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Big Oil Ready to Deploy New Containment Device for Deepwater Spills

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HOUSTON (Dow Jones Newswires), Apr. 18, 2011

The high-tech marvel that's enabling oil companies to return to the deep waters of the Gulf of Mexico sits in a sun-baked industrial lot in the outskirts of Houston, not far from a gas station, a taco truck, and a highway that could quickly take it to the scene of the next Gulf oil spill.

The new spill-containment device was developed by a consortium led by ExxonMobil to control future spills similar to the largest marine oil spill that leaked more than 4 million barrels in the Gulf in April last year.

"We like it here," Marty Massey, chief executive of the Marine Well Containment Co. (MWCC), said Friday, as the company unveiled to reporters the device, called a capping stack that is the heart of the containment system. "[The device was] built here; the people who built it can maintain it" and can be deployed to its destination "in a matter of days," Massey said. "We are ready to go."

The 30-foot tall, 100-ton stack--a tree-shaped mass of blue, yellow and white steel with protruding knobs and gauges--is meant to be lowered on top of a deepwater gusher, either killing the flow or funneling the oil to ships. It draws on the lessons of the system that BP struggled to develop during the three months it fought to control the damaged Deepwater Horizon well that unleashed a major environmental disaster.

The company said the containment system that the device is part of can capture up to 60,000 barrels a day from wells up to 8,000 feet below sea level.

Massey said that the consortium, created by Exxon, Chevron, Shell and ConocoPhillips, is also developing a similar system with a higher capacity capable of capturing up to 100,000 barrels a day from gushers as deep as 10,000 feet. This improved version, Massey said, will operate from several bases along the Gulf Coast and will be ready around mid-2012.

As the government suspended deepwater drilling following the Gulf disaster, the oil industry needed to quickly take steps and prove that it was capable of controlling any future deepwater spills. In late February, the government lifted the moratorium on deepwater drilling, following the development of MWCC's containment system and another competing system developed by Helix.

Ten deepwater drilling permits have been granted so far by the Bureau of Ocean Energy Management, Regulation and Enforcement, a U.S. Department of Interior agency.

The fact that there are two different systems now available to cap deepwater rogue wells in the Gulf of Mexico is "a huge step forward," said Tad Patzek, head of the Department of Petroleum and Geosystems Engineering of the University of Texas at Austin. The technology was always available in principle, but it wasn't really proven to work until, after much effort, BP used it to control the well that caused last year's spill, Patzek said.

While it's fortunate that these systems now exist, Patzek said, "none of these devices should ever be deployed," if the oil industry does the job right. With these devices, it could take 10 days instead of three months to stop a spill after a well blowout, but "still, considerable damage will be done, not to mention [possible] loss of life," Patzek said.

In the event of a deepwater blowout, MWCC will transport the capping stack to a Gulf Coast port and to its offshore destination. Its operation will be placed under the control of a joint command of U.S. authorities and the company responsible for the oil spill.

When submerged at the bottom of the sea, it will be able to withstand gusher pressures of up to 15,000 pounds per square inch with tough steel blades that shut close.

If the well cannot be shut in, the escaping oil and gas will be shipped to the surface through a series of tubes. The captured oil will be stored in drill ships and captured gas will be flared, said Dan Smallwood, MWCC's chief operating officer.

MWCC also keeps another capping stack, designed to operate at lower pressures.

The company has commissioned the construction of two large vessels to store oil, to augment the improved version of the system, Massey said. When not in use for controlling spills, the ships will be utilized to offload oil from tankers in the Gulf.

Besides its four founders, six other companies have joined MWCC--all accounting for a total common investment of $1 billion. These are BP, Apache, Norwegian oil giant Statoil, BHP Billiton, Anadarko and Hess.

Massey said that the 10 companies that equally share investment and operational expenses account for 70% of the deepwater wells drilled in the Gulf. Other companies can pay fees to use the system even if they don't want to become full-fledged members of the consortium.

Copyright (c) 2011 Dow Jones & Company, Inc.

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