Friday, May 28, 2010

Why Are We Drilling @ 5,000 Ft. in the First Place?


Here's an excellent question from Charles Krauthammer:

"Why are we drilling in 5,000 feet of water in the first place?

Many reasons, but this one goes unmentioned: Environmental chic has driven us out there. As production from the shallower Gulf of Mexico wells declines, we go deep (1,000 feet and more) and ultra deep (5,000 feet and more), in part because environmentalists have succeeded in rendering the Pacific and nearly all the Atlantic coast off-limits to oil production (see map above, source).

And of course, in the safest of all places, on land, we've had a 30-year ban on drilling in the Arctic National Wildlife Refuge.  So we go deep, ultradeep — to such a technological frontier that no precedent exists for the April 20 blowout in the Gulf of Mexico."

16 Comments:

At 5/28/2010 10:55 AM, Blogger juandos said...

"Many reasons, but this one goes unmentioned: Environmental chic has driven us out there"...

A.K.A. 'moonbat lunacy'...

Example # One

Example # Two

Example # Three

 
At 5/28/2010 11:09 AM, Anonymous gettingrational said...

In Novemeber of 2009 Devon Energy announced plans to sell its off-shore oil interests. This was done because off-shore accounted for 7% of reserves but 29% of Devon's capital expenditures.

Who did Devon sell to? BP announced in March it was buying and that Devon was taking a major interest in one of BP's Canadian sand projects. Thus, BP became the overwhelmingly largest Gulf oil producer.

BP bought expensively produced reserves and so it must consider itself the most efficient deep water producer. How could BP look to cut costs of production and not have the technological solutions in place in case of deep-water "spillage"?

BTW, Exxon-Mobil has been under attack for not increasing reserves the last couple of years. HMMM, these are pretty smart guys that make their shareholders a lot of money.

 
At 5/28/2010 11:55 AM, Anonymous Daniel said...

Don't expect ANWR or coastal areas to get opened anytime soon. This catastrophic mess will put those areas off for a years to come; coupled with Exxon Valdez several decades back, and it looks like the environmentalists have fresh ammunition to keep ANWR closed.

BP's short-sightedness is going to hurt more than the company: beyond the environmental damage, the future oil depletion scenario will get exacerbated as we're unable to exploit critical areas when needed.

That means we'll have to exploit what's left onshore and import from a (soon to be) diminishing oil pie. The Bakken will help a bit with a 400,000-500,000 bpd production, the Three Fork formation should pitch in some assistance. Although it's too early to tell, the Eagle Ford Shale in Texas, which contains large volumes of natural gas condensates rather than methane, may prove to be a nice strike.

 
At 5/28/2010 12:31 PM, Blogger juandos said...

"BP's short-sightedness..."...

Excuse me Daniel, what was BP's short sightedness?

I'm thinking/guessing that the methane gas from the drill site could've set off the explosion on the TransOcean rig out in the gulf...

From Halliburton: Deepwater Cementing Consideration to Prevent Hydrates Destabilization

 
At 5/28/2010 12:36 PM, Anonymous Daniel said...

gettingrational said,

"BTW, Exxon-Mobil has been under attack for not increasing reserves the last couple of years. HMMM, these are pretty smart guys that make their shareholders a lot of money."

You're right, ExxonMobil is smart with their money and they make their shareholders a lot of cash. Now I've said this several times in the past, but Exxon last year presented an offer of $100 a barrel to the Ghana government for a quarter access in the offshore Jubilee Oil Field. Jubilee's a nice field (estimated 1.8 billion barrels), but it's hardly a Cantarell.

Now if Exxon has some smart people, and they're not known for wasting money, what does this offer reveal about their thoughts?

 
At 5/28/2010 1:11 PM, Anonymous gettingrational said...

Daniel, why did Exxon offer $100 a barrel? I can only speculate. This may have been a down payment for access to far cheaper production in other fields. XOM has been rebuffed a couple of times recently in Africa. Another may be to drive up the bidding for BP and China Oil to long term and expensive fields. XOM seems to be laying back and let others get in over their financial heads -- Ex China which has unlimited dollars for oil. XOM may "well" have its pick of distressed oil producing properties in the next couple of years.

 
At 5/28/2010 2:03 PM, Blogger Colin said...

Also recall that when restrictions are placed on exploration in the US that it means more exploration in places like Nigeria with more lax environmental standards.

 
At 5/28/2010 2:33 PM, Anonymous Daniel said...

gettingrational,

Actually, CNOOC outbid Exxon but they've run into problems securing the field because of the Ghana government's mistrust of the Chinese. Two big players spending large to secure increasingly scarce resources tells me one thing: both are paying attention to the EIA's worldwide depletion warning, and therefore, oil prices will be high enough to make the investment sufficient.

 
At 5/28/2010 2:36 PM, Anonymous grant said...

They are drilling at 5000 ft because that is where the geologist think that is where the oil is. The management of BP decided to go with that when they drilled. There are other deep oil wells in other areas of the world and they don't collapse because they are built to a high enough engineering standard that they don't collapse. The current disaster in the Gulf of Mexico should be paid for by BP for this reason.

 
At 5/28/2010 2:51 PM, Anonymous grant said...

I don't think there is a long term shortage of oil. There are many applications in to explore in new areas and I don't want to mention any specific ones as it may have a negative bearing on the applicants outcome.

 
At 5/28/2010 7:50 PM, Anonymous Daniel said...

Juandos said,

"Excuse me Daniel, what was BP's short sightedness?"

Methane gas bubbles looks to be the cause the of Macondo blowout, but the smart thing to do with oil drilling is to try to prevent blowouts in the first place.

BP screwed up on several fronts. First, there were some technical failures with the blowout preventer: a dead battery in the "deadman trigger" and leaking hydraulic fluid is believed to be the possible cause to why the BOP failed to activate during the blowout. In all honesty, there's over 260 possible things that can go wrong with BOPs, and they must be addressed for preventive measures.

Second, BP management went against the results of two negative pressure tests. The pressure tests are conducted to see if any gas is leaking into the well through the cement or casing. Both tests came back unsatisfactory. However, BP pushed for the drilling mud (there was a heated verbal skirmish between a BP rep and the rig crew about this on the day the accident happened) to be removed, and lighter sea water to be placed in the well.

More details will likely emerge as time goes on. It's too bad BP tried cutting corners to save a bit of cash: it looks like they had a nice well down there.

 
At 5/28/2010 10:30 PM, Blogger Jersey McJones said...

Environmentalists? LOL! No. Rich people who live along the coast? Yes.

JMJ

 
At 5/29/2010 4:40 AM, Blogger Ron H. said...

>"There are many applications in to explore in new areas and I don't want to mention any specific ones as it may have a negative bearing on the applicants outcome."

grant, do I understand this correctly? Do you believe that your mentioning an application to drill in a specific area could jeopardize that application? How did your words become so powerful?

 
At 5/29/2010 2:24 PM, Blogger juandos said...

"Second, BP management went against the results of two negative pressure tests. The pressure tests are conducted to see if any gas is leaking into the well through the cement or casing. Both tests came back unsatisfactory"...

O.K. Daniel!

This is exactly what I was wondering about myself...

I knew about TransOcean's BOP valve problems but what part BP played in it all I wasn't sure of...

Thanks...

 
At 5/29/2010 2:37 PM, Anonymous Anonymous said...

Ron H, with the over-reactor in chief on the job, it's not a small worry.

Look at how overboard they've gone with everything they've done. If I had any kind of permit app. pending with the government I'd not be popping my head up.

 
At 5/29/2010 6:22 PM, Blogger juandos said...

"over-reactor in chief on the job"...

Ha! Very good but a chief who apparently demands an audience for each time there's a photo op...

BP paid workers $12-per-hour to show up for Obama visit, be props for the photo ops

 

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