Friday, July 16, 2010

Day 88 BP Oil Spill Update: The Flow Is Stopped; Hold Your Breath

Jul 16: Yesterday afternoon the valves on the new "three ram capping stack" were closed and for the first time in 87 days -- oil stopped flowing into the Gulf of Mexico from the BP MC252 well. With cautious optimism, and assuming no major problem with the capping stack or the wellbore casing, it appears that the disaster in the Gulf has turned a corner with three options now available -- all with positive outcomes: (1) the well could be continuously "shut-in" stopping the flow; (2) recovery of the oil could continue with recovery of up to 80,000 barrels per day which should include all oil (i.e. estimated at up to 60,000 bbls/day); (3) finally, the two relief wells are now with in striking distance of intercepting the MC252 wellbore and hopefully will be able to tap and kill the well. Obviously, beyond stopping the flow; a massive and ongoing cleanup effort will continue for years and the process for compensation for direct and indirect damages to businesses, people, wildlife and the environment will be ongoing.
    The official response from BP is that the well integrity test is ongoing. Currently the well remains shut-in with no oil flowing into the Gulf; any significant change to the operation will be announced via a press release. BP says that pressure continues to rise and is currently above 6700 psi. Ultimately, experts have said that a pressure of 8,700 psi would indicate that the wellbore casing is not compromised and is capable of a continuous shut-in situation. Due to the well integrity test, no oil was recovered during the last 12 hours on July 15 (noon to midnight). On July 15, total oil recovered was approximately 9,305 barrels (5,875 barrels of oil were collected; 3,430 barrels of oil were flared; and 22.5 million cubic feet of natural gas were flared). The total oil recovered from the LMRP Cap, Q4000, and Helix Producer systems since they were implemented is approx. 804,800 barrels. An additional 22,000 barrels were collected from the RIT tool earlier in May bringing the total recovered to approx. 826,800 barrels. BP is expected to issue its next update at around 6:30 PM CDT on July 16, 2010.
    Speaking for the Unified Command, Admiral Thad Allen issued a statement following the announcement of the stop in oil flow saying, "We're encouraged by this development, but this isn't over. Over the next several hours we will continue to collect data and work with the federal science team to analyze this information and perform additional seismic mapping runs in the hopes of gaining a better understanding on the condition of the well bore and options for temporary shut in of the well during a hurricane. It remains likely that we will return to the containment process using this new stacking cap connected to the risers to attempt to collect up to 80,000 barrels of oil per day until the relief well is completed."
    In terms of evaluating the various closure and/or oil recovery options it is important to note that on June 8 (day 50 in the spill) [See WIMS 6/9/10], BP announced that as part of its commitment to restore the environment and habitats in the Gulf Coast region, it would donate the net revenue from oil recovered from the MC252 spill to create a new wildlife fund to create, restore, improve and protect wildlife habitat along the coastline of Louisiana, Mississippi, Alabama, and Florida. The creation of the fund is over and above BP's obligations under the Oil Pollution Act of 1990. BP's net revenue from the sale of oil recovered from skimming operations and the well containment systems will be deposited into this newly-created fund. BP said it could not predict the total of amount of net revenue that would be deposited into the wildlife fund. The amount of funding will be contingent upon the amount of oil collected during operations and the price at which the oil is sold. BP will provide regular updates on the amount of proceeds being deposited into the fund. [Note: WIMS has not seen an accounting of proceeds deposited in the fund; only the daily accounting of recovered oil, i.e. currently total recovered oil is approx. 826,800 barrels].
    At approximately 10 AM today, President Obama delivered a brief statement from the White House on the status of the situation in the Gulf. The President said, "I wanted to give everyone a quick update on the situation in the Gulf. As we all know, a new cap was fitted over the BP oil well earlier this week. This larger more sophisticated cap was designed to give us greater control over the oil flow as we complete the relief wells that are necessary to stop the leak. Now, our scientists and outside experts have met through the night and continue this morning to analyze the data from the well integrity test. What they're working to determine is whether we can safely shut in the well using the new cap without creating new problems, including possibly countless new oil leaks in the sea floor.

    Now, even if a shut-in is not possible, this new cap and the additional equipment being placed in the Gulf will be able to contain up 80,000 barrels a day, which should allow us to capture nearly all the oil until the well is killed.  It's important to remember that prior to installation of this new cap, we were collecting on average about 25,000 barrels a day. For almost 90 days of this environmental disaster, all of us have taken hope in the image of clean water instead of oil spewing in the Gulf.  But it is our responsibility to make sure that we're taking a prudent course of action and not simply looking for a short-term solution that could lead to even greater problems down the road. So to summarize, the new cap is good news.  Either we will be able to stop the flow, or we will be able to use it to capture almost all of the oil until the relief well is done.  But we're not going to know for certain which approach makes sense until additional data is in.  And all the American people should rest assured that all of these decisions will be based on the science and what's best for the people of the Gulf.

    In other matters related to the oil spill, the Department of Interior has informed BP that it must report all oil and gas-related activities at its damaged well and pay royalties on all oil and gas captured from the leaking well. The company also will be liable for royalties on lost or wasted oil and gas if it is determined that negligence or regulatory violations caused or contributed to the Deepwater Horizon explosion and subsequent leak. The Interior Department's chief oil and gas regulatory official, Director of the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEM) Michael Bromwich, officially notified BP in a July 15 letter, noting that the company's failure to fulfill these obligations could be considered a knowing and willful violation of the Federal Oil and Gas Royalty Management Act.  

    Also, the Unified Command reported that U.S. EPA Assistant Administrator of Solid Waste and Emergency Response Mathy Stanislaus visited a waste site in Grand Isle, LA, with representatives from the Sierra Club, Gulf Coast Fund, Gulf Restoration Network and BISCO Environmental. On June 29, the U.S. Coast Guard, in consultation with EPA, issued a directive to BP outlining expectations for the management of waste and materials collected in the Gulf oil spill response. The directive ensures that BP's waste plans will receive community input, that all of their operations will be fully transparent, and that state and federal authorities will have strong oversight roles throughout the process.

    Access further updates from the BP website (click here). Access a July 16 update from the Unified Command (click here). Access the new RestoreTheGulf website for links to the latest Unified Command updates and more (click here). Access the statement from the President and response to press questions (click here). Access the BP release on the  wildlife fund (click here).

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