Oil Spill: The Industry Looks to Clean Up

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While the rest of us wait to see whether a brewing storm will bring oil spill containment and cleanup on BP’s spill to a halt—just when the endgame had begun—the oil industry is moving on. Yesterday four of the biggest oil companies announced they were committing $1 billion to build a rapid-response system to cleanup deepwater oil spills in the Gulf of Mexico. The new system—funded equally by Conoco Phillips, ExxonMobil, Shell and Chevron—will be operated by a new non-profit organization, the Marine Well Containment Company, and will include specially designed subsea containment equipment and vessels designed to rapidly store and process spilling oil from a blown well. The idea is that instead of the jury-rigged and improvised response we’ve seen from BP—where solutions like containment ships and caps took weeks to be put in place—this new system would be prefab and ready to respond quickly to any spill. “It’s doubtful we will ever use it, but this is a risk-management gap we need to fill in order for the government and the public to be confident to allow us to get back to work,” Exxon chairman Rex W. Tillerson told the New York Times.

Beyond the fact that it really takes an amazing amount of chutzpah for Tillerson to claim this response system will probably never be used while the industry is actively struggling to end the Deepwater Horizon blowout, the new plan is at least a welcome sign that the oil exploration industry knows it has a problem. It became blindingly obvious during last month’s Congressional testimony of Tillerson and other top oil executives that the industry has no ability to effectively deal with a deepwater well blowout. (In fact, Tillerson said so himself.) During the hearings Representative Edward Markey showed that the oil majors’ response plans to a spill were virtual carbon copies of BP’s—which obviously hasn’t worked out very well—and that they even included to protecting animals like walruses that don’t live in the Gulf of Mexico.”No oil company appears to be better prepared for a disastrous oil spill than BP was,” Markey and Representative Henry Waxman wrote in a letter to the oil majors last month. “Each of the oil companies’ oil spill response plans are practically identical to the tragically flawed BP oil spill response plan.”

Analysts came out in favor of the plan, as energy consultant Raoul LeBlanc told the Financial Times in an interview:

This is the beginning of a real solution. The industry and government have excellent, ready answers to make blow-outs even more rare. But response is difficult — as has been amply demonstrated. And a billion dollars tells us that the companies understand that they still have to create, build, and test equipment that will be able to reliably get the job done quickly.

Of course, energy consultants want the energy industry to get moving again. So is this new response plan a real improvement? It can’t hurt—the companies say that the system, which will take six months set up, will be able to contain spills in water as deep as 10,000 ft. (twice as deep as the Deepwater Horizon rig was drilling) and will be able to capture up to 100,000 barrels of oil a day, with added capacity if necessary. (The BP spill is estimated to be 35,000 to 60,000 barrels a day.) Of course, BP’s own response plan—rubber stamped by the government artist formerly known as the Minerals Management Service—said the company supposedly had the ability to deal with a 100,000 barrel-a-day spill, and we can all see how that’s worked out. Numbers in a plan matter less than the actual ability of the company to respond to the spill—and that means keeping equipment and personnel at the ready, which wasn’t the case before. And of course this new spill response plan will be voluntary, and seems at least partially devised to deflect the Congressional push to strengthen government oversight of deepwater drilling.

Markey, for one, wasn’t terribly impressed

While this proposal’s response time could be quicker than this spill, the proposal these companies are submitting is essentially the current BP cap system and plan for 100 percent collection of oil. This current, ad hoc system erected by BP cannot and should not be the final proposal by these companies. While this could be a rapidly-deployed system, the oil companies must do better than BP’s current apparatus with a fresh coat of paint. The oil companies must also invest more in technologies that will prevent fatal blowouts in the first place.

As the federal government is buffeted by criticism of its deepwater drilling moratorium, it’s clear we need to come to a public agreement on what levels of risks we’re willing to take with offshore drilling. As the BP experience shows, an underwater well blowout will be incredibly difficult to deal with—though having pre-fabricated equipment and meaningful response plans in place before an accident could blunt some of the damage. The oil industry says it’s learning from the Deepwater Horizon. Let’s hope so.