The report into the Gulf oil spill, a chapter of which was released last night, made for pretty grim reading for BP and the other companies involved.
Most of the mistakes and oversights at Macondo can be traced back to a single overarching failure – a failure of management. Better management by BP, Halliburton, and Transocean would almost certainly have prevented the blow-out.
Shares in BP hit a 6-month high this morning after a report that rival Royal Dutch Shell considered an opportunistic takeover bid for the UK oil group in the summer during the Gulf of Mexico oil spill.
BP’s shares were up 5 per cent to 488.85p at 10am this morning in London trading.
According to the report in the Daily Mail Shell weighed a bid while oil was still flowing into the waters of the gulf but decided against it because of the potentially uncapped legal liabilities facing BP. The paper says Shell might still bid for BP if another suitor emerges over the coming months but is unlikely to be the “first mover”.
The Times is currently publishing extracts from Loren Steffy’s new book Drowning in Oil, about the BP oil spill, in addition to the extracts on Fuel Fix published earlier this month.
As Ed Crooks said in his review of the book, it is good on drama and detail but less so on telling us anything particularly new about the spill or the company.
The Times extracts are readable and interesting, however. In the first (£), he tells the story of the night of the explosion via two of the crew on board, Stephen Stone and Mike Williams. This is the from williams’ story:
Back in the electronics shop, the first explosion blew the three inch-thick steel door off its six hinges, knocked Mike Williams across the room, and slammed him into the far wall. The door followed and struck him in the head. A line containing carbon dioxide ruptured and began spewing gas into the room, clouding his vision. He couldn’t see. He couldn’t breathe. He crawled along the floor, knowing that oxygen would be more prevalent there, and made it back to the opening where the door had been.
The second is a similarly entertaining read, memorable for one quote in particular, from a “retired oil company executive”: “Tony’s a good guy, bright guy, but he can’t keep his mouth shut sometimes.”
The BP oil spill has harmed the reputation of the entire oil industry, the chief executive of Shell, BP’s closest rival, has said.
Answering Energy Source readers’ questions, Peter Voser said:
Undeniably, the Macondo incident has greatly harmed the oil industry’s reputation. Our ablity to drill in deep water has been questioned, and that’s a serious matter.
The civil suit against BP brought by the US government on Wednesday had been inevitable since we first found out that thousands of barrels of oil were spilling into the Gulf of Mexico. The timing of Wednesday’s announcement, mandated by the judge at the New Orleans court where the trial will be held, was the only surprise. It perhaps did not send the best message about the business-friendly nature of the administration, on a day when President Obama was courting many of America’s top CEOs.
The share price reaction was modest, reflecting the fact that while the headlines are terrible for sentiment, investors always knew this day would come. The news looks bad for BP, but shareholders can still hope for better, as the Lex column points out.
Nevertheless, the Department of Justice’s action is a salutary reminder that, eight months after the fatal accident on the Deepwater Horizon, and three months after the ill-fated Macondo well was sealed for good, BP is still not even close to finding out exactly how much the disaster will cost.
The Obama administration has decided not to grant any new leases in the eastern Gulf of Mexico, off the coast of Florida, for the foreseeable future, as a result of the BP spill.
AP broke the story, reporting that the ban would last seven years:
A senior administration official told The Associated Press on Wednesday that drilling leases won’t be considered in the waters off Florida as part of the change. He spoke on condition of anonymity because the decision hadn’t been announced yet.
He said that because of the BP spill, the administration now understands the need to elevate safety and environmental standards. Before the spill, the administration had considered a plan to allow drilling in the eastern Gulf.
One note of caution: the NY Times has the same story, but is reporting that the ban would last “at least for the next five years”. Presumably the picture will become clearer when Ken Salazar has made the formal announcement this afternoon.
Our US energy editor Ed Crooks last night won the UK Foreign Press Association’s print and web news story of the year for his inside story on BP’s response to the Gulf spill.
You can read the story, which judges called a “rigorous and balanced” piece on “one of the biggest stories of the year”, here.
In February, a group of business leaders (including Richard Branson) came together to issue the government a warning: we’ve had the credit crisis, the next crisis will be a peak oil crisis.
Their message to government was to stop listening to the over-exuberance of oil companies who promised great things from their upstream operations and start thinking seriously about how to move away from the UK’s dependence on oil.
Now they have repeated that call, with an additional warning: Macondo has made the situation even more pressing.
Here’s an interesting story from the States with potentially serious political implications.
The US interior department’s inspector general has carried out an investigation into why the government’s moratorium on deepwater drilling in the Gulf of Mexico, implemented in the wake of the BP oil spill, looked like it had been peer-reviewed, when it had not.
The investigation found the following sequence of events: