Industry Market Trends

Crude Fines Won't Plug Perpetual Oil Spillage

Dec 22, 2011

As North America debates the questionable merits of the Keystone oil pipeline that, if constructed, would connect the U.S. to Canada - and potentially create jobs while reducing our dependence on foreign oil - it's important to keep in mind that oil spillage is a global issue that refuses to be properly addressed. From the Gulf of Mexico to the warm waters of Rio to the frozen tundra in Russia, vast amounts of oil perpetually seeps from deep water rigs, freighters and deteriorating abandoned wells. So why is it still ok to "drill baby drill"?

Based on a recent spate of eye-opening news, it's readily apparent that fining big oil companies billions of dollars isn't going to change hazardous drilling and extraction practices.

Russia, for example, sets the bar pretty high when it comes to global oil disasters. A recent article by the Associated Press says Russia's oil country is a "sprawling, inhospitable zone that experts say represents the world's worst ecological oil catastrophe."

Here's more from the Associated Press:

Environmentalists estimate at least 1 percent of Russia's annual oil production, or 5 million tons, is spilled every year. That is equivalent to one Deepwater Horizon-scale leak about every two months. Crumbling infrastructure and a harsh climate combine to spell disaster in the world's largest oil producer, responsible for 13 percent of global output.

And it's also important to keep in mind the devastating impact oil has on the environment, which the Associated Press article also does very well, in very simple terms:

Oil, stubbornly seeping through rusty pipelines and old wells, contaminates soil, kills all plants that grow on it and destroys habitats for mammals and birds. Half a million tons every year get into rivers that flow into the Arctic Ocean, the government says, upsetting the delicate environmental balance in those waters.

The remainder of the Associated Press article is a fascinating look at Russia's crumbling oil technology and infrastructure and how harsh weather conditions complicate matters. It also states very clearly that Russia is the biggest oil spill offender in the world, again proving that current counter measures and fines for infractions simply don't work. Here are other top global offenders who seem to be unaffected by fines:

  • Nigeria, which produces one-fifth as much oil as Russia, logged 110,000 tons spilled in 2009, much of that due to rebel attacks on pipelines.
  • The U.S., the world's third-largest oil producer, logged 341 pipeline ruptures in 2010 - compared to Russia's 18,000 - with 17,600 tons of oil leaking as a result, according to the U.S. Department of Transportation. Spills have averaged 14,900 tons a year between 2001 and 2010.
  • Canada, which produces oil in weather conditions as harsh as Russia's, does not see anything near Russia's scale of disaster. Eleven pipeline accidents were reported to Canada's Transport Safety Board last year, while media reports of leaks, ranging from sizable spills to a tiny leak in a farmer's backyard, come to a total of 7,700 tons a year.
  • Norway, Russia's northwestern oil neighbor, spills amounted to some 3,000 tons a year in the past few years, said Hanne Marie Oeren, head of the oil and gas section at Norway's Climate and Pollution Agency.

We can also add Brazil to the list. The region has experienced a couple of spills in less than two months. As this story from CNN uncovers, a civil suit worth $11 billion is being levied against Chevron, one of the perpetrators, but only time will tell if it will truly have any impact. But here's the real rub, according to the CNN story:

The accidents, though small, are getting high-profile treatment as Brazil begins to develop more deep-water sites in extreme depths off the coast of the state of Rio. Extraction will require extremely complicated techniques but Brazil hopes it will also make the country the third largest oil producer in the world by 2020.

With these types of ambitions still on the horizon all around the globe, and with oil spilling freely into the environment on a daily basis, it doesn't look like clean energy has a fighting chance.