Oil Rig Rorschach Test

Yesterday's fire on Mariner Energy's Vermilion 380 production platform in the Gulf of Mexico thankfully resulted in neither loss of life nor another big oil spill. However, the timing of this event seems likely to complicate the debate over the drilling moratorium that has been in place since the Deepwater Horizon accident, and that the government had been showing signs of relaxing or ending early. Based on the reactions so far, this latest accident also provides a Rorschach test on attitudes concerning offshore oil. Those convinced that the risks of offshore drilling outweigh its benefits are citing it as further evidence, while supporters of drilling are likelier to see it as proof that accidents offshore needn't be catastrophic. In reality, the two situations were so different that I'm not sure how much light one sheds on the other.

Although information on Vermilion 380 has been somewhat sketchy, we know from statements by the company and Coast Guard that unlike Deepwater Horizon, which was a floating deepwater drilling vessel, this facility is a fixed production platform in relatively shallow water, tapping a smallish oil and gas field with proved reserves of 33.2 billion equivalent cubic feet of gas--the equivalent of about 5.7 million barrels of oil, with more than half of that consisting of natural gas. The platform had recently undergone restoration work after having been damaged by Hurricane Ike in 2008. It was not engaged in exploration or any other kind of drilling, but instead producing oil and gas from previously-drilled wells. A company press release indicated that production in August averaged 9.4 million cubic feet per day of gas and 1,400 bbl/day of oil and condensate. This is orders of magnitude smaller than the Macondo field and its blown-out exploration well. In its particulars, Vermilion is more typical of the thousands of oil & gas platforms in the Gulf than the big, complex drilling rigs like Deepwater Horizon that we've been focused on since April.

Under the circumstances, another distinction between Vermilion and Deepwater Horizon is even more important than the ones above. While every accident is one too many, the outcome of yesterday's was precisely what the designers of such facilities work hard to enable and offshore oil & gas workers undergo intensive training to be able to execute: The wells were apparently secured, the crew evacuated safely, and damage was limited to the surface hardware.

This accident will be investigated, and I'm sure its lessons will find their way into the ongoing reassessment of offshore oil & gas practices and regulations. But without jumping to conclusions about its causes, yesterday's incident provides no proof at all for the argument that every offshore oil & gas well is a potential Macondo-style blowout, and every facility a potential Deepwater Horizon calamity waiting to happen.

Meanwhile, as my US readers head off for Labor Day weekend I suggest reading Technology Review's assessment of the energy aspects of the US economic stimulus, about which I had originally planned to write today. It raises important questions concerning the impact and effectiveness of the stimulus, including on employment, as well as the sustainability of efforts begun with its impetus. Expect to hear a lot more about this later this year, as eligibility for the Treasury renewable energy grants and other stimulus programs draws to a close, and recipients and their advocates call for temporary or permanent extensions.