RFF suggests putting deepwater risks in context

Resources for the Future, an independent economic research group, suggests that neither government or the oil and gas industry yet has adjusted to the high-risk context of deepwater operations. RAF recommends setting liability caps for individual wells at a level reflecting damages from worst-case spill scenarios.

Lynn Scarlett, RFF visiting scholar and former deputy secretary of the interior, made this comment during a Feb. 15 luncheon symposium hosted by ConocoPhillips at its Houston headquarters.

“One might argue it is rocket science,” Scarlett said of regulating drilling and production activities in the deepwater Gulf of Mexico. “No project is business as usual.”

RFF recommends that third-party insurance should be researched as a possible way to strengthen external monitoring of deepwater oil and gas operations. If insurance pools are used to assist smaller firms, fees should be related to risk, Scarlett said.

She said both government and the private sector lacked capacity and practices for performing adequate risk assessments.

‘You just don’t know what you don’t know,” Scarlett said, adding that risk assessment capacity and practices will be a key issue for both industry and regulators going forward after the April 2010 Macondo well blowout and resulting massive oil spill in the gulf.

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.

Crews cleaning oil residue from Louisiana wetlands

Crews using special vacuum devices are sucking pools of spilled Macondo crude oil residue out of Louisiana marshes, said US Coast Guard Rear Adm. Paul D. Zukunft, federal onscene coordinator for the Deepwater Horizon response.

“At some point, we will let Mother Nature do the work,” Zukunft said, adding the USCG and other federal officials are working with state officials to mutually determine when “there is no net environmental benefit” to continuing to clean marsh areas.

During a Sept. 29 teleconference, Zukunft said 588 miles of shoreline remained oiled and are being cleaned. This includes both marshes and beaches.

In Louisiana, one particular marsh cleanup crew involves 600 people, he said. Nine marsh areas continue to be cleaned, and they are all in Louisiana. Zukunft described a heavy, black “sticky residue in marsh grass.”

An Apr. 20 blowout of the deepwater Macondo well resulted in a fire and explosion on Transocean Ltd.’s Deepwater Horizon semisubmersible, killing 11 workers and resulting in a massive oil spill in the Gulf of Mexico. No oil has spilled since the installation of a capping stack on July 15. BP operated the well.

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.

Gulf of Mexico becomes science laboratory for dispersants

President Barack Obama requested $2 million in supplemental federal funds for dispersant research associated with the oil spill in the Gulf of Mexico. Record volumes of dispersants have been used on the gulf's surface and in the subsea at 5,000 ft of water. Most previous research on dispersants involved laboratory testing, but the spill resulted in scientists monitoring the effects of chemical dispersant on a much grander scale.

Lisa P. Jackson, administrator of the US Environmental Protection Agency, testified on July 15 before a subcommittee of the Senate Committee on Appropriations about the request for funding dispersant research.

Dispersants played a big role in the Macondo oil spill response efforts. Scientists and others are studying the effects that dispersants might have on marine life. Federal officials and Louisiana state officials granted BP authorization to use approved dispersants to break down the oil into smaller drops.

In May, EPA and the US Coast Guard issued a directive requiring BP to implement a monitoring and assessment plan for subsurface and surface applications of dispersants. Federal authorities on May 26 asked BP to significantly decrease the overall volume of dispersants being used.

“Since that directive, we have seen the total volume of dispersants used fall by almost 70% from their peak levels,” Jackson said. EPA set up an extensive network to monitor the air, water, and sediments for the presence of dispersants and crude oil components.

The next phase of EPA’s testing will assess the acute toxicity of multiple concentrations of Louisiana sweet crude oil alone and combinations of Louisiana sweet crude oil with dispersants.

Judge says 150,000 jobs tied to offshore gulf operations

The offshore industry is crucial to the economies of communities along the Gulf of Mexico, US District Judge Martin Feldman of New Orleans notes in his ruling blocking a 6-month deepwater drilling moratorium in the gulf.

The moratorium stemmed from the Apr. 20 explosion and fire on Transocean Ltd.’s Deepwater Horizon semisubmersible rig, which was drilling the Macondo well in 5,000 ft of water for BP PLC and its partners. Eleven people were killed and a massive oil spill resulted.

US Interior Secretary Ken Salazar believes industry needs to refine blowout prevention, containment, and response planning before deepwater drilling should resume. DOE is appealing the temporary injunction that Feldman granted, blocking the drilling moratorium.

In his June 22 ruling, Feldman discussed how gulf drilling activities rely upon a vast and complex network of technology, assets, people, and experience.

“Indeed, an estimated 150,000 jobs are directly related to offshore operations,” Feldman said. “The government admits that the industry provides relatively high-paying jobs in drilling and production activities.”

Hornbeck Offshore Services Co. of Covington, La., and some 30 other companies requested the preliminary injunction against the moratorium. Feldman said plaintiffs own and operate vessels, shipyards, and supply service companies that support deepwater exploration and production.

“In addition to the vessels and facilities involved in their work, the plaintiffs together employ over 11,875 people,” Feldman said. “At least 19 other companies, aside from BP’s operations involved with Deepwater Horizon, are presently operating deepwater drilling rigs.”

Surveys show “sea of discontent” with subsea equipment

EnergyPoint Research Inc. reports its oil field service surveys suggest oil companies are significantly less satisfied with equipment available for subsea and deepwater projects than with equipment for surface-based applications.

“As the industry searches for ways to avoid a repeat of the catastrophe in the Gulf of Mexico, it may prove helpful to develop a more thorough appreciation of what drives the lower scores for subsea equipment,” EnergyPoint Research said on June 10.

“Data indicate customers see subsea blowout preventers, wellheads and trees, and riser and flexjoints as particularly lacking,” said EnergyPoint Research, suggesting this dissatisfaction stems in part from rapid growth within the subsea business. “Notably, ratings for subsea BOPs trail those of surface BOPs by material margins.”

Meanwhile, remotely operated vehicles received the highest long-term ratings of any subsea product category EnergyPoint tracked in its survey. The findings stem from more than 5,600 customer evaluations of oil field product suppliers since 2005.

Indeed, ROVs have proved to be the workhorses in dealing with the failed BOP and resulting oil spill in the gulf since the Apr. 20 deepwater Macondo well blowout and resulting explosion and fire to Transocean Ltd.’s Deepwater Horizon semisubmersible. BP PLC operates Macondo on Mississippi Canyon Block 252.

BP flooded with thousands of ideas on how to stop oil spill

Drilling and well-control experts aren’t the only ones with ideas about how to resolve the oil spill in the Gulf of Mexico. BP PLC, operator of the runaway Macondo well, reports it received some 40,000 ideas on the evolving situation since the Apr. 20 deepwater blowout.

“A lot of people have had some really good ideas,” Kent Wells, BP senior vice-president of exploration and production, said during a June 7 technical briefing in Houston. Some ideas “were bang on” he said, adding they suggested similar strategies as the ones already being developed by industry experts and federal scientists.

Some ideas were good but would not work in 5,000 ft of water, he said, adding other ideas were very creative and held potential, but they would have taken too long. Although none of the ideas from the public yet have proven to be game changers providing instant answers, BP found them to be useful.

“They have helped us rethink things, Wells said. “They’ve helped us tweak things.”

Some ideas, such as using explosives, were impractical, Wells said. BP received ideas on how to stop the flow as well as suggestions for collection systems and how to prevent the formation of gas hydrates.

NOAA vessel joins the hunt for possible underwater oil plumes

The National Oceanic and Atmospheric Administration is sending its own research ship, the Gordon Gunter, to study reports of oil plumes suspended in the Gulf of Mexico.

NOAA’s Gunter was in the gulf already sampling plankton to establish baseline conditions for the deepwater oil spill off Louisiana. On May 28, NOAA expanded the Gunter’s mission to use its sonar equipment to define any underwater plumes.

Researchers from various universities have reported underwater oil plumes, and their findings need to be put into context. Some oceanographers suggest increased microbes are growing in response to the spill, which could tip the marine system out of balance. They warn that too many microbes robs oxygen from the seawater, creating an uninhabitable hypoxic area, or "dead zone" threatening marine life.

Still, documentation of these reported plumes has yet to be provided by the broad scientific community. BP PLC Group Executive Tony Hayward says there is “no evidence” of masses of oil suspended in seawater.

Meanwhile, NOAA scientist Charlie Henry told reporters weeks ago that a sample of water from these so-called plumes would look just like normal seawater. Hydrocarbons are present, but the oil is in tiny droplets.

“Layers of oil are totally untrue,” Henry said of some media reports regarding initial reports from university research vessels about underwater plumes of oil (OGJ Online, May 17, 2010).

If potential plumes are identified, the Gunter will deploy an underwater vehicle, Gulper, provided by the Monterey Bay Aquarium Research Institute “to take discrete water samples at various depths to allow precise characterization of any oil, dispersants, or other substances,” NOAA said.

Record volumes of chemical dispersants have been used on the spill, and any potential long-term dispersant effect on marine life remains unknown.

Threats to fisheries or marine life must be taken seriously, but first these reported underwater oil plumes have yet to be substantiated.

Process management proving key in oil spill response

BP PLC executives painstakingly examined each part of each step in the “top kill” operation they started May 26 in efforts to halt the flow of oil and gas from a deepwater runaway well. Meanwhile, the public grows increasingly impatient for an end to the oil spill.

The longer it takes to stem the leaking Macondo well in 5,000 ft of water off Louisiana, the more detailed information BP is releasing about the process management behind each option being considered.

On its web site, BP posted illustrations showing a fleet of specialized vessels on the surface standing ready to do the top kill work. Progress at the seabed was monitored via video from numerous remotely operated vehicles. An illustration of subsea activity for the top kill emphasizes the complexity and the safety issues involved in deepwater efforts.

Doug Suttles, chief operating officer for BP Exploration & Production, told reporters that nothing is simple in 5,000 ft of water, and that any individual step can take longer than expected.

“I wish this thing would come to an end and come to an end very quickly,” Suttles said during a May 24 news conference from Robert, La. “I think everyone is very, very frustrated.”

What the public is learning is that nothing in the deepwater oil spill response effort happens instantly. Every decision is being made with much deliberation between BP, scientists, industry experts, and government officials.

So far, testimony from regulatory investigations primarily has involved talk about equipment. But I suspect process management issues also will come into play as regulators and companies figure out exactly what happened so that such an accident can be avoided in the future.

National Wildlife Refuge system, National Park Service responding to oil spill

The Deepwater Horizon rig accident and ensuing oil spill in the Gulf of Mexico happened during peak bird breeding and nesting season on coastal National Wildlife Refuges, some of which are on barrier islands. Oil was confirmed on the Chandeleur Islands chain off Louisiana, home to Breton National Wildlife Refuge, which has been closed to the public.

US Coast Guard Rear Adm. Mary Landry said May 10 that daily flights are assessing the location of the leading edge of the oil spill, status of boom, and impacts on wildlife and habitat.

A Shoreline Cleanup Assessment Team, which includes leading shore cleanup scientists and BP PLC environmental specialists, is making flights and shoreline surveys on Chandeleur Islands.

Ultimately, 24 National Wildlife Refuges could be affected, said the US Fish and Wildlife Service, which manages the refuge system.

Acting Director of the US Fish and Wildlife Service Rowan Gould worked out of Houma, La., May 11 as part of the federal government’s oil spill response efforts. Twenty wildlife teams have been deployed out of the Houma Command Center for wildlife recovery.

National Park Service Director Jon Jarvis worked out of Mobile, Ala., May 11 to supervise the park service response efforts. In Alabama, tar balls resulting from the oil spill have been confirmed on Dauphin Island, Rear Adm. Landry said.

The park service set up two incident management teams along the gulf coast where it manages various parks including Gulf Island National Seashore, Jean Lafitte National Historical Park and Preserve, and Everglades National park.

Meanwhile, various federal agencies are helping local and state governments prepare for potential oil spill-related consequences to Mississippi, Alabama, and the west coast of Florida.