Industry Has Improved Its Capabilities for Subsea Well Containment in the Gulf of Mexico

Since the Deepwater Horizon incident, the oil and gas industry has  improved its capabilities to respond to a subsea well blowout in the Gulf  of Mexico. In particular, operators have formed two new organizations  that are expected to offer improved well containment capabilities,  including more effective equipment and services, and expertise to  member operators in the event of a well blowout. The subsea well  containment capabilities available for the Gulf of Mexico consist primarily  of existing technologies that have been modified to support well  containment. Well containment  capabilities in the Gulf of Mexico include the following:  containment equipment, including capping stacks used to shut in a  well, and containment domes and top hats that are used to collect  escaping oil and gas and flow them to the surface;  subsea support systems, such as riser systems that direct captured oil  and gas to surface vessels in the event that the well cannot be shut in  completely; utility equipment, such as dispersant injection systems,  hydrate inhibitor systems, and hydraulic power systems; manifolds  and connection systems; and remotely operated vehicles; and  surface vessels, such as multipurpose containment response vessels  that can be configured to conduct a variety of drilling or containment  activities, production vessels that can process captured oil, storage  tankers to transport the captured oil, and other support vessels used  to distribute dispersants and control remotely operated underwater  vehicles. 3). Interior Has Issued New Guidance and Is Documenting Many of Its Oversight Processes, but Has Not Documented a Time Frame for Testing Operators’ Responses to a Subsea Blowout

Following the Deepwater Horizon incident, Interior issued new guidance  that identified information operators are to provide to demonstrate well  containment capability, but Interior has not fully documented its internal  process for reviewing this information. According to Interior officials, on at least  12 occasions, an operator strengthened its wellbore design based on the  results of the screening tool. Interior Is Documenting Its Process to Ensure Equipment Is Inspected and Available, but Has Not Documented a Time Frame for Incorporating Well Containment Scenarios into Unannounced Spill Drills

As previously stated in this report, since the Deepwater Horizon incident,  the well containment plans that operators submit to Interior as part of the  permitting process identify equipment that the operator plans to use to  contain subsea well blowouts. However, Interior has  not tested most operators’ ability to respond to a subsea blowout, and has  not established a time frame to incorporate these tests into unannounced  spill drills. Subsea Well Containment Capabilities Available for the Gulf of Mexico Could Be Used in Other Federal Waters, but Environmental and Logistical Risks Differ

Subsea well containment capabilities similar to what industry offers for the  Gulf of Mexico could generally be used in other federal waters, including  the outer continental shelf off Alaska. Industry officials said that they are  developing a well containment response capability for use in this region. Industry Is Developing Well Containment Capabilities for the Alaska Outer Continental Shelf

For the past two decades, the majority of subsea oil and gas exploration  and production in U.S. waters has occurred in the Gulf of Mexico;  however, in 2010, Shell Oil submitted plans to Interior to drill in the waters  north of Alaska as early as the summer of 2012. For example, while  Interior has not fully documented its well containment plan review  process, Interior officials told us that they expect to have documentation  in place by spring 2012. Finally, Interior has  conducted two unannounced spill drills that have included a subsea well  containment scenario, and Interior officials told us it will incorporate these  scenarios into future spill drills. However, Interior has not established a  time frame for incorporating subsea well containment scenarios into spill  drills and until it does so, there is limited assurance that operators drilling  in the Gulf of Mexico or other areas will be prepared to respond to a  subsea well blowout. Agency Comments and Our Evaluation

We provided a draft of this report to the Department of the Interior for  review and comment. If you or your staff have any questions about this report, please contact  Madhav Panwar at (202) 512-6228 or panwarm@gao.gov or Frank Rusco  at (202) 512-3841 or ruscof@gao.gov.
Why GAO Did This Study

On April 20, 2010, an explosion and fire on board the Deepwater Horizon, an offshore drilling rig, resulted in 11 deaths and the largest oil spill in U.S. history in the Gulf of Mexico. After this event, the Department of the Interior (Interior), which oversees oil and gas operations in federal waters, suspended certain offshore drilling operations. After developing new guidance, Interior resumed approving drilling operations in the Gulf of Mexico. GAO was asked to examine (1) the industrys improved capabilities for containing subsea wells (those on the ocean floor) in the Gulf of Mexico; (2) Interiors oversight of subsea well containment in the Gulf of Mexico; and (3) the potential to use similar subsea well containment capabilities in other federal waters, such as those along the Alaskan coast.
GAO reviewed laws, regulations, and guidance; documents from oil and gas operators; and Interiors oversight processes. GAO also interviewed agency officials and industry representatives.

What GAO Found

Since the Deepwater Horizon incident, the oil and gas industry has improved its capabilities to respond to a subsea well blowoutthe uncontrolled release of oil or gas from a well on the ocean floorin the Gulf of Mexico. In particular, operators have formed two new not-for-profit organizations that can quickly make available well containment equipment, services, and expertise. Among the equipment that these organizations can provide are capping stacksdevices used to stop the flow of oil or gas from a well. This improved well containment response equipment consists primarily of existing technologies that have been modified to support well containment, according to industry representatives.
Following the Deepwater Horizon incident, Interior strengthened its review plans and resources to contain a subsea well blowout; however, its internal oversight processes have not yet been fully documented. Interior has issued guidance to operators outlining information that must be provided to Interior to demonstrate that operators can respond to a well blowout. Interior officials said that they expect to have documentation of their process for reviewing this information in place by spring 2012. Also, Interior incorporated tests of an operators well containment response capabilities into two unannounced spill drills, and Interior officials told us they intend to incorporate such tests into future spill drills. However, Interior has not documented a time frame for incorporating these tests, and until it does so there is limited assurance of an operators ability to respond to a subsea well blowout.
Subsea well containment capabilities developed for the Gulf of Mexico could generally be used elsewhere, including Alaskan waters, according to industry representatives and Interior officials. However, because other areas lack the infrastructure and equipment present in the Gulf of Mexico, well blowout response capabilities are more limited. Two operators have submitted plans to Interior to drill in waters north of Alaska as early as the summer of 2012. They are developing, but have not submitted, final well containment plans to Interior, and these plans will need to be approved by Interior before drilling. Oil and gas exploration and production off the coast of Alaska is likely to encounter environmental and logistical risks that differ from those in the Gulf of Mexico because of the regions cold and icy conditionsfactors that would also likely affect the response to a well blowout.

What GAO Recommends

To help ensure that operators can respond effectively to a subsea well blowout, GAO recommends that Interior document a time frame for incorporating well containment response scenarios into unannounced spill drills. In commenting on a draft of this report, Interior concurred with GAOs recommendation.
or Frank Rusco at (202) 512-3841 or ruscof@gao.gov .