Category Archives: offshore oil

fossil fuels, gulf of mexico clean-up, offshore oil, oil pollution

Fuel Fix: Offshore regulators to keep eye on bad actors

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Fuel Fix

http://fuelfix.com/blog/2014/05/08/offshore-regulators-to-keep-eye-on-bad-actors/?utm_source=twitterfeed&utm_medium=twitter

Posted on May 8, 2014 at 6:29 pm by Jennifer A. Dlouhy

HOUSTON – Maritime and drilling regulators vowed Thursday to keep a closer watch on oil companies and contractors they say are consistently cutting corners on safety offshore.

The Coast Guard’s assistant commandant for prevention policy, Rear Adm. Joseph Servidio, and Brian Salerno, director of the Bureau of Safety and Environmental Enforcement, delivered that message directly to oil industry representatives on the final day of the Offshore Technology Conference.

Servidio said the Coast Guard will consider launching unannounced inspections of oil and gas industry vessels after some logged more than five deficiencies during scheduled probes.

“There are significant areas of concern, and we have a ways to go with some vessels and some companies,” Servidio said.

While acknowledging some offshore supply vessels and mobile offshore drilling units have come through examinations without problems, and still others have worked to improve their performance, Servidio said some still are falling short. “There are other companies where we find the same problems over and over again,” he said.

The Coast Guard already conducts unannounced inspections of some cruise ships – and that same model could be applied to oil industry vessels with bad track records.

“We will be looking at expanding oversight on those vessels and those companies that have demonstrated significantly above average trends and deficiencies, and we will take appropriate control and enforcement actions where needed,” Servidio said. “We’re looking at the potential for instituting no-notice exams for the small population of vessels whose performance and commitment to safety may be in question.”

Salerno said the safety bureau he heads, which regulates offshore drilling, also sees evidence of spotty performance, with a few repeat offenders mingled among companies with deep commitments to the safety and environmental management systems now required to minimize process risks offshore.

“There are companies we have encountered that think they can cut corners or regard SEMS as just a plan on a shelf,” Salerno said. “In some tragic cases, lives have been lost – needlessly – for failure to follow established safety processes.”

A spate of recent accidents have highlighted the risks of offshore oil and gas development – even in shallow waters close to shore.

In its probe of a fatal Gulf of Mexico oil platform blast that killed three workers in November 2012, the safety bureau blamed Houston-based Black Elk Energy and its contractors for failing to make sure areas were cleared of explosive gas before welding.
The agency also is investigating what caused a welder to fall to his death while dismantling an Energy Resource Technology platform in the Gulf last October.

Salerno did not name names, but he said his view about bad actors offshore “was formed as a result of actual events.”

“Incidents occur and we investigate them,” he said. “We look at the reasons why they have occurred, and in many cases, you can point to a failure to follow pretty well-established safety principles. A lot of what we have seen in the incidents is very, very preventable, and when you read the reports, you say, ‘how can that have happened?'”

Salerno, who has spent nine months leading the safety bureau, said he wants the agency to focus its attention on the riskiest operations and the most problem-prone companies.

That risk-based approach wouldn’t mean companies with good track records would escape inspections altogether, Salerno said, but data could be used to justify spending less time on some operators with proven performance and more time on those “where there are clear problems.”

The safety bureau has asked a national laboratory to help it develop a robust risk methodology.

The agency is also looking to step up its technological know how – and keep updating its regulations – as the oil and gas industry sets its sight on reservoirs with bone-crushing pressures and 350-degree temperatures miles below the sea floor.
That’s a big challenge, Salerno admitted.

The industry “sets a very aggressive pace,” Salerno said.

“Regulations have always had a tough time keeping up with technological change; for that matter, industry standards are having a tough time keeping up as well,” Salerno said. “And that has become even more of a problem as the pace of technological innovation and change has accelerated.”

Charlie Williams, Brian Salerno and Coast Guard Rear Adm. Joseph Servidio discuss safety during an OTC panel Thursday.
Special thanks to Richard Charter.

energy policy, fossil fuels, offshore oil

Houston Chronicle: Efficient use of water called key to future energy projects

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http://www.houstonchronicle.com/business/energy/conferences/article/New-rules-coming-for-retiring-offshore-oil-5458587.php

May 8,2014 by Matthew Tresaugue

Water may be everywhere in the Gulf of Mexico, but it’s becoming increasingly scarce in many other areas where oil and gas is produced. “Water is already a crucial issue and will shape the future,” said Emmanuel Garland, an environmental expert for Total Exploration, during an Offshore Technology Conference session Tuesday.

Energy companies consume water for drilling and cooling, among other uses, and it now accounts for up to 25 percent of project costs, Garland said.

At the same time, less water is available because of swelling population, worsening water quality and a changing climate. The National Climate Assessment released Tuesday by the Obama administration showed that the Gulf Coast is especially vulnerable to higher temperatures and decreased availability of water.

Moving forward, companies must limit consumption, increase reuse of wastewater and reduce the impact of discharges on the environment, Garland said, because future operating licenses probably will depend on a company’s demonstrated ability to conserve water.

Special thanks to Richard Charter

energy policy, fossil fuels, offshore oil

Houston Chronicle: New rules coming for retiring offshore oil structures & Norwegian Company Plans Underwater ‘factories’

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http://www.houstonchronicle.com/business/energy/conferences/article/New-rules-coming-for-retiring-offshore-oil-5458587.php

May 6, 2014 | Updated: May 6, 2014 11:06pm
by Jennifer A. Dlouhy

Tommy Beaudrieu

Tommy Beaudreau says new rules are coming on the decommissioning of old offshore oil infrastructure.

New regulations governing the decommissioning of old offshore oil infrastructure are on the horizon, a top Obama administration official said Tuesday. The Bureau of Ocean Energy Management will begin tackling the issue this summer, said Tommy Beaudreau, the former director of the agency. Although Beaudreau did not give specifics during a presentation at the Offshore Technology Conference, the coming regulations are expected to deal with concerns that existing bonding requirements for oil and gas companies are insufficient in an era of ultradeep exploration far from the coast.

“This will be an open, transparent process on how we meet these challenges around aging infrastructure and decommissioning,” said Beaudreau, who is now chief of staff to Interior Secretary Sally Jewell. The issue is a live one as some of the oldest deep-water wells in the Gulf of Mexico reach the end of their lives and companies look to dismantle the operations. Randall Luthi, the head of the National Ocean Industries Association and a former federal drilling regulator, said any changes should embrace rigs-to-reefs programs designed to allow old structures to have new lives as a habitat for marine life.

Norwegian company plans underwater ‘factories’ by Ryan Holeywell

Statoil wants to build huge underwater “factories” by 2020 that would sit on the seabed as they produce and process natural gas offshore.
The effort would be the culmination of work the Norwegian oil and gas company has pursued since 1986, when it drilled its first subsea wells, said Ola Anders Skauby, Statoil’s vice president of communication, technology, projects and drilling.

Statoil’s 500 undersea wells now account for half of its energy production, and its plan is to put almost every component needed for that work underwater in some locations, in part to insulate personnel and technology from difficult conditions. The company says subsea factories will be vital in parts of the world that are farthest from shore in deep, cold, harsh environments. One key to making them work is development of giant undersea gas compressors to boost production. Statoil is set to deploy a pair of those devices next year off the coast of Norway at a site called Åsgard.

“It’s as large as a soccer stadium – something you put on the seafloor,” Skauby told the Houston Chronicle. Compressors typically are placed on surface facilities. Building and installing the two compressors will cost $2.7 billion, but Statoil projects they will increase production in the Åsgard fields by at least 282 million barrels of oil equivalent. Subsea factories also will include an electrical power source and machinery to separate oil, gas and water. Statoil already operates a commercial separator off the coast of Norway. “We have that technology today,” Skauby said.

Still, subsea is costly and only will take hold where the economics make sense, he said.

__________
Black Elk rig

The Black Elk Energy platform is submerged at South Timbalier Block 185 in the Gulf of Mexico. OceanGate, a Seattle-based provider of deep-water submersible vessels, has released a new crop of underwater images from the federal Rigs to Reefs program, showing sea creatures swimming among the steel legs of an old Black Elk Energy platform. The manned submersibles typically are contracted for deep-water research and filming of shipwrecks and underwater life. But OceanGate made its first dive to observe an oil facility in the Gulf of Mexico earlier this year.

Special thanks to Richard Charter

energy policy, fossil fuels, offshore oil, oil pollution

Miami Herald: CUBA EMBARGO Revise restrictions to ensure safe oil drilling

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http://www.miamiherald.com/2014/05/03/4094534/revise-restrictions-to-ensure.html

Posted on Saturday, 05.03.14

BY WILLIAM K. REILLY AND BOB GRAHAM

After an unsuccessful round of drilling in 2012 and 2013, Cuba’s oil and gas industry is poised for further deepwater exploration in the Gulf as soon as 2015. As Cuba explores and eventually drills for oil, Florida and neighboring states have a paramount interest in ensuring that Cuba’s drilling operators employ the highest safety standards and the best available technology. From our experience with the BP tragedy, failure to meet these standards would seriously threaten Florida’s economy and environment.

A half-century of trade and travel restrictions separates the United States and Cuba. And yet the island’s northern boundary floats just 50 miles from southern Florida. For communities in southern Florida whose commerce, especially tourism, depends on a healthy marine system, an oil spill would be disastrous. Coral reefs and mangroves, such as those found in the Everglades, Biscayne National Park and the Florida Keys, serve as protective barriers from hurricanes. They also provide critical nurseries for species that support commercial and recreational fisheries on the east coast.

Earlier this year in Havana, we met with top energy and environmental officials in Cuba to assess the country’s preparation to mitigate an oil spill in Cuba’s Gulf waters. After successive meetings, we left with a new realization of Cuba’s imminent intention to explore for oil. Seismic studies indicate the potential for commercial-scale oil and gas deposits, and the instability of Venezuela, Cuba’s main oil provider, is further incentive.

We are confident that Cuba is adopting standards in line with the recommendations developed by President Obama’s National Commission on the BP Oil Spill and the Future of Offshore Drilling, which we co-chaired. The test will be the capacity to achieve these standards.

Given Cuba’s limited human and material resources and lack of substantial experience regulating deepwater oil and gas exploration, the United States should revise embargo-related restrictions to foster the highest standards of safe drilling. It is beyond our intentions to advocate for a total lifting of the embargo; rather, we urge for modifications to specific provisions to achieve maximum protection from a BP-type accident. One such restriction in need of modification is the U.S. sanction that prevents Cuba and its contractors from acquiring advanced technology with more than 10 percent U.S. content. Only one drilling rig in the world qualifies under this criterion.

U.S. travel and export restrictions further limit spill response in the Gulf of Mexico as they prohibit U.S. oil spill mitigation companies from traveling readily to Cuba. This potential danger became a reality during the BP explosion where the delay in capping the surging oil substantially increased the damage. In the aftermath of BP, the U.S. oil and gas industry established two response teams in the Gulf. But under current U.S. embargo restrictions, these response capabilities would not be available in the event of a similar accident in Cuban waters. We therefore urge the president to issue appropriate industry-wide “general” licenses for travel and export so that companies in the oil service and spill response industry can position proper equipment in advance.

The BP oil spill underscored that the Gulf of Mexico waters transcend national boundaries, making all countries sharing the Gulf vulnerable to consequences of a major spill. Within a year of the BP spill, commission representatives and affected U.S. agencies met with Mexican counterparts to coordinate Gulf drilling safety and response. Culminating at the Clean Gulf 2013 conference in Tampa, this dialogue now includes the Bahamas, Jamaica, and Cuba. The result was the establishment of the Multi-Lateral Technical Operating Procedure (MTOP) to institute safety protocols in the event of a cross-border spill. While this was a substantial start, more needs to be done. Appropriate agencies in the U.S. government should brief oil companies on safety procedures in the agreement. To strengthen their oversight of drilling in the Gulf, these agencies would likewise benefit from creating channels for the exchange of expertise and training between Cuban and U.S. personnel.

Given Cuba’s serious pursuit of offshore drilling and the potential risk of an oil spill, the slow pace of U.S. preparedness greatly concerns us. To avoid environmental and economic damages reminiscent of the 2010 Deepwater Horizon oil spill, the United States must relax equipment restrictions. It must take comprehensive actions to facilitate cross-border exchange of best practices, mitigation training and response strategies. Until such steps are in place, we cannot be satisfied that every possible measure has been taken to preserve the economic and ecological wellbeing of the Gulf of Mexico.

William K. Reilly, former administrator of the Environmental Protection Agency, and Bob Graham, former governor and senator from Florida, co-chaired the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling.
Read more here: http://www.miamiherald.com/2014/05/03/4094534/revise-restrictions-to-ensure.html#storylink=cpy

Special thanks to Richard Charter

energy policy, fossil fuels, offshore oil

OilPrice.com: Problems At Petrobras Mount As Brazil’s Oil Production Stagnates

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http://oilprice.com/Energy/Energy-General/Problems-At-Petrobras-Mount-As-Brazils-Oil-Production-Stagnates.html

By Nick Cunningham | Tue, 06 May 2014 22:06 | 0
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For the past 30 years or so, Brazil has increased its oil production every year. Brazil’s state-owned oil company, Petrobras, has become a world class producer of offshore drilling technology, which puts it in a good position for the future, as oil comes from increasingly difficult places to reach.

In the 1980s, Brazil’s oil production was negligible, but by 2010, it was pumping 2.7 million barrels of liquid fuels per day (bpd). By the mid-2000s, the trend line seemed to be inexorably rising upwards, and with the huge oil discoveries in 2007 in Brazil’s pre-salt basins – oil reserves that are trapped beneath a thick layer of salt – many observers believed Brazil was destined to become an oil superpower.

But then something happened. Since 2010, oil production has flattened out entirely. In 2013, Brazil averaged only 2.7 million bpd of oil production, which is where it was three years ago.

Petrobras’ performance over the last few years deserves some of the blame, and a steady stream of reports point to mismanagement within the company as why. A former executive was arrested in March for money laundering in connection with a gang. The company is conducting an internal investigation because of allegations that top company officials accepted bribes from a Dutch company in exchange for awarding contracts.

Local content rules are also hampering production. With Brazilian oil service companies booked up, there is a shortage of labor, leaving Petrobras and its partners struggling to find enough qualified contractors. Not only has this raised costs, but it has also delayed projects. Most recently, Brazil’s oil regulator ANP recommended a delay of further auctions for offshore blocks until 2015, so that local service companies could absorb all the demand.

Petrobras’ problems were perfectly summed up in an April mishap. According to Reuters, Saipem SpA, an Italian contractor working at a Petrobras-run oil field in the Atlantic Ocean, managed to drop a 2.3 kilometer steel pipe deep into the ocean. Saipem was trying to attach the pipe to a drilling rig, but it sank 1,800 meters (5,900 feet) to the ocean floor. Damaged and lost to sea, the $2 million pipe is not recoverable. That’s only the beginning – the lost pipe could set the project back by more than a month, costing Petrobras tens of millions more.

The incident fits a pattern – several other rigs in nearby oil fields are also behind schedule, including Parque da Baleias off the coast of the state of Espirito Santo, and Papa Terra near Rio de Janeiro.

But the problem is deeper than just bad management. The state-owned oil company is used as a tool to achieve policy goals by the government, such as subsidizing fuel prices for drivers, which has cost the company $37 billion since 2011.

All of these problems have caused Petrobras to claim the mantle of the world’s most indebted and least profitable major oil company. It has amassed $114.3 billion in debt, and according to Moody’s, Petrobras owes $11.50 for every barrel of oil it has yet to produce. Its share price has cratered, losing half of its value since 2010.

The stagnating oil industry is becoming a hotter political issue in Brazil. Whether true or not, it fits the narrative of how corruption at the highest levels is causing the economy to stagnate. And the angry protests in several major cities last year demonstrated voter frustration as Brazil heads into this fall’s presidential election.

Brazil’s political opposition is using Petrobras’ woes in an effort to unseat President Dilma Rousseff. But she continues to back the firm, which is a symbol of nation pride. “No one and nothing will destroy Petrobras,” she told a crowd of oil workers and supporters in April in the state of Pernambuco. “Petrobras is bigger than all of us. Petrobras is as big as Brazil.” Her fate, as well the country’s, hinges on the performance of Brazil’s largest company.

By Nick Cunningham of Oilprice.com Special thanks to Richard Charter