By Frank M. Hughes
Fellow Floridians; Oil is not just another commodity.
Something extraordinary and of signal importance to the world occurred with the drilling of the first oil well at Titusville, PA. in 1859. Then applying genius to combine oil and innovation such as the internal combustion engine, a $13 trillion economy based on transportation and distribution evolved over 150 years to create our affluent life styles. Besides powering all modes of transportation — land, sea, and air — over 6000 products get their start from oil and natural gas — fabrics, medicines, fertilizers and most 20th century miracle chemicals to make our toys, iPods, and computers. It truly is black gold for our drive-in, drive-thru, fly-me, pleasure-boating culture. Even the most hard core environmentalist needs fossil-fueled transportation to get to meetings, gatherings, or must-attend protests.
Because five of the concerns cited at your forum deal with some aspect of an environmental drilling risk or aftermath of a possible incident, the Tampa Bay Regional Planning Council’s Top Ten Concerns about offshore Florida oil drilling can actually be reduced to two primary questions: (1) what is the environmental risk of drilling? and (2) is the risk acceptable? Two other concerns involve industry infrastructure needed for drilling operations; one seems to question the thoroughness of western and central Gulf operations; another is about possible interference of drilling with military operations; and finally there is a concern about a realistic timeline for petroleum product exploration and development off the Florida coast.
By its very nature petroleum exploration and production is unpredictable, so the purpose of this response to your concerns is to try to add clarity and some certainty for ascertaining the drilling risk by offering independent data, much of it from an agency of the Federal government. The response provides evidence that the environmental risk of drilling is acceptable, it addresses all of the above mentioned concerns, and concludes that we should move forward and exploit our Nation’s wealth by drilling offshore Florida for oil and gas.
“The development of the offshore petroleum industry is a remarkable story of inventiveness, entrepreneurship, hard work, and risk-taking that turned Louisiana’s relatively isolated coastal communities into significant contributors to the U.S. and world economies.”
Sounds like spin from a Petroleum Industry spokesman, but it is a direct quote from the website of the Minerals Management Service (MMS), Gulf of Mexico Region (GOM), United States Department of the Interior. A few lines later the description continues, “This industry emerged as returning World War II veterans applied skills, technologies, and can-do attitudes (emphasis added) to overcome the many challenges of producing oil from below the ocean floor.”
The 615,000 square mile Gulf of Mexico basin is a smaller part of the Atlantic Ocean and almost half of the basin is shallow intertidal waters. The MMS Eastern GOM Planning Area encompasses 76 million acres and 700 miles of NE GOM shoreline and Outer Continental Shelf (OCS).
Webster defines “natural resources” as “those actual and potential forms of wealth (emphasis added) supplied by nature as coal, oil, waterpower, arable land etc.” Potential in this definition means some resources don’t become wealth until they are extracted from the ground (or from under the sea) and/or used to the benefit of mankind -- like what the Florida Energy Associates want to do -- risk billions of dollars to find and produce oil and gas from the Eastern GOM. An exploratory well can cost from $10 million to $30 million in shallow waters and $100 million or more if in deepwater (200 miles due south of New Orleans, Chevron Corp. has spent 10 years and $2.7 billion dollars operating an oil platform in 4,300 feet of water)-- and the probability that a well will produce commercial hydrocarbons averages about 40 percent. Uncertainty blankets the entire process, but MMS mean estimates for the Eastern GOM Planning Area of 3.9 billion barrels (bbl) of oil and 21.5 trillion cubic feet of gas are consistent with Florida Energy Associates estimates and adds credibility to their expected royalties of $1.5 to 2.25 billion for the state of Florida. The Destin Dome, offshore Pensacola, is said to have enough natural gas to supply 1 million households for 30 years. These forecasts are buttressed by MMS’s reports of an average annual production of 441,141,556 bbl of oil from western and central GOM for 2005 to 2009, which infers that the Eastern Gulf projection of 150 million bbl annually represents a reasonable estimate.
To say that our economy depends on oil is a serious understatement. The United States consumes 20 million bbl of oil per day and imports 60 percent of it. Transportation accounts for 70 percent of U.S. oil consumption (14.3 million bbl) and oil fuels 97 percent of U.S. transportation needs. Obviously, developing alternative energy sources is both technologically and economically astute, as are conservation and improving energy efficiency, but the Department of Energy’s (DOE) 2009 Annual Energy Outlook declared that in 2030, 79 percent of our total energy use will still be powered by fossil fuels. There is not now a feasible alternative energy available for transportation or a technological ‘silver bullet’ on the horizon. Last time I traveled somewhere by aircraft, it needed fossil fuels to propel it forward and thankfully to keep it aloft. The point here is that when an alternative to the ICE and gasoline is discovered, if ever, you may need to have alternatives available for all transportation. Right now, 47 percent of a barrel of oil is used to produce automotive gasoline which means that its revenue absorbs most of the economic costs of exploration, production, refining, marketing, and transportation. What happens to the prices of all those other products when we reduce or even eliminate automotive gasoline? Right now, electricity appears to be the favored substitute for oil fueled ground transportation, but only if an affordable solution is found to increase the vehicle’s power and range; make it convenient to plug-in for a recharge; and -- most critical -- build sufficient electric power generation to support the demand. The latter will require the use of more coal, oil, gas, and nuclear energy, perhaps supplemented by wind and solar. A rational energy policy has to include drilling more oil and gas now, no matter how green you visualize the future.
That $73 billion Florida tourism industry depends on people being transported from their residences around the world to Florida and its beautiful beaches. Automotive, aviation, and diesel locomotive fuels have to be available and affordable to sustain that tourism industry. It is all about risk and the case can be made that there is a higher risk of shortages, supply interruptions from an unstable Middle East, and escalating prices than any environmental risk of a few oil platforms in the Eastern Gulf -- picture pristine but empty beaches. No tourists; no revenue.
For the commercial fishing industry, oil platforms will probably aid in locating the schools since fish seem to like artificial reefs or any underwater structure with places to hide, feed, and spawn...
Let’s for all time discard those stories of barge and tanker collision spills when discussing the risks of operating oil drilling platforms; they are irrelevant, the 1993 barge spill and the Exxon Valdez have been beaten to death, and floating tanks filled to capacity and slicing through undulating seas have nothing in common with a fixed or anchored structure sucking oil into a secure pipeline. As Representative Seth McKeel stated in his response, a ban on drilling does nothing to reduce the risk of barge or tanker collisions; in fact, drilling might actually reduce the risk. It is oil in the water, but when measuring risk the focus has to be on how it got there. It’s enlightening that environmentalists have to go 10,000 miles across the planet to Australia for an oil drilling incident about which to wail opposition to drilling Florida waters. The Gulf has over 50 years of drilling experience and there is not one major spill incident to which they can point to support their opposition. There are about 4000 active drilling platforms and 33,000 miles of pipeline that have been subjected to Cat.5 hurricanes and other contingencies without a major production spill. Hurricanes Katrina and Rita destroyed 115 platforms, damaged 52 others along with 535 pipeline segments and caused a near shut-down of all Gulf offshore production. Quoting MMS once again, “fortunately for all, due to prompt evacuation and shut-in preparations made by operating and service personnel, there was no loss of life and no major spills attributed to either storm.” Eight days after Katrina’s landfall, DOI’s Assistant Secretary for Land and Minerals Management testified before the Senate Energy and Natural Resources Committee regarding the status of offshore oil and gas production in the Gulf of Mexico: “It is important to note that there have been no reports of significant spills related to production. All safety systems worked to successfully shut-in production on the OCS platforms.”
MMS also “requires that all drilling or production operations on the OCS have an approved oil spill contingency plan that describes where the nearest equipment is located, where the trained personnel are, and how everyone is notified.” Since 1980 OCS operators have produced 4.7 billion barrels (bbl) of oil and spilled only 0.001 percent of this oil, or 1 barrel (42 gals) for every 81,000 bbl produced. In the last 25years (updated), there have been no spills greater than 1000 bbl from an OCS platform or drilling rig.”
Transplanting the “Down Under” spill 10,000 miles to the Gulf of Mexico is conveniently ignoring the human factor in the drilling equation – WHO implements and executes improved technology will significantly influence results as well as modify risk factors. Those values that created the offshore industry; the freedom to reason, and qualities such as individual initiative and desire to excel and achieve are pervasive in American culture and American workers. We can do it better; we already do it better. We started the oil industry and our technology, geologists, geophysicists, engineers, technicians, drill crews and roustabouts are still in great demand around the world to help other nations develop their oil wealth. Let’s develop all of U.S.A. wealth.
I am suggesting here that we look to our own 50 years experience in the Gulf to gauge the risk of drilling off the Florida coast. If such a spill were to occur just doesn’t cut it when measuring risk; a hypothetical spill garnished with imprudent speculation doesn’t stand up to hard sustainable evidence like 50 years of successful experience.
“Natural seepage of oil in the Gulf of Mexico (unrelated to natural gas and oil industry operations) is far more extensive” (than spills) says MMS. “Researchers have estimated a natural seepage rate of about 120,000 bbl per year from one area (23,000 square kilometers) offshore of Louisiana.” Research has found that 99 percent of all oil in the oceans originates from seepage (60 percent), a combination of tanker and cargo ship bilges, tanker accidents, and land runoff. The studies also conclude that oil drilling and production actually reduce natural seepage.
Research by the University of South Florida Marine Science Department suggests that GOM currents are probably more favorable to Florida’s coastline than they are to Texas or Louisiana beaches. They have also determined that geology, wind, and tides are the reasons Texas beaches look like brown sugar, not because of the oil and gas industry as has been charged. If some other dots are connected like the above mentioned natural seepage with Gulf currents it sheds light on the tar balls and patties that often end up on Texas beaches.
When hypothetical spills didn’t convince Floridians that offshore oil drilling was a threat to its beaches, a yarn was created about drilling platforms scattered over the vast 76 acres of the Eastern Gulf interfering with military training, and hurting the economy by forcing a reduction in military operations. As of 2008, 64 exploratory wells had already been drilled offshore Pensacola’s Naval Air Station, Ft. Walton Beach, and Panama City’s sugar-white beach without any known problems or complaints. 20 of those wells, incidentally, found commercial quantities of hydrocarbons. These same yarn spinners have been surprisingly silent about the possible interference with military training of a proposed 172 offshore wind turbines for every mile of Atlantic Ocean OCS, a fantasy of the Secretary of the Interior. It could be they just don’t like birds, but a study released in January 2010 by Securing America’s Future Energy (SAFE), a non-partisan, non-profit organization partnered with retired military officers concluded that military operations and oil drilling can safely coexist in the Gulf, and specifically rejected past assertions by both Senator Bill Nelson and the Department of Defense (DOD) of negative impacts of drilling on military operations and training.
On the other hand, a genuine direct threat to national security is ignored by this opposition: that of assuring a reliable, adequate, and affordable oil supply to sustain the military’s mobility, on the land; in the air; and on the seas. Our 60 percent dependence on imported oil undermines the reliability of supply since much of the oil is from hostile regimes or unstable regions, while increasing prices undermine the capability of the DOD to fund military operations and maintenance. According to the Brookings Institution, every $10 per bbl increase in price raises DOD oil costs by $1.3 billion. By expanding Gulf of Mexico oil drilling to the Eastern Gulf the SAFE report says, “We can improve our energy security and remain at peak military readiness at the same time.” World War II is instructive here as well – Germany and Japan had no domestic oil resources and their surrenders were preceded by empty fuel tanks.
A concern was voiced which seems to suggest that all Western Gulf wells need to run dry before drilling goes east. Common practice has been for concurrent exploration and drilling anywhere and everywhere there is promise of hydrocarbons. Secondly, there is skepticism about all western leases having been fully explored? There are about 4000 active platforms in the Western and Central Gulf and exploration continues, but there has been a lot of noise about this matter. A producer doesn’t usually leave evidence that he has tested an area and found it wanting, though he would report results to his exploration department and perhaps the MMS. Because of the high costs of drilling exploratory wells mentioned above, a producer is going to do extensive geological and geophysical testing before deciding to drill. If there are no indications of commercial quantities of oil and/or gas, they are not going to continue exploring that area. You know what they say about doing the same thing over and over and expecting different results.
Regarding the infrastructure needs of the drilling operations and local land-use regulations, history suggests that coastal counties, cities, and towns want whatever jobs and economic growth the offshore industry can create for their citizens and adapt and adjust as needed to acquire the facilities. MMS’s statement mentioned above of what offshore oil development did for Louisiana’s economy is an example of the mutual benefits experienced. We need to recapture those can-do attitudes that overcame a lot of human and technological challenges with the birth of the offshore industry.
Florida offshore drilling would be a restart of activity that was halted about 30 years ago, and as long as the starting point is imminent, a new time line would be a good management tool. However, as Representative Seth McKeeln stated, “Each year that we wait to address this issue places us a year farther away from that revenue and those jobs.” His straightforward statement says it all.
I won’t say the science is in; the debate is over like those tricky climatologists did, but I will say that: In light of 50 years of safe and secure drilling experience supported by independent evidence and the undeniable benefits to the Nation, the State, and the Region, drilling offshore Florida is the only rational course of action. We need to stop regurgitating and rehashing the same warmed over political clutter tossed out there just to prevent any kind of economic development and growth. Appoint someone to verify the above information or go to www.mms.gov and examine the GOM offshore drilling experience, management, and oversight that promise safe, secure, oil and gas exploration and production with low risk to the environment. Even if the Council as a unit doesn’t take a position on the issue, they could act as a clearinghouse to keep the discussion focused and moving forward, and individual Council Members, understanding the true risk, can express support for drilling in their jurisdictions and to their legislative representatives and areas of influence.
Conclusions: 50 years successful experience supports an acceptable level of risk to the environment; MMS’s independent assessments and reports confirm Florida Energy Associates estimates of potential production, revenue, and royalties (it’s time to drop the mysterious and shadowy oilmen tags), the potential benefits are real; the latest report from an independent source confirms a coexistence of military operations with oil platforms; and since we are already 30 years late, we need to start now and drill all the oil and gas we can, in all the ways we can, in all the places we can, at all the times we can, with all the zeal we can, for as long as we can. Thanks for attention.
Frank M. Hughes is a retired financial controller
and community college adjunct instructor
who worked for 15 years in the petroleum
industry.