OFFSHORE DRILLING:

Wide-ranging spill scenarios complicate U.S. containment plans

Second of two parts. Click here to read part 1.

After millions of gallons of oil spilled and billions of dollars spent, Mark Cohen figures the United States is ready to handle a spill like the deepwater blowout that fouled the Gulf of Mexico a year ago.

But it's probably not prepared for the one that happened in 1979.

Ixtoc was a nine-month spill off Mexico that spewed 140 million gallons into the Gulf after a drilling platform sank on top of the well.

To researchers like Cohen, vice president of research for the think tank Resources for the Future, it is a symbol of how industry and the Obama administration are racing back to deepwater drilling even though they are still unprepared for other large spills.

"I don't know what the next blowout will look like, but it won't look like the last one," said Cohen, whose environmental think tank did research reports for the presidential commission that investigated last year's Gulf spill. "Neither" of the new spill containment outfits, he said, "is ready to handle Ixtoc."

Whether it is impatience, political pressure or financial constraints, some researchers say the country is making the classic mistake of "fighting the last war" in its spill response plans.

"When you put this picture together, we've pretty well reverted back to where we were before Macondo," said engineering professor Robert Bea from the University of California, Berkeley. Bea joined with the school's Center for Catastrophic Risk Management for a study of last year's Deepwater Horizon disaster. He says it is "premature" to start drilling new exploratory wells in the Gulf without fundamental changes.

Cohen, Bea and the presidential Oil Spill Commission raise several questions that oil companies and the Obama administration struggle to answer, such as:

  • What if there is a spill more than 10,000 feet deep? Offshore rigs already can drill deeper than that, but response companies do not have equipment to contain a blowout at those depths.
  • What if a well collapses underground and oil erupts from the sea floor far from the well? Neither of the two new spill response outfits that operators are depending on have equipment on hand that can deal with such a situation, but federal regulators are still letting them drill.
  • What if the operator, unlike BP PLC in last year's spill, does not have the resources to cover all the spill damages? A smaller company might dissolve into bankruptcy, leaving taxpayers on the hook for billions of dollars.
  • What if there were multiple spills at once? At least in the early stages, the two spill containment organizations plan to use much of the same equipment, leaving little backup if another well ruptures.

Some of those scenarios might seem remote. But, once upon a time, so did a deepwater blowout or an earthquake-and-tsunami combination crippling a nuclear plant.

Industry figures say it is impossible to plan for every possible scenario critics might devise.

"You can always paint a blue-sky scenario that you can't respond to," Owen Kratz, president and CEO of Helix Energy Solutions Group, said in an interview.

Containment options

Kratz's company helped contain the BP spill and has parlayed that experience into becoming one of two containment options for independent Gulf drillers, like Noble Energy Inc. and ATP Oil & Gas Corp. (Greenwire, April 25)

"Is it the ultimate, everything we need? Probably not," he said of his company's technology. "It has to be a living process, and we'll have to keep assessing it and adding it as technology allows."

Such a living process may also depend on research and development being done by other organizations. Kratz notes that his company has developed "a Macondo solution," and its approach is to take proven, existing technologies and find new uses for them.

That research might be expected to come from Marine Well Containment Co. a consortium of global oil majors, organized by Exxon Mobil Corp. Martin Massey, a longtime Exxon Mobil executive detailed to run the new spill response nonprofit, told a congressional committee last week that his organization is set up to adapt.

"I don't mean that we are just prepared for today," Massey said. "But that we are looking to the future. Our members have the know-how, resources and commitment to continually improve the system to meet future industry needs, especially as new technologies emerge."

The American Petroleum Institute is also setting up a "safety institute" to promote standards for spill prevention and response.

"Companies are continually assessing the risks," said Andy Radford, API's senior policy adviser for offshore drilling. "One of the main incentives is the huge investments and the cost of spill response itself."

But the follow-up to the 1989 Exxon Valdez spill, as laid out in the Oil Spill Commission report, offers a cautionary tale.

Industry joined together in 1990 and created the Marine Spill Response Corp. to prepare for future spills. But industry funding stagnated and MSRC's equipment aged even as deepwater drilling technology evolved to look more and more like NASA's.

Asked what money they were spending on research and development for oil spill response, many oil companies pointed spill commission staffers to their yearly MSRC dues. But MSRC dropped its research and development program in 1995 after "its objectives had been achieved," according to an API report. After the Deepwater Horizon sank, the underfunded MSRC was "ill-prepared" to handle such a large spill, the commission found.

"What is the incentive for MWCC and Helix to spend money to figure out ways to fight a spill that's never happened?" Cohen asked. "I don't see one right now."

Who pays for 'acts of God'?

MWCC is designing a 200-foot-tall, 50-foot-wide "caisson" to drive into the seabed to funnel to the surface oil from sea floor leaks. And Helix is working on a system that would float above such a spill, collecting the oil as it rises.

Still, neither is ready. And the Interior Department's Bureau of Ocean Energy Management, Regulation and Enforcement does not require well operators to prepare to contain such a spill. Nor has it required them to do live testing of the existing containment equipment they are relying on to handle a spill.

A spokeswoman for Michael Bromwich, President Obama's director of Ocean Energy Management, Regulation and Enforcement, declined to comment for the record or make Bromwich available for an interview.

But the agency has provided documents that show officials are thinking about a spill like Ixtoc.

The revised oil spill response plan for Noble's Santiago prospect, the first deepwater permit issued after the spill, includes Helix's plan to contain a spill if the platform collapses on top of the leaking well.

The scenario indicates the first step would be to try to drag the platform off the well. But if that does not work, the plan shows, the well would keep leaking until a relief well is drilled.

But the Oil Spill Commission found in its final report that while the systems devised by Helix and MWCC "are designed to contain quickly the kind of blowout that happened at Macondo, they would not be able to contain a spill of the type that occurred in the Gulf of Mexico in 1979 during the Ixtoc oil spill, where the rig collapsed on top of the well."

Many smaller operators, were they to have such a spill, could be quickly crushed by the liability. RFF found that BP's spending on the oil spill last year was bigger than the market capitalizations of more than half the companies drilling in the Gulf. That could leave taxpayers and the $1 billion Oil Spill Liability Trust Fund on the hook to pay environmental damages and compensate the people and businesses that get harmed.

Kratz, whose company is also a small, independent driller, said companies like his are more careful because they know that one bad accident could wipe out their company.

Taxpayers would also be on the hook for damages if a hurricane, earthquake or other natural disaster caused a spill, because federal law shields drillers from having to pay for "acts of God."

Those are the kinds of disasters that RFF's containment report suggested might cause multiple spills to erupt at the same time. A 2003 study for federal offshore drilling regulators found the risk of earthquakes in the Gulf is low. But it also noted that there have been a number of earthquakes between magnitude 3 and magnitude 4.9 and that earthquakes are not considered in the design of deep-sea wells.

Overall, said UC-Berkeley's Bea, what changes have been made by the federal government do not delve deep enough. The old Minerals Management Service has been rechristened as BOEMRE, but the inspectors and managers are largely the same. There are more rules, but Congress has allotted no more money to enforce them.

"Why," Bea asked, "do we think we can use the same ingredients we used before Macondo to prevent it from happening again?"