Offshore Oil Drilling: Public Costs and Risks are Too High
An EnergyComment Policy Paper
by Dr Steffen Bukold, Director
As the 20 April 2010 blowout at the Macondo well in the Gulf of Mexico (Deepwater Horizon) illustrated, with 11 workers killed, 17 others injured, and an oil spill of approximately 5 million barrels of oil, the public risks of offshore oil are not justifiable.
The “Macondo Incident” represents the largest environmental disaster in U.S. history and, globally, the most severe since Chernobyl. In relatively close proximity to, arguably, some of the worldʼs most advanced technical offshore oil resources, safe control of the well was achieved only five months later, after experimenting with various procedures and processes for the first time in these circumstances.
The reality is that even with close access to the best resources in the indus- try the public risks of offshore oil are fundamentally unsupportable. That the fundamental risks of offshore oil eclipse lower risk opportunities to secure energy security and sustainable economic renewal via investing in climate responsible, non-nuclear, renewables.
The U.S. government placed a 6 month ban on new deepwater drilling after the Deepwater Horizon explosion, while other governments are debating similar steps as deepwater oil drilling is on the rise in many regions of the world, including the North Sea and North Atlantic, without a comprehensive, transparent analysis of the inherent risks.
The Macondo tragedy set off a worldwide discussion about offshore oil and deepwater oil in particular. What are the costs and benefits in terms of envi- ronmental risks, climate change, economics and energy security?
An integrated examination, including externalized costs, supports better environmental, economic, security and climate responsible alternative en- ergy paths via responsible renewables. To prevent a misallocation of enor- mous amounts of capital into new offshore oil, investment decisions need to be initiated now for the long-term benefits.
Offshore oil is inherently risky, with increasing risks of technical and proce- dural failures in complex deepwater operating environments and the indus- tryʼs inability to effectively control oil spills. An integrated approach needs to include:
● Hostile operating environments amplifying risks of technical failures ● Climate change costs due to the combustion of fossil oil must be internal- ized ● Opportunity costs of higher job creation in renewable energy industries ● Higher long-term energy costs as fossil fuel prices are rising and clean energy prices are falling ● The strategic cost of fossil oil exploration reaches an impasse in the face of peak oil and depleted “cheap oil” ● Long-term energy security unattainable due to unpredictable offshore oil supply disruptions
This brief concludes that a ban on all new offshore oil drilling is justi- fied as the risks are too high relative to the rewards.
 The definition of “deepwater” varies between studies and over time; it is com- monly applied to water depths below 200m or to water depths below 400 to 600m. IHS Cera used the 600 feet (approx.180m) threshold to define global deepwater discoveries and the 2000 feet mark (approx. 600m) for deepwater production. IHS Cera 2010. The Role of Deepwater Production in Global Oil Sup- ply, Cambridge (Mass.). Press Release 30th June 2010.
 To name only a few recent activities and events in the North Sea and North Atlantic: The Cladhan oil find in 498m water depth, exploratory drilling in the Norwegian Sea (Dalsnuten in 1450m water depth) and off Greenland ́s west coast (Baffin Bay exploratory drilling); recent drilling in the Orphan Basin off Newfoundland took place in water depth of 2600m, 1000m deeper than BP ́s ill- fated Macondo well.
Read entire EnergyComment Policy Paper.