Monday, June 21, 2010


Behind  the scene update  -


Monday, June 21, 2010


Am still going back and forth to Dallas keeping my toe in the oil business. However, fortunately, I am working on a deepwater project in offshore Ghana and will not be sticking my toe into the Gulf of Mexico. Thus, I will still miss the Thursday luncheons for the foreseeable future.

I know many of you are curious as to what is going on in the Gulf, as I am sure you are aware the politicians and press are not well informed and have no interest to be well informed. I have attached a MS Word file with a sketch of the two relief wells which are being drilled as fast as they can to "kill" the blowout well - Macondo #1.

It is a good status of the two wells, one of which is closing in on the blowout. When I finish my Dallas gig, I will do a lunch presentation on the incident.

Also, let me share some statistics and personal thoughts which can put this well into perspective.

a. The U.S. has more than 525,000 producing oil wells in the country. With about 5 million barrels per day produced in the U.S., this means that the average well in the U.S. produces less than 10 barrels per day and included in that average are prolific wells in Alaska and the Gulf which are capable of producing much more.

I would bet the median oil rate of a U.S. well is less than 3 barrels per day. More than 31% of the oil wells in the U.S. according to the DOE produce less than one barrel per day!

b. With the Macondo well belching an estimated 40,000 to 50,000 barrels per day means the Macondo well is capable of flowing more than 4,000 to 5,000 average wells in the U.S!

Is there no surprise that fields like this one are the prize being sought after by the industry which cannot drill in shallow waters or much of anywhere in the U.S. anymore? This one well produces about 1% of the entire U.S. production rate and is most likely the most productive well in the country!

And probably one of the most productive wells in the world. It is too bad that this field will most likely never be produced following shutting and abandoning the Macondo #1 blowout.

c. The only way the Macondo well can be stopped is by intersecting the well with the relief wells being drilled now. If the "junk shot" or "top kill" method would have stopped the flow or the blowout preventer finally closed, the pressured oil would have just ruptured the shallow geological formations and oil would have been coming up in geysers all over the place for miles and then the only way to stop the flow would have been to allow the reservoir to deplete. And this could have been years! Thus, it is a "good" thing that the "top kill" failed.

ALAN NOTE: Read the above paragraph AGAIN - carefully!

"pressured oil would have just ruptured the shallow geological formations"

What is omitted from this scenario is reportedly the feared possibility of this vast "oil" reserve being connected to an EVEN VASTER poisonous Methane gas "bubble" rupturing through with enough content to poison and kill MILLIONS of Gulf coastal States!

This has received passing mention but not reported fully. Apparently not much we can do about it except prepare to die.

 d. This next statistic is not to bash our president; but to put things into perspective: When Air Force One is in the air, it consumes jet fuel (which incidentally comes from the Gulf of Mexico) at the rate of 5 gallons per mile as indicated in data released by the govt.

 And anywhere the pres goes, there are at least two jets of equal size carrying his cars, golf carts, secret service, guests, press, etc. If you make the calculations, this means that when the president takes a junket in Air Force One, he and his entourage are consuming the entire oil production of approximate 450 average oil wells in the U.S.!

e. Tony Hayward, the beaten down CEO of BP, is a friend of mine who I worked with on our project in Colombia in 1994-1997. He was the Exploration Manager for BP's Bogota office. He has a phD in geoscience with highest honors and has more 28 years experience in technical and management positions with BP, which is a heck of a lot more applicable to his job than community organizing.

It would be impossible for him to know the level of detail of what happened on that rig; and Rep. Waxman's questioning just revealed the U.S. government's requirement to place personal blame and focus on something other than the administrations failings on a number of fronts. I contend that the pollution in the Gulf is horrific; but the Gulf will recover.

However, the government's overreach into the oil industry as a result of the incident will do more harm to the country in the long run. Waxman et. al. will deal more harm to the country which will never be cleaned up.

My advice to Tony Hayward when he met with the congressional panel, and his other public appearances, would have been to have a good speech writer and use a teleprompter. That way he could have kept his foot out of his mouth and look more like a competent chief executive.

f. The blowout was clearly caused by human error and an unintentional accident and combination of unforeseen failures of protective devises which all have levels of redundancy. It is very analogous to the loss of the space shuttle Challenger which was destroyed because of seal failure of the solid fuel rocket booster.

When that happened, in spite of engineer in Morton Thiokol (manufacturer of the solid fuel booster) pleading to stop the launch following freezing weather at the launch pad; I did not see the head of NASA butchered in front of Congress and asked to jump on a sword.

BP has assured everybody that all legitimate claims will be honored; but I heard today that a homeowner was asking reimbursement for loss of home value as surely his failure to sell his home is the fault of BP.

Am sure the hookers in New Orleans will charge BP for the loss of income from the rig workers who will be unemployed for six months.

How much of the $20 billion will go to ACORN? Will be interesting to follow this money trail........

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