Managing Offshore Oil Risks

Energy Matters0


Managing Offshore Oil Risks

Julia Aasberg, Allianz Global Corporate & Specialty (AGCS)

“This will be a significant insurance loss of more than a billion dollars and our expectation is that rates and terms will harden” (Photo: Allianz)



What caused the sinking of the Deepwater Horizon semi-submersible drilling unit?

It’s too soon to tell. However, we know there was a fire and explosion following a control of well event and the exact sequence of events is under investigation. What is interesting is that they had already struck oil and were in the process of completing the well for later production.  This process is usually regarded as lower risk than when actually drilling 13,000 feet deep into the seabed.


Do we know if the problem occurred on the platform or on the seabed?

Something happened during the completion operation in the well bore. The drilling crew was installing a casing into the well to prepare it for oil and gas production. Customarily, a special mud is pumped down to create a hydrostatic pressure to counteract the pressure from the oil reservoir.


Something upset this balance and it is believed that an uncontrolled flow of oil and gas rose up to the drilling rig, found a source of ignition, and caused the explosion that ultimately sank the rig.


What happened after the explosion?

Tragically, among the 126 people on board, 17 were injured and there were 11 fatalities. Two days after the explosion, the unit sank and since then the well has continued to leak.


BP is the majority owner of the lease/well and Transocean was hired by BP to drill this and other wells under a long term contract. They will be working closely together to bring the well under control and, in addition, BP has the primary responsibility for cleaning the oil pollution


Was this well known to be especially dangerous?

When there is drilling into a rock formation that has been there for thousands of years with trapped oil and gas the expectation is that there will be pressure, evidenced by the surveys or other well data. BP will have performed extensive surveys and compared them to other well data to establish a design for the well. Based on the information currently available, we do not believe this presented an abnormal risk


You are talking about one borehole, but apparently there are several leaks.

Yes, after the unit sank it landed on the ocean floor some 500 meters away from the original well. The riser tube that connects the seabed equipment to the drilling rig was ruptured in two places when the drilling rig sank. We understand that oil is leaking from the riser tube and possibly the seabed equipment.


BP is trying to install some sort of metal dome on the well to stop the flow of oil. How would that work?

BP developed a giant dome to sit over the leaks to contain the oil allowing it to be siphoned up to a tanker rather than let it float to the surface.


Another idea is to drill once again into the oil reservoir. What would that achieve?

That’s happening right now. There is another oil rig already on site and they are drilling a relief well into the original well bore to attempt to stop the flow. This is achieved by pumping heavy drilling mud through the relief well into the original well bore to stop the uncontrolled flow of oil. This may take 2 to 3 months

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