HPHT Wells: Plumbing The Depths Of Nature, Profit And Contract Law

In the global oil and gas industry, companies are compelled to meet or exceed a vast array of environmental, health and safety standards.

The high-profile blowout and explosion at BP’s Macondo well in the US Gulf of Mexico, brought the challenges and the risks of drilling into high-pressure, high-temperature (HPHT) fields increasingly into focus.

High pressure, high temperature, high risk?

It is an inescapable reality that high-temperature and/or high-pressure drilling environments could pose significant dangers to people, property and the natural world. These risks make equipment more likely to fail, which may ultimately lead to pressure issues and spills that could have enormous implications in the realms of nature, profit and contract law.

Similarly, in a high-pressure setting, it is a general assumption that the higher the pressure, the more stored energy is available. This provides obvious benefits for companies tapping these resources, but should there be an uncontrolled release, serious injury and damage to property could ensue.

Operators must therefore be able to weigh up the advantages and risks, developing strategies to maximise efficiency while maintaining safety standards and remaining compliant throughout every stage of production.

BOEMRE and the aftermath

In September 2011, the US Coast Guard and the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) released their joint investigative report on the Deepwater Horizon spill, which occurred in April 2010, in waters off the coast of Louisiana.

The report places most of the blame for the devastating event, which killed 11 workers and spilled an estimated 4.9 million barrels of oil, on the rig's operator BP, though it also implicated rig owner Transocean and contractor Halliburton in the farrago.

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The Joint Investigation Team (JIT) was established on April 27th 2010, by the US Department of Homeland Security and to identify what caused the explosion and resulting spill, which dominated headlines across the globe for weeks.

Contained within Volume II of the report are some of the JIT's most notable findings. Officials looked incisively at evidence developed throughout the investigation, which involved them holding seven sessions of public hearing and receiving testimony from over 80 experts and witnesses.

They concluded that BP, Transocean and Halliburton's conduct in relation to the Deepwater Horizon disaster had violated a number of federal offshore safety regulations under BOEMRE's jurisdiction. This reinforces past findings from other groups and institutions, including the White House Oil Spill Commission and the Marshall Islands' Maritime Administrator.

Two lessons to learn from in the BOEMRE report

Following the Deepwater Horizon case, BOEMRE launched reforms to offshore oil and gas regulation and oversight. These essentially affect requirements governing everything from the design of HPHT wells to workplace safety and corporate accountability.

Another consequence of BOEMRE’s report was the establishment of a centralised Centre For Offshore Safety (COS) in Houston, Texas in 2012, "to promote the highest level of safety for offshore drilling, completions, and operations through leadership and effective management systems addressing communication, teamwork, and independent third-party auditing and certification."

In the wake of such a high-profile incident, it was no surprise to see endless questions raised with regard to the lessons that had been learnt, primarily by the companies involved, but also the energy industry as a whole.

Amongst the list of regulatory recommendations published in the voluminous tome, two key lessons that spring to the fore.

Firstly, that operators must not consider overstepping established safety protocols and best-practice routines. Secondly, it is absolutely crucial that oil companies build risk management into every stage of their decision making.

Conclusions?

It is all too easy for failings to be pointed out in hindsight, but the overall lesson for the global oil and gas industry is to resist the temptation of prioritising bottom-line profits over safety.

The fact that the Macondo well disaster occurred on a deepwater, HPHT prospect instantly made it the most famous HPHT well in the world. Since then, the BOEMRE report has highlighted that a perfect storm of minor failings conspired to cause the disaster, minor failings that were not specifically HPHT related but could have taken place as a part of any project.

While scores of HPHT wells have been drilled successfully and without incident since April 20^th, 2010, it is indisputable that until HPHT makes its way from unconventional to conventional and established practice, the fear of the dangers that lurk in the depths will continue to permeate the industry and public conscious.