Macondo Volume 1 Final Report

US C H E M I C A L S A F E T Y A N D H AZ A R D I N V E S T I G A T I O N B O A R D

INVESTIGATION REPORT VOLUME 1 EXPLOSION AND FIRE AT THE MACONDO WELL (11 Fatalities, 17 Injured, and Serious Environmental Damage)

DEEPWATER HORIZON RIG MISSISSIPPI CANYON BLOCK #252, GULF OF MEXICO APRIL 20, 2010 KEY ISSUES IN VOLUME 1 • MACONDO INCIDENT BACKGROUND AND GENERAL DESCRIPTION • DEEPWATER DRILLING AND TEMPORARY ABANDONMENT OF THE MACONDO WELL

REPORT NO. 2010-10-I-OS 6/5/2014

[This page left intentionally blank.]

Volume 1 Macondo-specific incident events: Relevant background on deepwater drilling and temporary abandonment

[This page left intentionally blank.]

Contents VOLUME 1 .................................................................................................................................................. 3

ACRONYMS AND ABBREVIATIONS ..................................................................................................... 7

1.0 MACONDO BACKGROUND AND INCIDENT SUMMARY..................................................... 8 1.1 Involved Parties ............................................................................................................................... 8 1.2 The US Offshore Regulator ........................................................................................................... 10 1.3 The Well, the Rig, and the Crew.................................................................................................... 12 1.3.1 The Deepwater Horizon Rig ............................................................................................. 14 1.3.2 The Crew........................................................................................................................... 14 1.4 Planning the Well........................................................................................................................... 15 1.5 Incident Description ....................................................................................................................... 16

2.0 DEEPWATER DRILLING AND TEMPORARY ABANDONMENT OF THE MACONDO WELL ............................................................................................................................................ 18 2.1 Controlling Pore Pressures with Drilling Fluids ............................................................................ 19 2.2 Controlling Pore Pressures with Casing and Cement .................................................................... 23 2.2.1 Cement Integrity Testing and Final Displacement ........................................................... 26 2.3 Controlling Pore Pressures with a Blowout Preventer ................................................................... 28 2.4 Consequences of Explosion and Fire ............................................................................................. 31

REFERENCES ........................................................................................................................................... 32

Figures and Tables

Figures Figure 1-1. Relationship between key companies associated with the Deepwater Horizon accident........... 9 Figure 1-2. Location of the Macondo well. ................................................................................................ 12 Figure 1-3. Timeline from when BP acquired the Macondo well lease until the Deepwater Horizon took over drilling the well. .............................................................................................................. 13 Figure 2-1. During drilling, mud travels down the drillpipe, through the drill bit, and then back up the annulus (yellow), carrying crushed rock back to the rig. ........................................................ 20 Figure 2-2. A simplified drilling margin plot. The planned mud weight (red dashed line) is formulated to remain less than the fracture gradient (green line) and greater than the pore pressure (black line). New casing transitions (green diamonds) are installed when the fracture gradient is approached............................................................................................................................... 22 Figure 2-3. Cementing casing in place involves filling the annulus with cement above any hydrocarbon bearing zones if they are present as well as a small length (30ˈ-90ˈ) in the shoe track........... 24 Figure 2-4. The final Temporary Abandonment configuration intended to remove drilling mud down to 8,367 feet to install a cement plug in seawater. ....................................................................... 26 Figure 2-5. The Deepwater Horizon BOP .................................................................................................. 29

Tables Table 1-1. Total number of employees and revenue as reported by companies associated with the Deepwater Horizon ................................................................................................................... 10 Table 1-2. Personnel On Board on April 20 by Company [NEED UPDATED TABLE] .......................... 14 Table 1-3. Well Control Personnel On Board the Rig on April 20, 2010 ................................................... 15

Acronyms and Abbreviations

APD Application for Permit to Drill BOEM Bureau of Ocean Energy Management (United States) BOEMRE Bureau of Ocean Energy Management, Regulation, and Enforcement (United States); the US offshore safety regulator between June 18 and October 1, 2011 a BOP Blowout Preventer BSEE Bureau of Safety and Environmental Enforcement (United States); US offshore safety regulator since October 1, 2011 b CSB United States Chemical Safety & Hazard Investigation Board DWH Deepwater Horizon EDS Emergency Disconnect System IADC International Association of Drill Contractors MMS Minerals Management Service (United States); US offshore safety regulator at the time of the Macondo accident until June 18, 2011 c MODU Mobile Offshore Drilling Unit OCS Outer Continental Shelf ONRR Office of Natural Resources Revenue (United States) ppg pounds per gallon SEMS Safety and Environmental Management System UK United Kingdom

a Department of Interior, Order No. 3302, Change of the Name of the Minerals Management Service to the Bureau of Ocean Energy Management, Regulation, and Enforcement (June 18. 2011), http://www.doi.gov/deepwaterhorizon/loader.cfm?csModule=security/getfile&PageID=35872. Accessed February 19, 2014. b The Reorganization of the Former MMS, http://www.bsee.gov/About-BSEE/BSEE- History/Reorganization/Reorganization/..Accessed February 19, 2014. c Department of Interior, Order No. 3302, Change of the Name of the Minerals Management Service to the Bureau of Ocean Energy Management, Regulation, and Enforcement (June 18, 2011), http://www.doi.gov/deepwaterhorizon/loader.cfm?csModule=security/getfile&PageID=35872. Accessed February 19, 2014.

1.0 Macondo Background and Incident Summary At the time of the accident, the Deepwater Horizon (DWH) crew had finished drilling and was completing temporary abandonment of the well so that a production facility could return later to extract oil and gas from the well. Chapter 1.0 Overview The Macondo well was exploratory in nature, meaning significant uncertainty remained about the geology, the This chapter provides general petroleum resources, and the formation characteristics that background as an introduction to the make the well easy or difficult to drill. Managing such CSB’s investigation of Macondo. It is uncertainties ultimately determines a company’s success. not meant to be all-encompassing. Additional relevant information On the day of the April 20 tragedy, no effective safeguards including key findings appears in were in place to eliminate or minimize the consequences of subsequent volumes. a process safety incident. a The safeguards (or barriers) intended to prevent such a disaster were not properly This chapter summarizes information constructed, tested, or maintained, or they had been on the companies and entities removed. The management systems intended to ensure the involved in the drilling and temporary required functionality, availability, and reliability of these abandonment of the Macondo well, safety critical barriers were inadequate. Ultimately, the the well itself, the Deepwater Horizon barriers meant to prevent, mitigate, or control a blowout rig, and the drilling crew aboard the failed on the day of the accident. rig on the day of the incident. It concludes with an incident 1.1 Involved Parties description summary that identifies the failures in the hours leading up to BP Exploration & Production Inc. (BP) b was and is the main the explosions and fires aboard the lease holder/operator of the block of land c that includes the DWH. Macondo well site. d BP identifies itself as the largest leaseholder in US Gulf of Mexico deepwater, owning more than 650 different blocks of land in water depths of 1,200 feet or greater. 1 Offshore lease holder/operators such as BP largely conduct deepwater well drilling and completion activities through a number of contractors. Effective selection, oversight, and coordination among the operator and various contractors are vital to safe offshore exploration. To drill the well at Macondo, BP

a A process safety incident is the unexpected releases of toxic, reactive, or flammable liquids and gases in processes involving highly hazardous chemicals—Process Safety Management, OSHA 3132, 2000 (reprinted). b BP p.l.c. is the parent company of many BP group companies, including BP Exploration & Production Inc. (BPXP). When referring to “BP,” BPXP is intended unless otherwise stated. c The Outer Continental Shelf has been divided into geographical areas referred to as blocks for identification purposes on maps and in databases, http://www.data.bsee.gov/homepg/pubinfo/freeasci/leasing/leaselistdfn.asp. d As of February 23, 2010, U.S. Department of Interior documents indicate Anadarko E&P Company LP (22.5%), Anadarko Petroleum Corporation (2.5%), MOEX Offshore 2007 LLC (10%), and BP Exploration & Production Inc. (65%), shared leasing title interests, but as of December 5, 2011, BP retained 100%, http://www.data.bsee.gov/PI/PDFImages/ACTIVE-LEASE/130/133905.pdf. Retrieved November 12, 2013.

contracted Transocean, the drilling contractor, and other well service providers, including Halliburton and Sperry-Sun Drilling Services, a subsidiary of Halliburton (Figure 1-1). As of November 2013, Transocean operated a worldwide fleet comprising 80 different drilling rigs. 2 In the US Gulf of Mexico, the fleet included 13 ultra-deepwater drilling rigs, which have the same water depth capability as the Deepwater Horizon’s, 7,500 feet and greater. Transocean has stated that BP was one of its most significant customers in 2012, accounting for approximately 11 percent of operating revenues. 3 As indicated in Figure 1-1, Cameron was not directly contracted to BP, but the original contract between Transocean and BP specified the configuration of the blowout preventer and made specific references to “Cameron or equivalent” components throughout the contract. 4 Cameron provided updated parts, testing, technical assistance, and repair services for the Deepwater Horizon BOP throughout its service period. a

Figure 1-1. Relationship between key companies associated with the Deepwater Horizon accident.

Transocean owned and operated both the Marianas and the DWH drilling rigs that were used at Macondo. It also employed most of the onboard crew of both rigs. As the contracted driller, Transocean was in charge of furnishing and maintaining materials, supplies, equipment, and services required for the drilling and completion activities that occurred at Macondo. 5 These services included maintaining well control equipment, which the contract between BP and Transocean stipulated would be done according to good oilfield practices and by “all reasonable means to prevent fire and blowouts.” 6 BP retained control of how various aspects of the drilling program would progress by specifying the completion activities (Section 1.5), the mud program (Section 2.1), and the casing program (Section 2.2). 7 Halliburton Energy Services (Halliburton) and its subsidiary Sperry-Sun Drilling Services provided cementing and well monitoring services to BP during drilling, completion, and temporary abandonment activities at Macondo. 8 BP, its contractors, and the BOP manufacturer operate worldwide and earn between $8 and $375 billion dollars annually (Table 1-1).

a Cameron provided the CSB with numerous engineering report sheets, signed factory acceptance tests, repair sales orders, and purchase orders.

Table 1-1. Total number of employees and revenue as reported by companies associated with the Deepwater Horizon 9

1.2 The US Offshore Regulator At the time of the Macondo incident, Minerals Management Service (MMS), a division within the Department of the Interior, was the primary offshore regulator responsible for overseeing offshore energy operations to ensure compliance with relevant laws and regulations, predominantly the Outer Continental Shelf Lands Act and 30 CFR Part 250. a MMS managed the nation’s natural gas, oil, and other mineral resources on the Outer Continental Shelf (OCS). Its jurisdiction incorporated developing and implementing plans for leasing conventional and renewable energy resources, safety and environmental protection in all offshore energy activities, and revenue management. MMS minerals revenue amounted to approximately $13 billion annually, approximately 95% of the total revenue collected by the Department of the Interior. b,10 On May 19, 2010, four weeks following the Deepwater Horizon incident, then-Secretary of the Interior Ken Salazar signed a Secretarial Order to separate and reassign the responsibilities of the Minerals Management Service 11 into three independent entities:

a In addition to the Department of the Interior, several other federal agencies regulate safety and environmental activities on the OCS. For instance, the US Coast Guard regulates marine safety, particularly the “safety of life and property on Outer Continental Shelf (OCS) facilities, vessels, and other units engaged in OCS activities.” 33 C.F.R §140.1. The Environmental Protection Agency regulates air pollution from OCS sources (40 C.F.R. § 55.1) and manages oil spill response in inland waters (40 C.F.R. Pt. 110 and 112). The Outer Continental Shelf Lands Act grants the Occupational Safety and Health Administration the authority to enforce its regulations on the OCS. However, if the working conditions are already regulated by another agency, the Department of the Interior and the US Coast Guard, 4(b)(1) of the Occupational Safety and Health Act and 21(d) of OCSLA prevent OSHA from duplicating their efforts. b The Department also manages other natural and cultural resources, including Bureau of Indian Affairs, Bureau of Land Management, Bureau of Reclamation, National Park Service, Office of Surface Mining, Reclamation and Enforcement, U.S. Fish and Wildlife Service, and U.S. Geological Survey, http://interior.gov/whoweare/index.cfm. Retrieved October 28, 2013.

• The Office of Natural Resources Revenue (ONRR), responsible for the royalty and revenue management function, including the collection and distribution of revenue, auditing and compliance, and asset management. On October 1, 2010, the office began its duties. 12 • The Bureau of Ocean Energy Management (BOEM), responsible for the sustainable development of the Outer Continental Shelf’s conventional and renewable energy resources, including resource evaluation, planning, and leasing-related activities. • The Bureau of Safety and Environmental Enforcement (BSEE), responsible for the comprehensive oversight, safety, and environmental protection of all offshore energy activities. The changes could not immediately take effect, so in the interim Salazar renamed MMS to Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE), to identify the agency’s role more accurately. 13 On October 1, 2011, BOEMRE ceased to exist after transferring its remaining responsibilities to BOEM and BSEE. 14 In the aftermath of the incident, BOEMRE and then BSEE took significant proactive steps to promulgate new safety regulations, including the Interim 15,a and Final [Drilling] Rules, 16,b the Safety and Environmental Management Systems (SEMS) Rule [30 CFR Part 250 Subpart S], 17 and subsequent amendments (SEMS II). 18 While these are the principal entities of the Macondo case, additional companies, government agencies, and stakeholder organizations are associated with the incident aftermath and general offshore operations. Background information on relevant entities appears throughout the CSB Macondo Investigation Report volumes.

a Requirements included a one-time recertification of BOPs, ROV capabilities and testing, autoshear and deadman on dynamically positioned rigs, stump test of autoshear and deadman, deadman initial seafloor test, documentation of BOP inspections and maintenance according to API RP 53, and, if shear rams activated on pipe during well control, retrival and inspection of the BOP. b Requirements included third-party verification of subsea BOP “compatibility” and up-to-date engineering, subsea secondary BOP intervention capability and testing, BOP drillpipe shearing capacity at the maximum anticipated surface pressure (MASP), third-party verification of shear calculations, and a BOP surface test between each well.

1.3 The Well, the Rig, and the Crew The Macondo well is in the Central Gulf of Mexico, in Mississippi Canyon Block #252, approximately 50 miles from Louisiana, the nearest shoreline (Figure 1-2).

Figure 1-2. Location of the Macondo well.

BP acquired the lease for the Macondo well in March 2008 19 and began drilling there in October 2009 20 after the offshore regulator approved BP’s exploration plan and issued BP a permit to drill. 21 Two rigs, first the Marianas and then the DWH, were used to drill the Macondo well (Figure 1-3). The Marianas drilled the Macondo well from October 6 to October 29, 22 but the Marianas had to be moved to a shipyard for repairs after being significantly damaged by a hurricane; 23 the Deepwater Horizon replaced it, arriving on site with a crew on January 31, 2010, 24 and began setup and testing. Drilling resumed in February. 25

Figure 1-3. Timeline from when BP acquired the Macondo well lease until the Deepwater Horizon took over drilling the well.

BP planned to drill two exploration wells—Macondo being the first—and follow with a production facility if the oil and gas-bearing region revealed commercial potential. 26 The plan was to drill beyond the primary target of approximately 18,400 feet to a total depth 20,200 feet to also assess the sections below the target. 27 The water depth of the Gulf at the location was just short of 5,000 feet. BP designed Macondo for use as a producing well if successful, but the well was, in fact, exploratory because of the uncertainty about both the type and quantity of the oil and gas (hydrocarbons) present at the site and the effort necessary to actually extract the oil and gas. If the well proved commercially viable, data concerning the well’s geology and hydrocarbon properties would be collected and used to create a production plan; alternatively, if the well was not viable, the data would be gathered to determine why the commercial predictions failed. 28 Ultimately, as BP hoped, the Macondo well was appropriate for conversion to a producing well.

1.3.1 The Deepwater Horizon Rig The DWH was a mobile offshore drilling unit (MODU) measuring 396 by 256 feet 29,a with housing capacity for 146 people. 30 The DWH was a dynamically positioned rig that used global satellite technology and thrusters to maintain position over the well rather than cables and anchors to hold it in place. 31 By their very nature, offshore rigs like the Deepwater Horizon MODU face unique hazards compared to their onshore counterparts. For example, on a rig a substantial number of workers occupy a small living and working area, where escape and rescue from a catastrophic event, such as a hazardous chemical release, fire, or explosion, are inherently more difficult due to the offshore location.

1.3.2 The Crew At the time of the blowout, 126 people employed by 13 different companies were onboard the DWH (Table 1-2).

32 Table 1-2. Personnel On Board on April 20 by Company

Eighteen of these individuals are typically identified as the crew intimately involved in the drilling and temporary abandonment activities or having direct oversight responsibilities for those activities. (Table

a For comparison purposes, the dimensions of a National Football League football field are 360 by 160 feet.

1-3 provides additional details relevant in subsequent volumes of the CSB Macondo Investigation Report.)

33 Table 1-3. Well Control Personnel On Board the Rig on April 20, 2010

1.4 Planning the Well The goal of drilling a deepwater well is to create a pathway between oil and gas reservoirs trapped beneath the seafloor and the surface. a To reach the reservoirs, a hole (the wellbore) is drilled through

a The general references describing drilling used in this chapter include Van Dyke, K. Fundamentals of Petroleum, 4th ed. Austin: University of Texas, 1997; Offshore Well Construction, 1st ed. Austin: University of Texas, 2005; and A Primer of Oilwell Drilling, 7th ed. Austin: University of Texas, 2008. Readers may also review the Chief Counsel’s report by the National Commission, which offers more detail than this report, but still at an introductory level. See the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling, Chief Counsel’s Report: The Gulf Oil Disaster, http://www.oilspillcommission.gov/sites/default/files/documents/C21462-408_CCR_for_web_0.pdf (February 14, 2011). Accessed August 14, 2013.

various layers (formations) of rocks and/or unconsolidated sediments such as sand, shale, a gravel or silt. b The formations, such as the target reservoir, are porous c and permeable, and they contain water, oil, and/or gas which