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.
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.
From the House of Representatives, the FT’s US political correspondent Anna Fifield reports:
A second day of hearings into the BP oil spill got underway in Washington on Wednesday, with the same line-up as for the Senate committee hearings on Tuesday – Lamar McKay of BP, Steven Newman of Transocean, and Tim Probert of Halliburton – joined by Jack Moore, president of Cameron International, manufacturer of the blow-out preventer used by the Deepwater Horizon.
The four appeared before the oversight and investigations subcommittee of the House of Representatives’ energy committee, a powerful panel that received more than 100,000 pages of documents from the companies involved. The documents contained a number of eye-popping revelations.
From the Senate hearing room, the FT’s US political correspondent Anna Fifield reports:
Protestors and lobbyists jostled for seats in the back of the packed Senate hearing room on Tuesday morning.
Some environmentalists with black tears painted on their faces wore T-shirts saying “Energy shouldn’t cost lives” while others in suits worse stickers reading “Protect our beaches”.
As the senators and executives walked in, some protestors, this time in pink, yelled “BP kills wildlife”.
BP was responsible for critical decisions on the Deepwater Horizon drilling rig, its contractors have said, pointing the finger at the British company for its role in the disaster that killed 11 men and created an oil slick the size of Florida in the Gulf of Mexico.
In prepared testimonies ahead of a Senate hearing on Tuesday, executives from Transocean, which owned the rig, and Halliburton, which was responsible for cementing the well to secure it after it had been drilled, both described BP’s role in designing and overseeing the project, and in making key decisions about technical details.
This is a rather different picture of the working practices on the rig from the account often presented by BP.
BP is turning to desperate measures in its battle to stop its oil spill in the Gulf of Mexico, proposing to fire bits of tyre and golf balls into the failed blow-out preventer on the sea bed, to plug the leaking pipe.
It has been forced to consider such extreme tactics by the failure of its attempt to use a “coffer dam” – a 100-tonne steel and concrete box – to trap the oil. As the attempt started, BP warned that coffer dams had never previously been used in such deep water, and its experience has shown that the conditions 5,000 feet down do indeed make things much more difficult.
The problem at those depths has been the formation of gas hydrates, ice crystals described as “jelly like” by one former drilling engineer, which filled the top of the container and made it impossible to use it to pump the oil up to the surface.
The problems have highlighted the issue of gas hydrates: strange substances that create a variety of hazards, but may also offer a huge opportunity.
The fury levelled against BP in the US over its Gulf of Mexico oil spill is, of course, principally provoked by the scale of the leak. But at times there seems to be an extra edge to the attacks because BP is a foreign company. The insistence of some administration officials that the company is called “British Petroleum” – not its name since the 1998 – makes the point very clearly.
Would officials speak so freely about keeping their “boot on the throat” of an American company? Perhaps not.
Piecing together the causes of the Deepwater Horizon disaster will take months. Exactly what happened on the night of April 20 may never be known: some of the key equipment may never be recovered from the sea bed, and the 11 men who died in the blast appear to have been the ones closest to the explosion, because they were working on the drill floor when it happened.
The investigations mounted by BP, Transocean and the US authorities will be huge forensic exercises, akin to the task of trying to understand an air crash in mid-ocean.
From accounts provided by survivors, the companies involved and industry experts, this explains what we think we now know about the Deepwater Horizon explosion, and what the recovery of the blowout preventer could reveal.
As Royal Dutch Shell reports first quarter results – matching BP in comfortably exceeding analysts’ expectations – its chief financial officer Simon Henry has had some interesting things to say about the company’s plans in China.
Or rather, it would be more accurate to say, “with China”.
Gas storage has, unsurprisingly, not featured as a prominent issue in the UK general election campaign. The public only notices its gas supply if it fails to arrive at the turn of a knob, and when the bill comes. There is also, as discussed in an earlier post, a remarkable degree of consensus between Labour and Conservative parties about the right way forward. (The Liberal Democrats are also broadly in agreement, although on this as on many issues there is rather more difference between them and the other two parties than there is between Labour and Conservatives.)
However, while the politicians may be all of one mind, and looking for second-order points of difference so they can attack each other, there is a much greater gulf between them and some of Britain’s leading energy experts.