What are described as “increasingly harsh conditions for oil and gas extraction” could lead to the industry increasing its spending for environmental, health, and safety (EHS) measures by 60 percent from 2011 to 2030, according to a recent report from Lux Research.
The report states that “As recent high-profile environmental disasters have prompted increased regulatory scrutiny in the oil and gas industry, environmental, health, and safety spending in this industry is expected to increase from $35 billion in 2011 to $56 billion by 2030.”
Harsh Environments, New Technologies, Drastic Innovation
Rick Nariani, Lux Research analyst and the lead author of the report, said that with producers now working to extract resources “from increasingly harsh environments, new technologies and drastic innovation are required to improve [EHS] practices and make the production and transportation of hydrocarbons safer.”
Safety incidents within the industry have already been cut in half over the last decade. Despite all the regulation, the oil and gas industry is, according to statistics, one of the safest around today, with an overall safety record well above the national average.
The report also found that if you’re an upstream producer, the guys who actually get the stuff out of the ground, you’re bearing $0.70 per barrel of oil equivalent (BOE) on such costs, “compared to midstream operators that spend less than $0.01 per BOE.” Midstream companies that store, transport, and market the products “now must navigate past interest groups and journalists before every major project.” The report recommends they invest accordingly, as their scrutiny and exposure to action resulting from injuries could increase.
EPA Regulations Driving Billions In EHS Spend
The United States, as in the past, will dominate spending in EHS for the upcoming future, the report found, thanks to EPA regulations. The report calculated that currently, “over 39 percent of all EHS expenditure is in the United States, where spilling a single barrel of oil currently costs producers $8,000 in penalties.” One place a lot of that spend will go, according to the report, will be leak containment and detection.
All this is in the context of an industry that’s one of the safest in the world today. According to the U.S. Bureau of Labor Statistics reported in Forbes, in 2011 there were 2.3 incidents of injury and illness per 100 oil and gas workers: “That’s compared with 3.5 incidents per 100 for the entire private sector. The U.S. offshore industry experienced an even lower rate of 0.8 incidents per 100 full-time workers.”
If you’re an oil refinery worker, you’re exactly four times less likely in incur injury or fall ill than other manufacturing workers, as the injury and illness rate was 1.1 per 100 full-time workers for oil refining, “versus 4.4 per 100 for the U.S. manufacturing sector overall.”
Hard To Improve On Zero Injuries or Illnesses
And if you’re a pipeline worker you’re the safest of all. As Forbes noted, the U.S. Bureau of Labor Statistics showed that when comparing U.S. pipeline transportation data with American transportation and warehousing sector, “precisely zero pipeline workers experienced injuries and illnesses in 2011,” while “the rest of the transportation sector clocked in a rate of 5.0 safety incidents per 100 full-time employees.”
Not too many industries can boast of a zero-incidence worker safety record over an entire year.
Compare the oil and gas industry’s safety record to the facts compiled by the Caithness Windfarm Information Forum, which found that of the 162 wind turbine industry accidents documented worldwide in 2011, 12 involved human injury, a figure which increased to 15 accidents with injuries in 2012. In fact, “since the 1970s, 133 fatalities have occurred on turbines — a high figure considering the relatively small size of the wind sector,” Forbes reported, noting the “shoddy” nature of record-keeping within the industry, compared to the laser focus on oil and gas industry casualties.
UK Oil and Gas Injuries at “All Time Low.”
Even Britain’s The Guardian admitted this week that “Oil and Gas UK, the lobby group for the major oil companies, has issued its latest annual health and safety report before the Piper 25 conference in Scotland, outlining a 48 percent reduction in the number of reportable oil and gas releases over the last three years, plus an all-time low in 2012 in the incidence of ‘over-three-day’ injuries.”
The article quotes Jake Molloy, Aberdeen-based regional organizer of the RMT union, the national union of rail, maritime and transport workers, as saying that safety statistics are “irrelevant if those employed offshore were still too frightened to report safety breaches because they believed they could lose their job.”
Molloy didn’t produce anybody who actually lost their job because they reported a safety breach. An Oil and Gas UK spokesman told The Guardian that “The UK oil and gas industry places a major focus on engaging the workforce in safety issues because evidence shows that the involvement of workers is important in ensuring continuous improvement in this area,” adding that there’s a telephone number for offshore workers to “anonymously report any concerns they have about safety, to ensure that everyone is heard by the relevant authorities.”
Now Trailer and Mobile Home Manufacturing…
In fact, if the government were looking for unsafe manufacturing industries to regulate, they would be focusing their efforts on ice, steel, or trailer and mobile home manufacturing.
According to a U.S. News & World Report feature in October 2012, Labor Department data reveals that workers in those three “harrowing industries have as dangerous of jobs as their peers who fight fires and crime.”
As the article noted, maybe Hollywood should start making action movies about mobile home manufacturing workers, since they have about as risky a job as cops and firefighters, perennial staples of silver screen suspense flicks. Oil and gas workers are a total snooze in comparison.
Steel foundry workers have the highest nonfatal injury and illness rate of any manufacturing industry in the country at 12.7 per 100 full-time workers, behind only government-employed firefighters (13.5) and government-employed nursing and residential care facilities (13.1).
The ice manufacturing industry had a rate of 11.9 nonfatal injuries per 100 full-time workers, and the travel trailer and camper manufacturing industry 11.2, with mobile home manufacturing next at 10.9. The rate for all industries was 3.8 injuries or illnesses per 100 full-time workers.
Compare that to oil and gas workers’ rate of 2.3 per 100 full-time workers, oil refinery workers’ rates of 1.1, offshore workers’ rate of 0.8,
and pipeline workers’ rate of 0.0, and you wonder why it’s the oil and gas industry that will have to fork out billions more dollars for safety spend over the next couple decades.