Monday, December 6, 2010

Montara Oil Spill: "A failure of sensible oilfield practice"

While BP's deepwater spill in the Gulf of Mexico was worldwide news for months, the worst incident of its kind in Australia in August 2009 also leaked for 74 days before the well could be brought under control. Yet in Australia media interest was muted after the first few days and most people even here would have forgotten that it ever happened. Nobody seems to care if you don't have a household name like BP?

An inquiry was completed in August 2010, but the report has only now been released along with the Government's response.

Some Background

Wikipedia: The Montara oil spill was an oil and gas leak and subsequent slick that took place in the Montara oil field in the Timor Sea, off the northern coast of Western Australia. It is considered one of Australia's worst oil disasters. The slick was released following a blowout from the Montara wellhead platform on August 21, 2009, and continued leaking until November 3, 2009 (in total 74 days), when the leak was stopped by pumping mud into the well and the wellbore cemented thus "capping" the blowout.

The West Atlas rig is owned by the Norwegian-Bermudan Seadrill, and operated by PTTEP Australasia (PTTEPAA), a subsidiary of PTT Exploration and Production (PTTEP) which is in turn a subsidiary of PTT, the Thai state-owned oil and gas company was operating over on adjacent well on the Montara platform. Houston-based Halliburton was involved in cementing the well.

The Montara field is located off the Kimberley coast, 250 km (160 mi) north of Truscott airbase, and 690 km (430 mi) west of Darwin. Sixty-nine workers were safely evacuated from the West Atlas jackup drilling rig when the blowout occurred.

The Incident

Having worked in the industry, my impression was that most operators are working pretty hard to prevent accidents like this. The inquiry suggests that is not the case, with the Thai operator in this case failing to meet the most basic requirements for safe drilling:

The Inquiry has been asked to determine what caused the Blowout. In this context, the Inquiry has found that at the time the H1 Well was suspended in March 2009, not one well control barrier complied with PTTEPAA’s own Well Construction Standards (or, importantly, with sensible oilfield practice). Relevantly, the 9⅝” cemented casing shoe had not been pressure tested in accordance with the company’s Well Construction Standards, despite major problems having been experienced with the cementing job. In particular, the cement in the casing shoe was likely to have been compromised as it had been substantially over‐displaced by fluid, resulting in what is known as a ‘wet shoe’. None of this was understood by senior PTTEPAA personnel at the time, even though the company’s contemporaneous records, such as the Daily Drilling Report (DDR), clearly indicated what had happened. The multiple problems in undertaking the cement job – such as the failure of the top and bottom plugs to create a seal after ‘bumping’, the failure of the float valves and an unexpected rush of fluid – should have raised alarm bells. Those problems necessitated a careful evaluation of what happened, the instigation of pressure testing and, most likely, remedial action. No such careful evaluation was undertaken. The problems were not complicated or unsolvable, and the potential remedies were well known and not costly. This was a failure of ‘sensible oilfield practice 101’.

As at April 2009 when the H1 Well had been suspended and the West Atlas rig had departed from the Montara WHP to undertake other work, not one well control barrier in the H1 Well had been satisfactorily tested and verified, and one barrier that should have been installed was missing. In other words, the H1 Well was suspended without regard to PTTEPAA’s own Well Construction Standards or sensible oilfield practice.

When the West Atlas rig returned to the WHP in August 2009 it was discovered that the 13⅜ ” PCCC (pressure containing anti‐corrosion caps) had never been installed. The absence of this PCCC had resulted in corrosion of the threads of the 13⅜” casing and this, in turn, led to the removal of the 9⅝” PCCC in order to clean the threads. This was viewed by PTTEPAA personnel as a mere change of sequence that simply involved bringing forward the time of the removal of the 9⅝” PCCC. PTTEPAA’s Well Construction Manager, Mr Duncan, took a positive decision not to reinstall the 9⅝” PCCC. This meant that, according to PTTEPAA’s operational forecast and drilling program, the H1 Well would have been exposed to the air without any secondary well control barrier in place for some 4 to 5 days, with sole reliance on an untested primary barrier (the cemented 9⅝” casing shoe) that had been the subject of significant problems during its installation.

After the 9⅝” PCCC had been removed, the H1 Well was left in an unprotected state (and relying on an untested primary barrier) while the rig proceeded to complete other planned activities as part of batch drilling operations at the Montara WHP. The Blowout in the H1 Well occurred 15 hours later.

It seems that Halliburton who performed the cement job were aware there was a problem, but the operator accepted it anyway:

Despite the fact that the Halliburton cementing report clearly showed that the casing shoe could not be regarded as having barrier integrity, the report was ‘signed off’ by Mr Treasure (PTTEPAA’s senior on‐rig representative) later in the evening on 7 March 2009, with a handwritten annotation ‘good job well done’.

[And from the detailed section of the report:]

The extraordinariness of this state of affairs need not be laboured. It suffices to reproduce the following evidence given by Mr Treasure.

Q. To someone who’s familiar with this document, it’s not a matter of missing the words. I want to put to you that a person who would ordinarily see this document would know, without a second glance, that this was not a normal situation; correct?
A. Yes, sir.
Q. That there had been a problem experienced; correct?
A. Yes.
Q. And that that problem hadn’t been resolved; correct?
A. Yes, sir.
Q. So in this document was all the information, I want to put to you, that anyone in your position needed to realise that a problem had occurred and had not been resolved; correct?
A. Correct.
Q. In the clearest of terms; correct?
A. It was obvious, yes.
Q. Well, it can’t be any clearer. What else do you think Mr Doeg (Halliburton) should have done to make it clearer to you?
A. There’s nothing else he could do, is there?

Let's recap:

In summary, as at April 2009 when the H1 Well had been suspended and the West Atlas rig had departed from the Montara WHP to undertake other work, not one well control barrier in the H1 Well had been satisfactorily tested and verified, and one barrier that should have been installed was missing. In other words, the H1 Well was suspended without regard to PTTEPAA’s own Well Construction Standards or sensible oilfield practice.

The Findings

The inquiry did not mince words:

In essence, the way that PTTEPAA operated the Montara Oilfield did not come within a ‘bulls roar’ of sensible oilfield practice. The Blowout was not a reflection of one unfortunate incident, or of bad luck. What happened with the H1 Well was an accident waiting to happen; the company’s systems and processes were so deficient and its key personnel so lacking in basic competence, that the Blowout can properly be said to have been an event waiting to occur. Indeed, during the course of its public hearing, the Inquiry discovered that not one of the five Montara wells currently complies with the company’s Well Construction Standards. Indeed, so poor has PTTEPAA’s performance been on the Montara Oilfield, the Inquiry considers it is imperative that remedial action be instituted.

They didn't even do a good job after the incident:

The Inquiry considers that the manner in which PTTEPAA approached the National Offshore Petroleum Authority (NOPSA), the NT DoR and the Inquiry itself provides further evidence of the company’s poor governance. PTTEPAA did not seek to properly inform itself as to the circumstances and the causes of the Blowout. The information that it provided to the regulators was consequently incomplete and apt to mislead. Its dealings with this Inquiry followed a similar pattern.

The Inquiry recommends that the Minister for Resources and Energy review PTTEPAA’s licence to operate at the Montara Oilfield. At this juncture the Inquiry has little confidence in PTTEPAA’s capacity to apply principles of sensible oilfield practice.

The Northern Territory is too small to manage the regulation and oversight of the oil industry, and a new national regulator has been recommended - this would seem well overdue!

The Northern Territory has also contended that ‘at all material times prior to the [Blowout], the Territory appropriately administered the licence area within which the Montara Wellhead Platform is located’. The Inquiry has no hesitation in rejecting this contention.

and again..

The Inquiry is of the view that nothing should detract from the primary responsibility of PTTEPAA to ensure well integrity. However, the Inquiry finds that the NT DoR’s regulatory regime was totally inadequate, being little more than a ‘tick and flick’ exercise.

By way of example, when PTTEPAA submitted an application to suspend the H1 Well utilising PCCCs rather than a cement plug, it received preliminary approval in 30 minutes. However, as the Inquiry heard from the manufacturers of the particular PCCC used, they were not intended to be used as barriers against a blowout. In this respect, the information that had been conveyed to the NT DoR was seriously deficient. However the NT DoR, which had no real prior experience with PCCCs, gave almost immediate approval for their use.

As the report states, regulation of the Australian oil industry needs a complete overhaul to prevent wildcat operators like this creating more 'accidents waiting to happen'. I am personally amazed that an oil company as bad as this exists and they were allowed to operate here in Australia, a country that is normally seen as modern and highly regulated.

Let's hope the report into the BP spill is not as damning as this!

Posted by Phil Hart

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