[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]
DEEPWATER DRILLING
TECHNOLOGY, RESEARCH, AND DEVELOPMENT
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON ENERGY AND
ENVIRONMENT
COMMITTEE ON SCIENCE AND TECHNOLOGY
HOUSE OF REPRESENTATIVES
ONE HUNDRED ELEVENTH CONGRESS
SECOND SESSION
__________
JUNE 23, 2010
__________
Serial No. 111-101
__________
Printed for the use of the Committee on Science and Technology
Available via the World Wide Web: http://www.science.house.gov
______
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COMMITTEE ON SCIENCE AND TECHNOLOGY
HON. BART GORDON, Tennessee, Chair
JERRY F. COSTELLO, Illinois RALPH M. HALL, Texas
EDDIE BERNICE JOHNSON, Texas F. JAMES SENSENBRENNER JR.,
LYNN C. WOOLSEY, California Wisconsin
DAVID WU, Oregon LAMAR S. SMITH, Texas
BRIAN BAIRD, Washington DANA ROHRABACHER, California
BRAD MILLER, North Carolina ROSCOE G. BARTLETT, Maryland
DANIEL LIPINSKI, Illinois VERNON J. EHLERS, Michigan
GABRIELLE GIFFORDS, Arizona FRANK D. LUCAS, Oklahoma
DONNA F. EDWARDS, Maryland JUDY BIGGERT, Illinois
MARCIA L. FUDGE, Ohio W. TODD AKIN, Missouri
BEN R. LUJAN, New Mexico RANDY NEUGEBAUER, Texas
PAUL D. TONKO, New York BOB INGLIS, South Carolina
STEVEN R. ROTHMAN, New Jersey MICHAEL T. MCCAUL, Texas
JIM MATHESON, Utah MARIO DIAZ-BALART, Florida
LINCOLN DAVIS, Tennessee BRIAN P. BILBRAY, California
BEN CHANDLER, Kentucky ADRIAN SMITH, Nebraska
RUSS CARNAHAN, Missouri PAUL C. BROUN, Georgia
BARON P. HILL, Indiana PETE OLSON, Texas
HARRY E. MITCHELL, Arizona
CHARLES A. WILSON, Ohio
KATHLEEN DAHLKEMPER, Pennsylvania
ALAN GRAYSON, Florida
SUZANNE M. KOSMAS, Florida
GARY C. PETERS, Michigan
JOHN GARAMENDI, California
VACANCY
------
Subcommittee on Energy and Environment
HON. BRIAN BAIRD, Washington, Chair
JERRY F. COSTELLO, Illinois BOB INGLIS, South Carolina
LYNN C. WOOLSEY, California ROSCOE G. BARTLETT, Maryland
BEN R. LUJAN, New Mexico VERNON J. EHLERS, Michigan
PAUL D. TONKO, New York JUDY BIGGERT, Illinois
EDDIE BERNICE JOHNSON, Texas W. TODD AKIN, Missouri
DANIEL LIPINSKI, Illinois RANDY NEUGEBAUER, Texas
GABRIELLE GIFFORDS, Arizona MARIO DIAZ-BALART, Florida
JIM MATHESON, Utah
LINCOLN DAVIS, Tennessee
BEN CHANDLER, Kentucky
JOHN GARAMENDI, California
BART GORDON, Tennessee RALPH M. HALL, Texas
CHRIS KING Democratic Staff Director
SHIMERE WILLIAMS Democratic Professional Staff Member
ADAM ROSENBERG Democratic Professional Staff Member
JETTA WONG Democratic Professional Staff Member
ANNE COOPER Democratic Professional Staff Member
ROB WALTHER Democratic Professional Staff Member
DAN BYERS Republican Professional Staff Member
TARA ROTHSCHILD Republican Professional Staff Member
JANE WISE Research Assistant
ALEX MATTHEWS Research Assistant
C O N T E N T S
June 23, 2010
Page
Witness List..................................................... 2
Hearing Charter.................................................. 3
Opening Statements
Statement by Representative Brian Baird, Chairman, Subcommittee
on Energy and Environment, Committee on Science and Technology,
U.S. House of Representatives.................................. 7
Written Statement............................................ 9
Statement by Representative Ralph M. Hall, Ranking Minority
Member, Committee on Science and Technology, U.S. House of
Representatives................................................ 9
Written Statement............................................ 11
Prepared Statement by Representative Jerry F. Costello,
Subcommittee on Energy and Environment, Committee on Science
and Technology, U.S. House of Representatives.................. 12
Witnesses:
Mr. James Pappas, Vice President, Technical Programs, Research
Partnership to Secure Energy for America
Oral Statement............................................... 14
Written Statement............................................ 15
Biography.................................................... 19
Dr. Benton Baugh, President, Radoil, Inc.
Oral Statement............................................... 19
Written Statement............................................ 21
Biography.................................................... 24
Mr. Erik Milito, Group Director, Upstream and Industry
Operations, American Petroleum Institute
Oral Statement............................................... 25
Written Statement............................................ 27
Biography.................................................... 28
Mr. Greg McCormack, Director, Petroleum Extension Service,
University of Texas-Austin
Oral Statement............................................... 28
Written Statement............................................ 30
Biography.................................................... 32
Discussion
The Safety of Current Technologies............................. 33
Human Factors of Error......................................... 34
More Information from Dr. Baugh................................ 35
A Drilling Moratorium.......................................... 35
Inherent Risks................................................. 37
Safety Considerations at Individual Companies.................. 39
Potential Risks Taken by BP.................................... 40
Drilling in Shallower Waters................................... 40
Accident Prevention............................................ 41
Responsibilities of the Permitters............................. 42
Limited Remaining Oil Resources................................ 43
Funding for Research and Safety................................ 44
Support for Safety Mechanisms.................................. 45
How To Halt the Deepwater Horizon Spill........................ 46
Monitoring and Diagnostic Capabilities and Coordination........ 49
More on Activities Coordination................................ 51
Oil Spill Response Programs.................................... 52
A Potential Moratorium on West Coast Deepwater Drilling........ 53
Blind Shear Rams............................................... 54
More on Funding Research....................................... 55
Deepwater Drilling and EPAct Section 999....................... 56
New Technology Development and DOE............................. 58
More on Inherent Risks and Safety Improvement.................. 58
Closing........................................................ 60
DEEPWATER DRILLING
TECHNOLOGY, RESEARCH, AND DEVELOPMENT
----------
WEDNESDAY, JUNE 23, 2010
House of Representatives,
Subcommittee on Energy and Environment
Committee on Science and Technology
Washington, DC.
The Subcommittee met, pursuant to call, at 10:03 a.m., in
Room 2318 of the Rayburn House Office Building, Hon. Brian
Baird [Chairman of the Subcommittee] presiding.
hearing charter
COMMITTEE ON SCIENCE AND TECHNOLOGY
SUBCOMMITTEE ON ENERGY AND ENVIRONMENT
U.S. HOUSE OF REPRESENTATIVES
Deepwater Drilling Technology,
Research, and Development
wednesday, june 23, 2010
10:00 a.m.-12:00 p.m.
2318 rayburn house office building
Purpose
The purpose of this hearing is to explore the technologies,
standards, and practices for prevention and mitigation of oil spillage
during deepwater oil and natural gas drilling operations; the role of
government-sponsored technology development programs in advancing these
technologies; and, in the wake of the Deepwater Horizon tragedy, how
firms will assess risk as it relates to incident prevention and
mitigation.
Witnesses
Mr. James Pappas--Vice President, Technical Programs,
Research Partnership to Secure Energy for America (RPSEA). Mr.
Pappas will discuss the unique technological challenges of oil
and natural gas drilling in deepwater and ultra-deepwater, as
well as the role of RPSEA in developing technologies to prevent
and mitigate incidences.
Dr. Benton Baugh--President, Radoil, Inc. Dr. Baugh
will address the adequacy of existing systems for incident
prevention and mitigation, as well as the need for
technological advances and the processes for deploying new
technologies in the field. Dr. Baugh is a member of the
National Academy of Engineering and an Adjunct Professor at the
University of Houston.
Mr. Erik Milito--Group Director, Upstream and
Industry Operations, American Petroleum Institute. Mr. Milito
will address technical standards and best practices for
deepwater drilling incident prevention and mitigation.
Mr. Gregory McCormack--Director, Petroleum Extension
Service, University of Texas at Austin. Mr. McCormack will
address advances in worker training as well as health and
environmental safety practices in the oil and natural gas
drilling industry.
Background
BP Deepwater Horizon Incident and Blowout Preventers (BOP)
On April 20, 2010, an explosion and fire occurred on the Deepwater
Horizon drilling rig in the Gulf of Mexico. The rig, owned by
Transocean and leased by BP, was in the final stages of drilling an
exploratory well at the Macondo prospect in BP-operated Mississippi
Canyon Block 252, and had achieved a depth of approximately 18,360 feet
in 5,000 feet of water. The accident resulted in the death of eleven
workers, a massive release of oil into the Gulf, and a national
response effort by Federal and state government agencies as well as BP.
Oil continues to flow from the well at an estimated rate of up to
60,000 barrels per day, and will likely continue at this rate until two
relief wells are completed in August. While an investigation into the
exact cause of the Deepwater Horizon accident is ongoing, it is
understood to be a confluence of critical human errors and the failure
of certain wellhead equipment designed to stop an incident. Through
this hearing the Committee seeks to better understand the possible
improvements in technologies to prevent and mitigate accidents during
drilling operations, and the appropriate role of government-sponsored
technology development programs in advancing these technologies and
other methods to ensure safety.
At the Macondo well, initial investigations indicate that the
primary technology failure lay in the Blowout Preventer (BOP), which is
a large mechanism that includes a series of high pressure hydraulic
valves designed to stop an uncontrolled flow of oil and gas from the
wellbore. The Deepwater Horizon's BOP included elements of three
different types of valves, or ``rams.'' One type, known as a pipe ram,
stops flow by sealing around the tubular components of a well. Another
is a ``blind ram,'' which closes over an open wellbore that does not
contain pipe. The final line of defense, and likely the most critical
failure in the Macondo accident, is the ``blind shear ram,'' which uses
two blades to cut through the metal drill pipe and seal the wellbore.
A BOP can be activated either remotely by personnel from the rig
via electrical signal, automatically via a ``deadman switch'' in the
case of a catastrophic incident in which the rig becomes disconnected
from the BOP or a signal cannot otherwise be activated by personnel,
via acoustic signal from a vessel other than the drill rig, or manually
by remotely-operated vehicles (ROV). Crew members aboard the Deepwater
Horizon attempted unsuccessfully to activate the BOP, including the
blind shear ram, before the fire forced an evacuation. Furthermore, the
automatic deadman switch did not appear to activate the BOP, nor was it
equipped with an acoustically-activated switch. A number of subsequent
attempts to activate the BOP using an ROV also failed. Gamma ray
imaging of the BOP--devised by the Department of Energy for this
incident--indicates that one of the two blades of the blind shear ram
activated, but it is otherwise unknown when and how this occurred.
Several factors may have led to the failure of this BOP, but it
appears that a leak in a ``shutter valve'' caused a catastrophic and
irreparable loss of hydraulic pressure that rendered the blind shear
rams too weak to cut through the drill pipe and seal the wellbore. It
is not clear whether this leak happened before or after the blowout.
However, even under normal operating conditions, the strength and
reliability of blind shear rams have repeatedly been called into
question by a number of studies and tests conducted in the last decade.
In fact, some tests have concluded that the blind shear rams could only
be counted on to fully activate approximately half of the time.
Cutting through hollow drill pipe requires several thousand pounds
per square inch of pressure from each of the two blades. However, up to
one-tenth of the length of the drill string is made up of more solid
joints that connect the drill pipes, and these joints are virtually
impossible to cut with blind shear rams that currently are designed to
cut only through hollow drill pipe. This is compounded by the apparent
fragility of the hydraulic system, and possibly the effects of deep
ocean pressures and temperatures, which can weaken the force the
hydraulic system can apply and increase the resiliency of pipes. Some
operators in the Gulf have opted to increase the reliability of their
BOPs by including two blind shear rams in case one fails, yet two-
thirds of the rigs operating in the Gulf still have only one blind
sheer ram. Still, many others both inside and outside of the industry,
including the CEO of BP, have concluded that the design of blowout
preventers must be rethought altogether.
Deepwater and Ultra-deepwater Drilling Technologies
Completed in 2001 in South Korea by Hyundai Heavy Industries, the
Deepwater Horizon was a semi-submersible ultra-deepwater mobile
offshore drilling unit (MODU) capable of operating in harsh surface
conditions and water depths up to 10,000 feet with a crew of
approximately 135 personnel. It was a dynamically-positioned vessel,
meaning that it was not moored to any fixed point, but instead
maintained its position above the well using multiple propellers and
thrusters. Though state of the art when introduced, by 2010 the rig was
one of approximately 200 deepwater rigs capable of drilling in greater
than 5000 feet of water, and some are drilling at depths greater than
10,000 feet. In 2009 the Deepwater Horizon set the record for the
deepest oil well in history by drilling to a depth of 35,000 feet.
Often likened to space exploration in its complexity, deepwater and
ultra-deepwater drilling presents a unique set of technological
challenges, including for safety and incident prevention and
mitigation. For instance, the greater the depth of water, the longer
the drill string must be suspended without support from the rig, and
the more important it then becomes for a rig to maintain its position
above the well. Deviations can put considerable strain on equipment,
causing failure or even a disconnection of the rig from the subsea
(seafloor) architecture. This is made all the more difficult for a rig
floating in open ocean that must endure high swells, high winds and
strong currents. Consequently, the drill string must be considerably
thicker and stronger for deeper wells, and thus requires larger BOPs
with much higher pressure rams to shear the drill string. Greater
depths also add significantly to the weight of the fluid column in the
drill string, and thus add greater bottom hole pressure and require
more energy to lift drilling fluids and other materials from the well.
Furthermore, because of the tremendous overburden, the hydrocarbon
reservoir may be under intense pressures far beyond those encountered
in more conventional operations.
To overcome some of these challenges, deepwater drilling operations
utilize subsea installations to conduct a range of functions that would
otherwise be done at the surface. Such equipment must be robust enough
to operate under the extreme pressures and temperatures which can cause
everything from hydraulic equipment to the hydrocarbons to behave
differently. Because of the high cost of testing technologies in the
field, the industry is increasingly reliant on simulations and modeling
to predict the performance and failure of equipment at depth. However,
the extreme conditions of deepwater drilling are impossible to fully
replicate in a lab.
The industry has devoted billions of dollars to researching and
developing technologies for subsea and surface facilities specific to
deepwater and ultra-deepwater drilling, especially those technologies
which represent an increase in production efficiency. However, many
contend that the industry has not devoted similar resources to the
development of technologies and methods for accident prevention and
mitigation. If there is a critical technology gap, the question remains
as to the appropriate role of government-sponsored programs in
assisting industry in developing more reliable technologies, overseeing
their deployment, ensuring the development of more robust industry
standards, and disseminating best practices.
Department of Energy Programs
The Office of Oil and Natural Gas, in the Department of Energy's
Office of Fossil Energy, supports research and policy options to ensure
clean, reliable, and affordable supplies of oil and natural gas for
American consumers. However, funding for this program in recent years
has been relatively limited, resulting in few initiatives to develop
technologies to avoid and mitigate incidences such as the Deepwater
Horizon accident. From fiscal years 2007 through 2011, both the Bush
and Obama administrations have made no request for funding of any oil
technology research. However. Congress has continued to appropriate
small amounts solely towards exploration and production technologies.
The last appropriation to the Office of Fossil Energy's Petroleum--Oil
Technology program was in 2009 for just under $5 million.
Under section 965 of the Energy Policy Act of 2005, DOE has the
authority to conduct research and development in oil and gas
exploration and production as well as related environmental research.
DOE has a wide range of intellectual and technical resources, including
the national labs, that could be leveraged to conduct research and
advance technologies in areas that individual companies alone are not
likely to aggressively pursue.
DOE also funds oil and gas R&D through authorization of $50 million
in annual mandatory spending from offshore oil and gas royalty revenues
collected by MMS. Through authorization in Section 999 of the Energy
Policy Act of 2005, DOE conducts approximately $12.5 million of ``in-
house'' research at the National Energy Technology Laboratory (NETL).
The remaining $37.5 million in R&D is managed by a public-private
research consortium.
EPAct 2005, Section 999--Ultra-deepwater R&D and the Research
Partnership to Secure Energy for America (RPSEA)
Section 999 of the Energy Policy Act of 2005 authorizes the
Secretary of Energy to establish an ultra-deepwater and unconventional
onshore resources research and development program. Management of the
program was awarded to a research consortium headquartered in Sugar
Land, Texas, known as the Research Partnership to Secure Energy for
America, or RPSEA, which is overseen for DOE by the National Energy
Technology Laboratory (NETL).
The program under RPSEA is divided into three parts: ultra-
deepwater architecture and technology (UDW); unconventional onshore
natural gas and other resources; and technology challenges of small
producers.
According to RPSEA, and consistent with EPAct 2005, the mission of
the Ultra-Deepwater Program is to identify and develop economically
viable (full life cycle) acceptable risk technologies, architectures,
and methods for exploration, drilling, and production of hydrocarbons
in formations under ultra-deepwater, or in the Outer Continental Shelf
(OCS) in formations that are deeper than 15,000 feet.
This mission of technology development encompasses:
Extending basic scientific understanding of the
various processes and phenomena that directly impact the design
and reliable operation of an ultra-deepwater production system.
Developing ``enabling'' technologies that facilitate
the development of additional technical advances.
Enhancing existing technologies to help lower overall
cost and risks.
Pursuing ``Grand Challenges'' (long-term, high-risk
research on applied science and on key leveraging and
transformational technologies capable of ``leapfrogging'' over
conventional pathways).
Accomplishing ultra-deepwater resource development in
a safe and environmentally responsible manner.
The goals of the UDW are to develop the ultra-
deepwater resource base and to convert currently identified
(discovered) resources into economic recoverable (proven)
reserves, while protecting the environment.
These goals will be achieved by:
Reducing the costs to find, develop, and produce such
resources.
Increasing the efficiency of exploration for such
resources.
Increasing production volumes, production efficiency,
and ultimate recovery of such resources.
Improving safety and environmental performance, by
minimizing environmental impacts associated with exploration
and production in ultra-deepwater.
Since the inception of the program both the Bush and Obama
administrations have sought to repeal funding of the Section 999
program. However, Congress has kept the funding mechanism and the
program in place. RPSEA currently has approximately 170 members, with
representation from across industry, academia, NGOs, and government
laboratories and programs. In the wake of the Deepwater Horizon
tragedy, questions have arisen as to how this program, in conjunction
with a more robust program in DOE Fossil Energy, could better serve the
nation's needs for development of advanced environmental and worker
safety technologies and practices while providing a Federal resource
for technical expertise on deepwater and ultra-deepwater drilling
technologies.
Industry Standards and Best Practices
The Department of the Interior's Minerals and Management Service
(MMS) is responsible for the promulgation of the nation's offshore
operating regulations. According to MMS, the regulations are written to
ensure ``safe operations and preservation of the environment, while
balancing the Nation's needs for energy development.'' These
regulations are often informed by industry standards developed by the
industry through the American Petroleum Institute (API). API is the
main U.S. trade association for the oil and natural gas industry and is
also the main body responsible for the establishment of industry
standards. API issues standards that fall into two categories:
manufacturing specifications and recommended practices. API's standard-
making procedure is approved by the American National Standards
Institute (ANSI) and convenes experts from manufacturers, drilling
companies, operators, service providers, government regulators, and
academia. Standards are also developed by other organizations such as
the International Association of Drilling Contractors (IADC). MMS rules
and regulations often incorporate these third-party organizations'
standards which, when published in the Federal Register, have the
``force and effect'' of law. There is growing support for MMS to
transition from broader, industry-written performance goals to
narrower, more prescriptive regulations.
Chairman Baird. Good morning, everyone. Thank you for being
here. Our hearing today will now come to order.
I want to begin actually by speaking on a topic not
particularly germane, and that is to acknowledge the tremendous
contribution of the Ranking Member of this Committee, of our
Subcommittee. That is Mr. Inglis, who is a dear friend, a
respected colleague, who can't be with us today. He had an
election yesterday, and from this Member of Congress's
perspective, it was a remarkably unfortunate result. He is an
outstanding human being, a great asset to this Committee and to
the country, and I appreciate deeply his many years of service.
I also should note that we have been informed that the
Administration witness who we had hoped to join us today will
be unable to participate, but we have received assurance that
he or another member of the Administration will come and talk
to us about this very issue at some future date. Given all they
are dealing with down in the Gulf, we certainly can understand
that and look forward to that testimony at some point in the
future.
Mr. Ehlers. Mr. Chairman.
Chairman Baird. Yes, sir, Mr. Ehlers.
Mr. Ehlers. I would like to join you in your accolades of
Mr. Inglis. He is--I served with him both times he was in the
Congress, and after his hiatus and he returned, he was a
different person. He is very, very dedicated to this country
and also to preserving its environment, but in a reasonable,
sensible way, and I think he provided a lot of good leadership
on this committee in his very quiet and subtle way. Our
Congress is the worse for not having him around in the future.
So thank you.
Chairman Baird. I thank you, and obviously share that
remark and very much appreciate it. Bob, by the way, is not
dead. He is just--there was an unfortunate outcome and perhaps
will have a better life for it. At any rate, he has just been a
great Member of the Committee and he will be missed.
So today's hearing is----
Mr. Hall. Mr. Chairman.
Chairman Baird. Mr. Hall.
Mr. Hall. They may not know it, he was voted back to
private life.
Chairman Baird. That is a nice way to say it.
Mr. Hall. He didn't pass away.
Chairman Baird. That is right.
Our hearing today is to discuss technologies, standards and
practices to ensure safer deepwater and ultra-deepwater
drilling. A wide range of technological innovations have
allowed the industry to venture into ever-deeper waters to
access the massive reserves of oil and gas found there.
Admittedly, the payoff of pushing the technology envelope is
enormous, and for the foreseeable future we are likely to be
relying on fossil fuels, though I hope we will gradually and as
soon as possibly reduce that reliance for a host of reasons.
But the Deepwater Horizon tragedy proved that, in the high-
stakes game, poor judgment and faulty equipment can bring
unimaginable consequences. It is precisely because this
incident occurred in 5,000 feet of water that we are discussing
an ongoing spill 64 days after it began.
Committee staff and I just returned from visiting the
Deepwater Horizon response efforts in the Gulf, and I want to
pay my respects to the people down there who are working so
hard. They are working 24/7 in extremely difficult conditions.
We spent two days doing flyovers, on the ground, on the water,
and met with them. I asked a group of folks in an integrated
command system what can we do to help, and the first thing they
said was interesting. They looked at me like I was from Mars
and they said, ``Are you serious? Because we are not used to
politicians asking how they can help. Usually what you do is
get off an airplane, make a bunch of critical comments and get
back on the airplane.'' And they said the single most important
thing we can do is to tell the public about the good work that
is being done, and not in any way minimize the enormity of the
spill or the loss of human life or the consequences for the
environment, but that people are doing all they can. Every
branch of government virtually is represented down there. All
branches of the uniformed services are there with their assets,
a total of 30,000-plus people. It is 100-plus degrees out there
and they are working very, very hard in dangerous conditions
with shifting weather and a challenging and unpredictable
adversary in the form of the oil. They are doing some really
remarkable work in what is the largest recovery and restoration
effort in the history of humankind, and they deserve our
admiration and respect and appreciation, and it is time, I
think, for all of us in Congress to get past the blame game.
We need to understand it, but the goal really is to try to
solve the problem for the future. And that is the purpose of
this hearing, and I think it is important to say that it is not
only the Federal agencies--and we met with NOAA, NIMS, Coast
Guard, EPA, MMS--but also BP has got a lot of folks down there,
and they are working hard and doing a good job, and I am proud
to say a lot of folks from many of our states are there. I met
Texans, I met Washingtonians, I met Michiganders and people
from the DC area. Everybody, every state in this country, has
got people down there working, and they deserve our
appreciation. My personal goal is that at some point soon, if
they are still insisting on having the spill image up, right
beside that image is an image of the recovery and restoration
efforts, because those deserve equal credit and that is where
the real human beings are working really hard on the surface of
the water and on the shores.
Having said that, our charge today, however, is to
understand the technological advances and best practices to
ensure that drilling in the deepwater can be done, if it is to
be done, with minimal risk to workers and the environment.
Operating safely in such extreme environments entails immense
engineering and technological challenges, the complexity of
which is encountered in few other human endeavors.
The technological expertise for drilling at these depths
appears to reside almost solely right now with the private
sector, and in the hyper-competitive field of energy, the
industry is rightfully guarded about sharing information and
collaborating on proprietary technology development. But safety
interests are universal, and we lost 11 lives in this instance.
We must now ask ourselves if the Deepwater Horizon tragedy
calls for us to reevaluate the government's role in the
development of accident prevention and mitigation technologies
and in industry best practices.
And I would assert here, as well, that I would hope
shareholders will pay attention to this. Instead of just asking
what our return on investment is and what the latest reservoir
is, I hope shareholders will start asking, is it consequential
to our market value if we have a spill? And the people of BP
have learned that the hard way, but it is rare that the
shareholders look at the quarterly reports with a careful eye
to what is being done on safety and accident prevention. I hope
they will start, and that corporate boards will be a lot more
attentive to that. It should not be the sole responsibility of
the Congress.
So our goal today is to shed light on these important
questions.
[The prepared statement of Chairman Baird follows:]
Prepared Statement of Chairman Brian Baird
I want to welcome everyone to today's hearing to discuss
technologies, standards, and practices to ensure safer deepwater and
ultra-deepwater drilling. A wide range of technological innovations
have allowed the industry to venture into ever deeper waters to produce
the massive reserves of oil and gas found there. Admittedly, the payoff
of pushing the technology envelope is enormous, and for the foreseeable
future the world will be highly-reliant on these fossil fuels.
But the Deepwater Horizon tragedy proved that, in this high-stakes
game, poor judgment and faulty equipment can bring unimaginable
consequences. It is precisely because this incident occurred in 5,000
feet of water that we are discussing an ongoing oil spill 64 days after
it began.
Committee staff and I just returned from visiting the Deepwater
Horizon response efforts in the Gulf. While the coordination and scale
of the Federal effort is truly impressive and should be commended,
witnessing it firsthand only strengthened my resolve to ensure that we
never find ourselves in this situation again.
Whether the moratorium on drilling activities in the Gulf is lifted
in 30 days or 30 years, we must accept that the hydrocarbon reserves in
these fields will be produced someday. And if not there, it will
certainly be done somewhere else in the world. Our charge is to
understand the technological advances and best practices to further
ensure that drilling in the deepwater can be done with minimal risk to
workers and the environment.
For good reason, drilling at these depths is often compared to
space exploration. Operating safely in such extreme environments
entails immense engineering and technological challenges, the
complexity of which is encountered in few other human endeavors.
However, unlike space exploration, the technological expertise for
drilling at these depths appears to reside almost solely within the
private sector. In the hyper-competitive field of energy, the industry
is rightfully guarded about sharing information and collaborating on
proprietary technology development. But safety is universal. We must
now ask ourselves if the Deepwater Horizon tragedy calls for us to
reevaluate the government role in the development of accident
prevention and mitigation technologies and industry best practices.
At the least, we must identify the critical gaps in safety
technology and practices, identify the resources already in place in
government-sponsored research programs and laboratories, and push to
coordinate these resources to meet both the needs of the taxpayers and
the safety requirements of the industry. It's time we push the
technological envelope of environmental and worker safety in offshore
operations.
My goal is to shed light on these important questions through
today's hearing.
Chairman Baird. With that, I yield to our distinguished
Ranking Member of the Full Committee, Mr. Hall, my friend from
Texas.
Mr. Hall. Thank you, Mr. Chairman, for holding the
Committee hearing, and as the response effort on the Gulf
enters its third month, we are beginning to get, I guess, a
more clear picture of what went wrong in the Deepwater Horizon
and what needs to be done to make sure it doesn't happen again.
I hope and expect the S&T Committee to play an important role
in this effort, particularly as we inform and contribute to the
legislation package that the House will pursue in July. This
package may seek to address and provide guidance on whether or
not a short-term or a permanent moratorium on deepwater
drilling is necessary.
As is evidenced by yesterday's granting of injunctive
relief by the United States District Court for the Eastern
District of Louisiana suspending enforcement of the
Administration's 6-month moratorium, more time is needed to
craft a reasoned and measured response and solution to this
incident and to others like it.
It is important to remember that prior preparation and
understanding provide the best foundation for long-term
solutions. The economic impact of the moratorium would be deep
and lasting. Thousands of people have lost their jobs already.
An estimated 40,000 additional jobs hang in the balance as the
uncertainty associated with the moratorium remains unsettled.
Beyond jobs, the moratorium would also introduce a
significant new environmental risk. The enormous global demand
for drilling rigs would be likely to result in their departure
from the Gulf to other countries, increasing U.S. dependence on
imported oil and on oil tankers which are much more prone to
spills than undersea pipelines. The moratorium would also drive
skilled workers off the rigs and onto the onshore jobs, meaning
that a high percentage of new, less experienced will be
responsible for operations when drilling resumes. These events
related to the moratorium would appear to increase, not
decrease, environmental risk while inflicting economic damage
on the people of the Gulf that would rival, if not surpass,
that caused by the spill itself.
I hope that today's hearing will be informative in this
regard, and I am pleased that we have some of the world's
leading drilling technology experts before us. I hope the
witnesses can help the Committee better understand the
contributing factors to the Deepwater Horizon disaster,
particularly as it relates to the soundness of the drilling
technology itself versus the practices governing its use and
its application.
The evidence gathered thus far indicates that technology
concerns may not have been at issue. Rather, it seems a failure
to follow industry-wide best practices created an environment
ripe for a blowout. If this is indeed the case, it is my hope
that these procedural shortcomings can and will be quickly
addressed. I have heard from experts in the well intervention
and oil spill containment fields that state-of-the-art
technology currently exists in the form of state-of-the-art
vessels and systems designed to respond to such situations and
now finally being used to contain the BP spill itself. In
discussions with these experts, it has been noted that a
missing piece of an effective oil spill policy is planning for
containment. I am interested in hearing more about how these
technologies can be incorporated into the process so effective
for planning and containment becomes the norm.
Regardless of the ultimate causes and best responses to the
disaster, it makes sense to continue pursuing improvements to
deepwater drilling, architectures and systems which will only
increase its safety. In 2005, I helped create a program to do
just that at the Department of Energy known as the Super 999,
or Ultra Deep program. It supports cutting-edge technology
through a collaborative effort between DOE and industry into
safe and environmentally responsible offshore and onshore oil
and gas development. This program has been a success. Its
contributions to deepwater drilling technologies are helping us
recover energy supplies that we knew existed but were unable to
access. This has returned significant benefit to taxpayers in
the form of domestic jobs and affordable energy as well as
increasing royalties to the fund that pays for the program in
the first place. And unfortunately and despite the program's
strong record of support in Congress, the Administration has
repeatedly--both Administrations, Republicans and Democrats,
have repeatedly called for its termination and it has also
zeroed out funding for oil and gas R&D within the fossil energy
program at DOE.
I think this represents a clear misprioritization and I
hope the Administration will reconsider its position in light
of the section 999 program's potential to advance safe and
environmentally responsible drilling. Unfortunately, the
Administration inexplicably backed out of this commitment to
testify before our Committee at the last minute, so we won't
get a chance to discuss the position on section 999 today.
I thank the witnesses who kept their commitments for
appearing before us today, and I realize that you are very
busy, very valuable hours to spend and that you give up
something to come before us because we rely on you to tell us
what is best for the greatest good of the greatest number of
this country and we know that you are making a contribution to
us, and I appreciate you being here and appearing before us
today, and I look forward to the testimony and discussion, Mr.
Chairman, to a good chairman, I yield back whatever time I
have.
[The prepared statement of Mr. Hall follows:]
Prepared Statement of Representative Ralph M. Hall
Mr. Chairman, thank you for holding this hearing today on deepwater
drilling technology, research, and development.
As the response effort in the Gulf enters its third month, we are
beginning to get a clearer picture of what went wrong on the Deepwater
Horizon, and what needs to be done to make sure it doesn't happen
again.
I hope and expect the S&T Committee to play an important role in
this effort, particularly as we inform and contribute to the
legislative package that the House will pursue in July.
This package may seek to address and provide guidance on whether or
not a short term or permanent moratorium on deepwater drilling is
necessary. As is evidenced by yesterday's granting of injunctive relief
by the United States District Court for the Eastern District of
Louisiana, suspending the enforcement of the Administration's 6 month
moratorium, more time is needed to craft a reasoned and measured
response and solution to this incident and others like it. It's
important to remember that prior preparation and understanding provide
the best foundation for long term solutions.
The economic impact of the moratorium would be deep and lasting.
Thousands of people have lost their jobs already, and an estimated
40,000 additional jobs hang in the balance as the uncertainty
associated with the moratorium remains unsettled.
Beyond jobs, the moratorium would also introduce significant new
environmental risks. The enormous global demand for drilling rigs would
be likely to result in their departure from the Gulf to other
countries, increasing U.S. dependence on imported oil--and on oil
tankers, which are much more prone to spills than undersea pipelines.
The moratorium would also drive skilled workers off of the rigs and
into onshore jobs, meaning that a high percentage of new, less
experienced workers will be responsible for operations when drilling
resumes.
These events related to the moratorium would appear to increase,
not decrease, environmental risks, while inflicting economic damage on
the people of the Gulf that would rival--if not surpass--that caused by
the spill itself.
I hope that today's hearing will be informative in this regard, and
I am pleased that we have some of the world's leading drilling
technology experts before us. I hope the witnesses can help the
Committee better understand the contributing factors to the Deepwater
Horizon disaster, particularly as it relates to the soundness of the
drilling technology itself, versus the practices governing its use and
application.
The evidence gathered thus far indicates that technology concerns
may not have been at issue; rather, it seems a failure to follow
industry wide best practices created an environment ripe for a blowout.
If this is indeed the case, it is my hope that these procedural
shortcomings can and will be quickly addressed. I have heard from
experts in the well intervention and oil spill containment fields that
state of the art technology currently exists in the form of state of
the art vessels and systems designed to respond to such situations, and
now finally being used to contain the BP spill. In discussions with
these experts it has been noted that a missing piece of effective oil
spill policy is planning for containment. I am interested in hearing
more about how these technologies can be incorporated into the process
so effective planning for containment becomes the norm.
Regardless of the ultimate causes of and best responses to the
disaster, it makes sense to continue pursuing improvements to deepwater
drilling architectures and systems, which will only increase its
safety.
In 2005, I led creation of a program to do just that at the
Department of Energy. Known as the ``Section 999'' or ``Ultra-Deep''
program, it supports cutting-edge technology through a collaborative
effort between DOE and industry into safe and environmentally
responsible offshore and onshore oil and gas development.
The program has been a success--its contributions to deepwater
drilling technologies are helping us recover energy supplies that we
knew existed but were unable to access. This has returned significant
benefits to taxpayers in the form of domestic jobs and affordable
energy, as well as increasing royalties to the fund that pays for the
program in the first place.
Unfortunately, and despite the program's strong record of support
in Congress, the Administration has repeatedly called for its
termination, and also zeroed out funding for oil and gas R&D within the
fossil energy program at DOE.
I think this represents a clear mis-prioritization, and I hope the
Administration will reconsider its position in light of the Section 999
program's potential to advance safe and environmentally responsible
drilling.
Unfortunately, the Administration inexplicably backed out of its
commitment to testify before our committee at the last minute, so we
won't get a chance to discuss its position on Section 999 today.
I thank the witnesses that kept their commitments for appearing
before us today, and I look forward to the testimony and discussion.
I yield back.
Chairman Baird. Thank you very much, Mr. Hall. I
acknowledge the presence also of the Full Committee chair, Mr.
Gordon, who has been a champion of safety and environmental
protection and development of technologies. I understand Mr.
Gordon has no opening comments to make, but thank you for being
here, Mr. Chairman.
We all know, my colleagues know well if there are other
members who wish to submit opening statements, those will be
added to the record at this point.
[The prepared statement of Mr. Costello follows:]
Prepared Statement of Representative Jerry F. Costello
Good Morning. Thank you, Mr. Chairman, for holding today's hearing
to discuss technologies, standards, and practices to prevent oil spills
in deepwater and ultra-deepwater drilling operations.
The explosion of the Deepwater Horizon oil rig in April 2010 has
resulted in the largest oil spill in U.S. history and an environmental
and economic disaster for the Gulf Coast region. Following the
disaster, President Obama declared a moratorium on deepwater drilling
in the Gulf until the government and oil companies understand what
happened on Deepwater Horizon and how it can be prevented. If the
President lifts this moratorium and allows for deepwater drilling to go
forward, we must ensure drilling mechanisms are tested and safe in
deepwater. Further, as we develop new practices and technologies for
deepwater drilling in the future, we must invest in research and
development of safe and efficient drilling techniques.
First, it is imperative that the Federal Government and private
industry inspect and test new technology before deploying it in
deepwater drilling operations. Under the Bush administration, there
were no requirements for companies to test and certify equipment and
technology before beginning to drill. Further, neither the Bush nor the
Obama administration requested any funding for programs within the U.S.
Department of Energy to research and develop deepwater drilling
technologies and practices that mitigate risks. In particular, Section
999 of the Energy Policy Act of 2005 has not been funded since it was
established, and Congress has funneled small sums towards these
research programs. The Deepwater Horizon explosion makes clear that
Congress and the Obama Administration have a responsibility to provide
adequate Federal funding for research on how oil companies who engage
in deepwater and ultra-deepwater drilling can prevent explosions and
quickly respond when something does go wrong.
Second, it appears that the blowout preventer (BOP) on Deepwater
Horizon is likely the source of the explosion, fire, and leak. This BOP
passed through several international companies and was never tested at
5,000 feet before it was put in use in the Gulf Both British Petroleum
and Transocean have no experience with a failure of these dimensions at
this depth or to fix the leak. Even if more extensive testing were
required, according to researchers, precisely replicating the
conditions of a deepwater drilling site in a laboratory setting is
nearly impossible. However, without appropriate testing, companies have
no knowledge of the risks they may face at 10,000 feet below sea level
or how best to respond when something does go wrong. I would like to
hear from our witness what safety tests they complete before deploying
new drilling technology in deepwater. Further, I am interested in how
researchers account for differences between real-life and laboratory
conditions and what role Congress can play in improving the current
testing programs to better replicate the conditions in deepwater
drilling sites.
I welcome our panel of witnesses and I look forward to their
testimony.
And now, it is my pleasure to introduce our first panel of
witnesses at this time. Mr. James Pappas is the Vice President
of Technical Programs at the Research Partnership to Secure
Energy for America. My staff here has given me the acronym we
all know as RPSEA but unfortunately the way they have written
it, it looks like R-I-P-S-E-A, which is rather unfortunate. Dr.
Benton Baugh is the President of Radoil, Incorporated. Dr. Erik
Milito is the Group Director of Upstream and Industry
Operations at the American Petroleum Institute. Did I say that
right?
Mr. Milito. No, you just gave me a doctorate, and I
appreciate that.
Chairman Baird. Well, I have got a doctorate. I am not sure
that is a promotion, so you pick. I will call you whatever you
want. When we say there is a doctor in the house, we won't look
at you.
And Mr. Greg McCormack is the Director of the Petroleum
Extension Service at the University of Texas in Austin, a very
distinguished and capable group of witnesses. As we discussed
before with the witnesses, you have five minutes for your
spoken testimony. We will have lots more time after that in the
Q&A with the panelists so you will have more time, and feel
free at some point, you know, if we haven't asked a question
that you think is important, feel free to, you know, speak out
on that. We will try to lead things in a good direction here,
but if there is something really critical, let us know. When
you have completed your spoken testimony, we will begin with
questions. Each Member of our panel will have five minutes to
question the witness.
And with that, Mr. Pappas, please begin. Thank you all for
being here.
STATEMENTS OF JAMES PAPPAS, VICE PRESIDENT, TECHNICAL PROGRAMS,
RESEARCH PARTNERSHIP TO SECURE ENERGY FOR AMERICA
Mr. Pappas. Thank you, sir. Good morning, Chairman and
Members of the Subcommittee. I represent RPSEA, and the Marine
Technology Society also asked me to represent it today.
The Research Partnership to Secure Energy for America,
RPSEA, is a 501(c)(3) nonprofit organization. Through the
Energy Policy Act of 2005, section 999, RPSEA administers a
public-private partnership that performs research and
development for the ultra deepwater Gulf of Mexico on
conventional onshore natural gas and other petroleum resources
in the United States, namely small producing companies. RPSEA
has over 170 member companies, including 26 research
universities, companies and other organizations and it manages
$37.5 million per year of U.S. government funds plus cost share
from project groups. Government funds are generated from
royalties and distributed to RPSEA through NETL on behalf of
the U.S. Department of Energy.
RPSEA is unique in that we administer our program through a
collaborative research environment that includes subject-matter
expert volunteers from leading research universities, vendor
companies and Federal organizations, small operators,
individuals, private labs, government labs and offshore
operators. Furthermore, RPSEA is proud and fortunate to have
members from several prominent environmental and safety
concerns within our ranks. The fully transparent process that
we have has proved to result in high-quality technology and
research development. We currently have 71 projects in progress
or completed and an additional 28 projects are in contract
negotiations.
I have been invited to discuss oil prevention and
mitigation technologies in deepwater, as well as standards for
deepwater gas and oil drilling. We pinpointed several areas of
study, including technology enhancement to minimize incidents.
This program will identify and develop technologies to prevent
incidents from occurring in the first place. These technologies
will improve safety, protect the environment, and ensure well
bore integrity of offshore operations. The program should
consist of an evaluation of existing safeguards and
international offshore procedures, standards and practices. It
should also identify promising technologies to address safety
and environmental concerns associated with deepwater and harsh
environments.
Identification, development, and improvement of proactive
and reactive response procedures and processes will address the
research required to minimize response time to an incident so
that environmental impact is also minimized. The industry has
various vessels and equipment on standby use to contain spills,
to skim, or to deploy dispersants. A research program should be
established to identify state-of-the-art technologies and
methodologies and identify other necessities to enhance
response to an emergency situation. This program can also
include early warning sensors to identify potential hazards to
the environment.
The second area of study is the development of an
understanding of the value ecosystems services and location
identification of high-value and seasonally dynamic ecosystems.
The goal of this program would be to study deepwater coastal
regions in the Gulf Coast wetlands in order to identify high-
value areas and to place monitoring and early warning devices
in there.
RPSEA has several research projects that relate to safety
and environmental studies ongoing already. In addition, every
project that RPSEA has in its program is required to employ a
level of understanding of safety and environmental impact.
Example projects are detailed in my written statement. They
include the self-standing riser system that has recently been
developed with an ongoing demonstration project for use in
deepwater well interventions. This technology can enable
operators to do various deepwater tasks more safely.
RPSEA, through its oversight by the Department of Energy,
stands at the forefront of the development of systems to enable
industry to improve energy security. The Research Partnership
to Secure Energy for America uniquely provides the structure
for researchers and other interested parties from a multitude
of research universities, environmental organizations, safety
concerns, companies, and others to exchange ideas, transfer
technologies, and provide unbiased science to develop sound
policies so that industry can operate in a safe manner. It is
because of the role of the Federal Government through the EPAct
section 999 program that RPSEA has been successful and that its
members are willing and anxious to participate, to lead in
these activities that are so important to our country. Funding
currently is not sufficient to pay for all of the projects that
have been recommended by our expert review panels.
Thanks for the invitation and the opportunity to discuss
the ongoing research and needs related to deepwater spill
prevention and mitigation.
[The prepared statement of Mr. Pappas follows:]
Prepared Statement of James Pappas
Good morning, Chairman and members of the Subcommittee. My name is
James Pappas. I am employed by the Research Partnership to Secure
Energy for America, RPSEA--a 501(c)3 non-profit organization
(www.rpsea.org). Through the Energy Policy Act of 2005 Section 999,
RPSEA administers a public-private partnership that performs research
and development for the ultra-deepwater in the Gulf of Mexico,
unconventional onshore natural gas, and other petroleum resources of
the United States, namely for small producing companies. RPSEA has over
172 members, including 26 research universities, companies, and other
organizations and manages the $37.5 million per year of U.S. Government
funds, plus cost share funds from project groups. RPSEA is unique in
that we also have an Environmental Advisory Group that enables
prominent environmental organizations to assist us in managing our
program. Government funds are generated from royalties and funneled to
RPSEA through NETL, the National Energy Technology Lab, on behalf of
the U.S. Department of Energy. Additionally, the National Energy
Technology Laboratory at the Department of Energy (NETL) has a $12.5
million per year complementary program under the same Act. Our two
groups work together to ensure that research is properly prioritized
and funding is effectively utilized.
Deepwater offshore exploration and production is challenging in
many respects. Each prospect is full of unknowns, and the industry must
be prepared for the worst. Its toolkit is vast but it has not kept up
with the challenges. A proactive approach that studies possible
outcomes, plans and prepares people, contains the proper amount of
safety features and methods to employ them, sets responsible oversight
and regulations, and is available to all for use is paramount to the
safe and environmentally responsible success of the judicious use of
America's oil and gas resources. RPSEA, through its oversight by the
Department of Energy through NETL, stands at the forefront of the
development of systems to enable the industry to improve energy
security. The Research Partnership to Secure Energy for America
uniquely provides the structure for researchers and other interested
parties from a multitude of companies, research universities,
environmental and safety organizations, and others to exchange ideas,
transfer technologies, and provide unbiased science to develop sound
policy. It is because of the role of our Federal Government through the
EPAct Section 999 Program that RPSEA has been successful and that its
members are willing and anxious to participate--to lead--in these
activities that are so important to our country.
RPSEA is unique in that we administer our program through a
collaborative research environment that includes subject matter expert
volunteers throughout the oil and gas industry, outside of the
industry, research universities, national labs, and other state and
Federal organizations. Furthermore, RPSEA is proud and fortunate to
have members from several prominent environmental and safety concerns
within our ranks. The inclusion of so many experts from such a large
base makes this program a success. All stakeholders are represented.
Our fully transparent process has proved to result in high quality
technology research and development that is advancing all sciences
related to our function. Thus, this one-of-a-kind, all inclusive
organization truly represents the public interest. We currently have 71
projects in progress or completed, and an additional 28 projects are in
contract negotiations.
Through our experts, who cover all technical disciplines, we
develop a five-year plan that we update annually. Specifically, the
annual plan (http://www.rpsea.org/annual-plans) is submitted by RPSEA
only after an exhaustive and comprehensive review of technology ideas
generated by nine committees of subject matter experts. More than 700
individuals work to identify and develop these ideas and the subsequent
plan. RPSEA takes its direction from the Secretary of Energy when he
approves the annual plan after consultation with a Federal Advisory
Panel. The needs are prioritized, we balance our near and long term
goals, and then we publicly issue requests for proposals. Proposals are
evaluated by independent experts and projects are selected that follow
Federal Acquisition Regulations. Each project must not only meet the
technical objectives, but it must also provide a plan that ensures that
the technology will be safe and have no adverse environmental impact.
In fact, some of the current projects specifically address improved
safety and environmental performance. Although the projects are managed
by RPSEA, they utilize industry advisory boards to assure that they
meet their objectives. This process is meant to act as a check-and-
balance, and it also assists in early development and commercialization
of any related technologies. Our aggressive technology transfer efforts
ensure the work being conducted is applied in a cost effective manner.
I have been invited to discuss oil spill prevention and mitigation
technologies in deep water, as well as standards for deepwater gas and
oil drilling. The recent incident involving the Deepwater Horizon is a
tragedy that has resulted in the loss of 11 lives, an environmental
nightmare, and hardship on countless Americans. Clearly, no one
expected this incident to happen. The U.S. offshore drilling industry
had an extraordinary safety record prior to its occurrence. Quite
appropriately, the incident has resulted in everyone reflecting,
refocusing, and rethinking the importance of offshore production, as
well as the research required to ensure the safe and environmentally
sound production of these precious resources. As efforts continue to
rein in the blowout, to clean-up the environment, and to identify the
root cause of the accident, the failure of the overall system and the
resulting impacts have already identified specific areas requiring
research.
Through RPSEA's Environmental Advisory Group, as well as its
Drilling Advisory Group, we have pinpointed several areas of study:
Technology enhancement to minimize incidents--This
program will aim to prevent incidents from occurring in the
first place. A review of the state-of-the art of technologies
that may be used to improve safety, protect the environment,
and ensure wellbore integrity of offshore operations will
identify priorities, as well as technology gaps and further
research needs. The review should consist of an evaluation of
existing safeguards and international offshore procedures,
standards, and practices. It should also identify promising
technologies to address safety and environmental concerns
associated with deepwater, harsh environments.
One of RPSEA's projects, the Environmentally Friendly
Drilling Systems Program (www.efdsystems.org), enlists the
participation of several research universities, national
laboratories, and industry contributors. Its advisory committee
includes members from all stakeholder groups including
environmental organizations, academia, industry, and other
concerned citizens. The project is focused on identifying and
developing new technologies for environmentally sensitive
development of unconventional onshore energy resources. Its
objective is to identify, develop, and transfer critical, cost
effective, new technologies to allow onshore reserves
development in a safe and environmentally friendly manner. This
project can serve as a model for a similar offshore program
that will enable all stakeholders to identify needed research,
to provide direction, and to follow progress. Furthermore, the
new offshore program can be developed using the same
organizational structure as the Environmentally Friendly
Drilling Systems Program, and might also explore various
approaches to regulate safe activity in the offshore sector, in
addition to identifying and developing new technologies. For
example, it might investigate the feasibility of a performance-
based systems approach to enhance or complement the current
prescriptive-based method of laws and regulations. It might
also address recommendations contained in the Secretary of
Interior's May 27, 2010 report: ``Increased Safety Measures for
Energy Development on the Outer Continental Shelf,''
particularly recommendations concerning well control systems
and safety equipment. Other research needs related to wellbore
integrity include cement evaluation technologies, methods to
maintain communication and power between the surface and subsea
safety systems, and increasing the intervention capability of
remotely operated vehicles.
Identification, development, and improvement of
proactive and reactive response procedures and processes will
address the research required to minimize response time to an
incident, so that environmental impact is minimized. The
primary response objectives in any open-water marine spill are:
Prevent the spill from moving onshore
Reduce the environmental impact
Speed the degradation of any unrecovered oil while
minimizing the harm on the ecosystems
Mobilize rapid well intervention/containment standby
equipment
The industry has various vessels and equipment on standby
used to contain spills, to skim, and to deploy dispersants. But
quite frankly, the research in this area has been lagging and
as evident was not prepared for this past incident. RPSEA is in
a position to immediately conduct a research program to
identify the state-of-the-art technologies and methodologies to
enhance a response to an emergency situation. The Secretary of
Interior's report, previously mentioned, also recommends a
comprehensive study of methods for more rapid and effective
response to deepwater blowouts. This program can also include
early warning sensors to identify potential hazards to the
environment. And it should also include studies to understand
the effect on marine life and other wildlife movements
resulting from an incident. Other evaluations might include the
effects of using different dispersants on the ocean and marine
life, advancing skimming technologies and separation/water
handling technologies, prescribed burns impacts, and general
emergency preparedness logistics improvements.
Development of an understanding of the value of
ecosystem services and location identification of high value in
a seasonally dynamic ecosystem--This program will aim to
determine the value of ecosystems. The goal is to study
deepwater, coastal regions and Gulf Coast wetlands, in order to
identify high value areas to place monitoring and early warning
devices. Valuation of ecosystem services can furthermore be
used to prioritize spending on ecosystem protection.
RPSEA has several research projects related to safety and
environmental studies. In addition, every project in the RPSEA program
is required to employ a level of understanding of safety and
environmental impact. Example projects include:
Our composite riser for ultra-deepwater high pressure
wells project is aimed to decrease weight requirements, thus
easing the task of riser installation and reducing the
potential for human injury.
The fatigue performance analysis of high strength
risers in sour environments project is aimed to improve our
understanding of long term riser fatigue physical changes under
various dynamic conditions, for various fluid types.
The effects of climate change on hurricane activity
project is a study to better forecast storms in the Gulf of
Mexico that can inevitably allow companies to safely and
effectively shut down operations and may have an additional
benefit of improving hurricane early warning for all Gulf Coast
Americans.
Included in another project is a Self Standing Riser
System (SSR) that has recently been developed, with a
demonstration project for use in deep water well intervention
ongoing. This technology includes a riser and an adjustable air
can that may enable operators to do various deep water tasks in
an easier, timelier, and safer manner. The system may include
blowout preventers at both the mudline (seafloor) and at the
water's surface, adding redundancy to current systems.
Both the hybrid power systems study and the ultra-
deepwater electrical power distribution systems projects aim to
place power where it is needed--near the wellhead. Doing so can
increase monitoring and control capabilities, add levels of
redundancy to current systems, and reduce response times.
Similarly, wireless subsea communications can be a
game changer when it comes to monitoring and control.
The new technologies to monitor and inspect pipelines
project has the potential to revolutionize early warning
methods in that arena.
The 3-D, high resolution, laser imaging project
similarly has the potential to greatly improve offshore
equipment inspection, maintenance, and repair.
Abstracts describing each of these projects and others can be found
online under the RPSEA public access section at http://www.rpsea.org/
en/cms/?1475
When the thorough investigation of the Deepwater Horizon incident
is completed, there will be identified needed changes in deepwater
drilling standards. Areas that might, require additional standards or
recommended practice development include:
Blowout preventer inspection and enforcement
procedures, including backup equipment, and reporting
requirements
Well control procedures, training programs, and/or
response mechanisms for deepwater wells
Improved comprehensive safety management programs
Emergency equipment certification and testing
improvements
Streamlined reporting systems to Governmental
agencies
Additional safety barriers during critical well
construction stages
Well construction certification procedures for cement
and tubular equipment
Standardized well construction procedures from
wellhead to the reservoir
Increased enforcement by Government agencies,
including training and development of additional personnel
RPSEA is currently in the process of developing our 2011 Annual
Plan for research. The Deepwater Horizon incident has greatly
influenced us, and thus we will place even more emphasis on safety and
environmental research. The Deepwater Horizon incident has greatly
influenced us, and thus we will place even more emphasis on safety and
environmental research. We must do all we can to make certain that an
incident like that involving the Deepwater Horizon never happens again.
The value of collaborative research is important. It is precisely
because of government funding that a combined group from academia,
research organizations, and industry can perform this type of research,
which otherwise would not be cost effective. Thanks to government
funding through the Energy Policy Act, coupled with significant
industry cost share, the higher risk technology challenges are being
addressed, The Section 999 funding of $50 million per year ($37.5
million to RPSEA and $12.5 million to NETL for complementary research),
has been far from sufficient to address all the concerns. I hope you
will agree with the over 170 member companies of RPSEA that this
program is a great value to our country. We could be far more effective
if additional funds that have been authorized were appropriated.
The universities, the subject matter experts, the vendor community,
the small producers, and the major integrated operators, in cooperation
with NETL and the DOE, have the network in place to immediately begin
to develop the technologies needed to add increased safety and
environmental protection to our drilling efforts. I urge you to see
RPSEA as a part of the solution to balancing our nation's energy
imperatives and environmental requirements. We are ready now. We have
the network now. We are up and running and there will be no delay
because our relationship with the government and other stakeholders is
already in place. We can begin developing solutions now.
Thank you for this opportunity to discuss the ongoing research and
needs related to deepwater spill prevention and mitigation.
Biography for James Pappas
James Pappas is Vice President of Technical Programs for RPSEA, the
Research Partnership to Secure Energy for America, in Sugar Land, TX.
He has held the positions of Global Technology Coordinator, Facilities
Engineer in the Deepwater & International Well Engineering & Facilities
Division, Deepwater Project Coordinator for Devon Energy in the past,
as well as Production Engineer in the Gulf of Mexico Division for
Devon, and Santa Fe Snyder prior to their merger. He has also held
drilling, completions, production, operations superintendent,
reservoir, and acquisitions and divestitures (A&D) positions with Fina
Oil and Chemical Company, UPRC, and Amoco Production Company.
He has been involved with the Society of Petroleum Engineers for 30
years. He is both the immediate past SPE International Production and
Operations Technical Director and SPE Technical Programs and Meetings
Committee Chair, and is a former chair of the 13,000-member SPE-Gulf
Coast Section. He serves on several technical program committees for
meetings including: the Offshore Technology Conference (OTC), SPE
Annual Technical Conference and Exhibition (ATCE), the Latin American
Continental Petroleum Exhibition and Conference (LACPEC), the SPE R&D
Conference, and the SPE Production & Operations (P&O) Conference. He is
also the immediate past Private Industry Practice Chair and Executive
Committee member of the Texas Society of Professional Engineers and
serves on that body's Legislative and Governmental Affairs Committee.
He is also active in the American Petroleum Institute (API), National
Society of Professional Engineers (NSPE), the American Association of
Drilling Engineers (AADE), and Marine Technical Society (MTS), and he
chairs the University of Texas Petroleum Engineering Advisory Council.
James has authored over 40 papers or spoken at various conferences
and interviews on various technical and professional topics including:
Monte Carlo reservoir simulation, hydraulic fracture analysis, well
conformance remediation, subsea tiebacks, flow assurance issues,
floating platform concepts, project management, drilling, government
and the oil and gas industry, engineering, professionalism, recruiting,
training and development, retention, volunteerism, and ethics.
James earned a Bachelor of Science degree in Chemical Engineering,
as well as a Bachelor of Arts in Chemistry with Math and Spanish
minors, from the University of Texas at Austin in 1979. He graduated
with a Master of Business Administration with highest honors from the
University of Texas at Tyler in 1993. He has earned numerous accolades
including the SPE Gulf Coast Section and Gulf Coast Region Service
Awards, Houston Area Engineer of the Year in 2007, Texas Engineer of
the Year by the Texas Society of Professional Engineers in 2008, and
was selected Distinguished Engineer in Texas by the Texas Engineering
Foundation in 2008. He has been a Registered Professional Engineer in
Texas since 1985.
Chairman Baird. Thank you, Mr. Pappas.
Dr. Baugh.
STATEMENTS OF BENTON BAUGH, PRESIDENT, RADOIL, INC.
Dr. Baugh. My name is Benton Baugh and I have been asked to
give testimony on the current state of the drilling equipment
and whether or not it provides an adequate level of safety for
doing deepwater drilling. It is my opinion that the systems are
currently developed to a state that they are completely
adequate to provide protection to the environment and safety of
the personnel. My opinion is based upon working in this
industry for more than 50 years, having received more than 100
U.S. patents primarily in this area, and specifically having
received a patent on almost every subassembly of a deepwater
drilling system.
Subsea drilling has existed for about 50 years--from the
early 1960s when it was considered to be ultra-deep drilling to
drill in 250 feet of water, to now where we are commonly making
equipment for 10,000, 12,000 feet of water. Overall, there is
an impressive safety record for having drilled in this time.
The subsea business that we are talking about--and I will
be talking primarily from the point of view of a manufacturer--
the subsea business system is dominated by three major
manufacturers. Each of these has highly specialized safety
systems, highly developed manufacturing systems, and each of
them has ISO-quality certification and follows conventional
practices of design, testing, and verification of their
equipment. You can fully expect that any equipment in the field
has been pressure-tested to 50 percent higher than the pressure
it will ever see in the field. It has been loaded to loads 50
percent higher than any load that it is ever expected to see in
the field. You can also expect that this equipment is regularly
tested in the field, and is certified on an ongoing basis to
maintain the quality of equipment.
The company I work for is a second-level company, and that
means that, basically, we sell equipment to a first-level
company who provides it directly to the operators. On the first
slide you see here is a set of reels which we would provide to
a company like one of the major first-level companies. The
yellow and blue reel there handles electrical umbilicals that
go down and control the control pods on the sea floor. The
white one will be a hydraulic hose that takes hydraulic power
down and provides power for the systems on the sea floor.
What you see on the left of this slide is an ISO 9001
certification which our company has received. It is a
certification that we have systems in place to maintain quality
and traceability of all equipment that we do. It is a very
difficult certificate to get for a manufacturer. On the right
side is a type of approval certificate which is for a piece of
equipment. It says that not only a third party, in this case,
Det Norske Veritas, has certified that we have good equipment.
They have it certified as a standard type of equipment, so in
the future anything similar to that is automatically approved,
because they have done a complete analysis on it.
On this slide, what you will see is what we call a FAT
test. We do this on every piece of equipment that leaves our
company. On the left side is simply the cover sheet of it. On
the right side, what you see is page ten of 15 of the FAT test,
and what you will notice coming down is, on the left column,
there will be a signature by the Radoil employee that confirmed
that this step was successfully accomplished during this FAT
test. Toward the center of the page you will see little round
circles. That means that the customer's inspector has come and
has certified that this has successfully passed the test as
specified. On the right there is an oval stamp. That is the
American Bureau of Shipping. That says a third party has come
in and has certified that it has passed these steps in the
test. This happens over 15 pages on these reels and this is
characteristic of what you would expect in the offshore
industry. All of our products don't require this level of
quality, but this is characteristic of what you would expect to
see if something goes offshore.
Again, these are practices you would expect of all the
first-level manufacturers. There is an obligation, basically,
that if a manufacturer buys something from an ISO-certified
supplier, you automatically get accepted as a supplier. For
instance, if we choose to accept some equipment from someone
that is not ISO certified, it becomes our requirement to do the
ISO certification for it. We must do the inspection, we must do
all things to make it good. Again, this is what you expect from
these first-tier providers. They provide good equipment. It is
very well certified.
The well that we are talking about here is not something
where they were doing experimental things, pushing the
envelope. It was drilled in about 5,000 feet of water. It is
very likely that this very same rig had drilled in at least
10,000 feet of water, and, I can assure you, if it hadn't
drilled in 10,000 feet of water, it was most likely certified
to be able to drill in 10,000 feet of water. There is very
little difference when you go offshore between drilling in
1,000 feet of water and 10,000 feet of water. It is just wet.
The biggest change you see is what happens on the nitrogen
accumulator banks, and that is a well-studied subject, but,
basically, there is very little difference in 1,000, 5,000 or
10,000 feet of water. This is highly capable equipment.
Again, the actual cause of what we are talking about here
may never be known. Depending on how we get closure on this
particular well, it could be submitted up right to the top and
never touch it and not ever take a chance on the thing, but it
appears reasonable that there is a good chance it had nothing
to do with equipment, that it had to do with the ways some
operations were done. It is potentially not an equipment
problem at all.
Chairman Baird. Dr. Baugh, I am going to ask you to
conclude at this point. We have got five minutes per witness,
and----
Dr. Baugh. Oh, I am sorry.
[The prepared statement of Dr. Baugh follows:]
Prepared Statement of Benton Baugh
I have been asked to give testimony as to whether current subsea
drilling equipment is sufficiently developed to provide an adequate
level of safety for deepwater drilling operations.
It is my opinion that the current state of technology of subsea
drilling system is completely adequate to provide an appropriate level
of safety to control wells being drilled, protect the environment, and
provide safety for personnel. The basis of my opinion is more than 50
years of working in oilfield equipment design and manufacturing,
receiving more than 100 U.S. patents, and having personally received a
patent on almost every subassembly of a subsea drilling system.
Subsea drilling systems have existed for approximately the same
period of time, from the early 60s when 250, of seawater was considered
ultra-deep, until now when we are drilling in 12,000, of seawater.
Overall they have an impressive safety record. The BOP or blowout
preventer stack is a piece of seafloor equipment approximately 12 foot
square by 80 feet tall which typically weigh 600,000 to 800,000 lbs.
They are connected to a surface vessel by a 21" outside diameter steel
riser pipe with flotation added to give it approximately a four foot
diameter.
This subsea equipment business we are discussing is dominated by 3
major first level manufacturers. Each of these suppliers have highly
developed and refined systems. Each of these suppliers is ISO quality
certified and follows conventional procedures of design, development,
testing, and independent verification. You can fully expect that any
system in the field has been tested to loads and pressures 50% higher
than the loads and pressures ever anticipated to be seen in operations,
and that the testing has been verified by independent third parties.
You can equally well expect that the equipment is regularly tested to
the maximum working pressures to confirm ongoing workability.
The company I work with is a second level company which sells large
reels to each of these first level suppliers. On the first slide
presented you can see a set of these reels of the type which will hold
10-12,000, of umbilical or hose to send signals and power to the subsea
BOP control pods. The second slide on the left hand side shows a copy
of the ISO 9001:2008 certification which we have received to certify
that we have systems in place to promote the delivery of quality
products. The right side of the same slide shows a ``Type Approval''
which we have received for a design, implying that not only has a 3rd
party certifier checked the design, but has approved it as a type of
design.
The third slide shows a factory acceptance test or FAT test for a
product, in this case a reel. On the left side is the first page of the
FAT and on the right side is page number 10 of 15 pages of this FAT
test. On the right side you will notice that our personnel have signed
that each step has been successfully accomplished. Each of the small
round stamps indicate that our customer's quality control personnel
have witnessed and confirmed each requirement. Each of the oval stamps
indicates that an independent third party, in this case the American
Bureau of Shipping, has witnessed and confirmed each step. This occurs
on every performance step, every pressure step, and every load step.
All of our products do not require this level of quality and
verification, but this is characteristic of what goes offshore.
These are the practices you would expect of the current first level
suppliers. Clearly the systems for appropriate design, testing, and
verification are in place today.
The well in question does not represent a ``pushing of the
envelope'' in terms of what has been done. It is in 5000, of water and
likely the exact rig had drilled other wells in depths greater than
10,000,. There is very little difference in drilling in 1000, of
seawater and 10,000, of seawater. Probably the biggest difference is in
what happens to the nitrogen charge in the accumulators which is well
studied. The actual cause of the current problems is not known, and may
well never be known depending on how ultimate closure happens to this
well. Clearly it is the confluence of a number of events, none of which
may have been the fault of the drilling system.
In spite of the current difficulties with the Maconda well blowout,
there have been approximately 4000 offshore wells drilled and the last
significant spill from a U.S. offshore well was in the Santa Barbara
Channel, about 30 years ago. This is an impressive record of complex
systems handling the critical sources of energy upon which our
civilization is based.
The present question is whether a work stoppage will improve or
reduce safety and technology. There is not a question whether we need
fossil fuels in our lifetime. In spite of substantial investments to do
so, it is clear that there will be no substitute for fossil fuels in
our lifetime. A substantial work stoppage or moratorium will mean:
1. A reduction in safety because when the work restarts it
will restart with a high percentage of less skilled workers.
The most dangerous time for operations is when new workers
start up a new task, and that is exactly what this will cause.
2. A reduction in safety because stopping drilling will cause
more oil to come from foreign sources by tanker. It is far less
safe for oil to be brought to the U.S. by tanker than it is to
flow in a passive subsea pipeline to the shore. In fact, the
last significant spill oil spill in the U.S. was that of a
tanker--the Exxon Valdez.
3. Financial damage to the work force and U.S. companies will
likely be more extensive than the oil spill itself, with no one
to pay for it.
I assure you that the technology is in place and the systems are in
place to do safe deepwater drilling. For these reasons I recommend:
1. The moratorium be lifted as soon as practical.
2. As equipment comes back to the surface, it be retested to
confirm compliance with original factory acceptance testing and
systems integration testing and have full independent 3rd party
verification. If it is, the rig needs to go right back to work
and continuity of the work force needs to continue.
3. All equipment and systems fabricated for collecting the
present spill be captured and further developed in case another
spill happens in the future.
4. Shear rams and shear ram actuators need continuing
development as the wall thickness and material strength of the
drill pipe is increased.
5. Tertiary back-up systems be commonly defined and
implemented.
6. ROV interface systems be further developed for a fourth
level of back-up control.
7. To a large extent, if existing rules, regulations and
practices are enforced the overall quality and safety of the
industry will be approved.
I encourage and promote ongoing and aggressive new product
development and systems upgrade, not for 6 months but forever. At this
time, in the past, and in the future it has been or will be appropriate
to pursue upgrades in safety and technology. We will never reach
perfection except in the smallest areas. We need to put our people and
the country back in business now, not after some future arbitrary date.
Biography for Benton Baugh
Benton F. Baugh, Ph.D., P.E. is President of Radoil, Inc. which
does oilfield engineering and manufacturing and Baugh Consulting
Engineers, Inc. which does oilfield related consulting and expert
witness work. Significant product areas are Reels for Deepwater Control
Systems, Deepwater Drilling Riser Centralizers, J-Lay Pipeline Towers,
Arctic Platforms, and pipeline blockage remediation activities.
He is a registered professional engineer having earned a BSME
degree from the University of Houston and earned MS and Ph.D. degrees
from Kennedy Western University. Prior to starting his own businesses,
he worked with Beta Division of Brown Oil Tools, Vetco Valve Company,
Vetco Offshore, Cameron Iron Works, Camco, and Bowen Tool Company
He is a member of the National Academy of Engineering, an Adjunct
Professor at the University of Houston, a Fellow in the American
Society of Mechanical Engineers; and a member of the Marine Technology
Society. He has written numerous technical papers, holds more than 100
patents, has been Chairman of the ASME Petroleum Division, President of
the University of Houston Engineering Alumni Association, Chairman of
the ASME/UH OTC Cajun Crawfish Boil, on the Board of Directors of the
Offshore Technology Conference and on the Board of the Offshore Energy
Center.
Chairman Baird. That is all right. If there will be other
points you want to make, I am sure we will have a chance to do
those in questioning.
Mr. Milito.
STATEMENTS OF ERIK MILITO, GROUP DIRECTOR, UPSTREAM AND
INDUSTRY OPERATIONS, AMERICAN PETROLEUM INSTITUTE
Mr. Milito. Good morning, Chairman Baird, Members of the
Subcommittee. Thank you for the opportunity to address
deepwater technology, research and development. My name is Erik
Milito and I am the Upstream Director for the American
Petroleum Institute. API has more than 400 member companies
which represent all sectors of America's oil and natural gas
industry. Our industry supports 9.2 million American jobs,
including over 170,000 in the Gulf of Mexico related to the
offshore development business, and this industry provides most
of the energy that America needs.
First, our thoughts and prayers go out to families who have
loved ones, to the workers who were injured, and to our
neighbors in the Gulf who are affected by this tragic accident.
In testimony just last month, Secretary Salazar said the
offshore oil and natural gas industry is a very highly
regulated industry. Indeed, offshore operators are subject to
27 statutory authorities, 88 CFR parts in terms of the Federal
regulations, and 27 permits and approvals. All these apply to
offshore operations. However, our industry's top priority is to
provide energy in a safe, technologically sound and
environmentally responsible manner. We thus take seriously our
responsibility to work in cooperation with the government to
develop practices and equipment that improve the operational
and regulatory processes across the board. We support the
government's ongoing review of the incident and the existing
systems in place. The industry will take the necessary steps to
prevent accidents like this from occurring again.
As further proof of our commitment, API has been the leader
for nearly nine decades in developing voluntary industry
standards that promote reliability and safety through proven
engineering practices. API's standards program is accredited by
the American National Standards Institute, the authority on
U.S. standards, and undergoes regular program audits to ensure
it meets ANSI's essential requirements. API standards are
developed through a collaborative effort with industry experts,
as well as the best and brightest technical experts from
government, academia, and other stakeholders.
API maintains more than 500 standards which include
recommended practices, specifications for equipment, codes,
technical publications, reports, and studies that cover all
aspects of the industry, including 240 focused on exploration
and production activities related to offshore development. The
standards are normally reviewed every five years to ensure they
remain current, but some are reviewed more frequently based on
need. In the case of the Deepwater Horizon incident, we are
already going to work and we have activity in place to review
standards and to develop new standards already. API standards
are frequently referenced in Federal regulations because they
are recognized to be industry best practices. The Minerals
Management Service references 78 API standards in its offshore
regulations. Overall, nearly 100 API standards are referenced
in more than 270 citations by government agencies, including
the Environmental Protection Agency, the U.S. Department of
Transportation, and the Occupational Safety and Health
Administration, in addition to the MMS.
Complementing our standards program, API has a separate
industry quality program. First established in 1924, the API
Monogram provides for the consistent and reliable manufacture
of equipment and materials in accordance with our standards and
recommended practices. The program grants manufacturing
licenses for more than 70 API equipment specifications. The
Monogram program is governed by consensus committees consisting
of technical experts from the industry, government, academia,
and other stakeholders. More than 5,000 licenses have been
issued to some 3,000 facilities in 70 countries to companies
ranging from small firms to multinational corporations making a
wide range of equipment.
The industry is committed to a goal of zero fatalities,
zero injuries, and zero incidents. I appreciate the Chairman's
comments at the outset which recognize the efforts in the Gulf
region, and the industry is committed to helping out in those
efforts and has already taken steps to look across at what the
industry is doing throughout offshore operations to elevate
industry standards to make sure that we have the best systems
in place. Immediately following the incident, the API and the
industry as a whole assembled the world's leading experts to
conduct a top-to-bottom review of offshore drilling procedures
from operations to emergency response. Two industry task forces
that are addressing issues related to offshore equipment and
offshore operating practices delivered recommendations to the
Interior Department last month. In fact, the Interior
Department report of May 27th actually includes a lot of the
recommendations made by industry with regard to equipment and
procedures. Two other task forces to address subsea well
control and oil spill response have also begun their work.
We intend to use any findings from the incident
investigation to continue to improve the technologies and
practices to achieve safe and environmentally sound operations.
As part of this process, we will work to develop new API
standards, and will revise and adapt existing standards to
raise the bar of performance. We look forward to providing
constructive input as this Committee, the Congress, and the
Administration consider changes to existing policy.
This concludes my statement, Mr. Chairman, and I welcome
questions from you and your colleagues. Thank you.
[The prepared statement of Mr. Milito follows:]
Prepared Statement of Erik Milito
Good morning Chairman Baird, Ranking Member Inglis, and members of
the subcommittee. Thank you for the opportunity to address deepwater
technology research and development.
My name is Erik Milito. I am the upstream director for the American
Petroleum Institute. API has more than 400 member companies, which
represent all sectors of America's oil and natural gas industry. Our
industry supports 9.2 million American jobs--including 170,000 in the
Gulf of Mexico related to the offshore development business--and
provides most of the energy America needs.
First, our prayers go out to the families who lost loved ones, to
the workers who were injured, and to all of our neighbors in the Gulf
affected by this tragic accident.
In testimony last month, Secretary Salazar said the offshore oil
and natural gas industry ``is a very highly regulated industry.''
Indeed, offshore operators are subject to significant Federal
regulatory requirements, including 27 statutory authorities, 88 Code of
Federal Regulations parts, and 24 significant approvals and permits.
However, our industry's top priority is to provide energy in a
safe, technologically sound and environmentally responsible manner, and
we therefore take seriously our responsibility to work in cooperation
with government to develop practices and equipment that improve the
operational and regulatory process across the board. We, therefore,
support the government's ongoing review of the incident and the
existing systems in place and industry will take the necessary steps to
prevent accidents like this from occurring again.
As further proof of our commitment, API has been the leader for
nearly nine decades in developing voluntary industry standards that
promote reliability and safety through proven engineering practices.
API's Standards Program is accredited by the American National
Standards Institute (ANSI), the authority on U.S. standards, and
undergoes regular program audits to ensure it meets ANSI's Essential
Requirements. API's standards are developed through a collaborative
effort with industry experts, as well as the best and brightest
technical experts from government, academia and other stakeholders.
API maintains more than 500 standards--recommended practices,
specifications, codes, technical publications, reports and studies--
that cover all aspects of the industry, including 240 focused on
exploration and production activities. The standards are normally
reviewed every five years to ensure they remain current, but some are
reviewed more frequently based on need.
API's standards are frequently referenced in Federal regulations
because they are recognized to be industry best practices. MMS, for
example, references 78 API standards in its offshore regulations.
Overall, nearly 100 API standards are referenced in more than 270
citations by government agencies, including USEPA, the Department of
Transportation and OSHA, in addition to MMS.
Complementing our standards program, API has a separate industry
quality program. First established in 1924, the API Monogram Program
provides for the consistent and reliable manufacture of equipment and
materials in accordance with our standards and recommended practices.
The program grants manufacturing licenses for more than 70 API
equipment specifications.
The Monogram Program is governed by consensus committees consisting
of technical experts from industry, government, academia and other
stakeholders. More than 5,000 licenses have been issued to some 3,000
facilities in 70 countries to companies ranging from small firms to
multinational corporations making a wide range of equipment.
The industry is committed to a goal of zero fatalities, zero
injuries and zero incidents. It has already taken steps to improve
safety and environmental performance in the aftermath of the Gulf
incident. Immediately following the incident, we assembled the world's
leading experts to conduct a top-to-bottom review of offshore drilling
procedures, from operations to emergency response. Two industry task
forces that are addressing issues related to offshore equipment and
offshore operating practices delivered recommendations to the Interior
Department last month. Two other task forces, to address subsea well
control and oil spill response, have also begun their work.
We intend to use any findings from the incident investigations to
continue to improve the technologies and practices to achieve safe and
environmentally sound operations. As part of this process, we will work
to develop new API standards and revise and adapt existing API
standards to raise the bar of performance to a higher level.
We look forward to providing constructive input as this committee,
the Congress and the Administration consider changes to existing
policy.
This concludes my statement, Mr. Chairman. I welcome questions from
you and your colleagues. Thank you.
Biography for Erik Milito
Erik Milito is the Director of Upstream and Industry Operations for
the American Petroleum Institute (API), which is the national trade
association representing more than 400 companies involved in all
aspects of the oil and gas industry, including exploration production,
refining and transportation. Mr. Milito's work covers regulatory and
legislative matters related to domestic exploration and production,
including access to domestic oil and natural gas resources both onshore
and offshore. Prior to his current position, Mr. Milito served as
managing counsel covering a host of issues, including oil and gas
leasing, royalty, environmental, fuels, transportation, safety, and
civil justice reform. Prior to joining API, Mr. Milito served for over
four years on active duty in the U.S. Army as a judge advocate, and
additional four years in the U.S. Army Reserve, resigning at the rank
of Major. Mr. Milito was assigned to active duty tours in Hawaii, Korea
and Aberdeen Proving Ground, Maryland, and he served as a prosecutor,
defense attorney and command advisor. Mr. Milito was awarded the
Meritorious Service Medal and Army Commendation Medals during his
military tenure. After leaving the Army, Mr. Milito worked as a career
attorney with the Solicitor's Office of the U.S. Department of the
Interior. While at Interior, Mr. Milito worked on royalty, employment
law, and disability access issues. Mr. Milito attended the University
of Notre Dame on an R.O.T.C. scholarship, and received a bachelor's
degree in business administration. Mr. Milito then received his juris
doctor from Marquette University Law School, where he was a member of
the law review. Mr. Milito has authored and co-authored several papers
related to natural resources issues and has served as a guest speaker
on multiple occasions. Until recently, Mr. Milito served on the Board
of Trustees of the Rocky Mountain Mineral Law Foundation. Mr. Milito
and his wife Elizabeth have two children, William and Helen, and live
in Alexandria, Virginia.
Chairman Baird. Thank you, Mr. Milito.
Mr. McCormack.
STATEMENTS OF GREG MCCORMACK, DIRECTOR, PETROLEUM EXTENSION
SERVICE, UNIVERSITY OF TEXAS-AUSTIN
Mr. McCormack. Mr. Chairman, Members of the Committee, and
staff, thank you for inviting me to present and talk about
training. Training is the key to safe application of industry
technologies.
You may wonder why the University of Texas is here to talk
about training. The University of Texas is a land-grant
institution, which means when it was first established over 100
years ago, it was given three million acres out in west Texas.
The three million acres then were worth nothing, but guess
what? We found oil and natural gas on those three million
acres, and so it became quite important to the University
system. Back in 1944, the industry found itself with a skill
gap shortage. The legislature of the State of Texas mandated
that the University would provide training to the oil and gas
industry, and we have been doing that ever since. We provide
not only training, but we also provide training material and
audiovisuals to the industry. We have trained Minerals
Management Service, Bureau of Land Management, Homeland
Security, JWAC, and most of the companies that are involved in
the petroleum industry.
I personally have worked in the industry for 40 years and
have seen many changes, and what hasn't changed is the impact
of technology on this industry. It has been a technology-driven
industry almost right from the inception. Training is a
critical component of this industry, but it has not improved at
the same speed as the technology. As a trend, I have observed
over 40 years a shift from an investment-based industry to a
more cost-focused business. Technology drives down cost.
Unfortunately, training is looked at as cost and not an
investment. Without appropriate training, technology comes with
risk.
Today, training is down 25 percent over the training that
was done in 2008. I would challenge the industry through its
associations to have its members step up and increase their
funding for training. The American Petroleum Institute,
respected worldwide, a leader in setting standards in many
places for the industry, should also be a leader in training
standards. I notice a very direct correlation to profitability
of the industry and the amount of investment and training. With
fluctuating profitability, there is a fluctuation in training,
and it should not be surprising that the results and
effectiveness of training fluctuate, as well.
For the most part, the industry has created relevant
content that should allow anyone who is trained in this content
and passes appropriate testing to become knowledgeable about
drilling rig safety and drilling rig operations. But training
is not experience. This industry currently is losing experience
at a faster rate than it is gaining it. So we have a problem in
experience attrition.
One of the other real issues at hand is the growing
multigenerational aspects of the workforce, with its mix of
four distinct generations with disparate life experiences,
varying ways of communicating, and distinctly different goals
for professional careers. We have not learned how to train this
multigenerational workforce.
The days of cheap oil are over. The great technological
challenges in locating, drilling for, and producing
hydrocarbons have taken a quantum leap forward in complexity.
Unfortunately, training has not kept up with that complexity.
New technologies and training are invaluable. Ironically,
it is the new generation that invented many of the new
multimedia technologies. Fortunately, they are also very
comfortable using those technologies. Though online training
has existed for some time, in most cases, it has not been very
interactive or intuitive. It is therefore necessary to rethink
and reposition online training in formats that are familiar to
newer generations of professionals.
What can the government do? I think the government can step
in and look at the best practices of training that are underway
today and pull those together and communicate them to all
parties. It could include a training reporting system similar
to the financial reporting system. They could audit the
effectiveness of training providers. There is a great spectrum
of training providers with great capabilities, and some with
not so great capabilities.
The third area is to encourage the industry to fund
fundamental research in how to train and retain the
multigenerational workforce. Billions are spent on research;
half a billion cumulatively spent on alternative fuels. I know
of no funds that are being expended on research on training
methodologies.
[The prepared statement of Mr. McCormack follows:]
Prepared Statement of Greg McCormack
Training is Key to Safe Application of Industry Technologies
Thank you for the invitation to present our views on Science and
Technology as it pertains to training in the oil and gas industry. The
University of Texas through PETEX (Petroleum Extension Service) has
been providing training and training materials to the oil and gas
industry since 1944. We work with the industry through its many
organizations and associations to define its needs and produce quality
training, publications and audiovisual products. I have personally
worked in the industry for 40 years and have seen many changes, and
what hasn't changed is the impact of technology on the industry. It has
been a technology-driven industry almost from its inception. From
locating oil from natural seeps to having the ability to drill in
12,000 feet of water to a total vertical depth of 30,000 feet,
technology has enabled the industry to succeed. Without relatively
inexpensive oil and gas, growth in world economies would have slowed.
Training is a critical component of this industry. As we drill
deeper in more remote locations, the need for technology has become
greater along with the need for training to apply technology safely and
effectively. A trend that I have observed over my 40 years of
experience is a shift from an investment-based industry to a
more cost-focused business. Technology drives cost down.
Unfortunately, training is looked at as a cost and not an investment.
Without appropriate training, technology comes with risk. Today,
training is down by over 25% from levels experienced in 2008. I would
challenge the industry through their associations to have their members
step up and increase their funding for training. The American Petroleum
Institute, the leader in setting standards in many places for the
industry, should also be the leader in training standards. My
perception is that there has been a reluctance to put capital into
training because it is difficult to measure the return you get from
that investment. On the other hand, everyone in a leadership role in
the oil and gas industry has been educated and trained both as an
undergraduate and in further development during in their career. I
believe that they feel it was a wise investment. I am not sure that
they feel that a similar investment in training for entry-level
personnel is as valuable. I notice a very direct correlation to
profitability of the industry and the amount of investment in training.
With fluctuating investment in training, it should not be surprising
that the results and effectiveness of the training fluctuates.
There are two different kinds of training required to safely and
successfully operate a drilling rig, whether on land or over water. The
first type of training relates to the operation and maintenance of the
drilling rig itself. The second type of training is very specific to
the oilfield services provided to support the drilling activities.
These include, cementing, casing, drilling fluids, logging while
drilling (LWD), measurement while drilling (MWD), running wireline,
perforating, etc. The first type of training is usually provided by
third-party training providers or carried out in-house. The second type
is usually provided by the companies that are providing the oilfield
services, because it is very specific to each individual company's
equipment and products. I am going to address the first type of
training.
The oil and gas industry faces many challenging issues in training,
now and in the future. For the most part, the industry has created
relevant content that should allow anyone who is trained in this
content and passes appropriate testing to become knowledgeable about
drilling rig safety and drilling rig operations. The knowledge gap
created by ``The Great Crew Change'' that exists in most companies has
been well documented and discussed. This knowledge gap was caused by
inconsistent hiring during periods of low oil and gas prices. The
problem is not one of filling the gaps. There are sufficient numbers of
people entering the workforce to do that. The problem is one of
``experience attrition,'' and it is a challenge that must be addressed.
We should not expect that in replacing a retiring person with over 30
years of experience with an entry-level person that performance would
not decline without extra efforts to replace years of experience with a
significant increase in training. I don't see this situation being
addressed. With large gaps in experience, personnel are promoted from
one position to the next at a faster rate than in the past.
The characteristics and expectations of `Generation Y' or the `New
Millennials' have been examined and debated. They learn differently and
in much shorter spans of time. The real issues at hand are the growing
multigenerational aspects of the workforce with its mix of four
distinct generations with disparate life experiences, varying ways of
communicating, and distinctly different goals for their professional
careers. The first of the baby boomers reached age 60 in 2008. In
perspective, the average age for retirement in the oil and gas industry
is 59. Along with the global economic slowdown and stock market slump
is a rise in the average retirement age. These three impacts--boomers,
industry retirees, and economic changes--are all interrelated and
impacted by the cyclical nature of the oil and gas industry.
This cyclicality is our industry's hurdle in trying to resolve
issues surrounding the employment of top talent going forward.
Cyclicality is also the area over which the industry has least control.
It is inevitable that the industry will be cyclical because it is
based, quite simply, on supply and demand.
Why is cyclicality so important? The answer becomes clear from the
perspective of career time spans and talent management. Most employees
in the oil and gas industry are responsible for developing a career
spanning an average of 35 to 40 years. During the last 40-year time
span, there have been seven business cycles. Driven by Wall Street and
shareholder interests, the industry has always reacted to these cycles
by reducing fixed costs as they would in any downturn in the economy.
However, the main element of fixed costs is employee expense. So if the
oil and gas industry is driven by quarterly earnings, as are many other
industries, then it will respond by driving down fixed costs and
therefore, employee costs. This industry will need the brightest and
the best to deliver what the world needs, which is energy to drive
economic growth. Energy means oil and gas accompanied by great
technological advances that require great technical talent. Is the
industry ready to attract, train, and--the biggest challenge--retrain
professionals to step up to the plate? Companies seem to have little
difficulty in investing in new technologies and equipment that have
long payout times but are reluctant to invest in training that could
have immediate results. There are no easy answers.
A look forward to 2025 forecasts an increasing worldwide demand for
oil, from 85 million BBLS/day to 115 million BBLS/day. Fossil fuels--
oil, natural gas, and coal--make up 86% of the world's energy supply.
Matters are complicated by the fact that fossil fuels are under attack
by proponents of global warming. Production will have to increase by 30
million BBLS/day in the next 15 years or equivalent substitutes for oil
will be necessary. Currently, 98% of transportation fuels come from
crude oil, yet production from existing fields is declining anywhere
from 10% to 60% depending on the field.
Another contemporary issue is that new supplies of oil and gas are
coming from deeper and more difficult formations. The technological
challenges in locating, drilling for, and producing hydrocarbons have
taken a quantum leap forward in complexity. The 93% of conventional
resources that currently exist are owned or controlled by National
Governments (NOG) or National Oil Companies (NOC). This leaves only 7%
of conventional hydrocarbons, and a large part of the unconventional
ones, in play to the highest bidder. Of course, the NOGs and NOCs still
require a full suite of technically skilled personnel.
The question arises: What are unconventional hydrocarbons anyway?
Put simply, they are either very heavy oils or hydrocarbons held
tightly in reservoirs of very low permeability. What new technologies
will be required to extract these unconventional hydrocarbons and what
training is going to be needed to support these technologies?
Locating and reaching these hydrocarbons requires new technologies
in the form of highly sensitive equipment, higher speed processing of
seismic data, better software algorithms, electromagnetic field
interactions to supplement seismic and visualization techniques--all
requiring significant and continuous training investments. The new
frontiers of exploration and production will require not only training
in those regimes but also new materials and modes of operations to
succeed.
The petroleum industry started globalizing in the 1920s. This
movement has accelerated in the past two decades and has significantly
impacted the types of skills required to succeed. These tend to be the
``soft skills'' needed in relating to a multicultural workforce and in
dealing with NOGs and NOCs.
The immediate challenge today is transmitting the soft and hard
skills necessary to quickly bridge the gaps between new and existing
personnel. Productivity is an ongoing training concern, both in time to
train and time to be trained. Today, training is moving closer to sites
of operations--a trend that will only increase as the number of new
entrants to the industry increases. Those personnel who might be
released for extended periods of time from the worksite to train will
be in short supply. To decrease time away and increase productivity at
the worksite, travel time must be eliminated or reduced.
New technologies in training are invaluable. Ironically, it is the
new generation who invented many of the new multimedia technologies.
Fortunately, they are also very comfortable using them. Although online
training has existed for some time, in most cases, it has not been very
interactive or intuitive. It is therefore necessary to rethink and
reposition online training in formats that are familiar to a newer
generation of petroleum professionals.
Company trainers and good trainers in general are also in short
supply; so as a consequence, training of employees will be done in
smaller increments and more frequently, allowing more time on duty. The
qualifications for being an effective trainer in the oil and gas
industry need to be researched. But if we rely on distributed training,
blended learning, and smaller increments of training, how do we track
the extent and effectiveness of our training? Learning management
systems become important in tracking training effectiveness and e-
learning comprehension through testing both written and on-the-job
skills application. The whole area of blended learning needs to have a
lot of attention paid to it. There is no clearly defined mix of
learning modes that gives the greatest outcome.
Companies, government agencies, and society at large demand that
training provide competence. It is going to be the joint responsibility
of training providers and companies to certify competence. At the end
of the day, companies want a measurable return on investment (ROI).
They want to achieve a reduction in accidents, an improvement in oil
and gas measurement yield, and fewer lost days of production. The
measured ROI will require considerable effort to develop a system that
can isolate the effects of training on an organization.
Moving forward, the industry will be challenged by its cyclicality
of financial results. There will be an intense need to hire the
brightest and most technically competent employees to meet the future
challenges. The industry cannot afford to be seen as an unstable
workplace.
What role if any should the government take in training? I think
that there are three things that the government should be prepared to
do. The first is to develop a set of best practices from all of
training underway in the industry today and communicate them to all of
the involved parties. This could include a training reporting system
similar to the Financial Reporting System (FRS) that focuses on key
metrics for training. The second is audit the effectiveness of training
providers. This can be done by testing the personnel that have been
trained after they have been on the rig for a period of time. This
should be ``surprise'' testing to determine the retention rate of
training. This will do a number of things: it will allow an assessment
of the training providers and it will provide metrics to determine the
retraining periodicity. This can be done in conjunction with API and
the International Association of Drilling Contractors (IADC) who have
certification criteria for training providers. The third area is to
encourage the industry to fund fundamental research in how to train and
retrain the multigenerational work force that exists in industry today.
We need to determine the best mix of learning delivery systems that is
the most effective in delivering results.
Biography for Greg McCormack
Gregory M. McCormack is director of PETEX (Petroleum Extension
Service), a continuing education unit of The University of Texas at
Austin. He leads the organization's efforts in providing quality
education and training to oil and gas industry personnel worldwide.
With oversight of expanding facilities in both Austin and Houston, he
focuses on continuing business development and workplace excellence in
response to the oil industry's growing training demands. Prior to
director, McCormack served as PETEX marketing manager in charge of
developing the organization's marketing strategy and promoting the
unit's mission externally. McCormack's lengthy petroleum industry
career has concentrated on midstream and downstream activities of
pipelines, refineries, and petrochemicals. For the past six years he
has focused his activities on the upstream industry--drilling and
production. He frequently trains and gives speeches on the oil and gas
industry. He has held positions in business development, operations,
strategic planning, budgeting, process control, health and
environmental safety; and has directed efforts in North America,
Europe, and Asia. He consistently engages research and evaluation teams
in studying organizational issues, business needs, and client
requirements. He has an MBA, a BASc in chemical engineering, and has
advanced management training. Currently based at PETEX's Houston
Training Center, he travels frequently to Austin headquarters where
publications and training materials are produced and distributed to
clients around the world.
His prior work experience included working for Cambridge Energy
Research Associates were he focused on clients strategic needs in the
oil and gas industry. He also worked for SRI International (Menlo Park)
helping to develop new technologies and moving them into the petroleum
industry.
Discussion
Chairman Baird. Thank you, Mr. McCormack. I thank all the
witnesses. You hit the mark on time and much appreciated. I
will recognize myself for five minutes and following that we
will recognize the members in alternating order.
The Safety of Current Technologies
Very important and informative testimony, and I want to, if
I may use the expression, drill down on a little bit of it
here. Dr. Baugh, I was actually a little bit surprised--and I
think a lot of people might be surprised--by the statement that
you made. Maybe I am not understanding it well, but the current
state--and you said it in your written testimony as well: ``The
current state of technology of subsea drilling systems is
completely adequate to provide an appropriate level of safety
control of wells being drilled, protect the environment,
provide safety to personnel.'' If that is so, why are we having
this hearing?
Dr. Baugh. Obviously some serious mistakes were made and
you have people involved in the system. If I were going to
fault the system, it would not be the equipment out there. It
is well developed. Sooner or later you are going to have a
problem such as the one we have, and we have not done a good
enough job of the contingency equipment to go out and capture
this spill, but I would suggest to you that the equipment
itself is well developed. The downstream systems are not as
well developed.
Chairman Baird. But there are reports that some of the last
line of defense equipment appears to have failed. Now, given
the nature of the problem, we don't know exactly why that is. I
understand the Deepwater Horizon folks and BP are trying to
understand it, but it seems that this was a combination of
hardware and human failure. And so the question from me was, if
we were to take that quote at face value, it would sort of
imply that, hey, there is nothing to worry about. And there is
a lot to worry about somewhere, and I am worried when people
say we don't have to worry because everything is fine.
Dr. Baugh. No, I do think you need to worry. We have a good
set of equipment out there at this time. At all points in
history you need to be continuing to develop better safety
systems, keep on doing R&D and look at the next thing. We have
not done the next thing, which is basically to say sooner or
later you are going to get some kind of a leak and the next one
will be different than this one, but we have spent all of our
money getting oil out of drilling. We have not done a good job
of capturing a potential spill, whether that would be from a
tanker or from a pipeline rupture, just a rupture in the earth,
a blowout. But I have studied and tried to get all the
information I could on this particular incident and I literally
have designed every piece of equipment that you are talking
about, and the bits of information that are you getting are
conflicting. There is something strange that happened here.
Chairman Baird. Okay. I appreciate that. That helps me
understand where you are coming from.
Human Factors of Error
Let me pick up something you said and go to Mr. McCormack.
You know, some years ago, right here in this city, there was a
tragic aviation accident where an airplane iced up while
waiting to take off and went into the Potomac and a lot of
lives were lost. Subsequent data and other aviation accidents,
FAA looked at a lot of human communication. They realized that
you can build the best airplane in the world, but if the people
flying it don't operate it according to its specifications,
they are going to have a problem. I am curious--and Mr. Pappas,
maybe you can address this, Mr. McCormack--what percentage of
our research goes into the kind of things Mr. McCormack was
saying in terms of how to better train people for RPSEA, and
what percentage of it goes to the human factor side? In FAA,
they changed the flight deck rules. It had been basically pilot
is God, co-pilot is passenger, and if God says, you go. FAA
changed that. They are now co-gods in the aircraft, and if one
says I don't think it is safe, that person has the career
protection for saying so for the best interest of the safety of
the passengers. What have we done in the API--any of you want
to--I am very interested in this question, because my read of
it is that there were hardware physical failures of equipment,
but there are also failures to wire it correctly, failures to
install it correctly, apparently, and apparently grievous
decision differences between BP and Deepwater about how fast to
move forward. What do we know about human factors, Mr. Pappas,
from RPSEA's perspective? Then we will work on down.
Mr. Pappas. All right. I will start. Thank you. We have one
project that we have got on our onshore program that considers
that. What it is looking at is the combination of smart systems
and utilization of new technologies to help people decide when
to turn on and turn off equipment, when to move forward and
move back. It is a different way of learning, and what we are
trying to do is focus it on the onshore program right now,
specifically for the unconventional resources. The reason we
are doing that is that there are many systems around, but a lot
of times they are not compatible with each other. They don't
talk well. They don't play well. And the issue is that there
are many different companies that develop these things. What we
have to do is, we have got to find a way to put them together
in a systematic way so that they create a logical response that
covers all bases and doesn't make mistakes. So that is what we
are looking at specifically in our program.
Chairman Baird. Mr. Milito?
Mr. Milito. I think the point that I would like to make on
this is that, you know, when we are looking at this, we are
looking at it from a prevention standpoint. You don't even want
to get to the blowout preventer, and to that end, what the
industry is doing is looking at the best ways to have the
procedures in well design in place so you don't have conflicts
of opinions on how you design it, so that you have elevated the
design of the well and the operating practices to a point where
there is no question as to how you are going to do it. You are
going to have the barriers in place, you are going to have the
casing strings done in a way that is the highest level of
performance. So if any of these human factors could potentially
arise, they would be resolved already because of the standards
in place. So the industry is doing it across the industry to
elevate everybody to a point where the standard is at a higher
level.
Chairman Baird. So if there is a conflict, somebody could
say, ``I disagree with you, you are violating standard,'' but
what do they do if the person paying their salary insists they
violate it?
Mr. Milito. Well, you know, we are open to a system where
those people should be empowered to be able to raise that
question, and, if need be, you stop any kind of operations if
there is a safety issue. Safety is the priority, and if there
is a safety question and there are operations ongoing, there
should be an opportunity there to make sure that that does not
occur.
Chairman Baird. Mr. McCormack, very briefly, because I have
exceeded my own time here.
Mr. McCormack. Ninety-eight percent of the operations on a
drill rig are very routine. It is the two percent that are not
routine. We train towards the technologies. We don't train the
soft skills: communication, chain of command. We don't bring
the whole team together and train them that way. That really
does need to be done. We need to be doing a lot more research
in that area. We are doing so little research in training. It
is disappointing.
Chairman Baird. Thank you very much. I appreciate the
witnesses.
Mr. Hall is recognized.
More Information from Dr. Baugh
Mr. Hall. Thank you, Mr. Chairman.
Dr. Baugh, you apparently hadn't concluded your
presentation. Could you do that? If I am kind enough to give
you half of my five minutes. could you do it in that?
Dr. Baugh. Okay. As a practical matter, the remainder of my
presentation is exactly what you said, and you said it more
eloquently than I could. You basically said it. I was going to
suggest that there are--one thing additional was that there are
some specific areas that we should be funding research in,
specifically tertiary controls systems for subject BOP stacks
and more comprehensive ROV control systems for BOP stacks and
upgrading shear ram, shear ram actuators, are specific areas we
need to be doing development work in. But other than that, you
said it very well.
A Drilling Moratorium
Mr. Hall. I want to go to the court ruling last evening.
Last night Secretary Salazar announced that he was going to be
issuing a new moratorium that addresses the shortcomings that
the court set out, and as knowledge of the causes of the
blowout continue to grow, he says a moratorium is going to be
proven necessary and just. I don't know how he arrived at that.
He is simply going to issue a new one. I don't know how many
moratoriums, how many more he has in line to--as fast as the
court knocks them down--dig up. But luckily we have the three
branches of government and the courts get the last guess at
what the law is, whether it is us Congressmen doing it or some
bureaucrat, and right now that knocking out the moratorium just
looks to me like another step by this Administration to lessen
our dependency on energy that we have here that we know we have
here and that we ought to be getting here.
Dr. Baugh. I do have a suggestion on that. A blanket
moratorium, which is what we have right now, is only punitive
and does damage to everybody. We need to establish what I would
call a rig moratorium, where you shut down every rig at the
next convenient stopping point and recertify that rig to pass
its FAT test, its systems integration test. And you certify
every rig individually, and when a rig certifies that it is
good, it is as it is supposed to be, let it go back to work. At
that point, you either put people back to work or you put them
to work making the rig right, but you have people gainfully
employed rather than unemployed.
Mr. Hall. Well, from his statement it is clear that he is
convinced that a moratorium is necessary to ensure the safety
of drilling operations and protect the environment. Considering
the evidence of the spill you have seen thus far and the
increased risk posed by a moratorium as you mentioned in your
testimony--and I thank you for that--I will ask this question.
Is there any scientific or engineering justification you can
think of that would also pass muster in a rigorous peer review
process that would justify a moratorium?
Dr. Baugh. I think probably the opposite, because if you
presume a moratorium is to determine some greater level of
safety that you would like to achieve, you are going to spend
six months in a moratorium figuring out what to do, and then
you need to tell the good people of south Louisiana that they
are going to be out of work for two or three years while you
implement whatever it is that justified your having the
moratorium in the first place. So I would say that a six-month
moratorium is not a credible thing. We are going to have a two-
and three-year moratorium if we are going to accomplish
something, or we are going to institute best practices,
recertify rigs, put them back to work, and then continue to
spend money, continue to do development, continue to train
better. But, basically, we need to be in the oil business while
we are doing this.
Mr. Hall. I have almost--would you like to enlarge any more
on your opening statement? I have about 20 seconds left I can
give you.
Dr. Baugh. I think I have said everything I know.
Mr. Milito. Mr. Hall, if I could add to your discussion on
a moratorium, I think we have already seen the Administration
take significant action in light of the incident. The first
thing they did was they went out and inspected 33 rigs and
found only minor infractions. I think you are looking at things
like expired eyewash bottles and things like that. And, in
addition to that, they came out with a notice to lessees, which
outlines the requirements that the operators have to undergo,
and they are significant requirements, so steps have been taken
to ensure safety. That is called a safety NTL. Measures are
being taken, so you wonder why you need a moratorium when the
safety measures are being put in place.
Mr. Hall. I don't think that justifies laying off the
thousands and thousands of people who are going to be laid off.
We are going to lose a workforce that we can't replace.
Mr. Milito. I agree with you. Some of the economic numbers
show hundreds of thousands of jobs at risk here.
Mr. Hall. I yield back. Thank you, Mr. Chairman.
Chairman Baird. Thank you, Mr. Hall.
Dr. Lipinski.
Inherent Risks
Mr. Lipinski. Thank you, Mr. Chairman. I appreciate you
holding this hearing. I think we have certainly heard a lot of
talk about this disaster in the Gulf, and I am happy that we
are having a hearing now where I think we can actually look at
some of the issues that we really need to look at instead of
just having a lot of heat. Hopefully some light is shed on what
happened here and where we should move on in the future.
I really want to focus on what the witnesses think that
the--maybe we have to put aside what has happened here. What do
you believe is the real risk and the likelihood of such a
disaster like this happening? Obviously, you know, some people
would say with the disaster that we now see in the Gulf there
is no risk worth taking. Obviously there is always going to be
a risk no matter what kind of, you know--say we are just
looking at energy. With any kind of energy, whether it is
exploration or using that energy source, there is always going
to be a risk. What do you really think the risk was before this
happened of such an accident occurring? Obviously there should
be a calculation being made for this type of risk, so would
each of you place a percentage on the risk of this occurrence?
I don't know if everyone feels that they can, but we will
start. If you don't think you can, just let me know that. Mr.
Pappas?
Mr. Pappas. Thank you, sir. First, I would like to say
that, obviously, people didn't recognize this as a risk at all.
Mr. Lipinski. I mean, everyone has to say that there is
some risk of this happening no matter how small it may be.
Mr. Pappas. What I am saying is that it is obvious that the
industry did not recognize it beforehand and now they do. Now
the industry does. RPSEA as a group is ready to do some work.
We have got the people in place to do that. Now, regarding your
question, the risk obviously was small but disastrous, and, you
know, if you have to put a number on it, is it one in 999,000?
I have heard that number before, but I don't have any
substantiation. The real problem is that we don't have all the
facts right now, so the real question that I would have, that I
would turn around and ask, is, do you want to wait until you
get more of the facts, or do you want to take a chance on what
you know now and decide where you need to go? The question
really is a fundamental one.
Mr. Lipinski. Dr. Baugh?
Dr. Baugh. I think there have been something like 4,000
wells drilled in water depths such as this since the last
significant spill that we had from drilling, so that would be
one chance in 1,000 something like this might happen. But there
was--from all the information I have seen, there was really an
odd confluence of events, as, for instance, the casing hanger
wasn't locked down. Potentially, the casing hanger floated up
and blocked the blowout preventers, and it is provided some
restriction, but, if that is what happened, if we do something
as simple as make sure that they lock down every casing hanger,
this would never happen again. But it is equipment. Equipment
does fail occasionally. It would be difficult to say that you
are never going to have another spill like this. It would be a
shame to say that we have come out of this and we don't have
equipment to collect this kind of a spill and take care of it.
I want to assure you that if I had come to you and said a
year ago that we need to put $100 million aside to make sure
that if a pipeline cracks, if a BOP splits open or whatever
happens, that we go out there and be able to suck it up and
take it onto vessels and property take care of it--a year ago I
would assure each of you would have laughed at me. This year,
nobody is laughing. I would like to suggest to you that we end
up with $100 million invested in the Gulf of Mexico and in the
world because in some place in Southeast Asia or something
there is going to be another leak that happens and we need to
be able to go down there and vacuum it up, process it, take
care of it on the spot, not spend 65 days trying to figure out
how to do it.
Mr. Lipinski. Mr. Milito.
Mr. Milito. Yes, I think prior to this event, we have had
over 42,000 wells drilled in the Gulf of Mexico, over 2,000 of
those in deepwater, and nationwide in the offshore, over 16
billions of oil produced, and, of that, less than 1/1000th of a
percent spilled. That being said, the industry understands that
there are risks, and over the course of last 80 to 90 years,
industry has been working hard to continue to develop the best
practices and technologies. Our standards program is
continually updating documents. We have recently had a new
document come out on isolation of flow zones so that you can
manage these types of situations, and we are recommending that
be adopted by the government. In addition to that, Dr. Baugh
mentioned casing hanger latching. That is something that
Interior put in its report that should be done. So what I am
getting at is the Administration has taken action on a number
of items that should be included in offshore operations to
ensure safety, and if these things are done across the board, I
think you are minimizing the risk to even lower levels so that
we can safely operate.
Mr. Lipinski. Mr. McCormack, is there anything you can add?
Mr. McCormack. Usually on a blowout, there are seven to 11
events that occur that lead up to the blowout. Some of them are
equipment, some of them are human intervention. We need to make
sure that the human intervention succeeds. We need to train the
people properly.
Mr. Lipinski. But is there a--I know I am out of time here,
but I think we need to look at--first of all, is there a
calculated level of risk here? And I would assume that if you
are engaged in this activity, that any company engaged in this
would be calculating for themselves what the level of risk is
and what can be done to lower that level of risk. This isn't
just something that we look at after an accident, but also
beforehand when you are engaged in such an activity. There
obviously is a catastrophic failure here and a disaster that no
one wants to see, but if we are going to move forward with this
drilling, we have to be looking at not only what caused this,
but at each point, where is the risk and where is the
possibility potential of that risk calculating all that risk in
making a decision? As policymakers, we need to make a decision
of what risks we are willing to live with for having such a
catastrophe happen again in the future, and I think that is
what we should be looking at as we move forward and where in
the system--technologically, human factors--how we can really
lower this risk.
Chairman Baird. Thank you, Dr. Lipinski.
I want to recognize Dr. Ehlers now. Thank you.
Safety Considerations at Individual Companies
Mr. Ehlers. Thank you, Mr. Chairman.
I do not profess to be an expert on anything relating to
the oil industry but I did discuss this with someone who I do
consider a fairly good expert, and this person went down and
spent some time in Houston, talked to a number of the oil
executives, people who are experienced in this field of
drilling. There is sort of a universal reaction to some of the
questions along the line of this could only happen to BP. This
is a reflection of the feeling of a number of people in the
industry that BP is less careful than most of the other
companies that are drilling in the Gulf. I don't know if that
is true or not but it brought me up short that you are talking
about equipment, you are talking about training. Those are all
very important components, absolutely essential components. But
are there companies--and I am not going to point a finger a BP
because I can't verify that. But are there companies that tend
to pay far less attention just as a matter of company policy,
either policy neglect or of intention, that pay less attention
to safety issues or issues of this sort than other companies
do? In other words, are there some good citizens among the
companies and some bad citizens? I appreciate any comments
anyone could offer.
Dr. Baugh. I would like to respond to that, if you don't
mind. I think one of the problems is that BP has been one of
the most aggressive companies. They have gone from not so much
here to a lot. If you compare BP to Exxon Mobil, you would
think Exxon Mobil is much safer, and I think their actual
record is safer, and so there tends to be a thing when you hire
new people, you expand, you try to get the people that you can,
there tends to be a little bit more of a risky situation, which
is one of the primary reasons we would suggest that the
moratorium is not a good idea. It sort of puts everybody right
back in that mode. But I have personally been on several BP
rigs and my general impression of BP has been they have been so
anal about safety, it was nauseous. The time it takes to get a
permit to breathe on a BP rig, it just drives me crazy. I work
with a small company, and we pride ourselves on being quick and
responsive. When I go out to a BP rig, I never get the feeling
that we have got people that are being dangerous or they are
cowboys. I have always gotten the impression that they were
very conscious of safety. I think that their real downfalling
is they expanded rapidly. They are trying to do a lot of
things. Exxon Mobil is very staid, doing the same thing all the
time and so they have a good appearance of being very safe but
they are very conservative.
And so BP probably has some culture problems. They need to
address them. I can assure you they will be addressing them
better after this time, but I would not characterize BP as a
company which was just reckless. I think you see some
individual decisions--people trying to catch up on their
schedule, doing some things where people push the envelope
some--but I would not characterize BP as just being a bad
company.
Mr. Ehlers. Any other comments?
Mr. McCormack. I think what we are seeing is BP did not
take the most conservative approach in their operations in the
deepwater Gulf compared to other companies, and I think that is
a fair statement.
Mr. Ehlers. In your opinion, is that likely to lead at some
point to a disaster?
Mr. McCormack. If you cumulatively don't take the most
conservative approach and take the most aggressive approach,
just building on what Mr. Lipinski says, you are certainly
going to increase the risk factor.
Potential Risks Taken by BP
Mr. Ehlers. I was also struck recently when 60 Minutes
interviewed someone who worked on the rig, and he had an
interesting perspective. He related the events that had gone up
to it where at various points the BP person in charge had said,
this isn't quite right but we have to get this done. Have you
heard any verification of that or that type of approach?
Mr. McCormack. What I can say about that is that the BP
company man on the rig was a land-based man with very little
experience on deepwater rigs. Deepwater rigs have a certain
higher risk factor to them. Drilling processes are the same,
but the risk factors for failure are much different. You cannot
put someone on an exploratory well--which is the first well in
that formation and has very unknown activities that are going
to occur during the period of drilling--and not have
experienced people representing both the company and the
drilling.
Mr. Ehlers. Dr. Baugh, you wanted to add something?
Dr. Baugh. No.
Mr. Ehlers. Any other comments?
I yield back. Thank you.
Chairman Baird. Thank you, Dr. Ehlers.
Next on our side is Eddie Bernie Johnson.
Drilling in Shallower Waters
Ms. Johnson. Thank you very much, Mr. Chairman.
I need to ask our guest, Mr. McCormack, isn't there
drilling between the deepwater that was being done and no
drilling at all?
Mr. McCormack. I am sorry. I don't understand the question,
Ms. Johnson.
Ms. Johnson. Well, this particular incident was one of the
deepest drilling in history, I understand. Isn't there other
drilling that is not nearly as deep that has been successful?
Mr. McCormack. Oh, the shallow water, which is anything
less than 1,000 feet, has been incredibly successful. This is
not the deepest well. They have drilled in 10,000 feet of water
and gone down 20,000 feet, so it is a 30,000-foot well. So this
is definitely not the deepest, but this is an exploratory well.
This is in a new formation that hasn't been drilled into. You
can make estimations of core pressure and the temperatures and
pressures that you are going to incur on that, but until you
drill the well, you don't know exactly what you are going to
come across.
Ms. Johnson. Has this been deeper in the Gulf of Mexico?
Mr. McCormack. Yes, we drilled deeper in the Gulf of
Mexico.
Ms. Johnson. If the drilling continues in more shallow
water, would all the jobs be lost?
Mr. Milito. I think--I am sorry. I think part of that has
to do with where the oil is. We have been operating in the Gulf
for close to 50, maybe 60 years at this point, and we are
really picking over bones and having to go out in these deeper
waters where we are allowed to get it, where there has
essentially been a moratorium in place off the Pacific and
Atlantic coasts. So there is a lot of oil in the deeper waters.
The companies are able to find it there and it makes business
sense to go out there and develop it, because that is where it
is.
Ms. Johnson. Are there any----
Dr. Baugh. Excuse me. Could I address that?
Ms. Johnson. Yes.
Dr. Baugh. You are really, I think, asking, is there a
safer place to drill and a not-so-safe place to drill, and
probably the distinction you are looking for is development
drilling and exploratory drilling. Development drilling means
they have already drilled into a formation and have a good idea
of what is there and so they are just drilling more wells for
production. Exploratory means you are drilling in, you don't
know quite what is there and you may hit a high-pressure
pocket, and a compromise you may be looking at a short term is
to allow people to continue drilling, but to do development
drilling so that they are producing more oil and basically have
a moratorium more along the idea of doing exploratory drilling
where you are drilling into unknown formations.
Ms. Johnson. Yes?
Mr. Pappas. Short comment. Shallower wells closer to the
coast are typically gas producers these days and not oil
producers, as was mentioned. Most of the oil has been pulled
from those wells.
Accident Prevention
Ms. Johnson. Anyone can answer this for me. What would you
suggest that needs to be done to avoid this type of accident? I
know there is not a perfect situation where you can predict
that it will never happen again but what improvements would
have made a difference in this incident?
Mr. Pappas. May I, Representative Johnson?
Ms. Johnson. Yes.
Mr. Pappas. As I mentioned earlier, RPSEA has a group of
over 700 subject-matter experts in the oil and gas business and
they run the gamut from environmental and energy companies,
vendors, research universities and interested parties, other
interested parties. These experts are the people that we should
ask that question of. It should not, in my opinion, be the
decision of just a single group of people that have a dog in
the fight. They all have to have different opinions and we need
to put those all together. In my estimation, we need to put
this group together and a group like RPSEA is one of those that
is excellent at putting these diverse groups of people
together. If we could do that and utilize the process that we
have in place, it won't take very much time at all. We can come
up with a distinctive list of technologies that need to be
looked at and technologies that are already in place, whether
they be state-of-the-art or accepted already to see which
direction we need to go.
Ms. Johnson. Anyone else?
Mr. McCormack. Representative Johnson, all blowouts can be
prevented. There are signs that a kick--meaning oil and gas--is
entering the well bore when you don't want it to be there.
There are signs ahead of time. The problem when you are
drilling this deep is, the amount of time that you have to
react is shortened, so you have to be able to recognize and
respond much quicker. But all blowouts can be prevented.
Ms. Johnson. Thank you very much. My time is expired, Mr.
Chairman.
Chairman Baird. Thank you, Ms. Johnson.
I have got Mr. Bartlett--Dr. Bartlett.
Responsibilities of the Permitters
Mr. Bartlett. Thank you very much.
Several days after the blowout, the Wall Street Journal had
a fairly long article, kind of a moment-by-moment story of what
was happening. I was struck with how detailed the permitting
process was. It would seemed to me they could hardly tighten a
screw without going to the regulators to say is it okay for us
to do this. It seems to me there was a very meticulous
procedure for making sure that the regulators knew everything
they were doing. Was there any time during these procedures
that the regulators said hey, guys, aren't we cutting a few too
many corners? Did that kind of an inquiry ever happen? It
wasn't in the story. There was no indication in the story in
the Wall Street Journal that that ever happened.
The reason I am asking this question is that if you are
subject to meticulous regulation, isn't there a shared guilt
here if in fact there is some guilt? Isn't there a shared guilt
here? If BP couldn't make a move without getting permission
from the regulators, why is 100 percent of the blame placed on
BP here? Help me understand that.
Mr. McCormack. Mr. Bartlett, the inspector for the MMS had
just come over four months ago from a production platform.
Platforms are completely different than drilling platforms, so
we had basically a very inexperienced inspector from MMS making
some of these decisions.
Mr. Bartlett. My concern is that, you know, everybody did
what they thought was the right thing here and we end up--there
were two entities involved in it. Clearly there is a very tight
partnership here between the drilling people and the regulators
because I was struck with how frequently the drilling people
had to go to the regulators, hey, is it okay for us to just
change the size of a pipe, for instance, they have to go and
say is it okay to do this, and the answer is yes, it is okay to
do that. So my question is, why do you think that we are
assigning 100 percent of the blame to BP and the regulators are
never, ever mentioned as being complicit in this problem? Yes,
sir.
Mr. Pappas. Representative Bartlett, I will just give you
my personal experience. From the times I worked offshore, the
Minerals Management Service representatives were very
professional, and, in some cases, were a real pain in the neck
for me. It was because they had such stringent requirements and
we had to follow everything, and the relationship that I
developed with those people on a personal basis was purely
professional and I understood that they had a job to do, and
that is the way I took it.
Now, that being said, my understanding is that BP is being
pinpointed because they are the operator of record and that
that is the law. Besides that, I am not sure I could help you.
Mr. Bartlett. But if they couldn't move without getting
permission from the regulators, why isn't there some shared
responsibility here? There is clearly shared responsibility. I
just don't see that noted in the press.
Limited Remaining Oil Resources
Mr. Milito, you mentioned that we have now produced, what
was it, 16 billion barrels of oil from Gulf drilling. Is that
the number?
Mr. Milito. The 16 billion is offshore development for
domestic production activities.
Mr. Bartlett. Sixteen billion?
Mr. Milito. And I would assume that, you know, 90-some
percent of that is from the Gulf of Mexico, because that is
really the only area that we have access to at this point.
There is some production off the coast of California.
Mr. Bartlett. It is kind of interesting to put this problem
in some perspective. That 16 billion barrels of oil will last
the world 192 days. Every 12 days we use a billion barrels of
oil. I think the significance of that escapes most people.
Every day we use 84 million barrels of oil. Check my
arithmetic. I think 84 goes into a thousand roughly a dozen
times. Doesn't that mean that every 12 days we use a billion
barrels of oil? So we find a huge reserve out there, 10 billion
barrels of oil, and we heave a sigh of relief, gee, guys, no
problem now, we have got plenty of oil. That will last 120
days. Do you think there should be a broader recognition of the
role that the trifling amounts of oil that are yet to be found
compared with what we are using?
Mr. Milito. In terms of that there is a small amount yet to
be found or that----
Mr. Bartlett. Well, I don't think that there is a whole lot
yet to be found, and we use a billion barrels of oil every 12
days. You find 10 billion barrels of oil, that is a big find,
that will last the world 120 days. Big deal. My time is up. But
I just think it is important to put this in context.
And you really need to ask the question, do you think it is
worth the question? I have 10 kids, 17 grandkids and two great-
grandkids. We are leaving them a huge debt. I would like to
leave them a little oil. Is that okay? Thank you very much.
Chairman Baird. Thank you, Dr. Bartlett.
Mr. Tonko.
Mr. Tonko. Thank you, Mr. Chairman. I just have to respond
to that last question. I agree with the sentiment. It is time
for us to begin to explore new alternatives and renewable
opportunities because of the limitations that face us.
Funding for Research and Safety
With that being said, Mr. Pappas, in your work with the
Research Partnership to Secure Energy for America, how much of
the research funding would you say has been focused toward
extracting technologies as compared to safety technologies?
Mr. Pappas. That is a really good question, and I would say
that eight of the 71 projects that we have are specific to
environmental and safety side of the business, but every one of
those projects has a component of environmental and safety to
them. So small parts of every project, but eight are specific
to environmental and/or safety concerns.
Mr. Tonko. And with the growth of investment in technology,
there seems to be an indication that, in reports from as much
as 10 or 15 years ago, there were recommendations to invest
much more heavily in technology. But then we see situations
like that of, I believe it was May 2008, where an exemption was
granted to BP where a valve that perhaps could have been
utilized that cost a half a million dollars could have avoided
tens of billions of dollars of impact here. How would you
characterize the exemption? Would it be because of overreach,
or is it because of being deemed unnecessary or duplicative?
What would technology explain is a reason for exempting a
company like BP from that requirement?
Mr. McCormack. Maybe I can answer that. I think what you
are talking about is an acoustic switch that you can operate
from the surface to close the blowout preventers. The blowout
preventers failed and an acoustic switch would not have been
able to actuate the blowout preventers. So in this case, it
would not have helped. In other cases it might help.
Mr. Milito. If I can add to that, my understanding is all
the rigs operating do have secondary means of shutting down the
well and the blowout preventer. There may not be a requirement
that they do have that. But with regard to an acoustic
regulator, there are some concerns about posing other risks,
and in deepwater there are concerns about regulators being
triggered by things like vessels passing by. What is being
recommended by the industry as we look at that type of
equipment and technology to see where it would be most
appropriate to include that because we don't want to be
increasing risk when we are trying to improve safety.
Mr. Tonko. Okay. So with those increased risks or some of
the awkwardness of utilizing that technology, why wasn't there
a more aggressive approach to come up with the technology that
would avoid all of that potential impact and have something
that was streamlined and directed to do what it needed to do?
Mr. Milito. Well, as I was saying, I think most every rig
has a dead-man shutoff, which means when there is a separation
in the riser from the BOP, that you are supposed to have an
automatic shutoff, or, if there is a disconnect between
communication from the BOP and the rig floor, you are supposed
to be able to have an automatic shutoff. This gets to what Mr.
McCormack was talking about. The BOP wasn't functioning so it
wasn't how you control it. We really need to see the final
results of the investigation to see why that thing didn't shut
down.
Mr. Tonko. Thank you, Mr. Chair. I have no further
questions.
Chairman Baird. Thank you, Mr. Tonko.
Mr. Rohrabacher.
Support for Safety Mechanisms
Mr. Rohrabacher. Thank you very much, Mr. Chairman, and let
me note that I agree with Dr. Bartlett's analysis that we
should be developing alternatives to our dependence on oil and
gas right now, and I would suggest, however, that we cannot do
that at the expense of not doing the research and development
of technologies that we need to make sure that our current
structure is safe, and I would suggest that that is exactly
what has been going on here in that we have, for example, last
year the Department of Agriculture alone, their spending on
basically global warming money--pardon me for bringing that up
again--was 16 percent higher than all of the research and
development in the DOE in terms of oil and gas. So just the
money spent by the Department of Agriculture on global warming
research was basically 16 percent higher than what we spent
trying to make our own oil and gas safer. That is a false
priority. I mean, yes, we have to prepare for the future but
you don't prepare for the future in a way that you have a
greater emphasis than making sure that what you are doing today
is safe, and apparently that is what has been going on, and I
have been told that DOE fossil fuel research programs, that the
DOE in their fossil fuel research programs, they are moving
almost entirely towards the issues of capturing and storage of
carbon rather than safety and rather than trying to see how we
can produce more oil and gas in a safer way. Again, that is a
false priority based on this concept of global warming that I
think has been misdirecting our resources.
Let me just ask a question here. From what you have seen in
this catastrophe that we have had down in the Gulf, were
there--were all of the standards and accepted procedures, were
they being followed or can we say that this tragedy is a result
of not following accepted standards and accepted procedures?
Mr. Milito. I think at this point we really have to wait to
see the root cause analysis that comes out of the
investigation. We are hearing a lot of reports in the media,
and there is some talk about well design and operating
procedures, but we really do have to wait. That being said, the
industry did put together several task forces, including two on
equipment and operating procedures. Putting this incident
aside, they looked across to see what is being done at a higher
level to----
Mr. Rohrabacher. Well, we have standards in place, and Mr.
McCormack has made it clear that had we had everything going
the right way and doing what was sulfur dioxide to have
happened, this would not have been a catastrophe. So I am
assuming that the standards and the procedures were not being
followed, and I understand, for example, safety equipment was
not maintained. Is there anybody who understands that? Some of
the safety equipment that should have gone into place like you
say, it should have functioned that were not maintained
properly? Batteries were not present and things like that.
Mr. Pappas. I will say that one of the things that I had
heard is that the blowout preventer had some of the valves that
had been changed over and there is a possibility that they may
not have been properly inspected by a professional engineer.
That is entirely possible. We will have to wait and see and
wait for the root cause.
Mr. Rohrabacher. Well, let us just note that there is risk
in any endeavor. I mean, I fly an airplane every week and
sometimes there are airplane crashes, but we recognize that
people have high standards, and as the Chairman pointed out, a
change in standards for airlines that made it safer for us. We
must pay attention to training and standards and make sure that
we have a very high level of commitment to that, and perhaps
again, there may not have been the commitment to this in
British Petroleum as in some of the other companies and that
may have been one of the reasons, and so--but whenever we have
any endeavor, there is going to be risk involved and actually
minimizing the risk is part of their job but also it is part of
our job, Mr. Chairman, and what I am suggesting is that we have
not even in Congress done our part because we have had our
priorities shifted way and money being spent on things that
should have had less priority than making sure that our current
dependence was on equipment and technologies that were
reliable.
So with that said, thank you very much, Mr. Chairman, and
let me congratulate you, Mr. Chairman. This is an excellent
panel and you have done a great job of leadership in this
issue, and I respect that.
Chairman Baird. Thank you. While my colleagues are all
here, I hope we can get a CODEL, another trip down to the Gulf
area. I was just there this weekend. Some of you came after I
mentioned that. We are going to try to get another trip down
there to see firsthand the work that is being done, so we will
try to give you advance notice on that.
Mr. Lujan.
How To Halt the Deepwater Horizon Spill
Mr. Lujan. Mr. Chairman, thank you very much, and before I
begin my questioning, Mr. Chairman, I want to submit an article
to the record from the Los Alamos Monitor that highlights two
individuals that have come up with what appears to be a simple
idea, as well. I know that, as we are looking to make sure that
we have a vehicle to be able to accept some of these thoughts
and ideas for true vetting, that this is one that we want to
make sure that we get a close look at. So if there is no
objection, Mr. Chairman, I would ask permission to submit this
into the record.
[The information follows:]
Chairman Baird. Okay.
Monitoring and Diagnostic Capabilities and Coordination
Mr. Lujan. Mr. Pappas, given the events in the Gulf, it has
become apparent there is a need for new diagnostics and
technology to monitor the state of the deep-sea wells and their
safety equipment. The more we know about the wells deep under
the ocean--its pressure, its flow rate, its composition,
whether we are talking about gas, fluid or mud--and the more we
know about the state of safety equipment is important such as
the blowout preventer, the better we will be able to prevent
accidents and the more we will be able to deal with accidents
should they occur. There are DOE entities right now and brain
trusts that are private and public that are engaging in
diagnostic activity as we speak. Do you agree that there is a
need to develop improved diagnostics, and if so, what
diagnostics are most urgently needed?
Mr. Pappas. Thank you. Representative Lujan, I think that
we are moving in the right direction. Unfortunately, it is for
the wrong reasons because of what has happened, but the notice
to lessees that came out had some excellent, excellent
recommendations to improve systems just to start with. I
believe what we need to do is we need to dissect the issue,
dissect it into its components and take a look at it, and then
see how it gets put back together into a system. We need to get
those experts together to formulate where we need to go.
Obviously, communications is an issue. Obviously, training is
an issue, as was mentioned earlier. Hardware is probably going
to be an issue, not necessarily because it--it may be that it
is adequate for right now, but will it be adequate in the
future since we continue to move into deeper and harsher
environments in both gas and oil drilling? We all know that we
need that as a bridge to get us to the next generation of
energy. So, to start with, that is where we need to go.
The programs that I outlined a little while ago I think are
focused on the environment and on the safety issues, but every
one of these components, I think, needs to be looked at from
the environmental impact side and also from the safety side.
Mr. Lujan. And with that being said, Mr. Pappas, how might
RPSEA be better integrated with DOE's drilling research
activities as well?
Mr. Pappas. Yes. You know, we work very, very closely with
the Department of Energy. We have meetings from time to time.
We try to keep in touch. They have a complementary program
through NETL that works with us very closely. So we are moving
in that direction. One of the problems that we have is that
money that was authorized was $100 million, but only $50
million was appropriated, and as I mentioned, we have other
projects that could have taken priority. And then in addition
to that, what we have uncovered because of this recent
catastrophe is that we could probably utilize another $100
million, and we probably still wouldn't have enough.
Mr. Lujan. Mr. Milito, if we wanted to set up a focused,
quick response DOE partnership with some of the efforts that we
see underway now, a program to develop new safety diagnostics
of deployment as soon as possible, do you have thoughts on if
the Office of Fossil Energy or ARPA-E would be a better
location for partnerships and collaborations that you are
engaged with now?
Mr. Milito. Yes, it certainly should be something that we
need to consider. We have to make sure that all the agencies
that are doing the research are coordinating and collaborating
with what the industry is doing. It is an effort that Congress,
the Administration, Department of Energy, Department of
Interior, and the trade associations need to work together on.
So, if there is a way to manage that and have the coordination,
we should have that discussion and make sure it happens because
a lot of ideas are being generated. We are providing them to
Interior, but if Energy is going to play a significant role
here, as it should, then we have to make sure that that
discussion is held.
Mr. Lujan. And is API currently engaged with the evaluation
of diagnostics to see what we can be doing better based on what
we know is occurring around the Gulf that we should be
expecting to see in some of the reports soon to be released?
Mr. Milito. Some of the recommendations that have come out
from the industry have to do with the blowout preventers and
the remote operated vehicles, and a lot of those
recommendations concern testing that has to be done at the rig
level as well as underneath the water. So we are moving forward
with changes to the standards on BOPs and ROVs to address some
of those issues, so that is occurring.
Mr. Lujan. And any thoughts on how we might be able to
better integrate with the DOE drilling research activities?
Mr. Milito. Same thing. We just have to have an open
dialogue and make sure that--and our standard-setting process
is open to the government. David Miller, our standards
director, is here, so we can make sure that we have an
opportunity to have them as a participant or an observer,
however DOE thinks that they would best fit in.
Mr. Lujan. I appreciate that.
And Mr. Chairman, I know we didn't have time to get----
Mr. Pappas. Mr. Lujan, could I add something very quickly?
Mr. Lujan. Mr. Pappas.
Mr. Pappas. One of the things that I see is that the
function of government--and the Department of Energy in
particular--is to look at the fundamental type of research.
When it gets into application, it is probably best left to
people that are little bit closer to the industry. Now, the
oversight may continue to be from the government level, but I
believe that the subject-matter experts sit down in Houston and
offshore and in New Orleans and so forth, and those are the
folks that we need to ask to get to applications so that we can
utilize what we best need. Thank you.
Mr. Lujan. And Mr. Chairman, maybe along those lines, there
are existing entrepreneurial lead programs that exist at the
labs to work with small business startups. There may be a lead
program along the lines where you can work and you can
integrate these activities to best make sure that we are
accelerating them. Thank you, Mr. Chairman.
Chairman Baird. Mr. Garamendi.
More on Activities Coordination
Mr. Garamendi. Thank you, Mr. Chairman. I am going to
follow up on some of the questions that Mr. Lujan had raised.
Specifically, I want to go to the moratorium. A lot of
discussion going on around here and perhaps in other places, I
guess also in a Federal court about moratoriums. When the
military in 2008 lost two T-38 trainers, jet fighter trainers,
the Air Force stood down until they could figure out what is
going on. The moratorium should be the same purpose. We have
had a horrendous problem. Why did it occur? What are the
elements of it? A moratorium in my view is absolutely necessary
until we find out what goes on and what has gone on. You have
described the difference between development and exploration.
Understood.
My specific question is, what is the industry doing in
coordination with the Department of Interior on standards and
procedures including both the oversight of the government and
the policy procedures and equipment that is to be used in the
exploratory processes?
Mr. Milito. When we put together the task forces on
equipment and operating procedures, this was shortly after
Secretary Salazar had a meeting with the exploration and
production presidents and vice presidents, quickly assembled
them and quickly started having a dialogue with Interior. Those
task forces really came up with three buckets of
recommendations that went to Interior. There are 22
recommendations. The first bucket has a lot to do with a lot of
the discussion we have had. It has to do with risk management
and making sure that the drilling contractors have a safety
program in place, making sure that the operators have a safety
program in place and making sure those two programs are
talking. And then there is a recommendation that has to do with
operating procedures, making sure you have the appropriate
barriers underneath the wellhead to ensure that hydrocarbons
cannot breach the well, and then making sure you have the right
interfacing between BOPs, ROVs, and making sure that you have
sharability. All those technical recommendations have been
made. Sixteen of the 22 were accepted by Interior in its
report, and then some of the other work. We have a recommended
practice in isolating flow zones for drilling operations. We
have recommended that it gets adopted and we are moving forward
with working, improving our standards on BOPs and ROVs. So
there is a lot going on and they are not stopping the work.
They are going to continue to work in the long term.
Mr. Garamendi. To wrap up this one question, it just seems
to me absolutely essential that, before we continue to do
deepwater exploration, we have all of those procedures in
place, including the oversight, review, and appropriate role of
the Department of Interior's new organizational structure.
Until that happens, we ought not do any more exploration. As to
development, that is another question. The same things would
apply. I think there would probably be different kinds of
requirements.
Oil Spill Response Programs
The next question, I think, Dr. Baugh, you raised this
point. I want to go to it. In California, we have had since
1990 a very sophisticated oil spill response program. It does
have in-place funding. It does have in-place materials,
communication programs located in southern California, northern
California, I think also in the central coast of California.
Does such a program exist in the Gulf, and if so, is it--
obviously it is not sufficient. What would you do to make it
better? A hundred million dollars was a number that you came up
with a moment ago.
Dr. Baugh. That number came out of thin air, for what it is
worth.
Mr. Garamendi. It sounds----
Dr. Baugh. There are----
Mr. Garamendi. --on track.
Dr. Baugh. You saw a lot of booms deployed in the Gulf of
Mexico, which says there is a lot of response capability in the
Gulf of Mexico, but I would suggest to you that we should not
be sitting at the surface letting oil come to the surface, come
to the beaches, and then try to collect it. We need to go to
the site of the spill and we need to vacuum it up and take care
of it there and not let it pollute the beaches.
Mr. Garamendi. My question doesn't go to how we do it, but
is there is--obviously there is not a sufficient program in
place. The program in California is funded by the industry,
both the transportation industry as well as the development
industry. And it seems to me we must have such a program
everywhere oil is drilled and developed and explored. Otherwise
we are going to be left with wondering how are we going to deal
with this. A question for all of you: Would the industry
support such a robust program in the Gulf area?
Dr. Baugh. I think the problem is that individual companies
have difficulty taking care of these systems. This is something
that the Federal Government, MMS, should be very much involved
in and directing, but literally it may well be that you could
get a high response characteristic out of--do you know what a
cold tubing unit is? Basically, it is a rig which has three and
a half inch pipe you roll up like a hose, but it could be very
small, very portable to be able to do a lot of things, and it
could be here. It could go to California and do a lot of
things, but there is a next generation of capability that needs
to be done that is just not there, and MMS would be the
appropriate people to take a lead in that.
Mr. Milito. Congressman, if I could add to that, the
industry does support a robust program in the Gulf of Mexico.
In fact, I think a lot of the activities that you see occurring
are being occurred by the OSROs, the oil spill response
organizations. Those are funded by the industry. And if there
are improvements to be made, we need to make them.
Mr. Garamendi. Mr. Chairman, I would recommend that
legislation forthcoming deal specifically with this. California
is a model, perhaps not the best. There may be other models
around the United States and around the world but we really
must have in the Gulf and other places where oil is produced in
the marine environment a very robust, ready-to-go program in
place to deal with all the eventualities, whether it is shallow
drilling, tanker, pipes or deepwater drilling. It does not
appear to have existed previously or to exist presently in the
Gulf, and we need to do that.
A Potential Moratorium on West Coast Deepwater Drilling
My final point is just very, very quick, and that is, I am
the author of a ban on deepwater drilling, new leases off the
West Coast. I think it is absolutely essential. There is a lot
of talk about ``well, we are going to need oil.'' It is in fact
true that several, well, two to three billion barrels of oil
off the coast of California in California waters could be
accessed from the shore, and, in fact, you can get into Federal
waters, nine miles now, with directional drilling. You don't
need to be in the marine environment with all of the all too
obvious hazards associated with marine environment. And so we
ought to think about that. However, Mr. Bartlett is quite
correct. We have to move beyond oil, and that is the
fundamental policy, Mr. Rohrabacher. That is the fundamental
policy we ought to be pursuing.
Thank you very much, Mr. Chairman.
Mr. Baird. Thank you, Mr. Garamendi.
Mr. Carnahan is next. Thank you.
Blind Shear Rams
Mr. Carnahan. Thank you, Mr. Chairman and our Ranking
Member, for calling this important and timely hearing on how we
can make improvements to technology.
I wanted to start really my first question with Dr. Baugh.
We have seen many studies over the last decade that have
questioned the strength and reliability of the blind shear rams
in terms of again their--they suggest, you know, many of them
do not function properly and, in fact, Transocean indicated
that 11 of its 14 rigs in the Gulf have two blind shear rams. I
guess my question is, do you believe every blowout preventer
should have two in terms of backup, but, also, are there things
that can be done to improve the reliability, as well?
Dr. Baugh. I would have a personal preference for dual
blind shears on every BOP stack. It becomes a single point of
failure, and you would like to have no more single points of
failure than practical. It will take a while to put them on
there, and I think all industry needs to be moving in that
direction. There are things that can be done to improve the
ability to shear. We have a very small company, but we have an
intensive research program and we are personally working on
ways to improve how you would shear drill pipe and potentially
shear drill collars that are in the well. But there not only
needs to be an upgrade of the ability to shear and shear
reliably, but also there are times when you are going to put
equipment in front of the shear rams that cannot be sheared,
period, and you need to--we potentially need procedure so that,
whenever you are going to put something in front of the shear
rams that cannot be sheared, you would know it. So potentially
you stop and you wait five minutes and see if you get any flow
of oil but check your returns to make sure there is nothing
coming in from the formation before you put something in front
of the rams. So I think we need procedure and equipment
upgrades in this area.
Mr. Carnahan. And any others on the panel that want to
comment on that, please?
Mr. Pappas. I will. I would say that API recommended
practice 17-N addresses the reliability for subsea equipment,
and if we can utilize that to determine if additional
improvements need to be made of any sort that we should take
advantage of that.
Mr. Carnahan. Do you think some of the data that suggests
that the blind shear rams could only be counted on to fully
activate about half of the time, is that consistent with data
you have seen?
Mr. Pappas. That is true.
Mr. Carnahan. Any others?
Mr. McCormack. Yes, I think the reason for having two blind
shear rams is that it is very difficult to shear the tool
joint, which is the joint between the drill pipes. So if you
have them four feet apart, if one is on the drill tool joint,
the other will be on the pipe, and it is much easier to shear
that. The problem, though, if you had the drill collar, which
is the heavy part of the drill stem in the blowout preventer,
it is almost impossible to shear that.
More on Research Funding
Mr. Carnahan. Let me go on to the second question I have
that really has to do with how additional research can be paid
for. Certainly the industry has devoted billions of dollars for
research, but it has largely focused on ways to increase
production, not so much devoted to accident prevention and
mitigation. So I guess my first question is, how do we have a
more balanced mix toward that? And the other is, I guess models
of how other countries are paying for this kind of research
with regard to royalties, lease fees, and how that needs to be
better put to use, particularly at a time in recent years when
we have seen oftentimes record profits being reported from
several companies in the industry. Let me start with Mr. Milito
and we will go on from there.
Mr. Milito. Recent information from the National Science
Foundation shows just what you have said, that there are $200-
plus billion spent in 2008 on R&D among the $300 billion in
capital expenditures in the industry. While a lot of that is
spent on production capabilities, when you are looking at, you
know, BOPs and drill ships and things like that, you are
building those and designing them to have safety components
embedded in the process. Along with that, the industry as a
whole is working on best practices which provide the safety
mechanisms to be in place as we move forward. That said, in the
wake of this incident we have to look at everything. We have to
look at the opportunities and the needs to do further research
to make sure that we are operating in a safe manner, so it is
something we have to consider.
Mr. Carnahan. Mr. Pappas.
Mr. Pappas. Thank you. You know, the European Union
basically spends two percent of what it gets out of the ground
basically and turns it back into R&D. The United States doesn't
do anything near that. We have such a small percentage. From my
understanding, royalties that the U.S. government retains is
the second largest revenue producer after the IRS. We know that
that money isn't being reverted back to R&D in the energy
industry, and in my opinion, it needs to be because it is a
priority. It is definitely a priority.
Mr. Carnahan. Excuse me. Do you know what our percentage
is? You said it is way under two percent.
Mr. Pappas. I think it is 2/100ths of a percent in the oil
and gas business or something like that. So that is one point
that I would make.
The second point has to do with what percentage to put into
safety and environment versus ongoing productivity. In my
opinion, you need to have a healthy percentage, ten to 15
percent probably should be at the very least. When you have an
issue like this, you need to throw a lot more at it and you
need to throw it at it very quickly, not because you want a
quick answer, but because you want the right answer soon.
And the third question, if I am not mistaken, had to do
with how we fund this stuff and why the government should fund
more versus private companies. Private and public companies
basically answer to their stakeholders and their stockholders,
and what they look at is they look at R&D and technology
development as it relates to economics for them, and that is a
capitalist society that we are in. What the government needs to
do is, they need to assist us to move on beyond that, to look
at things that may not be economically viable as we see right
now, and lo and behold, we may learn something that may
actually open up some doors and it may actually improve it for
everybody.
Mr. Carnahan. Any others on the panel?
If not, thank you, Mr. Chairman. I yield back.
Chairman Baird. Thanks, Mr. Carnahan. To my colleagues, we
have been informed that we expect votes to start any moment
now. Mr. Hall has notified me he has a brief question he wants
to follow up. I have one brief one, and then unless there are
other burning issues----
Mr. Rohrabacher. Mr. Chairman, I have just one very brief
thing.
Chairman Baird. Well, how about we recognize Mr. Hall first
and then I will recognize Mr. Rohrabacher, and then I will
finish.
Mr. Hall. Thank you, Mr. Chairman.
Deepwater Drilling and EPAct Section 999
Well, to Mr. Lujan, I say he had a lot of good questions
but they were really questions that ought to have been directed
to the DOE, who could have answered them but they chose not to
show up, and Mr. Carnahan, I like him with his idea of how
something has to be paid for, because way back 10 or 15 years
ago, I was on the Energy and Commerce Committee and we were
looking for how to drill the depths of the Gulf, and with a lot
of outside help. The major problem we had was how we were going
to pay for it and what was there, and I sought a bill some ten
years before it was passed. It was passed into I believe the
2005 bill is when that last good energy bill was passed that
was supported by Democrats and Republicans, maybe mostly from
the energy states, but it had support by both parties there.
But they put my Ultra-Deep in as an amendment. I tried to put
it in for ten years and finally we got it in that bill. I based
it on the fact that we at that time knew the energy was there
but we didn't have the technology to get it to the top, so Mr.
Carnahan hits the ball right on the face of the bill when he
says we need to have a way to pay for it. We detected a way to
pay for it, to get people to do the technology parts and it
became a technology bill more so than an energy bill with I
think some 24 universities that were providing that technology.
We paid them with energy we got up from there that we couldn't
have gotten up without their technology, and with their
technology we could, and I think that is operating now. It is
known as the section 999 or the Ultra-Deep program.
Mr. Pappas, I think that you have some knowledge on that. I
just want to ask you one quick question. I would like you to
highlight some results of the R&D supported by the RPSEA and
how it impacted our ability to conduct safe drilling, but I
will just get right to the point and ask you those. How can the
section 999 program address technical challenges that improve
deepwater drilling safety?
Mr. Pappas. The safety side of the business, yes, sir.
Well, we have got several projects that are ongoing right now
that really look promising. One of them is a composite riser
for ultra deepwater, and what that would do is lighten the
load. It makes it easier to move. It makes it safer and makes
it more environmentally friendly. Another one would be a
fatigue performance analysis. We don't have a correct way to
look at analysis of risers and drilling equipment. It doesn't
seem to work in deepwater right now. We use empirical
equations. What we are trying to do is get down to the
fundamental physics here, and so that helps out a whole lot.
I talked about the self-standing riser system. That has to
do with interventions going back into wells that have been
drilled and trying to help them out. There is no way of doing
that economically right now, but what this does besides that is
it gets you away from the heavy vessels, the heavy lifting that
is necessary so it improves the safety of the people that are
on board doing those kinds of things. A hybrid power system
study that we are looking at would use other types of power
such as wave energy and wind energy to try to supplement some
of the power that we need for the production, not necessarily
for drilling, but for production of wells. So if you can try to
combine some of these things, perhaps they make sense so that
we can go ahead and be more efficient in the way that we do
business. So that is environmentally friendly in its own way.
Mr. Hall. Well, I might say that we had a lot of support,
technical support from men of industry just like you that are
coming and giving your time here today, one of whom is in the
audience here that was of great benefit to me as we pushed for
this. I rode with President Bush out to New Mexico to sign the
energy bill. My amendment was in that bill for the first time
in ten years. I felt good about it until, he, when he was
signing it, recognized me standing behind him as there only to
get some free coffee off of Air Force One. What he didn't know
was I had six of his coffee mugs in my briefcase at that very
time. But he signed that, and then later because he got knocked
around a lot saying that he was supporting big energy firms, he
turned and decided that he wanted to kill that bill and took a
shot at us on the Floor through Congressman Markey, which he
was turned back with the help of Republicans and Democrats,
some 245 votes to 161, and there would be other assaults on
that but it is the safe, paid-for thrust.
And the gentleman on the end suggested maybe a moratorium
on drilling. Maybe he means a moratorium on the dangerous type
of drilling, the most ultra deep, and he probably has a foot to
stand on there but I can't understand anybody that wants just a
whitewash all moratorium and knock out thousands and thousands
of jobs right now to pursue a safety that they don't know
whether it is safety or not, because like you say, we won't
know until we get there and get that out. We won't know why
their four checks didn't work but those are things that we will
find out.
I yield back. I thank you for the time.
Chairman Baird. Thank you, Mr. Hall. I have actually spoken
to former President Bush about his decision and he said that
will teach Mr. Hall to steal my darn coffee cups.
Mr. Hall. He hasn't spoken to me since.
Chairman Baird. There is a take-home lesson here.
Mr. Rohrabacher, and then I will briefly ask a question and
then we will finish up.
New Technology Development and DOE
Mr. Rohrabacher. Well, thank you very much, Mr. Chairman,
and again, I appreciate your leadership. Let us note that right
here in this room we had a hearing a couple weeks ago, and
Kevin Costner was here and he sat right over there where Mr.
McCormack is sitting and told us that he had put considerable
amount of investment of his own money into developing a
technology that could have been put to use in doing what Dr.
Baugh has described today of sucking up oil and water and
separating it, but we are not now prepared to do that, but
Kevin Costner a decade ago put his own money into that
technology and it sat there, it sat unused and not put into a
place where we could now mobilize it to help us solve this
disaster or come to grips with it. So that, number one, was
what came out of that hearing, and the Chairman and I want to
note we met with Mr. Costner later and I think that again we
must make sure we are doing our part here, and we are making
sure that the Kevin Costners of the world or the people in the
oil business were doing their part but we need to do our part
here as well.
And one of the things we need is to make sure the executive
branch, this isn't just legislative branch, it is very
disappointing that the Department of Energy was not here today
to participate. There are some serious questions that needed to
be asked and they weren't here. But I think all of our
witnesses presented some very fine ideas and insights and I
thank them, and I thank you, Mr. Chairman.
Chairman Baird. Thank you, Mr. Rohrabacher. I share that
concern. We hope to--we got a commitment from the Executive
Branch to get a witness here, and we lament the absence, as
well, but I appreciate that the Committee is focused on the
witnesses who are here.
More on Inherent Risks and Safety Improvement
I just want to thank my colleagues for their good questions
and then our witnesses. This issue of risk--you know, Mr.
McCormack, you talked about the cumulative effects of small
risk. You know, NASA some years ago when they first started the
moon mission, they set what appeared to be a microscopic
probability of risk and it was something like one out of
100,000, a really low number, and people said, ``why are you
being so rigorous?'' And they said, you know how many parts
there are on a spaceship, and you add those up and even a
little tiny valve fails and that prevents hydraulic fluid from
going somewhere else, et cetera, et cetera. And so I am
concerned about that, but then also, when we look at this, we
too often in this institution say, well, how much money did you
throw out, that shows whether you care or not, okay, and I
don't think we should do that. But conversely, if you throw
relatively little money at something relative to everything
else, it doesn't suggest a high priority. So when we look at
RPSEA's expenditures and you say, you know, you listed some
things and they all sounded impressive, they seem to have
safety as an artifact almost. Maybe it will be a direct result.
But how do we say going forward from here with RPSEA and API,
look, we lost 11 lives, we are spending hundreds of billions of
dollars over time--not hundreds of billions yet but we are
spending many billions. Let us say that. How do we focus more
on safety? And how do we know what we are doing is actually
safety and whether it is human factors and training, whether it
is better physical technology? Dr. Baugh mentioned improved
shear technology. Then, as I listened to the shear things, it
is like we have got the technology there. Unless there is
something in the way, which there often is and then it doesn't
work, so we need two of them, but there could also be something
in the way of that second one and then it doesn't work. That is
not reassuring. How do we say--I mean, if we know that, if we
know our safety equipment can be blocked from working and yet
we say to ourselves we are reassured. It is like I have a smoke
detector in my house with no batteries in it, so educate me.
How do we make sure RPSEA and API spend more attention so we
are not here five years from now or ten years from now doing
the same thing?
Mr. Pappas. Okay. Thank you very much. Mr. Chairman, as I
mentioned earlier, we didn't realize we had a problem; the
industry did not, anyway. So we have come together, and I
detailed three different scenarios that we could look at going
forward. You mentioned drilling down as a pun, but that is
exactly what we have done, and we have come up with a list, and
if I can read very quickly, okay?
Chairman Baird. Please do.
Mr. Pappas. Blowout preventer inspection and enforcement
procedures including backup equipment and reporting
requirements. Looking into all these things, by the way. Well
controls procedures, training programs and/or response
mechanisms for deepwater wells. Improved comprehensive safety
management programs need to be looked at also. Emergency
equipment certification, which was noted also, and testing
improvements, streamlined reporting systems to governmental
agencies, additional safety barriers during critical well
construction stages such as what we had, well construction
certification procedures for cement and tubular equipment,
standardized well construction procedures from wellhead to
reservoir, increased enforcement by government agencies
including the training and the development of additional
personnel. These are the ones that we identified right off the
bat that need to be looked at as a group, and we have got folks
in place to look at those.
Chairman Baird. I thank you, and I thank all the witnesses.
Did you want to add to that, Mr. Milito? Please.
Mr. Milito. Well, I was just going to point out that this
is something industry is doing, but I think an important part
of it is making sure that the regulators understand how the
technology is advancing. And as part of our process, part of
Mr. Pappas's process, MMS as a regulator should be involved in
that. They should be in our standards meetings so they can see
how the industry is working together and what the technologies
are so that the regs don't fall behind technology. In addition,
they need to see what Mr. Pappas's group is doing so that the
regulatory system is at that level, that we are not missing out
on these opportunities.
Chairman Baird. And it would seem those regulators need to
have, as Mr. McCormack pointed out, not only comparable levels
of training, but also expertise in the specific type of
environment that they are regulating rather than saying we are
going to take something from dry land put it over on deepwater
or shallow water onto deepwater, different exigencies of the
environment.
Mr. Milito. Agreed.
Closing
Chairman Baird. I want to thank the witnesses. The reason
we are having these hearings and Mr. Gordon is working so hard
and all of my colleagues are is that we don't want to see this
happen again, and if we are going to try to respond to this, we
think we need to improve our research portfolio, how it focuses
on this, and maybe our regulatory portfolio. We want to do so
in a way that is responsible and informed, not just something
for symbolic, you know, we all feel good because we had a good,
clever name to a bill. And your testimony today and your input
will be incredibly helpful, and, as always on this Committee,
the record will remain open for two weeks to give you all a
chance to respond to any questions from members or if you have
additional information you want to submit, and also for any
additional statements from members.
With that, Mr. Hall has a final comment.
Mr. Hall. I just want to say we will miss Mr. Inglis in
this Committee but we are also going to miss Dr. Ehlers and Dr.
Baird, who have been good guidance for us and helpful in
encouraging men and women like you to come and testify and give
us your time, and we are going to miss you, Doctor, very much.
I will miss some of the trips that we didn't get to make that
we always planned, but you have been a gentleman and I have
agreed with you not 100 percent of the time but when I didn't
agree with you, you were probably wrong.
Chairman Baird. I will accept that.
Mr. Hall. Or maybe I was the one that was wrong. Anyway, we
thank you for your long service here and look forward to
working with you even after you are gone. Come on back. My door
will always be open to you.
Chairman Baird. I am honored by that. Thank you.
The witnesses did an outstanding job both in preparation
and your presentation today. We are grateful for your service.
Again, if there is any information we didn't cover in the
limited time, feel free to let us know. Thank you.
With that, the Committee stands adjourned. Thanks to all my
colleagues for their good questions and input.
[Whereupon, at 12:00 p.m., the Subcommittee was adjourned.]