Is Drilling a Relief Well in Advance the Answer to Deepwater Blowout Risk?

There is a lot of buzz over Senator Frank Lautenberg’s suggestion that oil companies be required to drill a relief well at the same time as they drill any deepwater production well. That would allow the company to go in and plug any leak in relatively short order. Kate Mackenzie over at the FT Energy Source flags the most promiment objection, other than cost, as articulated by ExxonMobil CEO Rex Tillerson:

“Well I would say you just doubled your risk. This is an exploration well so it means you’re drilling in an area that’s not previously been drilled before. If you look at the history of well control problems and blowouts, most of them have occurred on the way down to the objective, not once they reach their objective. They’re caused by shallow gas hazards, they’re caused by unknown pore pressures on the way down to the objective, so if you have two wells going down at the same time it means you have just increase your risk of having a problem on the way down to them.”

I have two problems with this argument.

It is representative of a pre-Deepwater Horizon mentality that focuses entirely on the probability of a blowout and largely neglects the consequences of an event. It may make sense to accept a doubling of the (small) probability of a blowout if, at the same time, we can drastically reduce its consequences. Indeed politically, if deepwater drilling is to be maintained, the government will need to be able to explain how it will stop a blowout. Simply pointing to reduced odds of one won’t be enough. The pre-drilled relief well provides a means of answering that question.

My second problem is with the assumption that the two wells would need to be drilled simultaneously. That is the least-cost option, but it is not the only one. Drilling the two wells in sequence, rather than in parallel, would seem to substantially lower the odds of an accident with the second one, since the area would be much better known by the time that well was being drilled. It would, of course, be more expensive and time consuming. But that is the foundation for a cost-benefit analysis, not a reason to reject the option altogether.

My sense is that the big question is indeed cost, and, consequentially, the impact on production. Profit margins for deepwater production may or may not be high enough to absorb the extra cost without foregoing production. (There is also a cost-benefit question, but producers would do well to keep in mind that the politically realistic alternative to adopting expensive failsafe mechanisms may be seeing a huge amount of reserves put off limits completely.) I may do a back of the envelope calculation later to get a sense of how these numbers work. But this is something the EIA should be able to crank out. When it does, it should also look at the international impact. Other countries may well copy any new regulations that the United States imposes. The U.S. government should make sure that it anticipates the production consequences of such a move.