Day 58 BP Oil Spill: 60,000 Bbl/day; Oval Office Address; $20b Fund

Jun 16: At approximately 2:30 PM this afternoon, the President announced that the Administration and BP executives had reached an agreement on establishing a $20 billion dollar fund to be administered by an impartial third party to begin processing claims for damages and losses as a result of the Gulf oil spill. The President said the $20 billion is not a cap and does not limit BP's liability, responsibility or legal challenges. The funding would be provided over a four-year period at a rate of $5 billion per year, including $5 billion within 2010. Additionally, a $100 million fund will be established for unemployed oil workers (See link below for details).

 

    On June 15, in his first Oval Office address of his presidency, President Obama outlined his commitment to fighting the full impacts of the BP oil spill with everything we've got for as long as it takes. In his prime time address the President said, "The millions of gallons of oil that have spilled into the Gulf of Mexico are more like an epidemic, one that we will be fighting for months and even years. But make no mistake: We will fight this spill with everything we've got for as long as it takes. We will make BP pay for the damage their company has caused. And we will do whatever's necessary to help the Gulf Coast and its people recover from this tragedy. . ."

 

    On the cleanup efforts the President said, "We now have nearly 30,000 personnel who are working across four states to contain and clean up the oil.  Thousands of ships and other vessels are responding in the Gulf.  And I've authorized the deployment of over 17,000 National Guard members along the coast. . . millions of gallons of oil have already been removed from the water through burning, skimming and other collection methods. Over five and a half million feet of boom has been laid across the water to block and absorb the approaching oil. We've approved the construction of new barrier islands in Louisiana to try to stop the oil before it reaches the shore, and we're working with Alabama, Mississippi and Florida to implement creative approaches to their unique coastlines. 

 

    He said secondly, the government is focused on is the recovery and restoration of the Gulf Coast. He said, "Tomorrow, I will meet with the chairman of BP and inform him that he is to set aside whatever resources are required to compensate the workers and business owners who have been harmed as a result of his company's recklessness.  And this fund will not be controlled by BP.  In order to ensure that all legitimate claims are paid out in a fair and timely manner, the account must and will be administered by an independent third party. Beyond compensating the people of the Gulf in the short term, it's also clear we need a long-term plan to restore the unique beauty and bounty of this region." He announced that he asked Ray Mabus, the Secretary of the Navy, and a former Governor of Mississippi and a son of the Gulf Coast, to develop a long-term Gulf Coast Restoration Plan as soon as possible.

 

    Thirdly, the President said, we're taking steps to ensure that a disaster like this does not happen again." He reminded that a few months ago [See WIMS 3/31/10], he approved a proposal to consider new, limited offshore drilling under the assurance that it would be "absolutely safe." He said, "That obviously was not the case in the Deepwater Horizon rig, and I want to know why. . . "I've established a National Commission to understand the causes of this disaster and offer recommendations on what additional safety and environmental standards we need to put in place. Already, I've issued a six-month moratorium on deepwater drilling.  I know this creates difficulty for the people who work on these rigs, but for the sake of their safety, and for the sake of the entire region, we need to know the facts before we allow deepwater drilling to continue."

 

    He announced that Michael Bromwich, who was a tough Federal prosecutor and Inspector General, has been charged to over the next few months, overhaul the Minerals Management Service within the Department of Interior and "build an organization that acts as the oil industry's watchdog -- not its partner."  He said, ". . .one of the lessons we've learned from this spill is that we need better regulations, better safety standards, and better enforcement when it comes to offshore drilling. But a larger lesson is that no matter how much we improve our regulation of the industry, drilling for oil these days entails greater risk."

 

    His final point focused on the need to accelerate efforts to develop alternatives to fossil fuels. He said, "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. Now is the moment for this generation to embark on a national mission to unleash America's innovation and seize control of our own destiny. This is not some distant vision for America. The transition away from fossil fuels is going to take some time, but over the last year and a half, we've already taken unprecedented action to jumpstart the clean energy industry."

 

    He reminded that last year, the House of Representatives acted and passed what he called "a strong and comprehensive energy and climate bill -- a bill that finally makes clean energy the profitable kind of energy for America's businesses." He continued, "Now, there are costs associated with this transition. And there are some who believe that we can't afford those costs right now. I say we can't afford not to change how we produce and use energy -- because the long-term costs to our economy, our national security, and our environment are far greater.

 

    In a major new development the researchers working on the critical question of how much oil is leaking into the Gulf released their latest estimates. Based on updated information and scientific assessments, Department of Energy (DOE) Secretary Steven Chu, Secretary of the Interior Ken Salazar, and Chair of the National Incident Command's Flow Rate Technical Group (FRTG) Dr. Marcia McNutt (Director of the U.S. Geological Survey) announced an improved estimate of how much oil is flowing from the leaking BP well [See WIMS 6/15/10]. Working together, U.S. government and independent scientists estimate that the most likely flow rate of oil today is between 35,000 and 60,000 barrels per day (bbl/day). The improved estimate is based on more and better data that is now available and that helps increase the scientific confidence in the accuracy of the estimate.  

    At the direction of the Federal government, BP is implementing multiple strategies to significantly expand the leak containment capabilities at the sea floor even beyond the upper level of the latest flow rate estimate. The Lower Marine Riser Package (LMRP) cap that is currently in place can capture up to 18,000 bbl/day. At the direction of the Federal government, BP is deploying a second containment option, called the Q4000, which could expand total leak containment capacity to 20,000-28,000 bbl/day.   Overall, the leak containment strategy that BP was required to develop projects containment capacity expanding to 40,000-53,000 barrels per day by the end of June and 60,000-80,000 barrels per day by mid-July. 

    Energy Secretary Steven Chu said, "This estimate brings together several scientific methodologies and the latest information from the sea floor, and represents a significant step forward in our effort to put a number on the oil that is escaping from BP's well. As we continue to collect additional data and refine these estimates, it is important to realize that the numbers can change.  In particular, the upper number is less certain -- which is exactly why we have been planning for the worst case scenario at every stage and why we are continuing to focus on responding to the upper end of the estimate, plus additional contingencies." Over the weekend, at the insistence of Secretary Chu and the science team, pressure meters were added to the top hat to assist with these estimates.  

    The scientists stressed the need for continued and refined pressure measurement, but emphasized that the "improved" estimates have a greater degree of confidence than estimates that were possible prior to the riser cut. They said the estimates are better because of more and different kinds of data that is available now and a single flow is easier to estimate versus prior to the riser cut, when oil was flowing both from the end of the riser and from several different holes in the riser kink. 

    The FRTG was assembled at the direction of National Incident Commander Admiral Thad Allen, and is led by United States Geological Survey Director Dr. Marcia McNutt.  The FRTG, and a scientific team led by Energy Secretary Steven Chu, continue to analyze new data and use several scientific methodologies to develop updated estimates of how much oil is flowing from BP's leaking oil well in the Gulf of Mexico. 

    Its important to note that over a month ago, Purdue University mechanical engineering professor Steven Wereley, the researcher that testified before Representative Markey's hearing on May 19, that the BP leak was much larger than previously estimated. Wereley indicated that the flow rate was at least "an order of magnitude higher" than the 5,000 bbl/day being reported by BP and the Unified Command. Wereley, who is now one of the researchers on the FRTG, used an initial 30-second video clip of the oil gushing from the 21.5-inch pipe that was released by BP on May 12, Wereley deployed a technique called particle image velocimetry (PIV) to create freeze-frame shots of the video. From his calculation, Wereley determined that 56,000-84,000 barrels of oil, plus gas, had been leaking daily into the Gulf -- a flow that was nearly 10 times higher than other estimates at that time [See WIMS 5/29/10].

    On June 15, 2010, the President signed into law S. 3473 - Amending the Oil Pollution Act of 1990 to authorize advances from Oil Spill Liability Trust Fund for the Deepwater Horizon oil spill. The bill authorizes the Coast Guard to obtain multiple advances (up to $100 million each), with the total amount of all advances not to exceed the incident cap under current law ($1 billion), from the Oil Spill Liability Trust Fund to underwrite Federal response activities with regard to the discharge of oil that began in connection with the explosion on, and sinking of, the mobile offshore oil unit Deepwater Horizon. The bill was introduced on June 9, by Senate Majority Leader Harry Reid (D-NV) and passed the Senate by unanimous consent and received a 410-0 vote in the House.

    In other activities NOAA and Coast Guard seized shrimp taken from the closed fishing area in Gulf; Administration officials met with BP officials on the containment and recovery plans; established three Deputy Incident Commanders under Incident Commander Admiral Thad Allen, to lead oil impact mitigation and cleanup efforts in Alabama, Mississippi and Florida; the Administration continued its oversight over the BP claims process; and more (See link below).

   Access a fact sheet on the $20 billion funding and other funds (click here). Access the complete Presidential address (click here). Access links to a video of the address (click here). Access a release on the updated flow rate estimate (click here). Access legislative details on S.3473 (click here). Access a White House summary of the last 24 hours of oil spill activities with extensive links to more information (click here). Access additional information updates and links to releases and briefings on the Administration's response from the Unified Command website (click here). Access the BP response website for links to visuals more information on the recovery work (click here). 

Day 57 BP Oil Spill: Calls For Increased Recovery & Funding

Jun 15: Potential cost estimates for the overall BP oil spill disaster continue to climb, with talk in the $50 billion range (up from $20-30 billion); the company's market price holds at about $98 billion (down about $80 billion); and the company's credit rating was cut to BBB from AA by Fitch, one of the three big credit agencies. The President will speak to the nation this evening from the Oval Office following his two day visit to the Gulf. Then, tomorrow he will meet directly with BP officials. Media reports are beginning to surface over a possible lever the Administration may have over BP -- i.e. mineral leases valued at $55 billion which the government controls. The New York Post is reporting on a possible tradeoff where BP keeps its leases and agrees to some sort of $50 billion Gulf Oil cleanup fund including payments to businesses and individuals that have suffered economically.

 

    BP indicates that it has spent some $1.6 billion to date on the cleanup and compensation. BP announced that it has approved initial payments toward 90% of commercial large loss claims that have been filed as a result of financial losses of the Deepwater Horizon incident and spill. Using an accelerated process BP approved payments of 337 checks for a total amount of $16 million to businesses that have filed claims in excess of $5,000. Initial payments began over the weekend and will be completed this week. The remaining outstanding commercial large loss claims are awaiting documentation and are continuing through the process.

 

    BP indicated that the acceleration of commercial large claims payments will help ease the burden on impacted businesses by providing access to money in a short period of time. Improvements to the commercial large claims process have been made as a result of applying learning from the existing individual claims process, as well as consultations with local, state, Department of Homeland Security and United States Coast Guard officials. BP also announced a number of future process improvements.

 

    BP's Claims Team said, "We hope that these changes will help those whose businesses and livelihood have been hurt by the oil spill. "We are working hard to fine-tune our claims process so that it's as simple, straightforward and effective as possible. We will keep doing everything we can to address the impact of the spill on the Gulf region." The company said to date, it has opened 25 claims offices and issued approximately 25,000 claims checks totaling $63 million. By the end of the week it expects to have paid out $85 million inclusive of these initial large loss claims payments.

 

    The lower marine riser package (LMRP) containment cap, installed on June 3, continues to collect oil and gas flowing from the MC252 well and transport them to the Discoverer Enterprise drillship on the surface. In the first 12 hours of June 13 (midnight to noon), approximately 7,720 barrels of oil were collected and 16.9 million cubic feet of natural gas were flared. On June 12, a total of approximately 15,000 barrels of oil were collected and 32.9 million cubic feet of natural gas were flared. The total volume of oil collected by the LMRP cap system since it began operation is approximately 127,000 barrels. A further approximately 22,000 barrels of oil previously had been collected through use of the Riser Insertion Tube Tool and stored in the Discoverer Enterprise.

 

    In the early evening of June 10, the Flow Rate Technical Group (FRTG), which is led by United States Geological Survey Director Dr. Marcia McNutt, and a scientific team led by Energy Secretary Steven Chu provided an update on their analysis of new data and bringing together several scientific methodologies to develop an updated estimate of how much oil is flowing from BP's leaking oil well in the Gulf of Mexico. Dr. McNutt announced that three of the scientific teams analyzing flow rates have reached updated assessments, based on new data or analysis, of flow rates from BP's well before the riser was cut on June 3. [Note: most experts have commented that the flow rate would increase following the riser cut, e.g. +10-20%).

 

    The FRTG reported that the Plume Modeling Team which has originally estimated 12,000 to 25,000 barrels of oil per day updated its estimate to between 25,000 to 30,000 barrels per day, but could be as low as 20,000 barrels per day or as high as 40,000 barrels per day. The Mass Balance Team which had originally estimated 12,000 to 19,000 barrels of oil per day refined its estimate and has concluded that the best estimate for the average flow rate was in the range of 12,600 to 21,500 barrels of oil per day. The Reservoir Modeling Team and the Nodal Analysis Team are continuing to work on independent estimates that will be completed later this month (See link below for details on estimates).

 

    On June 9, BP submitted a plan to the Unified Area Command outlining a plan to build additional capacity and redundancy for the containment of oil. In summary the plan called for various elements that might result in recovery of 20-28,000 bbl/day by mid-June and 25-38,000 bbl/day by mid-July. Another "permanent riser system" is proposed to recover as much as 40-50,000 bbl/day. On June 11, Federal On-Scene Coordinator Rear Adm. James Watson's issued a letter directive to BP to build greater capacity and redundancy for oil containment to address the revised and "substantially higher flow of oil from the well." Watson said, ". . .your current plans do not provide for maximum mobilization of resources to provide the needed collection capacity consistent with the revised flow estimates." Watson requested a response from BP within 48 hours.

 

    On June 15, BP also announced that it was making its first round of funding for a half-billion dollar pledge to the Gulf of Mexico Research Initiative (GRI). Three research institutions in the Gulf region will receive a total of $25 million in fast-track funding for high-priority studies of the distribution, composition and ecological interactions of oil and dispersant. Three initial studies will help establish critical baseline data as the foundation for subsequent research. In this first round of funding, GRI is providing: $5 million to Louisiana State University; $10 million to the Florida Institute of Oceanography (FIO) hosted by the University of South Florida; and $10 million to the Northern Gulf Institute (NGI), a consortium led by Mississippi State University (NGI). 

   

    Access a report on BP credit rating (click here). Access NYP report on the $50 billion deal (click here). Access a BP release on recent response progress (click here). Access a release on the new FRTG flow estimates with links to details on each method (click here). Access links to the exchange of letters on increasing the recovery capacity (click here). Access a BP release on the GRI (click here). Access additional information updates and links to releases and briefings on the Administration's response from the Unified Command website (click here). Access the BP response website for links to visuals more information on the recovery work (click here).

Day 52 BP Oil Spill: BP Stock Plunges; Presidential Update

Subscribers Note:
WIMS will not be publishing Friday, June 11, or Monday, June 14, 2010.  
We will resume publication on Tuesday, June 15, 2010.

 

Jun 10: As the Administration ratchets up the pressure on BP to pay claims and recover oil, and Congressional hearings (three more today) on the oil spill continue to dominate Congress, the company's stock price continue to plummet -- now hovering around $30 per share; down from $60 before the Gulf Coast disaster. The company has lost around $80 billion in market value since the Deepwater Horizon accident and is now valued at now around $98 billion. Projections of the ultimate cleanup cost range from a low of $10-15 billion to a high from Goldman Sachs analysts who are now estimating figures around $33 billion. Concerns and discussions are now taking place about possible bankruptcy. Concerns increase yesterday when Department of Interior Secretary Ken Salazar testified before the Senate Energy & Natural Resources (ENR) Committee that the Administration would consider claims for loss of work from energy workers in the Gulf due to the drilling moratorium as legitimate.

    BP issued a release on June 10, saying, "The company is not aware of any reason which justifies this share price movement. BP continues to keep the market updated on the Gulf of Mexico oil spill through regular announcements. The response to this incident is our top priority. BP faces this situation as a strong company. In March, we indicated that the company's cash inflows and outflows were balanced at an oil price of around $60/barrel. This was before the costs of the incident. Under the current trading environment, we are generating significant additional cash flow. In addition, our gearing is currently below the bottom of our targeted range. Our asset base is strong and valuable, with more than 18bn barrels of proved reserves and 63bn barrels of resources as at the end of 2009. All of the above gives us significant capacity and flexibility in dealing with the cost of responding to the incident, the environmental remediation and the payment of legitimate claims." 

    BP reported that for the last 12 hours on June 9 (noon to midnight), approximately 7,890 barrels of oil were collected and 15.4 million cubic feet of natural gas were flared. On June 9th, a total of approximately 15,800 barrels of oil were collected and 31 million cubic feet of natural gas were flared. The total oil collected .since the LMRP Cap containment system was implemented is approximately 73,300 barrels. BP said it expects to increase the recovery of oil in the coming days. The volume of oil captured and gas flared is being updated twice daily on BP's website.

    Preparations for additional planned enhancements to the LMRP containment system continue to progress. The first planned addition will use the hoses and manifold that were deployed for the "top kill" operation to take oil and gas from the failed Deepwater Horizon blow-out preventer (BOP) through a separate riser to the Q4000 vessel on the surface, in addition to the LMRP cap system. This system is intended to increase the overall efficiency of the containment operation by potentially increasing the amount of oil and gas that can be captured from the well and is currently expected to be available for operation in mid-June.

    The second planned addition is intended to provide a more permanent LMRP containment cap system by directing the oil and gas to a new free-floating riser ending approximately 300 feet below sea level. It is then proposed that a flexible hose be attached to a containment vessel. This long-term containment option is designed to permit more effective disconnection and reconnection of the riser to provide the greatest flexibility for operations during a hurricane. It is expected to be implemented in early July. In the meantime, work on the first relief well, which started May 2, continues and has currently reached a depth of 13,978 feet. The second relief well, which started May 16, is at 8,576 feet, and preparing to drill ahead. Both wells are still estimated to take approximately three months to complete from commencement of drilling.

    BP reported that to date, almost 42,000 claims have been submitted and more than 20,000 payments already have been made, totaling over $53 million. BP has received more than 173,000 calls into its help lines. The company says the cost of the response to date is approximately $1.43 billion, including the cost of the spill response, containment, relief well drilling, grants to the Gulf states, claims paid, and Federal costs. This also includes the first $60 million in funds for the Louisiana barrier islands construction project. BP said, "It is too early to quantify other potential costs and liabilities associated with the incident."

    This morning President Obama hosted Congressional leaders from both parties to talk through the months ahead and make sure they are as productive as possible. In comments following the meeting, the President said, the top priorities have to be the BP oil spill and putting people back to work. He said, "Obviously the top of our list was our continued response to the crisis in the Gulf and what's happening with the oil spill. We gave them an update on all the measures that are being taken, the single largest national response in United States history to an environmental disaster. But we had a frank conversation about the fact that the laws that have been in place have not been adequate for a crisis of this magnitude. The Oil Pollution Act was passed at a time when people didn't envision drilling four miles under the sea for oil.

    "And so it's going to be important that, based on facts, based on experts, based on a thorough examination of what went wrong here and where things have gone right, but also where things have gone wrong, that we update the laws to make sure that the people in the Gulf, the fishermen, the hotel owners, families who are dependent for their livelihoods in the Gulf, that they are all made whole and that we are in a much better position to respond to any such crisis in the future. So that was a prominent part of the discussion, and I was pleased to see bipartisan agreement that we have to deal with that in an aggressive, forward-leaning way."

    At the President's direction, National Incident Commander Admiral Thad Allen met with top BP claims officials to assert the administration's oversight of BP's claims process in order to ensure that every legitimate claim is honored and paid in an efficient manner. He expressed the American people's urgent need for additional transparency into BP's claims process, including how the process works, and how quickly claims are being processed for both individuals and businesses impacted by the oil spill. Additional meetings will be held in each of the four impacted states from June 11-13. Allen also reported on the progress of the Flow Rate Technical Group (FRTG). He said he had hoped to have new estimates today (June 10); however, information is still being evaluated and should be available very soon.

    Access yesterday's ENR hearing website for Salazar's testimony and a video (click here). Access a Wall Street Journal article on BP stock prices and related issues (click here). Access a release from BP on its stock price (click here). Access a June 10 update release from BP (click here). Access more information on the President's meeting with Congressional leaders (click here). Access a late June 9, updated from the Unified Command center (click here). Access additional information updates and links to releases and briefings on the Administrations response from the Unified Command website (click here). Access the BP response website for links to visuals more information on the recovery work (click here). Access a full timeline of the Administration-wide response to Gulf crisis (click here).

Day 51 BP Oil Spill: More Pressure On BP; Oil Recovery Increases

Jun 9: As Congress held five hearing on the BP Gulf spill, the Administration appeared to be putting more pressure on BP to increase and continue oil recovery continuously, and to make its claims process more transparent. One Senator says its time to convert BP's pledges of payment into a binding agreement. Finally, the major unknown of how much oil is leaking from the well, remains. Officials continue to say that new estimates will be available very soon. In the meantime they continue to use the 12,000 to 19,000 barrels per day estimate of the Flow Rate Technical Group (FRTG).

 

    National Incident Commander Admiral Thad Allen sent a letter to BP CEO Tony Hayward regarding clarification of the claims filing, review and processing procedures. The letter indicates that the oil spill is having a "devastating impact" on the environment and  economy in the Gulf Coast. The letter indicates that although BP has "accepted responsibility for the spill and that you are committed to paying all related expenses. Allen said, the Federal Government and State partners need to ensure that all affected parties receive "just and timely reimbursement for their economic damages." He said, "We need complete, ongoing transparency into BP's claims process including detailed information on how claims are being evaluated, how payment amounts are being calculated, and how quickly claims are being processed." The parties were to meet today to address the issues in Allen's letter.

 

    On June 8, Federal On-Scene Coordinator Rear Admiral James Watson sent a letter to BP COO Doug Suttles. The letter indicates that, "Now that the so-called 'top hat' containment system has begun to capture and recover some of the oil escaping from the wellhead, it is imperative that you put equipment, systems and processes in place to ensure that the remaining oil and gas flowing can be recovered, taking into account safety, environmental and meteorological factors."

 

    The letter appears to ramp up the pressure on BP to not stop its oil recovery efforts or delay efforts in any way because of equipment or logistical concerns. Watson says, "I am instructing BP to establish system(s) capable of safely collecting the oil and gas flowing from the Macondo 252 well. The system(s) established must have appropriate redundancies to maintain complete collection rates in the event that operational problems are encountered in any part of the system. For example, if multiple oil recovery vessels are employed for collection/recovery efforts, redundancies must ensure that the failure of a vessel(s) does not reduce the capacity of the system for continuous recovery of oil. There should be no interruptions of the recovery effort while awaiting another recovery vessel to arrive on scene. Further, plans and processes must be put into place to ensure that, in the event that a hurricane or other severe weather causes recovery vessels to go off station, those vessels (or alternate vessels) can be brought back on station as quickly as possible after the storm passes and that collection efforts can resume without delay."

    On June 8, and again today at a Senate hearing, Senator Byron Dorgan (D-ND) said it is time to make BP's commitment to paying for the damage caused by its oil spill in the Gulf binding. Dorgan is the second ranking Democrat on the Senate Energy Committee and chairs a key energy appropriations subcommittee. In a release, Dorgan explained, "BP has consistently said it will provide the funding necessary to pay for the damages caused by the oil spill in the Gulf Coast. But when I asked the Justice Department, in a recent hearing, whether the BP pledge would be binding on the company the answer from the Justice Department was that it is not binding."

    He said, "On this 50th day of the oil spill with the incalculable costs of the disaster still rising, I think it is time to nail down a binding commitment that BP will provide the full funding for the cleanup as well as the economic costs that have resulted from the oil gushing into the Gulf of Mexico. I propose that the Justice Department enter into a formal arrangement with BP that would have them pay $10 billion into a Gulf Coast Recovery Fund that would be jointly managed and dispersed by a Special Master selected by the government and a Counselor selected by BP. . .

    "BP has averaged $15 billion a year in profits over the past ten years. Asking them to make a payment of much less than one year's profits into a Gulf Coast Recovery Fund that will be jointly managed with public as well as private sector management will be a start to nailing down the commitment that I believe is necessary to respond to the growing costs of this disaster. Some estimate that the ultimate costs will far exceed the $10 billion that I propose be the first commitment from BP. If that is so, BP should be prepared to meet that as well. But for now, there needs to be more certainty to the BP pledge, and this approach is the first step in determining whether the BP pledge is going to be met in full. . ."

    BP announced that as part of its commitment to restore the environment and habitats in the Gulf Coast region, it will 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 this 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. At this point, BP said it cannot predict the total of amount of net revenue that will 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.

    Tony Hayward, BP's chief executive officer said, "We believe these funds will have a significant positive impact on the environment in this region." BP indicated that on May 24, 2010, it also announced a commitment of up to $500 million for an open research program studying the impact of the Deepwater Horizon incident, and its associated response, on the marine and shoreline environment of the Gulf of Mexico.

 

    BP reported that for the last 12 hours on June 8 (noon to midnight), approximately 7,160 barrels of oil were collected and 13.9 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. Total oil collected in the last four days since the containment system was implemented is approximately 57,500 barrels.

 

    Access the letter from Allen to Hayward (click here). Access the letter from Watson to BP (click here). Access a release from Sen. Dorgan (click here). Access a release on the BP commitment on recovered oil and the wildlife fund (click here). Access additional information updates and links to releases and briefings on the Administrations response from the Unified Command website (click here). Access the BP response website for links to visuals more information on the recovery work (click here).

Day 50 BP Oil Spill: Presidential Ass Kicking & More Oil Recovery

Jun 8: Adm. Thad Allen, National Incident Commander for the BP oil spill reported earlier today that BP had recovered nearly 15,000 barrels of oil in the past 24 hours. BP reported that on June 7, approximately 14,800 barrels of oil were collected and 30.6 million cubic feet of natural gas flared. BP said the total oil collected in the last four days since the riser pipe cap was installed was approximately 42,500 barrels. However, the overriding question remains as to how much oil is actually being leaked from the well -- estimates seem to range from 15,000 to 95,000 and perhaps more. A new update from the Flow Rate Technical Group (FRTG) is expected soon [See WIMS 6/7/10].

 

    In an interview with Matt Lauer on NBC's Today broadcast, President Obama defended his actions on the Gulf oil spill crisis and reminded that he was in the Gulf a month ago before "most of these talking heads were even paying attention." The President also said that BP's CEO Tony Hayward "wouldn't be working for me" based on the statements he's made about the "wanting his life back" and characterizing the spill damage as "modest." Also, in response to a question from Lauer about whether someone's butt should be kicked, President Obama said, ""I don't sit around just talking to experts because this is a college seminar. We talk to these folks because they potentially have the best answers, so I know whose ass to kick." 

    As part of the previously announced commitment to fund the entire $360 million cost of six berms in the Louisiana barrier islands project, BP announced that it would make an immediate payment of $60 million to the State of Louisiana. In a letter to Louisiana Governor Bobby Jindal and as previously announced, BP detailed its plans to make payments in stages based on the project's completion milestones. The initial $60 million payment is intended to permit the State to begin work on the project immediately. BP will then make five additional $60 million payments when the Coastal Protection and Restoration Authority of Louisiana.

 

    National Oceanic and Atmospheric Administration's (NOAA's) independent analysis of water samples provided from the May 22-28 research mission of the University of South Florida's R/V Weatherbird II confirmed the presence of very low concentrations of sub-surface oil and PAHs (polycyclic aromatic hydrocarbons) at sampling depths ranging from 50 meters to 1,400 meters. The Weatherbird II samples came from three stations: 40 and 45 nautical miles to the northeast of the well head and 142 nautical miles southeast of the well head. NOAA's analysis of the presence of subsurface oil determined that the concentration of hydrocarbons is in the range of less than 0.5 parts per million, and PAH levels in range of parts per trillion. NOAA announced its analysis in conjunction with the University of South Florida.

 

    Dr. Steven Murawski, chief scientists for NOAA Fisheries said, "NOAA's analysis of the Weatherbird II samples shows that concentrations of hydrocarbons decrease with depth, with a notable exception of samples at 300 meters from Station 07, which warrants additional research attention. Also, PAH levels are very low in all samples, with only five of 25 having reportable concentrations of the priority pollutant PAHs." NOAA Administrator Dr. Jane Lubchenco said, "We have always known there is oil under the surface; the questions we are exploring are where is it, in what concentrations, where is it going, and what are the consequences for the health of the marine environment? This research from the University of South Florida contributes to this larger, three-dimensional puzzle we are trying to solve, in partnership with academic and NOAA scientists."

 

    NOAA also announced that it has opened 339 square miles of previously closed fishing area off the Florida panhandle -- the northern boundary now ends at the Florida Federal-state water line on the east side of Choctawhatchee Bay.The area was initially closed on June 5 as a precaution because oil was projected to be within the area over the next 48 hours. However, the review of satellite imagery, radar and aerial data indicated that oil had not moved into the area. The Federal closed area does not apply to any state waters. Closing fishing in these areas is a precautionary measure to ensure that seafood from the Gulf will remain safe for consumers. The closed area now represents 78,264 square miles, which is approximately 32 percent of Gulf of Mexico Federal waters. This leaves approximately 68 percent of Gulf federal waters available for fishing.

 

    The Incident Command Post in Mobile, AL indicated that a Sentry plan has been initiated to provide real-time ocean monitoring off the Florida Keys and Dry Tortugas. Vessels will be used to conduct maritime patrols to provide early identification of any weathered oil products such as light sheen, which will naturally dissipate, or mousse mats and tar balls that could potentially threaten the Florida Keys and east coast of Florida. A vessel departed from John's Pass, near St. Petersburg, Fla. on the first patrol and patrols will generally last from four to 10 days.  Additional vessels and aircraft Sentry patrols may be implemented as necessary to provide early warning detection of any weathered oil products. These vessels are intended to provide a minimum of 48-hours additional notice so responders can maximize preparedness and response activities and notify the public. A June 6, release indicates, "There have been no reports of Deepwater Horizon/BP Oil Spill-related oil products reaching shore in the Florida Peninsula and there is no indication that it will have impacts from weathered oil products in the near future." 

 

    Yesterday (June 7) at a Cabinet meeting on the BP spill, the President offered promise and encouragement. He stated that he is confident that the Gulf Coast ecosystems and people affected by the crisis will make a full recovery. He said, Let me just make one final point, and I think this was something that was emphasized by everybody here, and it's something that I want to say to the American people. This will be contained.  It may take some time, and it's going to take a whole lot of effort. There is going to be damage done to the Gulf Coast and there is going to be economic damages that we've got to make sure BP is responsible for and compensates people for.

 

    "But the one thing I'm absolutely confident about is that as we have before, we will get through this crisis.  And one of the things that I want to make sure we understand is that not only are we going to control the damages to the Gulf Coast, but we want to actually use this as an opportunity to reexamine and work with states and local communities to restore the coast in ways that actually enhance the livelihoods and the quality of life for people in that area. It's going to take some time.  It's not going to be easy. But this is a resilient ecosystem. These are resilient people down on the Gulf Coast. I had a chance to talk to them, and they've gone through all kinds of stuff over the last 50, 100 years. And they bounce back, and they're going to bounce back this time. And they're going to need help from the entire country. They're going to need constant vigilant attention from this administration. That's what they're going to get."

    Access more information and a video of the NPC interview with the President (click here). Access a release from BP on the berm payment plan (click here). Access a release on the NOAA sampling and link to the sampling report (click here). Access a release and map on the NOAA closed fishing area report (click here). Access a release on the Sentry plan (click here). Access the President's statement at the Cabinet meeting and a video (click here).

Day 49 BP Oil Spill: Oil Recovery & BP Reimburses 14,000 For Losses

Jun 7: President Obama met with officials in Louisiana as he made a trip to the Gulf Coast on Friday afternoon to view the and be briefed on the latest efforts to stop the leak and cleanup the spreading oil slick. Also on Friday BP reported, that following the first full day since the cap was installed over the well, they had collected over 6,000 barrels of oil. Now, today (June 7) they are claiming to be recovering over 10,000 barrels of oil per day (bbl/day) -- a figure which BP Group Chief Executive Tony Hayward said was a "vast majority" of the oil being leaked.

 

    However, that estimate is based on the latest "official" estimate of between 12,000 and 19,000 bbl/day made by the Flow Rate Technical Group (FRTG) [See WIMS 6/1/10]. Other experts, including those the are participating on the FRTG, have estimate a flow rate that is much higher. Purdue University mechanical engineering professor Steven Wereley, a researcher that testified before Representative Markey's hearing on May 19, and is on the FRTG, has indicated the flow rate may be around 95,000 barrels/day with a plus or minus 20% degree of accuracy [See WIMS 5/29/10]. Also, the FRTG estimate was made before the riser pipe was sheared off to allow the cap placement -- a move that experts say could increase the flow by 10-20%.

 

    Following BP's "vast majority" claim, Representative Markey sent a letter to BP asking for clarification on the total amount of oil that is coming out of the well. In his letter to BP America CEO Lamar McKay, Markey says, "At this time, BP appears to know how much oil is being captured, which is encouraging. Yet BP still does not appear to know precisely how much oil is actually escaping, which is discouraging." Markey notes that BP will face potential fines of up to $4,300 per barrel of oil spilled.

 

    At a White House press briefing today with Adm. Thad Allen, the national incident commander and Press Secretary Robert Gibbs, Allen reminded that the FRTG had two estimates on the size of the leak -- one was a range of 12,000 to 19,000 bbl/day. The other one was a range of 12,000 to 25,000 bbl/day. He said, "We are now approaching production that will get up around 15,000 barrels a day" [speaking of the amount recovered]. WIMS contacted a member of the FRTG who indicated that the group will likely have a new leak flow estimate on Tuesday or Wednesday.

 

    On his visit to the Gulf the President said, "The most obvious area of progress was, coming out of the meeting last week, trying to bridge what seemed to be differences with respect to the berm, the barrier islands that Governor Jindal had proposed, and we now have that authority and dredging is beginning.  And now we want to make sure that BP is paying up, but it seems like we're making progress on that front.

    "We spent a lot of time here just talking about the logistics of the response on the shore as oil begins to come in.  And everybody here has particular concerns because we've got limited resources. . . One of the things that we've done to make sure that organizationally things are working the way they should is we now have a Coast Guard official who is stationed with each parish president and we actually have a BP representative who is stationed with each parish president, so that they have direct access to making sure that any information, any problems that they've got, are immediately being shot up to Thad and he can respond quickly.  And we want to set that up not just in Louisiana, but in Alabama as well as in Florida -- we want county equivalents to have that same kind of representation and rapid response.

    "We also talked about claims.  And this is an area where I think everybody has a lot of concern.  My understanding is, is that BP has contracted for $50 million worth of TV advertising to manage their image during the course of this disaster.  In addition, there are reports that BP will be paying $10.5 billion -- that's billion with a B -- in dividend payments this quarter. Now, I don't have a problem with BP fulfilling its legal obligations.  But I want BP to be very clear, they've got moral and legal obligations here in the Gulf for the damage that has been done.  And what I don't want to hear is, when they're spending that kind of money on their shareholders and spending that kind of money on TV advertising, that they're nickel-and-diming fishermen or small businesses here in the Gulf who are having a hard time. . ."

    As WIMS previously reported, BP indicated to it shareholders on June 4, that it has already spent over $1 billion in gross direct costs for the response, clean up and relief wells and spending at this rate is expected to continue for some time beyond successful completion of work to stop the flow of oil from the damaged well. Any fines and penalties would present additional costs; but the company said the costs of containment, removal and clean up are likely to be largely complete in 2010. BP reports that 34,656 claims have been opened, from which more than $45.9 million have been disbursed. No claims have been denied to date, and there are more than 516 claims adjusters on the ground. The Administration reports that it is providing aggressive oversight of the BP claims process from start to finish that will ensure that every legitimate claim is honored and paid in an efficient manner, and its strong commitment to providing residents with full, streamlined access to available assistance programs [See WIMS 6/4/10].

    The President said, "We've assigned federal folks to look over BP's shoulder and to work with state and local officials to make sure that claims are being processed quickly, fairly, and that BP is not lawyering up, essentially, when it comes to these claims. They say they want to make it right. That's part of their advertising campaign.  Well, we want them to make it right.  And what that means is that if a fisherman got a $5,000 check, and the next time he goes in, because it's a new month, suddenly BP is saying, well, we need some documentation and this may take six months to process, or 60 days to process -- or 30 days to process, for that matter -- that fisherman, with all his money tied up in that boat, just may not be able to hang on for another 30 days. He may lose his boat and his livelihood. . ."

    We've [the Federal Government] already submitted one bill [$69 million, See WIMS 6/3/10] and they haven't said that they're not paying it, so I don't want to anticipate problems. But we are already starting to see at the local level folks experiencing problems. And we don't want those problems to build up -- we want to nip that at the bud right now. And the fact that BP can pay a $10.5 billion dividend payment is indicative of how much money these folks have been making.  And given the fact that they didn't fully account for the risks, I don't want somebody else bearing the costs of those risks that they took.  I want to make sure that they're paying for it."

    On June 4, BP announced it will be sending a second advance payment during June to individuals and businesses along the Gulf Coast to compensate for the loss of income or net profit due to the cleanup of the Deepwater Horizon Incident in the Gulf of Mexico. With the second advance payments, BP estimates it will have spent about $84 million for loss of income or net profit through June, based on the claims it has received to date. This number will grow as additional claims are filed. About 14,000 individuals and businesses in Louisiana, Mississippi, Alabama and Florida have received an initial advance payment for loss of income or net profit to date.

    According to a BP release, "With the second payment, about 7900 individuals and businesses in Louisiana will have received about $50 million for loss of income or net profit by the end of June. The numbers for Alabama are about 3000 claimants receiving about $16 million, in Mississippi about 1900 individuals and businesses receiving about $10 million, and in Florida about 1200 claimants receiving about $8 million. BP expects these numbers will grow as claims continue to be filed during the month." BP said the second advance payment will be the same amount as the first payment received; no check will be reduced. The mailings will start this week (June 4). Individuals and businesses will receive their second payment about 30 days after their initial advance payment was received.

 

    BP said it has moved to pay advances as fast as possible and, therefore, is still conducting evaluations of losses by claimants. "Payment adjustments may be required in the future when evaluations are completed; however, BP will not seek repayment if it overpaid advances. Loss of income or net profit payments are made in advance because individuals and businesses need to pay their bills. Claimants, who have provided documentation that demonstrates their loss of income or net profit was larger through May than the initial advance payment received, also will receive a supplemental payment for those losses. This payment will be provided after direct consultation with a claims adjuster."

    Access the June 7 press briefing from Thad Allen (click here). Access the June 6 release from Rep. Markey (click here). Access the President's full remarks on June 4 in Louisiana (click here). Access the BP release on claims processing (click here). Access the BP response website for links to visuals on how the LMRP is supposed to work (click here). Access additional information updates and links to releases and briefings on the Administrations response from the Unified Command website (click here). Access EPA's environmental monitoring site (click here). Access the White House website on the BP spill which contains links to all Federal agency response websites and more (click here).

Day 46 BP Oil Spill Crisis: Cap Installed; A Presidential Visit

Jun 4: BP reports that the lower marine riser package (LMRP) cap was placed on top of the LMRP at approximately 8:35 PM CDT on June 3. Gas first reached the Discoverer Enterprise at approximately 11:00 PM CDT on June 3; oil followed at approximately 11:10 PM CDT. Operations are progressing as planned; increasing the flow of oil and gas to the surface and reducing the amount entering the Gulf of Mexico. Media reports at mid-morning on June 4, indicated an initial recovery rate of 1,000 barrels per day; however, 4 vents in the cap were still open and scheduled to be closed periodically throughout the day to increase the recovery rate. The Unified Command reports that BP is attempting to reduce nitrogen pressure in the riser, gradually closing vents in the cap and trying to prevent hydrates.

    This afternoon, President Obama was traveling to the Gulf Coast and expected to speak with individuals and business leaders likely that have been affected directly by the economic consequences of the spill, and continue to get from Admiral Allen a firsthand update on the progress, both in dealing with the well and in dealing with the spread of pollution that has leaked from the well.

    BP's Chairman Carl-Henric Svanberg and Group Chief Executive Tony Hayward told shareholders that the company's response to the Gulf of Mexico oil spill is their top priority, along with rebuilding trust and confidence in BP and ensuring that such an accident never happens again. Both Svanberg and Hayward expressed their deep regret and sorrow for the tragedy. Svanberg underscored the company's commitment to mitigating damage from the oil spill and said, "The Board of BP has been clear from the outset that all resources available to the company should be applied to meeting BP's responsibilities in addressing these events. The task is by no means complete and we have a long way to go. This is a tough job and Tony and the team continue to work relentlessly. They have all our support.

    "In conjunction with the US authorities, a massive response has been mobilized which is focused immediately on containing and stopping the flow of oil. We will also continue to apply all of the necessary resources to the aftermath, both in the clean-up operation and in remediation and payment of legitimate claims. These are our most critical and immediate tasks. We will meet our obligations both as a responsible company and also as a necessary step to rebuilding trust in BP as a long term member of the business communities in the US and around the world. This is in the interest of all our stakeholders."

 

    In commenting on the significant financial costs of the incident, the company officials said: BP has already spent over $1 billion in gross direct costs for the response, clean up and relief wells; Spending at this rate is expected to continue for some time beyond successful completion of work to stop the flow of oil from the damaged well. Any fines and penalties would present additional costs; The costs of containment, removal and clean up are likely to be largely complete in 2010; and The longer-term costs of environmental remediation, claims and litigation are not predictable at this stage, but they will be sizeable and are likely to be spread over many years. [Note: BP stock has fallen from around $60/share at the time of the accident/spill to a current price of under $38/share].

 

    Hayward said, "Everyone at BP is heartbroken by this event, by the loss of life and by the damage to the environment and to the livelihoods of the people of the Gulf Coast. It should not have happened and we are bound and determined to learn every lesson to try and ensure it never happens again. We will stand by our obligations. We will halt this spill and put right the damage that has been done. We will rebuild the confidence of the American people and the world in BP."

 

    In its March presentation, prior to the Gulf of Mexico incident, BP indicated that its cash inflows and outflows were balanced at an oil price of around $60/barrel [oil is currently just under $72/barrel]. Now, Hayward said, "Under the current trading environment we are generating significant additional cash flow. In addition, our gearing is currently below the targeted range, and our asset base is strong and valuable, with more than 18 billion barrels of proved reserves and 63 billion barrels of resources. All of this gives us significant flexibility in dealing with the costs of this incident." BP said it will create a separate stand-alone organization to manage the long-term response once the spill is over. Managing Director Bob Dudley will lead this new organization reporting directly to the Group Chief Executive. 

 

    The Interagency Alternative Technology Assessment Program (IATAP) workgroup, newly established by the National Incident Commander for the BP Deepwater Horizon oil spill, announced a new effort to collect and review oil spill response solutions from scientists and vendors. The Coast Guard's Research and Development Center (RDC), in collaboration with interagency partners, issued a Broad Agency Announcement on the FedBizOpps website, calling for the submission of white papers that cover: oil sensing improvements to response and detection; oil wellhead control and submerged oil response; traditional oil spill response technologies; alternative oil spill response technologies; and oil spill damage assessment and restoration.

    According to a release, the IATAP and the RDC will screen and triage submissions based on technical feasibility efficacy and deployability. This will be a Federal process to ensure a fair, systematic, responsive and accountable review of alternative response technologies by interagency experts. The IATAP and RDC initial screening will result in one of three determinations: the white paper has a potential for immediate benefit to the oil spill response effort; the white paper submission needs more detailed investigation or evaluation by the appropriate government agency; or the white paper submission does not support this incident.

    The IATAP workgroup, established by Adm. Thad Allen, the national incident commander, includes the U.S. Coast Guard, National Oceanic and Atmospheric Administration, Department of Interior, Minerals Management Service, U.S. EPA, and the Department of Agriculture.

 

    National Incident Commander Admiral Thad Allen discussed the administration's aggressive oversight of the BP claims process from start to finish that will ensure that every legitimate claim is honored and paid in an efficient manner, and its strong commitment to providing residents with full, streamlined access to available assistance programs. The administration will continue to hold BP responsible for all removal costs and damages associated with the BP oil spill, including efforts to stop the leak at its source, reduce the spread of oil and protect the shoreline and mitigate damages, to the maximum extent possible under the law. According to a release the federal government is closely monitoring the BP claims process from outreach to language accessibility to intake to adjustment to payment.

 

    This week, the Integrated Services Team conducted site visits in Louisiana, Mississippi and Alabama to gather information about challenges faced by individuals, families and small businesses that have been impacted by the spill. Within the Integrated Services Team, field-based interagency teams are being established for each state to identify gaps in the claims process for resolution by BP. These teams are led by a single Federal Resource Coordinator and a state point of contact identified by Gulf Coast Governors. BP reports that 34,656 claims have been opened, from which more than $45.9 million have been disbursed. No claims have been denied to date, and there are more than 516 claims adjusters on the ground. At the request of the Federal government, BP is providing daily reports tracking claims to ensure the Federal government has full visibility throughout the entire process.

 

    The latest June 4, operations report from the indicates: Total active response vessels: more than 1900; Containment boom deployed: more than 2.04 million feet; Containment boom available: more than 747,000 feet; Sorbent boom deployed: more than 2.30 million feet; Sorbent boom available: nearly 2.10 million feet; Total boom deployed: more than 4.34 million feet (regular plus sorbent boom); Total boom available: more than 2.91 million feet (regular plus sorbent boom); Oily water recovered: nearly 14.97 million gallons; Surface dispersant used: more than 765,000 gallons; Subsea dispersant used: more than 256,000 gallons; Total dispersant used: more than 1,021,000 gallons; Dispersant available: more than 450,000 gallons; and Overall personnel responding: more than 20,000 personnel responding.

    Access a release from BP on the cap placement and LMRP operation (click here). Access a lengthy BP release on its report to shareholders (click here). Access the BP response website for links to visuals on how the LMRP is supposed to work (click here). Access additional information updates and links to releases and briefings on the Administrations response from the Unified Command website (click here). Access EPA's environmental monitoring site (click here). Access the White House website on the BP spill which contains links to all Federal agency response websites and more (click here). Access a release on the IATAP workgroup and link to more information (click here). Access the FedBizOpps announcement (click here). Access a release and links to more information on the claims process and oversight (click here). Access links to all live underwater video feeds (click here).

Day 45: BP Oil Spill Crisis; Sen. Nelson Calls For Military Option

Jun 3: With oil drifting closer and closer to the world-famous beaches of the Florida Panhandle, U.S. Senator Bill Nelson (D-FL) has been insisting that the White House should call in the military "to help keep the slime at bay." According to a release from Senator Nelson, "No one expects the military to be able to cap the gushing well. As the chairman of the Joint Chiefs Adm. Mike Mullen says, the military isn't suited or equipped to do so. But Nelson believes the military can bring what former Secretary of State Colin Powell said in a recent interview: "The military brings organization. It brings control. It brings assets." 

    Nelson said as he departed Orlando for a trip to the Pensacola area for a first-hand look at preparations to combat the spill, "This is the largest environmental disaster in our nation's history. If this doesn't call for more organization, control and assets -- like, subsea mapping by the Navy, for instance -- then nothing does." Nelson's stop at area emergency operations centers comes as the Panhandle confronts the stark reality of oil washing ashore in Florida. Government forecasters are closely tracking a significant plume of oil 35 miles off Pensacola Beach. None of that oil was expected to make landfall before Saturday. But officials warn tar balls could start hitting area beaches by tomorrow. 

    In a June 1, letter to the President, Senator Nelson said, "Last week I respectfully suggested that you consider calling on the Pentagon -- if the attempted 'top kill' of the well didn't work. Despite initial reports to the contrary, that attempt failed. And it now appears likely that oil will continue gushing at least until August when two relief wells can be finished. . . it is my belief that the broader assets and command and control capability of the Department of Defense could better translate your directives into prompt, effective action."

    Nelson's release indicates that he is a long-time opponent of offshore drilling off Florida's Gulf coast. Nelson was instrumental in getting the first live images of the well disaster made public, leading to a re-evaluation of the amount of oil actually gushing from the well. He's also filed legislation to raise the liability cap for economic and environmental damages for the spill from $75 million to whatever it costs to "fix the mess and compensate folks for their losses." He's filed another bill to toughen regulation of the oil industry and end lax oversight by the Federal government. 

 

    Today, the 45th day of the Gulf oil spill tragedy, BP reported success in shearing through and separating the damaged riser from the lower marine riser package (LMRP) at the top of the Deepwater Horizon's failed blow-out preventer (BOP). The operations was halted yesterday when a saw became stuck in its attempt to cut the pipe. BP is now attempting to connect the containment cap to a riser from the Discoverer Enterprise drillship and then placing it 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.

 

    BP also announced yesterday that it supports the U.S. government's decision to proceed with the construction of six sections of the Louisiana barrier islands proposal. The company will fund the estimated $360 million it will cost to construct the six sections. BP said it will not manage or contract directly for the construction of the island sections, "nor will the company assume any liability for unintended consequences of the project." The company said it plans to make payments in stages based on the project's milestones.

 

    Tony Hayward, BP's chief executive officer said, "BP is committed to implementing the most effective measures to protect the coastline of Louisiana and reduce the impact of the oil and gas spill in the Gulf of Mexico. The federal government and the state of Louisiana have agreed that the barrier islands construction is an effective response to the spill, and we look forward to working with them on this project. BP said it already has provided $170 million to Louisiana, Alabama, Mississippi, and Florida to help with their response costs and help promote their tourism industries. The company also has paid approximately $42 million in compensation to people and companies affected by the spill.

 

    The Obama Administration sent a preliminary bill for $69.09 million to BP and other responsible parties for response and recovery operations relating to the BP/Deepwater Horizon Oil Spill. The Administration said it will continue to bill BP regularly for all associated costs to ensure the Oil Spill Liability Trust Fund is reimbursed on an ongoing basis. According to a release, to provide full transparency of the ongoing efforts and to ensure that the American public is not held accountable for the costs of response and recovery activities, the Federal Government will bill BP and the other responsible parties periodically for costs incurred by the Federal On-Scene Coordinator to support Federal, State, and local response efforts. The Administration said it expects prompt payment and will take additional steps as necessary to ensure that BP and other responsible parties, not American taxpayers, pay all of the costs associated with the BP/Deepwater Horizon Oil Spill.

 

    In other activities, the Coast Guard pollution investigators from Sector Key West are currently responding to reports of an oily substance and tar balls near Duck Key, FL, Long Key, FL, and Grassy Key, FL. The response will require sampling and testing to determine if any pollution is related to the Deepwater Horizon/BP oil spill. The Coast Guard said it received multiple notifications from the National Response Center Tuesday of an oily substance and tar balls approximately four nautical miles south of Long Key, FL. 
    
    Access a release from Senator Nelson (click here). Access Nelson's letter to the President (click here). Access the BP response website for links to visuals on how the LMRP is supposed to work (click here). Access a release on the BP billing (click here). Access a release on the Coast Guard response in the Keys (click here). Access additional information updates and links to releases and briefings on the Administrations response from the Unified Command website (click here). Access EPA's environmental monitoring site (click here). Access the White House website on the BP spill which contains links to all Federal agency response websites and more (click here).

 

THE REST OF THE NEWS WIMS PUBLISHED TODAY. . .

            -- NATIONAL/INTERNATIONAL NEWS --

Day 45: BP Oil Spill Crisis; Sen. Nelson Calls For Military Option
U.S. Submits Final Climate Action Report 2010 To UNFCCC
President Obama Reviews Progress; Outlines Vision For Future
EPA Sets One-Hour SO2 Health Standard At 75 PPB
USGS Study On Effects of Urbanization on Stream Ecosystems
EPA Appoints New Members To Farm, Ranch, & Rural Committee
OIG Looks At EPA Oversight of Federal Agency Superfund Reviews
USA v. Aerojet General Corporation

                     -- MICHIGAN NEWS --

MPSC Approves Amendments To DTE & Mich Con EO Plans
Michigan Legislative Tracking (6/2)

               
WIMS Daily & eNewsUSA

BP Gulf Oil Spill Disaster; Latest Company & Administration Response

Jun 2: As conditions in the Gulf worsen and tension increases between local governments, residents, businesses and the Federal government and BP, news of attempts to curtail the flow of oil were not good as the LMRP Cap operation was halted, at least temporarily, due to problems. The Administration issued a release underscoring its scientific response to the BP oil spill. The National Oceanic and Atmospheric Administration (NOAA) Administrator Dr. Jane Lubchenco highlighted the critical role science has played in the U.S. government's response to the Deepwater BP oil spill. A release indicates that from the beginning, the Administration's response to this "unprecedented event" has been based on the best science available in both the public and private sectors, as responders have worked to measure and mitigate the impacts of the oil, monitor air and water conditions and assess any and all impacts to the environment as well as human health.

    She said, "From day one, the Obama administration has ensured sound science was driving this response. While we have marshaled all the resources available to fight this unprecedented spill, we have also engaged the full expertise and assets of the best scientific and engineering minds throughout the country -- from the federal government, the private sector, academia, and non-governmental organizations -- to study impacts and assess response efforts." At President Obama's instruction -- and under the coordination of National Incident Commander for the Deepwater BP oil spill, Admiral Thad Allen -- NOAA Administrator Dr. Jane Lubchenco, Department of Energy Secretary Dr. Steven Chu and U.S. Geological Survey Director Dr. Marcia McNutt have brought their expertise and experience to bear throughout this effort.

    Secretary Chu has assembled a team of top scientists from academia and the U.S. government, with support from more than 200 personnel from America's national laboratories, to analyze the response efforts and recommend additional options for stopping the leaking oil -- including recommendations that BP use high energy gamma rays to image parts of the internal state of the Blow-Out Preventer (BOP). Additionally, lab personnel have independently analyzed the two-dimensional gamma ray images which are crucial in helping understand what is happening inside the BOP and informing the approach moving forward.

    Recognizing the environmental, legal, and financial importance of providing the public with access to accurate measures of the flow of oil leaking from the BP Deepwater Horizon well, Director McNutt continues to lead the government's independent review panel -- the Flow Rate Technical Group. The team is leading the coordinated effort across the Federal government and academia to determine oil flow rates from the spill by collecting and analyzing data, and running state-of-the-art models, as well as conducting an independent peer review of all reports and findings of the modeling team under a contract with an independent organization. 

    Administrator Lubchenco also highlighted NOAA's ongoing scientific response to the Deepwater BP oil spill -- including the Gordon Gunter's ongoing acoustic survey of the submerged oil fields, or "plumes," and the Thomas Jefferson, which is returning to sea today -- including the collection of water samples and the net sampling of pelagic species throughout the water column.

    Also, U.S. EPA has used its science expertise to ensure protection of public heath and the environment. EPA is aggressively sampling and monitoring the air, water, sediment and underwater use of dispersant every day, and each day EPA posts this monitoring data and its scientific analysis on a special website to ensure the public has access to it. EPA and DHS have also demanded BP post the data it has collected publicly.

    On June 2, BP posted extensive visuals on it efforts to implement the Lower Marine Riser Package (LMRP). Remotely operated vehicles (ROVs) were engaged in operations attempting to cut through and separate the damaged riser from the LMRP at the top of the Deepwater Horizon's failed blow-out preventer (BOP). Unfortunately, media reports indicate that the operations have been stalled because the saw has apparently become stuck. If operations can resume, deployment of the system will involve connecting the containment cap to a riser from the Discoverer Enterprise drillship and then placing it 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. The operation was originally expected to take 4-7 days.

 

    On June 1, Attorney General Eric Holder spoke in New Orleans on the Gulf Oil Spill following a tour of the area and said in part, "As we move forward, we will be guided by simple principles: We will ensure that every cent of taxpayer money will be repaid and damages to the environment and wildlife will be reimbursed. We will make certain that those responsible clean up the mess they have made and restore or replace the natural resources lost or injured in this tragedy. And we will prosecute to the full extent any violations of the law. . ."

 

    He listed the various statutes involved which they are reviewing as: The Clean Water Act, which carries civil penalties and fines as well as criminal penalties; The Oil Pollution Act of 1990, which can be used to hold parties liable for cleanup costs and reimbursement for government efforts; The Migratory Bird Treaty Act and Endangered Species Acts, which provide penalties for injury and death to wildlife and bird species; and, Other traditional criminal statutes.

 

   He said, "There are a wide range of possible violations under these statutes, and we will closely examine the actions of those involved in this spill. If we find evidence of illegal behavior, we will be forceful in our response. We have already instructed all relevant parties to preserve any documents that may shed light on the facts surrounding this disaster. As our review expands in the days ahead, we will be meticulous, we will be comprehensive, and we will be aggressive. We will not rest until justice is done."

 

    Access the BP response website for links to visuals on how the LMRP is supposed to work (click here). Access more information and links to releases and briefings on the Administrations response from the Unified Command website (click here). Access EPA's environmental monitoring site (click here). Access the complete statement from Eric Holder (click here). Access the White House website on the BP spill which contains links to all Federal agency response websites and more (click here).

 

THE REST OF THE NEWS WIMS PUBLISHED TODAY. . .

-- NATIONAL/INTERNATIONAL NEWS --
BP Gulf Oil Spill Disaster; Latest Company & Administration Response
Rep. Markey Probes Concerns Over Underwater Oil Plumes
EPA Pesticide General Permit for Discharges To U.S. Waters
Enviros Settle CAFO Suit; EPA Issues Guidance
CASAC Review Of Carbon Monoxide NAAQS
FOA For Short Term Wind Energy Forecasting
$6 Million In Funding For Midsize Wind Turbine Technology
Butte Environmental Council v. U.S. Army Corps
                     -- MICHIGAN NEWS --

Senate Unanimously Rejects MNDRE Budget Bill

Tax Credit For Large-Scale Batteries & Storage
MEC Announces Winners For Environmental Awards Celebration
Michigan Legislative Tracking (6/1)
               
WIMS Daily & eNewsUSA