Before proceeding further, I would like to declare that I own a petrol driven car, have lots of plastic items around the house and use various chemicals in the home and the garden. While acknowledging my oil based dependency, am I alone in being appalled at the sight of a 98-tonne metal funnel being touted as the solution to one of the biggest environmental disasters of our time?
The explosion on the Transocean rig, operated on behalf of BP in the Gulf of Mexico is a personal and environmental disaster on its own merits but once again it raises questions over the long term sustainability of the oil industry and our associated dependence. While it is not the first oil based incident and will not be the last, given the frenzied arguments around ‘peak oil’ and the move towards a low carbon economy, the sight of the Heath-Robinson funnel speaks volumes about the state of the oil industry.
The event itself has exposed aspects of the commercial structure of the oil exploration sector, where the multinational behemoths no longer do the work but subcontract to the ‘services’ companies. In this case, we have a rig operated by Transocean with certain critical tasks undertaken by Halliburton, all under the auspices of a BP contract. Which is fine, up to a point, but as per the UK financial meltdown, when something goes wrong, everyone is left looking quizzically at everyone else. In this case, BP’s Chief Executive Tony Hayward has gone so far to say that BP was not at fault, even though it has promised to pick up the bill for the cleanup.
An inevitable enquiry will no doubt expose problems with systems and safety procedures, however, the fact that the best solution seems to be a large metal funnel seems somewhat inadequate, not to say pathetic. Given the technological advances made to seek out and extract oil and gas from the sea bed in massively hostile environments, there must be a lingering concern that the technology push has focussed too much on identifying reserves and a smooth extraction process, rather than multiple and sophisticated fail safe solutions and contingency procedures.
While views will vary on the significance of this event to BP’s long term prospects, immediate share price dips aside, the images of Tony Hayward looking and sounding like a man who is wondering what all the fuss is about, exemplifies a certain measure of big oil untouchability. Such a position is however misplaced, given the gradual move towards low and no carbon fuel sources and the fact that whichever way you look at it, the amount of oil that we extract from the earth is in a long term decline. The oil majors will of course argue that new reserves will be discovered and technology will make extraction economically feasible, however, their horizon extends no further than 30-40 years, if that. One does not need to think in geological terms to start pondering the need to expend significant time and effort now in order to eventually replace oil as a fuel, lubricant, intermediary and product constituent. This latest event has already caused many people to question the USA’s offshore drilling efforts, a policy largely driven by oil interests.
While restrictions in US offshore activity may be a lasting legacy of the tragedy in the Gulf of Mexico, it may also represent the chronological point at which the world started to create a road map for a post-oil economy. In Scotland, the offshore oil and gas sector has of course wrought significant economic benefits, particularly in and around Aberdeen and HM Treasury. We have all benefited through the North Sea dividend, created by many clever and brave individuals, but we now face the prospect of declining reserves in our own offshore waters. At the same time in Scotland, we are seeing a gradual commercial transition from oil and gas to offshore renewable in the form of wind, wave and tidal, at the same time the traditional oil and gas services companies have already internationalised and focussed on maintenance and decommissioning. While the low carbon transition in the North Sea may seem insignificant at the moment, I am reminded of an ITN Roving Report from 1962. The intrepid reporter joins the crew of a converted North Sea trawler using IIWW anti-submarine technology to map the sea bed for its oil bearing potential. On returning to land, our correspondent asks a Professor of Oceanography the immortal question: “Do you think that they will ever find oil in the North Sea?” What a lot has changed in fifty years, what a lot will change in the next fifty years.
