As pressure grows on the Government and the industry to justify their cavalier approach to deep sea petroleum exploration they cannot seem to provide any assurances. This is encouraging as it means it will be only a matter of time before the threat of losing an election over their indefensible position will mean both major parties support a ban on deep sea exploration and extraction.
The main claims the politicians and lobbyists are clinging on to now seem to be: (a) the economic potential outweighs the risks; (b) adequate regulations will be in place before any drilling commences; and (c) any environmental or economic risks associated with their activities are born entirely by the mining companies and their insurers.
Let’s look at those claims…
- Economic Potential: By investing so much political and financial capital in backing big oil, the Government denies New Zealand the prosperity that would come from such investment being made in home grown clean technology. We could be world leaders in this sector but instead their plan locks us into a dangerous and polluting energy future. A more energy independent nation would make us less exposed to oil and gas price shocks. In 2009 Price Waterhouse Coopers estimated our clean technology market could be worth between 7.5 to 22 billion, representing up to 17% of the economy, while oil and gas royalties that year earned only $965m. And while the East Coast wears the risk of another oil disaster, the industry acknowledges that no jobs on the rigs are likely to go to locals. So without even taking into account the massive, potentially criminal, risk our district is being exposed to by deep sea exploration, the numbers by themselves don’t stack up.
- Adequate Regulation: No amount of regulation short of banning deep sea exploration will provide proper protection against another disaster. The US agency responsible for regulating deep sea exploration says it will be many years before they can establish a regime that will even minimise (let alone one that could eliminate) risks to the environment and workers. Regulators acknowledge it is a complex, highly technical and inherently risky activity they are charged with overseeing. After all the investigations and regulation strengthening, Petrobras was the first company permitted to resume deep water extraction and almost caused a second disaster last month, a riser broke away from the seabed and it would have started leaking oil if it happened a few days later. Rig inspection is obviously inadequate protection from a large earthquake or simple equipment failure as happened last month for Petrobras. The national ‘oil spill preparedness’ plan consists largely of three small vessels that are limited to inshore responses, the Gulf disaster required hundreds of vessels and we are much more isolated.
- User Pays for Accident: BP lost over US$100 million in value following the Deepwater Horizon accident. There is a real risk that such an event could bankrupt Petrobras and while insurers may struggle cover the financial cost of any cleanup, no money could pay for the environmental, social and cultural damage inflicted, and little, if any, compensation would be paid for the economic impact on fishing, tourism and other sectors. The containment system eventually used for the Deepwater Horizon well cannot be deployed beyond 2,500 metres and the Raukumara Basin goes beyond 3,000 metres in many places. The blowout preventers in use today remain incapable of handling a well rupture of the force of the BP blast. The containment system developed by the industry to respond to another blowout has not been tested in real-life conditions and, by the industry’s own estimate, could still allow hundreds of thousands of barrels of oil to spew before a runaway well could be capped. Hekia Parata admitted under questioning from Green party members in Parliament that there are no assessments of environmental effects or risks contained in the permit and the safety record of Petrobras was never looked at by officials prior to granting the permit.
The corporate PR advisors (what the industry calls ‘communications counsellors’) are obviously being paid too much if that is all they’ve got!