Here’s one I bet you haven’t heard much about. And of course, the problem of increased costs, for insurance, for dealing with expanded and improved and revised drilling regulations that will be required to minimize the risks of another blowout can’t be ignored.

See the update comment under the fold about partner liabilities, also quite informative.

Anadarko owns a 25 percent stake in London-based BP’s Macondo well, where the April 20 rig disaster killed 11 people and set off leaks spewing an estimated 5,000 barrels of oil a day into the sea. Anadarko, based near Houston, had no say in how the well was drilled.

“They were basically the passenger and somebody else was doing the driving, so the car crashed,” said Fadel Gheit, an analyst at Oppenheimer & Co. in New York. “What we see here is that Anadarko got hurt more than the driver.”

Pound for pound, Anadarko may have to pay more than BP. ING Bank NV estimated that costs of the spill may reach $7.8 billion. Anadarko may have to pay as much as 25 percent of those expenses, which would be almost $2 billion, if ING’s forecast proves accurate. BP, which owns 65 percent of Macondo and is project operator, is 29 times the size of Anadarko by revenue and almost eight times as big based on reserves available for future production.
source: Spill May Hit Anadarko Hardest as BP’s Silent Partner, Bloomberg Businessweek

So here’s another area that deepwater drilling is going to see major ripple affects down the road: the willingness of businesses to invest in drilling ventures. And of course, also the ongoing problem of insurance re-adjustments for deep water drilling. All in all, Deepwater Horizon is looking to be a major game changer in global oil production.

The price to insure offshore rigs will almost certainly rise as the accident’s cost to the insurance industry becomes clearer. Premiums may remain permanently higher if the investigation of the disaster reveals previously unknown dangers, or if the inevitable legal wrangling breaks new ground in assigning blame more broadly than insurers expected.
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I am posting this in its entirety, because I want this message to be clearly understood.

Shelburn posted this in order to clarify the complexity/difficulty, as well as the frustrations, of the people who have been brought in to deal with the results of some bad decision making/processes/internal BP policy in regards to safety vs economics. So I think people should understand that dealing with the results of catastrophic errors is not the same as watching a CSI investigation where everything ties up neatly by the last commercial break.

shelburn here is responding to another poster’s comments, one who I believe well represents the views held by people who depend on TV for their news. To get to the original theOilDrum.com thread, just click on the link on shelburn’s name below.

shelburn on June 5, 2010 – 4:06am Permalink | Subthread | Comments top

From “bucket” on June 4, 2010 – 9:37pm

shelburn:

With all due respect:

1. We would recall that the object here should be to keep the oil out of the water, not to obtain production from this blown out well.

2. If there is any question of processing capacity at the surface, the better answer is to increase processing capacity, not to send more oil into the water.

3. The top hat may not have been designed to take any significant pressure, but there are various kinds of containment structures even of the size of the BOP that will take a lot of pressure, like 15,000 psi. They are not cheap. But they are cheaper than what the spilled oil costs the nation and the world.

4. There exist various techniques for “gasketing” the bottom of such a containment structure placed over the BOP etc. now gushing oil, including into the mud of the sea floor, such that oil will not be forced out the bottom because the top is sealed. Interlocking heavy concrete pads, with multiple packing structures, etc.

5. If there are concerns about the strength and ability to handle pressure of the BOP structure or the well casing below it (as well there may be) the right answer is to drill into the sea floor in the area surrounding down to solid rock (even if it is some distance down), set fasteners of great tensile strength, and then pull against them (through sheaves, etc.) using cables from surface ships, pulling down any device (containment structure) that one needs to seriously seal. (With tons of force.) The reserve buoyancy of the large surface ships is the biggest physical “fulcrum” in the whole picture. (The weight of a drill collar under water is laughably small in the scheme of things.)

One can tell you are a very smart guy, and know the oil business, and can think carefully in an “oil business” kind of way. For the rest of the country watching the live feed videos, however, the anger and frustration at watching the various “cutesy” and, basically, “fussing” approaches taken when we want to see executed a very simple, very certain, very capable, approach that will stop the flow of oil from the blown out well into the water, without any concern as to cost (whatever it is, it will be vastly cheaper than the costs imposed by the spill), or as to production (the world will be just fine without ever seeing a drop of oil from this reservoir). Quite literally, put a very, very strong bucket over it. Tie it down very tight. Then talk to us about any other issues.

There are a number of ground rules you should understand:

A – the safety of the several hundred men working directly above this well is an absolute priority.

B – the laws of physics must be obeyed, not my choice, just immutable fact.

C – If what you do increases the spill you haven’t done any good.

D – cost is no object, well maybe if it is $100 million or over, but then BP would pay $100 million in a heartbeat if they could stop this spill.
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I was following the daily theOilDrum.com BP Deepwater Horizon blowout thread, when I came across this interesting discussion.

A few things. Note the starting two Gulf accident reports. Keep those in mind. This is risky dangerous work, and unless you have the good fortune to have a guy like ROCKMAN in charge, that risk might even be encouraged by the company in order to cut costs and expedite well completion times. So read and weep:

Accident 1:

junkshot on June 4, 2010 – 9:29am Permalink | Subthread | Comments top

Executive Summary
An accident that resulted in one fatality and a brief loss of well control occurred on Forest Oil Corporation’s (FOC) Platform B, High Island Block A-466, Well B-11, Lease OCS-G 03242 in the Gulf of Mexico, offshore the State of Texas, on February 20, 2006, at approximately 0820 hours. Forest Oil Corporation had hired the contractor, Twachtman, Snyder & Byrd, Incorporated (TSB), to conduct plug
and abandonment operations on Well B-11.

From February 14, 2006, to February 19, 2006, plug and abandonment operations were being conducted on the subject well. The tubing was being stripped out of the hole by using a hydraulic rig (casing jacks) when the tubing became stuck on February 19, 2006. On the morning of February 20, 2006, an attempt was made by FOC’s “company man” to pull the tubing, when the tubing parted. The parted tubing was forced upward, causing the top slips to be ejected from the top bowl of the casing jacks. The ejected slips fatally struck FOC’s “company man” as he attempted to evacuate the immediate area.
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As noted, this oil spill dispersion model video is just a computer model, and will depend on various factors that are as of yet unknown, for example if the LMRP unit works, what percentage of the oil it gets if it does work, how bad the hurricane season will be, and I’m sure many other things. But here it is, for what it’s worth.

I assume that uses current, quantities of oil not broken up or scooped up, and many other variables.

While disaster looms large, and everyone is following this on TV, it’s useful to remember that in 1979 there was another oil rig blowout, in the Mexican waters of the Gulf, the Ixtoc blowout. Everyone was certain that the Gulf would be dead for decades, but what actually happened, due primarily to the heat and relatively shallow waters of that area, was that the microbes that exist already in the Gulf and which feed on oil (because oil seeps into the Gulf constantly from natural seeps) ate the oil really fast and the area largely recovered, though of course Texas got tar balls on the beach for a long time.

So people are looking back at that blowout now to see what the analogies are, and what we can learn from it.

In terms of blowouts, Ixtoc 1 was a monster — until the ongoing BP leak, the largest accidental spill in history. Some 3.3 million barrels of oil gushed over nearly 10 months, spreading an oil slick as far north as Texas, where gooey tar balls washed up on beaches.

Surprisingly, Mexican scientists say that Campeche Sound itself recovered rather quickly, and a sizable shrimp industry returned to normal within two years.

…
Soto and other Mexican marine scientists feared the worst when they examined sea life in the sound once oil workers finally capped the blowout in March 1980.

“To be honest, because of our ignorance, we thought everything was going to die,” Soto said.
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