(cross-posted at Deny My Freedom and Daily Kos)
It was big news when British Petroleum (BP) announced a few weeks ago that it would have to shut down. Oil prices shot up towards record highs that had recently been hit due to the Mideast conflict between Israel and Hezbollah, and there was much concern that oil prices would climb even higher. In the past year or so, though, a closer look at the Prudhoe Bay oil facility (pictured above) reveals a sad look at America’s energy policy. We have become so thoroughly dependent on oil that we are caused to squeeze every last drop that we can. Neglect for the environment, along with shoddy maintenance, has resulted in a shutdown of a crucial pipeline to America. The lesson that we should learn? It’s imperative that we stop relying on oil so much, where the costs – whether they be environmental (incurred to the general population) or company-related (increased maintenance costs) – are going to outweigh any benefits there may be to continually relying on oil.
Before delving into Prudhoe Bay’s – and more specifically, BP’s – problems, we’ll start with a Washington Post article a year ago that chronicles the decline of the region’s oil fields. In it, a stark picture is painted:
PRUDHOE BAY, Alaska — Oil keeps flowing through a maze of aging wells, pumps and pipelines that poke through the snow on this desolate North Slope tundra.
But this vast field is ailing: Output has fallen by nearly 75 percent from its peak in 1987 and is expected to continue dropping.
The Prudhoe Bay field sprawling over an area the size of Howard County still pumps more oil than any other site in the United States. But its shrinking production reflects a trend throughout the country: After years of pumping, fields in the U.S. are drawing less oil from the ground.
The production numbers aren’t pretty: in its heyday more than 35 years ago, Prudhoe Bay produced plenty of oil to help keep America supplied. Now, the field accounts for only 8% of our production – an amount that’s still enough to cause a spike in oil prices:
Oil companies like BP are trying to extend the life of U.S. fields by using a variety of new technologies to wring more oil from the ground. But the technology and increased Gulf production are not enough to reverse the declines.
Nationally, daily production of oil and natural gas liquids dropped last year to an average of 7.2 million barrels a day — a 36 percent decrease since peaking in 1970. At Prudhoe Bay, average daily production last year was about 450,000 barrels a day, a 72 percent drop from its peak.
My summer work exposed me to several various types of oil and energy companies that were planning on drilling. While companies in the industry do seimic surveys to determine what kinds of oil reserves are around, they do not exactly pinpoint where oil is. In particular, when one is attempting to extract additional oil from nearly exhausted oil wells, the process essentially becomes a shot in the dark. I can’t divulge the types of technologies that I looked at, but the process is no longer scientific – in essence, these companies make their best bet as to where some oil may be, and they create additional holes underground in hopes that oil trickles into the newly-created flow. I’m not an expert, but one can surmise that blasting through the bedrock must have some detrimental environmental effects.
The Post article interviewed an executive from BP, which operates more than 1,000 wells, tried to put a positive spin on the situation but acknowledged that additional exploration was pointless and that it’s only a matter of time until oil runs out:
BP, which operates more than 1,000 wells on the Prudhoe field, has given up exploring for new oil on the North Slope, saying its prospects are better elsewhere.
The company says that when the first wells started producing here, officials envisioned that even less oil would be flowing by now. BP executives say they’re doing everything they can to squeeze as much oil from the ground as possible.
“It does feel like we’re pedaling hard and running out of options,” said Maureen Johnson, a BP senior vice president in charge of Prudhoe Bay and nearby fields.
With an aging oil field, one would expect that there would be heavy monitoring of the Trans-Alaskan Pipeline, which begins at Prudhoe Bay. However, earlier this year, there was an oil spill caused by leaks in a feeder pipeline. While it was only 1/42 the size of the massive Exxon-Valdez spill, it was still the largest spill in the northern region of the fields:
“I can confirm it’s the largest spill of crude oil on the North Slope that we have record of,” Linda Giguere, from Alaska’s state department of environmental conservation, was quoted as saying by the Associated Press news agency.
[…]
The spill covers about two acres (one hectare) of the snow-covered tundra in the sparsely populated region on Alaska’s north coast, some 1,040km (650 miles) north of the state’s biggest city, Anchorage.
The source of the spill was a hole caused by internal corrosion in the pipeline, officials say. It remains unclear when the leak started.
It’s difficult to determine just how much harm such a spill could cause. One potential problem in identifying any short-term or long-term effects is that a lot of it probably seeped into the ground:
It was not immediately apparent how much ground the spill covered. Hot oil in the pipe melts snow and spreads underneath it along the ground, he said.
“A lot of the oil isn’t visible,” Beaudo said.
Field responders said oil had reached the edge of a lake.
Remember that the cause of the oil leakage was deemed to have been corrosion? Well, this resulted in an inspection of the pipeline – and that inspection is what led to the shutdown of the Prudhoe Bay oil fields in August. BP owns 22 miles of the pipeline, and another leak – a very small one – led to the shuttering of production:
BP, the world’s second-largest oil company, began shutting down the pipelines on Monday and said it would replace 16 miles of the 22 miles of transit pipeline in the Prudhoe Bay field following a leak discovered Sunday.
After the shutdown, there was alarming talk that the oil field would not be reopened until next year. However, half of the potentially lost daily production was restored when BP was given clearance to reopen the western portion of its oil fields. Nevertheless, one has to wonder if it’s best to let a company continue pumping, given its awful record with maintaining the pipelines by which the oil flows:
“They have a real blind spot when it comes to the North Slope,” says Athan Manuel, director of lands protection for the Sierra Club, an environmental activist group.
U.S. Rep. Ed Markey, D-Mass., chastised BP Monday for failing to properly clean out many of its oil pipelines.
He cited April testimony from Stacey Gerard, acting administrator of the U.S. Pipeline and Hazardous Materials Safety Administration, that BP has failed to exercise some of the most basic techniques to remove sludge.
“We have no single logical reason why they did not use the scraper pigs,” said Gerard in that testimony. Scraper pigs clean the line of corrosion and other foreign material.
A damning article in the Christian Science Monitor shows that these are not isolated incidents. It appears that hundreds of leaks occur each year, undoubtedly a result of poor maintenance on the pipelines. Although it’s stated that the situations are ‘remedied’, who knows just how much damage has been done to the environment when one adds up all these ‘minor’ leaks:
Despite what industry supporters say are more environmentally friendly ways of detecting and extracting oil from the North Slope today, the means of transporting the liquid gold south is old and – critics say – becoming dangerously decrepit. In some places pipeline walls have lost as much as 80 percent of their thickness as a result of corrosion, industry officials say.
[…]
In recent years, about 500 oil spills have occurred in the Prudhoe Bay oil fields and along the 800-mile pipeline each year, according to the Alaska Department of Environmental Conservation, even though the daily “throughput” of oil has declined from about 2 million barrels a day in 1987 to less than half that today. Most leaks are minor, quickly detected, and remedied.
While the average American probably isn’t happy by any gasoline price increases the shuttering of the oil field caused, the shareholders of BP aren’t any happier. It appears that they will sue BP for an unspecified amount of damages:
Senior executives at BP PLC face a lawsuit filed by shareholders who claim the oil giant’s poor maintenance practices at Prudhoe Bay led to the partial shutdown of the nation’s largest oil field.
The suit alleges that BP has known for years about the severe pipeline corrosion that led to last week’s shutdown, but took no substantial steps to properly monitor and repair the transit lines that ferry oil straight into the 800-mile trans-Alaska pipeline.
I’m no legal prognosticator, so I can’t say whether or not such a lawsuit holds any merit. However, it appears that a potentially damaging piece of evidence has come to light recently. The grand jury for the shareholder lawsuit was exposed to an engineering report by a Seattle firm. Yesterday, the Associated Press wrote an article that revealed that BP was warned about its practices – and that this occurred almost five years ago:
The draft report by Seattle’s Coffman Engineers, published in November 2001, is among documents being reviewed by a federal grand jury in Anchorage that is investigating a March oil spill of more than 200,000 gallons from a pipe on the western side of the Prudhoe Bay oil field.
[…]
The 2001 report questioned whether BP was using remote-operated devices that check for corrosion and other wear extensively enough. Most of the comments about the devices were eliminated from the final report, published early in 2002.
In the aftermath of last March’s spill, BP acknowledged that the transit lines in western Prudhoe Bay had gone without an inspection by the remote-operated device since 1998, and it has been scrambling to make those inspections.
It’s always great to know that corporate executives are manipulating independent reports given to them, essentially covering up negligent business practices. To view what the Project On Government Oversight has on the reports, you can visit them and read the disgusting truth for yourself. In the Seattle Times, a brief overview of the report’s contents shows just how much was changed:
Warnings by a Seattle-based engineering firm about problems with BP’s monitoring of its Alaska oil pipelines were significantly toned down after the company complained that the report was “extremely negative,” according to documents now under review by a federal grand jury.
The draft report by Coffman Engineers, published in November 2001, raised concerns about the way BP was tracking and reporting Prudhoe Bay pipeline corrosion, which this year resulted in oil spills and forced a partial shutdown of those fields.
But the final Coffman document, in its summary, had a strikingly different tone: It praised BP for a “comprehensive program of monitoring and inspections” and “steadily improving” trends in internal pipeline corrosion.
It’s unclear just how much this will hurt BP, which has been trying to improve its public image by branding itself Beyond Petroleum. However, there’s a good chance that it could take a hit in the pocketbook if the lawsuit is successful. The firm had $7.3 billion in net income in the most recent quarter, but unless oil prices continue to rise, its loss of profits from losing half of Prudhoe Bay, added costs of maintenance (now that they will be under increased scrutiny), and potential damages from the lawsuit could impact the company in a highly negative way.
While BP is clearly another example of corporate malfeasance, the overall lesson is clear: as our infrastructure for pumping oil ages, it becomes even more environmentally harmful to use oil – and that’s before it’s burned off, which adds to global warming. Hopefully, this will cause politicians to face the unpleasant reality that drilling for more oil in places such as ANWR will merely compound the problem.
