More than a year has passed since BP’s Deepwater Horizon rig exploded in the Gulf of Mexico, killing 11 workers and causing the largest marine oil spill in the history of the petroleum industry. A presidential commission investigating the spill concluded in January that the April 20, 2010, disaster and aftermath revealed “systemic” failures by the offshore drilling industry and federal regulators.
In response, the Interior Department has revised the rules governing offshore oil and natural gas drilling to include a lengthier and more extensive permitting process, and the industry has developed new well control and deepwater spill containment technology. But Congress has made little headway toward addressing the safety issues raised by the disaster.
One major reason is the highly partisan political environment on Capitol Hill, where a small Democratic majority in the Senate has found little common ground with the overwhelmingly Republican House of Representatives.
For example, while Senate Democrats have been pushing legislation that would tighten government oversight of offshore drilling practices, House Republicans have put the focus on measures that would accelerate oil and gas production.
The Obama Administration has called on Congress to write into law the beefed-up safety and environmental standards imposed by the Interior Department in the aftermath of the BP oil spill. The measures are intended to prevent other massive spills. An estimated 4.9 million barrels of oil were released before the company’s underwater well was plugged last September.
Interior Secretary Kenneth L. Salazar has suggested that Republicans are suffering from “amnesia” in advancing legislation that would greatly speed the pace of issuing permits for offshore drilling and open vast new areas along the Atlantic and Pacific Coasts to energy development.
As a result of the BP Deepwater Horizon rig explosion on April 20, 2010, new steps have been put in place to improve safety. Specifically, before obtaining permits from the Interior Department to drill in the deepwater Gulf of Mexico, oil companies are now required to prove they have access to containment systems able to halt even a worst-case spill.
To meet Interior’s requirements, the oil and gas industry has been working to develop improved spill prevention, containment, and recovery plans. Last year, for example, ExxonMobil and four other major oil firms together invested $1 billion to establish the nonprofit Marine Well Containment Co. (MWCC), which has developed a new rapid response system that is now available to capture and contain oil in the event of another deepwater well blowout.
The MWCC containment system includes a “capping stack” of valves and pipes, controlled by underwater robots, that can be placed on top of a gushing well in 10,000 feet of water to stop oil flow. The equipment is capable of capturing 60,000 barrels of oil per day from a leaking well, roughly equivalent to the daily amount of crude that escaped from BP’s blown-out well.
Next year, MWCC will bring on-line an expanded well containment system that will have the capacity to capture up to 100,000 bbl of oil per day.
“If we all do our jobs properly, this system will never be used,” says Rex W. Tillerson, chairman and chief executive officer of ExxonMobil. “The extensive experience of industry shows that when the focus remains on safe operations and risk management, tragic incidents like the [BP spill] should not occur.”
“Much of the legislation that I have seen being bandied around, especially with the House Republicans, is almost as if the Deepwater Horizon incident never happened,” Salazar told reporters in April after the House Natural Resources Committee approved a trio of bills (H.R. 1229, 1230, and 1231) to spur oil and gas production in the Gulf. “Some people seem to have gotten amnesia of Deepwater Horizon and the horrific BP spill,” he said. “I don’t have amnesia.”
The fact that Congress has not passed legislation to strengthen offshore drilling safety has also drawn the ire of the environmental community.
“Under the cover of high gas prices, the ‘drill, baby, drill’ crowd keeps trying to speed up drilling and expand the areas drilled,” says Michael Gravitz, oceans advocate for Environment America, a federation of state-based environmental advocacy organizations. “Instead, Congress should permanently protect our clean oceans and beaches from the kinds of environmental and economic destruction that BP’s Deepwater Horizon spill caused in the Gulf.”
The full House approved the measures on largely party-line votes in May, but Senate Democrats shortly thereafter rejected similar proposals packaged together by Senate Minority Leader Mitch McConnell (R-Ky.). His legislation (S. 953) would have speeded up the permitting process and expanded oil and gas drilling by opening up the Atlantic Coast and other offshore areas now closed to exploration and production.
During the Senate floor debate on May 18, Sen. Dick Durbin (D-Ill.) said the GOP bill would lead to more drilling “with less safety and regulation of the industry. You would think the BP oil spill never happened.”
Republicans have argued that pro-drilling legislation is needed because the Administration has dragged its feet on allowing energy producers to get back to work since last year’s spill. In October 2010, the Interior Department announced it was lifting the ban on all deepwater drilling that had been imposed in the aftermath of the BP accident.
But Rep. Doc Hastings (R-Wash.), chairman of the Natural Resources Committee, points out that the department has issued few permits to drill new wells offshore since lifting the moratorium. “The regulatory cobweb of red tape and constantly moving goalposts created by the Obama Administration after the Gulf of Mexico oil spill have resulted in a de facto moratorium on deepwater and shallow-water drilling permits,” he says.
Hastings has indicated that he will move forward with safety legislation once an investigation into the BP spill by the Interior Department and the Coast Guard wraps up. “From day one, I’ve said that we need all the facts surrounding the cause of this tragic event before jumping to conclusions and passing reforms with long-term consequences,” Hastings remarks.
Although the House has not yet addressed drilling safety, the Senate has made an effort to pass a spill-response measure. But a long-standing dispute over whether the federal government should give coastal states a slice of the royalties it collects from oil and natural gas drilling is threatening to derail the legislation.
After more than a year of negotiations, Senate Energy & Natural Resources Committee Chairman Jeff Bingaman Jr. (D-N.M.) introduced a bill in May (S. 917) that would overhaul offshore drilling policies by boosting safety requirements for the oil and gas industry, increasing civil penalties for companies that violate those provisions, and giving the Interior Department more time to consider industry exploration plans.
But a group of lawmakers, mostly Republicans, blocked a key committee-level vote on the measure last month after efforts to use the bill to steer billions of dollars of oil royalties to coastal states appeared likely to fail.
The situation unfolded on July 21 after senators on the Energy & Natural Resources Committee sparred over the controversial revenue-sharing proposal championed by Sens. Mary L. Landrieu (D-La.) and ranking member Lisa Murkowski (R-Alaska). The senators have long pushed for the federal government to share royalties from oil and gas production in federal waters with the adjoining coastal states to boost state coffers and to create a financial incentive for other states to back energy exploration off their shores.
The Landrieu-Murkowski plan would direct 37.5% of energy production royalties to coastal states. Of that, 20% would be passed on to local communities that shoulder the burden of roads, docks, pipelines, and other facilities. Currently, virtually all royalties and revenues from energy production in federal waters—about $5 billion to $10 billion annually—goes to the U.S. Treasury Department.
Their amendment would also allow coastal states that do not have oil and gas operations near their shores to share in royalties from emerging marine renewable energy projects, such as wind farms.
Murkowski argued that coastal states deserve compensation for their share of the burden of offshore energy development. And Landrieu noted that last year’s Gulf oil spill also was a reminder of the risk that coastal states face from accidents at nearby offshore oil and gas operations.
However, Bingaman has firmly opposed state revenue sharing, arguing that federal offshore resources and the revenue they produce belong to all 50 states. Opponents of the revenue-sharing plan also maintain that the federal government cannot afford to lose out on potentially billions of dollars annually, given the nation’s rising debt.
Bingaman pleaded with his Senate colleagues not to allow “unrelated controversies” to bog down the drilling-safety bill. But sensing defeat, Landrieu and several Republicans who backed the revenue-sharing plan walked out of the room, leaving the committee without enough members to hold a vote and effectively blocking any further action on the legislation.
At the conclusion of the failed session, Bingaman said he did not know what would become of the underlying drilling-safety bill. “I don’t know how we proceed,” he remarked.
Murkowski said she remains optimistic that the committee will resolve the matter but stressed that the legislation must simultaneously address safety, production, and a fair return for coastal states. “We must recognize the importance of putting safety and the nation’s need for greater energy production together,” she said. “Our shared goal is to have safe production.”