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Stuart Nathan
Features editor
Shrinking feeling for Big Oil
The oil is still seeping, flowing or gushing out of the seabed of the Gulf of Mexico — pick your adjective depending on who you’re listening to — but the repercussions of the Deepwater Horizon disaster are clearly going to go on for some time. It’s not a good time to be BP in the US, particularly in Texas or Washington DC.
The share price of Britain’s biggest company is falling off a cliff, pension fund managers are starting to make angry noises and BP chief executive Tony Hayward is doing himself no favours at all. Commenting that he’d ‘like his life back’ was not tactful; that’s not the sort of thing to say in the aftermath of an incident which killed people, and the hundreds of people trying to block the leak and clean up the spill, none of whom are on Mr Hayward’s salary, would also like their lives back.
BP’s engineers are also looking increasingly desperate. With the failure of the ‘top kill’ and ‘junk shot’ procedures, the option of cutting the leaking pipe and attempting to cap the stump is extremely daunting. Comparisons with other blowouts, such as the Montara incident off Western Australia last year, are facile. In that case, a top kill operation and relief wells were successful, but the operation was performed in very shallow water. The depth, pressure and sheer distance of working at the bottom of the Gulf of Mexico makes it a much more difficult prospect.
In the meantime, US authorities are beginning a criminal investigation amid talk of seizing BP’s US assets until the leak is repaired. It’s certain that there will be heavier regulation of oil industry activities; the Minerals Management Service, which overseas the environmental impact statements of oil companies’ exploration activities, will be shaken up. It’s going to be more difficult and more costly to drill for oil in the US and off its coast.
Many will say that’s a good thing, and that the Deepwater disaster proves it was far too easy to drill without appropriate safeguards. But the consequences in the US market could well go further than that. The Obama administration is keen on reducing the dependency of the US on foreign oil, but the market is huge — America consumes a quarter of the world’s oil but has only three per cent of its reserves. If the government is serious about reducing imports, it’s going to have to look for ways to plug a huge energy gap.
Is this an opportunity for engineering? Unlike the UK government’s belt-tightening policy, Obama is increasing funding for research, with alternative energy generation high on the priority list. If the Gulf of Mexico is the catalyst for a surge in activity in this area, the oil industry could find itself in a very uncomfortable position.
Readers' comments (10)
Trevor Best | 2 Jun 2010 3:51 pm
Stuart,
BP is caught between a rock and a hard place. The world's consumption of oil will not fall away rapidy however many solar panels, wave generators and wind farms are commissioned and the oil we will need is difficult to extract. The mechanisms for shut off were tested twice before drilling but there was a still a single nut on the hydraulics that was not tightened properly. It seems we can get at this oil but it is going to take a lot of management control and fail safe procedures to make it happen.
In the early stages of this spill I mentioned to a few people why it was not possible to "pinch" the pipe from the well head shut with a heavy weight or robotic pincers. This would have slowed the flow and made sealing easier. Now they are cutting the pipe to insert a valve, so it seems they do have sufficient pipe to work with and I wonder why no one explored this method before. Still, it is easy for us to comment as we are not in the coal (oil) face of the problem.
Trevor Best
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Paul Sanderson | 2 Jun 2010 3:56 pm
There is an irony that the country most heavily dependent upon oil has this catastrophe occur in its own back yard. It is easy to foresee the end to BP, Britains largest company. The environment will pay the ultimate cost as this could well go on for months or years, devastate US argriculture and make vast areas of land uninhabitable (wait and see how hurricanes suck up and distribute the oil). Surely no deep sea oil extraction should ever have been allowed without a proven way of stopping such a leak.
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Steve D. | 2 Jun 2010 3:57 pm
I am a Instrument & Control engineer with over 25 years experience in the UK Oil & Gas industry and I would like to make the following observations.
From most news reports I have read about this disaster it would appear that the Blow-out Preventer failed and caused the explosion.
However, as with most cases like this, when the whole truth comes out in years to come we'll probably find that the BOP was only one of several seemingly small insignificant incidents which occured prior to the explosion.
Think about the Piper Alpha disaster. The Cullen Report highlighted many problems which on there own would not have resulted in catastrophy, but when combined had a terrible effect.
In the UK waters, as a result of the Cullen Report we now have more robust permit-to-work systems, platforms have sub-surface safety valves, increased blast proof walls etc etc..
Perhaps most importantly of all, certainly within my company, any individual person now has the authority to stop any job if we consider it to be dangerous - without fear of any reprisals from the operating company.
If someone knew the BOP was faulty, and possibly dangerous, they should have been empowered to stop the job.
I only hope that the US government and the Operators will learn from this and improve their safety cultures as we have done over the last 20 years.
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max | 2 Jun 2010 4:11 pm
Paul; There is a way of stopping the leak and that relief well(s) is 2/3rds the way to completion. This leak will end at the end of August 2010 at worst. I have more insight than most as I have worked on offshore blowouts. Your comments on agriculture are way off beam as there will be no effect. The spill has killed people and is disastrous but has not ( yet ) caused mass death of sea life. It may do but we should look at the evidence not at emotion. I am deeply disturbed at talk of 'end of BP' type talk as it is a key component of our economy and more than likely contributes to your pension fund through its dividend. We should wake up in the UK to our best interests and they are not served by unfounded talk and disparagement of BP. This accident could have occurred on any of the deep-water exploration wells and is therefore emblematic of a systemic failure in the technological and human systems employed. These will be improved as a result.
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paul bruce | 2 Jun 2010 7:03 pm
Interestingly It was reported last night in the US that BP had hundreds of violations regarding their offshore programs vs a dozen by the next highest violator.
Is this accurate? The News media is always long on the hype and short on the facts.
Maybe someone on that (your) side of the pond has more info on these 'facts'.
paul bruce
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Dave | 2 Jun 2010 9:47 pm
Having read the comments by experienced drilling and piping observers about this disaster, I have formed the impression that it was there but by the grace of God.
I am certain that an established company such as BP will call upon worldwide experience and resources to help seal the leak.
I shall be investing in BP firstly to show my support and secondly in better times to show a profit.
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Colin Fourie | 3 Jun 2010 8:46 am
The little I know about engineering, it seems to me that the problem could be solved by simply using a much larger pipe, with control valves etc already in place, to put over the existing pipe. Firstly, this would give a little more direction of the oil while keeping the flow going unrestricted. Secondly, this pipe could then be attached to the existing pipe without having oil all over nor pressure while doing the attachment. Once done, control of flow via the existing valves will be possible. It seems like there is substantial pressure from the well and that trying to shut off flow by any means can create problems, so keep the oil flowing to it's destination, at least this would prevent furthur loss and pollution.
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Chris Wood | 3 Jun 2010 10:55 am
I wonder if the same criminal investigation would be starting against the company if it was American?
As for pinching off the end of the pipe - that would increase the speed of the oil as it comes out through the smaller hole making it harder to put anything over it.
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Mike | 4 Jun 2010 11:31 am
Doubt it would mean the end to BP or even hit them too hard, since with any oil operation there are so many contractors, that although the main company may be culpable, it is the contractors that will feel the financial repercussions even more.
Legal wrangling will most likely go on for years anyway, after all, we do know what these US. lawyers are like for spinning something out over the longest period they can. Just look at companies like MS, Apple or Intel for proof of that.
Since there must be some very experienced Engineers working on this problem, with inputs from all sources, I don't think a few suggestions here would carry much weight, although it is interesting to see the ideas that people come up with.
You would have to lay the blame on different parties, but even the U.S. Government are not blameless in this matter. It is there greed for oil( a relatively cheep form of energy, compared to the vast amounts they would have to sink into new technology), in a world with ever diminishing supplies that is an equal cause of this disaster.
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Ray Edwards | 8 Jun 2010 4:13 pm
“If it can happen it will happen”
That’s life; you can plan for everything but the unexpected.
BP will survive this, but the American press and people need to report fairly and honestly and stop being so bias.
BP is not British petroleum, it’s a company called BP, and is owned internationally.
Also what of the company “American” that operated the drilling rig, very little is mentioned of them?
This was a disaster of monumental proportions, stop playing the blame game start working to minimise the effects.
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