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Topics: Experts predict another blowout within five years. More protests at BP annual shareholder meeting. International scrutiny of BP mistakes. BP chairman says "we are a different company". US House panel votes to force more leases in in US waters. TransCanada threatens eminent domain for Keystone XL pipeline. Salazar and Bromwich get an in-depth look at drilling. Shallow-water production in the Gulf is almost done.

You are in the current Gulf Watchers BP Catastrophe - AUV #503. ROV #502 is here.



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We know it is going to happen. With greed-driven speed and lax supervision, the conditions that produced the Deepwater Horizon disaster have not been eliminated. Charles Perrow, a sociologist and organizational theorist at Yale, says the industry is "ill-prepared at the least" in drilling deepwater safely, and in containing a spill should it, inevitably, happen.

"I have seen no evidence that they have marshaled containment efforts that are sufficient to deal with another major spill. I don't think they have found ways to change the corporate culture sufficiently to prevent future accidents."

He added: "There are so many opportunities for things to go wrong that major spills are unavoidable."

As opportunities for shallow-water drilling diminish (see last story in this diary) with the most easily accessible fields depleted - in US waters and around the world - deepwater production becomes the virtually the only source for petroleum. Even as the government tightens regulation with new, and supposedly more stringent, oversight, drilling more than a mile below the ocean's surface remains a risk-filled endeavor.

The effectiveness of the much-touted containment system is being questioned because it hasn't been tested on the sea floor. A design flaw in the blowout preventers widely used across the industry has been identified but not corrected. And regulators are allowing companies to obtain drilling permits before approving their updated oil-spill response plans.

BP says it is poised to become a much safer company. It ousted several key figures during the disaster -- including CEO Tony Hayward -- and created a powerful unit to police company safety. BP spokesman Daren Beaudo said that because of advances made during the crisis, "the capability exists to respond to a deep-water well blowout." Similarly, Chevron spokesman Russell A. Johnson said his company is "confident of our ability to prevent an incident similar" to the Gulf oil spill.

Perrow says that even if all the regulation works as advertised, there will most likely be another major spill within a five-year span.

"I'm not an oddsmaker, but I would say in the next five years we should have at least one major blowout," Perrow said. "Even if everybody tries very hard, there is going to be an accident caused by cost-cutting and pressure on workers. These are moneymaking machines and they make money by pushing things to the limit."

Several of the big oil companies are waiting for their disaster plans to be approved. The BOEMRE says it is still operating under 2002 regulation protocols, which allows drilling permits to be granted, but a two-year time frame for the blowout plans to be approved - if they certify in writing they can handle a blowout, says agency spokeswoman Eileen Angelico.

But the "we can handle it" attitude is not going over well with environmentalists and others.

The agency "is taking the oil companies' word for it that they can handle a spill," said David Pettit, a senior attorney for the National Resources Defense Council, one of the nation's leading environmental groups. "This is the same kind of deference to claimed oil company expertise that led directly to the BP Deepwater Horizon disaster."

Oil companies say the "new system"can contain a blowout, even in deep water...and where have we heard that before?

Oil companies say the system is capable of quickly containing a blowout 8,000 feet under water and capturing as much as 60,000 barrels of oil per day. By comparison, at the height of the Gulf spill in mid-June, BP's well was spewing some 57,000 barrels a day at a depth of 5,000 feet.

Michael Bromwich, recently acknowledged that the system was not tested in a dynamic situation -- meaning in the ocean or during blowout conditions. He said such testing would be ideal, but he was still confident the system would work.

Martin W. Massey, CEO of the Marine Well Containment Co., the consortium of companies that built the system, told the AP that components of the system were tested on land in Houston in a controlled environment, with government officials monitoring and approving it. He suggested that ocean testing was not necessary.

"We're quite confident," he said. "We're ready to respond. The system is ready to go."

The consortium has said an expanded network capable of plugging a well at more than 10,000 feet below the surface and collecting 100,000 barrels of oil per day won't be ready until early 2012.

Bromwich has said that the oil companies continue to tell BOEMRE that the Deepwater Horizon disaster was totally BP's fault, and that such a blowout just could not happen to them.

"In my judgment, this is as disappointing as it is shortsighted," Bromwich said. "Our view is this was a broad problem."

Residents of the Gulf Coast who purchased BP stock in order to attend shareholders meetings scuffled with security and police after being denied entrance to the meetings in London on Thursday.

The protesters had flown in from the US to draw attention to what they say is evidence that the Gulf continues to be badly affected by last year's spill. Louisiana fisherwoman Diane Wilson was arrested for breach of the peace after she smeared herself in an oil-like substance as she tried to gain access to the conference center. "I’ve come all the way here from the Gulf Coast,” said Diane Wilson, a fourth-generation fisherwoman from Seadrift, Texas. “My community is gone, and they won’t let me in.

Chairman Carl-Henric Svanberg told shareholders that security didn’t allow them to enter because it thought they would disrupt the meeting.

Indigenous communities angry at the company’s involvement in tar sands extraction in Canada and scores of local workers embroiled in a dispute at a BP-owned biofuels plant in northern England, also protested.

During a tense meeting, Svanberg tried to prevent Antonia Juhasz, an activist promoting a book about the Gulf spill, from reading a statement from Keith Jones, whose son Gordon was one of the 11 workers to die when the Deepwater Horizon exploded.

"His son died aboard the rig and you don't want to hear his voice?" she interrupted, before she read out the statement: "This was not an act of God. BP and Halliburton could have prevented the blow-out. You were rolling the dice with my son's life and you lost."

In response to her comments, BP chief executive Bob Dudley read out the names of the 11 men who died when the rig exploded. He said nothing could be done to bring the 11 men back, that the accident had "shocked and saddened us all", and the company would do everything it could to make sure it did not happen again.

Juhasz maintained that large areas on the ocean floor in the Gulf have become dead zones, coated with layers of brown, oily goo.

Dudley continued: "I disagree with your assessment that the BP oil spill has ruined life on the bottom of the ocean. It's a lifeless zone in some of these areas because of the fertiliser coming down …You say it's because of the oil, which you can't see and I can't see."

Mike Roberts, one of the three Louisiana shrimpers barred entry, told the Guardian outside: "That is typical tactics from BP – they say something that sounds good. When you have got that kind of money you write your kind of history and make your own reality."

Roberts, from Grande Isle, has not been fishing since the spill and says few people in the Gulf feel confident about eating fish caught there. He added: "We came all the way from Louisiana. We weren't going to be rowdy. We were here, dignified and respectful, on their terms.They looked at our passports and asked us if we were all from Louisiana. They didn't let us in because they didn't want the truth to be told."

Please click on this link for a video story from the BBC on a three-generation oyster-fishing family who is now going out of business. Check out the sign announcing that fact about halfway through the report. (And sorry, you have to wait for the "advert" to finish at the beginning of the clip...)   Thank you, jnhobbs, for the story.


International drilling regulators examine lessons from Gulf spill.

Offshore drilling regulators from a dozen countries today said the Deepwater Horizon disaster is shaking up government oversight of coastal oil and gas exploration far beyond the Gulf of Mexico.

Geoffrey Podger, chief of the United Kingdom’s health and safety executive, called the blowout of BP’s Macondo well a “seminal” event, like the 1988 explosion on the Piper Alpha platform in the North Sea that killed 167 people.

Podger made his observation at the start of a daylong Ministerial Forum on Offshore Drilling Containment at the U.S. Interior Department. Oil and gas regulators from 12 countries and the European Union are discussing lessons learned from the Macondo blowout — including the need for better well containment practices and equipment.

“The accident was a watershed for the oil industry,” said Hector Moreira Rodriguez, Mexico’s undersecretary of hydrocarbons, who has been meeting with U.S. officials to harmonize standards for drilling in the Gulf.

One of the biggest post-Macondo lessons, Rodriguez said was “the need for drilling and development plans to include design of emergency procedures” for countering blowouts.

Jan de Jong, the Netherlands’ inspector general of mines, stressed that “it is absolutely necessary to raise standards in industry.”

“This accident is not unique for deep-sea drilling in general, nor BP, nor for the Gulf of Mexico,” Jong said. “It could have happened anywhere.”

Norway’s top petroleum and energy minister, Per Rune Henriksen, said he was dismayed by “the inability to cap blowouts,” as evidenced by the Gulf spill that took 85 days to contain and the Montara blowout near Australia that leaked for 74 days before it was finally killed in November 2009.

Those crude-containment failures are “highly unsatisfactory,” Henriksen said. “This is an area where the industry must provide solutions.”

Well, duh...


BP chairman: ‘We are a different company’ from a year ago.

BP Chairman Carl-Henric Svanberg reassured shareholders today that the British oil giant has become a “different company” in the year since the deadly Deepwater Horizon disaster and asked for patience as the company continues to recover from the crisis.

“Everything we have done since Deepwater Horizon has had one aim; to win back the trust of shareholders and communities the world over,” Svanberg said in a speech kicking off BP’s annual meeting in London.

The company’s efforts have included making safe operations a top priority, overhauling management ranks, announcing the sale of more than $30 billion in assets and paying billions in claims to Gulf Coast residents affected by the massive oil spill, he said.

BP also temporarily cut dividend payments, an unpopular move among investors,which Svanberg described as “one of the hardest decisions we have taken.”

But it was an “absolutely imperative” act to preserve financial flexibility in the face of mounting spill claims, he said. And contrary to rumors, BP was not forced into cutting the dividend by the U.S. government, Svanberg added, noting that the topic did not come up in his meeting with President Barack Obama at the White House during the spill.  The dividend has since been restored, though at a lower level than prior to the disaster.

BP  faced protests Thursday at the annual meeting from environmental groups and others about the lingering effects of the Gulf spill. But the company was also expected to feel backlash from investors upset by management’s handling of the crisis.


House Panel Votes to Force More Oil Leases in U.S. Waters.

A bill requiring the U.S. to open areas off the Virginia coast and in the Gulf of Mexico to oil and gas exploration cleared a key hurdle in the U.S. House Wednesday. The House Natural Resources Committee voted to approve the leasing measure, paving the way for a vote by the full House next month. Earlier Wednesday, the committee also voted to establish a 60-day maximum for the Interior Department to approve or deny offshore drilling permits. If Interior took longer, the permit would be deemed approved.

The bills are part of an effort by House Republicans to support domestic oil and gas production, which they have stepped up in recent months in the face of rising gasoline prices. Democrats have pushed back, saying that Congress should focus on providing incentives for non-traditional energy sources and reducing energy consumption.

All but two Democrats voted against the bills on offshore leasing. The bills' prospects are less certain in the Senate, where Democrats hold a majority.

One proposal approved Wednesday would override a decision last year from the Obama administration not to open the U.S. Atlantic Coast to offshore drilling. It directs the Interior Department to lease areas off the Virginia coast within one year after the bill becomes law.

The bills would also direct Interior to move forward with three new leases in the Gulf, declaring previous environmental reviews of those areas to be sufficient. The administration has delayed its Gulf leasing plans and is conducting new environmental reviews following the Deepwater Horizon disaster nearly one year ago.

"What we're attempting to do is provide some certainty to those who would give us American-made energy," said Rep. Doc Hastings (R., Wash.), chairman of the Natural Resources Committee, and a main sponsor of the bills.


TransCanada threatens to use eminent domain for Keystone XL.

A Canadian company that wants to build an oil pipeline to the Gulf of Mexico is again threatening landowners with court action if they don’t sell TransCanada the rights it needs to build the Keystone XL pipeline.

TransCanada was criticized last summer for mentioning eminent domain in letters to landowners. Company spokesman Terry Cunha said TransCanada has agreements with more than 80 percent of landowners along the six-state route and wants to be ready if the project is approved.

The project is designed to carry oil from Canada across Montana, South Dakota, Nebraska, Kansas, Oklahoma and Texas. TransCanada also has proposed connecting to the Bakken oil field in Montana and North Dakota.

The U.S. State Department said last month that it would delay its decision on whether the pipeline can be built to conduct an additional environmental review. A presidential permit from the State Department is required because the pipeline would cross the U.S.-Canadian border.

Supporters say the project would be a boon for U.S. jobs and energy production while strengthening a friendly source of oil. Pipeline opponents say the Keystone XL has the potential to be an ecological disaster and could jeopardize the vast stores of underground water in the Plains states.

National Wildlife Federation spokesman Tony Iallonardo says TransCanada shouldn’t threaten landowners with court action before the project is approved.>/blockquote>


Offshore Officials Get In-Depth Look.

The top U.S. officials in charge of offshore oil and gas exploration on Wednesday got a close-up look at the first deep-water drilling project approved since last year's oil spill.

Interior Secretary Ken Salazar and his chief offshore regulator, Michael Bromwich, spent two hours examining new safety systems -- including one spurred by the spill -- on the Ensco 8501 rig that is about to begin drilling a bypass well for Noble Energy in the Gulf of Mexico.

They touched drilling fluids hauled from pits on the semisubmersible rig, interviewed workers about their jobs and studied the systems used as a last line of defense against surging oil and gas.

Afterward, Salazar said he was impressed that "testing capabilities have been significantly enhanced since a year ago."

"We're starting to see the beginning of a significant change in the culture that holds great promise," Salazar added.

Within days, the Ensco 8501 is set to begin drilling the well in Noble Energy's Santiago prospect 70 miles southeast of Venice, La., resuming work that started just four days before the blowout of BP's Macondo well and destruction of the Deepwater Horizon drilling rig last April 20.

Houston-based Noble drilled more than 7,000 feet below the seafloor in 6,500 feet of water before it was forced to plug the well under a moratorium on deep-water drilling that took effect weeks after the Macondo blowout.


Shallow water fields in the Gulf are running dry.

The much maligned Deepwater Horizon project in the Gulf took place in deepwater, and for good reason - shallow water production in the area has all but run dry.

Most of the producing assets in shallow waters of the Gulf of Mexico (GOM) offshore are past their peak production and have been witnessing a steep fall in production during the last 15 years.

The share of shallow water production in the total GOM production decreased from 67% in 2000 to 35% in 2009 and is expected to tail off at an average annual rate of 13.8% through to 2018.

Production has declined from 917.6 million barrels of oil equivalent (mmboe) in 2000 to 347.8 mmboe in 2009, registering an average annual decline rate of 10.8% during the period 2000–2009.

Crude oil production declined at an average annual rate of 8.2% and natural gas declined at a rate of 11.8% during the same period.

Despite a few small discoveries, hope is fading, and according to market data from leading analysts Global Data, very few discoveries in the shallow waters of GOM offshore are likely to offset the fall.


BP's Russian partners talk tough in Rosneft dispute.

BP's partners in its Russian venture TNK-BP rejected the UK oil major's attempts to settle a dispute caused by its $18 billion tie-up with Rosneft, casting further doubt on the deal.

"Now is the time for sensible proposals from BP to resolve the problems that have been created," Stan Polovets, chief executive officer of AAR, the consortium that represents the four billionaires who own half of TNK-BP said in a statement.

BP believes the Russians are angling to be bought out of TNK-BP at a high price -- possibly over $35 billion.

BP Chief Executive Bob Dudley said Thursday BP had offered to do this -- sources close to the matter said the oil giant offered $27 billion in conjunction with Rosneft -- but he added BP would not overpay.

Polovets said AAR was not planning to sell out and simply wanted BP to conduct the planned $16 billion share swap and $1.2 -$2 billion Arctic Sea exploration deal with Rosneft, through TNK-BP instead, in line with the TNK-BP shareholder agreement.

AAR convinced an arbitration panel to block both elements of the Rosneft deal pending a settlement between the two sides.

Analysts and investors are growing increasingly pessimistic the deal, which was supposed to signal BP's recovery after the Gulf of Mexico oil spill, will be sealed.

PLEASE visit Pam LaPier's diary to find out how you can help the Gulf now and in the future. We don't have to be idle! And thanks to Crashing Vor and Pam LaPier for working on this!

Previous Gulf Watcher diaries:

4-13-11 06:00 AM Gulf Watchers Wednesday - Mississippi AG v/s Feinberg, Round 2 - BP Catastrophe AUV #502 peraspera
4-11-11 05:42 PM Gulf Watchers Monday-BP Money Paid for That? - BP Catastrophe AUV #501 shanesnana
4-10-11 11:57 AM Gulf Watchers Sunday - Why did BP buy a beach? - BP Catastrophe AUV #500 Lorinda Pike
The last Mothership has links to reference material.

Previous motherships and ROV's from this extensive live blog effort may be found here.

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