(Reuters) – BP and Anadarko Petroleum Corp, with a combined 90 percent stake in a ruptured Gulf of Mexico oil well, could handle up to $35 billion in costs from the spill, independent research service CreditSights said on Wednesday.
Assuming costs come in under $35 billion, stocks and bonds of the companies are attractive for long-term investors willing to take on significant risk, CreditSights analysts Brian Gibbons Jr and Jake Leiby said in a report.
Three groups of researchers are now reporting evidence of large plumes of oil far below the surface of the Gulf of Mexico. This growing proof that an unknown quantity of oil from the ruptured Deepwater Horizon rig is now accumulating in deeper waters of the gulf comes after BP chief executive Tony Hayward said his company found “no evidence” of such plumes. Hayward also maintained that oil is lighter than water and thus will float to the top of the gulf.
By now, most of us have heard about the infamous oil spill in the Gulf of Mexico and the woes that BP has had in trying to cap it. The exact total amount of the spillage is actually unknown, but estimates keep climbing.
But have you ever considered exactly how they calculate and track that oil spill? Well, there happens to be some very specialized software that does exactly that… and given the current events we thought it would be good to take a look at this software. There are two types of software that we need to look at — one to estimate the size of the spill at the site, and the other to track that spill over a given period of time.
Calculating Spill Size
Released by The Oil Spill Training Company Limited, The Slick Calculator And Reporter uses the Bonn Agreement Code — an internationally recognized system — to generate its information. The software uses the overall appearance of the oil spill to calculate the volume of oil in the water by the estimated oil thickness.
Another Bad Week, Or a Really Good One? Good news grows as slow as a tree, but bad news spills as fast as a broken oil main. That seems to be the lesson from this week as BP, the U.S. government and an armada of ships and volunteers tried but mostly failed to contain the Deepwater Horizon oil spill. Though BP had some success at slowing the spigot, oil is pooling in the wetlands of the Mississippi Delta and resides at unmeasured quantities in the deeps. There it has joined the Loop Current with a probable next stop in Florida.
Meanwhile, 1,500 miles north, an equally momentous event drew little attention: an agreement to curtail or end logging on 72 million acres of Canada’s boreal forest, an area roughly the size of France. An unlikely consortium of logging companies and Greenpeace agreed to halt the chainsaws altogether for three years in an area as big as Montana, and to develop a sustainable-forestry program for the remainder. The accord might be the forerunner to permanent protection for an area that encompasses two-thirds of Canada’s logging concessions.
Imagine paying over $300 for a gallon of gas. That was essentially what Exxon was paying in 1989 when their oil tanker, Valdez, split open and released over 10 million gallons of oil into Prince William Sound, Alaska. The cleanup alone is estimated to have cost roughly $2.5 billion and settlements over $1.1 billion. Divide $3.6 billion by 10 million gallons and Exxon paid well over $300 a gallon for oil they never even sold at the pump. Include all the bad PR and the total cost of the whole incident could easily double.
If current estimates are correct about BP’s monster oil leak in the Gulf of Mexico then there is roughly 5 to 6 million gallons of crude floating around in need of some immediate attention. And immediate is the key word because statistics show that the cost to clean up a gallon of oil on land can run 10 to 30 times more than it does at sea.
So what should BP do? Wait and hope the booms hold and the oil never makes it to land. But when it does, they can expect to start paying over $300 a gallon. This wait and hope is not the answer. The answer is in the backs, equipment and know-how of the Gulf area fisherman.
(Reuters) – Oil major BP said it would pay up to $500 million over 10 years to fund research into the effects of an oil spill from its Gulf of Mexico well, as it faces pressure from the U.S. government to halt the leak.
BP said the research would try to assess the impact of Ocean currents, how the oil affects sea life and whether chemicals used to disperse the spill damages the environment.
The London-based company, which has faced increasingly harsh criticism from President Barack Obama’s administration in the past week, said it was starting the program with an undisclosed grant to Louisiana State University.
BP shares have fallen on investor fears the damage to its reputation in the United States could severely curb the company’s business in its most important market, where 40 percent of its assets are based.
For almost a month, BP monitored oil and natural gas gushing from the broken riser and blow-out preventer with remote operated vehicles (ROVs). And for almost a month, they kept all of that video to entirely to themselves. But that’s about to change.
In the hours and days immediately following the explosion on the Deepwater Horizon offshore drill rig in the Gulf of Mexico, the federal response was centered on firefighting, search and rescue. For nearly three days, although the rig was burning, the wellhead and riser assembly were still in tact and there was no leaking oil to speak of. And then, the worst-case scenario happened: the Deepwater Horizon sank.
Officials at the Environmental Protection Agency are considering whether to bar BP from receiving government contracts, a move that would ultimately cost the company billions in revenue and could end its drilling in federally controlled oil fields.
Over the past 10 years, BP has paid tens of millions of dollars in fines and been implicated in four separate instances of criminal misconduct that could have prompted this far more serious action. Until now, the company’s executives and their lawyers have fended off such a penalty by promising that BP would change its ways.
That strategy may no longer work.
With the BP Deepwater Horizon oil rig spill on its 28th day and counting, some answers are finally beginning to emerge regarding how it happened and who might be responsible. Unfortunately, even the best answers raise more questions than they put to rest, and the worst seem to be the result of obfuscation, uncertainty, and outright collusion.
For example, a recent report from the Wall Street Journal indicates that the final showdown on procedure (before the blowout) was between Transocean’s rig manager, Jimmy Wayne Harrell , who reportedly got his marching order direct from BP, and Donald Vidrine, the top executive from BP aboard the oil rig.
Harrell said BP had given him precise instructions regarding taking out the drilling mud and testing for gas seepage before cementing the well. Vidrine reportedly told Harrell it was not the right way to go about closing off the oil pipeline.
This morning the President met with members of his cabinet to get another comprehensive update on the ongoing administration-wide response to the disastrous BP oil spill in the Gulf region. The president made clear his frustration with BP and the other parties involved in the spill, committed once again to ensuring they are held accountable for picking up the tab, and recapped the Administration’s efforts to tighten up the regulation of offshore drilling sites.
He began with the top priorities, however:
The potential devastation to the Gulf Coast, its economy, and its people require us to continue our relentless efforts to stop the leak and contain the damage. There’s already been a loss of life, damage to our coastline, to fish and wildlife, and to the livelihoods of everyone from fishermen to restaurant and hotel owners. I saw firsthand the anger and frustration felt by our neighbors in the Gulf. And let me tell you, it is an anger and frustration that I share as president. And I’m not going to rest or be satisfied until the leak is stopped at the source, the oil in the Gulf is contained and cleaned up, and the people of the Gulf are able to go back to their lives and their livelihoods.
The key executives of the companies responsible for the titanic oil spill in the Gulf of Mexico were raked over the coals by members of Congress this week and managed to skillfully dance away and blame each other when the grilling got too hot.
Called to account before the Senate Environment and Public Works Committee, chaired by Senator Barbara Boxer (D) of California, were BP America President Lamar McKay; Steven Newman, CEO of well driller Transocean limited; and Halliburton chief health, safety and environmental officer Tim Probert.
In their testimony, all three men appeared simultaneously to accept responsibility for what happened then shift the blame to the other parties. All relied heavily on the fact that critical details regarding the precise cause of the accident are not yet available. Indeed, when asked by several senators about whether certain industry standards for building ocean-based oil rigs were followed, the witnesses indicated several times that they didn’t know the answer or would have to wait for the outcome of what they promised will be a thorough investigation of the disaster.
They say timing is everything. And when it comes to the timing of the BP oil spill in the Gulf of Mexico and the politics of climate and energy in the United States, they are right — although it’s not entirely clear what about.
First off, there was President Obama’s sudden — and some would argue surprising — announcement of his intention to lift the moratorium on offshore oil exploration and development on parts of the Outer Continental Shelf (OCS): a move that many environmentalists decried as political pandering, ceding a valuable bargaining chip or just plain bad policy.
But Obama saw opening up some areas to offshore oil and gas development as politically expedient, economically rational and — thanks to assurances from the oil industry — environmentally responsible. And then there was the explosion at a BP-leased offshore oil well where contractors were finishing a deepwater exploratory well about 30 miles off the coast of Louisiana.
BP Plc, Transocean Ltd and Halliburton Co are all back in the hot seat in Washington over their responsibility in what could be the worst oil spill in U.S. history.
After a day of hearings on Tuesday where company officials traded blame for the April 20 rig explosion and oil spill, a U.S. House of Representatives panel said it had uncovered significant problems with a safety control mechanism on BP’s oil well that could have contributed to the accident.
WASHINGTON (Reuters) – In response to the BP oil spill, U.S. Interior Secretary Ken Salazar will announce on Tuesday that the Minerals Management Service will be divided so collection of oil royalties and safety inspection of offshore drilling are separated, a department official told Reuters.
The MMS currently carries out both roles, drawing criticism from some U.S. lawmakers and environmental groups.
Critics argue the MMS is faced with a conflict of interest because it is responsible for regulating and shutting down offshore oil production over safety concerns, if necessary, and also charged with keeping the oil flowing so the government can collect royalties.