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May 7, 2012

Drill, No-Spill High Tech

May 7, 2012
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Offshore oil and gas is booming. And it is sustainable, driven by consumer demand for the best of energies in a hampered-but-free market.

Compare this to ethanol, wind power, and (on-grid) solar power, all of which depend on special government favor. Their boom is artificial, unsustainable. Expect a bust as the political winds shift. The lesson: energy users want dense, reliable energy, not dilute, intermittent, false substitutes.

The Offshore Technology Conference (OTC) in Houston last week was host to more than two thousand companies and nearly 80,000 engineers, geologists, and business executives. More than 100 countries were present. With single exhibit models costing hundreds of thousands of dollars, OTC is tomorrow’s energy on display.

Offshore energy is still a frontier industry. Today’s small cities at sea, with a technological web beneath them, were unimagined just a few decades ago. Next-generation offshore platforms will continue to amaze. But more than size and reach, the theme of this year’s conference—two years removed from the Deepwater Horizon explosion and spill—is safety and the environment.

Malthusian Non-Imagination

Such progress confounds the “Peak Oil,” limits-to-growth crowd. In their 1977 textbook, Ecoscience: Population, Resources, Environment, authors Paul and Anne Ehrlich and John Holdren (yes, Obama’s science guru) described offshore drilling as a reason to not expect much more oil and gas.

Their example was a state-of-the-art 200-square-foot rig drilling in 300 feet of water. The caption below the full-page diagram (p. 412) read: “The complexity of this operation suggest one reason why the price of oil increases as society is forced to get it from less convenient locations.” And in the text (p. 413): “The complexity, the expense, and the environmental impact of exploratory drilling increase greatly as depletion of the most accessible deposits pushes the search for oil and gas into more remote and more hostile environments.”

Compare this to Shell’s Perdido offshore platform, which has been producing in the Gulf of Mexico for two years without incident. It produces hydrocarbons at 8,000 feet (40 times deeper than the Ehrlich/Holdren example) from a multi-layer platform. And deeper projects are on Shell’s drawing board.

Loren Steffy, author of Drowning in Oil: BP & the Reckless Pursuit of Profit, and business editorialist at the Houston Chronicle, described OTC as “the world’s pre-eminent gala of oilfield geek chic.” He highlighted:

The TeleCoil Downhole Communications System, Baker Hughes’ device for improving the flow of real-time data from deep inside a well; and Tesco’s Directional Liner Drilling System, which improves the process of angling the direction of a well miles below the surface.

And then, there’s The Claw… a floating leviathan that can reach into the depths and pull out a damaged or sunken piece of offshore equipment – even an entire platform – like a child playing with a toy crane.

Ten stories high, The Claw was too big to exhibit at the trade show—but still the talk of the town.

Julian Simon Lives!

What would have Julian Simon (1932–98) thought had he walked the exhibit halls in Houston this week? He might have uttered something like, “I am a realist/optimist, but I could not have imagined …”

But two of his major themes are proudly on display. One is the ultimate resource of human ingenuity, which is not a depleting resource but an expanding one. And two, his adage that our problems make us better is evident with much of the new technical equipment designed for safety and redundancy.

Public Policy

And then there is public policy. “A common refrain in [OTC] panels … was that offshore drilling regulators are spending too much time processing and vetting drilling permit applications,” the Chronicle reported. In fact, the post-spill moratorium (April–October 2010) was followed by a de facto ‘permatorium’ until approximately February 2011.

But now the Gulf of Mexico is getting back to normal (or a new-normal). Permit processing time between applicants and the Department of Interior’s Bureau of Safety and Environmental Enforcement has fallen from of 125 days to 50 days on average in the last year. With the applications in the pipeline, the number of floating deep-water rigs is expected to surge some 20 percent by year-end 2013, according to above article.

To eliminate all risk is to stop industrial innovation and progress. But there can be learning and improvement. The technology boom on display in Houston, Texas last week was about deeper, more, and safer.


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