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#382816 - 06/07/10 01:54 PM Small Oil
Marty Offline
by Mike Campbell

SMALL OIL COMES TO BELIZE

“If this was to happen to Belize, the prospect of 5,000 barrels per day of crude oil becoming available after a couple of months might well make the GOB declare national mourning for a day, and quickly change that for a month-long fiesta.

The pollution would get rid of seaside-monopolising tourists, regrettably kill any wildlife that remains after they have already destroyed the mangrove protection, but then allow the long-term natural recuperative process to kick in, and GOB to substitute a major stable revenue source for touristic whimsy.”
Roaring Rocks 1 May 2010

“Personally I wouldn't use any dispersant at all like many countries around the world, but then I guess the whining from the USA would be deafening. I would rather see the beaches and wetlands coated in oil and let evaporation and bugs get rid of it. There is no question that you get more dead birds and reeds that way as well as some dead fish, but it all becomes compost or food within days anyway. Dispersants shift the problem out of sight but make the problems worse in the long term.”
RigRat 31 May 2010

These two quotes are directly copied from a local message board (www.belizeforum.com) concerning Offshore Oil Exploration in Belize, the first was posted by RigRat on 31 May 2010 and the second by Roaring Rocks on 1 May 2010. RigRat is Jerry Larder, a Petroleum engineer with over 35 years of experience. He is the President and CEO of Welltech Group LLC which is an independent energy consultancy. The main focus of Welltech is to provide oil companies and governments with engineering expertise and is a permanent resident of Belize.

Roaring Rocks who is another oil industry professional lives both in the UK and near Belmopan but as of this date has refused to identify himself or his status in the country.

Mr. Jerry Larder states that Gulf spill is only the 40th largest spill in the world. He states ”But the absolute root cause for this disaster was the government of the USA and the MMS for allowing a well with such a poor design to be drilled in the first place their slack supervision, and poor legislation.”
While acknowledging that the GOB has to the best of his knowledge no viable emergency response plan and insufficient technical ability to inspect off shore drilling operations, Mr Larder did not respond when asked whether or not he would recommend proceeding with offshore drilling in Belize without these measures in place. He did say “most governments worldwide insist that oil companies have an emergency response plan. And they ensure it is in place before any drilling commences.” Additionally he stated “...oil already surpasses Tourism as Belize's number one foreign currency earner. I also believe that oil and tourism can peacefully co-exist, and I firmly believe that Tourism does immeasurably more, and visible, damage to the environment. I would suggest that it would be an incredibly dimwitted thing to do to jeopardize oil exploration for the sake of tourism, Oil exploration doesn't generally rip out the mangroves, trample on the reefs, and the carbon footprint of their activities is minuscule compared to tourism.”

However another oil industry professional with ties to Belize volunteered this “If I was to make a sweeping statement, I'd be inclined to urge Belize to get some outside help, since I do not believe there is the level of expertise necessary to properly oversee the proposed operation currently in the country.
Having said that, I would not expect the actual drilling operation to be anything but a routine job.

But - as we've seen - things can go wrong. My concern would be that there is almost no equipment available to tackle any kind of emergency, in the unlikely event that it is needed. Worse than that, since the amount of oil that I would expect to be found (if any) would be relatively small - it would not make financial sense for whoever would be responsible for cleaning up a spill (or whatever) to do so with any level of completeness.

Finally, it seems to me that every single entity above a certain size that is doing or has done business in Belize has managed to negotiate terms and conditions that leave Belize with little benefit from them being there. I would hope that should this exploration go ahead that Belize would get a better cut of the profits than it has negotiated for itself in the past.”

“I have been saddened by the willingness of certain companies operating in Belize to maximize profits either to the detriment of the Belizean people or without adding to the quality of life of the people in whose country they operate. This, unfortunately, is in the nature of business. However, it is the business and purpose of the Belizean government to ensure that Belize also profits from these enterprises. This obligation appears to me to have been sadly neglected in the past and my fear is that it will not be met in the future.”

“Nobody in Belize has the equipment or resources to tackle an oil spill. Neither does the government have the necessary finances to do this. Therefore it would necessarily fall to the company who makes the spill to clean it up. However, since the consequence of not doing a good job are likely to be far less than doing a good job - there would be little reason for the oil company to meet it's obligations. In the USA the consequence would be to stop that company from operating there anymore. This would be a huge loss to the company. In Belize they'd just laugh and wave out of the aircraft window as they head off.

In addition - this will not be a huge corporation with massive resources doing the drilling - or I very much doubt it. It is more likely to be a fairly small operation that has limited resources.
In the case of BP - it is big enough to be self insured. It can bear massive costs. In the case of Anadarko (who are 25% owners of the GOM well) although they are a large oil company, they are still not large enough to be self insured. Although this insurance was thought to be large enough for purpose - it's now clear that it will only pay for two months of the cleanup.
The lesson to be learned here is that whoever is doing the drilling must have a huge amount of insurance in order to pay for the cleanup.

And - they better have a plan, because you can bet your bottom dollar than nobody in the GOB has the slightest clue on how to tackle an oil spill.”


“I, like you, believe that the best results for Belize will come from Tourism. It is my opinion that no enterprise should be allowed to operate in Belize that has a substantial risk of putting this valuable resource and revenue stream at jeopardy.”

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#382817 - 06/07/10 03:58 PM Re: Small Oil [Re: Marty]
bywarren Offline
Great analytical approach to the question as opposed to forming an opinion before understanding and evaluating all of the pros and cons.
Now let’s hope those so adamant about supporting tourism will be as forceful in efforts to insure that industry does not continue to do unnecessary harm to the environment and future of Belize.

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#382818 - 06/07/10 06:12 PM Re: Small Oil [Re: Marty]
Rigrat Offline
Originally Posted By: Marty by Mike Campbell

“If this was to happen to Belize, the prospect of 5,000 barrels per day of crude oil becoming available after a couple of months might well make the GOB declare national mourning for a day, and quickly change that for a month-long fiesta.
The pollution would get rid of seaside-monopolising tourists, regrettably kill any wildlife that remains after they have already destroyed the mangrove protection, but then allow the long-term natural recuperative process to kick in, and GOB to substitute a major stable revenue source for touristic whimsy.”
Roaring Rocks 1 May 2010

Originally Posted By: Marty by Mike Campbell
“Personally I wouldn't use any dispersant at all like many countries around the world, but then I guess the whining from the USA would be deafening. I would rather see the beaches and wetlands coated in oil and let evaporation and bugs get rid of it. There is no question that you get more dead birds and reeds that way as well as some dead fish, but it all becomes compost or food within days anyway. Dispersants shift the problem out of sight but make the problems worse in the long term.”
RigRat 31 May 2010
Yes, dispersants make the oil sink, the oil then coats the corals and seagrasses and kills the lot. Plus it is toxic for a period of time. Wetlands, birds, fish, and reeds all regenerate a lot faster than coral and seagrass, plus when the oil is exposed to air it degrades far faster as well as allowing aerobic bacteria to break it down. Plus if it is onshore you can use mechanical means to remove far more of it than if it coats the seabed.
Originally Posted By: Marty by Mike Campbell
These two quotes are directly copied from a local message board (www.belizeforum.com) concerning Offshore Oil Exploration in Belize, the first was posted by RigRat on 31 May 2010 and the second by Roaring Rocks on 1 May 2010. RigRat is Jerry Larder, a Petroleum engineer with over 35 years of experience. He is the President and CEO of Welltech Group LLC which is an independent energy consultancy. The main focus of Welltech is to provide oil companies and governments with engineering expertise and is a permanent resident of Belize.

Roaring Rocks who is another oil industry professional lives both in the UK and near Belmopan but as of this date has refused to identify himself or his status in the country.

Actually this is totally wrong. Roaring Rocks has never been involved in the oil industry in his life, and has never claimed to have been. He also didn't refuse to identify himself, he just didn't bother to answer Mike's question. In fact he didn't answer any of Mike's questions.

Originally Posted By: Marty by Mike Campbell
Mr. Jerry Larder states that Gulf spill is only the 40th largest spill in the world. He states ”But the absolute root cause for this disaster was the government of the USA and the MMS for allowing a well with such a poor design to be drilled in the first place their slack supervision, and poor legislation.”
While acknowledging that the GOB has to the best of his knowledge no viable emergency response plan and insufficient technical ability to inspect off shore drilling operations, Mr Larder did not respond when asked whether or not he would recommend proceeding with offshore drilling in Belize without these measures in place.

Well I hope that people will actually go and see what I did write. I most certainly did not say that the GOB had no viable emergency response plan, nor did I say they had insufficient technical ability to inspect offshore drilling operations. What I did actually say was that the Government of Belize, like the vast majority of governments in the world, was responsible for legislation that requires Oil Companies themselves to have an emergency response plan and they government was in charge of ensuring it was a viable plan. This really is media distortion on a grand scale.
Also there is quite a bit of applied innuendo here. Of course I wouldn't recommend that drilling should commence in Belize without a plan in place. That is why I didn't say it should continue without these measures in place.
Originally Posted By: Martyby Mike Campbell
He did say “most governments worldwide insist that oil companies have an emergency response plan. And they ensure it is in place before any drilling commences.” Additionally he stated “...oil already surpasses Tourism as Belize's number one foreign currency earner.

I actually did clarify that and said that oil production is the Belize Government's number one foreign currency earner.

Originally Posted By: Marty by Mike Campbell
I also believe that oil and tourism can peacefully co-exist, and I firmly believe that Tourism does immeasurably more, and visible, damage to the environment. I would suggest that it would be an incredibly dimwitted thing to do to jeopardize oil exploration for the sake of tourism, Oil exploration doesn't generally rip out the mangroves, trample on the reefs, and the carbon footprint of their activities is minuscule compared to tourism.”

Yes, I did say this


Originally Posted By: Marty
However another oil industry professional with ties to Belize volunteered this “If I was to make a sweeping statement, I'd be inclined to urge Belize to get some outside help, since I do not believe there is the level of expertise necessary to properly oversee the proposed operation currently in the country.
Having said that, I would not expect the actual drilling operation to be anything but a routine job.

Well I also said pretty much this as well.

Originally Posted By: Marty by Mike Campbell
But - as we've seen - things can go wrong. My concern would be that there is almost no equipment available to tackle any kind of emergency, in the unlikely event that it is needed. Worse than that, since the amount of oil that I would expect to be found (if any) would be relatively small - it would not make financial sense for whoever would be responsible for cleaning up a spill (or whatever) to do so with any level of completeness.

Well this may be your opinion, but legislation says otherwise. Anyway, Nature will do the majority of the clean up given time, not humans.
Also the statement that Belize has almost no equipment available to clean up oil spills is incredibly disingenuous. If an oil company wants to start drilling, then their Emergency Response Plan ensures that this equipment is in place before the drilling starts. Of course there is no equipment here at present. Where are the rigs drilling at present? When they arrive, so does the clean up gear.

Originally Posted By: Martyby Mike Campbell
Finally, it seems to me that every single entity above a certain size that is doing or has done business in Belize has managed to negotiate terms and conditions that leave Belize with little benefit from them being there. I would hope that should this exploration go ahead that Belize would get a better cut of the profits than it has negotiated for itself in the past.”

Now you are talking. The PSA that BNE works under is ridiculously generous. Oil companies have better terms in Belize than in any country I have ever operated in.

Originally Posted By: Marty by Mike Campbell
“I have been saddened by the willingness of certain companies operating in Belize to maximize profits either to the detriment of the Belizean people or without adding to the quality of life of the people in whose country they operate. This, unfortunately, is in the nature of business. However, it is the business and purpose of the Belizean government to ensure that Belize also profits from these enterprises. This obligation appears to me to have been sadly neglected in the past and my fear is that it will not be met in the future.”


Originally Posted By: Marty by Mike Campbell
“Nobody in Belize has the equipment or resources to tackle an oil spill. Neither does the government have the necessary finances to do this.

This is absolutely not the case. BNE has a warehouse full of oil clean up equipment.
Originally Posted By: Marty by Mike Campbell
Therefore it would necessarily fall to the company who makes the spill to clean it up.
As is totally normal in all countries.

Originally Posted By: Marty by Mike Campbell
However, since the consequence of not doing a good job are likely to be far less than doing a good job - there would be little reason for the oil company to meet it's obligations.

Apart from the presidents and CEO's going to jail, having their assets seized, claiming on their insurance to pay for an independent clean up company, the list of consequences to failing to do is long. The money is also there to perform the clean up. Don't let them leave until its all fixed. In Saudi Arabia when this happens, all the senior guys are thrown in jail until the problem is sorted out.

Originally Posted By: Marty by Mike Campbell
In the USA the consequence would be to stop that company from operating there anymore.
Not hardly, Exxon still operates there. As are most of all the other oil companies who have ever had spills.


Originally Posted By: Marty by Mike Campbell
This would be a huge loss to the company. In Belize they'd just laugh and wave out of the aircraft window as they head off.
Not if they were in jail they wouldn't

Originally Posted By: Marty by Mike Campbell
In addition - this will not be a huge corporation with massive resources doing the drilling - or I very much doubt it. It is more likely to be a fairly small operation that has limited resources.
In the case of BP - it is big enough to be self insured. It can bear massive costs. In the case of Anadarko (who are 25% owners of the GOM well) although they are a large oil company, they are still not large enough to be self insured. Although this insurance was thought to be large enough for purpose - it's now clear that it will only pay for two months of the cleanup.
The lesson to be learned here is that whoever is doing the drilling must have a huge amount of insurance in order to pay for the cleanup.

Well this is also a bit backwards. they can't drill if they don't have the insurance. Anadarko doesn't have to pay for all of the clean up, as all parties are jointly and severally responsible. Anadarko can easily pay for two months of the clean up which is proportionate to their share. They can also at any time back out of the agreement, but then they lose their share in this very prolific block. Also the statement that small companies are likely to drill in Belizean waters is true. However their discoveries are also proportionate, and likely to be low pressure, low deliverability wells that are immeasureably easier to cap should a disaster happen

Originally Posted By: Martyby Mike Campbell
And - they better have a plan, because you can bet your bottom dollar than nobody in the GOB has the slightest clue on how to tackle an oil spill.”

Well again this is a ridiculous statement. No government on earth knows exactly what should be done. Especially the USA which has seen a catalogue of errors in the government response. The National Response Center claims it is in sole charge of cleaning up oil spills. They were also in charge of having all of the oil spill equipment ready to go. It was in the original well plan that the USA government would take total charge of any spill. And what has happened? BP has had to do the vast majority of the work for them. Most sensible governments realise that they don't have the expertise to clean up any spill, which is why they hand the responsibility to the oil companies. The oil companies in turn have contracts with professional oil spill clean up people who do this for a living nearly every day. They do have the training and the resources.
Again Belize is no different from any company in the world. The government doesn't need to do the oil spill. It just needs to be visibly in charge of ensuring it is done, and call on expert advice as and when needed.

Originally Posted By: Martyby Mike Campbell
“I, like you, believe that the best results for Belize will come from Tourism. It is my opinion that no enterprise should be allowed to operate in Belize that has a substantial risk of putting this valuable resource and revenue stream at jeopardy.”


This is just far too emotive. have any of the previous wells drilled in Belize ruined the tourist industry? Have drilling destroyed the tourist business in Trinidad? Barbados? Cuba? The USA (slightly damaged admitted, but it will recover quickly), Thailand? Malaysia? Australia? The UK? Norway? Holland? The Fiji islands? Sao Tome and Principe? No.
Remember that oil drilling in Belizean waters will never result in a spill coming anywhere close to the disaster in the Gulf. The chances are tiny, the risk is negligible but the rewards are great. Even before the drilling starts, Belize has been paid considerable sums just to ward the blocks, as well as getting money for training, as well as yearly block renewal fees. And let's face it. They aren't going to find anything of any consequence there anyway. Geology is for the most part wrong. That's why you don't have the big boys here.


Edited by Rigrat (06/07/10 06:14 PM)

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#382819 - 06/07/10 07:45 PM Re: Small Oil [Re: Rigrat]
Peter Jones Offline
Originally Posted By: Rigrat
Originally Posted By: Martyby Mike Campbell
Finally, it seems to me that every single entity above a certain size that is doing or has done business in Belize has managed to negotiate terms and conditions that leave Belize with little benefit from them being there. I would hope that should this exploration go ahead that Belize would get a better cut of the profits than it has negotiated for itself in the past.”

Now you are talking. The PSA that BNE works under is ridiculously generous. Oil companies have better terms in Belize than in any country I have ever operated in

One of the most crucial points here. If confused by the network of responsibilities, and by the obfuscation introduced by many of the big players both here and overseas, follow the money. You have to wonder why the various Belize officials who give away such generous terms do it. What's in it for them?

The other key issue is the one of insurance. BP is actually the only company I can think of whose pledge of "self insurance" I would be inclined to accept. Partly because of the highly honourably way they have conducted themselves with the Gulf of Mexico disaster, when it's quite clear that a large part of the responsibility actually belongs elsewhere. Nonetheless, BP have picked up the tab. For ALL other companies I would look for unlimited insurance cover at Lloyds and backed up by their parent government. Lloyds because despite monstrous losses in times past they have never sought to liquidate themselves and thereby avoid their debts. Government cover because we could be looking at truly astronomical sums that even Lloyds couldn't meet.

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#382820 - 06/07/10 09:28 PM Re: Small Oil [Re: Peter Jones]
Mike Campbell Offline
Please read Rigs quotes that he disagrees with and remember that I did not write them, only the first few, the others are direct quotes from another oil guy who approached me by PM and gave permission to use his statement. My original paper makes that clear.

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#382821 - 06/07/10 09:39 PM Re: Small Oil [Re: Mike Campbell]
TheRealDeal Offline
Oil co-exists with greed, pure and simple!
Oil makes money..
The big boys will say whatever suits them to smooth the turmoil or distrust.
If drilling were to take place offshore Belize it would only be a matter of time before a spill takes place and this would be with the bigger operators like the BP's, a smaller cheaper route will obviously bring more spills and pollution.. and sooner than may be the case.

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#382822 - 06/07/10 09:50 PM Re: Small Oil [Re: TheRealDeal]
TheRealDeal Offline
If the Belize government allows the operator to drill, no amount of insurance is going to be of benefit in the longterm.
At the end of the day, they will have to weigh the pro's and con's of tourism for eternity verus a reservior that has great potential to bring unlimited wealth to a nation.
There are other options.. it depends where they intend to drill.. if it is fairly close to the shoreline then they could drill "fishhook" wells. The name implies the look or plan of the well, usually drilled from land out to sea. The benefit here is two fold, one; the cost will be a lot less, two; if there is a spill from the rig itself then it can be controlled on land.. most small spills come from the rigs and their plumbing..

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#382823 - 06/07/10 09:59 PM Re: Small Oil [Re: TheRealDeal]
Barnacle Offline
i seem to remember a certain hydroelectric dam that was to ease Belize's dependency on Mexican power, and lower Belizeans power bills.
instead,, look who makes money and who's bills were raised.

i don't trust any of them. not one.

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#382824 - 06/07/10 10:12 PM Re: Small Oil [Re: TheRealDeal]
Mike Campbell Offline
Gosh unlimited wealth sure does sound good, I think i'll just wait for the mother ship, it will come first.

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#382825 - 06/07/10 10:27 PM Re: Small Oil [Re: Mike Campbell]
TheRealDeal Offline
Mike, you are correct, that is the way the government will be sold on this, the operators will sell it as hitting the motherload!

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