Richard Nehring has spent 27 years tracking oil and gas deposits in the United States. The founder of Colorado Springs-based NRG Associates, Nehring says that, despite the Gulf oil spill, oil companies will seek to tap reserves in deeper waters and in more remote areas. And as that occurs, the nation will have to make sure safety regulations are not only in place — but enforced — to prevent future oil catastrophes. He also grades the Obama administration’s response to the disaster.
Tell us what you make of the BP spill in the Gulf.
I think BP is clearly to blame. There are hundreds of deep water wells. Clearly, BP made some bad decisions. You can do it right, and spend more money, or you can do it cheaply to save money. It’s obvious BP chose to do it cheaply, and now we’ve seen what happens.
Chevron just started production from a well that is between 8,000 and 10,000 feet under the ocean. It’s very deep water, very close to the international boundary of the Gulf. And they did it without a single accident, with no time lost because of accidents. … They didn’t have any lost time. So it can be done. Good practices. That’s all its going to take to prevent this kind of spill. We have to be insistent that safety is paramount.
What are the major challenges of oil exploration in the wake of the spill?
The challenge is going to be one of enforcing regulations. Safety measures are already there; they just need to be enforced better. The administration should include oil companies in crafting the policy more often. The companies are the ones doing the work, they are the ones that have the expertise.
There are industry best practices in place, and if they had been followed this never would have occurred.
People are going to be more aware of the risk in oil exploration. But they need to realize that risk is inherent in every job. No one expects airlines to be 100-percent safe, with no crashes or accidents. No one expects zero car accidents. We’ve come to accept a certain amount of risk in those industries. And we’re going to have to accept the risk inherent with oil exploration.
How would you grade the Obama administration’s response?
I’d give them a D or an F. In times of emergency, we don’t need rigid bureaucracy. There are companies in Britain and Holland who are experts in cleaning up ocean spills. The North Sea is so much rougher than the Gulf, they’d have to be. But there are these regulations in place that hinder having them help — the Jones Act, the EPA (Environmental Protection Agency).
One Dutch company can siphon up 95 percent of the oil spilled, but they can’t help because the EPA said it wasn’t enough. The Jones Act keeps foreign ships from helping in U.S. waters.
It’s BP job to shut down the spill. But the government should be working to clean up the spill. They seem to be hampered by bureaucracy.
BP oil spill aside, what do you see as a major industry challenge in the coming decades?
Supply is going to be a huge issue. It’s why companies that wouldn’t work in the U.S. in the past are now looking for domestic sources. It isn’t just a matter of ending dependence on foreign oil — it’s a matter of finding reserves now.
With oil between $70 and $80 per barrel, it makes it easier for companies to do the kind of research and development to get to oil reserves that weren’t easily gotten to in the past. When oil was cheaper, companies could barely stay in business, much less explore for new wells.
Companies are going to adapt — and they’ve adapted in the past. Shell is going after unconventional sources in a big way, for example.
In my opinion, we have to keep exploring for new oil deposits. Wind and solar power are just too expensive without government subsidy. They are intermittent sources. We need oil and gas right now, and we’ll need them for the foreseeable future.