At the Peterson Institute a few weeks before the disaster in the Gulf of Mexico, Tony Hayward proudly referred to BP’s advanced technology as the key to efficient oil production in the twenty first century: “Take for example the US Gulf of Mexico,” he said. “When BP went into the deepwater Gulf in the early 1990s, the area was known within the industry as ‘the dead sea’.” Along with other ill-chosen phrases used at the time of the disaster these words are likely to haunt Hayward for years to come. However, dig a little deeper into the phrases and terminology that are becoming common place in how the oil industry talks and thinks about energy and disturbing truths about the direction that the oil industry is heading are revealed.
Speeches given by Hayward and his lieutenants prior to the Deepwater Horizon disaster constantly vaunted BP’s ‘frontier’ mentality. This ‘frontier’ language evokes inspiring connotations of human courage and ingenuity. As BP’s Head of Exploration & Production, Andy Inglis put it earlier this year, “Ultimately it is that frontier mentality that creates value for shareholders. It is that mind-set that delivers quality to customers and partners. And it will be that frontier spirit that enables the world to meet one of its greatest challenges – creating sustainable energy security.” Yet an early attempt to ‘kill’ the well on the Gulf of Mexico frontier involved ‘junk shot’ using shredded tyres, golf balls and knotted rope. It is time to close the gap between rhetoric and reality. We need a new glossary of terms – a more honest industry vocabulary.
Over the past decade, we have heard rhetorical spin from all of the oil majors. The days of ‘easy’ oil are over, but virtually unlimited reserves of ‘difficult’ oil are there to satisfy the world’s insatiable and growing appetite for hydrocarbons. BP’s own Gulf War to contain this runaway disaster tells us that for ‘difficult’ we should read ‘dangerous’. As Tony Hayward put it, “We need to be better prepared for the low likelihood accidents”. Given the magnitude of the risk it is astonishing that not one of the oil companies testifying before Congress could offer any comfort that they could have responded any better than BP or that they even had proper contingency plans in place. It is inevitable too that the economics of deepwater oil exploration and production will have seriously worsened – not only dangerous but also ‘expensive’. At best, the regulations will tighten severely – requiring, for example, that a second rig should be on site, and even required to drill simultaneously to provide a rapid response should a similar ‘spill’ occur.
As the dangers of deepwater oil production have dominated the headlines, industry opportunists have begun to spot the opportunity to promote another, ‘safer’ source of hydrocarbons: Canadian oil sands. Here again, we need to dig beneath the new terminology: in this case, the industry has promoted the need to move beyond ‘conventional’ petroleum to what are euphemistically called ‘unconventional’ sources. These include not only oil sands (this is the industry term – campaigners consistently refer to the sticky black bituminous deposits as ‘tar sands’ and have proven resistant to the industry-led rebranding campaign) but also shale oil and gas. Shale oil was a source of petroleum largely abandoned in the 1980s as the oil price collapsed. In common with oil sands, shale oil extraction demands huge energy inputs and imposes significant negative environmental impacts. For ‘unconventional’ might we read ‘dirty’?
If we peel away the gloss that is generously applied by oil industry wordsmiths, we understand that our future oil security hinges increasingly on risky, dangerous, expensive and dirty hydrocarbon resources. And where does the climate challenge come into the debate? Our own research shows that the oil majors have all decided to pursue oil security ahead of climate security. In particular, BP and Shell have both reversed commitments from the late 90s to decarbonise their portfolios and to invest in clean, sustainable energy. This would be hard to detect in their public statements and reports, but the facts speak for themselves. BP has determinedly gone ‘back to petroleum’. On the other hand, energy security rather than oil security is entirely compatible with maintaining a safe climate. But the pursuit of energy security would require that the oil majors redefine themselves as energy companies. Done properly, this would be a hugely significant undertaking – difficult, but not dangerous.