The indispensable Keith Hennessy the other day suggested some common-sense new safety regs for deepwater drilling. The first one was, “Require that all deepwater wells have a relief well in place before production begins.” (Keith admits this, and his other ideas, might make some drilling uneconomical). I asked our oil-safety guy what he thought of the relief-well proposal. His email:

waaay too expensive, and of dubious value to boot. Each well is tens of millions of dollars (the budget for the well that failed was $98 million… and it was over budget when it failed). Remember last year when Obama tried to make a big deal out of cutting $100M from the entire federal budget? The oil companies are spending that on a single well in the deep water. This is serious money… federal-budget kind of money. The relief well would double the cost, and the relief wells themselves could also have problems during drilling – especially for exploration wells where the company doesn’t really know what they are going to find, and where. Statistically, I wouldn’t be surprised to find that doing twice as many wells for the same production actually increases the chance of a major incident, so there would be absolutely no benefit on a statistical basis… but a hell of a lot more cost. There are other things that can (and I’m sure will) be done that would be more effective at much lower incremental cost – such as more robust blowout preventers, additional casings, etc.
BTW, the press should be blasting Obama even more than they are over the deepwater drilling BAN. There is absolutely no science to support stopping all deepwater drilling, and that is why their experts did not endorse (or even see) that recommendation. Over 90% of each well is just drilling through rock, in hopes of that the last few % will actually find a decent oil or gas reservoir. There is virtually no potential for wells to blow out in that first 90% – especially for areas where the geology is well understood (known as “development drilling” as opposed to “exploration drilling”). Most wells are development wells since only the first one is the exploratory well, and you need several wells to develop a reservoir. All the deepwater rigs in the Gulf of Mexico, and all their employees and suppliers, could be gainfully employed as we speak, drilling all the wells on their development plan to 90% of their ultimate depth, then moving to the next location, with no real environmental risk. Instead, these rigs are heading elsewhere on the globe instead of sitting idly by for 6 or more months. These things rent for $500,000 a day. They aren’t going to just sit there awaiting a politically driven panel to deliver their politically motivated decisions. The total BAN on ALL deepwater drilling activity is solely for political purposes, and has nothing to do with preventing the next disaster. ”Why can’t they drill through the stuff that they know is just rock, and keep those people employed in the US while your presidential commission does its work? Aren’t you just shipping REALLY GOOD 6-figure jobs overseas, in the hopes that people will think you are doing something effective when you really aren’t?” Those questions should be asked at every opportunity. For all Obama’s talk about saving jobs, he sure is killing these directly, and for no good reason. Instead, Obama extorts an extra $100M from BP to pay for his purely political, non-scientific decision. Meanwhile, the rigs are heading to Brazil and other non-US waters, where they will be gainfully employed when the 6 month (or however long) BAN is over. They won’t drop what they are doing in the middle of the well to come back once Obama gives the green light…