Oil Industry Completes Undersea Containment System; What Does Bromwich Say Now? (UPDATED)

After the Deepwater Horizon explosion and the resulting oil spill in the Gulf of Mexico, one demand the Obama administration through its Interior Department made of the oil industry as a condition of re-starting deepwater drilling was that a system be constructed which would completely contain a blown-out deepwater well in a worst-case scenario.

The industry – specifically ExxonMobil, Chevron Corp., ConocoPhillips and Royal Dutch Shell, founded a consortium called the Marine Well Containment Company (MWCC) for the purpose of satisfying that demand. And today, MWCC announced it has completed an interim well containment response system.

MWCC’s interim system can operate in water depths up to 8,000 feet and has storage and processing capacity for up to 60,000 barrels per day of liquids.  The capping stack has a maximum operating pressure of 15,000 pounds per square inch.  The equipment is located on the U.S. Gulf Coast and it can be at work within 24 hours of a spill.

“The Marine Well Containment Company has successfully developed a solution for rapid well containment response,” said Marty Massey, chief executive officer. “This milestone fulfills acommitment set forth by the four sponsor companies to deliver a rapid containment response capability within the first six months of launching the marine well containment project.”

US Representative Charles W. Boustany, Jr., (R-Southwest Louisiana) was effusive.

“The completion of the interim containment system is great news for the people of Louisiana, and for American energy production,” Boustany said. “With every advancement in the permitting process, we are one step closer to getting Louisiana workers back to their jobs and revitalizing our economy that was damaged first by the moratorium and now by the defacto moratorium on permitting. We still have much to do until American energy production has fully resumed. I will be there every step of the way to continue putting pressure on the Obama administration and aiding our workers in any way I can.”

“The fight is not over,” Boustany said. “The President has made no signal that he is a fan of American energy producers. In his budget this week, he vowed to tax energy producers, which will have an impact on every man and woman in this country. We will continue to fight the policies of this administration until the hard working folks in Louisiana and throughout the Gulf Coast are back to work.”

MWCC says it’s working on an expanded containment system for use in deepwater depths up to 10,000 feet which has the capacity to contain 100,000 barrels per day of liquid (and 200 million standard cubic feet per day of gas). The expanded system will include a 15 kpsi subsea containment assembly with a three rams stack, dedicated capture vessels and a dispersant injection system.

The Bureau of Ocean Energy Management, Regulation and Enforcement, whose director Michael Bromwich had a stormy meeting with Sen. David Vitter (R-LA) yesterday on the subject of his agency’s stonewalling of drilling permits, had taken the position on Monday that no containment system was available to satisfy its requirement for drilling to be reinstated. At a Feb. 14 energy conference, Bromwich had said

“it has not been able to fully demonstrate it has the systems in place to respond to a blowout in deep-water,” Michael R. Bromwich said at an offshore energy conference in Houston. “It would be simply irresponsible” to allow deep-water drilling without knowing a blowout similar to the one that led to a massive oil spill last year can be controlled, he said.

It’s unclear whether Bromwich was simply unaware of MWCC’s work on the interim system when he made an announcement that the industry didn’t have one, or whether BOEMRE plans to reject the system.

Either possibility seems discouraging.

If Bromwich was ignorant of MWCC’s progress just three days before the completion of their project it would be evidence of his disengagement from the subject matter his agency is supposed to govern – and it would be consistent, for example, with Vitter’s mention yesterday that he wasn’t aware of a lawsuit filed by an offshore operator alleging the permitting slowdown is a breach of contract on offshore leases let by the Department of Interior.

And if Bromwich knew about the system unveiled today and still made the statements he made on Monday, it’s evidence that BOEMRE may simply be moving the goalposts in an effort to delay deepwater drilling permits as long as possible. His statement to Vitter that “it’s not my job to issue permits” for drilling in yesterday’s meeting would be given greater meaning if this latter possibility surrounding his Monday statement is true.

UPDATE: Jim Adams, president of the Offshore Marine Service Association – whose membership has been absolutely ravaged by the offshore moratorium and the current permit slowdown, had this to say…

The reason oil companies aren’t drilling is because the administration isn’t letting them. Though the administration claimed to have lifted its unlawful moratorium, in order to keep it in effect the Interior Department said Jan. 25 that it was refusing to issue deepwater exploration permits because energy companies hadn’t shown a capability to respond to a massive spill.

What is underreported is that neither Secretary Salazar nor Director Bromwich has ever provided these energy companies with specific language clarifying what the agency meant exactly when it said “demonstrate capacity to respond to a massive spill.” So while the Marine Well Containment Company has announced completion of an initial response system, it does not mean that BOEMRE will issue new permits for deepwater drilling.

Exploration in the Gulf is still paralyzed by this President’s de facto moratorium. With today’s announcement—a concept that started as a
voluntary initiative of several oil companies last year—we now have the delivery of the most expensive and comprehensive spill containment system in the world.~This, along with other safety initiatives implemented by the industry since Macondo, attests to the notion that deepwater drilling in the Gulf should be safer now than ever before.

As a reminder, more than 50,000 wells were drilled safely in the Gulf before the BP spill, and we have confidence that safe deepwater drilling can continue.

UPDATE: The New York Times reports BOEMRE’s response…

“We appreciate Marine Well Containment Company’s significant progress to address this issue,” Melissa Schwartz, a spokeswoman for the ocean energy bureau, said in a statement. “And we continue to encourage them to make their containment system available as quickly as possible to deepwater operators so that new, responsible oil and gas drilling in deepwater can proceed.”

That’s not quite good enough for House Energy and Commerce Committee chairman Fred Upton

“Completion of the well containment response system is welcome news for the families in the Gulf region who rely on energy production for their livelihoods, but who have remained sidelined since the spill. And ultimately, this is good news for all Americans. The more energy we can produce safely here at home, the more secure and energy-independent our nation will be,” said Upton.

“Last week the Energy and Commerce Committee heard testimony on the effects of Middle East events on U.S. energy markets. What we heard reaffirmed our belief that America needs an all-of-the-above energy policy that takes advantage of all the resources available to us and reduces our reliance on other parts of the world where uncertainty and upheaval can drive up prices and jeopardize access,” said Upton. “Industry rightly invested in this new tool to protect our coastlines and communities from the unlikely threat of a future spill. Now that we have the safety measures in place, it’s time for the Obama administration to let the Gulf get back to work.”



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