Thursday, September 16, 2010

The Gnashing of Oil Industry Teeth

Oh, I can hear the tales of woe already! There are 27,000 abandoned oil and gas wells in the Gulf of Mexico, and the US government wants the oil industry to shut down the ones that haven't been used in over five years.

Over five years.

This means around 3500 wells will have to be capped and 650 abandoned platforms will be removed. Oil industry types are already predicting doom for their diminishing industry:

The Wall St. Journal cited one expert as saying the cost could total $1.4 billion to $3.5 billion. Mark Kaiser, R&D director at Louisiana State University's Center for Energy Studies, also estimated that companies, mostly smaller producers, would be giving up $6 billion to $18 billion in lost revenue from future production.

The oil industry is so overburdened by being asked to pick up after itself! Is anyone surprised that this is the same industry that tore up the Louisiana coast with canals and pipelines? They've dug these since the 50's, and then abandoned them when they were done with them, never cleaning up after themselves. This behavior is a direct cause of the salt water intrusion which has accellerated the erosion and disappearance of the coast by orders of magnitude. Why would we expect their treatment of drilling infrastructure be any different?

Because have no doubt, these abandoned wells and platforms are a clear and present danger to the human and natural environment of the Gulf South. Contrary to the right-wing "drill, baby, drill" narrative that "not one drop" of oil spilled during the hurricane season of 2005, the real numbers are inching closer to Exxon Valdez levels. And that's just what you haven't heard about.

Some additional thoughts:

1. Does this move by the government represent change I believe in? Maybe. Let's see if they actually make the oil industry clean up their own messes instead of passing it on to the taxpayers.

2. I know what you "free market" folks are going to say: "Cousin Pat, if we make the oil industry clean up after itself, they'll just pass the cost along to the consumer."

You know what?

I'm fine with that. No, not just fine. Good. This sounds like a plan I am down with. We pay either way: through taxes, at the pump, or when Louisiana suffers another catastrophe. So here's what we do: stop subsidizing the oil industry's misbehavior and let Americans pay at the pump. Look at how energized Americans are at the mere hint of a tax increase, let's see how they respond to the real cost of gasoline. Now, that is a market-based solution I am down with.

3. Regarding the mindset of the right-wing as expressed by Sarah Palin's tweet: "Extreme Greenies:see now why we push'drill,baby,drill'of known reserves&promising finds in safe onshore places like ANWR? Now do you get it?":

3A. If any accidents happen while contractors attempt to cap the 3500 abandoned wells and 600+ abandoned platforms, expect to hear how those accidents are the fault of government regulation. Because you always blame the folks trying to fix the problem, not the ones who caused it in the first place; and

3B. 27,000 abandoned oil and gas wells. TWENTY-SEVEN THOUSAND. Representing, as "experts" say, possibly $18 BILLION in production revenues. If we've got that many wells that can produce that much revenue and THEY ARE SITTING AROUND ABANDONED, why the fuck are we even discussing drilling in Alaska? Do we need to create more abandoned wells around this country?

4. Rush Limbaugh famously said "oil is natural as ocean water" and echoed an "expert" estimate that 5000 barrells a day naturally seeped into the Gulf of Mexico. With 27,000 man-made, abandoned oil and gas wells, does it make more sense that the "seepage" of so much oil is a natural occurence, or could the culprit be something else?

5. 18 BILLION DOLLARS in possible revenue sounds like an awful lot of money in this economy. Especially for cash strapped Louisiana. Especially for a Louisiana that has lost an awful lot of coast because of oil extraction. Especially for a Louisiana that needs money to adequately defend her southeastern population from flooding. A cool 18 billion will go a long way to address those issues. I'm just sayin'.



Dante said...

1. Let's see how they implement it. If this is a genuine cleanup effort, I'm all for it. If this is part clean-up and part cash/power grab for the federal government I'll be less impressed.

2. You're supposed to build a straw man to tear it apart, not agree with it. I personally agree with you on both counts, just not as hyperbolically. The 3,500 wells that are designated as "temporarily abandoned" (some since the 50's apparently) should be closed down and the oil companies should be the ones to do that. That is IMHO a very valid part of the "total cost" calculation, much more so than bullshit environmental impacts that can't accurately be measured (and for the record I am all for making companies pay for environmental impacts that can be accurately measured, priced, and given to affected parties). Yeah, consumers will pay the cost but we're the ones who used the oil.

3a. Yeah, and they'll have a point, but the counterargument is to point to the current oil spill mess. I that argument can hold its own without having to go on defense.

3b. On the flip side, how hard is it going to be to put them into production if it's cheaper to set up entirely new operations in Alaska. Furthermore, how much safer will the Alaskan installations be now the federal government will probably be crawling all up the oil companies asses on safety? In software engineering the best way to ensure safety is to build it in from the ground up. I imagine the same applies here.

4. You show me proof and I'll your idea fair weight.

5. If there's that kind of revenue sitting around then perhaps the best alternative is to treat the oil rigs like any other abandoned property: condemn it and auction it off as intact rigs for whoever would like to use them.

Cousin Pat from Georgia said...

2. You're supposed to build a straw man to tear it apart, not agree with it.

Contrary to popular belief, I do like a lot of things about how the free market works. Our government's subsidization of oil is keeping the price of gasoline artificially low and stifling the innovation we need to solve our energy problems. We'd likely not have to depend on legislative somersaults like cap and trade if the real costs of our energy production weren't hidden.

I absolutely think people would change their behavior and lifestyles if they realized how much their choices really cost.

3B: Is it cheaper to build all new infrastructure in Alaska? The narrative doesn't indicate an economic reason outside "we need all the oil we can get." I have a problem with that line of thinking if we are demonstrably leaving oil on the table, or beneath the waves, as the case may be.

4. Oh, I'm sure some seepage is natural. But I find it difficult to believe that so much seepage is natural, when there are 27,000 man-made reasons it might not be. I'd sure like to see a real investigation into where the "seepage" is coming from, too.

5. I completely agree with you. The whole concept is very strange, since that's what I thought we were doing already. An oil well that still has the potential to produce oil doesn't sound like the type of thing that just gets abandoned, but if that's what is actually happening, we need to figure out what to do with them.