Off-Shore Oil Exploration and Production

Introduction

The extraction of oil onshore has been ongoing for several decades. Offshore oil extraction is a process that began decades after onshore exploration had begun. For many years, scientists and the oil companies were certain that the exploration and production of petroleum from deep-water formations would not incur any sort of environmental damages. Several decades later, scientists learned new information from monitoring programs and research studies that offshore drilling did cause effects on the health of benthic organisms and other marine fauna in the proximity of offshore platform rigs.

This paper studies the consequences of offshore platform rigs on marine organisms and wildlife from the perspectives of what causes environmental degradation offshore, the issues pertaining to marine life, and the detriment incurred by oil exploration and production (E & P). This paper begins with a brief explanation of how the oil industry works and how a well is chosen, drilled, and put into production. Subsequently, I present the four major externalities from offshore oil E & P: (1) drilling muds and cuttings, (2) waters, (3) chronic oil spills, and (4) possible socio-economic disturbances. The final section of this research study presents concluding remarks.

Quick overview of oil Exploration and production

Oil companies performing exploration and production services belong in the ‘upstream’ area of the business. Upstream oil companies such as Exxon, Shell, and BP, among others, lease the services from ‘service companies’ to perform the actual drilling of the well. Pride International, Halliburton, Baker and BJ are a few major service companies. Pride International performs drilling worldwide, both onshore and offshore. Companies like Halliburton cement and stimulate oil wells.

Several previous levels precede the process of actually drilling the oil well. This process begins when the oil company’s exploration manager studies an area in particular. Once the oil company obtains the lease for the area planned for development, the site is examined thoroughly, seismic sampling is performed, the first exploratory drilling takes place (in order to know if the well contains oil and will be of economic benefit) and finally, the well is put into production.

II. Environmental Issues

Externalities from oil extraction

Offshore oil and gas exploration and production cause several environmental externalities. Various operations in offshore rig platforms pertain to exploration and hydrocarbon extraction: perforation, cementation, stimulation, and transportation. The use of the facility and the living environment of the engineers at these offshore bases can also impact the environment.

Once the location has been decided and the company has been granted permission through Federal leasing for the operations, the platform is located. The platform rig location can cause environmental impacts. The platform rig location can cause disturbances to deep-water organisms. Perforation of oil wells consists of utilizing drill bits to puncture the continental shelf and begin drilling. As the perforation of the well is taking place, several forms of muds are incorporated into the well to facilitate the perforation. These forms of “muds” are most likely to be either synthetic or oil-based and contain harmful chemical compounds. Cementation of the wells reinforces the walls of the well in order to hold the tubes inside the well and prevent the walls from collapsing in on the well. Stimulation is the practice of using ‘sands’ and varieties of ‘gels’ used to facilitate the extraction of the petroleum from the formation. The crude oil extracted from the formation carries radioactive material as well as ‘waters’, which have remained within the structure, as well as ‘produced waters’ from liquids injected into the structure for the release of petroleum.

i. Drilling muds, cuttings and fluids

Drilling muds are incorporated into the oil well to facilitate perforation by lowering the temperature of the drill bit. These muds are also foaming agents and serve as anti-corrosive agents and prevent emulsification. Drill muds contain bentonite clay and barite (barium sulfate, BaSO₄). According to the Global Oceans Observing System (GOOS), an Intergovernmental Oceanographic Commission: “Despite the controversy over the long-term impacts of oil spills, it is clear that the short-term effects of accidental introductions of petroleum hydrocarbons into the coastal environment can be locally severe, highly visible, and have major economic impacts on coastal communities. Furthermore, in areas of offshore oil extraction, contaminated drilling muds do significantly alter benthic community structure and marine species distribution.”(GOOS, 2001). The alteration of benthic organisms is an important environmental impact. In the Environmental Management in Oil and Gas Exploration and Production (1997) – a joint publication by the UNEPIE and the Oil E&P Forum, a consortium of international oil companies – it is stated that discharged water-based drilling muds can smother benthic organisms at a distance of 25 meters from the platform (UNEPIE, 1997). Moreover, according to this report, oil-based drilling muds can affect benthic organisms 100 meters away from the platform. The report also explains that the discharge of oil-based muds can affect organisms as far as 800 meters from the platform. Although slightly unclear in regards to distances of impacts, this joint publication explains that the effects from oil-based muds are only temporary and that the threshold for changes in benthic organisms is 1000 ppm. Still, this figure seems misleading as the proper measure for evaluating risk in benthic organisms because “individual species showed effects between 150 and 1000 ppm” (UNEPIE, 1997). Moreover, Milligan et al. (1996) find evidence off the Canadian East Coast that “drilling wastes would sediment rapidly and be concentrated in the benthic boundary layer near the drilling rig” and that these could be located up to 8 km away from the platform rigs. Further studies showed that these drilling wastes could be re-suspended and relocated by the tidal cycle.

Over two decades ago scientists believed Travers and Luney (1974): the environmental impacts from drilling muds to benthic organisms were minimal because drilling muds were similar in composition to the muds in the continental shelf and that organisms can adapt easily and naturally to the muds used for perforation. Lissner et al. (1991) provide evidence that the anchorage of platform rigs can cause “breakage and dislodgement of organisms and hard substrate”, and that sediment, drilling cuts, and muds from oil-well perforation can smother these organisms. Lissner et al. (1991) point out that the placement of a platform in the continental shelf, in this case off the coast of California, can take up to six months – the duration of the sedimentation process is similar. In the case of drilling cuts and muds, the organisms may “form relatively resistant mounds near the platform… fauna may develop that is characterized by many motile predators such as sea stars and crabs”(Lissner et al, 1991). Although these can cause smothering due to sediments, platform rig placement and drilling operations may have a positive effect since they can act as artificial reefs for deep-water species (Lissner et al, 1991).

A study published in Canada’s Fisheries and Oceans commission web site by Milligan et al. (1996) shows evidence on the effects of drilling wastes on benthic organisms, particularly sea scallops near offshore oil exploration platforms off the coast of Georges Bank and the Grand Banks. Milligan et al. (2001) cite Cranford and Gordon’s 1991 study that found evidence “that the exposure of sea scallops to mineral-oil based drilling mud cuttings has potentially damaging implication for production, reproductive success and population survival in the vicinity of a drilling platform.” Their results show conclusive evidence that the presence of oil-based drilling muds can cause adverse effects on the life of sea scallops, even though the sea scallop population that was used in the experiment was “exposed for up to 70 days to different kinds and concentrations of drilling fluids…results indicate that sea scallops are very sensitive to low concentrations (10 mg I^-1 or less) of drilling waste and associated contaminants in their food supply” (Milligan et al, 2001).

Ample evidence exists from recent studies to support the assertion that drilling muds and wastes cause damages to the marine environment. This research counters the hypotheses presented by scientists and oil companies three decades ago. Currently, drilling wastes are thought to be detrimental to the development of benthic species, their reproduction, and their food supply.

ii. “Waters”

Produced waters, injection waters, and formation waters are present in exploratory and non-exploratory oil wells. Produced waters occur due to condensation during the drilling of the well. Injection waters are mainly ‘injected’ into the oil well to maintain the pressure level needed to keep the formation from collapsing in on the drill. Formation waters are present within the geological formations and may contain both solids and chemical compounds. The different types of water include several toxic and non-toxic chemical compounds, including heavy metals, chemicals from production, inorganic salts, normally occurring radioactive material (NORM) and “dispersed oil, dissolved metals…hydrocarbons, organic acids, phenols and traces of chemicals added in the separation and production line” (Verguería et al., 2002).

In the 1970’s scientists and geologists did not believe that operations in offshore platforms could cause environmental impacts. For example, Travers et al. (1978) were among the scientists that believed that produced waters in no shape or form could affect marine deep-sea organisms (in this case, the drilling for exploratory purposes in the Artic) because the waters were “essentially normal sea water, a substance to which marine biota have rather successfully adapted.” Almost three decades later, studies and research have largely shown the opposite. Although water is present in the formations and is injected to maintain pressure levels within the formation, the discharge of “produced waters is the largest wastewater stream in the offshore oil and gas exploration and production process” (Verguería et al., 2002). Moreover, the product from mixing seawater and formation waters is discharged into the ocean and ‘”as a result the mixture [of seawater with formation water], which usually has a higher salt concentration and a lower pH than seawater, the chemical equilibrium is broken and sulfates (mainly BaSO₄ and SrSO₄) and carbonates (mainly CaCO₃) are precipitated” (Vergueria et al, 2002).

Water discharges are of importance in offshore oil exploration and production because they are one of the largest forms of waste to leave the platforms, along with the drilling muds. These forms of waters can be highly lethal, not only to organisms that live in the continental shelf were the rig has been placed, but also because of the contamination probability for coastal areas. Douglas Holdway of the Department of Biotechnology and Environmental Biology (Royal Melbourne Institute of Technology University) presents evidence for the perils of produced waters. Holdway estimates that “234 million tones of PFW were discharged into the UK sector of the North Sea alone in 1997” (Holdway, 2002). Holdway adds that the release of hydrocarbons into marine ecosystems through produced formation waters is around 7500-11,500 tons globally. Produced formation waters are released into the oceans with a maximum level of hydrocarbons of 40 mg/l or less. Produced waters also “altered benthic communities dominated by short-lived opportunistic polychaetes up to 100 m from offshore platforms (Neff et al., 1992)” (Holdway, 2002). Furthermore, the effects from produced waters can also be sub-lethal to species, especially in the case of reef fish. Holdway (2002) points out that the chemical compounds of the produced water had negative effects on reef fish liver enzyme activities, produced fertilization and reproduction problems in giant kelp, and tend to accumulate in oysters (Crassostrea virginica) (as in the case of those studied in the Gulf of Mexico) where polycyclic aromatic hydrocarbons (PAH) were found (see Cinira).

Verguería et al.’s study in the Bacia de Campos Oil field offshore platforms, a project funded by Petrobras (one of Latin America’s largest and most important oil companies), tested the wastes up to 1 km from the Pampo and Pargo offshore platforms 60km off the coast of the state of Rio de Janeiro. Sediment, seawater, and produced waters were tested and examined. Samples were taken in both of the platforms to evaluate the environmental impacts created by the presence of the offshore oil activities. The sediment water, produced water, and seawater were examined to determine the concentration of barium, radium radioactive isotopes, nickel, lead and vanadium. Verguería et al.’s study (2002) concludes that “no hot spots and radioactive material in the areas studied”, although the study did find conclusive evidence of the presence of “elevated concentrations of radium and barium in produced water”. Furthermore, the study of the samples concludes that “seawater and sediment samples are at the local background level” (Vergueria et al, 2002). However, Verguería et al.’s research (2002) does not take into account the marine ecosystem and the Brazilian continental shelf marine life. The information presented by this research study is important in understanding that although the problem of produced water has escalated, efforts should be placed in examining the reaction of marine species to the different components of produced waters. In other words, Verguería et al.’s results (2002) would be in a better context if the marine life were taken into account.

iii. Chronic Oil Spills (intentional pollution of oceans)

The National Oceanic and Atmospheric Administration’s estimated that the percentage rate of chronic oil spills in the American continental outer shelf in the past 2 decades has been 0.001. According to the report published by the Global Oceans Observing System (GOOS), “Chronic releases of oil to the marine environment may lead to the long-term exposure of marine organisms to the toxic constituents of oil.” In the past 3 decades oil spills have decreased by over 70 %, and the total amount spilled, in millions of gallons, has also decreased dramatically. Still, benthic organisms can be impacted by small levels of oil in water. Southward (1982) explains that changes did occur when oil spills were present off the coast of England, mainly Brittany and the Baltic Sea. For example, in Brittany, “sheltered sandy beaches retained oil from the Amoco Cadiz spill for more than 3 years, buried as much as 55 cm deep and only partly degrade”(Southward, 1982). From this perspective, one can understand that oil remains in the sandy coastal areas for prolonged periods of time because it decomposes very slowly.

Southward (1982) explains that in addition to macrofauna, micro- and meio- fauna are impacted by oil. Southward (1982) notes that “sheltered sand show a high initial mortality, with reduction in biomass and number of species” and that oil in water may cause the development of ‘pollution fauna’, i.e. opportunistic species. Moreover, Southward (1982) presents the interesting point that although coastal areas may be susceptible to oil, only a handful of studies had been presented regarding the effects of chronic oil spills in offshore platforms. Still, he argues that “one long-term monitoring programme around an oil rig (Addy et al. 1978) has reported changes in the fauna that to some extent parallel those found in inshore sediments after acute oiling”(Southward, 1982). For example, this effect is witnessed in the decrease in one polychaete and the appearance of Chaetozone, an opportunistic species. Diversity in the coastal ecosystems, as Southward (1982) points out, may be reduced by the presence of oil in the water. Though very little is still known about the effects of chronic oil spills, Southward explains that it causes “increases in algal cover and decreases in grazing herbivores, including patella (Crapp, 1971; Nelson-Smith, 1972), indicating a shift in balance towards a community more typical of sheltered shores” (Southward, 1982), as has been studied in the Milford Haven oil ports. Similar effects were seen in Santa Barbara, California.

iv. Socio-Economic

In the United States, continental shelf exploration and production of oil and gas contribute to 22% and 27%, respectively, of the domestic supply (NOAA, 2004). Revenues to the Federal government from the production of oil and gas are approximately $4 billion dollars, mainly from exploration and production in the Gulf of Mexico.

The number and the technological development of new and more effective offshore rigs have led to the increase of these in the Gulf of Mexico. According to the National Oceanic and Atmospheric Administration, the newest platform rigs used in offshore oil production have been able to reach 7,700 feet. Approximately 4000 platform rigs in the Gulf of Mexico reach depths of 3,900 feet.

Robert Grambling’s book, Oil on the edge, offers a detailed description of the socio-economic changes that occur in small towns on the coast and watersheds of Louisiana. According to Gramling, “The single largest impact of the Outer Continental Shelf Leasing program has been in the Gulf of Mexico and on the human environment…”(Gramling, 1996). The coming of the petroleum era to Louisiana, argues Gramling, caused the following issues:

“First, the specialized development (social, economic, physical) surrounding the extractive industry is often not transferable to new activities, and thus flexibility is lost, as local human and financial capital focus ever more narrowly on the primary extractive and support sectors. Second, the creation of the new support sectors may use up or destroy local resources. Third, the existence of high-paying jobs in the extractive sector makes the competition for labor keen and thus the introduction of alternative economic activities difficult”(Gramling, 1996). Furthermore, the arrival of an industry such as the oil industry to small towns in the coast of Louisiana also caused cultural differences that Gramling touches upon in his book. As examples, he describes the fact that many in the work force had joined the oil companies operating in the area at the time in order to increase their income and in a short period of time, the state known for its shrimp industry had put this industry aside.

Gramling and Freudenburg’s book, Oil in troubled waters, shows a different angle by comparing the case of Southern Louisiana to California’s oil development. Gramling and Freudenburg (1994) find evidence through personal interviews that the inhabitants of southern Louisiana parishes welcomed the oil industry because it was a “benign form of industrialization” which allowed people in different communities to become a part of the oil industry within their community or parish. In other words, people did not have to leave their community to earn higher wages. Furthermore, and more interestingly, Gramling and Freudenburg show evidence that the populations of Northern California and Southern Louisiana were very different in the way they approached guarding the local natural resources. One interviewee acknowledged, “You know, we haven’t been as astute in the environmental area. I think we’re becoming much more aware of it, and we’re working at it more seriously.”(Gramling et al, 1994). On the other hand, northern Californians tended to be more concerned about their coastline and their environment. Californians interviewed in Gramling and Freudenburg’s book were appalled by the environmental consequences and impacts that offshore oil drilling could trigger. Gramling and Freudenburg add “that a growing number of residents of the northern California coast see oil-related growth as being somewhere between undesirable and unacceptable,” and that most of the people who agreed on these issues where those who had come or lived in northern California to escape that very way of life.

III. Conclusion

Coastal and marine ecosystems provide a variety of benefits to a nation’s population. Oil companies have developed thousands of oil wells on the outer continental shelf and even deeper water. It is easier for human beings to cover what they have done wrong than to actually accept that there is a problem, and this is the case for the environmental impacts from offshore oil production. It is clearly visible that problems have been caused by the elimination of drilling wastes into the oceans, such as the ones addressed in this paper. This paper has found evidence that the installation of offshore platforms disturbs the ocean floors and smothers some forms of marine life, while allowing invasive and opportunistic species to appear. This paper has also found that the chemical contents of produced waters and drilling muds (and wastes) can cause reproductive as well as development and liver problem in certain types of reef fish. Moreover, the installation of offshore oil rigs and platforms can concomitantly disturb communities’ aesthetic values, their employment, and more importantly, their environment. Recent studies can be used for proper monitoring of the discharge of drilling wastes from offshore platforms, as well as for policy. Governments and international institutions that protect marine resources should begin to take into account, and to take more seriously, the effects that drilling wastes have on benthic organisms. Marine resources could be protected more efficiently if these effects would be taken into consideration and studied further.

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