BP Environmental Reporting ‘Wildly Unrealistic’; First Post-Spill Deepwater Permit Issued

by | Mar 1, 2011

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BP’s environmental reporting practices were under attack yesterday, as the federal government granted the first deepwater drilling permit since the Gulf of Mexico oil spill.

Environmental law organization ClientEarth filed a complaint with the U.K.’s Financial Reporting Review Panel (FRRP), which assesses whether companies’ annual reports comply with the law. ClientEarth said that BP used a “wildly unrealistic scenario” to predict future energy demand.

These flawed predictions are helping to justify investment in risky methods of extraction, ClientEarth said, including that which led to the Deepwater Horizon disaster.

“We believe the report’s use of energy demand and climate models painted a misleading picture to shareholders and anyone else that read it, and that it fell far below the standards required by UK law,” ClientEarth chief executive James Thornton wrote in the Guardian yesterday.

According to ClientEarth, BP’s projections relied on a reference scenario published by the International Energy Agency (IEA). This scenario is an analytical baseline, assuming no changes to policy and regulation after 2009. Were the scenario to come true, it would lead to alarming consequences, the IEA said – with average global temperatures rising by as much as 6 degrees Celsius.

“Perhaps most importantly, the BP report at no point states whether or not the company’s strategy was actually based on this apocalyptic scenario,” Thornton said. “If it was, BP’s management was effectively constructing a business plan based upon the end of the world.”

BP declined to comment on the Guardian piece, telling Environmental Leader, “It would be for the FRRP to make a comment about a document that has been submitted to them.”

Thornton said that BP’s new management has signalled a different approach to forecasting. In BP’s Energy Outlook 2030 (pdf), issued to investors and the public in January, chief executive Bob Dudley said that the company’s projections of rising CO2 emissions are “a wake-up call, not something any of us would like to see happening”.

Earlier this month oil and gas industry association IPIECA published updated guidance on improving transparency in environmental reporting. BP was among the companies contributing to the update.

In other news, the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) yesterday granted a deepwater oil drilling permit to Noble Energy, for an area about 70 miles south-east of Venice, La.

Initial drilling on the well began last April at a depth of 6,500 feet, but drilling was suspended June 12 under the temporary moratorium issued after the Deepwater Horizon spill.

“This permit represents a significant milestone for us and for the offshore oil and gas industry, and is an important step towards safely developing deepwater energy supplies offshore,” said BOEMRE director Michael R. Bromwich. “This permit was issued for one simple reason: the operator successfully demonstrated that it can drill its deepwater well safely and that it is capable of containing a subsea blowout if it were to occur.

“We expect further deepwater permits to be approved in coming weeks and months based on the same process that led to the approval of this permit.”

BOEMRE said Noble has met new safety regulations and information requirements. Since the new rules were enacted, BOEMRE has issued 37 permits for shallow water wells.

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