The Tribune

By RICHARD COULSON

No sooner had Simon Potter, CEO of Nassau-based Bahamas Petroleum Company (BPC), announced an international oil company had signed a 90-day renewable option to become a farm-out partner with BPC, than our environmental activists predictably denounced the deal — indeed, the very concept of drilling for oil in Bahamian waters.

The issue lay dormant in the recent past while the market price for crude oil dropped to less than $40 a barrel, making it cheaper to buy in the open market than to develop new sources like the promising but unproven Bahamas. With the price approaching $80, the formula has reversed, leading to success in the year-long negotiations conducted by Mr. Potter. While production of oil in commercial quantities is still by no means assured, it is far more likely now that a “major” has expressed interest and will help fund the cost of drilling exploratory wells to prove the long-term reserves that have been indicated by extensive seismic research over the last ten years. On this good news, the BPC ‘s London share price jumped 130 percent.

But it was bad news for our environmental spokespeople. Publicist Diane Phillips, Joseph Darville, chairman of Save the Bays advocacy group, and Re-Earth founder “Sam” Duncombe are on record as being totally opposed and are actively campaigning to convince uncertain citizens to join their movement. They are all well-meaning folk with admirable vigour in a free society to defend the natural gifts of our unique environment.

But they are profoundly misguided.

They seem barely aware, or they discount, that as far back as 2012 our BEST Commission reviewed and accepted a multi-volume Environmental Impact Assessment (EIA), followed in 2014 by an Environmental Management Plan (EMP), a site-specific plan covering all performance criteria to mitigate potential impacts to the environment. They ignore that the EMP is steadily upgraded to meet the requirements of our Petroleum Act 2014 and its associated regulations, specifically for environmental protection and pollution control. This regimen was not drafted in a vacuum, but follows the best practices and advice of experienced producing countries.

Our environmentalists remain concerned that, nevertheless, oil spills do occur, citing Wikipedia’s list of over 100 in the past 60 years. But any such list must be kept in rational perspective. Many spills have been small releases from pipelines that are easily contained with minimal effect. The greatest pollution has been caused by groundings, accidents and collisions suffered by supertankers, such as the Exxon Valdez in Alaska in 1989 and the Torrey Canyon in the British Isles in 1967. Just this January, Iranian tanker Sanchi was rammed, burned and sunk in the East China Sea, killing all its crew and leaving a slick of 100 square kilometres still not fully dispersed.

But there has never been a serious incident involving all the scores of tankers that every year transit the Gulf Stream or the Northwest Providence Channel, waterways not far from our beaches and marine life.

Of course, the down-well explosion and resulting flows from the famous Deepwater Horizon rig in 2010 killed 11 workers and did incalculable harm along the shores of US States on the Gulf of Mexico, with billions of dollars spent on still incomplete clean-up efforts. The Ixtoc blow-out disaster off Campeche in 1979 had much the same effect on Mexico. With these exceptions, the hundreds of wells drilled and producing across the Gulf have created no major spills. Our activists often cite Deepwater Horizon as a template for what could result from drilling in The Bahamas. In fact, the alleged similarity to our five licenced drilling locations is virtually meaningless. They will reach sea floor at about 1500-foot depth, while drilling in the Gulf now is at the harder-to-control 10,000-foot level, operating in ambient pressure of 16,000 psi compared with 4,000 in our different undersea geology.

Our wells lie in a narrow strip across the Old Bahama Channel from Cuba, over 100 miles from the nearest Bahamas land-mass on the southwest coast of Andros. The whole Grand Bahama Bank lies firmly between the exploration area and our incomparable beaches, resorts and fishing grounds. This geography means prevailing conditions will sweep any slicks straight into the Gulf Stream flowing north at a predictable three to five knots for dispersion in the vast Atlantic, for past and surely future millennia, unaffected by hurricanes.

Our activists worry that our small country will be left alone without skills or resources to handle a spill. But we have joined several multi-country cooperatives like the International Association of Drilling Contractors (www.adc.org), and upon production BPC will become a dues-paying member of Oil Spill Response Limited. These arrangements assure that any needed equipment and personnel will be committed from Florida and the Gulf. Since Deepwater Horizon, the expertise of the world’s oil industry has been focused on assuring a similar disaster does not occur elsewhere.

Balanced against the virtually invisible environmental risk, the potential economic and social benefits are overwhelming. Every cost of the investigative, exploration and drilling programmes has been and will be covered by BPC together with all its operating expenses, and a annual licence rental of $1m to Government. When, and if, oil is sold in commercial quantities, BPC will pay royalties rising from 12.5 percent to 25 percent on increasing production levels. These revenues will be channeled into a Sovereign Wealth Fund, for long-term investments capable of meeting national objectives like reducing our critical unfunded pension obligations. This type of fund has accumulated over $5.5bn for Trindad-Tobago, the only Caribbean nation with proven oil earnings.

New opportunities will be granted to Bahamians for employment in the offshore oil industry, where technical positions will be available and education will be provided. Once profitability seems assured, BPC will launch a public offering of its shares on our capital markets, giving citizens an equity stake in a type of business sought by investors worldwide.

I am sympathetic to the constant calls that our nation’s beauty be preserved for our children and grand-children, but has passionate environmentalist Ms Phillips carefully considered her public appeal to Prime Minister Minnis that he “leave whatever oil that is beneath the waters right where it is”? He would have to cancel all the leases and extensions granted to BPC since 2007, wiping out the roughly $100m of capital invested and held by several hundred shareholders on the London Stock Exchange. Such a blatant state confiscation could only leave us with a painful lawsuit, and a certain black eye to show international investors, the IMF and the rating agencies.

Like the hard-bitten saying, “No good deed goes unpunished.”