Forbes Archives

Survey Says…Offshore Seismic is Safe

August 11, 2017 by Justin Williams

Forbes | Robert Bradley, Jr. | August 11, 2017

Late last month, Delaware Senators Tom Carper and Chris Coons released a joint statementopposing seismic surveying in the Atlantic Ocean. Their worry is that such preparatory drilling work for oil and natural gas below the ocean floor would negatively impact marine life along the Atlantic coast.

Their fears are unfounded. Atlantic drilling would create economic benefits at virtually no environmental cost. As environmental economists understand, wealth is health; that is, economic prosperity redounds to individuals and families in ways that result in longer and better living.

Higher-income individuals eat more fresh foods than lower-income persons, for example. They drive safer cars. More wealth affords more education -- and a better environment too.

What is Seismic Surveying?

Here's how seismic surveying works. A boat tugs along an air gun that fires sound waves towards the ocean floor. When the waves bounce back, seismic detectors aboard the boat measure the waves, giving surveyors the data they need to detect oil and natural gas deposits.

In January, Obama denied permits to six energy companies who had petitioned the U.S. Bureau of Ocean Management to use seismic surveying along the Atlantic coast, from Delaware to Florida. The outgoing administration cited concerns about the safety of marine animals.

The Trump administration's National Oceanic and Atmospheric Administration is now poised to grant five of these permits, subject to public comment. If approved, the permits would allow surveys in areas that haven't been explored for more than three decades.

Read the full story here.

Arctic Infrastructure: The Unintended Victim Of The Administration’s Offshore Energy Ban

January 4, 2017 by Justin Williams

Forbes | January 3, 2017 | Brigham A. McCown

Last week, the Friday afternoon before Christmas, the Obama Administration announced its long expected offshore oil and gas leasing program for 2017 – 2022. Perhaps unsurprisingly given the timing of the statement, the decision was a controversial one; both of the Arctic leases in the proposed plan had been cut, leaving the Gulf of Mexico and Alaska’s Cook Inlet as the only parts of the United States outer continental shelf open to energy development.

The Administration has always acknowledged the essential role that fossil fuel development plays in American life. Last August the President stressed in his weekly address that as long as “our economy still has to rely on oil and gas,” the U.S. “should rely more on domestic production than on foreign imports”. And as recently as October top official Amy Pope reiterated the point, noting that “responsibly developing Arctic oil and gas resources aligns with United States’ ‘all-of-the-above’ approach to developing domestic energy resources.”

The about-face – perhaps the product of the shock election result and a newfound urgency to cement the Administration’s environmental legacy – is surprising and comes with significant ramifications. In particular, it is likely to have dire consequences for Native communities who have repeatedly stressed the importance of on and offshore energy development to their economies.

The Arctic Slope Regional Corporation, an Alaskan Native group that represents 12,000 Iñupiat people, criticized the decision, warning that a ban on Arctic drilling would “endanger our communities with no regard for the future health of our people and region.” Alaska’s Governor and Congressional delegation in turn issued public statements that that they were “very disappointed” and “infuriated”, denouncing the Administration for “once again capitulating to the demands of extreme environmental groups over Alaskans and their fellow Americans.”

In addition to the impact on the state and Native economies, the ruling also casts a pall of gloom over the future of a number of projects that are integral to asserting America’s presence and leadership in the region.

From expanding docks to enhancing search, rescue and emergency capabilities, the United States needs to build out its infrastructure in order to keep pace with the changing conditions in the Arctic, where melting sea ice is affording greater access but also elevates the risks and strategic imperative of the region.

In the past the resources, capabilities and infrastructure that have supported energy development, have played an essential role in this process. Roads built to access oil and gas facilities have improved local transportation networks, while oil and gas vessels have conducted search-and-rescue missions for a Coast Guard that continues to face severe resource constraints in the region.

Read the full op-ed here.

Mr. McCown is a philanthropist, fmr federal gov't executive, public policy expert, and the founder of the non-profit group Aii.org.

Oil And Gas Industry Buoyed By Trump Election

November 15, 2016 by Justin Williams

Forbes | November 11, 2016 | Mark Druskoff and Chad Watt

After nearly two years of depressed commodity prices and a host of regulations and activist opposition, the U.S. oil and gas industry is hopeful a Donald Trump administration can help re-ignite growth in the sector, said industry sources.

The 45th president will likely remove regulatory impediments imposed by the Obama administration that have stymied oil and gas drilling and infrastructure buildout, said Frank Murphy, managing director, RW Baird.

One area of likely change is the opening up of more federal lands to drilling activities, said Murphy. A Trump administration is also added insurance against a general ban on fracking, said a midstream investor.

Trump’s election will put more emphasis on expanding U.S. oil and gas production, an industry banker said. The banker did not see Trump as being particularly helpful in the big-ticket offshore drilling projects. Yet the Trump administration could positively impact bonding in the offshore oil and gas sector, an industry lawyer said. The amount and type of bonding companies need to operate in the arena was set to rise under Obama administration efforts and a Trump administration could change that.

Key takeaways

Industry observers believe a Trump administration represents a friendlier environment for the building of pipeline projects, which has the potential to improve the economics of numerous plays that are constrained by lack of takeaway capacity.

Both Murphy and the midstream investor believed more friendly federal agencies could benefit midstream players in the Bakken, such as Dakota Access-owner Energy Transfer Partners, said Murphy and the midstream investor. The Dakota Access Pipeline requires the input of the Army Corps of Engineers, for example, noted Murphy.

More broadly, Trump is seen as reducing the risk premium investors are imposing on midstream companies seeking to build a pipeline, said the midstream investor. In recent months, sector observers have been noting that pipe in the ground is worth more than a large inventory of organic growth projects.

Improving infrastructure will enhance economics for upstream operators like Hess Corp, which owns a substantial Bakken position, said Murphy. It could also help Hess’s plans to take public Hess Midstream, its Bakken-focused subsidiary, as an MLP, said Murphy and the midstream investor. Takeaway capacity alone will not push forward an IPO, however, and rising oil prices will play a critical role in showing the viability of Hess’s drilling, and by extension its midstream operations, said Murphy.

Read the full story here.

Media Hype Aside, Energy Industry Is Exceptionally Safe

October 25, 2016 by Justin Williams

Forbes | October 20, 2016 | Robert Bradley, Jr.

The new movie Deepwater Horizon chronicles a few brave rig workers during the 2010 oil spill in the Gulf of Mexico. This is a story worth telling, but the Deepwater disaster should not be taken as an indictment of the entire energy industry.

Oil and natural gas firms actually have an exceptional safety record. Thanks to rapid technological advancement and steadily improving safety standards, incidents like Deepwater have proven extremely rare. In the century-plus history of offshore drilling, only two accidents are known to history in addition to Deepwater Horizon: the 1969 Santa Barbara Oil Spill and the 1989 Valdez Oil Spill.

Three major accidents is three too many from the industry viewpoint. But energy development involves unique risks. Workers have to handle heavy equipment and toxic material, often in tight spaces. That’s why energy developers have created new technologies that significantly reduce danger. Automation of machinery reduces the chance of human error. Efficient new water pipelines reduce waste. And improved drilling technologies cut the amount of time workers have to spend underground.

What’s more, energy firms have worked closely with the Occupational Safety and Health Administration (OSHA) and other key federal agencies to develop new safety standards for equipment posing the highest risks, such as hatches and storage tanks.

Safety First

These developments have translated into real safety improvements. A new study from the Colorado division of OSHA shows that the average injury rate on new oil rigs is a third less than that of older rigs.

Meanwhile, the overall fatality rate for the oil and gas industry has dropped 60 percent since 2003. And the rate of work-related injury and illness has fallen 40 percent since 2005.

These are substantial gains, and they’ve helped make oil and gas work exceptionally safe. As of 2014, the private sector suffered 3.2 job-related, non-fatal injuries per 100 full-time workers. The energy industry, by comparison, had a rate of only 2.1. And offshore drilling, the focus of the Deepwater movie, is even safer, with an injury rate of just .5 per 100 workers.

Read the full op-ed here.

Robert L. Bradley Jr. is the founder and CEO of the Institute for Energy Research.

Arctic Development Can Help Ensure National and Energy Security

July 27, 2016 by Justin Williams

Forbes | July 26, 2016 | Brigham A. McCown

Thanks to its strategic location and plentiful reserves, the state of Alaska provides a unique opportunity to bolster national security through infrastructure creation and the development of the world’s largest conventional energy resources. Alaska and the rest of the United States have much to gain from energy exploration of those projects offshore from the North Slope.

The clearest example of these benefits is the Trans Alaska Pipeline Systems, or TAPS as it is more frequently known, which has been a vital source of energy supply, particularly to Western states, and is evidence of the synergies between regional development, domestic energy production and national security.

Despite a decline in output from TAPS, the United States is in the enviable position of being able to supplement onshore production with its vast offshore Arctic resources. Two Arctic sites, the Beaufort and Chukchi seas, are currently under consideration for inclusion in the Department of Interior’s 2017-2022 Outer Continental Shelf Leasing Program.

The inclusion of those leases could have a critical impact in ensuring Alaska’s future economic well-being. If the Administration decides to remove the Arctic from the next plan, as is rumored, the state will certainly feel the repercussions from lost investment. Put in simple terms, cutting the leases will effectively mean that there will be no revenues from offshore resources in the Arctic for the next twenty years.

But the impact will be felt more broadly. The Senior Senator for Alaska and Chair of the Senate Energy and Natural Resources Committee, Senator Lisa Murkowski, touched on this recently when she said that, “to forsake Arctic oil and gas would be to forsake America’s energy security in a world that is using more energy, not less.” Without offshore Arctic resources, the future of TAPS looks bleak and California and other Western States will increasingly have to look overseas for energy supplies.

A group of fifteen senior foreign policy experts, led by former National Security Advisor to President Obama, General James Jones, expanded on this security point when they authored a statement noting the critical role that the Arctic plays in our national defense.

Read the full op-ed here.

Mr. McCown is a former government executive, attorney, public policy expert, and the founder of the non-profit group Aii.