Oil, Oil Everywhere
by ilene - May 23rd, 2010 9:31 pm
Oil, Oil Everywhere
Courtesy of Karl Denninger at The Market Ticker
We’re now about a month into the BP Oil "blowout" incident in the Gulf.
We still don’t know exactly what caused the blowout, but that’s not the important factor from my point of view.
We know that a gas "bolus" got into the drill pipe and expanded as it rose, and that was the proximate cause of the blast and sinking of the Deepwater Horizon.
What we don’t know is why the blowout preventer failed to close.
There have been several theories and claims, among them:
- The Blowout Preventer’s hydraulic system has one or more leaks in it, and as such it couldn’t close. If this is true then the question becomes who knew of the leak, if anyone, as it would have caused the preventer to fail routine tests.
- There are also claims that the well failed a negative pressure test a few hours before the incident. That would imply that there was a problem with the casing integrity (or the cement job done to lock it in place) and work continued without addressing this first.
Let me provide some context here: I live in the Florida Panhandle and in a "worst case scenario" the value of my home is likely to be destroyed. On April 30th I wrote a piece called "Drill Baby Drill", and I stand behind it today, even with the increased knowledge we now have.
I want answers to the above two questions, and I want the firms and persons responsible for those two breaches of protocol and common sense (along with safety measures) tarred, feathered and bankrupted, in that order, with every penny they personally and corporately possess confiscated to perform whatever remediation we can.
What I do know is this: A deepwater rig like the Horizon costs about $500,000 per day to have on site and operate. There was obviously a decision taken by someone that halting operations to pull and repair or replace the blowout preventer stack would cost millions (such an operation would result in significant downtime, of course, during which the rig would be sitting idle) and thus it was not done.
But this does not change my base view, which is that we have no valid alternative to drilling in the Gulf and elsewhere – indeed, everywhere we can find oil and gas.
What…
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW. She manages the site