Oil Industry Offers Plan for Major Spills

The petroleum industry, responding to last year’s Exxon Valdez disaster in Alaska’s Prince William Sound, unveiled a $393-million proposal Thursday for preventing and containing major oil spills along the nation’s coastline.

The report calls for establishment of a Petroleum Industry Response Organization consisting of five major response centers--two on the Pacific Coast, two on the Atlantic and one on the Gulf of Mexico--equipped to handle catastrophic spills.

John D. Costello, spokesman for the proposed organization, said each facility would be capable of responding to spills of up to 216,000 barrels, or slightly less than the 250,000-barrel Valdez spill. The response centers would be funded by the oil industry.

Costello noted that the largest existing cooperative in the United States has an open sea response capability of only 25,000 barrels, and the largest response capability in protected waters currently is 40,000 barrels.

“Each region will be nearly 10 times larger than anything that exists in the United States today, and half again as large as the world’s biggest existing response capability,” he said.

In order for the plan to work, Costello said, the federal government must shield the new organization from liability when responding to a spill. Also, he said the Coast Guard should assume leadership in major spills.

Costello said the recommended budget of $393 million would provide funding for five years, including a $35-million research and development program.

When a spill occurred, the organization would charge the responsible party for the cost of the clean-up. If the costs were beyond the spiller’s ability to pay, the excess would be covered by an industry fund financed by contributions from oil producers and shippers.

Although the cost of treating a spill would be covered by the industry, it probably would be passed on to consumers in the form of higher prices, the sponsors acknowledged.

“Since the Exxon Valdez spill, the whole ballgame has changed,” said David Boutte, associate general counsel of Mobil Corp. and legal counsel for the new organization. “The order of magnitude of cost is tremendously greater than what is once was. So you can not just look to the spiller or the insurance company” to cover the entire cost.