Tuesday, May 11, 2010

Senate Hearings On BP Gulf Oil Blowout & Spill

May 11: The Senate Energy & Natural Resources (ENR) Committee, Chaired by Senator Jeff Bingaman (D-NM) with Ranking Member Lisa Murkowski (R-AK) held a hearing to review current issues related to offshore oil and gas development including the Department of the Interior's recent five year planning announcements and the accident in the Gulf of Mexico involving the offshore oil rig Deepwater Horizon (SR-325) [See WIMS 5/10/10]. Witnesses testifying at the hearing included: Dr. F.E. Beck - Associate Professor, Texas A&M University; Elmer Danenberger - Former Chief, Offshore Regulatory Program, Minerals Management Service (MMS); Lamar McKay - President and Chairman , BP America, Inc.; Steven Newman - President and Chief Executive Officer, Transocean Limited; and Tim Probert - President, Global Business Lines; Chief Health, Safety and Environmental Officer, Halliburton.

    In his statement, MMS's Danenberger who retired in January indicated that he had closely followed the investigation of the Montara blowout in the Timor Sea northwest of Australia and the ongoing Deepwater Horizon (DWH) blowout in the Macondo field in the Gulf of Mexico. He said he wanted to "express my disappointment in certain media comments directed at my former MMS colleagues. These comments have not only been ill-informed and unsubstantiated, but malicious.  Without hesitation, I can tell you that MMS regulatory personnel - inspectors, engineers, scientists, and others – are 100% committed to their safety and pollution prevention mission.

    He indicated that he had written several papers on blowout occurrence rates and causes. The most recent paper reviews the blowout record during the 15-year period from 1992-2006.  He said, "According to these data, well control performance for deepwater drilling was significantly better than for shallow water operations. There were no fatalities or major spills associated with deepwater drilling blowouts during the 15-year study period."

    He commented on various media reports regarding the lack of an "acoustic switch" backup system [See WIMS 5/3/10] and said "At this time, there is no evidence that such systems would have made a difference in this incident. Attempts to close BOPs [blowout preventers] were reportedly made prior to the DWH evacuation. The BOP should have also been signaled when the rig lost power and when the riser disconnected. It is unlikely that additional signals sent acoustically to the stack would have prevented the blowout."
    BP's McKay testified that, "Our subsea efforts to stop the flow of oil and secure the well have involved four concurrent strategies: (1)  Working to activate the blow-out preventer (BOP) on the well using submersible ROVs. This would be the preferred course of action, since it would stop or diminish the flow at the source on the ocean floor. Unfortunately, this effort has so far not proved successful. (2) Work continues on a subsea oil recovery plan using a containment system, placing large enclosures or containment chambers atop the leaks and conducting flow from the ocean floor to a ship at the surface through a pipe. As we anticipated, however, there have been technical challenges. This system has never been used before at 5,000 feet. Engineers are now working to see if these challenges can be overcome. (3) We have begun to drill the first of two relief wells to permanently secure the well. These wells are designed to intercept the original MC252 #1 well. Once this is accomplished, a specialized heavy fluid will be injected into the well bore to stop the flow of oil and allow work to be carried out to permanently cap the existing well. On Sunday, May 2nd, we began drilling the first of these wells. A second drillship will mobilize to the area to begin the second relief well later this week. This relief well operation could take approximately three months. (4) A fourth effort is known as a "top kill." It is a proven industry technique for capping wells and has been used worldwide, but never in 5000 feet of water. It uses a tube to inject a mixture of multi-sized particles directly into the blowout preventer. The attempt to do this could take two or three weeks to accomplish."
    In response to questioning from Senator Mary Landrieu (LA), BP's McKay said that BP would pay for all "reasonable" claims and damages. He said reasonable meant legitimate. He also, said this would far exceed the $75 million limit. Senator Robert Menendez (D-NJ) asked if BP objected to raising the liability limit to $10 billion. McKay said he could not comment on that in particular, but that BP would pay all legitimate claims.
    Senator Maria Cantwell (D-WA) mentioned that some had estimated that damages could be as much as $14 billion. She asked BP if they would pay that amount. BP responded they would not comment on specific dollar amounts but that they would pay all legitimate claims. All three companies testified that they were conducting separate investigations of their own and that those investigations would be made available to the public.
    On further questioning Senator Cantwell said that the Exxon Valdez claims and payments took 20 years and went to the Supreme Court. She said is that BP means, i.e. fighting it out in court over time. BP's McKay said repeatedly in response to several inquiries by Senator Cantwell that "BP would pay all legitimate claims." Senator Cantwell said that BP was saying it was "stepping up" to its responsibilities and she certainly hoped that was true.
    Transocean's Probert testified that, ". . .the April 20 Deepwater Horizon explosion and its possible causes. What is most unusual about the explosion in this case is that it occurred after the well construction process was essentially finished. Drilling had been completed on April 17, and the well had been sealed with cement (to be reopened by the Operator at a later date if the Operator chose to put the well into production). At this point, drilling mud was no longer being used as a means of reservoir pressure containment; the cement and the casing were the barriers controlling pressure from the reservoir. Indeed, at the time of the explosion, the rig crew, at the direction of the Operator, was in the process of displacing drilling mud and replacing it with sea water.
    "For that reason, the one thing we know with certainty is that on the evening of April 20, there was a sudden, catastrophic failure of the cement, the casing, or both. Therein lies the root cause of this occurrence; without a disastrous failure of one of those elements, the explosion could not have occurred. It is also clear that the drill crew had very little (if any) time to react. The explosions were almost instantaneous. . ."
    At 2:30 PM, the Senate Environment and Pubic Works (EPW) Committee, Chaired by Senator Barbara Boxer (D-CA) with Ranking Member James Inhofe (R-OK) also held a hearing entitled, "Economic and Environmental Impacts of the Recent Oil Spill in the Gulf of Mexico." Witnesses included the same three company representatives from BP, Transocean and Halliburton. Additional witnesses included representatives from Gulf of Mexico Fishery Management Council; Governor's Office of Coastal Activities, State of Louisiana; Florida Restaurant and Lodging Association; Department of Natural Sciences, University of Maryland Eastern Shore;  Woods Institute for the Environment, Stanford University; and United States Air Force (Ret.).
    Access the Senate SNR hearing website for links to all testimony and webcast (click here). Access the Senate EPW hearing website for links to all testimony and webcast (click here).