A More Revealing BP Hearing?

The House Commerce Committee is holding the third hearing into what went wrong on the BP Deepwater Horizon rig (CSPAN is showing it on CSPAN3). As is typical for a Waxman/Stupak hearing, the Committee has done its homework, advancing the understanding of what went wrong.

Henry Waxman’s opening statement reveals that the well failed a number of tests, but BP kept testing until getting a passing test, and then proceeded to close the well.

Rigs like the Deepwater Horizon keep a daily drilling report. Transocean has given us the report for April 20, the day of the explosion. It is an incomplete log because it ends at 3:00 p.m., about seven hours before the explosion. But it confirms that three positive pressure tests were conducted in the morning to early afternoon.

The next bullet says: “After 16.5 hours waiting on cement, a test was performed on the wellbore below the Blowout Preventer.” BP explained to us what this means. Halliburton completed cementing the well at 12:35 a.m. on April 20 and after giving the cement time to set, a negative pressure test was conducted around 5:00 p.m. This is an important test. During a negative pressure test, the fluid pressure inside the well is reduced and the well is observed to see whether any gas leaks into the well through the cement or casing.

According to James Dupree, the BP Senior Vice President for the Gulf of Mexico, the well did not pass this test. Mr. Dupree told Committee staff on Monday that the test result was “not satisfactory” and “inconclusive.” Significant pressure discrepancies were recorded.

As a result, another negative pressure test was conducted. This is described in the fourth bullet: “During this test, 1,400 psi was observed on the drill pipe while 0 psi was observed on the kill and the choke lines.”

According to Mr. Dupree, this is also an unsatisfactory test result. The kill and choke lines run from the drill rig 5,000 feet to the blowout preventer at the sea floor. The drill pipe runs from the drill rig through the blowout preventer deep into the well. In the test, the pressures measured at any point from the drill rig to the blowout preventer should be the same in all three lines. But what the test showed was that pressures in the drill pipe were significantly higher. Mr. Dupree explained that the results could signal that an influx of gas was causing pressure to mount inside the wellbore.

Another document provided by BP to the Committee is labeled “What Could Have Happened.” It was prepared by BP on April 26, ten days before the first document. According to BP, their understanding of the cause of the spill has evolved considerably since April 26, so this document should not be considered definitive. But it also describes the two negative pressure tests and the pressure discrepancies that were recorded.

What happened next is murky. Mr. Dupree told the Committee staff that he believed the well blew moments after the second pressure test. But lawyers for BP contacted the Committee yesterday and provided a different account. According to BP’s counsel, further investigation has revealed that additional pressure tests were taken, and at 8:00 p.m., company officials determined that the additional results justified ending the test and proceeding with well operations.

This confusion among BP officials appears to echo confusion on the rig. Information reviewed by the Committee describes an internal debate between Transocean and BP personnel about how to proceed. [my emphasis]

Read more

Maria Cantwell Tries to Get BP to Define “Legitimate Claims”

One of the highlights of the first of several Deepwater Horizon hearings in Congress this week came when Maria Cantwell tried to get BP American President Lamar McKay to commit to what BP would pay as “legitimate claims.” She asked about:

  • Long term and short term harms to the fishing industry
  • Business loss to tourism
  • State and local governments for lost tax revenue
  • Long term damages to LA fishing industry and it’s brand
  • Additional troubles with fisheries
  • Shipping impacts
  • Impacts on further drilling operations
  • Impacts to the pristine beaches in this area

He balked about the tax revenues, the brand of LA’s fishing industry, and further drilling operations.

In any case, he certainly didn’t commit to what he meant by “legitimate claims.”

Oil and Water and Leaky Hydraulics Don’t Mix?

I wanted to call your attention to this excellent story from the Houston Chronicle describing some of the potential causes of the Deepwater Horizon spill. The short version appears to be that they were switching the drill chamber over from mud to water, which exposed what may be a potentially faulty concrete job, which brought gas to the surface. When that happened, and the blowout preventer was activated, the BOP failed, potentially because of leaky hydraulics.

As the Chron story explains, BP should not have been replacing the mud with water unless they were very sure of the cement job done the day before.

Experts say well-capping poses special hazards. One arose that day as crews were replacing the mud with seawater in pipes going from the ocean floor to the rig.

Deep gases exert astounding upward pressure on a well. “Drilling mud,” a heavy fluid used to lubricate the drill and bring up bits and pieces of rock, is used as the main line of defense against the upward pressure, or a disastrous eruption of gas.

The mud was being displaced so the riser could be detached from the rig and the wellhead, and the well could be capped with a final cement plug. But seawater is much lighter than mud. The pressure the riser was applying to the well would have lessened by as much as 38 percent, experts said.

That could prove significant.

Investigators likely will be considering whether the drill hole and the casing pipe were secured properly with cement a day earlier.

“The big question is how confident were they in the casing cementing job,” said Elmer “Bud” Danenberger, who recently retired as chief of offshore regulatory programs for the Minerals Management Service. “They shouldn’t have begun this (riser) operation until they were confident in that.”

Now, as the MMS recently found, problems with the cementing process have been one (but not necessarily the only) cause in a plurality of blowouts in recent years. Though most of those cementing-related blowouts occurred in far shallower waters than this well.

Cementing problems increased significantly during the current period as these problems were associated with 18 of the 39 blowouts, compared with 18 of the 70 blowouts with identified contributing factors during the previous study. During the current period, all but one of the blowouts associated with cementing problems occurred in wells with water depths less than 400 ft.

The Chron notes that HAL claimed it had tested its cement job in its “we worked to spec” statement from last week, but had not released the results of that test. Read more

Halliburton: We Worked to Spec

As oil continues to gush into the Gulf, I’ve been haunted by the statement Halliburton put out about the Deepwater Horizon spill.

Here’s the statement, dated April 30, in its entirety.

Halliburton (NYSE: HAL) confirmed today its continued support of, and cooperation with, the ongoing investigations into the Deepwater Horizon drilling rig incident in the Gulf of Mexico earlier this month. Halliburton extends its heartfelt sympathy to the families, friends and our industry colleagues of the 11 people lost and those injured in the tragedy.

As one of several service providers on the rig, Halliburton can confirm the following:

  • Halliburton performed a variety of services on the rig, including cementing, and had four employees stationed on the rig at the time of the accident. Halliburton’s employees returned to shore safely, due, in part, to the brave rescue efforts by the U.S. Coast Guard and other organizations.
  • Halliburton had completed the cementing of the final production casing string in accordance with the well design approximately 20 hours prior to the incident. The cement slurry design was consistent with that utilized in other similar applications.
  • In accordance with accepted industry practice approved by our customers, tests demonstrating the integrity of the production casing string were completed.
  • At the time of the incident, well operations had not yet reached the point requiring the placement of the final cement plug which would enable the planned temporary abandonment of the well, consistent with normal oilfield practice.
  • We are assisting with planning and engineering support for a wide range of options designed to secure the well, including a potential relief well.

Halliburton continues to assist in efforts to identify the factors that may have lead up to the disaster, but it is premature and irresponsible to speculate on any specific causal issues.

Halliburton originated oilfield cementing and leads the world in effective, efficient delivery of zonal isolation and engineering for the life of the well, conducting thousands of successful well cementing jobs each year. The company views safety as critical to its success and is committed to continuously improve performance. [my emphasis]

HAL’s first concern, in its statement, was to invoke “its cooperation” in the investigation. Only after that did it mention the casualties from the explosion. Then, it described (sort of) its role on the rig, stating that their work was:

  • Consistent with that utilized in other similar applications
  • In accordance with accepted industry practice approved by our customers
  • Consistent with normal oilfield practice

You get the feeling that HAL wants to cement (heh) the impression that everything it was doing on the rig was all standard practice? You get the feeling that HAL wants you to know that everything they were doing on the rig had been approved by BP?

And it took them a full week to come up with that statement.

All of which leads me to wonder whether–though mind you, I’m just wondering–HAL (which did, after all, originate oilfield cementing) did something that may well have met BP’s specifications, but which HAL, with its expert knowledge of what it should do in conditions like those at the Deepwater Horizon site, might be rethinking. That is, the tone and content of their statement suggests HAL is preparing a defense that it met spec, regardless of whether that spec was appropriate to the conditions involved.

BP Oil Slick The Result Of Republican DOJ And Regulatory Policy

The economic and environmental damage resulting from the exploding fireball compromise of the Deepwater Horizon oil platform may be unprecedented, with the potential to emit the equivalent of up to four Exxon Valdez breakups per week with no good plan to stop it. There will be plenty of finger pointing among BP, Transocean and Halliburton, while it appears the bought and paid for corporatist Congress put the screws to the individual citizens and small businesses by drastically limiting their potential for economic recovery; all in the course of insuring big oil producers like BP have effectively no damage liability for such losses.

How did this happen? There are, of course, a lot of pertinent factors but, by far, the one constant theme underlying all is the mendacious corporate servitude of the Republican party, their leaders and policies. The arrogance and recklessness of BP and its oily partners gestated wildly under the Bush/Cheney administration.

Until the turn of the decade, BP had a relatively decent safety and environmental record compared to others similarly situated. Then BP merged with American oil giant Amoco and started plying the soft regulated underbelly of Republican rule in the US under oil men George Bush and Dick Cheney. Here from the Project On Government Oversight (POGO) is an excellent list of BP misconduct, almost all occurring and/or whitewashed under the Bush/Cheney Administration. If you open the door, foxes eat the chickens.

But it is not just regulatory policy behind the open and notorious recklessness of BP and its ilk, it is intentional policy at the Department of Justice as well. Here is how the former Special Agent In Charge for the EPA Criminal Investigative Division, Scott West, described the DOJ coddling of BP under the Bush/Cheney Administration:

In March 2006, a major pipeline leak went undetected for days, spilling a quarter-million gallons of oil on the Alaskan tundra. The spill occurred because the pipeline operator, British Petroleum (BP), ignored its own workers warnings by neglecting critical maintenance to cut costs. The spill sparked congressional hearings and a large federal-state investigation. Despite the outcry, in a settlement announced in late October 2007, BP agreed to one misdemeanor charge carrying three-year probation and a total of only $20 million in penalties (a $12 million fine with $8 million in restitution and compensatory payments).

The settlement resulted from a sudden U.S. Justice Department August 2007 decision to wrap up the case, according to West. That precipitous shutdown meant Read more

Erik Prince Proposes Blackwater Become Big Oil’s Enforcer

Jeremy Scahill reports on a recording that was liberated from a recent Erik Prince talk in which Prince talks about all the great roles he thinks Blackwater should play in protecting Big Oil. Mind you, he didn’t call it Big Oil. But he proposed sending Blackwater to a number of countries to (seemingly) counteract Iran’s challenge of Saudi hegemony in the Middle East.

Prince painted a global picture in which Iran is “at the absolute dead center… of badness.” The Iranians, he said, “want that nuke so that it is again a Persian Gulf and they very much have an attitude of when Darius ran most of the Middle East back in 1000 BC. That’s very much what the Iranians are after.” [NOTE: Darius of Persia actually ruled from 522 BC–486 BC]. Iran, Prince charged, has a “master plan to stir up and organize a Shia revolt through the whole region.” Prince proposed that armed private soldiers from companies like Blackwater be deployed in countries throughout the region to target Iranian influence, specifically in Yemen, Somalia and Saudi Arabia. “The Iranians have a very sinister hand in these places,” Prince said. “You’re not going to solve it by putting a lot of uniformed soldiers in all these countries. It’s way too politically sensitive. The private sector can operate there with a very, very small, very light footprint.” In addition to concerns of political expediency, Prince suggested that using private contractors to conduct such operations would be cost-effective. “The overall defense budget is going to have to be cut and they’re going to look for ways, they’re going to have to have ways to become more efficient,” he said. “And there’s a lot of ways that the private sector can operate with a much smaller, much lighter footprint.”

In addition to his plot to use Blackwater to counter Iranian power, Prince also called to send Blackwater to Nigeria, in what would amount to propping up a corrupt (but US-friendly) government to beat back the indigenous opposition to the abuse, environmental degradation, and corruption related with the oil industry in that country.

Prince also proposed using private armed contractors in the oil-rich African nation of Nigeria. Prince said that guerilla groups in the country are dramatically slowing oil production and extraction and stealing oil. “There’s more than a half million barrels a day stolen there, which is stolen and organized by very large criminal syndicates. There’s even some evidence it’s going to fund terrorist organizations,” Prince alleged. “These guerilla groups attack the pipeline, attack the pump house to knock it offline, which makes the pressure of the pipeline go soft. they cut that pipeline and they weld in their own patch with their own valves and they back a barge up into it. Ten thousand barrels at a time, take that oil, drive that 10,000 barrels out to sea and at $80 a barrel, that’s $800,000. That’s not a bad take for organized crime.” Prince made no mention of the nonviolent indigenous opposition to oil extraction and pollution, nor did he mention the notorious human rights abuses connected to multinational oil corporations in Nigeria that have sparked much of the resistance.

Scahill doesn’t say it explicitly (nor did Prince), but this amounts to a plan to use mercenaries to shore up the hegemonic system the US build on big oil.

Scahill describes a lot more of Prince’s braggadocio in his post. But I, for one, am particularly intrigued by Prince’s naked aspirations to become Big Oil’s privatized enforcer.

$75 Million Buys BP Six Years of Lobbying or One Giant Oil Spill

As you’ve no doubt heard, BP’s own liability for the damages the Deepwater Horizon spill will cause may be limited to $75 million (though it will have to pay for cleanup).

The federal government has a large rainy day fund on hand to help mitigate the expanding damage on the Gulf Coast, generated by a tax on oil for use in cases like the Deepwater Horizon spill.

Up to $1 billion of the $1.6 billion reserve could be used to compensate for losses from the accident, as much as half of it for what is sometimes a major category of costs: damage to natural resources like fisheries and other wildlife habitats.

Under the law that established the reserve, called the Oil Spill Liability Trust Fund, the operators of the offshore rig face no more than $75 million in liability for the damages that might be claimed by individuals, companies or the government, although they are responsible for the cost of containing and cleaning up the spill.

That’s obviously puny. But to give you a sense of just how puny it is, consider that, at its current levels of spending on lobbying, BP will spend as much every six years on politicians in DC.

BP is one of the most powerful corporations operating in the United States. Its 2009 revenues of $327bn are enough to rank BP as the third-largest corporation in the country. It spends aggressively to influence US policy and regulatory oversight.

In 2009, the company spent nearly $16m on lobbying the federal government, ranking it among the 20 highest spenders that year, and shattering its own previous record of $10.4m set in 2008. In 2008, it also spent more than $530,000 on federal elections, placing it among the oil industry’s top 10 political spenders.

But the puny amount for which BP will be liable for damages didn’t stop them from potentially trying to make their liability even punier. The early contracts it drew up to pay Alabama fishermen to help contain the spill included a $5000 damage limit, which presumably wouldn’t even cover the cost of a fishing boat.

Alabama Attorney General Troy King said tonight that he has told representatives of BP Plc. that they should stop circulating settlement agreements among coastal Alabamians.

The agreements, King said, essentially require that people give up the right to sue in exchange for payment of up to $5,000.

Read more

BP’s Procedural Spills

Another thing that happened while I was tromping around one of the most beautiful places on earth (Yosemite) is that the BP drilling rig that had an explosion and fire last week sunk and oil has started to spill into the Gulf (as this dramatic NASA picture makes clear). In the last day, the Minerals Management Service (one of the federal agencies that regulate offshore drilling) has released documents showing that BP was cited in 2007 for training problems related to a similar problem in 2002.

BP Exploration & Production, which owns the deep water rig that exploded last week in the Gulf of Mexico, was cited in 2007 for inadequately training employees in well control, according to the US Minerals Management Service.

The conditions of the training are the same as those suspected in the possible blowout aboard the TransOcean Deepwater Horizon, which left 11 workers missing and presumed dead.

MMS slapped BP with $41,000 in fines in October 2007 after a series of violations related to a near-blowout five years earlier.  In November 2002, the Ocean King rig, operated by Diamond Offshore Drilling, in the Gulf had to evacuate all 65 of its workers for nearly two days after operators detected a dangerous rise in gas pressure.  The rig, which had been drilling at a depth of more than 5,000 feet, didn’t resume work for nearly a week, according to the MMS report.

Unlike last week’s disaster, workers were able to keep the well from leaking by using cement and mud to plug the well.  The same subcontractor, Diamond Offshore, was also used when BP was fined $25,000 in 2004 for bypassing a gas detection system while drilling.  A BP spokesman in London says the company still uses Diamond Offshore as a contractor.

KEY SAFETY PROCEDURES

In the 2002 incident, the MMS said that BP and Diamond Offshore were unaware that some of the key safety procedures they used to initially stop the dangerous rise in pressure could have contributed to a blowout.  The MMS cited BP for what it called “no formal procedures” and “no written guidelines” to follow in case of an emergency.  MMS also cited BP and contract workers in the incident for what they said was a “lack of knowledge of the system, and lack of pre-event planning and procedures.”

Let me give some background on this. In the 1990s, I worked for a company that consulted on safety procedures for the oil industry (a writer who reported to me did some procedures for one Amoco refinery, which was subsequently purchased by BP; we bid on, but did not get, a job that included BP; and we did some procedures for a drilling entity that has since been purchased by Halliburton, which is involved here as well). The way in which the government forces oil companies to operate in ways which minimize the safety and environmental danger of inherently dangerous processes is to ask (either nicely or by mandating) a set of procedures to cover both normal and emergency procedures. It’s a way of setting up documented procedures which can be trained and audited; the procedures allow the government to check whether the operators are operating as safely as possible. Just as importantly, it’s a way of proactively making sure that in case something does go badly wrong, the operator in question–and more importantly, the workers actually doing the work–will have a way of figuring out what to do quickly enough so as to minimize the safety and environmental damage.

MMS is saying that in 2002, BP not only had none of these procedures, but it hadn’t trained the workers and contractors on the rig, and as a result, the workers did the wrong thing to contain the damage. BP got lucky in 2002, because doing the wrong thing did not exacerbate the problems.

Read more

Biden To Announce Fisker Auto Plant In Wilmington Delaware

imagesVice President Joe Biden is set to make an appearance in his home state of Delaware today to make an announcement that Fisker Automotive will be purchasing, retooling and opening up operations in a shuttered former General Motors facility in Wilmington. From the Washington Post:

Vice President Biden will make the announcement that Fisker Automotive of Irvine, Calif., is expected to invest $175 million to retool the plant.

Fisker, which will pay the old GM $18 million for the facility and equipment, is getting tax incentives from the state of Delaware, although officials there declined Monday to say how much.

Fisker plans to make a car in Delaware that is being developed under the name “Project Nina” after the ship belonging to explorer Christopher Columbus. Russell Datz, a Fisker spokesman, said that the project’s name is meant to be “symbolic of the transfer from the old world to the new in terms of auto technology.” The car is expected to cost about $39,900 after tax incentives.

The Fisker facility is expected to create 2,000 jobs and will likely be operational by 2011. Administration officials said the deal will indirectly create another 3,000 jobs once the plant is fully operational, expected in 2014. Administration officials say that Fisker expects many of the jobs will go to former GM or Chrysler auto workers.

Time will tell, but on the front end this looks like a wonderful deal in a lot of ways. Fisker is a company that has been putting the pieces together behind the scenes for a couple of years for a major production move, and their initial prototype, and soon to be production model, the Karma, is absolutely stunning and, from all reports, technologically sound. Wilmington is an area that, while not as hard hit as Detroit, is certainly depressed and has been further decimated by the recent closing of the large GM plant there as well as a separate Chrysler plant. When fully up and running, the Fisker Nina plant in Wilmington may Read more

Don’t Drill Baby, Don’t Drill

In yet another chapter of Ken Salazar being my temporary favorite cabinet secretary, Salazar and Obama have reversed Bush’s plans to increase offshore drilling.

The Obama administration on Tuesday overturned another Bush-era energy policy, setting aside a draft plan to allow drilling off the Atlantic and Pacific coasts.

"To establish an orderly process that allows us to make wise decisions based on sound information, we need to set aside" the plan "and create our own timeline," Interior Secretary Ken Salazar announced in a statement.

Alleging that the Bush administration "had torpedoed" offshore renewable energy in favor of oil and natural gas, Salazar said he was extending the public comment period by 6 months.

"The additional time we are providing will give states, stakeholders, and affected communities the opportunity to provide input on the future of our offshore areas," he said.

Salazar also ordered Interior Department experts to compile a report on the Outer Continental Shelf’s energy potential — not just oil and gas, but also renewables like wind and wave energy.

"In the biggest area that the Bush administration’s draft OCS plan proposes for oil and gas drilling — the Atlantic seaboard, from Maine to Florida — our data on available resources is very thin, and what little we have is twenty to thirty years old," he said. "We shouldn’t make decisions to sell off taxpayer resources based on old information."

Granted, compared to Eric Holder (who gets to embrace renditions as his first meaningful act) and Tim Geithner (who is stuck with the worst economy in decades), Salazar has it easy. He can stay busy for months just undoing Bush’s harm. 

Still, it’s nice to see one Department improving on what Bush had done.

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