Bud's Offshore Energy (BOE)

The Unified Command’s collegial atmosphere seems to have given way to letter writing and public posturing.  Agency and company logos are no longer side-by-side on the official response website banner and joint briefings ended shortly after the Top Kill disappointment.  What all this means for future emergency response operations and the Unified Command concept remains to be determined.  Major spill response exercises and table-top drills cannot simulate the stress associated with a long battle like Macondo, and the resulting legal, administrative, and political tension.

In any event, a 13 June letter from Doug Suttles to Admiral Watson outlines BP’s impressive production strategy for the Macondo, pending completion of the relief well.  Most elements of this collection and production plan had been previously identified.  However, I was surprised by the following sentence on page 3:

Install a new LMRP cap with sufficient seal integrity to ensure a successful relief well kill operation.

I believe this is the first time BP has suggested that the success of the relief well was in any way linked to seafloor capping or wellhead intervention operations.  I assume BP is simply acknowledging that the kill operation would be easier if flow from the cap is constrained and back-pressure imposed on the flowing well.  Perhaps BP would like to elaborate.

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Ponder this: What if the responsible party was not BP or one of the other “supermajors” (i.e. Shell, Chevron, ConocoPhillips, ExxonMobil, and Total)? This would have been the likely scenario:

1. The responsible party, which we’ll call Company XYZ, would have quickly exhausted its financial resources, including insurance.  Bankruptcy would be a high probability.
2. XYZ would have to control costs and would not contract a second relief well rig, employ an armada of support vessels and ROVs, fund protective barrier islands, or install a complex floating production system for oil containment and recovery purposes.  The Federal government could, of course, direct XYZ to do all of these things, but how could XYZ comply?
3. The Oil Spill Liability Trust Fund would be exhausted.  The per barrel production and transportation fees would have to be quickly and  significantly increased to pay the ongoing spill response costs.
4. XYZ would limit damage payments to the $75 million maximum specified in the Oil Pollution Act of 1990.  Congress could, of course, change that limit, but could they do so retroactively?
5. In light of the above, the entire mess would become the responsibility of the Federal government.  The government would have to design and manage the relief well operations, subsea collection programs, and all aspects of the spill response.  All this would have to be accomplished amidst loud (think vuvuzela noise levels) public criticism, finger-pointing, and emergency hearings and litigation.  Multiply the current level of acrimony and discontent by 100 and you get a sense of how ugly this would be.

What happens to the Macondo field? We don’t know much about the size of the Macondo reservoir(s), but we have certainly learned about the impressive flow potential.  After the well is plugged and the regulatory issues are addressed, will BP seek to develop the field, assign their interests to other companies, or relinquish their leases?  Will BP even have the option of making these choices, or will the Federal government seek to disqualify the company from developing the field?

Relief well plans: While BP has done a better job of providing technical information, the precise relief well target has not been specified.  In that regard, BOE has received a number of complaints from engineers and other interested parties.  Since the region and nation are literally and figuratively dependent on this well for relief, the public needs to know more about the plan.  We now have the casing program details for the well that is flowing (thanks to DOE), so the key piece of information needed is the specific intercept point in the well bore.   We also need to know the suspected flow path(s) for the oil.  Surely BP and the Unified Command have an informed opinion on that important matter.  Again, the right to confidentiality on these matters was forfeited when the well blew out.

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