The Plot Thickens

Jim Brown
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The farther we get away from the event the more information is appearing on the events surrounding the explosion on the Deepwater Horizon. Information is coming from unexpected sources and the revelations are amazing.

The heads of the three major players in the Horizon accident testified before the Senate today. Mostly the outcome was predetermined but it made for interesting theater. BP blamed Transocean for the failed blow out preventer. Transocean said the drilling on the well had ended three days earlier along with any liability for the BOP. Transocean blamed Halliburton for a failed cement job and improper procedures. Halliburton blamed BP for removing the mud from the well before cementing the plug in the bottom of the well and that appears to be where the fault will eventually rest.

Several workers have now come forward to substantiate claims that BP told crews to remove the heavy drilling mud from the well before Halliburton set the cement plug at the bottom of the well. This would be the ultimate dumb move and apparently is what happened.

The drilling mud weighs 14.3 pounds per gallon, which roughly equates to a foot of pipe. The well is 13,000 feet deep in 5,000 feet of water for a total of 18,000 feet of mud or some amount smaller than that depending on what they were doing at the time.

The weight of the mud keeps the hydrocarbons in the well. You can imagine how much that mud weighs at the bottom of the well. Normally the well is cemented closed by actually pouring the cement on top of the mud and letting it sink to the bottom. The cement is heavier than the mud. Once there it is left in place for at least six hours in order to set. Then the drilling mud is removed from the well and seawater fills the pipe down to the cement.

BP apparently told the crews to remove the mud first and replace it with seawater before the cement plug had been poured. Not only is the mud twice as heavy as seawater it is also much thicker. This prevents the oil and gas from pushing up through the thick heavy drilling mud. By replacing the mud with thinner, lighter seawater there was nothing of substance to keep the gas pressure in the well.

Today the contents of an interview with the captain of the Damon B Bankston, Alwin Landry, made the news. The Bankston was tied up alongside the Horizon. The Bankston was pumping the heavy drilling mud from the three mile deep well through a hose connected to the well. Landryn was on the bridge catching up on some paperwork. Shortly after 9:PM his mate "advised him there was mud coming off the rig. It was like black rain coming down."

Workers on the Horizon advised the captain they were having trouble with the well and advised him to disconnect the hose and move the vessel away. The captain said there was rising concern in the workers voice.

Landry said he heard something else that concerned him. It was the loud hiss of a high-pressure release of gas or air that lasted for 30-seconds or more. Reportedly that was the hiss of the high pressure methane gas rushing up the drill pipe and onto the rig floor. Shortly thereafter he saw the green flash on the main deck of the Horizon to the aft of the derrick. About 10 minutes later there was a distress call from the rigs radio, "Mayday, Mayday, Mayday, the rigs on fire, abandon ship!"

Landry said the fire quickly enveloped the rig as workers scrambled to reach the lifeboats and some plunged into the water. Two boats made it clear of the rig but a smaller life raft was hanging by a rope and could not get free. The Bankston's rescue boat pulled alongside and passed them a knife which they used to cut themselves free.

According to the rig's captain, Curt Kuchta, his crew had slammed a "kill switch" on the drill deck meant to activate the blow out preventer to shut off the well.

An unidentified worker said they thought it was strange that BP had asked permission from the MMS to evacuate the mud from the pipe before setting the concrete plug. He said they were half done with removing the mud and replacing with seawater when the "well came at us." Another worker corroborated the story saying the blowout began with a flood of mud being pushed up out of the well onto the drilling floor followed by the escaped gas and several explosions.

Halliburton's President Tim Probert, said in his prepared statement that Halliburton would have set the final cement plug before the mud was removed but BP told them to remove the mud and flood with sweater first. As a contractor they are contractually bound to comply with the well owners instructions. Transocean's CEO confirmed in his testimony that BP had directed them to remove the mud first before setting the plug.

I would say it appears the blame is going to fall directly on BP and whoever asked the MMS for permission to remove the mud prior to setting the plug. That appears to have been the fatal decision for the Horizon and 11 workers. It is probably the decision that is going to cost BP more than $10 billion.

BP has two partners in the well. Anadarko Petroleum has a 25% interest and Japan's Mitsui has 10%. Anadarko is in trouble. The most commonly quoted price for the spill and cleanup seems to be around $13 billion. Anadarko's portion would be $3.2 billion and their insurance will only cover $178 million. Their market cap is roughly $25 billion but dropping fast. APC said it earned $716 million in Q1 so a $3.2 billion hit would be really painful. I am wondering if BP could end up owning Anadarko after the smoke clears.

Jim Brown

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