The U.S. government has asked Chevron, Shell, and our old friends at Transocean to halt drilling on wells in the Gulf of Mexico. Why? Because the systems connecting the rigs to the ocean floor contain defective parts.
[The companies] have been directed by U.S. regulators to suspend work aboard rigs that employ General Electric Co. devices connecting drilling tubes to safety gear and the seafloor. The equipment must be retrieved so defective bolts can be replaced, the U.S. Bureau of Safety and Environmental Enforcement said in an alert issued on Jan. 29. …
The defect was discovered last month after a leak of drilling fluid was linked to bolts that failed because of stress corrosion, according to the Jan. 29 alert. The regulator didn’t identify the owner of the rig or which oil company was leasing it. GE declined to identify the manufacturer of the bolts.
Thanks for your help, GE.
How big a deal is this for the companies?
Installing new bolts and resuming drilling may take as long as three weeks for each rig, Credit Suisse Group AG said. For oil companies paying upwards of $600,000 a day to rent the most-sophisticated deep-water vessels and another $500,000 a day to staff and supply each of them, the delays may be significant, said Craig Pirrong, director of the University of Houston’s Global Energy Management Institute.
“This certainly will be costly for the industry,” Pirrong said in a telephone interview yesterday. “This is a result of increasing government scrutiny of deep-water activities. The question is, will the increased costs be so onerous that they discourage some companies” from searching the deep oceans for crude.
1. You know what’s more expensive than spending $1.1 million a day to replace faulty bolts? Massive oil spills.
2. If a company is going to be discouraged from drilling offshore because it might have to fix defective, leaky parts, it’s probably for the best.