BP Close to Plugging the Well

Jim Brown
 
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BP was going to start the static kill process on Monday but had to delay it 24 hours after a hydraulic leak was discovered in the current well cap. Tuesday is now the target date to start killing the well.

Most people will probably take the news that BP is ready to finally plug the well with a grain of salt. BP has said many things over the last four months and followed through or been successful with only a rare few. However, this time I believe they will be successful.

Starting on Tuesday they will do another well integrity test by pumping refined oil into the well to test for leaks. While pumping oil into the well makes no sense to me I am sure there is a valid technical reason for the process.

Secondly, if no leaks are detected they will begin pumping 2,000 barrels of heavyweight drilling mud into the well at the rate of one barrel per minute with a bump to two barrels per minute once the process appears to be working.

In theory the heavy drilling mud will force the oil in the well back into the reservoir at the bottom of the well. Thousands of pounds of heavy drilling mud in nearly two miles of vertical pipe under pressure from multiple 30,000 horsepower pumps on the drillship should accomplish the task.

As the initial mud settles to the bottom of the well the continued flow of mud will pack the mud on the bottom and compress it to remove the oil pockets. Once the pipe is full of mud BP will do another pressure test. If the pressure at the top of the well has dropped significantly then BP will pump cement into the well from the top to permanently plug it.

However, even if the process is a success BP will continue to drill the relief well and inject additional mud and cement into the reservoir from the bottom of the well. Currently the relief well has installed the last section of casing and it ready to drill into the casing of the broken well. The relief well is now only four feet from the damaged well and 100 feet from the bottom of the Macondo well. Once the static kill proves is concluded the relief well will drill into the Macondo casing and begin injecting high pressure mud and cement into the Macondo hole. This high pressure mud will expand into the reservoir at the bottom of the Macondo well and kill the ability for the oil to flow through the rock and into the well. The relief well will then be cemented shut and abandoned.

BP claims it has not decided whether to drill another well into the reservoir to actually produce oil from this deposit.

U.S. scientists said on Monday that the refined estimate of the spill rate was 53,000 bpd before the well was capped, plus or minus 10%. They now claim the initial spill rate once the riser was cut off was 62,000 bpd. They believe a total of 4.9 million barrels of crude escaped from the well and BP collected only 800,000 barrels. With fines per barrel of as much as $4,300 this could mean billions in fines for BP. Just using a figure of $4,000 per barrel this represents more than $16 billion in fines and the number could go higher if BP is found to have been negligent or worse criminally negligent in the disaster.

Since BP never allowed the flow rate through the new cap to be tested they have a good position to argue with the findings from the scientists in court. They can claim as little as 30,000 bpd and there is really no proof to the contrary. I have said before I am amazed the coast guard did not make BP collect the oil for a couple days using their current 80,000 bpd capacity just so the government would have a firm number to calculate from. This was a good move by BP in delaying long enough that they got the static kill process approved.

If BP is successful in plugging the well this week we will probably not know it was successful until Thursday or even Friday. They will want to monitor the well for pressure spikes once the mud and cement is in place. I believe the news of a successful plug could produce the high for BP stock that could last for years. It will also give us an entry point for a long term LEAP put to capitalize on their eventual decline as the lawsuits take the place in the news that the oil spill had captured for the last four months.

Jim Brown

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