The insurance companies did not apparently know

deepwater horizon by NASA Goddard Photo and Video

NYTimes: Finally, the BIG B.O.P. story. BP Knew. MMS Knew. They all knew, they were warned again and again.
[Via Knight Science Journalism Tracker]

Now I know about blind shear rams and shuttle valves in a hydraulic T-joints and how they are supposed to work. And I know that drill pipe is connected with joints – like the buckles on a soft leather belt – and if a blind shear ram tries to slice through and pinch off a raging oil well’s center pipe and hits one of the joints, it won’t work. And that shuttle valves can leak. And that if one has TWO blind shear rams, the last line of defense, it cuts drastically odds for failure. And that repeated studies had concluded that all deepwater wells should have two blind shear rams but Deepwater Horizon’s managers elected to use just one. I know the Minerals Mgt. Service had those studies, and yet, and yet ….. nobody was sufficiently grown up and brave enough with the company’s check books or the government’s theoretical power of oversight to be sure that the last-ditch way to stop a blowout would actually work.

Could have guessed all that in fuzzy detail. And the above barely represents the size of the gusher of their own that a NYTimes team, David Barstow, Laura Dodd, James Glanz, Stephanie Saul, and Ian Urbina unload today (with tagline credit to Michael Moss and Henry Fountain). Their account pummels the reader repeatedly with separate reports, instances, vignettes, historical incidents, and warnings in plain English from several independent groups of consultants and industry engineers all saying the same thing: blowout preventers or B.O.P.s are more like B.O.M.P.s, with the M for maybe.


It is wonderful that this is making it into the major media now. But a lot of this was actually discussed on The Oil Drum over the last few weeks. Many people in the business have watched BP take risks that other oil companies have not. Now it has to bear the consequences.

And this is probably going to have a bigger effect on drilling in the deep than anything the Administration is planning – insurance rates. The industry itself seems to be surprised with just how much this is going to cost insurance agencies. Deepwater rates have already increased 50%.

Companies that self-insure are going to have to take a hard look now at possible costs. A 10% increase in costs could render at least 7 discoveries in the Gulf of Mexico unproductive. SInce the moratorium is affecting about 34 wells now, it seems very likely that higher insurance costs could have long term effects. Some wells may now never be drilled because of the higher costs due simply to insurance in case of a spill.