Disaster Scenario?

As the consequences of the ongoing oil leak in the Gulf of Mexico unfold, it's still not clear what we're facing. I've seen repeated requests by those affected to know what the worst-case scenario might be. I can't blame them, though when we don't even know how much oil is leaking, and with so much uncertainty surrounding the measures that BP and the US government are pursuing to plug the well and mitigate the spill, the range of possible scenarios becomes very wide. And if these near-term effects remain unpredictable, the potential longer-term implications for US energy policy are even more divergent. Until the well is capped and the full scope of the environmental and economic damage known, we can only guess at the future shape of this component of our energy supply.

In trying to imagine the range of outcomes, we must consider the rate at which the oil is flowing, how long it will flow, and the relative success of efforts to recover or break down the oil that has leaked before it reaches the shoreline, fisheries and other sensitive environments. A high-end projection of the volume of oil spilled might involve a leak that is actually well above the current 5,000 barrel-per-day (bpd) estimate, and that continues as long as it took to cap last year's Timor Sea leak: 10 weeks. Even at 5,000 bpd, that would eclipse the total spilled from the Exxon Valdez before it ended. And if oil were leaking much faster, as some estimates suggest, the result could rival the largest oil tanker spills, such as the Amoco Cadiz in 1978, while still falling short of the 1979 blowout of Pemex's Ixtoc-1 well farther south in the Gulf. We may never know the true extent of the spill, because there's no accurate way to measure the quantity of oil currently flowing from 5,000 ft. down in the Missississipi Canyon.

If that's the far extreme, what might a less dramatic scenario look like? As described in this morning's New York Times, BP is pursuing several approaches that could either shut off the well quickly, or at least contain the leakage until the well can be sealed by means a relief well drilled into the same formation to block the flow to the current well. The critical event following the explosion on the drilling rig was the apparent failure of the blowout preventer, which BP has been attempting to activate by remotely-operated vehicles (ROVs.) The BOP was supposed to cut off the errant flow--literally. The quickest solution would be to set a new BOP in place and activate it to crimp the riser and drillpipe and shear them off. From my limited understanding of the techniques involved, doing this at depths like these, using only ROVs, and with a well that might be blowing gas and oil at much higher rates once the bent riser and drillpipe were removed would be extremely challenging. BP's plan to use "domes"--essentially underwater cofferdams--to contain and siphon off the oil as it comes out of the well could be nearly as tricky to pull off, though with less downside if it failed. If any of these techniques worked, the total volume of the spill might be limited to something under 150,000 bbls, assuming that the well has already leaked 50-60,000 bbls. That would still qualify as a very large oil spill--much larger than early estimates projected--though far short of a true worst-case.

For now the efforts of all the oil and oil-service company personnel, the Coast Guard, and other military and civilian government personnel involved--along with those whose homes and livelihoods are affected--are properly focused on addressing the leak and its direct consequences. In the interim, the rest of us have had some time to think about what all this means in a broader context. Although I would argue that any permanent changes in policy would be premature, it's not too early to think about what should happen once the leaking well is capped. None of my readers will be surprised to learn that I disagree strongly with those calling for a permanent halt to offshore drilling anywhere in the US. At the same time, I believe most observers agree that the Deepwater Horizon accident raises serious questions about the technology and practices involved in drilling at such depths. This morning's Wall St. Journal cited a 2004 study questioning the efficacy of at least some of the blowout preventers that have been used in deepwater installations, and various reports have pointed to requirements by Brazil and Norway that offshore drillers install equipment enabling the BOP to be activated remotely, should the drilling vessel lose direct communication with it. Both issues should be revisited, in light of current events.

Until the Deepwater Horizon rig and the BOP on the well are ultimately recovered from the sea bottom and analyzed, we won't know exactly what caused the accident that led to the spill. That could take a year or more. Meanwhile, drilling continues on other rigs in the Gulf of Mexico. Even with President Obama calling a temporary halt to expanded drilling beyond the Gulf, that leaves a number of other blocks on the Gulf's Outer Continental Shelf that have been leased but not yet drilled. What standard should the government apply, when it receives applications for new drilling on these? (That could even include the lease encompassing the Macondo prospect, which is demonstrating its resource potential in the least-desirable manner imaginable.) Unfortunately, at this point we have nothing beyond the event itself and the previous, uneventful completion of thousands of similar wells (and many thousands of wells in shallower water) to gauge the probability of this ever happening again. If the administration opts for a hiatus in Gulf of Mexico drilling or an outright ban, that would have far-reaching economic and energy-security consequences that I will address in a subsequent posting.