Political India: Engaging America

From The Hindu

Oil companies BP, Transocean and Halliburton share the blame for the 2010 oil spill in the Gulf of Mexico along with government regulators who failed to rigorously examine industry practices, according to the final findings of a Presidential panel investigating the causes of the spill.

In a chapter of the report, made available in advance of the full report’s release, the panel said that the blowout of BP’s Macondo well in the Gulf was not the product of a series of “aberrational decisions made by rogue industry or government officials that could not have been anticipated or expected to occur again.”

Rather, the panel argued, the root causes of the explosion and subsequent environmental catastrophe were systemic and in the absence of significant reform in both industry practices and government policies, they might well recur.

The BP-operated Deepwater Horizon rig sank on April 20 last year, following an explosion that killed 11 workers. Since then nearly five million barrels of oil from the well spewed into the Gulf, causing widespread environmental damage exceeding in scale the Exxon Valdez spill near Alaska in 1989.

The panel of experts also specifically noted that the missteps involved were rooted in systemic failures by industry management extending beyond BP to contractors, and also by failures of government to provide effective regulatory oversight of offshore drilling.

Describing their findings as “considerable and significant,” they said that firstly each of the mistakes made on the rig and onshore by industry and government increased the risk of a well blowout; and secondly the cumulative risk that resulted from these decisions and actions was both unreasonably large and avoidable.

In its report the panel recalled that the immediate cause of the Macondo blowout was a failure to contain hydrocarbon pressures in the well and there were three ways to have contained those pressures – the cement at the bottom of the well, the mud in the well and in the riser, and the blowout preventer.

“But mistakes and failures to appreciate risk compromised each of those potential barriers, steadily depriving the rig crew of safeguards until the blowout was inevitable and, at the very end, uncontrollable,” the report said.

Media reported a statement by BP this week in which the company underscored that the panel had apportioned blame to a number of companies, and not BP alone. “Even prior to the conclusion of the commission’s investigation, BP instituted significant changes designed to further strengthen safety and risk management,” a BP official was quoted as saying in the New York Times. BP’s share price rose after it became clear that several companies said to be at fault for the accident.

Halliburton and Transocean also issued statements deflecting blame away from themselves, emphasising BP’s role or the quality of their own management processes instead.

Last month, the United States Justice Department announced that it had slapped BP and other companies with a lawsuit seeking “unlimited removal costs and damages,” under the Oil Pollution Act of 1990.

Labels: BP, environmental catostrophe, oil spill

From The Hindu

A BP subsidiary responsible for a 2005 blast that killed 15 workers and injured 170 others at a Texas refinery will pay a fine of $50.6 million, the United States Occupational Safety and Health Administration (OSHA) announced on Friday.

BP Products North America Inc. will additionally allocate a minimum of $500 million towards taking immediate steps to protect those now working at the refinery, as per the agreement that the company struck with the government.

“This agreement achieves our goal of protecting workers at the refinery and ensuring that critical safety upgrades are made as quickly as possible,” said Labour Secretary Hilda Solis. She added that the size of the penalty reflected “BP’s disregard for workplace safety and shows that we will enforce the law so workers can return home safe at the end of their day.”

Another blow

The fine was yet another blow to the oil major which has come in for scathing attacks from environmental groups, the administration and those affected by the devastating oil spill from its offshore well in the Gulf of Mexico. The spill from BP’s Deepwater Horizon rig, which continued incessantly until a few weeks ago, was due to an explosion on the rig in April that was again blamed on lax safety standards.

Under the latest agreement, BP is required to immediately perform safety reviews of the refinery equipment as per set schedules and make permanent corrections. According to a statement, the agreement also identified many items in need of immediate attention and provided an “unprecedented level of oversight of BP’s safety program” including regular meetings with OSHA, frequent site inspections and the submission of quarterly reports for the agency’s review.

Assistant Labour Secretary for OSHA David Michaels said, “Safer conditions at this refinery should result from this arrangement, which goes far beyond what can normally be achieved through abatement of problems identified in citations... Make no mistake, OSHA will be watching to ensure that BP complies with the agreement and safeguards its workers.”

Higher fine

The fine announced this week was substantially higher than a September 2005 penalty of $21 million imposed on BP as a direct consequence of the Texas City refinery explosion. The fine was fixed at a higher level after a follow-up investigation in 2009, wherein OSHA discovered that that BP had “failed to live up to several extremely important terms” of a preliminary improvements agreement. As a result, OSHA said in a statement, it had cited BP for “failure to abate” violations with penalties totalling a record $50.6 million that BP now has agreed to pay.

During the 2009 investigation OSHA said it had further identified “439 new wilful violations and assessed more than $30 million in penalties. It said that litigation before the Occupational Safety and Health Review Commission regarding those violations and penalties was ongoing and was not impacted by today’s settlement.

Labels: BP, fined, Health Review Commission, OSHA, refinery blast

From The Hindu

In a bid to save what is left of its reputation, BP announced that its gaffe-prone British CEO, Tony Hayward would step down and be replaced by an American chemical engineer and head of mop-up operations in the Gulf of Mexico, Robert Dudley.

The company, which has not only come under scathing attacks for its role in the oil spill but also courted controversy relating to the release of convicted Libyan terrorist Abdel Baset al-Megrahi, said Mr. Hayward would stop functioning as group chief executive with effect from October 1, 2010.

Seeking to project the change in the leadership as a break from its past, BP chairman Carl-Henric Svanberg said, "The tragedy of the Macondo well explosion and subsequent environmental damage has been a watershed incident. BP... will be a different company going forward, requiring fresh leadership supported by robust governance and a very engaged board."

The announcement came even as BP admitted that it had made a record "replacement cost" loss during the second quarter of the year, amounting to a staggering $17 billion. The company said it was facing a charge of $32.2 billion, "to reflect the impact of the Gulf of Mexico oil spill, including costs to date of $2.9 billion for the response and a charge of $29.3 billion for future costs, including the funding of the $20 billion escrow fund".

Remarking on the financial results, Mr. Hayward said, "We expect we will pay the substantial majority of the remaining direct spill response costs by the end of the year. Other costs are likely to be spread over a number of years, including any fines and penalties, longer-term remediation, compensation and litigation costs."

On stepping into the shoes of Mr. Hayward, Mr. Dudley said that in the change of roles, he particularly wanted the people of the Gulf Coast to know that his commitment to remediation and restitution in the region was not lessened. "I gave a promise to make it right and I will keep that promise," he said.

In a comment that reflected the management’s commitment to those affected by the spill but equally to BP shareholders, Mr. Svanberg said, "We remain confident in our ability to meet our obligations to those on the Gulf Coast of the United States, other impacted parties and all our stakeholders... As we said last month, the Board remains strongly committed to the payment of future dividends and delivering long term value to shareholders."

Labels: BP, BP oil spill, Robert Dudley, Tony Hayward

From The Hindu

It is possible that the oil from a damaged offshore rig may continue leaking into the Gulf of Mexico until August and cause the largest environmental catastrophe in the United States' history. The grim prognosis emerged even as rig owner British Petroleum (BP) admitted that its much-touted "top kill" operation had failed to stem the surge of oil from the Deepwater Horizon rig, which exploded on April 20.

The enormity of the damage that has already occurred combined with the inability of the administration to stop the leak, has led to the possibility that "Oilgate" may have a significant political fallout and irreparably damage the Obama presidency as well.

In a statement BP said, the "top kill" procedure intended to kill the well by injecting heavy drilling fluids through the blow-out preventer (BOP) on the seabed, into the well. However it said that despite pumping over 30,000 barrels of heavy mud in three attempts, and deploying a wide range of different bridging materials, "the operation did not overcome the flow from the well".

While there are several further steps that BP will take to halt the flow of oil, U.S. Coast Guard Admiral Thad Allen, leading the effort to curtail the spill, said, "The ultimate solution is going to be to drill a relief well, take the pressure off that well and cap it. That will be sometime in August. We don't want to wait that long."

"Assault on the people"

President Obama echoed some of the frustrations of those affected in states such as Louisiana, when he said that every day that the leak continued was an assault on the people of the Gulf Coast region and their livelihoods.

He added, "It is as enraging as it is heartbreaking, and we will not relent until this leak is contained, until the waters and shores are cleaned up, and until the people unjustly victimised by this manmade disaster are made whole."

On the unsuccessful efforts to stop the leak Mr. Obama said, "While we initially received optimistic reports about the procedure, it is now clear that it has not worked. Rear Admiral Mary Landry today directed BP to launch a new procedure whereby the riser pipe will be cut and a containment structure fitted over the leak."

BP confirmed that it had received government permission to move to the next step in the subsea operations, the deployment of the Lower Marine Riser Package (LMRP) Cap Containment System. This procedure would entail cutting and removing the damaged riser from the top of the failed BOP to leave a cleanly-cut pipe at the top of the BOP's LMRP, BP explained.

The cap designed to connect to a riser of a surface-level drillship, will be placed over the LMRP "with the intention of capturing most of the oil and gas flowing from the well". BP added the LMRP cap would be connected in approximately four days.

"This operation has not been previously carried out in 5,000 feet of water and the successful deployment of the containment system cannot be assured," BP warned.

Since the crisis unfolded, the Obama administration has come under fire from various quarters, including Bobby Jindal, Governor of Louisiana, who recently expressed frustration at the delays in containing the damage to his state's coastline, which had seriously endangered its marine life and associated livelihoods.

Labels: BP, Gulf Coast, LMRP, oil spill, President Obama

From The Hindu

After 37 days of failure to halt the torrent of oil spilling from its damaged offshore rig into the Gulf of Mexico, engineers from rig owner British Petroleum (BP) and other agencies reportedly stemmed the flow using a “top kill” operation that choked off the leaking pipe with drilling fluids.

Quoting United States Coast Guard Admiral Thad Allen, leading the effort to curtail the spill, the LA Times newspaper reported on Thursday morning that “industry and government engineers had pumped enough drilling fluid to block oil and gas spewing from the well… [and the] pressure from the well was very low but persisting”.

The next step in the operation would be to pump cement into the hole to entomb the well, in preparation for which, Admiral Allen said, engineers were also pumping some debris into the blowout preventer at the top of the well.

However, neither the administration nor BP has yet commented on whether or not the flow of over 5,000 barrels of oil per day from the damaged MC252 offshore well had been stopped.

Earlier U.S. Secretary of the Interior Ken Salazar had said, “We will keep our boot on their neck until the job gets done. And… we will make sure that all of their responsibilities are fulfilled to the people of the Gulf Coast and to the U.S. government.”

The early reports of success surfaced even as the Obama administration came under a barrage of criticism for failing to act decisively to stop the leak and clean up the massive environmental damage that has already occurred. Significant loss of animal and plant life as well as the livelihoods of shrimp farmers among others has been widely reported for weeks now along the fragile coastal marshlands of Louisiana.

Under rapidly mounting political pressure, the President was poised to announce an extension of a moratorium on deep-water offshore drilling for a further six months, according to reports that quoted the White House.

Enhanced safety standards

As stated by Reuters, President Obama “will announce standards to strengthen oversight of the industry and enhance safety, a first step in a process that the independent Presidential Commission will continue”.

The White House was further reported to have indicated that Mr. Obama would announce the cancellation of drilling leases for projects off the coast of Virginia and delays in both exploration and drilling off the coasts of Alaska.

In a further fallout from the crisis, it was reported that Elizabeth Birnbaum, Director, U.S. Minerals Management Service overseeing offshore drilling, had been fired.

Labels: Barack Obama, BP, British Petroleum, Gulf Coast oil spill, top kill operation

From The Hindu

In a pitched battle to shut off the MC252 well that has been spewing vast amounts of oil into the Gulf of Mexico for over a month, British Petroleum (BP) announced plans to use a new technical manoeuvre called a “top kill” operation.

The announcement was made even as the Obama administration came under fire from various quarters, including Bobby Jindal, Governor of Louisiana, who expressed frustration at the delays in containing the damage the spill was doing to his State’s coastline. BP CEO Tony Hayward was reported to have said the manoeuvre had a “60 to 70 per cent chance of success”.

The top-kill operation entails the use of heavy drilling fluids that would be injected into the well to stem the flow of oil and gas and, ultimately, kill the well, according to a statement by BP. The petroleum major noted that preparations for this operation were already under way, with a view to deployment “within a few days”.

It also explained that the equipment was also in place to combine this operation with the injection under pressure of bridging material, aimed at sealing off the upward flow through a blow-out preventer (BOP).

Speaking alongside Louisiana Senator Mary Landrieu and others, Mr. Jindal told the media gathering on the coastline, “For over two weeks we have been asking the United States Army Corps of Engineers to issue an emergency permit. We have answered every set of questions the same day they have asked those questions.”

However, Mr. Jindal reportedly said he had not yet obtained a permit to dredge up large amounts of sand to build massive booms along the coastline. He added, “Every day we do not fight this oil on a barrier island, every day we are not dredging sand means one more day this oil has a chance to come into our ecosystem, into our wetlands that are home to some of the nation’s most important fisheries.”

Govt determined to clean up spill

Ken Salazar, U.S. Secretary of the Interior, had strong words on the government’s determination to ensure that BP took the necessary actions. He said, “We will keep our boot on their neck until the job gets done. And… we will make sure that all of their responsibilities are fulfilled to the people of the Gulf Coast and to the U.S. government.”

Janet Napolitano, U.S. Homeland Security Secretary added, “We are going to stay on this and stay on BP until this gets done and it gets done the right way.”

Doug Suttles, COO for Global Exploration, BP, said the government was “clearly” expecting BP to “get this flow stopped and to get this cleanup done as quickly as possible”. However, he said, “We are putting everything we [can into] this. We have got the best people, the best scientists, whether it is from our own company or across the industry or from the government. So, I think everyone is frustrated.”

Providing technical details on the operation planned in parallel to the top-kill, BP said it was developing a “lower marine riser package” (LMRP) cap containment option. This would first involve removing the damaged riser from the top of the BOP, leaving a cleanly-cut pipe at the top of the BOP’s LMRP, BP said.

Then, as per the process proposed by BP, the LMRP cap, an “engineered containment device with a sealing grommet,” would be placed over the LMRP with the intention of capturing most of the oil and gas flowing from the well and transporting it to the drillship on the surface.

Labels: blow-out preventer, BP, Gulf Coast oil spill, oil spill, top-kill operation