Pointing to the recent OC oil spill as a sign of a “ticking time bomb” from old drilling infrastructure, Congressional Democrats on Thursday called for speeding up an end to offshore drilling by making oil companies put aside enough money to decommission their rigs and pipelines.
Congressional Republicans accused them of attacking American energy production and jobs, and hurting sensitive fish ecosystems by pushing to remove the abandoned oil rigs they call home.
It was the second day of Congressional proceedings on the oil spill, following debate Wednesday on whether to ban offshore oil drilling and impose more regulations and public disclosure of pipeline safety failures.
On Monday, a Congressional investigative subcommittee arrives in Orange County, holding a oversight hearing at the Irvine Ranch Water District about the spill’s impact on local residents and businesses.
Thursday’s hearing of the House Subcommittee on Energy and Mineral Resources featured witness testimony that oil companies make billions from public oceans, only to sell off rigs – and liability – to much smaller, bankrupt-prone companies and thus passing cleanup costs to taxpayers for dismantling old infrastructure.
The subcommittee’s chairman, Alan Lowenthal (D-Long Beach), said the OC spill shows Congress must act to speed up decommissioning – something witnesses said could be accomplished by making oil companies pay into a fund to clean up the infrastructure they’d be leaving behind.
Federal rules currently require offshore drillers to set aside less than 10% of the actual costs of decommissioning, the subcommittee heard from one of its witnesses.
“It’s critical that we don’t simply move on and wait for the next accident to occur. Offshore oil and gas infrastructure – both in the gulf and in the Pacific – is a ticking time bomb, and the California spill is part of a much larger disaster in the making.”
Rep. Alan Lowenthal (D-Long Beach), at the hearing.
“In 2015 the Government Accountability Office alerted us that taxpayers are on the hook for billions of dollars in offshore decommissioning costs,” Lowenthal added, saying the recent spill needs “to be a wake up call for Congress.”
The subcommittee’s top Republican said he and his GOP colleagues support holding polluters accountable, but not dismantling the American oil industry – which they said would lead to more dependence on foreign oil.
“We draw a hard line on vilifying an entire industry that employs hard-working Americans earning high-quality wages and lets you and I put affordable gasoline in our vehicles.”
Rep. Pete Stauber (R-Minnesota)
“I recognize that many would use the recent events in California to argue for outright banning oil and gas development, or nickel-and-diming folks in the industry out of a job,” he added.
“Policies proposed by this very body will only make this crisis worse.”
Who Foots the Bill for Cleanup?
An expert witness told the panel that a driving reason old, riskier pipelines are still in place is because federal authorities don’t require drillers to prepare anywhere near enough money to pay for decommissioning them.
“Decommissioning is costly,” said Robert Schuwerk, a witness and executive director at the Carbon Tracker Initiative.
Federal regulators estimate total costs to decommission offshore drilling at $35 billion to over $50 billion, he said.
Yet companies’ financial set-asides for decommissioning are only about $3.5 billion dollars – “less than 10% of expected liability,” and creating an incentive to avoid decommissioning even after wells are no longer profitable, Schuwerk said.
“The solution is simple: require financial assurance equivalent to the full cost of carrying out all decommissioning obligations.”
Schuwerk told the subcommittee that big oil companies often sell old platforms to small, newly-created shell companies that can push costs to taxpayers through bankruptcy proceedings.
“The result of that is we the taxpayers have given oil and gas companies our oceans, our public lands, our wildlife, our nature, our planet, to make profit and [we] end up on the hook if they take advantage of this scheme – this legal scheme, and the transfers, and they put us on the hook for that.”
Rep. Katie Porter (D-Irvine)
The pipeline that leaked off Orange County was originally developed by the oil giant Shell, before being sold eventually to a company about one-one thousandth of Shell’s size that went through bankruptcy in recent years.
“Why shouldn’t we have higher bonds [from oil drillers], and make sure that no taxpayer is on the hook for cleaning up a mess that another company profited from making?” Porter asked.
“Certainly no private [company] would do what the federal government does, which is [to] not have a [financial] security for these risks,” Schuwerk replied.
“That is not acceptable to me,” Porter said of the status quo, calling for new federal requirements that offshore drillers guarantee enough money to pay for decommissioning.
“You buy the ticket, you take the ride…and that includes paying for the full cost of decommissioning. And that’s exactly what I think the federal government ought to be requiring of oil and gas companies – is protecting taxpayers when they want to benefit from the taxpayers’ property.”
Drilling Bans Would Hurt Environment and Americans’ Pocketbooks, Say Republicans
Republicans on the subcommittee said the Democrats’ decommissioning push will harm the environment and further spike energy prices for everyday Americans.
“Now, are we going to go forward and actually harm the environment with things like this that are going on, including this whole notion that we simply cannot have any fossil fuel infrastructure here in America?”
Rep. Tom Tiffany (R-Wisconsin)
“We can have prosperity and a clean environment,” he added.
Under Democrats’ proposals, Tiffany said, “this country is going to continue to pay far more for energy, and it will deplete our standard of living.”
Decommissioning has support from across the political aisle among residents in coastal Orange County, said Rep. Mike Levin (D-San Juan Capistrano) – adding he’s committed to push for an end to offshore drilling off Southern California.
“Decommissioning is expensive, and it’ll certainly face opposition from the fossil fuel companies that profit from drilling activity, and their allies,” Levin said.
“But make no mistake, this endeavor is absolutely necessary for the wellbeing of our local economy and our economy here in coastal California – and it’s broadly supported by our coastal constituents: Republicans, Democrats and independents. This is not partisan here in our coastal communities,” he added.
“I will do all I can to move forward with decommissioning.”
Nick Gerda covers county government for Voice of OC. You can contact him at ngerda@voiceofoc.org.