Natural Resources Committee on June 17th, 2010

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

We've either seen a practice failure or a failure of equipment in the deep water. You made some mention of the second barrier not having been inserted into the well. How does a company go about testing the blowout preventers at the pressures at the depths we're now going into? Do you test a certain amount in the lab and then simply have to put it in the field and give it a shot there?

These are very expensive pieces of equipment, extraordinarily expensive, and what they do is crush pipe. They ruin what they're engaged next to when they come across and try to clamp off a well. Is that correct?

[Kevin Roche]

It's partially correct. It's a very sophisticated piece of equipment that typically works under pressures in the 10,000 to 15,000 psi range. It is factory tested and approved to that test pressure.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Just to be clear, is 10,000 to 15,000 psi the kind of pressure you would experience at a 3,000-metre well or a 2,600-metre well?

[Kevin Roche]

Yes. The 15,000 psi blowout preventer design is currently the standard for the typical worst case. That would cover your worst case formation pressure. Bear in mind that BOP is your last resort.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

There are others.

I guess the secondary question in terms of the equipment and the backup, the so-called fail-safe mechanisms--I'm not sure that British Petroleum can use that exact term anymore--is that it is also operating at that great depth. What BP has told the world is that capping the well with the equipment--the submarines and whatnot--is so much more difficult than it would be at a depth of 100 metres. When you're down at 1,500 metres, you can't have manned subs. You have to use different things. Everything becomes a greater challenge. That's recognized by the industry. Is that correct?

[Kevin Roche]

That is correct.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

The industry has been operating at much shallower depths for most of its history. We have been drilling in the offshore for a long time but not at these types of depths for the large majority of wells. Is that fair to say?

[Kevin Roche]

In the last ten years, it has been increasing. That's correct.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

In some senses, we're learning as we go as an industry, because things change. BP is saying that it's learning a lot right now. It's very expensive learning.

The association you represent, the international body, also operates in the gulf. Your association was comfortable operating under the rules and regulations in the gulf. They felt they were safe. They felt they did enough to protect the environment and the workers. Is that correct?

[Kevin Roche]

That is correct.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Is there any difference between the regulations in the U.S. and the ones in Canada?

[Kevin Roche]

As I mentioned earlier, my experience is that in Canada there is a lot more engagement with the regulatory body. To your first question about pressure testing, you purchase a big piece of equipment that's designed to a maximum pressure. Before you ever run it into the well, you have to pressure test it. Every seven days you have to function test it to make sure that all of those things work. Every 14 days you have to pressure test to its maximum pressure rating for the casing you're going to be using. It's tested all the time.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

That's interesting.

Have you read the recent Norwegian report on blowout preventers that was just released?

[Kevin Roche]

No, I haven't.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

It bears some interest, because they point out some significant concerns with what's happening.

In a letter that you wrote to Ken Salazar, the Secretary of the Interior, your organization wrote, on June 4: “The 30 deepwater rigs in the Gulf of Mexico are operating according to established industry best practices and emphasize the best possible safety and environmental practices.”

We keep hearing that Canada has the best rules and regulations in the world. Your association also believes this of the rules and regulations guiding practices in Mexico. That's simply not enough. There also have to be the practices and the vigilance.

I want to get to Ms. Fraser for a second, because what you said disturbs me in terms of the public's ability--the stakeholders' ability--to get at information about spills and what's happening in real time with oil companies. You said there is a caveat in subsection 119(2) of the Atlantic accord. Essentially, the C-NLOPB has to go to the company and ask if it wants to release its information. The company invariably says no, and then they turn to the public and interest groups and ask.

Is that correct?

[Dr. Gail Fraser]

That is correct. In fact, I started this work in 2002, and in 2005 they were not releasing oil spill data on a per project basis. They were just saying there were 16 spills on the Grand Banks this year and this is how much has spilled. So that completely prevented the linking of environmental assessments to particular projects. But now apparently, from what I have heard from the chair and the media recently, they do have to go to these operators and ask their permission to disclose these spills.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

So I don't understand—

[The Chair, Conservative, Leon Benoit]

Mr. Cullen, I'm sorry, but your time is up. I've let you go a little beyond it.

We go now to Mike Allen from the government side for up to seven minutes.

Go ahead, please.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Thank you, Chair, and thanks to our witnesses for being here today.

Mr. Roche, I just want to follow up on a couple of comments you made with respect to the regulatory aspect of things.

You have the drilling fluid and the casing. So there's built-in redundancy there. Is the relief well a third level of redundancy after something would be in operation?

[Kevin Roche]

No. By current practice the relief well is, and has only been, deployed as a means of providing an alternative conduit for the fluid to go after you've lost control of the well.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Okay.

You were just starting to comment on the regulatory oversight, and you were talking about seven days and 14 days. As a drilling contractor, you said there's significant observer status.

Who are the observers, and can you elaborate a little more on what are the controls exercised by the regulatory authorities while you're drilling? Then I want to get into the hand-off to the operator.

[Kevin Roche]

An example is that the BOP has to be pressure tested and function tested every seven and 14 days, respectively. Typically, if you're in the middle of an operation, that's difficult to do; and the only way you can get a dispensation from doing that is to seek approval from the regulator. The idea is that you test this big piece of equipment before it goes to the bottom, then you put it on the bottom, and then every seven days you make sure it's working. This goes back to the proper maintenance and control of the critical equipment you're going to use in your barrier provisions.

You cannot delay or defer that confirmation of the integrity of the equipment without approval of the regulators. Every day you do a minute by minute morning report for the day and you send in the report at six o'clock the next morning. The regulators, the operators, and the drilling contractors all see those details every day.

So you report when you make those tests, and if there's a delay beyond 14 days in doing a pressure test, you get picked on for that. The regulator will go to the operator and say, “You've missed your deadline. Stop what you're doing and do a test.” But typically it runs well.

Did I answer your question?

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Yes.

You talked a lot about your five tools, and a couple were based on people skills and personal competencies in your company. Can you talk a little more about those personal competencies.

I'd also like to understand the following. Once the well is drilled, you as a drilling contractor hand it off to the operator. How does the regulation follow that hand-off to the operator to ensure that the same levels of control are in place?

[Kevin Roche]

That's a good question, but it illustrates what I was trying to do in my presentation. There's confusion about the whole hierarchy of accountability and responsibility.

There is no actual handover, as such. The only handover that happens when the well is drilled is that you take it from the drilling team and hand it over to the production team—if your well is a producer and it's hooked up to infrastructure that allows the oil and gas to flow. Typically the operator and the drilling contractor and a number of other subcontractors, such as the cementing people, all work together daily to manage the progress of that well. There is no actual hand-off to the operator as such at the end of the well. What you do is you move locations when the well is finished and you go to another location and you restart the process.

But the operator is accountable for the day-to-day running of that plan to execute that well, day in and day out. The contractors who work for the operator follow the plan, as instructed and as contracted. So that accountability never changes. As I said, the only subtle change is that you turn it from a drilling operation over to a production operation. But still, the operator is accountable in that transition.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Okay.

You talked about these operating practices, the casing, and the cement, and you commented a little bit about what happened in the gulf. If standard operating practices such as the ones you use had been followed, in your view, would we have had that problem in the gulf?