Exxon’s Tillerson disputes comment by BP’s Dudley

Tension continues to surface regarding the Macondo well blowout and Gulf of Mexico oil spill nearly 1 year ago. ExxonMobil Corp. Chief Executive Rex Tillerson criticized comments made by BP PLC’s Chief Executive Bob Dudly at the IHS-CERA energy conference.

On Mar. 8 in Houston, Dudley said industry can learn from safety issues identified since the Apr. 20, 2010, Macondo well control incident in 5,000 ft of water off Louisiana. The blowout caused an explosion that killed 11 people aboard Transocean Ltd.’s Deepwater Horizon semisubmersible drilling rig.

During a separate Mar. 9 news conference, Tillerson said the accident and spill primarily stemmed from management oversights by BP. Tillerson met with reporters following Exxon’s analyst meeting in New York.

“I think those comments are a great disservice to this industry,” Tillerson said of Dudley’s remarks. “This conclusion that this is a bigger problem for the industry is just wrong.”

Top executives of major oil companies rarely express negative comments about one another, but Tillerson openly disputed Dudley’s comments.

“I think the industry manages this risk well. When you do things the proper way, these things don’t happen,” Tillerson said. He believes Exxon manages risk well, relying on a system it developed after the Exxon Valdez tanker spill in Alaska’s Prince William Sound.

Tillerson’s unhappiness with his BP counterpart's industry remarks is an unusual demonstration of tension between oil companies.

Industry keeping tabs on funding request for US BOEMRE

President Barack Obama requested $358.4 million to fund the Bureau of Ocean Energy Management, Regulation, and Enforcement (BOEMRE) in fiscal 2012. Oil companies operating in deepwater and offshore drilling contractors will be watching closely to see how Congress responds.

Following the April 2010 blowout of the Macondo well and the resulting oil spill in the Gulf of Mexico, government officials have acknowledged BOEMRE, formerly the Minerals Management Service, historically was underfunded. Lack of funding reportedly has hindered the agency's regulatory oversight of oil and gas activities.

Industry spokesmen have told OGJ that BOEMRE needs technically savvy inspectors and engineers who can keep up with deepwater drilling advances. BOEMRE also needs enough people to help streamline the approval process for deepwater drilling permits.

The requested BOEMRE budget marks a 50% increase above the 2010 funding level after adjusting for the reorganization of the MMS. Additional funding would be used to hire more inspectors, engineers, scientists, and others to oversee industry operations and to review offshore safety systems.

Industry agrees that BOEMRE needs more people. One issue that cannot be resolved by any budget request is the question of how to recruit and train additional BOEMRE inspectors so that they can be brought up to speed on the complex drilling equipment that they will be inspecting.

Real-time IT becoming more important to drilling contractors

Real-time drilling information is become more important to contractors and operators following the April 2010 deepwater Macondo well blowout and resulting explosion and fire on Transocean Ltd.’s Deepwater Horizon semisubmersible, speakers acknowledged at a recent energy forum in Houston.

Investigators looking into the cause of the accident have questioned who had access to what drilling information about the Macondo well and the timing of that information. The blast killed 11 crew members, and the semi later sank. Industry and government jointly responded to a massive oil spill in the Gulf of Mexico.

During a Feb. 2 panel discussion on consolidation within service companies, Amy Meyers Jaffe of Rice University’s Baker Institute suggested “the better players” among drilling contractors are going to offer top-notch information services.

“I see a real push post-Macondo for real-time information,” said Jaffe. She moderated the panel discussion during an Energy Mergers and Acquisitions Forum sponsored by Mergermarket.

William D. Marsh, Baker Hughes Inc. vice-president legal-Western Hemisphere, agreed that software and IT is becoming much more important to Baker Hughes and its competitors.

Lackland H. Bloom, a managing director with J.P. Morgan, said that IT remains the domain of major service companies. He described “isolated circumstances” for information-services companies outside the oil and gas industry to gain exposure within the energy industry.

Oil companies review their safety policies following Macondo spill

Oil and gas industry executives surveyed by Delotte LLP were about evenly split regarding whether changing US offshore regulations actually will improve drilling safety.

Of 201 executives polled earlier this month, 41% said yes while 42% said no. The rest said they don't know.

Regarding future corporate health and safety policy, 57% said their companies are more likely to review and update HSE policy as a result of BP PLC's Macondo well blowout and the resulting explosion and fire on Transocean Ltd.'s Deepwater Horizon semisubmersible. The accident triggered a massive oil spill in the Gulf of Mexico.

Nearly 60% of those polled said any improvements in drilling safety will come from the industry itself rather than from government regulations or third-party insurance and financing requirements.

Scientists find new microbe in Macondo oil spill

US Department of Energy Lawrence Berkeley National Laboratory scientists found microbes degraded oil in deepwater much faster than anticipated, and this degradation appears to take place without a significant level of oxygen depletion.

That is among the most positive findings following the massive oil spill from BP PLC’s Macondo well off Louisiana in 5,000 ft of water. Berkeley Lab scientists found the presence of various hydrocarbon degraders, adding that the dominant microbe in the dispersed Macondo oil was a new, unclassified species.

The existence of oil at extreme water depths posed numerous questions. BP deployed chemical dispersants at the wellhead, creating tiny petroleum particles in efforts to prevent oil from reaching the gulf’s surface.

The environmental effects of dispersants have been studied in surface water applications for years, but their potential effect on the deepwater gulf marine ecosystem was unknown.

Terry Hazen, a Berkeley Lab microbial ecologist, said findings “suggest that a great potential for intrinsic bioremediation of oil plumes exists in the deep sea.” The research done by Hazen and his colleagues was reported in Science (Aug. 26 online) in a paper entitled “Deep-sea oil plume enriches indigenous oil-degrading bacteria.”

The influx of oil “profoundly altered the microbial community” by stimulating psychrophilic (cold temperature) gamma-proteobacteria closely related to known petroleum-degrading microbes.

Psychrophilic petroleum degraders contributed to the rapid decline of the Macondo oil, he said. Analysis of changes in the crude oil composition indicated faster-than-expected biodegradation rates with the half-life of the oil’s alkanes ranging from 1.2 to 6.1 days.

Macondo to undergo standard abandonment process

Nothing has been typical with BP PLC’s deepwater Macondo well in the Gulf of Mexico since an Apr. 20 blowout caused an explosion and fire on Transocean Ltd.’s Deepwater Horizon semisubmersible, killing 11 people. The rig sank on Apr. 22, and the well was responsible for a massive oil spill.

Yet eventually, the well will be abandoned according to typical industry practice. BP and its partners will plug and abandon Macondo on Mississippi Canyon Block 252 with nothing left to see, marking a drastic change from months of live video feeds provided publicly via remotely operated vehicles.

The well has been shut in since July 15, and BP engineers plan to swap the Deepwater Horizon blowout preventer with another BOP before completing a relief well, now expected scheduled for after Labor Day. Industry routinely puts on and takes off BOPs.

Kent Wells, BP senior vice-president of exploration and drilling, said industry has very clearly defined regulations and procedures on how to abandon a well.

“There’s a very sophisticated procedure we’ll go through before the well is ultimately abandoned,” Wells said. “But, of course, it will have been killed and cemented…well in advance of that. But, those will be the final steps we’ll take. That will be very much routine, like we do any well when we plug and abandon it.”

The exception being that the Deepwater Horizon BOP, once removed, will be the subject of investigation.