With gas prices hitting $4 per gallon in some parts of the country, Americans want more energy production. But while they are eager for more energy they also insist that it be produced safely.
One year ago today, the biggest oil spill in U.S. history occurred in the Gulf of Mexico. The spill at the Macondo well fractured America’s trust in the offshore oil program and the entire energy industry.
As we reflect upon the first anniversary of that spill, the undisputed reality is that regulation and oversight had not kept up with the staggering scale and technical capability of the offshore oil industry. Both government and industry needed an overhaul. The public, understandably, wants to have a high degree of confidence that another blowout will not occur, but more importantly, that another massive spill will not be managed as it was after failure to cap BP's Macondo well in the Gulf.
Clearly, the technology and systems needed for prevention and containment require significant improvements in order to ensure safe, responsible energy exploration in Gulf waters. With extraordinary cooperation between industry, government and service companies, and investments of over $1 billion, vastly expanded response systems to protect safety and the environment are now in place.
One year after the spill, now it's time to let the thousands of idled Gulf area workers and the Americans employed in related businesses nationwide get back to work producing the energy our country needs.
Offshore oil producers have taken the lessons learned from the BP spill and responded by creating two mutually supportive containment systems. One of those systems is an advanced system developed in mid-February by an industry consortium called the Marine Well Containment Company. Its containment system can deploy within 24 hours of an incident, and can handle blowouts in 8,000 feet of water and capture 60,000 barrels of liquid and 120 million cubic feet of gas per day.
The government has done its part as well, implementing recommendations from those with industry practice and technological expertise into tougher regulations for well control and sub-sea containment. Both of these industry-supplied containment systems meet new, tighter safety requirements.
These developments in drilling safety have been welcome news. Over the past few weeks, regulators within the Department of the Interior have issued a handful of deepwater drilling permits for the Gulf of Mexico, and officials say they expect to issue more drilling permits in the coming weeks and months.
Although a positive development, the pace and frequency of permitting must be increased in order to take thousands of workers off the unemployment ranks. A recent study by Louisiana State University Professor Joseph Mason found that some 13,000 jobs and $800 million worth of wages have been lost in the Gulf region since last summer’s moratorium on offshore oil production. National job losses are estimated at 19,000, and national wage losses at $1.1 billion.
During my tenure as Assistant Secretary of the Interior in the early 1980’s, the U.S. offshore oil industry was similarly mired in controversy. The oil industry and its fiercest critics were both charting a treacherous path; the former suggesting that Interior open all federal waters to leasing with little or no regulation, and the latter requiring that offshore oil and gas operations meet a virtually impossible zero-risk standard. The challenge then was to strike a compromise for responsible production of American energy.
That challenge is again before us, but it isn’t impossible. The public is quite correct to insist that drilling operators should be under vigilant, competent and timely supervision by regulators who understand the risks and mitigation of these complex operations. Industry and government cooperation has produced the makings of a more effective regulatory structure.
However, government must invest in high quality personnel for industry oversight to ensure that this new response system operates smoothly, sustaining production while mitigating the risk of a major accident but also reducing the impact in the unlikely event another should occur. Underfunding the agencies that are responsible for offshore drilling safety would be a false economy for everyone involved. Jobs will be lost, production will fall, and the environment will not be safer.
Although the Department of Interior and the Bureau of Ocean Energy Management, Regulation and Enforcement face no easy task in clearing the backlog of permits and in establishing a timely and transparent permitting process, they mustn’t ignore the huge steps the industry has taken in the Gulf of Mexico to raise standards in the areas of well design, containment and oil spill recovery capability. And they mustn’t forget that the Gulf of Mexico is an important source of domestic energy, accounting for more than a quarter of U.S oil production and 11 percent of the nation’s natural gas supplies. In fact, we produce more oil from the Gulf than we import from all Middle East nations combined.
This could change, however, if regulators, continue to slow-walk permitting in the Gulf. Then, the U.S. will be forced to import the energy we need, possibly an extra 88 million barrels of oil per year by 2016 with an $8 billion price tag.
Moving oil by tanker has far greater environmental risks than off-shore production. Furthermore, other nations considerably less “pro-business” than the U.S. don’t hesitate to develop their offshore resources because doing so yields enormous economic and security benefits. It is within our economic, political and moral best interests to produce energy resources Gulf of Mexico. Unfortunately, unnecessary obstacles borne from politics and bureaucracy are standing in the way.
Notwithstanding last year’s tragedy, America’s offshore energy producers have an outstanding safety record, averaging 44 barrels of spilled oil per year out of every 14 million barrels produced from 1970-2009. Even as we continue to upgrade technology and regulatory standards, which will take time, we should use everything we have learned from this event to get our offshore oil drilling program and the American jobs it supports back to work.
Robin West is founder, chairman and CEO of PFC Energy and former Assistant Secretary of the Interior for Policy, Budget and Administration overseeing US offshore oil policy from 1981-3.
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