[Senate Hearing 111-653, Part 1]
[From the U.S. Government Publishing Office]
S. Hrg. 111-653, Pt. 1
MASSIVE OIL SPILL IN THE GULF OF MEXICO
=======================================================================
HEARING
before the
COMMITTEE ON
ENERGY AND NATURAL RESOURCES
UNITED STATES SENATE
ONE HUNDRED ELEVENTH CONGRESS
SECOND SESSION
TO
REVIEW ISSUES RELATED TO DEEPWATER OFFSHORE EXPLORATION FOR PETROLEUM
AND THE ACCIDENT IN THE GULF OF MEXICO INVOLVING THE OFFSHORE OIL RIG
DEEPWATER HORIZON
__________
MAY 11, 2010
Printed for the use of the
Committee on Energy and Natural Resources
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COMMITTEE ON ENERGY AND NATURAL RESOURCES
JEFF BINGAMAN, New Mexico, Chairman
BYRON L. DORGAN, North Dakota LISA MURKOWSKI, Alaska
RON WYDEN, Oregon RICHARD BURR, North Carolina
TIM JOHNSON, South Dakota JOHN BARRASSO, Wyoming
MARY L. LANDRIEU, Louisiana SAM BROWNBACK, Kansas
MARIA CANTWELL, Washington JAMES E. RISCH, Idaho
ROBERT MENENDEZ, New Jersey JOHN McCAIN, Arizona
BLANCHE L. LINCOLN, Arkansas ROBERT F. BENNETT, Utah
BERNARD SANDERS, Vermont JIM BUNNING, Kentucky
EVAN BAYH, Indiana JEFF SESSIONS, Alabama
DEBBIE STABENOW, Michigan BOB CORKER, Tennessee
MARK UDALL, Colorado
JEANNE SHAHEEN, New Hampshire
Robert M. Simon, Staff Director
Sam E. Fowler, Chief Counsel
McKie Campbell, Republican Staff Director
Karen K. Billups, Republican Chief Counsel
C O N T E N T S
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STATEMENTS
Page
Beck, F.E., Associate Professor of Petroleum Engineering, Texas
A&M University, College Station, TX............................ 6
Bingaman, Hon. Jeff, U.S. Senator From New Mexico................ 1
Danenberger, Elmer P., III, Former Chief, Offshore Regulatory
Program, Minerals Management Service, Department of the
Interior....................................................... 11
McKay, Lamar, President and Chairman, BP America, Inc............ 34
Murkowski, Hon. Lisa, U.S. Senator From Alaska................... 4
Newman, Steven, Chief Executive Officer, Transocean Ltd.......... 40
Probert, Tim, President, Global Business Lines, and Chief Health,
Safety and Environmental Officer, Halliburton.................. 45
APPENDIX
Responses to additional questions................................ 75
MASSIVE OIL SPILL IN THE GULF OF MEXICO
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TUESDAY, MAY 11, 2010
U.S. Senate,
Committee on Energy and Natural Resources,
Washington, DC.
The committee met, pursuant to notice, at 10 a.m. in room
SR-325, Russell Senate Office Building, Hon. Jeff Bingaman,
chairman, presiding.
OPENING STATEMENT OF HON. JEFF BINGAMAN, U.S. SENATOR FROM NEW
MEXICO
The Chairman. The committee will come to order. We're here
today because of a disaster that never should have happened.
The sobering reality is that, despite the losses and damage
that have already been suffered, we do not yet know what the
full impact of this disaster will be.
We should begin by remembering the 11 people who lost their
lives in the explosion at the Deepwater Horizon rig and express
deep sympathy for their families. I'm glad to be a co-sponsor,
along with Senator Murkowski, of the Senate resolution that
Senator Landrieu and other Gulf State Senators are offering and
authoring, expressing the condolences that I know we all share.
I hope the Senate will act on that resolution as soon as
possible.
I'd also, of course, like to express our concern for all in
the Gulf region whose jobs and way of life, are threatened by
the effects of this Deepwater Horizon disaster. We owe it to
them to see that disasters like this never happen again.
This hearing is the start of the Energy Committee's
oversight of issues related to offshore oil development and the
catastrophic blowout that occurred in the Gulf on the evening
of April 20. It is the first of what I expect to be several
hearings on these issues. Next week we'll be receiving
testimony from Secretary of Interior Ken Salazar on these
events and issues.
Our goal in the hearings is to create a thorough factual
record and an informed discussion of the very important
questions presented by the disaster. The disaster raised here
both technological and regulatory questions. We have an
obligation to bring a level of seriousness to this endeavor and
to determine as quickly as possible and to the best of our
ability the appropriate next steps.
As those steps become clear through the testimony we
receive and the investigative work of our committee staff, I
intend to work with Senator Murkowski, the ranking member, and
other members of the committee on a bipartisan basis to develop
and introduce and advance any necessary and appropriate
legislation through the Senate.
At the heart of this disaster are three interrelated
systems: a technological system of materials and equipment;
second, a human system of persons who operated the
technological system; and third, a regulatory system. Those
interrelated systems failed in a way that many have said was
virtually impossible. We need to examine closely the extent to
which each of these systems failed to do what it was supposed
to do.
I don't believe it's enough to just label this catastrophic
failure as an unpredictable and unforeseeable occurrence. I
don't believe it's adequate to simply chalk what happened up to
a view that accidents do happen. If this is like other
catastrophic failures of technological systems in modern
history, whether it was the sinking of the Titanic, Three Mile
Island, or the loss of the Challenger, we will likely discover
that there was a cascade of failures and technical and human
and regulatory errors.
So our examination of what happened here will have the goal
of putting in place improved systems to ensure that this type
of catastrophe never happens again. We will also be looking to
identify any problems or risks that might exist for operations
that are ongoing so that we can ensure that they are addressed
with quick and appropriate action to safeguard human lives and
the environment.
We will begin the process today with two panels of
excellent witnesses, and I welcome all of them. The first panel
we will hear from is composed of two technical experts. One has
long experience in the industry, as well as an independent view
as a highly regarded university professor. The other is a
retired expert from the Minerals Management Service of the
Department of the Interior, with long experience in overseeing
safety of offshore oil and gas operations.
After our first panel has given us a baseline of
information and perspective on best practices for controlling
oil and gas wells and overseeing their safety, we'll hear from
a second panel composed of leaders of the three companies
involved in this accident, BP, Transocean, and Halliburton.
They'll provide us the information currently at their disposal
on the disaster, the steps being taken to deal with the
aftermath, and their future plans for continued investigation
and remediation.
[The prepared statement of Senator Landrieu follows:]
Prepared Statement of Hon. Mary L. Landrieu, U.S. Senator From
Louisiana
Thank you, Mr. Chairman, for holding this important hearing to
examine the terrible tragedy that occurred on April 20, 2011 and the
record of offshore exploration and development of petroleum.
Our nation lost 11 men in this terrible accident. Our thoughts and
prayers are with their families and with those that are injured.
Today, along with all of the Senators from the Gulf Coast, and with
the Chairman and Ranking Member of this Committee, I introduced a
Senate Resolution in their memory.
We must not forget them. And we must do everything we can to
prevent an incident kike this from happening again.
In short, we need to learn from this. But we most learn the right
lessons.
We Can't Retreat
Some have suggested that we put a halt to all new offshore
drilling. I believe it would be a terrible mistake to retreat from
domestic energy production. In the face of this disaster, it may seem
easy to simply ban offshore oil and gas. But banning offshore drilling
will not keep industry workers safe and it won't prevent our shores
from the threat of an oil spill.
Why? Because unless we stop using oil, then we have to get it from
somewhere. We could stop drilling here, but then we would simply import
more than we already do from Saudi Arabia, Nigeria, Venezuela and
elsewhere.
Transporting larger quantities of oil from far away places will
increase, not decrease, our risks. That's because we need to get it
from there to our gas tanks in massive oil tankers. And periodically,
those tankers crash. In fact, according to the National Academy of
Sciences, oil tankers spill about 4 times as much oil as offshore
drilling does, on average.
Of course, it is also true that when we rely on energy production
overseas, we are exporting it to countries whose environmental
standards are lower, and whom have fewer resources to mitigate the
impacts.
Why not stop using oil?
America must reduce its oil consumption, for national security, and
yes, for environmental reasons.
But we need to be realistic. Today America consumes about 20
million barrels of oil each day. We produce about 5 million barrels of
oil per here. We produce another 3 million barrels worth of biofuels.
I believe that the right course is reducing our oil consumption by
promoting safe and clean alternative energy while increasing our
domestic production. That is the true environmental stance. In that
way, the United States takes responsibility for its production needs.
And we would extricate ourselves from any number of geopolitical
hotspots.
Summary--We Need to Learn the Right Lessons
We have seen disasters like this before. We have seen them in the
oil industry, in coal mining, in shipping, in the nuclear power
industry, and in the space race. We can react to this disaster in a
meaningful fashion or we can react to it the wrong way.
We could deal with this disaster in the same way that we dealt with
the meltdown at the Three Mile Island nuclear power plant. But I think
that decision had terrible consequences:
We are 30 years behind the French in nuclear technology. Today,
France gets almost 80% of its electricity from nuclear power. We get
20%.
France is also the world's largest net exporter of electric power,
exporting 18% of its total production, and the cost of electricity in
France is among the lowest in Europe. The United States is a net
importer.
Today, France's carbon emissions per kilowatt hour are less than 1/
10th that of Germany and the UK, and 1/13th that of Denmark. US carbon
emissions are amongst the highest in the world.
By contrast, let's look at how the United States reacted to
the disaster of the Space Shuttle Challenger. In
that instance, millions of Americans watched in
horror as the shuttle exploded after takeoff,
killing all 7 of its crew, including the school
teacher, Christa McAuliffe.
The horror of that disaster shocked us all, and has haunted the
nation with its memory. But what is notable is what we did not do: we
did not end the U.S. space program. We did put the shuttle program on a
brief hiatus and we carefully reviewed what went wrong, corrected those
mistakes, and then kept the program going.
As a result, the United States remains the global leader in the
space race. We have the best technology, the best satellites, and our
space age industries are undisputed global leaders--generating jobs,
spin-off industries, and technological innovations that have generated
billions in revenues and improved the quality of life for all
Americans.
Conclusion
Mr. Chairman, today I hope that we can begin to understand what
went wrong on April 20th when 11 offshore oil-workmen lost their lives.
And I hope that we can take steps to reduce the chances that it will
ever happen again.
But I also hope that we learn the right lessons.
Attachment.--Statement of Statistics on Louisiana and Gulf Coast
Seafood Industry Submitted by Senator Landrieu
Louisiana seafood is a $2.4 billion industry, and is
responsible for more than 27,000 jobs.
In 2008, commercial fishermen in the Gulf of Mexico
harvested 1.27 million pounds of finfish and shellfish and
generated $659 million in revenue from these harvests.
Depending on the season, up to 40 percent of the nation's
commercial seafood harvest comes from the Gulf of Mexico.
Let me turn now to Senator Murkowski for her opening
statement.
STATEMENT OF HON. LISA MURKOWSKI, U.S. SENATOR
FROM ALASKA
Senator Murkowski. Thank you, Mr. Chairman.
It's been 21 days now since the explosion of the Deepwater
Horizon rig, and since that time I think all of us have been
intently following the news as the incident has unfolded. At
first we hoped to hear that the 11 missing rig workers had been
found, and now each day we watch the battle to shut off the
flow and contain the oil spill.
I've said before that this incident is a tragedy on many,
many levels, and our prayers continue to be with those who have
lost loved ones in the explosion and with those who were
injured. Mr. Chairman, you mentioned the resolution honoring
the crew of the Deepwater Horizon and I too am honored to be a
co-sponsor of that.
We continue to hope that this spill can be stopped and
cleaned up as soon as possible in order to minimize the impact
on the Gulf Coast, its residents, and the marine environment.
America joins every Gulf Coast resident in hoping for all the
factors to work in their favor right now, and it's everything
from the weather cooperating, the technology to work, and the
judgment of those in charge to be decisive and to be correct.
This accident has reminded us of a cold reality, that the
production of energy will never be without risk or
environmental consequence. Last November we on this committee
heard testimony that left us with a simple conclusion, that
offshore development does carry risks to both human and marine
life, as well as the livelihoods of our coastal citizens, so
government and industry must never grow complacent and always
strive to minimize those risks.
Those reasons why are very, very simple: We all agree that
we need to steadily minimize the percentage of oil in our
overall energy mix, but under anyone's most optimistic scenario
our Nation will need a lot of oil for a long time to come. For
the sake of our Nation's economy, for the sake of our national
security, and, this incident notwithstanding, for the sake of
the world's environment, we need to safely produce the maximum
amount of that energy here at home.
I was talking to someone recently about why those lessons
that we truly take to heart tend to either be very painful or
very expensive. Unfortunately, we all know that this incident
has been both. We need to make sure that we take the right
lessons to heart.
I'm going to have questions today for our technical panel
and for BP, Transocean, and Halliburton on what they've learned
and how we can produce oil while minimizing future risks. I've
got a host of questions about what caused the initial blowout,
about well design, field pressure, the casing, the cementing
process, the blowout preventer design requirements and their
inspection and triggering mechanisms. I've got questions about
sources of ignition, the challenges of very deep oil
exploration and production, and the newly learned issues with
mitigating a spill originating a mile under water. I've got
questions about the interactions and authorities between the
different parties with varying degrees of control over the
drill rig and the well.
I've got many more questions than will fit at this hearing
or that I can reasonably expect the witnesses to know at this
time. But I am committed to getting full answers to all of
them.
We often cite our Nation's strict safety and environmental
laws for oil and gas development as a means to reassure
Americans that we can responsibly develop our resources. But
this argument will ring hollow if those stringent laws are not
enforced equally stringently and objectively.
Many times I've said that there are words and then there
are actions, and actions necessarily have consequences.
Hopefully, all the actions associated with the Deepwater
Horizon incident were in good faith and compliant with our
laws. But if that's not the case, there will be no excuse.
Next week this committee will be hearing from Secretary
Salazar. We'll be discussing with him the impacts on America's
energy policy of the Deepwater Horizon incident. Our Nation is
struggling to define our energy policy and this Deepwater
Horizon will affect that process. But we can't look at this bad
chapter and conclude that we should increase the billions of
dollars we are sending to foreign governments who run greater
risks and use our own money against our interests.
According to several polls that were released last week, it
appears that Americans understand this. The American people are
not yet ready to turn their backs on offshore production and
neither should we. Again, our Nation already has some of the
strongest environmental standards in the world. Those
protections will only grow stronger in the wake of this
tragedy.
But that fact doesn't make our jobs on this committee
easier. It makes our jobs even harder. We are tasked with
figuring out how to deliver America's energy resources to
Americans in an imperfect system where lives can be lost and
environments and lifestyles put at risk. What's worse, we must
find the right balance in a global economy where so many other
nations can compete for our energy dollars by relaxing their
worker safety and environmental standards rather than
strengthening them.
To that end, the Deepwater Horizon will teach us here today
and perhaps for many years to come about how America can
strengthen our standards for producing the energy that we need
without compromising our economy or energy security. The
question is how and when we might arrive at constructive and
realistic agreements. We know where to start. We must figure
out what happened to the Deepwater Horizon, what caused the
apparent blowout, what started the fire on the rig, and what
caused so many safety mechanisms to fail. Above all else, after
this pain, after this expense, after this tragedy, what are the
lessons that we need to take to heart?
Mr. Chairman, I look forward to the testimony this morning
from all gathered and appreciate the opportunity today.
The Chairman. Why don't we go ahead with the first panel.
We have two witnesses, Dr. F.E. Beck, who is an Associate
Professor of Petroleum Engineering at Texas A&M University, and
Mr. Elmer Danenberger, who retired in January from his position
as the Chief of Offshore Regulatory Programs for the Minerals
Management Service, if those two gentlemen would come forward.
Because of the gravity of this hearing, we have asked that
all witnesses testify under oath. So I would ask if each of you
would stand, please, and raise your right hand. Do you solemnly
swear that the testimony you're about to give to the Senate
Committee on Energy and Natural Resources shall be the truth,
the whole truth, and nothing but the truth?
Mr. Beck. I do.
Mr. Danenberger. I do.
The Chairman. Thank you. Please be seated.
Let me mention a couple of housekeeping matters. First of
all, of course, your written statements will be made part of
the record, so we would ask you to take 6 or 8 minutes to
summarize the main points that you think we need to understand
from what you have developed as testimony.
We may, depending upon the number of Senators who come to
ask questions, we may want to have only one round of questions
to this panel, so that we can also hear from the second panel
before we have to adjourn for the weekly lunches that we take.
But we'll just see how many people arrive. If there is no great
attendance, then we won't have to limit it that way.
The other point I would make as a housekeeping matter is
we've been advised by the Majority Leader that there will be
two votes on the Senate floor starting about 11:30, and it
would be my intention to try to keep the hearing going and just
ask that Senators who are not asking questions and who can go
to vote early and then come back, and they can then keep the
hearing going while others of us go.
So Dr. Beck, why don't you go ahead and tell us what you
can to inform us as to the circumstances, not just of this
accident, but the whole process that goes on with regard to
deepwater drilling.
STATEMENT OF F.E. BECK, ASSOCIATE PROFESSOR OF PETROLEUM
ENGINEERING, TEXAS A&M UNIVERSITY, COLLEGE STATION, TX
Mr. Beck. Chairman Bingaman, Ranking Member Murkowski,
members of the committee: Good morning. Thank you for allowing
me the opportunity to provide this testimony today. I have come
here in hopes of providing some basic blowout prevention
knowledge that I think each of you will find useful as you
investigate the events which occurred on the Deepwater Horizon
drill ship.
I am an Associate Professor of Petroleum Engineering at
Texas A&M University. Prior to joining A&M, which was just last
fall, I worked in industry for over 20 years and had academic
experience prior to that time. During my industry career I have
safely drilled numerous high-pressure natural gas wells. I do
not claim to be an expert in deepwater drilling, but I do not
see that this is a hindrance. Perhaps it is even an advantage,
as I have no preference for any process, practice, or equipment
package exclusive to deepwater drilling.
I maintain that any well, deepwater or onshore, drilled
into a high-pressure oil or gas zone employs a common strategy
for controlling pressure. I believe that understanding this
strategy, which I'll call the multiple barrier strategy, will
be critical in order for you to dissect the events that led to
the Deepwater Horizon disaster. As I continue my discussion
this morning, I will refer to oil and gas collectively as
``gas'' for simplicity.
Gas occurring in the subsurface is pressurized, as we all
know, and it will naturally seek to flow to the atmosphere once
it is penetrated by a wellbore. Barriers are used to protect
the gas from flowing to the atmosphere. So a barrier provides a
means by which gas is prevented from entering the wellbore or,
if it has already entered the wellbore, from continuing to
enter the wellbore, and from moving up the wellbore to the
surface.
In the context of barriers, a ``kick'' occurs when a
primary barrier, such as drilling fluid, has become ineffective
and gas unexpectedly flows into the wellbore. This is not an
uncommon event and there are time-proven techniques for
preventing that kick from escalating to a blowout. A
``blowout'' occurs when gas flows uncontrollably to the surface
because all barriers have failed.
In the drilling business, it is standard practice to have
multiple barriers in place in the wellbore at all times. That
way, if one barrier fails another barrier is already in place
to be used to stop the well from flowing in an uncontrolled
manner. There are numerous barriers that are routinely used for
pressure control, many of which you may have already heard
about in the accounts of this disaster. Common barriers are
drilling fluid, cement, casing, wellhead seals, float valves,
and of course blowout preventers.
The diagram before you shows how these barriers would exist
in a typical wellbore. As you study this diagram, note that the
pathway for gas to travel from the subsurface to the surface
must cross multiple barriers. This simple principle, to assure
that multiple barriers are in place in the wellbore at all
times, is the cornerstone for safely drilling a high-pressure
gas well.
Routine test procedures confirm the effectiveness of a
given barrier. Barriers must be tested to be effective,
oftentimes repeatedly, as in the case of blowout preventers. As
we all know, we do not live in a perfect world and there
remains the possibility that human error can create conditions
whereby the design limits of a barrier are exceeded or where a
barrier is not put in place correctly or in a timely manner.
If a barrier is lost or becomes ineffective and a kick
occurs, it is critical that drill crews be able to quickly
recognize when a kick is occurring and immediately take
corrective action to prevent a kick from turning into a
blowout. Monitoring the well at all times is critical.
Once again, for a blowout to occur multiple barriers must
fail, be removed, or rendered useless through human error. As
you seek to determine what happened on the Deepwater Horizon,
there will be many highly technical and complicated discussions
related to the equipment and processes involved. I encourage
the committee to stay focused on determining the barriers that
were in place in the wellbore and in how the barriers were
tested and how they failed.
Many of the best and brightest people in the drilling
industry have been working diligently for years to assure that
a disaster like the Deepwater Horizon never happens. Now that
the unthinkable has happened, the industry will now need to
take the lessons to be learned from the Deepwater Horizon and
move forward to ensure that an accident such as this never
happens again.
The industry needs to know the precise well conditions,
well configurations, and operational decisions which led to the
blowout on the Deepwater Horizon sooner rather than later.
Thank you very much.
[The prepared statement of Mr. Beck follows:]
Prepared Statement of F.E. Beck, Associate Professor of Petroleum
Engineering, Texas A&M University, College Station, TX
Good morning, thank you for the opportunity to provide testimony to
this Committee. I trust that I will be able to provide some basic well
construction knowledge that each of you will find useful as you
investigate the events which occurred on the Deepwater Horizon semi-
submersible drillship.
I sit before you today as a practicing petroleum engineer and
Associate Professor of Petroleum Engineering at Texas A&M University,
specializing in drilling deep, high pressure wells. I have, in the
course of a twenty-plus year industry career, been involved in all
aspects of designing and safely drilling deep, high pressure wells. I
do not present myself as a deepwater drilling expert, as the bulk of my
career has been onshore. However, I do offer myself as an expert in
drilling engineering and operations management of high pressure wells
in general.
The principles of well construction, blowout prevention and
control, and safe operating practices are common across the onshore and
offshore operating environments. While specific equipment and systems
used in the deepwater offshore environment are unique and often quite
different from that used onshore, the underlying purpose for which
specific equipment is to be used is common to an onshore well of
similar complexity. I believe that understanding a few of the basic
principles that are used to plan and safely drill a high pressure well
will assist you in dissecting the events that led to the Deepwater
Horizon disaster.
As many of you know, oil and gas, which I will call ``gas'' from
now on, are trapped in the microscopic pore space of subsurface rock
formations. As the depth of the trapping formation increases, the
pressure of the gas in the rock also increases. To complicate things,
the rate at which the pressure increases is often variable and
difficult to predict. If a borehole is drilled into the formation where
the gas is trapped, there is a natural tendency for the gas to try to
escape, or ``flow'' into the wellbore.
The challenge in designing and drilling a wellbore into a
pressurized gas formation is to be able to prevent the gas from
escaping the formation; and if it does escape, to be able to stop it
from continuing to escape; and, then be able to return the wellbore to
a balanced and safe condition whereby the gas remains in the formation.
This leads me to a simple but fundamental concept that is used in well
planning and blowout control, the concept of a ``barrier''. A barrier
provides a means by which gas is prevented from entering the wellbore,
or if it has already entered the wellbore, from continuing to enter the
wellbore and from moving up the wellbore to the surface.
In the drilling business it is standard practice to always have
multiple barriers in place in the wellbore at any given time. That way
if one barrier fails, another barrier is already in place to be used to
stop the well from flowing in an uncontrolled manner. A ``kick'' occurs
when gas enters a wellbore during the drilling process because a
barrier has become ineffective. A ``blowout'' occurs when gas flows
uncontrollably to the surface because all barriers have failed. The
drilling industry has time tested and proven techniques for installing
barriers in a wellbore. In kick situations, barriers must be used to
prevent the kick from escalating to a blowout.
To safely drill a well, it is very important to routinely check the
effectiveness of a given barrier. It is even more critical to install a
new barrier, and test the effectiveness of that barrier, before any
barrier is removed from the wellbore. There are numerous barriers that
can be used, many of which may be familiar to you. One barrier is the
fluid that fills the wellbore during drilling, commonly called ``mud''
or ``drilling fluid''. Drilling fluid is an extremely versatile barrier
and is considered in most instances the first, or primary, barrier in
the wellbore. Drilling fluid is very useful as a barrier because the
density of this fluid can be changed to respond to changing formation
pressures. The density of the fluid causes the drilling fluid to exert
pressure against the formation. Increasing density causes an increase
in pressure exerted against the formation, while reducing the density
reduces the pressure exerted against the formation. In most instances,
adjusting the density of the drilling fluid is all that is required to
keep the pressures in the wellbore in balance.
Another common barrier is the high strength steel casing used in
the construction of the well. Casing placed across a pressurized
formation is an effective barrier, but only when used in conjunction
with other barriers such as cement and some type of mechanical sealing
element at the top of the casing. Casing is installed in a wellbore
when the density of the drilling fluid can no longer be adjusted to
exert sufficient pressure to keep the pressurized gas contained in the
formation.
Cement is one of the key barriers used during the well construction
process, but it is important to recognize that cement is perhaps the
most difficult barrier to install and control. This is because cement
is installed as a liquid but acts as a barrier as a solid. The time
during which cement transitions from a liquid to a solid is critical,
and the cement must be tested in place, meaning in the wellbore, as a
solid in order to be a dependable barrier.
A different type of barrier is the mechanical barrier. A mechanical
barrier is a device which, when deployed, physically blocks the
movement of gas in the wellbore. The most common mechanical barrier is
a blowout preventer. A blowout preventer is a large valve, more
precisely series of valves, called the blowout preventer stack, placed
at the top of the wellbore and used to stop movement of fluids into and
up the wellbore.
Because piping, called the drill string, is used to drill the well,
certain components of the blowout preventer stack are used to seal off
the volume around the outside of the drill string. This leads to the
need to also seal off the inside of the drill string by the use of
smaller valves called ``inside'' blowout preventers or safety valves.
Casing strings also require mechanical barriers, called float valves,
to be installed at the bottom of the casing string.
Other components of the blowout preventer stack are used to seal
off odd shaped or sized drilling tools run in the wellbore, or across
the full diameter of the wellbore when no drill string is in place in
the wellbore. Finally, a special valve, called the blind shear ram, is
used to seal the wellbore in its entirety by cutting through the drill
pipe, and possibly other piping components, and sealing the wellbore.
The blind shear ram is used only in an emergency and is the last
barrier against a blowout. It is very important to note that the blind
shear ram will not necessarily cut though all possible piping
components that may be in place in the wellbore.
The blowout preventer stack has multiple components with which to
provide a barrier for given preconceived situations. Components of the
stack have pressure ratings, for instance 10,000 pounds per square
inch, or psi. This means that a blowout preventer component rated to
10,000 psi should be able to trap or contain wellbore pressures up to
10,000 psi, but that if pressures exceeding 10,000 psi are encountered
the component cannot be expected to function properly. As with other
barriers, testing the effectiveness of the blowout preventers is
critical in that a non-functioning blowout preventer cannot be a
barrier.
I should note at this point that the blowout preventer stack on a
subsea well, as existed on the Deepwater Horizon, is an extremely
complicated system, particularly in the means by which the blowout
preventer is installed, tested, and operated. Blowout preventer valves
are operated by hydraulic pressure; applying hydraulic pressure
reliably at a water depth of five thousand feet can be a very
complicated task and is an engineering marvel in itself.
An often overlooked but critical mechanical barrier exists at the
junction between the casing and the blowout preventers. This junction
is called the ``wellhead''. The wellhead system provides a mechanical
barrier at the top of the outside of the steel casing and is critical
in the event that cement fails to provide a barrier. Failure of a
wellhead barrier can be catastrophic.
This leads us back to cement. Cement can be used as a barrier in
several ways. First, cement is placed on the outside of the casing
string to provide hydraulic isolation between the pressurized gas in
the formation and the top of the casing string, wellhead, and wellbore.
Cement can also be used as a barrier in the form of a ``plug''
across the full diameter of the wellbore. When in place and tested this
is considered to be a very reliable barrier. Mechanical devices such as
bridge plugs and packers also act as barriers and can be used in place
of cement plugs.
Failure of cement as a barrier is not in and of itself uncommon or
disastrous. However, when cement fails as a barrier it is critical that
a second barrier be in place and tested so as to offer the opportunity
to repair the cement failure. Repairing cement failures is not
uncommon, but can be time consuming and thus expensive.
I have mentioned several barriers that are commonly used to
construct a wellbore in a safe and systematic manner, providing a means
by which gas pressure in a formation can be safely encountered and
balanced. These barriers are drilling fluid, cement, casing, the
wellhead, and the blowout preventers.
As we all know we do not live in a perfect world, and often during
the course of drilling a well a barrier becomes ineffective and gas
enters the wellbore. In this event a second barrier, most often a
mechanical barrier such as a blowout preventer, is called upon to be
used to control the entry of gas into the wellbore.
As I mentioned earlier, the variation of pressure within subsurface
formations is often erratic and unpredictable, and continuous
adjustments of the density of the drilling fluid are required to
balance the pressure in the formation. Often major adjustments to the
drilling fluid density are required when a kick enters the wellbore. It
is my experience that in the event of a kick on a deep high pressured
well it is critical that the drill crew be able to flawlessly execute
the standard procedures that the drilling industry has developed for
such situations.
These procedures involve activating the blowout preventers,
removing the kick from the wellbore, and then adjusting the density of
the drilling fluid in order to return the wellbore to a balanced
condition, in the process re-establishing the drilling fluid as an
effective barrier.
For the drill crew to be able to do this, it is critical that the
crew be able to recognize when a kick has occurred. Failure of a drill
crew to recognize a kick in a timely manner is often disastrous. When a
kick is recognized it is critical that the crew respond immediately to
the kick and install a barrier, such as closing a blowout preventer
valve across the wellbore or around the drill string.
In order for the drill crew to respond to a kick in a timely
manner, it is imperative that certain critical parameters be
continuously monitored. Since the drilling process requires the
circulation of drilling fluid into the drill string and out of the
wellbore, perhaps the most critical parameter to monitor is the rate at
which fluid is exiting the well relative to the rate at which fluid is
pumped into the well. It is a warning sign of a kick when fluid exits
the well at a rate greater than fluid is entering the well.
Another warning sign of a kick is when the fluid volume in the
drilling fluid holding tanks begins to increase. I cannot overstress
the importance of monitoring fluid volumes throughout all phases of a
drilling operation.
Only when at least two mechanical barriers are in place, and
sufficiently tested, can the drilling fluid be removed as a barrier.
Once again I stress the importance of testing a barrier for reliability
prior to depending upon it to prevent a blowout.
The drilling industry strives to assure multiple barriers remain in
place at all times during operations on a well. This reduces the
possibility of a blowout caused by sequential loss of barriers.
However, there remains the potential for human error to create
conditions by which barriers are subjected to loads for which they were
not designed. The industry has used intensive training as a means of
reducing this risk, but unfortunately it has not eliminated the risk.
Drilling a deep, high pressured well is a complicated task.
Drilling the same well in a deep water environment only adds to the
complexity. However, deepwater wells, like any other well, can be
safely drilled by insuring that multiple barriers remain in place at
all times during the drilling operation.
For a blowout to occur multiple barriers must fail or be rendered
useless through human error.
I hope that my testimony has provided the committee with a means to
understand the barrier concept and to relate many terms such as
drilling fluid, cement, casing, and blowout preventers to this concept.
I encourage the committee to continually ask themselves and
interested parties whether or not multiple tested barriers were in
place at all times on the Deepwater Horizon. It is my opinion that
understanding all of the barriers that were in place on the Deepwater
Horizon and their status at the time of the blowout will lead to a
clear understanding of the disaster.
If a barrier failed, we must determine when and how it was tested,
and when and how it failed; if a barrier was removed, we must ask why
it was removed and determine if another barrier was put in place and
tested in proper sequence. I know through extensive discussion with my
peers that the drilling industry is keen to determine what happened on
the Deepwater Horizon, and why it happened. Thank you very much.
The Chairman. Thank you very much.
Mr. Danenberger, why don't you go right ahead.
STATEMENT OF ELMER P. DANENBERGER, III, FORMER CHIEF, OFFSHORE
REGULATORY PROGRAM, MINERALS MANAGEMENT SERVICE, DEPARTMENT OF
THE INTERIOR
Mr. Danenberger. Thank you, Mr. Chairman.
Firstly, I want to extend my sincere condolences to the
family and friends of the 11 workers who lost their lives. I
talked to a lot of people associated with offshore oil and gas
operations and every one of them has taken this personally and
is committed to doing everything that they can to make sure
this doesn't happen again, in the Gulf of Mexico, elsewhere in
the U.S., off of Canada, in the North Sea, West Africa, Brazil,
Arabian Gulf, Southeast Asia, Australia, and anywhere that oil
and gas operations are conducted.
Also I want to express my disappointment with some of the
comments that have been directed at my former colleagues with
the Minerals Management Service. I can tell you without
hesitation that everyone in that regulatory program is fully
committed to safety and pollution prevention--inspectors,
engineers, geologists, scientists, and others. The inspectors,
they expose themselves to considerable risk every day when they
fly offshore and they go around platforms, every day. After
Hurricanes Ivan, Katrina, Rita, Gustav, Ike, even when their
own personal lives were disrupted, these people were on the job
next day doing everything they could to get production restored
in a safe and timely manner.
Ethics? These people won't take a donut from industry. I
know; I've tried to set them up.
So, that said, I want to get to my main points here. My
written statement summarizes the history of offshore deepwater
drilling, compliance record, blowout record, and then I've got
some suggestions that I would like to offer to the committee.
Just quickly on the history, deepwater drilling really goes
back to 1965 offshore California, with wells in comparable
depths to the Deepwater Horizon well first being drilled in
1979 offshore Newfoundland. There's extensive history of
deepwater drilling, over 3,000 wells drilled in more than 1,000
feet of water.
The compliance record has been very good. I looked back
through all the civil penalty data and there really is a
flawless record for the deepwater operations. Blowout history
is better for deepwater operations than it is for shallow. I
also took a look at some of the issues that have been raised
since April 20. I've provided some comments on those for your
consideration.
But I want to spend the rest of my time talking about the
path forward. I think there should be an independent commission
that takes a look at all aspects of this, regulatory and
otherwise. They should draw from the detailed technical
investigation that the MMS and Coast Guard have initiated
today, not duplicate it but draw from it. I think we need some
technical and regulatory experts on this committee.
Some of the things that I think that they should consider
would be looking at whether we should streamline the OCS
regulatory regime. Gaps, overlap, confusion can exist when
there are too many different organizations. The amount of time
that's dedicated to coordination should be focused on safety
and preventing accidents. Those are resources that we need.
I don't have any studies to confirm this, but from my
experience the less complicated the authority and the regime
the more effective. That said, we can't have the regulator
investigating themselves. So I think there needs to be an
independent investigation authority for major offshore
accidents like this. This was first recommended by a former
colleague of mine who used to be a professor at the University
of Oklahoma, and it was after the Santa Barbara blowout and
incidents in the early 1970s. It never really got traction, but
I think it's an excellent idea.
I think we should either expand the role of the Coast
Guard's National Offshore Safety Advisory Committee or
establish a new expert committee to consider technological
advances, performance data, and then make recommendations to
the regulators, Congress, and others on standards and
procedures. There should also be some sort of an annual forum
so that everybody can be presented the latest information on
research and technological advances.
I think there should be a system, preferably a private one,
for collecting and assessing failure data for blowout
prevention equipment. We may also want to look at standardized
manufacturer testing programs for some BOP components,
particularly the shear rams. This data I think should be
publicly released so everyone can see it.
Beyond that, I think we should conduct a thorough review of
blowout preventer performance considerations, including their
redundancy, independent functioning, shearing capability,
backup actuation options, and riser disconnect and sequencing,
intentional and otherwise.
I think existing well control training programs should be
expanded to include some of the well integrity, casing, and
cementing aspects that have been prominent not only in this
blowout, but in the recent Montara blowout offshore Australia.
I think we should develop standards that address best practices
for cementing operations, with decision fault trees that
describe safeguards, problems, and appropriate responses. We
also need to give considerations to other options for ensuring
the integrity of the annulus and redundancy there, with perhaps
some external packers in some situations.
I think we need to establish procedures that will
facilitate the prompt publication of safety rules. This was
always a frustration of mine and many other people that work in
the Federal Government, trying to get a rule out in a timely
way when it's urgent for safety reasons.
That said, we can't accomplish everything with prescriptive
rules. There's no amount of--no number of people, no number of
volumes, that's going to tell people precisely what they have
to do in every situation. So really it has to fall back to
operator responsibility, and that has to be clearly established
through safety and environmental management programs.
These programs should also indicate what are you going to
do for the industry as a whole, what are you going to do to
participate in standards, what are you going to do in research.
After Katrina and Rita we had an important hurricane conference
in New Orleans and less than half of the operators showed up.
Now, how do you operate in the Gulf of Mexico without paying
attention to hurricane issues?
Last, I think we need to recognize the importance of
international cooperation on safety issues. This is an
international industry. We have the same issues and concerns. I
think we need to work together, and a good example for that has
been the informal work of the International Regulators Forum.
Thank you for your time. I appreciate the opportunity.
[The prepared statement of Mr. Danenberger follows:]
Prepared Statement of Elmer P. Danenberger, III, Former Chief, Offshore
Regulatory Program, Minerals Management Service, Department of the
Interior
My name is Elmer Danenberger. In January, I retired after a 38 year
career with the Department of the Interior's offshore oil and gas
regulatory program. During my career, I served as a staff engineer in
the Gulf of Mexico regional office, Chief of the Technical Advisory
Section at the headquarters office of the U.S. Geological Survey,
District Supervisor for Minerals Management Service (MMS) field offices
in Hyannis, Massachusetts and Santa Maria, California, and Chief of the
Engineering and Operations Division at MMS Headquarters. For the past
five years, I served as Chief, Offshore Regulatory Programs, with
responsibilities for safety and pollution-prevention research, accident
investigations, regulations and standards, and inspection and
enforcement programs.
Since retirement, I have closely followed the investigation of the
Montara blowout in the Timor Sea northwest of Australia and the ongoing
Deepwater Horizon (DWH) blowout in the Macondo field in the Gulf of
Mexico. My comments to the Australian Commission of Inquiry may be
viewed at http://www.montarainquiry.gov.au/submissions.html
In this statement, I will briefly comment on the history of
deepwater drilling, the compliance and performance record with an
emphasis on blowout data, and regulatory issues that have emerged since
the Macondo well blew out three weeks ago. I will then suggest
technical and regulatory improvements for your consideration.
Before I begin, I want to extend my sincere condolences to the
families and friends of the eleven men who lost their lives on the
Deepwater Horizon. Offshore workers are vital to our economy and energy
security; yet their important contributions to society often go
unnoticed. The best way to honor the victims of this tragedy is through
our commitment to prevent future accidents. Everyone I have spoken to,
in the US and around the world, is eager to assist in any way possible.
I also want to express my disappointment in certain media comments
directed at my former MMS colleagues. These comments have not only been
ill-informed and unsubstantiated, but malicious. Without hesitation, I
can tell you that MMS regulatory personnel--inspectors, engineers,
scientists, and others--are 100% committed to their safety and
pollution prevention mission. MMS inspectors are themselves exposed to
risks every day when they fly offshore and inspect facilities. MMS
personnel have repeatedly made personal sacrifices to support the
regulatory mission. After Ivan, Katrina, Rita, Gustav, and Ike, MMS
employees worked to restore oil and gas production essential to our
economy, even when their personal lives had been disrupted by the
onshore impacts of these hurricanes. These personnel work under strict
ethics standards, and despite a few isolated and highly publicized
incidents that occurred more than four years ago, conduct themselves
with the highest degree of professionalism. While a critical review of
the entire offshore regulatory regime is necessary and appropriate,
unsubstantiated accusations and personal attacks are not.
history, compliance, and blowout record
Deepwater drilling is not new. In 1965, the drillship CUSS I
ushered in the deepwater era by drilling a well in 632' of water
offshore California. In 1979, the Discoverer Seven Seas drilled an
exploratory well in 4876' of water off Newfoundland. This was the first
of many wells to be drilled in water depths similar to or greater than
those at the Macondo site. In the early 1980s, the Discoverer Seven
Seas drilled a series of deepwater wells in the Mid-Atlantic including
a record-setting well in 6952' in 1984. The current water depth record
is 10139'--more than twice the depth of the water at the blowout
location. In the Gulf of Mexico alone, 2500 wells were drilled in water
depths greater than 1000' between 1992 and 2006. Recently,
approximately 30 rigs have been operating in greater than 1000' of
water, about half of which are working in depths of 5000' or more.
Deepwater rigs are typically staffed with experienced and capable
personnel, and their compliance records tend to be very good. I
reviewed civil penalties summaries for the past 5 years (2006 to
present) on the MMS website. Not a single case appeared to be related
to deepwater drilling operations. According to recent news reports, the
DWH had achieved a milestone of 7 years of accident-free operations.
I have written several papers on blowout occurrence rates and
causes. The most recent paper, co-authored with David Izon and Melinda
Mayes, reviews the blowout record during the 15-year period from 1992-
2006. I have attached a link to that paper and a summary of the
pertinent findings. According to these data, well control performance
for deepwater drilling was significantly better than for shallow water
operations. There were no fatalities or major spills associated with
deepwater drilling blowouts during the 15-year study period.
regulatory issues raised since the blowout
I will briefly comment on some regulatory issues that have been
raised by the media since the Macondo blow out began on April 20. The
extent to which these issues are relevant to the blowout has yet to be
determined.
Acoustic Backup Systems for Seafloor Blowout Preventers.--At this
time, there is no evidence that such systems would have made a
difference in this incident. Attempts to close BOPs were reportedly
made prior to the DWH evacuation. The BOP should have also been
signaled when the rig lost power and when the riser disconnected. It is
unlikely that additional signals sent acoustically to the stack would
have prevented the blowout.
MMS requires a backup system for all seafloor BOPs, and disconnect
sequencing that ensures that a well is secured before the marine riser
is detached from the well bore. http://www.gomr.mms.gov/homepg/
regulate/regs/ntls/2009NTLs/09-g11.pdf
The DWH backup was a remotely operated vehicle (ROV) which
successfully stabbed into the BOP stack and attempted to actuate ram
closure after the well blew out. Problems with the rams or other BOP
components apparently prevented a full, effective closure. The press
has reported that cost was a factor in the MMS decision not to require
acoustic backups. I never heard cost mentioned in any discussions about
these systems. Concerns were raised that ambient noise from a flowing
well would render the ROV systems ineffective, that seafloor topography
might affect their reliability and performance, and that there was a
risk of unintended actuations. The internal consensus was that ROVs
were the more reliable option. Further research on this topic is
suggested.
Shear Ram Reliability.--Shear rams are intended to cut through pipe
that might be in the BOP stack when the well has to be secured in an
emergency situation. Heavier, high strength drill pipe is more
difficult to shear, and thus a complete seal of the well bore is not
always achieved. Also, increased hydrostatic pressure at greater water
depths and higher well pressure increase the force required to
completely shear the pipe. In 2003, MMS revised its regulations
(250.416(e)) to require the submittal of information demonstrating that
shear rams on the proposed BOP stack can cut the drill pipe in the hole
under maximum anticipated surface pressure. However, shear rams may not
be able to cut tool joints and certain other equipment that is run
through the BOP. Since this is an industry-wide issue, I suggest that
an international standard or guidance document be developed for
minimizing the risk of shearing failures. Standardized shearing tests
should be required for each BOP model, and test data should be publicly
available. http://www.mms.gov/tarprojects/463/
%28463%29%20West%20Engineering%20Final%20Report.pdf
Reduced BOP Testing Frequency.--MMS reduced the required BOP
pressure testing frequency to once every 14 days (from once every 7
days) after an internal review and a contract research study (http://
www.mms.gov/tarprojects/253/AA.PDF) indicated that there would be no
increase in the risk of BOP failure. To the best of my knowledge, no
company or international regulator requires more frequent testing.
Cementing.--Cement is used to secure the steel casing installed in
the well bore, and prevent the migration of gas or fluids in the
annulus surrounding the casing. As indicated in the attached summary of
blowout data, 18 of 39 blowouts during the 15-year period from 1992-
2006 involved cementing operations. An industry standard should be
developed to address cementing problems, how they can be prevented, and
the actions that should be taken when they do occur. In light of the
findings from the Montara blowout (Australia) and related concerns
elsewhere, there is significant international interest in such a
standard. The advisability of using external casing packers, in
addition to cement, to seal certain annuli should also be considered.
Research--Deepwater and Well Control.--The MMS Technology
Assessment and Research (TAR) program has been a leader in deepwater
operations (http://www.mms.gov/tarprojectcategories/deepwate.htm) and
drilling research (http://www.mms.gov/tarprojectcategories/
drilling.htm), and funded a pioneering deepwater well control research
center at Louisiana State University. MMS also participates in the
International Committee on Regulatory Authority Research and
Development (ICRARD), a consortium that addresses offshore safety
issues. Many operators and contractors conduct related research. An
organized process for reviewing the findings and recommendations of
industry and government safety research and proposing follow-up studies
is suggested.
Research--Spill Response.--The TAR program has conducted oil spill
response research (http://www.mms.gov/taroilspills/) for more than 30
years and currently operates the Ohmsett spill response research center
in New Jersey (http://ohmsett.com/). Most boom and skimmer and skimmer
performance data have been collected at Ohmsett. Some of the first in
situ burn tests were conducted at the facility. Remote sensing tests
and data on dispersant performance have also been collected at Ohmsett.
The TAR program funded one of the first studies on seafloor containment
and collection systems. The Coast Guard, NOAA, the states of Alaska and
California, Norway, and Canada have been important oil spill research
partners. The oil spill research community is rather small, and the
communication among researchers has been quite good. Consistency is
critical, and we need to make sure that industry and governmental
research efforts are sustained.
path forward
In the aftermath of the DWH tragedy, we need to consolidate our
efforts and ensure that all pertinent issues are addressed in a
complete and timely manner. I recommend that a single, independent
commission be established to recommend operational and regulatory
changes to the President and Congress. The Commission should be
comprised of technology, operations, and regulatory policy experts from
the public and private sectors, and should draw on, not duplicate, the
detailed technical investigation that the MMS and Coast Guard have just
initiated. The following are policy and technical recommendations that
I believe such a Commission should consider:
1. Streamline the OCS regulatory regime to minimize the
potential for gaps, overlap, and confusion. Because of the
complexity of the OCS regime, regulatory and industry personnel
spend too much time resolving and coordinating administrative
and procedural matters. This time would be better spent
focusing on mission critical safety issues. A single agency
should be responsible and accountable for safety and pollution
prevention at offshore facilities, and should draw on the
expertise of other agencies and organizations as necessary to
achieve performance objectives.
2. Establish an independent authority to investigate offshore
accidents, make recommendations, and assess trends. Such an
authority was first recommended by Dr. Don Kash, then a
professor at the University of Oklahoma, in 1973 following a
series of major offshore accidents.
3. Either expand the role and jurisdiction of the Coast
Guard's National Offshore Safety Advisory Committee, or
establish a new expert advisory board to review technological
advances and performance data, and make recommendations
regarding new research, standards, and procedures. This board
should also organize an annual public forum for presenting
government and industry research and safety performance
updates.
4. Establish a public or private system for collecting and
assessing failure data for blowout prevention equipment.
Establish standardized manufacturer testing programs for
certain BOP components (e.g. shear rams). The resulting data
should be publicly released. Existing quality assurance program
for surface and subsurface safety valves (producing wells)
should also be reviewed.
5. Conduct a thorough review of BOP performance
considerations including redundancy, independent functioning,
shearing capability (for pipe or other obstructions), backup
actuation options, and riser disconnect and drive-off
sequencing (intentional and unintentional).
6. Expand existing well control training programs or develop
new programs to cover well integrity issues. This training
should include a review of major historical accidents to remind
personnel what can happen and why.
7. Develop standards that address best practices for
cementing operations with decision/fault trees that describe
safeguards, problems, and appropriate responses. Consideration
should be given to other options, such as external packers, for
redundant annular protection above oil and gas reservoirs.
8. Establish special procedures that will facilitate the
prompt publication of safety rules. The Federal review and
publication process for rules is enormously complex, time
consuming, and frustrating. Too many resources must be
dedicated to getting rules through the system, and
technological advances and new findings cannot be readily
addressed.
9. Require that all OCS operators have comprehensive safety
and environmental management programs. Compliance with
prescriptive rules and standards is only part of the safety
equation. Companies must actively manage their activities to
minimize safety and environmental risks. These management
programs should also explain how the company will participate
in the standards development and research activities needed to
make everyone safer.
10. Recognize the importance of international cooperation on
offshore safety and pollution prevention issues. The offshore
industry is international in scope, as are the operational and
regulatory challenges. Effective international communication
reduces risks and burdens. The International Regulators' Forum
(http://www.irfoffshoresafety.com/) is a model for informal
cooperation, but more could be done.
attachment
ocs drilling blowouts--1992 to 2006
elmer danenberger, david izon, and melinda mayes
(http://drillingcontractor.org/dcpi/dc_-julyaug07/
DC_July07___MMSBlowouts.pdf)
Highlights
1. During the study period, blowouts occurred at a rate of
one for every 387 wells drilled, compared with a rate of one
blowout for every 246 wells during the period covered in my
previous blowout study (1971-91).
2. 2493 wells were drilled over the study period in water
depths greater than 1000.' There were five minor blowouts
yielding a rate of 499 wells per incident. This is better than
the rate of 387 wells per incident for all water depths.
3. The severity of blowouts, as measured by their duration
and consequences, decreased significantly compared with the
previous study period (1971-1991). Only one fatality and two
injuries resulted from drilling blowouts during the 1992-2006
period compared with 25 fatalities and 61 injuries during the
previous period. The fatality was on a jackup rig; a crew
member was found missing after the rig was evacuated because of
well control incident.
4. The seven fires and explosions associated with the 1992-
2006 blowouts occurred either on jackups or platform rigs, not
deepwater floating rigs.
5. Blowouts during the 1992-2006 period resulted in the
spillage of 341 bbls of oil/condensate and 982 bbls of
synthetic-based mud. Most of the spillage resulted from an
unintended riser disconnect, that caused a release of mud and
allowed the well to flow briefly. The blowout preventers were
shut-in by a remotely operated vehicle. Procedures were changed
to automatically close blowout preventers when the riser is
disconnected.
6. Over-pressured shallow gas influxes persisted as a major
contributing factor to blowouts. These incidents have minimal
environmental risk, but significant safety risk.
7. While the number of blowouts declined, the percentage of
blowouts associated with cementing operations increased
significantly. Cementing problems were a contributing factor in
18 of the 39 incidents.
8. Half of the blowouts lasted less than 24 hours. The
longest lasted 11 days. Over 50% of the blowouts were
controlled by pumping mud or cement or by actuating mechanical
well control equipment. 36% of the wells ceased flowing because
sediments bridged or sealed the well. 13 of the wells ceased
flowing when trapped gas or shallow gas pockets were depleted.
Although relief wells were initiated in two of the blowouts,
both wells were controlled by other means prior to completion
of the relief well.
9. Of the 34 blowouts involving mobile drilling units, 28
were bottom-founded jackups. Only 6 involved floating rigs, all
semisubmersibles.
The Chairman. Thank you very much.
Let me start questions. One of our witnesses on the second
panel, Steven Newman, who is the Chief Executive for
Transocean, has in his testimony a statement that I wanted to
ask you two gentlemen about. He says: ``The one thing we know
with certainty is that on the evening of April 20 there was a
sudden catastrophic failure of the cement and the casing or
both. Therein lies the root cause of the occurrence. Without a
disastrous failure of one of these elements, the explosion
could not have occurred.''
Do you agree with that, Dr. Beck?
Mr. Beck. I agree, but I think it must be supplemented with
the statement that the wellhead system at the top of the casing
is also suspect in that situation. So if you consider the seals
at the top of the casing part of the casing, then yes, I would
say that that's a likely scenario on where the failure was.
The Chairman. Let me just ask, though. What occurs to me
just reading through your testimony about all of the different
things that need to be done properly in order to ensure that a
blowout not occur, it seems that, although that failure of the
cement or casing may well be a proximate cause, a cause that
led to this disaster, you can cite others as well that are also
proximate causes: the failure of the shear rams on this blowout
protector to work properly. Had they worked properly, I assume
that that would have prevented the blowout from occurring. Is
that an accurate--
Mr. Beck. It's not totally accurate, Senator, because in
the context of a failure at the wellhead system it is possible
in my opinion that that could create a situation across the
blowout preventers that would render them useless at that point
because they're attempting possibly to close on a piece of
casing for which they were not intended to close or shear.
So in my opinion, with what I've read about the situation,
while it seems obvious that the shear rams did not shear, they
may have been asked to function on a piece of tubular in the
well that they were never intended to function on to begin
with. So it's possible there was something blocking the blowout
preventers that kept them from functioning correctly.
The Chairman. Let me ask about--your testimony also talks
about the importance of properly responding to a kick when
there's a kick involved, so that that doesn't become a blowout.
I would assume that an adequate response to a kick in this
circumstance might well have prevented this accident from
occurring?
Mr. Beck. It may have prevented it. It really depends upon
the failure that occurred. If there was a sudden catastrophic
failure, for instance at the wellhead, that somehow blocked the
BOP's, recognition of the kick wouldn't have made the blowout
preventers function in that situation. It may have given much
more time for people to evacuate, though, in that situation.
The Chairman. Another issue that's been raised is the
question of whether or not there should be sensors in the well,
as I understand it, to detect changes in temperature, changes
in pressure, and whether or not the lack of those, those
sensors, could have been a cause. What's your thinking on that?
Mr. Beck. Typically, putting a sensor in that situation is
desirable. Whether we could continually sense temperature is
difficult. Sensing pressure behind the casing is routine
practice onshore and I believe that some of the systems that
are used for hanging the casing in the wellbore prevent
monitoring the pressure behind the casing string. In my
opinion, that would be a desirable addition to the wellhead
systems that we use in subsea drilling.
The Chairman. Mr. Danenberger, you have a very good list of
recommended changes that ought to occur. I think you have ten
of them that you briefly described to us. The obvious question
is why hasn't the MMS put some of these in place prior to this
accident occurring? Has the need for this has only become
obvious since the 20th of April, or is this something that
should have been required previously?
Mr. Danenberger. I think regulations are an evolutionary
process. MMS has a research program that's been a leader in
deepwater well control and has looked at a lot of these issues,
and changes have been made over time in the regulations. More
need to be made, but I think it's been a process that perhaps
needs to be--could have been accelerated had some of these
issues been looked at more carefully. But I think MMS has made
a consistent effort over the years to address technological
issues.
The Chairman. Senator Murkowski.
Senator Murkowski. Thank you, Mr. Chairman.
Mr. Beck, you have stated in your testimony: ``For a
blowout to occur, multiple barriers must fail or be rendered
useless through human error.'' You've outlined the multiple
barriers process. Trying to understand where it failed is
obviously going to be an ongoing process. Will the eventual
removal of the BOP so that we can literally dissect it, will
that necessarily give us the answers that we're looking for in
terms of really what has happened?
Mr. Beck. I think that that will definitely address whether
or not some external blockage occurred in the BOPs that
prevented them from failing--or caused them to fail, excuse me,
that prevented them from functioning. So recovery of the BOPs
will be hugely beneficial to the investigation.
Senator Murkowski. Mr. Danenberger, your testimony provides
that you think that the frequency of the BOP tests is probably
sufficient, testing I guess every 14 days, and that it's as
stringent as it is anywhere else in the world. But what about
the test itself? Is there a way to fully execute the shearing
of a pipe each time that a BOP test is done without cutting off
that well entirely?
Are we testing what we need to test to give us that
certainty that we need?
Mr. Danenberger. That's an excellent question. I think that
the test is very good from the standpoint of measuring the
ability of the different rams and chokes and other components
in the blowout preventer system to hold pressure, and even the
blind shear ram with nothing in the hole. But I think there
probably needs to be a better program, as I indicated in my
testimony, for testing blind shears independently to better
understand what force is being generated and what force is
required to shear some of these different components that might
be in the blowout preventer stack.
Senator Murkowski. So it's not just an issue of making sure
that we're doing the monitoring on a regularly scheduled basis.
It's making sure that we've tested all that we can possibly
test?
Mr. Danenberger. Some of these other tests wouldn't be
during your biweekly test. They'd be an independent laboratory
effort. Also, good maintenance is critical throughout the
operation of this equipment.
Senator Murkowski. How often are you supposed to----
Mr. Danenberger. Excuse me?
Senator Murkowski. In terms of timing or regularly
scheduled maintenance, what is suggested there?
Mr. Danenberger. Any time a component fails during a
pressure test, that is corrected. But after each well there can
and I think typically is, should be, a thorough inspection of
the entire stack when it's back up on the surface.
Senator Murkowski. Let me ask you, Dr. Beck, about the
pressures. Can you give us some kind of indication as to what
pressures the Deepwater Horizon may have been contending with
leading up to the event? I've read in various media accounts
that it's anywhere between 10,000 psi to 40,000 psi. What were
we dealing with?
Mr. Beck. I have--I did have a chance to review just
quickly some of the data in the second panel's discussion,
although it wasn't complete enough for me to make direct
calculations. But a very well educated guess would be that
bottom hole pressure was in the neighborhood, in the subsurface
formation, was in the neighborhood of about 14,000 psi.
I'm working--once again, I don't--it is an assumption, but
with a 10,000 pound wellhead system BOP stack that failed, then
it's clear that that much pressure occurred at the surface. So
pressure of 10,000 psi was able to be generated probably all
the way up at the seafloor at the wellhead.
Senator Murkowski. To what extent is it likely or perhaps
unlikely that as we keep pushing out and going deeper into
seeking additional reservoirs out there, that we're going to
encounter these higher pressure reservoirs? I mean, is this
going to be the norm as we continue to push further out, that
we'll be seeing pressures like this?
Mr. Beck. The deeper the wells that we drill, the higher
the pressures that we will encounter. I think our industry is
capable of handling surface pressures of 15,000 psi almost
routinely. But if we start trying to handle 20,000 psi or
higher, new systems--the reliability of those systems is going
to need to be tested extremely before we deploy those.
Senator Murkowski. The reliability needs to be tested, but
according to Mr. Danenberger we need to make sure that we're
doing the right kind of testing.
Thank you, Mr. Chairman.
The Chairman. Senator Dorgan.
Senator Dorgan. Mr. Chairman, thank you very much.
I think it's likely the one thing that unites all of us on
this committee is we don't know very much about the details of
this spill, and that's the purpose of the first panel, to hear
from these experts.
The chairman indicated that there's technology, human
factor, and the regulatory factor, and suggested all have the
potential to see failures. This is--as I understand it, the
offshore platform is one mile above the ocean floor and the
drilling goes 18,000 feet below the ocean floor. That's the
kind of sophisticated exploration that most of us have very
little understanding of. So I appreciate the testimony that
you've given us.
Let me ask, if I might, Dr. Beck. Is the equipment and the
technology used on this platform different or similar or
identical to the equipment and technology used on other
drilling that's going on around the world?
Mr. Beck. The technology used in deepwater drilling is
developed specifically for deepwater drilling. Now, the work
that's done in the Gulf of Mexico is similar to the work that's
done in other areas of the world in terms of deepwater. So
those equipment packages would be very similar, right, supplied
by the same companies and the like.
It's quite a bit different, of course, from my world, which
would be onshore drilling. The same small components on a small
scale, but on a large scale the complexity of the deepwater
systems are extreme.
Senator Dorgan. Dr. Beck, the kind of well that we're
talking about here, because of its depth and because of the
nature of it, is are there higher risks trying to access that
oil?
Mr. Beck. I don't see that the conditions that this well
was drilled into are, while severe, extreme relative to what
the industry capabilities are right now. It's a very difficult
well, but it is not the most difficult well the industry has
drilled really by any means. Our capabilities are--we are
capable of handling much higher formation pressures than what
in my observation or deduction from the data tells us we
encountered in this well.
Senator Dorgan. So, Dr. Danenberger, if this is not an
unusual situation, using no different technology, or no
different equipment, how should we consider the situation? I
was in an area of Norway recently where they have massive
numbers of offshore drilling and production and so on. We've
had offshore production for years. Then clearly this has to be
a failure of systems. Is that correct? Is the chairman correct
when he says it's likely a failure of one of three things, the
technology that exists, the human factor, or the regulatory
system?
Mr. Danenberger. Yes, absolutely correct. That should have
been--at the time that this blowout occurred, the production
casing had been set. It should have been a totally sealed
wellbore with no potential for influx.
Senator Dorgan. Mr. Chairman, I'm going to discontinue
questions. I'm anxious for the second panel, obviously. I think
these two witnesses have provided a substantial amount of
information.
Thank you very much.
The Chairman. Thank you.
Senator Barrasso.
Senator Barrasso. Thank you very much, Mr. Chairman. Thank
you for holding this hearing. As the members know, there is no
coastline in Wyoming, but we know quite a bit about energy
production, about treasured landscapes, and about wildlife
protection. The tragedy unfolding in the Gulf of Mexico is
heart-wrenching and communities and people's economic
livelihoods are in jeopardy. Our first priority needs to be
stopping the leak, containing the spill.
Reading the written testimony for today's hearing, reading
the written testimony, I hear one message, and the message is:
Don't blame me. Shifting this blame does not get us very far. I
am hopeful that we can learn from this experience, first to
better prevent another massive spill, and also to ensure that
we have an immediate and effective response.
It's important to remember that this tragedy does not
change America's energy needs and our continued dependence on
foreign oil. Blocking future offshore exploration only means we
will import more from foreign countries. I'm confident that
America can do a better job of developing offshore energy than
Azerbaijan, Nigeria, and Venezuela. If there is a way to make
the process safer and the response more effective, then it's
very important that we implement it immediately.
Mr. Danenberger, if I could--38 years of experience with
the Department of the Interior--we're talking multiple
administrations, nonpartisan, working as you have. I was
wondering about the suggestion by Secretary Salazar recently
that he's considering proposing splitting MMS into two. One
agency would be in charge of inspecting the rigs, investigating
oil companies, enforcing safety regulations; the other to
oversee leasing and royalties.
Do you think that that will be more effective for managing
offshore exploration and improving safety?
Mr. Danenberger. Let me just say that that tends to be the
trend internationally, to separate the resource management
agency from the safety and pollution prevention agency.
Certainly, at least it would be viewed as being more
independent under those circumstances.
Senator Barrasso. In the last Congress I introduced, along
with Senator Wyden, a bill to encourage and make the Director
of MMS be someone who would then be confirmed by the Senate.
Right now that position is not a Senate- confirmed position. I
think that by doing such a thing that actually lets the Senate
focus on that person and ask these tough questions during every
confirmation process. What would you think of that idea?
Mr. Danenberger. I don't really have an opinion on that.
Senator Barrasso. Dr. Beck, one of the things that you
said, you said that something blocking the blowout preventers--
that there might have been something blocking the blowout
preventers that prevented them from working properly, something
blocking them that might have prevented them from working
properly. Then the question comes there, are these systems
vulnerable to sabotage, to terrorist attack? Are these systems
vulnerable either prior to installation or by someone plotting
against us who is working on the rig?
Mr. Beck. That's a very difficult question. I think a
determined effort, obviously, by a knowledgeable person, would
be--somebody would be capable of doing damage in that manner.
The fact that there are multiple people on the rig, multiple
people--you can't do any single operation on a rig like this
singlehandedly, right. It would take a lot of people. A single
person would have a hard time, I think, doing anything like
that.
For instance, when you're working on the BOPs, that's not
one person. It's a crew doing it. So I think that the risk of
terrorism on a rig like this would be extremely minimal.
Senator Barrasso. Mr. Danenberger, I saw you shaking your
head.
Mr. Danenberger. Yes, I agree totally. I don't think it was
a terrorism situation.
Senator Barrasso. Thank you.
Thank you, Mr. Chairman.
The Chairman. Senator Landrieu.
Senator Landrieu. Thank you, Mr. Chairman. Thank you for
noting when this important hearing started the loss of the 11
workers and those that are still struggling with injuries.
Several of those were from my State of Louisiana, from other
Gulf Coast States, and our thoughts and prayers continue to be
with them.
I want to just make a short statement and then ask my
questions, because I think it's important to keep this in
perspective. There are over 300,000 men and women that work in
the oil and gas industry in Louisiana alone, and almost every
State in the Nation contributes in some way, shape, or form to
this industry, both onshore and offshore. The work done by
offshore crewmen is particularly difficult and dangerous at
times. They are separated from their families weeks at a time,
usually 2 weeks on and 2 weeks off. We owe a debt of gratitude
to the people that work in this industry.
I believe some of these facts are important. Mr.
Danenberger, you outlined some today, but I'd like for the
record to put some more into the record. From 1947 until today
there have been 42,645 wells drilled in State and Federal
waters in the Gulf of Mexico. The first deep well was 31 years
ago in 1979. That well was 1,022 feet deep. Until that time
until now, there have been 2,259 deepwater wells drilled. That
averages approximately 133 wells per year. These wells
accounted for only 4 percent of oil production in the Gulf in
1990, but today they're responsible for 60 percent, and we need
their production. We must find a way to do this more safely.
Since 1971, not a single spill in the Gulf or the entire
Federal OCS caused by a well blowout exceeded 1,000 barrels of
oil. We're exceeding 7,000 barrels of oil every day and a half
with this current uncontrolled flow.
The record will show from 1947 to 2009, 175,813 barrels
have been spilled out of 16 billion produced. That is one one-
thousandth percent of the total production.
I think it's important to keep that in perspective. I also
think it's important to understand, Mr. Chairman, as you have
said many times, that America uses 20 million barrels of oil a
day. We produce less than half of that. Any constriction of
domestic oil and gas production either onshore or offshore will
only further put us in a perilous situation and an overreliance
on foreign oil, and in addition will export some of these
problems to countries less equipped and less inclined to
prevent this kind of catastrophic disaster.
So my question to you, Mr. Danenberger, is about this shear
ram. There was a report done in 2004, I understand, by West
Engineering Service that recommended that there be some changes
because it was noted that sometimes the shear rams would not
work in terms of multiple prevention. Can either one of you
comment about why that was not taken into more serious
consideration, and should we continue to go forward with
deepwater production when we know now that blowout preventers,
which is one of the last lines of defense, may not function if
there's something jamming that casing?
Mr. Danenberger, starting with you, and then Mr. Beck.
Mr. Danenberger. Thank you. There were changes made in the
regulations to require that operators provide data to show that
the shear ram would effectively shear the drill pipe that was
in the--that was being used on the well, under the worst
possible conditions. However, we do know that tool joints and
other type of piping that might be in the hole can't always be
sheared. So I think more work is needed there to minimize the
amount of time that such equipment--that you're exposed to that
risk, and to get more data on the performance of shear rams and
the challenges. You almost need a little safety assessment with
each well right now until things are more comfortable.
Senator Landrieu. Mr. Beck, real quickly?
Mr. Beck. Senator, in the context of the West report, I'm
not familiar with that report, so I won't address that. But in
the context of shear rams, I think it's important for everybody
to realize that the use of shear rams is a rare occurrence.
This is not something that's going on daily or weekly or
monthly. It's possible that rigs out there have never used
their shear rams in a serious event such as this. So it is the
last line of defense. It is something we definitely need to
look at. They will not shear all elements, all piping elements,
that are latent. They are subject--it is subject to human error
for incorrectly spacing the pipe across the BOPs. You have to
physically say or measure and not place a tool joint across a
shear ram.
So the shear rams are built to shear a specific tube, OK.
Senator Landrieu. Mr. Chairman, as I conclude I want to
call on this committee again to relook at the revenue-sharing
proposals that have been put before this committee. Obviously,
these are resources belonging to the Federal Government, but
right now Louisiana and the Gulf Coast States are assuming
almost 100 percent of the risk to our wetlands and coastline,
which is why I believe we need a new look at that provision.
Thank you, Mr. Chairman.
The Chairman. Thank you.
Senator Sessions.
Senator Sessions. Thank you, Mr. Chairman, and for having
this hearing.
I was able to fly over the Gulf recently and it was a very
disturbing scene. People are very worried. Some people think
that the Atlantic Coast may be beginning to see some signs of
oil on our beaches, but the mayors that I have talked to told
me their beaches are OK so far. But we're just at the whim of
the tides and the winds.
So it has a ramification that goes beyond almost anything
I've seen in terms of the economics of this situation. I'm
really worried about it. I believe we need to have some
questions answered. I believe we need to review our policies
and only then can we feel confident that we can go forward
effectively.
The production of oil and gas off our shores is so
important to this Nation and to our economy which most people
probably don't fully recognize. It is something that I have
supported for a long time, and I hope and I pray that we can
get this situation straightened out. But I believe we must have
a full review of what we are doing and how we do it. We've had
a good success record in the Gulf, that could have created some
laxity or complacency or overconfidence. I don't know, but it
is time to find that out.
Mr. Beck, you talked about the shear rams and how often
they're activated. Do you know how many times in the Gulf of
Mexico shear rams have actually been executed?
Mr. Beck. No, sir, I do not know that.
Senator Sessions. You mentioned that the use of shear rams
were rare and then you mentioned that they have never been
activated. What was that?
Mr. Beck. There are many rigs drilling in the Gulf of
Mexico that have never experienced a blowout. It just doesn't
happen to every well, every rig that we drill. So these people
are not going to have--they're not going to say, well, my shear
rams worked in this situation. Perhaps in a situation where you
were evacuating for a hurricane they would use them, but not
always in the context of a blowout, because we just don't have
that number of blowouts to test every single blowout preventer
out there.
Senator Sessions. But that does not diminish the necessity
that they work, does it?
Mr. Beck. Not at all. They need to be tested and known to
work.
Senator Sessions. Now, one of you indicated that you had
unusual pressure coming from this well. There is a 2004 study,
Mr. Danenberger, by the MMS which raised significant questions
about the ability of the rams to cut through the stronger pipes
used in deepwater drilling. Apparently, these are thicker
pipes, and they have additonal pressure placed on them at these
great depths. In your opinion, Dr. Beck, was that MMS finding
correct and can we depend on shear rams as presently configured
to operate at 5,000 feet of water?
Mr. Beck. Once again, all I can say, Senator, is that a
shear ram as designed to cut a specific tube is very
dependable. It's when it attempts to cut something other than
that tube that it's no longer dependable.
Senator Sessions. Mr. Danenberger, is there any assurances
we have that these shear rams are being used so that we can
depend on them to work? When people have raised questions about
whether or not it's safe to drill in the Gulf, I've made
reference to them, and I'm under the impression we can depend
on this technology. What I understand Dr. Beck to say is, well,
it may not work. What do you think?
Mr. Danenberger. I think there are good data that they're
reliable from a functioning standpoint and they're reliable, as
Dr. Beck indicated, in cutting pipe that they're designed to
cut. But I think we need to take more of a look at the
situations where there might be----
Senator Sessions. Do MMS regulations require that shear
rams actually work or does it accept the fact that it just
might not work?
Mr. Danenberger. They require to drill pipe that is going
to be primarily in the well, that it be able to shear that.
Now, there are going to be short time periods where something
else is in the wellbore and I think that needs to be examined
more closely.
Senator Sessions. Would that kind of pipe be in the well
after it's being brought on line, after the drilling is
complete?
Mr. Danenberger. I don't think so, but I'm not sure exactly
what activity was going on at the time of the blowout.
Senator Sessions. So you would acknowledge that there is
uncertainty. Would you say too much uncertainty, which needs to
be eliminated?
Mr. Danenberger. I think, as I mentioned in my testimony,
we need to have a little bit better standardization on the
performance of certain BOP components, and the shear ram would
be one of them.
Senator Sessions. Is that what MMS is supposed to do?
Aren't they supposed to have minimum regulations that would
ensure that the shear rams work?
Mr. Danenberger. MMS sponsored the study you referenced.
They're very much attentive to these issues and have made
changes in the regulations. Whether they're sufficient at this
time, I think----
Senator Sessions. Could they have mandated changes so that
they could be certain to work?
Mr. Danenberger. I think we need to know better the
potential for problems and the extent of the problems and the
options in terms of solutions.
Senator Sessions. I would agree.
Thank you, Mr. Chairman. I don't think we're there yet and
we need to do more.
The Chairman. Senator Menendez.
Senator Menendez. Thank you, Mr. Chairman.
Mr. Chairman, despite what I have heard for quite some time
from the industry, that we are just absolutely safe under all
circumstances, I think it doesn't take a rocket scientist to
figure out that there is no such thing as too safe to spill,
because we've had that experience already. I'm looking forward
to the second panel because, as I read the written testimony, I
can already see the liability chase. In one step, it's like a
bit of a Texas two-step: Oh, yeah, we're responsible, but. BP
says Transocean, United States says Halliburton.
So I can see the liability chase that's going to go on. So
I'm looking forward to that second panel to see who's going to
fess up to what.
Let me ask you, Mr. Danenberger. I understand you left MMS
a year ago, is that right?
Mr. Danenberger. January, this January.
Senator Menendez. Oh, January this year, OK. Thank you for
your service.
I wonder. The Montara wellhead explosion off the coast of
Australia in 2009, it spilled for 105 days. It leaked between
1.2 and 9 million gallons of oil. Based upon the testimony we
received from MMS last year, it seems MMS simply dismissed the
spill as something that could not occur in U.S. waters. Now
it's happened.
Did MMS learn anything from this accident?
Mr. Danenberger. That investigation, like this one, is
still going on. As a matter of fact, they just finished the
hearings 4 days before this incident occurred. So there are
still lessons to be learned there. There are some similarities
in that there is a failure of well integrity in both
situations. I think there needs to be renewed emphasis on the
well integrity work.
Senator Menendez. You submitted, I guess on a voluntary
basis, to the commission in the Montara a statement; is that
correct?
Mr. Danenberger. Yes.
Senator Menendez. In it you said, among other things I
found to be very interesting, it says: ``This incident appears
to have been entirely preventable if internationally accepted
practices were followed.'' Is that true in the case of the
situation here?
Mr. Danenberger. It may be. We have to find out more. The
main point there with the Montara blowout was that they didn't
have a secondary barrier in the production casing. So that's
internationally recognized and it was going to be in place
here, but apparently it never happened.
Senator Menendez. Dr. Beck, the blowout preventer as I
understand it--correct me if I'm wrong--had supposedly multiple
redundancies, right?
Mr. Beck. Correct.
Senator Menendez. Yet none of them worked; is that a fair
statement?
Mr. Beck. That I think is a fair statement.
Senator Menendez. So we have multiple redundancies. It's
not just a singular thing that's going to work to create the
safety. Multiple redundancies. We're told that, oh well, don't
worry because if one doesn't work another one will, and if that
one doesn't work another one will. None of them worked. None of
them worked.
So, Mr. Danenberger, when MMS goes ahead and does testing,
can you give me a sense of the testing? How is it that the
testing always seems to pass and yet when it was needed it
failed?
Mr. Danenberger. All the components of the blowout
preventer stack that have to hold pressure are pressure- tested
during these blowout preventer tests and charts are made that
show the pressure holding, and they're certified. So it's----
Senator Menendez. This is a test that in retrospect now is
an appropriate test to really judge whether or not under these
set of circumstances it will operate as it's supposed to? Is it
something that should be----
Mr. Danenberger. It's an appropriate test. Whether more
needs to be done, we'll have to learn that.
Senator Menendez. One final question. Dr. Beck, as I
understand it, current safety and environmental regulations
don't differentiate between deep and shallow water development.
Should there be more stringent regulations for deepwater
development?
Mr. Beck. Senator, I would defer that to Mr. Danenberger in
terms of----
Senator Menendez. All right. Mr. Danenberger, can you
answer that question for me?
Mr. Danenberger. The operations are similar in many
circumstances, particularly with regard to well integrity, and
there are some differences in the regulations. Whether there
should be a separate set of regulations or a separate section
for deepwater, I think that merits consideration.
Senator Menendez. Thank you, Mr. Chairman.
The Chairman. Senator Risch.
Senator Risch. Thank you, Mr. Chairman. Thank you for
holding this hearing.
Gentlemen, I have just one question for you. I come at this
with a couple of premises. First of all, we're going to
continue to develop oil wells in the Gulf. I don't think
there's any question about that. It's necessary. Fourty years
ago on the first Earth Day, the big issue was stopping nuclear
power, and they were incredibly successful and stopped nuclear
power, and as a result of that, of course, we are much more
reliant today on fossil fuels than what we were. We're going to
continue to be like that as we drift away from that, and this
committee I think, as everyone on this committee, is committed
to move from fossil fuels. But it's going to take some time,
there's no question about it.
When you have human activity like this, where you have a
highly technical and highly sophisticated process of developing
a deepwater well, accidents are going to happen. The thing that
has struck me, aside from the tragedy of this--and I think
everyone would concur that this is an awful situation--but it
seems to me that we have been totally unprepared to respond to
this. Knowing the Federal Government as I do and the
bureaucracy as I do, that doesn't--it really doesn't surprise
me, that the government is not able to respond to this.
But it seems to me that the industry itself has the
expertise, has the technology, has the engineers, that they
should be able to respond to this better. Now, I know that
there was some concerted effort to get the best minds together
to try to resolve this, but it would seem to me that some type
of an agency--and I'm thinking of a private agency--that brings
together all of the companies that are doing this kind of
exploration and production, would be very beneficial to them,
because this is a problem--this isn't just BP's problem. This
is an industry problem that everyone's going to pay the price
for for a long time, along with the American consumer.
So my question to you is, what do you think about some type
of a private agency, obviously overseen by the Federal
Government or that sort of thing, that provides the technical
help when something like this happens to respond quickly and to
put the best minds together they can to try to resolve this?
Mr. Beck, could we start with you?
Mr. Beck. Senator, in terms of a private agency, there are
so many operators drilling wells in the Gulf, each of them
needing a staff to be able to do the types of responses that
you're talking about. I think a private agency would turn into
an extremely large organization to be able to service all of
those individual companies, if I understand your premise here
in terms of a centralized response unit.
The industry is very good at sharing technical information.
We have societies, technical societies that publish large
amounts of papers that people read and digest what's happening
technically. But there is no central clearinghouse for assuring
that everybody knows that information.
Senator Risch. It seems to me that a central clearinghouse
might work better. I mean, the response right now, I don't
think anybody is satisfied with the way the industry is
coordinating a response to this.
Mr. Danenberger, I'd like to hear your response.
Mr. Danenberger. I think in terms of a response, I really
have a hard time finding a lot of fault. Every option in terms
of the intervention and trying to stop the flow hasn't worked,
but every possibility is being tried in terms of actuating the
existing equipment or trying new equipment and concepts. So I
think that's been very good myself.
Senator Risch. What's the exit strategy here? What is going
to work? Or what's the path to get there? I mean, obviously you
can't tell me what's going to work, but I'm looking for a path
to get to an end game, because there's got to be an end game
here.
Mr. Danenberger. The relief well will work and I think the
chances are good that the well will be killed before the relief
well is called on to complete the job.
Senator Risch. Gentlemen, thank you very much.
Mr. Chairman, I'm less than satisfied with those answers,
but thank you.
The Chairman. All right. Senator Wyden.
Senator Wyden. Thank you, Mr. Chairman.
Mr. Danenberger, you spent decades at the lead Federal
agency in this area, the Minerals Management Service, the key,
particularly in terms of offshore oil drilling, before your
retirement in January. The agency allowed rigs like Deepwater
Horizon to drill with near certainty that blowouts would occur,
without adequate backup devices. Why?
Mr. Danenberger. I think I'm not really sure about the
question. There were good backup capabilities----
Senator Wyden. They weren't required, were they?
Mr. Danenberger. Yes, they were required to have a backup
actuation system, which in this case was the remotely operated
vehicle. It performed its function. It's just there were some
other issues----
Senator Wyden. So the agency you're saying required these,
enforced the regulations, and they just didn't work? Or what
happened?
Mr. Danenberger. Yes, they were required to have a backup
actuation capability, not an acoustic backup----
Senator Wyden. Pardon me?
Mr. Danenberger. They're required to have a backup
actuation capability, which doesn't appear to have been the
problem.
Senator Wyden. But they weren't required to have a backup
capability that worked, were they?
Mr. Danenberger. The backup worked. It was just the stack--
it did its job. It's just the stack was either damaged or
unable to perform the function when it was activated by the
backup ROV.
Senator Wyden. In 2007 you co-authored a study of blowouts
and it's entitled ``Absence of Fatalities in Blowouts
Encouraging; an MMS Study of Offshore Incidents'' in the
previous decade. It strikes me that that title is instructive
because, though not every blowout ends in tragedy, it turns out
that blowouts and fatalities are not exactly absent in oil and
gas drilling.
So again, my question is, when you're putting out these
studies, how can one conclude that Minerals Management is doing
its job to ensure that adequate preventive activities are
taking place, when you're saying, shoot, absence of problems
are what people ought to be thinking about here?
Mr. Danenberger. The study showed an improvement in the
blowout record and performance. So I think that's what that
title was reflecting.
Senator Wyden. Was it fair to say that there were an
absence of these problems? Because to me that's a signal, Mr.
Danenberger, from the lead Federal agency that people really
don't have to sweat it in this area.
To me--Mr. Chairman, I'd like to put into the record as
well this particular study, because it looks, for example, at
the number of blowouts, for example, in these deepwater
situations, and you sure can't conclude that there is an
absence here. For wells in water deeper than 1,000 feet,
there's a blowout once for every 499 wells. People who are
riding on airplanes aren't going to say it's acceptable to have
a tire blowing out every 500 takeoffs, and yet the lead Federal
agency is basically telling everybody they really don't have to
sweat the safety concerns here, and I don't think that is what
a lead Federal safety agency ought to be doing.
By the way, Mr. Danenberger, when you talk about the
question of financial oversight, we had the Inspector General
do a report, as you will recall, that I asked for with respect
to financial improprieties, and it seems to me there are some
pretty significant safety gaps at this agency that need to be
corrected as well.
I want to give you the last word, Mr. Danenberger.
Mr. Danenberger. The purpose of studies like that is not to
say there aren't problems. It's to report on the record, and
that was the purpose of that study. It was a 15-year period.
There was one fatality from a blowout that didn't have anything
to do with deepwater drilling. Most of the blowouts cited are
not blowouts that you would consider--that the average person
would think of as a blowout. It was just a short loss of well
control, less than a day, and it was controlled either with
blowout preventer equipment or other immediately available
options.
Senator Wyden. Mr. Chairman, I hope colleagues will take a
look at this study, because what this study is all about is
sending a message that there really are not the safety concerns
in this industry that the American people now full well exist.
Thank you, Mr. Chairman.
The Chairman. All right. We have four other Senators who
have not asked questions of this panel yet. Let me call on
Senator Lincoln.
Senator Lincoln. Thank you, Mr. Chairman, and a special
thanks to you and Senator Murkowski for holding such an
important hearing on the tragedy that's taken place in the Gulf
of Mexico. While I think it's clear to many of us that domestic
oil production is critical to our national security, so is the
safety of our domestic oil production, and that's what we're
here today to talk about. It's imperative that we get some
answers as to what happened, what the response has been, and
how another accident like this one in the Gulf can be
prevented. We appreciate you gentlemen being here today to help
us answer some of those questions. We appreciate your
expertise.
I'm not sure how many of my questions have been addressed,
as I was absent for a little bit. But I would like to ask Dr.
Beck, in your testimony you state that the blowout preventer
valves were operated by hydraulic pressure and that applying
hydraulic pressure reliability at a water depth of 5,000 feet
can be a very complicated task and is an engineering marvel in
itself. What are the differences in how blowout preventers are
installed and, more importantly, tested, as well as operated,
at deepwater levels? Do you believe that the blowout preventers
are any less reliable in deepwater than they are in the more
shallow water? What's the testing for all of that?
Mr. Beck. Senator, as I said in my introduction, I do not
portray myself as a deepwater drilling expert. So the issues
with specifics on the deepwater BOP stacks I have not dealt
with in my career. So I would decline to speak about specifics
that are going on in the testing and the installation of those.
There are much better experts than me to address that.
Senator Lincoln. Are they tested at those levels?
Mr. Beck. The BOP stacks are tested repeatedly on 1-day
intervals.
Senator Lincoln. At 5,000 feet?
Mr. Beck. On the sea floor, I believe. But once again, I'm
stretching out of my expertise. But it's a very difficult task
to retrieve a BOP stack off of the sea floor, so maintenance
work and testing work should be done in place.
Senator Lincoln. Right. But you don't know that it is?
Mr. Beck. I don't know the specifics of how that's
accomplished.
Senator Lincoln. I just think it's important for us to know
that if these are the technologies that we're depending on,
that they've been tested in the circumstances that they're
being used.
Just to Mr. Danenberger: As you well know, in 2000 MMS
issued a report that recommended deepwater drillers be
installed with remote control shutoff devices. However, in 2003
I believe MMS determined that these devices were not essential
and therefore not required. Some reports claim that MMS based
these decisions on complaints from some of the drilling
companies in terms of cost: too expensive, not always reliable.
In your testimony you dispute that costs were discussed in
that decision from MMS and state other concerns led to the
decision. Do you believe a remote control shutoff switch would
have made a difference in this accident, and do you believe
that MMS should review this decision and make remote shutoff
switches mandatory, as they do in Norway and Brazil?
Mr. Danenberger. They had backup capabilities on the
Deepwater Horizon that should have actuated the blowout
preventer system. So I don't think the problem was the absence
of an acoustic backup. However, I think that's something that
merits further review as to whether it would provide any
advantages in the future. The ROV system has been reliable when
tested and attempted.
Senator Lincoln. The remote shutoff?
Mr. Danenberger. Yes, shutting in with the remotely
operated vehicle, which is presently used by most of the rigs
in the Gulf.
Senator Lincoln. So you're not necessarily saying that it
would have been a difference in this, but you do think it
should be further reviewed?
Mr. Danenberger. Yes.
Senator Lincoln. Thank you.
In the testimony as well, you state that 18 of the 39
blowouts from the years 1992 to 2006 involved cementing
operations. I don't know--I know Senator Wyden brought some
issues from the letter there. But you go on to say that an
industry standard should be developed to address cementing
problems, how they can be prevented, and the actions that
should be taken. Would you care to elaborate on that, on the
need for industry standards for cementing in offshore drilling,
and what role do you believe that cementing may have played in
this accident?
Mr. Danenberger. Possibly played a significant role. We
don't know what happened yet. But that should have been a
secure wellbore with no influx possible at that point. So there
was some failure, and quite possibly the cementing system. I
just think the record on well integrity points to some problems
with cementing operations that require further review and
perhaps standardization.
Senator Lincoln. So there are no standards currently?
Mr. Danenberger. There are standards, more for the makeup,
composition, but not the real fault tree, like if this happens
I'll do this, that type of analysis.
Senator Lincoln. Thank you.
Thank you, Mr. Chairman.
The Chairman. Thank you.
Senator Stabenow.
Senator Stabenow. Thank you, Mr. Chairman.
In the interest of time, I would just ask one question, but
I would first preface that we all understand that this was a
horrible disaster and the most important thing to remember is
there are 11 lives that were lost as well as the catastrophe
economically and environmentally.
Mr. Danenberger, I just have one question. You had a series
of recommendations regarding an independent commission, to
streamline regulations, so that they can focus more on safety,
expanding training. Then you said that we need standards for
best practices. I'm very surprised that today we don't
currently have standards for best practices. Are you suggesting
we don't have standards for best practices?
Mr. Danenberger. There are many standards for best
practices, over 100 incorporated in the MMS regulations. There
are just a couple areas where maybe more work should be done.
One we just mentioned, cementing, and maybe some more work on
certain BOP components.
Senator Stabenow. I think, Mr. Chairman, I think probably
the American people would have assumed we would have had
standards for best practices in all of these areas. Certainly
if we don't, we need to.
Thank you.
The Chairman. Senator Udall.
Senator Udall. Thank you, Mr. Chairman. I'll also be short
and ask one question. I do associate myself with all the
remarks this morning from my colleagues on both sides of the
aisle.
Mr. Danenberger, I appreciate your comments in your written
statement and I look forward to reading it more exhaustively,
and your support and, if you will, defense of most of the
employees at MMS. That's true, but there's also been a couple
of cases that I believe you're aware of where MMS has
demonstrated its close and sometimes inappropriate relationship
with industry, most notably in the Denver office. As a Colorado
Senator, it's on the forefront of my mind.
MMS collects billions of dollars in royalties from oil and
gas lease sales every year, but it's also charged with
regulating the safety and environmental practices of the
industry. Those two roles, you could argue, contradict each
other, come into conflict. Can you comment on this mixed role
that MMS plays as both the advocate and the regulator for the
oil and gas industry?
Mr. Danenberger. I think it's something that is probably
going to be looked at, and that's a reasonable--something
that's reasonable for your committee certainly to look at,
whether we should have a truly independent safety and pollution
prevention regulator that's separate from the resource
management and royalty collection function. I think that
concept might merit further attention.
The Chairman. Senator Shaheen.
Senator Shaheen. Thank you, Mr. Chairman. I also would like
to thank our panelists for being here, especially you, Mr.
Danenberger, because I think your knowledge of MMS is very
helpful to this committee.
My question is for you. I would like to follow up on the
issue raised by Senator Lincoln. She was asking about the
cement that's used to keep oil and gas from bubbling to the
surface and exploding during drilling. It's my understanding
that in 2000 MMS asked the industry for advice on how to deal
with problems with that cement used in the drilling. I guess
I'd like to ask you, do you think it should take a decade or
longer to fix a problem MMS has identified, and in your
experience with the agency are these types of delays common or
have they occurred more recently since MMS has begun relying
more on industry self- regulation?
Mr. Danenberger. I think that the issues associated with
cementing have been under discussion for a while and there have
been some changes made in practices and in the regulations. I
think clearly more needs to be done and that should be a focus
of attention right now.
Senator Shaheen. Can you just--do you know what the
regulation is governing that cement use and how the industry
was involved with developing that regulation?
Mr. Danenberger. Yes. It was developed by the MMS. That
regulation tells when you have to cement, how much cement you
have to use, how high up into the annulus, how long you have to
wait on cement, how you pressure-test the casing after the
cement is set. So that is well covered. It's just from my
experience in looking at the Montara blowout--and I don't know
what the situation is with this one--there wasn't a good
understanding on the part of some of the workers as to what
actions they should take when certain signals were given that
maybe they didn't have a good cement job. So that's kind of a
fault tree assessment that we may need in a standard.
Senator Shaheen. Given that the training is now done by the
industry, is that something that should be incorporated into
the industry training?
Mr. Danenberger. Yes, I think there should be--there are
certain specialists that do the cementing, but I think the
primary operator's representatives and drilling contractor
people should have a pretty good familiarity with those
operations. Cementing is not currently required as part of the
overall well control training program.
Senator Shaheen. Thank you.
The Chairman. I believe that everyone's had a chance to ask
questions. We appreciate both of you testifying today very much
and we may call on you in the future for additional expert
advice on this issue.
Our second panel is composed of witnesses from the three
companies that are most immediately involved in the operation
on the Deepwater Horizon drilling rig in the days and hours
leading up to this catastrophic failure. BP is the integrated
exploration and production company that was ultimately the
primary operator of the well being drilled. Its representative
on this panel is Lamar McKay, President, Chairman and President
of BP America.
Transocean Limited was the owner and operator of the
Deepwater Horizon drilling rig that exploded on April 20. It is
the primary offshore drilling contractor in the deepwaters of
the Gulf of Mexico, providing rigs to many of the deepwater
exploration and development wells, and its representative on
this panel is Steven Newman, its Chief Executive Officer.
Halliburton is the oilfield services provider that was
subcontracted to provide a range of services on the Deepwater
Horizon, including the cement and casing program of the well
that experienced the disastrous blowout. Its representative on
this panel is Tim Probert, the President of Global Business
Lines and Chief Health, Safety and Environment Officer.
As I indicated before, we're asking all witnesses to please
be sworn today. If each of you would stand, raise your right
hand, I'll administer the oath to you. Do you solemnly swear
that the testimony you're about to give to the Senate Committee
on Energy and Natural Resources shall be the truth, the whole
truth, and nothing but the truth?
Mr. McKay. I do.
Mr. Newman. I do.
Mr. Probert. I do.
The Chairman. Please be seated.
As with the previous panel, your entire statement, written
statement, will be made part of the record, and we would ask
that each of you take 5 or 6 minutes to make the main points
that you think we need to understand, starting with you, Mr.
McKay, and then Mr. Newman, and then Mr. Probert. Go right
ahead.
STATEMENT OF LAMAR MCKAY, PRESIDENT AND CHAIRMAN, BP AMERICA,
INC.
Mr. McKay. Thank you, Chairman. Chairman Bingaman, Ranking
Member Murkowski, members of the committee: My name is Lamar
McKay and I am the Chairman and President of BP America.
We have experienced a tragic series of events. 3 weeks ago
tonight, 11 people were lost in an explosion and a fire aboard
the Transocean Deepwater Horizon and 17 others were injured. My
deepest sympathies go out to the families and friends who have
suffered such a terrible loss and to those in the Gulf Coast
communities whose lives and livelihoods are being impacted.
Over the last few days I've seen the response firsthand and
I've talked with the men and women on the front line. There is
a deep and steadfast resolve to do all we humanly can to stop
the leak, contain the spill, and to minimize the damage
suffered by the environment and the people of the Gulf Coast.
As a responsible party under the Oil Pollution Act, we will
carry out our responsibilities to mitigate the environmental
and economic impacts of this incident. Our efforts are part of
a unified command that was established within hours of the
accident and provides a structure for our work with Departments
of Homeland Security and Interior, as well as Defense, Energy,
OSHA, and other Federal agencies, as well as affected State and
local governments and Transocean.
We are grateful for the involvement of President Obama and
members of his Cabinet and for the leadership, direction, and
resources they have provided. We are also grateful to the
Governors, Congressional members, State agencies, and local
communities of Mississippi, Alabama, Louisiana, Texas, and
Florida.
I want to underscore that the global resources of BP are
committed to this effort and have been from the outset. Nothing
is being spared. Everyone understands the enormity of what lies
ahead and is working to deliver an effective response at the
wellhead, on the water, and at the shoreline.
Before I describe our round-the-clock efforts to respond to
this series of events, I want to reiterate our commitment to
find out what happened. Figuring out what happened and why it
happened is a complex process. We are cooperating with the
joint investigation by the Departments of Homeland Security and
Interior and investigations by Congress. In addition, BP has
commissioned an internal investigation whose results we plan to
share so we can all learn from these terrible events.
I want to be clear. It's inappropriate to draw any
conclusion before all the facts are known. As we speak, our
investigation team is locating and analyzing data, interviewing
available witnesses, and reviewing and assessing evidence.
Today I think it's important to give you and the American
public an idea of the questions we are asking. There are really
two key sets of questions here and we're actively exploring
both of them. First, what caused the explosion and fire on
board Transocean's Deepwater Horizon rig? Second, why did
Transocean's blowout preventer, the key fail-safe mechanism,
fail to shut in the well and release the rig?
With respect to the first question, the key issue we are
examining is how hydrocarbons could have entered the wellbore.
BP as the leaseholder and the operator of the well hired
Transocean to drill that well. Transocean as owner and operator
of the Deepwater Horizon drilling rig had responsibility for
the safety of drilling operations. We don't know yet precisely
what happened on the night of April 20, but what we do know is
that there were anomalous pressure test readings prior to the
explosion. These could have raised concerns about well control
prior to the operation to replace mud with seawater in the
well, in preparation for setting of the cement plug.
Through our investigation we hope to learn more about what
happened and what was done in the hours before the explosion.
Apart from looking at the causes of the explosion, we are also
examining why the blowout preventer, the BOP as it is called,
did not work as the ultimate fail- safe to seal the well and
prevent an oil spill. Clearly the BOP remains a critical piece
of equipment throughout all operations to ensure well control
up until the time the well is sealed with a cement plug and is
temporarily abandoned.
We will continue full speed ahead with our investigation,
keeping all lines of inquiry open, until we find out what
happened and why. At the same time, we are fully engaged in
efforts to respond to these events. Our subsea efforts to stop
the flow of oil and secure the well involve four parallel and
concurrent strategies. Activating the BOP would be the
preferred course since it would stop or diminish the flow at
the source. Unfortunately, this has proved unsuccessful so far.
We are working on a containment system which will place
large enclosures or containment chambers atop the leaks and
conduct flow to a ship at the surface. There have been
technical challenges, however. Engineers are now working to see
if these challenges can be overcome.
We have begun to drill the first of two relief wells
designed to intercept and permanently secure the original well.
We began drilling the first relief well on May 2 and expect to
begin drilling the second relief well later this week. This
operation could take approximately 3 months.
A fourth effort, known as a ``top kill,'' uses a tube to
inject a mixture of multi-sized particles directly into the
blowout preventers to cap the well. It's a proven industry
technique and it's been used worldwide, but never in 5,000 feet
of water.
On the open water a fleet of about 300 response vessels has
been mobilized and about one million feet of boom is now in
place, with more than a million more feet available. We ar also
attacking the spill area with Coast Guard-approved
biodegradable dispersants, which are being applied from planes
and boats. We have also developed and tested a technique to
apply dispersant at the leak point on the seabed. The EPA is
carefully analyzing options for this technique's further use.
To protect the shoreline, we are implementing what the U.S.
Coast Guard has called the most massive shoreline protection
effort ever mounted. 13 staging areas are in place and over
4,000 volunteers have already been trained.
We recognize that there are both environmental and economic
impacts. BP will play all necessary cleanup costs and is
committed to paying legitimate claims for other loss and
damages caused by the spill.
Tragic and unforeseen as this accident was, we must not
lose sight of why BP and other energy companies are operating
in the offshore, including the Gulf of Mexico. The Gulf
provides one in four barrels of oil produced in the United
States, a resource our economy requires. BP and the entire
energy industry are under no illusions about the challenge we
face. We know that we will be judged by our response to this
crisis. We intend to do everything in our power to bring this
well under control, to mitigate the environmental impact of the
spill, and to address economic claims in a responsible manner.
No resource available to this company will be spared. I can
assure you that we and the entire industry will learn from this
terrible event and emerge from it stronger and safer.
Thank you for the opportunity to appear before you today.
I'd be happy to answer your questions.
[The prepared statement of Mr. McKay follows:]
Prepared Statement of Lamar McKay\1\, Chairman & President, BP America,
Inc.
---------------------------------------------------------------------------
\1\ The data described throughout this testimony is accurate to the
best of my knowledge as of 8am Monday, May 10, 2010, when this
testimony was submitted. The information that we have continues to
develop as our response to the incident continues.
---------------------------------------------------------------------------
Chairman Bingaman, Ranking Member Murkowski, members of the
committee, I am Lamar McKay, Chairman and President of BP America.
We have all experienced a tragic series of events.
I want to be clear from the outset that we will not rest until the
well is under control. As a responsible party under the Oil Pollution
Act, we will carry out our responsibilities to mitigate the
environmental and economic impacts of this incident.
We--and, indeed, the entire energy sector as a whole--are
determined to understand what happened, why it happened, take the
learnings from this incident, and make the changes necessary to make
our company and our industry stronger and safer. We understand that the
world is watching and that we and our industry colleagues will be
judged by how we respond to these events.
Three weeks ago tonight, eleven people were lost in an explosion
and fire aboard the Transocean Deepwater Horizon drilling rig, and
seventeen others were injured. My deepest sympathies go out to the
families and friends who have suffered such a terrible loss and to
those in Gulf Coast communities whose lives and livelihoods are being
impacted.
This was a horrendous accident. We are all devastated by this. It
has profoundly touched our employees, their families, our partners,
customers, those in the surrounding areas and those in government with
whom we are working. There has been tremendous shock that such an
accident could have happened, and great sorrow for the lives lost and
the injuries sustained. The safety of our employees and our contractors
and the safety of the environment are always our first priorities.
Even as we absorb the human dimensions of this tragedy, I want to
underscore our intense determination to do everything humanly possible
to minimize the environmental and economic impacts of the resulting oil
spill on the Gulf Coast. From the outset, the global resources of BP
have been engaged. Nothing is being spared. We are fully committed to
the response.
And from the beginning, we have never been alone. On the night of
the accident, the Coast Guard helped rescue the 115 survivors from the
rig. The list of casualties could easily have been longer without the
professionalism and dedication of the Coast Guard.
Even before the Transocean Deepwater Horizon sank on the morning of
April 22nd, a Unified Command structure was established, as provided by
federal regulations. Currently led by the National Incident Commander,
Admiral Thad Allen, the Unified Command provides a structure for BP's
work with the Coast Guard, the Minerals Management Service and
Transocean, among others.
Immediately following the explosion, in coordination with the
Unified Command, BP began mobilizing oil spill response resources
including skimmers, storage barges, tugs, aircraft, dispersant, and
open-water and near shore boom.
Working together with federal and state governments under the
umbrella of the Unified Command, BP's team of operational and technical
experts is coordinating with many agencies, organizations and
companies. These include the Departments of Energy, Interior, Homeland
Security and Defense, National Oceanic and Atmospheric Administration
(NOAA), US Fish & Wildlife Service (USFW), National Marine Fisheries
Service (NMFS), EPA, OSHA, Gulf Coast state environmental and wildlife
agencies, the Marine Spill Response Corporation (an oil spill response
consortium), as well as numerous state, city, parish and county
agencies.
As Coast Guard Rear Admiral Mary Landry noted on April 28: ``BP is
being appropriately forward leaning in bringing all the resources to
bear to control this spill.''
The industry as a whole has responded in full support. Among the
resources that have been made available:
Drilling and technical experts who are helping determine
solutions to stopping the spill and mitigating its impact,
including specialists in the areas of subsea wells,
environmental science and emergency response;
Technical advice on blowout preventers, dispersant
application, well construction and containment options;
Additional drilling rigs to serve as staging areas for
equipment and responders, more remotely operated vehicles
(ROVs) for deep underwater work, barges, support vessels and
additional aircraft, as well as training and working space for
the Unified Command.
The actions we're taking
As Chairman and President of BP America, I am part of an executive
team that reports directly to our Global CEO, Tony Hayward. I am BP's
lead representative in the US and am responsible for broad oversight
and connectivity across all of our US-based businesses.
BP itself has committed tremendous global resources to the effort.
Among many other tasks, they are helping to train and organize the more
than 10,000 citizen volunteers who have come forward to offer their
services.
Indeed, we have received a great many offers of help and
assistance. The outpouring of support from government, industry,
businesses and private citizens has truly been humbling and inspiring.
It is remarkable to watch people come together in crisis.
Our efforts are focused on two overarching goals:
Stopping the flow of oil; and
Minimizing the impact on the environment.
Subsea efforts to secure the well
Our subsea efforts to stop the flow of oil and secure the well have
involved four concurrent strategies:
Working to activate the blow-out preventer (BOP) on the well
using submersible ROVs. This would be the preferred course of
action, since it would stop or diminish the flow at the source
on the ocean floor. Unfortunately, this effort has so far not
proved successful.
Work continues on a subsea oil recovery plan using a
containment system, placing large enclosures or containment
chambers atop the leaks and conducting flow from the ocean
floor to a ship at the surface through a pipe. As we
anticipated, however, there have been technical challenges.
This system has never been used before at 5,000 feet. Engineers
are now working to see if these challenges can be overcome.
We have begun to drill the first of two relief wells to
permanently secure the well. These wells are designed to
intercept the original MC252 #1 well. Once this is
accomplished, a specialized heavy fluid will be injected into
the well bore to stop the flow of oil and allow work to be
carried out to permanently cap the existing well. On Sunday,
May 2nd, we began drilling the first of these wells. A second
drillship will mobilize to the area to begin the second relief
well later this week. This relief well operation could take
approximately three months.
A fourth effort is known as a ``top kill.'' It is a proven
industry technique for capping wells and has been used
worldwide, but never in 5000 feet of water. It uses a tube to
inject a mixture of multi-sized particles directly into the
blowout preventer. The attempt to do this could take two or
three weeks to accomplish.
We have succeeded in stopping the flow from one of the three
existing leak points on the damaged well. While this may not affect the
overall flow rate, it should reduce the complexity of the situation to
be dealt with on the seabed.
Attacking the spill
We are attacking the spill on two fronts: in the open water and on
the shoreline, through the activation of our pre-approved spill
response plans.
On the water On the open water, we have mobilized a fleet of
294 response vessels, including skimmers, storage barges, tugs,
and other vessels. The Hoss barge, the world's largest skimming
vessel, has been onsite since April 25. In addition, there are
15, 210-foot Marine Spill Response Corporation Oil Spill
Response Vessels, which each have the capacity to collect,
separate, and store 4000 barrels of oil. To date, over 97,000
barrels of oil and water mix have been recovered.
Also on the open water, we are attacking the spill area with Coast
Guardapproved biodegradable dispersants, which are being applied from
both planes and boats. Dispersants are soap-like products which help
the oil to break up and disperse in the water, which, in turn, helps
speed natural degradation.
Thirty-seven aircraft, both fixed-wing and helicopters, are now
supporting the response effort. Over 444,000 gallons of dispersant have
been applied on the surface and more than 180,000 gallons are
available. Typically, about 2,100 gallons of dispersant is needed to
treat 1,000 barrels of oil.
To ensure that adequate supplies of dispersant will be available
for surface and subsea application, the manufacturer has stepped up the
manufacturing process, and existing supplies are being sourced from all
over the world. The cooperation of industry partners has been superb
and that is deeply, deeply appreciated.
We have also developed and tested a technique to apply dispersant
at the leak point on the seabed. As far as we are aware, this is the
first documented attempt to apply dispersant at the source. Early
evidence suggests that the test has been impactful, and we are working
with NOAA, EPA, and other agencies to refine and improve the technique.
EPA is carefully monitoring the impact of dispersant and is analyzing
its potential impact on the environment and options for possible future
use.
Actions to protect the shoreline
Near the shoreline, we are implementing with great urgency oil
spill response contingency plans to protect sensitive areas. According
to the Coast Guard, the result is the most massive shoreline protection
effort ever mounted.
To ensure rapid implementation of state contingency plans, we
announced last week that we would make available grants of $25 million
to Louisiana, Mississippi, Alabama, and Florida.
To date, we have about one million feet of boom deployed in an
effort to contain the spill and protect the coastal shoreline, and
another 1.3 million feet are available. The Department of Defense is
helping to airlift boom to wherever it is needed across the Gulf coast.
Incident Command Posts have been or are being established at:
Alabama: Mobile;
Florida: St. Petersburg;
Louisiana: Robert and Houma.
Thirteen staging areas are also in place to help protect the
shoreline:
Alabama: Theodore, Orange Beach and Dauphin Island;
Florida: Panama City and Pensacola.
Louisiana: Grand Isle, Venice, Shell Beach, Slidell,
Cocodrie;
Mississippi: Pascagoula, Biloxi and Pass Christian;
Highly mobile, shallow draft skimmers are also staged along the
coast ready to attack the oil where it approaches the shoreline.
Wildlife clean-up stations are being mobilized, and pre-impact
baseline assessment and beach clean-up will be carried out where
possible. Rapid response teams are ready to deploy to any affected
areas to assess the type and quantity of oiling, so the most effective
cleaning strategies can be applied.
A toll-free number has been established to report oiled or injured
wildlife, and the public is being urged not to attempt to help injured
or oiled animals, but to report any sightings via the toll-free number.
Contingency plans for waste management to prevent secondary
contamination are also being implemented.
Over 10,000 personnel are now engaged in the response, including
shoreline defense and community outreach.
Additional resources, both people and equipment, continue to arrive
for staging throughout the Gulf states in preparation for deployment
should they be needed.
Communication, community outreach, & engaging volunteers
We are also making every effort to keep the public and government
officials informed of what is happening.
BP executives have regularly briefed the President's Cabinet and
National Security Council team, members of Congress, the governors and
attorneys general of the Gulf Coast states, and many local officials.
On the ground, in the states and local communities, we are working
with numerous organizations such as fishing associations, local
businesses, parks, wildlife and environmental organizations,
educational institutions, medical and emergency establishments, local
media, and the general public.
BP is leading volunteer efforts in preparation for shoreline clean-
up. We have and will continue to help recruit and deploy volunteers,
many of whom are being compensated for their efforts, to affected
areas. More than 14,000 calls from volunteers offering their help have
been received and over 4,000 volunteers have been trained thus far.
Volunteer activities at this time are focused on clearing the
beaches of existing debris and placing protective boom along the
shoreline. Our ``adopt a boom'' program is proving very successful in
engaging local fishermen in the response. More than 600 fishing vessels
are signed up to deploy boom and assist with the response.
There are five BP community-outreach sites engaging, training, and
preparing volunteers:
Alabama: Mobile;
Florida: Pensacola;
Louisiana: Venice
Mississippi: Pascagoula and Biloxi.
A phone line has been established for potential volunteers to
register their interest in assisting the response effort.
Coping with economic impacts
We recognize that beyond the environmental impacts there are also
economic impacts on the people of the Gulf Coast states. BP will pay
all necessary clean up costs and is committed to paying legitimate
claims for other loss and damages caused by the spill.
We have put in place a BP Claims Process. All claimants are being
directed to a toll-free number and a website and will be assigned to
experienced adjusters who will assist them in making their claim.
As an alternative, claimants can visit one of BP's Community
Outreach Centers or claims centers.
The process is being expedited to make immediate payments to those
who have experienced a loss of income, while the overall claim is more
fully evaluated. As of today, we have paid out approximately $3.5
million.
Commitment to investigate what happened
BP is one of the lease holders and the operator of this exploration
well. As operator, BP hired Transocean to conduct the well drilling
operations. Transocean owned the Deepwater Horizon drilling rig and its
equipment, including the blowout preventer.
The questions we all want answered are: What happened on the seabed
and aboard the Deepwater Horizon and why did these things happen?
A full answer to those questions will have to await the outcome of
a joint investigation by the Departments of Homeland Security and
Interior, investigation by Congress, and an independent internal
investigation that BP is conducting.
BP's investigation into the cause of this accident is being led by
a senior BP executive from outside the affected business. The team has
more than 40 people. The investigation is ongoing and has not yet
reached conclusions about incident cause. We intend to share the
results of our findings so that our industry and our regulators can
benefit from the lessons learned.
Investigations take time, of course, in order to ensure that the
root cause of the failure is fully understood. But let me give you an
idea of the questions that BP and the entire energy industry, are
asking:
What caused the explosion and fire?
And why did the blowout preventer fail?
Only seven of the 126 onboard the Deepwater Horizon were BP
employees, so we have only some of the story, but we are working to
piece together what happened from meticulous review of the records of
rig operations that we have as well as information from those witnesses
to whom we have access.
We are looking at our own actions and those of our contractors, as
is the Marine Board. We are looking at why the blowout preventer did
not work because that was to be the fail-safe in case of an accident.
The blowout preventer is a 450-ton piece of equipment that sits on top
of the wellhead during drilling operations. It contains valves that can
be closed remotely if pressure causes fluids such as oil or natural gas
to enter the well and threaten the drilling rig. By closing this valve,
the drilling crew can regain control of the well.
Blowout preventers are used on every oil and gas well drilled in
the world today. They are carefully and deliberately designed with
multiple levels of redundancy and are regularly tested. If they don't
pass the test, they are not used.
The systems are intended to fail-closed and be fail-safe; sadly and
for reasons we do not yet understand, in this case, they were not.
Transocean's blowout preventer failed to operate.
All of us urgently want to understand how this vital piece of
equipment and its built-in redundancy systems failed and what measures
are required to prevent this from ever happening again. In this
endeavor, you will have the full support of BP as well as, I am sure,
the rest of the industry.
Energy policy remains critical
Tragic and unforeseen as this accident was, we must not lose sight
of why BP and other energy companies are operating in the offshore,
including the Gulf of Mexico. The Gulf is one of the world's great
energy producing basins, providing one in four barrels of oil produced
in the United States. That is a resource that powers America and the
world every day, one our economy requires.
Conclusion
But before we can think about the future, we have to deal with the
immediate challenge of today.
BP is under no illusions about the seriousness of the situation we
face. In the last three weeks, the eyes of the world have been upon us.
President Obama and members of his Cabinet have visited the Gulf region
and made clear their expectations of BP and our industry. So have
members of Congress, as well as the general public.
We intend to do everything within our power to bring this well
under control, to mitigate the environmental impact of the spill and to
address economic claims in a responsible manner.
Any organization can show the world its best side when things are
going well. It is in adversity that we truly see what they are made of.
We know that we will be judged by our response to this crisis. No
resource available to this company will be spared. I can assure you
that we and the entire industry will learn from this terrible event,
and emerge from it stronger, smarter and safer.
The Chairman. Thank you.
Mr. Newman, go right ahead.
STATEMENT OF STEVEN NEWMAN, CHIEF EXECUTIVE OFFICER,
TRANSOCEAN, LTD
Mr. Newman. Chairman Bingaman, Ranking Member Murkowski,
and other members of the committee: I want to thank you for the
opportunity to speak with you today. My name is Steven Newman
and I am the chief executive officer of Transocean Limited.
Transocean is the leading offshore drilling contractor, with
more than 18,000 employees worldwide. I am a petroleum engineer
by training and I have spent years working with and on drilling
rigs. I have worked at Transocean for more than 15 years and I
am incredibly proud of the contributions our company has made
to the energy industry during that time.
Today, however, I sit before you with a heavy heart. The
last few weeks have been a time of great sadness and reflection
for our company and for me personally. Nothing is more
important to me and to Transocean than the safety of our crew
members, and our hearts ache for the widows, parents, and
children of the 11 crew members, including 9 Transocean
employees, who died in the Deepwater Horizon explosion. These
were exceptional men and we are committed to doing everything
we can to support their families as they struggle to cope with
this tragedy.
Over the last few weeks, we have also seen great acts of
courage and kindness in our colleagues and in our communities.
That courage and kindness was embodied by the 115 crew members
who were rescued from the Deepwater Horizon and were as worried
about the fate of their colleagues as they were about their own
safety. It was embodied by the brave men and women of the U.S.
Coast Guard who provided onsite response and search and rescue
efforts, and by the medical professionals and families and
friends who received the injured crew members when they arrived
on shore. It is embodied by our friends and colleagues in
Transocean and across the industry who have rallied to help the
families of those who were lost.
This has been a very emotional period for all of us at
Transocean. It has also been a period of intense activity and
effort. Immediately after the explosion, Transocean began
working with BP and the unified command in the effort to stop
the flow of hydrocarbons from the well. Our finest engineers
and operational personnel have been working with BP to identify
and pursue options for stopping the flow as soon as possible.
Our drilling rig, the Development Driller III, is involved
in drilling the relief well, and our drill ship, the Discoverer
Enterprise, is standing by on location to carry out unique oil
recovery operations in the Gulf.
We will continue to support BP and the unified command in
all of these efforts. At the same time, we have been working
hard to get to the bottom of the question that this committee
and the American public want and deserve an answer to: What
happened on the night of April 20, and how do we assure the
American public that it will not happen again?
Transocean has assembled an independent investigative team
to determine the cause of these tragic events, a team that
includes Transocean and industry experts. They will be
interviewing people who have potentially helpful information
and studying the operations and the equipment involved. Because
the drilling process is a collaborative effort among many
different companies, contractors, and subcontractors, the
process of understanding what led to the April 20 explosion and
how to prevent such an accident in the future must also be
collaborative. Our team is working side by side with others,
including BP and governmental agencies, and these investigative
efforts will continue until we have satisfactory answers.
While it is still too early to know exactly what happened
on April 20, we do have some clues about the cause of the
disaster. The most significant clue is that these events
occurred after the well construction process was essentially
complete. Drilling had been finished on April 17 and the well
had been sealed with casing and cement. For that reason, the
one thing we do know is that on the evening of April 20 there
was a sudden catastrophic failure of the cement, the casing, or
both. Without a failure of one of those elements, the explosion
could not have occurred.
It is also clear that the drill crew had very little, if
any, time to react. The initial indications of trouble and the
subsequent explosions were almost instantaneous. What caused
that sudden violent failure? Was the well properly designed?
Were there problems with the casing or the seal assembly? Was
the casing properly cemented and the well effectively sealed?
Were all appropriate tests run on the cement and the casing?
Were the blowout preventers damaged by the surge that emanated
from the well? Did the surge blow debris into the BOPs which
prevented them from squeezing, crushing, or shearing the pipe?
These are some of the critical questions that need to be
answered in the coming weeks and months.
Until we know exactly what happened on April 20, we cannot
determine how best to prevent such tragedies in the future. But
regardless of what the investigations uncover, ours is an
industry that must put safety first. We must do so for the sake
of our employees, for the sake of their families, and for the
sake of people all over the world who use and enjoy and rely on
our oceans and waterways for their sustenance.
Thank you again for the opportunity to speak here today,
and I'm happy to answer any questions.
[The prepared statement of Mr. Newman follows:]
Prepared Statement of Steven Newman, Chief Executive Officer,
Transocean, Ltd
Chairman Bingaman, Ranking Member Murkowski, and other members of
the Committee, I want to thank you for the opportunity to speak with
you today.
My name is Steven Newman, and I am the Chief Executive Officer of
Transocean, Ltd. Transocean is a leading offshore drilling contractor,
with more than 18,000 employees worldwide. I am a petroleum engineer by
training, I have spent considerable time working on drilling rigs and I
have worked at Transocean for more than 15 years. I am proud of the
Company's historical contributions to the energy industry during that
time. Today, however, I sit before you with a heavy heart.
The last few weeks have been a time of great sadness and reflection
for our Company--and for me personally. Nothing is more important to me
and to Transocean than the safety of our employees and crew members,
and our hearts ache for the widows, parents and children of the 11 crew
members--including nine Transocean employees--who died in the Deepwater
Horizon explosion. These were exceptional men, and we are committed to
doing everything we can to support their families as they struggle to
cope with this tragedy.
We have also seen great courage and kindness since April 20 that
has reaffirmed our faith in the human spirit. That spirit is embodied
by the 115 crew members who were rescued from the Deepwater Horizon and
were as worried about the fate of their colleagues as they were about
themselves. It is embodied by the emergency workers and friends and
family who were waiting for the injured crew members when they arrived
ashore. And it is embodied by the friends and colleagues who have
rallied to help the families of those who were lost at sea.
While this has been a very emotional period for all of us at
Transocean, it has also been a period of intense activity and effort.
Immediately after the explosion, Transocean began working with BP
(in BP's role as operator/leaseholder of this well) and the ``Unified
Command'' (which includes officials from the U.S. Coast Guard, the
Department of the Interior's Minerals Management Service (MMS), and the
National Oceanic and Atmospheric Administration (NOAA)) in the effort
to stop the flow of hydrocarbons. Our finest operational personnel and
engineers have been working with BP to identify and pursue options for
stopping the flow as soon as possible. Our drilling rig, the
Development Driller III, is involved in drilling the relief well at the
site, and our drillship, the Discoverer Enterprise, is involved in the
unique oil recovery operations in the Gulf. We will continue to support
BP and the Unified Command in all of these efforts.
We have also been working hard to get to the bottom of the question
to which the Members of this Committee--and the American people--want
and deserve an answer: What happened the night of April 20th, and how
do we assure the American public that it will not happen again?
Transocean has assembled an investigative team to determine what
led to these tragic events--a team that includes dedicated Transocean
and industry experts. They will be interviewing people who have
potentially helpful information and studying the operations and the
equipment involved. Our team is working side by side with others,
including BP and governmental agencies, and these investigative efforts
will continue until we have satisfactory answers.
As is often the case after a tragedy of this kind, there has been a
lot of speculation about the root cause. I believe it is premature to
reach definitive conclusions about what caused the April 20th
explosion, but on behalf of our Transocean employees, I feel compelled
to respond to some of this speculation. In particular, as we seek to
uncover what happened, it is important to understand the well
construction process--and the roles of the various parties involved in
an operation like the one that was taking place in the Gulf of Mexico.
All offshore oil and gas production projects begin and end with the
Operator. When the Operator (in this case, BP) leases a parcel of land
on the outer continental shelf (OCS) from the U.S. government, it must
prepare and submit detailed plans specifying where and how a well is to
be drilled, cased, cemented and completed based on its interpretation
of propriety data, including geologic data from seismic surveys. Once
those plans are approved and permits are issued and work begins, the
Operator--or leaseholder--serves as the general contractor that manages
all of the work that is performed on its lease. In this capacity, the
Operator hires various contractors to perform specific functions in the
construction of the well.
In addition, the Operator brings in various sub-contractors to
perform specific roles. For example:
The Operator selects a driller (in this case, Transocean),
which provides a vessel (called a ``rig'') from which drilling
operations are performed. As the name suggests, the driller is
also responsible for rotating the long string of drill pipe
with a drill bit on the end that drills a hole deeper and
deeper into the ocean floor. The Operator's well plan dictates
the manner in which the drilling is to occur, including the
location, the path, the depth, the process and the testing. The
drill bits, which are selected by the Operator, are supplied by
another sub-contractor.
A key element of the drilling process is drilling mud, a
heavy fluid manufactured to the Operator's specifications. That
mud is pumped into the well hole and circulated in order to
hold back the pressure of the reservoir and prevent oil, gas or
water in that reservoir from moving to the surface through the
well. The mud is monitored by another sub-contractor (the mud
engineer) (in this instance, M-I Swaco) to detect any problems.
As the drilling progresses, huge pipes are inserted into the
well to maintain the integrity of the hole that has been
drilled and to serve as the primary barrier against fluids
entering the well. This job is coordinated by the casing sub-
contractor selected by the Operator (in this case,
Weatherford). In its well plan, the Operator specifies the
diameter and strength of each casing segment, purchases the
casing, and dictates how it will be cemented in place. Well
casing is inserted in a telescope-like manner, with each
successive section inside the previous one. Each casing segment
also includes a seal assembly to ensure pressure containment.
After drilling is concluded, yet another area of expertise
comes into play. The cementing sub-contractor is responsible
for encasing the well in cement, for putting a temporary cement
plug in the top of the well, and for ensuring the integrity of
the cement. The purpose of this work is to seal the well to
make sure that the contents of the reservoir (i.e., oil and
natural gas) are not driven by the reservoir pressure into the
well. (Once drilling is complete and the well is cased and
cemented, it is no longer necessary to circulate drilling mud
through the well; at that point, the casing and cement serve to
control the formation pressure.) The cementing process is
dictated by the Operator's well plan, and the testing of the
cement on the Deepwater Horizon was performed by the cement
contractor (Haliburton in this instance) as specified and
directed by BP.
Against that background, let me turn to the April 20 Deepwater
Horizon explosion and its possible causes. What is most unusual about
the explosion in this case is that it occurred after the well
construction process was essentially finished. Drilling had been
completed on April 17, and the well had been sealed with cement (to be
reopened by the Operator at a later date if the Operator chose to put
the well into production). At this point, drilling mud was no longer
being used as a means of reservoir pressure containment; the cement and
the casing were the barriers controlling pressure from the reservoir.
Indeed, at the time of the explosion, the rig crew, at the direction of
the Operator, was in the process of displacing drilling mud and
replacing it with sea water.
For that reason, the one thing we know with certainty is that on
the evening of April 20, there was a sudden, catastrophic failure of
the cement, the casing, or both. Therein lies the root cause of this
occurrence; without a disastrous failure of one of those elements, the
explosion could not have occurred. It is also clear that the drill crew
had very little (if any) time to react. The explosions were almost
instantaneous.
What caused that catastrophic, sudden and violent failure? Was the
well properly designed? Was the well properly cemented? Were there
problems with the well casing? Were all appropriate tests run on the
cement and casings? These are some of the critical questions that need
to be answered in the coming weeks and months.
Over the past several days, some have suggested that the blowout
preventers (or BOPs) used on this project were the cause of the
accident. That simply makes no sense. A BOP is a large piece of
equipment positioned on top of a wellhead to provide pressure control.
As explained in more detail in the attachment to my testimony, BOPs are
designed to quickly shut off the flow of oil or natural gas by
squeezing, crushing or shearing the pipe in the event of a ``kick'' or
``blowout''.a sudden, unexpected release of pressure from within the
well that can occur during drilling.
The attention now being given to the BOPs in this case is somewhat
ironic because at the time of the explosion, the drilling process was
complete. The well had been sealed with casing and cement, and within a
few days, the BOPs would have been removed. At this point, the well
barriers--the cementing and the casing--were responsible for
controlling any pressure from the reservoir.
To be sure, BOPs are an important aspect of well control. During
drilling, BOPs provide a secondary means of controlling pressure if the
primary mechanisms (e.g., drilling mud) prove inadequate. BOPs are
robust, sophisticated pieces of equipment that can be activated by
various direct and remote methods. Since the BOPs were still in place
in this circumstance, they may have been activated during this event
and may have restricted the flow to some extent. At this point, we
cannot be certain. But we have no reason to believe that they were not
operational--they were jointly tested by BP and Transocean personnel as
specified on April 10 and 17 and found to be functional. We also do not
know whether the BOPs were damaged by the surge that emanated from the
well beneath or whether the surge may have blown debris (e.g., cement,
casing) into the BOPs, thereby preventing them from squeezing, crushing
or shearing the pipe.
For these reasons, I believe it is inappropriate to focus any
causation discussions exclusively on the BOPs. Certainly, we need to
understand what happened to the BOPs and whether changes should be made
to improve the effectiveness of these devices in the unusual
circumstances of an accident like the one on April 20. But the BOPs
were clearly not the root cause of the explosion. Our most important
task is to understand why a cased and cemented wellbore suddenly and
catastrophically failed. As a starting point, our investigative team
has looked at numerous possible causes, contributing factors, or
trigger events, in an effort to ensure that nothing is overlooked in
this investigation.
As I explained earlier, the well construction process is a
collaborative effort. For the same reason, the process of understanding
what led to the April 20 explosion and how to prevent such an accident
in the future must also be collaborative. Ours is an industry that must
put safety first. And I can assure you that Transocean has never--and
will never--compromise on safety. In 2009, Transocean recorded its best
ever Total Recordable Incident Rate (TRIR). And the federal agency
charged with enforcing safety on deepwater oil rigs, MMS, which--as you
know--is a unit of the U.S. Department of the Interior, awarded one of
its top prizes for safety to Transocean in 2009. The MMS SAFE Award
recognizes ``exemplary performance by Outer Continental Shelf (OCS) oil
and gas operators and contractors.'' In the words of MMS, this award
``highlights to the public that companies can conduct offshore oil and
gas activities safely and in a pollution-free manner, even though such
activities are complex and carry a significant element of risk.'' In
awarding this prize to Transocean, MMS credited the Company's
``outstanding drilling operations'' and a ``perfect performance
period.''
Despite a strong safety record, Transocean has never been
complacent about safety. We believe that any incident is one too many.
Last year, our Company experienced an employee accident record that I
found unacceptable. As a result, I recommended to our Board of
Directors that they withhold bonuses for all executives in order to
make clear that achieving stronger safety performance was a basic
expectation--and fundamental to our success. That recommendation was
accepted, and our Company paid no executive bonuses last year, in order
to send a loud message that we evaluate our success in large part based
on the safety of our operations.
Until we fully understand what happened on April 20, we cannot
determine with certainty how best to prevent such tragedies in the
future. But I am committed--for the sake of the men who lost their
lives on April 20, for the sake of their loved ones, for the sake of
all the hard-working people who work on Transocean rigs around the
world, and for the sake of people in each of the affected states and
worldwide who rely on our oceans and waterways for their livelihood--to
work with others in the industry, with Congress and with all involved
federal agencies to make sure that such an incident never happens
again.
The Chairman. Thank you very much.
Mr. Probert.
STATEMENT OF TIM PROBERT, PRESIDENT, GLOBAL BUSINESS LINES, AND
CHIEF HEALTH, SAFETY AND ENVIRONMENTAL OFFICER, HALLIBURTON
Mr. Probert. Chairman Bingaman, Ranking Member Murkowski,
and members of the committee: Thank you for inviting
Halliburton to testify. We'll continue to work with you and
your staff to collect the factual data that will enable an
understanding of what took place and what we can collectively
do to ensure that domestic oil and gas production is undertaken
in the safest, most environmentally responsible manner
possible.
The catastrophic blowout and the spread of oil in the Gulf
of Mexico are tragic events for everyone. On behalf of the
entire Halliburton family, we extend our heartfelt sympathy to
the families, the friends, and the colleagues of the 11 people
who lost their lives and those workers who were injured in the
tragedy.
As we hope you can appreciate, neither Halliburton nor any
other party can make a judgment or offer any credible theories
about what happened until, at a minimum, the well owner has
interviewed everyone on the Deepwater Horizon to recreate the
daily log of activities on April 20. In the absence of that
information, we should not be making a rush to judgment.
However, two things can be said with some certainty: the casing
shoe was cemented some 20 hours prior to the tragic incident;
and had the BOP functioned as expected, this catastrophe may
well not have occurred.
For more than 50 years Halliburton has provided--excuse me.
For more than 90 years, Halliburton has provided a variety of
production and--a variety of products and services to well
owners throughout the life cycle of their reservoirs in the oil
and gas exploration and production industry. With respect to
the Mississippi Canyon 252 well, Halliburton was contracted by
the well owner to perform a variety of services. These included
cementing, mud logging, directional drilling, and real-time
data acquisition and data delivery services for key personnel
on board the rig and on shore.
Since the blowout, Halliburton's been working at the
direction of the well owner to assist in the effort to bring
the well under control. This includes intervention support to
help secure the damaged well and assistance in drilling one or
more relief wells.
At the outset I need to emphasize that Halliburton as a
service provider to the well owner is contractually bound to
comply with the well owner's instructions on all matters
relating to the performance of all work-related activities. The
construction of a deepwater well is a complex operation
involving the performance of many tasks by many parties. While
the well owner's representative has ultimate authority for
planning and approving activities on the rig, the drilling
contractor performs and directs much of the daily activity.
Now, cement can be used to isolate formation fluids, to
prevent movement of these fluids between formations, and to
bond and support the steel casing. There are many external
factors which affect the design and the execution of the cement
job. These include the variability of the hole geometry, the
relative location of hydrocarbon zones, and the hydrocarbon
content of associated drilling fluids. The centralizer
placement on the production casing, the drilling fluid,
conditioning program prior to cementing, and the cement slurry
and placement design used for the well were implemented as
directed by the well owner and as shown on the diagram which is
attached to my prepared remarks. By design, there was no
continuous cement column installed throughout the entire
wellbore.
Approximately 20 hours prior to the catastrophic loss of
well control, Halliburton had completed the cementing of the
ninth and final production casing string in accordance with the
well program. Following the placement of the cement slurry, the
casing seal assembly was set in the casing hanger. In
accordance with accepted industry practice and as required by
MMS and as directed by the well owner, a positive pressure test
was then conducted to demonstrate the integrity of the
production casing string. The results of the positive tests
were reviewed by the well owner and the decision was made to
proceed with the well program.
The next step included the performance of a negative
pressure test, which tests the integrity of the casing seal
assembly and is conducted by the drilling contractor at the
direction of the well owner and in accordance with MMS
requirements. We understand that Halliburton was instructed to
record drill pipe pressure during this test. After being
advised by the drilling contractor that the negative test had
been completed, Halliburton's cementing personnel were placed
on standby.
We understand that the drilling contractor replaced the
dense drilling fluid in the riser with lighter seawater prior
to the planned placement of the final cement plug, the drilling
fluid being transferred directly to a work boat standing by
alongside.
The final cement plug would have been installed inside the
production string and enabled the planned temporary abandonment
of the well. But prior to that point in the well construction
plan that Halliburton personnel would have set the final cement
plug, the catastrophic incident occurred. As a result, the
final cement plug was not set.
Halliburton's confident that the cementing work on the
Mississippi Canyon 252 well was completed in accordance with
the requirements of the well owner's well construction plan.
Thank you for the opportunity to share our views and I also
look forward to answering your questions.
[The prepared statement of Mr. Probert follows:]
Prepared Statement of Tim Probert, President, Global Business Lines and
Chief Health, Safety and Environmental Officer, Halliburton
Chairman Bingaman, Ranking Member Murkowski, and Members of the
Committee:
Thank you for the opportunity to share my company's perspective as
you review issues related to deepwater exploration for petroleum and
the accident in the U.S. Gulf of Mexico involving the offshore oil rig
Deepwater Horizon. Halliburton looks forward to continuing to work with
you, your colleagues, and your staff to understand what happened and
what we collectively can do in the future to ensure that oil and gas
production in the United States is undertaken in the safest, most
environmentally responsible manner possible.
At the outset, I want to assure you and your colleagues that
Halliburton has and will continue to fully support, and cooperate with,
the ongoing investigations into how and why this tragic event happened.
We have already made our senior personnel available to brief Members
and staff and we have produced thousands of pages of documents in
support of current investigations. Halliburton had four employees
stationed on the rig at the time of the accident. They returned to
shore safely and each has and will continue to be made available to
assist the investigative efforts. We are mindful, however, that
Halliburton cannot make any judgment or offer any theories about what
happened until at a minimum the well owner has completed interviewing
everyone on board to re-create the daily log of activities, including
those that occurred after we successfully completed the cementing
operations of the production casing string.
The April 20th catastrophic blowout, explosions and fire of the
Deepwater Horizon rig and the spread of oil in the Gulf of Mexico are
tragic events for everyone connected to the situation. The deaths and
injuries to personnel working in our industry cannot be forgotten.
Halliburton extends its heartfelt sympathy to the families, friends and
colleagues of the 11 people who lost their lives and those workers
injured in the tragedy.
Background on Halliburton
As a global leader in oilfield services, Halliburton has been
providing a variety of services to the oil and natural gas exploration
and production industry for more than 90 years. Halliburton's areas of
activity are primarily in the upstream oil and gas industry. They
include providing products and services for clients throughout the life
cycle of the hydrocarbon reservoir--from locating hydrocarbons and
managing geological data, to directional drilling and formation
evaluation, well construction and completion, to optimizing production
through the life of the field. The company is also engaged in
developing and providing technologies for carbon sequestration and we
are a service provider to the geothermal energy industry.
Halliburton is the largest cementing service and material provider
in the oil and gas industry. Halliburton provides zonal isolation and
engineering solutions for the life of a well. The company safely
conducts thousands of successful well service operations each year and
is committed to continuously improve its performance. The company views
safety and environmental performance as critical to its success and
these are core elements of our corporate culture. Halliburton has much
to offer to help our nation meet its energy security needs.
With respect to the Mississippi Canyon 252 well, Halliburton was
contracted by the well owner to perform a variety of services on the
rig. These included cementing, mud logging, directional drilling, and
measurement-while-drilling services. In addition, Halliburton provided
selected real-time drilling and rig data acquisition and transmission
services to key personnel both on board the Deepwater Horizon and at
various onshore locations.
Halliburton's Participation in the Remediation Efforts on Mississippi
Canyon 252 Well
Since the blowout, Halliburton has been working at the direction of
the well owner to provide assistance in the effort to bring the well
under control. This includes intervention support to help secure the
damaged well and planning and services associated with drilling relief
well operations.
Halliburton has deployed survey management experts to assist in
planning the path of the relief wells and has mobilized its technology
group to work in collaboration with another industry partner to combine
our technologies, in an effort to develop an integrated ranging system
to expedite the intersection of the original well.
Operations Preceding the Catastrophic Loss of Well Control on
Mississippi Canyon 252 Well
I need to start this section with an important statement of
disclosure. Halliburton, as a service provider to the well owner, is
contractually bound to comply with the well owner's instructions on all
matters relating to the performance of all work-related activities. It
is also important to understand the roles and responsibilities of the
various parties involved in the construction of a well. The
construction of a deep water well is a complex operation involving the
performance of numerous tasks by multiple parties led by the well
owner's representative, who has the ultimate authority for decisions on
how and when various activities are conducted.
Attached* to this testimony is an illustration showing the
approximate depths and positions of the casing and liner strings set in
this well. In addition, the approximate position of the various cement
placements is illustrated, which is consistent with the well design. It
should be noted that cement is used at specific designated spots and is
not designed to be a complete barrier through the entire wellbore.
---------------------------------------------------------------------------
* Illustrations have been retained in committee files.
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Cement can be used to isolate formation fluids, to prevent movement
of these fluids between formations and to bond and support the casing.
A mixture of cement, water and chemicals is combined in a slurry that
can be pumped into position around the outside of steel liners and
casing. There are many external factors that impact the design and
execution of a cement job. These include the variability in the hole
geometry, relative location of hydrocarbon zones, hydrocarbon content
and the prior condition of the wellbore and associated fluids as
determined by the drilling fluid provider. Casing strings are typically
run with devices to centralize the casing concentrically in the
wellbore and prevent incomplete displacement of drilling fluid, or
``channeling''.
While every effort is made to complete a cement job with the
highest levels of mechanical and hydraulic integrity, the above
mentioned well conditions may prevent this. Confirming cement integrity
after placement would require the well owner to direct the wireline
provider to obtain cement evaluation logs. Based on the findings of
these logs, the well owner can elect to perform remedial action by
perforating the casing and ``squeezing'' cement into remaining voids to
improve the integrity of the original cement.
The centralizer placement on the production casing, the drilling
fluid conditioning program prior to cementing and the cement slurry and
placement design used for this well were implemented as directed by the
well owner. However, as shown in the attached diagram, by design there
is no continuous cement column throughout the entire wellbore.
Approximately 20 hours prior to the catastrophic loss of well
control, Halliburton had completed the cementing of the ninth and final
production casing string in accordance with the well program.
Following the placement of 51 barrels of cement slurry, the casing
seal assembly was set in the casing hanger. In accordance with accepted
industry practice, as required by MMS and as directed by the well
owner, a positive pressure test was then conducted to demonstrate the
integrity of the production casing string. The results of the positive
test were reviewed by the well owner and the decision was made to
proceed with the well program.
The next step included the performance of a ``negative'' pressure
test, which tests the integrity of the casing seal assembly and is
conducted by the drilling contractor at the direction of the well owner
and in accordance with MMS requirements. We understand that Halliburton
was instructed to record drill pipe pressure during this test until
Halliburton's cementing personnel were advised by the drilling
contractor that the negative pressure test had been completed, and were
placed on standby.
We understand that the drilling contractor then proceeded to
displace the riser with seawater prior to the planned placement of the
final cement plug, which would have been installed inside the
production string and enabled the planned temporary abandonment of the
well. Prior to the point in the well construction plan that the
Halliburton personnel would have set the final cement plug, the
catastrophic incident occurred. As a result, the final cement plug was
never set.
Halliburton is confident that the cementing work on the Mississippi
Canyon 252 well was completed in accordance with the requirements of
the well owner's well construction plan.
Thank you for the opportunity to share our views.
The Chairman. Thank you very much.
I just note for all Senators we're in the middle of a vote.
I guess we're halfway through a vote. So we will plan to keep
the hearing going. If Senators want to go ahead and vote and
then return to ask their questions, they're encouraged to do
that.
Let me start with some questions. Mr. Probert, you say in
one of your last statements there that you understand the
drilling contractor proceeded to displace the riser with
seawater prior to the planned placement of the final cement
plug. Is that standard operating procedure?
Mr. Probert. That is an operating procedure which is
commonly used, yes.
The Chairman. There's no safety problem in doing that as a
normal matter?
Mr. Probert. What that effectively does is it reduces the
density of fluid in the riser, and as a result of that reduces
the hydrostatic head which is bearing down on the wellhead.
Other than that, that's the primary issue associated with that
process.
The Chairman. But I would have thought that you would want
as much pressure in the well, downward pressure, as possible
until you had that plug in place. Am I wrong about that?
Mr. Probert. No, there's no question that the hydrostatic
head would have been reduced during the course of that process.
But it is a process which is undertaken prior to the setting of
the final cement plug.
The Chairman. Let me ask just a very general question about
data. I think you make reference to the need to recreate the
daily log of activities that occurred on the rig. I think that
was your comment, Mr. Probert. Is all of the data that was
available on the rig prior to the explosion, is all of that
information--has it been preserved and is it information that
is being made available to the government investigators at this
time, Mr. McKay?
Mr. McKay. As I understand it, there's quite a bit of data
that was located on a remote server from the rig onshore. That
data has been preserved. All data, everything that we can get
our hands on and turn over, is being turned over, yes.
The Chairman. All right.
Mr. Newman, is that your view as well?
Mr. Newman. There would be some amount of written data that
would have been on the rig at the time of the event, and
obviously that data is no longer available to us. But whatever
was transferred electronically or sent in to our offices prior
to the event is being preserved and provided to the government.
The Chairman. Did you have a remote server that was
capturing this data away from the rig, just as Mr. McKay
indicated BP did?
Mr. Newman. The only distinction I would draw, Senator, is
that BP's data would have been real-time leading up right to
the sequence of events that transpired. Our data, there is some
delay in the replication of our data, so our operational data,
our sequence of events, ends at 3 o'clock in the afternoon on
the 20th.
The Chairman. Mr. Probert, do you have that, all that data
preserved?
Mr. Probert. Yes, all that data has been preserved and it
has been made available as requested.
The Chairman. One of the issues that is going to be focused
on probably when we have Secretary Salazar next week is whether
there were efforts made to improve or to strengthen the safety
requirements for this type of drilling operation that MMS made
that were not successful, that industry resisted. Are there any
aspects of this that you're aware of, Mr. McKay, where the MMS
was urging additional safety precautions to be taken that the
industry was not in compliance with?
Mr. McKay. No, I'm not aware of any. Some people have
referenced a letter that went in to comment to the MMS about
safety regulations where we were providing comments as to the
nature and prescriptive nature of the regulation.
We suggested that performance standards should be set,
companies should be made to adhere to those performance
standards. So we made recommendations on how we thought
regulations could be made better. But we have not submitted
anything that would try to slow down or limit safety
regulations.
The Chairman. Mr. Newman, do you have any knowledge of
circumstances where your company or industry more generally has
been resistant to efforts by MMS to impose stricter safety
requirements?
Mr. Newman. Senator, I would draw a distinction between
discussions with the regulatory authorities and regulations. We
participate in those discussions when the area or topic being
discussed would have specific application to our business or
where we would have expertise that we could bring to bear on
those discussions.
When the regulations are passed, we adopt the regulations
and we stand in full compliance with those.
The Chairman. Mr. Probert, did you have a comment on this?
Mr. Probert. No, just to say that we also work closely with
the API and the MMS in developing standards for certain
processes which are undertaken.
The Chairman. Thank you all.
Senator Murkowski.
Senator Murkowski. Thank you, Mr. Chairman.
I might just note that in reading through the testimony of
each of the three of you--and this was alluded to by Senator
Menendez--that he suggests that there's this transference of
liability or finger-pointing. I have stated that there's going
to be plenty of time to try to figure out who is to blame, who
is at fault. That will go on, and I think we appreciate and
recognize that.
You have suggested, Mr. McKay, that as the owner and
operator of the Deepwater Horizon rig that Transocean--you're
not suggesting that that liability is there, but you're
transferring it. Mr. Newman is suggesting that it's not the BOP
at all. You're very clear about that in your testimony. You say
that's not the root cause, and that in fact we should be
looking to some of the things that could cause the catastrophic
failure, the casing, the cementing. Then Mr. Probert takes it
all the way back around to the well owner here, at BP.
I would suggest to all three of you that we are all in this
together, because this incident is affecting, will have impact
on the development of our energy policy for this country. If we
can't continue to operate and convince people that we can
perform safely, then not only will BP not be out there, but the
Transoceans won't be there to drill the rigs and the
Halliburtons won't be there to provide for the cementing. So we
figure out how we make this happen together.
Mr. McKay, I want to ask you some questions about what's
happening right now. We've been watching with fascination this
containment dome and whether it's going to work. It's not
encouraging and it's very disappointing to so many who were
hoping it would be able to contain some of that. We're now
talking and watching the ongoing effort with drilling the two
relief wells, but recognize that that's 2 months off.
We're now discussing the top-kill, but that too is a couple
weeks off. In the mean time, we've got volumes that are--we're
not entirely certain exactly how much is coming up on a daily
basis.
The issue with the dispersants. I would like to understand
from you whether or not we have the supply of dispersants that
we need, whether we are getting them out there, not only at the
surface but at the seabed, in a manner that is aggressive. When
the Exxon Valdez incident happened, we delayed with some
critical methods that we could have perhaps contained, whether
it was burning or dispersants. I'd like to think that there has
not been any delay. The dispersants at the seabed have been
held off until some further testing came about. Can you give me
some assurance that we're moving aggressively to try to break
up as much as we possibly can?
Mr. McKay. Yes. To answer pretty quickly, we've got two
levels of dispersants that we're utilizing. One is at the
surface through multiple sorties flown every day that the
weather permits, and that's been very successful and impactful,
I think, so far. We have also been testing--
Senator Murkowski. Do you have enough of the dispersant?
Mr. McKay. Yes. What we've done is we've worked the supply
chain such that NALCO, our chemical supplier, can supply 75,000
gallons a day sustainably. That amount of dispersant should
cover the amount we're using at the surface on the water, as
well as what we hope to do, is more subsea injection.
We've just done a 2-hour. The third test on subsea
injection for dispersant was yesterday. It ended at 4:40 a.m.
this morning, I believe. EPA is making absolutely sure that the
correct monitoring is in place and will be in place, and we
hope to be getting approval pretty soon for further
dispersants.
Senator Murkowski. Mr. McKay, do you know if this is the
first time that EPA has done these testings at these deepwater
levels, testing the dispersants for safety and effectiveness?
Mr. McKay. I believe--I believe this is the first use at
5,000 feet and the first test at 5,000 feet.
Senator Murkowski. It stuns me to think that we know that
we need to utilize dispersants in the event of a spill and yet
we haven't put in place the testing necessary. We've probably
lost days here where we could have been acting while we wait
for the testing to play out, which is more than just a little
bit frustrating there.
Let me ask you, Mr. Probert. You have--your written
testimony, and you've just repeated, indicates that the final
cement well plug wasn't yet placed prior to the blowout. This
is contrary to certain media accounts out there. So the
question is why is that significant. I want to make sure that I
am clear. The well--was the well in fact cased and completed
when the blowout occurred?
Mr. Probert. There are certainly some conflicting reports
in the media, and I can confirm that the final cement plug was
not set. As we heard in the testimony this morning, the concept
of multiple barriers is very important in any given well. That
plug would have been the final barrier before the well would
have been temporarily suspended, as was the plan, for
completion at a later date.
Senator Murkowski. So I know that we've got a vote that
we've got to get off to, but just one question. What sorts of
tests were conducted? What kind of maintenance logs are in
place for the cement work on the well? Do we have all that?
Mr. Probert. In actual fact there is no direct test that
was performed on the cement itself. However----
Senator Murkowski. Do you usually do a direct test?
Mr. Probert. The direct tests were to be performed on the
cement. It would be something called either a temperature log
or a cement bond log. That's the only test that can really
determine the actual effectiveness of the bond between the
cement sheath, the formation, and the casing itself.
Senator Murkowski. Then when is that typically conducted?
Mr. Probert. That is conducted after two prior tests which
are conducted. The first test is a so-called positive pressure
test, which is conducted to test the integrity of the casing
itself. The second test is a so- called negative test, which is
designed to test the integrity of the casing hanger seals, or
the seal assembly, which contains the casing.
Senator Murkowski. Were both of those tests conducted?
Mr. Probert. Those tests were performed, though I can't
comment as to what the information was relating to either of
those tests.
Senator Murkowski. Why can't you comment?
Mr. Probert. Because we do not have data associated with
both of those tests.
Senator Murkowski. Will you be able to gain that data?
Mr. Probert. There is information on the positive test,
though I do not believe that there is information available
from our data stream on the negative test.
Senator Murkowski. But is it fair to say, though, that
somebody has that?
Mr. Probert. I'm afraid I can't comment. It's certainly not
collected on our servers. I would have to defer on that
particular point to these gentlemen.
Senator Murkowski. It would seem to me, Mr. Chairman, that
we'd want to know whether or not the tests were conducted and
then what the results of those tests were. That seems to be
pretty key to what could have taken place.
Mr. Probert. I think that everyone is working very hard to
make sure that the data is made available so a reconstruction
of events can take place, so that determination can be made.
Senator Murkowski. Mr. McKay or Mr. Newman, do you have
that data?
Mr. McKay. I have not had a chance to review any data. I
know it's all being gathered. I hope that we do.
Senator Murkowski. You do believe you have it?
Mr. McKay.T1 I believe there should be some data, at least
from interviews, if not physical data from the servers, digital
data. So that will be a large part of the investigation, to
understand that sequence.
The Chairman. We're going to take a short recess until we
can return from these votes. We'll just stand in recess a few
minutes.
[Recess from 12:03 p.m. to 12:13 p.m.]
Senator Shaheen[presiding]. Thank you all for coming back
to order. We will go ahead and resume, and other members of the
committee will arrive shortly.
I missed some of the questioning, so if I'm covering
territory that's already been covered please let me know. I
think, to you, Mr. McKay, one of the things that I have found
troubling and I know that, in talking to others, they are also
concerned, is that there didn't seem to be an emergency plan in
place that could address how to deal with the spill once it
happened.
I know that there's a lot of investigating relative to what
actually happened, but, as you said or someone from BP said,
this was a spill that was unthinkable, but once it happened the
strategy around the containment dome seemed to be not a plan
that had been thought through in any significant way prior to
the accident.
So I guess I would like to ask, what kinds of measures BP
has had in place to address this sort of a spill and why did it
take the actual spill before the company came up with the idea
of the containment dome and had tested that to see how it might
work?
Mr. McKay. As far as spill response, the industry and I
think BP is very similar to the rest of industry in this
regard, the spill responses have heretofore concentrated
primarily on dealing with oil at the surface and dealing with
the spill, which I think sits under the national contingency
plan, One Gulf, and then the BP and MMS-approved spill response
plan, which I think has worked foundationally really well, and
it's been spooled up and it's the largest effort that's ever
been undertaken.
The point you bring up is about subsea intervention. We've
not dealt with a situation like this before. There are--
obviously, it's a specifically difficult situation in 5,000
feet of water. This fluid type is extremely difficult as well.
I think after this is under control and thought about in
hindsight, there will be some ideas about how to make the
subsea intervention response better. I think we're learning
right now as we go.
So I think that is something that needs to be looked at.
Senator Shaheen. Maybe each of you could answer: How much
research and development does your company do on deepwater
spills, and is this an area where there should be more focus?
Right now can you quantify how much money is being spent on
that kind of R and D to address deepwater spills, if anything?
Mr. McKay. I cannot quantify how much is being spent. We
work with government agencies, but I cannot quantify how much.
Senator Shaheen. Are you--is BP doing research in that
area, on how to respond to deepwater spills?
Mr. McKay. We have worked very hard on our spill response.
As I said, I think what we're learning here is subsea
intervention capability is something that needs to be looked at
further.
Senator Shaheen. Mr. Newman.
Mr. Newman. Transocean is not currently engaged in any
research and development with respect to deepwater oil spills.
Senator Shaheen. Mr. Probert.
Mr. Probert. Halliburton's focus really has revolved to
this point around the intervention of wells which require some
kind of remedial activity, either a relief well or some other
kind of activity associated with that.
Senator Shaheen. Are any of you aware of anyone in the
industry who is researching on how to handle deepwater spills,
or anybody in universities, for example? Is there anybody in
the industry, first of all?
Mr. McKay. I think the industry has a lot of knowledge
about handling deepwater interventions. But the question is in
the specific situation. We are dealing with fluids and depth of
water that hasn't been dealt with before in actuality. So what
we're doing is utilizing the industry experts all across the
world. We've got 160 companies working on this, as well as
government agencies.
I really do think what we learn from here is going to
impact the industry and how we ought to do this.
Senator Shaheen. I appreciate that, and I think we all
understand the enormous response and the commitment that BP now
has to try and respond to this accident. I guess my question
really is should we not be more proactive about recognizing
that when we're drilling at these depths that, despite all of
the precautions, that there is the potential for this kind of a
disaster and therefore having research under way that would
show us how to respond in case of a disaster is something that
we ought to figure out how to do? You can take that as a
statement rather than a question.
The Chairman [presiding]. I guess the normal routine is to
go back and forth. Senator Sessions, did you have questions?
Senator Sessions. Yes, thank you, Mr. Chairman.
The matters we're dealing with are exceedingly important.
If we don't produce oil off our shores, we'll be importing oil
that was produced somewhere else in the world. We do it today.
Diving for the reserves on our Outer Continental shelf is
important to our economy, it is important to jobs, and it is
important to our Nation's ability to be competitive.
But it needs to be done safely. Again I will say that maybe
we have become a bit too complacent.
To follow up on the chairman's comments, first let me
follow up on Senator Shaheen's question. It is a bit odd to me
that no one had considered prior to this incident that we would
have a spill of this magnitude and that industry did not have
the technology readily deployable to address the situation so
I'll ask you, Mr. McKay. Immediately after this blowout
occurred and we begin to see the leaks, the idea came that we
needed a cofferdam, a containment mechanism that could go over
the leak and take the oil out. That took several weeks to
construct.
Why had something like this not been constructed, and why
were these kinds of ideas not thoroughly examined prior to
diving in deepwater and under these unusual circumstances?
Mr. McKay. This situation is extremely, as you may imagine,
extremely hard to predict, the specifics of the situation. What
we have in this case is we have a blowout preventer that didn't
work, for whatever reason. We don't know why. We've got the
lower marine riser package still on top of that blowout
preventer. The emergency system disconnect, which we believe
was hit on the rig, did not activate the blowout preventer or
release that disconnect. So we've got a disconnect connected on
top of the blowout preventer and a riser coming off the top of
that.
Then that impacts what solution we have to use to address
the problem. So this situation where we've got a lower marine
riser package that hasn't come off and a riser bent over at the
top of it and along the seabed, that's extremely difficult to
predict, impossible to predict that.
So the intervention activity that we're doing has been
focused on trying to get that blowout preventer actuated and
shut. That's not been successful so far.
Senator Sessions. All I was asking basically was shouldn't
you have anticipated that these kind of things could occur, and
that this kind of cofferdam would be needed, and shouldn't we
have some already constructed or at least the designs tested?
Mr. McKay. I think what I would say, as we learn from this
incident we're going to have to understand what type of
capability we will--I think it's difficult to have predicted a
cofferdam would have been needed. But I think we're going to
have to look back and see what is needed.
Senator Sessions. The Wall Street Journal had an article
today regarding the removal of the mud. First I'll ask you, Mr.
McKay: Did BP direct that the reverse procedure should be
undertaken and ask the Minerals Management Service to alter the
normal requirements and to displace the mud before the plugging
operation began?
Mr. McKay. I've not read that article, so I can't comment
directly. I do know that the investigation----
Senator Sessions. You work for BP?
Mr. McKay. I do work for BP.
Senator Sessions. All right. But it said, according to a
worker, BP asked permission from Minerals Management Service to
displace the mud before the plugging operation, final plugging
operation, had begun, which mud weighs about, what, 50 percent
more than water. As the heavy mud was taken out and replaced by
the much lighter seawater, quote, ``that's when the well came
at us, basically,'' the worker said.
Mr. McKay. I'm not familiar with the individual procedure
on that well. The investigation is going to look at every piece
of the procedure, the directives, the decisions, and the
processes that were used, and that investigation is under way.
So I have not had a review of that yet.
Senator Sessions. Mr. Newman, what would be your answer?
What do you know--and I would ask you to tell us what you know.
This is an important question. Do you know whether BP made that
decision or did Transocean make that decision?
Mr. Newman. Because BP are the operator of the well and BP
are the permitholder and BP have the relationship with the MMS,
if there was a discussion between somebody and the MMS about
whether or not it was appropriate to proceed in a particular
fashion, that conversation would have taken place between BP
and the MMS.
Senator Sessions. Mr. Probert, I'll ask you what you know
about that situation.
Mr. Probert. I concur with Mr. Newman's view.
Senator Sessions. Not his view, but what do you know?
Mr. Probert. We have no knowledge of that discussion.
However, if a discussion took place it would be with the
leaseholder and the MMS.
Senator Sessions. What knowledge do you have about a
decision being made to remove the mud before the plug was
finished?
Mr. Probert. The only information that we have, that it was
part of the well program.
Senator Sessions. But it's an unusual thing, was it not?
Mr. Probert. I cannot say that it's not a procedure that
has been utilized--not utilized previously. It is a process
which has been undertaken previously. I'm afraid I can't tell
you how many times.
Senator Sessions. But it would not be the normal procedure,
would it not? Yes or no, normally?
Mr. Probert. It is a procedure which has been used on
multiple occasions in the Gulf of Mexico.
Senator Sessions. Would it be used less than 10 percent of
the procedures?
Mr. Probert. I'm afraid I am not in a position to comment.
Senator Sessions. You are in this business, are you not?
You're under oath. I'm just asking you a simple question. What
percentage in your best judgment is it that they remove the mud
before the final plug is put in?
Mr. Probert. I do not know, Senator.
Senator Sessions. Is it less than 50 percent?
Mr. Probert. I do not know, Senator.
Senator Sessions. You don't know?
Mr. Probert. I do not know. The obligation for that
decision lies between the leaseholder and MMS, and that's the
discussion----
Senator Sessions. I didn't ask about that. I asked you what
the procedure normally.
Do you know, Mr. Newman.
Mr. Newman. I couldn't be able to--I wouldn't be able to
quantify the percentage of wells that are handled in this
particular manner.
Senator Sessions. This article indicates it's unusual. Are
you aware of any time that this has been done before?
The Chairman. Could you withhold until we get to another
round?
Senator Sessions. I'm sorry, I'm over time. Thank you.
The Chairman. Thank you, Senator Sessions.
Senator Landrieu.
Senator Landrieu. Thank you very much.
As you can imagine, since this has happened I've been down
to the State on every occasion that I can get there. Just as
late as yesterday, I was visiting with elected officials and
fishermen that are extremely concerned about what's actually
happening on the ground today, as you can imagine.
My first question is to BP, because this is the question,
Mr. McKay, that I get more than any other question: Will BP
pay? Let me ask it in this way. It's my understanding that you
are the lease operator, that you're the responsible party under
the 1990 Act. It is also my understanding that if you're found
to be grossly negligent you can--will automatically be pressed
by the law to exceed the $75 million liability cap. But my
question is, if you're not found to be grossly negligent, is BP
prepared to pay the full extent of real economic damage, not
just to the individual businesses, but to parishes and other
government entities that are expending huge amounts of money to
try to contain this industry?
Mr. McKay. We've been very clear. Tony Hayward, our CEO,
has been very clear, and we are going to pay all legitimate
claims, all legitimate claims.
Senator Landrieu. Define ``legitimate,'' please, for us?
Mr. McKay. Substantiated claims. I can't define the term.
Here's the intent. The intent is to be fair, responsive, and
expeditious. As to the $75 million that you mentioned, we think
that we're going to exceed that, obviously, and that is
irrelevant. So we have been very clear we're going to pay the
claims and the entire resources of BP are behind this.
Senator Landrieu. Mr. Chairman, I may announce, because I'm
happy that we made this step yesterday, but at least for the
small businesses--and there are many, small and large, affected
by this catastrophe along the Gulf Coast--that the Small
Business Administration yesterday has made clear that on an
individual basis the 6,000 small business disaster loans that
are still pending in the same area from the last disasters we
had can be deferred and new loans can be given until these
claims can come full circle, because the last thing we want to
do is for a region that has been hammered by storms and other
disasters, is to have this be another economic disaster for the
people of this region. So knowing that gives some confidence.
My next question, Mr. Newman, is to you. Are you the
largest drilling operator in the world, and if not who is
larger than you and what rank are you?
Mr. Newman. Senator, we are the largest offshore drilling
contractor.
Senator Landrieu. Can you speak right into the mike,
please.
Mr. Newman. We are the largest offshore drilling contractor
in the world.
Senator Landrieu. To your knowledge, has a blowout of this
magnitude in terms of volume spilled in an uncontrolled fashion
for this length of time ever happened in the offshore waters in
the United States or anywhere else, to your knowledge?
Mr. Newman. The only incident that comes to my mind,
Senator, is the Ixtoc well in Mexico, which I believe happened
in the 1970s.
Senator Landrieu. Do you know how deep that well was? Do
you have any recollection?
Mr. Newman. I have a vague recollection that that operation
was conducted from a jackup, so it would have been shallow
water.
Senator Landrieu. I think, Mr. Chairman, for the record,
that incident, which is well documented, was in shallow water.
The Montara incident that was referred to by my colleague from
New Jersey was in 200 feet of water. This is in 5,000 feet of
water, 18,000 feet deep.
Now, given that, what are the regulations for these ultra-
deep wells that you can just comment briefly on that give our
people confidence that this deep drilling can be done safely?
Obviously it has, but it wasn't in this case. Is there anything
that you can offer that shows what you as the primary driller
in the world? Do you call special meetings? Do you have special
requirements? Did you not anticipate that this could happen?
Mr. Newman. With respect to the applicable regulations,
which have to do in our case with specifically the blowout
preventer, the regulations in the U.S. require two control
stations on the rig, and in fact on the Deepwater Horizon there
were three control stations. The regulations require that you
have three ram preventers and one annular preventer, and in the
case of the Deepwater Horizon the rig was fitted out with five
ram preventers and two annulars, so in excess of the
regulations.
The regulations require that there be an independent means
of activating the BOP, and in the case of the Deepwater
Horizon, in addition to manual operation from the rig, the BOP
system on the Deepwater Horizon was fitted out with two
automatic response systems and an ROV intervention system. So
in terms of satisfying and in fact far exceeding the
regulations with respect to the blowout preventer, we certainly
comply.
Senator Landrieu. Thank you, Mr. Chairman.
The Chairman. Thank you.
Senator Wyden.
Senator Wyden. Thank you, Mr. Chairman.
Mr. McKay, there have been with BP a series of horrific
accidents over a number of years. Again and again, major safety
problems, problems that have resulted in hundreds of millions
of dollars in fines being paid by your company, settling
criminal charges. In each case, as far as I can tell--and I've
looked back at the explosion at the Texas City refinery, the
fire at the Whiting refinery, the violations at the Toledo
refinery, the failure to maintain the pipeline system on the
North Slope--the company always says the same thing. I want to
have your reaction to this because I think we've all said that
we understand that the specific cause for the Deepwater Horizon
disaster isn't known, but this sure fits in my view a pattern,
a pattern of serious safety and environmental problems at BP.
The company always says the same thing after one of these
accidents: We're going to toughen up our standards, we're going
to improve management, we're going to deal with risk. Then
another such accident takes place and we have yet more finger-
pointing.
So my question to you is, why hasn't BP been able to change
its corporate culture and end this pattern of accidents?
Mr. McKay. In 2005 and 2006, you mentioned some incidents
that were extremely serious, extremely serious. I believe we
are changing this company. I believe it's being changed to its
core. Our CEO, Tony Hayward, in 2007 took over the reins. His
single mantra has been: Safety and compliant operations.
We are changing this company. We've put in management
systems that are covering the world in a consistent and
rigorous way----
Senator Wyden. But tell me, if you would, what management
systems you put in that would have taken all possible
precautions against this kind of problem? Because it seems to
me I'm hearing about reports of various things that others in
the industry are doing, various kinds of computer models and
the like that they test. What specifically have you done to put
in place changes that reduce the likelihood of these kinds of
accidents that BP has a history of being involved in?
Mr. McKay. I believe our operating management system in the
Gulf of Mexico is as good as anyone. I can't point to any
deficiencies to point out to you. The investigations are
obviously going to be important in terms of if there was
something missed. I know of nothing that points me in a
direction that we have deficiencies in our operating management
system.
Senator Wyden. With respect to the changes that you have
put in since 2007, in 2007--I'm looking now at a comment that
Tony Hayward made as Chief Executive: ``Our operations failed
to meet our own standards, the requirements of the law. We're
going to improve risk management.'' These are just quotes that
he has made.
You're telling me you know of no deficiencies, but I'm
still not clear what changes the company has made since those
comments from Tony Hayward, because we know for a fact--what's
on the record? We can't yet pinpoint the cause of this
disaster. Everybody stipulates that. But we sure know that
there has been a pattern of problems at BP, and I'm trying to
get you to tell me what changes, concrete changes, have been
implemented since Tony Hayward made that statement in 2007.
Mr. McKay. We have several things that have been made. One,
we have a board-level safety and environmental and ethics audit
committee that is very active. We have a group organizational
risk committee that has been installed by Tony Hayward at the
very, very top. We have an operation management system that has
been standardized and is being put in place in every single
location in the world, and I believe is very, very rigorous and
very complete.
I'll acknowledge we've had issues and we've got to change
some of the areas of the company. I don't see any----
Senator Wyden. What has to change at the company? You said
you've got to make changes at the company. That's what I want
to hear about.
Mr. McKay. As I said, we're installing operation and
management systems everywhere in the world that are consistent,
diligent, and rigorous, to a higher standard than they have
been in some places in the world. I would say in the Gulf of
Mexico this has been an area where we've been extremely safe.
We have a tremendous track record of compliance as measured by
the MMS.
What I'm telling you is I have not been aware of or seen
deficiencies in the Gulf of Mexico systems.
Senator Wyden. I'm still not clear what changes have been
made after Tony Hayward said there were going to be changes
made.
Mr. McKay. It gets down to the agenda and the culture of
the company.
Senator Wyden. It sure does, and the culture of this
company is that there's been one accident after another.
Mr. McKay. The agenda has been clear. I believe we've
progressed a long way. We're not finished. We'll never be
finished.
Senator Wyden. I'll hold the record open on this point, but
I would like to see an itemized list of what has actually been
changed since Tony Hayward said that there are going to be
changes. You told me that there were no deficiencies. I'm not
clear on what's been changed.
Thank you, Mr. Chairman.
Senator Menendez. Thank you, Mr. Chairman.
Mr. McKay, we're sitting in the very same hearing room
where the hearings were held to investigate the sinking of the
Titanic. At that time we had a ship supposedly so
technologically advanced that it could not sink. Here we have a
rig that the industry has told us so many times is so
technologically advanced it supposedly could not spill.
Unfortunately, despite these claims, both technological marvels
ended in tragedy.
When I look at this tragedy, it's not only, of course, the
loss of those lives, which we lament, and the enormous damage
being done to the Gulf region. But I look at BP's response
here. On page 7-1 of BP's exploration plan for the lease sale
in question, BP certified that it had the, quote, ``capability
to respond to a worst case discharge resulting from the
activities proposed in our exploration plan.'' What I see is a
company not prepared to address a worst case scenario, but a
company that is flailing around trying whatever they think of
next to try to deal with the worst case scenario that you had
the ability to do.
You seem to be jumping from action to action, which we all
hope and pray can work. But that doesn't give me a sense of a
plan that was ready to be implemented in a worst case scenario.
Isn't that a fair criticism?
Mr. McKay. Let me explain what we are doing. We have
multiple parallel efforts at every level of this crisis. One,
in the subsurface we're drilling 2 relief wells. Two, we're
working on the subsea, on the blowout preventers. We've got 8
remote operated submarines around that blowout preventer trying
to get it to actuate.
We've got containment and subsea systems that are being
developed to deal with a very unique and specific situation. We
have aggressive spill response on the surface that is part of
the national contingency plan, One Gulf, and the BP response
plan, which I think has worked well. We're fighting it
aggressively offshore. We are using dispersant, in situ burn,
and skimming. We're protecting the shorelines with boom. We are
prepared to clean up and deal with anything that gets to shore,
and we're prepared to deal with the economic impacts.
Senator Menendez. I appreciate your litany of what you're
attempting to do, but one seems more incredible than the other.
First we had this four-story dome, trying to lower it into a
spill, which I guess you couldn't all foresee the
crystallization that might take place. Then you have the oil
dispersants, which in and of themselves is a challenge. Then
I'm hearing of a plan that is called a ``junk shot,'' whereby
garbage such as shredded tires and golf balls would be shot
down the blowout preventer to clog the leak.
I mean, I don't get the sense that you are truly prepared
for the certification you made to the Interior Department of a
worst case scenario. I get the sense you're making things up as
you go along.
Let me go to--I know that my colleague asked you about
liability questions and you said all legitimate--``legitimate
claims,'' that was your word? Yes. I don't get the sense that
you are necessarily quantifying what a legitimate claim is or
defining what a legitimate claim is, which makes me nervous.
Do you have a problem with raising the liability cap in the
legislation that I proposed to $10 billion?
Mr. McKay. I have not had a chance to look at any
legislative proposals and understand----
Senator Menendez. Very simply, you have a $75 million
liability cap. You say that you're going to pay all legitimate
claims. I think it's pretty reasonable to understand that $75
million is not going to reach the amount that is going to be
conducted in damages here. So do you have a problem? You earned
$5.6 billion in the last quarter alone. Do you as an industry
have a problem with the $10 billion cap?
Mr. McKay. As I said, I can't comment right now on the
legislation or the $10 billion. What I can comment on is I've
made it clear and our CEO has made it clear we are going to pay
all legitimate claims. The $75 million does not come into
account. We've been as clear as we can be on this incident
about that.
Senator Menendez. Are you going to shift those legitimate
claims to the liabilities that we see in your testimony, when
you talk about Deepwater Horizon and when you talk about--they
talk about Halliburton? Is this going to be a liability chase
where all of those people harmed are going to have to wait and
file and go, as they did on the Exxon Valdez, all the way up?
Is that what you intend to do?
Mr. McKay. We have made it clear we're going to deal with
the people and the communities that are affected directly.
We've made that clear.
Senator Menendez. One last question, Mr. Chairman.
BP's lease for Deepwater Horizon received a categorical
exclusion from the NEPA process last year. Why would this rig
not require the oversight and regulation mandated under our
country's most important environmental legislation? How could
such an inherently dangerous activity not undergo through the
environmental review of that process?
Mr. McKay. You're asking me?
Senator Menendez. Yes.
Mr. McKay. The exclusion you're referring to is essentially
when the lease sale is done there's an environmental impact
statement that's done with the lease sale. Then there are grid
environmental assessments that are done for areas within that
lease sale. Those are utilized as the environmental assessments
for wells that are drilled in those areas, and that's what we
use, and that's a common industry practice, and it's also
used--it's MMS regulated.
Senator Menendez. It seems to me it's a common industry
practice we've got to review.
Mr. Chairman, I have a series of other questions. I'll
submit them for the record.
The Chairman. Very good.
Senator Udall.
Senator Udall. Thank you, Mr. Chairman.
Mr. Newman, I want to direct a question your way. I've
heard reports that your workers were instructed to sign energy
and liability waivers as soon as they returned to shore, in
some cases before they were even able to see their families.
Were employees given an opportunity to consult with their
doctors or lawyers before signing these waivers? I have a copy
of one of them here I'd like to ask to be included in the
record.
The Chairman. We'll include that in the record.
Senator Udall. If so, why was there a rush here? The
accounts certainly have me concerned. I think they would
concern other members of the committee as well.
Mr. Newman. Senator, if I could put that question into
context. Immediately after the disaster happened on the rig, we
mobilized a team of Transocean people to Louisiana to begin
preparations for the arrival on shore of those crew members.
That preparation included providing them with clothing, because
many of them were awakened from their beds when the explosion
happened. It included providing them with food and water. It
included providing them with medical care because they had left
the rig under such extreme circumstances. Many of them did not
have identification with them, so it included consultation with
the TSA to make sure that as those crew members were put on
planes the following day to reunite with their families that
they would have no identification issues with the TSA at the
airport.
It included a preliminary gathering of facts. The statement
that you're referring to is an exercise in our attempt to
facilitate that. So we asked our workers if they had any
information related to the cause of the event, and we asked our
workers if they were injured. I don't think it's appropriate to
characterize those statements as waivers.
Senator Udall. We'll leave that judgment as the
investigation unfolds. It certainly left, I think, in many
people's mouths a sour taste and questions about what the
intent was of Transocean, whether it was to support the workers
or defend Transocean from potential liability.
Let me move to all three of you. I know each of you are
conducting your own investigations. I'm just curious, will the
results and the analysis, as well as any testimony you generate
in your companies, will that be available to the Federal
Government and to the Congress? Mr. McKay, I could start----
Mr. McKay. Yes, it will.
Senator Udall. Mr. Newman.
Mr. Newman. I think this event has such an impact on our
business and our industry that it behooves us to share
everything we can with respect to understanding exactly what
happened, so that we can prevent it from ever happening again.
Senator Udall. Mr. Probert.
Mr. Probert. Similarly, I will add that we will of course
share any information and hopefully use it as a basis for
ensuring that the industry is safe and environmentally sound as
we look forward into the future.
Senator Udall. If I might, with a final question directed
to all three of you, I had the great honor to chair the
subcommittee in the House, Space and Aeronautics, so I'm very
familiar with the difficulty of working in extreme conditions
such as those that NASA works in. NASA's had its share of
disasters and its experiences emphasize that accidents, while
they can be few and far between, that doesn't make them any
less catastrophic or tragic.
It seems unfathomable to me that we didn't have any focus
on technological improvements in spill cleanup technology since
the Exxon Valdez more than 20 years ago. We've expanded our
technology to get to these resources, but we seem to be using
20th century technologies to respond to what's happened. Again,
I welcome your comments from each three--all three of you.
Mr. McKay. I think the improvements are in the deployment
and usage of some of the technology, as well as what we were
talking about earlier, subsea dispersant, which I think is a
new potential technology that could be, No. 1, effective, and
No. 2, use a lot less dispersant for the impact it may have. So
I think there is quite a bit of new technology being developed.
Senator Udall. Mr. Newman.
Mr. Newman. Senator, under the provisions of the
International Maritime Organization, IMO, which we are
obligated to comply with because we operate marine assets,
every one of our rigs is required to have a shipboard oil
pollution plan, which deals with the chemicals and the
materials that we use on the rig, such as diesel for our
engines, cleaning products, and things like that. I would tell
you that we work very closely with the providers of those
materials to ensure that our shipboard oil pollution plans are
as robust and comprehensive as possible to deal with the
materials we have on our drilling rigs.
Senator Udall. Mr. Probert.
Mr. Probert. As I may have mentioned earlier, our primary
focus as a company has revolved around intervention of existing
wells that may be challenged as a result of some kind of well
control issue. That is where most of our technological effort
has been focused.
Senator Udall. I know Senator Shaheen--and, Mr. Chairman,
I'll just finish with this comment--asked a similar question.
Her understanding, and mine, was that nobody's really doing any
research to address deepwater spills. I think that stands out
as obviously something that needs to be pursued with real vigor
here in the short term and immediately.
Mr. Chairman, thank you.
The Chairman. Thank you.
Senator Cantwell. Thank you, Mr. Chairman.
I want to follow up on my colleague Senator Landrieu's
question that was talking about how we're going to pay for this
and the full cost. I understand, Mr. McKay, you said that you
would pay all viable claims. What are ``viable claims''? Are
you talking about a legal standard of whether you are found
with gross negligence in the case?
Mr. McKay. No, no. Let me explain. What we've said is we
want to be very responsive and direct with claims, with people
and businesses that are affected. We've been clear that we want
to stand behind that. We mean it. That's our intent.
The only reason we say ``legitimate'' is that claims have
to have some basis, some substantiation. We've been clear about
the $75 million, that that's not going to be a limit for this.
Let me just tell you what we are paying. We've paid--I
don't know the number as of this morning, but as of yesterday
it was closing on 1,000 claims, mostly fishermen who are out of
work, mostly folks who don't have cash to make ends meet
because they're out of work, and that's what we're trying to
concentrate on right now.
So I think we're being very responsive with that.
Obviously, we've got to make sure that we keep getting better
and better at it. But so far I think we're meeting the local
needs, and we'll go from there.
Senator Cantwell. How are you determining a viable claim?
I'm assuming a lot of the discussion this morning, or at least
it sounds like BP is saying maybe the fault lies with the rig
operators, and Transocean is saying maybe the fault lies with
improper cementing by Halliburton, and Halliburton seems to
imply that Transocean may not have properly operated the drill
fluid right.
So is that an ongoing part of the discussion? Are you
saying any legitimate claim incident to this will be paid by
BP?
Mr. McKay. Let me be really clear. Liability, blame, fault,
put it over here. We are dealing with we are a responsible
party. Our obligation is to deal with the spill, clean it up,
and make sure the impacts of that spill are compensated, and we
are going to do that.
Senator Cantwell. No matter if that's $14 billion?
Mr. McKay. I'm not going to speculate on numbers. All we've
said is that every legitimate claim and the full resources of
BP are behind this.
Senator Cantwell. There is cost estimates by experts now
that say it could be as high as $14 billion. So are you saying
that BP will pay all claims, even if----
Mr. McKay. I'm saying we will pay all legitimate claims,
yes.
Senator Cantwell. Mr. Chairman, I think that that is the
question before us, is this is a panel and discussion about how
we're going to move forward from this, and I think it reminds
me of when we had in this very hearing--I guess you have this
room for big investigative hearings. The last time I think I
was in here was when the Challenger blew up and we had a big
discussion about what was the fault behind the Challenger
system, and we found out that there were system failures. Yes,
there was freezing of the temperature in the O-ring, but we
found that there were many, many other problems that led to
that. I think that's what we're going to find here as well,
that there is too cozy a relationship with MMS and the
oversight, and that the industry and the oversight of the
various things my colleagues have been talking about with the
blowout preventers and other things, that there is much more
oversight and detail that needs to be made here.
But I think the question that's going to remain is how are
we going to clean up $14 billion of oil spill, or whatever the
number is, and that we really have an accounting here of how
that is going to work, because we have to move forward with
preserving that area.
So, Mr. Newman or Mr. Probert, I don't know if you have any
comments about that, because I definitely feel like the case
from defense is being built here this morning.
Mr. Newman. I guess I would agree with the way Mr. McKay
has characterized it. Liability and culpability and ultimate
responsibility for the events that resulted in the incident are
one thing, and responding to the economic impact of the event
is another thing. I think the way Senator Landrieu has
explained it coincides with my understanding, which is that as
the lease operator and the well owner that falls on BP.
Mr. Probert. I would simply add that well owners, drilling
contractors, and service providers like ourselves really do
work very closely to try and create a safer environment to
develop oil and gas resources, and it's in the interests of all
of us and the industry in general and the Nation's energy
security that we learn from this and continue to take those
learnings and build them into our future operating procedures
and technology.
Senator Cantwell. For one opinion, what I've learned from
this situation is I think it's time for us to diversify off of
oil.
So thank you, Mr. Chairman.
Senator Landrieu. Mr. Chairman.
The Chairman. Senator Landrieu wishes to put something in
the record. Go right ahead.
Senator Landrieu. Thank you. I just have some documentation
about the value of the Louisiana seafood industry, which is
more than $3.4 billion I just want to put in the record. Thank
you, Mr. Chairman.
The Chairman. I think all Senators, at least all who are
here, have had a chance to ask one round of questions. Let me
now start on a second round. Senator Murkowski, did you have
questions?
Senator Murkowski. I'll be very brief, Mr. Chairman.
Mr. McKay, there was an Associated Press article that
referenced the comprehensive blowout plan for the Deepwater
Horizon. The article states that BP had not filed a specific
comprehensive blowout plan and indicated that it was not
required to file a scenario for potential blowout because it
didn't trigger certain conditions cited in the MMS report. The
article goes on to speculate whether or not--if there had been
a specific, a site-specific plan, it would have helped to
facilitate a quicker response.
Can you comment on this? Was there in fact an exemption?
did you file a site-specific comprehensive blowout plan?
Mr. McKay. I believe that is in reference to the exclusion
that's granted by the MMS for specific wells in a given area.
Senator Murkowski. What is the exclusion?
Mr. McKay. When the lease sale is conducted, an
environmental impact statement is done, which is a very
extensive environmental study. That's one for the lease sale.
Then there are grid environmental assessments that are done in
the areas within that lease sale. That environmental assessment
in the EIS are utilized as the environmental assessments for
drilling wells, and you essentially apply for exclusion because
they've already been done, and that's what we did. That's
industry practice and MMS practice.
Senator Murkowski. Do you believe that it would have helped
BP, Transocean, Halliburton, in this instance had there been a
specific blowout prevention plan?
Mr. McKay. I don't think it's called a ``blowout prevention
plan,'' though maybe I'm wrong.
Senator Murkowski. I'm going off an AP article, so I
apologize for that.
Mr. McKay. I don't--I honestly don't believe that--we filed
our scenarios around this well and the environmental
assessments that were done impact the spill response plans, and
those are clear, those are worked with the MMS. They're very
extensive. I don't think the individual well location within an
area, an environmental assessment would have made any
difference. I don't think so. I don't know that for a fact, but
that's what I believe.
Senator Murkowski. But you maintain that because MMS did
not require it there was no necessity from BP's part in doing
anything?
Mr. McKay. I don't believe so. I believe we were under
normal industry and MMS practice.
Senator Murkowski. Then a question to all three of you, and
it's the same question: Given where we are after the Deepwater
Horizon incident, have you ordered any additional safety
measures or modified procedures for operation outside the U.S.
based on this incident?
Mr. McKay. Yes. We have requested that all of our rig
contractors provide an update on any modifications that may
have been made to blowout preventers. We have instituted some
incremental testing on blowout preventers worldwide and have
sent notices to all of our businesses around the world that are
doing deepwater drilling. We have also communicated with the
MMS everything we understand about that, and they are
incorporating what we're learning here into new and--I think
new testing--well, I don't know what will come out, but new
ideas around how to ensure safety around these types of
incidents.
Senator Murkowski. Let me ask you. You've indicated that
you're asking for information on any modifications. Do you have
any reason to believe that the Deepwater Horizon BOP was
modified?
Mr. McKay. During our intervention work in the last 3 weeks
we have--we do have reason to believe that it was modified. I
don't know the extent of those modifications.
Senator Murkowski. Mr. Newman, can you speak to that,
because I'm assuming if there were any modifications that would
have been done by Transocean?
Mr. Newman. They were in fact done by Transocean, Senator.
They were performed in 2005. They were done at BP's request and
at BP's expense.
Senator Murkowski. What were those modifications?
Mr. Newman. As I mentioned in a comment earlier, the BOP on
the Deepwater Horizon is fitted with five ram preventers on the
rig. The modification made in 2005 converted one of those ram
preventers, the lowermost ram preventer, from a conventional
wellbore sealing ram preventer to a BOP test ram. So it allowed
for more efficient testing of the BOP.
Senator Murkowski. OK, but why would that modification have
been requested?
Mr. Newman. Because testing a BOP interrupts the well
construction process, it does have an impact on the efficiency
of the operation, and to the extent that we can make that
process more efficient it has clear benefits in terms of the
overall time required to drill the well.
Senator Murkowski. Have you ever done such a modification?
Mr. Newman. Yes, ma'am.
Senator Murkowski. Multiple times? I mean, is this standard
on deeper water wells?
Mr. Newman. On rigs that have blowout preventers that are
fitted with a number of ram preventers that exceeds
requirements, we have converted rams to BOP test rams.
Senator Murkowski. Have there been any incidents with those
where the BOPs have been modified?
Mr. Newman. There have been BOPs modified. There are no----
Senator Murkowski. Right, but have there been any
incidents?
Mr. Newman. No incidents related to that modification.
Senator Murkowski. Let me ask you the same question. Within
your interests outside the United States, have you requested
any additional safety measures or modification procedures as a
result of this incident?
Mr. Newman. Senator, we operate a consistent standard of
policies and procedures, maintenance practices, and operating
practices across the Transocean fleet throughout the world, and
in the aftermath of this incident until we find out what may
have contributed to the cause of events, we have not changed
any of that standard Transocean system of policies and
procedures around the world.
Senator Murkowski. Mr. Probert.
Mr. Probert. Other than to alert our organization around
the world to this incident, firstly. Second, we also operate to
a standard set of procedures, and it's certainly our
expectation that as we learn from this incident there may well
be some changes in process, procedures, or other approaches
which we would then implement as part of our global standard.
But that will wait, obviously, on the findings of the analysis
of the root causes of this incident.
Senator Murkowski. Thank you, Mr. Chairman.
The Chairman. Let me just ask a question here before going
on to everybody else. One of the issues the first panel talked
about was the known limitations on the ability of these shear
rams to function under certain circumstances where there's
joints in the drill shaft that they're expected to cut and that
sort of thing. Do you agree that the shear ram cannot cut these
tool joints, and if so is that not a serious design flaw in the
BOP? Mr. Newman?
Mr. Newman. I agree with the statement that there are
tubulars that are used in the well construction process that
the shear rams are incapable of shearing.
The Chairman. Do you agree that that's a serious design
flaw in the BOP?
Mr. Newman. I do not support the contention that that's a
design flaw in the BOP, because the industry recognizes those
limitations and there are strict operating procedures in place
to account for the inability of the BOP--the inability of the
shear rams to shear every tubular that might run through the
BOP.
The Chairman. Those are operating procedures that would
apply to your personnel operating that BOP?
Mr. Newman. Yes, our personnel understand what those
operating procedures are.
The Chairman. Do you believe they were followed in this
case?
Mr. Newman. I do.
The Chairman. So you think that, even though the
operating--the proper operating procedures were followed, the
failure of the shear rams to stop the explosion or the blowout
from occurring was not a problem with--it's not a problem with
the design of the BOP, it's not a problem with the way the BOP
was operated or managed? How do you explain the fact that this
BOP was not able to prevent this blowout?
Mr. Newman. The operating procedures that I referred to
earlier, Senator, would apply to the processes our people use
when they are manipulating pipe in the BOP or through the BOP.
So running drill pipe down to the bottom to put the drill bit
on the bottom of the hole to continue to drill, pulling that
drill bit back up through the BOP, running casing down through
the BOP to progress a casing operation.
The operating procedures I was referring to that are people
are following relate to situations where our people are in
control of the pipe that is going through the BOP.
The Chairman. They were not in control at the time this
accident occurred?
Mr. Newman. I believe there are--without knowing today,
Senator, what's inside the BOP, it is entirely possible that
there is material inside the BOP that would have come from the
wellbore, not from the Transocean people on the rig.
The Chairman. From the wellbore itself?
Mr. Newman. Yes, sir.
The Chairman. Let me go ahead with Senator Landrieu.
Senator Landrieu. Thank you, Mr. Chairman.
Let me just, since I've got a minute, put some additional
information into the record which I think will be important.
The commercial fishermen in the Gulf of Mexico harvested 1.27
million pounds of fish and shellfish, generated $659 million in
revenue. 40 percent of the Nation's commercial seafood harvest
is from the Gulf of Mexico, and that's one of the industries at
risk.
We also, of course, have commercial boat captains whose
boats have been pushed into their slips and their harbors,
unable to operate. So the amount of economic damage continues
to mount.
I am encouraged, Mr. McKay, by what you say, that there
will be no limit to legitimate true economic damage, because it
will be substantial, whether it's $14 billion or something up
to that amount. We don't know. It's important for the Gulf
Coast, who has leaned forward in this production, for the
people of the Gulf Coast, from Florida, even though they don't
allow drilling, all the way over to Texas, that do allow
drilling, to know that BP and the operators will be there to
protect their economic interests. We want to make sure that the
government agencies like the Small Business Administration,
like Commerce, like other industries, can step up and help us
through this difficult time.
But because my eyes are leaning forward even despite this
accident, I want to ask a question about ultra-deep drilling.
According to Offshore Magazine, there are currently about 120
deepwater sites drilling in the world today. Is that
approximately accurate, 120 are drilled every year, deepwater?
That's my information. Do any of you dispute that?
[No response.]
Senator Landrieu. OK, approximately 120 are being drilled
as we speak. What is required internationally to make sure that
this doesn't happen? Or maybe I should ask the question this
way: Are the requirements, Mr. Newman, which you say you
exceeded, that MMS requires for this deepwater drilling--are
our requirements the highest internationally or are there other
nations that require higher safety standards than what MMS is
requiring of us to do this kind of exploration and production?
Mr. Newman. The regulatory regimes--we operate around the
world and we operate in about 30 countries. The regulatory
regimes vary from very minimal to quite stringent. I would
characterize the U.S. as closer to the end of being quite
stringent in terms of very well-described rules as it relates
to----
Senator Landrieu. But we're not the most stringent?
Mr. Newman. I think there are aspects of the regulatory
regime in places like the U.K. and Norway that might be
characterized as being more stringent than the United States.
Senator Landrieu. But you're also testifying that there's
some places where the regulations could be quite lax?
Mr. Newman. There are areas where we operate with very
little regulatory oversight. But as I mentioned a minute ago,
our policies and procedures, our maintenance standards, our
equipment standards, our operating practices, are consistent
throughout the world regardless of the regulatory environment
we're operating in.
Senator Landrieu. So you would say that the requirements
that--and this committee has a great deal of responsibility in
this regard as the oversight for Interior and MMS. You would
say that the standards that we promote in this committee and
here in this Congress have international implications, because
what we require of you to drill in the Gulf you normally would
follow those around the world? So it's important for us to
everything this right; would you say that's true or not?
Mr. Newman. I think because of the opportunity that the
administration and the Congress have to influence the way
things are done in the U.S., it does have international
implications.
Senator Landrieu. Let me ask you this, Mr. Newman. You just
recently, your company, acquired another drilling operator,
which I think caused you then to become the largest in the
world. My question--some of my constituents might be thinking,
are you too large to be safe? What kind of parameters are in
place to make sure that--and you did, too, Mr. McKay. You've
acquired other companies to become a quite large operator.
What could you say, Mr. Newman, to give us any confidence
that when you acquired this most recent acquisition--if you
doubled in size, did you double your safety operators? Could
you comment about that?
Mr. Newman. You're referring to the combination between
Transocean and GlobalSantaFe----
Senator Landrieu. Yes.
Mr. Newman [continuing]. Which took place in November 2007.
That, the combination of those two companies and the
integration of such a large work force, I think in hindsight
went extremely well, and I believe that was due in large part
to the strong operating cultures and strong safety cultures
that both of those organizations had. Both organizations prided
themselves on a focus on safety, a focus on customer
satisfaction, and a focus on the quality and the performance of
our drilling equipment.
So I do not think it had an impact on our ability to
operate safely.
Senator Landrieu. Mr. Chairman, in this instance it may or
may not have, but I do think that this committee has to give
some focus to the merging of some of these companies and to the
extent in which they operate to make sure that they have
consistent policies throughout.
Thank you.
The Chairman. Senator Sessions.
Senator Sessions. Just to follow up a bit on the removal of
the mud, the Wall Street Journal says that it is common
practice to pour wet cement down into the pipe. The wet cement,
which is heavier than drilling mud, sinks down through the
drilling mud and hardens into the plug. Then the mud is removed
after the plug is in place.
In this case, a decision was made shortly before the
explosion to perform the remaining tasks in reverse order,
which is to take the mud out first. Mr. Lloyd Heinz, Chairman
of the Department of Petroleum Engineering at Texas Tech,
agrees that this is an unusual approach. ``Normally you would
not evacuate the riser''--that's the pipe from the seafloor to
the rig--``until you were done with the last plug at the
seafloor,'' he said in an interview.
So I guess I'll ask you, Mr. McKay: Do you agree that
normally you would not do that?
Mr. McKay. I don't have specific knowledge of the procedure
for this well, whether reverse circulating was part of the
procedure or not. That will be part of the investigation.
Senator Sessions. Mr. Newman, would you comment on that? Is
that normal? Would you agree with Mr. Heinz?
Mr. Newman. It is normal practice to remove the drilling
mud from the riser prior to disconnecting the riser from the
well, and that would have been part of the logical sequence of
events. Now, I don't have any specific knowledge with respect
to the actual order of the events as they took place on Tuesday
evening the 20th, because our record of events ends at 3 p.m.
Senator Sessions. Would you agree, Mr. Probert, that that
was normal?
Mr. Probert. I don't know the details. I certainly don't
want to be nonresponsive to your request, Senator, concerning
your earlier question, which was is this normal procedure and
is this undertaken on a regular basis. That's something that I
don't have knowledge of today, but I would certainly be more
than willing to sort of gather, attempt to gather that
information for you should it be helpful to you.
Senator Sessions. Mr. McKay, had the mud not been removed
first and replaced by seawater, would that have made the
blowout more or less likely in your opinion?
Mr. McKay. I don't know. I don't know.
Senator Sessions. Mr. Newman.
Mr. Newman. I think that calls into question the actual
mode of failure, and until we can determine that I think any
hypothesis about the impact the mud in the riser might have had
I think is premature.
Senator Sessions. Mr. Probert.
Mr. Probert. Indeed, we really need to gather the
information, reconstruct the sequence of events, to be in a
position to establish exactly what took place.
Senator Sessions. Mr. Newman, I suppose you've worked for a
number of companies and drilled for them. I'm intrigued by my
colleague's $10 billion cap on the strict liability
legislation. I think it's something we should consider. But I
understand there could be a result that it would favor only the
super-major oil producers because the sum of money is so large.
Do you think that significant increase to the liability caps
could keep competitors out of the business, smaller companies?
Would that be good policy?
Mr. Newman. I'm not sure I want to comment on public
policy. But I believe the Congress ought to take into
consideration all of the potential ramifications, including the
commercial ramifications of such a policy.
The Chairman. Senator Cantwell, did you have additional
questions?
Senator Cantwell. I did, Mr. Chairman. I know we're trying
to wrap this up, but I wanted to go back to Mr. McKay if I
could because I think this issue of who pays for this cleanup
is so critically important.
Mr. McKay, just going back to you, although I'm happy to
have the other witnesses chime in here. It literally was just
last year that the last parts of the Exxon Valdez cleanup were
settled. I mean, it was a 20-year process. It went all the way
to the Supreme Court.
So Mr. McKay, are you saying you're going to avoid that by
paying legitimate claims in advance? I know you can't stop
anybody from suing you, but are you saying you're going to pay
legitimate claims in advance of any court process?
Mr. McKay. We are paying legitimate claims right now, so
yes, I am. Obviously we can't keep from being sued, but yes, we
have said exactly what we mean: We're going to pay the
legitimate claims.
Senator Cantwell. So if it's a legitimate claim of harm to
the fishing industry, both short-term and long- term, you're
going to pay?
Mr. McKay. We're going to pay all legitimate claims.
Senator Cantwell. If it's an impact for a business loss
from tourism, you're going to pay?
Mr. McKay. We're going to pay all legitimate claims.
Senator Cantwell. To State and local governments for lost
tax revenue, you're going to pay?
Mr. McKay. Question mark.
Senator Cantwell. Long-term damages to the Louisiana
fishing industry and its brand?
Mr. McKay. I can't--I can't quantify or speculate on long-
term. I don't know how to define it.
Senator Cantwell. Additional troubles from depleted
fisheries and their recovery?
Mr. McKay. We're going to pay all legitimate claims.
Senator Cantwell. Shipping impacts?
Mr. McKay. Legitimate claims.
Senator Cantwell. Impacts on further drilling operations?
I'm talking about things now that were part of the Exxon
Valdez. I guess what I'm saying is I think the American people
are most anxious about this. I guess let me just go back. OPA
1990 set a framework, a process, that basically said: Here's
the liability and here's the framework. So we obviously only
have so much money in that. I know my colleagues think we're
going to raise that, but to make that retroactive is nearly
impossible.
So you're stepping up today at a hearing with probably the
best advice money can buy behind you, with PR and legal teams,
and I'm sure they're saying: Let's say that we're going to pay.
So I want to make sure that we really understand what you are
saying you are going to be committed to today, because the
long-term impacts of this is going to be for 20 years and we
cannot sustain this kind of behavior or cost, and I want to
make sure that we're getting full answers to the coverage that
you are really signing up for today.
Mr. McKay. I'm trying to give you as clear an answer as I
possibly can. We are trying to be extremely responsive,
expeditious, meet every responsibility we have as a responsible
party, and that means pay all legitimate claims. So that is our
intent. I can't speculate on every individual case, but I can
tell you this is not about legal words; this is about getting
it done and getting it done right.
Senator Cantwell. I hope so. Impacts to the pristine
beaches that we have in this area, those are legitimate claims?
Mr. McKay. Yes, as termed. If it impacts the beaches and
impacts commerce, yes.
Senator Cantwell. Mr. Chairman, I am one who hopes that we
never get into that situation where now we're into some court
debating about what is now a legitimate claim, because you're
making a big presentation here that you are stepping up to
these responsibilities. I hope that is true. I hope, Mr.
Chairman, that we will also go back on the legislation we've
already passed out of this committee that included an opening
up further of the Gulf and pass legislation to reconsider that.
I think this is clear evidence that the beaches of Destin don't
need to be subject to any more oil spill threats in the future.
I thank the chair.
The Chairman. Thank you very much.
If there are no other questions--do you have anything more,
Senator Sessions?
Senator Sessions. No. I thank Senator Cantwell for pursuing
that line of inquiry. I do believe there's some confusion
about--I've tried to look at the law on it. My understanding is
legally you still remain subject to all the normal trespass and
pollution laws of a State if you damage property or beaches. Is
that correct?
Mr. McKay. I don't understand the law in detail, but we'll
be subject to all laws for sure.
Senator Sessions. Essentially I would say this. The
provisions in the Pollution Act that provide for these damages,
strict liability damages, expressly--it is expressly stated in
the Act that that does not abrogate existing State law. So I do
feel like that that's part of it.
But I believe, again, your answer is you should do what's
right and compensate fully and not try to utilize technical
defenses that are not legitimate.
Thank you, Mr. Chairman.
The Chairman. Let me just thank the witnesses for their
testimony, indicate that if members have additional questions
they want to submit for the record they should do so by the end
of business tomorrow on Thursday. If you folks would be able to
respond to those in the next week, that would be appreciated.
Thank you all very much, and that will conclude the
hearing.
[Whereupon, at 1:22 p.m., the hearing was adjourned.]
APPENDIX
Responses to Additional Questions
----------
Responses of F.E. Beck to Questions From Senator Murkowski
Question 1. Can you describe your perspective in terms of your
observations of the regulatory environment and technological
improvements for offshore oil and gas over the years? Specifically, do
you observe that industry and government have been taking their safety
and environmental responsibilities more seriously, less seriously, or
about the same as OCS development has expanded into the deepwater?
Answer. Although I am not involved in the offshore business, my
observation is that safety and environmental concerns for deepwater are
taken very seriously by the vast majority of operators and service
companies. Development of technologies for deepwater have far outpaced
developments for OCS and onshore environments. However, in light of the
Deepwater Horizon disaster, I cannot help but think that the abilities
of regulatory agencies have not kept pace with the technological
developments associated with deepwater. I believe there needs to be an
expanded skill set and training matrix developed for regulators so that
they will be able to properly monitor and approve deepwater operation
plans.
Question 2. In the event of a large natural gas ``bubble'' hitting
the rig, are you aware of or would you favor requiring mechanisms to be
available where gas sensors and alarms could trigger an automatic
shutoff of any potential spark or flame source?
Answer. Using gas sensors in a ``smart'' manner to prevent an
explosion seems to me a very good idea. The ``smart'' part will need to
recognize that shutting down power at the wrong time can create many
other problems on the rig and potentially in the wellbore itself, so it
would be necessary to make sure the automatic shutoff would only occur
in a true emergency. In the normal course of drilling a well there are
numerous instances of gas being brought to surface that are not
emergency situations, so these normal occurrences would need to be
built into the ``smart'' system. All-in-all I like the concept.
Question 3. Can you describe the level to which the Deepwater
Horizon is in a situation where it is dependent on its BOP to avoid
catastrophic blowouts perhaps more than other rigs in shallower waters?
Answer. Actually, I consider deepwater drilling to be less risky in
terms of blowouts than OCS, or shallow water, operations. This is
because the BOP's are on the seafloor, and when correct designs and
procedures are in place, the gas and pressures are kept well away from
the rig and personnel. I think it is critical that everyone understands
that blowout preventer systems as designed today will never be able to
overcome poor well design or faulty operational decision making. The
blowout preventers fit into an overall well design. Drilling engineers,
and regulators, must understand how the BOP's are intended to be used
as a well control tool. I think that blowout preventer systems in a
subsea or deepwater environment are much more critical as a means to
protect the environment. As we have seen on the Deepwater Horizon,
there are limited subsea intervention methods for capping a subsea
blowout. On OCS operations there are many more tools, methods, and
techniques developed for controlling a blowout once it has occurred. It
is obvious that we need to develop new methods for intervention.
Response of F.E. Beck to Question From Senator Lincoln
Question 1. In media reports following this disaster, I keep
reading over and over again that certain devices and technologies being
discussed to stop the leak have never been used in water this deep. Do
you believe the depth of water presents more challenges in containing
the leak? Do you believe more testing, research and technologies are
needed to ensure the safety of deepwater and ultra-deep water drilling?
Answer. There are very few proven technologies for capping a subsea
blowout, partially because there have been so few blowouts in this
environment, but also because the deepwater environment is very
difficult to mimic in a controlled manner, so proving technology is
very difficult. There definitely needs to be a concerted effort made to
develop and test equipment, new technology, and procedures in a
realistically simulated deepwater environment. Industry, government,
and academia need to join in a consortium to create a research and
testing facility and think tank so that new and improved tools and
processes can be developed to allow continued safe and reliable
development of deepwater resources.
______
WilmerHale,
Washington, DC, June 11, 2010.
Hon. Jeff Bingaman,
Chairman, Committee on Energy and Natural Resources, U.S. Senate,
Dirksen Senate Building, Washington DC.
Re: Response to Chairman Bingaman's Correspondence Dated May 17, 2010,
to Mr. Lamar McKay, Chairman and President of BP America, Inc.
Dear Chairman Bingaman: I am writing on behalf of BP America, Inc.
(BP) in response to your May 17, 2010 correspondence to Mr. Lamar
McKay, its Chairman and President, in which you and your colleagues
requested responses to certain questions for the record in connection
with the U.S. Senate Energy and Natural Resources Committee's
examination of the incident in the Gulf of Mexico involving the
Deepwater Horizon oil rig. As part of BP's commitment to provide
information responsive to the Committee's requests in a timely manner,
we are providing the following responses to questions of the Committee,
which are highlighted below, including the documents identified by the
Bates range [BP-HZN-SNR00016959 to BP-HZN-SNR00019314]. To provide
responsive information in a timely fashion, BP has endeavored to
collect information and documents from some of the sources likely to
have relevant data and best able to provide it within the timeframe set
out by the Committee. This information supplements BP's earlier
production to the Committee on June 3, 2010 and represents current
understandings of these matters.
Included in this production are the following documents responsive
to the Committee's requests (b), (c), (d) and certain subparts of (f),
respectively, from your May 17 letter: (1) additional correspondence
between BP employees and the Minerals Management Service (MMS) related
to the Macondo well [BP-HZN-SNR00016988 to -89; BP-HZN-SNR00016991 to -
995; BP-HZN-SNR00017392 to -94; and BP-HZN-SNR00018153 to -75]; (2)
documents relating to the risk of an accidental release of oil or gas
at the Deepwater Horizon drilling rig or other offshore deepwater
drilling facilities; (3) additional reports of daily activity on the
Deepwater Horizon [BP-HZN-SNR00017395 to -8152]; and (4) well program
documents [BPHZN-SNR00016959 to -87; BP-HZN-SNR00016990; BP-HZN-
SNR00016996 to -7391; and BP-HZN-SNR00018176 to -80]. In addition, this
production includes documents responsive to elements of the document
requests embedded in the Chairman's several questions herein.
Responses of Lamar McKay to Questions From Senator Bingaman
Question 1. Please list all types of data from the Deepwater
Horizon operation now in BP's possession, and whether each item of data
has been made available without limitation to the Federal Government
investigators, and identify those investigators.
Answer. If the data has not been made available without limitation,
please state the extent and nature of any limitation. Please describe
the means by which data was transferred from the rig to BP data
collection facilities off of the rig. BP currently possesses the
following information recorded or measured by sensors on or from the
Deepwater Horizon for the Deepwater Horizon Mississippi Canyon 252 Well
#1 (MC252 #1) drilling operation. Except as noted, these data have not
been provided to any federal investigator. BP understands the request
as seeking data of the types listed and, on that basis, believes the
listing below is complete. However, reviews are continuing and BP will
supplement this response as appropriate.
(a) Wellbore data
Wireline logs and evaluation data.--This data for
the Deepwater Horizon was provided to BP by the contractor on a
CD after the April 20 incident.
Mud logs.--The Deepwater Horizon mud logs were
provided to BP on a CD by the contractor after the April 20
incident.
Logging While Drilling/Monitoring While Drilling
(LWD/MWD) logs.--The Deepwater Horizon LWD/MWD logs were
provided to BP by the contractor on a CD after the April 20
incident.
Wellbore Surveys.--The Deepwater Horizon surveys
were provided to BP on a CD by the contractor after the April
20 incident.
(b) Surface Data--(rig sensors that capture parameters such
as flow-in, flow-out, pit volume and pressures). This
information is real-time data that is provided to BP via an
internet site established by the contractor and on ASCII files
supplied by the contractor. This data was provided to the
Marine Board Investigation (MBI) Panel, on May 8 and May 21,
2010.
(c) Computer Analyzed Makeup Of Casing String Connections.--
This information is believed to have been provided to BP by the
contractor to BP after the April 20 incident.
(d) Blowout Preventer (BOP) Digital Test Data.--This data for
the Deepwater Horizon was provided electronically to BP by the
contractor.
(e) Cement Pumping Data Report Data.--This data was provided
to BP by the contractor after the April 20 incident.
Question 2. Please list all contacts with and witness statements
from eyewitnesses to the Deepwater Horizon operation including but not
limited to the crew present on the rig at the time of the explosion.
Please state whether these statements and witnesses have been made
available to the Federal government investigators without limitation,
and identify those investigators. If they have not, please state the
extent and nature of any limitation.
Answer. The following BP employees were eyewitnesses to the
incident and present on the scene at the time of the April 20 Deepwater
Horizon incident: (a) Shane Albers, (b) Robert Kaluza, (c) Lee Lambert,
(d) Patrick O'Bryan, (e) David Sims, (f) Brad Tippetts, and (g) Donald
Vidrine. Each of these witnesses provided a witness statement to United
States Coast Guard personnel following the April 20 incident. Messrs.
Vidrine and Kaluza also prepared a written statement shortly after the
April 20 incident. BP understands that employees of other companies
also provided statements to the Coast Guard. Pursuant to a
confidentiality order issued by the Coast Guard, BP is prohibited from
distributing this information.
Question 3. Please describe BP's data and document retention policy
as it relates to material relevant to the Deepwater Horizon Macondo
well operation. Please state when the last data from the Deepwater
Horizon was received by BP.
Answer. Since the Deepwater Horizon incident occurred on April 20,
2010, BP has taken steps to preserve documents that are potentially
relevant to the Macondo well operation, the April 20 incident, and the
subsequent discharge of hydrocarbons into the Gulf of Mexico. For
example, BP has sent a Legal Hold Order to over 3,500 BP employees
identified as possible custodians of potentially relevant documents.
The Legal Hold Order directs recipients to preserve all potentially
relevant documents, including those relating to the April 20 incident;
the response to that incident, including investigation, containment and
clean-up efforts; any damages resulting from the incident; the
exploration of, and drilling operations at, Mississippi Canyon Block
252, where the Macondo well is located; and the Deepwater Horizon rig
and equipment, including their design, safety features, maintenance and
operation; among many other matters. The Legal Hold Order explains that
the ``documents'' that must be preserved include all potentially
relevant electronically stored information (including electronic mail,
and other electronic databases or files, such as Word, Excel, and
PowerPoint), paper documents, video and other recordings, and physical
objects, among other things. The Legal Hold Order instructs that all
potentially relevant documents must be preserved, and calls for the
immediate suspension of any document retention policies that could
cause any such documents to be discarded or no longer retained.
Based on presently available information, the surface data from the
Deepwater Horizon was transmitted continuously by the contractor,
including on April 20, to a website to which BP had access that
disclosed real-time data of certain parameters, and stopped being
transmitted at 21:49 CT on the night of April 20, which is the last
data received from the Deepwater Horizon.
Question 4. Please describe the number of BP company employees at
the rig site at the time of the explosion as well as their job title
and function, education, and years of experience working offshore. Also
please state the number and job titles of all BP employees involved in
the well planning team for the Macondo well, including the original and
all subsequent well plans. Please include information for each employee
as follows: job title, education, and years of experience.
Answer.
(a) The following BP employees were on the Deepwater Horizon
at the time of the April 20 incident:
1. Shane Albers. Mr. Albers' job title is Subsea Project
Engineer Challenger. Mr. Albers' job function is focused on
delivery of subsea tie-back projects to new or existing hosts.
Mr. Albers holds a Bachelor of Science in Mechanical
Engineering and a Bachelor of Business Administration in
Finance, Economics, and General Business from Texas Tech
University, earned in 2009. Mr. Albers has 1 year of experience
working offshore.
2. Robert Kaluza. Mr. Kaluza's job title is Well Site
Leader. Well Site Leaders are stationed on the rig site to
evaluate whether the well is constructed to BP design
specifications. Mr. Kaluza holds a Bachelor of Science in
Business Administration and Finance from University of North
Dakota, earned in 1973. He also has a Masters of Business
Administration from the University of Alaska, earned in 1986,
and a Bachelor of Science in Petroleum Engineering from the
University of Alaska, earned in 1995. Mr. Kaluza has 35 years
of experience in the oil and gas industry and over 8 years as a
Well Site Leader, including nearly 2 years of offshore
deepwater working experience.
3. Conward Lee Lambert. Mr. Lambert's job title is Well
Site Leader Trainee. Mr. Lambert's job function is to develop
the necessary skills and competency needed to work as a
deepwater Well Site Leader. Mr. Lambert holds a Bachelor of
Business Administration in Computer Information Systems from
Texas State University, earned in 2002. Mr. Lambert has 2 years
of experience as a Well Site Leader, and 6 months of offshore
drilling training experience.
4. Patrick O'Bryan. Dr. O'Bryan's job title is Vice
President for Drilling and Completions in the Gulf of Mexico.
Mr. O'Bryan's job function is to manage drilling and
completions for BP's Gulf of Mexico business. Mr. O'Bryan holds
a PhD in Petroleum Engineering from Louisiana State University,
earned in 1988, a Master of Science in Petroleum Engineering
from Louisiana State University, earned in 1985, and a Bachelor
of Science in Petroleum Engineering from Mississippi State
University, earned in 1983. Mr. O'Bryan has 22 years of
experience in the oil and gas industry including over 5 years
of deepwater drilling experience.
5. David Sims. Mr. Sims' job title is Operations Manager
for Exploration & Appraisal in the Gulf of Mexico. Currently,
Mr. Sims' responsibilities include managing operations for the
relief well being drilled by Transocean's DDIII rig, and
previously, for exploration and appraisal in the Gulf of
Mexico. Mr. Sims holds a Bachelor of Science in Mechanical
Engineering from Texas A&M University, earned in 1982. Mr. Sims
has 28 years of experience in the oil and gas industry,
including 4 years of deepwater drilling experience.
6. Brad Tippetts. Mr. Tippetts' job title is Subsea Wells
Engineer Challenger. Mr. Tippetts' job function is to plan and
oversee all activities that fall under the category of wellhead
conversion for exploration/appraisal wells to development well.
Mr. Tippetts holds a Bachelor of Science from University of
Utah, earned in 2006 and has 3 years of experience working
offshore.
7. Donald Vidrine. Mr. Vidrine's job title is Well Site
Leader. Well Site Leaders are stationed on the rig site to
evaluate whether the well is constructed to BP design
specifications. Mr. Vidrine holds a Bachelor of Science in
Agronomy from McNeese University, earned in 1970. Mr. Vidrine
has 32 years of experience as a Well Site Leader, including 25
years of experience working offshore.
b. Numerous BP employees provided input and guidance in the
planning, design, and/or execution of the MC252 #1 well. To
date we have identified the following as individuals who
provided such input and/or guidance:
1. David Sims. Identified above.
2. Mark Hafle. Mr. Hafle's job title is Senior Drilling
Engineer. Mr. Hafle holds a Bachelor of Science in Petroleum
Engineering from Marietta College. He has 23 years of
experience in the oil and gas industry, all working for BP. He
has 17 years of experience in deepwater drilling.
3. Brett Cocales. Mr. Cocales' job title is Senior Drilling
Engineer. Mr. Cocales holds a Bachelor of Science in Petroleum
Engineering from Montana Tech, earned in 1986 and a MBA from
University of Montana earned in 1989. He has 24 years of
experience in the oil and gas industry, including nearly 10
years in deepwater drilling.
4. John Guide. Mr. Guide's job title is Wells Team Leader.
Mr. Guide holds a Bachelor of Science in Chemical Engineering
from the University of Pittsburgh, earned in 1980. He has 30
years of experience in the oil and gas industry, including 10
years in deepwater drilling.
5. Ian Little. Mr. Little's title is Vice President of
Drilling and Completions for North Africa. Mr. Little holds a
Bachelor of Science in Civil Engineering from University of
Strathclyde (Glasgow, Scotland), earned in 1981. He has 28
years of experience in the oil and gas industry, including 8
years of deepwater experience in West of Shetlands (UKCS),
Egypt, and the Gulf of Mexico.
6. Donald Vidrine. Identified above.
7. Robert Kaluza. Identified above
8. Ronald Sepulvado. Mr. R. Sepulvado's job title is Well
Site Leader. He has a Bachelor of Science in Agricultural
Business from Louisiana State University, earned in 1971. He
has 33 years of experience as a Well Site Leader, all in
offshore drilling.
9. Murry Sepulvado. Mr. M. Sepulvado's job title and
function is Well Site Leader. He has 32 years experience as a
Well Site Leader, all in offshore drilling.
10. Gregg Walz. Mr. Walz's title is Drilling Engineering
Team Leader, Gulf of Mexico Exploration & Appraisal. Mr. Walz
holds a Bachelor of Science in Petroleum Engineering from New
Mexico Institute of Mining and Technology, earned in 1980. He
has 30 years of experience, including 14 years of experience in
offshore drilling of which 6 have been in deepwater.
11. Brian Morel. Mr. Morel's job title is Drilling
Engineer. Mr. Morel holds a Bachelor of Science in Mechanical
Engineering from Rice University, earned in 2005. He has 5
years of experience in the oil and gas industry, including 2
years experience in deepwater drilling.
Question 5. Were there any incentives or bonus programs available
for your company employees or employees of any of your contractors in
effect at the time of the Deepwater Horizon accident? If so, please
describe the terms on which bonuses or incentives were available.
Answer. BP had no incentives or bonus programs for any of the
employees of any of the contractors for the Deepwater Horizon.
Further, BP had no incentives or bonus programs for any BP
employees directly related to the Deepwater Horizon. BP employees,
including the BP employees who worked on the Deepwater Horizon, are
eligible for participation in the Variable Pay Program (VPP), which
creates the opportunity to receive additional compensation beyond the
employee's base salary. The amount of the variable pay award depends on
the combination of the employee's performance based on individual
objectives set at the beginning of each year and the performance of the
employee's Strategic Performance Unit (SPU) during the year. BP's Gulf
of Mexico (GoM) operations is the SPU for BP's employees involved with
the Deepwater Horizon. The variable pay award for such BP employees is
based on the overall performance of the Gulf of Mexico SPU as a whole,
and not on the performance of any individual drilling operation.
Question 6. Please state whether there was any active monitoring in
the Macondo well of the annulus (using downhole sensors) in the 20
hours preceding the accident? Were there any sensors in the borehole?
If so, please provide that data. Please also state whether it is
included in the data listed in response to Question #1.
Answer. Based on information presently available, during the 20
hours immediately preceding the April 20 incident, all active
monitoring was conducted using sensors at the surface, and not with
downhole sensors.
Question 7. Please state whether it is your intention to acquire
downhole data during the relief well drilling process, and if so state
the purposes for which you intend to use the data. Include in your
answer whether it is your intention to use such data to analyze the
integrity of the bottomhole or to get a better understanding of the
competence of the cement within the production liner and in the
annulus. Include in your answer whether HR2D seismic data has been or
will be acquired. Do you have or will you obtain any data indicating
any changes to the subsurface, both in terms of the existing Macondo
well and the geology surrounding the well following the well blowout?
Answer. BP has acquired high resolution two dimensional (HR2D)
seismic data during the relief well drilling process. The purpose of
collecting this data is to determine the presence of shallow hazards to
support the relief well drilling program and casing design. These data
were produced to this Committee on June 3, 2010 [BP-HZN-SNR00000007 to
-010]. In addition, BP currently intends to collect downhole data in
compliance with MMS requirements, as well as any other data necessary
to complete the drilling of the relief wells, including but not limited
to the following:
(a) MWD/LWD logging data. Monitoring while drilling and
logging while drilling data includes subsurface lithology,
directional surveys, wellbore pressures and temperatures, and
drillstring dynamics of the relief well while drilling. The
purpose of collecting this data is to ensure the relief well
achieves the objective of intersecting the MC 252 #1 well and
to comply with regulatory requirements.
(b) Drill cuttings from the 22'' shoe to total depth (TD).
The purpose of collecting this data is to allow for comparison
of the cuttings from the original well to aid in determining
the interval being drilled and to comply with regulatory
requirements.
(c) Mud Samples from the 22'' shoe to TD. The purpose of
collecting this data is to allow for geochemical analysis to
check for any potential oil from the original well.
(d) Base oil samples from the 22'' shoe to TD. The purpose of
collecting this data is to allow for geochemical analysis to
check for any potential oil from the original well.
(e) Magnetic Ranging data. The relative position of the
relief well with respect to the MC 252 #1 well will be
determined using magnetic measurements.
The primary purpose of collecting the data described above is to
enable the relief well's intersection with the MC 252 #1 well and for
pumping operations to stop the flow of the MC 252 #1 well and prevent
further flow. The collection of this data is not specifically intended
to analyze the condition of the bottomhole and/or quality of the
cementing related to the MC 252 #1 wellbore. Some of the data
collected, specifically the mud and base oil samples, may provide some
indication of changes to the subsurface, but it is not being collected
solely or primarily for this purpose. BP may collect additional data in
the future.
Question 8. Please provide a complete description of the activities
that were occurring on the rig within the last 12 hours of operation
prior to the accident, and complete copies of any documents or data in
your possession that reflect those activities. Include in your answer
information on the activities of each employee and whether there were
any visitors on the rig at the time. If so, what were the purposes of
their visit?
Answer. Investigations into the Deepwater Horizon incident are
ongoing. That said, BP is producing a copy of a presentation developed
by the team that is conducting BP's nonprivileged, internal
investigation, which includes a timeline of events covering certain
activities during the last 12 hours of operations [BP-HSN-SNR00018985
to -9032]. As noted in the presentation itself, not all information
contained therein has been verified, and its perspectives are subject
to further review in light of additional information or analysis. BP is
also producing the cement test reports referred to in response to the
Chairman's question No. 1. Documents reflecting activities during the
last 12 hours prior to the accident also are included among those
produced to this Committee on June 3, 2010.
BP employees Patrick O'Bryan and David Sims were visiting the
Deepwater Horizon at the time of the incident for a scheduled
leadership visit.
Question 9. Please state your current understanding of the timing
and possible causes of this accident, and whether you believe it was a
sudden catastrophic failure or whether there were warning signs in
advance of the explosion. If you believe there were warning signs,
please state what they were and why they were not acted upon. Include
copies of any and all data and documents in your possession relevant to
your answer.
Answer. Investigations into the Deepwater Horizon incident are
ongoing, including BP's nonprivileged, internal investigation intended
to address the topics posed by this question. That said, we are
producing a copy of the presentation made by BP's internal
investigation team (referred to in the response to the Chairman's
question No. 8) which tentatively provides information relevant to your
inquiry. Not all information contained within the presentation has been
verified, and its preliminary perspectives are subject to review in
light of additional information or analysis. BP's investigation is
continuing into the timing and possible causes of the incident and the
actions of those persons on the Deepwater Horizon prior to the April 20
incident.
Other documents responsive to this request include: (a) the
technical data described in response to the Chairman's question No. 1;
and (b) the documents produced to this Committee on June 3, 2010
detailing well construction details and daily operations on the
Deepwater Horizon in the period prior to the incident.
Question 10. You have testified that there were anomalous pressure
readings on the well in advance of the explosion. Please provide
specific information about these pressure readings, when they were
obtained, and what you believe they indicate, including any information
they provide to you regarding the possible causes of the explosion.
Please provide copies of any and all documents in your possession
relevant to these pressure readings.
Answer. BP's non-privileged, internal investigation into the
activities and events of the April 20 incident is continuing. Based on
information presently available, there were pressure readings on the
MC252 #1 well prior to the April 20 incident that on post-incident
review appear anomalous. BP's current understanding of these pressure
readings is outlined in the presentation being produced with this
letter (referred to in the response to the Chairman's question No. 8).
As noted in the presentation itself, not all information contained
therein has been verified, and the preliminary perspectives it reflects
are subject to review in light of additional information or analysis.
BP's investigation as to the potential connection, if any, between
these pressure readings and factors that may have contributed to the
April 20 incident is continuing.
Other documents responsive to this request include the data
(including surface data) described in response to the Chairman's
question No. 1.
Question 11. Please state how the decision was made regarding the
number of centralizers to be used in this well, and whether you believe
the number used is industry best practice. Were there changes made to
the original well plan and casing program that reduced the number of
centralizers? If so, please state whether you believe that was adequate
to maintain the integrity of the casing and cement program. Please
provide any and all data and documentation regarding the decision on
the number of centralizers to be used. BP's non-privileged, internal
investigation into the April 20 incident is continuing.
Answer. BP's present understanding is that the number of
centralizers used with the MC252 #1 well was selected based on the
judgment and experience of the drilling team who were involved with the
well design and execution and their understanding of the
characteristics of the MC252 #1 well. For the 9-7/8'' x 7'' production
casing, early plans called for six centralizers. As the cementing
design iterations progressed, the number of centralizers varied. Six
centralizers were run and believed in the judgment and experience of
the drilling team to be adequate to maintain integrity of the casing
and cement program. We are producing with this letter documents
responsive to the assessment of the number of centralizers used.
Question 12. Questions have been raised about the timing of
removing drilling mud from the Macondo well and replacing it with
seawater during the plugging and abandonment process. Please state the
point at which this operation began, whether this aspect of the
operation was performed in accordance with your instructions to the rig
operator, and whether there were changes in these plans during the
course of the well operation. Please state whether any employee of any
company involved in the rig operation expressed opinions on this
subject or disagreed with any aspect of the operation directed by BP as
the well operator. Please provide any and all data and documents
relevant to this operation including the original and any modified
plans for the plugging and abandonment operation.
Answer. BP's non-privileged, internal investigation into the
activities and events of the April 20 incident are continuing and
includes an analysis of the topics posed by this question. That said,
based on presently available information, the removal of drilling mud
and replacement with seawater on April 20, in preparation for temporary
abandonment, began at approximately 16:00 CST. Based on information
known to date, and its understanding of the facts, BP is not aware that
any of its employees expressed disagreement regarding removal of
drilling mud and replacement with seawater for MC252 #1 in preparation
for temporary abandonment.
BP is producing a copy of the draft presentation developed by the
team that is conducting BP's internal investigation (referred to in the
response to the Chairman question no. 8). A copy of the Temporary
Abandonment Permit approved by MMS on April 16, 2010 for the temporary
abandonment of the Macondo MC 252 #1 well bore, which sets out the
procedure approved by MMS for the temporary abandonment of the well,
and related documents were produced to this Committee on June 3, 2010
[BP-HZN-SNR00000011--BP-HZN-SNR00000994]. Other documents responsive to
this request include the data (including surface data) described in
response to the Chairman's question No. 1.
Question 13. Some have suggested that the absence of an acoustic
trigger device on the blowout preventer on this rig is a significant
factor in the BOP's failure. Please state your view of this, including
whether you think the BOP was triggered and failed to operate properly
or whether there was a failure of the trigger mechanism itself. Please
provide copies of any and all data and documents relevant to your
response.
Answer. BP's investigation is continuing, and no determination has
been made yet as to whether the absence of an acoustic backup control
system was a significant factor with respect to the Deepwater Horizon
BOP's performance.
The purpose of an acoustic backup control system is to provide back
up operation of critical BOP functions in an emergency. Although the
Deepwater Horizon did not have an acoustic backup control system, the
Deepwater Horizon was equipped with multiple emergency systems: (1) an
Emergency Disconnect System (EDS), (2) an automatic mode function
(AMF), or ``deadman,'' which activates when all hydraulic and
electrical power is lost, and (3) ROV intervention capability. If a rig
is equipped with multiple emergency systems, such as the Deepwater
Horizon, an additional acoustic backup control system may be
disadvantageous because it adds complexity to the hardware on the BOP
stack.
BP is continuing its investigation and has not yet determined
whether the BOP rams activated and closed either during the April 20
incident or subsequently.
Question 14. Testimony was received to the effect that the shear
ram of the blowout preventer was known to be unable to cut through
certain material in the well, including tool joints and possibly other
debris. Please state your view of this. If this is the case, explain
how in your view a blowout preventer can be considered a fail-safe
mechanism? Were there other mechanisms on this blowout preventer that
you believe would have overcome this problem? Are there other
technologies not used on this blowout preventer but available that may
have overcome this problem?
Answer. The 5-1/2'' drillpipe tube that was across the BOP stack at
the time of the incident was capable of being sheared and sealed by the
blind shear rams. It is known that the blind shear ram cannot shear the
tool joint of the 5-1/2'' drillpipe, and it is the responsibility of
the drilling contractor, which operates the drill pipe and in this case
was Transocean, to know the location of the tool joints in the BOP
during all operations. In the event that the blind shear rams need to
be shut and there are non-shearable components across the BOP stack,
Transocean has procedures to drop the components into the well and
allow the blind shear ram to be closed. There are no other mechanisms
available on the BOP stack for the Deepwater Horizon that would shear
the drillpipe tool joint. BP is aware that at least one manufacturer is
developing shear ram technology that can shear through the tool joint
for certain sizes of drillpipe, but such technology is not yet
commercially available.
Responses of Lamar McKay to Questions From Senator Murkowski
Question 1. Your testimony on the response efforts reflects that
evacuated workers were all debriefed on the incident as soon as was
possible. Please talk about who was conducting these debriefings,
whether they knew the right questions to ask, and what mechanisms your
company and the Unified Command had in place to transmit any timely and
useful information back to the team working to contain the leak.
Answer. Individuals who were on the Deepwater Horizon rig were
debriefed concerning the April 20 incident by the U.S. Coast Guard. The
Coast Guard personnel responsible for debriefing these witnesses would
be the most knowledgeable concerning the specific nature of the
questions asked, and any transmission of information contained in the
statements to the larger Unified Command.
Question 2. Can you describe the process for applying dispersants
to oil at the leak source--how is it done and have initial attempts
been encouraging?
Answer. The U.S. Environmental Protection Agency (EPA) and the U.S.
Coast Guard have authorized BP to use dispersants underwater at the
source of the Deepwater Horizon leak. Authorization followed a series
of trials with ongoing sampling and monitoring of dispersant
effectiveness and water column effects with Coast, Guard, EPA and other
agency supervision. BP is currently applying liquid dispersant (Corexit
9500) at the wellhead at the rate of approximately 10,080 gallons/day,
pursuant to a June 8, 2010 subsea dispersant application plan and
approval. BP is using ROV's to apply the dispersant to the escaping oil
at the source.
EPA has stated that, ``[p]reliminary testing results indicate that
subsurface use of the dispersant is effective at reducing the amount of
oil from reaching the surface.'' EPA has also said that ``what the
monitoring data indicates so far is that the underwater use of
dispersants is effective at breaking up the oil and, to this point,
does not seem to have had any significant impacts on aquatic life.
Using the dispersant underwater at the source of the leak also requires
far less dispersant to be applied.'' [May 24, 2010 Press Release by EPA
and Coast Guard].
All dispersant use is performed under the supervision of the EPA
and the Coast Guard. The current plan requires BP gradually to reduce
the amount of dispersants used at the site. As more oil is captured in
the riser, less dispersant is needed to treat oil in the water column.
EPA maintains a website dedicated to this topic which contains further
details and documentation regarding the use of dispersants in
connection with the incident, the associated ongoing monitoring
required by EPA, and detailed monitoring.\1\
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\1\ http://www.epa.gov/bpspill/dispersants.html
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Question 3. Law requires the responsible party to advertise how to
claim compensation for losses due to a spill. Can you describe this
process for the committee and viewers?
Answer. BP Exploration & Production Inc. (BPXP) has been designated
as a ``responsible party'' under OPA and, when addressing claims, will
be guided by the statute and implementing U.S. Coast Guard regulations
and guidance. BPXP will abide by the statutory and regulatory guidance,
and our intent is to be efficient, practical, and fair. Under OPA,
claimants may recover for the following categories of costs and damages
caused by an oil spill: removal costs, property damage, subsistence use
of natural resources, net lost government revenue due to injury,
destruction or loss of property or natural resources, lost profits and
earnings due to injury, destruction or loss of property or natural
resources, and net costs of providing increased or additional public
services.
As directed by Congress under OPA, BPXP will evaluate a claim in
the first instance. BPXP has hired ESIS, Inc. (ESIS)--a known leader in
the field--to assist in the handling of claims. ESIS is part of the ACE
Group of Companies, headed by ACE Limited. The ESIS Claims team
assisting BPXP has extensive experience with claims, including injury,
environmental and property damage claims. BPXP will work with ESIS, the
Coast Guard and other relevant stakeholders as necessary in making
decisions regarding specific claims. After the first month, claimants
will continue to receive any future payments electronically. The check
for the advance payment will be mailed or can be picked up at the
nearest BP Claims Center, the location of which will be communicated to
the claimant. Alternative arrangements can be made if these methods of
check delivery are not feasible.
BP has established claims offices for the Deepwater Horizon
incident along the Gulf Coast in Alabama, Florida, Louisiana, and
Mississippi, with office hours from 8 a.m. to 7 p.m. each day. A
complete listing of BP claims office locations is available to the
public on the www.deepwaterhorizonreponse.com website.
Question 4. BP appears to be actively directing funds towards the
containment, response, and compensation efforts underway and we've
heard the company's statements about how it expects to exceed the $75
million strict liability cap under the Oil Pollution Act. Since the cap
is expected to be exceeded, does that indicate the cap should
potentially be raised?
Answer. In regard to the economic damages cap of $75 million
contained in the Oil Pollution Act (OPA), BP has stated that it is
prepared to pay above $75 million on these claims and will not seek
reimbursement from the U.S. Government or the Oil Spill Liability Trust
Fund. More generally, the OPA is applicable to a wide variety of
activities involving exploration, production, transport and handling of
oil. BP does not have a position at this time concerning changes that
might be made to that federal authority.
Question 5. Would BP anticipate a raise in this strict liability
cap to limit its ability to partner with and do business with
Independent exploration and production
Answer. BP has not assessed whether raising the economic liability
cap under the OPA would limit its ability to do business with
independent exploration and production firms. BP would expect to
participate in the public discourse in connection with any future
legislative proposals.
Question 6. As I understand it there are 10,000 personnel employed
on containment and response efforts with 2,500 volunteers. Can you
describe any positive developments in terms of innovative response that
the collective minds have come up with?
Answer. Since the start of the MC252 spill, BP has received
thousands of suggestions from the public describing potential ways to
stop the flow of oil and gas or to contain the spill on and off the
Gulf coast shoreline. Over 40,000 ideas had been submitted up until the
end of May. Since the beginning of June, the number of suggestions
coming in has increased--with BP's Houston Call Center now receiving,
on average, 5,000 suggestions a day. These suggestions have come in
from across the world. The suggestions have come in from a variety of
people, ranging from general members of the public to oil industry
professionals. The suggestions also have come in from those speaking
many different languages, ranging from Arabic to Russian. Anyone with
an idea for BP's team is encouraged to submit it using the Alternative
Response Technology (ART) online form located at http://
www.horizonedocs.com/artform.php.
This form is a valuable tool in helping the team to see quickly the
potential of the idea because it collects a list of the materials,
equipment, and skills required for the idea to work. After the caller
completes and submits the form, 30 technical and operational personnel
review its technical feasibility and application and classify it as one
of three categories:
Not possible or feasible under these conditions;
Already considered or planned for; or
Feasible.
So far, over 7,000 ideas have been reviewed by BP technical and
operational personnel. Currently, over 250 ideas have been advanced to
a higher-level review in order to determine which ones fill an
operational need and may require testing in the field.
One such idea, submitted by Clean Beach Technologies, is a
solution that is designed to mechanically separate oil from
sand. A sample taken from an oiled beach in Louisiana was lab
tested to verify this solution's efficacy. It appears that this
solution may be feasible, so it is being prepared for field
testing.
Another idea, presented by Ocean Therapy Solutions, offers
centrifuge equipment technology that can effectively separate
oil from water within an oil spill scenario. This idea is also
undergoing field tests.
Other information being evaluated includes methods to combat
the oil saturated in the sargassum, or seaweed, along the Gulf
Coast. BP is currently looking for technologies that might be
viable in this regard.
To ensure each idea received is reviewed in a timely manner, BP now
has expanded its internal team and has linked up with a new working
group. The working group has been set up by the U.S. Coast Guard. The
Interagency Alternative Technology Assessment Program (IATAP) workgroup
was announced in Washington on Friday, June 4th and includes
representatives from the Minerals Management Service (MMS), the
National Oceanic and Atmospheric Administration (NOAA), the
Environmental Protection Agency (EPA), the United States Army Corps of
Engineers (USACE), United States Department of Agriculture (USDA), and
the Maritime Administration (MARAD).
Responses of Lamar McKay to Questions From Senator Menendez
Question 1. Should BP be drilling in places and at depths at which
it is evidently not equipped to stop an oil spill once one has begun?
Answer. The circumstances of the Deepwater Horizon spill are
extremely unique. The cause of the April 20 incident is the subject of
BP's non-privileged, internal investigation, but, preliminarily, it
appears that it resulted from a series of unexpected and unusual
events. More than 40,000 wells have been drilled in the Gulf of Mexico
and the incident on April 20 is the first event of its kind. Because
the investigations of the incident are ongoing, it is premature to draw
any conclusions about causes, but BP expects those investigations and
review of the sub-sea interventions to be highly instructive concerning
appropriate sub-sea intervention capability. The lessons learned will
be incorporated into future planning and training.
Question 2. BP's lease at Deepwater Horizon received a categorical
exclusion from the NEPA process last year. Why would this rig not
require the oversight and regulation mandated under our country's most
important environmental regulation? How could such an inherently
dangerous activity not undergo thorough environmental review?
Answer. The MC252 well did undergo thorough prior environmental
review under the National Environmental Policy Act (NEPA). The Council
on Environmental Quality (CEQ) detailed the standard review steps
followed for this well in a recent Federal Register notice:
Under the Outer Continental Shelf Lands Act, MMS has
implemented a process for oil and gas development consisting of
the following stages: (1) Preparing a nationwide 5-year oil and
gas development program, (2) planning for and holding a
specific lease sale, (3) approving a company's exploration
plan, and (4) approving a company's development and production
plan. MMS is required to apply NEPA during each of these
stages, beginning with the initial planning of outer
continental shelf leasing and ending with a decision on a
specific well. The sequence of NEPA analyses is informed by the
CEQ Regulations Implementing the Procedural Requirements of the
National Environmental Policy Act, 40 CFR parts 1500-1508 . . .
Specifically, 40 CFR 1502.20, discusses ``tiering,'' a strategy
used to avoid repetitive discussions of the same topics, and to
prevent unnecessary duplication of work by reviewers, as the
NEPA reviews progress from a broad program to a site specific
action.
In the case of the Gulf of Mexico leases, MMS prepared
several tiered NEPA analyses. Environmental Impact Statements
(EIS), the most intensive level of analysis, were prepared at
two decision points. First, in April 2007, MMS prepared a broad
``programmatic'' EIS on the Outer Continental Shelf Oil and Gas
Leasing Program for 2007-2012. Also, in April 2007, MMS
prepared an EIS for the Gulf of Mexico OCS Oil and Gas Lease
Sales in the Western and Central Planning Areas, the ``multi-
sale'' EIS. In October 2007, MMS completed another NEPA
analysis, an Environmental Assessment (EA), under the multi-
sale EIS, for Central Gulf of Mexico Lease Sale 206. This is
the sale in which the lease was issued for the location that
includes the Deepwater Horizon well. MMS previously approved
BP's development operations based on a programmatic EA that MMS
prepared in December 2002. Finally, for the Deepwater Horizon
well, MMS applied its existing Categorical Exclusion Review
(CER) process prior to the decision to approve the Exploration
Plan that included the drilling of the Deepwater Horizon well.
The Categorical Exclusion used by MMS for Deepwater Horizon was
established more than 20 years ago.
75, Fed. Reg. 29996 (May 28, 2010). BP understands that the CEQ is
now conducting a review of NEPA policies, practices, and procedures for
the Minerals Management Service.
Question 3. BP likes to say that it is moving ``Beyond Petroleum.''
What percent of your company's global capital expenditures in each of
the last five years was spent on researching, exploring, and producing
fossil fuels, and what percent was spent on those same activities for
renewable fuels and renewable energy?
Answer. Since 2005, BP has invested approximately $4 billion in
alternative energy, with activity focused on advanced biofuels, wind,
solar power, and carbon capture and storage. From 2005 until 2009, BP's
most recent reporting date, capital expenditures on activities related
to exploration and production of oil and natural gas resources were
approximately $73.85 billion.
Question 4. In a regional oil spill response plan BP filed, the
company said it was capable of handling a spill of up to 300,000
gallons per day, which might be more than what is currently spilling in
the Gulf of Mexico. Yet BP is evidently incapable of responding
properly to the current spill. Why was the oil spill response plan
insufficient to handle the blowout? What lessons do you draw from this
failure?
Answer. BP has a comprehensive oil spill response plan (OSRP) that
was most recently reviewed and approved by the Mineral Management
Service in June 2009. The worst case scenario anticipated by the OSRP
is 250,000 barrels a day for 30 days. In connection with this event,
the OSRP was implemented and BP was able to draw on and deploy an
inventory of boom, dispersant, skimmers and other equipment to respond
to the spill. Upon notification, resources from Marine Spill Response
Corporation (MSRC) and National Response Corporation (NRC) (among
others) were activated and mobilized to the scene. The OSRP has been
the foundation from which the Coast Guard, other government agencies
and BP have directed the response across the Gulf on the surface, in
the subsea environment, and at the shore line. However, the type of
failure here is unprecedented and has complicated the response effort.
The investigations of the incident are ongoing, and it is premature to
draw any conclusions about causes or relative effectiveness. When the
leak is brought under control and investigations are complete, BP
expects to share with governmental authorities, the industry and others
any lessons learned, and it will certainly incorporate them into future
planning and training.
Question 5. Recent news reports reveal that, based on the videotape
of oil spilling from the seabed that BP released, numerous scientists
believe that far more oil is spilling out than earlier estimates
suggested. Does BP have other video or technical data that it has not
yet made publicly available that would help independent experts
determine the extent of the spill and what caused it? If so, do you
pledge to make these resources available to the public so that
independent experts can determine what went wrong?
Answer. BP has made video footage and other data information
available to a range of stakeholders, including the U.S. Coast Guard,
Minerals Management Service, National Oceanic and Atmospheric
Administration, U.S. Environmental Protection Agency, U.S. Department
of Homeland Security, U.S. Department of the Interior, U.S. Fish &
Wildlife Service, National Park Service, U.S. Department of State, U.S.
Geologic Survey, Centers for Disease Control, and the Occupational
Health and Safety Administration, Members of Congress, and the public
through live streaming video. In addition, the federal government
created a Flow Rate Technical Group (FRTG), comprised of members of the
scientific community and government agencies, to provide further
specificity on the flow rate. Consistent with its stated commitment to
transparency and cooperation, BP has provided the FRTG with data
showing release points and amounts of oil and gas currently being
collected on the surface, as well as subsea video of the oil release to
assist with FRTG's efforts. BP will continue to contribute its
resources to contain the oil spill and understand the rate of oil
release and its implications.
Responses of Lamar McKay to Questions From Senator Lincoln
Question 1. In media reports following this disaster, I keep
reading over and over again that certain devices and technologies being
discussed to stop the leak have never been used in water this deep. Do
you believe the depth of water presents more challenges in containing
the leak? Do you believe more testing, research and technologies are
needed to ensure the safety of deepwater and ultra-deep water drilling?
Answer. The depth of the water (in this case, nearly a mile) does
present certain challenges, but it is important to note that the
particular circumstances that led to the April 20 incident and that
have impacted the containment response efforts are unique.
BP has committed up to $500 million to an open research program
studying the impact of the Deepwater Horizon incident and the
associated response actions on the marine and shoreline environment of
the Gulf of Mexico. The key questions to be addressed by this 10-year
research program reflect discussions with the US government and
academic scientists. BP will fund research to examine topics including
technology improvements to detect oil, dispersed oil, and dispersant on
the seabed, in the water column, and on the surface; improved
remediation technology to address the impact of oil accidently released
to the ocean; the behavior of oil, dispersed oil and dispersant on the
seabed, in the water column, on the surface, and on the shoreline; and
the impacts of oil, dispersed oil, and dispersant on the biota of the
seabed, the water column, the surface, and the shoreline.
Question 2. As the responsible party, BP has assumed liability for
the damages resulting from this accident. What is BP doing to ensure
that in the response and cleanup efforts, taxpayers don't end up
footing the bill for this disaster?
Answer. As a responsible party under the Oil Pollution Act (OPA),
BPXP is carrying out its responsibilities to mitigate the environmental
and economic impacts of this incident. Its efforts are part of a
unified command that was established within hours of the accident, and
that provides a structure for its work with the Departments of Homeland
Security and Interior, other federal agencies, and state and local
governments. BP is committed to working with President Obama and
members of his Cabinet, the governors, relevant state agencies and
local communities of the affected Gulf States, and Congressional
members. Everyone at BP fully understands the enormous nature of what
lies ahead and is working to deliver an effective response at the
wellhead, on the water, and on the shoreline.
Pursuant to the OPA, BP is paying all necessary cleanup costs and
is committed to paying all legitimate claims for other loss and damages
caused by the spill. BP is expediting interim payments to individuals
and small-business owners whose livelihoods have been affected. As of
June 8, BP had received over 39,000 claims and paid over $53 million.
As BP has indicated, it believes the claims related to this event will
exceed the economic damages cap set out in the OPA. BP is prepared to
pay amounts above the statutory limit and will not seek reimbursement
from the U.S. Government or the Oil Spill Liability Trust Fund.
Pursuant to OPA and other laws, as of June 8, 2010, BP also has
paid $45 million to federal and state trustees, to enable them to
engage in the pre-assessment and initial assessment of potential
injuries to natural resources in the Gulf. The parties are working
together in a cooperative manner to develop and implement further
studies to evaluate the potential effects of this incident on natural
resources.
Question 3. In your testimony, you state that blowout preventers
are used on every oil and gas well today, and are supposed to be ``fail
safe.'' Clearly, as you indicated, that was not the case on the
Deepwater Horizon rig, and BP is looking at why the blowout preventer
did not work.
Answer. The functioning of the blowout preventer (BOP), and
specifically why it did not function as expected on the Deepwater
Horizon, is the subject of BP's ongoing non-privileged, internal
investigation.
Question 4. What was BP's contingency plan should a blowout
preventer fail and a leak take place? Do you believe a remote-control
shutoff device would have made a difference in this accident? Do you
believe that MMS should review their decision not to require remote
shutoff switches and make them mandatory as they do in Norway and
Brazil?
Answer. BP's investigation is continuing, and no determination has
been made yet as to whether the absence of an acoustic backup control
system was a significant factor with respect to the Deepwater Horizon
BOP's performance.
The purpose of an acoustic backup control system is to provide back
up operation of critical BOP functions in an emergency. Although the
Deepwater Horizon did not have an acoustic backup control system, the
Deepwater Horizon was equipped with multiple emergency systems: (1) an
Emergency Disconnect System (EDS), (2) an automatic mode function
(AMF), or ``deadman'', which activates when all hydraulic and
electrical power is lost, and (3) ROV intervention capability. If a rig
is equipped with multiple emergency systems, such as the Deepwater
Horizon, an additional acoustic backup control system may be
disadvantageous because it adds complexity to the hardware on the BOP
stack.
BP is continuing its investigation and has not yet determined
whether the BOP rams activated and closed either during the April 20
incident or subsequently.
Responses of Lamar McKay to Questions From Senator Sessions
Question 1. What is BP's safety record with offshore drilling in
the Gulf of Mexico and worldwide? Have you had any other incidents when
you have subcontracted with Transocean?
Answer. BP's Drilling and Completions operations safety performance
is at or better than industry (as measured by the International
Association of Drilling Contractors voluntary survey) for both Gulf of
Mexico and worldwide operations. In 2009, BP experienced 14 recordable
incidents including 2 that resulted in Lost Time Incidents (LTIs) in
our drilling and completion operations in the Gulf of Mexico. One of
the LTIs and 7 of the recordables occurred on Transocean drilling rigs.
These 14 incidents result in a LTI frequency of 0.12 and a Recordable
Injury Frequency (RIF) of 0.82 for BP 2009 Drilling & Completion
activity in the Gulf of Mexico. According to the International
Association of Drilling Contractors website, a voluntary reporting
mechanism for companies, the average 2009 US Waters Lost Time Incidents
frequency rate was 0.20 and the Recordable Injury Frequency was 0.87.
BP's 2009 worldwide Drilling & Completions Lost Time Incident rate
was 0.09 and the RIF rate was 0.67. According to IADC, global industry
rates in 2009 were 0.37 and 1.92 for LTI and total Recordable rates,
respectively. On Transocean rigs in 2009, BP experienced a total of 4
lost time incidents and 15 recordable incidents globally. There was one
fatality in 2009 that occurred on a rig in Azerbaijan operated by a
Joint Venture company, Caspian Drilling Company, which Transocean
provided rig management services. Transocean are no longer involved in
this operation.
There have been two incidents involving Transocean's Deepwater
Horizon drilling rig since January 2005, both of which occurred in 2007
and one of which resulted in a fine. One of the two incidents involved
a Notice of Violation assessed by the U.S. Coast Guard in April 2007 in
connection with the accidental release of 10-12 gallons of synthetic
base mud into the Gulf of Mexico. A $250 fine was imposed for this
incident.
The second incident occurred in March 2007. MMS issued an Incident
of Noncompliance (INC) after concluding that a pressure washer located
on the rig floor had no external ground wire. Rescission of the INC was
requested because the equipment in question was maintained and operated
in accordance with all applicable safety codes and regulations. On July
17, 2007, MMS approved the rescission request and removed the INC from
its database. No fine was imposed in connection with this incident.
Question 2. What is/was the role of BP in drilling this particular
well? Is there a BP employee on the rig overseeing the subcontractors?
Was BP responsible for all the drilling requirements (Ex. the depth of
the well, where to drill, the mud mixture, cement mixture, when to
remove the mud, when to place the cement plug in place)?
Answer. The roles and responsibilities of BP in drilling this well
are governed by the 1998 drilling contract between BP America
Production Co. and Transocean Holdings LLC.\2\ A summary interpretation
of these roles and responsibilities is provided below, in accordance
with BP's current understanding and interpretation of the contract. BP
reserves the right to amend or supplement this response upon further
review and analysis of contractual rights and obligations, and upon
further investigation.
---------------------------------------------------------------------------
\2\ The original contract was between Vastar Resources, Inc. and
R&B Falcon Drilling Co. The contracting parties became BP America
Production Co. and Transocean Holdings LLC through acquisition and
assignments.
---------------------------------------------------------------------------
MMS awarded the lease to BP Exploration & Production Inc.
(``BPXP''). As operator, BPXP creates the well design, which includes
drilling parameters such as well depth, drilling location, and the
overall requirements for mud and cement to meet the well objectives. BP
provides the procedures for well construction, including the order that
they are to be performed. As the owner of the rig and equipment,
Transocean is responsible for performing the drilling operation to the
supplied specifications, and is responsible for overall safety on the
rig. In addition, BP engages third-party contractors to provide
specialized services such as mud and cement design. Specifically,
Transocean is responsible for the safe handling of well control
situations in accordance with the procedures set forth in, for example,
the Transocean Emergency Response Manual.
BP company representatives, called Well Site Leaders, are stationed
on the rig site to evaluate whether the well is constructed to BP
design specifications. In addition, the Well Site Leaders are the
primary interface with the third-party contractors on the rig that
provide specialist services, such as mud and cementing services. The
third-party contractors are independent contractors and are responsible
for ensuring that their specialist services are performed properly and
according to specifications. Typically, two Well Site Leaders are
stationed on the rig site, and they work 12-hour shifts.
Question 3. Who were the subcontractors that BP hired to drill the
well, to pour the mud, and pour the cement?
Answer. The contractors retained for drilling the MC252 #1 well
were Transocean LTD to drill the well, M-I SWACO for mud-related
services, and Halliburton Company for cement-related services.
Question 4. It is my understanding that drillers rely on three
lines of defense to protect themselves from an explosive blowout: heavy
mud, cement/cement plugs, and a BOP and alll three of these defenses
failed? Could you please explain to me how three defenses failed to
work?
Answer. Please refer to BP's response to the Chairman's question
No. 8.
Question 5. Was this well abnormal in the amount of pressure that
was being released from the reservoir?
Answer. BP's current understanding is that the pressure in the
MC252 well is not materially different from the pressure that was
anticipated during well planning.
Question 6. Could you please tell me the progress of the relief
well and the current depth and time line for reaching the reservoir?
Answer. BP is currently drilling two relief wells. The depth of one
relief well, MC252 #3, is approximately 14,000 feet, as of June 9. The
depth of the other relief well, MC252 #2, is approximately 8,500 feet,
again as of June 9. BP expects to reach the reservoir by August.
Sincerely,
Tonya Robinson.
______
Responses of Elmer P. Danenberger to Questions From Senator Murkowski
Question 1. Your testimony indicates significant familiarity with
the Montara blowout off of Australia last year, so can you enlighten
the committee as to how this incident is different from the Montara
incident?
Answer. The differences are significant. The Montara blowout well
was one of six development wells drilled with a jackup rig cantilevered
over a production platform in <100 m of water. The wells were suspended
from the jacket (platform tower) above the water surface pending
installation of the platform decks. There was no BOP in place when the
blowout occurred. The only barrier in the well bore at that time was
the cement at the shoe of the production casing. The flow rate at
Montara was significantly lower (probably <1000 BOPD). The main
similarity in the two incidents is the failure of well integrity after
the wells had been drilled to total depth and the production casing had
been set. Both wells should have been completely sealed with casing and
cement, and oil and gas influxes should not have been possible.
Question 2. Can you describe your experience at MMS in terms of
your several decades as a regulator now that you've left? Specifically,
do you observe that MMS has been taking its safety and environmental
responsibilities more seriously, less seriously, or about the same as
OCS development has expanded into the deepwater?
Answer. MMS regulatory personnel have always demonstrated a high
degree of professionalism and taken their safety and pollution
prevention responsibilities very seriously. I haven't seen any change
in that commitment over the years. I do believe the function-based
division of responsibilities proposed by Secretary Salazar will ensure
that accountability and authority are clear, and will enable regulatory
managers and staff to focus solely on safety and pollution prevention.
I also believe this function-based approach will improve the efficiency
of the regulatory program and minimize the potential for gaps and
confusion.
Question 3. In the event of a large natural gas ``bubble'' hitting
the rig, has MMS required or contemplated requiring mechanisms be
available where gas sensors and alarms could trigger an automatic
shutoff of any potential spark or flame source?
Answer. As provided in 30 CFR 250.459 the areas around the rig
floor and mud pits are designed and equipped to minimize the risks of
sparks and other flame sources. However, the required alarm systems do
not actuate BOP equipment. The concern is that auto-actuations
triggered by gas alarms might compromise ongoing well control actions.
For example, if a gas kick was detected and a shear ram was
automatically actuated, it would no longer be possible to circulate mud
down the drill pipe and kill the well in that manner. In light of the
multiple BOP panels around the rig, personnel should be able to
initiate an emergency closure prior to evacuation. Also, the shear ram
should automatically actuate if power is lost or the riser is
disconnected. Why these signals were either not delivered or
unsuccessful in closing the shear ram on the BP well will be central
issues in the investigation.
Question 4. Can you describe the level to which the Deepwater
Horizon is in a situation where it is dependent on its BOP to avoid
catastrophic blowouts perhaps more than other rigs in shallower waters?
Answer. In my opinion, the dependency on the BOP is the same
regardless of the water depth. If there is a wellbore integrity failure
and effective downhole barriers are not in place, the BOP will have to
shut-in the well in any water depth. However, I agree that BOP
reliability, while important at any depth, is more critical in
deepwater. This is because of the greater difficulty in performing
subsea well interventions as compared to surface capping operations on
a shallow-water rig or platform.
Responses of Elmer P. Danenberger to Questions From Senator Menendez
Question 1. Why do the current safety and environmental regulations
not differentiate between deep and shallow water development? Do you
think there should be more stringent regulations for deepwater
developments?
Answer. There are differences in drilling, production, pipeline,
and environmental regulations for deep and shallow water. However, the
requirements specific to deepwater operations are not collated in a
separate regulatory subpart. This is something that I'm sure will be
considered as the regulations are reviewed in the aftermath of this
tragic accident.
A higher degree of reliability is critical in deepwater, because of
the greater difficulty in performing well interventions. Regulations
never precede technological and safety advances, so we cannot rely
entirely on standards and prescriptive rules. Operators must assess
risks and clearly demonstrate that they have redundant controls in
place to protect people and the environment. These protections must be
present during every phase of the drilling program and throughout the
life of production operations. Regulators must challenge operators and
make sure their management systems are effective and fully implemented
in the field.
Question 2. Do you think we are drilling at depths in our waters
that are too risky?
Answer. No, but I think well integrity risks need to be more
closely scrutinized for all OCS operations, particularly those in
deepwater. Special attention should be given to deepwater operations
because of the size and complexity of the facilities, the high flow
potential, the number of workers, and the greater difficulty and
complexity of emergency responses. Operators must carefully examine and
manage the risks associated with all of their activities and regulators
need to continually question operators, audit their management
programs, inspect their facilities, and hold them accountable for
safety achievement, not just for compliance.
Response of Elmer P. Danenberger to Questions From Senator Lincoln
Question 1. In media reports following this disaster, I keep
reading over and over again that certain devices and technologies being
discussed to stop the leak have never been used in water this deep. Do
you believe the depth of water presents more challenges in containing
the leak? Do you believe more testing, research and technologies are
needed to ensure the safety of deepwater and ultra-deep water drilling?
Answer. Deep water makes well intervention more difficult and
complicates well control operations, particularly when the rig and
riser are disconnected from the well. While the drilling technology for
5000' water depth wells is well established, there has never been a
major deepwater blowout, and subsea intervention and containment
systems are not sufficiently advanced. I believe that more research and
development are needed to further evaluate deepwater well intervention
options and test subsea containment systems.
______
Responses of Steven Newman to Questions From Senator Bingaman
Question 1. You have testified that the Deepwater Horizon explosion
was a sudden catastrophic failure of the casing, the cement, or both.
Please state the basis for that testimony, and provide any and all data
and documents in your possession that support that statement.
Answer. The Deepwater Horizon explosion occurred after the well
construction process was essentially finished. Drilling had been
completed on April 17, and the well had been sealed with cement by the
cementing contractor. BP did not plan to use the well for production at
this time; rather BP planned to reopen the well at a later date if it
chose to put the well into production. At the time of the explosion and
fire, the Transocean crew, at the direction of BP, was in the process
of displacing drilling mud and replacing it with sea water. The
drilling mud thus was no longer being used as a means of reservoir
pressure containment. The cement and the casing were the barriers
controlling pressure from the reservoir.
The basis for my belief that there was a sudden catastrophic
failure of the casing, the cement, or both, is that the reservoir of
oil at the Macondo well is located more than 13,000 feet below the sea
floor. The blowout preventer (``BOP'') is located at the sea floor. At
that stage of the drilling process, the pathway from the reservoir to
the sea floor was supposed to be barriered by cement and casing. In
other words, in order for the hydrocarbons to get from 13,000 feet
below the sea floor to the sea floor and ultimately the rig, one or
both of those barrier mechanisms must have failed.
Transocean has assembled an investigative team to determine what
caused the explosion and fire, a team that includes dedicated
Transocean and other industry experts. That investigation is ongoing.
As this Committee and others have requested, Transocean will report the
findings of the investigation when it is complete.
Question 2. You have testified that the plans for an offshore well
operation like the Deepwater Horizon begin and end with the Operator.
You have stated that the Operator's well plan dictated to Transocean as
the driller the ``manner in which the drilling is to occur, including
the location, the path, the depth, the process and the testing.''
Please provide a complete copy of the Operator's plan for drilling the
Macondo well including any changes made during the course of the
operation.
Answer. In response to this request, Transocean will provide the
Committee with a copy of the BP Well Plan for the Macondo well. For
ease of reference, the Well Plan will bear Bates-numbers TRN-HCEC-
00064695 through TRNFICEC-00064802. The Operator may submit changes; if
so, those would be in the possession of the Operator or the regulator.
Question 3. Please state whether Transocean would take any action
to challenge any aspect of such a plan if Transocean believed it to be
inadequate or unsafe. Would Transocean carry out a plan at the behest
of an Operator that it believed to be inadequate or unsafe? Did any
employee of Transocean suggest or express a preference for a different
approach for any aspect of the well operation or its implementation at
any time prior to the explosion? In particular, did any employee
suggest a different approach or any different activities for withdrawal
of drilling mud during the plugging and abandonment phase of the
operation? If not, did you believe the rig operation and implementation
of all phases of the drilling operation to be safe at all times up to
the explosion? Please provide any and all data and documents relevant
to any aspect of your answer. If Transocean employees' actions were
oral rather than written, please identify the employees and their job
titles.
Answer. Transocean does not participate in the creation of
Operator's well plan or changes and does not have expertise in that
area. Transocean would not carry out a specific action being urged by
an Operator if Transocean believed that action would be unsafe.
Transocean would, however, generally rely on the operator with respect
to decisions regarding the well design or integrity. Transocean is in
the business of leasing rigs to our customers, and customer
satisfaction is important to us, but we will not compromise safety in
pursuit of customer satisfaction.
Our investigation into the cause or causes of this accident is
ongoing. The investigation will examine the events leading up to the
explosion, including, but not limited to, whether any Transocean
employee suggested or expressed a preference for a different specific
action with respect to withdrawal of drilling mud during the
abandonment phase of the operation. There is some evidence of a
discussion about activities on the rig on April 19 or 20 as reflected
in testimony at the U.S. Coast Guard hearings. Transocean has a copy of
the transcript of Coast Guard proceedings. We have seen media
statements reporting various versions of events on April 19 and 20, but
our investigation has not yet provided sufficient information in part
because some Transocean employees died in the accident and some on the
rig are employed by 13P or are BP contractors.
Question 4. You have testified that the blowout preventer (BOP) was
not the cause of the accident. Please state whether. had it performed
correctly, it could have prevented the oil spill as a result of the
accident. If not, please state what you believe to be the ``fail-safe''
mechanisms that should be present in an offshore well operation. Please
provide any data or documentation relevant to your response.
Answer. Transocean will produce the following operations,
maintenance and training manuals from Cameron related to the BOP and
its control systems.
The Cameron BOP is designed to close around, or cut through, a
string of drill pipe in use on the well to restrict the flow of oil; it
is not designed to cut through cement, casing, tool joints, or other
significant debris. Thus, provided that the BOP was asked to function
within its design specifications, there currently is no reason to
believe that it would not have done so.
Because the BOP has not been retrieved from the sea floor, we do
not know whether it was damaged by the surge that emanated from the
well beneath the BOP or whether the surge may have blown debris into
the BOP, thereby preventing it from fully squeezing, crushing or
shearing. As part of the ongoing Transocean investigation into this
accident, personnel hope to examine the BOP when it is retrieved from
atop the well.
Question 5. Many have testified to the fact that BOP's shear rams
are known to be unable to cut through certain material in the well such
as tool joints or other debris. Do you agree? If so, please discuss
whether BOP's can or should be considered a fail safe protection
against well failure? Do you advocate or require any steps be taken
address this problem?
Answer. The BOP is designed to facilitate pressure control by
closing around, or cutting through, drill pipe and most sizes of
casing; it is not designed to close around, or cut through, all types
of materials, including significant debris, such as cement. Without
knowing what was inside the BOP at the time of the event, it is not
possible to determine whether the BOP was subjected to conditions that
exceeded its design constraints.
The BOP is a very robust piece of equipment and extremely effective
during drilling operations. At the same time, should not he and has
never been viewed by the industry as ``fail-safe'' in every
circumstance. We do not subscribe to the position that the inability of
the BOP shear rams to cut through every type of tubular or debris is a
design flaw. The industry recognizes those limitations, and there are
operating procedures in place to account for these limitations. Having
said that, Transocean believes that we need to fully understand what
happened to the well, the barriers, and the BOP and determine whether
changes should be made to improve the effectiveness and safety in the
unusual circumstances of an accident like the one on April 20, 2010.
Question 6. Please state whether the retrofit to the BOP discussed
during your hearing testimony was conducted with the approval and
oversight of the BOP manufacturer, Cameron.Please state whether these
changes were tested following the retrofit of the altered rams and, if
so, describe the nature of the tests and whether all the rams were
tested and passed inspection. Please provide all documents or data in
your possession that describe or otherwise discuss the retrofit or
modifications of the BOP stack and any testing of the BOP following the
retrofit.
Answer. As discussed in the hearing, the BOP was modified in 2005
at BP's request and at BP's expense, and as requested, Transocean will
provide the Committee with a copy of the October 11, 2004 agreement in
which BP requested the modification. The BOP on the Deepwater Horizon
was fitted with seven preventors on the stack (five rain preventors and
two annulars), which exceeded regulatory requirements. The 2005
modification converted one of those ram preventers, the lowermost ram
preventer, from a conventional well bore sealing rain to a BOP test
ram, which allowed for more efficient testing of the BOP.
Transocean performed the modifications under the direction of BP,
and BP presumably coordinated with the Minerals Management Service
(``MMS''). Although Cameron did not participate in these modifications,
the changes were made using Cameron equipment.
The BOP rams--including the test ram--have been tested regularly
since the conversion in 2005. The BOP most recently passed tests on
April 10, 2010, and April 17, 2010, and the BOP blind shear rams passed
a pressure test on April 20, 2010.
Question 7. Please describe any and all data or documents in your
possession relevant in any way to the Deepwater Horizon operation at
the Macondo well. Please state whether that data has been made
available without exception to Federal government investigators, and
identify those investigators. If not, please describe the extent that
any data or documents have been withheld and the reason for
withholding.
Answer. Transocean has been and will continue to be open and
responsive to requests from Congress and the federal government. This
request is too broad in scope to be answered in a narrative or at this
time; however, Transocean has collected and produced more than 100,000
documents to the federal government, including MMS and the U.S. Coast
Guard, the U.S. Senate Committee on Environment and Public Works, the
House Committee on Energy and Commerce, the House Committee on the
Judiciary, and the House Committee on Natural Resources and Transocean
continues to collect, review, and produce responsive materials.
Transocean will provide the Committee with disks containing the
documents it has previously produced and will provide the Committee
with additional documents as they arc produced.
Question 8. Please identify any and all Transocean witnesses, and
describe all witness statements from Transocean employees, with
knowledge of the Deepwater Horizon operation, whether present on the
rig or not. Please state whether these witnesses and statements have
been made available without exception to Federal government
investigators, and identify those investigators. If not, please
describe the extent to which witness statements or access to witnesses
has been withheld.
Answer. In response to this request, Transocean first refers the
Committee to the April 20 Daily Drilling Report and the Persons on
Board report that list all persons working on the rig that day.
Transocean has produced all written and/or transcribed oral statements
that Transocean representatives took from these employees after the
accident and also produces statements that were taken by the U.S. Coast
Guard following the accident to the extent these statements have been
shared with Transocean. In addition, several persons on board have
testified in the Coast Guard proceeding that is ongoing and/or to the
House Judiciary Committee in May. Transocean has made its witness
statements available from the outset.
Transocean has not prevented any federal government investigators
from meeting with or speaking to any Transocean employee on the rig
during the accident. For instance, we understand that most of the 70
surviving Transocean employees on the Deepwater Horizon at the time of
the accident provided written statements to the Coast Guard and some
have testified in the ongoing Coast Guard proceedings and/or the House
Judiciary Committee hearing on May 27. For those employees who have
retained their own counsel, Transocean has provided contact information
for such counsel.
Finally, Transocean has not produced any of its attorneys' notes
prepared during and after witness interviewed to assist Transocean's
preparation for civil litigation. In addition to being privileged work
produce, such interview notes do not appear responsive to this request
upon request.
Question 9. Some have suggested that replacement of drilling mud
with seawater is an area of concern in connection with this accident.
Please describe in detail the operation and its sequence in the well
plugging and abandonment process in which drilling mud was withdrawn
from the well. Please state whether the sequence and timing of this
operation is considered industry best practice, and whether you have
ever used this sequence and timing of operation in other wells. If so,
what percentage of your wells are handled in this manner? To the extent
not covered in your response to question #3, please state whether any
Transocean employee expressed any opinion on this matter to the
Operator BP. If so, what was that opinion? Please provide any data or
documents in your possession relevant to this issue, and identify any
employee who made oral statements in this regard.
Answer. It is normal practice to remove the drilling mud from the
riser prior to disconnecting the riser from the well, and that would
have been part of the logical sequence of events during abandonment of
the well. Given that our investigation into the accident has not yet
concluded, however, we do not yet have a definitive understanding of
the actual order of the events that took place on the evening of April
20, 2010, and therefore have not assessed whether the sequence of
events would be considered consistent with industry best practices.
Question 10. You have testified that BP and Transocean jointly
tested the BOP on April 10 and April 17 and it was found to be
operational. Please state whether all the rams were activated during
these tests and indicate whether they were tested individually or in
concert (i.e. were all annular rams tested at the same time?). Please
provide any and all data and documents related to these tests. In
addition, please address media reports suggesting that pieces of rubber
or rubber seals from the annular rams were brought up to the rig in
drilling mud. Did any Transocean employees observe or learn of this
result? Did they have opinions expressed in writing or orally about the
causes and seriousness of this event? What actions if any were
recommended or taken as a result? Please provide any data or documents
in your possession related to this issue, and identify any employees
who made oral statements in this regard.
Answer. In response to this request, Transocean has produced the
IADC Daily Drilling Reports and the RMS Morning Reports documenting the
results of the 130P tests conducted on April 10. 2010, and April 17,
2010. These reports reflect that the BOP passed tests on April 10,
2010, and April 17, 2010. In accordance with standard procedures, all
rams except the shear rams were activated during these tests, and all
were found to be functioning properly. This complies with testing
procedures which are that all rams except the shear rams be tested
individually, not simultaneously. In addition, the blind shear rams of
the BOP were pressure tested on April 20, 2010, and passed.
We understand from the May 16, 2010 60 Minutes segment that
Transocean Chief Electronics Technician Michael Williams stated that he
saw pieces of rubber brought up to the rig in drilling mud
approximately four weeks before the accident. While the Company has not
located any record of this reported observation, having some rubber
returns to the shakers in the drilling mud is normal. There are several
sources of rubber down hole; annular rubber would be the most common
source. Given the size of the annular, the manufacturer advises that
periodic stripping by use is expected, and a handful of chunks of
rubber is immaterial. The annular is roughly three feet in diameter,
about 18 inches tall, and weights about 2.000 pounds. It is designed to
close around drill pipe, and drill pipe regularly moves through closed
annular valves, which can displace small pieces of the annular rubber.
The rubber used in annular blowout preventers is known to be a
consumable item, and rubber loss is not considered problematic if the
annular blowout preventer continues to hold rated pressure. Cameron
brochures, publicly available on Cameron's website highlight these
facts. For example, one such brochure explains that ``Rifle elastomeric
packing elements used in CAMERON Type D/DL annular blowout preventers
are considered to be consumable items and will eventually wear-out as a
result of repeated closures and pressure test. Every closure and
pressure test while in-service will use up some of the packing element
life. The packing element subassembly should not he rejected for
continued service based on cosmetic appearance. Failure of a pressure
test or drift test are the only justifiable reasons for rejection.''
See In-Service Condition of CAMERON D/DL Annular BOP Packing Element
Subassemblies, available athttp://www.c-am.com/cam/search/
showdocw.cfm?DOCUMENT__ID=8360.
Question 11. Please state how many centralizers were used in the
casing of the Macondo well. Include in your answer the number required
in the original well plan and whether any changes were made to that
aspect of the plan or its implementation at any time prior to the
explosion. Please provide any and all data and documents relevant to
your answer.
Answer. The Wall Street Journal has reported on the number of
centralizers used in the casing of the Macondo well. Centralizers are
used in the cement process and were provided by either the cementing
contractor or the Operator. Transocean does not have independent
knowledge of the number of centralizers available or used in the easing
of the Macondo well.
Question 12. Please describe Transocean's data and document
retention policy as relevant to the Deepwater Horizon Macondo well
documents and data.
Answer. Almost immediately after the incident, Transocean
instituted a policy of preserving documents that may he informative
about the incident. That policy, which preceded any government or
external requests to hold documents, remains in place. Any written
documentation maintained solely on the rig at the time of the event is
no longer available.
Question 13. Please describe when the last data available to
Transocean regarding the Deepwater Horizon Macondo well operation was
generated.
Answer. Recording of data is triggered by the manual entry of data
on the rig. The next manual entries were not expected until midnight or
later, as entries are typically made on the rig at the end of a twelve-
hour shift that starts at noon. Transocean received the last data pack
from the rig at 3:00 p.m. on April 20, 2010, the time of the last entry
on the April 20, 2010 drilling report. Any information generated after
3:00 p.m. is not available to Transocean, although BP is believed to
have real-time, streaming data from the rig to shore.
Responses of Steven Newman to Questions From Senator
Question 1. Briefings and testimony have indicated that mud weight
in the drill column is an important barrier against blowouts. This
blowout seems to have occurred after drilling and after the mud weight
would have been relevant, so is it a fair assumption that the root
problem seems to have been with the actual well?
Answer. You are correct in that this blowout seems to have occurred
after drilling and after the mud weight would have been relevant, where
the casing and cement are expected to provide the sole barrier to
hydrocarbon ingress. Therefore, without a failure of the cement, the
casing, the well head hanger assemble seal for the 9-5/8'' casing, or
both, the explosion would not have occurred.
Question 2. Our previous panel spoke to the range of pressures that
may have been at play leading up to the incident. Is it fair to say
that at some point before the explosion, the rig experienced some kind
of abnormality in well pressure, even though the well had been cased
and cemented and was nearly complete?
Answer. The Deepwater Horizon explosion occurred after the well
construction process was essentially finished. Drilling had been
completed on April 17, and the well had been sealed with cement by the
cementing contractor.
A blowout is associated with abnormal pressure. Transocean does not
have records to determine when or how pressures became abnormal or
triggered the blowout although BP is believed to received real-time,
streaming data from the rig to shore.
The reservoir of oil at the Macondo well is located approximately
13,500 feet below the sea floor whereas the blowout preventer (``BOP'')
is located at the sea floor about 2 V2 miles away. At that stage of the
drilling process, the pathway from the reservoir into the well and up
to the sea floor was supposed to be effectively sealed by cement and
casing. Therefore, in order for the hydrocarbons to get from 13,500
feet below the sea floor to the sea floor and the BOP and ultimately to
the rig, one or both of the casing or cementing must have failed.
Question 3. What was the crew's and management's reaction to this
abnormality?
Answer. As the Operator, BP was managing operations on the
Deepwater Horizon. Media reports have indicated that BP stated that
they were not prepared to address abnormalities of this nature. Media
has also reported a rig to shore communication among BP personnel in
which Transocean was not involved.
We do have information that members of the Transocean crew
activated the blowout preventor prior to evacuating the rig.
Question 4. To the extent you are familiar with the Montara blowout
off of Australia last year, can you enlighten the committee as to how
this incident is different from the Montara incident?
Answer. Transocean has no direct knowledge of the Montara blowout
other than what was reported in initial findings issued by the U.S.
Coast Guard. While both involved the use of nitrogen cement, Transocean
understands that the Montara incident involved a shallow-water
operation using a jack-up rig over a platform, which is distinct from
the deepwater incident involving the Deepwater Horizon.
Question 5. Transocean's operations have been directly affected in
US waters as a result of the Deepwater Horizon incident, but have you
ordered any additional safety measures or modified procedures for
operations outside the U.S. based on the incident?
Answer. Transocean maintains a consistent standard of policies and
procedures, maintenance practices, and operating practices across the
Transocean fleet throughout the world. Until we know exactly what
happened on April 20, 2010 and the real sequence of events, it is
difficult to speculate about what additional safety measures should be
implemented or what operational procedures should be modified. In the
aftermath of this incident, we have continued to follow Transocean
policies and procedures around the world until we find out what may
have contributed to the cause of events.
Transocean is committed to working hard to understand what caused
this accident and what might have averted it. We will implement
whatever recommendations come out of that analysis.
Question 6. Is it foreseeable that a BOP would encounter a sudden
introduction of cement or other foreign substance from a well that has
either lost or failed to establish its integrity, or is such a scenario
so unlikely that it had not previously been contemplated?
Answer. As noted above, the BOP is designed to close around or cut
through, drill pipe to restrict the flow of oil; it is not designed to
cut through cement, casing, tool joints, or significant debris. Failure
of well integrity of a cased and cemented well and the possible
subsequent introduction of cement and casing into a BOP is extremely
unlikely.
Responses of Steven Newman to Questions From Senator Menendez
Question 1. What other redundant mechanisms are available to the
industry for preventing with deep blowouts that were not present on the
Deepwater Horizon, and why were they not present?
Answer. The primary industry means of controlling reservoir
pressure during drilling operations is drilling mud and cement and
casing. The BOP serves as a secondary means of controlling reservoir
pressure if the drilling mud proves inadequate during drilling
operations. The BOP function is to seal the wellbore in the event of a
blowout during drilling operations. I am not aware of any available
mechanism other than a BOP for sealing the wellbore in the event of a
blowout during this phase of operations.
In contrast, the sole means of controlling reservoir pressure after
the drilling phase is complete and the well has been plugged or
abandoned are the casing and cement. The BOP is removed from every well
when the abandonment phase is complete, and at that time the B0P is no
longer intended to serve as a redundant control mechanism. Therefore,
the well design must be able to secure the well and seal it from
hydrocarbon ingress and transport to the surface.
Response of Steven Newman to Question From Senator Lincoln
Question 1. In media reports following this disaster, I keep
reading over and over again that certain devices and technologies being
discussed to stop the leak have never been used in water this deep. Do
you believe the depth of water presents more challenges in containing
the leak? Do you believe more testing, research and technologies are
needed to ensure the safety of deepwater and ultra-deep water drilling?
Answer. In the course of our support of BP and the Unified Command
in attempting to contain the leak and based on media reports, it
appears that the depth of the water has presented more challenges than
anticipated. We cannot say, however, with any certainty what additional
testing, research and technologies might be warranted to ensure the
safety of deepwater and ultra-deep water drilling until what caused the
accident is known. Once the causes have been identified, Transocean
will certainly support development of any additional technologies that
may be necessary to ensure that the April 20 events do not occur again.
Responses of Steven Newman to Questions From Senator Sessions
Question 1. What is Transocean's safety record in the Gulf of
Mexico and worldwide?
Answer. Transocean has maintained a strong safety record in the
Gulf of Mexico and throughout the world. Transocean has never--and will
never--compromise on safety. In 2009, Transocean recorded its best ever
Total Recordable Incident Rate (TRIR). Thirty-eight (38) rigs had zero
TRIR (no recordable incidents) and sixty-seven (67) rigs had zero
serious injury cases. Four (4) rigs achieved our safety vision of zero
incidents. In addition, MMS awarded one of its top awards for safety to
Transocean in 2009. The MMS SAFE Award recognizes ``exemplary
performance by Outer Continental Shelf (OCS) oil and gas operators and
contractors.'' The Deepwater Horizon had a seven-year history with no
loss time accidents. The Deepwater Horizon set the record for deepwater
operations for a semi-submersible drilling rig and achieved the record
for the deepest well ever drilled.
Question 2. What purpose does the Blow Out Preventer (BOP) serve?
Answer. A blowout preventer (BOP) is a series of large valves that
are positioned on top of a well to provide secondary pressure control
of a well. BOPs are designed to quickly shut off the flow of oil or
natural gas in the case of a kick or blowout during drilling
operations, which is a sudden, uncontrolled release of pressure from
below the sea floor. BOPs are made in a variety of styles, sizes and
pressure ratings. Sometimes, several different units of a BOP are
combined into a single device, often called a BOP ``stack.'' A BOP
stack is a set of two or more preventers used to provide pressure
control of a well. A typical stack might consist of one to six ram-type
preventers and, optionally, one or two annular-type preventers. A
typical stack configuration has the rani preventers on the bottom and
the annular preventers at the top. The configuration of the stack
preventers is optimized to provide maximum pressure integrity, safety
and flexibility in the event of a well control incident. Deepwater BOP
stacks weigh as much as 700,000 pounds and stand five stories tall.
Question 3. How many rams are there within the BOP stack and could
you please explain the purpose of each ram?
Answer. The Outer Continental Shelf Lands Act (``OCSLA'') requires
that subsea BOP stacks (those positioned on wellheads on the ocean
floor like the Deepwater Horizon) include at least four remote-
controlled, hydraulically operated BOPs consisting of an annular BOP,
two BOPs equipped with pipe rams, and one BOP equipped with blind-shear
rams. The Deepwater Horizon BOP exceeded these regulatory requirements
by maintaining five rams and two annular preventers in its stack: two
pipe rams, one blind shear ram. one casing shear ram, and two annulars.
The BOP also had one test ram. The individual rams are pictured and
explained more fully in the Cameron Manuals that will be provided. They
are generally described as follows:
Pipe rams consist of two blocks of steel with a half-circle
hole on each edge sized to fit around the drill pipe upon
closure.
Blind shear rams are similar to pipe rams but without a hole
for the pipe. When blind shear rams close, they form a solid
surface in the center of the wellbore and contain pressure.
Casing shear rams are rams outfitted with steel shearing
devices designed to cut through drill pipe and other tubulars,
if all other barriers fail.
An annular B0P is another type of valve, this one featuring
a sealing element that weighs more than one ton. Annular BOPs
work by mechanically squeezing a rubber element inward to seal
on either a pipe or the open hole itself.
Question 4. When did the last safety test occur for this particular
BOP and what were the results of the test?
Answer. The Deepwater Horizon BOP was tested on April 10, 2010, and
April 17, 2010. In accordance with standard procedures, all rams except
the shear rams were assessed during these tests, and each passed
successfully. The blind shear rams of the Deepwater Horizon BOP were
pressure tested and passed on April 20, 2010.
______
Responses of Tim Probert to Questions From Senator Bingaman
Question 1. Please provide any and all data and documents,
including technical specifications, describing the well plan and its
casing and cementing program as well as any modifications to that plan
provided by BP or any other source for Halliburton's work on the Deep
water Horizon Macondo well.
Answer. Halliburton does not have the actual well plan document,
and thus has not had access to it in answering this question.
Halliburton developed the cementing proposal based on well
information provided by the well owner. Halliburton had no role
in developing the casing program. Decisions regarding the final
cementing procedure, including the number of centralizers and
the cement volume, were made by the well owner. See the
following documents:
Macondo--MC252--97/8x7 Prod Casing--V6--CustomerCopy.pdf,
HAL--0011047-HAL-0011058
9.875 x 7 Prod. Casing Design Report--21 Cent.PDF,
HAL0010699-HAL0010720
9.875 x 7 Prod. Casing Design Report--6 Cent.PDF, HAL--
0010988-HAL--0011020
Question 2. Please provide any and all documents or data to or from
Halliburton or BP concerning the equipment or material to be used
during Halliburton's activities on the Deepwater Horizon and in the
Macondo well. Please state the type of cement, type of casing, extent
of cementing, plugs and numbers of centralizers used in this well and
provide all documentation of these specifications, and any
modifications made to the original plan.
Answer.
The cementing system designed for the Mississippi Canyon
Block 252 Well Number 1, 9 7/8'' x 7'' casing job contained the
following:
Lafarge Class H Cement + the following chemicals
B WOC (by weight of cement) EZ-Flo,
BWOC D-Air 3000
Potassium Chloride Salt
BWOC SSA -1 (fine silica sand)
BWOC SSA-2 (100 mesh silica sand)
BWOCSA-541
GPS (Gallons per sack of cement) ZoneSealant 2000
GPS SCR-100 Liquid
GPS Fresh Water
See specifically the following documents:
Macondo--MC252--97/8x7 Prod Casing--V6--CustomerCopy.pdf,
HAL0011047-HAL-0011058
9.875 x 7 Prod. Casing Design Report--21 Cent.PDF,
HAL0010699-HAL0010720
9.875 x 7 Prod. Casing Design Report--6 CentPDF,
HAL0010988-HAL0011020
Question 3a. Please state how the decision was made regarding the
number of centralizers to be used in this well, and whether you believe
the number used is industry best practice.
Answer.
Halliburton conducted computer software simulations using
input provided by the well owner to determine the optimum
number of centralizers for the 9 7/8'' x 7'' casing. The
results of the computer simulations were communicated to the
well owner prior to performing the cement program for the 9 7/
8'' x 7'' casing.
Question 3b. Were there changes made to the original well plan and
casing program that reduced the number of centralizers?
Answer. The well owner did make changes to the recommended number
of centralizers for the 9 7/8'' x 7'' casing.
Question 3c. If so, please state whether you believe that was
adequate to maintain the integrity of the casing and cement program.
Answer.
The computer software simulations predicted the effects of
reducing the number of centralizers. The results were
communicated to the well owner. The results indicated that
cement would channel in the annulus. Cement channeling does not
in itself create a safety concern. When cement channeling
occurs, it is typically remedied by pumping additional cement
as a subsequent additional step in the well program.
Question 3d. What reasons would the Operator have for changing the
number of centralizers in the well design?
Answer.
Halliburton cannot speak for the well owner. The well owner
is in the best position to respond to this question.
Question 3e. Please provide any and all data and documentation
regarding the decision on the number of centralizers to be used.
Answer. Please see the following documents:
9.875 x 7 Prod. Casing Design Report--21 Cent.PDF, HAL--
0010699-HALOO10720
9.875 x 7 Prod. Casing Design Report--6 CentPDF,
HAL0010988-HAL0011020
April 15, 2010 email exchange between Halliburton's BP
account cementing representative and BP's cementing
engineer, HAL0010648-HAL0010650
April 18, 2010 email from Halliburton's BP account
cementing representative and BP's cementing engineer,
HAL0011088-HAL 0011090 3
Question 4a. Halliburton has stated that BP as the well Operator
would provide all specifications for the cementing and other activities
carried out by Halliburton. Would Halliburton question specifications
provided to it if it believed they were inadequate or unsafe?
Answer.
Yes
Question 4b. Was that done here?
Answer.
Halliburton communicated to the well owner that based on
their decision to use a reduced number of centralizers, the
cement would likely channel. As noted above, cement channeling
does not in itself create a safety concern. When cement
channeling occurs, it is typically remedied by pumping
additional cement as a subsequent additional step in the well
program.
Question 4c. If so, provide any and all data and documentation.
Answer. See the following documents:
9.875 x 7 Prod. Casing Design Report--21 Cent.PDF,
HAL0010699-HALOO10720
9.875 x 7 Prod. Casing Design Report--6 CentPDF,
HAL0010988-HAL--0011020
April 15, 2010 email exchange between Halliburton's BP
account cementing representative and BP's cementing
engineer, HAL0010648-HAL0010650
April 18, 2010 email from Halliburton's BP account
cementing representative and BP's cementing engineer, HAL--
0011088-HAL--0011090
Macondo--MC252--97/8x7 Prod Casing--V6--
CustomerCopy.pdf, HAL0011047-HAL-0011058
Question 4d. If not, please state whether Halliburton would proceed
with a well if it believed the specifications given it were unsafe or
inadequate, and whether Halliburton believes the specifications given
to it by BP for the Macondo well were adequate and safe.
Answer.
As stated above in B, Halliburton communicated to the well
owner that based on their decision to use a reduced number of
centralizers, the cement would likely channel. As noted above,
cement channeling does not in itself create a safety concern.
When cement channeling occurs, it is typically remedied by
pumping additional cement as a subsequent additional step in
the well program.
Question 4e. Also state whether Halliburton believes that the
specifications for the well ? both original and modified--were industry
best practices.
Answer.
The cementing program was developed based on well
information provided by the well owner and in accordance with
MMS requirements.
Question 4f. Provide any data and documentation in your possession
relevant to your answer.
Answer.
See documents referenced above in response to subparagraph
C.
Question 5. In the Macondo well, the cementing was required to
extend up the well for 500 feet above the lowest casing shoe. Please
state whether you believe that was adequate for the Macondo well based
on the casing program that was implemented, and provide any data and
documentation or other basis for that belief.
Answer.
The cementing program was designed in accordance with well
information supplied by the well owner and cement volumes were
calculated to meet the well owner's specifications.
See the following documents:
Macondo--MC252--97/8x7 Prod Casing--V6--
CustomerCopy.pdf, HAL--0011047-HAL-0011058
9.875 x 7 Prod. Casing Design Report--21 Cent.PDF,
HAL0010699-HAL0010720
9.875 x 7 Prod. Casing Design Report--6 Cent.PDF,
HAL0010988-HAL--0011020
Question 6. Please list all data or documentation from the
deepwater Horizon operation now in Halliburton's possession. Please
state whether all of that data has been made available without
exception to Federal government investigators, and identify those
investigators. If it has not been made fully available, please describe
all data that has been withheld and the reason for the withholding.
Answer.
Engineering reports
Real time data stream
Emails
Well schematics
All such documents related to the Deepwater Horizon operation have
been made available, without exception, to the Oversight and
Investigation Subcommittee of the House Committee on Energy and
Commerce, the House Natural Resources Committee, the House Judiciary
Committee, and the U.S. Coast Guard.
Question 7a. Please list all contacts with, and witness statements
from, Halliburton witnesses with information relevant to the Deepwater
Horizon operation and explosion.
Answer.
Halliburton made available to the well owner the four
Halliburton employees who were on the Deepwater Horizon at the
time of the explosion. Those employees have given interviews to
the well owner. No written witness statements have been given.
Two of those employees have been subpoenaed to testify before
the joint U.S. Coast Guard and MMS hearings in New Orleans May
26-29, 2010.
Question 7b. Please state whether these witnesses and statements
have been made available to Federal government investigators without
exception, and identify the investigators who have received this
information or interviewed these witnesses.
Answer.
These Halliburton employees are available to the Federal
government investigators and two of them have been subpoenaed
to testify before the joint U.S. Coast Guard and MMS hearings
in New Orleans May 26-29, 2010.
Question 7c. If they have not been made fully available, please
describe the extent of any limitation or withholding and the basis for
that limitation
Answer.
As stated in B above, these Halliburton employees are
available to the Federal government investigators and two of
them have been subpoenaed to testify before the joint U.S.
Coast Guard and MMS hearings in New Orleans May 26-29, 2010.
Question 8. Please describe the Halliburton policy for retention of
data and documents applicable to information related to the Deepwater
Horizon operation at the Macondo well.
Answer.
Following the explosion on the Deepwater Horizon,
Halliburton issued a document retention notice to employees
within Halliburton who would have data and documents relating
to Halliburton's operations on the Deepwater Horizon. Those
documents and data will be retained for six years following the
close of all investigations and litigation arising from the
explosion.
Responses of Tim Probert to Questions From Senator Murkowski
Question 1a. What is Halliburton's current role and outlay of
personnel and resources in the containment and response effort?
Answer.
Halliburton is working with BP on well control solutions and
mobilizing assets and resources at the direction of BP.
Halliburton is providing services on the following relief
well rigs:
i. On the Development Driller III, Halliburton is providing Baroid
Drilling Fluids, Cementing, Sperry Directional Drilling and
Surface Data Logging; and
ii. On the Development Driller II, Halliburton is providing Baroid
Drilling Fluids, Cementing, and Sperry Surface Data Logging
For the well kill operations on the vessel HOS Centerline
#14, Halliburton is providing Cementing Services and Production
Enhancement for high rate/pressure pumping.
Question 2. Has Halliburton ever questioned or refused its clients'
orders on a well cementing job due to concern over the order's
integrity?
Answer.
Yes, Halliburton maintains stop work authority for our field
crews and technical staff if there is a concern of an imminent
safety hazard.
Response of Tim Probert to Question From Senator Menendez
Question 1a. Halliburton is in the unenviable position of having
worked on the two most recent major spills-the Montara in Australia
last year and now the ongoing disaster in the Gulf. Neither
investigation is complete, but some have speculated that both accidents
may have been caused by Halliburton's cementing process. After each
accident has Halliburton thoroughly reviewed all of its procedures, its
training, its equipment and its materials?
Answer.
Yes
Question 1b. And has Halliburton made any changes in light of these
reviews?
Answer.
Until the root cause of the Mississippi Canyon Block 252
Well number 1 and the Montara incidents are identified,
Halliburton will continue its process of working at the
direction of the well owner in accordance with industry and MMS
standards.
Response of Tim Probert to Question From Senator Lincoln
Question 1a. In media reports following this disaster, I keep
reading over and over again that certain devices and technologies being
discussed to stop the leak have never been used in water this deep. Do
you believe the depth of water presents more challenges in containing
the leak?
Answer.
Yes
Question 1b. Do you believe more testing, research and technologies
are needed to ensure the safety of deepwater and ultra-deep water
drilling?
Answer.
Such advances could be most beneficial but until the root
cause of the Mississippi Canyon Block 252 Well number 1
incident is identified, Halliburton cannot speculate on the
specific objectives for such additional testing, research and
technologies.
Responses of Tim Probert to Questions From Senator Sessions
Question 1a. Is it true that Halliburton had completed pouring the
cement that lines the well 20 hours before the blow out?
Answer.
Yes, Halliburton had completed cementing at locations in the
wellbore as required by the well owner. We had not as yet been
instructed to pump cement for the final plug at the time of the
blowout.
Question 2. Was this particular well properly cemented?
Answer.
The cement program was executed according to the procedure
directed by the well owner.
Question 3. Were all the appropriate tests run on the cement and
casings?
Answer.
Pre-job laboratory testing of cementing materials was
conducted in accordance with industry standards.
Post-cementing evaluation (bond log) is the responsibility
of the well owner. Halliburton is unclear whether the well
owner included the bond log test in the well plan. Halliburton
understands the well owner did not conduct a bond log test.
Following placement of the cement slurry, the well owner
conducted a positive pressure test to demonstrate the integrity
of the production casing string. Halliburton did not conduct
the test, but understands that based on the result of that
test, the well owner chose to proceed with the well plan.
Halliburton understands that a negative pressure test was
then conducted by the drilling contractor and/or the well
owner. The negative pressure test tests the integrity of the
casing seal assembly. Halliburton is unclear of the results of
the negative pressure test.
Question 4a. There have been reports that mud was being extracted
from the riser before the top cement cap was in place. Is this true?
Answer.
Halliburton understands that the mud was displaced from the
riser. The top cement cap was never placed in Mississippi
Canyon Block 252 Well Number 1.
Question 4b. If so, why would you remove the mud prior to securing
the pressure with cement?
Answer.
The order of all well construction activities are at the
direction of the well owner. Halliburton did not take part in
the decision making or the execution of the mud displacement.
Question 5. A 2007 study by three U.S. Minerals Management Service
officials found that cementing was a factor in 18 of 39 well blowouts
in the Gulf of Mexico over a 14-year period. That was the single
largest factor, ahead of equipment failure and pipe failure. How many
of those 18 blowouts did Halliburton serve as the lead subcontractor
for cementing?
Answer.
Review of the 18 loss of well control incidents (LWC)
referenced in the article titled ``Absence of Fatalities in
Blowouts Encouraging in MMS study of OCS Incidents'' published
in the July/August 2007 issue of Drilling Contractor and in the
original MMS study as ``associated with cementing'' in the
1992-2006 period, indicate that rig and/or operator activities
shortly following cementing operations contributed to these LWC
incidents.
14 of 18 incidents resulted from post cementing rig
operations, including:
removal of the BOP (Blow Out Preventer) by the
drilling contractor before the cement was set;
the drilling contractor inserting a wash string in
the casing annuli which prevented the BOP from sealing the
wellbore during the LWC event; and
the drilling contractor cutting the casing or
removing a casing valve to set casing in the wellhead.
4 of 18 incidents resulted from well owners not utilizing
industry recognized best cementing practices.
The MMS report states that in nine LWC incidents, the cement
service company is not specified, Halliburton is specified in
six, BJ Services is specified in two, and Schlumberger is
specified in one.
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