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Why BP Deserves This May 3, 2010

Posted by Jamie Friedland in Offshore Drilling, Politics.
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3 comments

***UPDATE: I have added a new page to this site to let you more easily find the answers to your oil spill questions.  It is the new “2010 oil spill/offshore drilling answers” tab next to the “about me” at the top of each page, or you can click here.***

As BP’s stock rightfully plummeted on account of the horrendous disaster unfolding in the Gulf of Mexico, CEO Tony Hayward said to fellow executives, “What the hell did we do to deserve this?

Since I have been taking the time to answer other questions about the oil spill here, I think I can spare a few minutes to answer dear Tony’s question as well.

BP CEO Tony Hayward doesn’t understand why this is happening to him. Fortunately, it’s pretty simple to explain.

Some might call the blowout that engulfed the Horizon Deepwater rig in flames, killed 11 workers, injured 17 more, and unleashed an entire oil reservoir on the Gulf coast, an act of god.  Instead, I would counter that this is one of the real, now realized, risks of offshore drilling.  But can BP truly be blamed for this catastrophe?  In short, yes.  On account of simple, deliberate negligence.

And it could just as easy have happened, or even happen AGAIN, to any of the big oil companies operating off of our shores right now.

If you have been following the spill coverage, you have probably heard about the “blowout preventer.”  Blowout preventers (BOPs) are giant valve structures that can weigh 500,000 lbs and stand 50 feet tall.  They are bolted in position on the sea floor at the wellhead, where the “riser” pipe to the rig above penetrates the earth en route to the oil reservoir below.  They are full of redundant systems and backups because they are the ultimate failsafe to prevent disasters like the one we are now experiencing.  In the event of a high-pressure situation, they are designed to clamp shut, closing the well to prevent spills and protecting the oil rig above.  The Deepwater Horizon’s BOP failed.

As this story spreads, the oil industry will paint BOP failures as rare.  They are not. The unclassified version of a 1999 government report found that BOP failures are actually fairly common.  There were a staggering 117 BOP failures in just a 2-year period on the outer continental shelf of the U.S. alone.  Think about that: the last line of defense for American coasts failed more than 58 times per year. A 2007 paper from the Minerals Management Service said that there were 39 actual blowouts (not just BOP failures) between 1992 and 2007.  Add another one to both of those tallies.

Knowing that this final failsafe mechanism was imperfect and the multibillion dollar costs of an oil spill, you’d think that oil companies would do everything they could to prevent blowouts.  Instead, Big Oil used their millions of dollars in annual lobbying to FIGHT blowout preventer requirements.

Blowout Preventers are a flawed fail-safe. It is negligent not to employ every measure to improve their function.

BOPs operate on a type of dead-man switch.  The default position is closed.  The valve is only supposed to remain open if it receives a continuous signal from the rig above.  If that signal stops for any reason, the valves are supposed to slam shut.  Simple enough in theory, but as we now know, that doesn’t always happen.

Major oil-producing countries like Brazil and Norway responded to this concern 17 years ago in 1993.  BOPs on offshore wells there are required to have acoustic triggers, which can be used to remotely activate the BOP if everything else has failed.   The U.S. considered requiring remote-controlled shut-off mechanisms several years ago, but the oil industry successfully lobbied against the restriction, citing excessive costs.

Let’s examine their math, shall we?  Acoustic triggers cost an additional $500,000 per rig.  That’s the cost.  Now let’s look at the benefits: the Deepwater Horizon rig will cost $560 million to replace.  On top of that, BP is spending $6 million each day to try to contain spill.  When the oil really reaches the shore, those costs will multiply.  Then there’s the cleanup operation.

Finally, there are the legal battles.  Suits have already been filed and many more will follow.  Overall, Exxon paid $4.3 billion for the Valdez spill, and it should have been much more: the Prince William Sound still has oil on its beaches, and conservatives on the Supreme Court slashed the punitive fines that Exxon ultimately had to pay by 90% in 2008.

It is this last point that explains why oil companies can and do continue with their reckless behavior at the rest of the country’s expense.  Exxon was able to defer payment for its egregious actions for literally decades, and ultimately owed just four days’ profit in damages. That’s not even a slap on the wrist.

If that pisses you off as much as it does me, you will be similarly thrilled to hear this: while BP is obligated to pay for all of the cleanup effort, our nation’s powerful oil lobby succeeded in shielding oil companies from any real legal liability for spills decades ago.

The first jury (before the lengthy appeals process that well-oiled industry lawyers were able to win) awarded Exxon’s victims $287 million in actual damages and $5 billion in punitive damages.  As I said, they ended up paying only about 10% of that and not until decades later.  So what about BP?  Their actual legal liability for damages is capped at $75 million.  That’s right, $75 million.  God bless America.

More on Exxon Valdez and a similarly twisted cost-benefit analysis for single- vs. double- hulled tankers here.

So, in conclusion, BP/Tony: you deserve this because you skimped on safety precautions you knew to be inadequate.  It is an unmitigated tragedy that so many millions of people and countless innocent animal lives will bear the TRUE costs of your failures.  The same way mining safety caught up to Massey Coal last month, drilling safety just caught up to you.  These events shouldn’t be called “accidents.” The term “inevitables” would be far more appropriate.  As long as we continue to allow these industries to determine their own safety standards, the public (and their employees) will continue to pay the price for their reckless gluttony.

This would segue nicely into a diatribe against…erm, discussion of the absurd Citizens United Supreme Court ruling, but there are more pressing concerns at the moment.

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2010 Oil Spill Answers (Pt. 1) May 3, 2010

Posted by Jamie Friedland in Offshore Drilling, Politics.
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1 comment so far

Since the explosion on the Transocean Deepwater Horizon rig in the Gulf of Mexico, many people are trying to understand what happened.  Traffic to this page has spiked significantly because I recently wrote about the dangers and strong cases against offshore drilling in general.  But I have not yet addressed the current crisis.

This post and those to follow shortly will explain what has happened and is happening.  Below, you will find basic questions about this disaster and answers to them.  I will add additional questions and answers later today, but I want to get this out as soon as possible.  If any of you have additional questions, please add them as comments and I will try to address them.

These are the questions answered below:

  • What was the oil rig doing?
  • What caused the explosion?
  • How much oil is spilling?
  • Where is the oil spilling from?
  • Can we stop the spill?  How?
  • Could the spill get any worse?

What was the rig doing?

The oil rig in question was drilling an exploratory well called “Macondo” to see if that site could be used for large, commercial-scale production.  Signs were promising, and the attempt was soon to be labeled a success.  That has changed, but the site will definitely still make it into the history books.

This was a deepwater operation, even riskier than shallower “normal” offshore drilling, but at this point, the world’s oil companies have tapped all the easily accessible resources.  At that site, the ocean floor was nearly a mile beneath the surface.  The oil formation was another 3 miles underground.

What caused the explosion?

The exact causes have yet to be determined, but educated guesses can and have been made.  You may recall old time footage or photos of oil geysers shooting into the air after big oil finds in Texas.  Many oil formations are pressurized such that if a drill pierces the geological formation, the oil escapes under its own power.  This is a cheap way to get oil out of the ground since it comes up on its own.  Rigs like the iconic grasshopper oil derricks you may have seen around the country must be used if the pressure is not high enough.  For offshore drilling, the pressure is always high enough.

Anything that lies 4 miles beneath the surface of our planet exists at very high pressures.  To visualize this, imagine a huge, full water balloon encased in a block of cement.  Imagine that cement casing fits so tightly, that the balloon is squeezed beyond the bursting point but is unable to release its water because the cement is solid and there’s nowhere for the water to go.  Now imagine somebody drilled into the cement block.  When that drill pierced the chamber with the water balloon, that water would shoot back up through the tunnel the drill bored.  Depending on the pressure involved, it might do so explosively.

In the case of this oil rig, we are dealing with pressures that are hard to visualize.  What is less difficult to visualize is that instead of water, this rig had pierced a balloon full of highly combustible oil.  Furthermore, the company had been warned that this reservoir likely held pockets of volatile natural gas.

The exact cause is unknown, but we do know that in a matter of seconds, a huge blast of oil and gas shot up through the 4 miles of pipe and shot clear through the floor of the rig.  One spark lit all that fuel and suddenly the Deepwater Horizon was engulfed in a massive fireball. Drilling Ahead has a well informed and richly presented explanation of the ordeal those workers went through.

The state-of-the-art Deepwater Horizon rig goes up - and then down - in flames.

How much oil is spilling?

The ongoing oil spill in the Gulf of Mexico is worsening at an exponential rate.  BP’s initial lowball figure (and likely lie) pegged the spill rate at 1000 barrels/day. 1 barrel = 42, gallons, so 1000 barrels/day = 42,000 gallons/day.  Government officials examined the data and quickly realized that the rate was more like 5,000 barrels/day (210,000 gallons).  Since then, the spill pattern suggests that the rate is increasing rapidly.  On May 1st, experts determined that the oil could be spilling at a rate of 25,000 barrels per day (1.05 million gal/day). Unfortunately, this is only the beginning and this catastrophe stands to get far, far worse (See “Could the spill get any worse?” below).

Where is the oil spilling from?

It appears that there are three leaks: 2 from the crumpled remains of the pipe that ran from the ocean floor to the rig at the surface, and one from the point on the ocean floor where the subsurface pipe connected to that pipe that rose through the water.  It is this third site that presents the greatest problem.

Where the pipe meets the ocean floor, there is a giant valve called a “blowout preventer.”  In the event of a gusher or other dangerous, high-pressure event, the valve clamps shut, protecting the rig.  It is built with many redundancies as the last line of defense against this very kind of event.  Somehow, that valve failed, and is still leaking a high volume of oil from the reservoir.

There are 2 efforts underway to stop the spill. One has failed; the other will take months. Image Credit: Times/Picayune

Can we stop the spill?  How?

This is the question that makes this situation so dire.  A crashed oil tanker like the Exxon Valdez has a limited amount of oil that can spill.  A tapped reservoir like this has massive amounts of oil to release – it is estimated that this block could contain as much as 100 million barrels (3.1 billion gallons).  As the diagram above demonstrates, there are 2 efforts underway to stop this spill.

1)   Remotely operated submarines are attempting to engage the blowout preventer.  So far, they have been unable to do so.

2)   Another rig has moved into place to build a “relief well.”  To do this, it must drill down to the ocean floor, through the 18,000 feet of sea floor, and then they will attempt to drill into the subsurface pipe laid by the original rig.  If they succeed in doing that, they can stop the oil flow.  But this could take 2-3 MONTHS.

3) A final approach is to build a kind of dome to place over the spill site to funnel the oil up where it can be collected.  This has only been tested in shallow water.  As oil companies and the rest of the world now know, deep water is a whole different ball game.

If the current estimates are correct (and don’t get worse), within 2 months this spill will dump 6 times as much oil as was spilled by the Exxon Valdez.  In 3 months, there would be nearly 100,000,000 gallons of oil floating in the Gulf of Mexico, if not beyond.  And that’s assuming this spill rate doesn’t get continue to increase.

Could the spill get any worse?

Yes.  The blowout preventer isn’t closing like it is supposed to, but it is creating an artificial bottleneck and reducing the amount of oil that can escape at a time.  However, there is concern that behind that valve, the high pressure is circulating a mixture of water, hydrocarbons, and sand.  That sand is moving with considerable force and may be scouring the area behind the valve.  If a part of the valve or the support structure were to give way, the rate of the spill could increase by several orders of magnitude, experts say as much as 150,000 barrels/day (6.3 million gallons).  That would be an Exxon Valdez EVERY TWO DAYS.

More answers to come.  Check back later today and as this crisis develops.