How Oil Companies Plan to Maximize Their Profits at the Expense of Our Coastal Waters
By Richard Charter, for the H2oover Foundation
Exploration of natural gas and oil brings with it numerous and diverse environmental and human health problems. With so much attention focused on a long list of issues including oil spills, tar sands, fracking, carbon emissions, etc., little attention is being paid to the removal of thousands of offshore oil and gas structures.
Removing disused offshore drilling rigs from U.S. federal waters after the economic life of a seafloor oilfield has concluded is established public policy. In the U.S. Exclusive Economic Zone, beyond state waters that extend for three miles from shore off most coastal states and for ten miles off Texas and Florida’s Gulf Coast, longstanding federal regulations have required full decommissioning and removal of obsolete oil platforms.
Drilling platform support “jackets” that are no longer in use have long been required to be disposed of by being cleaned of oils, cut up, and either recycled for metals or transferred to landfills, while any remaining seafloor oil well casings have had to be sealed and severed 15 feet below the mud line. In each of the original Outer Continental Shelf (OCS) lease contracts executed between the Department of Interior and the petroleum industry, the companies willingly agreed to carry out eventual terrestrial decommissioning as part of the legally binding terms of their lease. In certain sensitive areas off of Southern California, this written contractual commitment by industry to eventually restore the seabed to “as-near-prelease conditions as possible” played an instrumental role in enabling drilling to proceed in the first place.
Old non-producing platforms have logically been slated for removal because they can create serious safety, environmental, and navigational risks, and often deteriorate in ways making them more susceptible to structural failure, leading to substantial liability issues for the rig owner or the government agency administering the lease. On November 10, 2012 a barge loaded with five million gallons of fuel oil hit a submerged oil platform in the Gulf of Mexico, 30 miles south of Lake Charles, Louisiana. The platform had been damaged by Hurricane Rita and was marked with unlit buoys. The 150,000-barrel double-hull barge DBL 152 suffered a 35’×6′ gash in one of its cargo tanks after striking the West Cameron 229A platform, leaking an estimated 1.3 million gallons of oil into the Gulf. Efforts to remove remaining oil from the barge were still underway a month after the collision.
In the past, parts of the Gulf of Mexico have been littered with disused offshore drilling rigs. In some instances leftover damaged wellheads have continued to leak oil for years into the Gulf, and some are still leaking even now. In response to the problems created by these kinds of orphaned rigs in the Gulf, the Interior Department has had to initiate what it calls the “Idle Iron” policy, requiring removal and careful plugging and abandonment of old wells within a certain timeframe with penalties for noncompliance.
An Industry Dodging Fiscal Responsibility:
The immense potential cost savings to the petroleum industry to be gained by not removing old rigs that have made immense profits for companies over the decades has led oil interests to undertake a slick public relations campaign as they try to break their promises. Financially motivated to avoid about 50% of their obligated decommissioning costs, the drillers cleverly anointed their effort to circumvent federal decommissioning requirements with the name Rigs-to-Reefs. Thus altering the “life cycle costing” considerations for a company as it evaluates whether or not to bid on a particular future drillsite can change a bidding decision considerably when the drilling company knows it will not be required to remove and recycle the rig itself at the end of its useful lifetime. This means that sensitive waters like the Arctic Ocean, the California coastline, and Florida’s long-protected Gulf Coast and Panhandle, for example, will be placed at increased jeopardy as industry bids more aggressively on challenging or remote drilling targets with the foreknowledge that the company will ultimately be able to just cheaply discard a platform in the ocean near the drilling site.
The petroleum industry has spent a lot of money and focus group message-testing as part of their nationwide Rigs-to-Reefs greenwashing effort, aimed primarily at the recreational fishing industry and at policymakers, trying to gain federal approval for their proposal. Once the oil industry figured out how much money they could save by simply dumping their cut-off steel jackets – or even by cutting them off “in-situ” below the water line and leaving the wreckage in place on site – an elaborate promotional effort was put into motion. Sadly, some of the most vocal advocates for the Rigs-to-Reefs concept have apparently not turned out to be among the most responsible operators in the Gulf of Mexico.
In response to political pressure from the oil industry, the Interior Department has initiated its own version of a Rigs-to-Reefs program, designed to interact with state programs in states that have passed specific legislation to establish programs for dealing with old oil and gas platforms, including Louisiana, Texas, Mississippi, and most recently, California. Under certain limited conditions, the Interior Department can now waive existing federal law requiring full decommissioning and “donate” the spent rig to one of these states for offshore abandonment in a state-designated “reefing site”.
With the exception of Florida, the Gulf Coast states that are still reeling economically from the disastrous BP Gulf Oil Spill find the powerful combination of the long-entrenched political persuasion of the petroleum industry and the pressure from the similarly influential sportfishing lobby combine to force them to embrace Rigs-to-Reefs with little objective scientific scrutiny, since few studies are available that have not been designed and paid for by the oil companies. First dozens, then hundreds, and eventually thousands of offshore rigs and related subsea pipelines and other petroleum infrastructure facilities will eventually need to be decommissioned, with Rigs-to-Reefs representing a potential savings to the industry amounting to billions of dollars. Even for the 23 rigs nearing obsolescence and facing near-term abandonment in federal waters off of California, the lure of potential future state funding that might someday be derived from even a fraction of industry’s cost-savings motivated the state legislature and former Governor Arnold Schwarzenegger’s administration to gloss over what was admittedly only a cursory literature review and become the latest guinea pig for the Rigs-to-Reefs scheme. California’s petroleum interests, joined by well-compensated sportfishing lobbyists and at least one normally-cautious conservation group, managed to dominate the debate and to obscure legitimate public concerns about the plan. Going forward, at least California agencies will supposedly be required to perform a case-by-case evaluation for each of the discarded rigs off the state’s coast, some of which are immense structures located in 400 to 1000 feet of water.
Hidden Adverse Impacts:
There are several underlying problems inherent in enabling the industry to avoid their prior requirement for full decommissioning of spent platforms. At the site of many offshore drilling rigs in relatively shallow water, seafloor obstructions consisting of drill mud mounds containing toxic substances often remain behind. Studies conducted around offshore drilling rigs in the Gulf of Mexico have revealed small amounts of mercury with the potential to bio-accumulate in the fisheries food chain leading to humans. This mercury pollution is thought to originate from mercury contained in spent barite drill muds used to cool and lubricate the drill bit, after which the used muds are discharged into the water column and dumped on the seafloor. Other toxic, carcinogenic, and mutagenic chemicals often remain in the seafloor wastes accumulated from years of drilling and oil production. Concentrations of these discharged oil-related pollutants do not need to be particularly high to be of serious biological concern. Research on oil pollution in Alaska’s Prince William Sound since the 1989 Exxon Valdez oil spill has provided compelling evidence that very low levels of PAH compounds (polycyclic aromatic hydrocarbons) associated with the spilled oil are causing life-cycle mutagenic damage to the eggs of Pink salmon at levels of two parts-per-billion. Dilution, it turns out, is not the solution for toxic pollution that bio-concentrates in the marine food chain.
Beyond the toxic chemical components found in the mud mounds, these seafloor snags also represent physical obstructions to the activities of commercial fishermen.
Can Oil Companies Really “Improve on Nature”?
There is also an ongoing dispute about the efficacy of the much-touted “artificial reef” functions supposedly provided by abandoning discarded drilling rigs in the marine environment. The oil industry’s Rigs-to-Reefs advertising claims that the dumped rigs reliably attract fish in various ecological settings. The state of current science, however, provides ample contrary evidence indicating that while their abandoned drilling structures might sometimes attract certain species of fish, in many locations these fish are not necessarily “new” fish biomass, but are instead coming from natural hard-rock seafloor substrate or other nearby natural habitat. Certain species are simply being aggregated around the dumped rig components in a manner that makes the fish easier prey for sportfishing interests normally precluded from fishing in close proximity to an active rig due to the usual closure zone surrounding an operating platform. There is no evidence that either operational or discarded platforms provide net ecological benefits to the marine ecosystem as a whole, relative to parts of the ocean left in a natural state.
Each proposed platform abandonment location in the Gulf of Mexico and off of Southern California is necessarily unique in terms of ecological setting and the specific types of marine species found in surrounding waters. No matter how carefully considered, not all artificial reefs are functional contributors to marine health. A 176-acre rocky-bottom fish habitat that Southern California Edison Company built a half-mile off San Clemente in 2008, supposedly “replacing” fish lost due to operations at the company’s nearby nuclear power plant, has recently been found to be failing to propagate enough fish to meet the agreed-to mitigation requirements.
The vision of a restored ocean returning to vibrant and healthy productivity after offshore rigs are removed is proving an elusive one in the face of a lopsided debate being dominated by petro-dollars, but for many states and for much of the American ocean, the fate of our marine environment is yet to be decided.
Promises Not Kept:
The word “ecosystem” finds its meaning in the Greek word oikos, defining a “house, dwelling place, or habitation.” The ocean is a key part of our collective home. In ecosystems, diversity is closely connected with network structure. A diverse ecosystem is resilient because it contains many species with overlapping ecological functions that can partially replace one another. We ourselves are living with, and literally living as part of, the Earth’s ocean ecosystem.
Left alone by human intervention and absent polluting activities, the ocean environment can prove to be a powerful and pervasive self-healing mechanism, and the case could be made that the ecosystem design that preceded the age of offshore oil development was likely the most successful biological niche that could have evolved in a particular location. Ultimately allowing the marine environment to restore itself was the stated rationale for the decommissioning contracts that the drillers originally accepted and signed when they began to explore and develop the offshore sites now in question, and there is no conclusive evidence that Rigs-to-Reefs is a beneficial use of spent drilling rigs for anyone but the accounting department of an oil company.
If our society allows the petroleum industry and their captive scientists to determine the fate of our sustaining hydrocommons in the oceans, decisions made by this special interest lobby will not be in the public interest, but made instead in the interest of maximizing industry profits by avoiding remediation of corporate messes and by circumventing willingly-accepted corporate responsibilities for rig removal.
In the event that we arbitrarily extend the duration of the impacts of the industrial detritus of the fleeting carbon age in our oceans, we are denying our grandchildren the possibility of experiencing the ocean we inherited from our ancestors. We are instead allowing the ocean itself to become a vast corporate chemical and biological experiment, with no coherent vision or sound science to tell us what the results might turn out to be over the long term.
Enabling the drilling industry to avoid keeping their solemn promise of full decommissioning of spent rigs, aside from the trail of pollution that would be left behind, particularly endangers ever more sensitive places in our coastal waters by making them more economically attractive for exploitation while arbitrarily incentivizing their unnecessary sacrifice. Our ocean, while appearing deceptively uniform when viewed from above the sea surface, actually embodies a wide diversity in seafloor habitats, species composition, and water column conditions, and an approach to dealing with obsolete drilling infrastructure that might at first appear to be effective in one location may not work at all elsewhere. The petroleum industry has an obligation to society to follow the precautionary principle that they themselves often espouse and to honor their original agreements to remove spent drilling rigs and restore the seafloor as much as possible to pre-drilling conditions when an oil field is depleted, lest Americans someday wake up to a polluted ocean haunted by thousands of dumped rigs comprising an offshore junkyard of epic proportions.
Richard Charter is a Senior Fellow with The Ocean Foundation and has worked for 35 years on offshore drilling safety, oil spill response, and ocean protection issues with local and state governments and the conservation community. Richard currently serves on the Methane Hydrates Advisory Committee to the U.S. Department of Energy and on NOAA’s Gulf of the Farallones National Marine Sanctuary Advisory Committee.
“The wise use of water is quite possibly the truest indicator of human intelligence, measurable by what we are smart enough to keep out of it. Including oil, soil, toxics, and old tires.”
-David Orr, Reflections on Water and Oil