Foreign countries use oil spill as a wake-up call

Miami HeraldJune 29, 2010 

The Gulf of Mexico oil spill has been a wake-up call for the countries of the Americas — some who fret tar balls could reach their beaches and damage fisheries and others who question the safety of their own offshore drilling programs.

British Petroleum's efforts to stop the Deepwater Horizon spill are being closely monitored in the region, where there's new respect for the impact a deepwater disaster can have on close neighbors.

The International Union for Conservation of Nature -- the world's largest environmental network -- has called for a global moratorium on oil and gas drilling in environmentally sensitive deepwater and polar areas.

"The technology to minimize the risks and impacts of catastrophes such as the Deepwater Horizon oil spill is obviously lacking at present,'' said IUCN Director General Julia Marton-Lefevre.

"The global nature of the problem calls for collaborative action between countries,'' the IUCN said in a statement.

There's a general consensus that Scandinavian countries now drilling in the North Sea have more stringent requirements, said Melinda Taylor, who teaches environmental law at the University of Texas School of Law and was formerly a senior attorney at the Environmental Defense Fund.

"Their laws aren't vastly different from the United States but they do have automatic cut-off equipment requirements that the U.S. doesn't have,'' she said. That means if an oil rig runs into problems, cut-off systems could be activated by remote control.

Though Canada is far removed from environmental damage from oil sloshing from the Deepwater Horizon, it is taking a hard look at its regulations -- examining not only what procedures it should follow for potential Arctic drilling but also stepping up oversight to make deepwater drilling off its eastern coast as safe as possible.

"Now Canadian laws and regulations are in flux; we're reevaluating,'' said Michael Byers, a professor of international law at the University of British Columbia. But for him, the lesson of the Gulf is ``companies must be required to have all available technology responses in place.''

Deepwater drilling safety also is a shared issue because many of the oil companies contract with the same global companies to sink their wells.

"These pieces move from market to market, and the technology and equipment are universal,'' said Jorge Piñon, an oil consultant and visiting research fellow at Florida International University's Center for Latin and Caribbean Studies. ``What will change now is the procedures on how the equipment is used from market to market.''

Only a handful of countries in the hemisphere are engaged in deepwater drilling. Here's a look at their programs or their future deepwater plans in the wake of the Gulf blowout.

BAHAMAS

Recently, there was speculation that the Bahamas might soon grant new exploration concessions to companies that want to look for oil in the Cay Sal area east of Cuba's oil-producing area as well as a northern block due east of Fort Lauderdale.

One hang-up: Cuba, the Bahamas and other neighboring countries need to agree on the boundaries of their underwater territories.

Proponents of drilling talk about potentially billions of barrels of oil in these waters and the jobs that an oil industry could create for the Bahamas.

But the Gulf spill also seems to have given the Bahamas pause. ``Even the best case scenario suggests that The Bahamas is at least 10 to 15 years away from even considering an application to drill a hole,'' Bahamian Environment Minister Earl Deveaux said at a recent news conference.

BRAZIL

Brazil, which potentially has the world's third largest offshore oil reserves, had its own equipment problems nine years ago when an explosion crippled an offshore rig, killing 11 workers, and sending it to the bottom of the ocean.

``Since then, they tightened up. They've got pretty good oversight and I don't think they feel the same type of danger as the U.S.,'' said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Mass.

Brazil's national petroleum company, Petrobras, is an experienced offshore driller and in recent years has made huge ultra-deep discoveries. Petrobras also has been drilling in the Gulf of Mexico, and its Chinook and Cascade projects are on schedule to begin production later this year.

And while Petrobras is monitoring the situation in the Gulf, it continues its drilling operations off the Brazilian coast. The company said its practices are among the best in the world.

CANADA

The National Energy Board, which regulates oil and gas exploration and production in the Canadian Arctic, is now reviewing offshore drilling safety and environmental requirements. ``We need to learn from what happened in the Gulf,'' said Gaétan Caron, NEB chairman.

The board wants to complete the review, which includes a look at well control methods, possible hazards and risks to the environment, how to respond to drilling accidents and malfunctions and what can be learned from the Gulf and other major accidents, before receiving applications for Arctic drilling.

Before the Gulf spill, there had been a review of a policy to require companies to be prepared to drill a relief well during the same season if necessary. In the cold-weather climate, the drilling season is limited and if a problem arises, a company needs to have the capacity to get the relief well in on a timely basis.

Some environmental proponents want to go further and say a second relief well should be drilled at the same time as an initial well.

But oil analysts say that would be extremely expensive.

``Drilling wells at deepwater depths is a $100 million exercise and you might come up with a dry hole,'' said Piñon. ``At the least, you'd have to identify a well as commercially viable first.''

Sean Kelly, a spokesman for the Canada-Newfoundland and Labrador Offshore Petroleum Board, also doesn't see it as much of a solution: ``You increase the risk by using two drilling vessels. You could have a blowout in the relief well.'' But he added, ``The relief well is the only effective way to kill a blowout.''

There are currently three projects, which have produced 1.1 billion barrels of oil, in the Newfoundland and Labrador offshore area, but only Chevron Canada Ltd. is currently doing exploratory drilling in deep water in Orphan Basin.

If there were a blowout, however, the closest drill rig to sink a relief well is in the Gulf of Mexico -- an 11-day journey away. But Canada's plan would be to complete its safety certification while the rig was en route so it could begin work immediately, said Kelly.

In light of the Gulf blowout, the board also has stepped up oversight of Chevron's well, requiring the posting of daily reports and increasing audits and inspections on the Stena Carron, the project's drill ship, from every three to four months to every three to four weeks.

The Stena Carron, which is drilling in water around 8,500 feet deep, is described as state-of-the art. Not only can its blowout preventer be activated from the drill floor by two hydraulic control systems but the vessel also has three backup systems that can activate the BOP.

Meanwhile, in New Foundland, the provincial government is conducting its own review of offshore drilling and the regulators have tightened oversight of offshore drilling.

CUBA

Most of Cuba's oil production comes from Matanzas or from shallow offshore waters. But Cupet, Cuba's state oil company, estimates that Cuba potentially has more than 20 billion barrels of undiscovered oil reserves offshore.

Spanish oil company Repsol-YPF began drilling for oil in waters 18 miles off the Cuban coast in 2004. Although several foreign oil companies have offshore concessions, Piñon said none of them are currently drilling.

But when they do, there's always the potential risk of a blowout -- and that's when things could get sticky. The U.S. embargo would preclude U.S. equipment being sent to Cuba to stem a spill.

``If the [Gulf] blowout had happened in Cuba, we'd be floating in oil already,'' said Piñon, former president of Amoco Oil Latin America. ``I think there's a recognition that if Cuba is going to drill for oil, something has to be done. Both parties better start talking and put protocols in place.''

There were working-level discussions between the U.S. and Cuban governments in late May. They agreed to share satellite pictures of where the oil spill is moving -- and discussed, in general terms, the impact if a spill occurred in Cuban waters.

MEXICO

Mexico's state-run oil company Pemex has done most of its offshore drilling in the relatively shallow Bay of Campeche, but it too is eyeing deepwater drilling.

Some analysts question, however, whether Pemex is prepared for the risks of deepwater drilling given its safety record. In 2007, there was a collision between a rig and floating oil platform, and in 1979 the Ixtoc I blowout took nearly 10 months to cap.

And because the Mexican oil industry has been very closed, it doesn't have the technology for deepwater drilling, said Lynch, ``so they're contracting out.''

Once the Deepwater Horizon spill is stopped, analysts expect the focus will shift to how countries might work together not only to prevent but also to respond to a devastating blowout.

``The whole history of international environmental cooperation going back to the 1960s has been driven by disasters such as this,'' said Peter Haas, a political science professor at University of Massachusetts, Amherst.

There's already a template that could be followed. A Mediterranean treaty, for example, sets standards for seabed mining and offshore drilling and also calls for a coordinated response and sharing of cleanup resources in the event of a spill, said Haas, who studies international environmental cooperation.

But reaching an agreement and getting countries to ratify it are two different things. The Mediterranean agreement was signed in 1994, said Haas, but still hasn't gone into effect because not all countries have ratified it.

A cooperative approach, however, doesn't have to be driven by governments, he said. ``Responsible oil companies can develop industry-based best practices that they could agree to follow.''

But increased safety and having clean-up facilities at hand will come with a cost and analysts say it will increase the price of oil.

``We're not paying the real price of oil,'' said Byers. ``We're off-loading it on the environment.''

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