Final Report “Case Study of Oil Drilling in Urban Cities”
Total Page:16
File Type:pdf, Size:1020Kb
Final Report “Case Study of Oil Drilling in Urban Cities” Isha Chaturvedi, Year 3 Hong Kong University of Science & Technology (HKUST) Supervisor – Prof. Bhavna Shamasunder Assistant Professor, Urban & Environmental Policy Occidental College 1 Content Page No. 1. Introduction...........................................................................................................3 2. Methodology…………………………………………………………………………………………………….4 3. Background 3.1 Company Profile – Freeport McMoran Oil & Gas………………………..4 3.2 Literature Review…………………………………………………………………………………….6 4. Research Analysis……………………………………………………………………………………….13 5. Conclusion…………………………………………………………………………………………………………21 6. References………………………………………………………………………………………………………..22 2 1. Introduction Oil Drilling, which was once restrained to only rural areas, has now not even spared urban areas. The potential risks caused by oil drilling to communities’ health and safeties living nearby, and environment, are magnified by high population density. In many cases, companies are able to re-open old wells after decades of inactivity without obtaining a new permit or notifying nearby residents. These urban oil fields are either camouflaged and hidden with office buildings, trees around like in Los Angeles, London, Houston or done offshore near population exploded areas like Mumbai. This paper analyses urban oil drilling in four locations around the world: Los Angeles (California), Houston (Texas) in US, London (UK), Mumbai (India), where drilling is contested by social movements. The definition of an “urban area” varies nationality-wise. The cities chosen are considered urban respective of their country, according to the UN definition of “urban”1 (“United Nations Statistics Division - Demographic and Social Statistics,” n.d.). Urban Oil Drilling is a new concept today, in the sense that the companies have started to look in to the possibility of drilling in urban area, to combat the increasing demand of oil and depleting oil quantities in the existing sources. Moreover even if the oil drilling in urban existed from long, a whole lot of population is unaware about its existence. Due to the rapid urbanization, and increasing population, more and more cities are falling into the urban oil drilling category. Places like Mumbai where oil drilling near the Arabian Sea coast have existed from long, but it is only recently that the communities living nearby have started to realize that there is a big elephant in the room. This paper studies the oil field locations in detail for each city with the main focus on Los Angeles, and examines their proximity to the population nearby. It looks into the accidents due to the oil drilling practices or pipeline breakage, and their effects on the environment – water, air and soil and the society. It also looks into the type of population effected on the basis of discrimination, income, colour, and class. The paper also digs into the issues raised by the communities living nearby the oil fields and pipelines, environmentalists, and reasoning of the companies in charge of those oil fields. The paper makes a comparison between the four cities, based on the above factors: location of the oil fields, impact on the community, which includes health impact and socio-economic impacts, type of community living nearby the oilfields, response of the communities living nearby, the impacts on the environment including water, air and land, and response of the Oil Industry and Government to the issues raised up due to urban oil drilling. 3 2. Methodology The research work involved Background Research work on Urban Oil drilling in general. Oil drilling practises in various countries were looked at, and four cities were selected based on the definition of “urban” and their economic importance to the respective country, so that all the four cities are comparable to each other. Various News Articles were studied relating to impacts of the oil drilling activities on the environment, society, and causalities occurred due to oil drilling nearby and pipelines breakage. Relation between Maps of oil drillings, oil fields and population density, and pipelines were analyzed to study the companies operating the oilfields, causalities occurred in the area and the type of population effected. The company profile of Freeport Mc Moran Oil & Gas, which is largely responsible for the urban drilling in Los Angeles, was studied, through the website statistics and internet research details. 3. Background 3.1 Company Profile – Freeport McMoran Oil & Gas Freeport-McMoran2 (“Freeport-McMoran Online Annual Report 2013 - Oil and Gas Operations,” n.d.)is a global US- based natural resource company, with a diverse portfolio of mineral assets, oil and gas resources, with headquarters in Phoenix, Arizona, US. FCX’s portfolio of oil and natural gas assets includes oil production and drilling activities mainly in US onshore- California, Eagle Ford Shale and offshore- Gulf of Mexico, and California. In 2013, FCX acquired Plains Exploration and Production Company (PXP) and McMoRan Exploration Co. (MMR). California contributes up to 40% to the FCX oil & gas reserves. James R. Moffett is the Chairman of the Board of Freeport, and Flores, James C. is the President and CEO of Oil and Gas LLC3(“FCX_Freeport-McMoRan Inc. - Investor Center, BOD,” n.d.). Following are the locations4(“FCX_Freeport-McMoRan Inc. - Worldwide Operations, Miami Mine and Processing Facilities,” n.d.) of its’ operation in California: Onshore Description Ownership of FCX Oil & Gas 1. Los Angeles Basin LA Basin properties are characterized by Hold a 100% working interest light crude oil (21 to 32 degree American in the majority of our LA Petroleum Institute (API) gravity), have well Basin properties in the depths ranging from 2,000 feet to over Inglewood, Las Cienega, 10,000 feet and include both primary Montebello, Packard and San production and mature wells using Vincente fields. waterflood recovery methods. 2. San Joaquin Basin San Joaquin Basin properties are located Hold a 100% working interest 4 primarily in the Cymric, Midway Sunset and in the majority of our San South Belridge Fields. These properties are Joaquin Basin properties in long-lived fields that have heavier oil (12 to the Cymric, Midway Sunset 16 degree API gravity) and shallow wells and South Belridge fields. (generally less than 2,000 feet) that require enhanced oil recovery techniques, including steam injection, and produce with high water cuts. 3. Other Onshore Located in San Luis Obispo County, the Holds a 100% working California Properties Arroyo Grande Field is a long-lived field that interest in the Arroyo Grande has heavier oil (12 to 16 degree API gravity) Field. and well depths averaging 1,700 feet requiring continuous steam injection. Offshore All the California Offshore properties are located in federal waters approximately 5 to 7 miles offshore in the Santa Maria Basin. 4. Point Arguello Point Arguello Unit is composed of the Holds a 69.3% working Hidalgo, Hermosa and Harvest platforms, interest in the Point Arguello and the various partnerships owning the Unit. related transportation, processing and marketing infrastructure. 5. Point Pedernales Platform Irene is the sole platform in Point Holds a 100% working Pedernales, which is utilized to access the interest in the Point Federal Outer Continental Shelf Monterey Pedernales field. Reservoir by extended reach directional wells and support facilities, which lie within the onshore Lompoc field. Table 1: FMOG Operations in California Foot Notes: Since 1982, Mr. Flores has had an extensive career in the oil and gas industry in the roles of Chief Executive Officer, President and Chairman of a private and four public oil & gas exploration and production companies listed on the New York Stock Exchange. He co-founded and led Ocean Energy, Inc. from 1992 to 2001. In 2001, he became the Chairman and Chief Executive Officer of Plains Resources Inc. (NYSE:PLX). Under his leadership, the exploration and production assets of PLX were spun off into Plains Exploration & Production Company (NYSE:PXP) and began trading on the NYSE with Mr. Flores as Chairman and Chief Executive Officer in December 2002, and President since 2004. After 10 years of substantial growth, PXP was acquired by Freeport-McMoRan Inc. in May 2013. 5 3.2 Literature Review Los Angeles The patchwork of oil and natural gas deposits in California covers a vast area reaching from Southern California to Central California, but Los Angeles is home to the most urban oil fields in the United States, according to the Center for Land Use Interpretation (CLUI)5(Preston, 2013). More than 3,700 derricks extract oil from about 55 active oil fields in the Los Angeles area alone. If one looks closely while travelling around town, one can notice tell-tale methane vents on curbs and the incognito buildings that house pumps in neighbourhoods and even in shopping centres. The more obvious oil wells sit in backyards, like those on Signal Hill and various hillsides. To the west, the Sawtelle Oil Fields stretch beneath the Veterans Administration land with 18 operating wells near the 405 Freeway. Moving east, the Beverly Hills Oil Field covers an area in West Los Angeles near Pico and Olympic Boulevards that includes the Venoco Flower Tower and other sites. For years, the nearby backlot of Fox Studios was home to a drilling island until it was abandoned in 1990. The Rancho Park Golf Course and the Hillcrest Country Club, whose members once received royalties from oil revenue, have hosted pumps onsite that draw from the Cheviot Hills Oil Field. To the east, the Salt Lake Oil Field lies underground near Cedars Sinai Hospital and the Beverly Center shopping mall. It extends to the prehistoric La Brea Tar Pits, which still ooze tar (actually, asphalt) on the park’s walkways and grassy areas, but no oil. In close proximity to the tar pits, lies the Los Angeles County Museum of Art. Further east, the Las Cienega Oil Field reaches from La Brea Avenue to downtown. But the largest remaining oil-producing reservoir in Los Angeles is the fabled Inglewood Oil Field beneath Baldwin Hills to the south.