Mark Ratchinsky Head of International Operations, Corporate Drilling. Deepwater Horizon Accident

Mark Ratchinsky Head of International Operations, Corporate Drilling Deepwater Horizon Accident #1 Corporate Drilling

Agenda Deepwater Horizon The Rig and the Macondo prospect Well schematic and Sequence of events What happened? BP Key Findings Remedial actions Summary #2 Corporate Drilling

Brief Perspective on Deepwater Maersk (and IADC) Definitions: Deepwater 3000 6500 feet Ultra Deepwater > 6500 feet The Deepwater arena is growing in importance as a supply source for energy Due to high volume, high permeability reservoirs Macondo Tupi, Brazil, estimated 8 billion bbls recoverable Deepwater production capacity has more than tripled since 2000 #3 Corporate Drilling

Deepwater Horizon the rig Deepwater semi-submersible drilling unit capable of operating in harsh environments and water depths up to 8,000 ft 18¾in 15,000 psi BOP and 21in OD marine riser. Rig Type - 5th Generation built in 2001. Contracted to BP in the Gulf of Mexico, since delivery from yard. #4 Corporate Drilling

The Macondo prospect The Macondo prospect is located in a water depth of 4,993 feet (1,522 meters) and with a reservoir depth of 13,000 feet below seabed. BP is operator and holds a 65% interest in the prospect, while Anadarko holds a 25% interest and Mitsui holds a 10% interest. Macondo Well was drilled by Transocean s Deepwater Horizon rig from February 2010 until April 20, 2010, when the accident happened. #5 Corporate Drilling

BP Latest News 11 persons dead $9.5 billion spent (17.Sep.10) including the cost of the spill response, containment, relief well drilling, static kill and cementing, grants to the Gulf states, claims paid and federal costs. BP created a $20 billion escrow account to satisfy certain obligations arising from the oil and gas spill. Macondo #6 Corporate Drilling

Well Schematic Well drilled to 18,380 ft, but incurred losses in primary target and stopped well short of secondary targets 9 7/8 x 7 tapered long casing RIH and cemented in place using N2 Foam Cement system Wellhead seal assembly installed, positive test indicates seal assembly is in place and holding pressure from above ~16hrs after cementation drill pipe RIH and the well is displaced to seawater in order to inflow test all the barriers Inflow test accepted and well was further put underbalanced with seawater #8 Corporate Drilling

What happened? During the replacement from mud to seawater gas entered the casing, through the float collar into the 7 casing putting pressure on the drill pipe. Flow indications were not recognised by the crew allowing oil and gas to enter the riser above the blow-out preventer and once on surface caused the explosion when it flowed out over the rig. #10 Corporate Drilling

What happened After a series of explosions, the rig catches fire on April 20, and sunk on April 22. The sinking of the rig destroyed the riser and lead to three leaks in the riser and thus to the oilspill. #11 Corporate Drilling

BP Key Finding 1 The Annulus cement barrier did not isolate the reservoir Foam cement slurry used is a very complex design High risk of cement contamination due to small volumes being used Tests indicate that, in this particular situation, the system was unstable and that there was N2 breakout #13 Corporate Drilling

BP Key Finding 2 The Shoe Track Mechanical Barriers did not isolate wellbore from hydrocarbons Shoe track cement failed to act as a barrier due to cement contamination and N2 breakout Hydrocarbon influx was able to bypass the float collar check valves #14 Corporate Drilling

BP Key Finding 3 The Negative (in-flow) test was accepted even though well integrity had not been established Bleed volumes not recognised as a problem Anomalous pressure on drill pipe with no flow from kill line not recognised as an issue Test procedure was not done in a standardised manner. #15 Corporate Drilling

BP Key Finding 4 The influx was not recognised until hydrocarbons were in the riser #1 Drill pipe pressure increased by 100 psi from 20:58 to 21:08 indicating a 39 bbl gain #2 Drill pipe pressure increased by 246 psi from 21:08 to 21:14 #3 Drill pipe pressure increased by 556 psi indicating a 300 bbl gain #16 Corporate Drilling

BP Key Finding 5 Well Control response fails to regain control of the well #17 Corporate Drilling

BP Key Finding 6 Influx was diverted to mud gas which resulted in gas being dispersed throughout the rig Hydrocarbons were routed to the mud gas separator rather being diverted overboard Resulted in rapid gas dispersion across the rig via the MGS vents and mud system Due to pressure on the system the slip joint would have vented hydrocarbons as well #18 Corporate Drilling

BP Key Finding 7 The fire and gas systems did not prevent explosion Gas dispersion was beyond electrically classified areas Gas ingress to main engine rooms were one potential ignition source #19 Corporate Drilling

BP Key Finding 8 The BOP emergency control systems did not work EDS was inoperable due to damage to MUX cables AMF did not funtion Auto shear did not seal wellbore #20 Corporate Drilling

Remedial actions 1. April 28, BP announces that the controlled test to burn oil off the surface was successful. 2. May 4, BP started to prepare containment dome and attempts installation. However, the dome fails due to hydrates. #22 Corporate Drilling

Remedial actions 3. May 7, BP starts to drill the first of two relief wells. 4. May 14, BP inserts a 4 wide riser into the 21 burst pipe to collect oil to surface. Some oil was captured. #23 Corporate Drilling

Remedial actions 5. May 16, the work on the second relief well has been initiated. 6. May 26, BP initiates plan for top-kill project. Despite pumping large volumes of high density fluids at high rates and pressures, the attempt to kill the well fails. #24 Corporate Drilling

Remedial actions 7. May 29, BP moved to the next contingency option the Low Marine Riser Package (LMRP) Cap Containment System. May 31, BP cuts the leaking pipe and places a cap on it to channel the oil to the surface. #25 Corporate Drilling

Remedial actions 8. For more than a month, the new cap enables BP to gather up to 25,000 Barrels of oil per day. Estimated total flow from the well is now between 30 and 60,000 barrels per day! Despite the more effective cap, oil is still leaking into the sea and work continues on other options. #26 Corporate Drilling

Remedial actions 9. On 14 July, BP replaces the LMRP cap with a new sealing cap system, in reality a small BOP designed to fit on top of the Deep Horizon BOP. #27 Corporate Drilling

Remedial actions 10.Finally on July 15th BP is able to close in the well and eventually stop the biggest oil spill since the first Gulf War in 1991 #28 Corporate Drilling

Remedial actions 11.On the 3rd August, BP commences the static kill operation and follows immediately with cement behind, thus eventually sealing off the well. Work on the two relief wells continue, in order to ensure complete isolation from the well of the reservoir. #29 Corporate Drilling

Agenda Deepwater Horizon The Rig and the Macondo prospect Well schematic and Sequence of events What happened? BP Key Findings BP Remedial actions Summary #30 Corporate Drilling

Summary of Key Findings Well Integrity was not established or Failed 1 2 Cement did not isolate reservoir Shoe Track Barriers did not isolate hydrocarbons Hydrocarbons entered the well undetected 3 4 5 Negative test accepted but well integrity had not been established Influx was not recognised until hydrocarbons were in the reservoir Well Control response actions failed to regain control Hydrocarbons ignited on the Deepwater Horizon 6 7 Diversion of flow to MGS resulted in gas being dispersed on to the rig Fire and gas systems did not prevent ignition Blowout Preventer did not seal the Well 8 Blowout Preventer (BOP) emergency control systems did not seal the well #31 Corporate Drilling