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Volatile Fuel Prices Shift Off-shore Drilling Debate

January 1, 2009 at 6:30 PM EDT
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The past year's volatile gas prices are impacting the ongoing debate on whether to drill for oil off the coasts of Virginia and California. Spencer Michels reports on how the price swings and new technology are affecting the controversy.

RAY SUAREZ: Now, technology and off-shore drilling. NewsHour correspondent Spencer Michels has our Science Unit report.

SPENCER MICHELS, NewsHour correspondent: This is the coast off Santa Barbara, California, where 20 off-shore oil platforms churn out 65,000 barrels of oil every day.

When gas prices were high, the political pressure to drill off-shore for oil here and elsewhere was intense. As a result, Congress put an end to a 26-year ban on off-shore oil exploration.

When the cost at the pump declined, so did the pressure to drill. But oil prices are volatile, and so new drilling off-shore remains a distinct possibility off Santa Barbara and perhaps off the coast of Virginia.

That’s because in November the U.S. Minerals Management Service announced it was taking the first steps to accept bids for off-shore oil leases off Virginia. The oil industry says there’s a lot more they could find in several spots, including near Santa Barbara.

But talk of new wells upsets environmentalists. They’ve been fighting against off-shore drilling for decades. They still point to a 1969 accident below an off-shore platform six miles off Santa Barbara. It created a spill so devastating that, 11 years later, Congress enacted the moratorium on new drilling.

Now, 40 years later, that spill is still influencing national policy.

CHARLIE ECKBERG, Get Oil Out: You couldn’t really walk here because of the thickness of the oil.

SPENCER MICHELS: Charlie Eckberg, who today is a real estate agent and a member of Get Oil Out, or GOO, was a student in 1969 who volunteered to clean oily birds on Santa Barbara beach.

CHARLIE ECKBERG: You saw the death in regard to the water fowl that had been caught in the oil and could not clean themselves. They essentially all died.

The waves were heavy with oil so that you didn’t hear the waves. It was just this — this silence of the black coming in. It was ugly, ugly, ugly.

SPENCER MICHELS: The spill turned Eckberg and thousands of others into environmentalists who successfully lobbied Congress to ban off-shore drilling.

CHARLIE ECKBERG: Out of that circumstance came some of the most significant environmental issues, Clean Air, Clean Water Act, the establishment of the Environmental Protection Agency. Earth Day was a result of it.

New technology decreases risks

SPENCER MICHELS: But the industry says it has cleaned up its act since '69 and now can drill and produce oil with little risk.

Tim Marquez, the CEO of Venoco, a small publicly held oil producer, took us via helicopter to one of the three platforms Venoco operates in the Santa Barbara channel. Along the way, we passed over the actual well that spewed the oil in '69, now partly owned by Venoco and still producing. Today's technology is completely different, Marquez says.

TIM MARQUEZ, CEO, Venoco Oil Company: The science has advanced more in the last 10 or 15 years than probably the previous 50, 60 years combined.

SPENCER MICHELS: His proof? A platform called "Gail," a giant, 150-foot-high, two-acre oil rig in 740 feet of water, seven miles off the coast.

Sea lions have taken up residence at the bottom of the platform. Twenty men live and work on Gail, putting in one-week-on, one-week-off shifts, enduring constant noise and making sure the 24 wells beneath continue to produce about 5,000 barrels a day.

But unlike the old days, the workers are now helped by computers.

TIM MARQUEZ: In the old days, you had to drill the well and then you would come back and see what you had drilled through. Nowadays, we can actually see it while we're drilling through it.

SPENCER MICHELS: New drilling techniques and improved equipment have also increased oil production.

TIM MARQUEZ: I think it's amazing that we're now drilling in over 5,000 feet of water and setting platforms and producing in over 5,000 feet of water. That almost seems impossible compared to where we were 20 years ago.

Some say threats are not minimized

SPENCER MICHELS: But just the concept of drilling new oil wells upsets those who favor cleaner and more sustainable energy. Bruce Luyendyk is a professor of marine geophysics at the University of California at Santa Barbara.

BRUCE LUYENDYK, University of California, Santa Barbara: The industrial world has been growing off on one energy supply: petroleum.

SPENCER MICHELS: Luyendyk says that conservation and development of alternative energy sources is far more important than finding new oil.

BRUCE LUYENDYK: The idea of relaxing our efforts because we think we're going to drill our way out of it, the only thing that we're going to get after the six years of using up this oil is being completely out, being -- the tank is dry.

SPENCER MICHELS: Most industry officials say they agree that alternatives to oil must be found, but for the foreseeable future, they argue, petroleum will be crucial.

So they drill where they can, using drilling ships, rather than platforms. A shortage of these ships has curtailed the drilling of new wells, but more vessels are being constructed to meet the worldwide demand.

Oilmen point out that they can now get more from less. Since drills now can reach out so far horizontally, one platform covers a much larger area, which means fewer are needed. And each platform now has multiple wells descending into the ocean.

TIM MARQUEZ: This platform here is now making four times what it was projected to be making 10 years ago. A platform like this can have anywhere -- in California, can have anywhere from the low side 15 to 18 wells to as many as 60 wells, or it's even -- there's one platform that could have 96 wells drilled from it.

SPENCER MICHELS: As for finding the oil, Venoco's chief geologist, Ted Carlsen, says computer power has allowed a three-dimensional look at rocks under the water.

TED CARLSEN, geologist, Venoco Oil Company: We can get a much better look at these subsurface features. And we are able to combine those with geology and drilling techniques, to put it all into one picture, one three-dimensional picture.

SPENCER MICHELS: Geologists have made diagrams like this one, showing different rock strata and the way wells penetrate them from a central location.

TED CARLSEN: What you also see on the left side of the picture is one yellow line there that goes way out to the left of the picture. And that's one of these extended-reach wells.

SPENCER MICHELS: Environmentalists, like those in Santa Barbara whose economy is tied to tourism, contend all this drilling is bound to result in more spills and damage to the shore. Linda Krop is the chief counsel for the Environmental Defense Center.

LINDA KROP, Environmental Defense Center: The threats are just as real today as they were 40 years ago. Even though we have additional regulations, we still have spills, we still have toxic gas releases, the reason being that you cannot prevent these things from happening.

Spills, quakes more manageable now

SPENCER MICHELS: Oil firms argue that safety features have reduced spills, that any that do occur can be cleaned quickly, and that workers are better trained.

Wells also now are lined with steel that is cemented in place. The spillage has been minimal, says Joe Sparano, president of the Western States Petroleum Association.

JOE SPARANO, Western States Petroleum Association: In the last 39 years since the Santa Barbara spill, the industry has produced one billion barrels of oil or more. During the same period, 850 barrels of oil have been introduced into the marine environment.

SPENCER MICHELS: Regulators are also doing a better job with more unannounced inspections and tougher rules, says Rishi Tyagi, who directs Pacific Coast operations for the U.S. Minerals Management Service.

RISHI TYAGI, U.S. Minerals Management Service: Companies are supposed to have fail-safe redundant systems. In case for any reason whatsoever, even if the well gets severed at the top, the well will stop flowing immediately.

SPENCER MICHELS: And what about the danger of earthquakes? Santa Barbara was destroyed by one 100 years ago.

TIM MARQUEZ: Over the last 20 years, every platform has been redesigned and strengthened to withstand 1,000-year seismic event.

SPENCER MICHELS: But there's one thing Luyendyk at U.C. Santa Barbara says nobody can prepare against.

BRUCE LUYENDYK: The question of human error is a significant one and a serious one and that -- no amount of training is going to prepare you for the eventual lapse, mistake, or confusion that comes with the human activity.

SPENCER MICHELS: Public opinion polls in California, once strongly opposed to off-shore oil, now show a shift in favor of drilling.

In Santa Barbara, the county government wants to drill, while the city government is opposed. The price of oil has an effect on whether to push for new drilling, acknowledges Venoco's Marquez.

TIM MARQUEZ: Yes, it's going to have a big impact. You've seen just in the past couple of weeks several public companies have come out announcing cutbacks in their 2009 drilling program by 50 percent, 60 percent, 70 percent.

SPENCER MICHELS: While there currently is no moratorium on new drilling, Congress and the new administration can determine if, when, and where new well sites can be developed. Additional off-shore platforms could take up to 10 years to start functioning.