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Topics: Report on blowout preventer could mean design change.  Blowout preventer thought to be "fail-safe" wasn't.  Bob Cavnar says redesign of blowout preventer is a necessity. Chevron to drill wildcat well in Gulf.  Deal between BP and Rosneft is blocked. Money changes hands between oil producers and Libya?

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The "fail-safe" device that was the blowout preventer on the Deepwater Horizon wellhead was rendered ineffective by an off-center piece of drillpipe... according to the report from Det Norske Veritas, forensic analysts on the BOP from the well. (The report is here, if you feel the need to read.)

"As the blind shear rams closed, a portion of the drill pipe cross section became trapped between the ram block faces, preventing the blocks from fully closing and sealing," said the 551-page report from Det Norske Veritas.

The company determined the failure would have occurred regardless of how the blowout preventer, or BOP, was activated.

The shears were designed to be closed by hydraulic signals sent by the crew of the Deepwater Horizon drilling rig on the Gulf surface a mile above, or by an automatic "deadman's switch" activated if the blowout preventer lost communication with the rig.

Invented nearly 90 years ago, BOPs are basically giant stacks of valves installed on top of land and sea wells to help maintain control during unexpected pressure changes.

As a last line of defense against runaway wells, BOPs have been compared to air bags and seat belts that don't prevent auto crashes but can reduce injuries.

But there is overwhelming evidence that the 90-year-old technology is not sufficient for today's wells in extreme environments.

"It isn't clear from this report that blowout preventers can actually prevent major blowouts once they've started," said Rep. Ed Markey, D-Mass., the top Democrat on the House Natural Resources Committee.

DNV, the forensic firm, recommended the oil industry further study whether shear rams can "complete their intended function" and completely cut drill pipe, no matter where it is in the well hole. It said that those conclusions should be incorporated in the design of future blowout preventers and used to modify those already deployed.

"The BOPs are manufactured by a very small number of companies," Interior Secretary Ken Salazar said last July. "And BOPs used across the industry tend to employ standardized components."

A spokesman for Houston-based Cameron, which manufactured the Macondo well's BOP, noted that it "was designed and tested to industry standards and customer specifications," and said the company continued "to work with the industry to ensure safe operations."

Transocean, which owned and operated the Deepwater Horizon, said that the examination confirms the BOP "was in proper operating condition and functioned as designed." The company added: "High-pressure flow from the well created conditions that exceeded the scope of BOP's design parameters."

Satish Nagarajaiah, a civil engineering professor at Rice University, said DNV's report affirms that a "complete shut-off of the well would have been possible," if the blind shear rams had been activated when the pipe was still centered.

The shear rams worked once they were activated, he said, but failed to stop the blowout because "the circumstances under which they performed were so abnormal and so difficult."

Officials for BP, which leased the Deepwater Horizon drilling rig from Transocean, said the oil company agreed with DNV's "recommendation that additional testing should be completed to provide a more comprehensive view of why the BOP failed."


Blowout preventer report could prompt design changes.

The failure of the shear rams in the BOP has already prompted a call for design changes in the way BOPs function, especially under extreme conditions of severe cold or mile-deep seawater.

David Pursell, head of macro research for investment bank and research firm Tudor Pickering & Holt in Houston, said the report calls into question the fundamental design of the shear rams.

"It feels like your fail-safe equipment shouldn't require optimal conditions to work," said Pursell. "By the time you have to close the shear rams, you probably already have a suboptimal situation."

A bill passed in the House but left to die in the Senate would have mandated a second set of shear rams and backup controls in the event the first set failed, but even that redundancy probably would not have stopped the Macando gusher due to the misplaced pipe.

Rep. Ed Markey, D-Mass., the top Democrat on the House Natural Resources Committee, said Wednesday's report casts doubt on whether blowout preventers can ever be counted on, leading him to call for an immediate top-to-bottom inspection of the design and effectiveness of the devices used in U.S. waters.

"Now we know there could also be systemic design issues with blowout preventers that could cause them to be ineffective, even when deployed as intended," Markey said in a statement.

The report likely won't prompt the ocean energy bureau to further slow the pace of deep-water permitting.

Jeff Spittel, an analyst with Madison Williams, said it seems clear BOEMRE officials had some idea of the findings prior to the report's release Wednesday, and wouldn't have granted the handful of deep-water permits they have in the past month if they expected to halt the process again.

"Where it might be problematic is in the case of new exploration wells, where less is known about the pressure and other conditions," Spittel said.

The industry has been making sturdier BOP designs a top priority since the spill, Spittel said.

Cameron International, the maker of the Macondo BOP, National Oilwell Varco and other manufacturers have units in development to handle greater well pressures than occurred in the Macondo blowout, Spittel said.

Problematic, you say? Check out the Chevron wildcat-well story further down the page... And those BOPs designed to handle more pressure than Macando - they are probably more expensive to install and maintain. Cut those corners anywhere you can, BP! Remember your bottom line!

Bob Cavnar at the Daily Hurricane weighs in on BOP design changes...

Yesterday, the Department of Interior released Det Norske Veritas' (DNV) report on the forensic testing that it conducted on the blowout preventer (BOP) that failed to shut in BP's blown out Macondo well almost a year ago.  I'm still going through the 500-plus page report to find answers to my many questions about the failed BOP, but I do agree with the overriding recommendation to the industry from DNV:

    "The finding of these studies should be considered and addressed in the design of future Blowout Preventers and the need for modifying current Blowout Preventers."

DNV was addressing a recommendation to the industry that it study the causes and results of "elastic buckling" of the drill pipe within the Macondo BOP that pushed it to the side of the wellbore, preventing the blind shear ram, or the ram that is supposed to cut the pipe and seal the well, from doing so.  During the time of the blowout, the forces within the well were so strong that it lifted the drill pipe, causing it to buckle and push over to the side of the BOP bore, positioning it outside of the shearing faces of the rams.

Cavnar states that if drilling continues without a full assessment of the weaknesses of the blowout preventers currently in use, and others to be installed, that an accident akin to the Deepwater Horizon - or greater - can easily happen.

The long-delayed DNV report is very thorough and highly technical.  I've been wading through it for several hours and will write about some of their more detailed conclusions in a later post, but I wanted to make this one key point right now:  The US Government is currently issuing permits to drill knowing full well that operators are using blowout preventers that are insufficiently designed to shut in blown out deepwater wells.  I have been talking about this fatal flaw for months now.  The industry and Gulf Coast politicians have been applying unrelenting political pressure on the government to let deepwater drillers go back to work, and it has rationalized its capitulation saying that the industry has demonstrated its ability to contain deepwater blowouts with new equipment designed to do that.  That's not really true, of course, since this new equipment is untested in real life conditions.  Add this to the now well documented flawed BOP design, and we have another potential catastrophe on our hands.

Read eljefebob's entire article at The Daily Hurricane.

The first exploratory (wildcat) well in the Gulf since the Deepwater Horizon blowout has been approved.
Chevron has been given the go-ahead by the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) to drill in a previously untapped area of Keathley Canyon Block 736, approximately 216 miles off the Louisiana coastline and 190 miles southeast of Houston.

The fifth permit issued since the moratorium on deepwater drilling was lifted last October, Chevron's exploratory well is in an area where oil and gas has not been produced. The previous four permits were issued in areas already producing oil and gas.

Chevron is drilling an exploratory well in 6,750 feet of water at its Moccasin project in hopes of discovering oil and gas. The company is effectively making a $1 million-per-day gamble that it will discover oil at the site.

The company first began drilling the well last March, a month before the blowout at BP’s Macondo well. Drilling was suspended on June 9.

Michael Bromwich, the bureau director, said the permit approval “further demonstrates industry’s ability to meet and satisfy the enhanced safety requirements associated with deep-water drilling, including the capability to contain a deep-water loss of well control and blowout.”

The permit could amplify concerns about the reliability and strength of blowout preventers, following a report Wednesday on the one used at BP’s doomed well in the Gulf. A four-month investigation of that blowout preventer revealed that it was unable to successfully shear through drill pipe and seal oil and gas underground because that pipe had buckled and shifted off center.

Offshore drilling advocates cheered the permit approval. Randall Luthi, president of the National Ocean Industries Association, said that while all of the deep-water permits issued to date are good news, “today’s approval of a permit for truly new deep-water exploration in the Gulf of Mexico is particularly noteworthy and is a milestone we have been awaiting.”

“We are encouraged that the backlog of permit applications is slowly growing smaller, and that some of our member companies who were sidelined for the past year will soon get back to work in the Gulf,” Luthi added.

On Tuesday, BOEMRE gave Exxon Mobil Corp. the go-ahead to drill a new well in the Keathley Canyon area of the Gulf, the first permit approved designating the MWCC system. As part of that process, federal regulators reviewed the operator's containment capability for the well and confirmed that the capabilities of the capping stack met the requirements specific to the proposed well's characteristics, the agency said.

Chevron has partnered with Marine Well Containment Company to contain the well in case of a sub-sea blowout.* Regulators require "proof" that the drilling enterprise can contain a spill prior to issuance of a permit. Chevron joined three other major oil companies — Exxon Mobil, Shell and ConocoPhillips — to form the MWCC after last year’s spill. BP, Apache Corp. and Anadarko Petroleum Corp. have since joined the containment company.

If you are still filling out your oil-permit brackets, here is what is on the books so far:

    * Feb. 28: Noble Energy secured a permit to drill a bypass well in its Santiago prospect about 70 miles southeast of Venice, La. (This is Mississippi Canyon Block 519).
    * March 11: BHP Billiton Petroleum secured a permit to drill in its Shenzi Field, 120 miles from the nearest Louisiana shoreline. (This is well SB 201 on Green Canyon Block 653).
    * March 18: ATP Oil & Gas secured a permit to finish drilling a well at its Telemark Hub about 90 miles south of Venice, La. (This is well no. 4 in Mississippi Canyon Block 941).
    * March 22: Exxon Mobil secured a permit to drill a new well in its Hadrian North field about 240 miles from the Louisiana coast. (This is Keathley Canyon Block 919).

(We all know who ExxonMobil is...)

*And for all who watched the gusher last summer, and are familiar with the equipment and layout used to try to control it, to very little avail, please go to the MWCC site and click on number 2 on the opening page photo montage. Tell me, does that collection of subsea gear look suspiciously like what we saw last summer that didn't work too well?

Just sayin'...

The deal between BP and Rosneft has been blocked. An arbitration tribunal has blocked a proposed $7.8 billion dollar share-swap deal and Arctic exploration plans between London-based BP and the Russian company OAO Rosneft. BP was attempting to lock up an agreement that would open vast areas in Russia to oil and gas exploration.

In a statement, BP said it was disappointed by the outcome of the tribunal and that it would look to find a way to “resolve its differences” with the Russian billionaire partners in its TNK-BP joint venture. It will also apply for a ruling as to whether the share swap can proceed by itself.

BP’s partners had claimed exclusive rights to pursue new opportunities in Russia for BP. Last month, they won a court injunction to delay the deal. AAR, the group that represents the billionaires, said in a statement today that TNK-BP is interested in finding a way to work with Rosneft itself.

Tensions between BP and the billionaires have escalated after two years of peace following a battle over TNK-BP’s strategy in 2008 that damaged output at Russia’s third-largest oil producer.

Russian Prime Minister Vladimir Putin had encouraged the deal, which would have been a first between a state-owned operation and an international oil producer.

The deal would have opened a 48,000 square mile area around the Kara Sea, north of developed drilling areas in western Siberia. The first well was planned to be drilled in 2015, with production only commencing around 2025.

TNK-BP management, led by billionaire shareholder and interim Chief Executive Officer Mikhail Fridman, had proposed replacing BP in the planned partnership with Rosneft, an arrangement that was rejected at a March 12 meeting in Paris by BP’s four directors on the TNK-BP board.

BP’s agreement to set up a strategic alliance with Rosneft, Russia’s largest oil producer, “would inevitably lead to conflicts of interest and new tensions between the shareholders,” TNK-BP said March 13.

Putin said on March 4 that TNK-BP CEO Robert Dudley had left him “completely unaware” of a potential spat. Neither TNK-BP nor the British company informed Rosneft that “there could be any difficulties,” Putin said.

That dispute led to Dudley's - now CEO of BP - dismissal after five years at the helm of TNK-BP.

Russian Deputy Prime Minister Igor Sechin, who is also Rosneft’s chairman, described the alliance with BP as a “strategic priority” and warned both BP and the billionaire shareholders of legal action if the deal were sabotaged, according to an interview with the Wall Street Journal published Feb. 22 and confirmed by Rosneft spokesman Rustam Kazharov.

Oil Companies That Gave ‘Bonuses’ to Libya Also Lobbied Against Disclosure Rules.

Multinational companies operating in Libya have had to deal with many obstacles, including a government rife with corruption that often asked for what amounted to bribes.

Sometimes those companies balked; sometimes they paid them. The New York Times cited an example of two oil companies who made other payments to Libya:

    In 2008, Occidental Petroleum, based in California, paid a $1 billion “signing bonus” to the Libyan government as part of 30-year agreement. A company spokesman said it was not uncommon for firms to pay large bonuses for long-term contracts.

    The year before, Petro-Canada, a large Canadian oil company, made a similar $1 billion payment after Libyan officials granted it a 30-year oil exploration license, according to diplomatic cables and company officials.

Last fall, representatives from ExxonMobil, Anadarko Petroleum, Chevron, ConocoPhillips, Marathon Oil, and Occidental—all members of the American Petroleum Institute, an oil and gas trade group—met with SEC officials to raise objections to the rule, the Wall Street Journal noted at the time.

According to a memo published by the SEC [PDF] after the meeting, the disclosure rules would apply to the seven oil companies operating in Libya that report to the commission. They are: Hess Corporation, Chevron, Occidental Petroleum, Shell, Eni, Husky Oil, Petro-Canada, Repsol, StatoilHydro and Canadian Occidental.

The American Petroleum Institute has touted a separate transparency program called the Extractive Industries Transparency Initiative, which it describes as a “voluntary, multilateral, multi-stakeholder global effort to promote revenue transparency in resource-rich countries.”

Aah, the American Petroleum Institute... a fine, upstanding, above-board, honest, TRANSPARENT organization with only our best interests at heart. The thought of a division of API policing the safety of deepwater drilling - or any drilling, for that matter - sends cold chills up my spine...

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:

3-23-11 06:00 AM Gulf Watchers Wednesday - Recent Gulf Spill Culprit Found - BP Catastrophe AUV #490 peraspera
3-20-11 10:54 AM Gulf Watchers Sunday - Another Leaking Deepwater Rig in the Gulf? - BP Catastrophe AUV #489 Lorinda Pike
3-18-11 04:59 PM Gulf Watchers Block Party: Ballads BlackSheep1
3-18-11 08:12 AM Gulf Watchers Friday - We Are Royally Screwed - BP Catastrophe AUV #488 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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