Deepwater Horizon oil rig explosion
Oil Spill from Macondo Well into the Gulf of Mexico
A sign for America and the whole world:
More dangers in oil production and exploration
Some days before, in Oval Office in the white house, Obama calls for new focus on Energy Policy. He summoned Americans to a “national mission” to move away from reliance on oil and develop alternative sources of energy. “We cannot consign our children to this future. The tragedy unfolding on our coast is the most painful and powerful reminder yet that the time to embrace a clean energy future away from oil is now”. He said.
In Oval Office Speech, Obama Calls for New Focus on Energy Policy
Deepwater Horizon oil rig explosion
At 48 miles south of Louisiana, and for unknown reasons, one of the worst offshore oilfield disasters in modern history took place. The Transocean Deepwater Horizon exploded, burned, capsized and sank to the bottom of the sea. It took the lives of 11 men and injured 17 others, four of them critically. U.S. wants to put the full responsibility on the BP. Also they want the company to scoop up every molecule of oil released by the blown-out Macondo well. Moreover, they ask the company to undertake the consequences of the death of seabirds and fish in the site of the event.
Deepwater Horizon oil rig before explosion
Boats attempt to put out the fire on Horizon oil rig
The oil-drilling rig known as Deepwater Horizon is owned and operated by Transocean, an offshore drilling contractor that owns 140 drilling units. Transocean was contracting with BP Exploration and Production Inc. to run Deepwater Horizon in Macondo well in the Gulf of Mexico. In 2008, BP paid $35 million for the rights to the 6000 acre site off the Louisiana coast. The Macondo exploration well that costs BP $100 million to build, has spilled oil into the gulf from 18,000 feet below the seafloor, which itself is 5,000 feet below the water’s surface.
BP has been accused of failing to follow proper procedures in the run-up to the explosion on the Deepwater Horizon rig on 20 April. A government panel of scientists now believes 35-60 thousand barrels are leaking each day. BP says that the costs of the oil spill in the Gulf of Mexico increased to about $3.5 billion, in addition to $300 million pledged to build sand islands off the Louisiana coast in order to protect wildlife.
The company hopes to collect all of the oil leaking from the well until the drilling of two other wells near the current well to be completed, so as it can transfer flowed oil into new wells and close the current well forever.
Building sand islands off the Louisiana coast in order to protect wildlife
Searching for oil in frontiers and deep water .. why?
Shashank Bengali, a distinguished writer in McClatchy Corporation
Many experts and reporters, of whom (Gary Taylor of Platts Oil gram News, Shashank Bengali of McClatchy Corporation, Alan von Altendorf, President of CWSX, Houston, Chris Skrebowski, the former strategist of British Petroleum, and Peter Maass, the author of “Crude World: The Violent Twilight of Oil”) say that the world consumes as much oil as it ever has. And to meet the world’s thirst for oil, drillers are searching in the sand and mud of remote western Canada, the tough shale rock of North Dakota and more than a mile under the seas off the southern U.S. coast, where the drilling accident has sent millions of gallons of crude spilling into the Gulf of Mexico.
Production from onshore oilfields in the U.S. has been declining since the 1970s, and near – shore production along the Gulf of Mexico peaked more than a decade ago. Many of the richest remaining conventional deposits are in places that are politically unstable, such as Iraq and Nigeria, or hostile to Western oil companies, such as Sudan, Venezuela and some countries in the Middle East.
Pushing ahead with unconventional drilling in the wake of a major spill could seem risky, but putting the brakes on exploration would worsen what analysts warn is an impending oil price crunch as world demand increases and production slows. The deepwater Gulf of Mexico is America’s last best hope to supply a meaningful fraction of US energy for transportation, without which USA cannot function as an industrial society.
Chris Skrebowski, a former strategist for BP
“No one goes and tries to drill in the deep waters if it is possible to drill somewhere easier. The oil that has been left lies in the frontiers, which are necessarily more technically challenging”. Chris Skrebowski, a former strategist for British Petroleum who now runs a London consultancy that studies oil depletion.
Peter Maass, the author of “Crude World: The Violent Twilight of Oil.”
“An oil spill here or there hasn’t gotten in the way of oil extraction anywhere, we want our oil, and we’re pretty much willing to pay any price for it. If you want to drill less, you have to significantly decrease your demand for oil…Patting ourselves on the back for fining BP, increasing safety standards, making more areas off-limits to drilling …it doesn’t get at the fundamental problem … which is our high consumption of oil.” Said Peter Maass, the author of “Crude World: The Violent Twilight of Oil.”
According to Gary Taylor of Platts Oil gram News, an industry publication, “They’re in this high-technology atmosphere where a lot of things have to work right and work perfect. That is the kind of risk that’s probably out there with deepwater exploration, but the resources there are large, so potentially, and there’s money to be made.”
Hayward to face hard situation in Congress
Tony Hayward: I understand how serious the situation is, it is a tragedy
Tony Hayward, chief executive of BP, faced many questioning in US Congress. He told the Congress that he had no role in drilling the well, and denied any personal responsibility for the decisions that led to the oil leak in the Gulf of Mexico. Hayward told the Representatives of Energy and Commerce Committee: “The explosion and fire on board Deepwater Horizon and resulting oil spill in the Gulf of Mexico never should have happened and I am deeply sorry that they did. When I learned that 11 people lost their lives I was personally devastated. I understand how serious the situation is, it is a tragedy, people lost their lives, others were injured, and the Gulf Coast environment and communities are suffering. This is unacceptable, I understand that, and let me be very clear: I fully grasp the terrible reality of the situation. We will not rest until the well is under control, and we will meet all our obligations to clean up the spill and address its environmental and economic impacts.”
Yet, Harry Waxman, the chairman of The House or Representatives energy and commerce committee criticized Hayward’s performance saying: “Not a single email or document that showed you paid even the slightest attention to the dangers of this well”.
Compensations are BP’s sole responsibility
The Obama administration has said BP is responsible for the spill and will pay for the cleanup. Tighter safety standards on offshore drilling are likely to follow. BP looks set to bear unlimited legal responsibility for the costs of cleaning up the oil spilled from the Macondo well in the Gulf of Mexico.
Barack Obama meets with BP chairman Carl-Henric Svanberg in the Oval Office.BP agrees to $20b compensation fund
President Obama meets BP executives in the White House’s Roosevelt Room.
After a long meeting at the White House, Barack Obama wrung an apology from BP and an agreement for the oil company to make a $20bn down payment into a special compensation fund for victims of the Gulf oil spill. Obama also extracted a commitment from BP for a $100m fund for oil rig workers put out of work by the moratorium on drilling – which the oil company had been resisting.
Obama told reporters: “The $20bn compensation is not a cap. The people of the Gulf have my commitment that BP will meet its obligations to them. And the payout which is equivalent to two years of dividends for BP is only the start of BP’s pain as it may not be enough to cover all the economic claims against the company. We will make BP pay for its recklessness over the Deepwater Horizon disaster, whose impact is compared to that of the September 11 terrorist attacks on the US. BP must pay for the damage their company has caused. And we will do whatever is necessary to help the Gulf Coast and its people recover from this tragedy.”
Following a meeting with the President of the United States, the BP Board announces an agreement to create a $20bn claims fund over the next three and a half years on the following basis; BP will initially make payments of $3bn in Q3 of 2010 and $2bn in Q4 of 2010. These will be followed by a payment of $1.25bn per quarter until a total of $20bn has been paid in. The fund will be available to satisfy legitimate claims including natural resource damages and state and local response costs. Payments from the fund will be made as they are adjudicated, whether by the Independent Claims Facility (ICF). Any money left in the fund once all legitimate claims have been resolved and paid will revert to BP.
As a consequence of this agreement, BP decided to cancel the previously declared first quarter dividend scheduled for payment on 21st June, and that no interim dividends will be declared in respect of the second and third quarters of 2010. The Board will consider resumption of dividend payments in 2011by which time it expects to have a clearer picture of the longer term impact of the incident. The Board believes that it is right and prudent to take a conservative financial position given the current uncertainty over the extent and timing of costs and liabilities relating to the spill. And to further increase the Company’s available cash resources, the Board intend to implement a significant reduction in organic capital spending and to increase planned divestments to approximately $10bn over the next twelve months.
Obama told reporters: “The $20bn compensation is not a cap.
BP’s Apology to Americans for the disaster
Svanberg, the BP Chairman, used the moment to repair BP’s battered image in America by serving up an apology. Speaking outside the White House he said: “BP would conduct its own investigations into the spill. What has been clear today is that this administration and our company are fully aligned in our interest of closing the wells, cleaning the beaches and caring for those who are affected. We wanted to win back public trust, so I would like to take this opportunity to apologize to the American people on behalf of all the employees of BP”.
Carl-Henric Svanberg, the BP Chairman : I would like to take this opportunity to apologize to the American people on behalf of all the employees of BP