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Friday, June 25, 2010

"Will This Well End Well?"

The definition of "onshore" changes when you are a regulator captured by the industry you are supposed to monitor:

Will this well end well?, by Eric Rauchway: There oughta be an axiom of regulation, that if you’re changing the rules in such a way that will make you sound grossly culpable when something goes wrong, you shouldn’t do it.

The future of BP’s offshore oil operations in the Gulf of Mexico has been thrown into doubt by the recent drilling disaster and court wrangling over a moratorium.

But about three miles off the coast of Alaska, BP is moving ahead with a controversial and potentially record-setting project to drill two miles under the sea and then six to eight miles horizontally to reach what is believed to be a 100-million-barrel reservoir of oil under federal waters.

All other new projects in the Arctic have been halted by the Obama administration’s moratorium on offshore drilling, including more traditional projects like Shell Oil’s plans to drill three wells in the Chukchi Sea and two in the Beaufort.

But BP’s project, called Liberty, has been exempted as regulators have granted it status as an “onshore” project even though it is about three miles off the coast in the Beaufort Sea. The reason: it sits on an artificial island — a 31-acre pile of gravel in about 22 feet of water — built by BP.

Then the article quotes some scientists saying this doesn’t sound like such a hot idea. So wait, why is it okay? “BP has defended the project in its proposal, saying it is safe and environmentally friendly.” Well, okay then.

I hope very much I have no future interest in returning to this link.

More from the article linked above:

Rather than conducting their own independent analysis, federal regulators, in a break from usual practice, allowed BP in 2007 to write its own environmental review for the project as well as its own consultation documents relating to the Endangered Species Act... The environmental assessment was taken away from the agency’s unit that typically handles such reviews, and put in the hands of a different division that was more pro-drilling, said ... scientists, who discussed the process because they remained opposed to how it was handled. “The whole process for approving Liberty was bizarre,” one of the federal scientists said.

    Posted by on Friday, June 25, 2010 at 12:15 AM in Economics, Oil | Permalink  Comments (7)


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