Blaze Shakes Oil Industry
Wall Street Journal (Link) - Leslie Eaton, Jeffrey Ball & Stephen Power (September 3, 2010)
The fire that engulfed an oil and gas platform Thursday in the Gulf of Mexico heightened pressure on the energy industry, which is battling greater regulation and a deep-water drilling ban.
The accident on Mariner Energy Inc.�s shallow-water platform sent 13 workers tumbling into the ocean, but there were no casualties and little or no oil appears to have been spilled.
But the towering column of smoke in the Gulf, 245 miles from where the Deepwater Horizon exploded April 20, provoked an outcry from environmental groups and politicians in Washington already skeptical of offshore drilling.
And it complicated the energy industry�s effort to portray BP PLC�s massive Deepwater Horizon oil spill as a fluke that shouldn�t have provoked a drilling moratorium, some energy experts said.
Kevin Book, managing director of research at ClearView Energy Partners LLC, a consulting firm with many energy clients, said that another accident in the Gulf, albeit minor compared with the April blowout, could prompt the Democratic Congress to push for greater changes.
Certain lawmakers� perceptions �that oil and gas production is safe is not affirmed by this disaster,� he said. �And worse, the idea that regulation is adequate is definitely not affirmed.�
The platform in Thursday�s incident wasn�t covered by the moratorium, because it didn�t involve drilling and wasn�t in deep water.
But the accident comes as the oil industry is trying to persuade the Obama administration to relax its drilling moratorium, on the grounds that offshore companies have taken sufficient steps to prevent another accident like the one aboard the Deepwater Horizon. That accident killed 11 workers and unleashed the worst offshore oil spill in U.S. history.
The administration has said it could lift or scale back the moratorium prior to its scheduled expiration on Nov. 30 if it determines that certain categories of rigs �present fewer risks than others.�
The industry remains hopeful that will happen. �It�s dispiriting, but it shouldn�t be an impediment to progress,� Lee Hunt, president of the International Association of Drilling Contractors, said of Thursday�s accident. Mr. Hunt noted that the Mariner facility was a production platform, not a drilling rig, and was pumping mostly natural gas.
�What you have is an industrial-style accident that could have happened onshore,� he added.
Louisiana Gov. Bobby Jindal, a Republican who has been leading the fight against the drilling ban, said the incident shouldn�t be used as political ammunition in support of a federal moratorium on offshore drilling. Speaking at the hospital here where the platform�s crew were being examined, he said, �Energy exploration can and should be done safely.�
Mr. Jindal said he welcomed increased federal safety oversight of drilling, but not a ban on drilling. �It�s important for the federal government to do their job, so thousands of Louisianans don�t lose their jobs.�
The American Petroleum Institute, an industry trade group that has mounted an aggressive push to overturn the drilling moratorium, said it was too soon to comment on the impact of the accident. �We don�t know at this point what impact this will have,� said spokesman Bill Bush.
But critics of offshore drilling said the fire showed the danger of offshore drilling, in both deep and shallow water.
�The half-measures and happy talk need to end,� said Rep. Ra�l M. Grijalva, an Arizona Democrat. The latest accident, he said, �is the starkest possible reminder that oil rigs in this country are not safe, have not been safe for years and are not currently being inspected for safety.�
Senior Democrats on the House Energy and Commerce Committee, which has been investigating the Deepwater Horizon disaster, fired off a letter to Mariner requesting a briefing on the incident by Sept. 10.
The cause of the fire, which began a little after 9 a.m. CDT, and was extinguished by midafternoon, remained under investigation Thursday. One worker on the platform, who wasn�t on board when the fire broke out, said a paint crew had joined the usual four-man crew on Wednesday.
None of the 13 workers aboard was seriously injured, Gov. Jindal said, though only 12 were able to grab life vests; they held their colleague afloat in the Gulf until rescuers arrived.
Edwin Stanton, commander of the Coast Guard�s operations in New Orleans, said six commercial offshore supply boats were on the scene, continuing to spray cooling water onto the platform. He said the sheen of oil seen around the rig probably amounted to about 10 gallons.
Fires aren�t uncommon offshore, especially at older platforms like Mariner�s, said Ray Kizer, an analyst at energy consultancy IHS. Mariner took over the platform, known as Vermilion 380-A, several years ago, but it has been operating for three decades.
The platform has a history of maintenance and repair issues, according to federal records. Government inspectors found an unusually high number of serious problems aboard the platform in both 2004 and 2005, and the facility was later damaged by Hurricane Ike.
Mariner is the sole owner of the platform, which it said recently produced an average of 9.2 million cubic feet of natural gas a day, equivalent to 1,533 barrels of oil, and about 1,400 barrels a day of oil and other liquids.
Apache Corp. said in April it would buy Mariner for $2.7 billion, acquiring a foothold in the deepwater Gulf of Mexico, which in recent years has become a major growth area for big oil companies.
The Deepwater Horizon incident, which is costing U.K. oil giant BP billions of dollars, also has cast doubt on whether smaller oil companies would be able to handle the high costs of responding to offshore accidents.
Bruce Bullock, director of Maguire Energy Institute at Southern Methodist University, noted that a majority of the public didn�t appear to support the moratorium. �But that didn�t stop the administration from imposing it,� he said, �so I don�t think this is going to do anything to help convince the administration to lift it.�