Obama Opened Floodgates for Offshore Fracking in Recent Gulf of Mexico Lease

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In little-noticed news arising out of a recent Gulf of Mexico offshore oil and gas lease held by the U.S. Department of Interior’s Bureau of Ocean Energy Management, the floodgates have opened for Gulf offshore hydraulic fracturing (โ€œfrackingโ€).

With 21.6 million acres auctioned off by the Obama Administration andย 433,822 acres receiving bids, some press accounts have declared BP America โ€” of 2010 Gulf of Mexico offshore oil spill infamyย โ€” a big winner of the auction. If true, fracking and the oil and gas services companies who perform it like Halliburton, Baker Hughes and Schlumberger came in a closeย second.

Gulf of Mexico Oil Lease Map August 2014
Map Credit: U.S. Bureau of Ocean Energyย Management

On the day of the sale held at the Superdome in New Orleans, Louisiana, an Associated Press article explained that many of theย purchasedย blocks sit in theย Lower Tertiary basin, coined the โ€œfinal frontier of oil exploration in the Gulf of Mexicoโ€ by industryย analysts.

โ€œThe Lower Tertiary is an ancient layer of the earth’s crust made of dense rock,โ€ explained AP.ย โ€To access the mineral resources trapped within it, hydraulic fracturing activity is projected to grow in the western Gulf of Mexico by more than 10 percent this year, according to Houston-based oilfield services company Baker Hughes Inc., which operates about a third of the world’s offshore frackingย rigs.โ€

ย 

Lower Tertiary Oil Map
Map Credit:ย U.S. Bureau of Ocean Energyย Management

Unlike other Gulf oil and gas, Lower Tertiary crude is located in ultra-deepwaterย reservoirs, industry lingo for oil and gas located 5,000 feetย โ€” roughly a mileย โ€”ย or deeper under the ocean.

Just over a week before the lease, theย Mexican government passed energy reform legislationย that willย prop open the barn door for international oil and gas companiesย toย sign joint ventures with state-owned oil company Pemex, including in Mexico’s portion of the Gulf ofย Mexico.

Baker Hughes Fracks theย Tertiary

The May edition of World Oil explains that Baker Hughes has lead the way in technology innovation to tap into Lower Tertiary oil and gas, described as existing within โ€œharsh HPHT conditions,โ€ or high pressure, high temperature conditions.

Using offshore fracking techniques, Baker Hughes has aided Petrobas in developing a test well in the Cascade offshore field. The company believes the recent Gulf acreage sale by the Obama Administration will serve as a boon for further offshore fracking in the months and years toย come.

โ€œWe expect that there will be more offshore stimulation in coming years,โ€ Douglas Stephens, president of pressure pumping at Baker Hughes, told the AP in the lease’s aftermath.

Baker Hughes maintains roughly one-third of the worldโ€™s offshore fracking operations.

Fracking as โ€œNext Frontier for Offshoreย Drillingโ€

Two weeks before the lease, Bloomberg published an article declaring that fracking could serve as the โ€œnext frontier for offshore drilling.โ€ That next frontier will come at a steep cost: $100 million spent per well, according toย Bloomberg.ย 

Even Halliburton, key innovator of onshore fracking technology and the force behind the โ€œHalliburton Loopholeโ€ within the Energy Policy Act of 2005, admits offshore fracking is riskyย business.

โ€œItโ€™s the most challenging, harshest environment that weโ€™ll be working in,โ€ Ron Dusterhoft, an engineer at Halliburton, told Bloomberg. โ€œYou just canโ€™t affordย hiccups.โ€

The article further explained that the oil industry at-large, and not just Baker Hughes and its fellow oil services companies, stand to win big from the push to frack the Gulf ofย Mexico.

โ€œThose expensive drilling projects are a boon for oil service providers such as Halliburton, Baker Hughes Inc. and Superior Energy Services Inc. Schlumberger Ltd., which provides offshore fracking gear for markets outside the U.S. Gulf, also stands to get new work,โ€ Bloomberg reported.

โ€œAnd producers such as Chevron Corp., Royal Dutch Shell Plc and BP Plc may reap billions of dollars in extra revenue over time as fracking helps boost crudeย output.โ€

According to lease statistics made public by BOEM, 42 of the 81 blocks of oil and gas auctioned off on August 20ย sit in water depths of over 1600 meters (roughly a mile, or 5,280ย feet).

U.S. BOEM Lease Sale 238 Stats
Image Credit: U.S. Bureau of Ocean Energyย Management

Measured by total acreage leased, that equates to 54 percent of theย land.

โ€œAll of theย Aboveโ€

A BOEM press release declared the Gulf lease falls under the broad umbrella of President Obama’s โ€œall of the aboveโ€ energy policy, which critics point to as a form of climate change denial.

โ€œThis sale underscores the Presidentโ€™s commitment to create jobs and home-grown energy through the safe and responsible exploration and development of offshore energy resources,โ€ Mike Connor, Department of Interior’s deputy secretary, said in theย release.

โ€œThe Gulf of Mexico has been and will continue to be a cornerstone of our domestic energy portfolio, with vital energy resources that spur economic opportunities and further reduce our dependence on foreignย oil.โ€

The oil and gas industry, for its part, has shownย signs of elation in reaction to theย lease.ย 

โ€œIndustry’sย Arroganceโ€

Jonathan Henderson,ย coastal resiliency organizer for theย Gulf Restoration Network,ย is not quite as pleased about these latestย developments.

โ€œDeepwater fracking in the Gulf should be banned immediately as the true impacts to the marine environment are unknown,โ€ Henderson told DeSmogBlog. โ€œA full environmental review is a legal requirement for these kind of high risk deepwater extraction activities, yet the industry seems to view it asย optional.โ€ย 

โ€œThe fact that companies are already fracking the Gulf of Mexico and discharging untold amounts of unknown chemicals speaks to the industry’s arrogance and yet another failure of federal agencies charged with protecting our environment to do theirย job.โ€

Andย Cherri Foytlin, a Rayne, La.-basedย contributor to the blog BridgeTheGulfProject.org, told DeSmogBlog she believes the new push to bring fracking to the Gulf of Mexico speaks to even deeper economic and socialย issues.ย 


Foytlin speaks at July 13 rally in Washington, D.C.; Photo credit: Carolineย Selle

โ€œThe debate concerning the belief that unlimited corporate, privatized growth is tatamount to the jeapordizing of an entire fragile and unique ecosystem seems to continue to be lost in these conversations,โ€ saidย Foytlin.

โ€œIf the BP oil spill of 2010 taught us nothing else, then perhaps it should be that policies, both environmental and economic, should center around the compatibility of an ethic that truly represents the value of our oceans and waters as a life source that we who live in the Gulf know them toย be.โ€

Photo Credit: Wikimediaย Commons

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Steve Horn is the owner of the consultancy Horn Communications & Research Services, which provides public relations, content writing, and investigative research work products to a wide range of nonprofit and for-profit clients across the world. He is an investigative reporter on the climate beat for over a decade and former Research Fellow for DeSmog.

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