Monday, March 26, 2012
BP in $7.8-billion settlement
Oil major BP has agreed to pay $7.8 billion in a settlement reached with claimants affected by the spill from one of its wells in the Gulf of Mexico in April 2010.
Commenting on the landmark settlement reached with the Plaintiffs' Steering Committee, which acts on behalf of individual and business plaintiffs in the multi-state proceedings ongoing in New Orleans, Bob Dudley, BP CEO, said, “The proposed settlement represents significant progress toward resolving issues from the Deepwater Horizon accident and contributing further to economic and environmental restoration efforts along the Gulf Coast.”
In a statement BP noted that it expected that the cost of the proposed settlement would be paid from the $20-billion escrow-account Trust, and would include a promise by BP to make good on $2.3 billion worth of economic loss sustained by the Gulf seafood industry.
The latest settlement comes in the wake of a string of filings and counter-filings between BP and the other corporations associated with the operation of the Deepwater Horizon rig, whose explosion in 2010 killed 11 workers and spewed four million barrels of oil into the Gulf.
Even as an unprecedented and costly operation to halt the leakage and mop up the oil followed, BP in a lawsuit alleged that one of its contracting companies, Halliburton, had destroyed vital evidence relating to the explosion. By late last year Halliburton had already slammed BP with a lawsuit over “for negligent misrepresentation, business disparagement and defamation.” BP has also sued other companies including rig owner Transocean and manufacturer of a failed blowout preventer, Cameron International.
Yet the Obama administration has kept up pressure on BP. Speaking on the occasion of the first anniversary of the Gulf of Mexico oil spill President Barack Obama said, “We continue to hold BP and other responsible parties fully accountable for the damage they have done and the painful losses that they have caused.”
In an interview with The Hindu, Kenneth Feinberg, Mr. Obama's “pay czar” charged with disbursing compensation from the $20 billion fund, said that BP as the “wrongdoer” had to step up and “pay the freight” of the compensation programme. At the time Mr. Feinberg said that that although $3.6 billion had already been disbursed to over 200,000 claimants, the emotional side of the disaster should not be disregarded, in particular the fact that many individuals, families and businesses had seen their livelihoods wiped out.
Labels: BP oil spill, Gulf of Mexico
Saturday, November 05, 2011
Halliburton counter-sues BP over damaged oil well
From The Hindu
More than one year after the worst oil spill in the United States' history, the parties held responsible for leaking nearly 5 million barrels of crude into the Gulf of Mexico are still embroiled in a litigious slugfest.
With nasty exchanges and blame-trading continuing unabated between the global corporations involved in the well's operation and construction, the latest legal blow was delivered this week by Halliburton Company, which has slammed BP, the well's owner, with a lawsuit over “for negligent misrepresentation, business disparagement and defamation”.
In a statement Halliburton, whose past CEOs include the former U.S. Vice-President, Dick Cheney, said in addition to these charges it would also amend its claims against BP in earlier litigation to include fraud allegation.
Specifically, Halliburton officials said its complaint was based on BP supplying it with “inaccurate information prior to performing cementing services on April 19, 2010, and BP's use of and omission of that information in subsequent public statements, filings and governmental investigations.”
BP hit back almost immediately arguing that the “lawsuit is the latest attempt by Halliburton to divert attention from its role in the Deepwater Horizon incident and its failure to meet its responsibilities, and to deflect all blame to BP.”
BP, which set up a $20-billion fund to finance the clean-up and reconstruction of the Gulf coastline following the massive spill last summer, rejected Halliburton's claims pointing out that investigations published so far had “concluded that multiple parties contributed to the incident, including Halliburton... [and they had] identified serious problems with the cementing of the well as a potential contributory factor to the Deepwater Horizon disaster.”
Taking another dig at the Halliburton lawsuit, BP said in a statement while it had accepted responsibility for responding to the spill and was accordingly paying costs and compensation, in contrast “Halliburton has refused to accept any responsibility or accountability”.
The unprecedented environmental damage suffered by the Gulf of Mexico last year occurred after the BP-owned Deepwater Horizon oil rig exploded on April 20, 2010, killing 11 workers.
A slew of legal cases followed, including one by the U.S. Department of Justice against BP and others by BP against Halliburton and several drilling companies, in a bid to hold all parties concerned responsible for their share of the costs.
Labels: BP oil well, Gulf of Mexico, Halliburton officials
Saturday, December 18, 2010
U.S. sues BP over Gulf of Mexico spill
From The Hindu
The Justice Department of the United States government has announced that it has slapped BP and several other companies it held responsible for the Gulf of Mexico oil spill last summer with a lawsuit seeking “unlimited removal costs and damages” under the Oil Pollution Act of 1990.
Speaking at a news conference following the announcement Attorney General Eric Holder said “We intend to prove that... violations [of industry regulations] caused or contributed to this massive oil spill, and that the defendants are therefore responsible – under the Oil Pollution Act – for government removal costs, economic losses, and environmental damages.”
Mr. Holder also warned that the Obama administration would not hesitate to take “whatever steps are necessary” to hold accountable those who are responsible for this spill, a remark that led some experts such as law professor David Uhlmann of the University of Michigan to speculate in the New York Times whether a criminal case might follow.
Currently it is only a civil suit that the U.S. government has filed, one that was built on the case that BP and companies related to the oil spill incident ought to be held liable for allowing over millions of gallons of crude oil to flow in the Gulf from the ruptured Macondo well of the Deepwater Horizon rig.
Other companies named as defendants in the suit include Anadarko Exploration and Production, Moex Offshore, Triton Asset Leasing, Transocean Holdings, QBE Underwriting and Lloyd’s Syndicate 1036. Deepwater Horizon exploded and sank in April this year, and was only capped in July after an unprecedented effort by BP and the government to halt the oil flow.
One notable absentee from the defendants list, however, was Halliburton, which was said to be the contractor for the cement work on the well. When asked about this Mr. Holder was reported to have explained that the complaint could be amended later and more defendant names could be added to the list. The wording of the lawsuit corroborated this claim.
Touching upon the vast scale of the damage resulting from the spill the lawsuit observed, “While the full scope and impact of this disaster are not yet known, the consequences include lost lives, destroyed livelihoods, and grave harm to natural resources across several States and related waters.”
The specific charges brought by the lawsuit against the operators of the well and the rig related to failure to prevent the blowout of oil and methane gas was not prevented by defendants, and the companies involved had not taken “necessary precautions to keep the Macondo Well under control.”
Other charges that the U.S. government has brought against the defendants include failing to use the best available and safest drilling technology to monitor and evaluate the Macondo Well’s conditions, failure to maintain continuous surveillance on the rig floor, and failure to maintain equipment and materials such as the Blow-Out Preventer stack, that were “available and necessary to ensure the safety and protection of personnel, equipment natural resources, and the environment.
Labels: environmental catastrophe, Gulf of Mexico, Obama administration, oil spill
Thursday, September 09, 2010
Sequence of failures, says BP
From The Hindu
A string of eight serious failures within the Deepwater Horizon oil rig led to its explosion and the subsequent large-scale pollution of the Gulf of Mexico, said an internal investigation report by BP.
The findings of the "Accident Investigation Report" released by BP this week, may be considered compelling evidence for an overhaul of both BP’s internal systems as well as regulatory oversight for the oil industry.
In the report, the investigators said, "No single factor caused the Macondo well tragedy. Rather, a sequence of failures involving a number of different parties led to the explosion and fire which killed 11 people."
Further the report concluded that decisions made by "multiple companies and work teams" contributed to the accident which it says arose from "a complex and interlinked series of mechanical failures, human judgments, engineering design, operational implementation and team interfaces".
Among the key failures that led to the explosion, the report cited cement and shoe track barriers at the bottom of the well that failed to contain hydrocarbons within the reservoir; the results of negative pressure tests being accepted by BP and Transocean despite well integrity not being established; the Transocean rig crew failing to recognise and act on the influx of hydrocarbons into the well; gas being vented directly on to the rig rather than being diverted overboard; gas flowing into the engine rooms through the ventilation system created potential for ignition; and the rig’s blow-out preventer not activating automatically to seal the well.
Role of other parties
Emphasising the role of other parties besides BP, its current CEO Bob Dudley said: "We have said from the beginning that the explosion on the Deepwater Horizon was a shared responsibility among many entities." He said the report made that conclusion even clearer, presenting a detailed analysis of the facts and recommendations for improvement both for BP and the other parties involved.
However, Mr. Dudley said, "We have accepted all the recommendations and are examining how best to implement them across our drilling operations worldwide," reiterating that BP "deeply [regretted] this event [and] sought throughout to step up to our responsibilities".
The report also proposed 25 recommendations designed to prevent a recurrence of such an accident, BP said, and they were directed at strengthening assurance on blow-out preventers, well control, pressure-testing for well integrity, emergency systems, cement testing, rig audit and verification, and personnel competence.
The company said it expected a number of the investigation report’s findings to be considered relevant to the oil industry more generally and for some of the recommendations to be widely adopted.
Labels: BP oil spill, disaster management, environmental pollution, Gulf of Mexico
Thursday, July 15, 2010
Well integrity tests put off
From The Hindu
Additional analysis of the procedure to test the wells was necessary before the actual well integrity testing begins, Admiral Thad Allen, National Incident Commander in charge of the Gulf of Mexico oil spill response announced.
The testing of the well’s integrity, an essential step following the installation of the “capping stack” by BP on Monday was postponed until Wednesday night, and will continue into Thursday, Admiral Allen said, instead of beginning on July 13 as initially planned.
BP said that during that period it would “continue to ramp up containment operations on the Helix Producer as well as continue to optimise the Q4000 operations”, the two skimming and flaring vessels deployed in the Gulf by the oil major. The company noted that the Helix Producer has the capacity to capture “approximately 20,000 – 25,000 barrels of oil per day… [and] historically, the Q4000 has flared an average of approximately 8,000 barrels of oil per day.”
However, the company also cautioned that success was not guaranteed in this latest capping operation given that “the sealing cap system, the Q4000 system, the flexible riser system, and the planned additional containment systems never before have been deployed at these depths or under these conditions, and their efficiency and ability to contain or flare the oil and gas cannot be assured”.
Meanwhile operations aimed at “permanent” containment continued with regard to the first relief well; however operations on the second relief well have been temporarily suspended at 15,963 feet to ensure that there is no interference with the first relief well. BP noted, “The relief wells remain the sole means to permanently seal and isolate the well.”
Obama sends fourth bill to BP
In parallel, the administration announced that President Barack Obama on Tuesday “sent a fourth bill for $99.7 million to BP and other responsible parties for response and recovery operations relating to the spill”. In a statement, the disaster response team said the administration would continue to bill BP “regularly for all associated costs” to ensure the Oil Spill Liability Trust Fund is reimbursed on an ongoing basis. It added that BP and other responsible parties have paid the first three bills in full — totalling $122.3 million.
Labels: British Petroleum, Gulf of Mexico, oil spill
Sunday, July 11, 2010
BP asked to put in place new cap
A rare public exchange of letters between National Incident Commander in charge of the Gulf of Mexico oil spill Thad Allen and Robert Dudley, who is leading the mop-up operations at BP, showed the government has been pressing the oil major to come up with plans to accelerate its collection of the oil.
It began on Thursday when Admiral Allen wrote to Mr. Dudley saying, “We are entering a critical stage in the Deepwater Horizon response where key decisions will be made in executing plans for total collection of oil at the wellhead and for potentially securing the well completely.”
Not mincing his words, Admiral Allen on Thursday demanded that Mr. Dudley provide him, within 24 hours, with a detailed timeline outlining BP's plans to affix onto the well a second cap — called a “capping stack” — that could significantly increase the containment capacity of the system. Paradoxically, the process for deployment of the capping stack would, Admiral Allen acknowledged, increase amount oil leaking temporarily. To mitigate this heightened flow, the Admiral asked Mr. Dudley to explain his plans to use a third containment ship, the Helix Producer. “I must have knowledge of the steps and decision points involved; mitigation efforts to be implemented; and contingency plans if these efforts are not successful,” he emphasised.
After scrambling to provide the Admiral with a response within the deadline, Mr. Dudley said in his letter that though BP had initially scheduled the capping stack installation to follow the Helix Producer beginning containment operations, “as weather has impacted our ability to execute these activities in series we … have proposed that the capping stack procedure be implemented in parallel with the start-up of the Helix Producer.”
After review Admiral Allen approved the plan, saying later to media: “After reviewing Bob Dudley's response to my July 8 letter … I approved BP's plan to simultaneously install the Helix Producer and ‘capping stack' containment mechanisms, which will require temporary suspension of the current top hat containment system.”
The Admiral added that he had validated this plan because the capacity for oil containment when the installations were complete would be “far greater than the capabilities we have achieved using current systems”. He also noted that weather forecasts had turned more favourable over the last few days and “will provide the working conditions necessary for these transitions to be successfully completed without delays”.
Admiral Allen said the transition to the new containment infrastructure could begin “in the next days but will take seven to ten days to complete”. He also said the entire process, “once we start unbolting until we're in a position to put the new cap on, could be three to four days”.
The Admiral conceded that there would be a spike in the outflow volume, saying: “There will be a period of time where the Discover Enterprise will have to move off station to allow us to put the new capping device on. So the amount they've been able to recover which is roughly around let's say 15,000 barrels a day will have to be released while we're putting the new cap on.”
Labels: British Petroleum, capping stack, Gulf of Mexico, oil spill, Robert Dudley, Thad Allen
Friday, June 11, 2010
Oil spill estimate doubled
From The Hindu
In what might be the most serious setback to date in the Gulf of Mexico oil spill crisis, scientists have suggested that the rate at which the spill is growing could be double the original estimation.
Marcia McNutt, United States Geological Survey Director and leader of the Flow Rate Technical Group (FRTG) monitoring the spill, said the best estimate for the average flow rate of the leak could be as high as 40,000 barrels per day.
If indeed the true flow rate is 40,000 barrels per day, it would imply that 1.7 million gallons of oil have been flowing daily out of the ruptured well of the British Petroleum-owned Deepwater Horizon offshore rig.
The rig exploded on April 22, killing 11 people, and has been spewing out vast amounts of oil into the Gulf since then. It has already caused extensive damage to marine life and eroded the incomes of those dependent on it, particularly in Louisiana where the oil slick has swamped the state’s fragile coastal marshlands.
Researchers had earlier estimated the amount of oil escaping into the Gulf at between 12,000 and 19,000 barrels — 504,000 to 798,000 gallons — per day. During the most recent attempt to halt and divert the flow, by cutting well’s riser pipe and placing a cap on the well, the experts had said that the rate flow had increased by 4 to 5 per cent.
The latest estimates were, according to Dr. McNutt, based on “additional video that BP was directed to provide” and calculated the lower and upper bound range estimates for a period of time before the Riser Insertion Tube Tool was inserted and before the riser was cut. The scientist team further cautioned that the estimates depended on “limited data available and the small amount of time to process that data”.
Meanwhile BP reported on the containment process currently underway, which has entailed the use of a lower marine riser package (LMRP) containment cap to collect oil and gas flowing from the MC252 well and transport them to the Discoverer Enterprise drillship on the surface.
In an update the company said, “In the first 12 hours of June 9 (midnight to noon), approximately 7,920 barrels of oil were collected and 15.7 million cubic feet of natural gas were flared. On June 8, a total of approximately 15,000 barrels of oil were collected and 29.4 million cubic feet of natural gas were flared.”
BP continues to face pressure from the Obama administration to not only halt and mop up the leak but also compensate fishermen and others along the Gulf coastline for loss of income. On Thursday it announced a second round of block grants of $25 million each to the states of Florida, Alabama and Mississippi.
Labels: BP oil spill, environmental issues, Gulf of Mexico, oil spill
Saturday, June 05, 2010
Obama wants BP to foot the bill
From The Hindu
U.S. President Barack Obama this weekend reiterated his determination to get BP to pay for the damage caused by the oil spill from their Deepwater Horizon offshore rig, including a preliminary bill of $69 million for the costs of the response thus far. After speaking at Grand Isle, Louisiana, to local residents and small business owners about the hardships that they were facing, he underscored his commitment to helping them recover and rebuild.
Mr. Obama also sought to deflect criticism that his administration had failed to respond rapidly enough to the crisis, arguing “… from the beginning, we have mobilised on every front to contain and clean up this spill. I have authorised the deployment of 17,500 National Guard troops to aid in the response. More than 20,000 people are currently working around the clock to protect waters and coastlines.”
He added that his government had also convened hundreds of top scientists and engineers from around the world, that more than 1,900 vessels were in the Gulf assisting in the clean up, and more than 4.3 million feet of boom had been deployed with another 2.9 million feet of boom available.
His comments came even as BP announced that oil and gas was being received on board the Discoverer Enterprise drill ship at surface level, following the successful placement of a containment cap on top of the rig's failed blow-out preventer (BOP). BP also issued caveats regarding the success of this operation. The company said, “It is expected to take one or more days for flow rates of oil and gas to stabilise and it is not possible at this stage to estimate how much oil and gas will be captured by this containment system.”
It added that a complex operation such as this one entailed the use of remotely operated vehicles at 5,000 feet under water and the containment cap had never before been deployed at this depth. Thus the “containment system's efficiency, continued operation, and ability to contain the oil and gas cannot be assured,” BP warned.
Top priority
However, in another statement to shareholders issued on Friday, BP's Chairman Carl-Henric Svanberg and Chief Executive Tony Hayward said that the company's response to the Gulf of Mexico oil spill was their “top priority,” along with rebuilding trust and confidence in BP and “ensuring that such an accident never happens again.” A press release said that both Mr. Svanberg and Mr. Hayward expressed their deep regret and sorrow for the tragedy.
The Obama administration has nevertheless sought to keep up the pressure on the oil major, with the President noting over the weekend that he had “… ordered BP to pay economic injury claims, and we will make sure they pay every single dime owed to the people along the Gulf Coast.” He said that in addition, after an emergency safety review, his administration would be putting in place “aggressive new operating standards for offshore drilling.”
In that context he emphasised the key role of the bipartisan commission that he had appointed last month to look into the causes of this spill. Mr. Obama said, “If laws are inadequate – laws will be changed. If oversight was lacking – it will be strengthened. And if laws were broken – those responsible will be brought to justice.”
Labels: environmental disaster, Gulf of Mexico, oil spill
Sunday, May 16, 2010
Oil spill larger than estimated
From The Hindu
Scientists have discovered enormous plumes of oils lurking beneath the surface of the water after leaking out of the critically damaged Deepwater Horizon rig. The plumes, which scientists said measured ten miles long and over a mile wide, were noticed even as British Petroleum's latest attempts to stem the flow of oil from the rig into the Gulf of Mexico failed yet again.
The discovery of the plumes may embarrass British Petroleum CEO Tony Hayward, who recently argued that given the size of the Gulf of Mexico the “amount of volume of oil and dispersant we are putting into it is tiny in relation to the total water volume.”
The plumes suggest that it is in fact the oil visible on the surface which is a tiny fraction of all the oil that spilled since the rig blew up on April 20, according to an assessment by the National Institute for Undersea Science and Technology. The NIUST report said that significant amounts of oil were spreading at various levels throughout the water column.
On its blog the NIUST reported on its scouting trip in the spill area, noting that scientists “started seeing an increase in fluorescence just below the surface and this was related to a marked increase in oil on and near the surface.”
The latest attempts by BP to stop oil from gushing into the sea failed on Saturday, as the company tried to fit a narrow tube into the damaged oil pipe a mile beneath the surface. The tube would have siphoned the oil directly to a ship on the surface and sealed the pipe as well.
According to government estimates the spill has so far caused 210,000 gallons, or 5,000 barrels, of oil per day to leak into the ocean. President Barack Obama earlier underscored his determination to end the “cosy relationship” between regulators and oil companies and to ensure that BP mopped up the cost of the clean-up.
Labels: Barack Obama, British Petroleum, Gulf of Mexico, oil spill
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