Apocalypse in the Gulf: Could a Sinkhole Swallow the Deepwater Horizon Well -- And BP?

BP has confirmed that the failed blowout preventer (BOP) on its Deepwater Horizon well in the Gulf of Mexico is tilting sideways at an acute angle 12 to 15 degrees from perpendicular. Geologists and petroleum engineers are now debating the worst case scenario: growing evidence that the Macondo discovery well's casings beneath the ocean floor have been irreversibly damaged, possibly to such an extent that it may be impossible to cap the well.

The Deepwater Horizon had recently completed promising exploratory drilling -- to a vertical depth of about 18,000 feet (3.4 miles as measured from the rig floor), not including vertical depth to canyon floor (about 5,000 feet) -- when it exploded as the rig crew prepped a temporary seal for the well on April 20.

BP spokesperson Toby Odone acknowledged to reporters last week that the 45-ton BOP was tilting, which the company attributed to a shift in the collapsed riser piping (from the rig accident).

Since the failure of last month's "top-kill" effort to stem the flow, knowledgeable scientists have argued about the potential significance of BP's inability to maintain enough topside pressure -- to "squash" the column of superheated fluids erupting upward -- during the plugging efforts. One popular hypothesis making the rounds online is that the underground well casing is fractured beyond repair. Some geologists and petroleum engineers argue that the top-kill failure could have resulted from too much "kill mud" leaking out of cracked pipe casings into the surrounding rock formation instead of flowing deeper into the well. (Click image for a larger version.)

BP cites a broken disk inside the well as the cause of the top-kill failure. Admiral Thad Allen, the incident commander for the BP oil spill response, has confirmed on recent conference call updates that structural problems in the well casing of the sunken Deepwater Horizon rig cannot be ruled out. Commenting on BP's decision to halt the top-kill contingency, Allen -- President Obama's point person -- said:

There was some discussion at that point about the uncertainty of the -- of the condition of the casings in the wellbore which you would want to do is drive so much mud down there and such a pressure that you might cause a problem and the problem was they (scientific summit that included Interior Secretary Ken Salazar and Energy Secretary Steven Chu) didn't know and they still don't know the condition of the wellbore. For that reason, they erred on the side of safety on how much pressure they would exert, and when they got near those pressures without having success in killing the well -- killing the well, that's when they backed off.

We know little about the underlying geology of the spill site since BP has held that information close, claiming that it's "proprietary" data. Scientists are clamoring for BP to publicly release geological survey data on the underlying "Lower Teriary" formations (rock layer formed 65 million to 250 million years ago). Remotely operated vehicles (ROVs) are streaming video feeds of high pressure columns of oil and gas bubbling up from fissures in the sea floor -- flowing from likely stress fractures in the underground piping.

A much talk-about anonymous posting at The Oil Drum, a blog often frequented by petroleum engineers and other oil-industry specialists, captures the fears of many scientists and environmentalists alike:

That the system below the sea floor has serious failures of varying magnitude in the complicated chain, and it is breaking down and it will continue to.

What does this mean? It means they will never cap the gusher after the wellhead. They cannot...the more they try and restrict the oil gushing out the bop [blowout preventer]?...the more it will transfer to the leaks below. Just like a leaky garden hose with a nozzle on it.

Don Van Nieuwenhuise, director of geoscience programs at University of Houston, told New Orleans Times-Picayune reporter Rebecca Mowbray that BP ran out of casing sections before it hit the reservoir of oil, so it switched to an inferior material -- something called liner -- for the remainder of the well. Consequently, the BP well has several weak spots that the highly pressurized oil could exploit. Specifically, the joints between two sections of liner pipe and the joint where the liner pipe meets the casing could be weak, said Van Nieuwenhuise.

Nieuwenhuise added that efforts by BP to try to stop the oil or gain control of it have been tantamount to repeatedly hitting the well with a hammer and sending shock waves down the pipe. "I don't think people realize how delicate it is," he told the paper. Nonetheless, Van Nieuwenhuise believes oil from a blown out well rupturing the casing and bubbling up through the ocean floor is unlikely -- a worst-case scenario -- as he 's never actually heard of such an occurrence.

Weak joints, shock waves down the pipe, cracks and fissures in the sea bed -- does a down-hole blowout seem such a remote "worst-case scenario?" Oh, and let's not forget the incessant, abrasive-mixed plume of oil, natural gas, and "itty-bitty" grains of sediment surging through the drill piping at incredible pressures. Anyone care to wager the integrity of the pipe liner ain't what it used to be after having been effectively sandblasted for the last 70 days?

The late Larry Flak, an engineer recognized the world over for his acumen in containing deepwater well blowouts, presciently warned back in 1997 (before drilling at depths of 30,000+ feet was feasible) of the dangers ultra-deepwater blowouts might pose:

Underground blowout risk is substantial in ultra deepwater wells.... Blowout control options in ultra-deepwater are very limited. Blowout prevention is of paramount importance.

Accusations are flying that BP has shifted its efforts from plugging the leak to outflow capture specifically in order to relieve hydrostatic pressure in the reservoir below the piping. The reservoir drive pressure, however, shows no signs of abating, as an estimated 35,000 to 60,000 barrels of oil continue billowing daily through the wellbore.

Flak does admit that nature could intervene -- if the strata above the reservoir is layered with more hard rock than permeable carbonate, the weight of thousands of feet of ocean and rock buckling under tremendous top-down pressure could create a "natural bridge" that plugs ruptured fissures in the reservoir rock.

Bob Bea, prominent petroleum engineering professor at UC Berkeley and an expert in offshore drilling and government advisor on causes of manmade disasters (like Hurricane Katrina), believes a worst-case scenario is not that far-fetched. In response to a question posed by Mowbray, Bea said, "Yes" -- there is reason to think that oil is leaking from the well outside the containment cap.

The likelihood of failure is extremely high. We could have multiple losses of containment, and that's going to provide much more difficult time of trying to capture this [oil].

The anonymous posting at Oil Drum also postulates that the weakened casing is literally "clinging" to the wellhead via the damaged riser piping -- like a clump of soil hanging to an uprooted tree. The commenter theorizes that if the 450 tons of riser containment piping and BOP equipment lean too much, the whole system would crash to the sea fool, ripping away the weakened rock. Moreover, the already weakened sea bottom beyond the wellbore (eroded by up to 100,000 pounds per square inch of corrosive fluid pressure seeking escape upward from the leaks in the undersea piping) would crack wide open like ice on a pond. Should this occur, one of three scenarios may occur (presented here from best-case scenario to worst):

Benign rockslides at nearby canyon walls, coupled with "natural bridge" formation, plug the oil leak.
An exposed reservoir opening bleeds 150,000 barrels of oil a day daily until natural hydrostatic pressures from above and below the surface equalize -- think two opposing teams in a tug-of-war running out of energy and calling the game a draw -- turning off the leak.
Weakened sand and salt layers above the reservoir simply collapse, turning a wide area of the outer continental shelf sea floor into an underwater sinkhole that could bleed 2 billion to 3 billion barrels of oil into Gulf waters. In addition, seismic-shock tremors roll in all directions for miles, with an unknown effect on other nearby fields, especially BP's Thunder Horse (18 miles) field and Shell and BP's Na Kika complex, located in Mississippi Canyon Block 474 (approximately 15 miles south-southeast of the blowout).

Tropical storm Alex -- rolling through Yucatan Peninsula in southeastern Mexico, and now nearing hurrican strength -- is another somber reminder of headwinds BP faces with cleanup and lockdown efforts: A major hurricane in Gulf waters could burst pipelines and topple drilling rigs, say scientists at the Naval Research Lab at the Stennis Space Center.

The race is on. "Bottom-kill" plug relief well efforts are still (at least) a month and a half away. Can the wellbore hold up that long? And, will relief wells -- even if successful -- change the outcome? Watch your undersea video feeds.

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David Phillips

David Phillips has more than 25 years' experience on Wall Street, first as a financial consultant and then as an equity analyst for several investment banking firms. He sifts through SEC filings for his blog The 10Q Detective, looking for financial statement soft spots, such as depreciation policies, warranty reserves and restructuring charges. He has been widely quoted in outlets such as BusinessWeek, The International Herald Tribune, Investor's Business Daily, Kiplinger's Personal Finance, and The Wall Street Journal.

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