lessons learned from deepwater horizon

29 April 2011

Jo Hulbaekdal, Manager DNV Kazakhstan LLP

Lessons learned from Deepwater Horizon

© Det Norske Veritas AS. All rights reserved.

Tuesday, 26 April 2011

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Presentation outline

The Deepwater Horizon, a game-changer?

DNV’s involvement and response

A new US regulatory regime?

Industry changes?



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About 21:40 local time, gas under high pressure flows uncontrolled up from the Macondo well onto Deepwater Horizon. The gas ignites resulting in fires and explosions. DWH sank 36 hours later.

11 fatalities and 17 injured

Oil leakage:- From April 20th – July 15th (well capped)- Initial rate 62,000 b/d declining to 53,000 b/d

(750.000 tonnes in total)

Twice as big as the largest oil spill event ever

The event: April 20th, 2010



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Industry response: Immediate uncertainties

Will liability and insurance premiums increase?

Will result of investigation lead to redesign of BOP stacks?

How will the new US regulatory regime and legislation affect cost?

How will this influence the drilling activity, the rig market and the competitive situation in US?

How will changes in the US affect offshore activities elsewhere?



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Major accidents have consequences on regulations

NEW REGULATORY REQUIREMENTS

Alexander Kielland (1980) – structural redundancy, risk acceptance criteria

Piper Alpha (1988) – “Safety Case”, risk management approach

Exxon Valdez (1989) – double hull tankers

Texas City (2005) – increased safety for process industry

MACONDO BLOWOUT ???



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DNV’s involvement and response



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To kill the Macondo blow-out was a complex marine operation: Managing risk is crucial

DNV involvement:

Hazid facilitation for BP

Verification of marine risers

Safety Case Studies for rigs

Re-certification of BOP systems

Topside verification, assessment of marine systems, stability inspections of involved vessels

Review of the DWH maintenance system and rig condition assessment program

Safety and flaring studies



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US-Norway, share industry learning



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Investigation of BOP for US Government The Joint Investigation Team (JIT) of the

departments of the Interior and Homeland Security has contracted DNV for the forensic examination of the blowout preventer and lower marine riser package that was fitted to the Macondo well

16 meter tall, weight 300 tonnes

Forensic investigation use expertise from: - Technology Centre, Columbus- Deepwater Technology Centre in Houston

Report published March 23rd, 2011



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A new US regulatory regime?



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Comparing the US and Norwegian offshore drilling regulations:Key regulatory regime differences

The Norwegian regulations are mainly performance-based

The U.S. regulations are primarily prescriptive

The intention with a performance-based regime is to make the operator regulate own activity when it comes to safety, health and environment (SHE)

The intention with prescriptive regulations is to prevent accidents by identifying specific technical requirements that the operator must comply with. The Authorities control the operator’s activity inter alia through approvals and inspections.



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Comparing the US and Norwegian offshore drilling regulations: Key learning points

Mainly risk-based approach, systematically identify and mitigate risks.

Separate authorities for resource management and SHE management

Agency with coordinating role in the development and supervision of SHE regulations.

Establish barriers on technical, operational and organisational levels

Latest edition of applicable regulations and referred standards for mobile units

Two independent and tested well barriers in all drilling and well operations

Recertification of blow-out-preventer (BOP) every 5 years

AND one area where we are not so different

Validation of functionality and capacity of oil recovery equipment ?



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Presidential Commission Report, Jan 11th 2011:Selected recommendations Significantly increase the liability cap and financial

responsibility requirements for offshore facilities.

Establish independent offshore safety agency.

Develop a proactive, risk-based performance approach similar to the “safety case” approach in the North Sea.

Supplement the risk-management program with prescriptive safety and pollution-prevention standards.

Industry “best practice” standards should be applied and updated in the Gulf of Mexico, in the Arctic, and globally.

Create a rigorous, transparent, and meaningful oil spill risk analysis and planning process for better oil spill response.

Well components, including blowout preventer stacks, are equipped with sensors or other tools to obtain accurate diagnostic information—for example, regarding pressures and the position of blowout preventer rams.

http://www.oilspillcommission.gov/final-report

http://www.oilspillcommission.gov/final-report



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Industry changes?



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Consequences in the US Gulf of Mexico The drilling moratorium was lifted on

October 12, 2010- certify compliance with existing rules and

requirements, including those that recently went into effect

- adequate blowout containment resources- shallow water drilling operations subject to new

rules and requirements as of June 8, 2010.

New regulations and standards- Environmental NTL (Notice to Lessees),

Compliance and Review NTL, Drilling Safety Rule and the Workplace Safety Rule.

13 companies may resume their drilling activities as of January 3, 2011 - provided they comply with new policies and

regulations set by BOEMRE



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Norway and UK:Reactions Norwegian and UK oil industries are reasonably

confident that their regulations are modern and well functioning.

Norwegian Government and OLF have been cooperating with the US authorities. Ditto UK Government and HSE.

In both countries the regulatory authorities and oil industry are however keen to extract key learnings from the event.

Environmental concerns have risen higher on the agenda, especially for the High North and more sensitive areas, such as Lofoten.

Oil & Gas UK has established the Oil Spill Prevention and Response Advisory Group (OSPRAG) looking at UK oil spill response.

Both countries also watching EU developments.



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Rest of the world’s reaction - examples Awaiting outcome of the US investigations

(UK, Norway, Canada, Brazil)

Greenland required Cairn Energy to have a second rig on standby to drill a relief well

Australia reviewing their national oil spill plans, current plans are for a tanker grounding and not a long term blow out

Gabon have cancelled offshore acreage bid rounds until US investigations are complete

A lot of understandable “wait and see”.



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Key take away

The Deepwater Horizon is a game-changer- we are facing a systematic shift with

significant reach

A new US regulatory regime is in the making- most likely with international impact

Industry changes will be significant- Increasing the focus on safety,

environment and risk management



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Safeguarding life, property and the environment

www.dnv.com

lessons learned from deepwater horizon

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