Two natural gas producing platforms in the area of the Gulf of Mexico (GOM) affected by the ongoing oil spill have stopped production, according to the Minerals Management Service. And a firm that tracks international tanker traffic has noted a slowdown in the region.
Gas production shut in due to the spill is estimated to be 6.2 MMcf/d, a drop in the bucket of the nation’s more than 6 Bcf/d of production. However, petroleum tankers are also experiencing impacts due to the spill, according to Poten & Partners, which tracks tankers.
“The spill has slowed traffic on critical trade routes for petroleum, among other goods, and raised a number of logistical issues likely to have wide-ranging consequences for tanker markets in the weeks to come,” the firm said in a note published Friday.
“Unlike other memorable oil spills, the long-term implications of the most recent spill are likely to be felt higher up in the supply chain…[T]he…spill is occurring in a heavily trafficked area responsible for about 30% of U.S. domestic oil production. Ships have been instructed to avoid contact with the heavy black floating oil at all costs and maintain a safe speed while moving through the lighter oil…”
Charlie Henry, an oil spill expert with the National Oceanic and Atmospheric Administration (NOAA), said Monday afternoon that the weather, at least in the near term, will be helping efforts to keep the oil from shore.
“In the short term we see the oil has not really impacted the shoreline yet either on the northern part of the Gulf or onto the Louisiana coastline,” he told reporters. “We also are expecting some good news in that we’re expecting a little bit of southwest and then north wind tomorrow [Tuesday], which will actually hold it offshore also. Unfortunately that will be followed by a little bit more southeast wind, which is more of an onshore condition.
“We’re actually also working hard to look at the bigger picture, the longer-term potential for other areas that might be impacted by a variety of things such as historical currents and every piece of information we can gather on how the ocean currents and the weather patterns are predicted for the next several months…it’s nothing that we would normally do on a routine basis so building it from scratch does take a little bit of time.”
BP plc is the owner of the lease where a ruptured well was still hemorrhaging an estimated 5,000 b/d, or about 200,000 gal/day, of crude 5,000 feet below the surface of the GOM on Mississippi Canyon Block 252 following a rig explosion on April 20 (see Daily GPI, May 3).
BP COO Doug Suttles told reporters Monday afternoon that earlier reports that the flow of oil had been reduced were not correct. Suttles said that over the last several days the company has been preparing a fix that could reduce the number of leaks from three to two through the attachment of a valve. “We hope to have that activity complete today, and we’ll report that tomorrow if we’re successful,” he said.
The company also has been in the process of fabricating three containment chambers intended to collect spilled oil and allow for its removal. The main containment chamber — a four-story, 70-ton structure that would be lowered over one of the three leaks — is to be ready Tuesday, Suttles said, and it is intended to address the main leak point. He said he did not know when the other chambers would be completed.
Drilling of the first of two relief wells was begun Sunday at about 3 p.m., Suttles said. When complete the relief wells will allow the injection of heavy drilling fluid and ultimately cement to seal the well permanently. However completion of the wells is expected to take two to three months, and that is why BP is pursuing fabrication of the oil collection chambers, the activation of the nonworking blowout preventer using remotely controlled submarines, as well as the use of oil dispersants both on the water and injected undersea at the well site, the first time such a practice has been done in waters this deep.
Last Saturday U.S. Coast Guard Commandant Admiral Thad Allen said that when the weather has allowed their deployment on the sea surface, oil dispersants have been pretty effective.
“…[B]ut British Petroleum [BP] operating with their private-sector partners came up with an idea to put a pipe down 5,000 feet at the source of the leaks and apply dispersants where the oil is leaking out of the riser pipe, with the hope that it would disperse the oil there and it would not rise to the surface,” Allen said. “A test application was made and it appeared visually to have an effect…[T]his looks like this could be a promising way to reduce the amount of oil that reaches the surface. It doesn’t stop the oil at its source, but it significantly mitigates the amount that will make it to the surface and ultimately could be a threat to beaches.”
Suttles said Monday afternoon that pumping of dispersant sub-sea had begun Sunday morning but inclement weather has not yet permitted flyovers that would allow responders to determine how effective subsea release of the oil dispersant has been.
Additionally, 30,000 feet of boom was deployed to try to corral the spill, and another 750,000 feet stood at the ready Monday afternoon, Suttles said.
Meanwhile, on Wall Street, trading in BP stock on the New York Stock Exchange which had dropped 20% since the catastrophe to $48 a share Monday morning, spiked upwards shortly after 2 p.m. to $51. Financial guru Jim Cramer on his “Stop Trading” program Monday on CNBC attributed the jump to a New York Times report that work had been completed on the containment chamber. Countering reports the company could be severely crippled by the event, Cramer said BP’s balance sheet is incredibly strong.
At 3:30 p.m. EDT BP stock had leveled off to $49.50. It closed the day at $50.19, down 3.76% from the previous close. Trading volume was 18 times what it is normally.
BP CEO Tony Hayward said Monday on ABC’s “Good Morning America” that the explosion and sinking of Transocean Ltd.’s Deepwater Horizon drilling rig was not his company’s accident but rather Transocean’s. However, he said BP accepted full responsibility for cleaning up the spill.
“This wasn’t our accident. This was a drilling rig operated by another company,” Hayward said. “It was their people, their systems, their processes.We are responsible not for the accident but we are responsible for the oil and for dealing with it and cleaning the situation up.
“We are clearly focused on minimizing the overall impact. We’re a big company and we intend to deal with this. We take this responsibility incredibly seriously. We absolutely will prevail, and we will deal with it.”
U.S. Attorney General Eric Holder said the Justice Department was involved in the investigation of the explosion and sinking of the rig; however, the probe was said not to be criminal.
BP said it is “doing absolutely everything in our power to eliminate the source of the leak and contain the environmental impact of the spill. We are determined to fight this spill on all fronts, in the deep waters of the Gulf of Mexico, in the shallow waters, and, if necessary, on the shore. More than 2,500 people are working in the response effort following the sinking of the Transocean Deepwater Horizon drilling rig.”
Project-specific coastal protection and spill response plans are being implemented consistent with the national, region and state oil spill response plans that are already in place and with input on priority locations from state and local experts, BP said. Onshore preparation is being significantly expanded in case released oil reaches the coast. “We have ramped up preparations for a major protection and clean-up effort on the shorelines of Louisiana, Mississippi, Alabama and Florida.”
A boom is being deployed with staging taking place from East of Bolivar in Texas to Tampa, FL. The company said that in addition to the incident command post in Robert, LA, it is establishing an incident command post in Mobile, AL, to oversee the onshore response in Mississippi, Alabama and Florida.
A community outreach plan also has been launched. Outreach to potentially impacted communities includes communications and engagement with state and local government officials and staff; other community leaders including fishing associations, local businesses, parks, wildlife and environmental organizations, educational institutions, medical/emergency establishments and news media, neighbors of potentially impacted areas and the broader general public.
BP said it is coordinating and deploying thousands of volunteers. There are five BP community outreach sites training, preparing and engaging volunteers in Pensacola, FL; Venice, LA; Mobile, AL; Pascagoula, MS; and Biloxi, MS.
On Sunday the National Oceanic and Atmospheric Administration (NOAA) said it would restrict for at least 10 days fishing in the federal waters most affected by the spill, largely between the mouth of the Mississippi River to off Florida’s Pensacola Bay.
“NOAA scientists are on the ground in the area of the oil spill taking water and seafood samples in an effort to ensure the safety of the seafood and fishing activities,” said NOAA Administrator Jane Lubchenco.
“We Support NOAA’s precautionary closure of the affected area so that the American consumer has confidence that the seafood they eat is safe,” said Ewell Smith, executive director of the Louisiana Seafood Board. “It is also very important to underscore the fact that this closure is only the affected area of the Gulf of Mexico, not the entire Gulf. The state waters of Louisiana west of the Mississippi River are still open and the seafood coming from that area is safe. That portion of waters represents about 77% of Louisiana seafood production of a 2.4 billion dollar economic impact to the state.”
According to NOAA, there are 3.2 million recreational fishermen in the GOM region who took 24 million fishing trips in 2008. Commercial fishermen in the Gulf harvested more than 1 billion pounds of finfish and shellfish in 2008.
NOAA is working with the state governors to evaluate the need to declare a fisheries disaster in order to facilitate federal aid to fishermen in these areas. NOAA fisheries representatives in the region will be meeting with fishermen this week. The states of Louisiana and Mississippi have requested NOAA to declare a federal fisheries disaster.
Monday marked the start of the Offshore Technology Conference, an event held every year in Houston that attracts thousands in the offshore energy industry from around the globe (see related story). However, this year’s conference and trade show will do without at least one speaker from BP. Andy Inglis, CEO of exploration and production, was to speak on “The Challenges and rewards in operating in the World’s Offshore Basins” during a Monday luncheon. The presentation was canceled.
How much worse the GOM spill gets is anyone’s guess right now; however bad it gets, it won’t be forgotten anytime soon.
“If history has taught us anything, it is that the public has a photographic memory when it comes to oil spills,” Poten & Partners said. “Expect to hear of this event for decades to come.”
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