CCES News For You

July 18, 2010

I haven’t yet commented on the BP Gulf Catastrophe. We are now at Day 90 since the initial explosion, and as I write this there is great optimism that the cap appears to be working to stop the oil leak (at least most of it), and that the relief well is ahead of schedule and should end the rupture “permanently” next month. I hope that this good news and being in the midst of summer and taking it easy and vacations does not cause us to forget the incredible issues that the catastrophe has brought up.

This is an environmental catastrophe of great proportions because even if it is isolated to just one coast line and 4 states, it has put to risk our tidal estuary breeding-grounds, many livelihoods, and important food sources. We are hurt by a broader issue here, and that’s our dependence on oil. As we have exhausted the “easy” sources of oil (i.e., the TV/movie images of digging a few feet into the ground and a geyser of oil erupts or “bubblin’ crude”), we find riskier sources of oil that require a greater amount of energy invested to obtain it. While the ratio of energy developed to that invested for the easy sources was often 20:1, we now have projects that are closer to 5:1 (estimated ratio for the Alberta tar shale), not to mention the greater risks of environmental damage.

Another thing that cannot be forgotten is the direct financial cost to BP. It appears that BP will survive this incident, but only because of its vast wealth and profits. The economic burden of this mess, the tens of billions of dollars it will spend to “get it right”, will hurt them temporarily, but not put them out of business. For many other companies, such a disaster would put them out of business.

Therefore, this should be a warning to companies. Plan and invest in prevention of environmental consequences big and small. Invest in contingencies at the ready. Design intelligently with redundant systems to minimize failures. This should teach all companies interested in investing in projects to make profits, that this is a small, wise investment compared to the risk of an unanticipated failure. Environmental risk is real.

From the government’s point of view, the federal government should not allow any new deep water projects until approved plans are in place with multiple-redundant systems to minimize the risk of catastrophies. President Obama says that his is a scientifically-driven administration. Great. Put together right now a commission of the brightest scientists, oil and gas engineers and drillers to determine the risks and develop minimum standards that should be implemented to minimize the chances of such a catastrophe happening. And also require appropriate reporting to demonstrate that such procedures are working and not ignored. The standards should be tested and upgraded periodically because the stakes are critical. Finally, any company doing deep water drilling should post an appropriate bond on projects and have insurance to cover at least this level of disaster. We shouldn’t have to scramble to find money.

Let’s not forget!