Tag: Macondo

Sheila McNulty

The issue of hydraulic fracturing, or fracking, has taken on a life of its own. But with so much misinformation, it is hard for the general public to know whether it is a good thing or a bad thing. The truth is – as with any polarising issue – somewhere in the middle. New York appears to have accepted that and decided to move forward to permit fracking in all but the most sensitive areas of the state.

But even as New York is poised to lift its moratorium on fracking, New Jersey’s legislature has moved to impose one. What this illustrates is just how divisive this issue has become.

Let us look at some of the pros: Hydraulic fracturing in a series of stages, combined with horizontal drilling, has given the US oil and gas industry a new lease of life. After years of declining production, the technology has enabled the country to grow not only natural gas but oil production. And with a country that consumes so much energy and has yet to make any serious attempt to scale back its usage, this can only be a good thing. It means more domestic supply to meet demand, which translates into less money leaving the country for imports and heightened energy security. And more drilling, of course, means more jobs and more economic activity.

Now here are the cons: if drillers are irresponsible about how they use the technology – and with far more than 1,000 operators drilling and producing across the country there will always be some who are – it hurts everyone. The damage to the environment and people could be very real. One only needs to think of Macondo, BP’s well at the centre of last year’s accident in the Gulf of Mexico.

As the EPA investigates the environmental risks associated with fracking, the industry must ensure it has no Macondos. By proving the industry can safely and responsibly develop the US’ domestic resources, companies eventually win over the public, and politicians, who are so afraid of the technology they are banning it outright.

But the industry cannot do this if it is not permitted to frack at all. Take New Jersey, which has just  passed a ban on fracking this week. While New Jersey is not a major gas producer – and does not seem to have the geology ever to be – this is, nonetheless, a symbolic gesture that might well ensure that what it does have is never developed.  That leaves the burden to other states, such as Texas, to continue producing the gas used by those in New Jersey.

While this is not fair, the industry will say it would rather deal with states individually than have a restrictive federal law passed down that might, in the end, restrict the use of fracking in industry-friendly places such as Texas.

Certainly there are risks of that happening, but it seems to make the most sense for the US to approach this issue on the federal level. If a fair, science-based investigation can be conducted, and the industry be given an opportunity to defend itself against the charges of environmentalists, perhaps a workable solution can be found - one that permits fracking to continue across the country with the necessary safeguards to prevent a disastrous onshore event, such as Macondo was to the offshore industry.

That way states like New York – which was among the first of a string of places to put a temporary ban on fracking - and New Jersey will not scare off the public and politicians in other states from permitting something that might well be done safely  – and limit imports and grow energy security as much as possible. For a country that consumes so much energy and cannot seem to get its arms around a comprehensive plan to reduce carbon emissions with a real committment to renewables and energy efficiency, this seems the best course to take.

Sheila McNulty

Deepwater Horizon explosionThe big question for months has been what would happen if there was a significant spill in the deepwater outside the Gulf of Mexico. Following BP’s Macondo disaster, the industry worked together to build two spill response systems for this area. But nobody said what would happen if a deepwater disaster unfolded in the waters offshore Ghana or Brazil.

Now the industry has gathered together to address that question. Nine of the world’s biggest oil and gas companies – BG Group, BP, Chevron, ConocoPhillips, ExxonMobil, Petrobras, Shell, Statoil and Total have launched the Subsea Well Response Project (SWRP), an initiative designed to  enhance the industry’s capability to respond to subsea  well control incidents.

Sheila McNulty

A year after the Macondo disaster, the industry has pulled together in the US and built not one, but two spill containment systems. These systems are really state-of-the-art and aimed at containing a massive spill in the deep water.

The first one, the Containment Response System, cost $1bn and is designed to be trucked to anywhere along the Gulf of Mexico, loaded onto a vessel, shipped out to a drill site and dispatched under water to contain oil spilling from a runaway well.

The system, complete with capture vessels, was developed by ExxonMobil, Royal Dutch Shell, Chevron and ConocoPhillips. It took several months to build and testing has shown it can operate in 8,000 feet of water, capturing 60,000 barrels of fluid per day at pressures of 15,000 pounds per square inch. A more comprehensive system, which can operate in 10,000 feet of water, and capture 100,000 barrels of fluid a day, will be available by the middle of next year.

FT Energy Source

Sheila McNulty

An oil rig in the Gulf of MexicoWhat a difference a year makes. Or does it?

Activity in the Gulf of Mexico remains slow following the Macondo disaster – but it is moving again. And despite all the talk about how the US risked driving away the industry by tightening up processes and procedures, just about everyone is still here.

Seahawk Drilling was forced into bankruptcy and Plains Exploration & Production is moving to exit the deepwater, but, for the most part, it is the same people, working for the same companies (BP was even among the first companies to get permission to resume drilling in the deepwater), using the same technology. Even the much maligned blowout preventer that got jammed and failed in the Macondo disaster is still here as the last line of defence.

And the gulf coast economy has remained pretty resilient. Michael Hecht, chief executive of the Greater New Orleans economic development agency, said the local economy received a boost from BP’s spill response effort that gave work to fishermen and tour boat workers who had lost jobs with the spill. That false economy is only now ending in some places, leaving the real economic cost still to be seen.

Sheila McNulty

President Barack Obama is calling on oil companies to increase production in the US, accusing them of sitting on tens of millions of unused and unexplored acres of leases on public land waiting to be tapped. But this must be put in context.

It would be one thing to make this accusation if companies were simply able to lease acreage and set to work exploring, drilling and producing. But the reality is not so. Even before the Macondo accident in the Gulf of Mexico, regulators have long forced oil and gas companies to go through a variety of hoops before producing on a lease. In some cases, they did approve permits without proper scrutiny, but there were many others, such as in Wyoming, where they forced the industry to go above and beyond before granting permission to drill.

Sheila McNulty

The oil and gas industry has been afraid there might be repercussions from the recent  investigation that found Macondo’s blowout preventer failed to close because a section of drill pipe had buckled during the accident and blocked efforts to seal it off.

Gary Luquette, Chevron’s president for North America exploration and production, said the industry would learn from the report. But he hopes it will not lead regulators to stop the permitting process just when companies have started to see progress. He explained:

The best way to deal with a blowout is never to have one. In this case, the pipe was blown up the hole because of a loss of control situation. If you have complete loss of control, you can’t imagine a BOP that can be designed for that.

Sheila McNulty

Ken Salazar, the US interior secretary, and Michael Bromwich, director of the US oceans regulator, held a press conference amid great fanfare on Monday to unveil that they had approved a plan by Shell for deepwater oil and gas exploration.

The approval was trumpeted as the first plan approved since the Macondo disaster last April, and one that provided a template for the industry to follow to get their own plans approved.

But the approval does not mean Shell can drill. Its plan calls for drilling three exploratory wells in about 3,000 feet of water, 130 miles offshore Louisiana. To actually drill, Shell must still get permits for each well. And, despite the fanfare, nobody has received a permit to drill a new deepwater well in the Gulf of Mexico since BP’s accident.

FT Energy Source

- Industry thrown into turmoil

- Companies feel effects of Macondo disaster

- Opportunities west of Shetland

- Ice thaws on Canadian oil sands projects

- Huge prize lies under pristine Arctic wilderness

- Shale extraction technology leads to oversupplied market

- Two different disasters will have profound effects on US energy policy

- UK suffers from legacy of North Sea gas abundance

- Plant power seen as only viable long-term alternative to petrol

Kiran Stacey

As the big guns of the oil industry gather in London this week for International Petroleum week, talk has been largely of two things: the effect of Middle East unrest on the oil price and how to improve its reputation, especially after Macondo.

I have just sat through a session entitled: “Restoring the industry’s licence to operate in the face of increasing public and political scrutiny”.

In it, Andrew Griffin, CEO of a PR company called Regester Larkin, explained how the Macondo spill showed that the oil industry needed to do more to explain its importance to the public. This, he said, would help protect companies’ reputations in the case of an accident or other negative event.

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