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We do a lot of preparation for both the hurricane season and the approach of any given storm.  To get ready for the season, we have to make sure we have a team assembled that is ready to go to our contingency office--our COOP office as we call it – which is located in Houston, some 300 miles away from New Orleans.  In effect it is a contingency in case we lose the regional office, and we would conduct a number of operations over there.

The first thing is we monitor the weather like the oil companies do.  And as storms start approaching, gathering in the gulf, then we are making sure that our team is ready to go to – for our contingency plan team to go to Houston.  We’re making sure that we have all our regulatory advice to companies and regulatory requirements in place. We issue what we call a notice to lessees, to all the oil and gas operators, of how they would report storm shut in-- that is ceasing production statistics and storm evacuation statistics to us. So that would start a couple of days before the storm actually hits landfall.  So even before the storm hits landfall, we are starting to gear up. If it is a very powerful storm, of course, then everyone is running for cover and we are turning back our helicopters for our inspectors back to the helicopter companies to allow the companies-- the oil and gas companies--to evacuate their personnel, some 35,000 that have to be brought into shore either on crew boats or supply boats or helicopters.  They use all of those means and they need every single helicopter that is available in order to get everybody to shore. 

The safety record has been a truly outstanding one over the last several years-- last 5 or 6 years--despite the increasing number of hurricanes that we have had in those years. We have some 15,000 or so wells that are in operation out there under 4,000 producing platforms and we’ve only had just a couple--just1 or 2--safety valves--subsurface safety valves-- fail over those years.  The rest of them are either shut in manually or if they are somehow forgotten to be closed down, they fail only in the closed position, so if you will it is a fail safe type approach.

The amount of oil that is being produced in the Gulf of Mexico in any given day is about 1.5 million barrels each day.   So we have the potential for the escape of a lot of oil during a storm and the hurricane season if things are not properly attended to.  So MMS goes into a mode of the companies are required to be shutting down, evacuating their platforms-- what we call shutting in their production, shutting the platform down from production, if you will. So at the height of any given hurricane, as an example, you may get upwards of 80, 90, or maybe even 100 percent of all the oil and gas that is being produced in the Gulf of Mexico is shut down for 1, 2, or 3 days depending on the strength of the hurricane and the location of the hurricane.  Obviously the more central it is located in the production fields, as opposed to being say off to the side of the production fields, then you are going to have a greater amount shut in.

One of the things that MMS does is we’re constantly looking for ways to better secure the platforms. We have issued some requirements along those lines.  We worked closely with industry to develop other things that are maybe not regulatory in nature, but are guidelines to have them secure their facilities better. From Hurricanes Rita and Katrina, one of the things that came out is that MMS came out with additional requirements on the drilling rigs that are out there drilling new wells, or working over old wells, where we improve the safety of the operation by dealing either with the type of mooring systems at the rig’s head. That is how they are anchored to the sea floor, how strong they are, what is the pattern, how many anchors do they have. So as an example, not in all cases, but in many cases, for the very, very large drilling rigs we changed the requirement from 8 point mooring systems to 12, and in some cases from a 12 point mooring systems to 16. So that there are more lines holding these things down so they don’t get turned loose.  The one thing you don’t want, obviously, is to have a drilling rig which weights maybe 20,000, 30,000 or 40,000 thousand tons out there bobbing around in the ocean where it can run into producing platforms and who knows what else.

A deepwater platform is a very, very large facility usually 20, 30, 40 or 50 thousand tons of steel that’s assembled to produce oil and gas.  It is a floating type structure that is anchored to the seafloor with, in effect, what we call mooring lines, which is, in effect, like anchors. So you’ll probably have 16 lines that are anchoring this to the sea floor.  But it’s basically moving a bit in the ocean side to side and up and down to a degree, but those mooring lines are restricting its movement.

A conventional platform, on the other hand, is one that is basically anchored into the seabed. So you will have a solid piece of steel, just like-- the analogy would be like an Empire State building that is anchored to the ground. That’s a standard type production platform and it’s used in, if you will, in a relative sense, in the more shallow water. Usually about 1,000 feet of water is the extent to where you would use a bottom-founded production facility.

Challenges to exploring and developing in deep water are pretty extensive.  The most obvious factor, of course, is just the water depth itself.  If you’re out in 5,000 or 7,000 or 8,000 feet of water, simply how you are going to be able to conduct your operations through that amount of water column is quite a challenge.  When you think about it, you know 5,000 feet of water is a mile, and that is a pretty long stretch for anybody to put a straw down to try to take oil and gas from the seafloor.  Then the other part of the problem is of course when you get to the bottom of the seafloor that is not where the oil and gas is.  The oil and gas is buried deep underground so you may have to go another 10,000, 15,000 perhaps even 30,000 feet into the seabed to find the oil and gas. And then not only because of the length of that production system, so you may be talking 5 -6 miles of pipe, your going to run into some very dynamic situations down there.  So as an example, if you’re going into a very deep formation (20,000-30,000 feet) you can very easily run into very high pressures, very high temperatures, very high corrosion environment.  So the oil and gas may be full of hydrogen sulfide, a very, very corrosive environment, high pressures like 15,000 pounds per square inch or greater, high temperatures of 300 degrees Fahrenheit or greater, perhaps even up to 450 degrees Fahrenheit. The analogy here is that in some of these deepwater formations, this is very much equivalent in trying to take somebody to Mars in terms of the environment that you are going to work in.

The risk in exploring and developing in deepwater, first of all is the same risk of exploring and developing anywhere.  You have a risk of there may be no oil and gas there.  So there’s a chance that, despite all your best efforts, and the application of the best science that you can bring to this, you may end up with a dry hole. Or even if you have had a discovery, you may find that it’s very, very difficult to produce the discovery and get the oil and gas out in any kind of economically reasonable producing way.  So there have been projects that people have made a discovery and started to produce and then have walked away form the project, because it is simply not feasible for them to continue.   So there are high risks in this, there are high risks in how they even operate.  So as an example, if you’re in 5,000 feet of water, we are starting to see--and MMS is doing some scientific studies in this area-- to see that the water currents out in deepwater are reacting much differently than everybody had predicted.  First of all, the strength of the current is much stronger than we had ever imagined. So this puts a big strain if you’re having this pipe drill through the water column.  It’s a very big strain on this pipe that is maybe a mile long in the water column.  The other thing we are starting to see is that on some occasions we are finding that the water current is moving in two different directions. That is at the bottom of the pipe in moving north and the top of the pipe in moving south. Well you can imagine the strain that is being placed by that current on that pipe and you’re trying to drill down to 30,000 feet into the seabed.  So this is putting a big strain on that operation.

There are also a number of safety challenges that are present in deepwater drilling that MMS tries very hard to stay on top of.  So as an example, one of the things we have run into is that we have had to issue some additional regulations on how the drilling rigs operate, when they can operate, because of high speed currents. And in fact, we have also had to go as far as requiring that the currents are real time monitored.  That is there are minute-by-minute readings of what the currents are out in the deep water.  We have done this so far as to require that the readings be linked by satellite and put in to a computer and put on the web so that there is real time access available to all the oil and gas industry, and for that mater all of the public for these various current readings. Which has a side benefit of they go into helping storm predictions and the weather service because these are readings that are way out there in the middle of nowhere out in the ocean. They might be 200 miles offshore. So these provide additional valuable readings for the weather models that everybody has. But they also give us real time data on how the drilling rig and the production platform are operating. What kind of stresses are they under.  And maybe if they get too high, that MMS has to require that the operations shut down so that we can operate and the oil and gas companies can operate very safely.

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Last Updated: 08/17/2007, 08:59 AM Central Time