Blowout Prevention Act – Will Rs Get Buyer’s Remorse? (Modified July 18, 2010)

by Marlo Lewis on July 16, 2010

in Blog

Last week, the House Energy and Commerce Committee unanimously approved H.R. 5626, Chairman Henry Waxman’s Blowout Prevention Act. Here’s the version of the bill as marked up and approved by the Committee. Here’s the earlier discussion draft on which the Energy and Environment Subcommittee held a hearing on June 30.

Like the discussion draft, the marked-up version of the bill is a Trojan Horse for restricting and, ultimately, shutting down deepwater oil production.

The most mischievous language is in the first substantive provision, Sec. (2).

Sec. (2)(a)(3) requires each applicant for a drilling permit to have an oil spill response plan ensuring “the applicant has the capacity to promptly control and stop a blowout in the event the blowout preventer and other well control measures fail” (p. 2). If the ongoing disaster in the Gulf has taught us anything, it is that once the blowout preventer and other well control measures fail, there may be no way “to promptly control and stop a blowout.” H.R. 5626 would establish a test no oil company can pass, a standard none can meet.

Nobody had the capacity to “promptly control and stop” the Macondo well 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.

The sponsors had to know they were demanding the impossible when they drafted the bill. Consider these excerpts from a colloquy between Oversight and Investigation Subcommittee Chairman Bart Stupak (D-Mich.) and ExxonMobil CEO Rex Tillerson at the June 15 Energy and Environment Subcommittee hearing:

Stupak: “So when these things happen, these worst-case scenarios, we can’t handle them, correct?”
Tillerson: “We are not well equipped to handle them. There will be impacts as we are seeing. . . .That’s why the emphasis is always on preventing these things from occurring, because when they happen, we’re not very well equipped to deal with them.”
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.”

The discussion draft’s permitting requirements apply to all “high risk” wells, defined expansively as any offshore well plus any onshore well having the potential to cause serious environmental harm in the event of a blowout. The marked-up version targets “covered wells” rather than “high risk” wells, but this is largely a distinction without a difference. Covered wells include all wells located on the Outer Continental Shelf (OCS), plus any other well that, “based on criteria established by rule … could, in the event of a blowout, lead to extensive and widespread harm to public health, safety, and the environment” (pp. 41-42).

The OCS is defined (by reference to Sec. 1301 of the Submerged Lands Act) as waters lying seaward of three geographic miles from the coastline (p. 43). So H.R. 5626 would cover any deepwater well plus any shallow-water and onshore well where a blowout could lead to widespread environmental harm. Very few large wells would be exempt.

Presumably, operators could “promptly control and stop” a blowout at any onshore well and most shallow-water wells. Nonetheless, H.R. 5626 could effectively ban new wells in deep water, and deep water is the future of offshore oil and gas 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