Welcome To Peak Oil - The Deeper You Drill, The More You Might Spill

Alfred Lord Tennyson, poet & author of Charge of the Light Brigade. Image credit:Wikipedia.

A British-owned company has failed publicly and massively in sovereign US waters, having outsourced an ill prepared charge into dangerous underwater territory. Hence the reference to Lord Tennyson's "Charge of the Light Brigade" - Light Crude Brigade...get it?

While it is hard to imagine how exactly they got process safety so wrong - drilling a mile below sea level without frequently testing and certifying that the system would actually shut the flow off when needed? - we should not miss the larger point, that this failed charge signifies the arrival of Peak Oil.

Everyone was expecting a steep and sustained run-up in oil price would mark the onset of Peak Oil. Not happening because of the economic downturn. Instead we get a Gulf-wide gusher. See below for ideas on how government regulation should be deployed under the Peak Oil reality.You'd think that the engineers in charge of Horizon rig would have been constantly focused on how important process safety was to sustaining corporate productivity. Millions of barrels leaked, times around $65 per barrel, represents a huge profit loss even without the cleanup cost added in. (So much for the power of free markets to encourage companies to 'do the right thing.')

How should we frame our understanding of what led to the failed oil brigade?

A snippet of verse sharpens perspective on the human side:Alfred, Lord Tennyson

'Forward, the Light Brigade!'
Was there a man dismay'd ?
Not tho' the soldier knew
Some one had blunder'd:
Theirs not to make reply,
Theirs not to reason why,
Theirs but to do & die,
Into the valley of Death
Rode the six hundred.

Aside from what specifics an Obama-appointed investigatory commission may eventually uncover, I submit that a major impetus for the failed charge - and this covers those at the Minerals Management Service - was the outlook encouraged by politicians of both US political parties who, over the preceding two years, cheer-led this offshore drilling imprudence with cries of "Drill Here, Drill Now." It was amplified by US broadcast media replays, and by print media which featured it without mentioning the risks. No critical thinking on display anywhere. Citizenry are immersed in talking points instead of real information and thoughtful questioning.

Two kinds of pressure.
A mile of water puts immense pressure on underlying strata. Which is why oil flows out with such great force and is so difficult to stop once deep strata are punctured.

The leasing of a deep water rig has to be hugely expensive. Thousands of dollars per minute possibly. Such high costs explain the pressure engineers are under to get on with the job of producing oil once all the equipment and people are in position to tap the leased reserves. Peak Oil leads to peak operating cost.

There specific and very logical reasons to drill a mile below the ocean surface, at such great expense. One is that the more shallow reserves in the Gulf are already tapped. Only by going for deep leases can they hit the big pools of oil which will have long lasting yields and which put big reserve listings on the balance sheet - holding up stock value..

These conditions lead to the question of the day. Amidst Peak Oil, is it practical to rely on a free market to protect other economic interests such as tourism, fishing, coastal barriers, and so on? Probably not, unless you are a Rand Paul or a Sara Palin acolyte.

How should government regulate process safety on a deep rig?
There's no need for inspectors to live on the rig or even to visit frequently - like you'd expect for inspectors of a meat packing plant or of a spinach bagging operation.

Much of what the deep rig operators see is by remote sensor or camera. A shared process safety protocol and tracking of performance metrics for the protocol can be made available to government inspectors, digitally, at little incremental cost. Peak Oil demands peak safety performance and near-simultaneous oversight.

Exxon Valdez was radically different.
The Valdez spill, caused by a ship navigation error, impacted several small communities of one very lightly populated state by a relatively short term release made near the surface. Valdez oil was not immediately exposed to deep, fast marine currents with regional exposure. Valdez was framed by rocky shoals and forested, steep bluffs, not wetlands and broad sandy beaches like the Gulf.

This BP Gulf spill is impacting Louisiana, Mississippi, Alabama, and may possibly touch Texas, Florida, and beyond. It has already been going on a month. Conversely, at the time of the Valdez spill, very few had ever heard of Peak Oil and the internet was a research platform mostly. The two situations are barely comparable.

What's next politically and with the law?
Before new offshore leases are approved Federally, I expect each Atlantic and Gulf state with riparian interest to want real time access to the drill cams at critical moments. Before critical steps are taken, these governments will want to review the history of process safety conformance reports and see any notices of deficiency issued by virtual inspectors.

Who else thinks that off shore lease terms will soon include stipulations for process safety performance that, if missed, will threaten the lease and/or lengthen production schedules until corrective actions are taken? (The latter would be a far more serious threat than an after-the-fact administrative penalty because of the seriously high revenue reduction potential and because lawyers will have a harder time delaying and deferring with appeals.)

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