Defaming the Petro-Industry

Article appeared in Sunday Mail, on the 27th of April, 2014.

By Constantinos Hadjistassou, PhD*

wait_for_gasRecently a series of articles appearing in the press and on the web have dealt with the “industrialisation” of Larnaca’s harbour. It all culminated in a demonstration by a group of Larnaca residents outside the harbour demanding the removal of the exploratory drilling facilities that are being planned there. Observing these events one came away with the impression that ordinary people are not exactly aware of what to expect, nor do they seem to have been properly informed. Contributing to this lack of awareness were the news stories that spoke of “fait accompli” and warning of the health risks posed to local residents, as well as the inadequate information provided by state policymakers. It’s therefore useful to clarify certain contentious issues.

For beginners, “industrialisation” is considerably different to the provision of oil field services to companies that have been granted prospecting and production licences. Without these services it would be impossible to explore for natural gas and oil. But what services are these exactly? What is their environmental footprint and what impact do they have on people’s health?

The exploration stage focuses on the acquisition and processing of seismic and other data. Once the data has been duly processed, the “target location” of the exploratory well is determined. Operating the drill requires a string of other specialised operations such as drilling mud, logging, core sampling, marine risers, supplies (food, water, fuel), remotely operated underwater vehicles (ROV), etc.

Nearly all the equipment needs to be stored, serviced, tested and repaired on land. It is then loaded onto support vessels and transported to the drill platform for use. The process and procedure followed during the drilling in Block 12 will be repeated in the other five licensed offshore blocks. This gear will be imported, and will not be manufactured in the harbour. Aside from the emissions arising from the above operations, no serious impact on the environment or people’s health is expected.

Drilling Mud Facilities
One point that needs attention is the composition of the mud used during the drilling of wells. Typically where offshore drilling is concerned, a synthetic drilling fluid is used. The mixing, transport, use, processing and disposal of the mud is governed by strict environmental regulations which corporations are required to faithfully adhere to as they are being monitored by the government granting them the concession. The mud is neutralised on land, adhering strictly to specific procedures which aim to protect the marine fauna and flora as well as to avoid toxic emissions and harmful waste. The same goes for drill cuttings produced during drilling. It is this same procedure that was successfully implemented in Limassol for the A-1 and A-2 wells in the Aphrodite prospect.

In practice, the harbour will serve as the companies’ base of operations and workspace where they will store their gear, conduct the necessary tests and provide support to drilling. Hiring of local workers is not expected to be extensive, unless new hydrocarbons finds are made, or natural gas and/or oil fields are developed.

Provision of High Added Value Activities
What will add value to the Cypriot economy and create new investment and employment opportunities will be the more active engagement in the petroleum industry of foreign but primarily local businesses and universities. Research and development of new technologies and tools, training, equipment testing, mechanical design, legal services, and trade of petroleum products, are just some of the areas that can help create a revamped and sustainable growth model for our economy – something akin to what occurred in Norway in the 1970s. But for this to happen, we need proper planning and incentives from the government, private initiative but also a streamlining of procedures in order to attract interested parties. Also, society at large would need to get behind the energy corporations.

To achieve all the above, however, it is important that the petroleum industry not be vilified in the public mind. Tarnishing an emergent conventional fuels energy sector is fairly easy to do if one is negatively predisposed, for example by citing examples of corruption and environmental impacts in other countries such as Venezuela and Nigeria. Moreover, ignorance and misinformation can also inflict damage. Let us keep in mind, however, that on its own Cyprus is not capable of utilising its natural resources due to lack of technical know-how and financial prowess.

Experience from cases of successful and unsuccessful countries in the management of natural resources teaches us that the engagement of governmental and private business in hydrocarbons gives added value to a country’s GDP, creates employment opportunities and a lot more. It is not enough merely to sell crude oil or natural gas, but rather to also create knowledge and convert this knowledge into products and services through innovation and entrepreneurship.

Stakeholder Engagement
Mishandling hydrocarbons resources can easily shatter the public’s confidence, and lost credibility can be very hard to regain. The dilemmas facing Cyprus are well known in the area of mineral resources.

Raising awareness through public hearings, emphasising the benefits and highlighting the challenges, the active participation of social partners, a better grasp of how the petroleum industry works, and the involvement of local authorities and groups in decision-making – these are some of the steps that can help in the social acceptance and growth of the energy sector. Creating a framework for the conversion of non-renewable energy sources into sustainable and long-term economic growth is perhaps the single largest hurdle that we face collectively. The dire economic situation that Cyprus finds itself in, especially with the scourge of unemployment, leaves no room for complacency.

*The author is an academic at the University of Nicosia and a researcher at the University of Cyprus.

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