Daily Archives: June 1, 2010

Sheila McNulty

The oil spill in the Gulf of Mexico had until now only impacted the industry’s overall reputation. Now it is starting to hit the bottom lines of companies with major investments in the deep waters of the Gulf, as  the administration’s decision to continue for six months a moratorium on new drilling in the Gulf will put off production planned for next year.

Many people agree with that decision, given that the industry has been working with BP to stop and contain the spill and yet has been unable to do either.

Amy Myers Jaffe, energy expert at Rice University, said in an interview:

What this event shows is that nobody really has a solution, and that is a frightening prospect. If around the world the only way to stop a major  spill from a blowout is to drill a relief well, and that could take up to four months, waiting four months to close down this kind of catastrophic spill is too long. It raises the question of whether we can permit offshore drilling unless we have the technology to close down a blowout in a matter of days, not a matter of months.

Kate Mackenzie

The US administration is launching an investigation into bringing possible criminal charges over the Gulf oil spill.

From attorney general Eric Holder’s press statement:

During the early stages of the response efforts, I sent a team of attorneys including the head of the Environment and Natural Resources Division, Ignacia Moreno, and the head of our Civil Division, Tony West, to New Orleans to lead our efforts to protect not only the people who work and reside near the Gulf, but also the American taxpayers, the environment and the abundant wildlife in the region. They have been working diligently ever since to gather facts and coordinate the government’s legal response.

As we move forward, we will be guided by simple principles: We will ensure that every cent of taxpayer money will be repaid and damages to the environment and wildlife will be reimbursed. We will make certain that those responsible clean up the mess they have made and restore or replace the natural resources lost or injured in this tragedy. And we will prosecute to the full extent any violations of the law.

Among the many statutes Department attorneys are reviewing are:

  • The Clean Water Act, which carries civil penalties and fines as well as criminal penalties;
  • The Oil Pollution Act of 1990, which can be used to hold parties liable for cleanup costs and reimbursement for government efforts;
  • The Migratory Bird Treaty Act and Endangered Species Acts, which provide penalties for injury and death to wildlife and bird species; and,
  • Other traditional criminal statutes.

There are a wide range of possible violations under these statutes, and we will closely examine the actions of those involved in this spill. If we find evidence of illegal behavior, we will be forceful in our response. We have already instructed all relevant parties to preserve any documents that may shed light on the facts surrounding this disaster.

Related links:

US looks at criminal probe over spill - FT

Kate Mackenzie

PTTEP Australasia

Source: PTTEP Australasia

Although the LMRP plan is still under way, focus is turning to BP’s effort to drill relief wells to ultimately stop the oil gushing from Deepwater into the Gulf of Mexico.

The relief wells will be critical to finally stopping the flow, whether or not the temporary fixes now under way are successful.

The Obama administration in mid-May seemed to be sceptical that the relief wells were a sure thing, although BP’s America chairman Lamar McKay said the company had a “high level of confidence” that it would be successful.

The question is: how long will they actually take to work?

The FT today looks at comparisons between the Gulf of Mexico disaster and the massive blowout of Pemex’s Ixtoc 1 exploration well in Mexican waters in 1979, which became one of the biggest offshore oil leaks ever.

A more recent incident, last year’s Montara oil leak in the Timor Sea, was eventually stopped by a relief well operation after more than 10 weeks. It provides plenty of examples of just how difficult relief well operations can be even today.

By Gwen Robinson

The news on BP and its seemingly uncontainable oil leak in the Gulf of Mexico “just gets worse”, as Lex observes in typically understated style on Tuesday.

That’s on both the financial and leak-containment fronts, though of course the two are inseparable (just look at this oil leak video link and updates in this Energy Source post). The latest desperate measure to plug the leak — trying to attach a cap so the oil can be collected — follows the weekend failure of BP’s attempt to “top kill” the leaking oil by plugging it. 

BP shares are also on a disastrous trajectory. As FT Alphaville noted earlier, the stock plunged more than 11 per cent shortly after London’s open and fell another few percent after that to 420p by 9.10am BST. As of Friday, the company had lost nearly 25 per cent, or $46bn, from its market value since mid-April.

And now, amid rising costs of the containment effort and an intensifying backlash — from investors, the US government, environmentalists and, increasingly, from the Gulf of Mexico states – come growing mutterings that BP itself might be a takeover target.

FT Energy Source

A quick recap of efforts to stop the Gulf of Mexico oil leak so far:

Tried and failed:

Using remotely operated submarines to trigger the switches to close the blowout preventer (BOP) valves

Putting a steel and concrete container over the broken pipe to collect the oil

Performing a “top kill” on the well by pumping heavy drilling fluid down it to push back the oil and gas

A “junk shot” of material such as golf balls and shredded tyres into the BOP to clog it, facilitating the top kill

By Joseph Cotterill

How much did the weekend’s Deepwater top-kill failure hurt BP? This much:

BP’s stock was down 11.4 per cent on the FTSE 100, as at pixel time. Ouch.

Kate Mackenzie

Forgot West Africa, the Falkland Islands and even Greenland for exotic new oil frontiers. Two western small oil companies are funding exploration in North Korean waters.

The FT reports that Irish-Anglo company Aminex signed a 10-year production sharing agreement with the communist nation’s state oil company and together with Singapore-listed Chosun Energy, formed a company called Korex to explore a block east of North Korea.

There’s little data on the 50,000 square kilometre block, which is on the country’s eastern side and includes both deepwater and shallow areas.

Kate Mackenzie

- Obama’s opportunity to move the US beyond oil

- BP’s Tony Hayward wants his life back

- Why don’t we just nuke oil well?

- Austria’s OMV talks Turkey

- Oil spills, climate change, and assessing risk

- Spill casts a long shadow over BP’s future

- Katrina, Exxon-Valdez ‘poor economic metaphors’ for GoM leak

- China ‘needs more big hydro’

- 13 questions and answers about the Nissan Leaf

Kate Mackenzie

- BP opts for containment to tackle crisis - FT

- Experts seek to learn from Ixtoc blowout - FT

- Shares in BP slide as ‘top kill’ effort fails - FT

- Spill could last months - FT

- China sees safety tweaks after Macondo – UpstreamOnline

- Shadow falls across Spanish solar industry - FT

- Rich-poor rift stalls progress at UN climate talks - Reuters

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