Sunday, May 30, 2010

Ultra-Deepwater Drilling and Normal Accidents

From the EIA:

"Gulf of Mexico (GOM) oil production began from shallow water fields (water depth of under 1,000 feet) but shallow water production began to fall in 1998. Steadily increasing volumes from deepwater fields (water depths between 1,000 and 4,999 feet) offset these declines until 2004, after which deepwater production also began to decline (see chart above).

But, ultra-deepwater production (water depths more than 5,000 feet) has risen dramatically since 2004 (and more than tripled since 2005), stemming the overall decline in GOM production. A trio of high-profile ultra-deepwater discoveries - Atlantis, Thunder Horse, and Great White (part of the Perdido development) - has recently started producing. Several more are in various stages of development."

HT: Paul Kedrosky, who argues that "part of what we're seeing here is the inevitable "normal accidents" from changing technology as we transition from one extraction depth regime to another."

6 Comments:

At 5/30/2010 10:28 PM, Anonymous Lyle said...

However there is an issue that BP appears to particularly accident prone. IN 2005 there was the Texas City Refinery explosion that killed 15, you have the leaks in the North Slope pipelines, the near loss of the Thunderhorse rig, as well as smaller events. The fact that these events happened over the entire company in the US suggest that the upper management has not made safety a focus of its oversight. If this were the first major accident BP had had in 10 years it would be different than the current situation.
Yes the technology pushes the limits, so some events can be expected, but the issue of the batteries on the BOP as well as the whole well design issue raise questions. Transocean's rig had a good record before this 7 years without a lost time accident, suggesting a decent safety record on the part of the rig company. Then again I wonder if BP used the acoustic device in the North Sea, why not go beyond the US regulations to add more safety, no one would stop you. Safety should for a multinational take the pattern of following host country rules but adding addition features from elsewhere in the world that add more safety.

 
At 6/01/2010 7:47 AM, Blogger juandos said...

"However there is an issue that BP appears to particularly accident prone"...

Good point Lyle...

From a Mar 8 Reuters story: UPDATE 3-BP faces $3 mln safety fines for Ohio refinery

Maybe this BP oil spill has an explanation, consider the following by Kurt Cobb: The Wages of Complexity

 
At 6/01/2010 7:49 AM, Blogger VangelV said...

BP became distracted from its business model when it tried to take advantage of the push towards subsidized renewables. Its management tried to sell the company as being Beyond Petroleum and by doing so took its eye off the ball. The US needs to maintain production in the deep water Gulf and to look at production in the target rich areas off the East and West coasts plus federal lands that are known to have reserves.

With all of these activities the US cannot reverse the long term trend. Production will continue to be well below the 1970s peak and new investments in new unconventional sources cannot bring sustainable increases for very long.

I look forward to seeing how sentiment changes over the next few months. While the industry is taking a hit at the moment I have already seen some sober voices point out that it is necessary to keep drilling because access to oil is essential for economic stability.

 
At 6/01/2010 9:40 AM, Blogger Robert said...

Has their ever been a published comparison of deepwater drilling regulations utilized in the North Sea , GOM and Brazilian offshore market? The North Sea operators claim to have a better understanding of the technical challenges.

 
At 6/01/2010 5:11 PM, Anonymous Lyle said...

Robert raises an interesting question why did BP not do a union on the safety regs from the regions it operates in? (Except where local regulations would prevent it) The acoustic shutoff device being just one example.
In general of course the issue was that this is just a black swan that no one thought could happen (although a similar incident happened off Australia in the last couple of years) Again why did the lessons of that incident not seep thru, at least to change the event from a black swan to a real possiblity. (Of course this happened at NASA with Challenger, the explosion was thought to be a black swan, although the study concluded at a 1 in 50 chance it was not, and the shuttle has proven to be between 1 and 50 and 1 in 75 in having fatal accidents).

 
At 6/01/2010 8:15 PM, Blogger Robert said...

Lyle, thank you for your response. This particular drill rig was built at Hyundai Heavy Industries, Ulsan, Korea in 2001. A fifth generation deepwater design, she was credited with drilling the deepest oil well in history in 2009 at a measured depth of 35,055 feet – more than six miles – while positioned at the Tiber well on the Gulf of Mexico in over 4,000 feet of water. Prior to that record, the rig operated seven years without a major lost time accident. An impressive set of accomplishments credited to her dedicated drilling crew and the effective planning and operations of BP.
Before we continue, take a moment to remember the eleven men of Deepwater Horizon’s drilling crew who lost their lives in this disaster. Their sacrifice alone should drive us to question and investigate what happened. The fact that the well continued to spill an estimated 12,000 to 25,000 barrels per day without a technical solution available to stem or stop that flow of oil demands the investigation is taken even deeper.
There is now a rush to place blame for the accident; Senate committee hearings, criminal charges and independent commissions vowing to overhaul regulations and change U.S. law. The rush should be the effort to cap the well and expedite the cleaning of the coastlines affected by the spill. What is more important is the need to determine the true cause as we fight to stop the effect. The answers required before a knee jerk reaction results in regulation greatly affecting U.S. energy policy.
This is a domestic American environmental disaster requiring international solutions. A Korean built semi-submersible, designed to drill anywhere in the world’s oceans, leased by a British company, classed by the American Bureau of Shipping and registered in the Marshall Islands. How could the solution not be International?
The media has already questioned how North Sea deepwater drilling differs from U.S. Gulf operations. Whether Brazil’s newly discovered fields or offshore drilling projected to take place near Cuba are prepared to address safety and environmental issues the Deepwater Horizon has raised. The questions were not raised as a result of the gulf disaster. On the day President Obama was in Oslo to receive the Nobel Peace prize, the Director – General of the Petroleum Safety Authority Norway (PSA) visited Washington DC to sign a new cooperative agreement with its U.S. counterpart the Minerals Management Service (MMS). The agreement extends a long-standing collaboration aiming to create a safer and environmentally sustainable oil and gas industry. The opportunity has been available to discuss “Well Control Equipment- Section 48” the BOP, Norway’s requirement to activate the BOP from remote locations and the acoustic shutoff device. The issue in my opinion is policy, regulation and oversight.

 

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