Point of view

Getting ahead of ourselves on oil drilling in NC

April 26, 2014 

Last week marked the four-year anniversary of BP’s devastating Deepwater Horizon oil spill in the Gulf of Mexico, and it’s an important time to analyze the lessons learned from that tragedy as North Carolina considers oil and gas exploration off its own coast.

Although Gov. Pat McCrory and many state lawmakers have bolstered the idea with projections on job creation and millions of dollars in royalties, they are overlooking some key facts and considerations.

It’s not that we shouldn’t investigate offshore energy resources, but we should proceed deliberately, with careful thought about practical realities. Above all, we must avoid making decisions based on wishful scenarios. Assuming that seismic testing would actually turn up significant and potentially profitable oil or gas reserves is like believing we’ll hit the lottery.

There are no proven commercially viable oil or gas reserves offshore in North Carolina, so claims about an offshore bonanza are very premature. We are still years of seismic testing and exploratory drilling away from having any proven reserves on which to base economic scenarios, and there are still significant steps required under federal law before any major payoff would be possible. Every step in the process of identifying and developing these publicly owned resources will require scoping, Environmental Impact Statements, mitigation for impacts and permitting before any activity can begin.

This process will be required for new seismic exploration, leasing programs, exploratory drilling and resource extraction, as well as for activities such as pipeline construction. History tells us that there will likely be objections to these activities and even potential legal actions, so we cannot expect any rewards from offshore oil and gas development for more than a decade.

What’s more, the resources produced offshore would likely be brought ashore in Norfolk, Va., or Charleston, S.C. Coastal North Carolina has no infrastructure with which to bring raw materials onshore, refine them or transport them elsewhere. The onshore activities required to support offshore production would require space that’s not currently available at either of North Carolina’s two state ports and likely not available along most of the coast due to zoning and incompatible uses on most private lands. Our coastal economy is, after all, heavily dependent on tourism revenue.

Let’s also not underestimate the physical challenge of developing deep-water oil and gas resources off North Carolina’s coast. The Gulf Stream’s strong current and the northern Atlantic Ocean’s frequent storms pose challenges more extreme than those faced in the relatively placid Gulf of Mexico.

Careful contingency planning is difficult. Estimating an “average” figure for oil spill-related costs is almost meaningless – there is no average oil spill. There are many small spills punctuated by unpredictably rare, disastrous events that destroy livelihoods and communities. Lawsuits are the only realistic remedy, and the history of such litigation is instructive: The Exxon Valdez cases took 17 years to settle. How long will injured parties have to survive before BP injury claims from the Deepwater Horizon spill have fully settled?

There is also a great deal of speculation surrounding royalties and how much North Carolina could stand to profit from offshore drilling. But there is currently no legal provision for sharing royalties from federal resources offshore North Carolina. Some players in this discussion have rumored that North Carolina would get many millions, but that’s incorrect under current law. Oil and gas revenues from federal resource development go to the federal government, and all 50 states benefit. Every dollar North Carolina could get from proposed revenue sharing is a dollar other states would have to give up.

The Deepwater Horizon spill is a cautionary tale for all offshore oil and gas exploration along our nation’s coastlines. Drilling should be considered carefully, and our state leaders should be making decisions based on facts – not speculation. But if we’re taking a quick look at current realities, offshore oil and gas production is years away for North Carolina and likely never to be significantly profitable at all.

Lawrence B. Cahoon is a professor of biology and marine biology at the University of North Carolina at Wilmington. He chaired the NC Ocean Resources Task Force in the 1990s and served on a Legislative Study Subcommittee on offshore energy 2009-2010.

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