BP Oil Spill Costs Nearly

8/3/2019 BP Oil Spill Costs Nearly

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BP oil spill costs nearly $10 billion

The Hindu, Tuesday, Sep 21, 2010

Julia KolleweBP's bill for containing and cleaning up the oil spill has reached nearly $10 billion, as the U.S.

government declared that the blown-out well has finally been plugged, five months after the explosion

on the Deepwater Horizon rig.

The beleaguered oil company revealed that its total cost of the spill had climbed to $9.5 billion.

BP also said payouts to people affected by the spill such as fishermen, hoteliers and retailers had

dramatically increased since it handed over authority for dispensing funds to a White House appointee.

BP hasset up a $20 billion compensation fund, which hasso far paid out 19,000 claims totalling more

than $240 million. The fund is run by lawyer Kenneth Feinberg, the Obama administration's formerexecutive pay tsar. The oil company previously paid out about $3.5 million a day in compensation, but

this has risen to $12.5 million a day since Mr. Feinberg took over. However, BP's incoming chief

executive,Bob Dudley, who takes over from Tony Hayward on October 1, told the City a week ago that

the company expects to pay out less than the committed $20 billion.

The oil well that spewed millions of gallons of crude into the sea has been sealed for good. Thad Allen,

the former coast guard Admiral heading the U.S. government response to the spill, declared the well

effectively dead following a pressure test by BP on Sunday. The spill was halted in July with a

temporary cap while a relief well was completed. That well finally reached the main shaft on September

16, permitting a cement plug to be pumped in. Guardian Newspapers Limited, 2010

Source:

THE HINDU

http://www.hindu.com/2010/09/21/stories/2010092163101300.html


2/17

BP chief deeply sorry about oil spill

The Hindu, Friday, June 18, 2010

Narayan Lakshman

Commits around $20 billion to help mitigate costs of cleaning up the spill

Company cut corners, had unsafe industry practices, say legislators

Washington: In a desperate bid to stave-off a surge off public anger that has now been engulfing oil

major BP for nearly two months, the company's CEO Tony Howard on Thursday said he was deeply

sorry.

Facing a grilling during a hearing by the Committee on Energy and Commerce of the House of

Representatives, Mr. Hayward said, I want to speak directly to the people who live and work in the Gulfregion: I know that this incident has profoundly impacted lives and caused turmoil, and I deeply regret

that.

Even as the Obama administration cranked up the heat on BP, the company announced it would commit

around $20 billion to an escrow account that would be used to mitigate the costs of cleaning up the

enormousspill from the BP-run Deepwater Horizon offshore rig.

On Wednesday, President Barack Obama and senior White House staff met Mr. Hayward and top BP

executives to lay out their demands regarding the escrow account and the costs that they expected BP

would make good.

According to reports Representative Henry Waxman said, BP cut corner after corner...and they were

apparently oblivious as to what was happening, during the hearing which was conducted by the

Subcommittee on Oversight and Investigations. Now the whole Gulf Coast is paying the price, he

reportedly said.

Further Representative Joe Barton noted, The picture emerging in this investigation is not one of

technological limits, but of unsafe industry practices It isBP's decision making that was a critical factor

in this incident.

Regarding the escrow fund, BPsaid in statement that an agreement was reached to create a $20 billion

claims fund over the next three and a half years on the basis that BP would initially make payments of

$3 billion in the third quarter of 2010 and $2 billion in the fourth quarter of 2010. These will be

followed by a payment of $1.25 billion per quarter until a total of $20 billion has been paid in, the

company noted.

Settling claims

The fund would be available to satisfy claimssuch as natural resource damages and state and local

response costs and fines and penalties would be excluded from the fund and paid separately.


3/17

U.S. sues BP over Gulf of Mexico spill

The Hindu, Friday, Dec 17, 2010

Narayan Lakshman

Desperate cry: A brown pelican on the beach at East Grand Terre Island along the Louisiana coaston June 3.

Washington: The U.S. Justice Department has announced that it hasslapped BP and several other

companies it held responsible for the Gulf of Mexico oil spill last summer with a lawsuit seeking

unlimited removal costs and damages under the Oil Pollution Act of 1990.

At a news conference following the announcement, Attorney-General Eric Holder said: We intend toprove that... violations [of industry regulations] caused or contributed to this massive oil spill, and that

the defendants are therefore responsible under the Oil Pollution Act for government removal

costs, economic losses, and environmental damages.

Mr. Holder also warned that the Obama administration would not hesitate to take whatever steps are

necessary to hold accountable those who are responsible for thisspill, a remark that led some experts

such as law professor David Uhlmann of the University of Michigan to speculate in the New York Times

whether a criminal case might follow.

Currently, it is only a civil suit that the U.S. government has filed, one that was built on the case that BP

and companies related to the oil spill incident ought to be held liable for allowing over millions of gallonsof crude oil to flow in the Gulf from the ruptured Macondo well of the Deepwater Horizon rig.

Other companies named as defendants in the suit include Anadarko Exploration and Production, Moex

Offshore, Triton Asset Leasing, Transocean Holdings, QBE Underwriting and Lloyd's Syndicate 1036.

Deepwater Horizon exploded and sank in April this year, and was only capped in July after an

unprecedented effort by BP and the government to halt the oil flow.


4/17

BP, others blamed for failures

The Hindu, Friday, Jan 7, 2011

Narayan Lakshman

Photo: AP

Systemic failures: The Deepwater Horizon oil rig burning after an explosion in the Gulf of Mexico,off the southeast tip of Louisiana, in this April 21, 2010 file photo.

Washington: Oil companiesBP, Transocean and Halliburton share the blame for the 2010 oil spill in the

Gulf of Mexico along with government regulators who failed to rigorously examine industry practices,

according to the final findings of a presidential panel investigating the spill.

In a chapter of the report made available in advance of the full report's release, the panel says the

blowout ofBP's Macondo well in the Gulf was not the product of a series of aberrational decisions

made by rogue industry or government officials that could not have been anticipated or expected to

occur again.

Rather, the panel argues, the root causes of the explosion and subsequent environmental catastrophe

are systemic and in the absence ofsignificant reform in both industry practices and government policies,

they might well recur.

The BP-operated Deepwater Horizon rig sank on April 20 last year following an explosion that killed 11workers. After that nearly five million barrels of oil from the well spewed into the Gulf, causing

widespread environmental damage exceeding in scale the Exxon Valdez spill near Alaska in 1989.

The panel of experts also specifically noted the missteps were rooted in systemic failures by industry

management, extending beyond BP to contractors, and also by failures of the government to provide

effective regulatory oversight of offshore drilling.


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Describing the findings as considerable and significant, the panel says each of the mistakes made on

the rig and onshore by industry and government increased the risk of a well blowout and the cumulative

risk from these decisions and actions was both unreasonably large and avoidable.

The panel recalls the immediate cause of the Macondo blowout was a failure to contain hydrocarbon

pressures in the well and that there were three ways to have contained those pressures the cement at

the bottom of the well, the mud in the well and in the riser, and the blowout preventer.

But mistakes and failures to appreciate risk compromised each of those potential barriers, steadily

depriving the rig crew ofsafeguards until the blowout was inevitable and, at the very end,

uncontrollable, says the report.

Media reported a statement by BP this week in which the company underscored that the panel had

apportioned blame to a number of companies, and not BP alone. Even prior to the conclusion of the

commission's investigation, BP instituted significant changes designed to further strengthen safety and

risk management, a BP official was quoted assaying in the New York Times. BP'sshare price rose after

it became clear that several companies were said to be at fault for the accident.

Halliburton and Transocean also issued statements deflecting blame away from them, emphasising BP's

role or the quality of their own management processes instead.

Last month, the United States Justice Department announced that it had slapped BP and other

companies with a lawsuit seeking unlimited removal costs and damages, under the Oil Pollution Act of

1990.

Source:

THE HINDU



6/17

Oil spill: what is a top kill'?

The Hindu, Friday, May 28, 2010

Finlo Rohrer

BP is using a top kill procedure to stop the Gulf of Mexico oil spill.

But what exactly is top kill?

One way to think about top kill is to imagine something sitting on a spring. Put a heavy enough weight

down on the spring and it will be squashed down. But put something on that's too light and the object

will be thrown off.

In this case, the spring is oil and gas coming out of the reservoir, beneath the sea, at the site of the

well drilled by the Deepwater Horizon and at pressures exceeding2,268 kg per square inch.

The top kill operation will involve pumping heavyweight drilling mud from a number ofships

through the command vessel on the surface, the Q4000.

The mud will be pumped down a drill pipe from the Q4000 and into a manifold a unit with

converging pipes on the sea bed.

From there it will be primarily pumped into the kill and choke pipes that connect to the blowout

preventer the unit that sits on top of the oil well.

If the density of the mud and the pressure of the pumping is right, it will pass through the blowout

preventer and then inside the top of the well and with its downward pressure will stop the flow of oiland gas gushing from the reservoir beneath.

Permanent seal

It is like two forces fighting with each other. If the force downwards exceeds the force upwards, you

are going to succeed, said Iraj Ershaghi, director of the petroleum engineering programme at the

University of Southern California. If this has happened, the well is killed The leak will be completely

stopped, but this will only be a prelude to a permanent seal using cement.

The procedure has been carried out many times around the world but, asBP admits, never at anything

approaching this depth. In 50 ft of water, divers would be doing much of the complicated work ofchecking pipes and connections.

But all the work on the Deepwater Horizon's well is being carried out by Remote-operated Vehicles

(ROVs), making everything much more difficult. And there could be a major difficulty, said Prof.

Ershaghi. The assumption behind the top kill plan is that the leakage is all coming out of the riser

connected to the top of the blowout preventer.


7/17

Further danger

The well itself has been drilled into a geological formation. Inside the hole there is a steel casing, and

the gap between the casing and the formation the annulus is filled with cement. If the cement job

is not adequate, leaks can occur behind the casing and oil and gas can find their way to the sea floor, or

can also cause a collapse of unprotected parts of the casing at shallower depths. If that cement has

leaks, then oil and gas could be escaping into the water to the side of the blowout preventer, said Prof.

Ershaghi.

It would not be easy to see if this was happening, he explained. When you have 5,000 barrels (795,000

litres) of fluid coming per day, you need better ROV camera shots otherwise you cannot pinpoint the

sources of leaks.

Even ifBP's experts are right and all of the oil is coming through the blowout preventer, the top kill

could still fail.

It could even start increasing the leakage of oil, by as much as 515 percent, if the high density mud

ends up bursting segments of the casing. For some engineers, it issimply impossible to speculate on thechances ofsuccess. I would hate to venture a guess, said Lloyd Heinze, professor of petroleum

engineering at Texas Tech University. [It is] a procedure described in training scenarios [an] established

procedure, not well-known, not the ideal way of trying to kill a well because it is not an easy way to do

it.

But he said only BP would know the chances ofsuccess, as engineers around the world would not know

the calculations the firm's experts had undertaken.

If the top kill fails, BP will then move on to other plans. It has prepared something called a lower

marine riser package (LMRP). This device would sit on top of the blowout preventer.

But every engineer involved will be crossing their fingers that the top kill'' works, and makes

engineering history.

BBC News/Distributed by the New York Times Syndicate

Source:

THE HINDU



8/17

BP retracts drilling remark

The Hindu, Sunday, Aug 8, 2010

Narayan Lakshman

Washington: Oil major BP found itself furiously back-pedaling over yet another public-relations blunder

when one of its officialssaid the company was again considering drilling for offshore oil near the very

site of the Deepwater Horizon rig from which vast amounts of oil spewed into the Gulf of Mexico for

over three months.

The AP quoted BP Chief Operating Officer Doug Suttles assaying BP might drill again someday into thesame undersea reservoir of oil, which isstill believed to hold nearly $4 billion worth of crude. There's

lots of oil and gas here... We are going to have to think about what to do with that at some point, Mr.

Suttles reportedly said.

Focus

However late on Friday evening, BP issued another statement, emphasizing that it would, at this time,

focus on killing the well and on the recovery of the Gulf coastline, not on future drilling in the offshore

reservoir.

The company said in a statement its present focus is entirely on the response effort in the Gulf ofMexico and the future use of the reservoir is not currently under consideration.

Source:

THE HINDU



9/17

Oil spill will impact Gulf for years to come

The Hindu, Monday, Aug 9, 2010

Photo: AP

Lasting damage: Oil that washed up in a cove on the Louisiana coast being vacuumed in thisrecent photo.

NEW ORLEANS: AsBP works to finally kill its runaway well and anxious coastal residents breathe a sigh

of relief, experts warn it could take years or even decades for the Gulf of Mexico to recover.Three

weeks after the flow was fully stemmed with a temporary cap, the massive slick which once spread for

hundreds of miles has been mostly dissolved or dispersed.

Nightmare scenarios in which tens of thousands of birds were smothered to death by blankets of oil

proved unfounded after the bulk of the slick stayed offshore. Fishermen who feared their way of life was

destroyed are being allowed back into most waters.

There's essentially no skimmable oil left on the surface, Doug Suttles, BP's chief operating officer, toldreporters on Friday.

But while Mr. Suttles appeared relieved that the well was finally plugged and should be officially killed

in a matter of days, he cautioned that we're far from finished.

Hundreds of miles of Louisiana's fragile coastal wetlands remain coated with sticky sludge and each tide

carries fresh tar balls onto once-pristine beaches as far away as Florida.Vast quantities of oil remain

hidden below the waves, suspended in the water column in droplets which remain toxic to the fish and

other marine life which once supported a multibillion dollar commercial and recreational fishing

industry.

The good news is that the oil appears to be biodegrading rapidly. AFP

Source:

THE HINDU



10/17

Gulf of Mexico Oil Spill (2010)

New York Times, Feb 2, 2011

An explosion on April 20, 2010, aboard the Deepwater Horizon, a drilling rig working on a well for the oil

company BP one mile below the surface of the Gulf of Mexico, led to the largest accidental oil spill inhistory. By November 2010, an emergency program had ended and the settlement phase began.

After a series of failed efforts to plug a gushing leak, BPsaid in July 2010 that it had capped what it had

named the Macondo well, marking the first time in 86 days that oil was not gushing into the gulf. Nearly

five months after it blew out of control, the federal government finally declared the well dead in

September, after pressure tests confirmed that cement pumped into the base of the well through a

relief well formed an effective, and final, seal. The Macondo well and the two relief wells were to be

abandoned, following standard industry practices.

Government scientists estimated that nearly five million barrels of oil flowed from BP's well, an amount

outstripping the estimated 3.3 million barrelsspilled into the Bay of Campeche by the Mexican rig Ixtoc I

in 1979.

The oil spilled from the BP well first made landfall in Louisiana. But in June, tar balls and oil mousse had

reached the shores of Mississippi, Alabama and Florida. Shortly thereafter, it spread on shore, smearing

tourist beaches, washing onto the shorelines ofsleepy coastal communities and oozing into marshy bays

that fishermen have worked for generations.


11/17

By August, the slick appeared to be dissolving far more rapidly than anticipated. The long term damage

caused by the spill, however, isstill uncertain, in part because large amounts of oil spread underwater

rather than surfacing. A new study published in the journal Science in late August confirmed the

existence of a huge plume of dispersed oil deep in the Gulf of Mexico and suggested that it had not

broken down, raising the possibility that it might pose a threat to wildlife for months or even years.

In September 2010, two independent researchers at Columbia University announced that the federal

government, after several missteps, had accurately estimated the amount of oil spilled at nearly 172

million gallons; 185 million gallons, a statistical match when the margins of error are figured in, had

actually leaked from the broken well, they said.

A presidential panel named to study the accident called it a preventable one, caused by a series of

failures and blunders by the companies involved in drilling the well and the government regulators

assigned to police them. In a chapter of its final findings released in early 2011, the panel found that BP,

Transocean, Halliburton, and several subcontractors working for them took a series of hazardous and

time-saving steps without adequate consideration of the risks involved.

Many other consequences will likely ripple out from the spill for a long time to come: investigations bythe Justice Department and Congress into the cause of the spill, new regulations imposing tougher

review for deepwater drilling, new leadership for BP as the oil giant struggles to repair a shattered

reputation. In December 2010, the Department of Justice filed a civil lawsuit in New Orleans against BP

and eight other companies over the Gulf of Mexico oil spill. Although the complaint does not specify the

damages that the administration isseeking, the fines and penalties under the laws that are cited in the

complaint could reach into the tens of billions of dollars.

Hundreds of thousands of people and businesses have filed for emergency payments from the $20

billion BP fund administered by Kenneth R. Feinberg. More than $2.2 billion has been paid so far in

emergency money to those affected by the spill. Mr. Feinberg announced the rules for those

settlements in November 2010 after consulting with lawyers, state attorneys general, the Department ofJustice and BP.

On Feb. 2, 2011, a report commissioned by Mr. Feinberg predicted that the Gulf of Mexico should

recover from the environmental damage caused by the enormousBP oil spill faster than many people

expected. The prediction, central to Mr. Feinberg's plan for paying claimants, is certain to be

controversial among those who believe the damage will be longer-lasting and therefore should result in

higher payouts for the spills victims.

Source:

NEW YORK TIMES

http://topics.nytimes.com/top/reference/timestopics/subjects/o/oil_spills/gulf_of_mexico_2010/index.

html?scp=2&sq=gulf%20of%20mexico%20oil%20 spill%202010&st=cse


12/17

Robots Work to Stop Leak of Oil in Gulf

New York Times, April 26, 2010

NEW ORLEANS Oil continued to pour into the Gulf of Mexico on Monday as the authorities waited to

see if the quickest possible method ofstopping the leaks would bring an end to what was threatening to

become an environmental disaster.

Remote-controlled robots operating 5,000 feet under the oceanssurface were more than a full day into

efforts to seal off the oil well, which has been belching crude through leaks in a pipe at the rate of

42,000 gallons a day. The leaks were found on Saturday, days after an oil rig to which the pipe was

attached exploded, caught on fire and sank in the gulf about 50 miles from the Louisiana coast.

The robots were trying to activate a device known as a blowout preventer, a 450-ton valve at the

wellhead that is designed to shut off a well in the event of a sudden pressure release.

Officials had initially said that the operation, which began Sunday morning, would take 24 to 36 hours.

But on Monday a Coast Guard spokesman said officials would keep trying as long as the efforts were

feasible because its the best option. The other options collecting the oil in a dome and routing it to

the surface or drilling one or more relief wells would take weeks or even several months to execute.

Wind has kept the spill from moving toward the coast. Officialssaid the spill had a 600-mile

circumference Monday, but most of that was a thin sheen of oil-water mix. Only 3 percent of the area

was crude oil with a pudding-like consistency, they said.

The wind was expected to change direction by Thursday, however, and the spills distance from the

coast has not prevented a threat to marine life.

On Sunday a crew from the United States Fish and Wildlife Service spotted three sperm whales in the

vicinity of the spill. Planes that were dropping chemicals to break down the oil were told to steer clear of

the whales.


13/17

The chemicals, known as dispersants, can be as toxic to mammals as the oil itself, said Jackie Savitz, a

marine biologist with a background in toxicity with Oceana, a Washington nonprofit group that focuses

on ocean conservation.

Ms. Savitz said environmental concerns were not alleviated by assurances that the spill was not yet a

threat to the coast. There is a misconception that if water doesnt hit the beach it isnt dangerous, she

said.

Plans are moving forward to design a dome that could be submerged over the leaks, which are coming

from a 5,000-foot pipe called a riser that ran between the wellhead and the rig. The riser is now snaking

along the ocean bottom.

Source:

NEW YORK TIMES

http://www.nytimes.com/2010/04/27/us/27rig.html?scp=9&sq=gulf%20of%20mexico%20oil%20 spill%2

02010&st=cse


14/17

Size of Spill in Gulf of Mexico Is Larger Than Thought

New York Times, April 28, 2010

NEW ORLEANS Government officialssaid late Wednesday night that oil might be leaking from a well

in the Gulf of Mexico at a rate five times that suggested by initial estimates.

In a hastily called news conference, Rear Adm. Mary E. Landry of the Coast Guard said a scientist from

the National Oceanic and Atmospheric Administration had concluded that oil is leaking at the rate of5,000 barrels a day, not 1,000 as had been estimated. While emphasizing that the estimates are rough

given that the leak is at 5,000 feet below the surface, Admiral Landry said the new estimate came from

observations made in flights over the slick, studying the trajectory of the spill and other variables.

An explosion and fire on a drilling rig on April 20 left 11 workers missing and presumed dead. The rig

sank two days later about 50 miles off the Louisiana coast.

Doug Suttles, chief operating officer for exploration and production for BP, said a new leak had been

discovered as well. Officials had previously found two leaks in the riser, the 5,000-foot-long pipe that

connected the rig to the wellhead and is now detached and snaking along the sea floor. One leak was at

the end of the riser and the other at a kink closer to itssource, the wellhead.

But Mr. Suttlessaid a third leak had been discovered Wednesday afternoon even closer to the source.

Im very, very confident this leak is new, he said. He also said the discovery of the new leak had not led

them to believe that the total flow from the well was different than it was before the leak was found.

The new, far larger estimate of the leakage rate, he said, was within a range of estimates given the

inexact science of determining the rate of a leak so far below the oceanssurface.


15/17

The leaks on the sea floor are being visually gauged from the video feed from the remote vehicles that

have been surveying the riser, said Doug Helton, a fisheries biologist who coordinates oil spill responses

for the National Oceanic and Atmospheric Administration, in an e-mail message Wednesday night. That

takes a practiced eye. Like being able to look at a garden hose and judge how many gallons a minute are

being discharged. The surface approach is to measure the area of the slick, the percent cover, and then

estimate the thickness based on some rough color codes.

Admiral Landry said President Obama had been notified. She also opened up the possibility that if the

government determines that BP, which is responsible for the cleanup, cannot handle the spill with the

resources available in the private sector, that Defense Department could become involved to contribute

technology.

Source:

NEW YORK TIMES

http://www.nytimes.com/2010/04/29/us/29spill.html?_r=1&scp=1&sq=gulf%20of%20mexico%

20oil%20spill%202010&st=cse


16/17

ENGLISH PROJECT

BP OIL SPILL IN THE GULF OF MEXICO

Submitted to: Submitted by:

Prof. PEARLINE LAWRANCE GURPREET SINGH

09-CO-357


17/17

BP Oil Spill Costs Nearly

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