Resolving BP spill will take years

The following op-ed article appeared in the June 17, 2010, issue of the Atlanta Journal-Constitution.

Opinion - http://www.ajc.com/opinion/resolving-bp-spill-will-550761.html

Posted at Atlanta Journal-Constitution Web site at 8:13 p.m. Wednesday, June 16, 2010

By Noel L. Griese

Just before the Deepwater Horizon accident, Florida spent $200,000 on a study of offshore drilling safety that concludes: “Oil spills from offshore exploration, development, production and the transportation associated with these activities are unlikely to present a major risk to Florida.”
So much for studies.
As the editor of Energy Pipeline News, I have followed the tragedy in the Gulf of Mexico with an insider’s knowledge of offshore drilling and an idea of what we can expect in the months and years ahead. Unfortunately, my background leads me to conclude that the cleanup will take years to accomplish, and compensating the victims and punishing those responsible will also take time.
Although the Deepwater Horizon may have been the first rig most Americans ever heard of, the Gulf is populated by a tangled network of 3,500 oil-drilling platforms and more than 43,000 miles of pipelines between Texas and Alabama.
The U.S. Gulf had accidents before the Deepwater Horizon burned and sank. Because of hurricanes Katrina and Rita, more than 8 million gallons of oil were spilled from coastal oil facilities and some 3.3 million gallons were spilled from a tank barge when it struck a sunken oil platform. More than 600,000 gallons were spilled from U.S. offshore oil platforms and pipelines.
Testimony before congressional committees reveals that shortcuts to safety were taken on the Deepwater Horizon to save money. The rig, which was costing BP $1 million a day, was 21 days behind schedule. So corners were cut. There’s plenty of blame to go around — for responsible party BP, rig owner Transocean, cementing contractor Halliburton, federal regulators and responders.
Based on an admittedly low-ball U.S. government estimate released in late May, the BP well blowout spilled about 500,000-800,000 barrels of oil into the Gulf through May. That compares with about 3.5 million barrels spilled off shore of Mexico over nine months in 1979 by the Pemex-operated Ixtoc I well that blew out on June 3, 1979, in the second-largest accidental spill in world history. But new estimates from a government technical committee on the amount of oil released through June 3 put the BP blowout already very close to surpassing the Ixtoc I record.
Despite vast U.S. waters, only 62 federal inspectors oversee offshore drilling in the Gulf and U.S. waters along the East and West coasts. Perhaps because its regulatory arm is understaffed, the Minerals Management Service quickly granted permission for BP to take the risks that resulted in the accident.
MMS also collects about $13 billion in annual royalties from the oil industry. This dual role of collecting revenues and enforcing safety put the agency in a conflict of interest with itself. Secretary of the Interior Ken Salazar is in the process of splitting the various MMS functions into three separate offices in an effort to minimize future conflicts of interest.
Despite our experience with the Exxon Valdez disaster in 1989, the response to the Deepwater Horizon spill was initially disorganized and inept. Even today, almost two months after the blowout, only a relatively few skimmers are in the Gulf cleaning up oil floating on the surface. Deployment of ocean booms to protect shorelines has been basically ineffective.
The Unified Command responding to the Gulf spill has not explained very well why supertankers are not being deployed to vacuum up oil, as was the case in the Persian Gulf some years ago. Vacuuming in the Persian Gulf was easier because the oil floated to the surface and was not broken up with dispersants.
After you suck this sort of oil into a supertanker, you wait for the oil and water to separate. Then, if there are no regulations against it, you siphon off the water and pump it back into the ocean.
Despite BP’s denials to the contrary, much if not most of the oil spilled in the Gulf is in huge plumes of droplets of oil in colloidal suspension. There are many of these plumes, which are up to 3,000 feet deep and miles long.
Normally, the heavy ends of the oil (used to make asphalt) settle on the ocean bottom. The thick, gooey oil, ranging in consistency from tar to mousse, floats on the surface.
Even if most of the Gulf could be vacuumed up into supertankers to get the droplets of oil, what would end up in the supertankers would be a tiny amount of dispersant and oil, mixed with a huge amount of water. Regulations prohibit dumping the siphoned water back into the ocean, so the responsible party (BP) would have to figure out what to do with much of the Gulf of Mexico sitting as oily water waste in supertankers. It’s doubtful that there’s enough tank capacity onshore to handle all this oily water until it is disposed of properly.
The spill may be reduced in size by various temporary measures, but stopping the oil will likely not happen until August, when two new relief drillings to intercept the blown-out well are completed. When that happens, the well will be cemented and capped.
But expect cleanup of the environment to go on for decades.
Under the Clean Water Act, the EPA and Department of Justice can fine BP up to $4,300 per barrel spilled if willful negligence is proved. Proving negligence should not be difficult.
BP is already on probation in the U.S. after pleading guilty to a misdemeanor criminal charge resulting from oil spills on Alaska’s North Slope.
The experience of the federal government in suing Exxon over the Exxon Valdez accident offers some clues about where future government lawsuits against BP are likely to head.
Less than a year after the Exxon Valdez oil spill of about 262,000 barrels (though the spill may have been larger), a federal grand jury indicted Exxon and its shipping subsidiary on five criminal violations. Exxon, facing $600 million in fines, pleaded not guilty.
In a plea bargain with the Justice Department, Exxon agreed to pay $100 million in fines and restitution. But the federal judge in the case rejected the deal. The parties settled for $125 million.
Later, in 1994, a grand jury in a civil action levied punitive damages of $5 billion against Exxon, but that was reduced by the U.S. Supreme Court to $507.5 million under a maritime law ruling. Maritime law may also apply in the BP case.
In all, Exxon, at risk for $6 billion, ended up paying just over $1 billion in these criminal and civil settlements. Settlements in most such cases are negotiated, delayed and appealed over a long time. By the time many suits are settled, the claimants are dead.
Companies like BP normally turn to contractors to handle the claims process for those seeking immediate damages, such as fishermen who have lost their livelihoods. The contractor employees, who may be overseen by a BP representative, are familiar with techniques for minimizing claims paid. Claimants are often desperate, and settle for cents on the dollar to get paid.
It remains to be seen how BP will exert its political muscle to minimize its losses.
BP has hired 27 more lobbyists, mostly former elected and appointed federal officials, to work its case on Capitol Hill.
The oil and gas industry spent more on federal lobbying last year than all but two other industries, with $174.8 million in lobbying expenditures, according to the Center for Responsive Politics.
Political action committees set up by the oil and gas producers contributed an additional $9 million in the last election cycle to congressional candidates, with Koch Industries (owner of Atlanta-based Georgia Pacific), ExxonMobil, Valero Energy and Chevron leading the way. BP ranked 19th, with $75,500 in contributions, mostly to Republicans.
BP has also rolled out a $50 million PR campaign featuring a TV spot starring CEO Tony Hayward, whose impolitic comments while the news cameras were rolling, such as “I’d like to get my life back,” have proven to be less than popular.
In paid TV ads, what the CEO says can be controlled.

Noel L. Griese is the editor of Energy Pipeline News, published daily by Anvil Publishers of Atlanta and the author of 17 books on the energy industry and other subjects.

$200,000 pro-offshore drilling study funded by Florida now subject of ridicule

ST. PETERSBURG, Fla. – A rushed April study commissioned by incoming Florida House Speaker Dean Cannon, R-Winter Park, that found minimal risks in drilling off Florida's coasts, is now the subject of broad contempt in the wake of the massive and so far unstoppable BP gulf oil spill.
The study, which cost $200,000 in taxpayer money, was ridiculed in a WUSF segment on May 31, and was subsequently covered by publications ranging from the St. Petersburg Times and Creative Loafing to the Orlando Sentinel and the liberal “Daily Kos” blog.
The 177-page study is titled “Florida Gulf Coast Oil and Gas Risk Assessment.” It’s a “drill-baby-drill”-leaning document produced by a British firm called The Willis Group.
The study's key conclusion, which of course sounds laughable now, especially with reports saying oil is already hitting beaches from Pensacola to Destin, and may hit other locations shortly, is this: "Oil spills from offshore exploration, development, production and the transportation associated with these activities are unlikely to present a major risk to Florida."
Another conclusion: "A 1,000-barrel spill is a 1 in 100 year event in state waters, assuming pipelines are the main transportation option; even a spill that size would likely be intercepted through emergency response prior to reaching Florida’s shoreline."
Yet another conclusion: "We view the risks associated with oil and gas drilling in Florida State waters as serious but manageable, as incremental to the forces of nature Florida faces each year, and small relative to risks from Florida’s existing industrial activity."

Obama extends ban on deepwater well drilling to six months

WASHINGTON - Escalating his administration's response to the disastrous Gulf oil spill, President Obama on May 27 announced a new six-month moratorium on deepwater oil drilling permits while a presidential commission investigates the Deepwater Horizon accident.
Obama on May 22 appointed a presidential commission to conduct a wide-ranging, six-month investigation of the causes of the ongoing oil spill in the U.S. Gulf. He traveled to the Gulf Coast on May 28, his second visit to Louisiana since the accident.
BP PLC’s latest effort to cap the blowout, an attempt begun on May 26 to plug the mile-deep well with heavy drilling mud, a tactic never before tried at such depths, was still under way as Obama left Louisiana on May 28.
The “top kill” maneuver's success would prove enormously welcome to the Gulf region if successful, and also to the White House, Congress, federal agencies and other institutions that share responsibility for oversight, regulation and what went wrong.
As Obama left the state, no announcement was forthcoming from BP regarding the success of the “top kill” attempt. An announcement on the success or failure was not expected until at least the morning of May 30.
Under the new ban, controversial lease sales off the coast of Alaska will be delayed pending the results of the new commission's investigation, and lease sales planned in the Western Gulf and off the coast of Virginia will be canceled, an aide to the president said on May 27.
Shell Oil was poised to begin exploratory drilling this summer on Arctic leases as far as 140 miles offshore.
Those steps, along with new oversight and safety standards also to be announced, are the results of a 30-day safety review of offshore drilling already conducted by Interior Secretary Ken Salazar at Obama's direction. Salazar briefed Obama on that inquiry’s conclusions on May 26 in the Oval Office.
The new announcements could be an early sign of a fundamental shift in the administration's policies on offshore drilling, which Obama promoted and hoped to expand prior to the April 20 explosion and ultimate destruction of the Deepwater Horizon drilling rig. The accident killed 11 people and unleashed a gusher of crude that has begun to wash up on land and cripple seabirds.
While the new regulatory oversight steps are being taken before the exact causes of the accident have been determined, congressional investigators have released details suggesting BP ignored warning signs of instability in the exploratory well they were attempting to cap when the explosion occurred.
At the Capitol on May 27, lawmakers grilled various officials at five separate congressional hearings. Topics included the Gulf spill's environmental damage, the administration's response and the impact of the catastrophe on small businesses.
On May 26, Salazar told the House Natural Resources Committee that lax oversight of oil companies dates to the administration of Republican President George W. Bush.
"Essentially whatever it is they wanted is what they got," Salazar said.
GOP Rep. Doug Lamborn of Colorado asked when Obama's team would stop blaming problems on an administration that left office 16 months ago. Salazar replied that the federal Minerals Management Service, while heavily criticized lately, is still not "the candy store of the industry, which you and others were a part of."

BP fought backup safety measures for deepwater oil rigs

WASHINGTON - BP, the company that chartered the oil rig that caught fire and sank in the Gulf of Mexico in April, spent years battling federal regulators over how many layers of safeguards weree needed to prevent a rig accident of the type that destroyed the Deepwater Horizon.
One area of immediate concern, industry experts said, was the lack of a remote system that would have allowed workers to clamp shut Deepwater Horizon's wellhead so it would not continue to gush oil.
The well drilled by the rig was still spilling 210,000 gallons of oil a day into the Gulf of Mexico on May 4.
In a letter sent as late as 2009 to the U.S. Department of the Interior, BP objected to what it called "extensive, prescriptive regulations" proposed in new rules to toughen safety standards. "We believe industry's current safety and environmental statistics demonstrate that the voluntary programs continue to be very successful."
While BP's arguments against safeguards date to the Clinton administration, BP won the greatest concessions during the Bush administration.