Gulf spill trickier than Valdez, Three Mile Island

SAN FRANCISCO Fri Jun 4, 2010 11:23pm IST

A dead Northern Gannet covered in oil lies along Grand Isle Beach in Grand Isle, Louisiana May 21, 2010.REUTERS/Sean Gardner

A dead Northern Gannet covered in oil lies along Grand Isle Beach in Grand Isle, Louisiana May 21, 2010.

Credit: Reuters/Sean Gardner

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SAN FRANCISCO (Reuters) - "Gulf spill" has already been seared into popular consciousness along with "Three Mile Island" and "Valdez," even if the long-term impact of the latest disaster in America's energy sector is still unclear.

The 1989 Exxon Valdez spill in Alaska changed the way parts of the oil industry operate, but did not alter its course. The partial meltdown of a unit at Pennsylvania's Three Mile Island nuclear plant a decade earlier stopped the growth of an industry for three decades.

Neither incident is a clear precedent for what BP Plc (BP.L) and the United States will face once the blown-out well a mile below the ocean surface is finally sealed.

The Gulf spill -- or whatever name for it ultimately sticks -- may soften cries of "Drill, Baby, Drill" from proponents of new wells in a country addicted to oil, but an immediate halt to home production of the economy's life-blood is unthinkable.

The Gulf of Mexico accounts for 30 percent of U.S. oil production, and even the most ambitious plans for alternative fuels will take years to fully develop.

After Three Mile Island, on the other hand, the world's biggest energy-consuming country had clear and workable alternatives to nuclear power in coal and natural gas, at a time when carbon pollution was not a major issue.

"Is this a game changer? I think it's premature to conclude that it is," nuclear industry consultant Bruce Lacy said of the Gulf spill.

Its effects may be felt most over the longer term.

President Barack Obama has seized on popular dismay over images of polluted beaches and fishing grounds to press for faster development of alternative energy, like solar and wind power, which was already one of his priorities.

Len Rodman, chief executive of energy-project engineering firm Black & Veatch, said the impact of the Gulf spill may surpass that of Three Mile Island over time, since it would spark a serious look at electric cars and cast doubt over the safety of traditional drilling.

"This BP thing has tentacles," he told the Reuters Global Energy Summit last week.

CLOSER TO HOME

The Exxon Valdez leaked an estimated 257,000 barrels of oil into Price William Sound, destroying wildlife and the livelihood of many fishermen, in what was then the worst U.S. oil disaster.

The environmental damage was extensive but for most Americans it was remote. Unlike the accident at the BP well, it did not blight a body of water touching the coastline of four states that are home to one-sixth of the U.S. population.

The level of public anger and fear will be a big factor in the equation. As the Three Mile Island accident showed, nuclear plants carry a special concern.

"The Exxon Valdez still comes up, but I don't know if it comes up with the same level of negative reaction that you get with Three Mile Island," said Lacy, who worked at a nuclear plant for 26 years before going into consulting.

The fear of nuclear power persists even though the industry always operates with multiple safety measures that have ensured a better safety and environmental track record, Lacy said. Americans have far less fear of oil and its products, which they use every day.

Following the Gulf spill, the biggest change might occur at the level of political discourse.

In a sign of how fast that can occur, California's Republican governor, Arnold Schwarzenegger, withdrew his support last month for more drilling off his state's coast.

CRISIS = OPPORTUNITY

Environmentalists are banking on the game changing a lot.

Rick Steiner, a retired marine conservation professor at the University of Alaska, said the Exxon Valdez incident prompted better tanker safety and prevented drilling in the Arctic National Wildlife Refuge, but did little to change people's view of oil.

He said if the only upshot from the Gulf spill was improved oversight and safer offshore drilling, that would represent the loss of a huge opportunity for cleaner energy.

"I'm kind of hoping that 10 years from now, 20 years from now, they'll look back on this and say 'that was the catalyst that really pushed us over the edge into a rapid transition that we know we need to do toward clean, sustainable energy for this country,'" Steiner said.

Short of a $1-per-gallon gasoline tax that he would like to see, but admits is political poison, he said all clean energy efforts in the past year should be redoubled, from improved car efficiency to tax incentives for alternative transport.

STATUS QUO

Although the Louisiana marshes will be hit hard by the oil in the Gulf, the state also depends heavily on the energy industry for jobs and taxes. More generally, many Americans worry first and foremost about the cost of fueling their cars.

The resulting desire to stick with the status quo, along with the fact that public attention can fade pretty quickly after a disaster, made both Lacy and Steiner wonder how extensive the long-term impact would be.

An executive at oilfield services company Halliburton Co (HAL.N), which did some work on the BP well, reflected the view of many in the energy business when he said the only lasting result of the accident would be further delay for offshore drilling and more oil imported from abroad.

"As an international company, though, the global need for hydrocarbons, we believe, is going to continue to grow," Chief Financial Officer Mark McCollum said on a conference call on Wednesday. "How it affects the Gulf of Mexico, or the U.S. business here, likely will shift business overseas."

But Steiner saw the endless race to extract oil in deeper, tougher locations as a warning sign that its users must heed.

"In our addiction here to oil, we're starting to exhibit riskier behavior," he said. "So what does that tell the addict? 'Continue to go look for stuff, or recover?'"

(Reporting by Braden Reddall and Peter Henderson; Editing by David Storey)