On Sunday a new tone of desperation entered discussions of the ongoing environmental disaster in the Gulf of Mexico as officials collectively abandoned the pretense that they know what the hell is going on, much less what is going to happen. -- On a visit to Louisiana, President Barack Obama said the disaster was "potentially unprecedented" and said serious damage to the region could "extend for a long time," the New York Times reported. -- None of the technical fixes that BP is discussing is carrying much conviction. -- And Admiral Thad Allen, the Coast Guard commandant overseeing efforts to control and clean up the spill, invoked two disasters: "What we’re doing is closer to Apollo 13 than the Exxon Valdez,” referring both to the 1989 tanker spill and the ill-fated August 1970 moon mission portrayed in Ron Howard's 1995 film. -- As for paying for the clean-up effort, President Obama said that “BP is responsible for this leak -- BP will be paying the bill,” but Campbell Robertson and Henry Fountain indicated that this is doubtful, since "federal law [no doubt largely written by oil industry lobbyists] sets a limit of $75 million on BP’s liability for damages, apart from the cleanup costs." -- Bloomberg Businessweek said that BP admitted that "it has no way of knowing how much oil is leaking because it can’t get data from the well." -- “'This is an American Chernobyl,' said Louie Miller, 55, senior representative for the Sierra Club." -- The Washington Post, meanwhile, presented BP CEO Tony Hayward as a plaintive innocent ("What did we do to deserve this?"), ignoring the Wall Street Journal's Apr. 28 revelation that BP failed to use a standard device known as an "acoustic switch" to ensure against catastrophe....
BP DESCRIBES RACE TO FIX WELL AS OBAMA WARNS OF OIL DAMAGE
By Campbell Robertson and Henry Fountain
New York Times
May 2, 2010
NEW ORLEANS -- President Obama visited Louisiana on Sunday afternoon for a firsthand look at the response effort to an oil spill that he called a “potentially unprecedented environmental disaster,” while officials for BP described in detail their desperate efforts to seal the gushing well.
“The oil that is still leaking from the well could seriously damage the economy and the environment of our gulf states and it could extend for a long time,” Mr. Obama said. “It could jeopardize the livelihoods of thousands of Americans who call this place home.”
Over the next two days, the National Oceanic and Atmospheric Administration said, the slick appears likely to move toward the Alabama and Florida coasts and engulf the Chandeleur Islands off Louisiana’s southeast tip.
BP was leasing the Deepwater Horizon oil rig that exploded on April 20. Two days later, it collapsed into the gulf, and the oil began leaking. BP, working with an array of government agencies and private companies, has been unable to stop the flow of crude from the well.
Bob Fryar, the company’s senior vice president for operations in Angola, who was brought to a command center in Houston for the engineering effort, said that on Monday, BP hoped to install a shut-off valve on one of the three leaks. That may stop some of the oil flow, Mr. Fryar said.
But the biggest leak, at the end of the riser pipe, which Mr. Fryar said was the source of most of the spewing oil, cannot be shut off this way. The company intends to address that leak by lowering a containment dome over it and then pumping the oil to the surface. That effort is still at least six days away, Mr. Fryar said. Another containment dome, for the third leak, which is on the riser near the wellhead, would follow two to four days after the first.
The root of the problem appears to be a towering stack of heavy equipment 5,000 feet below the surface of the gulf known as a blowout preventer. It is a steel-framed stack of valves, rams, housings, tanks, and hydraulic tubing that is designed to seal the well quickly in the event of a burst of pressure. It did not work when the Deepwater Horizon oil rig exploded.
Mr. Fryar and Charlie Holt, BP’s drilling operations manager for the gulf, described an audacious plan to confront the blowout preventer problem. In this approach, they would seal the well by cutting the riser at the wellhead, sliding a huge piece of equipment called the riser package out of the way and bolting a second blowout preventer atop the first one.
The risk in attempting such a maneuver -- which would be performed, as all the undersea work has been, by robotic submersibles tethered to support ships 5,000 feet above -- is that the pressure of the oil rising from the well could be overwhelming, and the well could gush oil at a far higher rate. Mr. Fryar said a pressure gauge would be installed soon to determine if it was safe to attempt the operation.
Speaking of the accident, Mr. Fryar said the blowout preventer “has lots of redundancies, there are lots of opportunities to shut these off. None of these worked.”
Whether the equipment was faulty or it was damaged in the accident was unclear.
Officials still plan to drill relief wells, which would allow crews to plug the gushing cavity with heavy liquid. Drilling of a first relief well was set to begin “as soon as the weather clears,” Mr. Fryar said. Drilling for a second well was expected to begin in two weeks. The relief wells, however, will take months to execute.
Cleanup efforts were hampered again Sunday by bad weather and 7- to 10-foot swells, which prevented planes from dropping chemical dispersants and oil skimmers from corralling the slick on the surface.
Mr. Fryar said that for a second day, crews were injecting chemical dispersant into the oil as it flowed from the main leak. Dispersant, which is more conventionally used on the water surface, breaks the oil into small droplets and reduces its buoyancy, so it will sink to the bottom.
Mr. Fryar said technicians were trying to determine whether it would be possible to inject the dispersant directly into the riser deep under the water so that it would mix better with the flowing oil. “We think this dispersant is highly effective,” he said. “We’re hoping the oil won’t make it to the surface.”
The impact of chemical dispersants on deepwater ecology is unclear.
Closer to land, crews continued to put out booms to stop the oil and were training volunteers in Mississippi and Florida to help minimize the impact if the slick reaches the beach, said John Curry, head of external affairs at BP.
Speaking to reporters in the rain in Venice, La., after talking with response teams that have amassed on the coast to try to stem the tide of oil lapping the shoreline, Mr. Obama vowed that the government would keep up the pressure on BP.
While he did not criticize the company in his public remarks, Mr. Obama’s comments reflected increased frustration in the administration with BP’s inability to plug the oil leak. The president again reiterated that American taxpayers would not foot the bill.
“BP is responsible for this leak -- BP will be paying the bill,” Mr. Obama said.
Mr. Obama had initially not planned to visit the region until later this week at the earliest, White House officials said Friday afternoon. But by late Friday night, with criticism mounting that the government’s response was too slow, White House officials decided that the president needed to make the trip to the gulf on Sunday.
White House officials sent two Cabinet officials to appear on the Sunday television talk shows with the message that the administration was doing everything it could to take control of the spill and that it had been involved from the beginning. Homeland Security Secretary Janet Napolitano said on Fox News Sunday that the government had an “all hands on deck” approach to the disaster.
For Mr. Obama, the widening environmental calamity in the gulf is made even more complicated, politically, by the fact that the spill occurred just a month after he announced he was expanding offshore drilling. He now says that no new leases will be approved until a thorough review of the causes of the BP leak is complete.
“Every American affected by this spill should know this: Your government will do whatever it takes, for as long as it takes to stop this crisis,” Mr. Obama said after his briefing by federal and state officials. He said the spill endangered the “heartbeat of the region’s economic life.”
Mr. Obama met with Governor Bobby Jindal of Louisiana upon the arrival of Air Force One in New Orleans. Then he went to Venice for two hours -- by road, rather than helicopter, because of inclement weather -- to look at the response.
He stopped to speak to several fishermen, assuring them that BP would reimburse them for lost earnings. But reimbursement may be one of the largest battles to come, given that federal law sets a limit of $75 million on BP’s liability for damages, apart from the cleanup costs.
“It’s going to be extremely tricky” to reimburse fishermen and others if economic damages tally above $75 million, said Stuart Smith, a New Orleans-based lawyer who is pushing for Congressional action to amend the law. “They may not be obligated to pay more than that unless they agree to do it.”
There is a federal fund, generated from a tax on oil, that may cover as much as $1 billion in damages.
--Campbell Robertson reported from New Orleans, and Henry Fountain from New York. Reporting was also contributed by Helene Cooper in Washington and Sam Dolnick in Baton Rouge, La. .
--This article has been revised to reflect the following correction:
--Correction: May 2, 2010
--An earlier version of this article incorrectly identified the location where Bob Fryar works for BP. He is the company’s senior vice president for operations in Angola, the country, not Angola, La.
BP TO TRY 'ANYTHING, EVERYTHING' TO STOP GUSHING GULF OIL WELL
By Jessica Resnick-Ault
May 3, 2010
BP Plc, owner of the Gulf of Mexico Macondo well that has been spewing oil 5,000 feet below the water’s surface since April 20, outlined a battery of techniques it will use to attempt to stem the leak.
Plans include chemical injections, containment domes, and new pressure equipment, Bob Fryar, senior vice president of BP’s operations in Angola, said yesterday in Houston. U.S. President Barack Obama visited Louisiana yesterday and said the government would protect the natural resources of the region and rebuild the area. He said the U.S. had coordinated a “relentless response” to a “potentially unprecedented” disaster.
Admiral Thad Allen, the Coast Guard commandant overseeing efforts to control and clean up the spill, described the dark, mile-deep region where the oil is leaking as “inner space” that can only be tackled using remotely controlled devices.
“What we’re doing is closer to Apollo 13 than the Exxon Valdez,” Allen said, referring to the 1989 tanker spill that dumped 260,000 barrels of oil off Alaska.
BP, based in London, said it has no way of knowing how much oil is leaking because it can’t get data from the well. It hasn’t been able to use the so-called blowout preventer, which may have become corroded with sand. Pressure is being applied to the apparatus to seal the leak, Fryar said. BP may also try to “snap on” a second blowout-preventer stack, he said.
DOMES ON LEAKS
The first of two domes to contain the crude at the sea floor will be put on one of three leaks in six to eight days, BP said. The second dome will take eight to 12 days. A valve, which the company said may be in place in 24 hours, will be tried on the most significant leak.
“I reiterated my commitment to the White House today that BP will do anything and everything we can to stop the leak, attack the spill off shore, and protect the shorelines of the Gulf Coast,” BP Chief Executive Officer Tony Hayward, who arrived in the Gulf area late May 1 to oversee containment efforts, said in an e-mailed statement yesterday.
Admiral Allen said federal agencies are preparing for a sustained effort as BP technicians try to figure out how to stop the leaks. Allen said in an interview he is seeking to improve communications and supply chains for distributing equipment and chemicals used to disperse the oil. “I am looking over the horizon.”
The spill has grown so large, Allen said, that he is concerned there may be a shortage of booms, such as those used on the open sea to help contain the slick.
The spill is 9 miles (14 kilometers) off the coast of southeastern Louisiana, Obama said at a press conference in Venice. BP said the weather forecast shows the slick won’t move over the next three days.
Obama, who was briefed on BP’s efforts to cap the well, met with Louisiana Governor Bobby Jindal after getting off Air Force One. The Coast Guard has said it has been unable to get an accurate estimate of how much oil is leaking and is preparing for a worst-case scenario.
More than 2,000 people have been deployed to protect the shoreline and coastal wildlife, according to a statement from the multiagency Joint Information Center coordinating the federal response.
A so-called relief well is due to be completed in about 90 days, Michael Abendhoff, a company spokesman, said yesterday in a phone interview from Robert, Louisiana.
The oil spill followed an April 20 explosion on a drilling rig leased by BP. The rig, owned by Transocean Ltd., sank two days later. Obama has ordered that no new offshore drilling leases be issued until a “thorough review” of the incident is completed.
The attorneys-general from Alabama, Texas, Mississippi, Florida, and Louisiana met yesterday in Mobile, Alabama, to discuss legal options and strategies. Mississippi Attorney General Jim Hood said the uncertainty of the oil slick’s size is the biggest concern.
Alabama Attorney General Troy King said the fund created after the Exxon Valdez tanker spill may need changes to meet the damages from the current incident in the Gulf.
BP has released 156,012 gallons of dispersant so far to break up the oil, said Bill Salvin, a BP spokesman. The company hasn’t been able to fully assess the efficiency of the method, Abendhoff said. BP was unable to spray dispersants yesterday because of weather conditions, said Steve Rinehart, another spokesman.
Strong winds and 7-to-10-foot waves make it impossible to measure whether the dispersants lowered the volume of oil emerging on the sea surface, Abendhoff said. The response teams opted against conducting flyovers yesterday due to continued foul weather, Rinehart said.
Surface estimates of the size of the slick and skimming efforts were hindered as the Coast Guard ordered boats and aircraft back to port because of stormy weather. Salvin said 23,968 barrels of crude and other material has been picked up by skimming boats.
The National Oceanic and Atmospheric Administration previously estimated the well is spewing 5,000 barrels of oil a day. At that rate, the volume of the spill would exceed Alaska’s Exxon Valdez accident by the third week of June.
While BP has begun an investigation into the cause of the explosion and resulting leak, it hasn’t set out a timeline for the project, Rinehart said.
About 6.2 million cubic feet of gas production was halted May 1 as environmental and safety concerns stopped operations at two offshore platforms and prompted one to be evacuated. That’s less than a 10th of 1 percent of U.S. output.
“This is an American Chernobyl,” said Louie Miller, 55, senior representative for the Sierra Club in Mississippi, referring to the explosion at a Ukrainian nuclear reactor in 1986 that killed 56 people, destroyed wildlife and contaminated waterways. Oil “may not be radioactive, but it’s toxic.”
The NOAA yesterday closed commercial and recreational fishing in parts of the Gulf affected by the spill for a minimum of 10 days, effective immediately. The agency said in a statement that it’s working with state governors to evaluate the need to declare fisheries a disaster to get federal aid to fishermen in the area.
The Louisiana Department of Health and Hospitals advised residents not to swim or fish in affected waters and to prevent young children, pregnant women, and pets from entering contaminated areas.
The impact on wildlife “depends on the tides, weather, and other factors beyond our control,” Jay Holcomb, director of the International Bird Rescue Research Center, said in a statement. The group has set up bird-rescue centers in Louisiana and Alabama.
Commercial shipping on Mississippi River fairways hasn’t been significantly affected so far, though that may change if cleanup efforts are implemented, Admiral Allen said earlier yesterday. Traffic may be halted in contaminated areas or ships will have to be washed after passing through oily waters.
St. Bernard Parish in Louisiana will employ local fishermen to deploy protective booms after training them on the procedure on May 1, the parish said in a statement.
Defense Secretary Robert Gates approved a request by Jindal to mobilize as many as 6,000 National Guard troops to add security, medical support, engineers, communications capability, and cleanup crews to the oil slick containment effort, spokesman Geoff Morrell said late April 30.
--With assistance from Aaron Kuriloff in Venice, Louisiana, Kari Lundgren in London, Fred Pals in Amsterdam, Kate Andersen Brower in Washington, Edward Klump in Houston, Katarzyna Klimasinska in Alabama, Margot Habiby in Dallas and Jeff Bliss in Washington D.C. Editors: John Viljoen, Jane Lee.
Oil and gas prices
OIL SPILL CRISIS A SETBACK FOR BP AND ITS CHIEF EXECUTIVE
By Steven Mufson
May 3, 2010
On the day he got news that the Deepwater Horizon drilling rig caught fire in the Gulf of Mexico, BP chief executive Tony Hayward received a series of crisis updates in his London offices. The rig belonged to Transocean, but BP had leased it to drill an exploration well and BP bore legal responsibility for any consequences.
The grim updates were interspersed with long silences. One person there said that on several occasions, Hayward asked, "What did we do to deserve this?"
Twelve days later, Hayward is grappling with the widening oil slick from the damaged well -- an environmental crisis for the Gulf Coast states, a political crisis for U.S. offshore drilling, and a corporate crisis for one of the world's biggest oil giants.
"This accident not only sets back BP, but could hurt it for years," said Fadel Gheit, an oil analyst at Oppenheimer.
On Sunday, the third anniversary of his becoming BP's chief executive, Hayward began his day in Houma, La., flew to a convention center in Mobile, Ala., where a new oil spill command center has been set up, and then went on to Venice, La. There, he planned to meet with local officials and others worried about the slick menacing the shore.
On Monday, he will be in Washington, running the gantlet of federal officials and members of Congress, many of whom are eager to tar BP with blame for the incident. Before the accident, he had expected to be in the United States giving a speech and promoting a climate change bill. Now, he will face questions about whether BP underestimated the risk and consequences of a well failure.
"Whatever else this is, it's a massive blow to confidence," said a senior BP insider who spoke on the condition of anonymity because he wasn't authorized to talk publicly.
The price tag for the disaster increases day by day. The company says it is spending $6 million a day on response efforts. Drilling a relief well will probably cost more than $100 million. The Defense Department says it will hand BP the bill for paying Louisiana National Guard troops, and the Environmental Protection Agency says it will charge BP for air monitoring. Covering damages to coastal fishermen, tourism businesses and residents could cost billions more. BP will pay 65 percent of these costs; its lease partners Anadarko Petroleum and Mitsui will pay 25 and 10 percent.
BP's share will come straight from its own pocket. "We are self-insured as a matter of policy -- you cannot insure these kinds of risks," a BP spokesman said.
Alabama Attorney General Troy King said Sunday night that he told BP representatives to stop circulating agreements offering coastal Alabamians $5,000 if they give up the right to sue the company. A BP official said the offer was part of a "standard waiver" to fishermen that was "inappropriate" and was "swiftly discontinued."
The oil spill crisis is just the sort of thing Hayward had hoped to leave behind when he became BP chief executive.
His predecessor, Lord John Browne, had been a brilliant deal maker and a friend of British Prime Minister Tony Blair's, but BP was often accused of neglecting safety precautions and adding to risks through deep cost cutting. Under Browne, who resigned after revelations about his personal life in Britain's tabloid news media, a fatal explosion took place at BP's Texas City refinery, leaks sprang onto the tundra from a company pipeline in northern Alaska, and a BP production platform in the Gulf of Mexico suffered structural problems that delayed its start date.
In 1990 and 1991, Hayward had been one of Browne's "turtles," company slang for the executive assistants Browne plucked from the ranks of BP's most promising young executives.
But when Hayward became chief executive, he wanted to make changes. A geologist who made his career on the oil exploration and production side of the business, Hayward didn't seem to share Browne's passion for greening the company image. Browne spruced up BP's logo and said that it stood for "beyond petroleum" not "British Petroleum." Hayward, who recently closed a BP Solar manufacturing facility in Frederick, said alternative energy projects had to make economic sense.
"The bit about 'beyond petroleum' being dead and buried is nonsense," he said. But, he added, "it's a business as opposed to an advertising slogan."
He wanted to change the corporate culture, in part by cleaning house. Hayward inherited 650 senior executives, but he pared that to 490, half of whom are new to their jobs and one third of whom are new to the company.
He showed an ability to strike deals, too. He resolved a dispute with BP's partners in its highly profitable joint venture in Russia. He won a contract to boost output from a supergiant oil field in Iraq, where BP had worked decades before. And recently, BP paid $7 billion to Devon Energy to buy deepwater oil and gas assets and leases in the Gulf of Mexico and off the coast of Brazil.
In an interview in Washington five weeks ago, Hayward called it "a natural fit with our deepwater portfolio." As oil and natural gas fields closer to shore have aged, the oil industry has been pushing out to deeper waters worldwide, and the Gulf of Mexico is typical.
Last year, a BP well was drilled in 4,130 feet of water to a record depth of more than 35,000 feet by the same Deepwater Horizon rig that caught fire April 20 and sank. At a London meeting five days before the accident, Hayward had noted that the giant reservoir it discovered "lies further below the Earth's surface than the summit of Mount Everest does above it."
Hayward's initiatives were starting to yield results. Last week, BP's earnings far surpassed analysts' expectations.
But the good news was blotted out by the oil slick. Over five days, the price of BP shares tumbled about 13 percent, erasing about $20 billion in market value.
In a video filmed in the company's crisis center in Houston and broadcast to employees, Hayward praised the company's strong earnings. "But," he said, "of course they're irrelevant in the context of what has occurred in the Gulf of Mexico over the past week." He said he had felt a range of emotions: "shock and indeed anger when I first heard about it, how could it happen. Tremendous sorrow when it became evident that the 11 people missing had probably died in the initial explosion."
Some of that anger has been directed at Transocean, owner and operator of the rig and the blowout preventer system, which Hayward has called "the fail-safe mechanism" that failed.
But Hayward hasn't tried to deny BP's obligations. In his video, he vowed "steely determination" to control the well, clean up and "do everything we can to understand how this has occured and to ensure that it never occurs again."