January 2012

Yesterday, the House Energy and Commerce Subcommittee on Energy and Environment held a hearing on H.R. 5626, the Blowout Prevention Act of 2010. Although the sponsors claim their intent is simply to prevent a disaster like the blowout of BP’s Macondo deepwater well from ever happening again, the bill would establish, as a precondition for obtaining a permit to drill, a test no oil company can pass.

Let’s look at the bill’s first substantive provision:

SEC. 2. NO DRILLING WITHOUT DEMONSTRATED ABILITY
 TO PREVENT AND CONTAIN LEAKS.
(a) FEDERALLY PERMITTED HIGH-RISK WELLS.—
Effective one year after the date of enactment of this Act, the appropriate Federal official shall not issue a permit to drill for a high-risk well unless the applicant for such
permit demonstrates, the Chief Executive Officer of the applicant attests in writing, and the appropriate Federal  official determines that—
(1) the blowout preventer and other well control measures will prevent a blowout from occurring;
(2) the applicant has an oil spill response plan that ensures that the applicant has the capacity to promptly stop a blowout in the event the blowout preventer and other well control measures fail; and
(3) the applicant has the capability to begin drilling of a relief well within 15 days, and complete such drilling of a relief well to control a blowout within 90 days of the well control event that causes such blowout.

The unattainable standard is in Section 2(a)(2). Under this provision, no oil company may obtain a permit to drill for a high-risk well unless it demonstrates the ”capacity to promptly stop a blowout in the event the blowout preventer and other well control measures fail.” But, as is painfully obvious, the Macondo well has been gushing oil into the Gulf of Mexico for more than two months with no clear end in sight. Nobody has the capacity to “promptly stop” the blowout after the preventer and other well control measures failed — not BP, not the oil industry working as a team, not the federal and state governments working with the oil industry.

In short, the bill would hold applicants for drilling permits to a standard that none can meet. Moreover, as fully documented here, the sponsors of the Blowout Prevention Act know very well that once the blowout preventer and other well control measures fail, physics takes over and there is no way to stop oil from spilling into the ocean environment. Consider these excerpts from a colloquy between Oversight and Investigation Subcommittee Chairman Bart Stupak (D-Mich.) and ExxonMobil CEO Rex Tillerson:

Stupak: . . . so no matter which one of the oil companies here before us had the blowout, the resources are not enough to prevent what we’re seeing day after day in the gulf, not only the loss of 11 people, but we’re on, what, day 56 or 57 of oil washing up on shores. There is no other plan. There is no way to stop what’s happening until we finally cap this well, correct?

Tillerson: That is correct. . . . There is no response capability that will guarantee you will never have an impact. It does not exist and it will probably never exist.

Now, you might suppose that although Section 2(a)(2) would effectively bar all drilling of “high-risk wells,” it would not affect offshore wells that are low-risk. Alas, no. Sec. 16(12)(A) defines “high risk” to include any “offshore oil or gas exploration or production well within 200 nautical miles of the coast of the United States.”

At yesterday’s hearing several members criticized this language as indiscriminate, because it ignores the site-specific circumstances (such as oil pressure, temperature, and geology) that would affect the risk level of a particular drilling operation. Chairmen Waxman (D.-Calif.), Markey (D-Mass.), and Stupak may thus agree to define “high risk” more narrowly — for example, offshore wells in water deeper than 1000 feet.

Even with this modification, however, the bill would still wreak havoc on offshore oil production. As the Department of Interior notes in its May 27 report, Increased Safety Measures for Energy Development on the Outer Continental Shelf, U.S. deepwater offshore oil production surpassed shallow water oil production in 2001, and in 2009, 80% of offshore oil production and 45% of offshore gas production “occurred in water depths in excess of 1,000 feet.” The future of offshore oil is in deep water. Even if “high risk” applies only to deepwater wells, H.R. 5626 would sabotage the industry’s future.

Sec. 16(12)(B) also defines ”high risk” to include any ”onshore oil or gas exploration or production well in the United States . . . that, in the event of a blowout, could lead to substantial harm to public health and safety and the environment.” Is there anyone in the environmental movement who does not think an oil spill in the Alaska National Wildlife Refuge (ANWR) “could lead to substantial harm to . . . the environment”? Let’s call this provision the ANWR Prohibition Clause. Of course, it could effectively prohibit onshore drilling in many places besides ANWR.

Federal officials won’t be able to finesse these strictures, even if they want to, because the bill would empower “citizens” to enforce the Act and its associated regulations and orders via litigation:

Any person may commence a civil action in Federal district court of appropriate jurisdiction on such person’s own behalf to compel compliance with this Act, or any regulation or order issued under this Act, or any regulation or order issued under this Act, against any person, including the United States, and any other government instrumentality or agency (to the extent permitted by the eleventh amendment to the Constitution) for any alleged violation of any provision of this Act or any regulation or order issued under this Act. [Sec. 16(a)]

Enact the Blowout Prevention Act, and every eco-litigation group will be able to sue any agency that fails to hold any oil company to an unattainable standard.

All of this would be okay if oil were evil and abolishing U.S. oil production could not happen too soon. That seems to be an unstated premise of the Blowout Prevention Act.

That premise, however, is outrageously false. Although oil spills are bad, oil is good. Without oil, there would be no modern commerce and no mechanized agriculture. Life for most of humanity, including most Americans, would be poor, nasty, brutish, and short. Indeed, many of us would not even be alive.

Banning offshore drilling would increase consumers’ pain at the pump, destroy tens of thousands of high-paying jobs, cripple the economy of the Gulf coast states, and make America more dependent on OPEC oil. Presumably, those are not results most Members of Congress want to bring about. Yet Congress will set the stage for just such a policy disaster if, applying the so-called Precautionary Principle to domestic oil production, it demands proof of absolute safety as a precondition for approving the operation of offshore and onshore wells.