Almost three weeks after the initial explosion at BP's Deepwater Horizon oil rig, the scope of the incident is still unknown. How will the Gulf oil spill affect the United States' offshore drilling policy? What are the next steps for the oil industry? During today's OnPoint, E&E reporters Mike Soraghan and Noelle Straub discuss the political implications of the BP incident.
Monica Trauzzi: Welcome to the show. I'm Monica Trauzzi. Joining me today are E&E reporters Mike Soraghan and Noelle Straub. Mike, Noelle, thanks for coming on the show.
Noelle Straub: Thanks for having us.
Monica Trauzzi: Noelle, it's been almost three weeks since the explosion and spill at BP's Deepwater Horizon oil rig in the Gulf. The incident has raised many questions about safety, preparedness, and the future of offshore drilling policy here in the U.S. The White House has decided to postpone plans for any new oil drilling. Is this a temporary pause or is this incident really going to have some major impacts on the future of energy policy here in this country?
Noelle Straub: It is a temporary pause, but I do think the oil spill will have some long-term effects on energy policy. President Obama asked for an investigation into what caused the explosion and any safety concerns resulting from that. And that's being carried out jointly by the Interior Department and the Homeland Security Department. They're supposed to have a report to him by May 28 and so the Interior Department said they will not approve any new applications to drill until that report comes out and they've had a chance to evaluate it and see if there are serious safety concerns with offshore drilling. But even industry officials have acknowledged that. One of the senior BP officials who's responsible for the oil spill said yesterday that the spill will have a far-reaching and permanent effect on the industry and that they'll have to weigh the pluses and minuses of offshore drilling. It won't stop the industry, but it may cause some setbacks.
Monica Trauzzi: Mike, what are you hearing from lawmakers on how this spill will impact prospects for climate and energy legislation and what kind of language we might see on offshore drilling in that?
Mike Soraghan: Well, in terms of climate and energy legislation it kind of scrambles the vote count. Offshore drilling was the carrot that the sponsors of the bill, Senators Kerry, Graham, and Lieberman, were going to use to try and win over some of the particularly centrist Democrats, also to some extent Republicans, Democrats like Mark Warner and Jim Webb and Mark Begich from Alaska, Warner and Webb from Virginia. That was their carrot and now it's going to be a little bit more difficult to wave that carrot. What you are going to see is Congress will have to come out with something on safety, find some of the problems that might have led to this and legislate on that. But the question, there hasn't been any great movement that we've seen for anything that would rein in drilling per se beyond I'm sure some people will say that safety regulations will limit drilling. But in terms of just flat out limiting it, putting more places off-limits, no, that has not really emerged.
Monica Trauzzi: Noelle, House Speaker Nancy Pelosi is pushing for legislation that would increase the liability of oil companies for economic damages relating to spills. Are lawmakers though moving too quickly on this? I mean a full investigation hasn't been done of what happened in the Gulf on this latest spill. So, are they moving too quickly as John Boehner has said they are?
Noelle Straub: Exactly, it depends who you ask. John Boehner, the Republican leader in the House, said that in all his years of lawmaking and being in the House, in the state legislature, you know, people want to legislate immediately when a disaster happens or some sort of crisis happens. And he said you always do it wrong when you're trying to do it too quickly and in response. And he feels that they should wait until the results of the investigation are in and they have all the facts and they know exactly what caused it. But Democrats want to move really quickly, seize the momentum while it's there. House Speaker Nancy Pelosi wants, as you mentioned, to raise the liability caps. Right now it's at 75 million for oil companies, that's what they would have to pay for economic damages such as loss to tourism or tax revenue, that sort of thing. Democrats want to raise that up to 10 billion, so quite a difference there, and they want to strike while the iron is hot, so it depends which side of the debate you're on.
Monica Trauzzi: Lots of politics at play here. Is this the end of drill baby, drill?
Mike Soraghan: It's the end of shouting it from the rooftops certainly. It's not the end of drilling though. Again, you're not seeing anybody who particularly wants to - nobody is making a credible case that drilling is going to be stopped, pulled back, new areas put off limits because of this. You could see some of the sales that are kind of in the pipeline get delayed or maybe not even happen, such as there's a planned lease sale off of Virginia. The administration postponed or canceled some of the planning work that it was doing on that yesterday, that being an area where there really isn't any drilling rigs for, you know, anywhere along the East Coast. That would seem to be one of the more vulnerable places.
Monica Trauzzi: Noelle, how is the Department of Interior faring in all of this?
Noelle Straub: Well, they're trying to be very proactive. The Interior Secretary, Ken Salazar, has been down in the Gulf region quite a bit. He was at BP's Houston headquarters yesterday and prior to that he traveled to several of the wildlife refuges that are most at risk of being hit by oil. And he's been pretty strong; he said his job is to keep the boot on the neck of BP, so he's been pretty out there. But the interior agency that is in charge of overseeing drilling, the Minerals Management Service, there's going to be a lot more scrutiny on that agency. It was already pretty well known for having a sex, drugs, and illegal gifts scandal. It's also been the subject of a long series of reports by government watchdog groups saying that it doesn't accurately collect royalties and now this whole safety aspect is coming into it. So, there's going to be a lot of scrutiny on how well the agency is doing with its safety regulations and whether it allowed the industry to have too much say over what regulations were put in place and which were kept voluntary.
Monica Trauzzi: Mike, how is this incident impacting big oil and what are their next steps? What do their next steps need to be in terms of PR?
Mike Soraghan: Well, basically, right now they seem to have unplugged their phones. You know, BP has hired a lot of PR firms to go out and sort of keep saying the same thing, we're responsible. We'll take care of it. You're not hearing a lot from the other oil companies. A source I was talking to the other day who's very pro industry was saying where are these guys? Why isn't there a coordinated PR campaign? But I think they've just kind of gone to ground. Industry wise, in terms of dollars, it's hard to see where this really hurts anybody besides BP and the money that they're going to have to pay out for the spill. Nobody stopped driving out of this. The oil companies have been making a great deal of money, big profits reported out of the last quarter and I don't see in a reason why that would stop.
Monica Trauzzi: Noelle, final question here. What are the next steps on the ground in the Gulf in terms of the cleanup efforts?
Noelle Straub: Right now, they're basically trying to contain the spill, which is the containment dome, but even if the containment dome continues to work the leak actually won't be stopped. It's just contained. So, they're trying several different methods to actually stop the leak. There's the possibility of putting another blowout preventer, which is the failsafe device that failed. They could put another one on top of it. They're also considering injecting heavy fluids into what's remaining of the equipment that's down there in an attempt to plug the leak. And then the last chance thing that they're doing is they're actually drilling another well that would go sideways into the well and that would permanently plug the leak. But that will take up to three months, so in the worst-case scenario the leak won't be stopped for another three months and it's spilling of approximately 80 to 100,000 gallons of oil into the Gulf every day.
Monica Trauzzi: All right, well, a story we'll continue watching here at E&E. Thanks for coming on the show.
Mike Soraghan: Thanks for having us.
Noelle Straub: Thanks.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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