NEW ORLEANS -- A top offshore expert predicts that accidents like Friday’s Black Elk platform fire will continue to be a steady problem for years to come because of the way shallow-water drilling is conducted.
Eric Smith, the associate director of Tulane’s Energy Institute, told WWL-TV that offshore oil fields like Black Elk’s West Delta 32 fit into a dangerous economic model: They use platforms that are 50 years old or older and have been abandoned by the larger, better capitalized oil companies, but government regulators and smaller, newer operators are both motivated to keep drilling on them to tap the reservoirs completely dry.
“As you get these older platforms, (with) more marginal production, in new company hands, people start worrying more about the bottom line,” Smith said.
Smith said he’s afraid that there’s a “perverse incentive” for companies to keep tapping into spent oil fields because it costs them money to plug and abandon old wells, with no financial benefit, while they can still make money by trying to tap new wells and tie them back to the old platforms -- even if they produce only a small amount of new crude.
Meanwhile, the federal Bureau of Ocean Energy Management also wants to collect as many royalty checks as possible as operators try to eke every last drop of oil out of old fields.
By law, oil companies must decommission platforms that don’t produce oil for five years. After the BP accident in 2010, President Barack Obama separated the royalty collectors at BOEM from the safety regulators at the Bureau of Safety and Environmental Enforcement, and thanks to new legislation spearheaded by Rep. Raul Grijalva, D-Ariz., 240 “idle iron” platforms, a record number, were dismantled in 2011.
But that appears to have slowed this year. According to Decomworld, a British oilfield monitoring organization, 813 of the 3,700 fixed platforms in the Gulf of Mexico qualify for removal.
Many are on expired leases, but the government has granted only 93 permits for removal in 2012 and just 23 structures actually removed.
It used to be that three main companies handled contract work on older wells in the shallow-water gulf, in the maze of decades-old wells near the Louisiana coast that lie under less than 500 feet of water. Those companies – Cal Dive International, Tetra Technologies and Superior Energy Services – are able to handle all kinds of work on shallow wells approaching the very end of their lifespan, with plugging and abandonment work, welding, diving and repairs.
But newer companies generally can’t afford those fully integrated contractors and have to rely on different companies to do a multitude of different jobs.
“So when you get to the very bottom of that heap, to someone who can’t afford a Tetra Tech or a Superior, somebody like that, they will attempt to do this work themselves and they’ll go out and subcontract three or four companies -- a diving company and a P&A (plugging and abandonment) company to do the wells,” Smith said.
“But the well guys don’t know anything about the structural removal so you have more room for loss of coordination.”
In the case of West Delta 32, Black Elk hired Grand Isle Shipyards, which provided Filipino guest workers to do the pipe cutting work that led to the fire.
Smith noted that federal regulations require pipes that carry hydrocarbons to be purged and filled with an inert gas, typically nitrogen, before any cutting is done.
While a federal investigation continues to determine what went wrong in Friday’s accident, Smith said it’s possible that such a cleansing “blow-down” was not done properly before the cutting work began.
A source who spoke with workers on the Black Elk platform told WWL-TV that there had been communications problems with at least some of the Filipino workers who knew little or no English, raising the possibility that Friday’s fire could have stemmed from miscommunication over which pipes to cut and which ones not to cut.
“In those situations where everyone works for the same contractor, you’re far less likely to get these conflicts,” Smith said. “There’s overlapping management so you don’t have as much chance of the welder not knowing what the guys who do the blow-down on the pipelines are doing.”