Drilling Plan Is Good for Consumers — and the Environment
https://www.realclearenergy.org/articles/2018/05/09/drilling_plan_keeps_costs_low_for_consumers__and_the_environment_110290.html...The blueprint, unveiled by the president in January, identified areas in the Outer Continental Shelf (OCS) to be leasable for oil and gas exploration purposes. Now, as the Department of Interior (DOI) firms up the plans drawn out four months ago, additional details have emerged from the administration’s agenda. Under the leadership of Secretary Ryan Zinke, DOI is planning significant modifications to drilling safety and inspection regulations put into place under President Obama.
...While ecological advocates are right to keep risk in mind, they fail to consider the unintended consequences of drilling restrictions and regulations. A full accounting of risk shows that the administration’s permissive policies will lead to better outcomes for customers, taxpayers, and, yes, even the environment.
To many advocates of drilling restrictions, the case for heavy-handed rules seems straightforward. Most remember the terrible pictures of birds and fish drenched in “black gold†following the Gulf of Mexico spill nearly a decade ago. But as with most policy, the devil lies in the details. The problems that led to the Deepwater Horizon spill largely had to do with equipment that was wired incorrectly and had a failed battery, according to an analysis by the U.S. Chemical Safety Board. Resulting regulations, ushered into law in 2016, applied an array of technical measures designed to reduce risk.
But new “drilling margin†requirements meant to make companies work more carefully around water pressure while drilling may actually cause an increase in blowout risk. With the new rules, operators using lighter muds to fill wells while drilling stand less of a chance of getting fined by the government. Mud weight, however, must be at a sweet spot, and getting the weight too low can result in a myriad of issues. Engineering scholars at the University of Uyo caution that, “too low mud weight may result in collapse and fill problems.†Frequently opening up blowout preventers to inspections can also compromise the system’s structural integrity, opening up the door to further risk.
When the federal government tried to quantify the costs and benefits of the proposed drilling margin rule, they simply assumed that tighter rules and more inspections would cause at least a 1 percent reduction in blowout risk. This made it easier to make the math work, since industry costs from the rule are estimated to be around $1 billion over the next decade. But not only is this assumption unjustified, the added costs inevitably get passed onto customers in the form of higher fuel prices and scarcer supply. Taxpayers also get squeezed, as the federal government spends tens of billions of dollars each year in petroleum costs....
