GoM

WARNING: Ranting follows.

GoM, pronounced "gom," is how the industry refers to the Gulf of Mexico.

While there is no doubt that BP made some fairly serious errors in the completion of this well, I have to say that I'm surprised an accident of this type didn't happen sooner. It could have happened to any company drilling in the deep GoM. BP unhappily drew the short straw back in April.

I won't try to rationalize this accident. But it is horribly fortunate that it happened on BP's watch. They are one of perhaps three or four companies with the resources (money, technology, manpower) to tackle this disaster.

What about the MMS? It has been common industry knowledge for decades that MMS was in bed with the companies. Literally and metaphorically. But the MMS had little to do with this accident. In fact, breaking up the MMS and creating additional regulation won't avert future accidents of this nature.

What about the BOP, the blow-out preventer? It is a mechanical machine...and like all mechanical objects, BOPs can fail. BOPs are usually tested every few days or every couple of weeks depending on the rig activity. Even if the Deepwater Horizon BOP passed its last safety test (although it appears that it did not), that does not ensure that it would not fail under the catastrophic conditions that had developed in the well bore. The WSJ is by far one of the best non-technical sources for information about the disaster. Click on "Recipe for Disaster" for an excellent text and graphic summary of what probably happened on the Deepwater Horizon rig.

As I said, BP did make mistakes, some of which they should be held liable for. But in some sense, one ultimate cause of the disaster is related to the current state of drilling technology, to the engineering problem of drilling for oil in overpressured, weakly consolidated sands, to the geological setting that created the overpressure in the first place.

DSL and I chatted about how Exxon has been keeping an extremely low profile of late. They are probably thrilled that they are no longer the industry whipping boy for environmental disasters. They are also sitting on a gigantic pile of money and are certainly patiently waiting for their chance to swoop in and buy up assets of smaller companies who will no longer be able to afford to drill in the GoM. For example, deepwater rig insurance went up 20% days after the disaster and those costs continue to climb. The drilling permit moratorium, if extended for more than 6 months, will force others out.

I have no doubt that greens will be screaming to shut down the domestic drilling industry (and Obama, desperate to buy votes in November, might listen to them to tragic consequences). While I agree that we need to find other energy sources, those will not magically appear today, tomorrow, or even next year. The global economy runs off cheap energy from hydrocarbons. Our own American culture is synonymous with cheap petroleum. I find it overwhelmingly ironic that the very same people calling for an end to drilling do so using modern gadgetry manufactured, shipped, and purchased via cheap petroleum.

I can't bear to look at the photos of the fish, birds, and mammals devastated by this disaster. I am saddened by the horrible deaths of the 11 rig workers on Deepwater Horizon. But rather than shrill baying about how bad the petroleum industry is, we need to take a deep breath and think carefully about what is really important to us. The so-called "War on Drugs" doesn't work because it doesn't affect demand at all. Similarly, our addiction to the things that cheap petroleum brings us won't be changed by a "War on Oil Companies." If you decide that we must punish the industry, how much more are you willing to pay to live in the 'burbs and drive 200 miles a day? To own the latest iThing? To buy strawberries in December?

And by the way, even after 50 years of production, Saudi Arabia is still sitting on so much fucking oil and gas that I can't even find superlatives to give perspective.* The Saudis would be happy to see the US fall on its own sword. They've got tankers lined up just for us.

*But let me try. The Berri field, a mere blip on the map, has booked reserves in 7 stratigraphic horizons. Those reserves represent a volume of oil and gas more than the total global reserves held by Exxon.

Here's another example. The gas cap in the Shaybah field contains 14.2 TCF. That's trillion cubic feet. The gas is not currently being produced. Aramco is only going for the oil beneath it. That gas isn't going anywhere. The Austin Chalk wells that I was involved in would perhaps produce 0.5 BCF during a 15-year lifetime. It would take 28,400 Austin Chalk wells just to equal the gas cap in Shaybah (assuming the Chalk even has that much gas in it, which it doesn't). Oh, and the remaining oil reserves in Shaybah, the oil left after 30 years of production? That's 17 billion barrels, more than the total booked reserves of Chevron and Shell combined.