Time to Cooperate

When the Enron scandal brought down Arthur Andersen, it was an open secret that the hearts of the other four of the “Big Five” accounting firms skipped a beat.  Arthur Andersen had done nothing that the other four hadn’t also been doing, but Arthur Andersen was the unlucky company which got caught, prompting the others to change their work pratices pretty damned quickly.

A friend of mine tells me that Shell has sent an internal memo around saying there is a time to be a competitor, and there is a time to show support, and now is the time to show support for BP over the Macondo well disaster.

I am certain that the other five supermajors will all be contributing everything they can to help BP, which is why suggestions to hand everything over to ExxonMobil are pretty daft (even assuming that Exxon really want a runaway well spewing crude all over the Gulf of Mexico dumped on their desk because they happen to be American and acceptable to the more nationalistic of the US public at large).  It is the entire industry which is under scrutiny here and the ramifications of this disaster will be far reaching and affect all oil companies severely.  It is very much in everybody’s interests to get this thing under control and minimise the damage.

Also, I expect when the technical aspects of the accident become known to the other majors they might well see some similarities, or maybe even little difference, with their own operating practices.  Maybe one or two of them will be able to relate what happened to BP to a situation they had previously.  Guaranteed they will be changing their procedures as we speak, but I wonder if there are any oil company executives waking in the night in a cold sweat thinking “That could have been us.”

The Nutters Emerge

BP is clearly struggling to get the Macondo well under control, and it’s latest attempt at a “top kill” has unfortunately failed.  Last night I was watching BP’s live video feed from the ROVs which are on the bottom of the sea around the well (Yes, I need to get a life.  Or a job.  I’m working on it, okay?  Watching ROV feeds is free, drinking beer all night long costs money) and I watched an ROV attempt to cut a clamp fixing one of the pipes to the BOP with a circular saw.  They managed to drop the thing and break it, and without a spare in the toolbox a mile under the sea they had to go back to the surface (a 30 minute trip) to either get it fixed or get another one.  For anyone interested in subsea engineering it was pretty interesting stuff, and it is rare you get to see a live feed of this work going on.  A bunch of like-minded folk, or geeks, have set up a live chat page where the activities of the ROVs can be commented on in real time.  It’s far more amusing than you think.  Clearly, I was not the only one who thought the ROV wielding a circular saw in the eerie light of its headlamps looked like an outtake from Terminator, and when the saw was dropped everybody chorussed “Butterfingers!”  Well, it was funny at the time.  I guess you had to be there with an engineering degree and a healthy interest in subsea well-head repair.

Anyway, BP’s struggles to regain control of the Macondo well has given license to various nutters to come out with bright ideas on how to fix it.

First we have this (currently just a rumour):

Hayride sources indicate that today’s effort at a “top kill” of the Macondo gusher carries with it gigantic stakes for BP – as if no measurable progress is made on the spill through that method, President Obama will announce when he comes to New Orleans on Friday that the federal government will seize control of the response from BP and turn it over to the U.S. Navy.

Secretary of the Navy Ray Mabus has reportedly floated the idea of sinking a battleship directly on top of the Macondo well in order to drop 80,000 tons on it and crush the drill pipe and the blowout preventer alike.

Yes, one way to improve a situation where you have a leaking well, a damaged BOP and a broken riser is to change things whereby you have a leaking well, a damaged BOP, a broken rise, and a ruddy great 80,000 ton battleship sat on top of it all.  That’ll really test the skill of the ROV operators! I am almost certain that Mr Mabus is contemplating no such thing, but it hasn’t stopped people in various comments threads around the internet nodding their heads enthusiastically at the simplicity of it all.

But some of these suggestions are more than just rumours and are being made in all seriousness.  There is a chap called Matt Simmons who thinks the “only thing we can do” is to explode a nuclear weapon in the well to seal it up:

Simmons said the US government should immediately take the effort to plug the leak out of the hands of BP and put the military in charge.

“Probably the only thing we can do is create a weapons system and send it down 18,000 feet and detonate it, hopefully encasing the oil,” he said.

So kick BP off the job and then “create a weapons system”.  Then let it off “hopefully encasing the oil.” Like all good ideas, it’s obvious when pointed out.  And of course, the effects of letting off a nuclear bomb in an enormous oil and gas reservoir beneath the seabed are all known and quantified, are they?  Somebody said the oil would just evaporate, presumably thinking “evaporate” means “cease to be” instead of “turn from a liquid into a gas”.  Then where would the gas go?  We’re not told.

“If you’re 18,000 feet under the sea bed, it basically wont do anything [on the surface],” he said.

Well, that’s reassuring.  Mr Simmons is … wait for it … an investment banker.  An investment banker?!!  Aren’t these the chaps who created a global toxic mess all of their own a while back?  Why the hell is anyone listening to him?

The problem is the story has gained traction because apparently nukes have been used to collapse a well before by, you guessed it, the Russians.  Whenever there is some batshit daft idea floating about that involves nuclear weapons doing something that nuclear weapons are not meant to do, somebody always digs up a story where the Russians have done it.  One would be forgiven for thinking the Russians spent three decades playing a huge episode of Mythbusters where they tried to do all kinds of crazy stuff with nukes.  The story originated in Komsomoloskaya Pravda, but it wouldn’t surprise me if the editor had seen Borat and thought he too could make westerners look like ignoramuses by peddling a story about the Soviet Union that would be swallowed whole.

Weapons labs in the former Soviet Union developed special nukes for use to help pinch off the gas wells. They believed that the force from a nuclear explosion could squeeze shut any hole within 82 to 164 feet (25 to 50 meters), depending on the explosion’s power. That required drilling holes to place the nuclear device close to the target wells.

A first test in the fall of 1966 proved successful in sealing up an underground gas well in southern Uzbekistan, and so the Russians used nukes four more times for capping runaway wells.

“The second ‘success’ gave Soviet scientists great confidence in the use of this new technique for rapidly and effectively controlling ran away gas and oil wells,” according to a U.S. Department of Energy (DOE) report on the Soviet Union’s peaceful uses of nuclear explosions.

A last attempt took place in 1981, but failed perhaps because of poor positioning, according to a U.S. Department of Energy report.

Sadly, a search of the Department of Energy’s website using a variety of terms, including the sentence supposedly quoted from a DoE report, reveals nothing of Soviets blowing up their wells with nuclear weapons.  Still, the story has legs because there is a small but vocal group of people (which includes some Americans) who think all Americans are as thick as pigshit and everybody else, especially the Russians, are ten times smarter.

Komsomoloskaya Pravda suggested that the United States might as well take a chance with a nuke, based on the historical 20-percent failure rate.

Somehow I doubt the Americans are thick enough to be taking advice from a Russian newspaper on the use of nuclear weapons in oilfield applications.

UPDATE

I stand corrected: it seems there is a DoE report describing Soviet use of nuclear weapons in peaceful applications, including for shutting off runaway gas wells.  Fascinating stuff.  Although I think the use of such a device at the bottom of the Gulf of Mexico on the Macondo well would be insane.  That the Soviets did something is not usually a reliable indicator that it was a good idea.

The Evacuation of the Deepwater Horizon

There is another good article in the Wall Street Journal which describes the chaos on the Deepwater Horizon during the evacuation, based on interviews with people who were on board at the time.  It is worth reading in full, but I must take issue with a summary the WSJ has made:

An examination by The Wall Street Journal of what happened aboard the Deepwater Horizon just before and after the explosions suggests the rig was unprepared for the kind of disaster that struck and was overwhelmed when it occurred. The events on the bridge raise questions about whether the rig’s leaders were prepared for handling such a fast-moving emergency and for evacuating the rig—and, more broadly, whether the U.S. has sufficient safety rules for such complex drilling operations in very deep water.

Let’s hold on a minute, shall we?  126 people made it off the rig via the lifeboats, a liferaft, or jumping into the water.  11 people were killed, 10 of whom the article confirms were killed by the initial explosion (the fate of the eleventh is not mentioned).  In other words, of those who could have made it off the rig alive, all but one did so and that one is very much open to question.  On a rig that’s just had a huge blast rip through it and is now on fire, that’s pretty damned good going.

The chain of command broke down at times during the crisis, according to many crew members. They report that there was disarray on the bridge and pandemonium in the lifeboat area, where some people jumped overboard and others called for boats to be launched only partially filled.

Well, yes.  There probably was pandemonium and a lack of cool heads on a rig which has exploded and is on fire with an out-of-control well underneath it.  If I was in the lifeboat with 250ft flames shooting out of the well hole I’m not entirely convinced I wouldn’t be yelling for them to release the damned thing instead of – literally – hanging about waiting for others who might not come, selfishness be damned.  That the lifeboat didn’t leave half empty is testament that some people running the evacuation process kept a cool head, and whoever they were they deserve the utmost praise.

I’m not sure what else is expected during a rig fire.  Perhaps a couple of colonial British officers, calmly sipping gin and tonics:

“I say, old boy!  That was an awfully loud bang, rattled the ice in my glass, it did.  And now that blasted heat has it all melted, and you know how difficult it is to get ice out here in the Gulf of Mexico, eh what?!”

I hope before long the industry will thank those who ensured that 126 lives were saved, and I am slightly dismayed by how little positive coverage the evacuation received in the press.  Twenty years ago a rig fire like that would have left few survivors.

Fateful Decisions on the Deepwater Horizon

For all my dismissal of the mainstream media in their coverage of the Macondo disaster, it appears (thanks to Gringo in the comments) that the Wall Street Journal is doing a pretty fine job of it.  This article is probably the most comprehensive and technically accurate account of what happened before the well blowout, and they have achieved something of a scoop by managing to interview not only people who know what they are talking about but those who were actually there.

All the signs are pointing towards corners being cut at the behest of BP representatives to complete work on the well which was already behind schedule and over budget.  I highly recommend reading the article in full, because I am only going to quote certain parts of it here.

Firstly, a brief summary of what they did wrong:

BP, for instance, cut short a procedure involving drilling fluid that is designed to detect gas in the well and remove it before it becomes a problem, according to documents belonging to BP and to the drilling rig’s owner and operator, Transocean Ltd.

BP also skipped a quality test of the cement around the pipe—another buffer against gas—despite what BP now says were signs of problems with the cement job and despite a warning from cement contractor Halliburton Co.

Once gas was rising, the design and procedures BP had chosen for the well likely gave this perilous gas an easier path up and out, say well-control experts. There was little keeping the gas from rushing up to the surface after workers, pushing to finish the job, removed a critical safeguard, the heavy drilling fluid known as “mud.” BP has admitted a possible “fundamental mistake” in concluding that it was safe to proceed with mud removal, according to a memo from two Congressmen released Tuesday night.

This speaks for itself.  Industry best practice and the advice of the specialist contractors were not followed and warnings were ignored with disastrous results.  This is not looking good for BP.

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A View of Life in Phuket

Living in a place like Phuket is similar to living in a place like Dubai.  Phuket, like Dubai, is primarily a holiday resort and holiday resorts are not normal places.  If you come here on holiday you will have a whale of a time, and you’ll visit the excellent but cheap restaurants, lie on the beach enjoying almost perfect weather, enjoy the numerous bars and the, erm, ever so friendly staff, and really kick back and enjoy the laid-back lifestyle which tourists assume is the same for everybody.  Seriously, it is a great place for a holiday.

But living here?  Well, that’s pretty damned good too.  If it wasn’t, I wouldn’t have bought a place here.  But when tourists tell me how lucky I am and how great it must be to live here, I do offer a word of caution: it isn’t half as good as it would first appear, and if you do live here you have to keep your feet on the ground.

So what do I mean by that?  Well, same as I did when I realised it in Dubai.  Most people who you see out in Patong, the town where I live and the main tourist area of Phuket, are indeed tourists.  They are extremely positive, very happy, carefree, outgoing, and very sociable.  Of course they are, they’re tourists, and that is exactly how they should be.  In fact, it is pretty good fun meeting a small group of tourists and joining  them on a night out, because they are genuinely out to have fun.  More than a few times I’ve hooked up with a bunch of Australians in a bar while watching rugby or cricket and joined them on a tour of the bars once the match has finished.  But the tourists leave, and more arrive.  You can quite happily maintain a lifestyle of drinking and partying and a positive outlook on everything you see for 1-2 weeks of a holiday, and as Dubai showed me, you can keep it up for about 6-12 months if you live in such a place.

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The Wisdom of Academics

Upstream Online provides us with a good example of the type of rubbish which is being bandied about regarding the Macondo well (emphasis mine):

Estimates for the flow rate have been controversial since the spill began after a blowout at the well on 20 April.

BP and the US Coast Guard first estimated the flow rate at just 1000 bpd and then later revised that figure to 5000 bpd, but admitted that there was a wide margin of error around that figure.

Academics and outside experts had said they believed the flow could be as high as 70,000 bpd to 100,000 bpd, despite the fact that the record production for a well in the US Gulf is a little bit more than 40,000 barrels per day.

What kind of academics and outside experts were these?  Can we at least name them so we know to disregard anything they say in future?

UPDATE

Named.  Can we now start the shaming?

BP’s Assets

I’ve just watched a CNN video of Barack Obama addressing a group of journalists about the federal government’s response to the Macondo oil spill, and he has reiterated that the government just does not have the assets that BP has which can be used to stop the leak (I can’t find a transcript of the video).

Firstly, are there really people out there who think the US government owns a few semi-submersible drillships and a fleet of ROVs which lie idly in a harbour in the event of an oil spill?  Why is it those who are so keen on government intervention usually have the least idea what of the government can actually do?

Anyway, Obama went on to say that it is a valid question to ask whether the government should acquire assets such as those BP has in the event of another major offshore spill, and he will look into that.  But I fear Obama has got something fundamentally wrong here.  BP also does not have the assets which are being used to rectify the leak in the Macondo well which is proving so technically difficult.  Almost all the vessels and equipment working at the site are owned not by BP but by their subcontractors.  The Development Driller III, the Discoverer Enterprise, and the Development Driller II are owned by Transocean, the company which owned the Deepwater Horizon which was drilling the well and was lost when the well blew out.  The Q4000 is owned by Helix.  The ROVs seem to be owned and/or operated by Oceaneering.  All BP are providing is specialist knowledge, key personnel, and – crucially – the management and direction of several dozen contractors involving the expenditure of millions of dollars per day.  The assets themselves were kicking around on the open market available for hire to anyone who needs them and can afford them.

Something Obama said later in the video suggested he understood that BP’s oil spill response involved the rapid execution of many contracts that were already in place for this precise purpose, but I’m not convinced he or many others realise that BP did not suddenly show up with a load of kit they had lying about, but instead embarked on an impressive feat of contract management (which only oil companies can really manage) in order to bring all the necessary expertise and equipment to where it was needed in record time.

It is not assets that the Federal Government needs, it is an emergency response plan which will allow them to engage the immediate services of the companies which have the expertise and equipment to get the job done.  This might work well for cleanup and containment activities, after all the environmental protection agencies and the coast guard have much of the expertise to be able to coordinate such a response.  But shutting off a rogue well a mile under the sea?  If the government wants to be in a position to be able to coordinate contracted companies to do this sort of stuff, they’re going to have to create a government department stuffed full of oil industry technical experts, project managers, contract managers, and cost controllers at great expense who will set up the response plan before putting their feet up for a decade or two waiting for the next big spill.  Actually, that sounds pretty much like many a government department and a cushy role to boot.  Maybe I can get myself in there?

It isn’t going to work, a government just isn’t suited for a role this complex.  Better to make sure all companies who have a license to operate have a proper emergency response plan in place which enables them to get the necessary men and equipment to the scene should the need arise.  Oh, wait: they already have this requirement, which is why BP was pretty slick in getting vessels and other equipment to the site once the accident happened.

So what should the government do?  Want my advice?  Get on the phone to Rex Tillerson and ask if ExxonMobil wouldn’t mind, for a fee, being on call 24/7 to jump in and manage the next offshore blowout on behalf of the US government.  But don’t start buying semi-submersible drillships because you think BP owns some.

Back Pedalling over BP

Further to this post we get an unsurprising admission:

The Obama administration is facing a rising tide of anger against its handling of the Deepwater Horizon oil spill and acknowledged on Sunday that it did not have the technical capabilities to step in and fix the gusher on its own.

That would be the same day you threatened to kick BP off the job, then.  Good to see everyone is keeping a cool head in this time of crisis.

Besides, I’m not so sure what the administration is so worried about.  So the public are angry.  Angry at whom?  For once, I’m confident in saying that it is not the government’s fault that there was a well blowout at the Macondo prospect and stemming the flow is proving to be a technical nightmare.  They need to get up there and say so, not sound off like some tough guy and backtrack the same day.  That’s not helping anyone.

Still, the childlike faith some people have in the omnipotency of government is almost touching.  Did they learn nothing from Katrina?

Macondo Failure Mechanisms Identified

We are still far from getting a clear idea of what exactly caused the well blowout on BP’s Macondo prospect, but the invesigation has managed to identify seven control mechanisms on which it will focus:

The investigation team’s work thus far shows that this accident was brought about by the failure of a number of processes, systems and equipment. There were multiple control mechanisms— procedures and equipment—in place that should have prevented this accident or reduced the impact of the spill: the investigation is focused on the following seven mechanisms.

1. The cement that seals the reservoir from the well;
2. The casing system, which seals the well bore;
3. The pressure tests to confirm the well is sealed;
4. The execution of procedures to detect and control hydrocarbons in the well, including the use of the BOP;
5. The BOP Emergency Disconnect System, which can be activated by pushing a button at multiple locations on the rig;
6. The automatic closure of the BOP after its connection is lost with the rig; and
7. Features in the BOP to allow Remotely Operated Vehicles (ROV) to close the BOP and thereby seal the well at the seabed after a blow out.

As is the case in almost all large oilfield accidents, the Macondo blowout is likely to be the result of mutliple failures or errors, and not a single idenifiable cause.  There will be four main questions to answer during the investigation:

A.  Why did blowout conditions arise in the well?
B.  Why did the measures put in place to prevent a blowout not work?
C.  Why was the blowout not contained once it was inevitable a blowout would occur?
D.  Why were the effects of the blowout not minimised once it had occurred?

    Referring to the list of seven failure mechanisms above:

    No. 4 is a factor related to the blowout occuring in the first place (A); controlling pressures in the well is essential to avoiding this.

    Nos. 1, 2, 3 and (to an extent) 4 are factors related to the blowout occurring once conditions had formed (B); cementing, casing, and the BOP are supposed to prevent a blowout occuring even if well conditions indicate there is a risk of such.

    Nos. 5  and 6 are factors related to the blowout not being contained as it should (C); a BOP is not only a tool used in the control of well conditions to prevent a blowout occurring, it is also a device for slamming the door shut once a blowout is inevitable.

    No. 7 is a factor related to the degree to which the disaster escalated (in terms of oil released) once it had occurred (D).

    Complicating things even further is the fact that some of these questions will overlap, and the answers will also overlap one another.  For instance, a faulty BOP might be crucial in both failing to measure and control the well pressures as well as failing to contain the blowout.

    Determining exactly which of the seven mechanisms contributed to which failures is going to be a complex task.  As BP CEO Tony Hayward has stated, presumably to a target audience of simple politicians and the equally simple media:

    “I understand people want a simple answer about why this happened and who is to blame. The honest truth is that this is a complex accident, caused by an unprecedented combination of failures … a number of companies are involved, including BP, and it is simply too early – and not up to us – to say who is at fault.”

    Quite.  Major accidents in the modern oil and gas industry are rarely simple affairs, and the Macondo blowout is no exception.

    Having read the BP press releases, I get the impression they are beginning to realise what sort of clowns they are dealing with in the mainstream media and are hedging their comments accordingly.  Take this one, for example:

    BP today confirmed that following detailed discussion with the National Incident Commander, Admiral Thad Allen, it will continue to provide live video feeds from the seabed throughout the planned ‘top kill’ procedure – the attempt to stop the flow from the damaged MC252 well by pumping heavy drilling fluids into it.

    Throughout the extended top kill procedure – which may take up to two days to complete – very significant changes in the appearance of the flows at the seabed may be expected. These will not provide a reliable indicator of the overall progress, or success or failure, of the top kill operation as a whole. BP will report on the progress of the operation as appropriate and on its outcome when complete.

    Translation:

    We are doing as requested by being open and transparent in sharing the live feed of our attempts to stop the oil flow from the Macondo well.

    However: idiotic journalists and politicians, please do not leap to ill-informed conclusions based on what you see from a 30-second cursory glance and run your mouths off to the whole world about how badly we’re doing.  Contrary to your earlier comments, we do have some idea what’s going on down there, and almost certainly a better idea than you do.  So let’s just keep our mouths shut and our typewriters silent until we have some concrete information, eh?

    Finally, spare a thought for Robert Dudley, BP Vice President for the Americas and Asia.  He was the former CEO of TNK-BP who had his work visa application turned down as part of the Kremlin’s efforts to force BP to cede control of the company to somebody more favourable to themselves.  As he departed Russia for the last time on the flight to his new posting, he must have thought the days of being hounded by politicians with an axe to grind were behind him.

    More Macondo Madness

    Just when I was beginning to think the US government couldn’t get more stupid regarding the Macondo oil leak, we get this:

    Oil firm BP may be “pushed out of the way” if it fails to perform in the Gulf of Mexico oil disaster clean-up, a top US official has warned.

    Interior Secretary Ken Salazar said the British company had missed “deadline after deadline” in its efforts to seal a blown-out oil well.

    “If we find they’re not doing what they’re supposed to be doing, we’ll push them out of the way appropriately,” Mr Salazar told reporters after visiting BP’s US headquarters.

    So they’re  going to boot BP off the job?  And who, then, is going to plug the leak?  Politicians?  Perhaps we could put Hilary Clinton’s mouth over the wellhead?  Or stuff the latest draft of the healthcare bill into the hole?  Who else can muster a flotilla of cleanup vessels and the army of subsea experts BP currently have on the scene?  Is Mr Salazar so completely deluded as to the capabilities of government – which, in case we forget, could not organise putting people onto buses three days before hurricane Katrina – that he thinks they are in a position to cap a leaking well a mile under the sea?

    As the BBC article helpfully acknowledges:

    Although it is within the government’s power to push BP aside, our correspondent says BP is the only organisation with the knowledge to deal with a situation like this at such a depth.

    Quite. Regardless of what BP has failed to do thus far, kicking them off the job now would be the height of stupidity.  As The Economist notes in an extremely well written and researched article:

    Where once the ill-fated Deepwater Horizon drilling rig floated in solitary splendour, there are now two similar rigs, along with the Discoverer Enterprise, a drilling ship; the Viking Poseidon, which knows how to install things on the sea floor; four mother ships for remotely operated underwater vehicles; various barges and supply vessels; and the Q4000, a rig that specialises in repairing and closing wells. If the well that the Deepwater Horizon was in the process of closing off four weeks ago continues to spray oil into the sea for months to come, it won’t be for a lack of expensive, sophisticated and improbable-looking hardware a mile up above it.

    The reason BP is struggling is because what it is trying to do is exceptionally difficult.  Yet understanding that seems to present an even bigger obstacle to some people.