RFF suggests putting deepwater risks in context

Resources for the Future, an independent economic research group, suggests that neither government or the oil and gas industry yet has adjusted to the high-risk context of deepwater operations. RAF recommends setting liability caps for individual wells at a level reflecting damages from worst-case spill scenarios.

Lynn Scarlett, RFF visiting scholar and former deputy secretary of the interior, made this comment during a Feb. 15 luncheon symposium hosted by ConocoPhillips at its Houston headquarters.

“One might argue it is rocket science,” Scarlett said of regulating drilling and production activities in the deepwater Gulf of Mexico. “No project is business as usual.”

RFF recommends that third-party insurance should be researched as a possible way to strengthen external monitoring of deepwater oil and gas operations. If insurance pools are used to assist smaller firms, fees should be related to risk, Scarlett said.

She said both government and the private sector lacked capacity and practices for performing adequate risk assessments.

‘You just don’t know what you don’t know,” Scarlett said, adding that risk assessment capacity and practices will be a key issue for both industry and regulators going forward after the April 2010 Macondo well blowout and resulting massive oil spill in the gulf.

BP, ConocoPhillips leave climate coalition

A lobby group focused on climate-change legislation is seeing its corporate membership numbers drop, which some analysts are calling another indication that Congress appears increasing unlikely to pass a climate change bill this year.

BP PLC and ConocoPhillips decided against renewing membership in the US Climate Action Partnership, a coalition of environmental groups and corporations targeted on building support for a national cap-and-trade program. BP and ConocoPhillips were among USCAP’s founding members in 2007.

Other large companies, including Royal Dutch Shell, remain in the coalition.

USCAP spokesman Tad Segar says there’s still momentum to get a climate change bill done. Some energy analysts are not so sure of that.

Raymond James & Associates Inc. said in a Feb. 17 industry brief that there is no realistic prospect of passing cap-and-trade in 2010, adding that attitudes in Washington are shifting “in the wake of the Climategate scandal and news that the UN climate panel made bogus claims about glacier melting, and perhaps also out of recognition that cap-and-trade is DOA in the US Senate.”

Can nanosensors boost oil production?

Oil companies and service companies are helping finance a research consortium promoting nanotechnology. The consortium hopes that subsurface nanosensors can coax more oil and gas out of conventional reservoirs.

The Advanced Energy Consortium says it “seeks to build a vital and economical hydrocarbon bridge while renewable energy resources are being developed.” AEC seeks to use nanosensors to characterize reservoir rock formations.

The medical industry already uses nanotechnology—engineering on the level of atoms and molecules. Paul Ching, AEC executive director, said most major oil companies are researching nanotechnology.

AEC members include BP America Inc., Baker Hughes Inc., ConocoPhillips, Halliburton Energy Services Inc., Marathon Oil Corp., Occidental Oil & Gas Corp., Schlumberger Ltd., Royal Dutch Shell PLC, and Total SA. The Bureau of Economic Geology at the University of Texas manages AEC. Rice University is a collaborating technical partner.

Separate from AEC, ConocoPhillips announced a 3-year nanotechnology program with the University of Kansas to research and test new technologies for enhanced oil recovery.

Stephen Brand, ConocoPhillips senior vice-president of technology, said the inclusion of nanoparticles might yield more efficient, environmentally sensitive EOR technologies.