Best of the Week
Most Popular
1.The Gallery of Crowd Behavior: Goodbye Stock Market All Time Highs - Doug_Wakefieldth
2.Tesco Meltdown Debt Default Risk Could Trigger a Financial Crisis in Early 2015 - Nadeem_Walayat
3.The Trend Every Nation on Earth Is Pouring Money Into - Keith Fitz-Gerald
4.Do Tumbling Buybacks Signal Another Stock Market Crash? - 26Mike_Whitney
5.Could Tesco Go Bust? How to Save Tesco from Debt Bankruptcy Risk - Nadeem_Walayat
6.Gold And Silver Price - Respect The Trend But Prepare For A Reversal - Michael_Noonan
7.U.S. Economy Faltering Momentum, Debt and Asset Bubbles - Lacy Hunt
8.Bullish Silver Stealth Buying - Zeal_LLC
9.Euro, USD, Gold and Stocks According to Chartology - Rambus_Chartology
10.Evidence of Another Even More Sweeping U.S. Housing Market Bust Already Starting to Appear - EWI
Last 5 days
Fed Ends QE? Greenspan Says Gold “Measurably” “Higher” In 5 Years - 30th Oct 14
Apocalypse Now Or Nirvana Next Week? - 30th Oct 14
Understanding Gold's Massive Impact on Fed Maneuvering - 30th Oct 14
Europe: Building a Banking Union - 30th Oct 14
The Colder War: How the Global Energy Trade Slipped From America's Grasp - 30th Oct 14
Don't Get Ruined by These 10 Popular Investment Myths (Part VIII) - 29th Oct 14
Flock of Black Swans Points to Imminent Stock Market Crash - 29th Oct 14
Bank of America's Mortgage Headaches - 29th Oct 14
Risk Management - Why I Run “Ultimate Trailing Stops” on All My Investments - 29th Oct 14
As the Eurozone Economy Stalls, China Cuts the Red Tape - 29th Oct 14
Stock Market Bubble Goes Pop - 29th Oct 14
Gold's Obituary - 29th Oct 14
A Medical Breakthrough Creating Stock Profits - 29th Oct 14
Greenspan: Gold Price Will Rise - 29th Oct 14
The Most Important Stock Market Chart on the Planet - 29th Oct 14
Mysterious Death od CEO Who Went Against the Petrodollar - 29th Oct 14
Hillary Clinton Could Be One of the Best U.S. Presidents Ever - 29th Oct 14
The Worst Advice Wall Street Ever Gave - 29th Oct 14
Bitcoin Price Narrow Range, Might Not Be for Long - 29th Oct 14
UKIP South Yorkshire PCC Election Win is Just Not Going to Happen - 29th Oct 14
Evidence of New U.S. Housing Market Real Estate Bust Starting to Appear - 28th Oct 14
Principle, Rigor and Execution Matter in U.S. Foreign Policy - 28th Oct 14
This Little Piggy Bent The Market - 28th Oct 14
Global Housing Markets - Don’t Buy A Home, You’ll Get Burned! - 28th Oct 14
U.S. Economic Snapshot - Strong Dollar Eating into corporate Profits - 28th Oct 14
Oliver Gross Says Peak Gold Is Here to Stay - 28th Oct 14
The Hedge Fund Rich List Infographic - 28th Oct 14
Does Gold Price Always Respond to Real Interest Rates? - 28th Oct 14
When Will Central Bank Morons Ever Learn? asks Albert Edwards at Societe General - 28th Oct 14
Functional Economics - Getting Your House in Order - 28th Oct 14
Humanity Accelerating to What Exactly? - 27th Oct 14
A Scary Story for Emerging Markets - 27th Oct 14
Could Tesco Go Bust? How to Save Tesco from Debt Bankruptcy Risk - 27th Oct 14
Europe Redefines Bank Stress Tests - 27th Oct 14
Stock Market Intermediate Correction Underway - 27th Oct 14
Why Do Banks Want Our Deposits? Hint: It’s Not to Make Loans - 26th Oct 14
Obamacare Is Not a Revolution, It Is Mere Evolution - 26th Oct 14
Do Tumbling Buybacks Signal Another Stock Market Crash? - 26th Oct 14
Has the FTSE Stock Market Index Put in a Major Top? - 26th Oct 14
Christmas In October – Desperate Measures - 26th Oct 14
Stock Market Primary IV Continues - 26th Oct 14
Gold And Silver Price - Respect The Trend But Prepare For A Reversal - 25th Oct 14
Ebola Has Nothing To Do With The Stock Market - 25th Oct 14
The Gallery of Crowd Behavior: Goodbye Stock Market All Time Highs - 25th Oct 14
Japanese Style Deflation Coming? Where? Fed Falling Behind the Curve? Which Way? - 25th Oct 14
Gold Price Rebounds but Gold Miners Struggle - 25th Oct 14
Stock Market Buy the Dip or Sell the Rally - 25th Oct 14
Get Ready for “Stupid Cheap” Stock Prices - 25th Oct 14
The Trend Every Nation on Earth Is Pouring Money Into - 25th Oct 14 - Keith Fitz-Gerald
Bitcoin Price Decline Stopped, Possibly Temporarily - 25th Oct 14

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Stocks Epic Bear Market

Plausible Gulf Oil Spill Scenario: Underground Blowout and Mudflow

Politics / Environmental Issues Jul 27, 2010 - 03:49 AM GMT

By: Dian_L_Chu

Politics

Best Financial Markets Analysis ArticleAmid rising fears over a circulating story about a leak and seepage, the federal government's oil spill chief said that seepage detected two miles from BP's oil cap is coming from another well. Meanwhile, BP is on track to use static top kill procedure in Macondo.


The static kill option is basically the cousin of the previously failed top kill. According to Platts, “the static kill would pump drilling mud and cement into the well, using the same entry points as the previous top kill procedure. The materials would be forced into the choke and kill lines of the well's blowout preventer (BOP).”

Scenario Apocalypse?

Although BP's new containment cap has stopped the flow of oil, circulating stories about a leak and seepage had caused mounting concern that the cap was displacing pressure and causing leaks deep underground.

One oil industry veteran engineer describes to me an underwater blowout (UGBO) as quite plausible, with the well being capped plus the static kill adding pressure from the top.

That is, capping the well might not be such good news.

The more they try to restrict the oil gush, the more pressure could be built up within the wellbore (like a soda can.) The increasing pressure could eventually push the leak below leading to a UGBO. (See graph)


(Note: The graph is a general illustration and does not represent the BP Macondo well.
Source: http://www.silentpcreview.com/)

What Is A UGBO?

According to Schlumberger Oilfield Glossary and Wikipedia:

“An underground blowout is a special situation where the uncontrolled fluid flows from one reservoir into the wellbore, along the wellbore, and into another reservoir. Usually this is from deeper higher pressure zones to shallower lower pressure formations.”

“Underground blowouts can be very difficult to bring under control, and are historically the most expensive problem in the drilling arena. If left unchecked the fluids may find their way to the surface or ocean floor nearby.”

While there are sporadic discussions around a possible UGBO at Macondo well, it is still hard to visualize what kind of damage it could actually bring. A look at the ongoing mudflow environmental disaster in Indonesia could shed some light.

Indonesia Mudflow

The Sidoarjo mudflow in east Java, Indonesia has been ongoing since May 2006. The mud volcano was created by the blowout of an exploration well drilled by PT Lapindo Brantas, which triggered the eruption of hot mud.

The hot mud has continued to spew out at a rate of 100,000 cubic meters a day--equivalent to the contents of forty Olympic-size swimming pools--despite government efforts to plug the leak.

News reports described the mud lake is so huge — seven square kilometers in area and 20 meters deep — that it is now visible from space. Experts have warned that the mud may continue to flow for several decades.

Since 2006, the mudflow ha s inundated hundreds of hectares while new mudflows are still opening up. Some 50,000 Indonesians reportedly have been displaced after the drilling accident in May 2006.

Mudflow in the Gulf?

In the case of the Macondo well, a UGBO could cause a seismic shift of the seafloor, and a potential astronomical increase of oil shooting to the sea surface of the Gulf, and flowing towards coastline. The seabed breach could also bring about a mud volcano and mudflow, similar to what happened in Indonesia, in the Gulf of Mexico deepwater, possibly for decades.

In fact, this is the very same doomsday scenario many scientists and geologists have feared, as there are some early signs of a typical UGBO such as the reported seepage and leak. That is why BP and the U.S. government have been feverishly analyzing underwater data and monitoring the pressure.

This one oil industry expert I talked to believes that with the failure of the first top kill, and the risk of UGBO, the more prudent course is to just drill the two relief wells as planned (see graph), instead of further risking the well integrity by the trying experimental well cap and another static kill.

Inaction Is Good …., Occasionally?

While this apocalyptic scenario seems beyond the imaginable, and there does not seem to be a previously documented case of a deepwater UGBO, but again, everything regarding this gulf disaster has been unprecedented.

I imagine all the experts in BP’s camp are quite aware that the risk of an UGBO is quite high, but with mounting public criticism towards BP and the Administration, any cautionary (i.e., non-action) note most likely will not be taken into serious consideration by the people in charge.

Crucial - Implementing Lessons learned

There are plenty of lessons learned and yet to be acted upon for the spill response and remedial side of the oilfield technology to catch up with the technology on the drilling and production side. The new rapid response system for the Gulf deepwater announced by the four oil majors--Chevron, ConocoPhillips, ExxonMobil and Shell-- seems to be a good start towards that direction.

Meanwhile, let’s hope a deepwater UGBO remains as a scenario-based discussion only.

(Many thanks to the silent co-contributor of this article.)

Dian L. Chu, M.B.A., C.P.M. and Chartered Economist, is a market analyst and financial writer regularly contributing to Seeking Alpha, Zero Hedge, and other major investment websites. Ms. Chu has been syndicated to Reuters, USA Today, NPR, and BusinessWeek. She blogs at Economic Forecasts & Opinions.

© 2010 Copyright Dian L. Chu - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2014 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Free Report - Financial Markets 2014