OFFSHORE IN DEPTH
RON BITTO, CONTRIBUTING EDITOR
Deepwater Horizon, five years later
Its been five years since the Deepwater
Horizon blowout in the Gulf of Mexico,
and the incident continues to widely im-
pact the offshore industry and the publics
perception of oil and gas development.
On April 20, 2010, the Deepwater Ho-
rizon semisubmersible lost control of the
Macondo well in Mississippi Canyon
Block 252, southeast of Louisiana. Eleven
men were killed in the explosion, the rig
burned for 18 hours and then sank, and
for the next 87 days, more than 3 MMbbl
of crude oil were released into the Gulf
of Mexico before the well was eventually
brought under control.
The Presidential Report on the incident
concluded that a combination of mistakes,
poor decisions and faulty equipment led
to the blowout. An inadequate casing pro-
gram, a poor cement job, a misinterpreted
pressure test, poorly maintained blowout
preventers, and personnel who lacked ex-
perience in handling emergencies all con-
tributed to the disaster. With the drilling
curve already five weeks behind schedule,
the rig crew felt cost pressure that likely
compromised safety.
Staggering impact on companies. The
blowout and spill had a devastating effect on
the companies involved in the project. BP
has paid, or committed to pay, $28 billion
in clean-up and settlement claims, and is di-
vesting $50 billion in assets to cover the cost.
Anadarko and MOEX, BPs partners on the
well, have paid $4 billion and $1.07 billion,
respectively. Transocean agreed to pay fines
and penalties of $1.4 billion. Halliburton
agreed to pay $1.1 billion to BP. Cameron,
the BOP manufacturer, paid BP $250 mil-
lion, and Weatherford paid $75 million.
After lengthy court proceedings, U.S.
District Judge Carl Barbier ruled in Sep-
tember 2014 that BP was grossly negligent
and could be held liable for spilling 3.19
MMbbl of oil, with potential fines of up to
$13.7 billion under the Clean Water Act.
Questions about the environment.
BP has waged a major PR campaign to
show that it has made every effort to clean
up the beaches, revive fisheries, promote
Gulf Coast tourism, and fund research on
the effects of oil spills on marine ecosys-
tems. In March 2015, BP published a status
report that paints a positive picture of the
Gulfs health, five years after the accident.
According to the reports introduction,
The science is showing that most of the
environmental impact occurred immedi-
ately after the accident Areas that were
affected are recovering, and data BP has
collected and analyzed, to date, do not in-
dicate a significant long-term impact to the
population of any Gulf species.
Environmental groups, like the National
Wildlife Federation, immediately rejected
BPs report as propaganda. The groups con-
tended that BP had cherry-picked data to
support its views, and questioned the tim-
ing of the report, which BP released before
the U.S. government could publish the find-
ings of its National Resource Damage As-
sessment on the spills long-term impacts.
Governmental response. After the
Coast Guard took command of the well
control operation, the U.S. federal govern-
ments first response to the disaster was
declaring a six-month deepwater drilling
moratorium. Although the industry ar-
gued against the ban, the administration
had no responsible alternative, as the well
raged out of control, and a huge cleanup ef-
fort lay ahead.
Following the disaster, the Department
of Interior divided the Minerals Manage-
ment Service, which previously had re-
sponsibility for all aspects of OCS leasing
and regulation, into three separate entities.
The Office of Natural Resources Revenue
now collects all revenue from lease-hold-
ers. The Bureau of Ocean Energy Manage-
ment (BOEM) manages development of
the nations offshore resources. And the
Bureau of Safety and Environmental En-
forcement (BSEE) enforces safety and en-
vironmental regulations.
Under the new framework, BSEE has
issued new requirements for worker com-
petency, materials tracking and regular
inspections that affect all offshore opera-
tors and service companies. In response to
stricter spill response guidelines, 10 Gulf
of Mexico operators have invested over $1
billion in the non-profit Marine Well Con-
tainment Company, which has built a fleet
of rapid-response vessels and equipment to
quickly contain deepwater spills.
Industrys strong recovery. Predic-
tions that the 2010 drilling moratorium
and subsequent regulations would drive
deepwater rigs out of the Gulf were largely
unfounded. Once the moratorium was
lifted, activity gradually recovered, reach-
ing the pre-accident level of 50 units in
September 2012, and peaking at 63 rigs
in August 2014, before tapering off in the
wake of lower oil prices.
After several years of slow decline, the
U.S. EIA expects Gulf oil production to
increase to 1.5 MMbpd this year, as eight
new deepwater fields come online. Strong
interest in the last two Central Gulf lease
sales shows the industrys ongoing belief in
GOM prospects.
Second-most serious fallout. Aside
from the 11 lives that were lost five years
ago, possibly the most serious fallout from
Deepwater Horizon may be the industrys
damaged credibility. Drill, baby, drill, has
become a punch line for environmental-
ists, proof of the industrys recklessness.
Despite BPs assertions about the Gulf
clean-up, serious questions remain about
long-term environmental impacts. The
images of a burning rig and tar on Gulf
beaches are reasons for Eastern seaboard
states to oppose new offshore leasing. The
disaster also undermined the publics trust
in the industrys ability to safely perform
hydraulic fracturing. The bad rap carries
over to concerns about Arctic drilling,
construction of the Keystone XL pipeline,
and rail transportation of Bakken crude.
Our industry has safely, and responsibly,
met bigger challenges than all of these, but
a continued, patient effort will be needed
to fully overcome the impact of mistakes
made on one rig in April 2010.
RON.BITTO@GMAIL.COM / Ron Bitto has more than 30 years of
experience as a technology marketer and writer in the upstream oil and
gas industry.
World Oil/APRIL 201529