More Safety in future Rig design and operation? More cost ?

The aftermath of the Deep Horizon rig explosion in the Gulf of Mexico has left a lot of lesson to be learnt for those in the offshore industry as well as those classification socities reviewing and approving the design and construction of rigs in various region in the world. For the majority of those who are non-offshore industry people, an oil well gushing uncontrollably into the sea for over two months seems bewildering and there still is no sign that BP, having mobilised many rigs and support vessels, is able to plug the powerful gush and luckily the recent Tropical Storm Alex veered away from the Gulf of Mexico oil spill Saturday but experts warned that strong waves and winds could still upset efforts to halt the environmental disaster.

For Americans, the accident has been catastrophic and costly, and for the offshore oil industry, the reputation has taken a severe hit. US President Barack Obama and his administration are also feeling a political backlash. The widespread pollution as a result of the gushing oil is wreaking havoc on the ecosystems of the Gulf and the livelihoods of affected Americans. Entire industries across the Gulf coast, from fishing to tourism, have been devastated. This makes the issue a political hot potato on top of everything else.

The political and regulatory fallout from this disaster will be analysed and discussed for many years, as happened following the Exxon Valdez oil spill some 20 years ago. New regulations to govern the industry are already in the works, and hopefully the commissions of inquiry and Congressional hearings will produce conclusions that will be helpful and instructive for the industry. But the question remains: how is it that the world's most powerful nation - with the most sophisticated scientific and technological resources at its command - looks so helpless in the face of an oil leak? It must be asked: is leaving the job of plugging the leak to just one company a satisfactory approach? It's high time the Obama administration considered the possibility that this is something BP cannot solve on its own. There is also the danger that as the bills mount, and its run of unsuccessful attempts continue, BP may just give up the ghost.

The option of pooling global resources and tapping the collective expertise of the entire oil industry should be seriously examined.

Meanwhile, for us in Singapore, the Deep Horizon rig disaster contains a cautionary lesson. We must remember that Singapore is not just an international maritime hub, but also the world's biggest oil rig builder. Keppel Offshore & Marine and SembCorp Marine together account for around two-thirds of the rigs built in the world currently. Our port and waterways are among the busiest in the world with most of the oil tanker fleet plying this route. Woe be the day when a manufacturing fault of a Singapore-made rig becomes the cause of a disaster elsewhere. Or when a major accident of a similar nature occurs close to our own shores as seen recently, the spill occurred when the Malaysian-registered tanker MT Bunga Kelana 3 collided with the St. Vincent's and The Grenadines-registered bulk carrier MV Waily in May2010 at the Singapore Strait about 13km to the southeast of the city-state's east coast.

Such minor spill have already created much inconvenience to shore lovers, sea-going businesses,etc.

The oil industry will continue to boom for several years yet. But as the Deep Horizon disaster has made clear, it is an industry exposed to unpredictable and enormous risks. The need for safety first cannot be overemphasised. And if that calls for tighter regulation here as well, so be it and we as rig builders in Keppel O&M will have to take a further step to look at our rig designs and what kind of possible prevention or pre-empt to the future possibility of repeat incident and upholding and sustaining the reputation of "world class" rig builder in the offshore business sector.


Mid July 2010, BP has halted the Gulf of Mexico oil leak for the first time after struggling to cap the well for three months, raising hopes yesterday that the worst oil disaster in United States history may finally be ending.


In London, BP shares were up after the latest development in a disaster that has cost the company US$3.5 billion (S$4.8 billion). Compensation for damage caused by the oil spill could reach 10 times that amount.

Mr Obama, who has encouraged, cajoled and outright ordered BP to stop the leak, welcomed the news as 'a positive sign' but reminded everyone that 'we're still in the testing phase'.

BP is hoping to choke off the oil flow from the well, estimated at between 35,000 and 60,000 barrels a day. But doing so from the top could force oil out in new leaks if the wellbore has been damaged.
During the tests, engineers will take multiple readings from the 9m capping stack placed on top of the wellhead on Monday to monitor the pressure inside. High pressure readings would allow the three valves to remain shut and the well would effectively be sealed, but low readings could mean there is a hole or holes somewhere else in the casing of the well where oil is escaping. After 48 hours, the engineers will open up the system again and begin capturing the oil through two surface vessels to allow a new seismic survey to be done, said the official in charge of the US response, Coast Guard Admiral Thad Allen.

A final solution is not expected before the middle of next month, when crews will complete the first of two relief wells, allowing the oil reservoir to be permanently plugged in a 'kill' operation.

The disaster began on April 20 when the BP-leased Deepwater Horizon oil rig exploded 80km off the coast of Louisiana, killing 11 workers. Two days later, the still-blazing rig sank to the bottom of the Gulf.


Oilwell Plugged

Reforming business schools a must ?

World’s leading business schools are changing their course syllabus and re-making their business school image ensuring they catch up with time and the reputation upheld with high rating. This year Harvard Business School (HBS) announced the appointment of a new dean, Nitin Nohria, a first-class choice. The Kellogg School at Northwestern University has also recently selected a new head, and the Judge School at the University of Cambridge, the Ross School at the University of Michigan and the Booth School at the University of Chicago are all in the process of doing the same. Our local uni business faculties (NUS,NTU,SMU) are also trying to boost up it's image and maintaining the international standard every year and they too have excel in the top lists of preferred MBA courses in many of surveys done.

Elite business schools are plagued by self-doubt and the financial crisis has dealt them a double blow. It has damaged their pristine images, because so many financial analyse and bankers are MBAs. It has also dented their market: Wall Street laid off 240,000 people in the 18 months from the middle of 2007.

The business-school boom depended largely on the idea that MBAs were entry tickets to the world’s two most lucrative professions: investment banking and consultancy. These trades not only consumed more than half the graduates of the leading schools. They also underwrote the schools’ finances: students were willing to pay US$100,000 in fees and living expenses (and forgo even more in income) because they were all but guaranteed jobs in these high-paying industries.

Criticism of MBAs extends beyond consultancies and banks. People in many industries worry that business-school professors are more concerned with pure theory than with practical management (promotion is usually earned by publishing articles in academic journals rather than by teaching, advising businesses or gaining managerial experience). The professors themselves complain that their students are spending ever more time looking for jobs and ever less time studying. These problems are already taking their toll on the two-year courses that once constituted the ideal of business education. Students are gravitating to one-year MBAs, which are offered by 70% of European business schools, and more specialised courses. Lower-ranked business schools are already finding it harder to fill their places. The elite worry that the trend will eventually catch up with them too.

Yet business schools have an important asset: they are remarkably flexible compared with the rest of academia. Even before the financial crisis they had begun to implement far-reaching changes. Both Stanford Business School and the Yale School of Management have changed their curricula radically in the past few years. Business schools are also moving to globalisation. INSEAD led the pack by opening a second campus in Singapore: all its students have a chance to study in Asia as well as Europe. Almost everybody has leapt on the bandwagon. Of course business schools must not lose sight of their primary function. We must remain faithful to academic rigour and excellent teaching. Yet at the same time we have to regain the entrepreneurial fervour of the past; the world expects more than good functional graduates. Recent times have underlined the need for managers capable of taking a fresh look at opportunities unafraid to forge new alliances and practices outside of the norm. Schools have also struggled to make their courses less theoretical. Yale has replaced conventional subject-based courses (marketing and so forth) with “integrated” courses based on “constituencies” (such as investors, customers and employees). The University of Michigan’s Ross Business School gives students a chance to work with, say, hospitals in India and energy companies in Mozambique. Most schools are trying to employ more people with practical experience.

The new generation of deans will undoubtedly preside over dramatic changes. We must play the role of an entrepreneur in its purest meaning. It is no longer enough that we concentrate on functional training. We must constantly scan for projects to which we can add value. Once found, we must take a more developmental, consulting role, helping the project’s different stakeholders—companies, public bodies, research centres and universities—to create and manage the organisation.

Is the "Rising Yuan" going to help?

FROM a global perspective, the world has every right to expect large surplus savers, such as China, to reduce outsize current account surpluses. At the same time, the world community needs to be fair in putting equal pressure on large deficit savers, such as the United States, to address its saving problem.

Is it wrong to insist that China’s global rebalancing imperatives be addressed by a realignment in a bi-lateral exchange rate with the dollar. What matters most insofar as global imbalances are concerned is China’s broad multilateral exchange rate. China can hardly be accused of manipulation vis-a-vis the rest of the world. In real terms, the trade-weighted renminbi is up 7.5% over the past six months and fully 20% over the past five years. These is good reason to believe that a pro-consumption structural policy agenda, is likely to be a central feature of the upcoming 12th Five-Year Plan, could achieve far greater traction in promoting a timely and effective rebalancing. There is good reason for China to view a tight RMB/dollar relationship as an important anchor for an embryonic financial system. Washington’s China complaint seems especially off base when it comes to the renminbi. Yes, the United States has a large bilateral trade deficit with China. But it turns out that America ran trade deficits with over 90 countries in 2008-09. Given the unprecedented shortfall of US saving—a net national saving rate of -2.5% of national income in 2009—the US must import surplus saving from abroad in order to grow and run massive current account and multilateral trade deficits in order to attract the foreign capital.

Without a fix to America’s saving problem—highly unlikely in an era of trillion dollar federal budget deficits—forcing the Chinese to appreciate the RMB versus the dollar, or imposing trade sanctions on them if they don’t, is like rearranging the deck chairs on the Titanic. It would shift the Chinese piece of the US trade deficit to someone else—most likely to a higher cost producer.

IT ALL sounds so simple. Let the renminbi appreciate and the world's economic problems will be solved. Yet, when you think about it, this is a distinctly implausible claim. The idea that an adjustment in one relative price in the entire global economy will rid the world of imbalances and lead to a new economic nirvana doesn't really make sense.

There are doubts to these and they need to relook at some of the pending events :

The Japanese yen has risen dramatically over the last forty years—from JPY380 against the dollar at the beginning of the 1970s to around JPY90 more recently. Despite this momentous rise, Japan's current account surplus has steadily gotten bigger as a share of its GDP. When the Japanese tried to do in the late-1980s exactly what is now being asked of China—shift away from export-led to domestic demand-led growth—it all ended in tears.

The Japan's experience shows, countries run current account surpluses for structural reasons that may have nothing to do with the value of the nominal exchange rate. Inadequate social security provision and a poorly-developed consumer credit system undoubtedly play a big role in boosting savings relative to consumption in china's situation. China uses a currency target partly because of a lack of credible alternatives. No one has any idea of what is really going on with Chinese money supply while an inflation targeting regime is highly problematic for any country with low per capita incomes, where the typical consumer basket is heavily weighted towards food and energy, the prices of which are highly volatile from year to year.

Discussion of the nominal exchange rate ignores the obvious point that it's the real exchange rate that ultimately matters. Let's face the fact, China was cut off from the rest of the world for over 500 years. Now that it's opening up, it can flood the world with workers who are prepared to accept wages a tiny fraction of those being paid in the West. Western workers have enjoyed a "monopoly" on access to global capital for most of the 20th Century, rewarding themselves with wages well above the market-clearing price. Nominal exchange rate adjustment won't prevent Chinese workers from undercutting their Western equivalents.

Admittedly, the terms of trade will likely move in China's favour whether or not there is nominal exchange rate adjustment. But the way that's playing out at the moment is through some hefty wage increases in China accompanied by deflationary pressures in the West. Whether through nominal or real exchange rate appreciation, however, this simply means that China's buying power over the world's scarce resources will slowly improve and, by implication, the West's will diminish, most obviously through rising commodity prices in dollar or euro terms. A rising Chinese real exchange rate will lead to a redistribution of income from commodity-consuming to commodity-producing nations.

Knowing to "Kill" an offshore well....

DIVERTER PROCEDURE WHILE DRILLING ON A FIXED RIG

Where shallow casing strings or conductor pipe are set, fracture gradients will be low. It may be impossible to close the BOP on a shallow gas kick without breaking down the formation at the shoe. If a shallow gas kick is taken while drilling top hole then the kick should be diverted.

Drilling shallow sand too fast can result in large volumes of gas cut mud in the annulus and cause the well to flow, also fast drilling can load up the annulus increasing the mud density leading to lost circulation and if the level in annulus drops far enough then well may flow.

When drilling top hole a diverter should be installed and it is good practice to leave the diverter installed until 13 3/8" casing has been run.

SHUT-IN PROCEDURE WHILE DRILLING ON A FLOATING RIG

1. Stop drilling

2. Pick drill string off bottom to predetermined shut in point. Stop the mud pump. If flow is excessive begin next step immediately and strip drill string to close in predetermined point once well is secured.

3. Close upper annular and open choke line fail-safe valves.

4. Ensure well is shut in and begin recording shut in pressures.

5. Pass word to the OIL COMPANY REP and DRILLING CONTRACTOR REP of the well condition.

6. Pick up circulating kill assembly if it is to be used.

7. Check space out then close upper pipe rams.

8. Adjust BOP closing pressure as required for stripping and landing drill string on upper pipe rams.

9. Close hang off rams with reduced pressure. Reduce annular pressure.
(Note: there will be pressure trapped between annular and rams)

10. Land drill string on upper pipe rams, adjust BOP closing pressure and down weight on upper pipe rams to prevent the hydraulic effect on the drill string

11. Close wedge locks and adjust compensator to support drillstring weight to BOP plus 20,000 lbs.

12. Bleed off any trapped pressure between the annular and rams.

13. Open annular.

14. Complete recording of shut in pressure build up and pit gain.

15. Decide kill programme. 

SHUT-IN PROCEDURE WHILE TRIPPING ON A FLOATING RIG

1. Set slips below top tool joint.

2. Install full opening safety valve, torque connection and close safety valve.

3. Close upper annular and open choke line fail-safe valves.

4. Ensure well is shut in and begin recording shut in pressures.

5. Pass word to the OIL COMPANY REP and SENIOR DRILLING CONTRACTOR REP of the well condition.

6. Make up the top drive or circulating kill assembly.

7. Open safety valve.

8. Complete recording of shut in pressure build up and pit gain.

9. Decide kill programme.

KILL METHODS - GENERAL

The objective of the various kill methods is to circulate out any invading fluid and circulate a satisfactory weight of kill mud into the well without allowing further fluid into the hole. Ideally this should be done with the minimum of damage to the well.

If this can be done, then once the kill mud has been fully circulated around the well, it is possible to open up the well and restart normal operations.

Generally, a kill mud which just provides hydrostatic balance for formation pressure is circulated.

This allows approximately constant bottom hole pressure which is slightly greater than formation pressure to be maintained as the kill circulation proceeds because of the additional small circulating friction pressure loss.

After circulation, the well is opened up again and the mud weight may be further increased to provide a safety or trip margin.

CONSTANT BOTTOM HOLE PRESSURE KILL METHODS

There are three ‘constant bottom-hole pressure’ kill methods in common use today which are:

• Driller’s Method
• Wait & Weight Method (also known as the ‘Engineer’s Method’)
• Concurrent Method

These three techniques are very similar in principle, and differ only in respect of when kill mud is pumped down.

Shutting a Well

Heavy rain does not mean abundance of water....Singapore

THERE were no sales, just splash at some parts of Orchard Road one morning when a flood turned roads into tea-coloured canals within three hours, from 8am.

It was mid of July 2010, a whopping 101mm of rain - about 60 per cent of what normally falls in the entire month of June - led to flash floods in several other areas too.

The prime shopping belt, Orchard Road, was the worst-hit, but flooding was also reported in Bukit Timah Road, Veerasamy Road in Little India, and Thomson Road.

The flood waters spilled into underground carparks, soiled luxury handbags costing thousands of dollars at the Hermes boutique, and rendered equipment and furnishings at the three-day-old Wendy's restaurant useless.Stores at Lucky Plaza were not spared either, and retailers there said the flooding was the worst they had seen in years.

WHEN the word water appears in print these days, crisis is rarely far behind. Water, it is said, is the new oil: a resource long squandered, now growing expensive and soon to be overwhelmed by insatiable demand. Aquifers are falling, glaciers vanishing, reservoirs drying up and rivers no longer flowing to the sea. Climate change threatens to make the problems worse. Everyone must use less water if famine, pestilence and mass migration are not to sweep the globe.

The language is often overblown, and the remedies sometimes ill conceived, but the basic message is not wrong. Water is indeed scarce in many places, and will grow scarcer. Bringing supply and demand into equilibrium will be painful, and political disputes may increase in number and intensify in their capacity to cause trouble. To carry on with present practices would indeed be to invite disaster.

Why? The difficulties start with the sheer number of people using the stuff. When, 60 years ago, the world’s population was about 2.5 billion, worries about water supply affected relatively few people. Both drought and hunger existed, as they have throughout history, but most people could be fed without irrigated farming. Then the green revolution, in an inspired combination of new crop breeds, fertilisers and water, made possible a huge rise in the population. The number of people on Earth rose to 6 billion in 2000, nearly 7 billion today, and is heading for 9 billion in 2050.

Industry, too, needs water. It takes about 22% of the world’s withdrawals. Domestic activities take the other 8%. Together, the demands of these two categories quadrupled in the second half of the 20th century, growing twice as fast as those of farming, and forecasters see nothing but further increases in demand on all fronts.

Meeting that demand is a different task from meeting the demand for almost any other commodity. One reason is that the supply of water is finite. The world will have no more of it in 2025, or 2050, or when the cows come home, than it has today, or when it lapped at the sides of Noah’s ark. This is because the law of conservation of mass says, broadly, that however you use it, you cannot destroy the stuff. Neither can you readily make it. If some of it seems to come from the skies, that is because it has evaporated from the Earth’s surface, condensed and returned.

Scarce or plentiful, water is above all local. It is heavy—one cubic metre weighs a tonne—so expensive to move. If you are trying to manage it, you must first divide your area of concern into drainage basins. Surface water—mostly rivers, lakes and reservoirs—will not flow from one basin into another without artificial diversion, and usually only with pumping. Within a basin, the water upstream may be useful for irrigation, industrial or domestic use. As it nears the sea, though, the opportunities diminish to the point where it has no uses except to sustain deltas, wetlands and the estuarial ecology, and to carry silt out to sea.

Priced or not, water is certainly valued, and that value depends on the use to which it is harnessed. Water is used not just to grow food but to make every kind of product, from microchips to steel girders. The largest industrial purpose to which it is put is cooling in thermal power generation, but it is also used in drilling for and extracting oil, the making of petroleum products and ethanol, and the production of hydro-electricity. Some of the processes involved, such as hydro power generation, consume little water (after driving the turbines, most is returned to the river), but some, such as the techniques used to extract oil from sands, are big consumers.

Let's remind ourselves, water is precious, one day may come and money might not even buy you the liquid. Let's us continue to use it prudently and educating the public constantly the importance to save as much and not waste, in future, we may need to recycle our own waste product, i.e. urine, and consume the recycled product to survive.