Daily Archives: May 25, 2010

Sheila McNulty

A Brown Pelican prepares to enter the water at the Egmont Key National Wildlife Refuge near St. Petersburg May 23, 2010. The bird was rescued and cleaned by U.S. Fish and Wildlife Service after being found oiled near Louisiana's coast. U.S. Coast Guard photo by Petty Officer 3rd Class Nick Ameen. The pictures of oil-soaked marshes, birds and turtles are starting to emerge from the Gulf of Mexico. But federal wildlife experts say it is what cannot be seen that is often the most worrying. Many animals that die from oil spills are never recovered; they are scavenged or wash up in locations that people do not normally go. Marine mammals, such as whales, dolphins and manatees, are especially hard to track as they drift down in the waters and are eaten by predators.

The risk of long term, chronic exposure is a worry, too. Ralph Morgenweck, US Fish and Wildlife Service senior science advisor and liaison officer at the Unified Area Command:

A lot of these impacts are more subtle than oil on the outside of an animal… We are in a very early phase of understanding the science here.

While the experts say previous spills can be indicative of what is to come, having an oil leak at 5,000 feet under the ocean adds a whole new dimension to those models.

BP share price 3-month to May 25By Neil Hume

Canaccord Genuity is providing some interesting commentary on BP and the Gulf of Mexico oil spill. And it goes some way to explaining why the share price of what was the biggest company in the FTSE 100 keeps heading south in spite of numerous “buy” recommendations from City analysts (and the fact that it now yields more than two times a 10-year gilt).

First, the broker picks up on reports that the US Environmental Protection Agency (EPA) is considering whether to bar BP from government contracts and end its drilling in federally controlled fields:

* BP is the largest oil and gas producer in the Gulf of Mexico and operates some 22,000 oil and gas wells across United States, many of them on federal lands or waters. They produce 39 percent of the company’s global revenue from oil and gas production each year – $16 billion.

Kate Mackenzie

BP diagram of how 'top kill' would work - click through for full sizeAfter some success with the riser insertion tube, BP is preparing to try its ‘top kill’ approach to stemming the flow of oil from the Macondo well, probably on Wednesday. This involves injecting dense fluid into the well before sealing it with concrete (a short animated explainer can be found here and a longer video here).

Once again, the complications of the ultra-deepwater environment are creating uncertainty around all efforts to plug the leak before the relief wells are working, in late July at the earliest.

Kate Mackenzie

BP’s response on the use of dispersants has left the Environmental Protection Agency (EPA) in something of a dilemma. On Sunday, the agency was reportedly investigating legal options after BP refused to stop using Corexit in massive quantities to break up oil flowing from the damaged deepwater well.

Now the EPA has criticised BP for being ‘more concerned with defending its decision’ than analysing the dispersant options, and has decided to carry out its own tests. The agency’s response highlights both the
both the questions still surrounding the use of dispersants, and the difficulty in finding better options — in otherwords, it’s depressingly similar to problems facing efforts to the stop the well leak itself.

Ed Crooks

BP has given its most detailed statement yet of the likely causes of the Deepwater Horizon rig explosion on April 20, which led to its huge oil spill in the Gulf of Mexico.

In recent weeks, BP has shown a tendency to try to pass the buck, trying to put the blame on Transocean, which owned the rig, just as Transocean has attempted to do the same to BP and to Halliburton, which was the sub-contractor for cementing the well. That attempt to evade responsibility has provoked some strong criticism of BP, however, and this latest statement shows more readiness to accept at least a share of the blame.

Kate Mackenzie

Shale gas excitement seems to be spreading everywhere. Gideon Rachman, the FT’s foreign affairs commentator, describes how he has been cornered more than once at international conferences (not energy-focused conferences, we suspect) by someone declaring the importance of shale gas.

He likens it to the scene in The Graduate in which Dustin Hoffman’s character is given the prosaic advice: ‘plastics’.

The excitement in the US is understandable; the production of shale gas does appear to be having a big effect on gas production there, just a few years after the technology to extract it became accessible. But Rachman has found a lot of excitement in China and particularly Europe. This might seem odd given that there are still big questions about the extent and recoverability of Europe’s shale gas reserves. But as Rachman explains, Europe is hoping to benefit from the US shale gas boom through increased access to LNG which was previously destined for the US — reducing dependence on Russian gas. And most interestingly, he writes that it is already being felt in diplomatic circles:

In recent months, western officials have noticed a distinctly more friendly tone in their dealings with Russia. The Russians have signed a new nuclear arms reduction treaty with the US, accepted the idea of tougher sanctions on Iran and responded to the air crash on Russian soil that killed the Polish president and his entourage with unexpected openness and sensitivity.

Some western officials attribute this change in tone in the Kremlin to the US altering its position on missile defence; others credit the growing influence of President Dmitry Medvedev. But some think that Russia is already adapting its foreign policy in response to the sharp fall in the price of gas and the shift on world energy markets.

Gazprom has famously rubbished shale gas, claiming it is not a threat and that environmental concerns will create a problem for the extraction technology. It seems however, that Russia is worried. But is the country — and the EU for that matter  –  jumping the gun on shale gas? Although it seems unlikely to stand in the way of the already fast-growing US industry, it is fair to say that the jury is not completely out on shale gas; a big EPA review is under way and the industry attracted Congressional scrutiny earlier this year.

Even if shale gas doesn’t pose a problem for Russia’s role as the dominant gas supplier in Europe, there might be other issues. Steve LeVine listed in March a ‘trifecta’ of threats to Gazprom, including shale gas, Qatar’s LNG efforts, and a new gas pipeline connecting China to Turkmenistan, a rival producer.  Meanwhile the FT points out another hindrance: ructions within the Russian gas industry itself.

Perhaps it’s not so surprising that the diplomatic mood has already turned.

Related links:

Where the European shale gas plays are - FT Energy Source

Kate Mackenzie

BP explains the ‘top kill’ plan and shows footage of some of the preparations preceding it:

Kate Mackenzie

After it last week made its riser-monitoring camera feed available Ed Markey, Massachusetts Democratic congressman, wants BP to make publicly available all video feeds it has — and has published this video grab of a dozen feeds from the site of the leak:

Kate Mackenzie

- A 42,000 barrel-a-day oil spill, from 1910

- A ‘death penalty’ for offshore drilling negligence

- The poor stepchild of oil data

- Public blames administration, but blames BP more

- ‘Green bond’ proposed to address cap-and-trade problems

Kate Mackenzie

- BP told to rein in use of chemicals - FT

- Engineers gamble on ‘top kill’ - FT

- BP CEO rates ‘top kill’ chances at 60 – 70% - Bloomberg

- Government has authority to leak spill response, but may lack know-how – CNN

- Administration conflicted over relying on BP to stop leak – Washington Post

- US declares fishery disaster in three Gulf states - Reuters

- India’s sibling saga may have more twists - FT

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