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Learning lessons from Deepwater Horizon

Editor's note: April 20 will be the second anniversary of the Deepwater Horizon oil spill.

On April 2, 2010, President Barack Obama defended his decision to open up new areas to offshore drilling by claiming that "oil rigs today generally don't cause spills." It was a mantra all too familiar to Floridians. Oil spills happen, yes, but statistically speaking they are rarely caused by drilling rigs. Working on behalf of the Century Commission for a Sustainable Florida, the nonpartisan Collins Center for Public Policy issued a report that same month that did not find fault with this claim.

I should know. I was a primary author of the report. Requested by former Senate President Jeff Atwater, the report tried to provide fair and accurate answers to questions pertaining to the ban on drilling in or near Florida's state waters. We based our answers on the best available knowledge and vetted them through experts.

The statistics on oil spills supported the general claim that oil spills associated with drilling rig blowouts were extremely rare. The total volume of oil spilled in U.S. waters was a small fraction of 1 percent of what was produced in U.S. waters; and only a small portion of that number was attributable to drilling rigs (in comparison with spills associated with transport and coastal runoff). And according to the National Academy of Sciences, the vast majority of oil found in marine waters actually results from naturally occurring seepage through the seabed.

Shortly after the release of the Collins Center report, the Florida House released a 180-page formal risk assessment by the Willis Group consulting company. The Willis report's conclusions weren't markedly different from those of the Collins Center. But they more forcefully downplayed the blowout risks. Referencing an accident off the coast of Australia that occurred in the summer of 2009, Willis argued that stricter regulations in U.S. waters meant a similar incident in the gulf should be considered a 1-in-100-year event.

Eleven days after the Willis report was released, the Deepwater Horizon exploded.

Before Deepwater Horizon, the prevailing narrative suggested that: (1) offshore drilling risks could never be eliminated completely, but they were modest, stable and well understood; (2) the industry's capacity and approach to effectively manage these risks had dramatically improved over time; and (3) the U.S. oil and gas regulatory regime was among the safest and strongest in the world.

After the accident, investigations have refuted this narrative and instead suggested that: (1) accident risks have dramatically increased in recent years due to the targeting of resources in deeper water and in deeper, older geology; (2) the industry's capacity and approach to managing accidental spill risks has remained stagnant; and (3) the U.S. oil and gas regulatory regime is relatively weak and has not kept pace with international best practices.

One might be tempted to ask what Deepwater Horizon has to do with the drilling debate in Florida. Florida state waters are quite shallow. This is true. Many of the aforementioned challenges associated with deepwater drilling would not be encountered within state waters.

But we shouldn't overlook the connection between Florida's drilling ban and the buffer zone it is granted in the federal waters of the eastern gulf. The latter continues to be politically dependent upon the former. And a number of lessons that were learned from Deepwater Horizon can and should be applied to the decisions Floridians make with respect to drilling in its coastal state waters.

These lessons revolve around the themes of knowledge, transparency, capacity and incentives. Overall, offshore drilling policies should strive to generate knowledge of potential risks and rewards — which are often site-specific — and make that knowledge accessible to industry, government and the general public. If societies decide — through democratic political processes — that moving forward with exploration and development of oil and gas resources presents an acceptable risk, then the issue becomes one of risk management capacity.

Can risks be effectively managed given existing capacity in specific firms and specific government agencies? Finally, given sufficient capacity, does the regulatory regime harmonize risk-reward relationships or do weak sanctions and modest liability caps generate conditions associated with market failure? Florida's 2009-10 drilling debate left something to be desired with each of these themes.

As we pause to reflect on the two-year anniversary of Deepwater Horizon, we should try to get past the blame game and draw some meaningful lessons for the future. Perhaps more important, though, we shouldn't be so naive to think that these lessons are of little concern to Floridians.

Frank Alcock is a senior fellow at the Collins Center for Public Policy, former director of the Marine Policy Institute at Mote Marine Laboratory, former director of Environmental Studies at New College of Florida, and a former policy analyst at the U.S. Department of Energy. His entire analysis of the lessons learned from the spill can be found at www.collinscenter.org.

Learning lessons from Deepwater Horizon 04/14/12 Learning lessons from Deepwater Horizon 04/14/12 [Last modified: Saturday, April 14, 2012 5:31am]

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Learning lessons from Deepwater Horizon

Editor's note: April 20 will be the second anniversary of the Deepwater Horizon oil spill.

On April 2, 2010, President Barack Obama defended his decision to open up new areas to offshore drilling by claiming that "oil rigs today generally don't cause spills." It was a mantra all too familiar to Floridians. Oil spills happen, yes, but statistically speaking they are rarely caused by drilling rigs. Working on behalf of the Century Commission for a Sustainable Florida, the nonpartisan Collins Center for Public Policy issued a report that same month that did not find fault with this claim.

I should know. I was a primary author of the report. Requested by former Senate President Jeff Atwater, the report tried to provide fair and accurate answers to questions pertaining to the ban on drilling in or near Florida's state waters. We based our answers on the best available knowledge and vetted them through experts.

The statistics on oil spills supported the general claim that oil spills associated with drilling rig blowouts were extremely rare. The total volume of oil spilled in U.S. waters was a small fraction of 1 percent of what was produced in U.S. waters; and only a small portion of that number was attributable to drilling rigs (in comparison with spills associated with transport and coastal runoff). And according to the National Academy of Sciences, the vast majority of oil found in marine waters actually results from naturally occurring seepage through the seabed.

Shortly after the release of the Collins Center report, the Florida House released a 180-page formal risk assessment by the Willis Group consulting company. The Willis report's conclusions weren't markedly different from those of the Collins Center. But they more forcefully downplayed the blowout risks. Referencing an accident off the coast of Australia that occurred in the summer of 2009, Willis argued that stricter regulations in U.S. waters meant a similar incident in the gulf should be considered a 1-in-100-year event.

Eleven days after the Willis report was released, the Deepwater Horizon exploded.

Before Deepwater Horizon, the prevailing narrative suggested that: (1) offshore drilling risks could never be eliminated completely, but they were modest, stable and well understood; (2) the industry's capacity and approach to effectively manage these risks had dramatically improved over time; and (3) the U.S. oil and gas regulatory regime was among the safest and strongest in the world.

After the accident, investigations have refuted this narrative and instead suggested that: (1) accident risks have dramatically increased in recent years due to the targeting of resources in deeper water and in deeper, older geology; (2) the industry's capacity and approach to managing accidental spill risks has remained stagnant; and (3) the U.S. oil and gas regulatory regime is relatively weak and has not kept pace with international best practices.

One might be tempted to ask what Deepwater Horizon has to do with the drilling debate in Florida. Florida state waters are quite shallow. This is true. Many of the aforementioned challenges associated with deepwater drilling would not be encountered within state waters.

But we shouldn't overlook the connection between Florida's drilling ban and the buffer zone it is granted in the federal waters of the eastern gulf. The latter continues to be politically dependent upon the former. And a number of lessons that were learned from Deepwater Horizon can and should be applied to the decisions Floridians make with respect to drilling in its coastal state waters.

These lessons revolve around the themes of knowledge, transparency, capacity and incentives. Overall, offshore drilling policies should strive to generate knowledge of potential risks and rewards — which are often site-specific — and make that knowledge accessible to industry, government and the general public. If societies decide — through democratic political processes — that moving forward with exploration and development of oil and gas resources presents an acceptable risk, then the issue becomes one of risk management capacity.

Can risks be effectively managed given existing capacity in specific firms and specific government agencies? Finally, given sufficient capacity, does the regulatory regime harmonize risk-reward relationships or do weak sanctions and modest liability caps generate conditions associated with market failure? Florida's 2009-10 drilling debate left something to be desired with each of these themes.

As we pause to reflect on the two-year anniversary of Deepwater Horizon, we should try to get past the blame game and draw some meaningful lessons for the future. Perhaps more important, though, we shouldn't be so naive to think that these lessons are of little concern to Floridians.

Frank Alcock is a senior fellow at the Collins Center for Public Policy, former director of the Marine Policy Institute at Mote Marine Laboratory, former director of Environmental Studies at New College of Florida, and a former policy analyst at the U.S. Department of Energy. His entire analysis of the lessons learned from the spill can be found at www.collinscenter.org.

Learning lessons from Deepwater Horizon 04/14/12 Learning lessons from Deepwater Horizon 04/14/12 [Last modified: Saturday, April 14, 2012 5:31am]

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