November 3rd, 2009

Oil Leak and Fire at Offshore Rig, Timor Sea

Posted at 5:10 PM ET

small-oil-leak-timor-seaAn oil well that has been leaking sweet light crude oil, condensate and gas into the Timor Sea for 10 weeks has been badly damaged after a fire broke out on the unit on November 1, 2009. PTT Exploration and Production Australasia (PTTEP Australasia), the company which operates the West Atlas drilling rig and Montara wellhead platform, said the blaze started when workers were pouring mud into a hole that had been leaking up to 400 barrels of oil a day since August 21. PTTEP Australasia says it does not know what sparked the blaze. Norwegian rig owner Seadrill, meanwhile, confirmed there were no personnel on the rig when the blaze started. According to reports, PTTEP Australasia contracted the drilling rig and wellhead platform from Seadrill for AUD255,000 a day (USD230,000). PTTEP Australasia said the rig was badly damaged by the fire after a portion buckled and came to rest on top of the wellhead platform.

Earlier today, PTTEP Australasia said a mixture of heavy mud and brine poured into the well finally stopped the leak. The company added the blaze on the rig was close to been extinguished. PTTEP Australasia said it dumped 3,400 barrels of heavy mud and 1,000 barrels of brine into the well, stopping the leak at the fifth attempt and cutting off the fire’s fuel source. The company added that some material on top of the rig was still ablaze, but the flames were expected to burn out. PTTEP Australasia stressed the mud was a temporary measure and there was still a long way to go before the well could be fully secured. Officials said they will monitor the rig for the next couple of days to ensure it remains stable, and may spray the wellhead platform with ocean water to cool it down. Once the platform has been secured, Seadrill said it will attempt to reboard the rig to assess the damage caused by the fire.


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The oil slick from the rig, about 250 kilometers (155 miles) off Australia’s northwest coast, covers up to 25,000 square kilometers (9,650 square miles) in the Timor Sea and it has been described as one of Australia’s worst environmental disasters by the World Wildlife Fund (WWF). Indonesia said last week that thousands of dead fish and clumps of oil were found drifting near its coastline. Australia’s government has ordered an inquiry into the incident and environmentalists have expressed concern about the impact on wildlife in the region. Australia’s Federal Resources Minister Martin Ferguson said an official inquiry will be launched once the spill has been contained.

PTTEP Australasia’s parent company, the Thai firm PTT Exploration and Production, said in a statement to the Stock Exchange of Thailand that it has an insurance policy of around AUD300 million (USD270 million) for the incident. The company said last week it had spent more than AUD170 million (USD153 million) on the oil and gas leak since August. According to market sources quoted by Insurance Day, claims are expected to enter the London market, and Watkins Syndicate could face significant claims as it is reported to be PTTEP Australasia’s lead insurer.

Sources: CNN News, Associated Press, Reuters News, Agence France Presse, BBC News, The Australian, Lloyd’s List, Insurance Day, AAP Bulletins, Australian Associated Press

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