INSIGHT: Gulf spill clogs offshore energy and climate bill

06 May 2010 17:06  [Source: ICIS news]

By Joe Kamalick

The Gulf rig disaster sinks US offshore and climate policiesWASHINGTON (ICIS news)--As the Gulf oil spill threatens to foul US coastal beaches and fisheries, it has already chilled any prospect for expanded offshore energy development - and it has driven a stake through the heart of climate legislation.

Various environmental and other interest groups have renewed calls for re-imposition of the broad offshore oil and gas drilling ban that barred energy development in some 85% of US outer continental shelf (OCS) regions for nearly 30 years.

That OCS drilling ban - which affected US offshore regions along the nation’s Atlantic and Pacific coasts and for much of Alaska’s coastline - was allowed to expire in late 2008 when record-high domestic gasoline prices made the congressional and presidential drilling moratoria politically untenable.

The US petrochemical industry and downstream chemical makers - along with a broad coalition of other manufacturing interests - had lobbied long and hard for an end to the offshore drilling bans. The US chemicals sector in particular is heavily dependent on natural gas, much of it produced offshore, as a feedstock and energy fuel.

However, Greenpeace executive director Philip Radford said the Gulf oil rig accident demonstrated that “The only way to prevent human, economic and environmental tragedies like the BP Deepwater Horizon disaster is to re-enact the moratorium on offshore drilling and to replace dirty, dangerous fuels with clean energy”.

The Center for Biological Diversity (CBD) said that the Gulf catastrophe dispels claims that offshore drilling is safe.

“The Gulf of Mexico disaster has shown with tragic clarity the absurdity of the claims by the oil industry and politicians beholden to that industry that offshore oil and gas development is safe,” said Miyoko Sakashita, CBD’s oceans programme director.

“We call on President Obama and Interior Secretary Ken Salazar to reinstitute a moratorium on new offshore oil leasing, exploration and development on all our coasts,” Sakashita said.

CBD has moved to file suit against the US Department of the Interior (DOI) to force reversal of the department’s recent approval for Shell Oil to begin exploratory drilling in the Beaufort and Chukchi Seas off Alaska. The centre said DOI’s approval was illegally predicated on Shell’s assertion that a large spill such as a blowout is extremely rare.

“Such a position is now clearly untenable,” said Rebecca Noblin, Alaska director for CBD.

The Sierra Club's executive director Michael Brune said the Gulf rig explosion and resulting oil spill “is a turning point for America”.

“Sadly, we are now witnessing one of the worst environmental disasters in American history,” Brune said, “and we will be dealing with the impacts of BP’s drilling rig collapse for decades to come.”

“We need assurance that this won’t happen again,” he added. “We need to restore the federal moratorium on drilling off America’s most fragile coasts immediately.”

Several coastal state senators, among them Bill Nelson of Florida and Frank Lautenberg and Robert Menendez, both of New Jersey and all Democrats, have called for a new offshore drilling ban. They also demanded that President Barack Obama suspend his already modest offshore development plan, and the White House quickly complied.

California Governor Arnold Schwarzenegger (Republican) also was quick to withdraw his two-year-old support for renewed oil and gas drilling off his state’s coastline, citing the Deepwater Horizon tragedy and the threat to Gulf coastal communities.

“That will not happen here in California, and this is why I’m withdrawing my support” for offshore drilling, Schwarzenegger said this week.

The American Petroleum Institute (API) cautioned that the Deepwater Horizon disaster should not trigger a new offshore drilling moratorium.

“In the wake of this accident, many people are understandably concerned about the safety and environmental risks associated with offshore drilling,” said API spokeswoman Cathy Landry.

“But we should be careful not to rush to judgement on this issue until we’ve learned what went wrong,” she added.

“It would be unfortunate if this accident were used as an excuse to roll back the gains we have made in finding new ways to explore and develop our own energy resources,” she said.

Landry said that the US simply could not afford to abandon its offshore energy resources.

“This incident does not change the reality of our energy future,” she said. “The demand for energy is growing. American needs domestic sources, and oil and gas will be part of America’s energy future for decades to come.”

“We must safely and responsibly pursue domestic energy production,” she added.

But the political tide may well have turned against renewed offshore development.

The nearly three-decades-long ban on drilling off the US East and West Coasts and in most of Alaska’s territorial waters was in part triggered by the 1969 blowout on Union Oil’s Platform A off the coast of Santa Barbara, California, that fouled 30 miles of coastline.

The moratoria were sustained by the 1989 Exxon Valdez tanker accident that spilled millions of gallons of crude into Alaska’s Prince William Sound.

Kert Davies, research director for Greenpeace in the US, said the Deepwater Horizon accident will have the same sort of impact as the Exxon Valdez disaster nearly 20 years ago.

“This now resets the discussion,” Davies said. “We’ve been lucky, and the offshore industry has been expounding on how safe it is and selling this to Florida and Virginia and other coastal states - but this tragedy reinforces the reality that these sorts of major accidents are inevitable.”

“This is clearly another marker, another Silent Spring,” Davies said, referring to the 1962 book by Rachel Carson that is widely credited with launching the environmental movement.

A Washington energy analyst said the Gulf rig disaster should not bring an end to renewed offshore exploration and development in the areas previously under moratoria.

“When there’s a major plane crash, we don’t react by shutting down commercial aviation,” he said. “We find out what went wrong and make things better, but we don’t abandon commercial aviation because of an accident, however tragic.”

But on Capitol Hill, and especially in an election year, reason and logic hold little ground against the tidal wave of political perception. Expanded US development of its outer continental shelf regions is probably dead for the near future, perhaps for years, even for decades more.

Ironically, the Deepwater Horizon tragedy also has put a final torpedo to the already foundering Senate climate change bill.

The compromise energy and climate change legislation that Senators John Kerry (Democrat-Massachusetts), Joe Lieberman (Independent-Connecticut) and Lindsey Graham (Republican-South Carolina) have hammered out - but not yet introduced - is described as a three-legged stool.

In the compromise, Senate Democrats were to accept incentives for renewed US nuclear power development and the limited Obama administration offshore oil and gas proposals in exchange for a mandatory cap on and steady reduction of the nation’s emissions of greenhouse gases (GHG).

The nuclear and offshore energy legs of the compromise were to bring enough Senate Republicans on board to support the climate bill and give it the needed 60-vote majority in the Senate.

But now, Florida’s Senator Bill Nelson and Ben Cardin of Maryland, both Democrats, are saying they won’t vote for any climate bill that includes offshore oil and gas authorisations, much less incentives.

If expanded OCS exploration and development is cut from the climate and energy bill, it will not win sufficient Republican votes, and the two-legged stool will fall over.

Many US energy industry and petrochemical sector officials declined to comment on the likely fate of climate legislation in the wake of the Gulf rig disaster.

But Lawrence Sloan, president and chief executive of the Society of Chemical Manufacturers and Affiliates (SOCMA), said the Deepwater Horizon accident kills climate change for the rest of this year.

“This issue will further complicate any consensus to bring Republicans to the table on cap-and-trade, at least for the remainder of this year, especially with mid-term elections looming,” Sloan said.

“I just don’t see anyone stepping up to the plate and insisting on new offshore drilling as part of a comprehensive new energy bill,” he added.

And, once the November elections are over, the US House and Senate are likely to have fewer Democrats and more Republican members - and more opponents to any sort of draconian federal emissions caps.

“This is the proverbial nail in the coffin of climate change legislation,” said Greenpeace’s Davies. “A lot of people were declaring it dead anyway, even before Deepwater Horizon.”

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Paul Hodges studies key influencers shaping the chemical industry in Chemicals and the Economy


By: Joe Kamalick
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