Saturday, May 29, 2010

BP used cheaper casing on oil well to save money, Congress papers show

Fire aboard the mobile offshore drilling unit Deepwater Horizon
(EPA) The gas that forced itself into the drill pipe caused a massive explosion that killed 11 on the Deepwater Horizon rig


The explosion on the Deepwater Horizon rig that precipitated the vast Gulf of Mexico oil spill came after the well was capped with a relatively cheap type of casing, BP papers have revealed.

The decision to use the riskier method to finish its Macondo well was taken partly on cost grounds, according to the document.

In the days before the blast, the oil giant selected a casing that provided only a single layer of protection to prevent gas from leaking into the well, according the details obtained by The New York Times from a Congressional investigator.

Workers on the rig and from BP have said that gas bubbled into the well and was a key factor in causing the April 20 blowout, which killed 11 people.

BP described the approach to finishing the well as the “best economic case” in the document, which has appeared following Congressional hearings into the cause of the accident.

News of the decision emerged as Douglas H. Brown, chief mechanic on the Deepwater Horizon rig, testified yesterday that a disagreement took place on the rig between one of the six BP engineers overseeing the operation and employees of Transocean, the owner of the rig, just a few hours before the blast took place.

Mr Brown told the hearing that the “skirmish” followed BP’s decision to withdraw heavy drilling mud from the well that was helping to control pressure inside it and to replace it with lighter saltwater before the well was capped with a final dollop of cement.

“Well, this is how it’s going to be,” the BP official said, according to Mr Brown.

BP has declined to comment about accusations made in the hearing.

Workers on the Deepwater Horizon rig, which BP was paying over $530,000 per day to lease, were running behind schedule when the accident took place.

The rig had originally been scheduled to drill another well in a different location by March 7.

Later today, the Obama Administration is expected to suspend exploratory drilling in the Arctic Ocean until next year as BP faces a defining day in the disaster with an attempt to plug the leak with mud.

In a report to be delivered to the White House today Ken Salazar, the Interior Secretary, is expected to say that he will not consider applications for permits to drill in the Arctic for at least seven months.

President Obama ordered Mr Salazar to conduct a review of America’s offshore oil drilling safety after the BP oil spill that began last month. If the suspension goes ahead, it will disturb plans by Shell Oil to begin exploratory drilling on leases as far as 140 miles (225 km) offshore.

The US gave Shell the green light for exploratory drilling in Alaska in October last year, despite environmental concerns. The area is home to large numbers of endangered bowhead whales and polar bears, as well as walruses, ice seals and other species. Critics also said that any oil spills would be impossible to clean up amid the Arctic’s broken sea ice.

The oil drilling industry has come under increased scrutiny over the past month following the explosion of the Deepwater Horizon rig on April 20.

The suspension in Alaska could signal a sea change in administrative attitudes to drilling permits. This week, Mr Obama said the Government would clamp down on companies that sidestep regulations and safeguards meant to protect the environment. He said a new review of environmental safeguards would be required before oil and gas development goes forward.

“For too long, for a decade or more, there’s been a cosy relationship between the federal agency that permits them to drill,” he said. “It seems as if permits were too often issued based on little more than assurances of safety from the oil companies. That cannot and will not happen anymore.”

Yesterday evening BP launched a risky deep-sea procedure using drilling mud known as “top kill” to plug the leak that has been spewing oil into the Gulf of Mexico for five weeks.

BP said today: “The procedure is intended to stem the flow of oil and gas and ultimately kill the well by injecting heavy drilling fluids through the blow out preventer on the seabed, down into the well.” The operation could take two days.

The fractured pipe from Deepwater Horizon has been spouting oil into the gulf for 36 days, creating a massive slick, washing up along the Louisiana coastline and threatening birds, animals and plants.

Oil from the giant slick has now soiled more than 100 miles of Louisiana coastline, State Governor Bobby Jindal said yesterday, more than doubling the previous estimate.

Just after 6pm GMT yesterday BP began pumping heavy mud into the leaking well. Last night executives said that everything was going as planned. BP hopes the mud could overpower the steady stream of oil, but chief executive Tony Hayward said that it would be at least 24 hours before officials knew whether the attempt had been successful. The company wants to eventually inject cement into the well to permanently seal it.

The scheme had a 60 to 70 per cent chance of success, said BP, though some experts were less optimistic. It has never before been done at this depth.

Failure would not only provoke fresh outrage at BP, but increase pressure on the White House to take control of the effort from the company. “If the thing is not fixed today, the President doesn’t have a choice, and he’d better go in and completely take over, perhaps with the military in charge,” said Senator Bill Nelson, of Florida. “The perception is that we’re fumbling.”

Under the US Clean Water Act, BP could be fined up to $4,300 (£3,000) for every barrel of oil gushing into the Gulf. With the disaster said to exceed the Exxon Valdez tanker spill of 1989, which involved 11 million gallons (50 million litres), that would mean a fine of at least $47 billion.

Mr Obama said that if it were successful, BP’s plan to cap the well should greatly reduce or eliminate the flow of crude. “We will not rest until this well is shut, the environment is repaired and the clean-up is complete,” he said. He added that the country could not “sustain this kind of fossil fuel use”.

Yesterday, the US Coast Guard recalled all 125 commercial fishing vessels working on cleaning up the oil spill in Breton Sound, Louisiana after four crew members reported feeling ill, with severe headaches, dizziness, nausea and chest pains.

BP has paid $29 million in interim compensation to people claiming economic losses from the spill. About 25,000 claims have been submitted and 12,000 cheques issued so far. The average payout is $2,416. No claim has yet been refused, the company said.

The handouts do not preclude victims from suing. More than 130 lawsuits have been filed against BP, which leased the rig; Transocean, which drilled and operated the well; and Halliburton, hired by BP to cement the well after drilling was completed last month.

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