Australia’s oil and gas regulator has delayed a controversial decision on whether to allow BP to begin deep water exploration drilling in an Australian marine park for a second time.
The regulator said on Wednesday that it needed more information on BP’s environmental plan and set a one month deadline for the company to provide further details. Conservationists oppose drilling in the Great Australian Bight — a pristine stretch of ocean that is a sanctuary for whales and other protected species.
They claim BP’s proposal to drill two wells at depths of up to 2km could cause a “Deepwater Horizon-style” oil spill disaster.
The regulator did not give a reason for the delay. BP said it would commence its drilling when all necessary regulatory approvals are in place.
“This is not a rejection or an acceptance — it is a request to clarify aspects of our plan and for us to provide information that has not been included in the plan,” said BP.
BP, Statoil and Chevron are among several companies with permits to explore the area, which research group Wood Mackenzie estimates could contain up to 1.9bn barrels of oil equivalent — worth $87bn at today’s depressed oil price.
Critics claim BP does not have adequate contingency plans in place to protect the environment in the event it suffers a “blowout” — an uncontrolled release of oil or gas from an exploration well.
A blowout at a BP-operated well in the Gulf of Mexico in 2010 led to the sinking of the Deepwater Horizon oil rig, the deaths of 11 people and an oil spill that BP said had cost the company $62bn before tax.
“This is an outrageous proposal,” says Peter Owen, of the Wilderness Society, an environmental think-tank. “This is the company that nearly wiped out the Gulf of Mexico, costing billions of dollars of damage. It now wants to deepwater drill in a whale nursery.”
Environmental groups, including ShareAction, have also criticised the drilling plan as contrary to BP’s commitment to take meaningful action against climate change.
A decision comes as a major Hollywood movie chronicling the disaster in the Gulf of Mexico opens in the US this week, prompting public relations issues for BP.
It is also a pivotal moment for the oil industry, which has cut spending on deep water exploration due to lower oil prices and the challenges of making a profit from riskier and more complex projects.
“Due to spending cuts, the majors have de-emphasised the importance of high-risk deepwater frontier exploration wells over lower-risk opportunities close to existing infrastructure, and so we have seen far fewer ‘new’ areas being tackled,” says Angus Rodger, a research director at Wood Mackenzie.
“The Great Australian Bight is an exception to the rule, being one of the largest untested deep water basins in the world.”
Analysts say BP has underperformed other oil majors in terms of booking new oil reserves over the past three years and is under pressure to find new resources.
In its submissions to an Australian parliamentary inquiry and to the oil and gas regulator, BP argues that finding oil in the Great Australian Bight would have enormous economic benefits for Australia and the company has learnt lessons from the accident in the Gulf of Mexico.
“Since the tragic 2010 Deepwater Horizon accident in the Gulf of Mexico, BP and the industry have advanced equipment, procedures and training/competency management in the areas of drilling safety and prevention, containment and oil spill response,” says BP.
“In the unlikely event that there was a well incident we would take action immediately, starting from within seconds — there are lots of parallel activities that we would mobilise, such as starting dispersant injection or surface recovery, at the same time as capping the well.”
BP released fresh details of its environmental plan this month, which show how the company would respond to any blowout similar to the one experienced at its well in the Gulf of Mexico in 2010.
Oil spill analysis conducted by BP shows oil could begin reaching shore nine days after a blowout at one of its wells. However, the oil company does not plan to deploy an on-site “capping stack” — the latest technology used to cap wells during a “blowout”.
Andrew Hopkins, professor at Australian National University and author of a book on the Deepwater Horizon disaster, says other deepwater drilling locations, including the Gulf of Mexico and the UK, have “capping stacks” located within 48 hours’ travel time.
“New US rules require a “capping stack” be located within 24 hours’ travel time of a drill site in the Arctic,” says Mr Hopkins. “If the Arctic justifies this type of protection: then why not the Great Australian Bight?”
He estimates it could take 35 days for a capping stack to be transported from Singapore to the region to begin work in the event of a blowout.
“One of the problems in the oil industry is that incentive and bonus structures are typically linked to cost savings and speed of drilling, rather than risk management,” says Mr Hopkins. “It is similar to banking.”
BP says that not all incidents needed a capping stack as a response. “But if one does we will transport one from any of a range of locations, such as Singapore,” says the oil group.