Saturday, July 17, 2010

BP's Macondo Field Should Now Be Production Well

Activity at Macondo Field post accident
The containment cap has now stopped the oil from leaking into the Gulf of Mexico. The two relief wells are a couple of weeks away from reaching their target near the bottom of the well pipe. Now an interesting decision has to be made: will the well be permanently closed via cement from the relief well(s) or will the well go into production to deliver oil to refineries. Our inclination is to make it a production well. The relief wells are now there as the appropriate insurance policy. The Center is also recommending that two relief wells should be a requirement for any deepwater drilling going forward. The Center opposes expanded offshore drilling.

The cap, right, is undergoing additional testing. Pressure has reached 6,745 pounds per square inch and is expected to max out at 6,800 psi. The tests are meant to reduce fears that the containment cap will cause a rupture elsewhere on the seabed, creating new leaks. The capped well was estimated to be gushing between 35,000 and 60,000 barrels of oil a day into the Gulf. Yet pumping the oil for production purposes would relieve much of the pressure. And taking the top figure of 60,000 barrels per day times rough $60 per barrel equals about $3.6 million per day. That money could be important in compensating the coastal states negatively affected by the disaster. That is $1.3 billion for the year. The Macondo well should go into production. (WSJ, 7/17/2010)

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