Cameron Wallace, left, and Eric Poller, a subsea engineer for Helix Well Ops, look at a new oil spill-containment system developed by Houston’s Helix Energy Solutions. (Michael Paulsen/Houston Chronicle)
The Bureau of Safety and Environmental Enforcement gave the permit to Murphy Exploration & Production Co., allowing the firm to drill a sidetrack well at its Thunder Hawk field about 150 miles southeast of New Orleans.
Other companies have successfully submitted oil spill response plans that would rely on the capping stack developed by Helix Well Containment Group or a separate system devised by the Marine Well Containment Co. But Murphy is the first firm to win regulators’ sign off for an emergency response plan involving Helix’s full flowback system.
The cap-and-flow system caps the well and contains any additional flowing oil in case it is out of control. The entire system involves a capping stack installed on the well head and a flowback system designed to direct the crude to vessels floating overhead.
Although some wells require only the containment system, the cap-and-flow equipment is geared toward operations with higher pressure. Regulators say the cap-and-flow program can help maintain the integrity of an underwater well in cases where the capping stack alone might not do the trick.
The Helix cap-and-flow system is capable of sending 55,000 barrels of oil and 95 million cubic feet of gas per day to the floating ships.
Separately, Helix is asking the Obama administration for a license to provide its containment equipment in case of a spill from offshore drilling in Cuban waters. The Spanish company Repsol is set to begin drilling a deep-water exploratory well north of the island nation — just 50 miles from south Florida — in December or January.
Helix spokesman Cameron Wallace said the ultimate scope of services that would be offered is still under consideration “and no firm commitments have yet been made.”
“We believe that it is important to make proven solutions, similar to our Helix Fast Response System, available for any drilling project that could potentially impact the nation’s coastlines,” Wallace said. “Helix’s goal is to make some of these spill containment technologies available while fully complying with federal trade regulations.”
- Helix seeks to provide capping stack in case of Cuba drill accident (mb50.wordpress.com)
- UK: Well Enhancer Helps in Testing of Well Cap Deployment (mb50.wordpress.com)
- USA: HWCG Chooses Sonardyne Acoustics for New GoM Well Containment Response System (mb50.wordpress.com)
- Helix: An Introduction to Well Intervention (gcaptain.com)
- Re-inventing subsea intervention to keep economics above water (mb50.wordpress.com)
While now facing greater scrutiny from regulators, contractors in the oil-service industry have considerable liability protection to fight the citations and any subsequent fines, legal experts say. They also have enough market muscle to strengthen liability protection in their contracts with oil companies.
Previously, U.S. regulators have held the rig operator responsible for whatever happens under its watch. The operator hired contractors, who perform drilling, seismic or cementing operations and whose contracts protected them from any liability.
That was upended by the Deepwater Horizon mishap in April 2010, which resulted in 11 deaths, the biggest accidental marine oil spill in history, and tens of billions of dollars in costs. BP said blame also falls on Halliburton, which was in charge of cementing the failed well shut, and Transocean, the drilling contractor that owned the Deepwater Horizon rig. U.S. investigations have widely cast the blame among all three companies.
The citations, issued Wednesday, set a precedent for holding contractors at least partially responsible for such accidents, and may increase the contractors’ exposure to civil suits from anyone claiming damages from the spill, analysts said.
The contractors have pledged to fight the accusations. Halliburton said that it is fully protected against penalties and losses from the Deepwater Horizon incident by its contract with BP. Transocean also said it intends to appeal.
However, if the courts determine that the government has the right to issue a citation to oil-service contractors, there is no contract that will protect them from the fine, according to Larry Nettles, an environmental attorney with Vinson & Elkins, a Houston law firm. “In most jurisdictions the courts do not allow indemnification for fines and penalties, because it defeats the purpose,” which is to punish bad behavior, Mr. Nettles said.
Still the industry is expected to bulk up its contracts even more in the wake of the regulators’ action, legal experts say, to get as much liability protection as possible. The contractors currently have considerable bargaining power to win such new concessions from rig operators on contract protection. Relatively high oil prices have led to a shortage of drilling crews and have put oilfield services at a premium, giving the contractors the upper hand in negotiations.
“When oil prices are high and there’s lots of activity, service contractors can drive a very hard bargain,” said Owen Anderson, a professor of law specializing in energy at the University of Oklahoma.
(c) 2011 Dow Jones & Company, Inc.
- New Federal Report Spreads Blame in Gulf Blowout, Spill
- BP Contractors Could Face Fines Over Gulf Oil Spill
- BOEMRE Looking to Expand Oversight to Drilling Contractors
- Oil Firms Face Liability Protection Issues (online.wsj.com)
- BP Contractors Could Face Fines Over Gulf Oil Spill (gcaptain.com)
- BP Contractors Could Face Deepwater Fines (online.wsj.com)
- Serious New Regulatory Risks Arise for Oil Contractors (BP, RIG, HAL, CAM, SLB, BHI, NOV) (247wallst.com)
By Humberto Fontova The Washington Times
In half a heartbeat, the Obama team could put the kibosh on the most dangerous offshore oil drilling ever proposed near U.S. shores, scheduled to begin in December. By fighting this drilling operation, President Obama’s environmentalist allies could get the biggest bang for their lobbying buck in their history.
But all bets are off. This drilling, you see, won’t be done by villainous U.S. oil companies. Instead, a Spanish-Cuban oil company will be drilling in Cuban waters 60 miles from Key West. U.S. companies are banned from exploring anywhere within 125 miles of the Florida coast.
But none of the usual histrionics and fist-shaking from environmentalist quarters against “rapists of Mother Earth,” “despoilers of our coasts and oceans” and “obscene profiteers” have manifested against Fidel Castro’s business partners – none whatsoever. Instead, as a contingency against any drilling mishaps, the above parties already have found a way to blame – you guessed it – Republicans. More specifically, fault already has been affixed to the most lopsidedly Republican voters in U.S. history, Americans of Cuban heritage, who supposedly single-handedly maintain the embargo against Cuba and thus would prevent any cooperation with Cubans in case of a spill.
“We’re shooting ourselves in the foot by not working together,” groused Environmental Defense Fund attorney Dan Whittle after returning absolutely enchanted from a recent meeting with members of Cuba’s Stalinist nomenklatura. “They’re taking the lessons of the BP spill very seriously. They could have easily distanced themselves from what happened and said theirs is a different situation from BP and said ‘thanks very much.’ The very opposite happened.”
Why, those fine folks down in Cuba just couldn’t have been more kind, helpful and accommodating. Us blockheaded Yankee bullies? Hopeless.
A team headed by the chairman of Mr. Obama’s BP spill task force, William Reilly, and Mr. Whittle just visited Cuba to assist that country with its drilling plans. But when the George W. Bush administration planned to open areas off Florida to U.S. oil companies, this same Environmental Defense Fund went ballistic:
“Offshore drilling poses an unacceptable level of risk to two of Florida’s most important economic sectors. Opening a new 1.5 million acre swath of the Eastern Gulf to oil drilling unnecessarily threatens marine life with pollution and puts Florida beaches at a much greater risk for spills. Given the environmental risks … this seems like an ill-considered move by the Bush administration. Opening more of the Gulf to drilling now makes little environmental, economic or political sense.”
The drilling rig on its way to a site 60 miles from Florida’s coast is Chinese-built, Italian-owned and Spanish-leased. Its purpose is to enrich Cuba’s Stalinist nomenklatura, enabling them to better sponsor terrorism and torture people. If only the Obama-environmental alliance team could muster the same contempt for this alliance that it has for Texans.
Texas-based Seahawk Drilling, for instance, among the biggest drillers in the Gulf, filed for bankruptcy in February. The company was battered and finally killed off by “the slowdown in the issuing of shallow-water [drilling] permits in the U.S. Gulf of Mexico following the Macondo well blowout,” read its press release.
Louisiana’s Democratic Sen. Mary L. Landrieu blamed “the administration’s excruciatingly slow release of oil and gas permits. … How many more rigs have to leave and how many more businesses have to close before it realizes the havoc the de facto moratorium is [wreaking] on the Gulf Coast?” The Energy Information Agency thinks more than 59 billion barrels of recoverable oil reside in U.S. offshore waters. But given environmental legislation, U.S. drillers are forbidden from going anywhere near this treasure trove.
As it happens, the Spanish-based oil company Repsol, which partners with the Castro regime, holds leases on U.S. territory. U.S. laws enforcing the embargo of Cuba call for penalties against such accessories to theft but have been meticulously and relentlessly overlooked.
To wit: In July 1960, Castro’s KGB-trained security forces stormed into 5,911 U.S.-owned businesses in Cuba and stole them all at Soviet gunpoint – a $2 billion heist from outraged U.S. business owners and stockholders. Not all Americans surrendered their legal and hard-earned property peacefully. Among some who resisted were Bobby Fuller, whose family farm would become a Soviet-style collective, and Howard Anderson, whose profitable Jeep dealership was coveted by Castro’s henchmen. Both U.S. citizens were murdered by Castro and Che Guevara’s firing squads.
Many of the Canadian, European and Chinese companies partnering with Castro occupy and operate those stolen properties and assets.For the most part, these foreign corporations blow their noses on U.S. laws.
But last week a letter drafted by the chairman of the House Foreign Affairs Committee, Rep. Ileana Ros-Lehtinen, signed by a bipartisan group of 34 House members and addressed to Repsol’s president, hints at the tight grip Americans hold on the Spanish corporation – and could tighten on a whim:
“Dear Mr. Antonio Brufau Niubo:
“Repsol’s partnership with the Cuban regime could violate U.S. law, and may run afoul of pending legislation in the U.S. Congress. … As to current law, Repsol may be in jeopardy of subjecting itself and its affiliates to criminal and civil liability in U.S. courts. Violations of the Trading with the Enemy Act, the Cuban Liberty and Democratic Solidarity Act, the Alien Tort Claims Act, and the Trade Sanctions Reform and Enforcement Act can lead to serious ramifications for individuals or businesses that deal with the Cuban regime.”
It’s a long shot, but there’s a chance the Obama team will see fit to bring the hammer down on a state sponsor of terrorism that helped the Soviets threaten us with nuclear weapons, stole billions from U.S. citizens and most seriously threatens Florida’s beaches. That would be a refreshing change from the team’s practice of acting against domestic oil companies that fuel our economy and employ millions of our fellow citizens.
- U.S. Legislators Want Repsol to Leave Cuba (mb50.wordpress.com)
- Drill, Bebé, Drill (mb50.wordpress.com)
- Chinese-built oil rig setting sail for Cuban waters (mb50.wordpress.com)
- Want to drill in Cuban waters? Perhaps forget doing business in the United States then… (gcaptain.com)
- Don’t talk oil with Cuba, lawmaker warns (mb50.wordpress.com)
- Want to drill in Cuban waters ? (uwtreasures.wordpress.com)
- Cuban Offshore Drilling Plans Raise U.S. Concerns (cubastation.wordpress.com)
- US experts eye Cuba oil plans after BP spill (mb50.wordpress.com)
- Castro calls Obama ‘stupid,’ mocks his Cuba policy (ctv.ca)
- Castro calls Obama stupid (caribnewsnow.wordpress.com)
The Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) announced it has signed a cooperative agreement with the University of Texas at Austin and a team of highly qualified and experienced Arctic researchers for a comprehensive study of the Hanna Shoal ecosystem in the Chukchi Sea off Alaska’s northwest coast. The study will be conducted from 2011-2016 and is expected to cost $5,645,168.
Ongoing studies have highlighted Hanna Shoal as an important biological ecosystem between the Chukchi Sea and Arctic Ocean waters. BOEMRE analysts and decision makers will use the information developed by this study in future National Environmental Policy Act analyses and decision-making regarding potential energy development in the Chukchi Sea.
“Over the course of many years, we have devoted substantial resources to promote better understanding of the Arctic environment,” said BOEMRE Director Michael R. Bromwich. “This five-year study will greatly contribute to the body of knowledge regarding the biological diversity of the Hanna Shoal area and will provide additional valuable information about the ecosystem that supports marine life.”
The main objectives of the study are to identify and measure important physical and biological processes that contribute to the high concentration of marine life in the Hanna Shoal area. The study will document physical and oceanographic features, ice conditions, and information concerning local species. BOEMRE will integrate data gained from this study with other relevant Chukchi Sea studies to provide a more complete understanding of environmental considerations such as food web and contaminant bioaccumulations.
Dr. Kenneth H. Dunton, University of Texas at Austin, will serve as Principal Investigator. His team will include researchers from the Florida Institute of Technology, Old Dominion University, the University of Alaska Fairbanks, the University of Maryland, the University of Rhode Island, and the Woods Hole Oceanographic Institution. BOEMRE will be involved in all phases of the study, including substantial input to the field research design and coordinating with other research efforts in the Chukchi Sea to ensure BOEMRE information needs are met. BOEMRE staff may also participate in field cruises, field data interpretations and analyses, and in writing articles that flow from research that will be conducted under this cooperative agreement.
Although BOEMRE developed the Hanna Shoal study parameters in 2010, the study will also address several issues raised by the U.S. Geological Survey June 2011 report, An Evaluation of the Science Needs to Inform Decisions on Outer Continental Shelf Energy Development in the Chukchi and Beaufort Seas, Alaska.
Since the early 1970s, BOEMRE and its predecessor organizations have funded more than $340 million in studies in Alaska. The Hannah Shoal study is one of approximately 40 ongoing studies the bureau’s Alaska Region is currently coordinating and managing. The bureau’s Environmental Studies Program conducts and oversees world-class, scientific research to inform policy decisions regarding leasing and development of OCS energy and mineral resources.
- Federal study on Chukchi Sea oil leases still full of gaps (summitcountyvoice.com)
- Shell Clears Air Permit Obstacle for Alaska Offshore Drilling Plans (gcaptain.com)
- Fed agency approves Shell Artic drilling plan (usatoday.com)
Leslie Bertucci, co-owner of R&D Industries in Harvey, stands in front of the company’s compartmentalized storage tank, designed by her husband and co-owner Dan Ness.
Watching it leave, co-owner Leslie Bertucci raised her camera phone and snapped a couple of pictures of a cherished sight in the last few months: a paying customer.
For R&D, this was rain after a drought, a breath of oxygen flowing into a small oilfield supply company that has been gasping for air. The company, which rents modular storage containers and racks to offshore rigs, has managed to stay in business since the Deepwater Horizon exploded last year and radically reshaped deepwater drilling in the Gulf.
But it’s been grueling.
R&D survived a four-month deepwater drilling moratorium that ended in October. Since then, it has been struggling to navigate the re-made regulatory environment that has settled over the Gulf, leaving drilling activity far short of where it was when Deepwater Horizon blew, killing 11 workers.
Bertucci and her husband, Dan Ness, founded R&D 11 years ago in their house in Metairie to manufacture and rent specialized equipment to deepwater drillers. When the moratorium clanged down and the Gulf went quiet, Bertucci said revenue plunged 80 percent almost overnight.
The company survived, in part, by enforcing furious economies, Bertucci said.
The couple slashed their own salaries by 75 percent. Months later they eliminated them entirely, and then began shoveling personal savings into company operations.
Bertucci said they slashed every discretionary nickel, ended their practice of cookouts or gifts for customers, cut off all charitable contributions.
Remarkably, over the course of 18 months, R&D has held on to its small workforce of a dozen or so employees.
“We didn’t lay off anybody but ourselves,” she said.
‘Not a penny‘
Meanwhile, Bertucci learned that R&D didn’t qualify for compensation from a $20 billion fund that BP established shortly after the spill.
Although the company had contracts in hand, it received no compensation for lost revenue, or for the estimated $144,000 in equipment that went to the bottom of the Gulf with the Deepwater Horizon.
“We haven’t received a penny. Not a penny,” she said.
However, since the spring, business has inched back up, “but it’s excruciating how slow it is.”
“I didn’t think a year and a half ago I’d be excited to have the numbers I have today,” she said. “They’re not great. But they’re creeping back up slowly.”
Bertucci said she and Ness are back on the payroll, but business is still down more than a third of what it was before the oil spill. The day of the BP disaster, Bertucci said her company had equipment on 23 deepwater rigs; today they’re on 12.
If her projections work out, Bertucci expects that next summer the business will be where it was in June of 2010.
Depressed deepwater drilling
On the day BP’s rig blew, 33 deepwater rigs were operating in the Gulf.
Today there are about 34, but only about half are drilling, said Eric Smith, associate director of the Tulane University Energy Institute. The rest are awaiting permits.
Just last week, a joint report by the Coast Guard and the Bureau of Ocean Energy Management, Regulation and Enforcement found that BP, Halliburton, its drilling contractor and Transocean, owner of the Deepwater Horizon, took disastrous shortcuts that led to the blowout of the 18,000-foot Macondo well, killing 11 crew members and spilling nearly 5 million barrels of oil into the Gulf.
Since the relaxation of a moratorium after the spill, Gulf deepwater drillers have been operating in a new environment in which regulators have ordered increased oversight at every stage of oil and gas development, and invited more government agencies to consult and comment on drilling permit applications, Smith said.
The result is that permit applications are significantly backlogged and deepwater drilling remains depressed.
Pleading their cases
In the months since the spill, Bertucci has become a highly visible spokesperson for thousands of small secondary businesses that support — and are supported by — the multi-billion-dollar corporate behemoths in the oil and gas industry.
Bertucci has pleaded the case of small businesses in Washington and before the president’s National Oil Spill Commission in New Orleans. She is the subject of a short pro-business video by the Heritage Foundation and the Institute for Energy Research.
Her message is clear: although the blowout was a disaster, the moratorium was an overreaction, and the post-moratorium regulatory environment has tilted the balance of oversight versus production too far in favor of oversight.
During the slowdown, Bertucci and Ness began looking to other markets for business. In the last few months, they have sought an international technical certification for their tanks and racks so they can bid on deepwater jobs in other regions — especially Brazil, which appears to be the preeminent new deepwater market.
During the darkest days of the moratorium, Bertucci frequently said the company needed to keep a full workforce on hand for the day the moratorium was lifted, for on that day, she believed, R&D would be swept off its feet with customers stampeding back into the Gulf.
It hasn’t worked out that way at all.
“It turned out to be sort of a joke. A joke on us,” she said.
“It was a very cruel joke.”
Bruce Nolan can be reached at email@example.com or 504.826.3344.
- Is Mexican Gulf Energy Production Recovering? (mb50.wordpress.com)
- Collateral Damage: Lost Gulf Rigs from Obama Obstructionism (10 down, more to go?) (mb50.wordpress.com)
- Push for permits in Gulf of Mexico (mb50.wordpress.com)
- USA: Chevron Strikes Oil in Deepwater Gulf of Mexico (mb50.wordpress.com)
- Getting back to work in the Gulf of Mexico… offshore drilling rebounds, finally. (gcaptain.com)