Offshore Oil Spills Versus Onshore Groundwater Contamination

  www.rothmanresearch.com - The world economies are highly dependent on the Oil & Gas industry to provide energy. On a statistic level, global oil consumption is currently anticipated to be approximately 1000 barrels per second or 86.4 million barrels daily, and projections for 2030 puts oil demand somewhere around 118 million per day. These figures highlight the urgent need for countries to secure oil supply so as to maintain economic growth or simply to continue existing economically. The number of drilling activities worldwide is on the rise to cater for the overwhelming demand from existing economic powers and emerging economies. With this surge in drilling and exploration activities, environmental concerns are also at an all-time high. The recent oil spill in the Gulf of Mexico caused by an oil well blowout in late April at BP-owned Deepwater Horizon offshore drilling rig has opened the debate on oil exploration and drilling activities' impact on the environment and the economy.

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The Deepwater Horizon incident has somehow questioned the present safety systems that are in place, and there is a growing expectation that such offshore activities will become financially costly and more challenging as industry watchdogs scrutinize the possibility of tightening safety measures. The immediate consequences following the spill is that the U.S. has stopped issuing new offshore drilling leases pending positive insights that offshore drilling can be made safer. This situation has also reopened the viability of pursuing onshore shale gas exploration and production. Even if the Obama administration and the Congress are still lingering on the advantages of shale gas, many industry experts believe that the future of the U.S. economy and environment policies could use natural gas as a strong platform to fix urgent issues. In recent years, many exploration and drilling companies have started to embrace the potential in the shale gas industry. One of the biggest highlights within the shale gas industry at the end of 2009 was the $41 billion deal from ExxonMobil to purchase XTO Energy Inc. (NYSE: XTO).

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However, shale gas production also comes with its own controversy concerning the horizontal drilling and 'fracking' process (hydraulic fracturing) to retrieve gas. The debate this time is that the onshore extraction procedures to retrieve gas from shale rock could have serious contamination issues on underground water sources. Whilst still very difficult to validate, benzene contamination to aquifers or other water sources close to shale mining operations is still aggressively disputed by industry players.

XTO closed up by $1.52 at $43.39 yesterday and American Oil & Gas Inc. (NYSE Amex: AEZ) also traded upwards finishing at $6.51.

Oil Prices is currently at $75.12 per barrel and natural gas is at $4.33 per million Btu.

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