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“Preventing Future Oil Spills”
– A Decision Tree Approach
Goh Peng Yang Davy
Deepa Radhakrishnan
Corina Ilmaniar
Somnath Kansabanik
Daniel Ilteris
Soumyak Sen
Phei Yee Tan
Agenda

•   Overview of the disaster
•   Aftermath of the disaster
•   Events & Decisions leading to the disaster
•   Current Risk Analysis Procedure
•   Proposed Risk Analysis Procedure
•   Optimal Decision & Sensitivity Analysis
•   Conclusions



2
Overview of the Disaster




3
Aftermath of the Disaster




•    Largest marine spill in history
•    11 casualties &17 more injuries
•    3 months to plug the leak which released 4.9 million barrels of crude oil
     into the ocean
4
Basics of Well Drilling



                          Fresh water   •   Centralizer design & cement
                                            chemistry are estimated prior to
                                            drilling
                                        •   If cement chemistry and centralizer
                          Shale             design are improved after obtaining
                                            real-time drilling logs, the probability
                          Salt water        of desired cement setting improves
                          Hydrocarbo        from 60% to 95% & probability of
                          n/Oil             good centralization improves from
                                            55% to 95%
If cement does not set,
90% chance of
hydrocarbon channeling     Without proper centralization
                           90% chance of hydrocarbon
                           channeling
5
Decisions & Events Leading
    to the Disaster
•   On April 19, Jesse Gagliano, the Halliburton
    cementing engineer, informed the BP engineer
    Brian Morel that compressive strength analysis
    (Cement Bond Log Test) for cement job has not
    been completed
•   Decision to be made on Apr 19, 2011:
      Wait for 3 additional days for centralizers to
         arrive?
      Wait for total 5 days for complete lab test
         result?

               BP did not listen to Halliburton’s recommendation to wait for more centralizers
               and Cement Bond Log (CBL) test results
               Brian Morel wrote an email to colleague Brett Cocales, saying:
                "Who cares, it's done, end of story, we'll probably be fine".
    6
Decisions & Events Leading
to the Disaster              Small, Minor or Major Oil spill
                             with 30%, 31% & 39%
                             chances of occuring


                             Failure of Well Control leads
                             to Emergency Response with
                             65% success rate


                             Failure of BOP will activate
                             Gas Detection. Well Control
                             success rate is 60%



                             BOP can prevent leak with
                             80% reliability

7
Current Risk Analysis
Procedure
                        Mitigation Plans:
                        Risk Management Plan:

                        4)BOP pressure test will be done. BOP
                        will help to prevent hydrocarbon
                        channeling
                        5)Gas Detection System will alert in
                        case BOP of failure. Well Control can
                        be done
                        6)Emergency Response Plan in place
                        to reduce severity of catastrophic
                        incident


8
Proposed Risk Analysis
Procedure




9
Risk Mitigation Procedure




10
Complexity of the Decision




11
Optimal Decision
                                                                                                                              95.0%                90.25%
                                                                                                                                   0              -7500000
                                                                                                     TRUE       Chance
                                                                                                  -3000000   -14803857.01




• Wait for Centralizers
• Wait for Cement Bond Log                                                                                                                                                   90.0%
                                                                                                                                                                                 0




                                                                                                                                5.0%       Hydrocarbon Channeling
                                                                                                                                   0           -153577140.3
                                                                                                                                                                             10.0%
                                                                                                                                                                         -1,000,000
                                                                 95.0%          Decision
                                                                    0        -14803857.01
                                          TRUE      Chance
                                       -4500000   -21592521.17




                                                                                                                                                                             10.0%
                                                                                                                                                                                 0




                                                                                                                              25.0%    Hydrocarbon channeling detected
                                                                                                                                   0            -649537290




                                                                                                                                                                             90.0%
                                                                                                                                                                                 0




                                                                                                     90.0%      Chance
                                                                                                         0   -166696822.5
                                                                                                                              75.0%                3.375%
                                                                                                                            -1250000              -5750000
                                                                  5.0%   Hydrocarbon Channeling
                                                                    0        -150577140.3
                                                                                                     10.0%      0.5%
                                                                                                  -1000000    -5500000
                          Decision
                        -21592521.17




  12
Sensitivity Analysis




13
Sensitivity Analysis



                       98% Reliability!




14
Sensitivity Analysis

•    Further sensitivity analysis keeping BOP reliability at 95%
     •   Probability of Emergency Response to control fire needs to improve by 20%




15
Insights for Oil & Gas Industry

•        Opportunity to improve the current business decision framework:
             From “gut feel” decision making to a more structured framework that “forces” the
              decision maker to consider all factors and quantify the risks/damages and rewards/
              profits (Expected Monetary Value) associated with the decisions

•        Reduce NPT (Non-productive time)
             Improve Reliability of BOP from 80% to 95%
              – Possible Action includes improving design of BOP, improving maintenance schedule
             Improve success rate of Emergency Response to control fire from 65% to 85%
              – Possible actions include training for personnel, conducting fire-drill exercises, etc


•        The framework is a good starting point for the industry to start collecting real data
         hence improving the accuracy of the probability set for each variable over time

    16
References

•    BP’s Investigation Report (Accessible at
     http://www.bp.com/liveassets/bp_internet/globalbp/globalbp_uk_english/gom_response/STAGING/loca
     )
•    US Govt Report on GOM Disaster: “REPORT REGARDING THE CAUSES OF THE APRIL 20,
     2010 MACONDO WELL BLOWOUT” (Accessible at
     http://www.boemre.gov/pdfs/maps/DWHFINAL.pdf )
•    http://en.wikipedia.org/wiki/Deepwater_Horizon_oil_spill
•    http://techcrunch.com/2010/06/21/bp-brand-value/
•    http://www.deepwater.com/fw/main/BOP-Video-1079.html
•    http://www.c-spanvideo.org/program/295154-107
•    http://www.youtube.com/watch?v=xi2K_BCPUec
•    http://www.youtube.com/watch?v=hj_r8vs2vmU
•    http://www.youtube.com/watch?v=zE_uHq36DLU



17
MERCI!




18

More Related Content

Team 1 Bp Decision Tree

  • 1. “Preventing Future Oil Spills” – A Decision Tree Approach Goh Peng Yang Davy Deepa Radhakrishnan Corina Ilmaniar Somnath Kansabanik Daniel Ilteris Soumyak Sen Phei Yee Tan
  • 2. Agenda • Overview of the disaster • Aftermath of the disaster • Events & Decisions leading to the disaster • Current Risk Analysis Procedure • Proposed Risk Analysis Procedure • Optimal Decision & Sensitivity Analysis • Conclusions 2
  • 3. Overview of the Disaster 3
  • 4. Aftermath of the Disaster • Largest marine spill in history • 11 casualties &17 more injuries • 3 months to plug the leak which released 4.9 million barrels of crude oil into the ocean 4
  • 5. Basics of Well Drilling Fresh water • Centralizer design & cement chemistry are estimated prior to drilling • If cement chemistry and centralizer Shale design are improved after obtaining real-time drilling logs, the probability Salt water of desired cement setting improves Hydrocarbo from 60% to 95% & probability of n/Oil good centralization improves from 55% to 95% If cement does not set, 90% chance of hydrocarbon channeling Without proper centralization 90% chance of hydrocarbon channeling 5
  • 6. Decisions & Events Leading to the Disaster • On April 19, Jesse Gagliano, the Halliburton cementing engineer, informed the BP engineer Brian Morel that compressive strength analysis (Cement Bond Log Test) for cement job has not been completed • Decision to be made on Apr 19, 2011:  Wait for 3 additional days for centralizers to arrive?  Wait for total 5 days for complete lab test result? BP did not listen to Halliburton’s recommendation to wait for more centralizers and Cement Bond Log (CBL) test results Brian Morel wrote an email to colleague Brett Cocales, saying: "Who cares, it's done, end of story, we'll probably be fine". 6
  • 7. Decisions & Events Leading to the Disaster Small, Minor or Major Oil spill with 30%, 31% & 39% chances of occuring Failure of Well Control leads to Emergency Response with 65% success rate Failure of BOP will activate Gas Detection. Well Control success rate is 60% BOP can prevent leak with 80% reliability 7
  • 8. Current Risk Analysis Procedure Mitigation Plans: Risk Management Plan: 4)BOP pressure test will be done. BOP will help to prevent hydrocarbon channeling 5)Gas Detection System will alert in case BOP of failure. Well Control can be done 6)Emergency Response Plan in place to reduce severity of catastrophic incident 8
  • 11. Complexity of the Decision 11
  • 12. Optimal Decision 95.0% 90.25% 0 -7500000 TRUE Chance -3000000 -14803857.01 • Wait for Centralizers • Wait for Cement Bond Log 90.0% 0 5.0% Hydrocarbon Channeling 0 -153577140.3 10.0% -1,000,000 95.0% Decision 0 -14803857.01 TRUE Chance -4500000 -21592521.17 10.0% 0 25.0% Hydrocarbon channeling detected 0 -649537290 90.0% 0 90.0% Chance 0 -166696822.5 75.0% 3.375% -1250000 -5750000 5.0% Hydrocarbon Channeling 0 -150577140.3 10.0% 0.5% -1000000 -5500000 Decision -21592521.17 12
  • 14. Sensitivity Analysis 98% Reliability! 14
  • 15. Sensitivity Analysis • Further sensitivity analysis keeping BOP reliability at 95% • Probability of Emergency Response to control fire needs to improve by 20% 15
  • 16. Insights for Oil & Gas Industry • Opportunity to improve the current business decision framework:  From “gut feel” decision making to a more structured framework that “forces” the decision maker to consider all factors and quantify the risks/damages and rewards/ profits (Expected Monetary Value) associated with the decisions • Reduce NPT (Non-productive time)  Improve Reliability of BOP from 80% to 95% – Possible Action includes improving design of BOP, improving maintenance schedule  Improve success rate of Emergency Response to control fire from 65% to 85% – Possible actions include training for personnel, conducting fire-drill exercises, etc • The framework is a good starting point for the industry to start collecting real data hence improving the accuracy of the probability set for each variable over time 16
  • 17. References • BP’s Investigation Report (Accessible at http://www.bp.com/liveassets/bp_internet/globalbp/globalbp_uk_english/gom_response/STAGING/loca ) • US Govt Report on GOM Disaster: “REPORT REGARDING THE CAUSES OF THE APRIL 20, 2010 MACONDO WELL BLOWOUT” (Accessible at http://www.boemre.gov/pdfs/maps/DWHFINAL.pdf ) • http://en.wikipedia.org/wiki/Deepwater_Horizon_oil_spill • http://techcrunch.com/2010/06/21/bp-brand-value/ • http://www.deepwater.com/fw/main/BOP-Video-1079.html • http://www.c-spanvideo.org/program/295154-107 • http://www.youtube.com/watch?v=xi2K_BCPUec • http://www.youtube.com/watch?v=hj_r8vs2vmU • http://www.youtube.com/watch?v=zE_uHq36DLU 17

Editor's Notes

  • #4: On the April 20, 2010, an explosion happened on rig called Deepwater Horizon, 9-year-old semi-submersible rig, owned by Transocean and leased to BP with daily operation cost of 1.5 million dollar . The Name of the well was Macondo, an Exploratory well drilling at 18,000 feet.
  • #5: “ This is the largest accidental marine oil spill in the history of the petroleum industry. The explosion killed 11 men working on the platform and injured 17 others. On July 15, 2010, the leak was stopped by capping the gushing wellhead after it had released about 4.9 million barrels (780,000 m3) of crude oil. An estimated 53,000 barrels per day escaped from the well just before it was capped.” Source of Video: http://www.youtube.com/watch?v=hj_r8vs2vmU http://en.wikipedia.org/wiki/Deepwater_Horizon_oil_spill
  • #6: To develop a new well, a hole is drilled till the targeted oil zone and then casing is run. Then liquid cement slurry is injected into the annulus between hole & casing to provide zonal isolation. If casing is not centered in the hole due to incorrect number of centralizers or liquid cement slurry not solidified due to improper cement chemistry, hydrocarbon may channel to surface with 90% probability. Prior to actual drilling, preliminary design of centralizers requirements and cement chemistry are usually done. After drilling of hole completed, original design of centralizers requirements and cement chemistry are revised based on log results taken on the actual hole. If this new design is verified using complete lab test (Cement Bond Log Tests), the probability of cement setting properly improves from 60% to 95%. The revised centralizers requirement based on log improves probability of good centralization from 55% to 95%.
  • #7: If Centralizers requirement changes based on the log results, 3 days usually needed to get new centralizers. Due to limited rig space, extra centralizers are not always available at the rig site. If cement chemistry needs to be redesigned based on log results, only thickening time test can be done during the time when casing is run. Cement Bond Log Test takes total 5 days to complete (2 additional days after waiting for centralizers) Source: Page 43, REPORT REGARDING THE CAUSES OF THE APRIL 20, 2010 MACONDO WELL BLOWOUT Video Source: http://www.c-spanvideo.org/program/295154-107
  • #8: In this case, Nitrogen based foam Cement probably did not set properly or bad centralization caused hydrocarbon to enter through float shoe & Annulus, however BP failed to react to failed pressure test on well integrity If Hydrocarbon channels, then Blow-out preventers (BOP) are 80% successful in preventing hydrocarbon going to surface. If BOP fails, Gas Detection System usually detects hydrocarbon with 90% accuracy. Proper Well Control following alert by gas detection can control situation in 60% of all the cases. If all above measures fail, emergency response can still control the situation with 65% probability with loss of 2 million. Otherwise oil spill of size small (10 M Loss), medium (319 M Loss) and Major (10 Billion Loss) can happen with 30%, 31% and 39% chances respectively. If cement does not set, a remedial job would be needed with cost around 1 million dollar. If Hydrocarbon channels up to surface, Well kill/control needs to be done with cost 0.5 million. BP’s Investigation Report (Accessible at http://www.bp.com/liveassets/bp_internet/globalbp/globalbp_uk_english/gom_response/STAGING/local_assets/downloads_pdfs/Deepwater_Horizon_Accident_Investigation_Report.pdf And Via YouTube at http://www.youtube.com/watch?v=zE_uHq36DLU) http://techcrunch.com/2010/06/21/bp-brand-value/ Below is an excerpt from the Australian report on Montara Oil Field spill. This gives us a firm number on probability. This oil field leak and explosion was also attributed to a failed cement job. It leaked for 79 days and cost $319m. "The first was undertaken by the Bureau of Transport and Communications Economics in 1991,11 and concluded that, with respect to platform and pipelines and based largely on United States of America data: “… the probability of one or more major oil spills occurring could be 39 per cent in the next five years and 83 per cent in the next 20 year s.”12"
  • #10: On the April 19th, BP engineer had two decisions to make either wait for centralizers or do not wait for centralizers. If they wait, a chance of good centralization is 95%. If they don’t wait for extra centralizers chances of good centralization is only 55%. If they chose to wait for centralizers, then they have to decide whether to wait 2 additional days for cement bond log test. If they wait for lab test confirmation, chances of good cement formation increases to 95%. Otherwise chances of good cement setting are 60%. In cement does not set, there is 90% chance that hydrocarbon channeled via annulus. Same tree is applicable in all cases including the node where bad centralization causing 90% chance that hydrocarbon may channel up to surface. If hydrocarbon goes up to surface, BOP can prevent leak of hydrocarbon with 80% reliability. In case of leak via BOP, Gas Detection alerts with 90% reliability. In such situations well control methods work in 60% cases. If Well Control fails, emergency response works in 65% cases. Otherwise small/medium/major spill can happen with 30%, 31% and 39% probabilities. The same tree applied to all cases involving hydrocarbon leaks.
  • #17: Opportunity to improve the current business decision framework which is mostly based on the “gut feel” of the personnel to a more structured framework that “forces” the decision maker to consider all factors and quantify the risks/damages and rewards/profits (Expected Monetary Value) associated with the decisions The new framework not only enables the decision maker to make the most educated decision, but also clearly identify areas for improvements to reduce (Non-productive time) NPT moving forward Reliability of BOP (E.g., 80% to 95%) E.g., improving design of BOP, improving maintenance schedule, etc Probability of Emergency Response to control fire (E.g, 65% to 85%) E.g., training for personnel, conducting fire-drill exercises, etc The framework is a good starting point for the industry to start collecting real data hence improving the accuracy of the probability set for each variable over time http://www.deepwater.com/fw/main/BOP-Video-1079.html