UK Deepwater Drilling-Implications of the Gulf of Mexico Oil Spill - Energy and Climate Change Contents


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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