OFFSHORE DRILLING

Faced with hardware failures, industry says, 'We've got this'

Andy Woodfield of GE Aviation has a hopeful message for a guy who leads off with a horrible accident. The July 19, 1989, plane crash in Sioux City, Iowa, that he opens with killed 111 people and injured 172 more, after a minuscule defect in a titanium part led to a total loss of flight control.

The crash led to some soul-searching in the aviation industry, which had long seen scattered evidence of parts failing from such defects but had never connected the dots to address them. Following the accident, enhanced industry information-sharing on the quality of materials was successful in driving a dramatic reduction in such defects and has likely prevented further accidents.

Woodfield's recent presentation came at the end of an intensive two-day workshop hosted by the National Academies of Sciences, Engineering and Medicine to address an oil and gas industry problem with unexpected breakage of connector bolts on offshore safety equipment. The deadly Sioux City plane crash is the public disaster that the industry hopes to avoid. Driven by its own history of deadly and damaging accidents, it seeks to resolve the bolt problem with as little attention as possible.

The offshore oil and gas industry's bolt failure problem is both hard to understand and tricky to pin down. The issue first surfaced in 2012 when Transocean Ltd., drilling in the Gulf of Mexico with GE Oil & Gas equipment, saw two components of the rig's blowout preventer, a critical piece of safety equipment, separate from each other during drilling operations despite being attached by a collar ringed with 36 huge steel bolts.

All of those bolts — each 9 inches long and 2 inches thick, nearly the size of a person's forearm — had cracked off, leading to the release of more than 400 barrels of drilling fluids into the Gulf of Mexico. In later examination, the steel bolts were found to have become brittle and broken apart.

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Because the accident led to an environmental release, it was reported to the Interior Department's Bureau of Safety and Environmental Enforcement, or BSEE, which oversees offshore oil and gas production. An analysis by GE and the other parties involved concluded that the bolts in question were poorly manufactured by a third-tier contractor, with an important heat-treatment step done incorrectly. As a result, the final product was prone to internal damage in the corrosive subsea work environment. BSEE urged the company to recall some 10,000 of the bolts in use on its equipment around the world and replace them with new bolts at significant lost time and expense.

The incident also set off a hunt for similar "near-miss" bolt failures that might have gone undetected by regulators and the industry. It found plenty of examples dating to at least 2003, affecting various aspects of critical safety systems. At the same time, regulators and operators began to investigate what could be causing the dramatic failures, which seemed to range across operators, equipment manufacturers and geographical regions.

Slow steps

Last year, as the industry's work groups churned slowly toward evaluating research and updating standards, federal regulators seemed to lose patience. In January, then-BSEE Director Brian Salerno published a letter to American Petroleum Institute chief Jack Gerard warning that bolt failures continued to pile up.

"I am concerned that the industry is not moving quickly enough given the potential for a catastrophic failure," Salerno wrote. "I am asking that you lead an effort to galvanize your members behind a concerted effort to create the necessary industry standards that provide consistent manufacturing requirements and procedures."

The following month, BSEE warned in a blog posting that a systemic fix "cannot wait for the issuance of a final rule or for the work of a standards committee." In August, BSEE hosted a public workshop in Washington. "It may be a matter of time before our luck runs out," Salerno said at that meeting.

BSEE, which was formed in a reorganization of the former Minerals Management Service following BP's deadly Deepwater Horizon accident in 2010, is the regulator with primary oversight of offshore drilling safety. Nevertheless, the agency's ability to push industry into a solution on the bolting problem is limited. "We'd have some authority," Salerno said last summer when asked if BSEE could force the industry to implement a fix on the issue. "Whether it would be sufficient, I don't know."

Many are watching what happens in the United States, but the problem is widely acknowledged to be global, and last year the fallout showed up in Australia. BP was pursuing a drilling program in the Great Australian Bight, the massive open bay on the country's southern coast that makes up a unique ecosystem, much of which is protected in a national marine reserve. Oil and gas exploration there was already controversial when environmental groups and other opponents learned of the subsea bolting issue.

Local press reports indicate that Australian regulators faced questions on what BP had done to guard against bolt failures on the project, and that the uncertainty around a possible catastrophic failure contributed to permitting problems for the company's planned exploratory drilling. In October of last year, facing a deadline from the Australian offshore regulator to revise its drilling plan for a third time, BP announced that it had made a decision to abandon exploration there.

Problems, large and small

Now, five years and countless working group meetings after the 2012 accident brought attention to the safety hazard, the studies seem to boil down to a prosaic problem: manufacturing shortcuts.

Most directly to blame for the unexpected bolt failures, it appears, is the use of parts from relatively new suppliers that cut corners or lack expertise in fabrication. A bolt is a simple part, but constructing them to withstand high pressures, a wide temperature range and a corrosive salt-water environment requires meeting a host of highly technical standards for shaping and treating the metal parts.

GE is one of three major manufacturers of the drilling rigs that are experiencing the bolt failures; Houston-based National Oilwell Varco Inc. and Schlumberger Ltd.'s Cameron International Corp. are the other two. All three have experienced bolt failures; none of the three has disclosed which suppliers provided the defective parts. But BSEE records indicate that at least some were sourced from contractors three steps down from the major manufacturer, beyond the reach of the quality-control practices that the big companies were using at the time.

While industry representatives steer clear of naming names and BSEE declined to release information on the matter, some in industry point to "global suppliers" — language often used as code for new, low-cost Chinese and Indian manufacturers — as culprits in the manufacturing problem.

The work groups and studies of the past few years have identified several contributing factors to the deterioration of the steel bolts that also merit attention, stakeholders say.

Environmental-assisted cracking, as the failure process is formally known, stems from hydrogen molecules migrating into the steel and compromising its chemical makeup. Research presented at the recent NAS meeting highlights several contributors to that process: the use of extra hard steel that has high strength but accompanying brittleness; the use of zinc coatings on bolts that keep them from corroding before they are put into service but accelerate embrittlement in ocean water; overly high levels of electric voltage that is maintained on rig safety equipment to limit corrosion but that can, in excess, hasten it; and a simple overtightening of bolts by work crews.

Industry insists that the bigger picture also includes many more rigs put into service in the U.S. Gulf and around the world pushing up the likelihood of failures and increasingly difficult environmental conditions that ratchet up the stress on equipment.

Voluntary measures

So far, industry's gamble with a measured response to the bolt failures seems to be paying off.

General Electric Co., the one company that carried out an aggressive recall on the bolts it said were affected, has not shared what that switch cost. A Bloomberg report in 2013 cited a GE spokesman as saying 30 to 40 of the company's customers could be affected by the recall. Industry sources say some replacements could have been made with very limited lost time while rigs were being repositioned between drilling jobs, while others could entail two to three weeks of unplanned downtime, with a cost per rig of $1 million or more per day in lost time and labor.

That range of replacement strategy and cost — stopping work to pull up safety equipment and make repairs at a potential cost of several million dollars per rig or waiting until a rig is idle to make the same replacement at minimal charge — is something that worries many observers.

While all the major manufacturers have had bolt failures, no other has opted to recall equipment. Still, at the recent National Academies of Sciences, Engineering and Medicine meeting, API said it was moving forward on a series of voluntary commitments agreed on by its members.

At the meeting, Trent Fleece, the blowout preventer team lead for BP and chairman of API's bolting work group, said the group has agreed to a series of actions to address the problem immediately, before more extensive study is completed. Work group members will replace all critical bolts in the Gulf of Mexico that have a high hardness rating this year, where critical bolts are those whose failure could lead to releases of wellbore fluids into the environment, Fleece said.

Fleece and Holly Hopkins, a senior policy adviser with API, refused to elaborate on the voluntary measures, including to describe how many bolts would be replaced or rigs affected, when the work would be completed, where the responsibility for action lies and how companies would be held accountable for the commitment. Hopkins said the work group provides quarterly updates to BSEE on its progress and that those updates include some information about replacement progress.

Fleece said the work group has also committed to better information sharing. "We're reporting those near-misses and learning from near-misses, as opposed to waiting for a drastic failure," Fleece said, though he described convincing stakeholders to change their practices based on other companies' experiences as "harder than you'd think."

Ken Armagost, who works on bolting issues for Anadarko Petroleum Corp., estimated that a single blowout-preventer stack could have more than 800 critical bolts. Penciling it out, he said, with almost 40 affected offshore rigs there could be about 60,000 critical bolts deployed. How many of those have the high hardness characteristic that would trigger a swap of bolts is unknown.

Imperfect data, imperfect decisions

If the industry's voluntary measures are completed this year as promised, will that resolve the bolt breakage problem in U.S. waters? What about drilling off the shores of other countries? Will companies carry their voluntary commitments through to environments where they don't expect regulators to keep public attention on the problem?

Cary Coglianese, director of the Penn Program on Regulation at the University of Pennsylvania, has studied low-frequency, high-consequence accidents and says they pose a particular challenge for regulation.

"It's hard to assess whether any kind of voluntary or regulatory strategy will work very well, because [by definition] we just don't have a lot of data on this kind of problem occurring," Coglianese said.

Coglianese said voluntary regulation raises questions about whether affected companies will minimize costs in ways that compromise the effectiveness of the solutions. But in cases with limited data on the level of risk and uncertainty in the appropriate response, Coglianese said, "a regulator can't be expected to know everything, and they won't know everything, and they will need to rely on industry to find solutions."

In the case of offshore drilling, one of the strongest motivators driving companies toward safety is a desire to avoid the public backlash that comes with accidents like the 2010 Deepwater Horizon. Then, a BP rig owned by Transocean exploded, killing 11 crew members and leading to the biggest oil spill in U.S. history, in which an estimated 3.19 million barrels of oil poured into the Gulf of Mexico.

The aviation industry is widely held up as a model of how finding ways to incentivize accident and near-miss data reporting that has led to real safety improvements. But Coglianese said aviation has certain differences from other industries, especially those in which the harm from an accident is concentrated heavily in environmental damage.

"The costs of a plane crash are internalized to the company due to external pressure," the researcher explained, while "the cost of environmental harms tend to be externalized ... so there is weaker pressure for companies to invest in the societally optimal level of protection."

Twitter: @JennyMandel1 Email: jmandel@eenews.net

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