DOI Calls for Drillers to Inspect, Replace Bolts after Defects Found

The U.S. Department of the Interior (DOI) has directed U.S. Gulf of Mexico drilling operators whose rigs have a lower mariner riser package (LMRP) H4 connector manufactured by GE Oil & Gas' Hydril division to cease operations and to inspect and possibly replace these bolts after defects were uncovered on some rigs.

GE Oil & Gas issued a notice Jan. 29 to customers calling for them to inspect and remove the bolts after the upper and lower bodies of a H4 Connector contained in the LMRP of a rig operating in the U.S. Gulf of Mexico separated.

A recent investigation indicated that stress corrosion cracking caused by hydrogen embrittlement contributed to the separation of the upper and lower bodies of the LMRP, according to a GE statement.

GE is conducting a root cause analysis into the incident. Additionally, the company has been recently made aware of two additional data points found during surface inspections of the identified bolts. Both instances are being investigated.

The company has expanded the safety notice to include all H4 Connector bolts (P/N H10004-2) produced from June 2007 to October 2009 in the H4 product family, including E, DxE, ExF, HD and DWHD.

While GE is investigating the production history of these H4 Connector bolts, a preliminary investigation has indicated bolts produced during this time are more susceptible to hydrogen embrittlement.

The safety notice does not affect the SHD Connector, GE commented.

The faulty bolts should concern mainly older rigs, DOI commented.

"Operators are currently evaluating which rigs have the faulty equipment, but at this time it looks like this will have a minimum impact on the drillers as this equipment is produced over a short period of time," DOI added in a statement.

Recently delivered rigs with the Hydrill blowout preventer (BOP) that have a Super HDH-4 connector were mostly delivered after 2009, and DOI has no indication that these rigs would be affected.

Officials with DOI's Bureau of Safety and Environmental Enforcement met with industry officials late last month to discuss the initial finding associated with a pollution incident involving the discharge of a synthetic base mud in the Gulf due to a loss of integrity of a LMRP H-4 connector. During the meeting, it was introduced that zinc electroplating without proper baking, as per ASTM B633, was a possible cause of hydrogen embrittlement. BSEE was also informed during this meeting of two other rigs as having H-4 connector bolt failures.

On Jan. 25, BSEE received information from GE which identified rigs as having BOP stack connectors that may contain bolts that may no longer be fit for purpose. BSEE then contacted operators associated with this subset of rigs currently operating in the U.S. Gulf of Mexico, asking them to halt operations until the existing bolts on the LMRP connector/wellhead connector could be changed out with bolts that have been certified by an independent third-party to comply with recommended heat treatment practices or if existing bolts have been examined and certified as fit for purpose.

Though the notice covers the entire Outer Continental Shelf, the issue is only for subsea BOPs, which are typically used for floating rigs, according to a Feb. 2 research note from Barclays Capital. GE holds approximately 50 percent market share for the deepwater Gulf BOP market.

Industry sources indicate that 159 connectors from GE's Vetco division have issues. Drilling contractor Transocean Ltd. is estimated to have 60 rigs and Diamond Offshore Drilling, Inc. has approximately 30 rigs. Rigs belonging to Noble Drilling and Ensco plc are believed to be impacted, while three Seadrill rigs were affected.

While U.S. Gulf rig operators will have to stop operations to pull the BOP and fix the problem, it is believed that drilling operators operating worldwide – at least in Brazil – the bolts will be repaired the next time the BOP is pulled for a normal reason such as a new well.

For rigs operating in the U.S. Gulf of Mexico, it is not known how this will play out in terms of rigs being on day rate or not when the bolts are fixed. According to one drilling contractor, one day per BOP in time of fixing the bolts, excluding pulling and setting the BOP, could total two weeks.

A final issue is whether the rig owners have spare bolts or not, but industry analysts believe most do. GE said in its notice it would supply new bolts as appropriate. GE estimates that 9,000 to 10,000 bolts need to be replaced and has been producing replacement bolts since Feb. 2 at a rate of 500 per day, according to Barclays' analyst James C. West.

GE said in its notice it would supply new bolts as appropriate.

Halting operations to inspect and replace bolts will pose additional downtime risk for offshore drillers, but Barclays Capital analyst James C. West commented that downtime could be limited and can be often mitigated through the course of normal operations.

While the BSEE notice called for operators to halt operations until the existing bolts are replaced and verified, the notice also recommended operators consult with contractors to determine the appropriate…corrective actions," potentially leaving some room to inspect BOPs during the normal course of operations rather than stopping work immediately, said West in the Feb. 7 note.

"While we await further clarity, we think this event could present knee-jerk headline risk for some offshore drillers, particularly those with direct exposure to GE bolts," West commented.

The H4 family of subsea connectors was introduced in 1964 and is used in every major producing region worldwide and every type of offshore environment, according to Hydril's website.

Karen Boman has more than 10 years of experience covering the upstream oil and gas sector. Email Karen at kboman@rigzone.com.

Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

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SandRidge: No Wrongdoing Found in Corporate Dealings

SandRidge Energy's board of directors found no evidence of wrongdoing in relation to allegations made concerning activities of its Chairman and CEO Tom Ward and the company board's oversight, SandRidge reported Friday.

However, the board will consider requests made by investment firms TPG-Axon and Mount Kellett Capital Management to appoint an independent counsel to conduct an investigation of the matter, the Oklahoma City-based company said in a statement.

Both firms in recent months have called for Ward's resignation and for an overhaul of its board and corporate strategy.

On Tuesday, TPG-Axon, the beneficial owner of 6.7 percent of SandRidge's outstanding shares, started mailing consent solicitation materials to SandRidge stockholders. Among the materials was a letter urging stockholders to support TPG-Axon in its effort to replace the company's CEO and make other changes to maximize shareholder value, including amending the company's bylaws and replacing SandRidge's entire board.

"We believe that SandRidge shares are significantly undervalued, and significant appreciation is realistic in the medium term under the right circumstances," TPG-Axon said in a Jan. 22 statement. "However, we believe change is necessary to achieve this value."

TPG-Axon added that the current depressed stock level reflects the destruction of value under current management, and the failure of the current directors to prevent leakage of value from stockholders.

Mount Kellett on Jan. 17 sent a second letter to SandRidge, reiterating concerns regarding TPG-Axon's allegations of front running and calling for the board to retain an independent law firm and forensic accounting firm to conduct a 'thorough and independent' investigation of these allegations.

Both firms claimed that Ward and WCT Resources, an independent oil and gas company formed in 2002 by irrevocable trusts established in 1989 for Ward's children, have engaged in "front running" and "flipping" leasehold interests to the company.

Front Running is defined as the unethical practice of a broker trading an equity based on information from the analyst department before their clients have been given the information. TPG-Axon has alleged that Ward and his son acquired mineral rights from third parties ahead of the SandRidge, and then 'flipped' them to SandRidge or other oil and gas companies at a profit, often retaining a participating interest in future wells in transactions with SandRidge.

TPG-Axon also noted that WCT actively competes with the company in the Mississippian Lime play. Meanwhile, Mount Kellett has voiced concerns regarding the allegations made by TPG-Axon.

"The management of WCT Resources is vested entirely in managers, including Mr. Ward's son, who are independent from the company and have no access to non-public information concerning the company's land and mineral acquisition programs," SandRidge commented, noting that Ward has no control over the trusts or WCT Resources and does not participate in its management, operations or business.

"Thus, contrary to TPG-Axon's assertions, neither the company nor Mr. Ward has the power to 'allow' WCT Resources to engage in any business regardless of whether it competes with the company," SandRidge said in a statement. "As an ongoing business not controlled by the company or Mr. Ward, WCT Resources is free to engage in whatever commerce it deems suitable wherever it chooses."

SandRidge noted that transactions between WCT Resources and SandRidge have occurred rarely and involve less than one-quarter of one percent of the acreage leased by the company in the Mississippian play. Furthermore, SandRidge asserted the transactions were reviewed in advance by disinterested board members.

The fact that WCT Resources owns leasehold acreage adjacent to acreage held by the company is an "entirely unremarkable fact," given SandRidge's interests in over 7,500 sections of the Mississippian play that cover nearly five million acres, according to SandRidge officials.

The acreage held by SandRidge in the play were acquired over a long period of time, well before SandRidge was formed, through TLW Land & Cattle, in which Ward holds an ownership interest. TLW has owned ranch land and other acreage in Oklahoma and Kansas, as well as associated mineral rights, for many years, SandRidge concluded.

Karen Boman has more than 10 years of experience covering the upstream oil and gas sector. Email Karen at kboman@rigzone.com.

Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

View the original article here

SandRidge: No Wrongdoing Found in Corporate Dealings

SandRidge Energy's board of directors found no evidence of wrongdoing in relation to allegations made concerning activities of its Chairman and CEO Tom Ward and the company board's oversight, SandRidge reported Friday.

However, the board will consider requests made by investment firms TPG-Axon and Mount Kellett Capital Management to appoint an independent counsel to conduct an investigation of the matter, the Oklahoma City-based company said in a statement.

Both firms in recent months have called for Ward's resignation and for an overhaul of its board and corporate strategy.

On Tuesday, TPG-Axon, the beneficial owner of 6.7 percent of SandRidge's outstanding shares, started mailing consent solicitation materials to SandRidge stockholders. Among the materials was a letter urging stockholders to support TPG-Axon in its effort to replace the company's CEO and make other changes to maximize shareholder value, including amending the company's bylaws and replacing SandRidge's entire board.

"We believe that SandRidge shares are significantly undervalued, and significant appreciation is realistic in the medium term under the right circumstances," TPG-Axon said in a Jan. 22 statement. "However, we believe change is necessary to achieve this value."

TPG-Axon added that the current depressed stock level reflects the destruction of value under current management, and the failure of the current directors to prevent leakage of value from stockholders.

Mount Kellett on Jan. 17 sent a second letter to SandRidge, reiterating concerns regarding TPG-Axon's allegations of front running and calling for the board to retain an independent law firm and forensic accounting firm to conduct a 'thorough and independent' investigation of these allegations.

Both firms claimed that Ward and WCT Resources, an independent oil and gas company formed in 2002 by irrevocable trusts established in 1989 for Ward's children, have engaged in "front running" and "flipping" leasehold interests to the company.

Front Running is defined as the unethical practice of a broker trading an equity based on information from the analyst department before their clients have been given the information. TPG-Axon has alleged that Ward and his son acquired mineral rights from third parties ahead of the SandRidge, and then 'flipped' them to SandRidge or other oil and gas companies at a profit, often retaining a participating interest in future wells in transactions with SandRidge.

TPG-Axon also noted that WCT actively competes with the company in the Mississippian Lime play. Meanwhile, Mount Kellett has voiced concerns regarding the allegations made by TPG-Axon.

"The management of WCT Resources is vested entirely in managers, including Mr. Ward's son, who are independent from the company and have no access to non-public information concerning the company's land and mineral acquisition programs," SandRidge commented, noting that Ward has no control over the trusts or WCT Resources and does not participate in its management, operations or business.

"Thus, contrary to TPG-Axon's assertions, neither the company nor Mr. Ward has the power to 'allow' WCT Resources to engage in any business regardless of whether it competes with the company," SandRidge said in a statement. "As an ongoing business not controlled by the company or Mr. Ward, WCT Resources is free to engage in whatever commerce it deems suitable wherever it chooses."

SandRidge noted that transactions between WCT Resources and SandRidge have occurred rarely and involve less than one-quarter of one percent of the acreage leased by the company in the Mississippian play. Furthermore, SandRidge asserted the transactions were reviewed in advance by disinterested board members.

The fact that WCT Resources owns leasehold acreage adjacent to acreage held by the company is an "entirely unremarkable fact," given SandRidge's interests in over 7,500 sections of the Mississippian play that cover nearly five million acres, according to SandRidge officials.

The acreage held by SandRidge in the play were acquired over a long period of time, well before SandRidge was formed, through TLW Land & Cattle, in which Ward holds an ownership interest. TLW has owned ranch land and other acreage in Oklahoma and Kansas, as well as associated mineral rights, for many years, SandRidge concluded.

Karen Boman has more than 10 years of experience covering the upstream oil and gas sector. Email Karen at kboman@rigzone.com.

Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

View the original article here

SandRidge: No Wrongdoing Found in Corporate Dealings

SandRidge Energy's board of directors found no evidence of wrongdoing in relation to allegations made concerning activities of its Chairman and CEO Tom Ward and the company board's oversight, SandRidge reported Friday.

However, the board will consider requests made by investment firms TPG-Axon and Mount Kellett Capital Management to appoint an independent counsel to conduct an investigation of the matter, the Oklahoma City-based company said in a statement.

Both firms in recent months have called for Ward's resignation and for an overhaul of its board and corporate strategy.

On Tuesday, TPG-Axon, the beneficial owner of 6.7 percent of SandRidge's outstanding shares, started mailing consent solicitation materials to SandRidge stockholders. Among the materials was a letter urging stockholders to support TPG-Axon in its effort to replace the company's CEO and make other changes to maximize shareholder value, including amending the company's bylaws and replacing SandRidge's entire board.

"We believe that SandRidge shares are significantly undervalued, and significant appreciation is realistic in the medium term under the right circumstances," TPG-Axon said in a Jan. 22 statement. "However, we believe change is necessary to achieve this value."

TPG-Axon added that the current depressed stock level reflects the destruction of value under current management, and the failure of the current directors to prevent leakage of value from stockholders.

Mount Kellett on Jan. 17 sent a second letter to SandRidge, reiterating concerns regarding TPG-Axon's allegations of front running and calling for the board to retain an independent law firm and forensic accounting firm to conduct a 'thorough and independent' investigation of these allegations.

Both firms claimed that Ward and WCT Resources, an independent oil and gas company formed in 2002 by irrevocable trusts established in 1989 for Ward's children, have engaged in "front running" and "flipping" leasehold interests to the company.

Front Running is defined as the unethical practice of a broker trading an equity based on information from the analyst department before their clients have been given the information. TPG-Axon has alleged that Ward and his son acquired mineral rights from third parties ahead of the SandRidge, and then 'flipped' them to SandRidge or other oil and gas companies at a profit, often retaining a participating interest in future wells in transactions with SandRidge.

TPG-Axon also noted that WCT actively competes with the company in the Mississippian Lime play. Meanwhile, Mount Kellett has voiced concerns regarding the allegations made by TPG-Axon.

"The management of WCT Resources is vested entirely in managers, including Mr. Ward's son, who are independent from the company and have no access to non-public information concerning the company's land and mineral acquisition programs," SandRidge commented, noting that Ward has no control over the trusts or WCT Resources and does not participate in its management, operations or business.

"Thus, contrary to TPG-Axon's assertions, neither the company nor Mr. Ward has the power to 'allow' WCT Resources to engage in any business regardless of whether it competes with the company," SandRidge said in a statement. "As an ongoing business not controlled by the company or Mr. Ward, WCT Resources is free to engage in whatever commerce it deems suitable wherever it chooses."

SandRidge noted that transactions between WCT Resources and SandRidge have occurred rarely and involve less than one-quarter of one percent of the acreage leased by the company in the Mississippian play. Furthermore, SandRidge asserted the transactions were reviewed in advance by disinterested board members.

The fact that WCT Resources owns leasehold acreage adjacent to acreage held by the company is an "entirely unremarkable fact," given SandRidge's interests in over 7,500 sections of the Mississippian play that cover nearly five million acres, according to SandRidge officials.

The acreage held by SandRidge in the play were acquired over a long period of time, well before SandRidge was formed, through TLW Land & Cattle, in which Ward holds an ownership interest. TLW has owned ranch land and other acreage in Oklahoma and Kansas, as well as associated mineral rights, for many years, SandRidge concluded.

Karen Boman has more than 10 years of experience covering the upstream oil and gas sector. Email Karen at kboman@rigzone.com.

Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

View the original article here

Stranded snowmobilers found uninjured on Rabbit Ears Pass

Font ResizeColorado NewsBy Matt Stensland
Pilot & Todaydenverpost.comPosted: 12/22/2012 01:16:34 PM MSTDecember 22, 2012 9:7 PM GMTUpdated: 12/22/2012 02:07:50 PM MST

Two stranded snowmobilers are fine after spending Friday night on Rabbit Ears Pass.

Routt County Search and Rescue incident commander Kristia Check-Hill said she received a call early Friday evening to help rescuers from Jackson County. Two snowmobilers had called 911 after getting stuck in a meadow northeast of the Rabbit Ears rock formation.

Rescuers from Routt County joined the search at 5 a.m. after overnight search efforts were unsuccessful. A team from Jackson County reached the Front Range snowmobilers by about 7:30 a.m. Saturday.

For more on this story, read the Steamboat Pilot & Today.

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Multiple people found dead in Weld County, apparent murder and suicide

Font ResizeLocal NewsBy Kieran Nicholson
The Denver Postdenverpost.comPosted: 12/18/2012 07:08:23 AM MSTDecember 18, 2012 2:46 PM GMTUpdated: 12/18/2012 07:46:23 AM MST


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