Business

Oil companies are expanding their offshore drilling, citing energy needs

About 80 miles southeast of the Louisiana coast, 100,000 tons of steel are floating in the Gulf of Mexico, a symbol of the hopes of oil and gas companies.

This metal giant, a deep-sea platform called Appomattox owned by Shell, collects the oil and gas that drilling rigs tap from reservoirs thousands of feet below the ocean floor. Equipment on the platform directs fuel to shore.

Politicians and business leaders have committed to reducing greenhouse gas emissions to zero by 2050. But oil companies like Shell assume that the world will still need oil and gas in the coming decades. To meet this demand, they are expanding offshore oil and gas drilling into ever deeper waters, particularly here in the Gulf of Mexico.

Oil executives argue that offshore production is not only crucial for powering cars, trucks and power plants, but is also better for the planet than onshore drilling. That’s because such operations emit far fewer planet-warming greenhouse gases than producing the same amount of oil and gas on land, according to industry estimates.

“By the way, the world will continue to need oil in 2050,” Shell CEO Wael Sawan said in a recent interview. “Emissions must become ever lower.”

Accordingly, the greenhouse gas emissions associated with extracting a barrel of oil from the Gulf of Mexico are up to a third lower than the emissions associated with extracting a barrel of oil from fields on US soil a report released last year by the National Ocean Industries Association, an industry group for offshore oil, gas and wind companies. (These figures do not include emissions from burning fossil fuels in engines or power plants, which are much higher than emissions from producing and refining oil and gas.)

Oil production in the Gulf of Mexico fell for several years after the 2010 Deepwater Horizon explosion caused the worst offshore oil spill in U.S. history. But oil production in the Gulf has increased over the past decade. The renewed interest in offshore production is part of a larger trend: The United States recently set oil production records, producing more crude than any other country.

Booming oil and gas production in the United States has alarmed climate activists and scientists who want the energy industry to shift more quickly to cleaner fuels and technologies such as wind and solar power and electric vehicles.

“We’re not talking about stopping oil production today,” said Brettny Hardy, senior attorney in the Oceans Program at Earthjustice, an environmental law nonprofit. “But no matter how you look at it, there is an urgent need to accelerate the transition to clean energy. The things the industry is doing now will not support that transition.”

For many environmentalists, the catastrophic potential of offshore fossil fuel production is significant. The Spill from the Deepwater Horizon oil rigoperated by BP, resulted in significant damage to marine life, the fishing industry and the beaches of the Gulf of Mexico.

The spill helped draw attention rice whale, which lives only in the Gulf of Mexico and is classified as an endangered species by the federal government. Due to incidents such as the Deepwater Horizon spill and collisions with ships, fewer than 100 of these whales remain.

“The concern and concern is for the right reasons because we have suffered a fire before because of the Deepwater Horizon,” said Najmedin Meshkati, a professor of engineering at the University of Southern California and a member of a National Academies committee that investigated that oil spill .

The Biden administration had planned to curb lease sales for oil drilling in the Gulf, which environmentalists said would help protect Rice whales. In August, the Bureau of Ocean Energy Management reduced the area available for leasing from 73 million acres to 67 million acres.

But in November, the U.S. Court of Appeals for the Fifth Circuit rejected the government’s plans. A month later, oil companies offered $382 million for the right to drill for more oil and gas.

Oil executives say offshore oil operations are now far less dangerous thanks to technological advances and improvements in standards and regulations. “Offshore oil and natural gas exploration and production is safer than ever,” said Holly Hopkins, vice president of upstream policy at the American Petroleum Institute, a trade group.

Energy companies prefer drilling in the Gulf because there is a lot of oil and gas there, especially in very deep waters. According to the American Petroleum Institute, the number of deep-water platforms has increased dramatically over the past three decades, while the number of shallow-water platforms has declined.

Analysts from the federal government estimate that oil production in the Gulf of Mexico will grow until 2027. Natural gas production in the Gulf is expected to remain largely unchanged through the early 2030s.

Shell is the largest oil and gas producer in the region’s waters. Its outsized presence in the Gulf is demonstrated at Appomattox, which the company says has a displacement larger than the world’s largest aircraft carrier.

The platform was launched online in 2019 and can accommodate up to 180 people. It remains in place while ships drill wells near it and connect those wells via pipes to the platform where the equipment separates oil, natural gas and water.

Shell recently launched a smaller floating platform, the Whale, which can accommodate up to 60 people. Another unit, Sparta, is under development. In total, Shell, a London-based global energy giant, operates nine active platforms – including four with built-in drilling rigs – in the Gulf of Mexico.

During a recent reporter’s visit to Appomattox, about 130 people were working aboard, including oil and gas engineers, cooks, janitors, a paramedic and laundry operators who keep the washers and dryers running 24 hours a day.

Crews live on the platform for 14 consecutive days and work 12-hour shifts. They return to their homes around the world for two weeks before returning for another 14-day stay.

The people on board are proud, even though they recognize that many people think their industry is destroying the planet.

“There’s another side that people don’t talk about,” said Matt Flanakin, Appomattox ballast controller for Shell. “We know that CO2 emissions must be reduced. But we still need fossil fuels.”

The platform floats on the deep blue water with nothing else visible. Occasionally an oil rig ship appears in the distance. These ships search the seabed for oil sources.

The platforms create artificial reefs that attract fish and pods of dolphins to Appomattox, said Rich Howe, executive vice president of Shell’s global deepwater business.

Shell is not the only one expanding its offshore activities. BP, Chevron and other energy giants are also expanding or planning to expand their operations in the Gulf of Mexico.

“This is the cradle of the global deep sea,” Mr Howe said. “A lot of technologies were invented here.”

The Gulf has an extensive network of pipelines and equipment that help transport oil and gas directly to onshore facilities without processing via pipelines. This will make the extraction of oil and gas from underground deposits in the Gulf more efficient and ultimately contribute to fewer emissions.

The technology has also led to a reduction in the need for offshore workers to be flown by helicopter to platforms and drilling rigs. Some control room operators work remotely on land. And the companies say they are minimizing the amount of natural gas they burn in a process called “flaring.”

“We want it to be as safe, affordable and low-carbon as possible,” said Andy Krieger, senior vice president for the Gulf of Mexico and Canada at BP, which has five platforms in the Gulf of Mexico.

But plans by oil giants, particularly those based in Europe, to invest in offshore production are viewed by some climate experts as a retreat from companies’ investments in renewable energy in recent years.

Mr. Sawan, Shell’s chief executive, is clear that the company should focus on the businesses it knows best, a category that includes oil, natural gas and hydrogen. He said it should allow other companies, including companies with which Shell has financial and commercial relationships, to develop renewable energy sources such as solar power.

That doesn’t mean Shell isn’t interested in newer parts of the energy sector, he added. He cited electric vehicle charging as one area in which his company wants to expand. To that end, Shell recently announced it would close 1,000 gas stations, or about 2 percent of its retail footprint, in 2024 and 2025 and expand its electric vehicle charging network from about 55,000 currently to 200,000 public charging points worldwide by 2030.

“Ultimately,” Mr. Sawan said at a recent energy conference in Houston, “the real intent here is to bring in the multidimensional nature of the energy transition and advance this dialogue that seems to be focused on ‘Is.'” Is it oil and gas or is it sun and wind?’ That’s all, and we need them in abundance.”

Source link