How Many BP People will be Fired?

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Permalink Reply by Overshot on June 7, 2010 at 8:16pm

Interesting article posted on foxbusiness.com. I know, I know, Fox is far to the right and often cries wolf, but if there is actually a wolf at the door, shouldn't we at least keep an eye open?

http://www.foxbusiness.com/story/markets/industries/government/losi...

Losing the War

By Charles Payne
FOXBusiness


There are so many obvious reasons why the BP oil leak is a disaster, but beyond the obvious tragedy of the situation is this reality: it has presented another opportunity for the Obama administration to launch its latest assault against capitalism.

The endless deflection of accountability to the oil spill from the White House to BP could work with some voters, opening the door for the kind of takeover of the industry that has occurred in healthcare and is being cobbled together right now for the financial industry. The White House has a playbook with one play: It's all about bringing big business to its knees. The way to do that is demonization. BP's CEO Tony Hayward has been such an easy foil central casting couldn't have produced a better villain. But that isn't good enough - every single day the flames of anger and hatred must be fanned by the administration. We must hate Wall Street, the healthcare industry and oil companies.

Under this cloud of hate and fear and distrust is it any wonder our economy has ground to a halt? Is it any wonder banks have been hoarding money and businesses hoarding money, and consumer spending went back into a shell in April. Of course BP is going to pay for the damage, but that isn't going to be enough. The industry has to brace for a series of investigations and hearings and public floggings. Executives will have to travel to Washington and try to answer dumb questions obviously designed for further embarrassment rather than solutions - and everyone there will arrive thanks to crude oil. Then again, I'm sure everyone in Washington has seen businesses grow from money raised on Wall Street and have benefited from the amazing medical industry America possesses, the best in the world.

I continue marvel when the president tells people or industries to take his wrath and shut up. It's called survival instincts. Of course Wall Street has hired lobbyists. Of course BP is going to spend money on trying to get out their message. Did they really want all of this oil to spill into the Gulf? Did Wall Street really want the economy to collapse? If anyone wants to see the economy collapse it would be a follower of an ideology that despises the foundation of this economy. Last week President Obama mentioned his ideas on what the pillars of the economy should be, and hinted that government is needed to control all four. Over the weekend he lashed out at BP paying a dividend to shareholders, a shot across the bow of investors just as little old ladies with GM bonds were painted as greedy and cold hearted. They must be salivating at the White House. What a gift, putting another industry (pillar) under their thumb.

America could only lose its position on top of the world through self destruction. I've talked about this for half a dozen years … fear and self-loathing. Now the idea of supplanting capitalism with a better system is underway. You can call it fettered capitalism but it’s more akin to socialism. It has never worked and never will. The very threat of this shift gave us Friday's jobs result. Trillions of dollars tossed at the housing market from government programs, Fannie Mae (FNM) and Freddy Mac (FRE) bailouts and support (unlimited) and FHA backing all mortgages hasn't stopped housing prices from continuing their descent. The steadfast and unwavering determination to fundamentally change our economy is impacting it faster than I thought it would.

Can everyone hide in their bunkers forever? Can we afford it while everyone braces for the moment it's their turn to be crushed rhetorically and under the weight of regulations and rules designed to control and punish? Where is the tipping point, where even if we tried we couldn't reverse the impact of this anti-business war on success? I don't know the answer to that I do think there is time to fix this. But the message isn't resonating. Take this moratorium on deepwater oil drilling. According to Louisiana Mid-Continent Oil and Gas Association the impact of halting work on 33 exploratory wells will be devastating:

Rigs - $250,000 to $500,000 a day means loss of up to $16,500,000 per day in costs for idle rigs.
Supply boats - $30,000 day for 33 rigs will cost about $1,000,000 a day.
Employees - up to 140 per shift at $1,804 week could add to $330,000,000 a month lost wages.

The gears of commerce have been locked, sealed shut the way Constantinople held against siege after siege until succumbing to the Ottoman Empire in 1453.

Banks want to lend, businesses want to grow and people want prosperity - unless all that stuff is going to be taken from them, at which point they only want to survive. I still believe in the business cycle and the uniqueness of the American capitalistic system. From time to time it needs nudging but it recognizes the difference between a takeover and a helping hand - not that it's hard to tell the origins and intents of government overtures these days.

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Permalink Reply by William Moore on June 8, 2010 at 5:13pm

Good points. I'd just like to add that the academic community has gone to the mat with young engineers and geologists to interest them in the industry. I'm a member of both AAPG and SPE and we're trying to prepare for the "great crew change". Well-if a prime source and work area for young people suddenly dries up (think moratorium) then the damage to the already shaky demographics of the industry will be even greater. I guess the work will go overseas with little chance of returning till about 2014, if then.

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Permalink Reply by Lerret on June 9, 2010 at 10:02am

agree - We have a gap from 1985 - 2000 where few newcomers came on board and there is a gap in experience that is impossible to breach in the short-term.


BTW, I agree with this totally

http://dailyhurricane.com/2010/05/acoustic-switch-would-not-have-sa...

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Permalink Reply by William Moore on June 9, 2010 at 1:27pm

Lerret,

Thanks for the reply. You nailed it. I'm a retiree reliability engineer and drilling guy and wouldn't mind getting back in for some years to help get the new guys/gals up to speed with respect to experience. I've talked with young geologists and many have never worked cuttings and picked tops. There is a wealth of information coming up the hole from both the rocks themselves and the drilling data in response to drilling them. What I had to do manually is handed to us now on a DVD. I've watched this progress but it is so dependent on a stable regulatory and tax environment which will probably not return till 2012 or later.

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Permalink Reply by Geowhiz on June 8, 2010 at 9:07am

Ive consulted on 56 BP (Amoco) wells over the years, and I can tell you that getting money out of them is like pulling teeth from a horse. They would constantly push payments well beyond the 30 day limit and in some cases right up to the point of placing a lien on the well. I suspect that the board of directors will eventually cave in and file for some level of bankrupcy to save their golden parachutes, particularly if the stock keeps going down, which will leave the government (meaning the taxpayer) to ultimately clean up the spill.

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Permalink Reply by Heath on June 14, 2010 at 10:09pm

The energy subcomittee investigation has today sent a letter to BP CEO Tony Hayward, describing in detail five seperate decisions made in the days before the blowout that appear to clearly indicate that BP put the rig and workers at risk by shortcutting some key final well construction procedures, and they want him to be prepared to fully explain these actions by BP. If true, these decisions are damning; this does not look good for BP and a number of their engineers that were involved with this project. This could be the beginning of the end for BP.

http://energycommerce.house.gov/documents/20100614/Hayward.BP.2010....

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Permalink Reply by Lerret on June 15, 2010 at 2:49pm

Heath - A letter to the editors of the Wall St Journal from Terry Barr, pres. of Samson Resources spells it out in plain language. BP should never be allowed to operate another well in the Gulf or anywhere else for that matter. This is that letter....

Dear WSJ
In response to Tony Hayward's June 4 op-ed "What BP Is Doing about the Gulf Gusher": It is time that the publicity spin that BP is putting on this disaster is put into perspective. What is alarming about the content of the article is not so much what it says, but what it does not say.

Mr. Haywood, chief executive officer of British Petroleum, asks, "How could this happen?" The answer has largely to do with BP's inability to follow its existing well-construction policies and those of the industry generally.

The BP testimony to the House Committee on Energy and Commerce on May 25 says it all, but perhaps that material needs to be explained. From looking at that evidence, this is what we know:

1) When cementing the production casing the cementing crew, which was being supervised by BP, had difficulty landing the top plug into the casing shoe. This was the first "red flag" because a satisfactory cement job to the production string is fundamental to the safe operation on a go forward basis. The fact that the cement job did not go as planned should have caused the testing operation that followed to be carefully scrutinized, it clearly was not.

2) As is normal practice, the integrity of the pressure tight seal was tested by pressuring up on the casing and observing the pressure response. If pressure bleeds off there is clearly a problem with the pressure integrity of the shoe, However, industry practice dictates that a positive test, that is no pressure drop, is not diagnostic, simply because the reservoir pressure is sufficient to retain the pressure being applied. A negative test is useful because it is diagnostic of a failed cement job. In this case the test was positive.

3) Again, as is normal industry practice a negative pressure test was run, with pressure released from inside the casing and the pressure response was measured. In this case evidence has been bought before the committee that there was a 1,400 psi pressure response. This response is highly diagnostic and is therefore the second "red flag" and at this point the BP supervisors should have concluded that they had what the industry calls a "wet shoe." That is that the cement job had failed to form a seal at the casing around the reservoir which we know contains high pressure oil and gas.

4) At this point a decision should have been made to do a remedial cement job; this is an expensive operation, but having seen a 1,400 psi response, there was no choice.

5) The BP engineers then proceeded with the balance of the operation to temporarily abandon the well. This meant replacing the 14-pound-per-gallon mud that was in the wellbore with 8.5-pound-per-gallon sea water. The denser mud had been, up until this time, the primary pressure control and was keeping the hydrocarbons in place despite the lack of an adequate cement job at the casing shoe.

Given the two red flags that had been thrown up previously, one would have expected that as a precaution a cement plug would have been placed somewhere in the wellbore as a secondary pressure seal before this primary pressure control system (heavy mud) was evacuated from the wellbore. But at the very least the mud replacement operation should have been heavily scrutinized. Clearly it was not.

6) Evidence provided at the hearing, including the pressure data transmitted from the rig for the last two hours before the explosion, is diagnostic. At 8:20 p.m. on the day of the explosion the pressure data suggest there was a constant flow of sea water being pumped into the drill pipe that was displacing the heavier mud system which was the primary pressure control for the well. The rate going in was 900 gallons per minute, but the flow data of mud coming out was steadily increasing from 900 gallons a minute at 8:20 p.m. to a rate of 1,200 gallons per minute at 8:34 p.m. During this 14-minute period one can conclude that hydrocarbons were flowing and pushing more fluid from the wellbore than was being pumped in.

This is what this data is supposed to monitor, but the well flow evidence would appear to have been ignored, because at this point the BP rig supervisors should have gone to a well kill operation and started to pump heavy mud back into the well bore to restore the primary control mechanism. Instead the mud continued to be evacuated.

7) At 9:08 there was another piece of evidence that is very clear cut. The sea water pump was shut down presumably to check the well stability. However, with the pump shut down a pressure increase was seen in the standpipe (SPP). This pressure response has to be associated with the reservoir flowing hydrocarbons and again at this point kill operations should have been initiated by the BP engineers.

8) From 9:08 p.m. to around 9:30, despite the sea-water pump either running at a constant volume or shut-in, the SPP continued to increase; again this is evidence that the well is producing hydrocarbons and should have caused a kill operation to be initiated.

9) At 9:30 p.m. the seawater pump was again shut-in to presumably observe what the well was doing, and again there is a notable increase in the standpipe pressure.

10) At 9:49 the SPP showed a very large increase and the explosion followed—this is obviously the point at which the gas and oil reached the drill floor and found an ignition source.

Mr. Hayward and BP have taken the position that this tragedy is all about a fail-safe blow-out preventer (BOP) failing, but in reality the BOP is really the backup system, and yes we expect that it will work. However, all of the industry practice and construction systems are aimed at ensuring that one never has to use that device. Thus the industry has for decades relied on a dense mud system to keep the hydrocarbons in the reservoir and everything that is done to maintain wellbore integrity is tested, and where a wellbore integrity test fails, remedial action is taken.

This well failed its casing integrity test and nothing was done. The data collected during a critical operation to monitor hydrocarbon inflow was ignored and nothing was done. This spill is about human failure and it is time BP put its hand up and admitted that.

Terry Barr

President

Samson Oil and Gas

Lakewood, Colo.

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Permalink Reply by Don York on July 25, 2010 at 2:54pm

Looks like BP's board is officially going to dump Heyward--perhaps as soon as this week. Dump, as in no longer having a connection at all to BP.

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Permalink Reply by Lerret on July 25, 2010 at 8:49pm

Goes back to the old ditty about

It's not my job to drive the train.
The whistle I can't blow.
It’s not my job to say how far
The train’s allowed to go.
It’s not my job to blow the horn,
Nor even clang the bell.
But let the dang jump the track
and see who catches H - E- double L

Tony wasn't the one who screwed up. But he is the one held responsible. I must confess it is hard to feel sorry for someone who will get $14 million for being fired... fire me fire me

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