Deep-water safety defect threatens global offshore drilling

Global Impact

“If needed, we will take the appropriate safety steps,” she said. “Currently, our operations have not been impacted.”

Diamond Offshore Drilling Inc. is replacing bolts for connectors on about 30 of its blowout-preventer packages around the world, including two in the Gulf of Mexico, John Vecchio, executive vice president for the Houston-based company, said in a phone interview yesterday.

The “vast bulk” of the bolt replacements should be done in the next six weeks, Gary Krenek, chief financial officer for Diamond Offshore said in the interview.

Replacing all bolts on all blowout preventers would have a “significant impact” on the offshore drilling industry, Matt Ralls, chief executive officer of Rowan Companies Plc, told investors yesterday at a conference in Vail, Colorado.

Industry Backlog

“Everything these days is on significant back order,” Ralls said. “Deliveries have been pushed out on everything and I’m sure if they have to replace all those bolts, it will take a while to get through the whole fleet.”

The bolts targeted by regulators are used “in every major producing region of the world, and in every type of offshore environment,” according to GE’s website.

Sales at GE’s oil and gas division totaled $15.2 billion last year, more than double the amount five years earlier, according to filings with the Securities and Exchange Commission.

Corrosion caused by hydrogen in the liquids in the drilling pipe occurs frequently and can be prevented if operators use the right kind of steel in their equipment, according to Les Ply, a retired drilling engineer who has worked for ConocoPhillips and other operators.

“This concern adds to numerous transitory risks facing the offshore drillers as the new rig delivery cycle unfolds and investor focus shifts to delivery execution, potential cost overruns and unplanned downtime on recently delivered units,” James West, an analyst at Barclays Plc in New York, wrote yesterday in a note to investors.

Bloomberg News

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