BP and the Louisiana oil mess

For two weeks oil has been spilling out of a broken oil well 50 miles (80 km) off the coast of Louisiana in the Gulf of Mexico.

As well as the 11 oil workers killed in the accident, it’s estimated that the several million litres of leaked oil will cause billions of dollars worth of damage.

So who is to blame? BP (British Petroleum) has taken on full responsibility for the cleanup but claims the accident wasn’t their fault. Instead they’re pointing the finger at their operating contractor who also happens to own the rig.

The oil rig in question was named Deepwater Horizon. It was built by Hyundai Heavy Industries, a South Korean company, for a Swiss company called Transocean.

As an exploration rig, it does the initial well drilling and then other rigs come in to extract the oil.

Upon building completion in 2001, the rig was immediately delivered to the Gulf of Mexico and leased to BP Exploration.

The accident

At 10pm on Tuesday 20 April an explosion occurred on Deepwater Horizon giving workers less than 5 minutes to escape.

Of the 126 people on the rig, 17 were injured and 11 were killed. The majority evacuated on lifeboats to a nearby workboat.

The rig then burned for two days before collapsing into the sea on April 22.

Attention quickly turned to the oil leaking out from the damaged well. Experts can't measure exactly how much is leaking but estimates have ranged from 5,000 to 25,000 barrels of crude oil per day (790,000-4,000,000 litres).

The 1989 Exxon Valdez oil tanker spill in Alaska, the largest in US waters, leaked 270,000 barrels. Environmentalists fear the Louisiana spill could exceed Exxon Valdez’s volume in a matter of days or weeks.

As exploration licence holder BP is ultimately responsible for cleaning up the mess.

In an unprecedented response, they have bombarded the sea with 76,000 tonnes of dispersant chemical to break down the oil. They’ve also dispatched 100 ships to contain and collect the oil that has reached the surface.

Barriers have been set up along the coastline and booms out at sea to prevent oil going ashore.

The major development, due to take place today, is to use remote-control submarines to place a gigantic metal dome over the leaking well.

This 98-tonne iron structure will trap the oil and funnel it up a pipe to a ship.

The operation has never been tried at a depth of 5,000 feet before and BP admits they are expecting some difficulties.

But if it works they hope to collect 85% of the leaking oil and have the leak contained by early next week.

Who’s to blame?

The cause of the explosion and consequential leak is still being investigated.

But speculation from industry experts is that the explosion came from a gas bubble rising with enormous force in the high pressure well and destroying the well head, igniting the fire.

In terms of the leak, a blowout preventer that’s fitted to the top of the well on the sea floor is designed to automatically cut off the oil flow in the event of an accident (it didn’t).

Some oil rigs have a back-up acoustic switch that can trigger the blowout preventer by remote control (they’re compulsory in Norway and Brazil).

But Deepwater Horizon didn’t have this trigger switch. US lawmakers considered making the device compulsory several years ago but oil companies convinced them it wasn’t necessary due to its questionable effectiveness and cost (about $500,000).

Since the explosion, six attempts by BP to physically activate the blowout preventer using remote-controlled submarines have failed.

BP maintains the accident is not their fault. Instead they blame their operations contractor – Transocean, the Swiss owner of the rig.

They point out that the rig, equipment, systems, processes and people all belonged to Transocean (various lawsuits have included both BP and Transocean as defendants).

It’s likely that BP will seek to recover costs by suing Transocean after the cleanup, who may in turn sue Halliburton and Cameron – sub-contractors who provided parts and performed work on the rig.

The failure of the blowout preventer is at the heart of the investigation.

The cost

Initial cost estimates of $250 million have now ballooned to $14 billion.

The cleanup costs are relatively small at about $7 million per day. The real cost will come via lawsuits arising from environmental, fishing and tourism damage as well as compensation to workers.

BP’s share trading has seen $20 billion wiped off the company’s value since the accident (it insures itself).

As well as uncertainty about how much cost it will shoulder, many fear the company may struggle to get business in the US in the near future.

From what started out as a minor disaster could indeed be turning into a major industrial catastrophe.

By The Casual Truth