Saturday, June 19, 2010

BP's risky decisions

From Russell Gold and Tom McGinty in the WSJ...

In recent years, oil giant BP PLC used a well design that has been called "risky" by Congressional investigators in more than one out of three of its deepwater wells in the Gulf of Mexico, significantly more often than most peers, a Wall Street Journal analysis of federal data shows.

It's interesting (telling?) that federal regulators didn't share that concern.

The design was used on the well that exploded in the Gulf of Mexico on April 20, killing 11 workers and causing America's worst offshore oil spill. The only other major well design, which is more expensive, includes more safeguards against a natural-gas blowout of the kind that destroyed the Deepwater Horizon.

A Journal analysis of records provided by the U.S. Minerals Management Service shows that BP used the less costly design—called "long string"—on 35% of its deepwater wells since July 2003, the earliest date the well-design data were available. Anadarko Petroleum Corp., a minority partner of BP's in the destroyed well, used it on 42% of its deepwater Gulf wells, though it says it doesn't do so in wells of the type drilled by BP.

Both companies used the design much more often, on average, than other major Gulf drillers. Out of 218 deepwater wells in the Gulf drilled since July 2003, 26% used the long-string design.

It derives its name from its use of a single, long "string" of pipe from the sea floor to the bottom of the well....A long-string design is cheaper because a single pipe runs the length of the well and can be installed in one step. But it also can create a dangerous pathway for natural gas to rise unchecked outside the pipe.

The alternative, known as liners, is seen as safer because it has more built-in places to prevent oil or gas from flowing up the well uncontrolled....

So, why wouldn't they be used all or none of the time? What are the other variables to consider?

A BP spokesman said long string is widely used and is a perfectly acceptable design, particularly in areas where other wells have been drilled and the geology is well understood....

Long-string wells are made of a continuous length of steel, which makes the well sturdier over time—a point Mr. Hayward alluded to in his testimony, noting that the design decision had "to do with the long-term integrity of the well." The Minerals Management Service signed off on BP's long-string plan for the Horizon well, he added....

Anadarko says it doesn't use long-string design for drilling exploration wells in unfamiliar areas. The company also says it only uses long strings in lower-pressure wells. The well BP was drilling with the Deepwater Horizon was an exploration well, and was well above normal pressure....


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