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Oil rig explosion could put chill on drilling

GULF OF MEXICO — The Louisiana oil and gas industry is bracing for tightened safety regulations as well as an overall chill in the push for offshore drilling expansion following the Deepwater Horizon incident in the Gulf of Mexico last week.

Amid BP and U.S. Coast Guard efforts to clean and contain the 600-mile-circumference oil slick off Louisiana’s shore, the Obama administration and federal agencies have called for a closer look at what caused the accident. The oil industry said it hopes to have a seat at the table as congressional hearings and analysis of offshore drilling safety regulations down the road.

“Not only are we working on containing this spill but we’re looking at what happened and certainly going to be involved in talks to regulate,” said Chris John, president of the Mid-Continent Oil and Gas Association.

John said the Transocean rig explosion was a terrible accident but regulators should keep the industry’s solid safety track record in mind when examining the incident before ramping up regulation and, ultimately, drilling costs for offshore oil companies.

“I think cooler heads must look at the environmental and safety record of the whole industry at one time and not just a rifle shot,” he said.

Eric Smith, associate director of Tulane Energy Institute, said the oil industry is already in tune with the Coast Guard and government calls to prevent future incidents and will most likely conduct “a very thorough investigation even without political pressure.” Sponsors of the Tulane Energy Institute include ConocoPhillips, McDermott and other companies in the energy industry.

Still, current safety regulations are stringent, requiring companies to test the blowout prevention system — what BP is attempting to activate with underwater robots — on a drilling rig every two weeks and U.S. Minerals Management Service inspections are frequent and often unannounced, Smith said.

“I think the thought that this is somehow an under-regulated industry is kind of fallacious,” he said.

And for Don Briggs, president of the Louisiana Oil and Gas Association, government regulations will not be able to meet the specificity of the Deepwater Horizon incident.

“I do not believe for a second that government can tell a highly technical industry like ours how we can do things better,” Briggs said.

Oil company officials said they are also concerned that safety hearings and the cleanup will chill the Obama administration’s plan to expand drilling in the Gulf of Mexico and off of the East Coast, a plan lauded by the industry as a boon for American business and energy independence.

“The mere fact that this has happened doesn’t mean that we are less dependent on oil and gas,” John said.

John said the overwhelming demand for transportation fuels will again accentuate the need for increased drilling, but that might take months.

Smith said pulling drilling rigs out of the Gulf could increase the number of oil spills and explosions that occur in the area as the need for imported oil increases.

Citing the Exxon Valdez tanker spill, Smith said tankers importing oil spill more oil off of American shores than drilling rigs.

“The last thing you want to do is encourage more tankers,” he said.

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Story contributed by Jennifer Larino of City Business of New Orleans.

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