Archive for the ‘Offshore Drilling’ Category

Bobby Jindal Presents “The Creature From the Oil-Black Lagoon”

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There’s a lot of swampland on the Gulf Coast. A lot of that swampland has been polluted with oil. And a lot of that oil has oozed into the swamps of the legal system which is brimming over with lawsuits brought against the extraction industry. BP’s Deepwater disaster is only the most high profile case. It certainly brought a lot of public attention to the parlous state of the Gulf of Mexico and its hundreds of miles of vulnerable coastline – attention BP and its energy cohorts don’t want.

Things haven’t been going well for BP in the litigation that flowed up out of its underwater well along with all that oil. It has found it rough going even in the famously conservative and business-friendly Fifth Circuit Court of Appeals which has consistently swatted down the company’s attempts to wriggle off the liability hook. But the oil industry is nothing if not industrious. A business that hunts for oil thousands of feet below the surface of the sea will work just as hard to find a political solution to its legal problems. Now, thanks to Louisiana  governor Bobby Jindal, the oil business has what it hopes is a magic cloak to ward of further lawsuits.

Last week Jindal signed legislation designed to kill a lawsuit against almost 100 oil and gas companies.

The lawsuit was filed by the Southeast Louisiana Flood Protection Authority in an attempt to get oil and gas companies to pony up billions of dollars for damage caused by exploration and production in the vulnerable wetlands around New Orleans – wetlands that play a vital role in protecting the city from what the suit describes as the mortal threat of hurricane storm surges. The stakes for New Orleans could not be higher. The Authority filed suit to avert the dire consequences of the environmental degradation of the region’s coastline. The suit demanded that energy companies “honor their obligations to safeguard and restore the coastal treasures entrusted to them and from which they have so richly profited.” The Flood Protection Authority described the measures it demanded in its suit as essential to preserving the future of the state and its biggest city. The coastal barriers it sought to preserve have been brought to the brink of destruction over the course of a single human lifetime. Without immediate action to reverse the loss of wetlands and restore the region’s natural defenses, many of Louisiana’s coastal communities will vanish into the sea. Meanwhile, the Authority says, inland cities and towns that once were well insulated from the sea will be left to face the ever-rising tide at their doorsteps.”

Jindal’s signature has now thrown the future of that suit, and other similar actions, into doubt. The new law is specifically intended to stop the lawsuit in its tracks. It would limit enforcement of the state’s coastal zone program to the state Department of Natural Resources, a parish, a parish district attorney or the state attorney general.  The law previously allowed any government agency to file claims. The oil and gas industry lobbied strenuously to get the new law passed. Apparently the industry’s efforts were more persuasive than the state’s own attorney general who urged the governor to veto the bill, arguing that the language was both so vague and so sweeping that it would prohibit local governments from filing lawsuits against energy companies for past or future actions. A passel of legal scholars also weighed in warning that the bill would nullify lawsuits already filed against BP for damages from the oil spill by dozens of governmental entities. Environmentalists and urban planners are aghast.  The industry, on the other hand, was crowing about its bill, describing it as “a huge victory for the oil and gas industry as well as the economy for the state of Louisiana.”

The bill demonstrates how far and how deep the energy industry’s tentacles reach into the machinery of Louisiana politics. The Deepwater catastrophe brought a lot of unwelcome attention to the long-intertwined relationship between the oil and gas industry and Louisiana’s politicians. The new law is designed to restore that relationship to its historical centrality in the state’s political ecology. Whether it survives the inevitable appeals (it almost certainly won’t) is irrelevant. As a piece of of intimidating muscle flexing it’s in a class of its own: Let there be no doubt of who calls the shots in the state.

Jindal defended the bill by saying it creates “a more fair and predictable legal environment.” The good people of New Orleans can sleep easier now, secure in the knowledge that at least the legal landscape is predictable. The levees be damned.

Note: The Times-Picayune is, as always, doing yeoman’s work covering this story.

Arctic Drilling: What’s it Worth?

Beaufort Sea, Alaska, one of Shell’s drill sites. Photo by NASA/Kathryn Hansen, some rights reserved.

Last week, Shell called off its plans to drill in the Arctic until next summer after part of its spill-containment system was damaged. Earlier, encroaching sea ice forced the company to abandon its drill site in the Chukchi Sea off Alaska just a day after it started drilling. Now that Shell has spent $4.5 billion on its Arctic drilling sites since 2005, we might ask, is it worth the money?

Geologists from the United States Geological Service sparked a discussion on the costs of drilling in the Arctic this week, including a succinct piece in Grist. Their research suggests that the amount of oil that can be pumped out of accessible fields in the Arctic is significantly lower than previously thought, requiring huge exploration budgets to even access the oil (this considering Arctic oil in Greenland and Russia as well). They estimate that prices of $100 to $300 a barrel would be necessary for Arctic drilling to be economically feasible.

Right now, we know little about the average cost of producing oil in the Arctic besides that it is high. It is worth noting that in the 1970s, Canadian companies ended a decade of exploration projects by sealing off drilling sites because commercial production was too expensive. We do know, however, that in the oil boom in Mozambique, French Guiana, and Angola, marginal costs are less than $70 a barrel, and that plans for drilling there go through the 2020s.

Where does that leave us? Well, with 7,000 blocks of drilling leases over 38 million acres of the Gulf of Mexico up for auction in 2013. Sure seems like there are easier places to get your oil than the Beaufort Sea.

Offshore Drilling: Alaska, and More.

Photo by Jim Bain. Some rights reserved.

The Interior Department is very publicly scrutinizing every detail of Shell’s plan to begin drilling in the fragile Arctic this summer. Top officials are personally reviewing equipment bound for the drilling sites in Alaska and held a press conference Thursday to tout DOI’s robust testing.

The past year has seen a series of approvals for Shell’s plans. In March, DOI approved Shell’s oil spill response plans, following the EPA’s announcement in September that it had granted air pollution permits to ships associated with the drilling sites.

Last May, the Obama administration created an inter-agency team to streamline the Alaskan permitting process to help speed up domestic development and responding to political pressure over high gasoline prices as well as what Republicans have called bureaucratic permitting delays.

But the Interior Department, increasing its safety standards and scrutiny of drilling plans, wants to ensure it is seen as taking every precaution in the wake of last year’s BP spill in the Gulf of Mexico. Interior’s Bureau of Safety and Environmental Enforcement director James Watson called his agency’s standards “the most rigorous safety and oversight program ever.”

Meanwhile, despite the delays to Shell’s Alaska plan, Republican South Carolina senator Lindsey Graham introduced a bill that would allow his state to open parts of its coast, to offshore drilling 10 to 100 miles off the coast – after which it would petition the federal government for approval.

Further abroad, the questions and politics of offshore drilling are alive and well in France – Paris on Wednesday suspended  exploratory permits for offshore oil in its district of Guyana, in northeastern South America. The French environment minister cited concerns for the local marine environment and said the permits will be suspended until the mining code is reviewed. Shell and other oil companies have found significant oil reservoirs in the region, which they believe mirror the oil reserves off the coast of western Africa.

EXTRA! EXTRA! Knowledge Mosaic Continues to Fill Out Its Energy & Environmental Materials!

Photo by DRB62. Some rights reserved.

It might not be the most headline-grabbing environmental news, but a recent memo from Fulbright & Jaworski announced that a 2010 BSEE Notice to Lessees and Operators (NTL No. 2010-N05) has been vacated as the result of an appeal to the Interior Board of Land Appeals by the Independent Petroleum Association of America (IPAA).

The appeal challenged “the NTL’s requirement that the Chief Executive Officers of federal offshore operators had to certify, on short notice and under threat of administrative sanction and criminal penalty, that their companies were in compliance with offshore regulations and had completed certain reviews of its operations.”

After a bit of back and forth between the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) – the earlier incarnation of Bureau of Safety and Environmental Enforcement (BSEE) and the Bureau of Ocean Energy Management (BOEM) – and the IPAA, BOEMRE complied with the IPAA request by vacating the NTL.

What does this all have to do with Knowledge Mosaic?

Well, late last week we fleshed out our agency materials by adding all current BSEE Notices to Lessees and Operators to our Laws, Rules, and Agency Materials search page. A search page, might I add, that allows you to not only search, but save, share and alert.

But it’s not all BSEE Notices to Lessees and Operators. We’ve now got press releases, speeches & testimony, guidance, and more from BSEE, BOEM, and even the now-defunct BOEMRE. We’ve also rounded out our Department of Energy and FERC offerings.

Don’t just take my word for it – check us out now!

Shell a Step Closer to Arctic Drilling

Beaufort Sea ice and Brooks Mountain Range. Photo by U.S. Fish and Wildlife Service, some rights reserved.

On Wednesday, the Department of the Interior announced approval of Shell’s oil spill response plan for its Arctic drilling plans, another milestone in the oil giant’s years-long efforts to drill in the Arctic.

For now, Shell has its eyes on two sites for Arctic drilling. Off the north coast of Alaska lie the shallow waters of the Beaufort Sea, and sitting atop the Bering Strait is the Chukchi Sea, separating northwest Alaska from Russia and its East Siberian Sea.

The Department of the Interior’s Bureau of Safety and Environmental Enforcement (BSEE) has approved Shell’s oil spill response plans for the two drilling sites, following the EPA’s announcement in September that it had granted air pollution permits to Shell’s drill ships, supporting icebreakers, and oil-spill response vessels for both sites.

For its part, the DOI has increased safety standards and scrutiny of drilling plans in the wake of last year’s BP spill in the Gulf of Mexico. BSEE director James Watson stresses that they have “conducted an exhaustive review of Shell’s response plan,” and that the Bureau will follow up with exercises, reviews, and inspections, according to the Hill’s post on the approval.

In May, the Obama administration created an inter-agency team to streamline the Alaskan permitting process as part of an effort to speed up domestic development, responding to political pressure over high gasoline prices as well as what Republicans have decried as undue bureaucratic permitting delays. The past year has seen a string of approvals fall into place for Shell.

Still, a long list of federal approvals await before wells can be drilled. Each well must receive an individual permit from the DOI, and the U.S. Fish & Wildlife Service and National Marine Fisheries Service must sign off on the plans.

Shell hopes to begin drilling in both regions this summer.

All of the Above? NRDC Wants None of It

Photo by NOAA's National Ocean Service. Some rights reserved.

Quick on the heels of an upbeat Department of the Interior Press Release came an equal-and-opposite reaction from the National Resources Defense Council.

The commentary focused on a recently released Programmatic Environmental Impact Statement from DOI’s Bureau of Ocean Energy Management that evaluates potential significant environmental effects of multiple geological and geophysical “G&G” activities in support of oil and gas exploration and development, renewable energy, and marine minerals in the Mid- and South Atlantic. All part of Obama’s all-of-the-above energy strategy, according to the DOI, which called these steps “critical,” and the PEIS “a milestone […] consistent with the Proposed OCS Oil and Gas Leasing Program for 2012-2017.”

But the NRDC sees it differently. The same G&G processes that might be used to “understand the extent, properties and geography of hydrocarbon resources, as well as the potential to site renewable energy structures and locate marine mineral resources like sand and gravel” – such as seismic air guns – are apparently “equivalent to blasting dynamite in a neighborhood every 10-12 seconds for weeks or months on end,” according to the NRDC, and “can cause hearing damage and death to marine mammals like endangered North Atlantic right whales that calve off the coasts of Georgia and Florida.”

Feel strongly one way or the other? The public may submit written comments by email to ggeis@boem.gov.

Injured On the Job, Offshore

Photo by Patrick Mackie. Some rights reserved.

A Mayer Brown Legal Update published late last week discussed the January 11, 2012, Supreme Court Opinion in Pacific Operators Offshore, LLP v. Valladolid, which held that “an injury is covered by the OCSLA [Outer Continental Shelf Lands Act, 43 U.S.C. 1331 – 1356] when there is a ‘substantial nexus’ between the injury and extractive operations on the Outer Continental Shelf (OCS).”

Juan Valladolid, an employee of Pacific Operators Offshore, LLP, was killed in a forklift accident onshore, though he spent “99%” of his time working offshore on drilling platforms off the coast of California. His widow sought benefits under the Longshore and Harbor Workers’ Compensation Act (LHWCA, 33 U.S.C. §901 et seq.), pursuant to the OCSLA, but because LHWCA only covers injuries “occurring as the result of operations conducted on the [OCS],” an Administrative Law Judge dismissed her claim – Valladolid was onshore when the accident occurred, after all.

The Department of Labor’s Benefits Review Board affirmed the decision, but the Ninth Circuit reversed it, concluding that a claimant seeking benefits under the OCSLA “must es­tablish a substantial nexus between the injury and extractive opera­tions on the shelf.”

The Supreme Court held that OCSLA extends coverage to an employee who can establish a substantial nexus between his injury and his employer’s extractive operations on the OCS.

On this “substantial-nexus” test, the Supreme Court says:

The test may not be the easiest to administer, but Administrative Law Judges and courts should be able to determine if an injured employee has estab­lished the required significant causal link. Whether an employee in­jured while performing an off-OCS task qualifies will depend on the circumstances of each case. It was thus proper for the Ninth Circuit to remand this case for the Benefits Review Board to apply the “sub­stantial-nexus” test.

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