The Cost Of Industry: Do Regulations On The Oil And Gas Industry Need To Be Strengthened?

By @FrederickReese |
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    (MintPress) – In New Hampshire, two giants of the petroleum industry — ExxonMobil and Citgo — are in court, fighting allegations that they are responsible for the cost of cleaning up widespread groundwater contamination due to the gasoline additive methyl tertiary butyl ether (MTBE). The state is seeking $700 million to monitor and treat contaminated sites, as reported by Al-Jazeera.

    MTBE is a volatile, flameless and colorless liquid that is marginally soluble in water. It has a minty odor, which manifests to an unpleasant taste and smell once dissolved. The chemical is an oxygenizer that can be used to raise the octane number and as an anti-knocking agent in gasoline. Many refiners prefer MTBE for its blending characteristics and its low cost. It is also safer than other ethers used to meet the federal government’s requirement for higher octane levels in gasoline; diethyl ether or tetrahydrofuran (THF) can degrade and build up to dangerous levels of explosive peroxides in just months.

    MTBE is extremely pervasive, however, making groundwater contamination a true problem in the case of spills. It is reported that as little as 10 gallons of MTBE can contaminate a 62 million gallon lake. MTBE is thought to be a carcinogen, but no definitive study has been completed to prove or deny this. What is known is that MTBE makes water nonpotable and has a spread rate that makes it an immediate threat to nearby aquifers and reservoirs in the general vicinity of a spill.

    Since 2007, MTBE has been banned in 25 states, including New Hampshire. MTBE cleanup is thought to cost as much as $30 billion — including the filtering of aquifers and municipal water sources and the replacement of leaky underground oil tanks. In 2005, the oil companies paid in excess of $200 million to cleanup over 346 million gallons of contaminated groundwater in Santa Monica, Calif. In 2009, ExxonMobil was assessed $105 million for groundwater contamination in Queens in New York City.



    Sixty percent of New Hampshire’s residents rely on private wells for their drinking waters. A contamination of the state’s groundwater threatens to impair nearly 800,000 people. In addition, Maine, Vermont, Massachusetts and parts of bordering Canada could also be affected. Treatment of MTBE-tainted water requires activated carbon filtration, which could be cost-prohibitive.

    Documentation from ExxonMobil showed that there was a concern among high-level ExxonMobil executives and employees, counseling the company against the use of the chemical and the possible high cost of remediation. Claire Hassett, counsel for ExxonMobil, told Al-Jazeera via email, “This case is about the state second-guessing decisions made by Congress, the EPA, and by the state’s own officials to rely on gasoline with MTBE as the solution to air pollution.

    “This case is not about health risks or personal injuries. There is no MTBE crisis in New Hampshire. There is not a single recorded case of anyone getting sick from drinking water with MTBE in it – not in New Hampshire, not anywhere else.”

    The state has marked over 200 sites that will require cleanup. Catherine Corkery, the director of the New Hampshire Sierra Club, said, “Clearly, New Hampshire families cannot trust big oil companies when it comes to our drinking water. They said MTBE would help clean up cars and reduce the air pollution. The time has come when the oil companies must clean up their messes and pay us for the damages they caused.”


    Petroleum contamination has became a major issue in recent years. During the 2012 elections, the oil and gas industry paid $8.7 million in contributions to the candidates, with 87 percent of that going to Republican candidates, according to the Center for Responsive Politics. The oil and gas industry has almost universally opposed federally-mandated regulations, despite a less-than-perfect record of safety.

    The National Wildlife Federation (NWF) has compiled a list of the oil- and gas-related spills and disasters from 2001 to 2010. The organization has also compiled a comparative sampling of the 3,997 oil-related accidental releases between 2001 and 2009 in a paper entitled “Assault on America: A Decade of Petroleum Company Disaster, Pollution, and Profit.

    The incidents profiled includes the January 2000 rupture of Marathon-Ashland pipeline (which spilled nearly 500,000 gallons of crude oil into Two-Mile Creek and a nearby golf course), the November 2000 oil spill of the oil tanker Westchester (which, upon running aground, dumped 554,000 gallons of crude oil into the Mississippi river) and the 2002 British Petroleum (BP) falsification of inspections of a Los Angeles area refinery. Also included are the BP’s 2005 Texas City Disaster (in which 15 were killed and 180 were injured), the 2.25 million gallon oil spill in 2006 on Southern Louisiana’s Calcasieu River and the March 2006 BP pipeline spill in Alaska (in which a corroded pipe cracked and spilled 267,000 gallons of crude oil).

    As reported in the paper in 2000, the Heady, Smith and Sumler families (seven adults, three children, two infants) were vacationing and heading toward Carlsbad, N.M. on Aug. 18. While camping along the Pecos River, an underground natural gas pipeline burst and exploded, shooting an enormous fireball 500 feet into the air. The flame was so intense that it melted the paint off of rescue vehicles a half mile away. Of the 12 caught in the explosion, only six survived, all “hideously burned” and “looked like mummies.” The six all succumbed to their burns. The National Transportation Safety Board later ruled that the probable cause of the explosion was “a significant reduction in pipe wall thickness due to severe internal corrosion.”

    As stated in the report, “This severe corrosion occurred, according to the NTSB, because El Paso Natural Gas Company’s corrosion control program ‘failed to prevent, detect, or control’ internal corrosion within the pipeline. Contributing to the accident, said the NTSB, were ‘ineffective Federal pre-accident inspections … that did not identify deficiencies in the company’s internal corrosion control program.’ In other words, negligence and regulatory non-compliance were the root cause of this horrific accident.”



    This is but one of many stories about the oil and gas industry’s lack of interest or ability to self-regulate. Prior to the Deepwater Horizon oil spill, and after every major spill or incident, the industry promises that another spill will never happen again.

    Despite such promises, the Deepwater Horizon, a 9-year-old semi-submersible mobile offshore drilling unit, suffered an explosion due to a blowout of the well it was drilling on April 20, 2010, killing 11, creating a fireball that could be seen from 35 miles away. The rig received six citations — upon inspection — for non-compliance in regards to safety. The rig burned for 36 hours before sinking. In all, the oil spill related to this collapse constitutes the single greatest ecological disaster in United States’ history: 4.9 million barrels of oil were released into the Gulf of Mexico.

    Hundreds of Gulf Islands species were made endangered. Ten of thousands individual animals were killed or impaired. Dozens of species are now mutated, including more than 50 percent of all shrimps in Barataria Bay, La., in which they have no eyes or eye sockets. Fisheries and oyster beds have been compromised and closed. BP was charged with criminal negligence and agreed to pay $7.8 billion in lawsuit settlements.

    As recently as Jan. 14, two men were hospitalized in San Antonio after the explosion of a piece of mining equipment at an oil rig 15 miles south of Charlotte, Texas. As of the filing of this report, one man is in stable condition, while the other is in critical condition.


    North Dakota

    Despite all of this, the oil and gas industry rejects the notion of regulation. As reported to Bloomberg Businessweek, Lynn Helms, director of the North Dakota Department of Mineral Resources, informed the House Appropriations Committee that the state’s oil industry is threatened by “onerous” federal regulations, a struggling worldwide economy and competition from emerging oil fields in other states. Helms has requested that a $1 million fund that is available to challenges to the federal government’s regulations be left intact.

    North Dakota is currently in the midst of an oil boom in part due to hydrofracking, or the shattering and forced expression of oil from shale rock by means of powerful streams of pressurized fluids. As reported by MintPress, hydrofracking endangers the area’s groundwater via the possible accidental spillage of the fracking fluid.

    The Obama administration has made motions toward the passing of new regulations, postponed previously due to the election. Among these regulations is the requirement that energy companies must disclose the chemicals used for hydrofracking and other mining activities on federal lands, new well construction standards, increased requirement for testing, strengthened storage mandates, improved safety equipment on offshore rigs, new guidelines to improve offshore worker safety, more stringent lifecycle checks of mining equipment and slashed sulfur emissions.

    The oil and gas industry complains that these regulations make compliance too costly. There is a fear that the enforcement of these new policies will raise the cost of gasoline as much as 9 cents per gallon while significantly squeezing oil profits. Industry lobbyists also are making the case that the increased amount of stripped sulfur will boost the amount of greenhouse gases in the atmosphere. The reduced sulfur content would allow catalytic converters to work more efficiently, which would help automotive makers meet their own environmental mandates.

    The NWF has formally made recommendations on how to minimize the impact of oil and gas drilling. These recommendations include the elimination of caps on oil and gas company liability for damages, removal of all exemptions from the Clean Water and Safe Drinking Water Acts, reforming the royalty structure for oil and gas leases on federal lands, development of alternative fueling options for transportation, investment in high speed rail and improved transit and freight systems and passing comprehensive climate and energy legislation in the US.

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