A downloadable audio file of the conference is available here; a full transcript of the call follows:
June 22, 2010
11:00 a.m. CT
ADMIRAL ALLEN:Good afternoon. Here to give you a quick update on the last 24 hours of operations. We’d like to answer any questions you might have from here in the studio and on the line when we’re done.
We had a really good last 24-hour period as far as productions out in the Discovery Enterprise and the Q4000 production platforms. We produced 25,836 barrels petroleum. That is a new record for us, and we continue to make progress in optimizing the capacity out of the wellhead there.
Regarding the relief well operations, the Development Driller II is—remains at the 10,677 feet below the sea floor in preparation of closing in on the pipe and doing a ranging technique, which will allow them to hone in for the actual point where theyll penetrate the wellbore. Development Driller II is at 4,662 feet and moving forward.
We continue to divide our vessels of opportunity into task force, provide them with radios, be more effective on the water as far as relating sighting information and surveillance information. This week we’re at a meeting with the United States Air Force at Tyndall Air Force Base regarding air space coordination, and we are prepared to go in with a coordinated structure on how we deal with the significant flights that are occurring in around the wellhead, these surveillance flights for oil and the flights to support logistics and so forth out there.
One other interesting note, we’ve found a—we didn’t find, we were able to recover the 40 feet of riser pipe that was cut off when we sheared off the lower ring riser pipe just below the kink. That section of pipe is important for forensics and for the ongoing inquiry. That is—that is being brought to the surface and will be brought to New Orleans, and of course that will be part of the evidentiary—the evidentiary material will be part of the Marine Board of Investigations, but also had several incursions into the closed area for fishing, where we have Coast Guard cutters out there enforcing the no-fishing areas.
There are some people, for whatever reasons, are wandering into those areas and actually fishing in areas that have been closed by NOAA, and in those cases we do boardings. I take appropriate of enforcement action and coordinate back to the National Marine Fisheries Service and NOAA, and most generally there is a citation issued, and the catch is discarded at sea. In addition to that, we are actively surveying the coastline and taking our fight, if you will, from shore out to about 15 or 20 miles regarding skimming operations as (inaudible) continues to migrate slowly towards the east moving over towards Destin Fort Walton Beach and the area between the airport and St. Joe.
I’ve got some schematics with me here today. I’ve been describing these drilling operations for many, many days. I’ve been doing it with my hands. We actually have some charts here that can explain, and if you have any questions, I’ll be glad to go into it.
gin-bottom: 0in;">With that, we can go to the question, here.
Q: (inaudible)
ADMIRAL ALLEN:If I could take you through the schematics here. This is what we’re going to try and do by the end of June. It’s on the schematic right here, and what you have is you have the current wellhead with the blowout preventer lower marine riser package connected to the Discovery Enterprise, and that’s what we’re producing right now. Then you have the Q4000, and it is drawing product off the choke line through this manifold, and that’s producing, and these two right now are the ones that gave us almost 26,000 barrels over the last 24 hours.
We are going to bring in an addition production vessel to come off the kill line. That’s the second line that comes out of this manifold over here, and that’ll add 20 to 25,000 barrels a day. That gives us up to 43,000 of barrels a day production by next week. That’s going to pretty much optimize what we can do at the wellhead site. There are three ways you can get oil out of this. You can come up to the riser pipe, and you can go through the kill or the choke lines to reverse those and actually bring oil to surface. So we’re producing through the kill and choke lines in the Q4000, and we’ll intend to do that with the Helix Producer once it gets on scene. And with the Discovery Enterprise, we have three vessels, and at that point, the total capacity will be 53,000 barrels.
Was that clear?
Q: What about the (inaudible)?
ADMIRAL ALLEN:Well, what’s going to happen, I’ll take—I’ll take you to the next chart here. The key difference, when we start shifting to different means of production, are something called a free-standing riser. You can see it here. The riser pipe between the Discovery Enterprise and the wellhead is connected by a fixed pipe. But this is actually—let’s back up here (inaudible). Will somebody hold this—can my—hold it for me? Thanks. Got it? OK. The Discovery Enterprise is actually fixed to the wellhead through this riser pipe here. The Q4000 actually is connected through a flexible hose. We’re going to create a free-standing riser from the tanker to the bottom that floats just below the surface, so we need flexible hoses both ways to connect that, and ultimately that will be way the entire new system will be put together will make it more seaworthy for the hurricane season.
If I can walk over here and show you this one. Hopefully, I won’t knock it off here. We go ultimately—it has to go to four standing free risers with no direct connections to the wellheads, and so there’s a couple of things. First of all, it allows us to maximize the amount of oil we produce. But there is nothing as thoroughly efficient as the wellhead. These risers are all flexible couplings that can be disconnected very, very quickly. It gives us redundancy on capacity and production. It gives us better (inaudible) capability because theyre riding on a hose and not a fixed pipe going forward, which gets us to 68,000 barrels a day by the middle of July and puts us in a better position to assess our options with hurricane season coming.
Q: What are the concerns of having that …
ADMIRAL ALLEN:There are many concerns about that. They would call this … (inaudible).
Q: (inaudible).
ADMIRAL ALLEN:I’m sorry.
Q: That’s OK.
ADMIRAL ALLEN:There are many concerns. When you have four standing riser pipes and four production platforms there, all within about a three or four-square-mile area, it brings up the issue that’s called simultaneous operations, and you have to deconflict that and be very, very careful about safety when you do that. I know that’s a concern for the folks that are out there, only from the vessels that the people that are involved in it, and we’re also dealing with oil which has got volatile organic compounds. We need to be careful of the safety of the workers.
In addition to those four standing riser pipes, at each side youll see Development Driller II here and Development Driller III. Those are the relief wells that are being drilled. So in addition to the four production riser pipes, we have two actual drilling operations going on that are aimed at drilling the relief wells, and the schematic over here shows you the two relief wells that are in process, Development Driller III and Development Driller II. And again, this one is closing, and as I said, the next couple of weeks we’ll be setting up in positions that can actually make the drill into the – into the wellbore.
Is that a little more understandable? Any other questions here?
Q: (inaudible) ROV, the ROV …
ADMIRAL ALLEN:It’s a real significant issue with ROV. It’s going to—every single one of these operations has ROVs related to them because that’s the eyes and the ears. Deconflicting ROV operations is very, very significant. The ROVs are shown here a little orange vehicles that are on the schematic there. We actually had a case here (inaudible) where youre trying to put the riser insertion tube in, and we had an ROV that was monitoring subsea dispersant application. They bumped into each other and had the riser tube dislodge itself about a month ago. So in every plan that’s been presented to us by BP, they have emphasized the fact we really well – we understand it very well that this is a very densely packed operation. But we need to get these four riser pipes up to give us the capacity we need.
(inaudible).
MODERATOR: Operator, we’re prepared to take questions from the phone now if you could please – questions from the phone.
OPERATOR:Yes. If you would like to ask a question, please press star one. We do have a question from Bryan Walsh of Time Magazine.
Q: Hi, Admiral. Can you tell me—we’ve heard reports about cleanup workers actually on the Gulf Shore. When they get sick, I mean the first people screening them are private ambulance and medical services hired by BP that before they would go to government services. Do you have a fix on who is actually in charge of making sure people are treated there on the Gulf Shore, especially workers, and also making sure youre getting fair data about what could be going on there so you actually know if there’s a problem. If something toxic is happening, you have you know authentic data that’s not potentially corrupted by a company that’s you know being on the BP payroll.
ADMIRAL ALLEN:Well, I’m not sure what’s happening right now at the tactical end. We could find out for you, but I would tell you this; for the last several weeks, we’ve been operating under a memorandum of understanding that we signed between the Department of Labor and the National Incident Command also include the role of the Occupational Safety and Health Administration on how we monitor worker health and safety and how we report that and how we coordinate that.
There is a unified structure set up down in OSHA and in Mobile to do that. Anytime there is an incident that is more than just plain first aid on scene, if somebody’s evacuated for any purpose at all, there’s a message sent up through the system, and I get those personally. I’m not aware of what youre talking about specifically, but I’ve had fairly positive feedback that when there’s a health issue that’s come up, we’ve treated it very quickly and with the interest of the individuals that are in mind. If youd like to give us some specific information on this case and how the patient was transported, we’d be glad to follow-up and see if that conforms to the procedures we set up with OSHA. But we have a pretty good working relationship with them, and as I understand, the coordination down on the ground is working fairly well. But we’ll follow-up if you can give us the details.
Q: OK, thanks.
ADMIRAL ALLEN:Yes.
OPERATOR:Your next question is from (inaudible) of Environmental News.
Q: Hello, Admiral. Thanks for taking my question. You keep saying that the driller ship three is down to about 10,000 feet and it’s closing in on for an intercept. But BP said early on that the well had been drilled down to 18,000 feet. Does it not have to go down all the way to 18,000 feet to do the intercept?
ADMIRAL ALLEN:It does not. I believe theyre going to try and intercept somewhere around between 16,700 and 17,000 feet. We will confirm that for you and put out a statement tomorrow. They dont have to go clear to the reservoir, which is at 18,000 feet, and what theyre going to do is theyre going to close in and very slowly close to that point where they will then drill through the wellbore casing, and if they need to, drill through the pipe itself. But you are right; theyll be slightly above the level of the reservoir. Was that responsive?
Q: Yes. Thank you.
ADMIRAL ALLEN:OK.
OPERATOR:Your next question is from Zach Warmbrodt of Argus Media.
Q: Hi. Thank you. There’s been some reports that the first major storm of the hurricane season might enter the Gulf as soon as next week. Could you walk us through what will happen with the collection operation if that happened next week?
ADMIRAL ALLEN:Sure. First of all, we’re watching the hurricane season very, very closely. I’m in constant contact with Jane Lubchenco, administrator of NOAA, and in fact, this week I talked to Craig Fugate, the FEMA administrator. We are informing each other of our respective operations. Of course you know they were involved with hurricane prep, so they would be anyway this time of year. And we do have that low depression that’s been informed in the Southeast Caribbean, and we’re watching that as well.
How we respond to a hurricane will be dictated by which production capacity we have on scene, and as you know this is evolving and will continue to evolve over the next two to three weeks. By the end of next week, let’s say, we would anticipate having three production vessels out there over the well site; the Discovery Enterprise, the Q4000 and the Helix Producer. Of those production capabilities, one of them is fixed hard to do the platform itself, and that’s the Discovery Enterprise down to the wellbore. The other two are on flexible couplings for vertical riser packages.
We would need in total to disconnect, recover to a safe harbor and return probably around 10 days to accomplish that, and we would probably have to start doing that anywhere between three to seven days in advance of the hurricane. Those procedures are being finalized right now. We’re discussing that with BP and the folks that are down at the area unified command in New Orleans. But if it happens—if we got notice that a hurricane was coming, we would need anywhere from three to seven days in advance of that to demobilize and redeploy the equipment.
Is that responsive?
Q: What kind of storm would have to be coming your way for you to do that? How—what kind of wind speed, or could you give anymore specifics on that?
ADMIRAL ALLEN:Well, what we’re going to do is—I was asked the question yesterday. I asked some folks working on how are mooring systems related to Saffir-Simpson Scales, because I think that’s the easiest way for people to understand that. And we will get that out to you in the next 24 hours. But basically, the least capable platform that’s in production to ride out heavy weather would be the Discovery Enterprise because it’s physically hooked to the well itself.
Anything that’s working through our vertical riser that’s floating with a flexible hose coupling will have a little bit more flexibility as far as the sea state, and the large vessels that will be coming on later in July, the shuttle tankers, have much more sea keeping capability, although none of them are designed or created, nor are the production mooring facilities and everything else, created to withstand a major hurricane. Exactly when the cutoff is as far as the sea state goes, we will put that together, and we’ll give you a brief in 24 hours.
OPERATOR:Your next question is from Sandy Davis of Advocate News.
Q: Hi, General—I mean Admiral, sorry. Thank you for taking my call. First of all, I didn’t—we didn’t get a copy of the charts. Will you be putting those up on the Web site later today?
ADMIRAL ALLEN:Sure. I’d be happy to do that.
Q: OK, and the second thing was why is the second relief well going so slow?
ADMIRAL ALLEN:Well, they didn’t start at the same time. The second relief well started several weeks afterwards, and also, the second relief well—the second relief drilling rig had a blowout preventer on it that they had intended to use after Top Kill if they were going to cap the well. They decided not to use the blowout preventer because of the uncertainty regarding the status of the wellbore and what pressure might do going down. That’s the reason they abandoned the Top Kill and the capping exercise at that point.
During that time, when they were doing the Top Kill exercise, the Development Driller II moved off station with the blowout preventer and had to prepare to put on the wellbore should we—or the lower marine riser package should we need to do that. That didn’t happen. They went back and they continued their drill. They are—there are the risk mitigator for the first relief well.
OPERATOR:Your next question is from Richard Faussett of the Los Angeles Times.
Q: Hi, Admiral Allen. Can you talk a little bit about the worst-case scenarios going forward? What happens if the relief wells don’t work out? How long could this go on, and what kinds of other contingencies have been drawn up? What kinds of conversations are you guys having about those possibilities?
ADMIRAL ALLEN:Well, first of all, we’re mitigating risk on the relief well by drilling a second relief well alongside it. Hopefully that won’t be needed. Secretary Salazar and Secretary Chu had a meeting last week in Washington with other industry representatives beyond BP, other oil-producing companies that are out there, and we’ve actually identified a couple of platforms that are in the area that might be capable of taking the product coming out of the wellbore through pipelines and either producing it or putting it back down into the reservoir. We’re exploring that over the next couple of days.
If we’re able to do that, that would give us an option of controlling the flow without having any surface vessels there, to some extent. That wouldnt be the capacity we’re looking for, but that would be another risk mitigator to handle some of the oil. We’re in exploratory conversations, and again, that was just the result of a meeting that we held last week where we asked industry to basically unconstrain their thinking and see what they could do for us. So we’re actually looking at whether or not there are normal wells out there (inaudible) wells out there we could use as alternate production facilities.
OPERATOR:Your next question is from Ray Henry of the Associated Press.
Q: Admiral, Ray Henry. Wanted to see if you could explain a little bit about what you just talked about, putting the oil potentially back in the reservoir. Give us a little bit of a sense of where those conversations stand, what youd be looking at. Would this be a production platform that would be brought in to do this, but you need to drill a new well to accomplish that? That’s the first time I think I’ve heard anyone speak of that.
ADMIRAL ALLEN:Well, it is the first time we’ve talked about it. We’ve had some communications with BP. At the industry meeting that was held last week hosted by Secretary Salazar and Secretary Chu, we were looking at alternatives that would help us increase capacity, and there was an idea in the room among all the people that were talking, and this is the reason we bring other people in and ask them continually searching for new and better ways to do this. They talk about whether or not it was in the immediate area, where this well was being drilled, that there are other production facilities that are already there that we – that could be used if we were to extend the pipeline along the bottom of the ocean, and that’s what we’re looking at right now.
The question of how many of those might be available and the capacity that we could generate is all being looked at right now through a series of letters of request for information that we are working, but it is something that we’re actively looking at because it could allow us to continue production out of that well without the—requiring a service vessel to be there, which is problematic, as you know when a hurricane.
Q: So you would extend a pipeline back into the reservoir to return the oil in a loop, or would it go to someplace else?
ADMIRAL ALLEN:No. We would send the pipeline to an existing facility that’s not being used for well production right now that has access to a different reservoir.
OPERATOR:Your next question is from (inaudible) at (inaudible).
Q: Hi, Admiral. I’m—the (inaudible) says repeatedly said that his—the chemical safety limits from OSHA are not sufficient to protect workers. I mean he called them outrageously out of date, and BP has said that these are the federal limits; those are the ones that theyre going to direct their contractors to use to see if the workers are safe. Have you talked to the OSHA director about this? Are you directing BP to follow limits that the director feels are safe?
ADMIRAL ALLEN:Well, let me make sure I understood your question, because it was a little bit garbled. I think you were asking about either protective equipment or protective procedures.
Q: No, these are chemical exposure limits.
ADMIRAL ALLEN:Oh.
Q: Like for (inaudible) and such that the OSHA chief has said that you know the limits that his agency has set are out of date and are insufficient for worker safety, and then BP has said that those are the official limits, so theyre going to follow them anyway.
ADMIRAL ALLEN:I was not aware of a statement by OSHA that their standards were—that they thought that their standards were out of date. But we will certainly look into that, and I’ll release a statement later on today. That’s the first I had heard of that.
MODERATOR: Operator, we have time for two more calls.
OPERATOR:There are no further questions at this time.
MODERATOR: OK. Thank you, everyone.
ADMIRAL ALLEN:Thanks.