Wednesday, March 2, 2011

Good Times Are Here Again: When the Federal Government issues the first permit to drill off-shore since the BP oil Spill?

Keywords or terms: Off-shore permits; Noble Energy; BP oil spill; Off-shore Drilling Moratorium; Bureau of Ocean Energy Management, Regulation and Enforcement

Full scale federal permitting system for off-shore drilling in the Gulf of Mexico may be few months down the road, but off-shore drilling in the Gulf is here as Noble Energy was given the first approval to drill in the waters of the Gulf of Mexico. This is the first off-shore oil drilling permit that was issued to anyone or organization to drill in the Gulf of Mexico since the BP explosion at the Macondo well. Oil companies contemplating approval or who have submitted applications for permit to commence off-shore drilling in the Gulf can be rest assured that their day is here or is very close. State and municipal governments which have suffered adverse impact from the moratorium on off-shore drilling since the Deep-water Horizon disaster, can now rest easy as it’s most likely their lost royalties is about to be a thing of the past, and anticipated tax revenues and associated intakes are about to begin rolling in, once more. Hotels and restaurants and other leisure businesses which once bemoaned the moratorium after the Deep-water Horizon disaster, can now say, there is a silver lining at the end of this rainbow.

So, if you think the wait had been too long or felt the buzz of the lifting of the moratorium on off-shore drilling is a wishful thinking, think again. The Bureau of Ocean Energy Management, Regulation and Enforcement issued permit to Noble Energy of Houston on Monday, February 28, 2010, ten months after the explosion and oil spill in the Gulf of Mexico by British Petroleum. According to the head honcho of the Bureau, this permit represents a significant milestone for the bureau and offshore oil and gas industry and it is probably a first step towards safely developing deep-water energy supplies offshore. Many members of the oil and gas industry are however skeptical and wonder if the newly introduced stringent guidelines would not prevent companies seeking approval since the BP disaster from achieving a permit on time to commence drilling. It is known that Noble Energy was one of the applicants for permit approval prior to the BP explosion of April 20, 2010. The new guidelines for permitting ensures that companies seeking approval undergo a streamlined and objective process of qualification that ensures safe drilling off-shore in the Gulf of Mexico and elsewhere in our national waters.

While skeptics may still be worried, many patient and reflective oil and gas companies are saying the wait is worth it. The American Petroleum Institute, an organization vehemently against the lengthy moratorium on off-shore drilling in the Gulf, believes that the effort of the Bureau is too late and just too minuscule. According to Jack Gerard, President of the institute, while every permit is welcome news, tightening the screws on domestic oil and natural gas production during a time of increased demand and global uncertainty is a formula for disaster. Is this really the truth? While associations as the American Petroleum Institute may question the essence of a long moratorium on off-shore drilling, assuming that the President of the Institute is speaking on behalf of the organization, must our attention be focused on increasing oil and gas production at all cost, even at the expense of life and public safety? Should we just relegate the issue of workplace safety to the background in the name of increased demand for oil and gas, or should we take the issue of public safety and workers welfare seriously, while harvesting oil and gas from the depth of the seas?

Industry insiders and large professional organizations in the business of off-shore oil and gas drilling have focused their attention on the perceived economic loss to the industry of the moratorium designed to help the industry and nation sort through the mess that the BP oil spill had become after the explosion at the Macondo well. hey have all concentrated on the bottom-line, profits, rather than a safe working environment; one of the problem that led to the Deep-water Horizon Explosion in the Gulf of Mexico. Many of these people and organizations who are saying this first permit is too belated, seems not to have sorted out or attempted to understand how the oil and gas industry can improve on its work place safety record; and if they had, some of them probably have failed to appreciate the magnitude of the Deep-water Horizon disaster. The onus of maintaining and ensuring that work place safety is as important as making profit in off-shore oil drilling, has just slide by them or escaped their mind.

Further, some of these apprehensive and probably short-sighted industry experts, seem not to understand that when an explosion of the magnitude at the Deep-water Horizon with the associated number of fatalities takes place, it is not only essential, it is compulsory, that the industry members, including oil and gas executives, governmental regulatory agencies, professional organizations and institutes, re-evaluate the process of drilling and extracting oil and gas, offshore. Now, if the steps for accomplishing this re-evaluation have to take nine months or a year, so be it. You will find it difficult to convince any member of the families that lost loved ones in the Deep-water Horizon disaster that it was just okay to go about business as usual after the BP oil explosion disaster at the Macondo well.

There were lot of rules and regulations regarding off-shore drilling and workplace safety that were contravened by British Petroleum and its associated contractors at the Macondo well that cannot just be swept under the carpet. These mistakes were not only operational or platform based, they involved fundamental engineering and technological processes that must not be overlooked, but were in the case of drilling off-shore at the Macondo well. The oil and gas industry may have discovered that British Petroleum took a very high risk drilling at a horrendous depth of about 15,000 feet below the sea level, but did they understand that the exclusions of some steps in the drilling and harvesting process or the failures of back up equipment and personnel led to the mayhem that the disaster at the Macondo well turned out to be? Can they attest to the fact that all blow-out preventer on existing rigs have been tested; or that, all existing oil and gas platforms have been tested for complete technical functionality? Can anyone one of these industry insiders or experts guarantee that by the time the next permit is issued to another company in the industry, over 100% of the industry members would have fine-tuned their safety hand books and made it available to all their workers, brought up-to-date guidelines regarding oil rig and platforms accidental explosions management and what to do in case of an emergency or unexpected failure of equipment?

The permit issued to Noble Energy of Houston is probably well deserved. Other oil and gas companies that had impending applications before the Bureau of Ocean Energy Management, Regulation and Enforcement, are wondering if they would be next. However, how many of these companies have considered re-evaluating each of their known processes or steps of operation, while exploring for oil and gas in the past, and how best to handle the thousands of eventualities that may take place on an oil rig or platforms, when their permit is issued. What are the logistic issues that may ground movement of equipment or deny access to some emergency safety apparatus that may consummate in another disaster, if care is not taken?

It was reported by Chron Energy that Helix Energy Solutions Group and Exxon-Mobile have developed processes, including vessels and equipment, to capture oil from runaway deep-water wells. Are these processes and equipment available to all companies with impending permits approval? These are genuine issues and factors that must be objectively considered. The cornerstone of off-shore drilling must now be an enhanced safety regulation and nitpicky oversight of the gas and oil extraction process. The Department of Interior and its agency saddled with the responsibility of overall site inspection, cannot afford to fail the industry or their department as they go about looking out for those inconsequential issues and processes that are easily overlooked, but end up in disaster as what we had with British Petroleum at the Deep-water Horizon site.

Noble Energy was at the depth of 13,585ft when it had to quit because of the moratorium, however the bypass drilling at the 6,500 feet designed to get around plugs in the original well, must still be certified as functional and ready to go, before subsequent processes commences. However, will Noble Energy share with all members of the oil and gas industry their learned experience with this impromptu process, in light of the experience of BP at the Macondo well? The wiliness to share learned experiences and capture important information on equipment and materials that will make the drilling process safer and more effective, must now be the consideration of all companies in the industry. No longer again can the industry afford the type of backlash from the Deep-water Horizon explosion.

The experience of the symbolic explosion at the Deep-water Horizon rig taught all of us in the industry, a very important lesson: we cannot take the issue of safety on rigs and platforms for granted, neither can we overlook the functionality of back-up equipment and processes, if we are to continue to drill and explore for oil and gas with workers’ safety at depths hitherto unfathomed, but made possible because of advances in oil and gas drilling technology. It is good news to know that the federal government is once again issuing permits to drill off-shore and that other permits will be issued in due course; however, it will also be wise, if we all work to prevent the type of mistake that befell British Petroleum at the Macondo well, in the Gulf of Mexico.

Post a Comment