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The Mimosa Dancing Girls strip joint on the edge of New Orleans was probably not what BP chairman Carl-Henric Svanberg had in mind when he promised last week that the company would look after the “small people” affected by the Gulf oil spill. But then every day seems to be full of unpleasant surprises for BP.

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As some of you know, my wife wouldn’t let me name our wonderful daughter Elmer IV (or even Elmira!).  This disappointment has now been completely forgotten thanks to the stunning announcement that the Department of the Interior’s newest bureau has been named after our modest blog.  Congratulations have been pouring into BOE headquarters from around the world.

We don’t know how the Bureau of Ocean Energy Management, Regulation and Enforcement got shortened to BOE.  Have Management, Regulation, and Enforcement already lost status?  Nonetheless, BOE Senior is flattered by the endorsement and welcomes its namesake (BOE Junior?) to the BOE family 🙂

Australia dumped its Prime Minister!  See the Upstream report.

Julia Gillard is now Australia’s first female Prime Minister.  Our request to her: Please release the Montara report!

Brazil, the Netherlands, England, and the US advance.  With Bubba in the house, you knew there would be more last minute drama for the US.

It’s a long shot for the Socceroos, but I’ll be pulling for them.  Will Minister Ferguson be (1) watching the game, (2) sleeping (it starts at 0430 in Canberra), or (3) reading the Montara Inquiry report?  Good odds on (1) and (2).  No chance for (3). 🙂

I believe they’re going to try and intercept somewhere around between 16,700 and 17,000 feet. We will confirm that for you and put out a statement tomorrow.

Comment: I pasted that portion of the well cross-section above.  It looks like the plan is to drill into the 7″ x 9 7/8″ annulus (the most likely flow path) and secure that annulus.  Based on the float and casing shoe issues that have been reported, the flow could also be inside the 7″ production casing or both inside the casing and in the annulus. (Also, sealing the annulus could force flow through possible shoe channels inside the production casing).  They will presumably have to drill through the 7″ casing (after the annulus has been secured?) and set a cement plug inside the casing.

They decided not to use the blowout preventer because of the uncertainty regarding the status of the wellbore and what pressure might do going down. That’s the reason they abandoned the Top Kill and the capping exercise at that point.

Comment: Admiral Allen confirms reports that the second BOP option was dropped because of downhole issues.  Poor well integrity sure makes things difficult.  Concerns have been raised about the strength of the 16″ casing, and possible fracture paths outside casing.   If the ROV had been able to actuate the BOP and seal the well, would casing failure and formation fracturing have occurred; or are subsequent events (erosion?) the primary reason for these well integrity concerns?

Secretary Salazar and Secretary Chu had a meeting last week in Washington with other industry representatives beyond BP, other oil-producing companies that are out there, and we’ve actually identified a couple of platforms that are in the area that might be capable of taking the product coming out of the wellbore through pipelines and either producing it or putting it back down into the reservoir. We’re exploring that over the next couple of days.

Comment: Yikes!

Click here for the judge’s full decision.

Click here for the judge’s order.

OMNI-MAX Anchor

Pasted below is a note from Evan Zimmerman that I am posting with his approval.  As many of you know, MODU station-keeping has historically been a major problem during hurricanes.  For the past 5 years, industry and government leaders have worked hard to improve hurricane and deepwater mooring capabilities.  Evan has been a key participant in this effort.  His company developed advanced anchors (see above picture) and mooring lines, and new risk assessment tools for assessing mooring system failure probabilities and their consequences.   The Gulf of Mexico will not be a safer place if deepwater technology leaders like Delmar are forced to close or move their equipment and personnel overseas.

The moratorium on drilling has put more than 70% of all that risk reducing mooring equipment on its way to the beach without contracts.  For a company like Delmar that derives more than 95% of its income from deepwater OCS drilling activity, its clear that we will have to immediately start shipping equipment outside of the US to find work.  Its my expert opinion that without a doubt, the offshore station keeping safety options will be reduced once drilling activities resume.  Its also clear the longer the moratorium continues, the fewer moored rigs will be left to drill not only the intermediate water depth areas the DP rigs cannot, but also the ultra deepwater wells they have been so busy drilling safely.  The longer this moratorium continues, the higher the station keeping risks for both DP and moored rigs the MMS will have to approve to keep the few rigs left in the Gulf working.  It’s the single biggest disappointment in my career to see all the hard work that MMS, Delmar and industry have done to increase station keeping safety quickly slip between our fingers here domestically.  I leave overseas again week after next to try to secure work for half (two sets) of OMNI-Max anchors as well as most of our other risk reducing equipment that now is no longer on contract due to the moratorium.

We are the last US owned deepwater anchor handling company that has brought the safest and most technically advantageous equipment to the mooring industry, and it looks like we will have to drastically change inclusive of cutting jobs domestically and moving outside of the US.

We know about the Macondo victims, most notably the 11 men who died and their families, but who stand to benefit from the blowout?

  1. OPEC – Will OPEC’s market share grow as the US and others prevent or delay production?
  2. West Africa and Brazil – Better rates and availability for deepwater rigs?
  3. PTTEP (Montara) – Not receiving much attention as BP draws all the flack
  4. Shale gas – Can the huge promise be realized?  Will natural gas gain an increased share of the transportation market?
  5. Alternative Energy – Are these industries ready to step up?
  6. Spill response research – Government and industry oil spill research funding always jumps after major spills.
  7. Nuclear industry – Perhaps, but Macondo may remind people that “the unthinkable” can happen.
  8. Lawyers – The only sure winners.  The litigation spectacular has already begun.

No Love for Long Strings – The rest of the industry has distanced itself from BP’s casing program, swearing their allegiance to tiebacks.

CEO sails while “small people” suffer – The PR disaster continues for BP.

BP partner seeks annulment – The first shots in the multi-billion dollar BP-Anadarko dispute have been fired.  Look for new liability clauses in operating agreements and regulations.

Who is in charge and accountable? – Macondo, like Montara, was entirely preventable.  Know who is in charge, and make sure they are competent and cautious leaders.  As a friend told me yesterday, the best technology can be undone by human arrogance.

Just ‘Roo It! – Australia’s investigation process works great until it comes to releasing reports.  Varanus Island deja vu?

Storm watch – Another common concern for Montara and Macondo – the onset of hurricane/cyclone season.  We need about six more weeks (preferably more) until the first hurricane evacuations in the Gulf.

Sad irony – The first FPSO production in the Gulf of Mexico is at the Macondo field.

90+% recovery – Promised soon with new well cap and production systems.

Relief? – First relief well is ahead of schedule.  Has a well ever been more anticipated and needed?

Aftermath – While the chance of BP operating Macondo is virtually zero, will PTTEP be allowed to continue operating Montara?