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Hamilton Alumni Review
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Point of View

We need a strong energy plan, not easy answers in wake of oil spill

By Bob Fryklund ’80

Bob Fryklund ’80 (right) speaks with a student during a March 2007 visit to Hamilton, where he met with an international finance class taught by Professor of Economics Erol Balkan (center) to discuss energy security and sustainability.

The recent oil disaster in the Gulf of Mexico began with the devastating April 20 explosion that killed 11 people and injured many more on the Deepwater Horizon drilling rig, and continues with the long-term cleanup of what Washington estimates was a spill of more than 200 million gallons of BP oil.

Beyond the essential facts, however, it is important to remember that we are still in the realm of speculation, not certainty. It is far too early to allocate blame for this catastrophe. To pass judgment at this point, without a full analysis, would simply waste our opportunity to learn critical lessons from the tragedy.

It is clear, of course, that the decision tree that was followed  on board the drilling platform was extremely complex, one that only the individuals who were there can explain.
In addition, many issues besides the operational ones remain unresolved. Why didn’t the blowout preventer work? Was there something wrong with it? Did the well blow out around the casing or within? Is the casing itself still intact?

Just as important is the long-term fallout for the industry and the nation. The spill has put on hold the main oil-producing province in North America — the deepwater Gulf of Mexico. It will cost both oil companies and U.S. taxpayers billions. While it appears that only 80,000 barrels of oil per day will be deferred based on the current moratorium, it is essential to remember that today’s drilling creates tomorrow’s oilfields and production. Generally, five to nine years are required for a field to be discovered, appraised and developed or put onstream. Hence the moratorium has its greatest impact not on the present, but on our future.

No other industry has had to face a knee-jerk reaction of this magnitude. When a plane goes down, we undertake a serious investigation, but we don’t simply cancel all flights or ground all planes. When a grain silo explodes, we don’t bring grain storage to a halt.

There is virtually universal agreement that the oil industry needs to change some of the ways it does business. We were not ready to handle a spill of this magnitude. We need to fix that. Now we have some good guide-lines for what might work. On the other hand, each well is different, so there are very few universal solutions. And until the findings on the tragedy are in, we should not blame the industry as a whole. The cause of the explosion and spill, as damaging as they were, could well prove to be a combination of human error and poor decision-making rather than a deeper systemic fault.

Meanwhile, U.S. energy policy itself remains fragmented and still lacks clear direction. It is an inescapable fact that fossil fuels, of which deepwater drilling is a key component, will be our main energy sources for decades to come. We can’t just turn off the spigot, as some would have us believe. We need to promote and search for alternatives, but ones that make economic as well as environmental sense — natural gas, nuclear power and some portion of renewable energy. If we are to find benefit in this disaster, it will be by thinking it through and using the conclusions to help shape a truly comprehensive and workable energy policy.
 

 

Bob Fryklund ’80 is vice president for research and managing director of Latin American operations at IHS Cambridge Energy Research Associates, a leading advisor to international energy companies, governments, financial institutions and technology providers. He frequently returns to the Hill to discuss energy and economics with students. The former geology major recently provided a gift to Hamilton for a new faculty position in environmental economics and a long-term survey to assess
values and attitudes affecting sustainability.

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