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Egypt has discovered a massive deepwater natural gas field. China is looking to be a contender in Big Oil. BP, with it's spectacularly bad safety record, is lined up for that 21,000-foot Egyptian money-maker. China is still working out it's plan of action, but it's even money BP will be champing at the bit to get in on that opportunity. Predicting what those nation's safety standards and protocols will be is anyone's guess. But England, long in the game, is finally taking a good hard look at the implications of the Deepwater Horizon disaster and the Oil Spill Commission's report on it.
The Energy and Climate Change Select Committee heard evidence on deepwater drilling following BP's accident in the Gulf of Mexico[...] Its members reported "serious doubts" about whether the current equipment to deal with oil leaks would work in the harsh environment west of the Shetland Islands, where Chevron and BP plan to drill in deep water.
And it found that companies have been "cutting and pasting" their plans for disasters without tailoring their responses to individual wells.
The committee, chaired by Tory MP Tim Yeo, also criticised the industry for lacking board members with environmental experience and "responding to disasters rather than anticipating them".
The U.K.'s Energy and Climate Change Committee has, in their recent report, some notable recommendations on offshore drilling:
2. Oil company boards lack members with environmental experience. The industry should take steps to remedy this and the Government should encourage them to do so.
3. The UK regulatory framework is based on flexible, goal-setting principles that are superior to those under which the Deepwater Horizon operated.
4. Nevertheless, we are concerned that the offshore oil and gas industry is responding to disasters, rather than anticipating worst-case scenarios and planning for high-consequence, low-probability events.
5. It is imperative that there is someone offshore who has the authority to bring a halt to drilling operations at any time, without recourse to onshore management.
We urge the Government to seek assurances from industry that the prime duty of the people with whom this responsibility rests is the safety of personnel and the protection of the environment.
6. Given that the failure of the single blind-shear ram to fire on the Deepwater Horizon’s blowout preventer seems to have been one of the main causes of the blowout of the Macondo well, we recommend that the Health and Safety Executive specifically examine the case for prescribing that blowout preventers on the UK Continental Shelf are equipped with two blind shear rams.
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8. We believe that the Government must ensure that the UK offshore inspection regime could not allow simple failures - such as a battery with insufficient charge - to go unchecked.
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10. We recommend that the Government should discuss with the industry and unions what further steps are needed to prevent safety representatives from being or feeling intimidated into not reporting a hazard, potential or otherwise.
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12. We recommend that the Government monitor any changes in the US regulatory regime to see if - in the light of the response to the Deepwater Horizon incident - the US establishes a new gold-standard of regulation, as the UK and Norway did after the Piper Alpha tragedy.
13. The Bly Report - BP’s internal investigation into the Deepwater Horizon incident— does not contain a root-cause analysis of the events that led to the blowout of the Macondo.
We urge the Government not to rely extensively on the Bly Report, given the controversy surrounding the responsibility for the incident and the design of the Macondo well.
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16. Given the high costs of the incident in the Gulf of Mexico, we believe that the OPOL (Offshore Pollution Liability Association) limit of $250m (£m) is insufficient. We are concerned that the OPOL provisions only cover direct damage and also that the precise definition of "direct damage" is unclear.
While membership of OPOL remains voluntary — despite it being a pre-requisite for a licence — its voluntary nature weakens its legality and the control and deployment of its funds. We believe this lack of legal control will allow polluters to claim that damages to biodiversity and ecosystems are indirect, and therefore do not qualify for compensation.
17. We conclude there needs to be clarity on the identity and hierarchy of liable parties to ensure that the Government, and hence the taxpayer, do not have to pay for the consequences of offshore incidents.
We conclude that any lack of clarity on liability will inhibit the payment of compensation to those affected by an offshore incident. We recommend that it should be a requirement of the licensing process that the licensee prove their ability to pay for the consequences of any incident that could occur.[...]
18. We recommend that the Government consider whether compulsory third-party insurance should become a necessary requirement for small exploration and production companies.
19. We acknowledge that oil spill response plans often share procedures for dealing with oil spills. There is some concern that in the past this may have led to a culture of copying-and-pasting rather than the production of site-specific plans which recognise the drilling environment and the risk of high-consequence, low-probability events.
We recommend the Government re-examine oil spill response plans to ensure that this is not the case.
20. We recommend that the Government draw up clear guidelines on the sub-sea use of dispersants in tackling oil spills, based on the best available evidence of both their effectiveness and their environmental impact.
21. We welcome the development of new capping and containment systems capable of dealing with a sub-sea blowout. However, we feel that the absence of these devices before the Macondo incident is indicative of the industry’s and the regulator’s flawed approach to high-consequence, low-probability events.
22. There are serious doubts about the ability of oil spill response equipment to function in the harsh environment of the open Atlantic in the West of Shetland.
23. We conclude that - as it stands - the EU Environmental Liability Directive is unlikely to bring to account those responsible for environmental damage caused by an offshore incident such as happened in the Gulf of Mexico.
We recommend that the Government works with the EU to ensure a new directive is drawn up that follows the polluter-pays principle and unambiguously identifies who is responsible for the remediation of any environmental damage.
It would have been nice to see such powerful recommendations coming from the OSC.
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A strange bit of news from Chevron, on working in the North Sea:
An oil spill from a deepwater blowout near the Shetland Islands could reach the coastlines of Scotland, eastern England, Norway and Greenland, according to a company which began drilling there in October.
Chevron, one of the world's largest oil companies, made a worst-case forecast of the impact caused by a spill of 77,300 barrels per day lasting just 14 days.
When the Department of Energy and Climate Change (Decc) allowed Chevron to drill the Lagavulin prospect on 30 September, it said that the secretary of state, Chris Huhne, was "satisfied that the project is not likely to have a significant effect on the environment". Decc told the US company that the application did not need to be accompanied by an environmental statement and did not order a separate assessment.
In earlier correspondence with Decc, Chevron also said it was "likely" that the impact of a spill on whales and dolphins in the area would be limited because "given their good swimming abilities, relative intelligence and nomadic behaviour, some avoidance behaviour could be expected".
How's that for a laissez-faire attitude? "Oh, I'm sure they'll be just fine."
Needless to say, Greenpeace was unimpressed.
"The UK government remains entirely unwilling or unable to learn any lessons from Deepwater Horizon. The government has given the green light to a project that could cause oil to coat the protected salt marshes and sand dunes of the north Norfolk coast off the back of an unfinished computer model run by a company who says we shouldn't worry about the effect of oil on whales and dolphins because they're clever enough to swim out of the way of a spill. This bizarre state of affairs shows precisely why there needs to be a moratorium on new deep-sea drilling off our coasts."
Now that computer modeling -- that brings us to some very interesting points, which Chevron very kindly provided for us.
The plan admits that spill modelling is not effective for oil spilt in deep waters nor when an "ongoing spill results in a continually replenished slick which has the potential for an ongoing beaching event". It also does not account for potential "jetting" from a well bore.
Based on the modelling it said that if attempts to cap the well or disperse the slick were not successful, more than 233,000 barrels "could be expected to beach on ... western Norway and the Shetland Islands. In smaller quantities, oil could also reach the Orkney Islands, Faroe Islands and even eastern Iceland and eastern Greenland with potential to reach eastern England and western Denmark."
"It is important to emphasise that spill modelling is just one tool used in preparation for spill response. In the event of an actual spill the direction of oil travel would be determined much more accurately by visual observation using spotter planes and this would be used as the basis for actual deployment of personnel and equipment.
To their minimal credit, Chevron added:
Chevron's first and greatest focus is on prevention – we take a conservative approach in exploration well design[...]. There would have to be a failure of all the barriers that are in place to prevent loss of containment – our west of Shetland wells have been drilled with multiple barriers and Lagavulin is no exception."
Decc said Chevron's environmental statement was approved after consultation with regulators and appropriate agencies: "Chevron adequately addressed the potential impact of an oil spill in its environmental submissions."
Still, it raises the questions not only of the stark limitations of computer modeling but -- far more significantly -- just how much computer models are depended upon to predict spill effects and anticipate spill response. Anyone out there want to do a research project?
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Here in the Colonies, the OSC's report has had some interesting fallout.
BP Plc’s gain in trading early today was premature because the operator made most of the mistakes that doomed its Macondo well in the Gulf of Mexico, said William Reilly, co-chairman of a U.S. panel investigating the disaster.
"The market reaction was premature," Reilly said today in a Bloomberg Television interview. "The centrally responsible company in the Macondo blowout was the operator, BP. There are other companies who are implicated. We are very clear about that. Most of the bad decisions, however, were made by BP or with BP’s approval and acceptance."
An editorial from the U.K. also questioned BP's stock spiking immediately after the Commission's report.
Why such an insouciant reaction to what could hardly have been a more aggressive report into BP's failure to put safety before cost in the Gulf of Mexico? Well, partly because the Commission is political and in the fevered corridors of Washington, a bit of playing to the gallery was to be expected. But more importantly because the conclusions of the report were such that it now looks as if BP's own assessment of the bill it will ultimately face for the Macondo disaster is going to prove realistic.
There is no certainty on that yet, mind you. The outcome of the law suit launched against BP by the US government last month – through which the fines and compensation the oil company must pay will be set – depends on the findings of a separate Department of Justice inquiry into the disaster. In theory, the fine alone could be as high as $21bn (£13bn).
Isn't it possible that the media was played by all those BP and Feinberg claims that BP might pay out only half of the $40 billion it had socked away in preparation of lawsuits and fines? But I digress...
[T]his sort of penalty would only be payable if BP is found guilty of gross negligence. [The Commission's] report, like BP's own inquiry into the accident, stopped short of that. It apportioned blame to a number of companies, including Halliburton and Transocean – the latter is also named in the government law suit against BP – rather than holding the British company solely responsible, and it did not meet the high bar required for a verdict of gross negligence.
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In the eight months since the Deepwater Horizon accident, the hostility against BP in the US has cooled somewhat, at least at the highest levels.
(Clearly, he hasn't been keeping up with Gulf Watchers.)
In succeeding Tony Hayward as chief executive of BP, Bob Dudley will have expected to face some brickbats. But Mr Dudley and his fellow executives will be taking this report on the chin, while privately conceding this affair could have turned out so much worse.
Exxon CEO Rex Tillerson had different objections to the Commission's report. Go figure.
Exxon Mobil Corp's chief executive officer disputed findings from a White House commission that lax industry practices were to blame for last year's massive BP oil spill.
At a conference in Austin on Thursday, Rex Tillerson, CEO of the world's largest publicly traded oil company, sought to insulate Exxon and the industry from blame for the incident, the worst offshore spill in U.S. history.
"I do not agree that this is an industrywide problem[...]"
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"The commission did not investigate the entire industry," Tillerson told reporters. "It seems to ignore years of record of good performance, so I do not agree with that conclusion."
The accident was "a painful reminder" of the harm that can result from failure to uphold performance standards, Tillerson said.
Tillerson pointed to the Exxon Valdez disaster in 1989, which spilled 257,000 barrels of oil into Alaska's Prince William Sound.
"It was a low point for our company, but also a turning point," Tillerson said.
Presumably, what got Tillerson's knickers in a twist were passages in the report like this: "The blowout was not the product of a series of abberational decisions made by a rogue industry or government officials... the root causes are systemic, and absent significant reform in both industry practices and government policies, it might well recur."
A press release from National Audubon Society President David Yarnold seems to sum it up well:
"These are the two words the drillers didn’t want to hear: ‘systemic failure.’ That means Americans have been lied to about the risks, across the board.
"Make no mistake: the report says drillers are unprepared for disasters like this. We don’t, for a minute, believe the industry spokespeople who say even today that this disaster was an isolated instance caused by rogue companies. While BP’s arrogance and corporate ineptitude set all-time lows, all aspects of this broken system need to be addressed.
"The report is clear; the Interior Department is outgunned by the drillers and needs the people and the dollars to police the industry. Audubon urges the White House, Congress, and the oil and gas industry to fund and enact swift and comprehensive reforms.
"A system so riddled with complacency and incompetence must not be permitted to endanger more human lives and precious natural resources. Audubon supports the report’s recommendations and commends the commission for its clear-sighted integrity and willingness to face hard truths."
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Executive Director of the newly-established Gulf Coast Ecosystem Restoration Task Force John Hankinson toured the Gulf Coast this week.
"[...P]reserving a Gulf Coast ecosystemdamaged by decades of erosion and months of crude oil that gushed from a deep-sea well off Louisiana will be an enormous undertaking... [The Task Force] will recommend how to use the heavy fines likely to confront energy company BP[...] - which could potentially run to the billions of dollars - on projects to restore beaches, marshes, water quality and wildlife in Florida, Alabama, Mississippi, Louisiana and Texas.
Louisiana's coast was hit hardest by the spill and also faces large-scale problems from years of erosion that have wiped away 2,300 square miles of coastal wetlands. The losses also have been attributed to the construction of levees, oil drilling, hurricanes and shipping.
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Louisiana lawmakers are working on legislation to make sure 80 percent of the potential fines will be used on restoration efforts. The restoration could include diverting freshwater from the Mississippi River into sediment-starved marshes, pumping mud to build new land, rebuilding barrier islands and planting new marsh. The commission Obama set up to investigate the spill has backed that idea and urged Congress to set aside the money for restoration.
Lawmakers had hoped to pass legislation by the end of the lame duck session, but that didn't happen.
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Hankinson said the task force was on track to come up with recommendations by this October, a deadline established by an executive order that President Barack Obama signed last October. The task force is overseen by Lisa Jackson, the head of the Environmental Protection Agency.
Hankinson, a former EPA regional administrator, spent more than 10 years on the restoration of the St. Johns River system in Florida. Historically, the St. Johns River system was damaged by citrus farming and cattle operations, the draining of marsh land and pollution.
He also worked on the National Estuary Program in the Gulf of Mexico and on a water quality protection plan for the Florida Keys National Marine Sanctuary.
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Those drillers who have always worked in shallow waters are claiming the BP spill has brought unwelcome scrutiny to their part of the industry, which suddenly finds itself facing new regulations.
These companies say they shouldn't have to pay the price for a mistake made by their deep-water brethren. But industry critics contend that the Gulf oil spill has brought about needed scrutiny to all offshore drilling.
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A significant speed bump for operators is a new drill-plan requirement to calculate the worst-case discharge of oil and provide a strategy for killing a blown-out well. Federal regulators returned 101 plans requesting modification in 2010—including 77 since June—compared with 59 such requests in 2009, and just 31 in 2008.
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Companies that operate in shallow water say it is safer than deep water, since the industry has more shallow-water experience, and when something does go wrong, a fix doesn't require remote-controlled submarines.
But environmental groups believe that drilling in shallow water is as risky as in deep. Regan Nelson of the Natural Resources Defense Council pointed to shallow-water blowouts off the coast of Australia in 2009 and Mexico in 1979 that spurted massive amounts of oil into the sea.
"Shallow-water drilling should be under the same amount of scrutiny" as deep-water drilling, Ms. Nelson said.
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BP continues its long trail of half measures and inadequate response by trying to bug out of Louisiana before finishing their clean-up responsibilities there.
State and local officials voiced concerns today over plans of federal officials and BP to turn the responsibilities for mitigating damage to wildlife across the oiled parts of Louisiana's coast over to LDWF. The continued presence of pooled oil, oil saturated boom in areas such as Bay Jimmy and Pass a Loutre Wildlife Management Area (WMA) underscore the need for a comprehensive, long-term plan to rehabilitate the marsh.
"It has been eight months since the Deepwater Horizon oil rig explosion, and five months since the well was capped. While workers along the coast dedicated themselves to cleaning up our shores there is still so much to be done," LDWF Secretary [Robert} Barham said. "BP and federal officials are ready to close up shop and claim the job is done, leaving the state to clean up the mess. We will continue to push for a real resolution, more than just a wait-and-see approach for the miles of Louisiana coastline still oiled. They may have forgotten the impact on our wildlife and our habitat, but we have not."
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Shoreline treatment recommendations (STRs) for areas like Pass a Loutre WMA have been written by contractors for BP, and some have been executed, but rarely to the full extent necessary to restore crucial coastal habitats. For Bay Jimmy, treatment recommended in STRs has yet to begin; state officials are monitoring cleanup operations to ensure they are fulfilled before BP and federal officials pack up shop at the end of February.
Oiled boom, once used to prevent oil from hitting the shoreline also remains in numerous locations, forgotten or lost by contractors charged with their maintenance and removal.
Oiled birds also continue to be recovered by LDWF biologists, including three live Brown Pelicans in Bay Jimmy, and one dead Brown Pelican. Biologists also recovered one oiled, dead Brown Pelican in Pass a Loutre and one oiled, live Killdeer. These birds, which were recovered in the last few days, have increased concerns for continued wildlife contamination if marshes are not properly cleaned.
"We will continue to try to work with BP, their contractors and federal officials to come up with reasonable, effective solutions for treating and restoring our coastline," said Secretary Barham. "But we won't step back while officials pack their bags and leave Louisiana. We're hopeful that we can reach an agreement for the next steps in our recovery plan."
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It's never good news when you talk about the IRS. In this case, it's adding insult to grave injury.
Tax experts said Monday that since the Deepwater Horizon oil spill was not classified as a disaster, BP claims might be taxed at the highest rate.
Have we missed some critical detail? "The Deepwater Horizon oil spill was not classified as a disaster?"
Disaster tax rules do not apply, so tax experts said they are warning people, especially those who received compensation from BP, to be prepared for the tax that they need to pay in the coming weeks.
CPA Ted Stacey said, "If you were paid for lost wages or income, that's going to be ordinary income that is taxed at the highest rate you pay. It could be as high as 35 percent for federal or 5 percent state."
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Gulf resident and artist Deborah Drew has graciously permitted Gulf Watchers to link to six of her paintings done in the wake of the Deepwater Horizon disaster:
Image 1
Image 2
Image 3
Image 4
Image 5
Image 6
All images copyright Deborah Drew
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QUICK HITS:
Latest youtube from Videos for a Healthy Gulf
More BP refinery troubles: BP PLC notified California state environmental regulators in a filing Thursday of its plan to flare excess emissions at a Los Angeles area oil refinery because of an unspecified equipment breakdown.
BP is auctioning off equipment from one of its solar manufacturing plants. So they're giving up on solar? Clearly it's nowhere near as profitable as destroying our oceans and wildlife.
Republicans attempt to stifle action on climate change
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