Politics of US Environmental regulations on drilling, pipelines, refineries - Essay Example

Environmental Studies 7 Nov Politics of US Environmental Regulations on Drilling, Pipelines, Refineries Introduction This paper deals with the subject of oil drilling in the US. Environmental regulations are being outlined, and the latest governmental guidelines and reports are being analyzed. As the reports are based on the changing results of assessment of oil drilling’s environmental impact, there are also introductory remark about drilling procedure and conditions in this paper. In the background part, the overview of the drilling process, oil drilling types, and key environmental considerations is given. It is followed by the analysis of the US oil reserves and resources, with regards to the variety of opinions about them (from optimistic to pessimistic). One of the central issues of the US drilling politics is the regulation of further offshore drilling. In this light, two alternative viewpoints are being examined: the first is “pro-drilling”, advocating the expansion of existing offshore drilling initiatives, based on such arguments as the state energy independence and job opportunities. The second is “pro-regulation”, critical about the progression of offshore drilling and about the impact of oil drilling in general, supported by environmental considerations and economic analysis. Key governmental documents are being examined in connection with these two tendencies. In this paper, we support the sustainable development view that economic and social needs should always be balanced with environmental considerations; that is why, little support is given to the dangerous industrial plans of oil explorations and development, but the existing objections are also being approached cautiously. Oil Drilling Process The Procedure of Oil Exploration and Development Oil resources are found in various environments. They are classified according to these environments into onshore and offshore crude oil resources. This distinction is politically significant, as offshore drilling accounts for most of the US oil recoveries: for instance, in 2009, IHS estimated that deepwater offshore oil discoveries were 6 times bigger (as measured by barrels) than the onshore discoveries (IHS, Role of Deepwater Production in Global Oil Supply). Exploration and development of the onshore crude oil is technically different from that of the offshore oil; hence, they will be described separately. It takes several stages for the oil resource (that is, “the total amount of oil in place, most of which can’t be recovered”) to become the oil reserve, or “the amount of oil that can be recovered economically with existing technology” (Rapier). Roughly sketched, these stages involve: Geologic and geophysical prospecting (the analysis of the potential place for well) Exploratory drilling (making drills, logging, and different analyses of the reservoir) (Centre for Economics and Management of IFP School 69-82) Primary drilling (usually commercially inefficient) (Centre for Economics and Management of IFP School 84) Secondary and tertiary, or enhanced, recovery (Centre for Economics and Management of IFP School 85). Later, the oil has to be separated from gas and water; it also has to undergo other preparatory procedures before being transported for commercial, communal, and industrial use. It is important that scientific exploration of the oil reservoirs also involves drilling; it continues 2 to 6 month and has the success rate (meaning the discovery of profitable reservoirs) of approximately 25% (Centre for Economics and Management of IFP School 76). This means that noise and damage to soil and local ecosystems on the stage of exploration affect 5 times more territory than that for later oil development. Offshore exploratory drilling also requires land use for meteorological and diving stations? (Centre for Economics and Management of IFP School 77). The very recovery of oil from the reservoir is possible due to the difference in pressures, as it is shown on the picture 1 (from Centre for Economics and Management of IFP School 85, fig. 2.16). Most of the world oil fields require additional injections of gas, oil, and other substances (acid for acidizing and propping agents like sand for fracking, or hydraulic fracturing) (Centre for Economics and Management of IFP School 86; 92). The facility typically produces oil 15 to 30 years during which only 30-40% of the total oil in reservoir can be recovered (Centre for Economics and Management of IFP School 83; 87). It is easy to see that oil recovery requires many additional resources, including water and gas (which is not mentioned when politicians talk about gas and oil prices). For the offshore drilling, the procedure is more complicated. Usually, it is manipulated distantly; the recovery facilities are installed on the floating or seabed platform (Centre for Economics and Management of IFP School 77). Since 1990s, most offshore developers in America (such as BP and Shell) deal with ultra-deep oil fields (over 3000 feet below the sea level) (National Commission on the BP Deepwater Horizon 45). Oil drilling occurs in hard physical conditions. The following list is the summary of hazards noted by the National Commission on the BP Deepwater Horizon: Hurricanes (Rita destroyed 66 platforms, and Katrina – 47 ones) (50) High pressures (sometimes more than 10000 PPS) and temperature (above 300 degrees Fahrenheit) (51) Tar and salt formations – most of the deepwater reservoirs lie beneath the level of big salt deposits (43) Raise of methane hydrates (“fire ice”) that can set the wells out of human control (52). In addition, offshore drilling equipment is especially vulnerable because of the contacts with sea water. The underwater currents may change the position (and even damage) the long and light blowout preventers (51); small oil spills (less than 1000 barrels) that account for 97% of total oil spills are caused by minor damages of the pipes due to the rust, and the rust may gradually cause serious leakages (Holing 14-15). Environmental Impacts of Drilling According to the Tribal Energy and Environmental Information Clearinghouse (TEEIC), onshore oil drilling affects the following factors of environment: Level of noise (2 month of blasting that generates the noise from 115 dBA at the source to above 55 dBA at distances 1,800 feet (549 m) to 3,500 feet (1,067 m) Air condition. Contamination with dust, nitrogen oxides, and carbon emissions occurs in the process of drilling; gas flares are also possible; some authors even connect oil drilling with the problem of global warming and the terrifying number of 21.7 billion tonnes of carbon dioxide and 400,000 tonnes of CFCs per year (however, this data is not directly related to the impact of oil development). US Environmental Protection Agency reports the number of 26 MMTCO2E for the specific sector of oil exploration (12.3) (TEEIC) Local biota (which is threatened with land and water pollution, scarcity of water, and “invasive nonnative vegetation”) State of water, soil, and air in relation to hazardous waste disposal (the list includes PAHs, “phenols, cadmium, chromium, copper, lead, mercury, nickel, and drilling mud additives (including potentially harmful contaminants such as chromate and barite”) (TEEIC) State of water (in the process of development, the quantity of water affected by the contact with oil and gas is growing) (Centre for Economics and Management of IFP School 94-95) Radiation level: so-called NORM radionuclides (radium-226, radium-228, and their progeny) may get into water and even soil Land resources: drilling requires increased use of heavy vehicles; pipes and refineries occupy considerably large zones. The most hazardous of underwater drilling additional outcomes are oil spills. The story is not new: 21 major spills were reported as long ago as between 1964 and 1985 (Holing 14). The National Commission on the BP Deepwater Horizon lists such widely known events as the 1969 blowout in Santa Barbara Channel killing seabirds and contaminating 30 miles of the nearest beaches (28); Chevron platform explosion in 1970 (29); finally, the Macondo well blowout in deep water horizon in the Gulf of Mexico that killed sea inhabitants on 40 miles of offshore territory, affecting all the region’s microbes, caused considerable losses in the populations of oysters and rare blue crabs, and exposed “8,183 birds, 1,144 sea turtles, and 109 marine mammals” to the oil spill (National Commission on the BP Deepwater Horizon 178-181). The losses of biota cannot be calculated for sure, as the organisms are also affected by breathing and interacting with other participants of the consumption chain (National Commission on the BP Deepwater Horizon 180). Actually, beyond such catastrophes, oil drilling could be a comparatively safe profitable prospect; however, the risk analysis suggests the similarity between the deepwater oil blowouts and nuclear accidents (Cooke, Ross, and Stern 12) on the ground that the consequences may be of unpredictably large scale and that they come from the very interdependence of the elements of the system (Cooke, Ross, and Stern 5). The safety of oil wells has the following characteristics: (1) there is a rich data history that testifies the possibility of such disasters (126 blowouts in 1971-2006); (2) each of the barriers that protect the sea from spills (“mud, casing, cement, plugs”) may cause the accident if it breaks down; (3) specifically for cement barrier, there have been no improvements in recent years (Cooke, Ross, and Stern 12). Thus, underwater drilling requires deliberate risk management. Specific risk management strategies are also suggested by NATO specifically for pipelines: immediate dealing with minor breakdowns is crucial for the complex systems. Pluvinage and Elwany suggest 3 stages of the development of leak conditions: defect initiation; crack propagation; and final failure (x-xi). This is critical for the long pipelines like Trans-Alaska oil pipe (TAPS) (the length of which is 1,270 km) (Pluvinage and Elwany ix). The US Oil Resources General Information The report of the US Energy Information Administration (EIA) of 2010 has shown an unprecedented growth of proved reserves of gas and crude oil (see picture 2, from EIA, fig. 2), namely, 12,8% (EIA Summary). This increase owes mostly to Texas where horizontal drills and fracking have allowed for higher esteem of proved oil resources. However, as it was stated, resources are not equal to reserves (Rapier), and the estimated outcome of “860 million barrel addition” from Texas seems to be not so promising if we take into account the growing oil consumption: Rapier has calculated that the corresponding reserves (that are actually going to be consumed) are 2-4 million barrels for the Bakken formation and 3.35 million barrels for eagle Ford formation. As for the graph, it is remarkable that onshore oil field discoveries outreach the offshore ones. However, this dimension of the issue is related to the change; as for the stable characteristics of oil development, the US owes considerably more to offshore oil. According to MMS, BLM, and API calculations (see picture 3), offshore resources offer many times more barrels of oil. It seems reasonable to evaluate these resources in relation to the consumption. The figures from EIA (2011) reveal that produces 5,659,000 barrels/day while consuming 18,835,000 barrels/day and importing 8,921,000 barrels/day (EIA Petroleum Statistics). This gives some sense to the politicians’ being troubled about energy independency; at the same time, there is little chance that with such a situation, full independency can ever be reached. Assessment These plain facts were commented in quite different ways. To sum up briefly, there are two main opinions: they will be called “optimistic” and “pessimistic”. The first is influential in official comments about oil resources, which is visible in the way the U.S. Geological Survey Reserve Growth Assessment Team represents its fact sheet 2012-2038: the researchers claim to have recorded 70 onshore fields of oil and gas with the potential of 32 billions of crude oil (Klett et. al. 1-2). The alternative opinion is based on criticism of the institutions that have provided such statistics. Roger Blanchard writes in Energy Bulletin that USGS and MMS (Minerals Management Service) reports of 1995 were misleading about the rise of the offshore oil production, and they are likely to be too optimistic in near future. What is more, this researcher comments upon the problematic issue of Alaska oil fields that this in fact Clinton’s administration that opened them to development. Consequently, the allegations for Alaska initiative for which Bush is notorious are merely political game: they conceal the fact that most of the promising Atlantic resources are depleted, and further exploration demand more and more complex technologies. Thus, the 2 opinions about further exploration are now dominating media: whether the offshore oil development should be continued at the same if not faster pace or it should be strictly regulated due to cost considerations and potential hazards. The former position appears to be based on more or less optimistic view of American oil resources; the latter takes the pessimistic outlook as its stance. Offshore Oil Drilling Debate Pro-Drilling Arguments Spakovsky and Loris have recently criticized Obama’s moratorium on offshore oil development because the companies that had invested in offshore drilling of the Mexican Gulf suffer commercial loss of $1.2 billion or even more. There is some reason in this argument: as it has been shown, oil drilling is a long-lasting project that pays itself off only in the long run (8 years, as Spakovsky and Loris state). This means that when the political course takes the optimistic perspective as a starting point, it makes certain financial plans of development that have to be fulfilled. An interesting case is the set of environmental regulations of petroleum industry implemented by AFPM (American Fuel and Petrochemical Manufacturers). They seem to have coped with all necessary safety requirements (including Clean Air Act and greenhouse emissions regulations), but at the cost of serious profit losses. The “job” and “income” argument is often sounded when it comes to the justification of further offshore oil exploration. An alternative Mitt Romney’s plan of American energy policy calls for the maximum development of “the Gulf of Mexico, both the Atlantic and Pacific Outer Continental Shelves, Western lands, the Arctic National Wildlife Refuge, and off the Alaska coast” as well as shale oil resources and the overhaul of the Clean Water and Clean Air Acts (“Believe in America: Mitt Romney’s Plan for Jobs and Economic Growth”). Romney refers to the facts that less than 15% of the graduates of corresponding programs managed to find their “green” jobs and that more than 10000 jobs were destroyed by Obama’s moratorium (“Believe in America: Mitt Romney’s Plan for Jobs and Economic Growth”). Romney implies that offshore oil exploration will solve these problems. Another frequently cited argument is “energy independency” of the US. For instance, Citigroup Commodities express excitement about the decrease in the US oil import in the following way: The percentage of oil imports as a percentage of domestic demand has fallen from over 60% in 2005 to 45% in 2011. We expect US import requirements to continue to decline, and as the US (including captive Canadian supply) becomes closer to being self-reliant, and the availability of domestic sweet crudes grows on the Gulf Coast, we expect the Brent-WTI disconnect to persist at very high levels… (Citigroup Global Markets Inc. 1) There was one more argument for extensive oil development, namely, that it will compensate the increasing gas prices. Analysts from Media Matters portal have performed a good content analysis regarding this myth; they quote several studies that show the absence of correlation between oil and gas prices (Fong and Theel). Pro-Regulation Arguments Ironically, the most convincing arguments were made by natural forces and later overblown by media. The impact of the Mexican Gulf accident has profoundly influenced the decisions of Obama’s administration. Nevertheless, scientific data also support this media tendency: the National Service Center for Environmental Publications (NSCEP) has issued the full record of the abstracts of its research program for the EPA drilling fluid hazard assessments. More than 100 studies from 1976 to the present are a potent evidence for the hazards of offshore drilling. The National Commission on the BP Deepwater Horizon has extensively described the hazards of oil spills for environment and public health. In addition to the things already mentioned, a map of land loss can be shown here (picture 4 from National Commission on the BP Deepwater Horizon 205, fig.7.4). The calculations by economists are likely to support part of one claim and part of another. Brown estimates that energy security would slightly increase due to the reduction of oil consumption, but it will be slightly reduced due to the increase in imports; the 20% moratorium on offshore drilling is likely to $2 million losses for oil manufacturers, which is not going to threaten the nation’s economy (9). However, Brown supports the view of most businessmen that it is not reasonable to associate the decrease of popularity of the US on the world market with the Gulf incident (10). Oil Drilling and Processing Regulations International Regulations According to the analysis by Zhiguo Gao, the US supports the following international conventions: 1973/78 MARPOL (which treats floating drilling platforms as 400tons ships and thereby prohibits spilling oil and oily mixtures) 1982 Law of the Sea Convention (the set of safety regulations) Climate Change and Biodiversity Conventions which establish the emissions quota and protected areas 1977 Convention on Civil Liability of Oil Pollution Damage Resulting From Exploration for and Exploitation of Seabed Mineral Resources (CLEE) The International Chamber of Commerce (ICC). Guidelines The Oil Industry International Exploration and Production Forum (E&P Forum). The US Regulations Specifically for the US law, Gao observes that there is no clear general national system of regulations, which makes it the subject of political speculations. This seem to be justified by the recent change of Obama’s politics. In 2011, Obama’s administration released The Blueprint for Secure Energy Future that emphasized the development of national resources (at the cost of expanding oil drilling) to reduce import. However, the Mexican Gulf incident has changed the government’s politics; taking into account the report of National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling. (“Deep Water: The Gulf Oil Disaster and the Future of Offshore Drilling”) and the releases from various green initiatives (including Green Peace and 350), Obama came up with the 20% Moratorium on leasing on the Outer Continental Shelf (2011-2012) and the Continental Shelf Oil & Gas Leasing Program for 2012-2017 that proposes 15 offshore oil and gas lease sales, 12 of which are of Mexican Gulf. North Atlantic, Mid-Atlantic, South Atlantic, and Straits of Florida areas have been excluded from the 2010 planned leasing activities. The regulatory institutions are undergoing the process of fundamental change: the regulatory responsibilities of MMS are being passed to the newly created Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE). BOEMRE has already accepted the responsibility for “regulatory concerns legislated in the OCSLA and the Oil Pollution Act of 1990 amendments to the Clean Water Act” and created a new Safety and Environmental Management System (SEMS) (Dagg et.al. 29-30). This means that the regulatory system of the US (as compared to those of European countries) is gradually moving from simply prescriptive to more demanding, with specific limits of oil exploration (Dagg et.al. 30). Alternatives The obvious way of dealing with the problem lies in the reduction of consumption rather than endless race for the supply: Holing asserts that energy efficiency strategies (in housing and the electrical appliances use) could save the amount of energy equal to 45 billion barrels of oil by 2020 (68). Leonard outlines 4 vehicle-related energy saving strategies and 1 fuel-related plan (the use of cellulosic ethanol) (16). He sees the transportation alternative in hybrid-electric vehicles, plug-in hybrid-electric vehicles, and in accepting the 2016 standard of fuel economy (Leonard 9). These 3 solutions require additional analysis of the cost of their implementation: along with the costs for vehicles themselves, there would be a need for drastic infrastructural changes. The fifth of Leonard’s proposal seems to be most reasonable, though also requiring considerable investments in the existing infrastructure: these are improvements in commuting patterns (16-17) with such innovations as telecommuting and the transition to 4 day work week. Those strategies seem to be reasonable in the light of the fact that the alternative energy sources will not be enough for America in the upcoming mid-century. “Energizing America”, a rather optimistic account of the nation’s energy future, predicts that the use of biomass and reusable energy will grow up to 11.4% in 2035 with the 10% decrease in oil energy consumption, but the US will still need some oil energy (33.3%) (24). Conclusions Obama’s recent legislation is rightly criticized for its abrupt turn in the energy policy. However, this turn seems to be beneficial for the US environment: oil drilling, especially offshore oil exploration, should be limited. It is proven not just by the accidents but also (and this is more important) by the damage that is not followed in media so attentively: minor leakages and the cost of onshore development. Two critical (and fully realistic) steps might be taken for the improvement of America’s oil regulations: 1) creation of the integrated national system of institutions and restrictive regulations (the system should be independent from the changing political climate); 2) implementation of energy saving measures in order to reduce oil consumption. The needs of the US economy do not allow for too strict oil drilling regulation; but without regulations at all, the government risks losing control over the situation. Works Cited American Fuel and Petrochemical Manufacturers. Environmental Regulations. 2012. Accessed 7 Nov 2012 http://www.afpm.org/policy-positions-environmental-regulations/. American Petroleum Institute. Energizing America: Facts for Addressing Energy Policy. 16 July 2010. 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