Big Oil Companies Plan $1 Billion Gulf Containment Project

July 22, 2010

Big oil companies including Exxon Mobil Corp. and Royal Dutch Shell will spend $1 billion to develop a new oil spill containment system for the Gulf of Mexico, the companies said Wednesday.

The project, a response to BP Plc’s Gulf oil leak, will be engineered for water depths up to 10,000 feet — about twice the depth of BP’s crippled Macondo well. It will have initial capacity to contain 100,000 barrels (4.2 million gallons) of oil per day, the companies said.

The system, which will be available for mobilization within 24 hours, will be used on a wide range of equipment and in varying weather conditions and has the potential for expansion, they said.

It will consist of specially designed subsea containment equipment connected by manifolds, jumpers and risers to capture vessels that will store and offload any spilled oil.

BP’s Macondo well ruptured three months ago, causing the the worst U.S. oil spill on record after the failure of a blowout preventer that was the last line of defense for the deepwater well.

The energy industry already faces the prospect of stricter deepwater safety regulations that have broad support from U.S. politicians, so the project can be seen as an effort to demonstrate the industry’s commitment to safety.

“The ultra deepwater is where all the money is,” Kevin Book, managing director at ClearView Energy Partners LLC Washington. “It’s important to come up with answers when you want to drill in deep water.”


Oil companies banded together and founded a similar organization soon after the Exxon Valdez spill in Alaska in 1989. The Virginia-based Marine Spill Response Corp was formed to respond to oil spills and much of its available equipment is already deployed in the Gulf..

U.S. Representative Edward Markey, a Democratic member of the House Energy and Commerce Committee, characterized the plan as a “positive step,” but urged more attention to the prevention of future blow-outs.

“The oil companies must also invest more in technologies that will prevent fatal blowouts in the first place,” Markey said in a statement.

Exxon, Shell, ConocoPhillips and Chevron Corp will form a nonprofit organization, called the Marine Well Containment Company, to operate and maintain the system. The group will also shoulder any additional costs.

A spokesman for BP said the company’s current focus was capping the blown-out well, not new technology to contain future oil spills.

“We expect to be part of the overall effort moving forward,” Scott Dean, a BP spokesman, said. “Once we get this leak capped, we would fully expect to share those learnings, which is key to what this group is doing.”

The group will proceed immediately with the engineering, procurement, construction equipment and vessels for the system, with Exxon taking the lead.

(Additional reporting by Joshua Schneyer in New York and Kristen Hays in Houston, Editing by Todd Eastham and Philip Barbara)

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