News this week goes from sky high to the deep ocean. Starting with the highs, we note that Delta Air Lines is now in the refining business.
It seems the air carrier wants to cut its bill for jet fuel. For a mere $150 million, Delta acquired the Trainer Refinery near Philadelphia from Phillips 66. For another $100 million, the airline company will refurbish the plant to increase the output of jet fuel.
The state of Pennsylvania agreed to provide $30 million as part of a deal to support job creation.
Delta expects to cut its annual fuel bill by $300 million. The company also signed a crude supply contract for three years with BP. The airline will then swap the other refinery products — gasoline, diesel, etc. — with BP for more jet fuel.
That could be the difference between a profit and a loss for the airline. Maybe having all of the airlines buy refineries will keep some of the East Coast facilities open that would otherwise be closed.
As for going off the deep end, much of the buzz at the 2012 Offshore Technology Conference is on operations in very deep water.
One presentation discussed a scientific project that involves drilling a well in about 14,000 ft of water. The project is designed to retrieve core, not to produce oil. It is expected to be the deepest offshore drilling with a riser.
The current record for deepwater drilling with a riser was set in April by Transocean in 10,194 feet of water for a well offshore India that was looking for oil or gas.
The new well will be drilled by the Integrated Ocean Drilling Program, which replaced the Deep Sea Drilling Project (DSDP) several years ago. The IODP researchers will be trying to drill another 20,000 ft below the seafloor.
Of course deepwater drilling is nothing new for DSDP, which drilled the seafloor without a riser. The record water depth for DSDP is 23,245 ft.
OTC hasn’t gotten quite that deep yet, but the Reliant Center in Houston is packed with industry participants from all parts of the globe. Still the premier oil and gas conference and exhibition, this year’s version is focusing on deepwater operations as the industry continues to push the limits of exploration and production.
At the same time, the industry recognizes the risks inherent in trying to keep a rig floating on the surface attached to a wellhead in 10,000 ft of water.
Many of the newest drilling rigs are designed to operate in 12,000 ft, but the technology may not be there quite yet. Risers will likely need to be redesigned. Additional mud pump horsepower would likely need to be boosted.
The industry isn’t quite sure that the extra 2,000 or so ft would be worth the additional expense.
However, the industry is alive and well. And, there is plenty of exploration and production in 5,000 to 10,000 ft of water to keep the industry busy for quite a few more years.
Contact the author, Scott Weeden, at email@example.com.
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