Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
Trading Crude Oil ETFs in Foreign Currencies: What to Focus On - 22nd Sep 21
URGENT - Crypto-trader event - 'Bitcoin... back to $65,000?' - 22nd Sep 21
Stock Market Time to Buy the Dip? - 22nd Sep 21
US Dollar Bears Are Fresh Out of Honey Pots - 22nd Sep 21
MetaTrader 5 Features Every Trader Should Know - 22nd Sep 21
Evergrande China's Lehman's Moment, Tip of the Ice Berg in Financial Crisis 2.0 - 21st Sep 21
The Fed Is Playing The Biggest Game Of Chicken In History - 21st Sep 21
Focus on Stock Market Short-term Cycle - 21st Sep 21
Lands End Cornwall In VR360 - UK Holidays, Staycations - 21st Sep 21
Stock Market FOMO Hits September CRASH Brick Wall - Dow Trend Forecast 2021 Review - 20th Sep 21
Two Huge, Overlooked Drains on Global Silver Supplies - 20th Sep 21
Gold gets hammered but Copper fails to seize the moment - 20th Sep 21
New arms race and nuclear risks could spell End to the Asian Century - 20th Sep 21
Stock Market FOMO Hits September Brick Wall - Dow Trend Forecast 2021 Review - 19th Sep 21
Dow Forecasting Neural Nets, Crossing the Rubicon With Three High Risk Chinese Tech Stocks - 18th Sep 21
If Post-1971 Monetary System Is Bad, Why Isn’t Gold Higher? - 18th Sep 21
Stock Market Shaking Off the Taper Blues - 18th Sep 21
So... This Happened! One Crypto Goes From "Little-Known" -to- "Top 10" in 6 Weeks - 18th Sep 21
Why a Financial Markets "Panic" May Be Just Around the Corner - 18th Sep 21
An Update on the End of College… and a New Way to Profit - 16th Sep 21
What Kind of Support and Services Can Your Accountant Provide? Your Main Questions Answered - 16th Sep 21
Consistent performance makes waste a good place to buy stocks - 16th Sep 21
Dow Stock Market Trend Forecasting Neural Nets Pattern Recognition - 15th Sep 21
Eurozone Impact on Gold: The ECB and the Phantom Taper - 15th Sep 21
Fed To Taper into Weakening Economy - 15th Sep 21
Gold Miners: Last of the Summer Wine - 15th Sep 21
How does product development affect a company’s market value? - 15th Sep 21
Types of Investment Property to Become Familiar with - 15th Sep 21
Is This the "Kiss of Death" for the Stocks Bull Market? - 14th Sep 21
Where Are the Stock Market Fireworks? - 14th Sep 21
Play-To-Earn Cryptocurrency Games Gain More and Is Set to Expand - 14th Sep 21
The CashFX TAP Platform - Catering to Bull Investors and Bear Investors Alike - 14th Sep 21
Why every serious investor should be focused on blockchain technology - 13th Sep 21
SPX Base Projection Reached – End of the Line? - 13th Sep 21
There are diverse ways to finance the purchase of a car - 13th Sep 21
6 Tips For Wise Investment - 13th Sep 21 - Mark_Adan

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

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.


© 2005-2019 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