Indian Council of World Affairs

Sapru House, Barakhambha Road New Delhi

Issue Brief
OFFSHORE ENERGY EXPLORATION: RISKY, YET VITAL
Vijay Sakhuja*

Nearly two months ago on April 20, 2010, BPs Deepwater Horizon offshore oil rig suffered an explosion and sank in the Gulf of Mexico killing 11 crew members and 17 injured. The deep-sea well continues to spill oil at a raid rate and a lower marine riser package containment cap has been installed to collect oil and gas and transport to the Discoverer Enterprise drillship on the surface where the oil is being collected and the gas flared. BP is mobilising technological resources to capture up to 90 percent of the oil leaking out of the well and plans to drill a relief well to stop the leak completely. Nearly 30,000 personnel, several ships and vessels are responding to the oil spill, and over 17,000 National Guard are being deployed along the coast. This is the worst environmental disaster in the U.S. history, and the U.S. President has issued a six-month moratorium on deepwater drilling. 1 According to some estimates, the Gulf of Mexico spill is more than twice of what was spilled in 1989 into Alaska from the oil tanker Exxon Valdez. The spill response agencies have so far skimmed 475,000 barrels of oil from the surface of the sea and the cost of the operations has exceeded US $1.5 billion, including spill containment, grants, claims and federal costs. The U.S. President has already made four visits to the region and has also raised the issue of liability and urged BP to pay compensation to the victims of the catastrophe. 2 The adversarial impacts of the oil spill in the Gulf of Mexico are quite evident and the ensuing damage to marine life and the eco system is quite visible. Environmentalists and conservationists have argued that continued offshore exploration activities could result in a series of environmental disasters similar to the BP oil spill leading to chaotic scenarios that can potentially heighten tensions among local populace and even states.

Meanwhile, states and oil companies across the world are seriously engaged in studying the BP oil spill and applying the lessons from the accident. The Norwegian Prime Minister Jens Stoltenberg has noted that We will take into consideration all knowledge, all experiences, also the experience from the recent accident in the Gulf of Mexico, 3 Similarly, the Oil and Natural Gas Corporation (ONGC) chairman has stated It (BP oil spill) has been a game changer for the industryGoing forward, I see a very difficult and very challenging time for us to operate within India and outside. 4 In the backdrop of the BP oil spill in the Gulf of Mexico and the risks in offshore energy exploration industry, this paper argues that it is important for India to examine its offshore exploration strategy by addressing the lessons learnt from the oil spill and also explore multilateral approaches to address issues relating to offshore oil spills. The paper begins by highlighting the complexity of offshore oil exploration infrastructure; it then tabulates the accidents onboard oil rigs, oil spills in the Indian waters and the responses by oil spill containment agencies in India. The paper also argues for multilateral approaches to fighting oil spills particularly in the Bay of Bengal where Bangladesh, India, Myanmar and Sri Lanka are engaged in oil and gas exploration. Offshore Oil Infrastructure and Accidents Offshore oil infrastructure is a complex web of exploration and drilling rigs, production platforms, pipelines, and supply/support vessels. The platforms are huge industrial complexes and can be identified at sea from far off distances by the flame that burns atop. These are manned by specialist personnel who are continuously monitoring exploration /production activity. Although, these rigs and platforms have reinforced materials to withstand hurricanes and storms, they are maintenance intensive and require a very high level of housekeeping particularly to keep them afloat. Offshore structures also contain large quantities of materials some of which are highly inflammable and are capable of making lethal mixtures that can produce devastating effect. Consequently, it does not require ordinary explosives for an accident to happen and start a fire. Although these energy complexes are equipped with state of the art firefighting systems but these may be inadequate in the event of a major fire because the personnel operating the platform would have to be evacuated during crisis. Further, these platforms are devoid of robust security systems with few armed personnel to repel an attack by subversive elements. Therefore they present themselves as a very potent target and can be destroyed, incapacitated, or even exploited by asymmetric actors such as terrorists. In the past there have several accidents onboard offshore oil drilling /production platforms. Some of these were due to human errors leading to collision between the oil rig

and a vessel. For instance, on July 27, 2005, the ONGC owned oil platform in the Mumbai High North (MHN) in the Arabian Sea caught fire resulting in a major disruption of domestic crude oil supply. The platform, capable of producing 100,000 barrels of oil per day, was damaged and 11 persons died and another 11 were reported missing. The accident occurred when the multipurpose support vessel M/V Samudra Suraksha, belonging to the Shipping Corporation of India, lost control during a medical evacuation, drifted, and hit a fuel-laden pipe on the platform causing multiple explosions. 5 The fire was so intense that in less than two hours the whole platform warped and fell into the sea. Given the complexity of these platforms, these are maintenance intensive and require a very high degree of water tightness. In March 2001, the Petrobras Platform 36 with a processing capacity of 180,000 barrels per day, located in the Campos Basin area about 125 km off the coast of Brazil caught fire and sank. Apparently, the accident was a result of deficient procedures and training to deal with emergency situations and also due to negligence of not sealing the watertight compartments. 6 Natural causes such as hurricanes and typhoons too have resulted in accidents onboard offshore platforms. In September 2005 Hurricane Rita destroyed 63 platforms and one drilling rig in the Gulf of Mexico and soon thereafter in October, Hurricane Katrina caused extensive damage to another 20 platforms and nine drilling rigs resulting in 90 percent of crude production and 72 percent of natural gas output paralyzed. 7 Oil Spills in Indian waters and Response Capabilities Between 1982 and 2007, there were 67 reported incidents of oil spill in Indian waters but in 2008 there were no oil spill reports. 8 However, there were 8 incidents of grounding and sinking of vessels in Indian waters in 2008. The Indian Coast Guard (ICG) is the national agency for ensuring marine environment security in Indias sea areas. The force identifies its role through (a) Protection of marine environment, (b) Preservation of marine environment, (c) Prevention of marine pollution, and (d) Control of marine pollution. 9 It is Indias nodal agency in the meetings of the Marine Environment Protection Committee (MEPC) of the International Maritime Organisation (IMO). The ICG engages in combating oil spill at sea and conducts marine pollution control exercises regularly as also imparting training to interested agencies. In January 1993, the ICG undertook Operation Safai to control the oil-spill resulting from a collision between two super tankers off the Straits of Malacca. The spill had spread over 8000 sq. nautical miles and the slick was observed as close as 10 nautical miles from Nicobar Island. The spill was managed efficiently and a major environmental catastrophe was avoided. 10

On another occasion, in March 2005, the ICG responded to a collision between two vessels off Goa on the west coast of India. Advance Offshore Patrol Vessel (AOPV) Sagar, Offshore Patrol Vessel (OPV) Vigraha, Interceptor boats and Dornier aircraft were deployed to combat the spillage by spraying chemicals through spill spray arm. 11 The spill was successfully managed in less than four days. In order to enhance its capacity for combating oil spill, in 2007 the ICG ordered three special vessels from ABG Shipyard. These ships are equipped with two arms that pump in water and oil inside the ship. 12 The ICG response to the fire that broke out on Mumbai High North (MHN) in the Arabian Sea merits attention. It dispatched ships and aircraft to rescue the stranded personnel and also to respond to the oil spill. The INDSAR and International Safety Net (ISN) were activated by MRCC calling all vessels in the vicinity to render assistance. An ICG Dornier aircraft reached the site and dropped life rafts. ICG vessels with Pollution Response Equipment and Oil Spill Dispersant were deployed and the damaged vessel was escorted by ICG vessels to Mumbai port. 13 Indias Offshore Energy Scene Indias rising demands for energy resources have led to aggressive oil exploration activities at sea to locate new oil and gas fields. Indias EEZ is dotted with offshore platforms engaged in offshore exploration for oil and gas in Cambay/Mumbai basin, Cauvery basin, Krishna-Godavari basin, Kutch basin, Mahanadi and West Bengal basins, Andaman and Nicobar Islands basin, and Kerala basin. Among these, the Mumbai High Basin located 160 km west of the Mumbai coast and operated by the ONGC since 1974, is the largest with a capacity of 80,000 barrels per day of crude production. In 1998, the Indian government announced the New Exploration Licensing Policy (NELP) to boost hydrocarbon exploration in the country. The initiative acted as a catalyst and several offshore gas finds were discovered in the deep waters off Indias east coast. The industry response to the NELP was encouraging and so far eight rounds have been announced. Under the NELP VI, the Indian government opened 164 blocks of which 103 blocks were offshore in deep and shallow waters. 14 The NELP VII offered 45 blocks
15

and

under NELP VIII 70 blocks around the country were on offer for exploration. So far US $9 billion worth of investments have been made under the NELP and production target of 600 million tonne of oil equivalent has been achieved from 203 blocks. 16 Further, the Bay of Bengal has emerged as an important source of gas to meet Asian needs. Significantly, Bangladesh and Myanmar are sitting over a gas lake. Bangladesh has recoverable reserves of 15.51 tcf of which 4.07 tcf have been already produced. Myanmar has

81.03 tcf of natural gas in offshore blocks that stretch over 270,000 square kilometers in the Bay of Bengal. Sri Lanka has offered China and India 9 blocks in the Mannar Basin. 17

Multilateral Approaches to Responding to Oil Spills The South Asia Co-operative Environment Programme (SACEP) to promote the adoption of a Regional Oil and Chemical Marine Pollution Contingency Plan for South Asia has not taken off. This is best reflected by an incident on July 27, 2003, when Tasman Spirit, a single-hulled tanker carrying 67,000 tonnes of crude oil ran aground off Karachi port. A few days later, on August 13, the ship broke into two and the resulting oil spill constituted a major environmental disaster. Pakistan decided to obtain assistance from UK to deal with the oil spill instead of India that has national capability to deal effectively with a spill of more than 100 tonnes in sheltered waters. Unlike the Arabian Sea, the Bay of Bengal is a large enclosed sea with abundance of mangroves, corals, marine parks, sanctuaries, turtle nesting areas and other sensitive habitat areas. Its littorals (Bangladesh, India, Indonesia, Malaysia, Maldives, Myanmar, Sri Lanka and Thailand) constitute over 400 million people and are highly dependent on the seas for their livelihoods. Any damage or degradation of important marine habitats and pollution would impact on their wellbeing. Besides, the region is also witness to heavy tanker traffic carrying crude oil and gas from the Persian Gulf to the Asia Pacific countries. The Andaman & Nicobar Islands in the Bay of Bengal comprise of 572 Islands and are witness to significant merchant traffic. Any marine pollution related accident would impact on the fragile eco system of the region and would merit immediate response. Although under the purview of the SACEP, the Andaman & Nicobar islands are geographically closer to Southeast Asian countries and any response to any oil spill in the region can be best addressed by the eastern littorals. However, there is no institutional mechanism among the Bay of Bengal littorals to address oil spills despite the region being declared as a Large Marine Eco System under the United Nations Environment Programmes UNEP. This issue gains further criticality in the light of the fact that Bay of Bengal is burgeoning with oil and gas exploration activity in Bangladesh, India, Myanmar and Sri Lanka. Conclusion From the above discussions, the question that arises is Are the offshore oil and gas fields more at risk than people realize? Apparently, it would take a few accidents such as the BP oil spill to bring home the realization of the vulnerability of offshore infrastructure. It could severely impact the fragile marine eco systems and also slow the flow of oil as it

happened in the case of the ONGC oilrig in the Arabian Sea. There is a fear that offshore explorations could emerge as the Achilles heel of energy security of several countries including India and such a scenario should be given greater consideration. Also needed is a sophisticated warning system to provide total domain awareness of offshore exploration activities and oil spills through a network of surveillance and monitoring. Further, the necessity for a timely and capable response strategy that is based on precise planning, preparedness, sufficient resources to respond, and well established and practiced consequence management arrangements are critical. This can be partly addressed through cooperative mechanism to respond to oil spill crisis and also through regional capacity building. It will be prudent to develop a Bay of Bengal databank which identifies marine ecosystem, marine sensitive areas, and develop a sophisticated communication network and perhaps a regional response centre to provide information to National/State/Local Authorities on the impending oil spill and the response options. This databank could be made accessible to all concerned parties through internet through their respective national marine pollution response centers. In that context the BIMSTEC (Bay of Bengal Initiative for MultiSectoral Technical and Economic) is a viable multilateral arrangement for addressing the risks in offshore exploration activities in the Bay of Bengal.
Dr. Vijay Sakhuja is Director (Research), Indian Council of World Affairs, New Delhi.

June 18, 2010

References

1 2

President Obama's BP Oil Spill speech Reuters, June 15, 2010. Ibid. 3 Alister Doyle, Norway to Apply BP Oil Spill Lessons to Arctic, Reuters, June 7, 2010. 4 BP Oil Spill Game Changer for Industry: ONGC Chief , available at http://www.newkerala.com/news/fullnews-125228.html accessed on June 12, 2010. 5 T.S. Subramanian and Anupama Katakam, A platform lost, Frontline, Volume 22 - Issue 17, Aug 13 - 26, 2005, available at http://www.hinduonnet.com/fline/fl2217/stories/20050826003602500.htm accessed on June 12, 2010. 6 Final Report Inquiry Commission P-36 Accident, Rio de Janeiro, Brazil June 22, 2001, available at http://www2.petrobras.com.br/ri/ing/ApresentacoesEventos/Apresentacoes/pdf/slide_trans0622.pdf accessed on June 12, 2010. 7 Hurricanes Destroyed 109 Oil Platforms: US Government, available at http://www.cccarto.com/katrina/ accessed on June 12, 2010. 8 Blue Waters, Indian Coast Guard Newsletter, Volume X, Issue 1, January 2009. 9 Prabhakaran Paleri, Role of the Coast Guard in Marine Environment Security: The P3C Factors Paper presented at the Oil Spill Management Workshop, Goa, 19-20 July 2002.


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Coast Guard: Samaritans of Sea, available at http://mod.nic.in/samachar/feb1-03/html/ch1.htm accessed on June 13, 2010. 11 Trajectory of an oil spill off Goa, Eastern Arabian Sea: Field Observations and Simulations, available at http://drs.nio.org/drs/bitstream/2264/618/1/Environ_Pollut_148_438.pdf accessed on June 13, 2010. 12 Coast Guard to Buy 3 More Ships, The Hindu, 23 March 2007. 13 For more details see SAR And Pollution Response Off Bombay High-BHN 27 July - 02 August 2005 available at http://indiancoastguard.nic.in/IndianCoastGuard/sar/archive_sar2.html accessed on June 12, 2010. 14 Partha Pritam Basistha , Offshore Drilling To Provide Shipping With New Dimensions, Oil Asia Journal, March-April , 2007, p.11. 15 44 Blocks Awarded Under NELP VII, The Hindu, November 21, 2008 16 Nelp VIII Puts 70 Blocks on the Block, DNA [Mumbai], April 10, 2009. 17 L.S. Ananda Wedaarachchi, Russia to Join Gas and Oil Exploration, Sunday Observer [Sri Lanka], February 21, 2010.