Prepared for. Part One Fisheries Part Two Moratoria Part Three Brand Damage

Transcription

1 A Study of the Economic Impact of the Deepwater Horizon Oil Spill Prepared for By OCTOBER 15, 2010 Part One Fisheries Part Two Moratoria Part Three Brand Damage

2 EXECUTIVE SUMMARY Greater New Orleans, Inc. is pleased to present this Economic Impact Analysis assessing the economic effects of the recent Deepwater Horizon Oil Spill Disaster in the Gulf of Mexico on fisheries. Greater New Orleans, Inc., a regional economic development organization, embarked on the process of estimating the impact of the Deepwater Horizon Oil Spill just weeks after the initial, tragic rig explosion triggered the largest oil spill in U.S. history. One of the major lessons of Hurricane Katrina is the importance of early and accurate economic analysis. Such documentation strengthens the ability of decision makers to ensure appropriate and timely recovery. This study is the first part in a three-part series, intended to provide base-line information, coupled with advanced methodology about the economic impacts of the Deepwater Horizon Oil Spill. We recognize that the economic impacts of this oil spill are shaped by diverse and unprecedented market changes. This project represents the first part of Greater New Orleans, Inc. s three-part economic impact analysis of the Deepwater Horizon Oil Spill Disaster, with studies on the Federal Deepwater Drilling Moratoria and damage to the Louisiana Brand to follow. While comprehensive data is still widely unavailable, this study presents a timely overview of the oil spill s composition and location at the time of publication; approximate financial impact of the spill on commercial fishing revenues; an economic analysis that takes into account these losses as well as claims payments and employment offerings from BP; and finally quantitative data from a recent fisheries focus group study. Economic impact in this study is based on assumptions about the direct ecological impacts of the oil spill as known to us nearly six months after the Deepwater Horizon oil rig explosion and does not take into account the widespread changes in seafood consumption habits. Moreover, this report offers a methodology by which to assess the economic impacts of the oil spill as new information becomes available. Our combination of qualitative and quantative data emphasizes the importance of involving lived experiences of workers and communities in affected areas of the Gulf Coast. As more data becomes available we expect our final results to be challenged; however, we intend the study to be a useful starting point for future analysis of this unprecedented disaster. The Context Originating with the Deepwater Horizon oil rig explosion, the Deepwater Horizon Oil Spill Disaster began April 20, 2010 and released approximately 4.9 million barrels as it ran until June 13, The effects of these events will be felt for years to come. The spill caused excessive damage to surrounding ecosystems and fisheries with ecological impacts still unfolding. Louisiana has always been a state that relies on the ocean s bounty for sustenance and income; prior to the spill it provided the U.S. with 30% of its domestic seafood. Our examination of the economic impact takes into account the size and location of the spill, the projected ecological 5

3 harm to the fisheries, the payments by BP, and the day-to-day realities of local fishermen, to provide the reader with comprehensive, up-to-date analysis. Principal Findings 1) Diverse clean-up methods are used Various ecological and anthropogenic clean-up methods worked to decrease oil concentrations during and after the spill. Combined with natural processes, we estimate that clean-up efforts limited the oil concentration in Louisiana s estuaries to be between 10 and 50 parts per billion (ppb), while concentrations at the well head were measured to be The various possible outcomes or fate of the oil particles following release from a deepwater well. This figure does not take into account anthropogenic activities. 1 to 2 parts per million (ppm). Though the Deepwater Horizon oil well has been capped, currents and storms may still change the oil concentrations on Louisiana s shores. The long-term effects of these concentrations are still unknown but have the potential to be ecologically devastating. 2) Possibly significant effects on early life stages of studies species; Revenue effects seen next two years Based on published research, we predict these oil concentrations will mostly affect early lifecycles of commercial fish species and, possibly, the reproductive success of adults. The most affected species include shrimp, crab, oysters, and menhaden. The primary effects, in terms of fishery revenues, will be felt in the first two full years after the oil spill (three years, in the case of oysters, due to freshwater diversion effects). Future studies regarding the causes of wide-spread fish kills in areas affected by the oil spill will complement these predictions. Losses will be concentrated in communities with critical masses of fisheries, resulting in disproportionate impacts in the coastal areas of the Greater New Orleans region. In the past decade, communities in these areas have faced numerous hardships including Hurricanes Katrina, Rita, Gustav, and Ike; decreasing seafood prices; land loss; and deforestation. The impact of the Deepwater Horizon Oil Spill would be challenging in and of itself; however, it builds on historical adversities. 6

4 Projected Impact Scenarios for Revenue Losses in Louisiana Commercial Fisheries $180,000,000 $160,000,000 $140,000,000 Total includes three years shown. Estimates are based on predictions of ecological impacts of the Deepwater Horizon Oil Spill and do not take into account changes in seafood demand. $120,000,000 $100,000,000 $80,000,000 $60,000,000 $40,000,000 $20,000,000 $0 $88,835,512 $74,029,593 $59,223,674 $56,459,735 $47,049,779 $37,639,823 $27,349,741 $22,791,451 $18,233,161 $172,644,988 $143,870, Total Year $115,096,658 High Medium Low 3) Some fishermen may benefit from BP claims and employment; related industries may suffer The BP claims process and the Vessel of Opportunity program are providing some boat captains and deckhands with temporary income. Due to changes in activities, from fishing to oil clean-up, this income may not trickle down to distribute throughout all components of the affected industries, such as docks, seafood processors, distributors, and equipment suppliers. These payments and incomes may help to mitigate the overall negative economic effects of the spill in some areas. 4) Lifelong fishermen face few employment options following Vessel of Opportunity program According to data from focus groups with 75 Louisiana fishermen, BP employment has been lucrative and compelling, provided one was able to obtain a contract. Once these contracts are completed, few fishermen plan to leave the industry. Should job transfer become necessary, few commercial fishermen believe they hold many transferable skills. Successful job training programs should focus on technical skills linked closely with job placement and incorporate ESL classes when applicable. 5) Further research is necessary to examine long-term ecological effects and market demand This document is based on predicting the economic impact of short-term ecological damage. While our study shows that these effects may not be catastrophic, or even as harmful as we expected, it must be understood that there are many factors contributing to this unprecedented event. This study examines the economic repercussions of short-term ecological changes and short-term BP claims payouts and clean-up contracts. It does not take into account long-term ecological effects, which are still unknown; nor does it take into account the impact on the Louisiana Seafood brand. Further research is needed to examine the long-term ecological impacts of exposure to oil concentrations and dispersant chemicals, as well as the impact on the fishery industry of decreased consumer demand for seafood. 7

5 A Study of the Economic Impact of the Deepwater Horizon Oil Spill Prepared for By OCTOBER 15, 2010 Part One Fisheries Part Two Moratoria Part Three Brand Damage

6 Contents Acknowledgements... 4 Executive Summary... 5 Chapter 1: Oil Location and Composition... 8 A. Dispersion of Oil Following the Deepwater Horizon Rig Explosion...8 B. Impact of the Loop Current...10 C. Oil Composition What Happens Over Time...11 Unique Dispersion Characteristics of Deepwater Spills...12 Surface vs. Deepwater Spill: A Comparison of Oil Fate/Composition...13 D. Critical Factors...14 E. Modeling Oil Dispersion and Movement...15 Modeling Oil (Hydrocarbon) Concentration...15 Comparison to Other Sources and Previous Spills...16 Chapter 1 Takeaways...17 Chapter 2: Impact of Oil on the Commercial Fisheries Revenues...19 A. Overview of Commercial Fisheries in Louisiana...19 B. Scientific Effects of Oil on Common Louisiana Seafood Species...21 Oysters...21 Shrimp...22 Blue Crabs...23 Finfish...23 Yellowfin Tuna...24 Black Drum...25 Menhaden and Striped Mullet...25 C. Potential Effects on Louisiana Seafood Species from High Concentrations of Oil...25 D. Projection of Effects from High Concentrations of Oil on Louisiana s Seafood Landings...27 Annual Adult Loss Ratios...27 Percentage of Expected Landings Losses...28 Total Projected Volume and Revenue Losses...30 Chapter 2 Takeaways...31 Chapter 3: Economic Impact of Fisheries Revenue Losses and BP Claims...33 A. RIMS II Analysis of Economic Losses Due to Impacts on the Fisheries, B. Impact of BP Claims and Vessel of Opportunity Funds on the 2010 Economy and Beyond...35 Chapter 3 Takeaways

7 Chapter 4: Focus Group Study on Future Opportunities for LA Fishermen...40 A. Profile of the Typical Fisherman s Financial Situation...40 B. Focus Group Study Overview...41 C. Methodology...42 D. Findings...42 General Perception and Understanding of the Disaster...43 Work and Skills...44 Current employment with BP or elsewhere...44 Current skill sets...44 Repurposing boats...45 Retraining and pursuing new opportunities...46 Age of fishermen and its impact on perceived opportunities...47 Limited-English proficiency and citizenship issues...48 Relocation to pursue different opportunities...49 Oil Spill Response...49 Possible claims packages...49 Debt forgiveness...50 Boat buy-back programs...50 Fisheries subsidy programs and aquaculture...51 Focusing on clean-up and coastal restoration...51 E. Summary Analysis and Recommendations...52 Appendix A: Focus Group Questionnaire

8 Acknowledgements Greater New Orleans, Inc. is grateful to all who participated in this project. Most importantly, Innovative Emergency Management, Inc., Headwater Capital Consulting and Jeremy Stone were instrumental in all aspects of data collection and analysis. We appreciate the assistance of the Environmental Defense Fund, specifically Oluseyi Fayanju for his critical economic impact analysis, as well as Timothy Fitzgerald and Paul Harrison. Ewell Smith with the Seafood Marketing and Promotion Board; Albert Rusty Gaude with the Louisiana State University Agricultural Center; Joshua Abbott with the School of Sustainability at Arizona State University; and David Lavergne, Randy Pausina, and Joey Shepard at Louisiana Department of Wildlife and Fisheries all contributed to the success of this project. We are grateful for Seedco Financial s assistance with the fishermen s profile, and the critical work of Sandy Nguyen with Coastal Communities Consulting and Tuan Nguyen with Mary Queen of Vietnam CDC. We are grateful for numerous Southeast Louisiana fishing associations, including Lake Ponchartrain Fishermen's Association, Louisiana Oystermen Association, South Plaquemines United Fisheries Cooperative, United Commercial Fishermen's Association, Shrimp Task Force, Louisiana Shrimp Association, and Commercial Fishermen of America. We acknowledge the valuable contributions of over seventy individual fishermen who gave of their time, energy and stories to this undertaking. This project was funded by the Economic Development Administration, U.S. Department of Commerce, with additional support from Chevron through the Greater New Orleans, Inc./Chevron Coastal Vitality Project. 4

9 EXECUTIVE SUMMARY Greater New Orleans, Inc. is pleased to present this Economic Impact Analysis assessing the economic effects of the recent Deepwater Horizon Oil Spill Disaster in the Gulf of Mexico on fisheries. Greater New Orleans, Inc., a regional economic development organization, embarked on the process of estimating the impact of the Deepwater Horizon Oil Spill just weeks after the initial, tragic rig explosion triggered the largest oil spill in U.S. history. One of the major lessons of Hurricane Katrina is the importance of early and accurate economic analysis. Such documentation strengthens the ability of decision makers to ensure appropriate and timely recovery. This study is the first part in a three-part series, intended to provide base-line information, coupled with advanced methodology about the economic impacts of the Deepwater Horizon Oil Spill. We recognize that the economic impacts of this oil spill are shaped by diverse and unprecedented market changes. This project represents the first part of Greater New Orleans, Inc. s three-part economic impact analysis of the Deepwater Horizon Oil Spill Disaster, with studies on the Federal Deepwater Drilling Moratoria and damage to the Louisiana Brand to follow. While comprehensive data is still widely unavailable, this study presents a timely overview of the oil spill s composition and location at the time of publication; approximate financial impact of the spill on commercial fishing revenues; an economic analysis that takes into account these losses as well as claims payments and employment offerings from BP; and finally quantitative data from a recent fisheries focus group study. Economic impact in this study is based on assumptions about the direct ecological impacts of the oil spill as known to us nearly six months after the Deepwater Horizon oil rig explosion and does not take into account the widespread changes in seafood consumption habits. Moreover, this report offers a methodology by which to assess the economic impacts of the oil spill as new information becomes available. Our combination of qualitative and quantative data emphasizes the importance of involving lived experiences of workers and communities in affected areas of the Gulf Coast. As more data becomes available we expect our final results to be challenged; however, we intend the study to be a useful starting point for future analysis of this unprecedented disaster. The Context Originating with the Deepwater Horizon oil rig explosion, the Deepwater Horizon Oil Spill Disaster began April 20, 2010 and released approximately 4.9 million barrels as it ran until June 13, The effects of these events will be felt for years to come. The spill caused excessive damage to surrounding ecosystems and fisheries with ecological impacts still unfolding. Louisiana has always been a state that relies on the ocean s bounty for sustenance and income; prior to the spill it provided the U.S. with 30% of its domestic seafood. Our examination of the economic impact takes into account the size and location of the spill, the projected ecological 5

10 harm to the fisheries, the payments by BP, and the day-to-day realities of local fishermen, to provide the reader with comprehensive, up-to-date analysis. Principal Findings 1) Diverse clean-up methods are used Various ecological and anthropogenic clean-up methods worked to decrease oil concentrations during and after the spill. Combined with natural processes, we estimate that clean-up efforts limited the oil concentration in Louisiana s estuaries to be between 10 and 50 parts per billion (ppb), while concentrations at the well head were measured to be The various possible outcomes or fate of the oil particles following release from a deepwater well. This figure does not take into account anthropogenic activities. 1 to 2 parts per million (ppm). Though the Deepwater Horizon oil well has been capped, currents and storms may still change the oil concentrations on Louisiana s shores. The long-term effects of these concentrations are still unknown but have the potential to be ecologically devastating. 2) Possibly significant effects on early life stages of studies species; Revenue effects seen next two years Based on published research, we predict these oil concentrations will mostly affect early lifecycles of commercial fish species and, possibly, the reproductive success of adults. The most affected species include shrimp, crab, oysters, and menhaden. The primary effects, in terms of fishery revenues, will be felt in the first two full years after the oil spill (three years, in the case of oysters, due to freshwater diversion effects). Future studies regarding the causes of wide-spread fish kills in areas affected by the oil spill will complement these predictions. Losses will be concentrated in communities with critical masses of fisheries, resulting in disproportionate impacts in the coastal areas of the Greater New Orleans region. In the past decade, communities in these areas have faced numerous hardships including Hurricanes Katrina, Rita, Gustav, and Ike; decreasing seafood prices; land loss; and deforestation. The impact of the Deepwater Horizon Oil Spill would be challenging in and of itself; however, it builds on historical adversities. 6

11 Projected Impact Scenarios for Revenue Losses in Louisiana Commercial Fisheries $180,000,000 $160,000,000 $140,000,000 Total includes three years shown. Estimates are based on predictions of ecological impacts of the Deepwater Horizon Oil Spill and do not take into account changes in seafood demand. $120,000,000 $100,000,000 $80,000,000 $60,000,000 $40,000,000 $20,000,000 $0 $88,835,512 $74,029,593 $59,223,674 $56,459,735 $47,049,779 $37,639,823 $27,349,741 $22,791,451 $18,233,161 $172,644,988 $143,870, Total Year $115,096,658 High Medium Low 3) Some fishermen may benefit from BP claims and employment; related industries may suffer The BP claims process and the Vessel of Opportunity program are providing some boat captains and deckhands with temporary income. Due to changes in activities, from fishing to oil clean-up, this income may not trickle down to distribute throughout all components of the affected industries, such as docks, seafood processors, distributors, and equipment suppliers. These payments and incomes may help to mitigate the overall negative economic effects of the spill in some areas. 4) Lifelong fishermen face few employment options following Vessel of Opportunity program According to data from focus groups with 75 Louisiana fishermen, BP employment has been lucrative and compelling, provided one was able to obtain a contract. Once these contracts are completed, few fishermen plan to leave the industry. Should job transfer become necessary, few commercial fishermen believe they hold many transferable skills. Successful job training programs should focus on technical skills linked closely with job placement and incorporate ESL classes when applicable. 5) Further research is necessary to examine long-term ecological effects and market demand This document is based on predicting the economic impact of short-term ecological damage. While our study shows that these effects may not be catastrophic, or even as harmful as we expected, it must be understood that there are many factors contributing to this unprecedented event. This study examines the economic repercussions of short-term ecological changes and short-term BP claims payouts and clean-up contracts. It does not take into account long-term ecological effects, which are still unknown; nor does it take into account the impact on the Louisiana Seafood brand. Further research is needed to examine the long-term ecological impacts of exposure to oil concentrations and dispersant chemicals, as well as the impact on the fishery industry of decreased consumer demand for seafood. 7

12 Chapter 1: Oil Location and Composition In evaluating the impacts the oil will have on the Louisiana and the Greater New Orleans region s economies and fisheries, it is important to understand what areas have been and could be contaminated by oil. Oil contamination in waters, in marshes, and on shorelines is a key factor driving the severity of the effects. This chapter focuses on the composition and dispersion of oil along the Louisiana Gulf Coast. In compiling this information, we used data and modeling results from the National Oceanic and Atmospheric Administration (NOAA), the Naval Research Laboratory, the National Center for Atmospheric Research (NCAR), the University Corporation for Atmospheric Research (UCAR), and the University of South Florida. We also gathered data from the HYCOM Consortium, a group of 23 government labs, university research groups, and private companies working together to develop and evaluate an ocean model called the Hybrid Coordinate Ocean Model, or HYCOM. Their work is sponsored by the National Ocean Partnership Program. A. Dispersion of Oil Following the Deepwater Horizon Rig Explosion Numerous government and university scientists have made estimates of the oil slick location during the time the oil was flowing. The National Oceanic and Atmospheric Administration (NOAA) produced surface oil trajectory maps from April 22, 2010 to August 23, Figure 1 shows the trajectory prediction for July 1, 2010, a day with some of the greatest amounts of visible surface oil. Figure 2 shows the surface oil trajectory the day the final cap was placed on the well, successfully stopping the flow of oil. Figure 1: NOAA trajectory map for surface oil resulting from the Deepwater Horizon Oil Spill. 8

13 Figure 2: NOAA trajectory map for surface oil resulting from the Deepwater Horizon Oil Spill. The reduction in the amount of visible surface oil can be attributed to natural and anthropogenic clean-up efforts as well as increasing amounts of oil settling below the surface. Currents and water temperature are important for determining where the oil is expected to go at any given point in time. NOAA and the HYCOM Consortium agreed that the loop current (which typically flows from the Gulf around the tip of Florida and up the East Coast) played a significant role in directing the flow of surface oil. As of mid-july 2010 it had pinched off to form several large eddies that were carrying the water and the oil in it around in circles within the Gulf rather than carrying it to the East Coast. This led to an expectation that little or no oil would reach the East Coast based on the direction and speed of surface currents. Despite the capped well, oil has continued to move a recent wave came ashore in Louisiana on the West Bank of the Mississippi River. Approximately three miles of shoreline were affected on the eastern side of Barataria Bay in the Bay Jimmie, Bay Wilkerson, and Bay Baptiste areas 1. This may have been an isolated incident as EPA's surface water samples collected September 16 and 17, 2010 along the Gulf Coast did not reveal elevated levels of chemicals usually found in oil. Additional analysis of water samples collected along the Gulf Coast on September 16 and 17, 2010 did not detect levels of dispersant chemicals above the reporting limit 2. The Lake Pontchartrain Basin Foundation s weekly oil spill report for September 27, 2010 reads: Approximately 104 miles of Gulf Coast shoreline is currently experiencing moderate to heavy oil impacts- approximately 94 miles in Louisiana, 9 miles in Mississippi 9

14 and one mile in Florida. Approximately 483 miles of shoreline are experiencing light to trace oil impacts. The most recent NOAA maps through the end of August 2010 show no visible surface oil. B. Impact of the Loop Current The loop current flows northward between Cuba and the Yucatan Peninsula, loops northward into the Gulf of Mexico, then east and southward through the Florida Straits. The loop current slowly changes shape and strength over several months. At times the current flows nearly directly from Yucatan around Cuba. Over time, it grows northward and may approach Louisiana in the vicinity of the Deepwater Horizon wellhead. Eventually the loop pinches off to form a circular eddy and a new shortened current. Sometimes, an eddy may rejoin with the loop current rather than dissipating. During its typical lifecycle, the loop current grows northward into the Gulf and sheds an eddy which dissipates as the current grows northward again. NOAA has been studying water currents in the Gulf and tracking the location of the loop current since shortly after the start of the spill. On April 22, when the spill began, the loop extended far northward into the Gulf, coming within about 60 miles of the spill site. About a month after the start of the accident, a counter clockwise eddy formed near the northeastern part of the current and caused the oil slick to tend to move in circles rather than being carried toward the Florida Straits. Around May 24, a large eddy, called Eddy Franklin, started to pinch off from the loop current. As of July 26, 2010, Eddy Franklin is more than 100 miles from the nearest oil associated with the spill. 3 NOAA analysis indicates that there is no clear way for the oil to be transported to Southern Florida, the Florida Keys, or along the East Coast of the United States, unless the loop current fully reforms with Eddy Franklin or moves northward, neither of which is likely to happen within the next few months. 4 Beyond the current NOAA analysis, predicting the long-term path of the oil with any accuracy is problematic, due to limited data and limitations of current state-of-the-art models for ocean circulations. The task shares some of the familiar uncertainty associated with predicting the track of a hurricane in the Gulf. Winds, which are also a major factor in determining where the oil will go, cannot be predicted accurately beyond several days in advance. While several modeling analyses and studies 5 over the past few months have attempted to provide some indication of the long-term trajectory of the spill, the results currently are subject to many variables, assumptions, and uncertainties. Based on historical data, some of these predict that a certain percentage of the oil could get caught up in the Gulf Stream and carried into the Atlantic. 6 However, given the closed loop currents now in the Gulf, we expect the amount of oil carried into the Atlantic to be minimal. 10

15 Figure 3. The loop current and current eddies in the Gulf of Mexico as of July 26, 2010 (Source: NOAA) C. Oil Composition What Happens Over Time In most major oil spills, oil has been leaked onto the surface of water or land, rather than deep underwater. For example, in 1989 the Exxon Valdez oil tanker ran aground on the Bligh reef in Prince William Sound, Alaska. The damaged tanker leaked more than 10 million gallons of crude oil onto the surface of the water in Prince William Sound. 7 Most oil spills are very similar to this, with tankers running aground in feet of water approximately 2 3 miles offshore. When the tanker spills its oil onto the surface of the water, the thick oil slicks are typically washed ashore. In contrast, the Deepwater Horizon Oil Spill Disaster had oil gushing into the Gulf of Mexico from damaged well casings approximately one mile beneath the surface of the water and about 48 miles from the nearest shore. Oil behaves very differently so far under the water, where it is subjected to colder temperatures and higher pressures than on top of the water. This section explains what happens to the composition of the oil as it is released in deep water. It discusses how long the different types of oil (top-water slicks, tar balls, underwater plumes, etc.) will be present in the water and on the areas of land they reach, which were identified in the previous section. How long the oil is present will influence the timeframe that the GNO region and Louisiana are impacted by the contamination. In analyzing what happens to the oil over time, we used only those models that were designed for deepwater oil spills. There are very few models of this kind, as most are designed for the more common spills on the water s surface. We also drew information from academic journal articles. We gained 11

16 valuable information from actual experiments conducted by SINTEF off the coast of Norway. SINTEF is the largest independent research organization in Scandinavia. They focus on research in technology, natural sciences, medicine, and social sciences that contributes to sustainable environments. In SINTEF s experiments, oil was released over 800 meters below the water s surface and the outcomes were observed and measured, significantly improving our understanding of deepwater oil spills. Publicly available literature on modeling of deepwater oil spills is very limited, and journal articles that were available were not detailed enough for us to incorporate into our model. However, we were able to capture the main premises of the studies and apply them to our models. Unique Dispersion Characteristics of Deepwater Spills In the Deepwater Horizon Oil Spill Disaster, the extreme pressure and temperatures at 5,000 feet underwater immediately act on the oil and begin breaking it up into tiny oil particles that can range from the width of a human hair to the length of an average red ant. Most of these oil droplets will remain suspended in the water while a small percentage float to the top and form thin oil slicks. In turn, the oil particles or droplets can undergo a number of different outcomes: Biodegradation The oil droplets can be biodegraded or devoured by bacteria that reside in the Gulf of Mexico. Mixing/Sedimentation After some time, the oil droplets can also mix with organic material in the ocean and fall to the ocean floor through sedimentation. Oil Slicks A small percentage of the oil droplets float to the top of the water and form thin oil slicks. Evaporation/Photolysis From the oil slicks, parts of the oil will evaporate or be broken down by the sun in a process called photolysis. Emulsification Mixture of water with the oil slick can produce emulsions of water-in-oil called mousse because of its consistency. Landfall/Beaching Oil slicks and mousse can drift toward the shore and become beached. Oil stranded on the beach can be physically removed or recovered by clean-up crews. Shore Sedimentation After some time, oil that remains on the shore will sink under the shore s surface and become sedimentation. These processes are illustrated in Figure 4. 12

17 Figure 4. This figure depicts the various possible outcomes or fate of the oil particles/droplets over time following release from a deepwater well. Surface vs. Deepwater Spill: A Comparison of Oil Fate/Composition When an oil spill occurs from a wrecked tanker, all of the oil is typically released and floating on the water s surface within hours. Evaporation and photolysis break down the oil components, but act only on a small portion of the floating oil. Natural dispersion of the oil slick is a slow process which eventually leads to biodegradation by marine bacteria and sedimentation. As the floating oil slick becomes beached on the shore, the oil can be manually recovered and disposed, or it can filter into the sediment. Within months, there is no more floating oil, and the breakdown process of the oil takes years. In contrast, when oil is released deep under water, as with the Deepwater Horizon Oil Spill Disaster, it is immediately dispersed due to extreme pressure and temperature at the release depth. It takes approximately one hour before some oil droplets float to the water s surface and form an oil slick. At any given time, the percentage of oil that is floating on the surface is very small, probably less than 20% of all the oil that has been spilled. In the Ixtoc I spill off the coast of Mexico (a sub-surface spill at approximately 130 feet), some scientists estimated that less than 5% of the oil was within the top 60 feet of the water column. Evaporation and photolysis act on the floating oil in the same manner as a surface spill. Biodegradation of the dispersed oil by marine bacteria begins much earlier in a deepwater spill and is expected to destroy more oil than in a surface spill. Once the oil slick becomes beached on shores, recovery and disposal of the oil as well as sedimentation can occur in the same manner as in a surface spill. Given what we know about what happens to the composition of oil over time for a surface spill, we can estimate what will happen to the composition of oil from a deepwater spill. Figure 5 shows the percentages of the different oil compositions we would expect to see at Day 100 of the oil spill and again at Day 1,

18 Figure 5. This figure depicts the expected distribution of fate oil over time from a deepwater spill. Because so much of the oil is dispersed early in the process, biodegradation is facilitated. This figure does not take into account the use of dispersant chemicals. A recent federal report 8 indicates that about 75% of the oil spilled from the Deepwater Horizon has evaporated, biodegraded, or been skimmed or burned. However, many members of the scientific community have criticized these numbers as overly optimistic. D. Critical Factors The ultimate fate or composition of the spilled oil and its impact on the GNO region will be influenced by several factors, some of which are either currently unknown or cannot be controlled by humans. These factors include duration of the oil spill, human responses, and natural processes. Duration of the oil spill clean-up efforts is difficult to determine as the volume of oil released is unprecedented, considering most spills release a finite amount of oil in a short period of time (as in the case of a tank rupture). The oil well began erupting oil on April 20 th and continued until June 15 th, a period of 86 days, releasing 4.9 million barrels of oil into the ocean. The Deepwater Horizon well wasn t declared effectively dead by the federal government until September 19, Human responses can help to speed up the recovery process from the oil spill. Recovery and disposal of oil that becomes stranded on the shoreline can help the physical removal of oil. Dozens of private boats were deployed to locate and report oil, and other boats were skimming oil. Chemical dispersants, the subject of some controversy during clean-up efforts, have been used to break oil into small droplets, which are more easily consumed by bacteria. Ironically, nature one of the principal victims of the oil spill may play the largest role in the recovery process. For instance, biodegradation of the spilled oil by marine bacteria may be responsible for the largest proportion of the recovery process. Experiments have shown that marine bacteria can eliminate 30% 50% of oil within weeks. 14

19 In addition, storms and hurricanes in the area of the oil spill would help to disperse the oil on the water s surface, and we saw evidence of this after Tropical Storm Bonnie moved through the Gulf of Mexico on July 25, However, this dispersal mechanism includes an additional threat: hurricane storm surge would be capable of carrying oil inland as far as the surge reaches, and debris washed up by the surge could be contaminated with oil. Analysis of currents and model results predict the ocean currents will eventually flush much of the oil away from the waters off Louisiana rather than allowing it to remain in the release area indefinitely. How quickly the oil will be flushed depends on the current and weather patterns that occur over the next several months. E. Modeling Oil Dispersion and Movement To understand how the oil may impact marine life, we first had to determine how the oil was dispersing and moving through Gulf waters over time. To accomplish this, we developed an oil dispersion model that was patterned after one developed in 2003 by Dr. Pavel Tkalich, Principal Research Fellow at the National University of Singapore s Physical Oceanography Research Laboratory. 9 Tkalich s model simulates emulsified oil, particulate oil, and dissolved oil and their interaction between the oil slick on the water s surface and the deposition of oil particles onto the ocean floor. Our implementation of Tkalich s model included modifications to accommodate for a deepwater spill. Movement of the oil is influenced by complex ocean currents, which our model did not include. We were, however, able to leverage modeling results produced by the University Corporation for Atmospheric Research (UCAR), which predict the movement of oil from the Deepwater Horizon Oil Spill over the course of 132 days. 10 The UCAR model results were beneficial because they model the ocean currents and show different possibilities for the oil transport by ocean currents and the dilution of the oil concentration over time. We overlaid the results of our dispersion modeling and the UCAR model to identify the movement and dilution of the oil concentration. Modeling Oil (Hydrocarbon) Concentration To understand how the oil will impact marine life, we also had to identify where the highest concentrations of oil (or hydrocarbons) were expected to be, as higher concentrations of hydrocarbons are more toxic. Because the oil is being spilled into Gulf waters about 5,000 feet below the surface, higher concentrations of hydrocarbons, and therefore higher toxicity, are found near the bottom of the ocean. Near the water s surface, the levels of hydrocarbons and toxicity are much lower. 11 Figure 6. The highest concentrations of oil are 3,000 to 5,000 feet under the surface of the water (represented by darker color), creating the highest levels of toxicity in this area. 15

20 In our model, we assumed that 60,000 barrels of oil were released each day from April 20 to July 16 from the wellhead of the Deepwater Horizon. The model shows that the oil quickly becomes dispersed in the water column and is carried by ocean currents, creating underwater plumes of oil that have been detected by researchers. Integrating results from our oil dispersion model and the UCAR model suggests that the maximum concentration of oil (total hydrocarbons) that would have entered Louisiana s estuaries after 100 days of continuous spillage is likely to be in the range of parts per billion (ppb). This is a conservative estimate, since, like similar models, our model does not account for evaporation, biodegradation, or physical removal of oil. However, according to EPA guidelines for risk to aquatic and human health, these levels are not likely to impact human or marine life. This concentration includes an adjustment factor for oil reaching the top 20 meters of the water column from the wellhead. Biodegradation by microbes and evaporation of the oil that reaches the water s surface were not included in the concentration estimates but would reduce the estimates further. While our concentration estimates are conservative, these concentrations are still not likely to impact human or marine life. Comparison to Other Sources and Previous Spills Our current estimates for total hydrocarbon concentration from the Deepwater Horizon Oil Spill Disaster match what is being reported by federal agencies, and fall into the range that has been observed in other documented oil spills. There have only been a few reports documenting the concentration of oil in the water column from the Deepwater Horizon Oil Spill Disaster. On July 2, there were reports of underwater plumes of oil. The highest concentration was detected at depths near the wellhead and reported as approximately 0.5 parts per million (ppm). Oil concentrations were undetectable beyond six miles from the wellhead and near the water s surface. 12 An interagency Joint Analysis Group (JAG) comprised of scientists from the National Oceanic and Atmospheric Administration (NOAA), the Environmental Protection Agency (EPA), and the White House Office of Science and Technology Policy issued a report 13 on June 23 that identified concentrations of only 1-2 parts per million (ppm) at depths of 3,300-4,600 feet near the wellhead and confirmed that oil concentrations were below detection limits in other locations and near the surface. Surface water collected by the EPA to date along the Gulf Coast has not been found to have compounds exceeding EPA guidelines for risk to aquatic life or human health. 14 Generally, this means that the water samples tested contained less than 1 part per billion (ppb) for each individual substance of interest. Surface water levels, however, may not indicate concentration on the sea floor. These findings mirror those of other oil spills. For example, oil concentration was reported for the oil spilled from the tanker Amoco Cadiz off the coast of France on March 16, The Amoco Cadiz ran aground approximately 1.5 nautical miles from shore and spilled its entire contents of approximately 1.6 million barrels over a period of 14 days. This rate of oil spill corresponds to roughly 117,000 barrels per day or approximately twice the rate of oil escaping the BP wellhead. Tests of the contaminated waters during the first three weeks immediately after the spill revealed total hydrocarbon concentrations of ppb. By the end of July, 1978 four and half months after the spill occurred the pollution level had dropped to 1-3 ppb, which has no significance in terms of pollution. 15 One month after the Prestige oil 16

21 tanker sank off the Galician coast in 2002 and spilled its oil, the total hydrocarbon concentrations were 1-30 ppb. Other oil tanker spills, including the Baltic Carrier, Exxon Valdez, and North Cape, have resulted in similar patterns of hydrocarbon concentrations ranging from 50 ppb to less than 1 ppb. 16 Chapter 1 Takeaways Although the amount of oil leaked from the Deepwater Horizon well may be in the hundreds of millions of gallons, due to natural dispersion patterns during and after the spill, the maximum concentration of oil in Louisiana s estuaries is likely to be between 10 and 50 parts per billion (ppb). According to EPA guidelines for risk to aquatic and human health, these levels are not likely to impact human or marine life. However, with concentrations at the well-head measuring between 1.0 and 2.0 ppm, there may be a continuum of polluted water between the well-head and Louisiana s shores which could affect the lifecycles of commercial fish species. For the sake of this analysis, we will consider high concentrations of oil in coastal waters as a range of 0.05 to 2.0 ppm. 17

22 1 The Times- Picayune. September 11, 2010 New Wave of Oil Comes Onshore West of the Mississippi River. 2 Environmental Protection Agency. EPA Response to BP Spill in the Gulf of Mexico: Coastal Water Sampling. 3 NOAA, Shoreline Threat Update, Southern Florida, Florida Keys and East Coast Deepwater Horizon/BP Oil Spill, July 30, 2010 (Downloaded from _id,subtopic_id,topic_id&entry_id%28entry_subtopic_topic%29=815&subtopic_id%28entry_subtopic_topic%29=2 &topic_id%28entry_subtopic_topic%29=1) 4 Id. 5 Mathew Maltrud, Synte Peacock, and Martin Visbeck On the possible long-term fate of oil released in the Deepwater Horizon incident estimated by ensembles of dye release simulations. Environmental Research Letters. Expected 2010 publication; NOAA, Shoreline Threat Update, accessed Jul. 16, 2010 (available at University Corporation for Atmospheric Research (available at University of Hawaii at Manoa, School of Earth Science and Technology, The long-term fate of the oil spill in the Atlantic, accessed Jul. 16, 2010 (available at 6 University Corporation for Atmospheric Research (available at See also University Corporation for Atmospheric Research, Oil Spill Animations (available at See also University of Hawaii at Manoa, School of Earth Science and Technology, The long-term fate of the oil spill in the Atlantic, accessed Jul. 16, 2010 (available at 7 Exxon Valdez oil spill, Wikipedia (available at 8 National Oceanic and Atmospheric Administration, Federal Science Report Details Fate of Oil from BP Spill, Aug. 4, 2010 (available at 9 Tkalich P, Huda K, and KYH Gin, 2003.A multiphase oil spill model.journal of Hydraulic Research. 41(2): University Corporation for Atmospheric Research: Oil Spill Animations (available at 11 Reed, Mark, Øistein Johansen, Henrik Rye, NarveEkrol, IvarSingsaas, Per Daling, and Per Johan Brandvik, Deepwater Blowouts: Modeling for Oil Spill Contingency Planning, Monitoring, and Response, Proceedings of the 1999 International Oil Spill Conference, Seattle, WA. API Publication No National Oceanic and Atmospheric Administration, Administration s Joint Analysis Group Releases First Scientific Report on Subsea Monitoring data from Gulf Spill, Jun. 23, 2010 (available at 13 National Oceanic and Atmospheric Administration, Joint Analysis Group: Review of R/V Brooks McCall Data to Examine Subsurface Oil, June 2010 (available at 14 U.S. Environmental Protection Agency, Coastal Water Sampling (available at data and data table available at 15 L Laubier The Amoco Cadiz oil spill: an ecological impact study. Ambio 9(6): Gonzalez et al Spatial and temporal distribution of dissolved/dispersed aromatic hydrocarbons in seawater in the area affected by the Prestige oil spill.marine Pollution Bulletin. 53:

23 Chapter 2: Impact of Oil on the Commercial Fisheries Revenues In this chapter, we identify the effects that oil may have on seven economically significant marine species shrimp, oysters, blue crab, yellowfin tuna, black drum, striped mullet, and menhaden. We include projections of how long it may take for each species to return to their pre-spill levels to support Louisiana s commercial fishing industry as they have in the past. To predict recovery time for marine life in the Gulf, we used published models and the best available data, including rates of marine life recovery observed in previous oil spills, such as the 1989 Exxon Valdez spill in Prince William Sound, Alaska. Our initial estimates should be viewed as approximations based on available data. A full assessment of the impacts on fisheries will not be possible for several years because many of the effects may not be apparent in the short term. However, these initial estimates are valuable in helping policy makers evaluate potential courses of action. A. Overview of Commercial Fisheries in Louisiana Together, shrimp, oysters, blue crab, yellowfin tuna, and menhaden represent the top five species in terms of Louisiana landings revenue. Black drum and striped mullet were included in this analysis at the request of fishermen s associations and other organizations that could benefit from this information. Together, these seven species contributed approximately 93% of 2008 Louisiana seafood revenue, as shown in the Figure The oil spill s impact on these species is a significant driver of economic losses for the GNO region and Louisiana. Figure 7. The seven marine species that are the focus of this analysis made up about 93% of 2008 Louisiana seafood revenue. These species are economically important to all five Gulf states, but Louisiana typically leads all Gulf states in landings for each species, except striped mullet, as shown in Figure8. 19

24 Figure 8. These images compare the total size of 2008 landings (in millions of pounds) for each of seven key fishery species across the five Gulf states. Louisiana, represented by the leftmost section of each image, led the Gulf states in every category except striped mullet. 20

25 B. Scientific Effects of Oil on Common Louisiana Seafood Species In order to make reasonable predictions of future landings, population dynamics models are necessary. These population models estimate the impact that contaminants like oil may have on eggs and larvae and the subsequent population sizes in the years that follow. These models typically include assumptions on growth rates, natural movement patterns, natural mortality rates, loss due to fishing, and assumptions about reproduction rates. Future analysis of these issues should include the kind of detailed population models that were beyond the scope and timeframe of the current analysis. To understand the potential effects on larvae and eggs, data on water quality samples need to be obtained through a long-term, frequent water quality monitoring effort. The EPA s water quality and sediment sampling programs will be useful in this regard. If feasible, consideration should be given to initiating studies of growth and development of key species larvae and sexually immature individuals in current and future seasons. These studies would inform population dynamic models to help policy makers best manage long-term recovery of Louisiana fisheries. In the short term, however, we will look at how oil impacts different seafood species and the effect of possible oil concentrations on species lifecycles. Oysters Anchored to their reefs, oysters cannot move to escape oil-contaminated waters. They filter, or breathe, gallons of water per day 18 and, as a result, they can bioaccumulate toxins present in the water. The concentration of oil expected to kill 50% of animals exposed for a 96-hour exposure is referred to as the LC50 for that specie. The LC50 for mature oysters is approximately 300 ppm over 96 hours, making them one of the more resistant adult marine species. 19 Oyster eggs and larvae, however, can be killed with much lower concentrations of oil (approximately ppm). In 2010, the first of two annual spawning seasons for Louisiana oysters occurred around late May. With oil hitting some estuaries in late May, oyster eggs that were released during spawning and floating on the water s surface were in potential danger. Even a light layer of sheen could coat the eggs and cause them to sink to the soft bottom, where they would die. Furthermore, toxins from the oil and the dispersants could kill the larvae. 20 While mature oysters are highly resistant to the lethal effects of oil, they can accumulate toxic compounds from the oil and become tainted and dangerous for humans to consume. An example of oyster tainting occurred in 1978 when the Amoco Cadiz ran aground off the coast of France. Spilled oil contaminated the shores and the oyster reefs. In this case, authorities considered oysters that had an average value of ppm (wet weight) to be tainted and could not be sold for human consumption. As a result, approximately 6,000 tons of tainted oysters were destroyed. While some oyster reefs were able to be used the following summer, other reefs could not be used until the second year after the oil spill. 21 Additionally, oysters can only survive in waters within a narrow salinity range of parts per thousand (ppt). They cannot survive in open ocean water, which has a salinity of 35 ppt. 22 Since April 25, 2010, Louisiana state officials opened the flow of fresh water from the Mississippi River in an effort to keep oil out of the estuaries. Reports in July, however, indicate that the influx of 30,000 cubic feet of fresh water has decreased the salinity of the water and has caused widespread oyster deaths on Louisiana reefs. According to Earl Melancon, an oyster expert at Nicholls State University, due to salinity 21

26 changes, this year s oyster production is considered a loss. Beyond the loss of this year s oyster harvest, the survival of the oyster reefs has been jeopardized by the effects of the fresh water and by potential oil contamination. If an oyster reef is lost, Melancon stated that it will take a minimum of three years to get it back into production, and it could take as long as five years. 23 Three years is a best-case scenario that assumes the oyster reefs and surrounding area are not fouled by oil. If the oyster reefs are contaminated by oil, their recovery cannot begin until the surrounding waters are suitable to sustain the oysters and the other marine life that are important to the oyster ecosystem. 24 Shrimp The major species of shrimp for the Louisiana shrimp industry are brown shrimp and white shrimp. Similar to oysters, adult shrimp are somewhat resistant to the lethal effects of oil, with an LC50 of approximately 30 ppm. However, shrimp eggs and larvae are highly sensitive to oil. The spawning season for white shrimp typically occurs between April and June, 25 with shrimp eggs being carried by the ocean currents offshore where the larvae hatch and grow. Unfortunately, the spawning season for white shrimp coincided with the Deepwater Horizon Oil Spill Disaster, jeopardizing next year s shrimp class. The brown shrimp follows a similar life cycle, but its spawning season occurs primarily from January until March. 26 The amount of oil present offshore will be affected by ocean currents and weather conditions (storms and hurricanes), and thus, it is currently unclear how much oil from the Deepwater Horizon Oil Spill Disaster may still be present offshore during the brown shrimp spawning season. We can draw some information on the potential recovery of shrimp following an oil spill from the 2002 Prestige incident. The Prestige oil tanker broke up and sank 250 miles off the shores of Northwestern Spain on November 19, Approximately 380,000 Figure 9. White shrimp eggs and larvae were in the Gulf of Mexico between April and June, potentially jeopardizing this year s shrimp class. (Graphic Source: Louisiana s Sea Grant College Program; Illustration by Ken Varden) barrels of oil were spilled from the tanker and affected more than 500 miles of the Northwestern Spanish coast. 27 One year after the incident, the number of Pandalid shrimp caught was only a small fraction of the catch prior to the oil spill. Two years after the incident, however, the shrimp landings returned to pre-spill levels. 28 The magnitude and duration of the Deepwater Horizon Oil Spill Disaster could, however, lead to a more prolonged recovery time for shrimp landings. Management of the shrimp population is challenging because they are a short-lived species, with an average life span of 1.5 years. If the larval class were severely impacted by the oil, more pressure is on the remaining adult shrimp to help restock the population. Thus, the short lifespan of shrimp may 22

27 require more stringent controls on catch limits, a shorter shrimping season, or a ban on the entire shrimping season to allow the shrimp to repopulate. Blue Crabs Adult blue crabs are more resistant to the effects of oil than mature shrimp with an estimated LC50 of approximately 70 ppm over a 96-hour exposure. Blue crab larvae, like the larvae of other marine animals, are highly sensitive to oil exposure. Blue crab eggs are released near the shore, and after hatching, larvae are carried out into open waters by ocean currents. The larvae typically spend days in open waters before moving back into the estuaries. Blue crab larvae were in ocean waters from March until past June and could have encountered oil from the Deepwater Horizon Oil Spill Disaster. In fact, scientists observed oil droplets on blue crab larvae at the beginning of July. This is not surprising given the fact that approximately 40% of the area where crab larvae were found has been affected by oil. 29 The exposure of blue crab larvae to oil puts this year s larvae in jeopardy. Blue crabs are a shortlived species, with a typical life span of 1 2 years. In order to rebuild a depleted blue crab population, stringent catch limits, closed areas, or closed seasons may need to be implemented. Figure 10. Blue crab larvae were in ocean waters from March through June and could have encountered oil from the BP spill. Approximately 40% of the area where crab larvae were found has been affected by oil. Finfish Unlike the oyster, shrimp, and blue crab populations, adult finfish are able to swim away from oilcontaminated waters. In June, fish and rays were observed congregating in great numbers off an Alabama pier, apparently trying to avoid the oil. 30 Fish larvae, however, cannot move away from the oil and are highly susceptible to the toxic effects of oil-contaminated waters. Data from other oil spills have demonstrated that fish landings experience a dramatic decline following an oil spill, and we investigated the potential cause for the decrease. The published concentration of hydrocarbons in the water following previous oil spills is much lower than the LC50 for fish, so it is unlikely that decreased landings were due to adult fish having been directly killed by the oil. Data from the 2002 Prestige oil spill in Spain suggests that fish actively moved away from oilcontaminated water. The coastal region of Spain impacted by the oil experienced a decrease in hake (a member of the cod family) landings to about 10% of normal, but hake landings dramatically increased about 70 miles northeast of the oil-impacted region. 31 These findings suggest that the hake moved to avoid the oil. The four-spot megrim (a deepwater flat fish similar to flounder) also demonstrated a 23

28 similar pattern as the hake. Historically, bottom trawl surveys for megrim in the region show that fish spawned in a given year represented the most abundant fish class the following year, with abundance decreasing in the years that follow (see Figure 11, red line). Survey data following the Prestige oil spill showed a different abundance pattern for the fish spawned the year prior to the oil spill (see Figure 11, black line). 32 The year of the oil spill, abundance decreases, but the following year, abundance increases. This increase in relative abundance in the year following the oil spill suggests that the megrim were not directly killed by the oil spill, but moved away to avoid the oil and returned the following year. Figure 11. Survey data following the 2002 Prestige oil spill in Spain showed a decrease in abundance the year of the spill, but an increase in relative abundance the following year. This suggests that fish are not directly killed by an oil spill, but move away to avoid the oil and return the following year. The data from the Prestige oil spill suggest that decreases in fish landings following an oil spill are primarily due to fish movement rather than direct lethal effects of oil. Experimental studies have also demonstrated that minnows actively avoid aromatic hydrocarbons in the water. 33 Another possible explanation is avoidance of oxygen depletion in the seawater which can happen when marine microbes consume and degrade oil droplets in the water column. Laboratory experiments have demonstrated that estuary fish such as spot and menhaden actively avoid oxygen-depleted waters. 34 Yellowfin Tuna 35 The life cycle of the yellowfin tuna is quite different than that of the other fish in this study. While the other fish generally live in and near the estuaries and spawn offshore in open waters, yellowfin tuna live and spawn in open waters, with the larvae feeding closer to shore. The spawning season for yellowfin tuna in the Gulf of Mexico typically occurs between May and August in the open waters of the Gulf. 36 This spawning season directly coincides with the Deepwater Horizon Oil Spill Disaster, which could jeopardize the spawning season, as well as the eggs and larvae of the yellowfin tuna. Figure 12. Yellowfin tuna s spawning season in the Gulf occurs between May and August in the open waters of the Gulf. Because it coincides directly with the BP oil spill, this could jeopardize the yellowfin tuna spawning season as well as their eggs and larvae. 24