergent (which BP produced) did not absorb the oil, and according to Guardian journalist Dennis Barker, who covered the story in 1967, "…using detergent to break up slabs of oil in the ocean was like trying to pick up quicksilver with boxing gloves" (Barkham, p. 4). The parties involved in the attempted clean up used foam booms (which didn't work), and there was an attempt to drop aviation fuel and burn the oil but that failed, too, Barkham writes.

Finally some of the most powerful energy decision makers in England came up with the idea of dropping Napalm on the slick (Napalm had been used by the Americans in Vietnam to destroy jungle foliage); "When that came in there was a sheet of flames," according to Les Hosking, an energy professional; "I've never seen anything like it… the smoke went up into the sky for what seemed like miles" (Barkham, p. 4). In all, the oil slick despoiled an estimated 120 miles of Cornish coastline; an estimated 15,000 birds were killed, and untold tens of thousands of seals and other marine life perished.

The legacy of death and environment degradation from this supertanker disaster is ongoing in England more than forty years later, Barkham continues. The decision was made in 1967 to dump the oil that had been scrapped off beaches and from the surface of the Atlantic Ocean into a quarry, and it is still there. "Because of its thickness and stillness birds see it as a solid surface," hence, they land on it "and then the weight of the oil holds them down" said Jayne Le Cras, director of operations at the Guernsey Society for the Prevention of Cruelty to Animals (GSPCA) (Barkham, p. 5). "It stinks" still today, Le Cras explained.

As for wildlife in the area where the oil sludge still stinks and is killing wildlife, there is a family of kestrels nesting nearby and "short-eared owls breed in adjacent pine trees"; when people passing by hear the "flapping of stranded birds they alert the GSPCA" but the staff can't get to the quarry in time in most cases and hence the birds are found dead face down in the pool of stinking goo (Barkham, p. 5). The only good news to come from the Torrey Canyon disaster is that "…international maritime regulations on pollution were created" (Barkham, p. 6).

Supportive Argument #2 -- Background on Oil Spills, Laws

The need for new and more stringent regulations was never more obvious than on April 10, 2010, when there was a horrific explosion on the Deepwater Horizon drilling rig in the Gulf of Mexico. An estimated 4.9 billion barrels of crude oil were released into the Gulf of Mexico; it was the most disastrous oil spill in U.S. history, according to Ramseur. The second most disastrous oil spill is still considered the 1989 accident involving the Exxon Valdez, which dumped approximately 11 million gallons (260,000 barrels) of crude oil into Prince William Sound in Alaska (Ramseur, 1).

Following the Exxon Valdez spill in 1989 (the cleanup costs were estimated at $2 billion and the loss in terms of natural resource damages was estimated at $1 billion albeit placing a value on the natural world is entirely speculative) Congress passed the Oil Pollution Act of 1990 (OPA). The new law made "comprehensive changes to U.S. oil pollution laws by expanding federal response authority and increasing spill liability" (Ramseur, 6). The OPA clarified the federal government's role in responding to oil spills and cleanup; OPA Section 4201 provided the U.S. president with the authority to order cleanup operations "immediately using federal resources" (Ramseur, 12).

This part of the law was enacted so there could be an immediate response to the oil spill and that there would be no loss of "…precious time…while waiting for the spiller to marshal its cleanup forces" (Ramseur, 12). The OPA also expanded the role and breadth of the "National Oil and Hazardous Substances Pollution Contingency Plan" (NCP), establishing a multi-layered "planning and response system" in order to improve the preparedness and responses to any spill that occurs in a marine environment (Ramseur, 13). Moreover, the OPA in 1990 required that oil tankers (flying the U.S. flag), offshore facilities (like the Deepwater Horizon rig), and certain onshore facilities operated by oil companies "…prepare and submit oil spill response plans" to federal agencies that regulate oil drilling and transport (Ramseur, 13). Without those advanced response plans, any drilling or transporting of oil is illegal, according to the particulars of OPA.

In 2004, Congress passed an amendment to OPA that requires vessels carrying oil for their own fuel consumption to also submit a "vessel response plan" if the vessel is carrying over 400 gross tons, Ramseur explains. The OPA is just one law that relates to oil issues; the Clean Water Act (CWA) is also pertinent because it flatly prohibits "…the discharge of oil or hazardous substances into U.S. navigable waters" (Ramseur, 17). The Outer Continental Shelf Lands Act (OCSLA) is actually the main regulating Act that governs oil exploration and operations in waters where there is federal jurisdiction. It has been amended several times, but clearly has not prevented environmental disasters like the Deepwater Horizon event.

Law professor Mark. A. Latham writes in the peer-reviewed journal Environmental Affairs that the regulations in place at the time of the Deepwater Horizon blowout were wholly inadequate. Providing scholarly collaborative narrative to support the thesis of this paper, Latham explains that while the "…catastrophe was a failure of technology," the over-riding facts subsequent to the disaster is that federal oversight is grossly inadequate (Latham, 2011, p. 345). The agency responsible for oversight prior to the catastrophe, the Minerals Management Services (MMS), and Latham asserts that any claim that the MMS was capable of being an "effective regulatory body" has been "shattered" (345).

In the first place, expecting that drilling an oil well 1,500 to 25,000 feet into the Gulf of Mexico -- "an incredibly challenging endeavor" -- will go smoothly is based on technology but also depends on "luck," Latham writes. Even drilling a well 1,500 feet into the ocean is like standing on the top of Sears Tower in Chicago "…and trying to stick a long straw in a bottle of Coke sitting on South Wacker Drive" (Latham, 347). Apparently the MMS failed to "adequately regulate the one piece of technology relied on in the industry as a last resort to shut down and out-of-control well," and that is the "blowout preventer" (Latham, 349). How much faith do engineers, MMS officials, and other industry professionals place in blowout preventers over the years? Very little, according to professor Latham.

Latham says blowout preventer equipment has not been believed to be an effective fail-safe / last resort technology in the industry, and hence, it is "shocking" that BP and the MMS were relying on the Deepwater Horizon blowout preventer (350). Given the poor record for preventing blowouts -- including the 1979 blowout and resulting massive 140 million gallon oil spill in the Mexican Gulf Coast waters (IXTOC 1) -- the failure of the BP blowout preventer "…was not some unexpected, unanticipated, rare occurrence. It was an entirely foreseeable event," Latham asserts on page 350.

Moreover, for many years MMS has had concerns as to how effective blowout preventers are in terms of preventing huge spills. Ten years prior to the Deepwater Horizon disaster, the MMS funded a study in order to assess the reliability of blowout preventer technology. That study closely examined "…a total of 117 failures associated with blowout preventers at eighty-three deepwater wells" and listed 57% of the failures as "safety critical failures" (Latham, 351). In 2004, MMS hired an engineering service (WEST Engineering Services) to answer this question: "Can a rig's blowout preventer (BOP) equipment shear the pipe to be used in a given drilling program at the most demanding condition to be expected, and at what pressure?" (Latham, 351-352).

The reason that MMS posed this particular question was not just out of regulatory curiosity, Latham continues. It was asked because failure to properly "…shear" when the final safety option is employed can be expected to result in "…a major safety and/or environmental event" (352). Certainly the Deepwater Horizon event can testify to the importance of making sure that the blowout preventer -- the very last resort for a well operator working on a platform in the ocean -- is capable of stopping a catastrophe. The WEST answer to the MMS question about blowout preventer capabilities was, in hindsight, foreshadowing: WEST was "…currently aware of several failures to shear when conducting shear tests using the drill pipe that was to be used in the well" (Latham, 352).

The failure of tests of blowout preventer technology that MMS was aware of in 2004 was not the only factor that is pertinent to the thesis of this paper. The procedural, bureaucratic history of MMS's process is also a factor; to wit, when the MMS research into blowout preventer failures was completed in 2006, "It then took several years for MMS to publish a proposed rule focusing on reducing the potential adverse safety and environmental aspects of deepwater drilling" (Latham, 355).

The rule that was finally adopted (vis-a-vis the reduction of potential adverse safety and environmental impacts in deepwater drilling) resulted from a study of "…more than 1,400 incidents" that were reported during oil exploration and production activities on the "Outer Continental Shelf" (Latham, 355). Those 1,400 incidents occurred on 41 different oil facilities, and there were ten instances in which control of the well (i.e., effectiveness of the blowout preventer system) "was lost" (Latham, 355). As another example of sluggish government response and ineffective regulatory procedures, it turns out that the final rule adopted by the MMS did not get published "…until almost six months after the Deepwater Horizon disaster resulted in eleven deaths" and an unprecedented amount of damage to the environment, to the economies of the Gulf Coast, and to wildlife (Latham, 355).

Meanwhile, the damage to wildlife from the Deepwater Horizon blowout (which resulted in the deaths of 11 workers) was extensive. The National Wildlife Federation (NWF) estimate more than 8,000 sea turtles, birds, and marine mammals were "…found dead or injured in the six months after the spill" (NWF). Birds were found will oil-coated feathers (birds lose buoyancy and the ability to regulate their body temperature); mammals that ingested oil suffered from ulcers and internal bleeding; sea coral suffered enormous losses, and those were the short-term impacts.

Long-term, there cannot be any certainty about the potential impacts to the environment and the wildlife in the Gulf, the NWF explains. For example, it took four years after the Exxon Valdez disaster to determine the impact on the herring population, and it was determined that the herring population had "collapsed" and twenty years later it still had not recovered (NWF).

As to the response of the Obama Administration to the Deepwater Horizon spill, the U.S. Department of the Interior (DOI) has reportedly set new standards and "certification protocols for well design, testing, and control equipment" (White House). Also, the administration has established what it calls "…rigorous performance standards to reduce workplace error" and has established "comprehensive safety and environmental management" (White House). What operators of offshore oil equipment must now present to officials "well-specific blowout scenarios" and they must also submit "revised worst-case discharge calculations," the White House details on its website.

For deepwater operators, they must demonstrate that they have "…the capability to contain a sub-sea discharge like the Deepwater Horizon Oil Spill," the White House explains. By imposing these tighter standards, the administration believes that there is a "clear, achievable path for responsible offshore exploration, development and production" (White House).

Meanwhile the U.S. Congress got deeply involved in the aftermath of the Deepwater Horizon disaster, according to The Times-Picayune. After more than 60 hearings in Congress, and after more than 150 legislative proposals had been offered, Congress actually enacted "…two statutes involving oil spill-related issues" (Schleifstein, 2013). The first law (signed by President Obama in January, 2012) is the "Pipeline Safety, Regulatory Certainty and Job Creation Act of 2011"; this legislation not only related to the BP blowout, but anticipated the possibility that the Keystone SL Pipeline -- that is being proposed to run from Canada down through the heart of the United States to Texas -- could be eventually approved.

The above-mentioned law greatly increases "…civil penalties for violating safety requirements" and the law also requires the use of "…automatic and remote-controlled shutoff valves on new constructed transmission pipelines" (Schleifstein). The law requires the Department of Transportation to "…analyze lead detection systems" and also involves the Pipeline and Hazardous Materials Safety Administration, asking that bureau to "…review whether current regulations are sufficient to regulate pipelines carrying 'diluted bitumen'" which is the technical name for "tar sands oil," the substance that would be pumped down from Canada through a pipeline to Texas (Schleifstein).

Will these post-Deepwater Horizon regulations prevent another blowout and environmental disaster? There is certainly no guarantee of that, but tightening regulations is necessary given that the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) has offered up to 37 million offshore acres in the Gulf of Mexico for gas and oil exploration. Since the BP disaster, the BOEMRE has approved shallow water permits for 37 projects in the Gulf of Mexico and BOEMRE has also issues the first deepwater permit "…since the new standards went into effect," the White House reveals on its website.

Moreover, presently there are 38 million acres of the Outer Continental Shelf under active lease from the BOEMRE; of those, only 6.5 million acres are actually producing, the White House reports. In fact over seventy percent of offshore leases held by energy companies are not producing oil.

Will the enormous financial cost to British Petroleum (following the Deepwater Horizon disaster) discourage other oil companies from drilling in deep water? The New York Times reports that British Petroleum agreed to plead guilty to "…14 criminal acts in connection with…" Deepwater Horizon and as part of that plea BP has agreed to pay $4.5 billion in fines (NYTimes). But the fines could be increased under the Clean Water Act and may end up costing BP $1,100 to $4,300 for each barrel of oil spilled into the Gulf of Mexico, the Times continues. Under the Clean Water Act, the fines BP is obliged to pay could run as high as $21 billion, according to the Times.

When the dollar amount is finally settled (which is expected to happen in late February, 2013), the way it will be dispersed goes as follows: a) 35% will be divided up equally between the five states along the Gulf of Mexico; b) 30% is to be used for "…Gulf ecosystem restoration activities" that are put in place and authorized by the newly formed "Gulf Coast Ecosystem Restoration Council"; c) 30% will be divided among the five Gulf states based on "…shoreline impact, oiled shoreline distance from the Deepwater Horizon rig and coastal population" (each of the 5 states must submit detailed plans as to how they plan to use this money); and d) 5% of the BP fines supports "marine and oil industry research" (Schleifstein).

The response to a massive oil spill like the Deepwater Horizon is necessarily enormous and expensive, according to The Times-Picayune in New Orleans. Journalist Mark Schleifstein reports that 7,000 vessels were involved in the cleanup and as of December, 2012, 339 miles of shoreline along the Gulf of Mexico still remain oiled and "…subject to further evaluation or cleanup operations" (Schleifstein, 2013). Days after the Deepwater Horizon spill, there were 1,100 miles of oil-coated beaches and wetlands along the Gulf.

In addition to the fine BP paid (as mentioned above), BP has also paid $6.7 billion in "economic claims through the Gulf Coast Claims Facility" and has paid $1.1 billion through the "settlement program overseen by the U.S. District Court in New Orleans" (Schleifstein).

Whether or not other energy companies will be frightened away by the huge fines and other sanctions levied on BP remains to be seen, albeit Shell Oil and other oil companies are gearing up to drill in the Arctic Ocean, which is seen as very risky business notwithstanding that global climate change is melting ice and making access to this wintry area more accessible to vessels.

Counter Arguments to the need for Oil and Gas Exploration and Production

Forbes magazine columnist Christopher Helman asserts that American's energy bills are lower simply because more natural gas is available, and hence fracking "is worth the risk" (Pinckard). Here is Helman's position:

"Society already benefits tremendously from cheaper, more plentiful American oil and gas. Thanks to fracking, lower natural gas prices already save consumers

$100 billion a year -- far more than any crumbs the federal government might want to dole out. What's more, the energy industry doesn't need the government's help when it comes to investing in energy infrastructure or research and development. This year American oil and gas companies will make well over $100 billion in capital investments, with Chevron and Exxon-

Mobil alone accounting for $70 billion. Thanks to fracking, the United States

can become not only energy independent of the rest of the world (oil will still|

be a global commodity with prices set on the world market) but definitely more energy secure. Fracking saves us money; fracking creates jobs; fracking reduces greenhouse gas emissions. God bless fracking" (Pinckard, p. 2).

Robert Chase is professor and chair of the Marietta College Department of Petroleum Engineering and Geology, and he accepts that "fracking is not without risk," but he insists that the "…risk must always be measured against the rewards" (Pinckard, p. 2). The rewards are "undeniable" Chase explains. By developing shale gas and oil reserves in Ohio and around the country will "…create economic opportunity" and as a side benefit it will help get America off foreign oil (Pinckard, p. 2).

The American Petroleum Institute (API) is, as part of its message, in advocacy for additional oil drilling and fewer regulations. In its "Energy Security" section on its website, the API insists that if policy allows, America could provide "100% of U.S. liquid fuel needs with increased Biofuels development and the implementation of four straightforward policies" (API, 2012). Those four polices are: a) giving energy companies access to U.S. oil and natural gas reserves "…that are currently off-limits"; b) returning to the Gulf of Mexico and changing rates to pre-moratorium levels "at a minimum"; c) "Resisting calls of imposition of unnecessary new regulatory requirements on oil and natural gas development"; and d) approval of the Keystone XL pipeline (API).

Conclusion

The thesis of this paper is that serious new environmental regulations are needed, for the reasons identified in the literature provided. There is absolutely no doubt that currently the world (and the U.S.) need to produce enough oil and gas to assure that industry and communities have enough electrical power and enough fuel for homes and cars. And those who see the need for heavier, stronger regulatory constraints on the industry are certainly up against public relations powerhouses like the API and the energy companies (Chevron, ExxonMobil), who can produce slick television ads that propagandize the energy pitch. "God bless fracking" indeed! How absurd. And how ridiculous it is for the API to call for resisting "unnecessary new regulatory requirements" when the environmental disaster from the Deepwater Horizon blowout is still a long way from being cleaned up. President Obama is right to open up areas for gas and oil exploration where it is proven to be safe. But any deep water drilling in the Arctic Ocean should be delayed until it is proven that an oil spill could be handled efficiently, which in fact may be impossible to prove. And if it can't be proven beyond a reasonable doubt, then the oil companies that are so eager to punch holes deep under the ocean to suck out the last drops of oil should begin to get into the renewable resource business (which some are, in token ways). Ultimately this writer sees a future where decentralized solar photovoltaics are installed on homes and businesses; people and companies will be able to provide their own electrical power, and if energy companies are smart and visionary, they will be selling and installing those solar collectors instead of risking the environment and wildlife by insisting on drilling for oil in dangerous places.