#168, 1999 International Oil Spill Conference

ESTIMATING CLEANUP COSTS FOR OIL SPILLSDagmar Schmidt Etkin

Oil Spill Intelligence ReportCutter Information Corp.

Arlington, Massachusetts, U.S.

ABSTRACT: The factors that affect cleanup cost arecomplex and interrelated. Each spill involves a unique setof circumstances that determine cleanup cost. Estimating auniversal per-unit cleanup cost is essentially meaninglesswithout taking into consideration factors such as locationand oil type, which can profoundly influence costs. Thispaper examines the host of factors that impact cleanup costin an effort to more accurately assess per-unit cleanup cost.A cost-estimation model, based on an analysis of cost datain the Oil Spill Intelligence Report (OSIR) International OilSpill Database (a 38-year record of over 8,600 oil spillsworldwide) is presented as an alternative to a universalper-unit cost value.

Introduction

The costs associated with cleaning up an oil spill arestrongly influenced by the circumstances surrounding thespill including: the type of product spilled; the location andtiming of the spill; sensitive areas affected or threatened;liability limits in place; local and national laws; andcleanup strategy. The most important factors determining aper-unit amount (either per-gallon or per-tonne) cost arelocation and oil type, and possibly total spill amount. Thecomplex interrelationships of these factors and the mannerin which they are influenced by other factors is shown inFigure 1.

Figure 1: Factors determining per unit oil spill cleanup costs.

Location

Most experts agree that the most important determinantof cleanup costs is location. Location itself is a complexfactor involving both geographical and political and legalconsiderations. The timing of a spill, both seasonally anddiurnally (e.g., tide cycles), can profoundly influence thenature and sensitivity of the geographical location. In somecircumstances, timing can also impact the political andlegal regime under which the spill falls.

Both geographical location and timing can have aprofound effect on the logistics of a spill response.

Bringing response equipment into a remote location ormobilizing crews during a winter storm can greatly increasethe complications of a response, and thus the cost.

The political regime under which the spill occurs can alsoaffect the ultimate cleanup cost. Spill responses in theUnited States, for example, are notoriously more expensivethan spills in other locations, according to many analysts,even when eliminating the costs of natural resource damageassessments. This can be attributed to a large extent on theresponse requirements stipulated by the Oil Pollution Actof 1990 (OPA 90) (Figure 2).

Figure 2: Average cleanup cost per tonne spilled (in 1997 U.S. $), based on analysis of oil spill cost data in the OSIRInternational Oil Spill Database.

A social culture that places a high value onenvironmental preservation can also have a large influenceon cleanup costs, especially with regard to wildliferehabilitation and intensive shoreline cleanup operations.Media coverage often increases social pressure to returnareas impacted by an oil spill to their former “pristine”condition even when the site has no extraordinarysignificance from a conservation point of view. Especiallyin the United States, fear of future litigation often impelsspillers to mount massive response operations—atconsiderable expense—to dispel any notions of“irresponsibility.” In some cases, public and governmentpressure for the responsible party to undertake radical—andexpensive—cleanup procedures may not always be in thebest interest of environmental protection, even if it is well-intentioned. In these cases, public pressure for the spiller to“do something” to quickly restore the environment may bemotivated more by aesthetics than by true environmentalconcerns. While a beach might look clean after aggressivecleanup efforts, the procedures employed may actuallyresult in more environmental damage than the spilled oilitself.

Sensitive resources

Proximity to sensitive resources is another essentialfactor in determining response costs. Even a relativelysmall spill in an “inopportune” geographical location ortime, such as one near a sensitive marshland during a birdmigration, near a beach at the height of tourist season, neara fish farm, or in the vicinity of a desalination plant, can beexpensive. Cleanups near a sensitive resource need to bethorough and conducted to the satisfaction of local andnational authorities and property owners to avoid legalaction. Spills in many areas in Asia often threaten localaquaculture calling for more thorough (and expensive)cleanup responses.

Shoreline oiling

The proximity of the oil spill to the shoreline is one of themost important factors impacting cleanup costs. Oil spillsthat impact shorelines are considerably more expensive toclean up than ones which can be dealt with offshore (Figure

3). When an oil spill occurs, the most importantgeographical factors to consider are:

• Did the oil spill in a location where it is likely to hitany shoreline? Is the oil spill close enough to shoreor under the influence of currents and windconditions that make it likely that the oil will impactthe shoreline?

• What type of shoreline is involved?• How close is the shoreline to inhabited areas?

• What value does the population place on theshoreline or resources likely to be impacted?

Figure 3: Average cleanup cost depending on shoreline impact (in 1997 U.S. $), based on analysis of oil spill costdata in the OSIR International Oil Spill Database.

Oil type

The type of oil spilled is another significant factor indetermining cleanup costs (Figure 4). The more persistentand viscous the oil the more widespread the contaminationand the more difficult removal will be. The compositionand physical properties of the oil will affect the degree ofevaporation and natural dispersion, as well as the ease of

removal. Lighter crude and refined oils evaporate anddisperse to a greater extent than heavier oils, except whenwater-in-oil emulsions form. Heavier crude, fuel oils, andemulsions are difficult to remove using dispersants,skimmers, and pumps, resulting in considerably highercleanup costs from manual methods.

Figure 4: Average cleanup cost depending on oil type and persistence (in 1997 U.S. $), based on analysis of oil spillcost data in the OSIR International Oil Spill Database.

Cleanup strategies

Choices made in cleanup strategies and the decision-making process in the aftermath of a spill can significantlyaffect cleanup costs. Cleanup costs are often directlycorrelated with spill impact, particularly shoreline impact,so that reducing the spill impact can result in reducing thespill response costs (Etkin, 1998b,c). Likewise money wellspent on an effective cleanup can significantly reduce laternatural resource and property damage claims.

When oil spills near a potentially sensitive coastline orresource (and near a potentially sensitive public), the mostcost-effective approach to a cleanup operation is to investas much equipment, personnel, and energy into keeping theoil away from the shoreline or sensitive resource. Oneunpublished study by an economist (Franken, 1991)suggests that in spill incidents in which the oil impacts acoastline, as much as 90–99% of the cost of cleanup isassociated with shoreline cleanup procedures, especiallywhen manual methods are employed. Franken (1991)showed that the cost of removing oil off shore (by either

dispersants or mechanical recovery) averaged$7,350/tonne, whereas shoreline cleanup ran as high as$147,000–$294,000/tonne.

Cost factors are particularly affected by the use ofdispersants, as shown in Figure 5. While costs vary widelywithin each response method category depending onlogistical and other factors, a general trend can be detected.Oil spill responses that involve dispersants only ordispersants as the primary response method are lessexpensive than those that involve a variety of methods.This trend is, to some extent, influenced by the fact that anoffshore oil spill, which is treatable by dispersants only orby dispersants with minimal backup of manual and othermethods, is generally less complicated to clean up than onewhich occurs nearshore. The cost benefits of dispersant usehave been described by other researchers, notably Allenand Ferek (1993) and Moller, Parker, and Nichols (1987),as well as the British Oil Spill Control Association(BOSCA) (1993).

Figure 5: Average cleanup cost depending on cleanup strategy (in 1997 U.S. $), based on analysis of oil spill costdata in the OSIR International Oil Spill Database.

Anecdotal evidence shows that use of dispersantsoffshore to prevent shoreline impact is often less expensivethan shoreline cleanup. An example of this is the 1984 spillof 9,493 tonnes of oil from the tanker ALVENUS off theLouisiana, (U.S.) coast in the Gulf of Mexico. After acontroversial decision not to use dispersants off shore, theshoreline, including large areas of tourist beaches, weresignificantly impacted necessitating a $67.6 million (1997U.S. $) shoreline cleanup. That same year, the tankerPUERTO RICAN spilled 14,286 tonnes of oil off SanFrancisco, California. In this case, responders relied heavilyon dispersants to keep much of the oil off shore, resultingin cleanup costs of only $1,129,800 (1997 U.S. $).

Spill amount

The amount of oil spilled can have a profound effect onthe cleanup costs. Obviously, the more oil spilled, the moreoil there is to remove or disperse, and the more expensivethe cleanup operation. But cleanup costs on a per-tonnebasis decreases significantly with increasing amounts of oil

spilled. An analysis of a sampling of 96 non-U.S. spills inthe OSIR International Oil Spill Database shows thatcleanup cost/tonne is significantly negatively correlated[Spearman’s rho (rs) = -0.362, p<0.01 and Kendall’s tau = -0.245, p<0.01)] with spill size (Figure 6). [Note:Spearman’s rho and Kendall’s tau are non-parametricstatistical measures of ranked correlation. rs = 1 -{6Σd2/n(n2 - 1)}, where, in this case, d = difference inrankings of cost in the different spill size categories, and n= number of samples. tau = 1 - {4Q/n(n-1)}, where, in thiscase, Q = total of cost ranks in different spill sizecategories, and n = number of samples. (Snedecor andCochran 1967)] In other words, smaller spills are moreexpensive to clean up than larger spills on a per-tonnebasis, and the larger the spill the lower the per-tonnecleanup costs. Smaller spills are often more expensive on aper-tonne basis than larger spills because of the costsassociated with setting up the cleanup response, bringing inthe equipment and labor, as well as bringing in the expertsto evaluate the situation.

Figure 6: Correlation of per-tonne cleanup costs (in 1997 U.S. $) and spill size , based on analysis of oil spill costdata in the OSIR International Oil Spill Database.

Cost increases over time

Observers have noted that cleanup costs have increaseddramatically over the last 20 years. This fact is borne outeven when inflationary changes are taken into account and

costs are converted to current dollar values as shown inFigure 7.

Figure 7: Average per-tonne cleanup costs (in 1997 U.S. $) by 5-year intervals, based on analysis of oil spill cost datain the OSIR International Oil Spill Database.

The reasons for this increase are complicated. Much of itcan be attributed to changing political and social pressuresto increase environmental responsibility. Some of theincrease can undoubtedly be attributed to the increasing

complexity of response operations, including the need forresponse monitoring.

Changes in response strategy is also an apparent factor.During the last 30 years the use of dispersants, known to be

the least costly response option, has decreaseddramatically. An analysis of response data in the OSIRInternational Oil Spill Database shows that, in the 1960s,90% of spill responses involved the use of dispersants, andthat this percentage decreased dramatically through the1970s to 52.2%, in the 1980s to 38%, and in the 1990s to28.4% (Etkin, 1998a).

The sharp reduction in dispersant usage by the early1970s is apparently attributable to the devastating effects ofthe highly toxic dispersant chemicals used in the notoriousTORREY CANYON spill in 1967, based on anexamination of historical records of oil spill responses(Etkin, 1998a). With the advent of less toxic, but also lesseffective “second-generation” dispersants, the use ofchemical dispersants in spill responses continued to drop asresponse officials opted for mechanical and manualrecovery methods.

Today, despite the availability of the new generation ofmore effective and safer dispersants, dispersant usage is at

an all-time low. While some of the reduction in dispersantusage in the last two decades may be attributed toimprovements in mechanical and manual recoverytechnologies, many observers feel that lingering concernsabout dispersant toxicity still override recognition of thepotential benefits of dispersant usage in many situations.Coupled with increased environmental awareness andresponsibility among officials and the public, theseconcerns often lead to what may be an overly restrictivestance on dispersant usage even when allowed by nationaldispersant use policies.

Cost estimation model

Based on analysis of cost data from the OSIRInternational Oil Spill Database, I have developed themodel of cost estimation shown in Figure 8.

Figure 8: Per-Tonne Cost Estimation Model (based on data from the OSIR International Oil Spill Database). The per-tonne costs (PTC) shown are based on 1997 U.S. dollars and can be adjusted with annual consumer price indices asneeded. The figures can be converted into a per-gallon cost estimate by dividing the resulting figures by a factor of294. Further refinement of estimates from this model take into account additional factors such as season, weather,and proximity to sensitive resources.

This model can serve as the basis of cleanup costestimation for oil spills that are anything other than“ordinary.” Additional factors, such as impact on sensitiveresources, season, and weather can be added to furtherrefine the cost estimation.

Conclusion

The circumstances surrounding a spill incident arecomplex and unique. Predicting the per-unit costs of a spillresponse is a highly imprecise science since the factorsimpacting cost are as complex as the factors impacting thedegree of damage the spilled oil will cause. Clearly, oneuniversal per-unit cost is meaningless in the face of thesecomplex factors.

A cost estimation model integrating the cost data on themost important cost factors—location, shoreline oiling,cleanup strategy, and spill amount—is presented. Costreduction strategies should be based on reducing thepotential for shoreline impact to the greatest extentpossible. Employing the use of dispersants, when possiblefrom both logistical and environmental perspectives, can bea significant factor in reducing costs. Developingcontingency plans and response capabilities to increase thepossibility of dispersant use and other techniques tominimize or prevent shoreline oiling will further reduce oilspill cleanup costs.

Biography

Dagmar Schmidt Etkin (B.A. Biology, U. Rochester;A.M., Ph.D. Biology, Harvard U.) is Senior ResearchAnalyst/Consultant for Oil Spill Intelligence Report andCutter Consortium, and a member of the UN/IMO JointGroup of Experts on the Scientific Aspects of MarineEnvironmental Protection Working Group on Oil

Discharges into the Marine Environment. She maintains theOSIR International Oil Spill Database and consults on oilspill issues and Y2000 problems.

References

1. Allen, A.A., and R.J. Ferek. 1993. Advantages anddisadvantages of burning spilled oil. Proceedings ofthe 1993 International Oil Spill Conference: pp. 765–72.

2. British Oil Spill Control Association (BOSCA). 1993.BOSCA Guide to Suppliers. Response MarketingGroup, London, UK.

3. Etkin, D.S. 1998a. Factors in the Dispersant UseDecision-Making Process: Historical Overview andLook to the Future. Proceedings of the 21st Arctic andMarine Oilspill (AMOP) Technical Seminar: pp. 281–304.

4. Etkin, D.S. 1998b. Financial Costs of Oil Spills in theUnited States. Oil Spill Intelligence Report, CutterInformation Corp., Arlington, Massachusetts, USA,346 pp.

5. Etkin, D.S. 1998c. Financial Costs of Oil SpillsWorldwide. Oil Spill Intelligence Report, CutterInformation Corp., Arlington, Massachusetts, USA,375 pp.

6. Franken, P. 1991. University of Arizona, Departmentof Economics, Tucson, Arizona, USA, unpublishedstudy.

7. Moller, T., H.D. Parker, and J.A. Nichols. 1987.Comparative costs of oil spill cleanup techniques.Proceedings of the 1987 International Oil SpillConference: pp. 123–127.

8. Snedecor, G.W., and W.G. Cochran. 1967. StatisticalMethods. Iowa State University Press, Ames, Iowa,USA. 593 pp.