Big Oil plans rapid response to future spills
NEW YORK
ExxonMobil, Chevron Corp., Conoco Phillips and Shell Oil said
Wednesday they've agreed to pool $1 billion to form a new company
that would respond to offshore oil spills at up to 10,000 feet
underwater. The system would deploy equipment that could arrive at
a spill within days and be fully operational within weeks, the
companies said.
Members of Congress investigating the explosion of the Deepwater
Horizon oil rig have criticized the oil industry for being
ill-prepared for a major oil spill, and regulators want the
industry to develop a thorough spill containment plan. Meanwhile,
the White House has imposed a moratorium on deepwater drilling, and
oil company share prices have plunged. Stricter regulations are
also likely on the way for offshore drillers.
Michael Bromwich, director of the Bureau of Ocean Energy
Management, the federal agency that oversees offshore drilling,
said the announcement was encouraging.
"Ultimately we are exploring the changes and reforms that need
to be made in deepwater safety standards, spill response and
containment," Bromwich said in a statement. "But steps like these
move in the right direction."
BP, whose blown-out well has leaked as much as 180 million
gallons of oil into the Gulf, was informed of the venture but it
hasn't joined, a spokesperson for Exxon said. BP didn't answer
calls to comment about the new response system.
The British oil giant struggled for nearly three months to plug
the well. It tried dropping a metal containment box over the gusher
and shooting garbage down the drill hole to block the oil from
seeping out. Neither attempt worked. After three months, a second
containment cap now seems to be working after a smaller cap only
captured some of the oil.
All these attempts were introduced with the caution that they'd
never been tried a mile underwater, where BP's well was gushing
oil. Exxon and the other companies on Wednesday promised their
equipment will be tested beforehand.
The new system draws on lessons learned from BP's efforts and
uses some similar equipment. The companies say the equipment
shouldn't break down under extreme pressures and depths.
The response system will include an array of underwater
equipment designed to create a permanent connection and seal over a
busted well. It will separate oil from gas and bring it to the
surface where the gas can be burned off and the oil can be stored
on tankers.
The companies say the system could capture up to 100,000 barrels
-- 4.2 million gallons -- of oil in depths of up to 10,000 feet,
twice as deep as the waters BP was operating in. The four were not
involved in the Gulf oil spill, but each rely on offshore drilling
to generate significant revenue. Shell and Chevron have prominent
drilling operations in the Gulf.
The system's similarities to what BP has used concerns U.S. Rep.
Edward Markey, D-Mass., one of the harshest critics of the
industry's disaster planning.
While the new system could be deployed rapidly, "the oil
companies must do better than BP's current apparatus with a fresh
coat of paint," he said.
He said the announcement of the containment system could be a
positive step, "but it cannot be the industry's last," adding
that what's needed are technologies "that will prevent fatal
blowouts in the first place."
Rex Tillerson, chairman and chief executive officer of
ExxonMobil, who has been critical of BP's handling of the well
prior to the explosion, echoed that sentiment in a statement
announcing the new system.
"If we all do our jobs properly, this system will never be
used," he said.
"The extensive experience of industry shows that when the focus
remains on safe operations and risk management, tragic incidents
like the one we are witnessing in the Gulf of Mexico today should
not occur," Tillerson said.
After numerous hearings on the safety of offshore drilling, the
House passed legislation Wednesday that more than doubles the
federal money for research in new cleanup methods and technologies.
Lawmakers passed a second bill that promotes research on devices
like blowout preventers that can prevent accidents.
All deepwater exploration has come to a halt in the Gulf
following the April 20 rig explosion. The Obama administration has
banned deepwater drilling until more research can be done on
whether its safe for the environment.
The industry has warned of an exodus of rigs out of the Gulf,
but so far that hasn't happened. Only two rigs, both owned by
Diamond Offshore, have been moved to foreign waters.
"It's not so simple moving a rig. It takes a lot of time and
money," Argus Research analyst Phil Weiss said. At the same time,
once a rig does move from the Gulf it isn't likely to make a quick
return, he said.
According to their joint statement, the four companies will
create a nonprofit organization called the Marine Well Containment
Company to operate and maintain the response system. ExxonMobil
will lead the effort and other companies will be invited to
participate.
ExxonMobil spokeswoman Karen Matusic said oil executives have
been meeting over the past weeks to devise ways to handle another
spill. About 40 engineers from the four companies have been working
in Houston on this solution.
Exxon and its engineers have worked with BP on its spill
response, but the British company wasn't invited to join the new
venture. But the system would benefit if BP joined, Matusic said.
"Certainly BP can lend their expertise on what they're
discovering now as they're containing the spill," she said. "We
certainly want to bring them in."