Offshore Oil Drilling in the U.S. Arctic, Part Three: Concerns and Recommendations





Offshore Oil Drilling in the U.S. Arctic, Part Three: Concerns and Recommendations

By Nicholas Cunningham, July 19, 2012



This article is the third of three in a series on Offshore Oil Drilling in the U.S. Arctic.

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On February 17, 2012, the U.S. Department of Interior (DOI) approved of Shell Gulf of Mexico Inc.’s Oil Spill Response Plan (OSRP), the last major hurdle to allowing Shell to move forward with offshore oil drilling in the Chukchi Sea.[i] In theory, Shell has developed a plan to guard against the environmental fallout of a hazardous incident, including a well blowout. Shell has safety vessels standing by, oil collection equipment on hand, and technology ready to drill a relief well in the event it needs to stop a blowout.

The reformed Department of Interior believes Shell has adequately demonstrated safety preparedness and response, ensuring against another environmental crisis comparable to the BP/Deepwater Horizon incident in 2010. However, Shell’s OSRP is unproven. It does not fill the fundamental gaps that pervade the regulatory structure of offshore oil drilling, nor does it ensure against a catastrophic blowout.  Very little has changed since the blowout in the Gulf of Mexico – there have been only minor reforms to environmental and safety oversight and no legislative action to address the root causes. Also, the science on Arctic ecosystems remains insufficient, and the effects of such a spill are unknown. Before offshore oil drilling commences in the Arctic, these problems need to be addressed.

CONCERNS

Environmental Sensitivity and Risks to Marine Ecosystems
The Chukchi and Beaufort Seas are home to a diverse array of marine life, including salmon, herring, walrus, seals, whales, and waterfowl.5 Additionally, the Chukchi Sea is home to higher occurrences of benthic marine fauna relative to other Arctic habitats.6 Scientific understanding of these ecosystems and the anthropogenic effects on them, are both not yet sufficiently understood.

Oil drilling in the marine environment has been shown to have deleterious effects on the marine environment. Evidence suggests that noise from seismic surveys conducted during oil exploration damage acoustic animals such as whales, which can ultimately lead to fatalities if within close proximity.[ii] While whales can generally alter migration patterns to avoid such dangers, an increase in industrial activity may push whales further away from preferred habitats, potentially damaging feeding or spawning patterns. Increased tanker traffic associated with higher oil exploration and production will worsen noise pollution in the Chukchi and Beaufort Seas.

Additionally, the impacts of hydrocarbon releases in the marine environment have been shown to cause detrimental impacts on reproductive health, immunological and neurological functioning, as well as higher incidences of mortality for marine wildlife.[iii] Contaminants from oil and gas drilling are also believed to travel higher up on the food chain, ultimately having cascading effects for marine ecosystems. Shell’s 2012 exploration plans include drilling exploratory wells in the Chukchi Sea, where bowhead whales migrate to during the spring months.[iv]

wildlife north slope-1.jpgThe National Wildlife Federation released a report in April 2012 detailing some of the scientific findings of the effects on the Gulf of Mexico from the Deepwater Horizon incident. An estimated 523 dolphins were reported stranded in the oil spill area, 95% of which were dead.[v] These strandings are four times the historic average. The Gulf of Mexico is also the spawning grounds of the Bluefin Tuna, and contact with oil may have reduced juvenile Bluefin Tuna by as much as 20%.[vi] These are only a few examples of the damage that can be done due to an oil discharge. While scientific evidence suggests drilling will damage the marine environment, the full impacts are not well understood, which will be discussed further below.

Lack of Science on Arctic Ecosystems
Ultimately, the effects of a very large oil spill on the marine environment in the Chukchi and Beaufort Seas are unknown. Since oil production in the Arctic thus far has been limited, impacts have not been thoroughly studied.[vii] Moreover, even the effects of the Deepwater Horizon blowout are so far unknown; the full effects will require years of careful scientific study.

The lack of scientific evidence presents critical concerns about further oil and gas development in the Arctic. The U.S. Geological Survey released a report in June 2011, detailing the gaps in scientific knowledge on the effects of an oil spill in the Arctic.[viii] In particular, the USGS report notes that “[n]umerous efforts have been unsuccessful at developing a transparent, quantitative, and comprehensive method to assess cumulative impacts.”[ix] The report issued three recommendations, “(1) large-scale synthesis of data and information, (2) enhanced dialog and collaborative science planning, and (3) a more transparent and inclusive planning and decision-making process.”

However, the acquisition of scientific knowledge on the Arctic has been relegated to a secondary priority when oil and gas development are in question. When BOEMRE submitted the supplemental environmental impact statement to comply with the court order that allowed Lease Sale 193 to proceed, BOEMRE ostensibly agreed that science should guide permitting decisions, but its submission allowed Shell to move to the next phase of permitting. Oceana, a marine conservation group, criticized BOEMRE and its SEIS, noting that despite submitting additional forecasts on the impact of a “very large oil spill” on the environment, the models were simply conjecture. [x] Literally nothing has changed about the general lack of scientific knowledge that exists on effects of Arctic ecosystems from oil drilling.

Inherent Risk of Deepwater Drilling
Offshore oil drilling is a highly complex and technologically advanced industrial activity. The Deepwater Horizonblowout demonstrated that despite innovative technology, drilling is inherently a risky operation and safety is not absolutely certain. The problems with drilling safety are compounded in the Arctic. Shorter days, harsh weather, presence of ice and lack of infrastructure are just some of the additional problems in the Chukchi and Beaufort Seas that do not exist in the Gulf of Mexico. Aware of these risks, Shell has only been given legal permission to drill during the warmer months of July to October.[xi]

Additionally, lessons learned from the Deepwater Horizon blowout have not translated into increased safety for offshore oil and gas drilling. As of mid-April 2012, French oil and gas firm Total was still struggling with a weeks-old gas leak off the coast of Scotland.[xii] A massive natural gas leak continues to flow uncontrolled, sparking concerns that if ignited, a massive explosion could occur. Total has begun to drill a relief well to kill the leak. Also, Chevron Corp. faces up to $22 billion in environmental damages in Brazil, for allowing 3,000 barrels of crude oil to leak into the ocean off the coast of Rio de Janeiro in November 2011.[xiii] Executives are potentially facing time in prison. Shell is also facing litigation in Nigeria for its accident at its Bonga offshore oil facility in December 2011. Fifty-five local communities in Nigeria impacted by the oil spill are filing a case against Shell for spilling 40,000 barrels of oil into the ocean.[xiv] While the industry would claim that drilling operations have grown much safer since the Deepwater Horizon and that these are isolated incidents, they merely demonstrate that offshore oil drilling remains inherently risky.

Inadequate Resources for Regulatory Oversight
Regulatory oversight is critical for ensuring safe offshore operations. Inspections of drilling equipment and operations were woefully inadequate. The newly reconstituted BOEMRE vowed to increase inspections and allocate more resources to oversight. However, oversight remains inadequate. Oceana noted in a new report that only one-quarter of the inspectors needed to effectively oversee the Gulf of Mexico have been hired.[xv]Additionally, inspections of platforms actually declined by 13% from 2010 to 2011.

Moreover, a lack of safety culture within the industry and the pursuit of cost cutting to enhance profits have exacerbated risk. Records of BP’s oil spill response plan submitted to the Department of Interior show a careless approach to safety. According to the National Commission on the BP oil spill, the designated lead person for oil spill response on BP’s application had been deceased for several years before the submission.[xvi]  Also, BP listed seals and walruses as animals that could be affected by an oil spill. Since seals and walruses do not live in the Gulf of Mexico, the error proves that BP must have literally copied an application from a different drilling project.[xvii]

Unproven Oil Spill Response
While the technology used in deepwater oil extraction has dramatically improved over the last several decades, oil spill response has remained largely unchanged. Although the U.S. government has setup several bodies [xviii]to address oil spill response and recovery, there has been little innovation in oil spill response.

In the event of an oil spill, response and cleanup operations involve oil containment, skimming, and even burning. These are techniques that have not changed since the Exxon Valdez spill in 1989.[xix] Shell has included similar operations in its oil spill response plan for the Arctic.

Moreover, confusion reigned during the response to the blowout in the Gulf of Mexico. Under the Oil Pollution Control Act of 1990, the “responsible party” (BP in this case) plays an active role in responding and controlling the oil spill. This created confusion as the Coast Guard was forced to alternately cede control and take the lead at different points in the response.

In the Arctic, the situation is unchanged. Shell has planned to use skimming for oil spill containment, and a “capping stack” to contain a well, similar to one used in the BP response. The Government Accountability Office noted in a report in February 2012 that these technologies could face technical and logistical problems in the Arctic. If a blowout were to occur at the end of drilling season in October, surface ice could prevent an effective response.[xx] Also, ice near the seafloor could prevent the use of the capping stack to contain the well. Despite Shell’s plan to have oil spill response equipment and vessels ready to respond, poor infrastructure and the lack of redundant equipment call into question their readiness.[xxi]

RECOMMENDATIONS

Based on the problems identified above, Arctic drilling plans should be suspended until the multiple gaps can be closed. The following recommendations should be considered to address these issues:

Congress should codify enhanced regulations by the Department of Interior
The Department of Interior took several steps in the aftermath of the Deepwater Horizon blowout, implementing rules to address drilling safety and technology. In particular, the Interim Drilling Safety Rule required higher technology standards for the blowout preventer and the blind shear rams, as well as other technical and safety requirements. The Workplace Safety Rule established performance-based standards for the workplace, including safety protocol, management practices, and environmental safeguards to address the safety culture onboard drilling rigs.

Both of these rules have addressed some safety and operational gaps. However, the longevity and permanence of these rules is uncertain, as executive initiatives can easily be undone in subsequent administrations. Were an administration more favorable to oil drilling to assume office, these rules could be scrapped. To address this, Congress should codify these rules into law, effectively shielding them from political whims.

More resources should be allocated to BOEM and BSEE
Effective regulatory oversight requires the resources to do so. Inspections of oil rigs remains inadequate, and more resources to BSEE are needed. Industry safety culture may not change on its own, and only rigorous oversight will ensure technical and operational standards are being complied with. Also, BOEM should be allocated more resources to enhance review and oversight of lease applications. The oil industry has shown a pattern of submitting lease applications with false or incomplete data while still receiving regulatory approvals. More resources are needed to bolster oversight.

A high-level commission on Arctic science should be established
The effects of oil spills on the marine environment are still not well understood, particularly in the Arctic. While exposure to oil spills damages many species of marine life, the full effects on the broader ecosystems remains unclear. A high-level commission to study the ecosystems in the Arctic should be setup, and its charter should include studying the effects on the marine environment of an oil discharge in the Chukchi and Beaufort Seas. The results could be used to determine the best course for permitting oil drilling leases in the Arctic.

Federal resources should be dedicated to oil spill response
Oil spill response technology and techniques have not kept pace with drilling technology. As offshore oil operators move further into deepwater, oil spill response has remained largely unchanged for decades. To ensure oil spills can be contained, innovation is needed in oil spill response. The Interagency Coordinating Committee on Oil Pollution Research (ICCOPR) was setup under the Oil Pollution Act of 1990 to conduct research on oil pollution, but only recently began a program on spill response. It currently lacks sufficient resources to drive innovation in oil spill response. Congress should allocate federal resources to the ICCOPR to boost oil spill response research.

Offshore oil drilling in the Chukchi and Beaufort Seas should be suspended until other recommendations are implemented
As noted above, despite advancements in technology, offshore oil drilling is inherently risky. Drilling in new frontiers, such as the Arctic, presents additional risks that do not exist in warmer regions. Until safety can be assured and the effects of oil on the marine environment are scientifically understood, oil drilling in the Chukchi and Beaufort Seas should be put on hold.

CONCLUSION

Shell will begin exploratory drilling in the Chukchi Sea in the summer of 2012, marking the beginning of a new era in offshore oil drilling. The Arctic represents the last great frontier for oil exploration, with a potentially large prize for those companies willing to invest in the region and brave the harsh Arctic elements. However, risks abound. The Deepwater Horizon blowout demonstrated the dangers of offshore oil drilling and the lack of oversight of an industry that has repeatedly cut corners to boost profits. The National Commission on the oil spill convincingly detailed the gaps that exist in the regulatory regime, but little has been reformed. Without robust regulatory oversight, one cannot be assured the problems onboard the Deepwater Horizon will not be repeated in the Chukchi and Beaufort Seas.  Moreover, the lack of scientific understanding of the ecosystems in the Arctic suggests the magnitude of the impacts of oil drilling and a potential oil discharge is unknown. Until these issues can be resolved, offshore oil drilling in the Chukchi and Beaufort Seas should not move forward.


[i] U.S. Department of the Interior. (2012, February 17). BSEE Issues Approval for Shell Chukchi Sea Oil Spill Response Plan. Washington DC.
[ii] Laboratory of Applied-Acoustics. (2012). Sons de Mar. Retrieved April 10, 2012, from
[iii] Huntington, H. (2009). A Preliminary Assessment of Threats to Arctic Marine Mammals and Their Conservation in Coming Decades. Marine Policy, 78.
[iv] MarineBio. (2002). Bowhead Whales. Retrieved April 10, 2012, from MarineBio web site:http://marinebio.org/species.asp?id=278
[v] National Wildlife Federation. (2012). A Degraded Gulf of Mexico: Wildlife and Wetlands Two Years Into the Gulf Oil Disaster. NWF. 4.
[vi] Ibid. 5.
[vii] Huntington, H. (2009). A Preliminary Assessment of Threats to Arctic Marine Mammals and Their Conservation in Coming Decades. Marine Policy, 79.
[viii] Holland-Bartels, L., & Pierce, B. (2011). An Evaluation of the Science Needs to Inform Decisions on Outer Continental Shelf Energy Development in the Chukchi and Beaufort Seas, Alaska. Washington DC: USGS.
[ix] Ibid.
[x] Oceana. (2011, August 18). Final Supplemental Environmental Impact Statement Released for Chukchi Sea Lease Sale 193. Retrieved March 26, 2012, from Oceana web site: http://oceana.org/en/news-media/press-center/press-releases/final-supplemental-environmental-impact-statement-released-for-chukchi-sea-lease-sale-193
[xi] Shell (May 2011). Bird Strike Avoidance and Lighting Plan Chukchi Sea, Alaska. 1. http://alaska.boemre.gov/ref/ProjectHistory/2012_Shell_CK/revisedEP/AppendixI.pdf
[xii] Urquhart, F. (2012, April 19). Total gas leak: No marine contamination found near Elgin platform.news.scotsman.com, http://www.scotsman.com/news/environment/total-gas-leak-no-marine-contamination-found-near-elgin-platform-1-2240907#.
[xiii] Millard, P., & Brasileiro, A. (2012, April 4). Chevron Brazil Suits Double to $22 Billion With New Claim.Bloomberg News, pp. http://www.businessweek.com/news/2012-04-03/chevron-sued-for-another-11-billion-on-brazil-oil-spill
[xiv] Amaize, E. (2012, March 27). Bonga spill: 55 communities sue NOSDRA, Shell. Vanguard, pp.http://www.vanguardngr.com/2012/03/bonga-spill-55-communities-sue-nosdra-shell/.
[xv] Oceana. (2012). Offshore Drilling Reform: Report Card 2012. Washington DC: Oceana.
[xvi] National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling. (2011). Deep Water: The Gulf Oil Disaster and the Future of Offshore Drilling. 133.
[xvii] Ibid. 133.
[xviii] The Interagency Coordinating Committee on Oil Pollution Research (ICCOPR) was created under the Oil Pollution Act of 1990 and its purpose was to establish a comprehensive federal research program for oil pollution. Also, under the same legislation, the Oil Spill Recovery Institute (OSRI) was established, which was another multiagency advisory board for oil spill response and recovery.
[xix] Ibid. 133.
[xx] Government Accountability Office. (2012). Interior Has Strengthened Its Oversight of Subsea Well Containment, but Should Improve Its Documentation. Washington DC: GAO. 23.
[xxi] Ibid. 24.