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.

FBR Capital: “No cookie-cutter process” for offshore drilling permits

Analysts are cautious about the pace that the US government might take in issuing deepwater drilling permits.

The Bureau of Ocean Energy Management, Regulation, and Enforcement approved the first Application for Permit to Drill (APD) for the deepwater Gulf of Mexico since the Macondo well blowout in April 2010 and the resulting oil spill.

“BOEMRE’s case-by-case evaluation of spill containment resources will not produce a cookie-cutter process for APD approvals, which are site specific and may require additional resources from operators,” FBR Capital Markets analyst Benjamin Salisbury said in a recent research note.

He believes the resumption of deepwater permitting “marks the beginning of a long period of slow approvals.” This is because BOEMRE significantly increased the volume of work involved in its review, verification, and approval of each permit application.

BOEMRE Director Michael Bromwich wrote an opinion article for the Houston Chronicle in which he said: “We need to ensure that our new drilling safety rules are fully complied with; we need to review certifications by professional engineers of every stage of the drilling process; and in many cases, we need to conduct more detailed environmental reviews. All of these steps are necessary and appropriate, but they extend the time needed to approve permits.”

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.

Macondo oil spill highlights gulf coast vunerabilities

Hurricanes and oil spills along the Gulf of Mexico typically bring renewed attention to the region’s disappearing wetlands and its fragile barrier islands. Countless people saw many pictures of oily brown pelicans and their stained nesting grounds in the aftermath of the Macondo well blowout and subsequent oil spill.

An inaugural World Delta Dialogues conference in New Orleans during October focused on the Mississippi River Delta where an estimated 25 sq miles/year erodes into open water. Some 350 people, including representatives from oil companies, attended the conference organized by America’s Wetlands Foundation.

Entergy Corp., a nuclear power provider, used the conference as a forum to release a study entitled “Building a Resilient Energy Gulf Coast.” America’s Energy Coast and America’s Wetlands Foundation supported the study. Entergy helped commission the study done by McKinsey & Co. and Swiss Re.

Global warming, rising sea levels, subsidence, and stronger, more frequent hurricanes all make the gulf coast vulnerable, said Wayne Leonard, Entergy chairman and chief executive officer. He called the study a “call to arms” for governors, lawmakers, and oil and gas companies.

The study examined potential benefits of various options, including changes in levees and coastal building codes along with changes in offshore drilling practices and production platform standards.

The study examined coastal counties and parishes along Texas, Coastal Mississippi, and Alabama where energy is key to the economy. A study executive report said that the gulf region averages losses of $14 billion/year, and that those losses are expected to climb in coming years.

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.

Helix Q4000 is a key player in oil spill response

The Helix Q4000 multiservice vessel certainly has laid its claim to fame during the highly publicized oil spill response and containment efforts involving BP PLC’s Macondo well in the Gulf of Mexico off Louisiana.

The Q4000 has performed numerous roles since the Apr. 20 blowout of the deepwater well. Cranes on the Q4000 lowered equipment to the seabed in 5,000 ft of water. The vessel also served as a receiving platform for oil and gas diverted from the spill, and was home to the equipment that then flared that oil and gas. It’s also been used to inject heavy drilling mud into the Macondo during the top kill and now the static kill efforts.

When BP pumped cement into the Macondo well from the top, the Q4000 was involved. Owned by Helix Energy Solutions Group, the Q4000 was commissioned in 1999 by Cal Dive International and built at Keppel AmFELS shipyard in Brownsville, Tex.

The Q4000 is built on a semisubmersible design featuring a large deck space that enables various tasks, including subsea completion, decommissioning, and handling coiled tubing.

For now at least, the Q4000 has become a household word for anyone closely following the oil spill response efforts. That’s pretty remarkable publicity for an oil service vessel.