As the Department of Interior moves forward with deepwater drilling permits, do the appropriate containment solutions exist if a spill were to occur? During today's OnPoint, Owen Kratz, CEO of Helix Energy Solutions, discusses his company's Fast Response System for containment. He also talks about movement by DOI to issue new deepwater drilling permits.
Monica Trauzzi: Hello and welcome to OnPoint. I'm Monica Trauzzi. Joining me today is Owen Kratz, CEO of Helix Energy Solutions. Owen, thanks for coming on the show.
Owen Kratz: Thank you for having me.
Monica Trauzzi: Owen, Helix has introduced new spill containment equipment that's available and ready for lease right now. What's different about your fast response system?
Owen Kratz: I don't think there's that much different about the fast response system. This is essentially the equipment and the methodology that was successfully used to stop the Macondo well. So it's a matter of the technology is there, the equipment is there. We've had a year now to assess can we do this faster than we did it on Macondo? And I think the resounding answer is yes. And the reason is because we have multi-producer support. All the procedures are written, the contracts are in place, so now we're able to basically do what we did on Macondo, but a lot faster.
Monica Trauzzi: So, how many days then are we talking about for a spill to be contained with use of this type of equipment?
Owen Kratz: One of the biggest steps forward I think for the industry was coming up with the requirement to have the casing design and then do your casing integrity calculations, so you know whether or not you can shut in a well or not. If you know that, then the total containment requirements is a containment cap. And to set that cap is as short as three or four days. If you have a well then -- or for some reason the cap is insufficient and you have to flow back, then there is the flow back technology that was used on Macondo ready today with all the procedures. And for that scenario you're talking about 10 to 15 days.
Monica Trauzzi: So, would this equipment have been successful in last year's Gulf spill, for example, or was that too large of a scale, too much flow back happening there for this to work?
Owen Kratz: It's hard to look back on Macondo because of the lack of information or as the information came out and the assessment of the decisions that had to be made along the way there. I fully understand the position that BP was in at the time. The track that we've been on this year is let's look back at all the difficulties that make responding to a crisis time consuming and let's try and get through most of those upfront, so that we're better prepared. And that's what we've been doing. So it's hard to look back and say that Macondo would've been any different, because the difference between Macondo and now is the level of preparedness.
Monica Trauzzi: So, as DOI begins to issue new deepwater drilling permits, the big question is, is safety going to be addressed? Can you guarantee that with the use of this equipment we won't see dramatic accidents like we saw last year?
Owen Kratz: Oh, a guarantee is a pretty strong word, but I think if you look at the industry previously was totally focused on prevention. Since Macondo, the industry has doubled down on its efforts on prevention. The DOI has been clear and the industry understands that prevention alone isn't enough. Therefore, there needs to be something further. Following the Valdez incident spill recovery was put in place, but the missing link has been the containment. And now I think the industry has responded and has added that missing link of containment, which is yet another backstop to if you do have an event, is the impact going to be the same as Macondo? And that, I think, you could pretty categorically say we have the ability to mitigate the impact of an event.
Monica Trauzzi: You've been testifying this month on the Hill about containment. What's the reaction been to the system that you guys have in place and how it could help things moving forward?
Owen Kratz: I think it's been very positive. In fact, I think this has been a very well received effort on our part by the Hill and there's been a lot of support for us going forward. And there's been an awful lot of collaboration in defining what we need to do and how we do it between the containment group, the HWCG, and the BOEM, as well as the Coast Guard. I think all of the parties have been collaborating well.
Monica Trauzzi: Are there specific regions or areas that this technology would be better suited for?
Owen Kratz: Globally you're talking about? I think the technology is applicable everywhere, whether or not they assess the needs the same as the Gulf of Mexico. Our focus has really been on what does the Gulf of Mexico need?
Monica Trauzzi: Have you been consulting with international counterparts on the experience that they've had with containment as you move forward with your plans?
Owen Kratz: We've had some dialogue exchanging ideas. I wouldn't say that it's collaborating on either our system or theirs, but there's certainly been a lot of dialogue in sharing the various approaches, the various viewpoints and it's been very positive.
Monica Trauzzi: What's your take on how the Obama administration has handled deepwater drilling following last year's incident in the Gulf? Are they being appropriately cautious?
Owen Kratz: I think they've certainly been cautious. That's a very difficult question. You look at other incidents around the world and you ask, you know, is the caution that necessary? I think you have to start from the premise that, you know, producers aren't out there to create the incidents. You know, I think the producers are highly motivated in their own right to try and produce the hydrocarbons as safely and without impact as possible. I think Macondo was an unfortunate event. I don't think it was a likely scenario to be repeated, especially in light of the provisions and the focus that's put on it now. And, even if it were, I think we've now done the next step, which is to assume that in spite of best efforts it's going to happen. What do we do to mitigate the impact?
Monica Trauzzi: OK, we'll end it there. Thank you for coming on the show and thanks for watching. We'll see you back here tomorrow.[End of Audio]