API Blogger Conference Call: Deepwater Horizon - 5.6.10

8/9/2019 API Blogger Conference Call: Deepwater Horizon - 5.6.10

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API

BLOGGER CONFERENCE CALL

MODERATOR:Jane Van Ryan, API

SPEAKERS:

Richard Ranger, Upstream/Industry Operations, API

Holly Hopkins, Upstream/Industry Operations, API

Robin Rorick, Group Director, Marine & Security, API

Allison Nyholm, Oil Spill Response Veteran, API

John Felmy, Chief Economist, API

John Wagner, Upstream Consultant, API

Thursday, May 6, 2010

Transcript by

Federal News Service

Washington, D.C.


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Bloggers on the call included Bear from The Absurd Report, Bob McCarty from Bob McCarty

Writes, Brian Westenhaus from New Energy and Fuel, Bruce McQuain from Questions and

Observations, Gail Tverberg from The Oil Drum, Geoff Styles from Energy Outlook, James Shott

from Observations, Jazz Shaw from The Moderate Voice, Joy McCann from Little Miss Attila,

Nick Chambers from Gas 2.0, Rich Trzupek from Big Journalism, Steve Kijak from Rightside VA,

Steve Maley from Redstate and Tim Hurst from Ecopolitology

00:15 JANE VAN RYAN: Hello, this is Jane Van Ryan from API. It sounds like we

have a few people on the phone today. Welcome.

(Cross talk.)

00:24 MS. VAN RYAN: Hi there. Why dont we start by finding out whos on the call?

First of all, were in a conference room here at API. I have several experts in the room with us,some of whose names I sent out to you by e-mail last time. However, there has been a bit of a

change in the lineup. Erik Milito is not with us today, but I do have Robin Rorick, John Felmy,

Holly Hopkins, whos going to be on the telephone with us, Allison Nyholm, Richard Ranger,whos also with our upstream department and is extremely knowledgeable about offshore

operations, and so on.

So I think well be able to respond to whatever questions you have today. One thing Iwant to mention to you is, if you are not asking a question, please hit *6 to mute your phone,

then hit #6 to un-mute. In the past, as you know, weve had some audio difficulties with peoplewho have not muted the phone. Again, please mute your phones by hitting *6. All right? Okay.

Lets find out who we have on the call with us today. Whod like to go first?

01:35 GAIL TVERBERG: This is Gail Tverberg from The Oil Drum.

01:36 MS. VAN RYAN: Great. Thank you, Gail. Who else?

01:40 NICK CHAMBERS: This is Nick Chambers with Gas 2.0.

01:41 MS. VAN RYAN: Thank you, Nick. Anyone else?

01:45 JAMES SHOTT: Yes, James Shott, Observations.

01:47 MS. VAN RYAN: Wonderful, good to talk to you. Lets see here, Im checkingyou all off the list to make sure that I have everybody. Next?

01:54 STEVE MALEY: This is Steve Maley at Badger Oil, blog at RedState and joinedby Dale Clark, whos our drilling engineer.

02:03 MS. VAN RYAN: Very good. All right, who else do we have?

02:07 BRIAN WESTENHAUS: Brian Westenhaus.


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02:09 MS. VAN RYAN: Great, thanks, Brian.

02:12 MR. WESTENHAUS: Youre welcome. Hi, Gail.

02:14 MS. TVERBERG: Hi, Brian.

02:16 MS. VAN RYAN: Who else do we have?

(Cross talk.)

02:19 JAZZ SHAW: Jazz Shawwith the George Phillips campaign.

02:20 MS. VAN RYAN: Okay, Jezz, I heard you. And then Ive missed someone else?

02:24 BOB MCCARTY: Bob McCarty at bobmccarty.com.

02:27 MS. VAN RYAN: Gotcha, okay.

02:30 STEVE KIJAK: Steve Kijak, Rightside VA.

02:33 MS. VAN RYAN: Great.

02:36 GEOFF STYLES: Geoff Styles, Energy Outlook.

02:37 MS. VAN RYAN: Gotcha, Geoff.

02:41 TIM HURST: Tim Hurst from Ecopolitology.

02:44 MS. VAN RYAN: Great. Thank you.

02:48 BRUCE MCQUAIN: Bruce McQuain.

02:50 MS. VAN RYAN: Oh, good. Thanks, gotcha on here. Who else? Maybe a fewothers are there, maybe some that will join us in progress today. Why dont we go ahead and getstarted? Were going to go about an hour. Well be happy to take any questions that you have.

If you saw the note that I sent out last night, then youre aware of the fact that werehoping to limit questions to one apiece until everybody has a chance to at least ask something

before we open it up really more broadly than that. Holly, are you on the phoneHolly

Hopkins? Okay, shell be joining us, then, in progress. Holly is an API person whos going tobe joining us

03:37 HOLLY HOPKINS: Yeah, I am. I was trying to un-mute. (Chuckles.) Im here.


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03:42 MS. VAN RYAN: Holly, why dont we start with you,because youll be able to

provide a quickand please keep it briefupdate as to whats happening the information

thats been released by the joint unified command.

03:54 MS. HOPKINS: Okay. As of this morning at 8:30 a.m. Central Time, there were

270 vessels involved in the operations, including skimming andIm sorry includingskimmers and barges, and 788,171 feet of boom have been deployed, with another approximately

1.5 million feet available.

Presently, 1.2 million gallons of oily water mix have been recovered, to date. 190,285

gallons of dispersant have been used; 55,611 gallons remain available. There are currently 10

ROVs operating. Over 6,700 personnel and an additional 2,500 volunteers have been trained, todate. There are 10 staging areas theyre operating out of.

As you probably all know, one of the three points of oil that were leaking have been

closed. There only are currently two areas that are leaking. The deployment and assembly of the

subsea containment system has begun, and they hope to have that operational by Monday. Theyare also still working with the ROVsthe remotely operated vehiclesto shut in the blowout

preventers. Thats ongoing.

The drilling of the first relief well began Sunday afternoon and has been ongoing for the

last several days. Yesterday, they had controlled burns that happened, and skimming continues.

Thats probably the latest update on operations so far.

05:37 MS. VAN RYAN: Okay, very good. Thank you. When you ask a question,

please state your name so well be able to have that information for the transcript. As you know,

this entire conversation will be recorded and well be providing an audio file and a transcript

online at energytomorrow.org, on the blog. Well hopefully have it up Friday afternoon so youllhave an opportunity to then use that whichever way you want to use itlink to it or pull quotes

or whatever. So who would like to ask the first question?

06:09 MS. TVERBERG: This is Gail. I was wondering, have there been any recent

studies done on the safety of the dispersants? I know there was an ABC news report yesterday

claiming that BP wasnt going to use any more until there were some more environmental testsdone, but that doesnt seem to be consistent withsome other stories Ive seen. But anyhow, just

generally, the safety issue.

06:34 ALLISON NYHOLM: Right, this is Allison Nyholm. And I dont have anyinformation relative to the reports that ABC put out. I can tell you that there is varying

information relative to toxicity. And I do know that theyre consistently looking at making

dispersant available. It is my understanding theyre using dispersants to affect the oil.

We know theyve done it sub-surface, as well as on the surface. Getting back to the

toxicity question, there is no real data associated with direct toxicity that we know of. Thats

extrapolated information. And I believe whats being used is information directly on thecontainers of Corexit or anything else thats being used. And that really is sort of a red herring,


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in terms of toxic levels. This dispersant is being used not at those concentration levels,

obviously. And so were just very careful to not use that information we dont want to havethat information be put out there incorrectly.

08:18 MS. HOPKINS: This is Holly Hopkins. If I may add a few comments, I think

what the news was reporting is related to the subsea diserseants that were being done. And asyou probably already know, BP had a pre-approved authority to use or there was a pre-

approved plan in place to use dispersants on the surface. And so that was done and is still being

done, and those approvals are in place.

What has stopped is the subsea introduction of dispersants, because this had not been pre-

approved and had not been done. They did put together a proposal that was approved, and whatit consisted of was, is that they would do two test dispersements, you know, and those two tests

have been completed. And then the agreement was to let all of the relevant agencies review

those tests and review the information that occurred during those, make a further decision on

whether to continue using the subsea dispersant. So I think that might be what they were

reporting.

09:24 MS. TVERBERG: Oh, okay. That sounds good.

09:27 MS. VAN RYAN: Okay, who has a question?

09:30 MR. MALEY: This is Steve Maley from RedState.

09:33 MS. VAN RYAN: Yes, Steve?

09:34 MR. MALEY: Could you give us a little more insight into how the one source

thats been controlled has been controlled? I assume that was with an ROV. And was it thejointed drill pipe that weve seen pictures of?

09:50 MS. VAN RYAN: Steve, this is Jane. Im not sure that anybody here in thisroom, unfortunately, would be able to give you an eyewitness account, basically, on what

happened. I know that BP has commented on that. Based on the news release that they put outand some published reports, apparently, they used ROVs to saw off, if you will, the end of the

drill pipe. And they were able to put a very heavy-duty valve on the end of the pipe.

Now, that does not preclude the two other leaks coming from this crumpled and bent pipe

from continuing to spill oil into the Gulf. That is continuing to happen, unfortunately. But thatsprecisely what apparently has occurred. They used an ROVat least one, perhaps moreto

shear off the end of the drill pipe and were able to place a valve on the end of it, therefore closingthat portion off. So I hope that answers your question, but again

10:47 MR. MALEY: Thank you.

10:48 MS. VAN RYAN: thats coming directly from BP and not really from API,sorry.


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10:53 MR. MCQUAIN: This is Bruce McQuain with Questions and Observations. Myquestion has more to do with the future, I guess. My background is military plans and

operations, and when we wrote plans and operations, we always had a go to hell plan, you

know, in which the worst-case scenario was imagined and planned for.

I get the impression that whats going on out there is definitely the worst-case scenario

for the petroleum industry. And my question is, why wasnt there a go to hell plan, or if there

was, did it envision this? And in the future, will the industry address this type of a scenario andhave teams and equipment available to address it more quickly?

11:40 RICHARD RANGER: Bruce, this is Richard Ranger responding to your question.And I think really, the array of vessels, the number of personnel, the amount of equipment being

deployed indicates that it is execution of what I think you could call the go to hell level of an

oil spill contingency plan. The plans that are developedBP, other companies in the industry

that have them are, you know, routinely re-examined and adjusted based on lessons learned,

most usually from drills and exercises.

And the drills and exercisebecause, you know, our record, certainly, up until thishorrible incident has been a record where there have been very few spills of scale against which

to test a plan. So the drills and exercises themselves are carried out at different scales. Theyrecarried out not simply by the companies, but in collaboration with government officials, be it

usually involving, for the OCS, the Coast Guard and Minerals Management S ervice. Theres atremendous transfer of knowledge throughout industry and between industry and government.

Now, so the question, in terms of scale here, was there access to equipment for animmediate response? Yes, there was. Was there access to additional, out-of-region equipment to

cascade into the Gulf of Mexico to augment the initial response? Yes, there was. Has there been

a scaling up of the government or public side of the response across Coast Guard districts and

involving additional personnel from both federal and state agencies? Yes, there has been.

This event has been moving at a very fast pace, but I think it would be mistaken to

suggest that there hasnt been, really, a very complete commitment, certainly, of the resourcesthat BP has available, the resources that the key government agencies have available, and most

importantly, the resources, the expertise and the personnel that the response organizations, like

MSRC, have available. So I would argue its been demonstrating scalability of the responseplan.

14:03 MR. MCQUAIN: Can I ask a follow-up, or

14:05 MS. VAN RYAN: Sure, go ahead.

14:07 MR. MCQUAIN: Yeah, I guess what Im getting at, Richard, is the fact that

theres been its been almost a month fabricating this dome thats going to be placed over thewellhead. And while I appreciate the fact that people have responded and are out there doing the


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best they can, and that we dont know whether this dome is going to work or not, that kind of

gets to my point.

If this dome had been available at the time of the accident, and if it, in some way, had

been tested or we knew more about it, wouldnt that type of a response have been much more, I

guess, impressive than what were seeing now?

14:50 MR. RANGER: Well, I guess, Bruce, in response to that, with your military

background, I forget how the words go, but youre probably familiar with the adage that youhave a plan and once the gunfire starts, you throw the plan away. And I think what there has not

been before is this type of catastrophic event effecting a failure of the drilling rig.

The sinking of the rig, the consequent bending of the riser and the creation of a situation

where youve got this, you know, significant leak of oil from below the sea floor and you have to

put something over that leakso this is kind of a serial number one effort that, I think with all of

the anticipation and all of the forward planning, this particular scenario, perhaps, hadnt been

envisioned before.

So your questions a good one. There are things that are going to be learned about the

performance and effectiveness of this particular piece of equipment, but I think its a significant

achievement that, in the span of a very few days, this idea was conceived, this piece of

equipments been fabricated and being brought to the location. So yes, I would agree youre

partly right, but I think the response that BP and others have put together shows the adaptabilityof people and expertise when confronted with the kind of situation we have here.

16:17 MR. MCQUAIN: Thank you.

16:19 MS. VAN RYAN: Another question, please.

16:20 MR. CHAMBERS: Yeah, this is Nick Chambers with Gas 2.0. You know, therewas some controversy recently aboutI think it was on Huffington Post where they claimed that

the oil industry had resisted the Minerals Management Service from promulgating new offshore

safety rules last year. And I think Jane, you responded with a blog post that said that wasnt true.

And I read through that letter that the oil industry wrote to the MMS, and it seems like

what theyre saying is that its just the rules are far too confusing and thats what you wereresisting, but that the key issue is that worker behavior is to blame in most of these incidents, and

that, that wasnt addressed in this MMS rule-making. Would you say thatand maybe you

dont know yet would you say that worker behavior was what caused this incident, or was it

something else?

17:12 MR. RANGER: This is Richard again. You know, were a long way away from

understanding the cause of this incident, and I think its not helpful for us to presume any causes

or factors. Theres a tremendous amount of effort going on now to try to find out what didhappen and why. I would say this with respect to the kind of front end of your question: Our


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industry, like any other closely regulated industry, is engaged in ongoing dialogue with the

agencies that regulate us.

We havewe promulgate, through API, you know, a considerable number of standards

and recommended practices that are developed by the subject-matter experts from both within

our industry, as well as government and third parties. And that process is one that we have directinvolvement in from Minerals Management Service. From time to time, inevitably, the questions

come up, do you set a rule here and prescribe something, or do you allow alternatives to be

considered by an operator based upon best professional judgment?

And I think one of the things that some in the media are running with, is that there are

pointsand these occur over time in connection with offshore exploration and production where we have expert-to-expert dialogue and conversation with the agencies over the

appropriateness, in certain circumstances, of having prescriptive solutions, versus alternatives

that operators can use, and then, that the government agencyin this case, MMScan evaluate

and oversee.

So I think thats the kind of dialogue that was going on in this instance, and again, since

were a long way away from finding the cause, its really, I think, impossible to say whathappened, what failed, what took place in this instance.

19:14 MS. VAN RYAN: Let me interject a question because its been sent to me on my

BlackBerry from one of the bloggers on the call today. Ill read it and then Im going to provide

a partial answer. Then, perhaps, others in the room can add onto that. The question is, AP saysthat BP was granted an exemption from filing a site-specific blowout plan and implied that the

Minerals Management Service failed to do its job because of its, quote, cozy relationship,

unquote, with the oil industry. And they wanted to know if somebody could comment on that.

But the first thing I want to say about that is that, interestingly enough, Commandant

Adm. Thad Allen was interviewed by the Houston Chronicle yesterday, and I noticed in todaysHouston Chronicle article that he refers specifically to a plan that was filed by BP with the

Minerals Management Service. But does anybody else here in the room have any other comment

on thatknow anything about it?

20:13 MR. RANGER: Im about a day behind that Houston Chronicle article.

(Laughter.)

20:17 MS. VAN RYAN: Not a problem.

20:18 MR. RANGER: I would add this smallis that thewhat companies do whenthey submit an exploration plan is, they do describe their plan of operations for drilling. And

sometimes, that directly speaks to, sometimes it incorporates by reference, other actions that the

companies take.

And with respect to well control generally, you know, there are various measures that

companies take as a standard practice to control well pressures to prevent blowouts. They do so


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in shallow water; they do so in deep water; and of course, they do so onshore. Its really

presumptive, at this point, to say what failed, because we simply dont have that information.

And theres going to so here again, people are, I think, trying to run with a narrative pointing at

some particular act or failure when, in fact, we simply dont have a causal chain established.

21:21 MS. VAN RYAN: All right. There is another follow-up question, and its to

21:25 MS. HOPKINS: Jane, if I may addthis is Holly, Im sorry. If I may add a

comment to Richards, while I completely agree that its premature to blame a cause, part of the

article, I think, was referring to MMSs requirements for a backup system. But MMS does notprescribe what type of backup system for the blowout preventer is required, and they leave that

decision up to the individual companies as a business decision. And so MMSIm sorry, BPdidIm sorry, the blowout preventer did have backup systems. They just werent theyre notspecifically prescribed by MMS.

22:00 MS. VAN RYAN: Thank you, thats a good point, Holly.

22:02 MR. RANGER: Thanks, Holly.

22:03 MS. VAN RYAN: All right. I do have a follow-up question, so if you dont

mind, Ill go ahead and give this one. This is coming from a blogger on the call. There areallegations out there that the Department of the Interior waived some safety checks for BP. Has

API had an opportunity to look into that, with everything else thats going on? The answer tothat question, from the head-shaking around the table, is no. Sorry, thats one were not going tobe able to respond to today. We just dont have the information. All right, who else has a

question?

22:32 MR. SHOTT: This is James Shott with Observations. Im curious as to whatfactor, or what influence there might be by the fact that the moratorium has pushed drilling

further and further offshore and into deeper and deeper water, and wondering, you know, how if this project hadif this problem had occurred in shallower water, how would that you know,

would that have had any effect on the cleanup and the stopping the leak and so forth?

23:02 MR. RANGER: James, this is Richard, and Ill take a whack at your question andanyone else can follow up. I wouldnt establish a cause between deepwater exploration and the

discoveries of new resources weve found in the past 10 or 15 years in Gulf deepwater directlywith the moratorium.

Certainly, weve not had the opportunity because of the moratorium to search for new

resources in a lot of other areas of the Outer Continental Shelf. But I think what the Gulfdeepwater experience has represented has been sort of a systematic gain in knowledge, testing of

new ideas, lessons learned from wells drilled in shallower-depth resources; encountered in

shallower-depths, some projections of where there might be new exploration targets.

And its very much, I think, a science-driven and experienced-driven quest for new

resources in the deepwater Gulf that has been of tremendous benefit to our energy security and


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our ability to provide new energy supplies. And obviously, that benefit has a big asterisk next to

it because of this event, this incident, involving the Deepwater Horizon.

But really, I think that the deepwater experience has been driven by a quest for new

resources and an application of lessons learned at shallower depths and theories tested to

discover new resources that have been of benefit to the nation and the economy.

24:48 MS. NYHOLM: This is Allison Nyholm, and just as a follow up and an additional

comment on the response, I would say that with Deepwater Horizon were realizing that distanceis a factor and that needs to be factored into a responseresponse timing. That said, I think that

the industry has really rallied on all resources to bear, as well.

25:17 MS. VAN RYAN: Thank you, Allison. We have another question.

25:20 MR. WESTENHAUS: Brian Westenhaus, New Energy and Fuel.

25:24 MS. VAN RYAN: Go right ahead, Brian.

25:29 MR. WESTENHAUS: It seems that thewell, what I gather from the news is theoil is getting away because the blowout preventer failed. Is there some information as why yet,

and is there an ongoing effort to get the thing to work?

25:43 MR. RANGER: This is Richard, again. Brian, no, again, this gets back to thisquestion of what mix of actions, procedures or failure to follow procedures or equipment failures

cumulatively led to this horrible incident. And we dont have that information. So I guess it

would be, again, very premature for us to comment lacking that information as to why theblowout prevents did not seal as well.

26:22 MS. VAN RYAN: There have been reports, Brian, of course, that its partially

sealed. So its really not known what has happened down there. I think itll be some time.There are investigationsat least two that apparently are underway and well hope to haveanswers to your questions here eventually.

26:39 MS. HOPKINS: And I might addIm sorry, this is Holly as I might add, yes,

efforts are continuously ongoing to close the preventerto close the blowout preventer (BOP)

by the ROV. That work continues to go on until the oil is stopped. So they are currently downthere with ROV working on the blowout preventer trying to get it to stop.

27:03 MR. WESTENHAUS: Is the reservoir slowing down or reducing pressure?

27:09 MS. HOPKINS: No, they have notthe flow has not changed. As Jane indicated,

apparently, they were able to activate part of the BOP and part of it did shut in. But the sealing

elements apparently are not working or somethingtheres another problem because, as we

know, the oil is still flowing.

27:40 MS. VAN RYAN: Next question?


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27:46 MR. HURST: Yeah, this is Tim Hurst from Ecopolitology. There are a fewreports or I guess pundit comments in the days after the accident that this could have been some

kind of inside job or sabotage of some sort committed by environmentalists. I was hopingI

understand that were still a long way from figuring out a cause here. I was hoping someone

from API could comment on how easy or difficult it would be for someone to get on a offshoreoil rig and sabotage it somehow.

28:21 MR. RANGER: We have no information on that, Tim, but theits real hard to

get on rigs. You dont just drive a boat up to them and get off on the ladder. So the people who

are on the rig are people who are on a manifest who have a job to do.

28:44 ROBIN RORICK: And I would addthis is Robin RORICKI would agree

with Richard. Were talking probably well in excess of 80 feet from the barge to the lowest

point on the platform that you would have to scale. These platforms are in the middle of the

water so its not like you can really sneak up on them.

And then it isthere are crews that work closely with one another on these rigs, so if

there was someone who should not have been there, that also would have been fairly obvious.

And then lastly, I would say that this equipment is extremely complicated. And it would

take someone with a lot of knowledge and a lot of time to really conduct any sort of sabotage.

Now, that being said, I have no idea what the cause of this incident is and I cant really speak towhether or not this was or was not the result of any sort of sabotage.

29:42 MS. VAN RYAN: Do we have another question or a follow-up to that? (Pause.)

All right. Im going to ask a question and it came from a blogger; it came in this morning.Holly, this one might be one that you can respond to:

It has been reported that our government did not have required fire booms on hand todeal with the initial incident before the slick became so large. And they perhaps could have

started oil-burning techniques earlier if theyd had more fire boom. Have you seen anything,

heard anything in the updates that would indicate that thats correct?

30:22 MS. HOPKINS: To be honest, no, I cant really comment on that. I believe that

there was fire boom available. Im sorry, I just dont have the answers to that. I know that therehas been quite a bit of discussion about it in the media but I just dont have those facts.

30:37 MS. VAN RYAN: And Allison, do you have a comment?

30:39 MS. NYHOLM: Yeah, I think I can respond to it a bit. It did take them time to

get the permit. I was told that it took a couple days to get the permit. Once the permit was in

place, then they had to mobilize. They did have the necessary boom available according to the

folks that I spoke with. And then once that was all in place, then they gotthey made sure thatthe conditions were proper for conducting the in-situ burn. So really, it happened in a pretty

rapid manner. I think everyone in the industry felt pretty good about the timeliness of it.


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31:20 MS. VAN RYAN: And then there were weather issues, too.

31:23 MS. NYHOLM: Well, right, once the conditions were proper. And by that, I

meant weather conditions. And so Robin Rorick just mentioned that it might be worthwhile

discussing what the fire boom is. And basically, its that boom thats used to contain a portion ofthe oil so that then an in-situ burn can take place.

31:44 MR. RANGER: Its got a surface material that resists heat for a longer period oftime. Regular boom is essentiallyit has flotation and its surface is a plastic skin. And so itsflammable and meltable whereas fire boom uses a mix of materials that resist flammability.

The one other thing about boom and equipment generally, however, thats important isthe main resource for fire boom skimmers, regular boom, shoreline boom and so forth is

industry. Industry maintains these stockpiles and its through either the Marine Spill Response

Corporation and in some other cases the more regional, port-based cooperatives.

The government hasthe Coast Guard maintains some assets, its true. I think some

other agencies do. But the vast majority of the equipment that has been brought to bear on thisincident comes from ventures that are supported by funding that the oil-and-gas industry

provides through sort of membership bases both in the U.S. and internationally. There is some

international equipment thats come in as well.

33:09 MS. NYHOLM: But again, that fire boom was available.

33:12 MR. RORICK: This is Robin RORICK. One thing that I would add is thatoftentimes, these issues with the availability of equipment or material are portrayed as, this

would be a panacea, or, this would cause rapid reductions. And you really have to be careful

with comments like that because the reality of it is, is that in any response activity, there are

multiple tools in the toolbox, if you will, of which booms, three or four different types ofskimmers, fire boom, dispersants, in-situ burning. There are multiple tools in the toolbox and the

most effective response is the one where the spill is going to be analyzed and you use any

combination of all of that equipment effectively.

So my point, I think, is just to say that you really have to look at the entire suite of

options that are available and utilize them to their full potential and dont fall into this trap ofthinking that simply because you may have been a day or an hour late, then you would have

yielded all of these great results. Its a matter of keeping it in perspective, I think.

34:24 MR. RANGER: Yeah, I think thats very good, Robin, and this is Richard, and

getting back to Bruces point. I really think the combat analogy is very, very valid. Youve got

a lot of equipment, youve got lines of supply that are converging on points that are 50, 60 milesoffshore; youve got all of these vessels which by the way, like the slick itself are moving in

three dimensions. And so some of your actions are only partially successful at first orcompromised by time or something like that.


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But I think the standpoint of access and availability of equipment, this incident has

demonstrated the capabilities of the oil-spill response community to bring massive amounts ofresources to bear on a very, very difficult and large-scale incident.

35:12 MS. VAN RYAN: Do we have another question?

35:13 MR. STYLES: Hi, Jane, this is Geoff Styles. Jane, you can imagine Ive got anumber of questions here, but in the interest of restraint, Ive been holding myself back. And

several of them really boil down to the issue of risk and the quantification of risk. And, you

know, were hearing a lot about what peoples perception now of the risk of offshore drilling is.

And its clear that after the fact the risk of this accident is 100 percent; it happened. But

its also not clearwhat this accident tells us about the ex ante assessment of risk of this kind of

accident, particularly in conjunction with a similar accident in the Timor Sea last year.

So Id be interested in hearing what you can say about the larger issue of assessing risk

here and specifically looking at how many wells, how many deepwater wells have been drilledglobally and how many have been drilled in the Gulf of Mexico to help try to establish whats

the universe here out of which this is one example? Is this a one in 100 shot? A one in athousand shot? A one in 10,000or so on.

And then, against that, you know, have you looked at anything on the relative risk of if

we stopped offshore drilling in the U.S., what does that translate into in terms of increased tankerdeliveries? My guess is about 270 additional VLCCs a year. And what does that translate into

in terms of the risk of an oil spill from a tanker, which is clearly much higher than the risk from

an oil platform. Thats a bunch of stuff but those are sort of half of my questions all in one.

37:01 MS. VAN RYAN: I think John Felmy is going to take a shot at this.

37:04 JOHN FELMY: Well, I think I can only contribute a little bit on that, Geoff. Ofcourse, risk is very much a function of a lot of things. And one of the things about going forward

on risk is, you know, we may be able to have a better assessment once the whole review is done,

as has been said before.

In terms of the numbers, if memory serves me, MMS listed about 500 discoveries in the

Gulf greater than 1,000 feet. So in terms of their terminology for deep water, thats theircataloguing of it up to I think the deepest discovery is just a little less than 10,000 feet of water.

In terms of worldwide, of course, youve got tremendous amounts of activity going in various

parts of the world, such as offshore Brazil, offshore West Africa and so on. But I dont have

those numbers at my fingertips to give you an assessment.

In terms ofyou know, this is the first incident of its kind. This is the first its happenedin 40 years of this magnitude. So clearly we have been following that we thought everything has

its place. And so gauging risk going forward, you know, its too soon to tell in terms of what wecan learn from the actual analysis of it.


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But clearly, the one thing that weve got to keep in mind is that this is a tragic accident,

that we need to learn from it and we need to stop it and we need to clean it up and we need tomove forward because the fundamentals of our energy situation havent changed. We get 30percent of our offshore oil from the Gulfor 30 percent of our production from the Gulf. And

all forecasts indicate that were going to continue to need oil for the foreseeable future and so we

need to put it in that context in terms of what we need to do to move forward in a positive way.

38:56 MR. RORICK: And Geoff, this is Robin. You know, what I would probably add

is that while I am not a risk expert, I do think its helpful to sort of put this incident in

perspective and if you look at production over the last 60 years, I mean, MMS reports that weveproduced about 15.5 billion barrels of crude oil. And if you looked at the amount of oil that was

released to the environment fromand this is the Gulf of Mexicoand if you look at the last 40

years as the oil that was releasing into the environment relative to production, thats about .001percent.

So I mean, if youI think you really have towhile this isI would agree with John

that you really have toour firstour attention right now has to be directed towards theresponse. We need to stop this, clean it up and figure out what happened and then make sure that

if there are any gaps that we address those. But I also think its important to keep this incident inperspective relative to how much crude has been produced and to the overall performance of the

industry.

39:54 MR. STYLES: Yeah, and I guess just as a follow-upand I agree witheverything you said there and at the same time, its very clear that the policy debate about whatto do about offshore drilling has already started. You know, unfortunately were not going to

have the luxury of waiting until the results are in. Just as a follow-up though, can anybody talkabout any similarities and differences between this accident and the accident that occurred in the

Timor Sea last year?

40:24 MR. RANGER: Geoff, this is Richard. No, not yet because I think they landed onthe failure in the cementing program in the Timor Sea that theres, I believe, pretty goodconfidence is the source of that particular loss of well control. We dont have that information in

connection with this incident.

40:49 MR. STYLES: Thank you.

40:51 MR. RANGER: Cementing programeverybody understands what I mean by

cementing program?

40:55 MS. VAN RYAN: It might be helpful to explain it, Richard.

40:57 MR. RANGER: Yeah. Fundamentally, the major lines of defense, if you will

the major lines of controlling and addressing the risk of drilling are the casing program the

setting of steel pipe that is cemented to the surrounding rock through which the fluid that wouldbe produced from the well or that would try to escape from the well are controlled. And they are

controlledso you have the steel pipe cemented to rock and if you think that through, there are


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sort of two basic categories of concern or interest: the integrity of the pipe and the integrity of

the cementing job that locks that pipe to the surrounding rock.

And what can happen if you have a poor cementing job is that you create a new weak

area through which a high-pressure fluid and/or gases can migrate and can either further crack

the cement, perhaps cause a change in pressure that would go beyond the tolerance of the pipe tothe environment fromand this is the Gulf of Mexicoand if you look at the last 40 years as

the oil that was releasing into the environment relative to production, thats about .001 percent.

So I mean, if youI think you really have towhile this isI would agree with John

that you really have toour firstour attention right now has to be directed towards the

response. We need to stop this, clean it up and figure out what happened and then make sure thatif there are any gaps that we address those. But I also think its important to keep this incident inperspective relative to how much crude has been produced and to the overall performance of the

industry.

39:54 MR. STYLES: Yeah, and I guess just as a follow-upand I agree with everythingyou said there and at the same time, its very clear that the policy debate about what to do about

offshore drilling has already started. You know, unfortunately were not going to have theluxury of waiting until the results are in. Just as a follow-up though, can anybody talk about any

similarities and differences between this accident and the accident that occurred in the Timor Sea

last year?

40:24 MR. RANGER: Geoff, this is Richard. No, not yet because I think they landed on

the failure in the cementing program in the Timor Sea that theres, I believe, pretty good

confidence is the source of that particular loss of well control. We dont have that information inconnection with this incident.

40: 49 MR. STYLES: Thank you.

40: 50 MR. RANGER: Cementing programeverybody understands what I mean by

cementing program?

40:55 MS. VAN RYAN: It might be helpful to explain it, Richard.

40:57 MR. RANGER: Yeah. Fundamentally, the major lines of defense, if you willthe major lines of controlling and addressing the risk of drilling are the casing program the

setting of steel pipe that is cemented to the surrounding rock through which the fluid that would

be produced from the well or that would try to escape from the well are controlled. And they are

controlledso you have the steel pipe cemented to rock and if you think that through, there aresort of two basic categories of concern or interest: the integrity of the pipe and the integrity of

the cementing job that locks that pipe to the surrounding rock.

And what can happen if you have a poor cementing job is that you create a new weakarea through which a high-pressure fluid and/or gases can migrate and can either further crack

the cement, perhaps cause a change in pressure that would go beyond the tolerance of the pipe


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and so that cementing job is one of the keysthat and the pipe itself are two of the keys to

assuring the integrity of the well.

And the other one that doesnt get talked about a lot because weve been having all this

conversation on blowout preventersis the drilling mud program, the fact that at all times when

the bit is moving, its moving through a fluid column. And that fluid column has hydrostaticweight. And the mud weightthe weight of that column is maintained by the use of additives to

that fluid so that you can offset the pressures that may be coming back up from the bottom of the

well. And that itself is also confined, controlled, protected by that casing programthat steel

piping thats cemented to the surrounding rock.

42: 57 MS. VAN RYAN: Another question? If not, Ive got an announcement I can give

you. Weve just been notified and this is coming through a publication called Greenwire,

which is affiliated with The New York Times. Greenwire is now reporting that the Interior

Department has just indefinitely suspended plans for an oil-and-gas lease sale off Virginias

coastline. As you might recall, its Lease Sale 220 and it was planned originally for next year. It

would have involved the development of oil and gas believed to exist about 50 miles offVirginias coastline. So I just thought Id pass that along. Any questions?

43:42 STEVE MALEY: This is Steve Maley. I dont have any questions about that inparticular, but Im hoping somebody could comment a lot has been taken from this incident as

relating to all of the offshore. Ive been telling people, to make an everyday analogy, that when

Dale Earnhardt died in NASCAR, we didnt shut down building the highways and take cars off

the road. Were a shelf operator in the Gulf of Mexico, where for 40 years, the safety record hasbeen impressive and improving and relatively pristine. Would anybody at the API care to

comment about that?

44:28 MR. RANGER: Ill start Steve, Ill make one venture. You know, one of thethings that, to me, has been the dog that hasnt barked in this discussion: Theres obviously been

a lot of coverage in recent days and weeks for good reason regarding the potential impact of thisspill to the fisheries industry, to the oystermen, the shrimpers and otherand then the

recreational fishing component that exists and thrives in the Gulf.

And I guess, you know, one thing Id like to point is that for those who have made theargument or sought to make the argument that our industrys presence in new parts of Americas

coastnew parts of the Outer Continental Shelf (OCS)would displace these industries. Hereyou have in the Gulf of Mexico after, you know, 50 or 60 years of significant production from

the offshore oil and gas industry, you have had a thriving commercial fishing industry, you have

had a thriving, in fact, growing tourism industry, particularly along the Alabama and Mississippi

coasts.

And Im not in any way trying to diminish the concerns that many of those people have

for their livelihoods and so forth. A lot of those people are now volunteering. A lot of those

people are working on the response. You know, certainly out of self-interest. But the point is, isthat the Gulf of Mexico has beenand we think can continue to bethe demonstration of a

successful multiple-use ocean environment where important energy resources can be produced


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and other activities of valueeconomic and non-economiccan be carried on in the same

marine environment.

46:15 MS. VAN RYAN: Thank you, Richard. Another question? If not, Ive got a

couple here. Anybody have anything they want to talk about first?

46:24 MR. STYLES: Jane, Ive just got one more quick question. This is Geoff Styles.

You know, obviously weve heard a lot about BPs resources devoted to solving this problem,

industry resources, Coast Guard and so on. Can you tell us anything about any other companyresources that have been thrown at thisany other oil and gas companies? I had heard one

report that Exxon was offering drilling rigs and experts. Are any of the other companies actually

pitching in? Because this is clearly an industry problem; its not just a BP problem.

46:56 MS. NYHOLM: This is Allison Nyholm. Yeah, I think I hinted at that a little bit

earlier. But yeah, the industry has been bringing all the resources to bear that they can, pitching

in where necessary. There are many examples of thatShell offered up a command center right

away. Boats of various sorts and types have been made available. I think some of the early oneswere used to move boom and dispersant. I think one of the most effective tools that are being

used across the industry are really the people, the personnel, the expertise that are being drawnon across the oil-spill response industry.

Sorry, I thought I heard somebody trying to interject. Anyway, huge amounts of

resources are being brought to bear. Without fully identifying people or putting them on thespot, I would say categorically the industry has come together to address the incident.

48:05 MR. STYLES: Thank you.

48:06 MR. RANGER : I would agree with that. And I happen to know there are people

from as far away as Alaska and England and throughout the U.S., maybe other countries. But I

just know of a couple of direct experiences where folks from industry are down on the team inthe command centers helping out with this effort.

48:23 MS. NYHOLM: You know, I guess I would add one more point that really wasone that wasit took somea leap of faith on the part of the industry. And that was to share

technologytechnologies that are still being underway. This is proprietary information that

folks said, you know what? We need to get beyond any legal obstacles we may see and reallyshare this technology, help out and bring it to bear.

48:54 MS. VAN RYAN: Very good. Ive got a couple of questions that have been sent

to me. And Ill pose these together. Perhaps the people here in the room will be able to providesome insight on this.

One of the questions is, Will the oil slick hinder any of the other oil or natural gas-

producing platforms in operation in the Gulf? And the other one is very similar in that it asks

whether it could disrupt deep-sea shipping here in New Orleans?


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49:26 JOHN WAGNER: I guess we wont have a comment on how it might hinder or

effect production. We simply dont know.

49:32 MS. VAN RYAN: Okay, that was John Wagner of API. At this point, apparently,

its premature. And I did not have the answer to that and John does. We simply dont know. So

I apologize.

49:43 MS. HOPKINS: Holly, if Ithis is Holly, if I may. Currently, there are two

production platforms that are shut in, in the Gulf. I do not have the amount. But they were shutin by the operator, by a decision on the part of the operator out of an abundance of caution. But

from what I canfrom whats been reported so far, its not a large amount.

50:10 MS. VAN RYAN: Thank you, Holly.

50:11 MR. SHAW: Do we have time for one more?

50:13 MS. VAN RYAN: Yes.

50:14 MR. SHAW: Yeah, this is Jazz again. And I guess its hard to ask people tospeculate and look towards the future. But a lot of the reports that have been coming in and

questions that were getting were doing a press conference on this next week as a matter offactseem to be that the technologies we currently are deploying after a spill has happened do

not always seem to be sufficient to the task out on ocean waters, deploying lines of buoys, settingoil on fire.

CNN did a report saying that there were new technologies for controlling oil, such aspelletizing the oil to get it to sink and make it more controllable so you dont get widespreadslicks. But none of that is happening right now. Do you have any sense or data or idea as to how

soon we might see a breakthrough that was ready to be deployed that would be more effective at

arresting a wide-scale spill like this after its already occurred.

51:20 MR. RORICK: I cant obviously speak for the responsible party. But what I can

say is that I am fairly certain that if there is a technology that they could utilize to respond to thisspill effectivelyand that wasthey would take advantage of that. So I cant speak to anyto

the efficacy of any specific technology. I know oftentimes you will have someone who will

claim that theyve got the next greatest thing. And in an instance like this, maybe they do and

maybe they dont. But those issues are all being addressed by the unified command on the spill

and Im sure every viable method of responding to this spill will be utilized.

52:09 MS. VAN RYAN: Thank you, Robin. Another question has been e-mailed in. Isthere a pre-established timeframe within which an investigation must be completed after the

fact? No? Im seeing people shaking their heads, apparently not. A follow-up to that: Whoon the industry or non-government side of matters will be involved in investigating? Are there

people within the industry that would be involved in investigating events of this nature?


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52:43 MR. WAGNER: Well, I mean this is John Wagner again. I mean, sort of the

incident-specific investigation would involve, you know, the parties who were involved and thenthe appropriate regulating industry, I mean, government agencies. But you know, there wouldntbe sort of a separate industry investigation. Government investigation now and I have every

confidence that the parties involved will fully cooperate with that investigation.

53:10 MS. VAN RYAN: Very good. Thank you, John. One other thing that we ought to

mention is that the industry has set up task forcesis that what you were justwe have people

looking at each other in here. And I guess thats what theyd like to explain to you. Whod liketo go talk about this issue?

53:26 MR. RORICK : Well, theres not were still very much in the beginning stages.The industry is in the process of setting up a couple of taskforces that will work closely with the

federal government to look at both equipment and operational issues. And youll just have to see

what they come up with. And at this point, like I said, those taskforces are still very much in

their infancy in scope, and so well have to stay tuned.

53:55 MR. RANGER: But I would say this. This is Richard. The interest in getting

answers on improvements and things like thattheres the investigation and then theres kind of

the look forward. And the interest in that is visceral. Ive spent some time in industry and spent

some time actually the last couple of days looking at drillers blogs. I dont know if you some

of you may know this but there are blogs of drilling professionals. And there is really sort of a

one-to-two, three separation in the industry, particularly in the offshore sector, of the people whowork in that sector knowthere before the grace of God go I element to this. There are some

there are people, Ive seen comments from people who know people who are missing as a result

of this incident.

So the interest in finding answers is deep throughout the industry. The people who are

engaged in this work, which is hard work, are professionals. You know, they may not always

wear tuxedos and go to some of the fine parties in Washington, D.C. But theyre every bit as

professional as any other profession. And theyre certainly committed to finding answers for thesafetyfor their safety and security and for their jobs and livelihood going forward.

55:11 MS. VAN RYAN: Were almost out of time. Im sorry, Robin.

55:12 MR. RORICK: Well, I just want to make a disclaimer. I dont want to give theimpression that these task forces will have any role in this investigation. So in the task forces

thats not to say that the results may not play into what these task forces look at. But the taskf

orces in no way are going to be part of the investigative team on this. That may have been

obvious. But I like to state the obvious.

55:37 MS. VAN RYAN: We probably have time for one more question?

55:40 MS. HOPKINS: Jane, this is Holly. If I could make one comment, its probablyknown. You guys probably all know this. But just to be clear, the government investigation,

theres a joint investigation that was agreed to by the Department of Homeland Security and the


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Department of Interior with U.S. Coast Guard and MMS, they have filed an MOU to work

together to do a joint investigation on the government side.

56:04 MS. VAN RYAN: Okay, thank you.

56:06 MR. CHAMBERS: Hey, Jane. Is there time for one more question? Actually,theres a clarification. Holly, before you had said the backupsthis is Nick from Gas 2.0. The

backup systems are not specifically prescribed by MMS but they can be determined by the

individual companies. Does that mean that they areare they approved by MMS or do thecompanies just come up with their solutions on their own?

56:29 MS. HOPKINS: Theyre required to have a backup system. But its not

prescribed on what kind it is. So they decide what theyre going to have. As long as they have

one, thats all that they need.

56:40 MR. CHAMBERS: But is thatI mean, so the federal government in no way

looks at that to make sure its some kind of you know it will work. Its left up to the companyentirely?

56:52 MS. HOPKINS: Im sorry. I cant answer that. Im not positive. I believe thatthey give them a list of options and they choose.

(Cross talk.)

57:05 MR. CHAMBERS: And then that was the clarification. My last question though

is that there has been a narrative developing recently that the deepwater drilling that wereseeing, which has caused this incidentand why its so difficult to control is a result of this

shallow water moratorium. Is that the case or is it simply that really the deepwater is where the

new oil discoveries are being found because weve ran out of everything else?

57: 32 MR. RANGER: This is Richard. I thought I spoke to that earlier. Really, itsbeenits closer to the latter than to the former. Its really the result of the application of

lessons learned from drilling over the history of drilling in the Gulf.

When I was a young landman in the late 70s working in Lafayette, Louisiana, I can

remember a geologist showing me a seismic plot on the wall that showedyou couldnt itshowed salt dome and you couldnt see what was below the salt domes. And he said, geologists

believe that below these salt domes, though which we cant see with our current seismic tools

this being 77 there would be additional strata that would contain oil or gas. But we cant get

there. We dont have the technology to drill out there.

You know, he was probably partly prophetic. And from the standpoint that over the

intervening years, a combination of technology, research and exploration effort sort of

progressively moved the frontier. And that really, I think, is the story of the Gulf deepwater

more than its because of moratoria or its because of this or that.


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58:39 MR. FELMY: If I could also addthis is John FelmyI think part of the

outcome of the deepwater opportunities that weve had is due to probably one of the most

successful pieces of energy legislation thats ever been passed. And that was the DeepwaterRoyalty Relief Act of 1995, which really jumpstarted a nascent industry in a time of very low

crude oil prices and an inability to take these projects forward. And so that 5-year program

really was a success in terms of helping the industry move forward, develop the technology andactually develop these resources that are going to be so vitally needed for the U.S.

59:19 MR. RANGER: And to develop, I think, engineering and technological leadershipthat has involved really exports because a lot of the expertise developed in these deepwater areas

is American. Its developed through these projects in the Gulf of Mexico. Its been applied

elsewhere in the world. But the source expertise, a lot of the companies engaged in the lines ofbusinessnot all of them certainlybut many of them are American. So this has been not only

providing jobs associated with the production to the Gulf of Mexico and to the U.S. but jobs and

expertise, high-value jobs associated with the technology.

59: 57 MS. VAN RYAN: All right, we just passed an hour. I think were going to shutdown now. I want to thank you all for your good questions and for your participation today. If

you have any additional questions that you would like someone here to address, please send themto me by e-mail. Ill do my best to get questions answered for you. Continue to read the blog.

Were trying to put information up there as frequently as possible. And keep an eye on the blogtomorrow afternoon because well have an audio file and a transcript up there for your use.

Thanks everybody. Good hearing your voices.

(END)

Documents

API Blogger Conference Call: Deepwater Horizon - 5.6.10