Lessons being learned

‘This Isn’t Going to Happen Again’

American Association of Petroleum Geologists (AAPG)

The well that sourced the Big Spill in the deepwater Gulf of Mexico was reported to have ceased flowing early in August owing to success of a static kill.

At press time, the permanent kill was imminent.

Early on, continuing video of the ghastly months-long spill reached a worldwide audience, and the political powers-that-be quickly slapped a six-month moratorium on deepwater Gulf drilling, which they defined as water depths greater than 500 feet. Even shallow water permits were stalled while safety standards were reviewed.

A let-up is in sight.

Michael Bromwich, director of the Bureau of Ocean Energy Management, which is the federal offshore regulator, reportedly has said the moratorium possibly can be lifted “significantly” in advance of its planned Nov. 30 expiration.

McMoRan Exploration Co. has a long history of working both the onshore Gulf Coast area and the offshore Gulf – and has become adept at drilling successful deep wells in shallow water.

A shining example is the company’s relatively recent and widely acclaimed Davy Jones discovery well Davy Jones discovery well, which reached almost 30,000 feet in depth while positioned in only 20 feet of water.

Jim Bob Moffett
Jim Bob Moffett
Being Prepared

But while shallow water may be its milieu, McMoRan co-chairman and veteran geologist Jim Bob Moffett has earned more than enough stripes in the business to comment with authority on the recent deepwater Gulf disaster.

“Some people are calling it the Chernobyl of the oil and gas business,” Moffett noted during the company’s recent Q2 2010 earnings conference call. “That’s an interesting comparison since you haven’t had an accident in the nuclear business similar to that in 34 years.

“We’ve been operating on the shelf for 40 years,” he noted. “As to the containment of a spill – whether because of a production facility, hurricane damage, a well out of control – we do fire drills around here all the time that the MMS basically conducts on the shelf.

“We can contain a spill around these wells on the shelf immediately,” he emphasized, “because the equipment is there.

“We’ve done some additional actual tests on the blowout preventers, even on new rigs, demonstrating that the rams can actually sever a five-inch or 6 5/8-inch drill pipe if needed.”

It’s a pointless exercise to speculate what might have happened had a well cap been sitting “on the shelf” at the ready when the recent Gulf well blowout and explosion occurred, or even a design in place to handle a damaged tree subsea.

“That’s spilt milk,” Moffett said. “I can assure you, at least in my opinion, those caps will be designed, because it’s not like every one of those subsea completions is unique.

“The stacks may have some different dimensions,” he commented, “but since we’re not deepwater experts, I won’t try to be a deepwater expert.

“But I can tell you that what’s been learned from this incident is that the equipment that’s been experimented with over the last three months, that won’t ever happen again because they’re going to have the stuff “on the shelf” before anybody goes back to work,” Moffett emphasized. “So if you have a problem, you go out there and put the right cap on the first time instead of experimenting.”

Moffett emphasized the answers will ultimately get sorted out.

After all, billions of dollars flow into the federal coffers annually from royalty payments on Gulf of Mexico production. On top of this humongous income stream, the government has collected probably billions in revenue from lease bonuses just since deepwater plays were discovered, according to Moffett.

Clearly the spill will have a number of ramifications. Moffett believes there will have to be an insurance pool – a high risk pool.

He emphasized this event is not like an earthquake or hurricane that likely will continue to occur over time.

“This isn’t going to happen again,” he reiterated. There won’t be experimental stuff as things have gone in the last months – at least in my opinion.

“You’re going to have to have that,” Moffett noted. “Nobody is going to operate in an environment where you have to factor into your goal whether or not to bid on a lease or drill a prospect if you’ve got a liability that’s totally unlimited.

“I don’t want to become a soothsayer here,” he said, “but those are kind of my impressions of what’s going to follow as people start to become rational and deal with the real economics and realities of how you keep the Gulf of Mexico as a resource for the United States.”

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