[Editor's note: As part of a major BNET redesign, David is moving to the new 10-Q Detective blog on the site. As of Thursday, you'll be able to find him here: http://www.bnet.com/blog/sec-filings. You'll be able to find all our business-news blogs at our new home in the Commentary section here: http://www.bnet.com/news. Thanks in advance for your patience.] BP's problems in the U.S. won't end with the successful plugging of its Macondo oil spill. An environmental group is pressing the Obama administration to suspend operations at the Atlantis oil and gas platform, a prolific contributor to the U.K.- based major's operations in Gulf waters. Food & Water Watch has accused BP and its minority partner, Melbourne-based BHP Billiton (44% working interest), of operating the Atlantis rig without proper documentation required by law, and necessary for safe operation (including maintenance).
In addition, the group claims that the Interior Department and Secretary Ken Salazar have done almost nothing to "protect the Gulf from another potential calamity," and it's urged members of Congress to either legislate -- or formally request President Obama to issue an executive order -- shuttering BP Atlantis until legally required safety documentation is presented for public review.
The industry watchdog's allegations draw heavily from internal BP Atlantis engineering documents reviewed by Apex Safety Consultants engineer Mike Sawyer, hired by a whistleblower's attorney last May. The whistleblower, whose name remains confidential because the whistleblower still works in the oil industry and fears retaliation, first raised concerns about the rig's safety in November 2008. Some of the more worrisome concerns being publicized by Food & Water Watch include:
- More than 6,000 critical documents -- including those for pipelines, flowlines, wellheads and other imporÂtant systems -- do not have the required engineering documentation;
- About 85 percent of the project's subsea piping and instrument diagrams, critical documents for operating the platform, have no "issued for construction" engineering approvals;
- Many of its safety shutdown system logic diagrams aren't up to date; and,
- More than 95 percent of the welding documents have no final engineering approval, calling into question the safety of the welds. A single bad weld "could have catastrophic consequences."
BP is more dependent on production from its Atlantis oil properties than ever, as the oft-delayed Thunder Horse field, BP's once-promising field in the Gulf of Mexico continues to under-perform. Designed with production capacity of 250,000 barrels a day, actual activity averaged only 133,000 barrels per day in 2009, according to BP's 2009 annual report. Furthermore, water being pumped out of Thunder Horse's main field is rising, and now exceeds 28,000 barrels per day: comprising an estimated 31 percent of each barrel of oil in February 2010, up from 12 percent in May 2009.Actual production peaked, too, at about 172,000 barrels per day in January 2009, according to the Houston Chronicle.
Daily production at BP Atlantis is approximately 54,000 barrels of oil, second only to Thunder Horse in the Gulf of Mexico. However, with estimated proved reserves of about 600 million barrels of oil, BP has been working to double daily production.
The Obama's determination to suspend all new drilling in the deep waters of the Gulf would adversely affect BP's production, too. Its Tiber prospect, located about 250 offshore from Houston -- at at a staggering depth of almost 5 miles -- is thought to hold more than one billion barrels of recoverable oil!
However, having already dished out $4 billion in direct costs attributable to clean-up and recovery efforts -- and on the hook for (at least) $20 billion more, the amount it pledged for an escrow fund to cover damages for those directly affected by the spill -- BP can ill afford to see its Atlantis production curtailed.
Kate Fried, Food & Water Watch spokeswoman, told me more than 30 legislators have voiced support for the group's objective to shutdown Atlantis. In my opinion (and as I told Ms. Fried), backing from Capitol Hill politicians will likely prove ephemeral, lasting only as long as the last television camera light stays on. Perhaps with this in mind, Food & Water Watch has gone to court, seeking to enjoin BP to released engineering and safety documents under the Freedom of Information Act.
For now, at least, the Atlantis deepwater wells in the Gulf keep pumping -- oil and cash flow.
- All Things BNET on BP's Gulf of Mexico Oil Spill
- Oil for Terrorists: BP CEO Tony Hayward's Odds of Survival Fall Daily
- More BP Gulf Oil Spill Conspiracies Flourish - From Algae Farms to Armed Dolphins
- Conspiracy Theories Behind BP Oil Spill in Gulf - From Dick Cheney to UFO
- An Embattled BP Looks "Beyond Politics" to Mislead Public on Oil Spill Details
- Noble Drilling: A Case Study in the Drilling Ban Pain