NG Oil & Gas US

European Debt Causes Oil Prices Down

Thu, 09 Dec 2010 09:45:00 +0000

Oil dropped below $90 a barrel this week due to Europe's debt crisis hurting fuel consumption, and after an industry report showed US gasoline supplies surged the most since January.

Futures fell a second day as traders secured profits from a rally to $90.76 a barrel, the highest in 26 months, according to Bloomberg. The dollar strengthened after European ministers ruled out immediate aid for debt ridden Portugal and Spain, dulling investor appetite for commodities. The American Petroleum Institute said gasoline stockpiles increased 4.8 million barrels last week.

Crude, due for delivery in January dropped by as much as 1.2 percent, to $87.61 a barrel in electronic trading on the New York Mercantile Exchange. The contract was at $88.37 at 1:32 p.m. GMT. Brent crude for next month settlement fell as much as $1.12, or 1.2 percent, to $90.27 a barrel on the London based ICE Futures Europe exchange.

Christopher Bellew, senior broker at Bache Commodities Ltd in London said: "Oil is facing contradictory pressures. On the one hand it's being pumped up by Chinese demand and colder weather, while on the other relatively high supplies and economic anxieties are dragging it down."

Oil has risen 11 percent in 2010, on the back of a soaring market of 78 percent in 2009 and a 100 percent increase in 1999.

Oil's rally is unlikely to coax OPEC into raising production quotas at a meeting this week in Ecuador, as group members consider the global economic recovery strong enough to withstand price gains, according to a Bloomberg News survey.

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Latin America's Goal for Energy Independence

Thu, 11 Nov 2010 14:19:00 +0000

Latin America's goal for energy independence is tied to its offshore oil and gas reserves. Experts from the illustrious O&G LA 20 committee believe that the offshore sector will become even more important in the future as the industry shifts to deeper waters.

A spokesperson for the committee set to meet in Rio de Janeiro, early next year chaired by Juan Carlos Zepeda, President CNH, Tomas Vargas, Vice President BPZ and Guimar Vaca Coca, MD Americas Petrogas stated this week "There is an apparent need to expand on the offshore services available. Whether it's deploying workers on and off rigs, improving offshore safety, or making sure subsea construction is done as efficient as possible, marine servicing has expanded thoroughly throughout the Americas."

But rapid expansion in offshore developments comes with tremendous risk. The recent oil spill in the Gulf of Mexico highlighted how susceptible deep-water drilling has become, and how difficult a leak is to suppress at such depths. But oil extractors are left with no choice but to drill to such depths, as the global demand for crude increases, whilst shallow wells become exhausted.

Drilling deeper - to lengths greater than a mile - requires technically demanding drilling and complex equipment and seriously reduces the room for error. And as those who witnessed the spread of crude throughout the Gulf of Mexico, it also makes stemming the flow and repairing crippled riser pipes and underwater wells that much more challenging.

The catastrophe in the Gulf of Mexico bares stark comparisons with the Lusi mud volcano in Indonesia, which many commentators have suggested was triggered by deep exploratory drilling in an environment with little-to-no room for error. In the Lusi case, those drilling failed to seal the well, which eventually led to the blow-out of catastrophic proportions. Like the Gulf of Mexico spill, both deep drilling adventures have caused a catastrophic impact on the environment.

With demand increasing, and supply dwindling, simple math dictates that more catastrophic spills and blow-outs are likely on the horizon. More drilling will take place in environmental hot-spots and difficult areas, where accidents like the Gulf of Mexico spill - major, hard to stem leaks - are likely to happen with more frequency. Safety regulations should be evolving to adjust to this new reality, resulting in better legislation for equipment like blow-out valves and shut-off triggers, and the necessary equipment in place to tackle a sprung leak.

And it is with this in mind, Latin America must tread carefully whilst securing energy independence. It will be imperative for those attending the O&G LA 20 in Rio de Janeiro to outline the safest practices whilst expanding its energy quotas.

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US Gas Prices On the Rise

Fri, 15 Oct 2010 14:06:00 +0100

Lord Digby famously quoted that "Demand for oil is going to increase because of the massive expansion of the Chinese and Indian economies." He could not have been more accurate with his prediction. Such global demand for a finite fossil fuel is being felt across the US this week as gas prices have grown exponentially by $0.8 in two weeks, bringing costs to $2.77 per gallon. But with the recent BP disaster within the Gulf of Mexico, the county knows firsthand the dangers of trying to relieve demand by mining in more challenging locations.

While many are commentators are forecasting higher oil and gas prices, executives within the industry are doubtful that higher prices will remain stable for very long because of the inability of people's incomes to cover the higher prices. Parts of the world that use much less oil and gas per capita may be able to sustain higher prices with less recessionary impact, but ultimately, all will be affected.

Currently, a high cost of oil production (or of any type of energy production) is seen as a marker for low "energy return on energy invested" (EROEI). However it is important to be cautious about substituting higher cost energy sources for lower cost energy sources, as it can raise the cost to the consumer and lead to greater recessionary impacts.

To combat this and similar issues the O&G20 committee, the world leading authority on Oil and Gas technology solutions have selected the thought leaders and top executives to meet at this year's Next Generation Oil and Gas summit in Austin Texas this November.

Greg Smith Head of US business for Repsol and Ronald Cramer Senior adviser from Shell are amongst the attendees of this locked down meeting. Petrobas (one of the most active deepwater companies in the world) are expected to announce investments in new fields within PreSalt regions of Brazil.

"Demand for oil, natural gas, and electricity, is likely to fall over the next few years", quoted the committee "because of increased recession and decreased credit availability". This will not get adequate attention without looking at subsidies for renewables and nuclear power and how they are likely to decline, as governments find they are more and more financially stretched. Even considering these components, there may be pressure to reduce emissions and thus fossil fuel use requiring increased costs seen by the consumer.

The announcement of the meeting has been anticipated by the US Oil and Gas industry for some time as potential exports to India and China are moving to the untapped coasts of east Africa and the Middle East. In conclusion the cost of sustainability will fall to the consumer but clever exploration and development within the industry will at least limit these costs.

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Seaswarm: A robot to clean up oil spills?

Wed, 29 Sep 2010 08:46:00 +0100

Seaswarm is pretty similar to Ocean Therapy Solutions' device which filters crude oil from sea water, because it is designed to specifically siphon crude oil from sea water at a spill site. Ocean Therapy Solutions' largest device could siphon up to 200 gallons a minute, but Seaswarm claim that as a collective group, their machines can work together to clean even larger areas of ocean.

The machines are around five metres long and two metres wide, and resemble something similar in appearance to a treadmill. Costing $20,000, each machine requires no human intervention and can work independently, and according to Seaswarm can locate a spill and transmit its location to other machines using WiFi and GPS. Collectively the machines will work through polluted ocean, and collect all the oil.

The machines are able to do this by soaking up oil with the tread as it skims over the surface, which uses nanotechnology which attracts oil and repels water. Once the tread has collected its fill - around 20 times its own weight in oil - it will deposit the oil collected in the ocean in a bag which can be collected and reused.

The robots are friendly to the environment too; they only require 100 watts of power, the equivalent of a bright light bulb. They also work autonomously and don't need to return to the shore for constant maintenance.

Assaf Biderman, who supervised this project at MIT says, "Because it (conveyor belt) adheres to the surface of the water, it cannot capsize. So it can withstand quite severe weather. Imagine this like a leaf that lands on the surface of the water and moves with the waves and the currents and cannot be flipped over."

The team at MIT have calculated that if the Seaswarm robots were deployed during the current Gulf of Mexico oil spill, the costs of collecting the surface oil would have been significantly reduced. Biderman claimed that 10,000 Seaswarm robots could have cleaned up the oil in two months and the cost of the whole operation would have amounted to $100 million to $200 million.

"Ideally, when spillage happens, the best thing to do is to contain it right where the spillage occurs. But quite often the oil goes out of containment, and this is where this technology would be most effective," he said.

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BP confirms well is fully sealed

Mon, 20 Sep 2010 14:05:00 +0100

BP has finally fully sealed the unruly Macondo well in the Gulf of Mexico, ending months of speculation and anticipation regarding such an outcome.

After spewing millions of barrels of oil into the fragile Gulf, the well was sealed 15 July, however BP had to wait a further two months until a costly relief well could be drilled to completely seal the well at source. Both BP, the federal government scientific team and the National Incident Commander confirmed that these operations successfully sealed the annulus.

"This is a significant milestone in the response to the Deepwater Horizon tragedy and is the final step in a complex and unprecedented subsea operation - finally confirming that this well no longer presents a threat to the Gulf of Mexico," said Tony Hayward, BP group chief executive. "However, there is still more to be done. BP's commitment to complete our work and restore the damage done to the Gulf of Mexico, the Gulf coast and the livelihoods of the people across the region remains unchanged."

BP will also now begin the process of dismantling and recovering containment equipment and decontaminating vessels that were in position at the wellsite.

According to Oil and Gas news, there are approximately 25,200 personnel, more than 2,600 vessels and around 25 aircraft involved in the response effort.

Due to a lack of visibility, no surface oil has been collected for two months, however constant reconnaissance flights are conducted as a precautionary measure.

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Oil industry must plug old oil, gas wells

Thu, 16 Sep 2010 09:57:00 +0100

In an effort to boost environmental protections and the safety of offshore energy protection the Obama administration has launched plans to plug old oil and gas wells in the Gulf of Mexico.

The plans were launched on Wednesday in an effort to clean up ‘idle iron' - dried up wells and rigs that have been left since oil excavation was complete. The mandate will affect nearly 3,500 nonproducing wells and require the decommissioning of about 650 unused oil and gas production platforms.

"We have placed the industry on notice that they will be held to the highest standards of planning and operations in developing leases," said Interior Secretary Ken Salazar.

The number of redundant rigs, platforms and offshore oil and gas wells has long been a thorn in the paw of environmental groups and industry analysts, who have been highlighting the problem of ‘idle iron' in an effort to get a resolution.

Since the Macondo well leak, and subsequent spill of 206 million gallons of oil into the Gulf of Mexico, fresh scrutiny has cast on well safety and have spurred concerns that the aging infrastructure poses environmental risks, especially during hurricanes
Michael Bromwich, the director of the new Bureau of Ocean Energy Management, Regulation and Enforcement, said the rule responds to that threat.

"This initiative is the product of careful thought and analysis," he said, "and requires that these wells, platforms and pipelines are plugged and dismantled correctly and in a timely manner to substantially reduce such hazards."

The previous rule required companies to dismantle used wells within one year after their individual offshore oil and gas leases expire.

But the "notice to lessees" issued by the Interior Department Wednesday would require the decommissioning of any well that has been idle for the past five years, along with any associated platforms and pipelines - even if they are part of an active offshore lease.

Under the rule, current offshore lease owners will have four months to outline their plans for breaking down and securing the facilities.

"These structures are not producing resources or creating jobs by just sitting there," and the risk of leaking, abandoned facilities "is something we've overlooked long enough," Grijalva said. "This announcement should put thousands of laborers back to work in short order cleaning up the Gulf," said Rep. Raul Grijalva, D-Ariz., who had pushed for such a cleanup of offshore drilling debris, said the rule will benefit the environment and the economy.

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Oil reform isn�t cheap: Obama requests funds

Tue, 14 Sep 2010 14:10:00 +0100

Following the catastrophe of the Deepwater Horizon rig explosion, where 11 workers died and oil spewed from the stricken well, BP have been digging deep into their pockets in an effort to win back hearts and minds and compensate those affected.

And the pockets would need to be pretty deep; BP has claimed that the spending so far has risen to $8 billion, which includes $399 million paid to settle 127,000 claims from businesses and others affected by the spill.

As a result, and in an effort to better prepare for future deep offshore oil drilling, President Obama has asked congress for $90 million to reform oversight of the oil and gas industry.

In an effort to raise the $90 million, the total sum would be made up of extra budget requests, and by offsetting more expenditure on oil and gas oversight elsewhere in the budget.

The extra funds in the 2011 fiscal year budget would pay for an overhaul of the Interior Department agencies that oversee the oil and gas industry.

Some victims of Gulf spill not entitled to pay-out

BP said yesterday that thousands of fisherman, hotel owners, seafood processors and restaurants that were affected by the millions of gallons of oil that spewed into the Gulf may not be entitled to compensation, according to court papers.

BP and its partners such as Transocean Ltd and Halliburton Co said the majority of alleged victims who have brought about 400 lawsuits must first take their claims to a $20 billion fund established by BP.

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More robust BOP installed above Macondo well

Mon, 06 Sep 2010 16:11:00 +0100

After the removal of the original 300-ton Blowout preventer (BOP) from the Gulf of Mexico, a new, fully tested, and better equipped BOP has been successfully placed above the Macondo well, according to National Incident Commander Admiral Thad Allen.

Allen, stated, "Under the direction of the federal science team and US government engineers, BP used the Development Driller II to successfully install a fully functioning and tested Blowout Preventer (BOP) on the cemented Macondo 252 well.

"This is an important milestone as we move toward completing the relief well and permanently killing the Macondo 252 well," Allen added.

Allen said in a statement that there was no discernable release of hydrocarbons from the site during the complicated crossover of BOPs, something that was a legitimate concern during the process.

The new BOP should be more robust in handling the growing pressures whilst BP implement ‘bottom kill', which in turn should protect the Macondo well from being compromised and damaged.

Assuming the weather remains conducive to drilling conditions, the remaining drilling distance of 100 meters should intercept the well annulus by mid-September. Allen has speculated that it should take around 96 hours to initiate ‘bottom kill' once the relief well has reached the well, which would allow sufficient time to pump enough mud and cement to seal the well sufficiently.

No substantial amount of gas or oil has leaked since technicians closed valves on a tight-fitting cap on July 15. Throughout the process, both BP and the US government claimed that the well would not be completely secure until the relief well was drilled.

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BOP could provide clues to disaster

Mon, 06 Sep 2010 13:56:00 +0100

The five-storey blowout preventer (BOP) that has been spewing oil from the Macondo well a mile below the surface in the Gulf of Mexico has been brought to the surface, where it will be photographed, videoed and investigated by officials.

As a safety precaution, the lifting of the 300-ton BOP took over 24 hours to raise a mile to the service, due to the formulation of ice-like crystals, called hydrates. Darin Hilton, the captain of the transporting vessel the Helix Q4000, said the hydrates needed to melt before they reached the service, as they are combustible. The same crystals put pay to BP's plan for a giant 100-ton dome in the Spring, which formed and clogged a riser pipe which was designed to transport leaking oil to a transport vessel at the surface.

On board the Helix Q4000 vessel, the BOP will be shipped to a NASA facility in Louisiana, to undergo further investigation and tests to better ascertain the intrinsic causes for the oil spill. Investigators know that the original explosion, which caused the death of 11 rig workers, was caused by a bubble of methane gas that escaped from the well, and travelled up the riser pipe, expanding as it burst several seals and barriers before igniting.

The issue for investigators is understanding how the methane gas escaped, and why the BOP didn't perform what it was designed to do; namely, to seal the well pipe at the foot of the eruption and why a leaking seal couldn't be closed by submersibles once oil was escaping into the Gulf.

Transocean, the Deepwater rig owners have claimed that the BOP may have been in perfect working condition, and the surging methane gas brought with it unforeseen debris from the well that blocked seals that prevented the BOP from shutting its valves. However, documents have surfaced showing the BOP did have a small hydraulic leak, which could have reduced its effectiveness.

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How much oil is still in the Gulf?

Wed, 18 Aug 2010 13:28:00 +0100

A few weeks ago, the US government said that almost three-quarters of the catastrophic BP oil spill in the Gulf of Mexico had been "cleaned up or broken down by natural forces". However a group of scientists have come forward and said that there is more oil still in the ocean than has been claimed, and that as much as 79 percent is present below the surface.

This assessment contradicts the Obama administration's claims that the worse of the oil spill is now over. However, the scientists, including Samantha Joye, a Professor of marine sciences at the University of Georgia in Athens, have said in a public memo that a lot of crude is lurking deep below the surface, some of it settling perhaps in a critical undersea canyon off the Florida Panhandle.

The scientists' research claims to have found evidence of microscopic amounts of oil mixing into the soil of the canyon which has in turn been poisoning plant plankton, the vital base of the ocean food web. They say the toxicity has been caused by a lethal combination of oil and dispersant.

It is a stark contrast to the White House statement of August 4, which said that: "At least 50 percent of the oil that was released is now completely gone from the system, and most of the remainder is degrading rapidly or is being removed from the beaches."

What is the truth?

However the scientists have faced a backlash saying their results are only based on a 10 day research trip and as such, any conclusions on the amount of remaining oil would require more tests. It has not stopped various government officials however, confirming that they feel the oil spill crisis is drawing to a close.

Jane Lubchenco, Administrator of the National Oceanic and Atmospheric Administration, has been quoted as saying at least half of the oil released is now "completely gone." Meanwhile other scientists have been disputing the new evidence with Edward Overton, an environmental chemist and Professor Emeritus at Louisiana State University saying, "I don't think it's still lurking out there."

"The Gulf is incredible in its resilience and ability to clean itself up," he said. "I think we are going to be flabbergasted by the little amount of damage that has been caused by this spill."

This group of scientists who released reports are not the only ones to contradict the government's stance on the oil clean up. Last week, a report from Georgia researchers that said as much as 80 percent of the oil from the spill remains in the Gulf. Both groups' findings have already been incorporated into lawsuits filed against BP.

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Gulf clean-up costs hit $6bn

Mon, 09 Aug 2010 13:47:00 +0100

The spill may have finally been sealed, but the clean-up continues and this weekend the cost hit $6 billion. However, with locals complaining that oil is still prevalent, despite a government report that said 75 percent of the oil had been cleaned up, it is clear that a lot of work is still needed.

The report that Infrastructure US commented on last week has been met with alarm by Gulf Coast residents who fear that the government report will lead to a general consensus that the worst is over and that political and media attention will fade.

Last week, White House energy adviser Carol Browner said that only a quarter of the leaked oil posed any further danger to the US environment and coastal communities, claiming that the majority of the oil had "either been captured, burned off, or evaporated."

The news came hours after BP announced that its ‘Static Kill' procedure to finally seal the leaking oil well had been successful, ending almost three months of oil spilling into the ocean since the DeepHorizon oil rig caught fire and sunk.

However local residents say that oil is still present and risks crippling the coastal communities who depend on industries like fishing to survive.

Clean-up costs

BP has said that they will do whatever it takes to clean up the oil spill and thus far, the expenditure of $6 billion has gone into the spill response, containment, relief well drilling and cementing up of the damaged well as well as grants to the Gulf states hit by the spill.

Thus far, the oil giant has also paid out $319 million in compensation to some of those affected by the spill, but reports indicate there are still many more waiting.

Although the oil has stopped, there are currently 30,800 people working on the clean-up response. During the 87 days that oil leaked into the Gulf, it is estimated that the total amount of oil spilled totaled 4.9 million barrels.

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Static Kill to seal Gulf oil well

Mon, 02 Aug 2010 16:03:00 +0100

Three months after the DeepHorizon rig exploded causing the worst environmental disaster in US history, there have been a series of attempts to seal the well, all of which have failed.

However this week, BP has said that work has begun on permanently sealing the well with a procedure known as a "static kill". Two weeks after the well was sealed with a new cap, BP engineers have begun to pump mud and cement into the well to permanently seal it.

A ‘bottom kill' procedure is also to be initiated where mud and cement is pumped in from a relief well below. This is set to happen in a few days time.

Admiral Thad Allen, who has been overseeing the clean-up operations, said that the static and bottom kill strategies would seal the well once and for all "could start as early as Monday night", depending on the results of ongoing tests.

Heavy mud is to be pumped through lines installed earlier this month on top of the blowout preventer, the unit that failed when the rig exploded. In theory the mud should force the oil and gas back into the reservoir below the seafloor. If pressure in the well remains stable and no unknown leaks are discovered, cement will then be poured in to seal the top of the well pipe.

While Admiral Allen is positive about the procedure, a similar effort called ‘Top Kill' famously failed in May due to the high pressure of the leak.

Speaking about the procedure, Allen said that if any leaks are detected during the procedure over the coming days, technicians will seek to identify them through seismic work and other diagnostic testing.

Finally capped

After initially spilling up to 60,000 barrels of oil a day into the sea since the accident on 20 April, the well has been capped for the last two weeks finally allowing clean-up operations to make a difference.

To date, the operation has cost over $4 billion with BP reporting a record loss of $17 billion, while putting aside $32 billion for clean-up costs and reparations to those affected. So far, the oil has affected coastal communities in over four US states, crippling fishing and tourism industries.

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BP oil spill cost is $32.2 billion

Tue, 27 Jul 2010 11:39:00 +0100

Last month BP made headlines when it was announced that they had spend $3 billion on the clean-up thus far. This month, that total has hit $4 billion, but today it was reported that the oil company has set aside an enormous $32.2 billion in order to sufficiently cover the costs of the Gulf of Mexico oil spill.

On top of this, it was finally confirmed that BP chief executive Tony Hayward would be stepping down from his current position ‘by mutual agreement' in October, being replaced by fellow executive, Bob Dudley, who is currently in charge of day-to-day clean-up operations in the Gulf.

Hayward isn't completely leaving BP however and is likely to retain some sort of role in the firm. It is expected that BP will give him the position of non-executive director of its Russian joint venture, TNK-BP.

Heavy losses

In the wake of the disaster, BP has seen losses of up to $16 billion for the second quarter of the year. As a result of these massive losses and the need to cover the clean-up operations as well as maintaining financial liquidity, BP has also announced it will sell of up to $30 billion worth of assets.

In a statement, BP chairman Carl-Henric Svanberg said, "The BP board is deeply saddened to lose a CEO whose success over some three years in driving the performance of the company was so widely and deservedly admired."

Mr Svanberg said the Gulf disaster had been a "watershed incident" for BP and there was a need for the company to change going forward, with a fresh leadership.

For his part, Tony Hayward said that now the oil spill had been capped, now was a good time to leave his post. "With the leak now capped, we have reached a significant milestone. This provides a firm basis to reshape the company," he said.

Hayward is expected to receive a year's salary in lieu of notice, amounting to £1.045 ($1.64) million.

While BP is setting aside $30 billion for the clean-up, Svanberg was quick to point out that there was no certainty the final bill for the spill would not be higher. Rumours have it going as high as $45 billion.

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BP chief Hayward to step down?

Mon, 26 Jul 2010 13:10:00 +0100

Rumors have been circulating all weekend about the future of the infamous Chief Executive of BP, Tony Hayward. Widely condemned in the media over his handling of the Gulf of Mexico oil spill crisis, Hayward has become the ‘face of BP' and, due to a series of embarrassing gaffes, has become somewhat of a hate-figure.

However, despite reports last week that any reports over him standing down were false, an official statement from the oil giant at the weekend has said that Hayward had the board's full support and "no final decision has been made".

The firm said a board meeting was being held on Monday night and "any decisions will be announced as appropriate", but that the company had noted "the press speculation over the weekend regarding potential changes to management and the charge for the costs of the Gulf of Mexico oil spill."

BP confirms that no final decision has been made on these matters."

However, despite BP saying that Hayward has the "full support" of the board and senior management, there have been rumors that he was discussing his severance package with company heads over the weekend.

Hayward's replacement has already been rumored to be his American colleague, Bob Dudley, who has taken charge of the clean-up operation. Not just that, but Hayward could leave with a pension of $17 million.

To compound matters, a US government official quoted by the Associated Press, said senior figures in the company had already briefed them about a change of leadership at the oil multinational.

Golden handshake

Hayward's pension was revealed by the UK's Daily Telegraph who reported his pension pot could be as much as $16.7 million, resulting in an annual payment of about $905,000.

If the rumors turn out to be true, it would see the end of Hayward's 28 years with BP, three of which he has spent as Chief Executive when Lord Browne stepped down in 2007.

When he took the position he was a popular choice, however the Gulf of Mexico disaster has made 2010 the worse year in the company's history and has left BP responsible for the US's biggest environmental disaster.

Comments such as saying that he "just wanted his life back" and that the Gulf of Mexico was a "big ocean" following the leak has not endeared Hayward to the public or to the US House Energy and Commerce Committee, and with BP reeling from mounting costs and accusations of poor safety standards, it looks like BP is looking to turn the page on The Hayward Years.

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Gulf clean-up hampered by storm

Fri, 23 Jul 2010 11:46:00 +0100

The armada of ships that are currently in the Gulf of Mexico overseeing clean-up operations have been ordered to evacuate the area due to a tropical storm.

The storm, known as ‘Bonnie' is reported to have speeds of 40mph and is the second named storm of the Atlantic's hurricane season. It is expected to hit the spill area early on Saturday.

Admiral Thad Allen, who has been overseeing the clean-up operations, has said the well will remain capped while ships pull out of the area.

"Due to the risk that Tropical Storm Bonnie poses to the safety of the nearly 2,000 people responding to the BP oil spill at the well site, many of the vessels and rigs will be preparing to move out of harm's way beginning tonight.

"This includes the rig drilling the relief well that will ultimately kill the well, as well as other vessels needed for containment. Some of the vessels may be able to remain on site, but we will err on the side of safety."

Allen acknowledged that "these actions may delay the effort to kill the well for several days" but "the safety of individuals at the well site is our highest concern."

Sealing the well

A "packer", which is a plug used during storms, has been placed in the relief well to stabilise it while workers leave the site. Admiral Allen has previously said that will the new cap seemingly holding, it should be safe to leave the well unmonitored for several days.

It is expected that the storm will also delay the drilling of the two relief wells on site, however since the well was closed off last week, initial tests seem to indicate that it is holding leading US Energy Secretary Steven Chu to say he has been "encouraged" by the results so far.

Reports also stated the first relief well is only 4 ft from the damaged well, but more work needs to be done before it is used to ‘kill' the flow permanently. BP is awaiting final approval from Admiral Allen on whether to move forward with the process.

What is clear is that while the situation may be progressing, the storm will delay it for a few days.

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Gulf well cap holding, oil seepage detected

Mon, 19 Jul 2010 11:53:00 +0100

For every victory, there appears to be a defeat for the engineers working on the leaking oil well in the Gulf of Mexico. This weekend saw them successfully cap the well, with pressure tests indicating that it was holding perfectly, but now there are reports that "a substance [is] leaking from the seabed".

This substance is believed to be methane, which means that oil may still be leaking. If this is the case, the capped well may have to be reopened so that oil can continue to be funnelled to the surface

In a letter to BP boss Bob Dudley, retired Coast Guard Admiral Thad Allen who is in charge of clean-up operations said, "Given the current observations from the test, including the detected seep a distance from the well... I direct you to provide me a written procedure for opening the choke valve as quickly as possible without damaging the well."

Mr Allen demanded that the oil company provide swift action over the latest detected seepage. "I remain concerned that all potential options to eliminate the discharge of oil be pursued with utmost speed until I can be assured that no additional oil will spill from the Macondo Well."

If the well is re-opened, it could take days to start to funnel off oil, which would result in tens of thousands of barrels of oil flooding into the Gulf.

The plan that failed

It was hoped that the new cap would stop the leak until relief wells, scheduled for completion next month, would stop the flow for good. However, pressure readings from the well were much lower than expected, raising the fear that oil was leaking, possible under the ocean floor or bedrock.

It will add to the rising costs of the clean-up, which has already cost BP just under $4 billion. The money has gone not just up on clean-up operations, but to 32,000 claimants who have had their livelihoods ruined by the accident.

The company is evaluating a further 17,000 for payment and is seeking more information on 61,000 other claims.

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BP gets 7 year drilling ban

Thu, 15 Jul 2010 13:44:00 +0100

The big fear impact in the wake of the Gulf of Mexico disaster was that a ban on offshore drilling would heavily impact the US economy with oil rigs along the east coast hauling anchor and potentially moving down to Brazil.

However a US Congressional committee has potentially found a way around the offshore drilling ban - just ban BP.

According to news reports from Washington, the Congressional committee has agreed measures that would ban BP from new offshore drilling for seven years. The House committee also voted in favour of precluding companies with poor safety records from offshore oil exploration permits.

While the proposed law does not specifically name BP, it does ban and apply to to any company that has experienced 10 or more deaths in the last seven years.... which would include the vilified oil company.

As well as the 11 workers killed in the Deepwater Horizon rig explosion in April, BP have admitted guilt in a separate accident in Texas in 2005 that killed 15 people. Despite its guilt over the 2005 incident, BP still has has not yet been convicted on any criminal charges or admitted any criminal liability for the Gulf of Mexico spill that has been dubbed the worst environmental disaster in US history on April 20 this year.

"Flagrant history of taking risks"

The new law, that the Committee on Natural Resources also voted to pass, has an amendment that prevents any company from getting new leases unless they pass environmental requirements. However, these laws will not be enacted unless they are approved by the House, Senate and President Barack Obama.

In a statement, representative George Miller said, "British Petroleum has a flagrant history of taking risks to boost profits that has resulted in deaths of workers, destruction of the environment, and economic chaos in local communities."

BP is currently at the centre of a criminal investigation over the oil spill, which has caused further political furore over the company's poor safety record in the US.

Currently tests on a new cap, designed to stop the spill, have been delayed over concerns that the pressure test could further damage the well bore. Relief wells, designed to completely stop the leak, will be completed in August.

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BP Gulf oil spill: Cap test delayed

Wed, 14 Jul 2010 13:27:00 +0100

Almost four months after the Deepwater Horizon drilling rig exploded on 20 April, BP may be close to finally sealing off the leaking oil cap. However, the oil giant has announced it has delayed a key test on the newly installed well cap saying "further analysis was needed" before it could begin.

The ultimate aim is that the well will be "shut in" and the leak halted until relief wells plug it entirely, stopping the flow of oil into the Gulf. The test was meant to begin at the start of the week to make sure the new cap could sufficiently contain the oil leak but, speaking to the BBC, Coast Guard chief Admiral Thad Allen said the extra analysis would continue into Wednesday.

Once the test is undertaken, high pressure within the cap will show the oil has been contained inside the wellhead. However, if the tests show there is low pressure, it is an indication that oil is leaking elsewhere in the well.

While the cap is being tested, work will continue on the two relief wells.

"No promises can be made"

After the disastrous attempts to seal the leak in the past, including underwater submersibles knocking off a cap, BP Vice President Kent Wells has been coy about the success of the new cap.

He said he could make no promises whether it would work or not, adding, "it's not simple stuff. What we don't want to do is speculate around it."

If the test - which sees three separate valves tighten around the leaking cap - fails, ships on the surface will continue the task they have been doing since mid-April, collecting oil from the water.

"The sealing cap system has never before been deployed at these depths or under these conditions, and its efficiency and ability to contain the oil and gas cannot be assured," BP said in a statement. If the cap is unable to take the pressure, another pipe will be connected to the cap to take as much of the oil as possible to the ships.

While this will stop the leak, the well will still not actually be plugged - an operation that BP has said may not happen until mid-August when the relief wells are ready.

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Gulf of Mexico oil spill cost: $3.12 billion

Mon, 05 Jul 2010 13:12:00 +0100

The Gulf of Mexico accident and clean-up has so far cost BP a grand total of US$3.12 billion. A large amount of money to be sure, but if estimates are to be believed, costs are expected to spiral close to US$40 billion.

According to industry reports, the amount of money spent so far has covered the costs of containing the spill and cleaning up the oil, and the cost of drilling relief wells - all jobs that are set to continue for the foreseeable future, as the leaking well is still not sufficiently capped.

Also included in the costs is the US$147 million so far paid out in compensation to those businesses and communities affected by the spill.

This week's new cost total is an indicator of how far costs are rising, especially as a week ago the cost was calculated at US$2.65 billion. The ever-increasing costs have led many to speculate how long BP will be able to afford the clean-up before possibly going bankrupt.

News that BP have sent financial demands to their partners has only fueled speculation. According to The Guardian, BP last month sent out demands for almost US$400 million to Anadarko and Japan's Mitsui Oil Exploration Company, both of whom are minority shareholders in the well. That is equivalent to 40 percent of the $1 billion BP said it spent in May. Anadarko owns 25 percent of the well and Mitsui has 10 percent.

The fact that BP is alleging demanding payment within 30 days has led many industry analysts to speculate that the oil giant might be in more financial trouble than initially indicated. They could face even bigger problems though, as Anadarko is refusing to pay citing that they have no part in the disaster and that BP's actions amounted to "gross negligence or wilful misconduct". Mitsui have likewise made no indication that they will pay.

The news is a massive blow for BP who have stated they will do everything that they can to restore the Gulf of Mexico to its previous condition, but may not have the monetary funds to back up their promises. Currently, the oil firm is having to finance up to 44,500 people, 6,563 vessels and 113 aircraft working on clean-up operations.

Ongoing disaster

Although some of the oil is being collected, the ruptured well is still leaking while work continues on the relief wells. Work on the first relief well is continuing despite reaching a depth of 17,725 feet on 4 July. The second relief well, which started 16 May, has now reached 13,871 feet. Both wells are expected to take three months to complete from start to finish.

Meanwhile, operations to skim oil off the surface of the water have been temporarily delayed due to the start of hurricane season and Hurricane Alex sweeping through the area. To date, 673,497 barrels of oily liquid have been recovered, while a total of 275 controlled burns have been carried out. While these burns have reportedly removed an estimated 238,000 barrels of oil from the Gulf, BP has courted controversy by apparently burning sea turtle communities in the process.

All of this has led to industry experts wondering whether a takeover of BP is on the cards, with Exxon Mobil and Shell rumoured as potential buyers. BP, of course, has denied such claims saying, "We welcome new shareholders and existing shareholders increasing their holding, but there are no current plans to issue new equity."

One thing is certain, if costs continue to spiral BP may have to file for Chapter 11 much sooner than many have predicted.

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Timon Singh

Timon Singh is a graduate of Liverpool University where he received a degree in Social and Economic History. He has previously worked for BBC Magazines on BBC Who Do You Think You Are? Magazine, the publication for the popular genealogy show.

Obama's six-month moratorium overturned by federal judge

Wed, 23 Jun 2010 10:57:00 +0100

The six-month moratorium issued by the Obama administration to suspend offshore drilling in light of the environmental disaster in the Gulf of Mexico has been blocked by a federal judge.

The six-month plan came in light of the 50,000 barrels of oil spewing into the Gulf of Mexico every day, which had seen offshore drilling u-turns from both President Obama and Californian Governor Arnold Schwarzenegger, who had previously championed further drilling off the Californian coast.

"An invalid agency decision to suspend drilling of wells in the depths over 500 feet simply cannot justify the immeasurable effect on the plaintiffs, the local economy, the Gulf region and the critical present-day aspect of the availability of domestic energy in this country," judge Martin Feldman said.

John Houghtaling, the CEO of Ocean Therapy Solutions told NG Oil & Gas that the six-month drilling ban "could finish Louisiana off," referring to the affects on the state after the devastation of hurricane Katrina and the loss of jobs for oil workers if the moratorium were upheld.

"[The] 33 rigs deep water rigs [in the Gulf of Mexico] are ... going to pull anchor, and they're going to go to Brazil and Africa. So this [could be] a major problem," he said last week.

Fossil fuel infrastructure

The overturned moratorium will come as a blow to environmental groups and those championing alternative energy, who saw the disaster as an opportunity to make inroads into the fossil fuel infrastructure which accounts for 98 percent of current energy production.

"The tragedy unfolding on our coast is the most painful and powerful reminder yet that the time to embrace a clean-energy future is now," President Obama told the nation from the Oval Office last week.

However, if the moratorium is overturned, it would mean continued reliance on fossil fuels, something that, not surprisingly, top executives from BP and Transocean have stressed is pivotal if global demands for energy are to be achieved.

"The world does need the oil and the energy that is going to have to come from deep water production going forward.

"Therefore, the regulatory framework must still enable that to be a viable commercial position," Steve Westwell, BP's chief of staff said.

The White House said it would be appealing the decision.

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