Tuesday, June 15, 2010

Onshore drilling accidents, not just Gulf blowout, add to scrutiny of oil and gas industry

Much of the nation's focus is still pointed to the BP oil blowout in the Gulf of Mexico, but recent accidents at onshore drilling sites are also causing trouble for the oil and gas industry. "With BP’s massive oil spill already prompting questions about the safety of offshore drilling in deep waters, a key growth area for the sector in recent years, the natural-gas accidents are bringing new scrutiny to a business that may be even more important to the local oil-and-gas economy," reports Brett Clanton of the Houston Chronicle. Incidents include two recent accidents at drilling operations in the Marcellus Shale in the Eastern U.S. (see item below) and two fatal gas-pipeline incidents in North Texas.

"It’s not clear whether those incidents will draw onshore gas operations into the push for tighter regulation that the offshore industry already is facing amid the unfolding disaster in the Gulf," Clanton writes. "But they do represent another setback for an industry desperate to repair its image and to reassure Americans that domestic oil and gas resources can be developed safely." Michelle Foss, chief energy economist and head of the Center for Energy Economics at the University of Texas' Jackson School of Geosciences, explained, "Right now, the industry just can’t afford any more mistakes."

"It just demonstrates that we’re at a point where the extraction of fossil fuels is very risky, whether it’s deep-well drilling under the ocean or hydraulic fracturing, that our dependence on fossil fuels comes with some significant risks," Larisa Ruoff, of Green Century Capital Management, a Boston-based investment advisory firm that is trying, through shareholder proposals, to push oil and gas companies to disclose more about risks associated with hydraulic fracturing, told Clanton. Aubrey McClendon, CEO of Chesapeake Energy Corp., the nation’s second-largest gas producer, told Clanton he doesn't believe the incidents will have any long-term impact. "You want to have no accidents ever, but as long as humans are involved and you’re dealing with great unknowns underneath the earth, you’re going to have some surprising things happen," he said. "The question is what do you do with it? If BP had been able to control that spill in a day, we wouldn’t be talking about the BP incident today." (Read more)

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