Rowan Fights Second Well Blowout in a Year at Same Offshore Site

Jan 31, 2014 4:17 pm ET

Jan. 31 (Bloomberg) -- The blowout at a natural gas well in the Gulf of Mexico yesterday is the second time in a year Rowan Companies Plc has lost control while drilling at the same location with the same rig.

Workers on Rowan’s “Louisiana” rig -- one of the oldest in its fleet -- are still trying to gain control of a well in Vermilion Block 356, about 100 miles (161 kilometers) off the coast of Louisiana, where another blowout occurred last April, according to records kept by the U.S. Bureau of Safety and Environmental Enforcement, which oversees offshore drilling.

While federal regulators and oil companies emphasize their heightened vigilance in offshore safety, there were more loss- of-control incidents at wells in the Gulf of Mexico last year than at any time since at least 2006, the first year such data was published by the safety bureau. There were nine loss-of- well-control incidents last year, compared with four in 2012, eight in 2008 and two in 2006.

In last year’s blowout, Rowan needed almost a week to stop the flow by pumping cement about 1,000 feet (305 meters) below the seabed in 262 feet of water, according to safety bureau data. Suzanne Spera, a spokeswoman at Houston-based Rowan, had no further information about last year’s incident.

In both incidents, Rowan was hired by the same company to drill the wells.

EnVen Energy Ventures LLC, a closely held producer based in Metairie, Louisiana, is the operator of the well involved in the current blowout. The company changed its name last year from Pisces Energy LLC, which is listed in federal reports as the owner of the well involved in the April blowout, said David Blackmon, a Houston-based managing director at FTI Consulting, hired as an outside spokesman for EnVen.

Flow Reduction

The companies continue to pump heavy drilling mud into the current out-of-control well to kill it. So far they’ve been able to reduce by about half the amount of gas, drilling fluids and water flowing from the well, the U.S. Coast Guard said today. No fire, explosion or oil spill has so far occurred from yesterday’s blowout and no one has been injured, the companies said.

Rowan and EnVen evacuated more than 50 workers from the rig yesterday, and 20 remain to try to get the well under control, Blackmon said. Fire remains a risk as long as gas is flowing. Two boats are on standby at the shallow-water well site in case they’re needed for additional evacuations, he said.

Concentrating Attention

The latest blowout may refocus attention on safety issues in the Gulf, though, “I don’t think there’s going to be wholesale change” to regulations, said Luke Lemoine, an analyst at Capital One Southcoast in New Orleans, who rates Rowan shares the equivalent of a buy and owns none. “There might be a little step change. It’s increased a little bit, but it’s kind of been a continual issue.”

The Rowan Louisiana is one of two rigs that first went into service in 1975, among the oldest in the fleet, according to the company’s fleet status report on its website. It’s one of three so-called conventional shallow-water rigs -- drilling vessels with less advanced technology and equipment that can be leased at a quarter of the price charged for newer vessels, which can cost more than $400,000 a day.

Last year’s blowouts involved wells operated by companies ranging from small private producers such as Walter Oil & Gas Corp. to big international explorers including BP PLC, Royal Dutch Shell PLC, and Petroleo Brasileiro S.A., known as Petrobras, according to safety bureau records.

--Editors: Susan Warren, Stephen Cunningham