Category Archives: BP

Deepwater Horizon may cost BP $53.8 Billion – 43.1% of it’s current value

Deepwater Horizon Spill in 2010. Photo: Gerald Herbert, AP.

11 Crew were lost in the explosion and fire on the Deepwater Horizon rig on April 20, 2010. In addition, roughly 5.2 million barrels of oil poured into the Gulf of Mexico during the 87 days between April 20, 2010 when the explosion occurred and July 15, 2010 when the well was capped.

BP, found guilty of “Gross Negligence” and “Willful Misconduct” in the Deepwater Horizon oil spill, (BBC, EcoWatch), has agreed to pay $18.7 Billion over the next 15 years (BP Press Release, Reuters) to settle various claims with the United States, the states of Florida, Alabama, Mississippi, Louisiana and Texas, and others. This amounts to 14.8% of BP’s current market capitalization.

Pursuant to the agreements, BP will pay $1.1 Billion per year over the next 15 years. While the $18.7 Billion amounts to 14.8% of BP’s current market capitalization of $125.59 Billion, the $1.1 Billion per year is only a loss of 0.88% of BP’s current market capitalization each year.

However,

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Reuters: “First spill trial witness: BP put cost cuts over safety”

Deepwater Horizon Oil Slick, May 10, 2010.

From Reuters reporting on the BP oil spill trial; First spill trial witness: BP put cost cuts over safety.

BP Plc fostered a culture that put cost-cutting over safety before the deadly 2010 Gulf of Mexico oil spill, a noted forensic engineer said in the first day of testimony in the federal civil trial centered on the disaster. “There is ample evidence of intense pressure within the system to save time and money,” said Bob Bea, co-founder of the Center for Catastrophic Risk Management at the University of California, Berkeley. “With stress and pressure come sacrifices to safety.” Bea was the first witness for the plaintiffs, the U.S. Justice Department and U.S. Gulf Coast states suing Macondo well owner BP, rig owner Transocean Ltd and well cement provider Halliburton Co. The plaintiffs plan to call Lamar McKay, chairman and president of BP America, to testify as a hostile witness once Bea wraps up. McKay is a member of the London-based oil company’s executive committee, alongside Chief Executive Officer Bob Dudley.

Bear in mind that this was filed after the first day of a long trial. (We think we found access to transcripts at MDL 2179 Trial Docs and Plaintiffs Steering Committee, and provide better daily coverage). It’s likely that things will look worse for BP before they look better. Of course, there is the possibility that BP, in cross-examining witnesses, and putting on its own case, will be able to demonstrate that that its conduct was entirely proper and honorable.

And also bear in mind that oil gushed into the Gulf of Mexico at the rate of 60,000 barrels per day for 85 days; an approximate total of 5,100,000 barrels of crude oil.

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Jonathan Soroko, Esq, is an attorney and an investigative consultant. In addition to writing for Popular Logistics, he writes for Caton Ave and Discovery Strategist blog, where this is posted.

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Popular Logistics Series on the Deepwater Horizon / Macondo Spill

Fossil Fuels and a Walk on the Moon, May 3, 2010.
Drill Baby Drill or Drill Baby Oops, May 7, 2010.
The Magnitude of the Spill, May 15, 2010.
One Month After The Spill BP Siphoning 3,000 Barrels Per Day, May 20, 2010.
Deep Water Horizon – The Chernobyl of Deepwater Drilling?, June 2, 2010.
The Deepwater Horizon: 40,000 Barrels Per Day or 70,000, June 13, 2010.
The Deepwater Horizon After the Macondo Well Explosion, June 19, 2010.
Deepwater Horizon – Bombs and Hurricanes, July 1, 2010,
Like a Bad High School Math Problem, July 14, 2010,
Crisis Management and the Gulf Oil Spill, July 16, 2010,
The Deepwater Horizon: The Good, The Bad, and The Ugly, October 7, 2010.

The Deepwater Horizon – The Good, The Bad, & The Ugly

Oil Eating Bacteria

The good news is that newly discovered bacteria biodegrade oil in the oceans, and have been chowing down on the oil spilled from the Deepwater Horizon (Earth and Sky, NPR, PBS, SFGATE) and from oil seeps for millions of years.

While it’s unexpected and wonderful that bacteria are biodegrading the oil, is begs the question:

Do we want to fill the seas with oil and oil-eating bacteria or oceans of clean water, coral, oysters, fish, turtles, and dolphins?

And how quickly can they consume the 5.1 million barrels that gushed into the Gulf at a rate of 60,000 barrels per day for 85 days begining April 20, continuing thru May and June, and ending July 15, 2011?

I suspect it will take more than a few weeks, months, or years.

And do those bacteria break down dispersants?

John Ehrenfeld defines “Sustainability” as “Flourishing.” Because they are small and short-lived, shrimp can handle a higher level of toxics than say dolphins, turtles, etc. We will know the Gulf is clean when there are flourishing populations of dolphins, turtles, and larger and longer-lived fauna, and when they have lower concentrations of heavy metals and petrochemicals in their tissues. Continue reading →

Crisis (Mis) Management and the Gulf Oil Spill

What BP and the Government Could Have Done and Should Be Doing (updated 10/7/10)

The handling of the Deepwater Horizon catastrophe is a textbook study of how not to manage a crisis. The government and the Obama Administration seems to have understated the problem and ceded responsibility to BP, which seems to have acted to protect the Macondo oil field rather than the Gulf of Mexico and the Gulf Coast.

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It's Like a Bad High School Math Problem

Oil and Oceans Don't Mix. From Mining News.

“If oil gushes into the Gulf of Mexico at a rate of 60,000 barrels per day, and it takes 84 days to achieve a capability of “process” the spilled oil at a rate of 30,000 barrels per day, how long does it take to “process” the spilled oil?”

It takes two days to process each day’s gushed oil. So the answer is “2N + 188” where “N” equals the number of days oil gushes into the Gulf beyond the 84 days it took to achieve a processing capability of 30,000 barrels a day. If BP or the government stops the spill effective July 15, 2010, then they will process the oil spilled into the Gulf of Mexico by January 20, 2011. If they are able to stop the flow of oil by August 1, 2010, then it will be Feb 19, 2011, before the spilled oil is “processed.” (Source of image)

And what exactly do they mean by “Process the spilled oil?”

People cleaning up the spilled oil.

Here’s another problem: “What is the toxicity for people cleaning up, or “processing,” the spilled oil? How much exposure can an average person tolerate? Is BP providing adequate safety gear and instructions? If people working to clean up the spill are reporting “light-headedness” and other symptoms, is that an indication that they have sustained a toxic exposure?” For more details, here is Melissa Taylor’s article, “Doctors call for help protecting Gulf oil spill workers.”

This Like a Bad High School Math Problem, is ninth in the series on the Deepwater Horizon / Macondo oil well disaster which began after Earth Day. Other posts include: