Black Gold is worse than Black Mold

[Pheidippides]

I don't know how many of you are following this oil spill in the Gulf. It's my industry, so I've been following it since the beginning.

I'm not an expert on the technical specs on platforms and such, nor am I an expert on the impact of oil spils, but I do know more than the average joe by a good bit.

This is a big deal. These sorts of things just don't happen.

BP (who already has a pretty shoddy safety reputation, at least in the industry) is going to suffer a major black eye from this. Exxon-Valdez was big and horrible, but it was in Alaska, which most of us care about only in the abstract. This is in the Gulf, which is closer to home and very close to home for some CUF members (the beach I vacation to is in danger).

After a few days worth of thought, I'm pretty sure that the gov't requirements aren't stringent enough in terms of bonding requirements. In this case, all the clean-up costs are going to get paid for because BP has very deep pockets. But there are many, many, many oil properties run by smaller companies without such pockets who would not be able to pay for the clean-up.

Right now, you have to post some sort of security, typically, to cover the decommissioning of your activities with respect to a certain piece of property. That security is enough to cover business as expected, though, not unexpected spills. I think bonding for spills is a good idea. It will cost more at the pump, to be sure, but the last thing you want is Butte, Montana in the middle of the ocean.

I also think a look at the leak prevention technology needs to be looked at and maybe federally mandated. BP has spent the last few days trying to get a valve to trigger - a valve that is supposed to automatically trigger and keep this from happening in the first place.

I'd also recommend that any leak be immediately subject to Gov't reporting (I think it is) AND to Gov't inspection. BP downplayed the seriousness of the leak initially, and it was only after the gov't estimates came in some days later that we realized how big a deal this is. I think it would have been helpful to have immediate independent assessment of the leak problem - this would have resulted in faster mobilization of resources. As it is, people are trying to play catch-up.

I'm as horrified at this event as I have been in quite some time.

[kccougar]

I'm currently working with BP on a wind energy project, and I think it's interesting that their approach in this sector of the industry is polar opposite. They are so obsessed with safety and environmental issues that we literally can not get anything done. It is crippling.

[PaloAltoCougar]

I've been watching this with great interest as well, as the economic implications for that region, and the country generally, are huge. I'm sure BP can cover the cost of the clean-up, but I wonder about the greater claims by third parties affected by this (e.g., the shrimping/fishing/tourist/etc. industries, for starters). Issues relating to standing, liability and damage computation, among many others, are going to keep armies of lawyers busy for years to come.

[Pheidippides]

I'm currently working with BP on a wind energy project, and I think it's interesting that their approach in this sector of the industry is polar opposite. They are so obsessed with safety and environmental issues that we literally can not get anything done. It is crippling.

BP has been aggressive in the wind sector, moreso than the other big oil concerns out there. I think it's mostly a PR/tax credit thing - I don't see a huge future for wind power as a significant source of electricity. That's not to say I think it's a bad idea - nothing wrong with wind power - but it has absolutely no baseload applicability. Same with solar (which is also much more expensive to build). I stand by my position of nuclear as the way to go, if we can figure out the storage of waste (RIP, Yucca Mountain).

[Pheidippides]

I've been watching this with great interest as well, as the economic implications for that region, and the country generally, are huge. I'm sure BP can cover the cost of the clean-up, but I wonder about the greater claims by third parties affected by this (e.g., the shrimping/fishing/tourist/etc. industries, for starters). Issues relating to standing, liability and damage computation, among many others, are going to keep armies of lawyers busy for years to come.

Several lawsuits have already been filed - at least two on behalf of shrimpers/fishermen. I really do think this is what will make this disaster so much worse than Exxon-V: the number of people directly impacted. Exxon-V hurt people as well as the environment, it is true, but Alaska is relatively unpopulated. The Gulf Coast, on the other hand, supports all manner of people and activities.

[kccougar]

BP has been aggressive in the wind sector, moreso than the other big oil concerns out there. I think it's mostly a PR/tax credit thing - I don't see a huge future for wind power as a significant source of electricity. That's not to say I think it's a bad idea - nothing wrong with wind power - but it has absolutely no baseload applicability. Same with solar (which is also much more expensive to build). I stand by my position of nuclear as the way to go, if we can figure out the storage of waste (RIP, Yucca Mountain).

Agreed.

[Moliere]

It was (and still kind of it and will be) my industry. I've been following it as well and it has made me reconsider my position on deep sea drilling. I still think deep-sea drilling is safe (come on, we haven't had something like this since like 1969) but there definitly are risks. Your idea of bonding companies who want to do this kind of drilling is intertesting. You could counter that by saying that bonding them will just tie up capital that they could use in other projects, however most (if not all) drillers in deep-sea wells are the big players and not your mom and pop shop E&P company. Your idea could be a good one.

Keep in mind that the reason these guys are drilling out there is not because there is more oil in the deep-sea wells, but they aren't allowed to drill in shallow waters anywhere but the GOM and all the drilling has pretty much been done in those shallow waters. They are being pushed further out from shore by the restrictions to drill anywhere else. This kind of tragedy could happen in shallow water, but it would be much easier to cap the well in 50 foot water instead of 5,000 foot water.

If anything, this might put the kabosh on a tentative vacation to Pensacola/Destin around labor day. That is our favorite beach to go to and we might look elsewhere.

[RobinFinderson]

Drill-Baby-Drill!

[Pheidippides]

It was (and still kind of it and will be) my industry. I've been following it as well and it has made me reconsider my position on deep sea drilling. I still think deep-sea drilling is safe (come on, we haven't had something like this since like 1969) but there definitly are risks. Your idea of bonding companies who want to do this kind of drilling is intertesting. You could counter that by saying that bonding them will just tie up capital that they could use in other projects, however most (if not all) drillers in deep-sea wells are the big players and not your mom and pop shop E&P company. Your idea could be a good one.

Keep in mind that the reason these guys are drilling out there is not because there is more oil in the deep-sea wells, but they aren't allowed to drill in shallow waters anywhere but the GOM and all the drilling has pretty much been done in those shallow waters. They are being pushed further out from shore by the restrictions to drill anywhere else. This kind of tragedy could happen in shallow water, but it would be much easier to cap the well in 50 foot water instead of 5,000 foot water.

If anything, this might put the kabosh on a tentative vacation to Pensacola/Destin around labor day. That is our favorite beach to go to and we might look elsewhere.

Pensacola/Destin is where I go too.

I'm still thinking through the bonding requirement. It obviously would have the effect of tying up capital. And it's probably unnecessary for the big players. Now that I think of it, a better idea would be to have each company pay a fee (maybe out of production, as a royalty - or maybe just use the existing royalties) to fill a clean-up fund. Because this happens so rarely, the amount with respect to each oil and gas lease could be relatively low, but you'd have a fund to cover the clean-up in the event that next time it's not BP but Bob's Drilling and Bait Shop. I think I like that idea better - you obviously couldn't have a bond cover the entire projected cost of something this big, or else you're making it all but certain that nobody but the big boys can/dare to produce.

[Moliere]

BP has been aggressive in the wind sector, moreso than the other big oil concerns out there. I think it's mostly a PR/tax credit thing - I don't see a huge future for wind power as a significant source of electricity. That's not to say I think it's a bad idea - nothing wrong with wind power - but it has absolutely no baseload applicability. Same with solar (which is also much more expensive to build). I stand by my position of nuclear as the way to go, if we can figure out the storage of waste (RIP, Yucca Mountain).

This is my current industry (energy generation/transp/distr) and I agree with you. Wind is good to have because it's clean, but it has no baseload capacity. In Texas, the typical electricity needs spike in afternoons in August and at that point we need about 70GW of electricity for the state. Some of that comes from wind, but you never know how much you will be getting. Right now wind is generating about 2GW but sometimes it will generate 6GW and sometimes even more. That kind of fluctuation is impossible to use in electrical forecasting.

Btw, if you are interested in tracking energy consumption in Texas, here is a link showing generation (it breaks out wind) and demand.

http://mospublic.ercot.com/ercot/jsp...cy_control.jsp

[Pheidippides]

This is my current industry (energy generation/transp/distr) and I agree with you. Wind is good to have because it's clean, but it has no baseload capacity. In Texas, the typical electricity needs spike in afternoons in August and at that point we need about 70GW of electricity for the state. Some of that comes from wind, but you never know how much you will be getting. Right now wind is generating about 2GW but sometimes it will generate 6GW and sometimes even more. That kind of fluctuation is impossible to use in electrical forecasting.

Btw, if you are interested in tracking energy consumption in Texas, here is a link showing generation (it breaks out wind) and demand.

http://mospublic.ercot.com/ercot/jsp...cy_control.jsp

The real problem we have in Texas with wind (as you probably know better than I do, given where you work) is transmission. We have tons of wind power and wind power resources in West Texas but we have a real limit on transmission capability. I know of at least one proposed project to build a line out there from the DFW area. I know we could use additional transmission capacity from DFW to Houston as well.

We Texans are unique in that we've essentially told FERC to take a flying <redacted> and just use ERCOT.

[woot]

I'm also very saddened by this. I can't imagine how many millions of animals have died because of it. Apparently the shrimpers have already filed suit, but I don't have much sympathy for them; shrimping is only slightly less destructive than an oil spill.

[Moliere]

The real problem we have in Texas with wind (as you probably know better than I do, given where you work) is transmission. We have tons of wind power and wind power resources in West Texas but we have a real limit on transmission capability. I know of at least one proposed project to build a line out there from the DFW area. I know we could use additional transmission capacity from DFW to Houston as well.

We Texans are unique in that we've essentially told FERC to take a flying <redacted> and just use ERCOT.

Yep, transmission lines are expensive to build. Now try building a transmission line to west Texas and you are in for some serious capex funding. I can't remmeber the cost per mile (someone in the finance group told me once) but it was somewhere close to $2 million per mile. You not only have to transport the electricity but you also have to gather it from every windmill, so you then have gathering lines similar to gathering lines in an gas field. The whole thing is not economical nor dependable compared to other options, which is why the government heavily subsidizes it. The idea of nuclear plant just oustide of town is much cheaper and more reliable.

As for the FERC, they are slowly getting their hands around Texas. We now file certain FERC forms, although they have no jurisdiation over rates. I'll see if I can find a map of the electrical grid in the US. It will prove what you implied above that Texans are unique.

[Moliere]

I'm also very saddened by this. I can't imagine how many millions of animals have died because of it. Apparently the shrimpers have already filed suit, but I don't have much sympathy for them; shrimping is only slightly less destructive than an oil spill.

Well, if it happens often enough those animals will evolve into something that can withstand oil spills. In fact, maybe they can evolve into a species that eats oil. win/win

[woot]

Well, if it happens often enough those animals will evolve into something that can withstand oil spills. In fact, maybe they can evolve into a species that eats oil. win/win

Yeah, like the bacteria that have evolved to eat plastic. That would be fun, but for every crazy mutation like that, there are untold numbers that go extinct. I don't know much about the demes of the gulf, but I imagine there will be some extinctions from this.