What if this is the end of deepwater drilling?

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  • Thu, May 27, 2010 - 05:50am

    #1

    Erik T.

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    What if this is the end of deepwater drilling?

I think we should discuss what it would mean to the economy and the world if deep water offshore oil exploration were outlawed in the wake of the Deepwater Horizon oil rig disaster in the Gulf of Mexico.

The United States Government has a long history of inaction in the face of credible warnings, followed by overreaction after something has gone terribly wrong.

For example, the nuclear power industry in the United States was basically halted in the wake of the Three Mile Island nuclear powerplant mishap back in 1979. Putting that event in context, what really happened was not a disaster by any stretch of the imagination. A small amount of radioactive gas leaked out of a reactor containment building after a malfunction and leak. Nobody died. Several cases of cancer were later attributed to the event, but the question of whether bona fide cause and effect really exists or if the claimants were just opportunists hoping to profit from lawsuits has been hotly debated. But just the possibility of another nuclear accident led to a public outcry of concern about the threat of something worse happening. That was enough to cause the government to effectively shut down an entire industry, in so doing further increasing the nation’s dependence on foreign oil.

Contrast that event with Deepwater Horizon, which unlike Three Mile Island, is a true bona fide disaster of proportions we’re only beginning to understand. Until now, the biggest accidental oil spill in the history of the world was the Ixtoc I spill which leaked 3,000,000 barrels of oil into the Gulf of Mexico in 1979, several hundred miles south of the Deepwater Horizon site. If one assumes that BP’s 5,000 bbl/day guesstimate is low and that the 75,000 bbl/day estimates tha several credible t scientists have put forth are more accurate, Deepwater Horizon has now already leaked 3,000,000 barrels, making it the biggest accidental spill in history, and more than twice the size of Exxon Valdez. And it’s still going strong, with no end in sight.

The situation with Ixtoc I was almost identical to Deepwater Horizon. The Blowout Preventer malfunctioned, and the well could not be shut off after a blowout. In the case of Ixtoc I, the emergency shutoff rams hit a drill collar that was too strong to be severed. In the case of Deepwater Horizon, the rams appear to have simply malfunctioned, which is not surprising considering that at least one eye witness on the rig told 60 Minutes that the control system that operates the BOP device was known to have malfunctioned before the accident ever occurred, but that BP continued the drilling operation rather than stopping to fix the malfunctioning blowout preventer.

So the problem we face now is nearly identical to Ixtoc I: A malfunctioning blowout preventer that won’t shut off, and oil that continued to leak until the device can somehow be made to shut off the flow, or until a relief well is drilled, which would take months by the most optimistic estimates.. In the case of Ixtoc I, it took fully 8 months to get the thing shut off, and doing so required the use of deep sea divers to repair the Blowout Preventer. The Ixtoc I well was in 160′ of water, within the range of commercial divers. But Deepwater Horizon is 5,000′ below the ocean’s surface, a depth far below that which can be reached by divers. It seems to me that if it took 8 months to shut off Ixtoc I, there is no reason to expect it to take any less time to solve the much more difficult problem of Deepwater Horizon. At currently estimated flow rates of about 75,000 bbl/day, that would make Deepwater Horizon approximately 8 times worse than the worst oil spill accident in the history of the world. But the Deepwater Horizon well is a mile underwater. If it took twice as long to fix this one, it will eventually leak 50 million barrels, making it 15 times worse than the worst oil spill accident previously recorded. What’s worse, the oil will eventually find its way to the loop current and then the gulf stream. That means the entire east coast of the United States, Greenland, Iceland, and even Scotland could all experience coastal damage from this oil spill. The U.S. economy is already facing crisis. What if the entire east coast commercial industry from Florida to Maine were lost? What if the Grand Banks of Newfoundland – one of the biggest and most important offshore fishing grounds on earth – became unfishable? What would that do to the economy? To the global food supply? What if Katla were also to errupt, and agricultural crops were destroyed en masse at the same time that major fishing grounds were lost? What would we eat?

For sake of argument, I think we should assume that once the full extent of the damage Deepwater Horizon has caused is fully understood, it will very likely result in a permanent ban on deepwater oil production projects.

That’s a really sobering statement when you stop and think about it. On one hand, if that is the outcome I would score it a huge victory for the Environment. The risk of something like this going so terribly wrong was clearly not widely understood, and preventing it from ever happening again with an outright ban on deepwater drilling seems to me like a great idea when I think like an environmentalist.

But as any Crash Course graduate should immediately understand, the world was already screwed in terms of the coming Peak Oil shock. We were already at risk of a horrific economic collapse as a result of declining energy availability at increasing cost. Not even the most devout anti-Peak Oil “drill baby drill” hardliners dispute the immutable fact that the Elephants – the big conventional oil fields on land – are being depleted. Those who claimed Peak Oil would not be a big problem were basing their whole argument on optimistic forecasts about new unconventional sources of oil. By far, deep offshore drilling was the biggest part of their “solution”. Most of us who studied the facts carefully thought that these people were kidding themselves to think deepwater drilling was going to solve the world’s energy problem. But if deep water is taken off the table, we’re really screwed.

Let’s revisit what may be the most telling chart ever produced by the U.S. Government:

(Source)

The world’s only hope to avoid economic, social, and industrial armageddon is to somehow figure out a way to fill in that huge gap shown on the chart as “Unidentified Projects”. If deepwater offshore drilling is taken out of the game, it appears to me that what was previously a nearly impossible problem just got twice as hard to solve.

So this thread is for discussion of the key question, what will it mean if Deepwater Offshore Drilling is outlawed? That includes economic effects, implications to society, how national and foreign policy might be affected, impact on financial markets, and everything else. I really hope someone smarter than me will tell me that I’m overreacting and that this isn’t as big a threat as I think it is. I hate to jump to conclusions, but this seems inescapable to me. Something has to be done to prevent another Deepwater Horizon disaster. I myself feel adamantly that banning these risky deep water projects probably is the right move. But when I consider the implications of such a move, it’s staggering. What do you think?

Erik

  • Thu, May 27, 2010 - 09:42am

    #2
    Peak Prosperity Admin

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    Re: What if this is the end of deepwater drilling?

Erik,

I’ll make this short but….

They may outlaw it for a time, but when the idea of “Peak Oil” actually hits mainstream and governments are forced by social unrest to find as much oil as possible as fast as possible….game over.  They’ll break down faster than a Yugo and start pumping in as deep water as necessary.  OR, they may outlaw DWD but still do it without telling anyone.  Then it would just become another CT on the radars, and some of our members will deny it to the end.Tongue out

  • Thu, May 27, 2010 - 12:13pm

    #3
    Peak Prosperity Admin

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    Re: What if this is the end of deepwater drilling?

Many of you are unaware of my vocation as a heavy construction safety engineer. From what I can tell this incident was entirely caused by a lack of respect for safety procedures.  We safety managers like to call such things incidents, not accidents, because the term “accident” is laden with a raft of “it was unavoidable!” presuppositions. The term “accident” implies there is no one to blame; these things “just happen.” In this case, that’s not so. Here’s the best of my sources.

Rumor Schlumberger Exits Deep Horizon Hours Before Blowout

With all the usual caveats, here’s a recap of what I know.

BP’s safety consultants,  Schlumberger, found an unsafe condition and BP was advised to shut the well down. Not only did BP’s on-site management  refuse to shut it down; they refused to allow Schlumberger’s staff to leave via a BP helocopter. Schlumberger got on the horn to their corporate headquarters and got their OWN helocopter to get them off the rig, STAT. 

Six hours later the damned thing blew, just like the safety consultants told them it would.The fire and explosion were mostl likely a result of natural gas from the well. To add insult to injury the BP employee survivors, it seems, were detained until they signed something that expunged BP’s liability (but we all know how useless a contract signed under duress is.)

I forecast  much more attention to safety. We need the oil; but no one will want to become responsible for another disaster like this. The lawsuits, my friends, are going to be EPIC.

  • Thu, May 27, 2010 - 12:38pm

    #4
    Peak Prosperity Admin

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    Re: What if this is the end of deepwater drilling?

At some point, the desire for oil will trump safety.  In a few years, they will probably think something along the lines of, “This coast is already ruined so we might as well keep drilling here.”.   If they wait too many years, the existing equipment will be that much more rusted and in need of repair/replacement.  It will take a lot more time and $.  Even now, according to Wiki, it costs $100 million for 100 days of drilling.

Erik, that’s quite a combo you’ve come up with – DWD ban and a volcano.  Everyone will be eating out of their mylar bags and plastic buckets in their basements and you will be in Maine welding giant metal sculptures of extinct fish such as cod.

  • Thu, May 27, 2010 - 01:14pm

    #5
    Peak Prosperity Admin

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    Re: What if this is the end of deepwater drilling?

Erik, another fine post and I’m starting to think that you need a Pay-Pal donation account to compensate you for all the work that you have put in lately, lol. I do think its likely that this accident could be a trigger event for the peak oil trade to start up again. The fact that the price of oil hasn’t budged in the face of this news has me concerned about unseen deflationary pressures, however. 

I don’t really think that this will mark the end of DWD, because it doesn’t really matter what the people think,  our constitution says:

“One nation, under the corporations, of the money, by the money, and for the money, people and the environment be damned.”

  • Thu, May 27, 2010 - 01:38pm

    #6
    Peak Prosperity Admin

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    Re: What if this is the end of deepwater drilling?

This is amazing… Bloomberg is reporting operation top kill a success! It’s all better now! And this is CONFIRMED by both LA times and the Coast Guard!

Meanwhile, the live video they are showing depicts oil continuing to spew out! The reporters are saying “And don’t worry, that substance you see coming out now isn’t oil – it’s drilling mud, which is 100 times heavier than water…”

Ok, forgive me for letting the laws of nature get in the way of a good story, but if the substance that looks just like oil that is coming out is 100x heavier than water drilling mud, why is it very rapidly flowing UP and being displaced by the “lighter” sea water around it? Just asking…

Erik

 

  • Thu, May 27, 2010 - 02:16pm

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    Re: What if this is the end of deepwater drilling?

Ok, forgive me for letting the laws of nature get in the way of a good story, but if the substance that looks just like oil that is coming out is 100x heavier than water drilling mud, why is it very rapidly flowing UP and being displaced by the “lighter” sea water around it? Just asking…

Although I am not an engineer, Erik, I will try to shed some light.  The drilling mud currrently being pumped down the hole was said to have weighed 16.5 pounds per gallon.  Water weighs about 8.5 ppg.  Oil is lighter even than water.  To push the oil and gas rapidly back into formation and encapsulate it necessarily required “heavy” drilling fluid.  The hydrostatic pressure of the water in the well bore would have been 5,967 psi which was rapidly “displaced” by the pressure of the oil reservoir which was significantly more and thus a blow out.  And in very simple terms, that is eaxctly what happened when the well exploded and began a high pressure fire similar to a bunson burner.  Pumping 16.5 ppg mud will exert a hydrostatic pressure of 11,583 psi on the well bore and keep the oil in place and perhaps the gas back into solution. 

The 16.5 ppg drilling fluid is akin to pumping molasses and would require about 3500 psi of surface pump pressure to pump the mud downhole.  That pressure of 3500 remains throughout the system.  Any ongoing leaks would show 16.5 ppg mud leakage and not oil.  The most important weighting agent of the mud is naturally occuring barite (usally mined in Wyoming or China).  It becomes a non-newtonian fluid in that it changes properties with flow and pressure.  A good example of that that we know is — cornstarch and water.

What we do not know at this point is if there were some sand reservoirs closer to the surface that were pressure charged by the oil rising to the top.  Remember a higher pressure will displace to the path of least resistance which will be lower pressured reservoirs.  I will not rest until I know that the reservoir has been stabilized and heavy cement can be pumped “down hole” and harden in the borehole. 

This may not be entirely the situation but it will be closer to anything that the msm can report.

 

 

 

  • Thu, May 27, 2010 - 02:22pm

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    Re: What if this is the end of deepwater drilling?

[quote=Erik T.]

This is amazing… Bloomberg is reporting operation top kill a success! It’s all better now! And this is CONFIRMED by both LA times and the Coast Guard!

Meanwhile, the live video they are showing depicts oil continuing to spew out! The reporters are saying “And don’t worry, that substance you see coming out now isn’t oil – it’s drilling mud, which is 100 times heavier than water…”

Ok, forgive me for letting the laws of nature get in the way of a good story, but if the substance that looks just like oil that is coming out is 100x heavier than water drilling mud, why is it very rapidly flowing UP and being displaced by the “lighter” sea water around it? Just asking…

Erik

[/quote]

Agin this is CHRIS here operating off my cell phone and wife’s computer to achieve connection to this site.

Erik, you silly dude!  Don’t you know that the laws of physics only operate at sea level?  Or maybe congress repealed them at any level in a rider attached to an omnibus spending bill recently.  You never know what’s in those tubes of sausage.

If true, I am going to make a killing on my next business venture, filling party balloons with CO2.  I figure they should float even better than the drilling mud because CO2 is only a couple of times heavier than air, not 100x.

Not only will I be using CO2 and saving the atmosphere, but I won’t be using up any of the last dregs of helium which is now in short supply.  It’s a win win!!

Seriously, that’s a good observation about the 100x heavier mud rising…. perhaps they’ll next tell us that we weren’t actually watching live feeds all this time and the explanation is not that mud flows upwards, but that they forgot to terminate the tape loop in time.

  • Thu, May 27, 2010 - 03:18pm

    #9
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    Re: What if this is the end of deepwater drilling?

The abject stupidity of the investing public sometimes boggles my mind.

Apparently there was a HUGE spike in BP stock in reaction to the “news” from Bloomberg that the problem was solved. These investors were watching the live photos of the “heavier than water drilling mud” that mysteriously looked just like crude oil rushing upward from its relative bouyancy. But the bimbo announcer was saying “problem solved” and I guess nobody bothered to process the images. Sigh.

Erik

 

  • Thu, May 27, 2010 - 03:48pm

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    Re: What if this is the end of deepwater drilling?

Note:  CHRIS here…

Excellent discussion of the efforts at the Oil Drum (link to live comment feeds).

The concensus there seems to be that what we are seeign are reduced flows from the various cracks in the drill string and that the substance seen in the videos is indeed mud. 

There’s still mud being pumped in to keep the pressure on teh well bore but they are watching the wellbore pressure to see if it is stable.  If so, then in goes the cement.

I will be extremely relieved if this works, so I am keeping my fingers crossed.  Once that drama is over, then the hard work of clean-up begins.

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