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‘Plug the damn hole’ – BP‘s day of reckoning!
Posted 26/05/10
Work at MC252, otherwise known as the Macondo Prospect and now infamous as the location of one of the worlds largest oil spills, today continues at a frantic pace.
BP has, over the past day, been pressure testing the ‘top hat’ that lies on the ocean floor in advance of a potential ‘top kill’ (lots of ‘tops’ then!), injecting the well with 50,000lbs of heavy drilling fluids and cement to try and plug the well, which at current estimates is spewing over 5000 barrels of oil a day into the Gulf (although some say it could be 3 or 4 times more than this.) The decision will be based on today’s results, and the outcome of the procedure could well define the near-future of the companies involved.
BP Chief Executive Officer Tony Hayward said “So far, it’s looking OK but we haven’t got all the data we need.” ‘Top kill’ procedures have been know to work above ground, but have never been attempted at 5000 feet below sea level. Scientists are divided as to the success, with most putting BP’s chances of success at around 60-70%.
However, as far as BP, Transocean and Halliburton are concerned, failure is not an option this time around. Tensions are mounting, residents are frustrated and the White House is losing patience. President Obama is reported as saying this morning to ‘Plug the damn hole’. Sen. Bill Nelson, D-Florida has suggested that “If the thing is not fixed today, the President doesn’t have a choice, and he better go in and completely take over, perhaps with the military in charge,”.
It is not just control of the operation that BP and associated parties stand to loose. Lloyd’s of London has updated estimates that put the net claims against BP of between $300 million and $600 million (£210 million and £420 million). This news emerged as BP tried to claim up to $700 million through a policy held by Transocean. However, 38 separate Lloyds underwriting syndicates, plus a string of other international insurers affected by the disaster, rejected BP’s claim. They claim that BP’s lease contract from Transocean specified that the insurers would only be responsible for damage to the rig itself, and not for pollution caused by a potential leak from it
On Monday BP said that the cost of the clean-up had hit $760 million.
It seems that White House patience with the companies involved has evaporated, and although praise was given to BP for its immediate and thorough response, President Obama was less than happy with the ‘finger pointing’ and ‘blame games’ going on between the three large players in this disaster. “I know BP has committed to pay for the response effort, and we will hold them to their obligation,” he said following a meeting with administration officials to discuss the oil leak. “I have to say though I did not appreciate what I considered to be a ridiculous spectacle during the congressional hearings into this matter. You had executives of BP, Transocean and Halliburton falling over each other to point the finger of blame at somebody else. The American people cannot have been impressed with that display, and I certainly wasn’t. I will not tolerate more finger pointing or irresponsibility,”
However, Wednesday trading saw BP shares climb as much as 2.4% in London to 497.50p, with market traders citing talks of potential good news in the very near future.
BP’s Chairman Carl-Henric Svanberg has now entered the fray commenting that the company’s “future reputation all depends on whether we are successful in stopping the leak and dealing with the clean-up”. However, perhaps more significantly he also chose to go on the offensive pointing out that “The US is a big and important market for BP, and BP is also a big and important company for the US, with its contribution to drilling and oil and gas production. So the position goes both ways.” Well said Carl-Henric!
In further bad news for the oil giant today, the Alyeska Pipeline Service Co. said it closed the Trans-Alaska oil pipeline after oil spilled during a scheduled test at a pump station near Fairbanks. The company said it lost power at a pump station during testing of a fire command system, and as a result relief valves opened and crude spilt into a secondary containment system. ‘Several thousand gallons’ were reportedly lost, although the containment system can hold up to 100,000 gallons. However, with BP as the main shareholder (47%), this is the bosses’ worst nightmare!
Fingers crossed for the top …..
This entry was posted 1 year, 8 months ago and was filed under BP plc.
