Daily Archives: June 4, 2010

Ed Crooks

BP has been holding its conference call for investors, aimed at reassuring them about the group’s financial position, in spite of the huge cost of its massive oil spill in the Gulf of Mexico, already the largest ever in US waters.

Carl-Henric Svanberg and Tony Hayward, BP’s chairman and chief executive, have been speaking, and the message is pretty clear: the dividend should be OK, but they are making no promises.

It was a happy accident of timing that, simultaneously with the investor call, the US authorities have reported some initial success with the containment cap over the top of the leaking well, but it is still too early to say how effective that cap has been. The success of that cap could well determine the outlook for the dividend.

Sheila McNulty

There is an unwritten rule in the oil industry that companies do not criticise one another. And for more than a month, as BP’s oil spill in the Gulf of Mexico has grown, the majors have stuck to that rule despite warnings from industry analysts. Indeed, since a BP-contracted oil rig exploded April 20, killing 11 and starting what has turned into the US’ biggest-ever spill, the oil industry has said almost nothing. Even the PR campaign it had launched in recent years to raise the industry’s profile and gain access to new areas has been put on hold as it has retreated.

But was this really the right approach? Ken Medlock, energy expert at Rice University, warned in an interview in the days following the accident it was important for the industry to break its rule and speak out:

If they want to be able to continue to operate and expand operations in that part of the world, they’re going to have to say something.

Kate Mackenzie

This video, showing how how oil could spread as far as North Carolina, has been circulating around the net rapidly.  It’s from the National Center for Atmospheric Research:

NCAR helpfully points out it’s only a simulation, not a forecast, and shows how dye would travel, rather than oil. Dye, unlike oil, has the same density as water and would not coagulate or form slicks.

It’s understandable however that viewers are slightly alarmed, when that disclaimer appeared on the media release *below* this paragraph:

“I’ve had a lot of people ask me, ‘Will the oil reach Florida?’” says NCAR scientist Synte Peacock, who worked on the study. “Actually, our best knowledge says the scope of this environmental disaster is likely to reach far beyond Florida, with impacts that have yet to be understood.”

Not to mention the headline: Ocean currents likely to carry oil along Atlantic coast

Meanwhile Florida is getting nervous as sightings of tar balls, “tar mats” and other oily substances are reported close to shore. Substances found near the Florida Keys were probably not from the Deepwater Horizon spill, the Coast Guard said, but oil patches are being monitored near other parts of the state.

At midday Thursday, the Florida Department of Environmental Protection said:

• Southwest winds are expected to continue through Sunday with speeds of 10-15 knots. Trajectories show a northeastward movement of oil over the next 3 days, threatening the shorelines of Alabama and possibly the western Florida Panhandle.
• Areas of tarballs, tar patties, and sheen have been confirmed approximately 10 miles from the Escambia County shoreline and 6 miles from Navarre Beach.
• According to the NOAA oil plume model, the primary oil plume is 30 miles from Pensacola, more than 150 miles from Gulf County, and 330 miles from St. Petersburg, with non contiguous sheens and scattered tarballs closer.

BP has issued Florida two $25m grants; one primarily for booming and the other for advertising to ward off a slump in tourism. But the state, fearing a much greater impact, wants more from both the company and the federal government.

Kate Mackenzie

BP is now working on containing the leaking oil from its Macondo well up to the surface.

But how much oil is likely to be caught?

As we wrote yesterday, the failure of the diamond claw has made it much more difficult to create a seal around the leak, and BP is running low on options for capturing the oil. Then there is the risk of methane hydrates, which BP is trying to tackle using warm water and methanol.

At pixel time, the videos are showing a lot of oil still gushing out:

(More video feeds here, and single-page view.)

The most recent official update:

“The placement of the containment cap is another positive development in BP’s most recent attempt to contain the leak, however, it will be sometime before we can confirm that this method will work and to what extent it will mitigate the release of oil into the environment,” said Admiral Thad Allen, National Incident Commander.  “Even if successful, this is only a temporary and partial fix and we must continue our aggressive response operations at the source, on the surface and along the Gulf’s precious coastline.”

Allen earlier said:

“Once the cap is on, there is some chance that some oil could escape,” Allen said. “It could be close to none, it could be some,” leaking out, he said, adding this only can be determined after the cap is placed.

BP chief executive Tony Hayward told media, mid-afternoon CDT, that it would be 12 to 24 hours before the success or otherwise of the cap was known.

Here’s BP’s video explaining how the LMRP cap would work:

Kate Mackenzie

- Lessons left unlearnt from a 2003 GoM near-spill

- The biggest culprits are the things we need most: food and energy

- Oil, the loop current, and the Atlantic

- Why I started @BPGlobalPR

- Electric cars with a range of 100 miles. So…?

- Living with an electric car

- In American southwest, the energy problem is water

- Oil sands production costs are rising

Kate Mackenzie

- Container cap placed; success unclear - DHCR

- BP moves to calm investors as shares fall - FT

- Big oil groups break ranks with BP - FT

- Police probe as carbon deal hit by bribe accusation - FT

- Further setback in bid to contain leak - FT

- Obama cancels Asia trip as concerns on spill mount - NY Times

- Oil expected to hit Florida on Friday – Houston Chronicle

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