When taking into account oil's sidekick, natural gas, the industry
is precariously poised for the so-called Era of the Environment of
Oil spills offshore in the past 1 1/2 years have caused
environmental watchdogs to turn an eye to onshore drillers as well.
At the same time, natural gas is being hailed as a clean-burning
alternative to the oil-based gasoline that is clogging U.S. airways
with smog and the coal stacks of electric generators.
In the search for oil and gas, though, the string of imposed
safeguards are the same.
Born-again environmentalism in the United States is seen by the
oil and gas industry as the most pervasive issue it will face in
this decade and beyond. The 1990 International Petroleum
Encyclopedia devoted a new section to the environment.
While associated costs seem overwhelming, the issue has formed
new segments of industry as an offshoot. It has, for example,
propelled environmental law as a specialty among the legal
profession and created a demand for consulting services to
environmentally assess or audit oil and gas properties.
More new environmental-related regulations are appearing on the
offshore forefront than onshore, but there is more attention being
paid to onshore activities.
For instance, the U.S. Environmental Protection Agency is
staging the first international symposium on oil and gas exploration
and production waste management practices Sept. 10-13 in New Orleans.
EPA issued a $300,000 grant to the Interstate Oil Compact
Commission, based in Oklahoma City, to study regulatory needs on
oilfield wastes such as drilling fluids, cuttings, produced water
and a list of some 20 others.
A draft report that offers criteria for state regulation has
been issued and written comments are being taken through Aug. 17.
The oil commission council and advisory members who authored the
report will meet in Oklahoma City Aug. 26-28 to review comments. A
final report is due in December.
EPA delegated the study after determining regulation of oilfield
wastes would be better handled by states. In considering federal
regulation of oilfield wastes by reclassifying such materials as
hazardous, the agency found astounding economic impact.
Annual costs to the industry and consumers for additional
management requirements, excluding corrective action, was estimated
at $1 billion to $6.7 billion a year. Net impact on oil prices
could be up to 76 cents a barrel with projected maximum costs to
consumers of $4.5 billion a year and increases in the deficit of up
to $11 billion.
The cost scenarios were based on American Petroleum Institute
survey estimates of the quantity of wastes produced, assuming only
40 to 60 percent would require management.
It is speculated such regulation, which remains a possibility,
would reduce domestic drilling by as much as 12 percent.
"There is some talk that RCRA (Resource Conservation and
Recovery Act) will be up for reauthorization in the next Congress,"
said Mike Fitzpatrick with the EPA solid waste office in Washington.
"It could be reclassified by Congress, but not the agency.
There is some talk to that extent."
There are new agencies and regulations for the oil and gas
industry to contend with, though.
For years, oilfield drillers in Oklahoma have reckoned with the
Clean Water Act, Safe Drinking Water Act, Superfund Amendment and
Reauthorization Act, Hazardous Communication Standards and others.
State agencies like the Oklahoma State Health Department, Oklahoma
Department of Pollution Control and Oklahoma Water Resources Board
have patrolled the oilpatch.
Now, the U.S. Game and Wildlife Commission is writing tickets
for failure to put nets over oilfield pits to protect migratory
The current cost of environmental measures taken on by the
industry and the cost of environmental cleanups are difficult to