Daily Archives: May 27, 2010

Sheila McNulty

When an oil rig in the Gulf of Mexico exploded April 20, caught fire and eventually sunk, it was a shock for the oil industry. The sector prides itself on being high-tech and has spent years urging more access, arguing it had the expertise and technology to prevent a disaster of the scale that is unfolding. Indeed, Rayola Dougher, senior economic advisor at the American Petroleum Institute, captured the industry’s response when she said the industry was more shocked than anyone that this could have happened.

There’s a concern this could be a major setback.  The  Obama administration has put a moratorium on new drilling permits for the Gulf and is expected today to extend the moratorium on deepwater permits, and announce other new measures.

But to the oil industry, this is a challenge to overcome. Companies involved in recovering oil and gas still believes they can – and will – continue to access the rich resources of the Gulf, once it proves it can stop a leak at 5,000 feet under the ocean and keep it from contaminating some of the most vulnerable shorelines in America.  The industry’s confidence comes largely from its history of overcoming technical challenges.

FT: What resulting government would the green party have preferred?

CL: We’d have preferred an election under a fair, inclusive voting system that would have delivered a reasonable representation of what the electorate wants, instead of forcing millions of people into tactical voting. Failing that, it’s clear from our own manifesto that ours is a genuinely progressive, redistributive agenda, with sustainability at its heart, and so we would want a government that was more likely to act on that agenda. We can’t be happy with the idea that the Lib Dems have got into bed with the Conservatives, at least without securing a commitment to proper political and electoral reform.

FT: Why do you think you won? – where do you see the 2nd green MP, and the 3rd, and the fourth…?

Kate Mackenzie

So Obama has finally come out and linked the Deepwater Horizon accident and the continuing oil leak to the ‘dangers of fossil fuels’. As the FT reports:

Touring a solar panel plant in California on Wednesday, Mr Obama said “the increased risks, the increased costs” of deepwater drilling “gives you a sense of where we’re going”.

“We’re not going to be able to sustain this kind of fossil fuel use,” he said, calling the spill “heartbreaking”.

The administration is expected to announce it will extend the suspension on new deepwater drilling permits, and place more stringent requirements on oil and gas companies operating offshore.

Kate Mackenzie

It’s not often we see oil analysts looking much at electric cars. But JBC Energy has made a reasonably bullish assessment, picking up on reports that Chinese electric vehicles will be subsidised to the tune of 60,000 yuan, or almost $9,000 each, and expand a pilot subsidy scheme from 13 cities to 20.

Noting also China’s ambitions to be the world’s biggest developer and manufacturer of electric vehicles, JBC analysts say they expect 9 per cent of Chinese passenger fleet to be electric by 2020.

Kate Mackenzie

Expectations are high that the Obama administration is going to come down tougher on offshore oil and gas drilling later today.

Yet just weeks ago, this year was set to be quite a special one for deepwater oil drilling in the Gulf of Mexico, and for US offshore drilling generally.

In March, things were looking particularly good for drillers. Just weeks before the Deepwater Horizon explosion, the Obama administration said it would expand offshore leases, while the Perdido platform began operation, extracting oil at an ocean depth of 8,000 feet. Operated by Shell (BP and Chevron are also part-owners), the platform was working at pioneering depths in the Gulf’s ‘lower tertiary’ deposits – rich in oil, but extremely deep.

Kate Mackenzie

We put together a list of the other ultra-deepwater leases in the Gulf of Mexico:

Kate Mackenzie

Spillcam‘ is running — but BP’s latest update, just published to its website in the past hour, does not reveal much:

“Top kill” operations continued over the night and are ongoing. There are no significant events to report at this time. BP will provide updates on progress as appropriate.

Despite BP’s insistence that the results won’t be known until much later on Thursday, and that the video may not indicate whether the operation is succeeding, viewers of the live feed video are inevitably speculating about just what the cameras at the Macondo well are showing, especially since the view was obscured a couple of hours ago, as this video shows:

Kate Mackenzie

- Did deferring to the chain of command contribute to explosion?

- Matt Simmons thinks well casing may have blown out

- ‘It’s not like only BP engineers are calling the shots’

- Glossary of terms related to Gulf oil spill

- Chu and Hayward in the control room

- Five questions for Obama on the oil spill

- Oil majors tap Asia’s gas resources

Kate Mackenzie

- Lawmakers hit out at latest MMS revelations - FT

- BP used riskier method to seal oil well before explosion - NY Times

- Svanberg links BP’s future to response - FT

- Obama warns on ‘risky’ fossil fuels – FT

- Exploratory Arctic drilling halted until 2011 - McClatchy

- Obama to keep deepwater drilling permit ban – source – Reuters

Kate Mackenzie

Doug Suttles, BP’s chief operating officer, told a press conference on Wednesday that it was “too early to know” whether the ‘top kill‘ attempt to seal the oil well leaking in the Gulf of Mexico had been successful, and it would be about 24 hours — until early evening Thursday, CDT — before that became clear.

BP would monitor the pressure, and whether the oil flowed to the surface, to determine if the injection of mud into the well would stem the flow, allowing it to be sealed.

The procedure holds some risk of backfiring and making the problem worse by creating new leaks or enlarging existing ones. Suttles said that monitoring at the top of the riser suggested the procedure hadn’t yet caused erosion that would indicate this problem, but he added it was too early to be certain that would not occur.

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