Memorandum submitted by Greenpeace
1. INTRODUCTION
1.1
It is becoming increasingly evident that we need
to end our dependence on oil. Easy to reach oil has virtually
run out. International oil companies are having to take greater
risks in more extreme environments to maintain oil supplies at
the levels of demand from them we have come to expect. If we change
now, we not only avoid the destruction and associated emissions
from obtaining this difficult-to-reach oil, but we start to create
a cleaner, energy secure world with less pollution, and a forward
looking economy. The urgency with which we need to control carbon
emissions and the decline in easily accessible oil means that
the world is at a crossroads in which society must make a choice
between clean energy or a continuing dependence on oil. Our taxes,
instead of being used to prop up oil companies, could be used
to start moving us beyond oil now. This is the only long term
solution to the connected problems of oil supply and climate change.
1.2 This race for difficult to reach oil not
only threatens some of the world's most delicate ecosystems but
it seriously undermines efforts to fight climate change. Producing
oil from these new sources is up to three times more energy intensive
than from conventional sources. 1.3 Not only is this seriously
damaging to the local environment and to the climate, but it also
makes little long-term economic sense Continuing our dependence
on oil is hindering the transition to a low carbon economy that
we urgently need to make.
2. DECREASING
ACCESS TO
EASY OIL
2.1 In the 1960s, International Oil Companies
(IOCs) had full access to around 85% of global oil reserves while
today that access has declined to around 6%.1 The decline
primarily stems from rising resource nationalism2 in
oil producing countries. The exhaustion of existing oil fields,
primarily in the North Sea and the USA, that for the past three
decades provided the main oil resource for IOCs, has also diminished
these companies' reserves.3
2.2 Faced with these ever increasing restraints
on access to new resources, the IOCs have been forced to develop
the technology to enable them to access the difficult oil. Ever
deeper offshore production has become increasingly commercial
in the past decade and is now a key component of these companies'
oil production and reserves.4 In the coming decade,
the IOCs plan to push into the offshore Arctic5, develop
deeper and more widespread tar sands resources6 and
drill deeper in waters than ever before, for example in Brazil7
and also in UK8.
2.3 These "frontier" oil resources
are risky, expensive and destructive. They require more energy
per barrel to produce, increasing the climate impacts of oil use.
As we have seen recently in the Gulf of Mexico, when they go wrong
they can be extremely difficult to control, spilling oil into
the environment for months. Despite industry claims to the contrary,
they are unnecessary, will not make oil cheaper and do not adequately
address energy security concerns. They may however, keep the IOCs
in business, for the short term at least.
3. IMPACTS OF
THE GULF
OF MEXICO
OIL SPILL
3.1 The Deepwater Horizon disaster resulted in
the deaths of eleven people and oil gushing into the Gulf of Mexico
for 87 days before it was stopped. It is the biggest oil spill
in US history and may be second only to the destruction of the
Kuwaiti oil fields by Saddam Hussein in 1991 in terms of global
oil spill events.9 Recently, it is estimated that 4.9
million barrels of oil leaked into the Gulf as a result of the
explosion.10
3.2 It is still too early to quantify the full
extent of the environmental, social and economic damage caused
by the oil spill but it is clearly of huge consequence. Although
it is 48 miles (77 kilometres) from land, currents and winds have
carried the oil ashore from Texas in the west to Florida in the
east.11 It could yet find its way to the east coast
of Florida and beyond via the Gulf Stream.12
3.3 Some marine scientists have expressed concern
that the huge plume of oil and gas, spread throughout the water
column from 5,000 foot below to the surface, may create giant
oxygen-deprived dead zones as oil consuming microbes proliferate
around the plume using up all the available oxygen.13
3.4 The impact on fisheries, wildlife, both coastal
and marine, and tourism and recreation industries in the region
will likely be felt for decades to come. There are concerns that
the presence of so much oil in the marine ecosystem is killing
certain species while encouraging others to proliferate, with
serious implications for the entire food web.14
4. A DISASTER
WAITING TO
HAPPEN?
4.1 The difficulty of completely stopping a blown
out well at 5000 foot below sea level has become startlingly clear
with the multiple failed attempts made at Macondo.15
The ultimate solution, the drilling of relief wells, takes months.
The low temperatures and high pressures present at these depths
make speedy and effective mitigation very difficult16.
Some of the dangers of working at these extreme depths were highlighted
to the US Minerals Management Service (MMS) and other industry
bodies by experts a number of times in recent years. But the warnings
appear to have been dismissed. There is a clear danger that the
warnings will be dismissed in the UK as well.
4.2 A presentation to the Society of Petroleum
Engineers in February 2003 warned that MMS procedures for offshore
blowout containment dated back to 1990 and did not consider operations
in water deeper than 1,500 feet.17 The author
posed the question of whether the chances of a blowout increased
with water depth and concluded that the "the odds are
not in our favour".18 The plans for controlling
blowouts in the UK context are no better. The government recently
released oil spill response plans submitted by BP setting out
how they would respond to an oil spill in wells in UK waters.
In this plan, BP admit that - "the oil spill consequences
of a catastrophic failure of a deep sub-sea well head, either
due to equipment failure or accidental damage, have never been
considered in detail."19
4.3 BP's disaster in the Gulf of Mexico and the
story of how warnings were ignored,20 illustrates the
choice facing society as we move into the twighlight era of the
oil age. If we continue to allow our demand for oil to grow despite
the increasing difficulty and cost of supplying it, we face escalating
risks with escalating consequences. Managing these at the best
technological level at the very least requires increased costs.
However, the expense of tighter safety regimes and procedures
for deepwater production is something BP and the industry as a
whole has fought successfully against for years.21
5. TO WHAT
EXTENT
Is the existing UK safety and environmental regulatory
regime fit for purpose?
5.1 Safety lessons have not yet been learned
from the Deepwater Horizon incident - for the simple reason that
the official investigation into the cause of the disaster has
not yet been published. BP's own investigation, published on 8
September, identified a whole series of failures, both human and
technological.22 But the report is widely seen as an
attempt to spread blame from BP to its contractors, as a possible
precursor of BP's legal strategy; its focus is not on tightening
the regulatory regime in order to prevent future accidents.
5.2 The UK Government has commissioned a review
of the offshore drilling safety regime which is due to report
later this year. However, within weeks of the blowout in the Gulf
of Mexico it had completed an "emergency review", on
the basis of which it has declared the regulations "fit for
purpose" and rejected calls for a moratorium. It has doubled
the rate of inspections,23 but only from one to two
per year, and increased the number of inspectors from six to nine.24
5.3 The Health and Safety Executive reports annually
on the offshore industry's safety record, and this year issued
a stern warning over the increase in both serious accidents and
spilled oil.25 It labelled the industry's performance
"not good enough", and Steve Walker, head of the offshore
division, commented: "I am particularly disappointed, and
concerned, that major and significant hydrocarbon releases are
up by more than a third on last year. This is a key indicator
of how well the offshore industry is managing its major accident
potential, and it really must up its game to identify and rectify
the root causes of such events".26
5.4 The HSE has issued BP with a total of seven
"notices of improvement" for a single project at Schiehallion
in the West of Shetland.27 In offshore inspection records
released to the Financial Times under the Freedom of Information
Act, all but one of BP's five North Sea installations inspected
in 2009 were cited for failure to comply with emergency regulations
on oil spills and rules on regular training for offshore operators
on how to respond to an incident.28
5.5 Greenpeace believes the Government's response
to the questions raised by the Gulf of Mexico disaster is totally
inadequate and is calling for a moratorium on new drilling, following
the lead of the US and Norway, and supported by Germany and the
European Commission.29 Greenpeace believes that pressing
on with licences and permits to drill in deepwater, without waiting
for the lessons from Deep Water, is unlawful.
6. WHAT ARE
THE HAZARDS
AND RISKS
OF DEEPWATER
DRILLING TO
THE WEST
OF SHETLAND?
6.1 The West of Shetland region is home
to diverse and abundant wildlife. Any spill would be highly like
to cause harm to these delicate ecosystems.
For example, West of Shetland is home to:
¾ Endangered
Fin and Sei whales, vulnerable Sperm whales, as well as Killer,
Humpback, Minke and Long-Finned Pilot whales.
¾ Several
species of dolphin and porpoise and three species of seal.
¾ 48 species
of seabird, including Fulmars, Manx Shearwater, European and Leach's
Storm Petrels.30
6.2 The area off the coast of Shetland also contains
two "special areas of conservation" (SACs) - Darwin
Mounds, designated for its cold water corals, and Wyville Thompson
Ridge, proposed for its stony reef species and bottle nose dolphins.31
These areas are designated SACs because of their significance
to European biodiversity.
6.3 Oil spilled in the cold waters off Shetland
would naturally disperse more slowly than the oil in the Gulf
of Mexico, and microbial dispersants would be less effective.
This means it could cause greater damage to wildlife, as it would
remain in thicker slicks for longer.
6.4 Sea birds are particularly at risk, as they
are very sensitive to both internal and external effects of oil,
and spend a lot of time on or near the surface of the sea. Oil-coated
birds can suffer hypothermia, dehydration, drowning and starvation,
and become easy prey.32
The impacts of a spill are obvious in their impact
on surface living animals but more significant damage may take
place in the water columns and on the sea bed. These are more
difficult to study but no less significance to the ecosystem.
The Secretary of State Huhne has himself acknowledged
in parliamentary debate on 14 June 2010 that an oil spill West
of Shetland "would be an absolutely enormous environmental
disaster".
7. IS DEEPWATER
OIL AND
GAS PRODUCTION
Necessary During the UK's Transition to a Low
Carbon Economy?
7.1 A transition to a low carbon economy is likely
to be undermined by deepwater oil and gas production in the UK.
The assumption that the global economy will sustain oil prices
on an inexorable upward curve - and prop up the UK economy - is
misguided. High oil prices can cause a slowdown in economic activity
and thereby suppress oil demand.33
7.2 Countries such as China and the US are already
reducing oil dependence.34 The US is beginning to address
the gross inefficiency in its transport system but still has a
long way to go. However, even these first steps have caused a
significant revision of future projections for oil demand. With
more concerted government action these forecasts could be revised
further.35
7.3 If the UK pursued more aggressively an energy
policy that truly addresses climate change and oil dependence,
it would impose serious risks on new deepwater production in UK
waters. Indeed, addressing climate change is impossible without
aggressively addressing oil consumption.
7.4 Current industry predictions for deepwater
production growth do not account for the action necessary to limit
the concentration of carbon in the atmosphere to ensure that global
average temperatures rise no more than 2 degrees C. To achieve
this crucial goal we will need policies first that constrain the
growing oil demand but then shrink significantly.
7.5 The IEA 2009 annual report36 clearly
outlined the choice facing the world regarding energy use and
climate change. The IEA presented two scenarios, the Reference
Scenario and the 450ppm scenario. The Reference Scenario projects
energy use and GHG emissions on the basis that no new government
policies aimed at reducing GHG emissions come into force; in other
words business as usual. In this scenario oil demand grows from
about 86 million b/d in 2010 to 105 million b/d in 2030.
The IEA states:
"But these Reference Scenario trends have profound
implications for environmental protection, energy security and
economic development. The continuation of current trends would
have dire consequences for climate change. They would also exacerbate
ambient air quality concerns, thus causing serious public health
and environmental effects, particularly in developing countries".37
"
Continuing on today's path, without new policies,
would mean rapidly increasing dependence on fossil fuels and continuing
wasteful use of energy, taking us towards a concentration of greenhouse
gases in the atmosphere in excess of 1,000 parts per million (ppm)
of CO2-equivalent. This, the outcome of the Reference
Scenario, would almost certainly lead to massive climatic change
and irreparable damage to the planet".38
7.6 The IEA's 450ppm Scenario explores the implications
of stabilising atmospheric concentrations of GHGs to avoid the
catastrophic consequences of the Reference Scenario. This scenario
sees fossil fuel consumption and its associated GHG emissions
peaking by 2020.39
7.7 It is certainly possible to go further than
the IEA suggests. For example, in the US Senator Jeff Merkley
drafted a plan to cut US oil demand by 50% by 2030 entirely based
on technologies that are available for use today.40
Pursuing this comprehensive suite of policies to cut oil demand
globally could undermine the push into frontiers such as the deepwater
west of Shetland.
7.8 This would however require stronger, more
aggressive emissions regulations and efficiency policies than
are in place today. Achieving a stable climate, reducing oil demand
and stopping the growth in frontier oil are all linked by polices
and actions that need to be taken by governments not just in the
UK.
7.9 The imperative to control GHG emissions and
the decline in easily accessible oil requires a new approach.
These conditions present policy makers with a choice: either to
perpetuate an unsustainable supply based approach by pursuing
increasingly expensive and polluting sources such as deepwater
oil, or to constrain demand for oil through a combination of vehicle
efficiency improvements, a shift to hybrid and electric vehicles,
greater support for public transport and changes in spatial planning
that reduce the need to travel. The latter option is the only
one that provides a long term solution to both the oil supply
problem and climate change.
7.10 Chris Huhne, the Secretary of State for
Energy and Climate Change, has said the UK will become a "dead
end economy", facing spiralling risks and costs, if it remains
economically, financially and technically dependent on fossil
fuels.41 Scrapping dangerous and dirty oil projects
and diverting support to renewables will help to protect tax payers
against future oil tax shocks.
8. TO WHAT
EXTENT WOULD
DEEPWATER OIL
AND GAS
RESOURCES CONTRIBUTE
TO THE
UK'S SECURITY
OF SUPPLY?
8.1 Increasing the UK's security of supply depends
upon reducing demand for oil and gas. Transforming our transport
system is crucial to reduce our dependency on oil; over three
quarters of petroleum products used in the UK are used in the
transport sector.42
8.2 It is also critical to cutting GHG emissions:
as noted by the Committee on Climate Change (CCC), domestic transport
emissions have increased by 9% between 1990 and 2006, and in 2008
accounted for 21% of GHG emissions in the UK and 22% of carbon
emissions.43 Emissions from international aviation
have been growing much faster still, more than doubling in the
same time period.44
8.3 Virtually all CO2 emissions in
the transport sector come from burning petroleum products (the
exception being the tiny fraction from electric rail, tram and
underground systems). The majority of transport emissions come
from road transport (69%), with aviation (22%) and shipping (7%)
contributing most of the remainder.
8.4 Action will be needed to tackle emissions
from all types of transport, and different solutions will be appropriate
for different modes. But there are certain cross cutting principles
which ensure that emissions are reduced. Greenpeace advocates
a hierarchy of principles for the transport sector that emphasises
of demand reduction:
¾ Reduce
the need to travel and the distance travelled (e.g. by localising
services).
¾ Encourage
a switch to the mode of transport that produces the lowest carbon
emissions.
¾ Harness
and develop clean technologies that reduce emissions from each
mode of transport.
8.5 Demand management is vital because under
a business as usual scenario, demand for transport is forecast
to continue to grow, offsetting any gains in efficiency (as has
happened in the past).
9. CONCLUSION
Our profligate use of oil, together with the commercial
pressures on international oil companies, are driving oil exploration
and production to more technically challenging and environmentally
fragile places, where the consequences of technical failure are
hard to manage and potentially very damaging. There have been
warnings about the dangers of doing this but these have not been
heeded. UK should not allow its marine habitat of European significance
to come under such a threat but adopt an alternative strategy
of demand reduction which leads to greater long-term security
as well as essential reduction of climate change emissions.
REFERENCES
1. Arthur D. Little Management Consultants, 2010.
New business models for the international oil company in
Prism, 7 January 2010.
http://www.adl.com/prism.html?&view=365 Available
following free registration.
2. The practice in oil exporting states of limiting
IOC access and asserting state control over the development of
oil resources.
3. Dr Vlado Vivoda, 18 August, 2009. Resource
Nationalism, Bargaining and International Oil Companies: Challenges
and Change in the New Millennium. Australian Institute of
Energy.
http://aie.org.au/Content/NavigationMenu/OilGasSIG/InterestingUsefulArticles/ISA09—Vivoda.pdf
4. See for example annual strategy updates of
the major IOCs. BP's 2010 strategy update cited deepwater as one
of three major growth areas post-2015 and listed BP as the leading
deepwater company. BP also announced plans for two new tar sands
projects in March 2010, on top of the one it already has in development.
Shell's 2008 strategy update showed that around 30% of its Total
Resources are Canadian tar sands, while another 7% lie in deepwater.
Similar situations pertain for Chevron, Exxon and Total.
5. Financial Times, 7 July, 2010, UK
group begins oil drilling in Arctic
www.ft.com/cms/s/0/2755cb2c-892b-11df-8ecd-00144feab49a.html
6. See for example, Pembina Institute, 17 March,
2010, Drilling Deeper: the in situ oil sands report card.
www.oilsandswatch.org/pub/1981
and Friends of the Earth Europe, 10 May, 2010. Tar sands: Fuelling
the climate crisis, undermining EU energy security and damaging
development objectives.
www.foei.org/en/resources/publications/pdfs-members/2010/tar-sands-fuelling-the-climate-crisis-undermining-eu-energy-security-and-damaging-development-objectives/at—download/file
7. Journal of Petroleum Technology, April
2010. Presalt propels Brazil into oil's front ranks. Society
of Petroleum Engineers.
www.spe.org/jpt/print/archives/2010/04/13Brazil.pdf
8. http://www.guardian.co.uk/business/2010/sep/15/bp-deepwater-drilling-north-sea
9. Journal of Petroleum Engineers, Ibid.
10. http://www.washingtonpost.com/wp-dyn/content/article/2010/08/02/AR2010080204695.html
11. www.usatoday.com/news/nation/oil-spill-map.htm
12. http://newmexicosupercomputer.com/pdf/nmcac-oceancurrents-sim.pdf
13. Samantha Joye, 9 June, 2010, Testimony
submitted to the Subcommittee on Energy and Environment, US House
of Representatives.
http://democrats.science.house.gov/Media/file/Commdocs/hearings/2010/Energy/9jun/Joye—Testimony.pdf
14. Huffington Post, 14 July, 2010. Gulf
Oil Spill Altering Food Web Scientists Say, Long-Term Impact Unknown.
www.huffingtonpost.com/2010/07/14/gulf-oil-spill-altering-f—n—645607.html
15. BBC News, 15 June, 2010. Stopping the
oil interactive guide. www.bbc.co.uk/news/10317116
16. http://www.boemre.gov/tarprojectcategories/deepwate.htm
17. Ray Tommy Oskarsen, presentation to the Society
of Petroleum Engineers and International Association of Drilling
Contractors 2003 Conference, 21 February, 2003. Recent Advances
in Ultra-deepwater Drilling Calls for New Blowout Intervention
Methods. Available at:
www.pe.tamu.edu/schubert/public—html/DOE—SLB%20short%20course/21.1%20Well%20Control.ppt
18. Ibid.
19. The Telegraph - "BP Oil Spill:
Deepwater oil blowout in North Sea not considered by BP",
8 September 2010.
http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/7987873/BP-oil-spill-Deepwater-oil-blow-out-in-North-Sea-not-considered-by-BP.html
20. Robert Campbell, Reuters, 14 June, 2010.
Special Report: Deepwater spills and short attention spans
www.reuters.com/article/idUSTRE65D3Z220100614
21. ABC News, 30 April, 2010. BP Fought Safety
Measures at Deepwater Oil Rigs
http://abcnews.go.com/Blotter/bp-fought-safety-measures-deepwater-oil-rigs/story?id=10521078
22. BP - "Deepwater Horizon: Accident Investigation
Report", 8 September 2010
http://www.bp.com/sectiongenericarticle.do?categoryId=9034902&contentId=7064891
23.DECC press release - "UK increases North
Sea rig inspections", 8 June 2010
http://www.decc.gov.uk/en/content/cms/news/pn10—067/pn10—067.aspx
24. The Guardian - "North Sea oil
rigs will face tougher environmental scrutiny after BP spill",
8 June 2010
http://www.guardian.co.uk/business/2010/jun/08/huhne-environment-checks-oil-bp-deepwater
25. HSE press release - "Offshore warned
over not good enough safety statistics", 24 August 2010
http://www.hse.gov.uk/press/2010/hse-offshorestats.htm
26. Ibid.
27. http://platformlondon.org/documents/offthedeepend.pdf
page 10
28. Financial Times - "BP cited for
safety lapses in the North Sea", 15 September 2010
http://www.ft.com/cms/s/0/e2ac5bb6-c03a-11df-b77d-00144feab49a.html#
29. Speech by Commissioner Oettinger at the European
Parliament plenary session , 7 July 2010
http://europa.eu/rapid/pressReleasesAction.do?reference=SPEECH/10/368
30. Joint Nature and Conservation Committee -
"The distribution of seabirds and marine mammals in the Atlantic
Frontier, North and West of Scotland", 2000, P5
http://www.jncc.gov.uk/pdf/part1.pdf
31. Joint Nature and Conservation - Marina Natura
2000, September 2005, P63
http://www.jncc.gov.uk/PDF/comm05P10.pdf
32. Effects of Maritime Oil Spill on Wildlife
- Australian Government
http://www.amsa.gov.au/Marine—Environment—Protection/National—plan/General—Information/Oiled—Wildlife/Oil—Spill—Effects—on—Wildlife—and—Non-Avian—Marine—Life.asp
33. James D. Hamilton, Causes and Consequences
of the Oil Shock of 2007-08. "Brookings
Papers on Economic Activity". Available at:
http://dss.ucsd.edu/~jhamilto/Hamilton—oil—shock—08.pdf
34. Arthur D Little, February 2009. The beginning
of the end for oil? Peak oil: a demand-side phenomenon? Available
from
www.adl.com/reports.html?&no—cache=1&view=356
following free registration
35. For more details on this, please see our
previous report: Shifting Sands: how a changing economy could
bury the tar sands industry:
www.greenpeace.org.uk/files/pdfs/climate/shifting-sands-bpshell-rising-risks-update-2.pdf
36. International Energy Agency, World Energy
Outlook 2009.
37. International Energy Agency, World Energy
Outlook 2009 Fact Sheet.
www.iea.org/weo/docs/weo2009/fact—sheets—WEO—2009.pdf
38. International Energy Agency, World Energy
Outlook 2009. p.168.
39. Ibid p.195.
40.http://merkley.senate.gov/imo/media/doc/Senator%20Merkley%20%20America%20Over%20a%20Barrel%200614101.pdf
41. Lib Dem press release, 27 July 2010
http://www.libdems.org.uk/news—detail.aspx?title=Coalition—sets—out—ambitious—climate—change—policies&pPK=98557ab3-503e-4f5c-b8ce-ee1371b6cd2a
42. See Digest of UK Energy Statistics, Chart
3.4:
www.decc.gov.uk/assets/decc/Statistics/publications/dukes/309-dukes-2010-ch3.pdf
43. DECC, UK final 2008 GHG emissions , 2 February
2010.
44. www.defra.gov.uk/sustainable/government/progress/national/3.htm
September 2010
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