By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas Petroleum Company’s (BPC) chief executive believes the risks associated with drilling oil wells in this nation’s waters are “relatively small compared to that which already exists”, given that one billion barrels of oil are shipped through the Old Bahama Channel annually.

Calling for the environmental and other risks associated with BPC’s planned oil exploration activities to be placed “in context”, Simon Potter said three million barrels of oil per day were currently being shipped past its proposed initial well site.

Noting that petroleum transhipment activities added up to 300 million gallons of oil per day, or one billion barrels per year, traversing Bahamian waters, Mr Potter told Tribune Business: “The Straits of Florida are as busy as the Straits of Hormuz.

“It has inherent risk. Is it more risky [here] than anywhere else in the world? Of course not. But let’s get the risk of drilling a well in the context of that already pertaining in the Bahamas.”

Noting that the Bahamas was also host to the Caribbean’s largest oil storage facility, the Bahamas Oil Refining Company (BORCO), with almost 25 million barrels of capacity, Mr Potter added: “I would contend that oil and gas activity already exists in the Bahamas

“The incremental risk pertaining to a well drilled by BPC is relatively small compared to that which already exists.”

While a substantial number of Bahamians and residents have expressed concern about the impact BPC’s planned exploration activities, especially if there was a spill, may have on the environment and tourism industries, Mr Potter said risk modelling techniques showed the greatest impact would be away from this nation.

“The demonstrated impact and spill response is actually away from the Bahamas,” he told Tribune Business. “The Great Bahama Bank and prevailing sea currents take the oil away from the Bahamas.”

But, leaving nothing to chance, Mr Potter said BPC’s membership of the Oil Spill Response Group gave it access to huge amounts of equipment to clean up, and mitigate, any impact on the Bahamas and its neighbours - especially Cuba.

And, acknowledging that the oil exploration industry had to live in a post-Macondo (Gulf of Mexico) world, Mr Potter said such an oil spill would be unlikely to occur in the Bahamas.

“Bahamian rock pressures are normal, and less than half that of Macondo,” he added. “The water depth here is 1,500-1,600 feet, compared to 5,000 feet in the Gulf.”

Pointing out that BPC had completed its Environmental Impact Assessment (EIA) in October 2012, Mr Potter said the company was now working on its Environmental Management Plant (EMP), “which deals with all the potential impacts identified in the EIA”.

And he added: “The Government themselves are looking at upgrading the regulations, which in the Bahamas date back to the 1970s, so we entirely support that initiative.

“We fully expect our plans to date to be fully compliant with the new regulations being put in place by the Government.”

Mr Potter told Tribune Business that BPC was “anxious to see” the proposed oil industry regulations, but said both its EIA and EMP had incorporated “international best practices”.

“I would hope that the standards we’ve applied, given that they are post-Gulf of Mexico, would fit in with those applied by the Government,” he added. “On a number of occasions they’ve said it’s fairly close.”

The Government finalising the regulations is one of two key steps to BPC fulfilling its obligation to drill an exploratory well by April 2015, as they will influence the well’s design.

The other major issue is BPC settling on, and reaching agreement with, a joint venture ‘farm in’ partner to share the risk burden and $100-$120 million cost of drilling that exploratory well.

Declining to identify the companies that have been through BPC’s ‘data room’, or how many there have been, Mr Potter declined to set a deadline for concluding the ‘farm in’ process.

“There’s been people through the data room, coming through again, and new people coming into the data room,” he said.

“There are companies we as partners would want to have, and we feel confident they would execute the well process efficiently and effectively. They would be bona fide international partners.”

While BPC did not “feel rushed”, and has “a long lead time’ to drill its exploratory well, Mr Potter acknowledged that commercially the company wanted to conclude the ‘farm in’ process as soon as possible.

“We’ve reduced the risk. We now need a partner that will mitigate that risk for me and my shareholders,” Mr Potter told Tribune Business.

“We have changed the perception of technical risk, and reduced it to the point where we can’t reduce it any more, and the only thing left is to drill the well.”