A mini-study done for the MMS in 2002 and a lengthy "Shear Ram Capabilities Study" completed two years later had concluded that some of the new higher-grade steel being used in drill pipe couldn't be cut and sealed by existing rams. The study also noted the inability of existing rams to cut and seal pipe if there were tools inside, or slice through welded joints where sections of pipe were joined.These inherent weaknesses in existing blowout preventers were the reason many Arctic nations -- although not the U.S. -- required oil companies to keep a second drill rig on location when drilling in case a relief well was needed to seal a blowout. BP, it should be noted, did not have a second rig on site in the Gulf of Mexico.
Long before the Deepwater Horizon oil rig exploded in the Gulf of Mexico, caught fire, sank and loosed a gusher of oil that would flow into the biggest environmental disaster in U.S. history, the oil industry knew that -- in the now famous words of the Apollo 13 astronauts -- "Houston, we have a problem."
As oil drilling in the new millennium moved increasingly into deep waters off the North American and European coasts, oilfield workers recognized they were operating with less and less of a safety net. Shear ram technology needed to make blowout preventers into failsafe devices capable of preventing catastrophic blowouts was, they knew, lagging behind the rest of oilfield technology.
A U.S. Minerals Management Service study had demonstrated as much in 2002. A more thorough study in 2004 had only served to underline the weaknesses. By 2005, Oklahoma City-based Devon Energy Corp., then a force in offshore drilling, had begun working with Houston-based Cameron, the major producer of blowout preventers, to develop new and better shear and seal technology for wells.
Why the technology never made it into the oil patch is unclear. Nobody in the industry wants to talk about it at this juncture, though development reportedly is continuing. What would come to to be called the alternative well kill system -- or AWKS -- is now being spearheaded by Chevron in partnership with Cameron. Devon began phasing out of offshore drilling earlier this year.
Ironically, it signed a $7 billion deal in March to sell its offshore assets in Brazil, Azerbaijan and the Gulf of Mexico to BP. Only about a month later BP was in charge of the Deepwater Horizon rig that blew up in the Gulf. London-based BP, the major player in the Alaska oil business, has ever since been battling to shut off an undersea volcano spewing beneath the sunken rig and deal with an oil slick that has grown to more than two times the size of the Exxon Valdez spill in Prince William Sound.
Cleanup and containment costs, at last report from BP, were approaching $1 billion and are expected to grow to orders of magnitude beyond that. This might all have been avoided if there had been a working, failsafe blowout preventer a mile deep on the ocean beneath the Horizon. There was a blowout preventer. Why it didn't work hasn't been fully determined, but the reasons why it might not work were known well before the Horizon accident.
Chevron noted in a presentation to the Norway Arctic Workshop in Tromso in January 2009 that existing BOPs have weaknesses. The company said in a PowerPoint presentation that it was working with Cameron on the AWKS to develop "simultaneous shear and seal capability on a broad range of tubulars -- unlike current shear rams." Everyone in attendance at the meeting knew what that last phrase meant.
A mini-study done for the MMS in 2002 and a lengthy "Shear Ram Capabilities Study" completed two years later had concluded that some of the new higher-grade steel being used in drill pipe couldn't be cut and sealed by existing rams. The study also noted the inability of existing rams to cut and seal pipe if there were tools inside, or slice through welded joints where sections of pipe were joined.
These inherent weaknesses in existing BOPs were the reason many Arctic nations -- although not the U.S. -- required oil companies to keep a second drill rig on location when drilling in case a relief well was needed to seal a blowout. BP, it should be noted, did not have a second rig on site in the Gulf of Mexico. BP has one there now, drilling a relief well. Everyone involved with the Gulf spill says a relief well is the only sure way to cap BP's undersea gusher. The relief well is expected to be completed in August. There is no telling how much crude could be washing around in the Gulf of Mexico by then -- or making its way into the Gulf Stream with potential oil spill consequences for Florida and the entire U.S. East Coast.
The reason BP failed to have a second drill rig standing by in the Gulf when the Deepwater Horizon was drilling is simple -- money. A drill rig costs about a half million dollars per day, according to oil industry officials. These costs are the reason that, although Shell planned to drill in the Chukchi and Beaufort seas off Alaska this summer, none of the oil companies holding leases off the Arctic coast of Canada planned any drilling.
Canadian drilling rules require companies supply a backup rig and a plan for completing a relief well before the end of the drilling season. The former requirement doubles drilling costs; the latter significantly shortens the operating time in the Arctic, where the drilling season usually ends in October. The requirement for completion of an emergency relief well to seal a blowout before the end of the season pushes the end time for the drilling of exploratory wells back into September or even August, depending on water and drilling depths.
The strict Canadian drilling requirements were what led Chevron, which holds Canadian Arctic leases, to pick up where Devon left off and pursue the alternative well kill system in cooperation with Cameron. Testing on the AWKS was to have begun last year and continued this year. At a MMS Arctic Technologies Conference in Anchorage last October, Chevron suggested testing would be done by early 2010. At that conference, the company also screened a slicker, expanded version of the PowerPoint it showed in Norway in January.
Chevron touted the AWKS as "designed to provide 100 percent backup/redundancy in both shearing and sealing capacity" and said it "does so in one single operation."
Hearings on the capabilities of the AWKS were planned in Canada this year. Chevron wanted the Canadian National Energy Board to recognize the AWKS as a system better than a relief well and waive the costly requirement for keeping a second drill ship on standby in the Arctic.
The hearings are now on hold as Canada reviews its offshore drilling policies in light of the Deepwater Horizon accident. Shell's plans for drilling in the Arctic off Alaska are on hold until at least 2011 for the same reason. The U.S. Department of the Interior said it wants to review Shell's drilling plans. Interior officials said it is possible the AWKS could come up in that review.
Sarah Kiley, a spokeswoman for the NEB, said Canadian regulators would like to know more about AWKS, but at this point have little more information than Chevron provided in Anchorage last fall. The company, meanwhile, isn't saying much.
Leif Sollid, a spokesman for Chevron's Arctic Center in Calgary, Alberta, Canada, said the AWKS is "still in testing." The Arctic Center has taken the lead on developing the AWKS, but Sollid said no one there is anxious to talk about it at the moment.
"Certainly there's information out there," he added. But Chevron fears any discussion of AWKS might fuel discussions about why such a blowout preventer wasn't in use beneath the Deepwater Horizon.
"We're not going to jump into that arena," he said. "We're not going to speculate."
He suggested Cameron might want to talk about the AWKS. It doesn't. It supplied the blowout preventer for the Horizon. The company has been actively trying to defend that BOP. Cameron CEO Jack Moore told the House Energy and Commerce Committee the Horizon accident wasn't his company's fault.
"Our BOPs have a very long history of reliable performance, including performance in some of the harshest operating conditions in the world," he testified. "We have over 400 BOP stacks operating offshore, of which 130 are operating in deep water. Each individual BOP stack is made up of components specified by our customers, is configured to their specific operating specifications, and is tested and manufactured in accordance with industry standards and applicable regulations."
Moore said it would be premature to say what went wrong with the Horizon BOP before it is brought up from the seabed and examined. That is true, but the oil industry has long known there are circumstances in which BOPs will not work.
The MMS study in 2004 documented that in tests, and Chevron underlined that fact in a sophisticated rollout of AWKS technology. There were the increasingly more detailed PowerPoint presentations to oil drilling conferences, first in Norway and then in Alaska, followed by stories planted in the press. All the efforts appear to have been aimed at setting the stage for a Canadian "equivalency" hearing, which would judge the AWKS better than a relief well and free industry from the costly requirement for a second drill ship when working in the Canadian Arctic.
In March, Chevron publicly pitched this idea to a broader audience through the publication Petroleum News. Beneath a headline proclaiming "A new Arctic paradigm," Bill Scott, the manager of Chevron's Arctic Center, was quoted as saying "we want to go one stage further at the front end to stop any problems happening later." He went on to explain how the AWKS would be the failsafe to prevent a blowout from becoming a catastrophe.
About a month later, BP began an ugly, unplanned demonstration of how big the catastrophe can become. Does Chevron believe its AWKS could have prevented this? The answer is unknown. Sollid wouldn't touch that question, but said he would try to find someone at Chevron willing to talk about the alternative well kill system -- but there were no further calls. Scott, Chevron's expert on the AWKS, did not return phone calls.
How much an AWKS might cost has never been discussed, but those familiar with the oil industry say the new, improved technology would certainly be significantly more expensive than existing BOPs. Knowledgeable observers, both in the industry and in government, have suggested the oil industry might be reluctant to talk about the AWKS now for fear widespread knowledge of such a system could create public pressure for the government to mandate it for all offshore drilling. Everyone agrees that would significantly raise drilling costs.
When it was suggested to Sollid that this might make Chevron nervous about discussing its AWKS, he admitted, "I'm certainly not disagreeing with you."
And there are those in the oil industry, as well as those involved in regulating it, who would argue they are perfectly comfortable with the way everything works today, including existing BOPs. They note the long history of accident-free operations in nearshore waters since the Santa Barbara blowout in 1969. The spill after that accident smeared the Santa Barbara channel. The late Wally Hickel, then U.S. Secretary of the Interior, ordered a moratorium on offshore drilling until better safety standards could be devised. Hickel, a former governor of Alaska fated to be re-elected Alaska governor again after his stint as Interior Secretary, put the fear of God in the oil industry, helping improve its safety record for decades.
There are questions being raised now as to whether complacency settled in among both drillers and regulators. Alaska state officials, who regulate drilling in nearshore waters along Alaska's coast, says they doubt that is the case, at least here. They say they keep a close eye on drilling and are comfortable with state regulations based on standards set by the American Petroleum Institute. They believe those regulations adequate to prevent any nearshore disasters in Alaska -- but doubts have been raised about API standards.
The API standards are inadequate, Ove Egil Kleivenes of DNV Energy in Norway told the International Association of Drilling Contractors at a conference earlier this year. Drilling Contractor magazine reported that in Norway the API rules have been "replaced over time with a better Norwegian approach. Defending the Norwegian approach, (Kleivenes) said: 'We have less leakage and accidents around the Norwegian Continental Shelf than other countries.'
"He closed with the warning that uniform well control guidelines were just one of a number of issues. Mr. Kleivenes asked 'Why haven't the governments in the UK, US, Denmark, Netherlands, etc., the same requirements to avoid leakages and accident as has the Norwegian government? Why is it that an operator that follows the Norsok/ISO standards on the Norwegian Continental Shelf does not follow the same standards when they perform the same work in other countries?'"
The U.S. Department of the Interior now has at least two studies underway to explore those questions and other in the wake of the Horizon accident. It is possible, an Interior department official said, investigators might examine why the shear ram purportedly capable of preventing a catastrophic blowout like that now underway in the Gulf of Mexico still hasn't been fully developed and deployed.
Contact Craig Medred at craig(at)alaskadispatch.com.