Despite worries, no signs of BP-style crisis

An oil and natural gas production platform exploded in flames Thursday morning, sending 13 workers on board plunging into the Gulf of Mexico and touching raw nerves about the safety of offshore energy operations in the wake of the BP spill.

None of the 13 workers suffered serious injury, and by the end of the day Thursday, it appeared catastrophe had been averted and that early comparisons to BP’s April 20 disaster were unjustified.

A passing service helicopter noticed a large fire on Mariner Energy’s Platform A in Vermilion Block 380, 102 miles off the Louisiana coast, at 9:19 a.m. The cause of the explosion was unknown, but Mariner Energy said in a statement that the crew was able to shut all seven oil and gas wells that fed the production operation.

The Coast Guard is investigating how the fire started. Gov. Bobby Jindal said at a news conference in Houma that 100 barrels of crude oil stored on the platform burned for about four hours Thursday morning.

The question of whether any oil would spill from the Mariner Energy platform dominated early reports Thursday. The rig owners quickly said workers had succeeded in shutting in the seven producing wells and reported seeing no sign of oil during an initial flyover. But around midday, the Coast Guard confirmed a milelong sheen of some kind of fuel on the water’s surface at the accident site.

A few hours later, the Coast Guard reversed itself when Capt. Peter Troedsson stood at a news conference in downtown New Orleans and said there was no visible sheen. He blamed the initial account on reports from Mariner Energy.

Comparing, contrasting

With national and international attention still squarely fixed on the BP disaster and its emerging lessons and devastating impact, parallels between the two incidents were quickly drawn in the news media and in Washington. Thursday’s accident occurred just 210 miles west of the BP well that blew in April, killing 11 rig workers and setting off the worst oil spill in U.S. history.

But the two incidents could hardly have been more different. The Mariner Energy fire occurred on a fixed production platform that wasn’t involved in any active drilling and was anchored in 340 feet of water. The incident was essentially over in a few hours. The Deepwater Horizon rig was a floating vessel that burned for two days in April, suffered a blowout of a well nearly a mile below the Gulf’s surface and created an oil leak that spewed thousands of barrels of crude daily for three months.

Also, the Mariner Energy platform’s production operations were not affected by the drilling moratorium imposed by President Barack Obama in May.

“The platform was authorized to produce oil and gas at this water depth, so it wasn’t involved in the current suspension (of drilling operations) or the requirements outlined in the notice to lessees,” said Eileen Angelico, a spokeswoman for the Interior Department’s Bureau of Ocean Energy Management, Regulation and Enforcement.

Still, that didn’t stop environmental groups and members of Congress from saying Thursday’s fire made their case for extending the drilling ban. Almost immediately, U.S. Rep. Raul Grijalva, D-Ariz., and the Sierra Club released statements calling for the moratorium to continue based on what Grijalva said was Thursday’s “starkest possible reminder that oil rigs in this country are not safe.”

Impact on moratorium

Oil industry leaders and Louisiana politicians, who have complained that the six-month moratorium on deepwater drilling will cripple the coastal economy and put a crimp on the nation’s energy resources, braced for a new fight.

“It’s certainly disheartening, and it is going to be yet another challenge for the industry,” said Chris John, president of the Louisiana Mid-Continent Oil & Gas Association. “We were making some progress on the moratorium. This certainly will complicate matters.”

While the moratorium did not affect the platform that burned Thursday, Mariner Energy has been a vocal opponent of the drilling ban. On Wednesday, The Financial Times quoted a Mariner Energy employee, Barbara Dianne Hagood, at a rally in Washington accusing the Obama administration of “trying to break us.”

If comparisons to the Macondo disaster were overwrought, federal accident data show that Thursday’s incident was not just an ordinary rig or platform fire. There have been more than 100 fires and explosions reported to offshore regulators each of the past four years, but it’s been more than three years since a significant fire forced personnel to evacuate. Only a handful of fires each year cause more than $25,000 in structural damage.

Mariner Energy had paid $65,000 in fines for three violations of federal regulations for its Gulf of Mexico operations, federal records show. Federal incident reports show that the platform at Vermilion Block 380 has had at least four accidents since 2000, two of them fires. Two of them occurred before Mariner Energy bought the rig, the records show.

Another oil company, Apache Corp., announced in April that it would pay $2.7 billion to merge with Mariner, but the deal has not been completed.

Workers brave waters

Thursday’s explosion was certainly significant for the 13 workers who had to float in open, choppy seas for two hours before they were rescued. Ten of the 13 workers were taken to Terrebonne General Medical Center in Houma at 2:30 p.m., and three others came later in the day. Sunburns appeared to be the worst of their injuries, the governor said.

“They didn’t have any visible injuries, they were in good spirits and were looking forward to going home,” Jindal said Thursday. “One of them has a child who has a birthday tomorrow, and I told him there are easier ways to come home for his child’s birthday party.”

He said the 13 workers had only 12 lifesaving devices, so one worker was held afloat by others, giving first responders the mistaken impression that he was hurt.

Sitting outside the hospital, a girlfriend of one of the workers excitedly told a friend about his encounter with the governor.

“He was standing there in a gown with little booties on his feet, talking to Bobby Jindal. I couldn’t believe it,” said the woman, who declined to comment about the incident.

Six of those on the platform were blasting paint and rust while the others were doing regular oil-field work, Jindal said.

But “it’s way too early to speculate on a cause,” Jindal said.

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BP crews will attempt to remove the capping stack atop the blownout Macondo well in the Gulf of Mexico today, National Incident Commander Thad Allen said Wednesday. After the capping stack is removed, crews will try to dislodge the well’s failed blowout preventer and replace it with a new one.

The procedure was scheduled to take place Monday, but was put on hold, Allen said, because waves of 6 to 8 feet at the well site made it unsafe to operate the necessary vessels and equipment.

“We’ve hit a weather window where it’s been difficult for us to move forward,” Allen said. But Allen said crews will have a favorable weather window today through Sunday.

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Waves are expected to fall to about 4 feet by noon today, allowing the Discoverer Enterprise drill ship to remove a capping stack atop the well with a drill pipe. The capping stack is the small blowout preventer put on top of the well July 15 that effectively stopped the flow of oil into the Gulf of Mexico. The apparatus will be placed on the sea floor after it is removed.

Following the capping stack’s removal, the Q4000 platform will attempt to remove the well’s failed blowout preventer. The Q4000 needs calmer seas, with waves of no more than 3 feet, to remove the blowout preventer because it will do so using a less sturdy mechanism called a drill string, Allen said.

Technicians are using the drill string, instead of a drill pipe, to remove the blowout preventer because that is the equipment available to the Q4000. Although the Q4000 was never intended as a lifting vessel, it’s being used in the procedure because it is already connected to the “yellow pod” that engineers use to control the blowout preventer on the water’s surface.

“We’re accepting some limitations on what (the Q4000) can do compared to what the Discoverer Enterprise could do,” Allen said.

Attempting to remove the blowout preventer, which together with the latching device that will unseal it weighs one million pounds, in the rough seas present earlier this week could have caused the drill string to snap, Allen said.

Engineers will try to remove the blowout preventer by giving it a “gentle tug” using 80,000 pounds of force. If that doesn’t work, they will open the device’s rams — seals that close onto drill pipe — and free it by sliding it off the pipe. The latter method would take more time, but may be necessary if a pipe trapped inside the blowout preventer is at all encased in the cement forced into the well during the “static kill” last month. Allen said he was “optimistic” that the blowout preventer would come free with just a tug because the pipe has become fragile.

The blowout preventer will be brought to shore for examination after it is removed.

BP is replacing the original blowout preventer with one that is better able to protect the well from being damaged as pressure rises in the well during the “bottom kill.” The new blowout preventer is being taken from the backup relief well BP had been drilling in the Gulf.

The bottom kill calls for pumping the damaged well with mud and cement, via a relief well, at 18,000 feet below the water’s surface. Although oil has not flowed inside the well since it was stuffed from the top with mud and cement this month, the relief well is considered the final step in plugging the well.

Allen said crews will proceed with the bottom kill sometime after Labor Day and following a series of diagnostic tests on the new blowout preventer. The relief well must be drilled about 100 more feet before it intercepts the Macondo well. It would take about 96 hours after the point of interception to pump the well with enough mud and cement to officially declare it sealed, Allen said.

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(Reuters) – A federal judge in New Orleans rejected on Wednesday the U.S. government’s request to dismiss a lawsuit challenging its original 6-month deepwater drilling moratorium.

Hornbeck Offshore Services Inc and other oil companies sued the government when it first ordered a halt to deepwater drilling in the Gulf of Mexico in May after BP Plc’s well rupture that killed 11 workers and caused the world’s worst offshore spill.

The drilling halt was subsequently amended, so the government sought to toss out the Hornbeck lawsuit, arguing it was no longer relevant.

But U.S. District Judge Martin Feldman, who earlier this summer blocked the first drilling halt, said in a 20-page ruling that the government’s amended moratorium offered “no substantial changes” from the first one.

The case is Hornbeck Offshore Services LLC et al v Ken Salazar et al, U.S. District Court for the Eastern District of Louisiana, No. 10-01663.

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WASHINGTON — Scandalized by federal regulators who had sex with oil company executives and negotiated with them for jobs, the agency that supervises offshore drilling is imposing a first-ever ethics policy that bars inspectors from dealing with a company that employs a family member or personal friend.

Michael Bromwich, head of the Bureau of Ocean Energy Management, said the new policy should help restore credibility to his agency, which was widely criticized under its former name — the Minerals Management Service — for being too close with oil and gas companies.

President Obama and Interior Secretary Ken Salazar have pledged to end the agency’s “cozy relationship” with industry and slow the revolving door between government and the energy industry.

Under the new policy, agency employees must notify a supervisor about any potential conflict of interest and step aside when inspections or other official duties involve a company that employs a family member or close personal friend.

Inspectors who join the agency from the oil industry cannot perform inspections or other work involving their former employers for two years.

The new policy, which takes effect immediately, comes after a series of jaw-dropping reports documenting the close relationship between agency workers and energy company representatives.

In May, the Interior Department’s acting inspector general found that MMS employees in the Lake Charles office accepted meals, football tickets, hunting trips and other gifts from the oil and gas companies they were regulating. In at least one case, an inspector admitted using crystal methamphetamine and said he might have been under the influence of the drug the next day at work.

A separate 2008 inspector general report singled out workers in the agency’s Lakewood, Colo., office for having sexual relationships with energy company executives and accepting gifts from them.

Mary Kendall, the Interior’s acting inspector general, said her biggest concern was the ease with which drilling agency employees moved between industry and government. Inspectors and oil company workers have often known one another since childhood, and their relationships took precedence over their jobs, Kendall said.

The new policy is directed toward the most clear-cut conflicts of interest and acknowledges that drilling regulators often live near rig workers and supervisors they see in the field. The guidelines don’t require recusal in all those situations, as long as the neighbors have limited personal knowledge of each other and only share general conversations.

In a memo to the drilling agency’s 1,700 employees, Bromwich acknowledged that the new policy responds to widespread criticism. But he said it was a significant overhaul that “underscores the importance of independence, objectivity and the absence of real or apparent bias on the part of any of our employees in the discharge of their duties.”

An investigator with the Washington-based Project on Government Oversight, Mandy Smithberger, called the ethics policy long overdue. She also said it should be expanded to other agencies within the Interior Department and high-ranking officials in the agency’s Washington headquarters.

Bromwich, a lawyer and former inspector general at the Justice Department, has pledged a lifetime ban on working in the energy industry, but Smithberger said a more formal policy restricting political appointees from working in the industry is needed.

At least two former MMS directors have served as president of the National Ocean Industries Association, an offshore energy trade group. Randall Luthi, who was MMS director from 2007 to 2009, took over the industry post in March, replacing Tom Fry, who had been president of the group since 2000. Fry headed the drilling agency during the Clinton administration.•

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Institute says drillers riding it out for now

Only a few rigs have left the Gulf of Mexico because of the federal deepwater drilling moratorium, but the directive could dampen long-term activity in the Gulf if it drags on, a senior policy adviser at the American Petroleum Institute said last week.

“Large operators have a number of leases in play, and they can ride out some level of inactivity,” Andy Radford told a group of journalists convened in New Orleans by the Poynter Institute, a Florida-based school and resource for journalists. “There is a willingness to ride it out,” but companies are also waiting to see some indication that they will be allowed to resume deepwater drilling.

“I think the next few months will be critical,” Radford said.

The moratorium, which the Obama administration put in place in late May soon after the BP oil spill, suspends exploratory drilling at 33 deepwater wells in the Gulf of Mexico for six months, but it remains unclear just how long the moratorium could last.

A long moratorium eventually could curb interest among energy companies in bidding for drilling tracts in the Gulf and cause a downward trend in offshore production.

“You won’t feel the (full) effects of it until down the road,” Radford said.

The Gulf of Mexico is thought to be the nation’s largest source of undiscovered oil and gas with an estimated 45 billion barrels of oil that have yet to be tapped. Back in the 1970s, initial estimates pegged the total amount of recoverable oil in the basin at 5 billion barrels, but technological advancements have significantly increased that amount, Radford said.

Much of the production in the Gulf comes from deeper waters of 1,000 feet or more. Deepwater discoveries are important, Radford said, because they tend to be larger than onshore discoveries. Deepwater regions also tend to be less explored.

“As you explore an area, you typically find the larger discoveries first,” Radford said. “The deepwater being less explored, you’d expect to find larger discoveries.”

Today, the Gulf accounts for 30 percent of the nation’s oil and gas production, but the appetite for energy continues to grow.

Radford said the world will require 44 percent more energy in 2030 than it did in 2006.

The transportation sector is the largest consumer of U.S. oil. Ninety-four percent of that sector’s energy needs were fueled by oil in 2008. Even with the growth of renewable resources, 85 percent of that sector’s energy needs will still be met by oil by 2035, Radford said.

“We’re going to need 16 million barrels of oil each day more to meet (the nation’s growing energy) demand,” he said. “So if you don’t produce this oil, if you don’t explore … you’re going to have to rely on imported oil and the risks associated with that.”

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