One-Third of U.S. Gulf Drilling Rigs to Be Inspected for Faulty Bolts

Published Feb 8, 2013 9:46 AM by The Maritime Executive

U.S. authorities ordered subsea equipment on 24 U.S. Gulf of Mexico drilling rigs be inspected for faulty bolts that are to blame for a drilling mud spill on a deepwater drilling rig.

A safety alert issued to offshore drillers on Jan. 29 by the U.S. Bureau of Safety and Environmental Enforcement said that bolts connecting blowout preventers manufactured by a subsidiary of GE Oil & Gas to other subsea well equipment need to be inspected and replaced. According to the alert, it's believed the bolts connecting the equipment, which is designed to shut-in a well during an emergency, can crack due to improper manufacturing techniques.

The move highlights the heightened awareness about offshore safety in the U.S. Gulf following the 2010 Deepwater Horizon disaster, which resulted in the deaths of 11 people and a massive oil spill. A blowout preventer's failure to contain an unexpected surge of oil and gas coming out of a deepwater well is partially to blame for the spill.

About one-third of the drilling rigs currently operating in the Gulf of Mexico appear to have equipment that uses the bolts, according to BSEE officials. Six drilling rigs have already had the equipment inspected and replaced, while another 18 rigs will have the work done in the coming weeks.

A spokesman for GE Oil & Gas, a unit of General Electric Co., said the company is working with regulators and customers to identify, inspect and replace bolts. This includes equipment that is being used outside the U.S.

The BSEE safety notice doesn't require operators to immediately halt all operations but rather allows for inspections and repairs in the course of normal operations.

Replacing the faulty bolts may add a day or so onto regularly scheduled maintenance work, according to analysts with Dahlman Rose & Co., but if a blowout preventer has to be pulled from the seafloor specifically for the work, it could add several more days to the process.

Analysts with Barclays Equity Research downplayed the impact of the safety notice on offshore drillers.

"While this event poses additional downtime risk for these drillers, we believe the downtime would be limited and can be often mitigated through the course of normal operations," Barclays said in a report Thursday.

The problem was first discovered in December 2012, when a drill ship owned by Transocean Ltd. and leased by Chevron Corp. was drilling a well in 6,400 feet of water about 200 miles off the Louisiana coast, according to people familiar with the matter. The bolts that connected the pipe running from the drilling rig to the top of the blowout preventer and other equipment on the sea floor cracked, allowing up to 440 barrels of drilling mud to escape, but no oil.

"We immediately shut in the well, ceased drilling operations and stopped the discharge of drilling fluid," Chevron spokesman Russell Johnson said. "We do not believe that any fluids from the formation were released into the water."

A spokesman for Transocean, the largest owner and operator of deepwater drilling rigs, said the company did not expect the bolt issue to lead to significant downtime for its drilling rigs.

"New bolts are being installed as necessary according to the protocol agreed to by regulators and the equipment suppliers," said Transocean spokesman Guy Cantwell.

The alert has led some offshore explorers to temporarily stop some work or change their drilling plans.

A spokeswoman for Royal Dutch Shell PLC (RDSA, RDSA.LN), the largest oil and gas producer by volume in the Gulf of Mexico, said the company has cleared up the issue with one of its drilling rigs and continues to assess two other rigs.

"If needed, we will take the appropriate safety steps," said Shell spokeswoman Kayla Macke.

BP PLC (BP, BP.LN), the second-largest Gulf oil producer, said it was inspecting its equipment, but a spokesman declined to discuss day-to-day operations.

Chevron, the third-largest Gulf oil and gas producer, said it was inspecting and replacing the bolts on an undisclosed number of offshore operations.

"While the inspections and replacements take place, our drill ships are able to conduct open-water work that does not require the affected equipment," Chevron spokesman Russell Johnson said.

Anadarko Petroleum will be changing out the affected bolts on subsea equipment at its Phobos development in the Gulf of Mexico and at a well that is currently being completed at the Caesar/Tonga project.

"These were the only operated wells impacted by the safety notice, and we will be able to replace the bolts at the next available stopping point with minimal downtime and no impacts on production," said Anadarko spokesman John Christiansen.


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