Some progress, but leak remains at BP well

By Gary Taylor and Katharine Fraser, with Kevin Saville in New York

May 3 - Although BP was able to report several points of progress May 3 in its fight to close its runaway Macondo exploration well in the Gulf of Mexico, the company still said it has not been able to reduce the flow of crude leaking from the wellhead 4,993 feet beneath the surface.

The US Minerals Management Service also announced the first Gulf of Mexico production curtailments May 1, listing 6,200 Mcf/d of natural gas production as shut in. The agency said two platforms have stopped production and one has been evacuated as a safety measure in the wake of the spreading oil spill.

MMS spokesmen have said that closure of platforms depends on whether their specific operations might constitute a fire hazard with a spill in the area or difficulty reaching the platforms by boat.

 As it has during other crises affecting the oil and other energy markets, such as hurricanes Katrina, Rita and Ike, Platts is producing this special summary of events surrounding the Deepwater Horizon rig disaster in the Gulf of Mexico. This special joint edition of Platts Oilgram News and OPR Extra will be published as frequently as Platts believes necessary to give its readers a quick summary of developments surrounding the leak at the wellhead, the growing footprint of the spill, and the impact these occurrences are having on markets and on US federal energy policy.

 

Oilgram News/OPR Extra special edition - May 3, 2010

Oilgram News/OPR Extra special edition - April 30, 2010

Oilgram News/OPR Extra special edition - April 29, 2010

Expectations ran high early May 3 when a BP employee told Alabama government officials and reporters in Mobile that activation of part of the well's malfunctioning blowout preventer had prompted a reduction in the flow.

Doug Suttles, BP's chief operating officer for America, later confirmed that the company had managed to activate the annular rams on the blowout preventer, but he said that development did not appear to have reduced the flow.

At the same time, Suttles said BP began drilling a relief well May 2 designed to intercept the flow from the original Macondo well, warning again that this solution could take three months to complete.

In the shorter term, he said he expects to begin placement of experimental containment devices on the leaks within the next seven days.

And earlier in the day, US Coast Guard Admiral Thad Allen described as "encouraging" the results from BP's initial test of underwater dispersants injected at the source of the flow near the sea floor.

"We've had some encouraging results in the last 24 hours by applying dispersants where the oil is actually leaking out of the riser pipe and dispersing it before its gets to the surface," Allen, who is coordinating the US government's response to the massive slick, said on CNN. "We will be finishing up a 24-hour trial here shortly, and if it looks like that's encouraging, we will start attacking the spill where it's actually leaking out of the pipe."

BP used a lot of time during a press conference to clarify comments by employee Jeff Childs, who briefed reporters in a televised interview after a conference with Alabama state officials.

Childs works in Alaska for BP, but he said he has been temporarily assigned to the incident command in Mobile for this crisis.

Citing the success with activation of the annular rams on the blowout preventer, Childs had given a detailed interview, concluding that: "We are making progress on getting it stopped."

"That report was inaccurate," said Suttles during the press conference later.

"Jeff is a BP employee and I have spoken with him," said Suttles during an afternoon press conference of the Deepwater Horizon Incident Command.

"What he got inaccurate is that it reduced the amount of oil flowing," Suttles said, confirming some success in activating part of the blowout preventer. "We don't believe it had any impact on the flow of oil."

He said activation of the annular ram should have stopped a significant portion of the flow from the well but, at this time, "we don't believe it will."

Suttles said hydraulic tests indicate those parts of the blowout preventer seem to have closed. But he said they also have indications that the "sealing elements didn't seal."

He said he would be "doing cartwheels" if the company's work with remotely operated vehicles had begun to show a reduction in the estimated 5,000 b/d leak coming from the Macondo well.

An April 20 blowout there created the leak (ON 4/22). The resulting explosion and fire destroyed Transocean's semisubmersible Deepwater Horizon drilling rig and left 11 of 126 workers missing and presumed dead.

And an oil spill from the explosion and leak has continued to threaten the Gulf Coast and Gulf fishing grounds between Florida and Louisiana.

The May 3 updates followed a hectic weekend that included visits from President Barack Obama and other Obama administration officials to response command headquarters in Robert, Louisiana (ON 5/3).

The Coast Guard and other market sources have said that so far shipping along the Gulf of Mexico corridor near the spill remains unaffected.

The US Department of Energy warned May 1 that the spill could affect four power plants that draw cooling water directly from the Gulf of Mexico or adjacent salt water sources.

The agency also cautioned that as much as 30,000 tons/d of coal imports could be affected if the spill shuts or limits shipping into the ports of Mobile, Alabama, or New Orleans.

Meanwhile, fishing was ordered restricted May 2 for a period of 10 days in the federal waters between the mouth of the Mississippi River and Florida's Pensacola Bay.

Predictably, the event has triggered a wide range of commentary and cancellation of certain events at the annual Offshore Technology Conference that began May 3 in Houston.

Program changes included cancellation of the annual press conference by the MMS to provide updates on deepwater exploration developments.

The agency is currently busy performing inspections on all Gulf of Mexico rigs ordered in the wake of the Deepwater Horizon disaster.

"We should not rush to judgment until we know what caused this, but our priority today needs to be focused on stopping the spill and arresting the damage," said Jack Gerard, president of the American Petroleum Institute, during an interview on the sidelines of the OTC.

The OTC exposition is expected to draw 65,000 participants from the oil and gas industry this week.

Asked if the disaster has dampened the mood, Gerard said: "Safety is our number one priority. What this does is we will again reflect to continue to improve our safety and practices."

To that end, API has organized two task forces, one focused on equipment currently used and the other to look at best operating practices.

While BP and the government are coordinating efforts to stop the spill, API is providing active support, he said.

"We have to get the spill shut off," he said, noting that "a lot of new things" are being tried in the response, such as underwater dispersants.

The industry "has moved quickly," he said.

As for political and long-term economic issues, "the energy reality of the US has not changed," Gerard said. "We continue to use oil and gas as the lifeblood of our economy and will continue to do so well into the future."