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Transocean Deepwater Horizon Senate Testimony [Full Text]

Testimony Before The Committee On Power & Pure Assets United States Senate Could eleven, 2010 Outer Continental Shelf Oil and Gas Strategy and Implications of the Deepwater Horizon Rig Explosion Steven Newman, Chief Executive Officer, Transocean, Ltd.

Chairman Bingaman, Ranking Member Murkowski, and other members of the Committee, I need to thanks for the chance to speak with you right this moment.

My title is Steven Newman, and I’m the Chief Govt Officer of Transocean, Ltd. Transocean is a number one offshore drilling contractor, with greater than 18,000 employees worldwide. I am a petroleum engineer by coaching, I’ve spent considerable time working on drilling rigs and I have labored at Transocean for greater than 15 years. I am happy with the corporate’s historic contributions to the energy trade during that point. Right this moment, nonetheless, I sit earlier than you with a heavy coronary heart.

The previous few weeks have been a time of great sadness and reflection for our Company – and for me personally. Nothing is more essential to me and to Transocean than the security of our staff and crew members, and our hearts ache for the widows, mother and father and youngsters of the eleven crew members – together with nine Transocean workers – who died within the Deepwater Horizon explosion. These have been distinctive males, and we are dedicated to doing the whole lot we are able to to help their families as they battle to cope with this tragedy.
We have now also seen great courage and kindness since April 20 that has reaffirmed our faith within the human spirit. That spirit is embodied by the a hundred and fifteen crew members who were rescued from the Deepwater Horizon and were as anxious in regards to the destiny of their colleagues as they had been about themselves. It’s embodied by the emergency staff and buddies and family who had been ready for the injured crew members once they arrived ashore. And it is embodied by the buddies and colleagues who have rallied to help the families of those who have been misplaced at sea.
Whereas this has been a really emotional interval for all of us at Transocean, it has also been a period of intense activity and energy.

Instantly after the explosion, Transocean started working with BP (in BP’s function as operator/leaseholder of this well) and the “Unified Command” (which includes officials from the U.S. Coast Guard, the Division of the Inside’s Minerals Administration Service (MMS), and the National Oceanic and Atmospheric Administration (NOAA)) in the trouble to stop the move of hydrocarbons. Our finest operational personnel and engineers have been working with BP to establish and pursue choices for stopping the movement as soon as possible. Our drilling rig, the development Driller III, is concerned in drilling the relief properly at the location, and our drillship, the Discoverer Enterprise, is involved within the distinctive oil restoration types of crude palm oil operations in the Gulf. We will proceed to assist BP and the Unified Command in all of these efforts.

We have also been working exhausting to get to the bottom of the query to which the Members of this Committee – and the American individuals – need and deserve an answer: What happened the night time of April 20th, and how will we assure the American public that it is not going to happen once more
Transocean has assembled an investigative staff to determine what led to these tragic occasions – a team that features dedicated Transocean and industry consultants. They are going to be interviewing people who’ve potentially useful data and finding out the operations and the equipment involved. Our workforce is working side by aspect with others, including BP and governmental agencies, and these investigative efforts will proceed till we’ve passable answers.

As is commonly the case after a tragedy of this sort, there was a variety of speculation about the basis cause. I consider it’s premature to succeed in definitive conclusions about what triggered the April 20th explosion, however on behalf of our Transocean workers, I really feel compelled to reply to some of this hypothesis. Specifically, as we seek to uncover what happened, it is vital to know the nicely building process – and the roles of the varied events concerned in an operation just like the one that was happening within the Gulf of Mexico.

All offshore oil and fuel production projects start and finish with the Operator. When the Operator (on this case, BP) leases a parcel of land on the outer continental shelf (OCS) from the U.S. authorities, it should put together and submit detailed plans specifying the place and how a properly is to be drilled, cased, cemented and completed primarily based on its interpretation of propriety data, together with geologic information from seismic surveys. Once these plans are authorized and permits are issued and work begins, the Operator – or leaseholder – serves as the general contractor that manages the entire work that is carried out on its lease. On this capability, the

Operator hires varied contractors to carry out specific features in the construction of the properly.
As well as, the Operator brings in various sub-contractors to perform specific roles. For example:

– The Operator selects a driller (on this case, Transocean), which types of crude palm oil gives a vessel (referred to as a “rig”) from which drilling operations are performed. Because the name suggests, the driller is also liable for rotating the long string of drill pipe with a drill bit on the top that drills a gap deeper and deeper into the ocean flooring. The Operator’s well plan dictates the style during which the drilling is to occur, together with the situation, the trail, the depth, the process and the testing. The drill bits, which are selected by the Operator, are equipped by another sub-contractor.
– A key component of the drilling course of is drilling mud, a heavy fluid manufactured to the Operator’s specs. That mud is pumped into the properly hole and circulated so as to carry again the pressure of the reservoir and stop oil, gasoline or water in that reservoir from moving to the surface by way of the properly. The mud is monitored by one other sub-contractor (the mud engineer) (on this instance, M-I Swaco) to detect any problems.
– As the drilling progresses, huge pipes are inserted into the properly to take care of the integrity of the hole that has been drilled and to serve as the first barrier in opposition to fluids entering the effectively. This job is coordinated by the casing sub-contractor selected by the Operator (on this case, Weatherford). In its nicely plan, the Operator specifies the diameter and energy of each casing phase, purchases the casing, and dictates how it will be cemented in place. Properly casing is inserted in a telescope-like manner, with each successive part contained in the earlier one. Every casing section also features a seal meeting to make sure pressure containment.
– After drilling is concluded, yet one more area of expertise comes into play. The cementing sub-contractor is liable for encasing the properly in cement, for putting a brief cement plug in the top of the nicely, and for ensuring the integrity of the cement. The purpose of this work is to seal the properly to make sure that the contents of the reservoir (i.e. oil and pure fuel) are usually not driven by the reservoir stress into the nicely. (As soon as drilling is complete and the well is cased and cemented, it’s not necessary to circulate drilling mud via the effectively; at that point, the casing and cement serve to regulate the formation stress.) The cementing course of is dictated by the Operator’s effectively plan, and the testing of the cement on the Deepwater Horizon was carried out by the cement contractor (Haliburton in this instance) as specified and directed by BP.

In opposition to that background, let me flip to the April 20 Deepwater Horizon explosion and its possible causes. What is most unusual about the explosion in this case is that it occurred after the well building process was basically completed. Drilling had been accomplished on April 17, and the properly had been sealed with cement (to be reopened by the Operator at a later date if the Operator chose to put the effectively into manufacturing). At this point, drilling mud was now not getting used as a means of reservoir stress containment; the cement and the casing had been the obstacles controlling stress from the reservoir. Certainly, at the time of the explosion, the rig crew, at the direction of the Operator, was within the strategy of displacing drilling mud and changing it with sea water.

For that motive, the one thing we all know with certainty is that on the night of April 20, there was a sudden, catastrophic failure of the cement, the casing, or both. Therein lies the foundation cause of this prevalence; with no disastrous failure of a type of components, the explosion couldn’t have occurred. Additionally it is clear that the drill crew had very little (if any) time to react. The explosions had been nearly instantaneous.

What precipitated that catastrophic, sudden and violent failure Was the nicely correctly designed Was the effectively properly cemented Have been there problems with the effectively casing Were all applicable exams run on the cement and casings These are some of the critical questions that must be answered in the coming weeks and months.

Over the previous several days, some have suggested that the blowout preventers (or BOPs) used on this venture were the reason for the accident. That simply is not sensible. A BOP is a large piece of gear positioned on prime of a wellhead to supply stress control. As explained in more element in the attachment to my testimony, BOPs are designed to quickly shut off the circulation of oil or pure fuel by squeezing, crushing or shearing the pipe within the occasion of a “kick” or “blowout” – a sudden, unexpected release of stress from throughout the nicely that can occur throughout drilling.

The eye now being given to the BOPs on this case is considerably ironic as a result of on the time of the explosion, the drilling course of was complete. The nicely had been sealed with casing and cement, and inside just a few days, the BOPs would have been eliminated. At this level, the effectively barriers – the cementing and the casing – had been liable for controlling any pressure from the reservoir.

To make sure, BOPs are an essential side of effectively management. Throughout drilling, BOPs present a secondary technique of controlling pressure if the primary mechanisms (e.g. drilling mud) prove insufficient. BOPs are robust, refined pieces of equipment that may be activated by numerous direct and remote methods. Since the BOPs were still in place on this circumstance, they might have been activated throughout this event and should have restricted the move to some extent. At this point, we can’t be sure. However we haven’t any motive to consider that they weren’t operational – they were jointly tested by BP and Transocean personnel as specified on April 10 and 17 and located to be useful. We also have no idea whether the BOPs have been damaged by the surge that emanated from the well beneath or whether the surge may have blown debris (e.g. cement, casing) into the BOPs, thereby stopping them from squeezing, crushing or shearing the pipe.

For these reasons, I consider it’s inappropriate to focus any causation discussions solely on the BOPs. Actually, we want to know what occurred to the BOPs and whether modifications ought to be made to improve the effectiveness of these units in the unusual circumstances of an accident just like the one on April 20. However the BOPs have been clearly not the root trigger of the explosion. Our most essential activity is to know why a cased and cemented wellbore abruptly and catastrophically failed. As a place to begin, our investigative workforce has looked at quite a few potential causes, contributing factors, or trigger events, in an effort to make sure that nothing is overlooked on this investigation.

As I defined earlier, the well building process is a collaborative effort. For a similar cause, the process of understanding what led to the April 20 explosion and the way to stop such an accident in the future should even be collaborative. Ours is an business that must put safety first. And i can guarantee you that Transocean has never – and will never – compromise on safety. In 2009, Transocean recorded its finest ever Complete Recordable Incident Rate (TRIR). And the federal company charged with implementing safety on deepwater oil rigs, MMS, which – as you understand – is a unit of the U.S. Division of the Interior, awarded certainly one of its top prizes for safety to Transocean in 2009. The MMS Safe Award acknowledges “exemplary efficiency by Outer Continental Shelf (OCS) oil and gas operators and contractors.” Within the words of MMS, this award “highlights to the public that corporations can conduct offshore oil and gasoline actions safely and in a pollution-free method, even though such activities are complex and carry a significant element of danger.” In awarding this prize to Transocean, MMS credited the corporate’s “outstanding drilling operations” and a “perfect efficiency period.”

Despite a robust safety document, Transocean has by no means been complacent about security. We believe that any incident is one too many. Last yr, our Company experienced an worker accident report that I discovered unacceptable. Consequently, I really useful to our Board of Directors that they withhold bonuses for all executives with the intention to make clear that reaching stronger security performance was a basic expectation – and fundamental to our success. That suggestion was accepted, and our Company paid no govt bonuses final yr, so as to ship a loud message that we consider our success in large half primarily based on the security of our operations.
Until we totally understand what happened on April 20, we can’t decide with certainty how finest to prevent such tragedies sooner or later. However I am dedicated – for the sake of the males who lost their lives on April 20, for the sake of their cherished ones, for the sake of all of the hard-working individuals who work on Transocean rigs around the world, and for the sake of people in every of the affected states and worldwide who depend on our oceans and waterways for their livelihood – to work with others within the business, with Congress and with all involved federal companies to ensure that such an incident by no means happens again.