Petrobras comes to NZ

It seemed strange to have Minister Brownlee fawning all over Russel Norman during question time in the House yesterday, eager to stress how much he cares about oil drilling safety.

Russel was repeating his challenge to the Government to halt all drilling programmes until such time as the industry demonstrates that it can handle a leak in deep water conditions.

What Russel didn’t know at the time was that only an hour later, Minister Brownlee would be hosting the Brazilian oil giant Petrobras upstairs on the 9th floor of the Beehive, to sign off on an exploration permit in the Bay of Plenty.

If there is one thing the Deepwater Horizon spill in the Gulf of Mexico makes abundantly clear is  that oil companies are working beyond the limits of their technology, and human and environmental safety is at risk.

There is no doubt,” Bea told NBC News Senior Investigative Correspondent Lisa Myers in an interview this week, “that safety was compromised. The biggest underlying problem of all, Bea says, is that “we horribly underestimated the risk.”

Ironically, Petrobras had a rig explode and sink in 2001, also costing 11 lives. While that was a clear case of human error and not a blowout, it too was exacerbated by cost cutting and technical failures that could have mitigated the damage.

As we desperately try and prop up our growth economies with cheap fuel, we are being forced to take bigger and bigger risks to grab bits of a smaller and smaller fossil energy pie.

Peak oil will only increase the frequency and impact of this type of accident. It’s high time we called a halt to further exploration and re-evaluated our priorities.

44 Comments Posted

  1. Right, thanks BJ. In that case, partial relief wells seem a perfectly reasonable safety directive.


    Drilling the second and third wells to a position close to the first is a perfectly reasonable thing to do. Moreover, because the target for these wells is not the actual oil structure, they remain essentially dry holes ready to be invoked at need with very little additional drilling. The rig that drills them waits until the production well and wellhead is is fully and safely installed.

    For a well this deep where the potential consequences are this severe it should be required.

    The only thing in mitigation of BP’s culpability is that it is doubtful that they had any clue the consequences could be THIS severe until hindsight became available.


  3. I thought a relief well was just the same as the primary well. It’s designed to drill into the reservoir to enable oil to be extracted to relieve the pressure, is it not? If so, then each relief well will need two relief wells drilled first. If we carry on like that, no wells will ever be drilled …. OH

    So that’s the plan – insist on safeguards that ensure no more wells are drilled. I’d go along with that!

  4. My first choice was a liquid N2 or CH4 filled balloon or cold-spike.

    They are about to set up to recover to a floating platform that is going to HAVE to stay in place through the hurricane season because they have no capacity to shut off the flow.

    Just to keep everyone focused on the really encouraging bits, the relief well progress can be interrupted by the big winds as well.

    As for nukes, I don’t think the bottom structure there is so sound that a nuke is going to do that much good. Whatever oil isn’t vaporized could just as easily escape all at once as a result.

    What is clear is that they have no capacity for blocking one of these holes that deep. They have not got the tools to do it. Which means that the importance of avoiding such failures has to approach things with as much or more fail-safe engineering as a nuclear plant or a space-telescope. It can’t be FIXED if it breaks that way, so you design it so it can’t break that way. You think hard about requiring relief wells to be drilled at the same time the primary hole is drilled. Expensive but you need the relief wells anyway. Put them in first.

    The fact that such measures were NOT taken is evidence of gross failures at the management level, but hey, its a self-regulating industry in the US. As Brownlee says, we can trust that they’ll take such precautions out of their own self-interest, to avoid liability.

    Which of course almost adroitly sidesteps the inconvenient FACT that even in the litigious environment of the USA, they weren’t bright enough to do that… and I would vastly rather have a clean Gulf than a bankrupt BP.

    Brownlee won’t make a commitment.

    He is quite clear that he DOES NOT want to say anything about what limits the government is prepared to put in place for the safety of the environment because he clearly does not know of and is ideologically opposed to ANY such limits.

    Russell was polite but insistent. Good work but we need someone to play attack dog too. The press loves it when the words are sharp enough to draw blood and these ARE our issues.


  5. greenfly – It says there’s only a 20% chance of nuclear fallout in the greater gulf region.

    What the hell – lets go for it. Let’s nuke it!

    (this from a blog that is complaining about environmental safeguards)

  6. greenfly – of course it make no sense. It’s talking about the blog you linked to which (if you read it) claims experts are looking at nuking the BP spill to fix it.

  7. greenfly – you talk about dishonesty, but the link it so doomsday scnario blog which is claiming there is serious consideration of fixing the BP leak with a nuclear bomb.

  8. photonz1, I didn’t say we needed to replace oil with renewable energy; I said that people will be screaming very loudly as we head down the oil production decline. What we don’t need is the replace oil with renewable energy; instead, we need to start living sustainably and that means powering down, not just switching to another energy source.

    But you’re absolutely right that we are all to blame for the predicament we find ourselves in. I rail at oil companies, though, because they have been trying for years to slam the idea of peak oil, thus wasting our chance of making a smooth transition down. And BP, in particular, appears to have been one of the worst environmental and safety offenders (though not the only one).

  9. Tony – I agree that we need to replace oil with renewable energy.

    I just find it hypocritical that everyone blames the oil companies when we all still buy consumer products from around the world, shop at the supermarket, go on holidays, drive in cars or buses etc.

  10. great develpments here for the public consciousness.. wot..

    Toad @ June 3, 2010 at 1:02 PM

    was onto it.. and on coming back for a looksee I was reminded therein of the brazilian team – they could be public, they could be private, but whatever they speak fluent portugise – witha big name in oil mining the sea. Yep, the sea, separating all those oil leaks in slick ops to seagoing tankers. Sort o’ mopping up ops you might say, though with a former mindset which allowed leaks in the ‘margin of error’ excuse for lousy drills was okay in the industry..

    Not so for modern economic governments… and said here and now just so our crowd at least stay in touch..

  11. photonz1,

    we’d scream even louder if we couldn’t get petrol at all

    Yup, and, now oil production is in irreversible decline (or soon will be), I’m sure we’re going to be seeing a lot of people screaming even louder, before too long.

    You do realise that oil is, essentially, a finite resource, don’t you?

    Oil and other resource extraction companies damage our biosphere performing an activity that will ultimately become impossible anyway. Is that a definition of madness, stupidity, greed or all three?

  12. but we scream when petrol prices go up

    Check your hearing mate, that’s cheering you hear around here.


  13. So we don’t want companies to drill for oil, and we don’t want them to make profits, but we scream when petrol prices go up and we’d scream even louder if we couldn’t get petrol at all.

    nommopilot – if you think BP cream massive profits, how do you explain that their market cap is less at the start of 2010 is lower than it was a decade earlier (and and now a third lower again since the spill).

    There is a really ignorant attitude among SOME/MANY lefties that all big business is absolutely creaming it and screwing consumers. Just like the electricity companies that are supposedly creaming massive profits, when in actual fact the likes of Contact in fact are only making a 6-7% profit on revenue earned.

    Those greedy shareholders are getting an after tax dividend of a massive 4 and a half percent for their investment and risk – how disgusting. And predictions are that dividends will stay at these extrodinarily high 4.5% level for the next several years.

    That doesn’t leave a lot of spare cash to invest in renewable energy.

  14. If the Deepwater Horizon tragedy can tell us anything it is that pursuit of the impossible dream of eternal economic growth is unatainable. Peak Oil, if it not here already is surely obvious to all when we’re now down to drilling many kilometres below kilometres of sea, for a reservoir that holds 12 hours global consumption of recoverable oil. Of course, it would have been profitable for BP, if it hadn’t gone wrong, but we’re down to the dregs and still the world believes that the party can go on forever.

    On another point, I see that there is to be a single agency for drilling consents and safety enforcement, the Environmental Protection [sic] Agency. Didn’t the Americans just split their one-stop shop for reasons of corruption? Enforcement and consents in one agency is surely a recipe for disaster.

  15. “I’d disagree they were working outside the limits of their technology – managers just put profits before safety… ”

    oh that’s ok then. As long as our government isn’t unduly motivated by profit our marine and estuarine ecosystems are safe…

    “all for the massively extravagant 6% profit they make revenues”

    yes… weird how they managed to become such a massive and rich company with such measly profits though, ay? maybe they have clever financial magicks for maximising their true profits?

    Anyway, back to Petrobras: What exactly is the agreement our government has signed us up to? If Petrobras find something what happens? How do Petrobras make money from the deal? When do we all get to live like Saudi oil barons?

  16. Yes greenfly – BP are driven by greed. Absolutely screwing consumers with high prices, while cutting corners – all for the massively extravagant 6% profit they make revenues (average after tax profit margin in 08 and 09 years).

    Personally, I would never invest in a company in a high risk sector when they only make a measly 6% on turnover.

  17. “It’s disingenuous to place all the blame on big oil companies, when they wouldn’t exist if it wasn’t for us.”

    Let’s give them a free pass then shall we, wee lambs!

  18. Toad – I note you don’t have the spill records for the last decade.

    According to Greenpeace, Petrobras initiated the largest safety programme in oil industry history, resulting in a 97% reduction in spillage between 2000 and 2002, and a 90% reduction in accidents.

    In fact Greenpeace states that with the implemetation of that programme it’s interests were met, and that the only way to stop oil spills completely is to stop drilling for oil.

    In the meantime we can complain about this all we like, but we still buy our milk in plastic bottles, after it has been trucked to the factory then the supermarket, we drive to the supermarket, drive or bus to work, go on holidays and purchase consumer goods, most of which have been transported from the other side of the world – then say it’s all BPs fault and it’s nothing to do with us.

    If we buy things, travel and eat – there will be a demand for oil. And if there is a demand for oil, there will be spills.

    It’s disingenuous to place all the blame on big oil companies, when they wouldn’t exist if it wasn’t for us.

  19. And in the leadup to the P-36 sinking, photonz:

    March 1975, 6 million litre spill, Guanabara Bay
    October 1983, 3 million litre spill, Bertioga
    February 1984, 700,000 litre spill, 93 dead, Cubatão
    August 1984, 37 people dead, Enchova submarine
    August 1989, 690,000 litre spill, São Sebastião
    January 1994, 350,000 – 400,000 litre spill, Campos Basin
    May 1994, 2 – 3.1 million litre spill, São Sebastião
    March 1997, 600,000 – 2.8 million litre spill, Guanabara Bay
    October 1998, 1 – 1.5 million litre spill, São José dos Campos
    January 2000, 1.3 million litre spill Guanabara Bay
    March 2000, 18,000 litre spill, Tramandaí
    March 2000, 7,250 litre spill, São Sebastião
    July 2000, 4 million litre spill, Barigui Iguaçu Rivers
    August 2000, 1800 litre spill, Rio Grande de Norte
    August 2000, 4000 litre spill, Angra dos Reis
    November 2000, 86,000 litre spill, São Sebastião

    As you say, they’ve been world leaders in deep sea drilling industrial accidents and environmental degradation for decades.

  20. Greenfly says “Petrobas is the world leader? YES – it’s well known. They’ve been the world leaders in deep sea drilling for decades.

    “I wonder if BP claimed the same thing up until…you know… the unfortunate event”

    NO – I’ve nver heard BP claim to be the world leader at deep sea drilling, because it would be so obviously wrong.

    Petrobras has gone from a company that once traded chickens for oil, to having the ability and expertise to drill at depths that other companies don’t and can’t, which is a major reason it has now become a major player on the world oil market (now at fifth largest I beleive).

    The mile deep well that BP are now struggling with is at a depth that Petrobras were drilling at 40 years ago, when no one else thought that was possible.

    They are clearly the world leader at deep sea drilling, and have been for decades.

  21. I’d disagree they were working outside the limits of their technology – managers just put profits before safety… If I followed 60 minutes last night a manager instructed workers to remove the mud that was protecting the well before Halliburton could put in three safety plugs…

    That isn’t a failure of technology – just H & S…

  22. “but in the case of deep sea drilling Petrobras is the world leader, and NZ has no experience.”
    Experience and knowledge are different things and NZ could ensure they don’t enter into agreements blindly (or partially sighted). I think we will become more aware of the down sides of free trade agreements, too. To let large multinationals get a foot in our door we have to ensure they won’t move in and take over our house. Guests are only welcome when they respect our ownership and we both benefit from the relationship, and when accidents happen who will shoulder responsibility.

  23. Petrobas is the world leader?
    I wonder if BP claimed the same thing up until…you know… the unfortunate event

  24. sprout – I agree there needs to be some checks and balances with foreign investment, but in the case of deep sea drilling Petrobras is the world leader, and NZ has no experience.

    Just been to Scotland and there’s a noticable economic benefit around the towns that service the oli rigs, compared to those that don’t, so the UK hasn’t completely missed out.

  25. photonz1-Not necessarily but there has been an almost fanatical support for having foreign investment with few doubtful checks and balances. I would have thought we had learnt our lesson after the 80’s but there seems to be a “Back to the Future” feeling about this current government.

    Norway made sure oil profits were fed back into public coffers, the UK allowed much of these same profits feed the multinationals.

  26. Sprout – so who should do deep sea drilling?

    Are you suggesting local companies should conduct deep sea drilling, even though they have zero experience at this, ahead of the one company that is acknowledged as the world leading expert in deep sea drilling?

    Surely this would be putting money ahead of risk to the environment.

    (though it’s likely that a big foreign investment will have far greater benefit to NZ than a minor local one)

  27. “Gosh, don’t ya just hate it when foreign capital is invested into New Zealand.”

    Who did best out of the North Sea oil, the UK or Norway? Having control over your own destiny has its benefits. Foreign capital often has a price and New Zealand has lots of examples of foreign investment gone wrong.

  28. Hell – we don’t want mining or drilling here. Of course our economy would die without these products but why should we risk our environment when we can get other countries to risk theirs.

  29. Hey guys.. have a thought for poor old Ollie (above).. after all he was only sticking out his soup bowl and asking for more… to which my only response would have to be that the petrobras boys are taking a punt.. period. and there’s a lot of those through four years of testing and reading the ‘tea leaves’..

    Done right that four years – mostly elsewhere – will turn up a failsafe operating routine.. that clearly does not exist at the moment.. Else all those stock prices could amount to tall columns of concrete, so to say, right down to the ocean floor. Yep. this business will have guys learning that they need the legs to continue making a go of oil exploration..

  30. Gosh, don’t ya just hate it when foreign capital BP’s oil is invested injected into the Gulf of Mexico.

  31. We should not allow Petrogas to do to Aotearoa what BP and the US govt has done to the Gulf. This is tantamount to agreeing to the mining issue, if not more so.

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