Saturday, July 31, 2010

The Increasingly Dangerous Hunt for Oil

Give Big Oil and their political stooges their due - they're not going to give in to Peak Oil without a fight, no matter the cost to others.

Around the world, stocks of conventional oil are said to be in decline.   By conventional oil, I mean good, sweet crude like the Saudis that can be pumped straight into the tanker from the wellhead.  It's sort of like picking teams in high school gym class and the point where you're down to the last handful of players that nobody really wants.

As conventional oil staggers under the load of increased demand from the steady customers and the new, emerging economies, it opens the market for unconventional oil.    Some of it is extracted from deep beneath the seabed.   Think Deepwater Horizon.   Some of it is ersatz oil, synthetic oil, call it tar if you like - the stuff that's mined in Athabasca.

The common feature of unconventional oil is that it's a lot harder, a lot more expensive, and a lot more dangerous and environmentally devastating to recover.   Building, deploying and operating massive offshore drilling rigs is enormously expensive.    Mining bitumen and then processing it for delivery to upgrader plants for further extensive processing is also very, very expensive.   That's when you start getting into the dangerous part.

Getting at unconventional oil is expensive but getting at it safely is far more costly yet.   If there's one thing Big Oil likes it has to be massive profits.  It's very good at maximizing profits in no small measure thanks to let's call them co-operative politicians.   Working hand in hand, Big Oil and compliant regulators have been successful at keeping costs down and profits up.   We know that the Deepwater Horizon disaster could have been avoided had the operator been required to install an elaborate wellhead safety system mandated for every rig in the North Sea.   But Cheney saw to it that requirement was scrubbed from the books, saving Big Oil hundreds of millions of dollars in costs on every Gulf offshore rig.

Now The Guardian reports that a study shows America's oil industry has been running out of control for years:

the National Wildlife Federation drew on records from the Minerals Management Service, which regulates offshore drilling, and the Environmental Protection Agency, to come up with a figure of 1,440 offshore leaks, blowouts, and other accidents were reported between 2001-2007In addition to environmental damage, these caused 41 deaths and 302 injuries.

The safety record for onshore activities was even more dismal. Some 2,554 pipeline accidents occurred between 2001 and 2007, killing 161 people and injuring 576.

...At times, the accidents occurred far from industrial installations such as offshore drilling rigs or refineries. In one particularly gruesome incident from August 2000, three families with young children on a camping trip in New Mexico were consumed by a 500ft fireball from a ruptured pipeline. All 12 people were killed, and an official investigation by the National Transportation Safety Board later blamed the pipeline company for failing to detect or repair severely corroded pipes.
...Among the causes for the poor safety record was the industry's relentless costcutting, despite record profits, said the report's authors, describing equipment failures, tank corrosion, and other signs of poor maintenance.
Quis custodiet ipsos custodes?
Exactly.   Who is watching the watchers?   Who is watching our legislators and our regulators, those we count on to protect the public interest?   Apparently just about no one because they've been had, turned.  It takes a lot of looking the other way to tolerate 1,440 drill rig incidents in eight years even if they were Bush-Cheney years.
Canadians have no reason to be smug.   Our elected representatives, Ottawa included, and regulators, federal and provincial, have been very much "looking the other way" in regard to the Athabasca Tar Sands.   If you want to know the extent of their perfidy, read Andrew Nikiforuk's Tar Sands.   When you're finished you'll be left convinced there are a lot of people - in Edmonton, Calgary and, yes, Ottawa who ought to be behind bars.   And they're not just Conservatives either.   The point is that, even in Canada, we cannot trust our elected officials and the bureaucrats they direct to safeguard the public interest.  It's not so much that they fail to do it, it's that they refuse to do it - they choose to look the other way.
Here's something you need to keep in mind.  We're just beginning to pursue unconventional oil.   There are some who want Tar Sands production expanded three-fold, perhaps even five-fold.   Ask yourself this.   If we can't environmentally regulate the current trickle, what chance do we have if we open the flood gates?
Those tailing "ponds," the only ponds visible to the naked eye from the space shuttle, the largest man made containment except for China's Three Gorges dam project, why are they still there behind earthen walls that already leak and are just waiting to rupture?   Why?   And that fairy tale about carbon sequestration and capture, how many CCS plants are under construction?   When will they come on line?   How much of the massive carbon emissions generated by the Tar Sands is the Alberta government even promising to capture?  How about 20%, max.   And those lethal carbon-filled caverns.  How many centuries are they going to have to be maintained and monitored?  Who will pay for that?   How many "accidents" will they create over the next thousand years?
Another aspect of the expanded development of unconventional oil is the "cherry picking" factor.  It only makes sense that Big Oil would go after the best, most easily extracted and processed, bitumen first.   That part of the Tar Sands won't last for long.   Big Oil is going to have to move on to more costly, secondary deposits.   The temptation to cut corners will only increase even as the risks head in the same direction.
So who is championing the public interest in this steadily developing environmental fiasco?   Harper, Stelmach?   No, but that's to be expected.   But what about the opposition, Ignatieff?   Not a chance.  Have you heard Bert calling for an enquiry into the true state of the environmental threats posed by the Tar Sands?  Not a peep.   Stiffy, in the most illiberal fashion conceivable, is a Tar Sander through and through.  He embraces the Tar Sands as the beating heart of the Canadian economy for the 21st century, even calling Athabasca a "key to national unity."   No, don't count on Mr. Ignatieff to protect the country and the people of the MacKenzie watershed.
Brace yourself.   The expanding quest for unconventional oil will proceed apace, testament to the marriage of convenience of Big Oil and the political class.  It's going to get more costly and more dangerous.   We're going to have accidents and a lot more of them.   As David Schindler warns, if one of those tailing ponds bursts, we're in for an environmental disaster of such magnitude that people will stop mentioning the Exxon Valdez.  And for what?


Anyong said...

Yep!! And people keep on building huge houses with two people living in them that use oil guzzling furnaces. As I had first had experience on Vancouver Island in 2007, one person living in only four rooms of a huge monstrosity being heated thrughout. These people are the ones complaining the loudest. Most of these houses are thrown together so that they will have to be rebuilt in twenty years. Perhaps that is the only way to keep people in the construction business in Canada alive. It's the way we live in North America in a throw-away society.

Anonymous said...
This comment has been removed by a blog administrator.
Anonymous said...

We CLOSED JOINT-STOCK COMPANY AGS OIL is one of the leading Oil & Gas trading companies in Russia Federation with good business reputation and well experienced in the Petroleum and mining sector. We offer the following trades through our reliable Refineries: D2 DIESEL OIL GOST 305-82, JP54 AVIATION KEROSENE COLONIAL GRADE, UREA 46%/PRILLS, LNG, LPG, REBCO, MAZUT100 GOST 10585-75/99, AUTOMOTIVE GAS OIL(AGO). We as well secure allocations from our various Refineries for our numerous buyers who are interested in Spot transactions on FOB/CIF deliveries to any world safe port (AWSP). Our Refineries have their products both at Russian ports and Rotterdam port. we also have a reliable SHIPPING COMPANY if you are in need of find the contact bellow.