I’ve been sitting on the sideline watching this sudden push in New Zealand to open up deep sea drilling. Having heard various arguments, I thought I’d do some digging and make up my own mind. I come with a decent grounding in this, having worked on Oil Exploration Rigs through the North Sea and Africa, and I can probably shed some light on the issue.
In many ways I see it as firstly risk versus reward. The main risk is oil spills from blowouts, while the main rewards are economic. Based on this, it then becomes a question of what areas will we allow for oil exploration, given the risks inherent in them. Our transport fuels and countless products are petroleum based, so we cannot simply bury our heads and say no to oil. But that doesn’t mean we must blindly accept oil wells in every corner of the globe regardless of the risks involved.
The Deepwater Horizon Well took 87 days before it was contained
A major spill is almost always the result of multiple factors. These include unexpected down-hole conditions, equipment failure, insufficient training / preparation, human error and weather. Some would also argue that luck, or lack thereof, plays a role. Dangerous situations arise on rigs on a regular basis.
Consider down-hole conditions. Down-hole pressure (the pressure at the bottom of a well) is almost always half a psi per foot of depth. So a 10,000 ft well will almost always have a pressure of about 5000 psi at the bottom. But occasionally, an exception occurs. I worked on one such well in the North Sea. I was suddenly called offshore to a rig that was on a site close to where another rig, the Ocean Odyssey, had suffered a massive blowout and fatal explosion a few years earlier.
On arrival on the rig, I met the company man, and he explained they had taken a kick (down-hole pressure forcing drilling fluid back up the well). They had increased the mud (drilling fluid) weight, and had managed to stabilise the well. Or so they thought. But exactly what they had hit, and how safe the rig was, remained a mystery.
The amazing thing was the mud weight was by now almost the heaviest ever recorded anywhere. The Mud Engineer was busy talking by satellite phone to his bosses to see if a) he could add any more barite to make the mud heavier still, and b) to arrange more barite to be shipped out, as he had all but run out.
I ran a couple of tools into the well on the end of a Wireline cable (my job description was Wireline Engineer). The first, a gamma ray tool, showed what looked like sandstone at the bottom of the well. The majority of wells in production are from sandstone. Next was a sonic tool, and this also suggested sandstone, but interestingly its porosity was over 20%, an incredibly high level for such a deep formation. Thirdly, I ran a Repeat Formation Tester, which shows hydrostatic pressure in the well, plus pressure inside the formation.
A key safety factor on oil wells while being drilled is hydrostatic pressure. It MUST remain greater than formation pressure, otherwise gas / oil can flow out from the rock, pushing up the drilling fluid (this is called a kick), and if not controlled correctly, it causes a blowout (the rig explodes and is potentially lost).
So all eyes were on my screen as I set the tool. I don’t remember the exact numbers, but hydrostatic pressure from memory was something like 12,000psi, as expected because our mud weight was so heavy. Next came the formation pressure, and there was an audible gasp from the company man as the number showed on my screen – 12,000 psi as well. Our formation pressure was so much higher than anyone had ever anticipated. Plus, it almost exactly matched our hydrostatic pressure, meaning we had no safety factor at all. Further to this, on testing the formation permeability (the ease with which gas / oil will flow from the rock), it was off-the-chart. It was so high I initially thought my tool wasn’t working properly.
The end result was the zone was loaded with gas, very porous, super-permeable, and we were sitting there with zero safety-factor in our drilling fluid weight. The slightest change could suddenly see gas flowing up the well, threatening the rig and all our lives.
Keep in mind we were just adjacent to the site where Ocean Odyssey had fatally exploded from exactly this a few years earlier, and so all precautions on the current well were thought to have been taken. Despite all this, here we were facing a similar ending. We pulled out our gear and closed the well off, while an exasperated mud engineer tried to scrounge up still more barite to increase mud weight. I tell you all this to explain that drilling underground is challenging because we never know what we will find. Drilling into unknown formations kilometres underground is an inherently risky business.
There are of course other risk factors. If we look at the 10 worst oil disasters in terms of loss of lives, all 10 of them occurred offshore, and 9 of them happened in the last 40 years. But another interesting statistic is 8 of them had bad weather as a major or contributing factor (1). Offshore rigs can be exposed to massive waves and wind, and there is nothing we can do to stop this, aside from not putting the rig there in the first place.
One further consideration is human error. In the BP Horizon Oil disaster, reports indicated multiple human errors, including Halliburton who had performed a poor cement operation, and BP who had failed to order a Cement Bond Log after the cementing operation (2). When you go through historical oil disasters, so many ofthem have human error as a contributing factor, and this is impossible to remove completely.
Take the Rena, a Greek owned vessel that round aground in New Zealand, causing our worst ever maritime environmental disaster. Rumour has it the Captain was below deck celebrating his birthday with a couple of slappers at the time. Slapper or no slapper, either way the Captain failed in his duties. Looking at oil industry disasters, several have involved collisions between vessels and stationary oilrigs. Human error, be it gross negligence or just poor judgement is impossible to eliminate.
Adding all this up, oil industry disasters will continue to happen. Unexpected down-hole conditions, equipment failure, weather and human error will ensure this. Over the last 40 years, there have been 27 oil spills involving 1 million gallons or more, and the average of these spills is a massive 49 million gallons (4). We have certainly not seen the last of them.
Thankfully however, there are ways to reduce or mitigate the risks, and part of this is in what areas we allow to be explored. Lets consider a blowout, which poses the main risk in oil exploration. A blowout is where control of the well is lost, and gas / oil gushes uncontrollably out the top. Over the last 37 years, there have been around 500 reported blowouts worldwide. Of these, 128 led to significant pollution. Blowouts then are not a rare occurrence.
If the blowout occurs on land, it is much easier to control. Capping equipment can be driven in, flown in, pushed in by robot. We also have multiple options for viewing the blowout and capping operation. These include naked eye, visible spectrum cameras, thermal cameras, and multiple viewpoints from above and beside the wellhead. This all makes it much easier to bring a blowout back under control on land wells.
Once you get offshore, direct access to the wellhead becomes more difficult. We must rely on divers and Remote Operated Vehicles to show us what is happening and guide us through the repair. And the deeper we go, the harder this becomes. Over 1000 ft it becomes impossible for divers to view / control operations, so we become totally dependent on ROVs and submarines. You imagine trying to control some repair equipment that is 3km below sea level – It is affected by tide, current, reduced visibility. There are long delays in getting the equipment up and down. Equipment must withstand external hydrostatic pressures of thousands of psi. All up it becomes extremely challenging. And the deeper you go, the greater the challenges.
This is why the BP Deepwater Horizon oil spill took so long to control. If it were on land, it would have been controlled within hours. If it were in shallow water (less than1000ft), it would have been controlled within days. But it was the fact that at 5000ft down, regaining control became almost impossible. It took a massive 87 days before the flow was finally halted! As a report to the US President stated,“When a failure happens at such depths, regaining control is a formidable engineering challenge – and the costs of failure, we now know, can be catastrophically high.”
This is the crux of the problem for me. The deeper you go, the more difficult it becomes to regain control of a well. I am not opposed to drilling for oil on land. For the most part, it is safe, and should well control be lost, recovering it is not so challenging. I am not opposed to drilling for oil in shallow water (< 1000 ft). The risks are greater than for land, but I believe they are manageable. But I do have a problem with deep water drilling. As an Engineer who was called to rigs when they had problems, I know the very nature of oil exploration and production leads to difficult situations, but as water depth increases we simply lose our ability to recover from them in any reasonable time. In many ways, Deep Sea Drilling is a game of Environmental Roulette.
I am not disputing the very real benefits of a prosperous oil industry. New Zealand is very dependent on foreign oil, so having our own oil would improve our current exchange position. Secondly, there is increased employment, and the jobs in the sector tend to be higher paid. Typically, pay rates are around double the average wage in New Zealand.
Norway is often cited as an example of a country that has benefitted from oil. Certainly the economy is strong and their state run superannuation scheme is the envy of almost all developed nations. Keep in mind however their industry is massive, and many of the fields relatively easy to access in shallow waters. Also, Production is dominated by a State owned company (Statoil) that helps ensure extensive profits remain in Norway, rather than being siphoned off overseas by BP, Shell, Mobil, et al. (3)
One final benefit sometimes cited is cheaper fuel, however this is really not the case. New Zealand doesn’t enjoy cheaper butter despite our massive dairy industry. Nor would we enjoy cheaper fuel. We’d pay just the same price for fuel at the pump, as our production would never be sufficient to make any real dent in global supplies.
So the upside for your average Kiwi of a large oil industry here is our imports would become cheaper, and there would be some high paid jobs within the oil sector. Our economy would also grow a bit. If we have no major oil spills then it’d be a good result. But the risks of a major blowout are very real. If it happens in a land or shallow water well, we’ll probably be OK. But if it happens in a deepwater well, then we may end up paying a very heavy price indeed. I’d rather just forgo the cheaper imports thanks.
I was discussing this last week with a mate of mine who I worked with in the North Sea. In some ways I have divided loyalty, having benefitted from working in the oil industry. Anyways, this bloke said, “you still drive a car (actually I don’t have a car, but I do still travel) – it is hypocritical of you to be opposed to drilling for oil.” But he misses the point about where we drill. The fact that our society values oil doesn’t mean we must drill for it in every location on earth. New Zealand is under no obligation to expose its coastline to excessive risk from Deep Sea Drilling. We already have land and shallow water oil / gas production, and I have no problem in a continuation with this. But when it comes to Deep Sea Drilling – Well I have a big problem with it. The rewards are just not worth the risk.
A couple notes.
1. Anadarko, the company now drilling for oil in New Zealand, was a 25% partner in the BP Deepwater Horizon Oil Spill in 2010. According to accident reports, Anadarko had approved budget-cutting measures that had contributed to the catastrophe.
2. The oil well I worked on in the North Sea discussed above suffered numerous problems over subsequent months, and was eventually plugged and abandoned. I am not sure if this field was ever explored again.
References
1. http://home.versatel.nl/the_sims/rig/i-fatal.htm