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Fitch: Total Gas Leak 'Not Another Deepwater Horizon'

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Fitch: Total Gas Leak 'Not Another Deepwater Horizon'

The gas leak at Total's wellhead platform on the Elgin gas field in the North Sea is not as serious as BP's Deepwater Horizon accident in 2010, said Fitch Ratings on Wednesday.

The ratings agency added that even in the event of a shutdown of the whole Elgin field, it believes that Total is likely to retain its 'AA' credit rating as it has the cash resources to more than cover any associated costs.
 
"The Elgin leak is a surface gas leak rather than an underwater oil leak, making its potential for environmental damage far lower than in the Deepwater Horizon case," said Fitch in a press statement Wednesday. "These sorts of accidents are often difficult to resolve and unpredictable; nonetheless, in our view the potential is low for this leak to escalate to a crisis on the scale of Deepwater Horizon. Total's preliminary assessment suggests there has been no significant impact on the environment and the use of dispersants has not been considered."
 
However, Fitch added that it had considered a "worse-than-base-case" scenario where Total may have to shut down the Elgin field to stop the gas leak. "This would imply the loss of a producing field that is worth, in net present value terms, EUR 5.7 billion [$7.6 billion] according to third-party valuations. Were the field to become permanently unusable it would cost Total EUR 2.6 billion [$3.5 billion] and the company might have to compensate its partners for the remaining EUR 3.1 billion [$4.1 billion]," Fitch said.
 
On Tuesday Dow Jones reported a source saying that the proximity of vessels owned by Transocean and Rowan to the Elgin platform may sway Total's decision in hiring a firm to drill relief wells to cap the leak.
 
Currently, Transocean's Sedco 714 (mid-water semisub) is drilling for Total in the North Sea, while a Rowan jack-up rig was used for drilling work at Elgin.
 
Total said Tuesday it is studying all options and could take time to make a decision, while dismissing reports that claimed the company had indicated it could take up to six months to drill a relief well. 
 
"They are not details that have come from us at all," a Total spokesperson told Rigzone Tuesday morning, explaining that the company did not yet have a timescale in place regarding the drilling of a relief well.
 
Meanwhile, Royal Dutch Shell reported Tuesday that it removed oil workers from two of its North Sea rigs due to the proximity to Total's Elgin/Franklin platform.
 
In a statement, Shell said it had reduced personnel on its Shearwater platform and the nearby Nobel Hans Deul drilling rig. Drilling operations on the Noble Hans Deul (400' ILC) rig, which is located offshore Scotland 138 miles east of Aberdeen, have been suspended and the wells "left in a safe state," said Shell.
 
"While the move is purely precautionary and primarily driven by the prevailing weather conditions, and both facilities remain operational, it has been decided to reduce numbers to a more manageable level until the full situation surrounding the Elgin leak has been established," said a Shell spokesperson.
 
Shell also reported Tuesday that it is using the downtime as an opportunity to conduct maintenance on one of its rigs.
 
"Further to the precautionary safety measures we took yesterday following Total's gas leak at Elgin, we have no brought forward plans to carry out maintenance at Shearwater. This will take place from today, starting four days ahead of schedule. We are therefore shutting down production in a controlled manner," said a Shell spokesperson.
 
Total reported Monday that it had evacuated the Elgin platform's crew and that all 238 personnel had been accounted for.



A former engineer, Jon is an award-winning editor who has covered the technology, engineering and energy sectors since the mid-1990s. Email Jon at jmainwaring@rigzone.com

WHAT DO YOU THINK?

Post a Comment Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
ElviM | Mar. 29, 2012
this is most probably an underground blow out with the HP gas breaking out the formation aroung the last casing shoe above. To kill this kind of blowout requires than a relief well to intercept the blowing well just in the kicking formation. An alternative bullheading followed by a huge cement job may also kill the well but this will result in an impressive enviromental water pollution.

Daniel Dominick | Mar. 29, 2012
Is this occurence even worse than the b.p. incident, in that they have actually damaged the rock formation. It might be hard to cap a well but it can be done. Is drilling a relief well going to make that much of a difference Have they been using the contravercial fracking methods and if so should the industry be reassessing the use of these methods. What if this had been onshore. The release of these gases could wipe out whole towns. Thats assuming they would never allow it near a city. No one is giving any estimations of the volumes involved, of which they must have a fair idea.

steve | Mar. 28, 2012
If it was above the subsea safety valves it would be shut in already, assuming they worked of course. So it must be below them on the riser or a formation issue

Russell | Mar. 28, 2012
If this is a leak at the surface, is it really necessary to drill a relief well? Are there no options for repairing a failed seal or other defect at the surface?


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