Most of you know me as supportive of responsible oil and gas development, including the offshore, as part of a comprehensive energy strategy. By developing our own oil and gas resources, along with conservation, we can extend our decline curve to give us time to develop alternate sources of energy including wind, bio, solar, and, yes, nuclear. Development of the deepwater is a key piece of this strategy, but the blowout of BP's Mississippi Canyon Block 252 well has set development of that key area back for months, if not years, and for good reason. More important, though, is that BP's disastrous blunder has made the likelihood of a permanent ban on drilling in new areas possible, if not a certainty. You'll recall that new offshore development virtually everywhere but the Gulf of Mexico was shut down after the huge oil spill off of Santa Barbara in 1969. Fear of oil in the water was reinforced by the Exxon Valdez disaster in 1989. President Obama was the first president since the Valdez to propose opening new areas for exploration. Less than 2 months later, he was rewarded for his courage with a big oil sludge pie from BP.
Not surprisingly, the White House announced this morning that the President is extending the new moratorium on deepwater development for 6 months, pending the report of the commission that he announced last week. I personally don't think that is enough time, because I believe that several new technologies need to be developed and standardized. First, all BOPs (blowout preventers) must be modified to allow entry into the well through means other than the riser from the rig. If this feature had been required on the Transocean Horizon BOP, a couple of weeks could have been saved that were spent fabricating the kill manifold and re-piping the choke and kill lines to take mud. Second, reliable deepwater oil containment that is immediately deployable must be developed, tested, and standardized. Third, new, very stringently enforced regulations must be developed and implemented focused on drilling safety and reliability, along with more environmentally safe remediation techniques.
BP is well known in the industry for its Masters of the Universe persona, especially since it took over Amoco, always confident that it could go "where no one had ever gone before". Clearly, this over-confidence also pervaded BP's contractors, such as Transocean and Halliburton, fed by their continued success that was a result of hard work, technical prowess, and, as we know now, more than just a little bit of luck. Unfortunately, when the luck ran out, BP's vulnerable underbelly became visible to everyone. As is becoming apparent from testimony in multiple hearings in Louisiana and Washington, bad judgment, bad decisions, and complacency combined to cause the blowout that took 11 lives, destroyed thousands of square miles of eco-system, and severely damaged the economies of the Gulf Coast states. As if we needed any further evidence that something was clearly amiss before the blowout, BP company man, Robert Kaluza, has refused to testify today, taking the fifth to avoid incriminating himself. This is only going to get uglier as we get to the bottom of these investigations, and indeed, even the life of BP itself could hang in the balance.
So. When you start paying $4 for gasoline again when our supply half way around the world gets cut for some reason out of our control, you can thank two entities: The US government for not establishing a comprehensive energy policy decades ago, but especially our friends at BP, who singlehandedly set the offshore oil and gas industry back 50 years.
More on The Daily Hurricane Energy page.