Nature and Environment Archive


What’s Changed About Deepwater Drilling Since Macondo? Not a Lot.

Monday, May 7th, 2012

April 20th at 9:50 pm central time marked the exact time that BP’s deepwater well named Macondo blew out, killing eleven workers, destroying Transocean’s Deepwater Horizon, and putting 5 million barrels of oil into the water 5,000 feet below the surface of the Gulf of Mexico.  Most of the world has moved on since then, thinking that everything in the Gulf is okey-dokey, and anxious to hear the latest news on Janet Jackson and Dancing with the Stars.  In the meantime, the industry is back to drilling the deepwater, oil continues to come ashore, and deformed seafood has begun to occur in alarming numbers.  And what is our Congress doing about offshore safety?  Going backwards by passing legislation in the House that actually reduces environmental review of new offshore leases.

This blog spent most of 2010 talking about the blowout and subsequent spill, trying to make sense out of the nonsense coming out of BP and much of the media.  Hopefully we helped change the conversation by explaining the mechanics and politics about what was going on.  BP was successful, with the help of the US government, in getting the 24/7 news coverage shut down in July of 2010 when they undertook a dangerous shut-in procedure that exceeded the design capacity of several wellhead components.  Since then, the President’s Oil Spill Commission did a study of the accident, issuing their report, and the Joint Investigation between the Coast Guard and the Bureau of Ocean Energy Management (the old MMS) completed an intensive investigation.

The fault for the blowout was clearly BP’s since they were the operator of record of the Macondo well.  Cultural issues, hubris, and complacency, combined with poor design and poor decision making all collided into the conflagration that was the blowout.  Inexperienced government officials, BP’s obfuscation, and politicians’ desire to get the blowing out off the television made matters worse.  Since then, the government has continued to ignore the extent of the damage, and Americans are either ignorant or uninterested about where their gasoline comes from.  The beat goes on.

Last week, former members of the Spill Commission issued a follow up report about government and industry actions since their initial report was issued.  Congress got the lowest grade, D, for obvious reasons.  Agencies and industry were also graded in various areas.  No one got an A.  The most infuriating fact that the report pointed out was something I’ve been watching in the industry: The Center for Offshore Safety, an independent source for research and work towards better operational safety in offshore drilling.  The model was the Institute of Nuclear Power Operations in the nuclear power industry.  Of course, the industry did not support the Center’s formation, but finally complied with the recommendation.  What makes the whole thing silly, though, is that it was formed under the authority of the American Petroleum Institute or API.  The API, which used to be a standards setting organization, has morphed into the largest lobbying firm for the industry.  So.  The Center for Offshore Safety is being run by an organization that opposes improving regulation of offshore safety.

We have a long way to go in improving offshore safety.  Equipment, procedures, and people must all be upgraded to prevent another Macondo.  With a deadlocked Congress, dysfunctional regulators, and uncooperative industry, I fear it will take another Macondo before we actually do something.

Originally published on The Huffington Post.

disasteronthehorizon Bob Cavnar is the author of Disaster on the Horizon.

Arrest of BP Engineer Exposes the Smoking Gun?

Wednesday, April 25th, 2012

Today, the Justice Department arrested a former BP engineer on two counts of obstruction of justice for allegedly destroying hundreds of text messages that included details of flow rate calculations of their blown out Macondo well in the days immediately following the Gulf disaster on April 20, 2010, just over two years ago. The engineer, Kurt Mix, was a drilling and completions project engineer who worked on flow rate estimates of the well after it blew out, as well as on efforts to stop the well from flowing, including the Top Kill procedure that was attempted (and failed) during the Memorial Day weekend of that year.

The affidavit filed by the FBI supporting the arrest of Mix contained explosive details about BP’s early knowledge of the well’s flow rate, and that the rate was far more than it was admitting at the time, or ever has, for that matter. You’ll recall that in the early days of the blowout, BP downplayed the amount of oil flowing into the Gulf, even telling the Coast Guard at one point that the well wasn’t flowing at all. When it became obvious that this assertion simply wasn’t true, BP slowly raised the estimate to 5,000 barrels per day, even when industry experts estimated the flow to be far higher. BP’s liability and fines for polluting the water, of course, are based on how much oil was spilled.

The FBI affidavit alleged that the flow rate estimates transmitted in messages that Mix later destroyed were far above BP’s public assertions. For instance, on April 21, 2010, the day after the blowout, Mix estimated the flow rate to be from 64,000 to 138,000 barrels per day. The next day, BP told the Coast Guard the flow rate was zero. According to the document filed today, Mix had done a number of estimates that he communicated to his bosses and to an outside contractor, even estimating on April 29, 2010 a flow rate possibly as high as 146,000 barrels per day.

A key point to note was Mix’s work on the Top Kill. Even though BP publicly stated that they gave the procedure a success probability of 60 to 70 percent, internal discussions alleged in this affidavit were, that if the well flow was over 15,000 barrels per day, the procedure wouldn’t be successful. With Mix’s calculations showing as much as 146,000 barrels per day, it appears that BP attempted the procedure when they knew it would not work, sticking to the 5,000 barrel per day estimate and telling the public that all was “going according to plan”.

I believe that this revelation today could be the beginning of a cascade of disclosures about what BP executives really knew in the days immediately after the blowout. Did they really know the well was flowing far more than they were saying? Did they know the Top Kill wouldn’t work? If these allegations by Justice are true, this story is just beginning.

Originally published on The Huffington Post.

disasteronthehorizon Bob Cavnar is the author of Disaster on the Horizon.

The Fight for Equality from MLK to Occupy Wall Street

Tuesday, October 25th, 2011

When it comes to tangibly honoring great Americans, Washington tends to drag its collective feet, usually decades, before making room along the Mall for a tribute. The notable exception is the Viet Nam war memorial that was completed a mere 7 years after the war ended; the impetus to build it so quickly was the hope that it would begin to heal the hemorrhaging wound of the Viet Nam war on our society. It fulfilled that hope for the healing to begin. Directly converse to the hasty Viet Nam memorial construction, the World War II memorial wasn’t completed until 2004, almost 60 years after the war ended, even as veterans of that war were dying at an estimated rate of 1,200 per day. I believe the reason it took so long for this memorial to be built was that not only was the generation that fought the war was the greatest, it was also the quietest.

43 years after his assassination, Martin Luther King, Jr.’s memorial was finally dedicated yesterday. Delayed from its original August dedication date by stubborn tropical storm Irene that wreaked havoc all the way up the eastern seaboard, yesterdays’s ceremony was a pared down version, yet even more important in light of Occupy Wall Street, which has sprung up in the last month.

Coverage of the dedication has rekindled my own memories of the civil rights movement as a child growing up in segregated Fort Worth, Texas. I was fortunately raised by parents who taught respect for all people regardless of race or religion, but was surrounded in my hometown by both overt and subtle racism. I went to segregated schools until high school; I remember Men, Ladies, and Negro restrooms at the local department store. I didn’t even know any African Americans until my school was integrated in 1967, when I suddenly went from starting forward on the basketball team to second string bench. I learned much during that period of time, but mostly that the black guys on my team were just like me, except they played basketball a hell of a lot better than me. But Lynn Washington, Otha Woodard, and others taught me how to really play ball, and I still carry some scars resulting from under-the-basket scuffles as I learned a more aggressive style of b-ball. Those years were a great experience for me, though I got much less actual game time for the rest of my short basketball career after we integrated. My fear of integration and the civil rights movement faded away as I gained maturity and perspectives of life that were not my own. I began to understand the importance of equality for all, not just those who looked like me.

Equality, though, does not concern only race and ethnic origin, however. Closely tied to racial equality is also social equality. Social justice and equality have been the common threads that have run through our culture, from our founding documents through history to today. In recent years, though, that concept has been overwhelmed by the hijacking of our political system by the influence of huge money. This influence, though, it just the latest assault on elections and democracy. Before the Supreme’s ruling on Citizens United that opened the floodgates to foreign and corporate money in elections, efforts over decades to reduce the ability of poor people and minorities to vote were common. Poll taxes, limited access to polling places, and even scarce voting machines have all been tactics to keep democratic-leaning voters away from the polls.

The financial crisis that has put millions out of work, as well as the backlash against the GOP’s war on labor unions and middle class workers, has generated a new civil rights movement, called Occupy Wall Street. It was only a matter of time that a movement like this would finally build, as joblessness has continued for a third year, and those who do have jobs have lost benefits and had their wages cut, stagnating the incomes of an entire class of Americans. Putting it in simple terms, regular folks now have virtually no voice in the current political system, and the frustration has finally boiled over. Heavy money influence in Washington has kept elected representatives from doing their jobs, instead just kicking the can down the road rather than making tough decisions to help turn the economy around and reforming our financial system to keep the same thing from happening again.

Republicans, in an all out effort to keep President Obama from earning a second term, have executed a blatant 24/7 effort to keep the economy floundering, scuttling every administration legislative effort. While the Repubs have introduced no legislation to help the economy, they have passed anti-abortion legislation 7 times in the House just this year. Dems, of course, have run for the exits, equivocating and focusing on their own donors, including those from Wall Street, watering down measures being considered that could help. The result? Our government has ground to a halt. Even procedural votes are victims of filibusters and death by amendment. The gridlock caused by party politics and corruption has overtaken all the other inefficiencies in our political system, which were already plenty. What’s changed, though, is that those being hurt by the politics and corruption have finally found their voice. Occupy Wall Street has grown from a small group protesting in New York to a worldwide movement with protests on Saturday spreading to over 900 cities. The anger is directed at the financial system, but the real issue is the stagnant global economy, high sustained unemployment, and the lack of response of our elected officials to do something that actually helps.

If Occupy Wall Street continues to grow, it will get to the point that politicians will be forced to address it. However, politicians do what they always do…Lead from the rear.

This article was originally published on The Huffington Post, where you can read the original.

disasteronthehorizon Bob Cavnar is the author of Disaster on the Horizon.

Preliminary Deepwater Horizon Report Rips Transocean, Marshall Islands

Monday, April 25th, 2011

(April 23rd) Late yesterday, the Deepwater Horizon Joint Investigation board issued a preliminary report of its findings related to causes of the Macondo well disaster that come under the jurisdiction of the Coast Guard.  This report focused only on the vessel, its condition, and the actions of the crew that caused the explosions and loss of the rig; it did not focus on the causes of the loss of well control, which will come in the complete report due out in July of this year.

The report clearly places blame on Transocean for the explosions after the blowout due to poor training, corroded and poorly maintained equipment, and bypassed alarms and shut down devices.  The report also singled out the Republic of the Marshall Islands, the flag state of the Deepwater Horizon, for “abdicating its safety inspection responsibilities”.  The report was an indictment on the status quo of the offshore industry that allows drilling and service companies to unnecessarily risk lives and the environment through complacency, and tax avoidance and substandard safety requirements.

In its criticism of the Marshall Islands the joint committee said:

This investigation also revealed that the oversight and regulation of DEEPWATER HORIZON by its flag state, the Republic of the Marshall Islands (RMI), was ineffective in preventing this casualty. By delegating all of its inspection activities to “recognized organizations,” without itself conducting on board oversight surveys, the RMI effectively abdicated its vessel inspection responsibilities. In turn, this failure illustrates the need to strengthen the system of U.S. Coast Guard oversight of foreign-flagged MODUs, which as currently constructed is too limited to effectively ensure the safety of such vessels (a MODU is a Mobile Offshore Drilling Unit - ed.).

As we’ve talked about before, most drilling companies “flag” or register their vessels in countries other than the US, called flags of convenience.  The companies all say that they do that to make it easier to move the vessels around the world more readily, but like incorporating their companies in foreign countries to avoid US taxes, they flag their vessels in countries that allow lax safety inspections, training, and crew requirements.  Such is the case with all of Transocean’s rigs and drillships (as well as most other companies’) where they register their vessels in countries like not only the Marshall Islands, but Panama, the Bahamas, and the Caymans, as well as other countries with lax regulations and third-party contract inspectors.  Some countries, like the Marshall Islands, actually allow the vessel owner to select (and pay) its own inspectors.

Other key findings for causes of the explosions were:

  • Failure to use the diverter line: The rig had 2 ways to keep wellbore fluids from coming onto the floor; one was a diverter, the dumps the oil and gas overboard.  The other was the mud gas separator (MGS) that is better for keeping mud and oil out of the water, but which is limited in capacity.  The crew chose the MGS, which was overloaded dumping a gas cloud over the rig.
  • Hazardous electrical equipment:  There was corroded and substandard electrical equipment in the engine room which likely caused the gas cloud to ignite.
  • Gas detectors: were not set to automatically activate the emergency shut down systems, and worse, the bridge crew was not trained in what to do when the alarms activated.  Had the rig’s engines been immediately shut down, explosions could have been prevented or at least delayed.
  • Bypassed systems: Gas detectors were either bypassed or inoperable when the rig exploded.  Testimony demonstrated that standard practice was to “inhibit” their function so that, even though they were reported to the control panel, no alarm would sound.  The crew also bypassed the automatic emergency shut down system.
  • Design of Main and Emergency Power: The rig design was inadequate to prevent total shut down of power due to the proximity of the independent power and distribution systems.  In short, the explosions took out all the power.
  • Crew blast protection:  As I noted in my book, Disater on the Horizon, the worst injuries (besides the drill floor and mud room deaths) occurred in the crew quarters.  There was no blast protection between the quarters and the drill floor, causing virtual destruction of that area of the rig while crew members were sleeping.
  • Command and control of the rig:  A “clerical error” by the Marshall Islands allowed the Deepwater Horizon to by classified for a dual command structure.  This meant that when the rig was latched up and drilling, the Offshore Installation Manager (OIM) was in charge.  When the rig was underway, it was under command of the Master or captain.  This caused great confusion and delay during the emergency, with the Master actually asking the OIM for permission to activate the emergency disconnect system (EDS) to get off of the blowing out well.

Several other key mistakes and weaknesses caused the loss of the rig and additional injuries; one was a design flaw the powered the fire control system with only electrical power.  When the power was knocked out, so was the firefighting system.  Another was inadequate evacuation training,  resulting in 11 crew members being left behind on the rig in the confusion.  Additionally, the commission found that the rig likely sank due to damage during the explosions exacerbated by poor firefighting technique from the rescue ships that probably sank the rig by flooding it with water.

This first report from the Joint Investigation board is a stark view into the dangers of complacency, overconfidence, and a convoluted management structure resulting from years of success from cutting, both corners and cost.  It also highlights how minor failures can cascade into a catastrophe that is initiated from poor training and judgement.  It is clear that the US Government must change the basic rules of offshore drilling, from regulation of training and safety programs, maritime law and operating regulations, design and operations standards, and the financial incentives that are built into the system.  Inspection frequency and thoroughness must be improved and penalties for violations greatly increased.

Even as the BOEMRE continues to issue permits for operators to re-enter the deepwater for more drilling, few of these issues are currently being addressed, especially those surrounding operations in US waters by vessels flying flags of convenience.  Eliminating this particular loophole in maritime law is essential in assuring safer operations in the offshore, protecting American lives and jobs.

Read the original post on The Daily Hurricane.

disasteronthehorizon Bob Cavnar is the author of Disaster on the Horizon.

Transocean Execs Shamed into Donating Safety Bonuses, Keep the Rest

Thursday, April 7th, 2011

You’ve probably heard by now that Transocean announced last week that 2010 was its “best year for safety performance” based on incident rate statistics even though their offshore rig, the Deepwater Horizon, burned down and sank during the largest blowout and oilspill in the history of the US. Eleven workers were killed in the disaster, nine of whom worked for Transocean. The company said their executives qualified for 115% of their bonus amount, which makes up 25% of their overall bonuses. As a token gesture to their dead employees and their families, the company reduced the safety portion of the bonuses to 67% of the target amount.

The public outcry was predictable; I’m amazed that no one at Transocean had thought through the ramifications of filing an SEC document that actually made the claim that they had the best safety year ever. Either their previous years had been even more disastrous, or some lawyer got involved trying to spin the facts of last year’s tragedy. I think it’s the latter, since their safety bonus last year was zero after they experienced four fatalities in 2009. I’m confused.

Anyway. Yesterday, the company belatedly apologized for the gaffe, announcing that the senior executives of the company will donate the safety portion of their bonuses to the Deepwater Horizon Memorial Fund totaling about $250,000. To be clear, they are donating only their safety portion of the bonus. They are keeping the rest of their compensation, totaling over $19 million. How generous.

Read the original post on The Daily Hurricane.

disasteronthehorizon Bob Cavnar is the author of Disaster on the Horizon.

More Bad News: BOEMRE Halts Floating Facility Startup Due to Equipment Failure

Wednesday, April 6th, 2011

Brazilian producer Petrobras announced yesterday that the BOEMRE ordered a halt to the startup of its Chinook/Cascade deepwater floating production, storage, and offloading (FPSO) facility that had just been permitted a few weeks ago.  The halt was ordered due to the failure of a buoyancy can that supports the free standing risers that bring oil and gas from subsea wells to the surface.  The riser collapsed and sank in over 8,500 feet of water.  The nature of the failure was not specifically disclosed, but is apparently serious enough to shut down the commissioning of the facility as investigations by Petrobras and the BOEMRE are begun.

Buoyancy Can.jpgA buoyancy can (seen at left) is a device attached to the top of a freestanding riser which is then anchored to the seafloor, keeping the riser in tension and in place.  The bottom end of the riser is attached to a subsea well or production facility, and flows oil and gas to the FPSO through a series of hoses and connectors.  FPSOs are the next step in deepwater production since these vessels not only process oil and gas, but can store the oil until offloaded to a tanker.  This technique eliminates the need for oil pipelines far our into the Gulf.

We discussed free standing risers last summer during the Macondo well blowout when several were installed, but never used, to contain flow from the well.  (Illustration from Recent Developments in Free Standing Riser Technology, Steve Hatton, John McGrail and David Walters from 2H Offshore Engineering Ltd. December, 2002)

You’re probably wondering why I’m writing about this seemingly obscure failure and subsequent work stoppage on the Petrobras FPSO facility, and why you should care.  Here’s why you should care:  freestanding risers are the backbone of the new subsea well containment systems that have been approved by the BOEMRE which are now required to get a deepwater drilling permit.  The failure of a key component in freestanding riser technology raises the question about the reliability of the free standing risers in the well containment systems that are staged for rapid deployment in the event of another subsea well blowout.  Having rushed the well containment systems into service so new drilling permits could be issued, one wonders whether they have been appropriately tested for durability and reliability.  Like subsea wellheads, they are installed below the surface and are not visible except through the lens of an ROV camera.  As the industry steps further and further out into deepwater, reliable riser systems will become key components in protecting the environment and making these projects economical.

We’ll be following this latest twist in the winding road back to the deepwater; it’s going to be critical to get free standing risers, just like capping stacks and subsea construction facilities, right this time, not only for the environment, but for the safety of those who work out in the deepwater.

Read the original post on The Daily Hurricane.

disasteronthehorizon Bob Cavnar is the author of Disaster on the Horizon.

Back to Square One? BOP Investigator Admits to Key Error in Report

Tuesday, April 5th, 2011

Yesterday, under intense questioning from the attorney for blowout preventer (BOP) manufacturer Cameron International, the project manager for Det Norske Veritas (DNV), the company who led the investigation of the BOP, admitted an error in the computer model they used to determine the cause of failure of the BOP during the BP well blowout last April.  The admission came during testimony on the first day of hearings convened in Metairie, Louisiana, by the board of the Joint Investigation of the Deepwater Horizon disaster to gather evidence about the forensics report on the BOP.

Even before testimony began, Cameron’s attorney David Jones stated:

“The report by Det Norske Veritas is based on a single hypothesis. That hypothesis is based not on testing but on computer models. The data that supports those computer models not included in the report. We requested the backup data on March 25.”

As he questioned Neil Thompson, as well as lead investigator, Greg Kenney, several weaknesses and mistakes in the DNV report were revealed including:

  • DNV used only computer modeling, not actual testing of the blind shear ram to determine that drill pipe deflected to the side of the ram bore, jamming the ram block.
  • None of the pipe recovered from the BOP was actually bent or buckled.  The witnesses said that they assumed the pipe was “elastic” and return to its original shape after recovery.
  • Even though testimony from Transocean employees on the rig stated that the upper annular was opened before the blowout, and it was open when they received it, the investigators assumed that the annular was closed. (This has always been a question for me, since subsea supervisor Chris Pleasant testified early on that the upper annular had been closed at the time of the blowout and that the crew actually held additional pressure on it to keep it from leaking.  Testimony from others that it was open during displacement of the riser conflicts, in my view, with this recollection.)
  • Not all functions of the BOP were tested.

During the testimony of the two witnesses, it became clear that the investigation had been rushed and there was not time to examine all of the components of the device (probably because all involved parties and the government argued about the testing for 2 months while the BOP languished on the dock exposed to the weather).  Both BP and the Chemical Safety Board, a government investigative agency, had previously argued that more testing should have been done before the DNV report was issued.  Cameron has complained that they still have not received the backup data to the tests.

Again, key witnesses from Transocean have refused to testify before the board even after BOEMRE director Michael Bromwich pressured the company to compel them to do so.  Even though remaining silent is certainly their right, we won’t really know what happened until we get this key information.

I’m afraid that this testimony has the effect of the ol’ one step forward and two steps back.  Cameron has revealed critical mistakes in the DNV study, and at least one government agency, the Chemical Safety Board, has impllied that more study is needed before we will really know what happened.  Yet, with all these huge question marks, we are still going back to work in the deepwater.  Was it design? Poor maintenance? Merely a “black swan”?  These are critical questions that have not been answered and workers’ lives and the environment hang in the balance.

Just a note:  The raging apathy and silence from the media on this issue is deafening.  The hearings are not being live streamed by anyone, including C-Span, and the only news outlets covering what are probably the most important of these critical hearings is the Times-Picayune out of New Orleans and my pals over at the Houston Chronicle’s Fuel Fix.  All else is dead silence. I’m amazed.

Read the original article on The Huffington Post.

disasteronthehorizon Bob Cavnar is the author of Disaster on the Horizon.

Good for Rachel…She’s Staying After the Deepwater Horizon BOP Story

Monday, March 28th, 2011

Tonight, Rachel Maddow stayed after the story in which I played a small part last night…that subsea blowout preventers (BOPs) cannot reliably contain deepwater blowouts.  Apparently, the Department of Interior is unhappy with her coverage of this story, but I believe she is correct in shining a bright light on this issue.  Currently, the US government is issuing deepwater drilling permits to operators that contract with drilling rigs that are using the very same BOPs that failed on BP’s Macondo wel, with no fundamental change to deepwter drilling procedures or equipment.  The only changes to regulatory requirements that have been made are training and inspection certifications…for devices that are now proven to be inadequate for containing a blowout.  No fundamental redesign has been directed or even contemplated by the government.

As my regular readers know, for months, I have been calling for a fundamental redesign of these well control devices to lower the risk of deepwater blowouts that are virtually impossible to control once hydrocarbons enter the wellbore.  Rachel is laser focused on this issue, and for good reason.  In its report, Det Norske Veritas (DNV), the Norweigan risk management company hired by Interior to study the Deepwater Horizon BOP, reached the conclusion that redesign of subsea BOPs must occur and that a number of questions about their reliability must be answered;  the firm documented numerous issues about the Horizon BOP and called for industry review and redesign to make subsea BOPs safe.  Interior is apparently ignoring these recomendations and issuing permits to resume drilling with the same equipment.  Here’s Rachel’s segment on this issue broadcast tonight:

Video link

Read the original post on The Daily Hurricane.

disasteronthehorizon Bob Cavnar is the author of Disaster on the Horizon.

Tests on BP Well Blowout Preventer Confirm Redesign a Necessity

Thursday, March 24th, 2011

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 over riding 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.

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.

I fully understand the many issues surrounding further delaying drilling the deepwater.  Thousands of jobs hang in the balance and our dependence on foreign oil is expanding above already dangerous levels.  Since our elected leaders have failed for over 40 years to establish a comprehensive energy policy, our need for deepwater development has become critical to allow us to maintain at least some control over our own energy destiny.  The elephant in the room, though, is the now documented unreliability of subsea BOPs.  It is an incontrovertible fact, and one that the industry will argue vociforously against, that we are going back to work in the deepwater with unsafe equipment.  Since the government is issuing drilling permits anyway, it is critical that they be issued only to operators who have virtually unblemished track records in the deepwater.  Thankfully, the first new drilling permit was issued last week to Shell, who represents the gold standard in deepwater operations.  You’ll recall that during the height of the crisis last summer, BP’s decisions and design were unfavorably compared to those of Shell’s.  Shell getting this first permit gives me some level of comfort, but it is just one of about a dozen deepwater operators.  I’m not as comfortable with others.

Until we face the fact that we have been driven into the deepwater because of our lack of a national energy policy, and learn from the failures in the previous catastrophe, we are only doomed to repeat that very same catastrophe.

Read the original post on The Daily Hurricane.

disasteronthehorizon Bob Cavnar is the author of Disaster on the Horizon.

Using the Strategic Petroleum Reserve is Not the Answer to High Prices

Monday, March 7th, 2011

All the buzz yesterday on the talk shows (besides Michele Bachmann repeating her talking point dozens of times on Meet the Press rather than actually answering questions) was tapping the Strategic Oil Reserve to somehow lower gasoline prices.  To even suggest such a move is not only a bad idea and bad policy, it won’t help.

First, a little history.  The Strategic Petroleum Reserve, or SPR, made up primarily of salt dome storage along the Texas and Louisiana coasts, was created after the oil shock of 1973 - 1974, when OPEC flexed its muscles by embargoing oil exports to the US to punish us for our Israeli policies at the time.  The emargo had the desired effects; first it drove oil prices to historic levels and second, it scared the bejesus out of everyone, including our elected leaders.   Injections of crude oil began in 1977, and was not actually filled to it’s working capacity of around 727 million barrels until the end of 2009.  The reserve was established to be used in emergencies such as wars and embargos, and it has been used for that a couple of times, notably Gulf War 1 and during the Gulf of Mexico production shut down during and after Hurricane Katrina.  About 30 million barrels were drawn down during each event.  It was used for political purposes in late 2000, when President Clinton arranged a “swap” of about 30 million barrels with private industry to help fuel prices during that year’s Middle East tensions.  The swap moved government oil into the private sector, to be returned the following year.  After several re-negotiations of the deal, all the oil was finally returned to the SPR by 2004.  This use of the SPR certainly didn’t meet the emergency or war standard, and some believe it was used to manipulate fuel oil prices downward during the price spikes in those years.

Which brings us to today.  White House Chief of Staff William Daley yesterday, coincidently, also on Meet the Press, suggested that the administration is considering tapping the reserve in response to rising crude prices due to the latest unrest in the MIddle East.  That idea is not only stupid, it just won’t work.  Currently, the US is importing about 11 million barrels of crude oil and petroleum products per day of which about 8.6 million barrels comes in as crude.  We currently consume about 19 to 20 million barrels per day of liquid petroleum products, making our import percentage about 60% of daily use.  With a 727 million barrel inventory in the SPR, that would give us about two months supply if all imports were cut off.  If only half was cut off, that still only give us 4 months, and we would be completely vulnerable to energy supply disruptions and unrest in the Middle East.

Which brings us to the real issue…the only way to reduce gasoline prices is to use less.  That is the only way.  Our elected leaders have been kicking the can down the road for over 40 years since the first oil shock, and continue to do that today, only fiddling around the edges of comprehensive energy policy. We must deal with this problem now, expanding our use of renewables, natural gas, and have an adult conversation about mass transit and nuclear power.

Until we do, we’ll continue to be at risk for our own future, and will continue tossing around stupid ideas like drawing from the SPR before we really need it.

Read the original article on The Daily Hurricane.

disasteronthehorizon Bob Cavnar is the author of Disaster on the Horizon.