TRADITIONAL RESOURCES: OIL (OIL- SPILL HISTORY)  AND COAL: POLITICO- FINANCIAL IMPACT?  OIL AND WATER DON'T MIX, ESPECIALLY IN HURRICANE SEASON - FOLLOW STORY FROM ACROSS THE POND;  U.S.  FEDERAL COURT STEPS IN.   OTHER FUELS...


Hess, under pressure, aims to get out of retail business
DAY
Article published Mar 5, 2013

New York - Hess is getting out of the gas station business and ridding itself of its energy trading and marketing businesses, as it shifts its focus further into exploration and production.

The company will also nominate a slate of six independent directors to its board, replacing six that already hold seats.

The announcement arrives about a month after the hedge fund Elliott Management, one of the company's largest shareholders, accused the board of "poor oversight," and said that the company's management was responsible for more than a "decade of failures."

Elliott, which holds a 4 percent stake in Hess, is pushing to seat five outsiders on the board.

But Hess rejected Elliott's nominees in a letter to shareholders Monday, accusing the firm of trying to disrupt progress it has already made in reshaping itself. It said that Elliott hasn't taken into account how much shares have risen since it began to shed previous business models.

Hess said the nominees chosen by Elliott would effectively dismantle the company.

Hess shares fell sharply after the recession, as did shares of most energy companies, but the stock began to rebound last summer and on Monday, they hit their highest levels almost two years.

Shedding the green and white gas stations that stretch from New Hampshire to Florida, the vast majority of which are owned by Hess rather than franchisees, will allow the company to broaden exploration and production capabilities.

Spokesman Jon Pepper would not elaborate further on the sale.

Hess, based in New York, has already announced the sale of U.S. oil storage terminals and plans to close a New Jersey refinery as it exits the volatile refining business. Other energy companies are doing much the same, focusing the booming domestic drilling and also high-risk drilling operations at deep-water drill sites.

Murphy Oil, ConocoPhillips and Marathon Oil Corp. have all split off their refining businesses in recent years to focus on production.

Elliott has said it wants Hess to boost shareholder value through various means, including a potential spin-off of its holdings in North Dakota's Bakken shale-oil field.

Transocean, Justice Department reach $1.4B settlement over rig owner’s role in Gulf oil spill
Washington Post
By Associated Press, Updated: Thursday, January 3, 1:14 PM

NEW ORLEANS — The Justice Department reached a $1.4 billion settlement Thursday with Transocean Ltd., the owner of the drilling rig that sank after an explosion killed 11 workers and spawned the massive 2010 oil spill in the Gulf of Mexico.

The proposed settlement resolves the department’s civil and criminal probe of Transocean’s role in the Deepwater Horizon rig disaster. It requires the Switzerland-based company to pay $1 billion in civil penalties and $400 million in criminal penalties and plead guilty to a misdemeanor charge of violating the Clean Water Act, according to a court filing.

The deal, which is subject to a federal judge’s approval, also calls for Transocean to implement a series of operational safety and emergency response improvements on its rigs.

“This resolution of criminal allegations and civil claims against Transocean brings us one significant step closer to justice for the human, environmental and economic devastation wrought by the Deepwater Horizon disaster,” Attorney General Eric Holder said in a statement.

Transocean described the settlement as a positive development in a statement.

“These important agreements, which the company believes to be in the best interest of its shareholders and employees, remove much of the uncertainty associated with the accident,” the company said. “This is a positive step forward, but it is also a time to reflect on the 11 men who lost their lives aboard the Deepwater Horizon. Their families continue to be in the thoughts and prayers of all of us at Transocean.”

Much of $1.4 billion will fund environmental restoration projects and spill-prevention research and training. The company has two years to pay the $1 billion civil penalty.

BP PLC, which leased the rig from Transocean, already has agreed to pay a record $4.5 billion in penalties and plead guilty to manslaughter and other criminal charges related to the spill. The deal with BP doesn’t resolve the federal government’s civil claims against the London-based oil company.

Transocean previously announced it had reserved $2 billion for paying claims related to the Deepwater Horizon disaster.

Transocean also said in a September regulatory filing that it had rejected settlement offers last year from BP and a group of attorneys for Gulf Coast residents and businesses who blame the spill for economic damages. Those claims are still pending.

Last month, U.S. District Judge Carl Barbier in New Orleans gave final approval to a class-action settlement agreement between BP and a team of private plaintiffs’ attorneys. BP estimates it will pay about $7.8 billion to resolve these claims, but the settlement isn’t capped.

Barbier also is set to preside over a trial designed to identify the causes of BP’s deadly well blowout and assign percentages of fault to the companies involved. The first phase of the trial is scheduled to start Feb. 25.

BP reported profits of more than $25 billion in 2011, but for Transocean the year resulted in a loss of about $5.7 billion, some of it attributed to contingencies for litigation resulting from the sinking of the Deepwater Horizon.

A series of government investigations has spread out the blame for the nation’s worst offshore oil spill among BP, Transocean and other partners on the project, including cementing contractor Halliburton.

The Deepwater Horizon was drilling in water a mile deep about 50 miles southeast of the Louisiana coast when it exploded on the night of April 20, 2010.

The Justice Department says Transocean crew members on the rig, acting at the direction of BP supervisors, failed to fully investigate clear signs that the well was not secure and that oil and gas were flowing into the well.

The rig burned for about 36 hours before sinking.

As engineers made repeated attempts to halt the flow of oil from BP’s burst well, millions of gallons of crude flowed out. Marshes, beaches and fishing grounds across the northern Gulf were fouled by the oil.

Iran Warns 6 Countries in Europe It Will Cut Off Oil
By RICK GLADSTONE and ALAN COWELL, NYTIMES
February 15, 2012

Besieged by international sanctions over the Iranian nuclear program including a planned oil embargo by Europe, Iran warned six European buyers on Wednesday that it might strike first by immediately cutting them off from Iranian oil.

Iran’s official Islamic Republic News Agency said the threat was conveyed to the ambassadors of Italy, Spain, France, the Netherlands, Greece and Portugal in separate meetings at the Foreign Ministry in Tehran. Officials said an earlier report by Press TV, Iran’s state-financed satellite broadcaster, that Iran had already cut supplies to the six countries was inaccurate — but not before word of the Press TV report sent a brief shudder through the global oil market, sending prices up slightly.

“Iran warns Europe it will find other customers for its oil,” the Islamic Republic News Agency said. “European people should know that if Iran changes destinations of the oil it gives to them, the responsibility will rest with the European governments themselves.”

Last month the European Union decided to impose an oil embargo on Iran as of July 1 as part of a coordinated campaign of Western sanctions aimed at pressuring Iran to halt its disputed uranium enrichment program, and the Europeans have been making arrangements since then to find other sources.

The European Union has been one of Iran’s biggest markets for oil, taking about 18 percent of total Iranian petroleum exports in 2011. Among the European Union members, the biggest buyers have been Italy, Spain and France.

Iran forecasted in December that a cutoff of Iranian oil could double the global price. But a combination of lower demand because of European economic weakness and ample sources of supply elsewhere have helped cushion the anticipated effects of both the planned embargo and Iran’s threat to stop exporting oil to Europe well before the embargo starts.

Saudi Arabia, the top producer in the Organization of Petroleum Exporting Countries, has said it could compensate for much of the shortfall from Iran, which is OPEC’s second-largest producer. And resurgent production from Libya, long crippled by the conflict there last year, has further added to the total global supply.

The relatively mild effects of the Iranian threat on Wednesday were reflected on prices at the New York Mercantile Exchange, where the March-delivery price for oil closed up $1.06 a barrel on Wednesday to $101.80, a gain of 1 percent.

The impact of sanctions, including severe restraints on Iran’s ability to conduct routine banking and shipping operations, have caused severe disruptions to Iran’s economy as the nuclear program remains an increasingly acrimonious issue between Iran and the West.

The Iranian warning came on a day of mixed messages emanating from Iran’s hierarchy about its nuclear program, which Western nations and Israel have called a cover for Iranian attempts to become capable of making a weapon. Iran has said the program is peaceful.

At the same time Iran was warning its biggest European oil buyers, it also announced it was willing to reopen nuclear talks suspended a year ago in a letter to Catherine Ashton, the European Union’s top foreign policy official. The Iranians also announced new advances in their nuclear program, including escalation of Iran’s enrichment practices, which if accurate could serve to further aggravate tensions.

A spokeswoman for Ms. Ashton confirmed receipt of a letter from Dr. Saeed Jalili, who heads Iran’s Supreme National Security Council, sent in response to a letter from Ms. Ashton in October of last year. The spokeswoman, Maja Kocijancic, did not disclose the contents but said “we are carefully studying the letter.”

The Iranian side also did not reveal the letter’s contents, but the Islamic Republic News agency paraphrased Mr. Jalili as saying in the letter that “returning to the negotiation table would be the best means to broaden cooperation between the two sides.”

In Tehran, President Mahmoud Ahmadinejad presided over ceremonies to mark advances in Iran’s nuclear program, partly to project an image of Iranian defiance against the Western sanctions. The new advances include centrifuges that Iran said were capable of enriching uranium at a much faster rate, and the insertion of the first domestically produced nuclear fuel rod into a nuclear reactor in Tehran.

“The era of bullying nations has past,” Mr. Ahmadinejad said in a televised broadcast of the ceremony. “The arrogant powers cannot monopolize nuclear technology. They tried to prevent us by issuing sanctions and resolutions but failed.”

Iran’s nuclear announcements came as tensions have escalated in particular with Israel, which regards Iran as an existential threat and has hinted at the possibility of a pre-emptive military strike on Iran’s nuclear facilities to forestall its suspected ambitions.

Iran has accused Israel, a nuclear weapons state, of responsibility for a clandestine campaign aimed at sabotaging Iran’s nuclear ambitions, including the assassinations of at least four Iranian scientists since 2010. Israel has counter accused Iran in recent days of retaliatory plots aimed at Israeli targets in Georgia, India and Thailand, which Iran has denied.

Rick Gladstone reported from New York, and Alan Cowell from London. Steven Erlanger contributed reporting from Paris, and Artin Afkhami from Boston.

U N D E R T O W   E F F E C T ?

WHERE DID THE OIIL GO?
Death and destruction; will the wetlands recover?  Check the cancer rates along the shore in a few years.  The Gulf of Mexico oil disaster could cost BP $40bn, analysts say; next, earlier oil leak...9/11 "paymaster" called in again to handle claims.  Summer hurricane season begins now.

A desperation move
NYPOST
By NICOLE GELINAS
Last Updated: 3:37 AM, June 27, 2011
Posted: 10:23 PM, June 26, 2011

Why is last week's surprise release of 60 million bar rels of oil from government reserves bad news? Because it's the West's -- and President Obama's -- last hope to goose the economy. Obama and European leaders are so desperate that they'll even promote burning cheap hydrocarbons -- they'd rather save the banks than the planet.

Worse, they're still bent on avoiding post-bubble reality.  America, Germany, France, Spain, Japan and Italy dropped their bombshell Thursday. Over a month, they'll draw on emergency oil reserves, with America providing half the supply.  It's only the third time that the West has ever taken such action. The jolt was supposed to push prices down, and it worked -- oil dropped 7 percent.

Good idea, right? Over a month, we're replacing the 1.4 million daily barrels that war-torn Libya isn't producing, and then some. Sure, it's not much in the long run, compared to the 82.1 barrels the world makes daily. Why not wield power to scare OPEC and the speculators?

Because it stinks of desperation. Going into his second long, hot "recovery summer," Obama will do anything to keep gas prices below $4. As growth in Europe slows, Nicolas Sarkozy, Angela Merkel and rest will also take any short-term fix.  The move should anger people on the left and right. First, these leaders are obviously perfectly willing to ditch a prime capitalist principle: Markets should set commodity prices.

Libya's disruption is part of the market. Whether you're buying an SUV or a jetliner fleet, you need to remember that Mideast supplies aren't 100 percent reliable. Prices can spike.  A real emergency would be different. It would be OK to tap petroleum reserves if, say, al Qaeda took over Saudi Arabia and the West couldn't buy its 10 million barrels. But Libya's lost output is far smaller.  It's also a slap at environmental thinking -- which says that gas prices should be high, so that people buy smaller cars and drive less. Want to wean the West off oil? Make sure gas prices hurt.

Why are Western leaders torching their beliefs? Because everything they've tried over the last four years to juice growth isn't working -- and they're terrified.

Interest rates can't go lower. The Federal Reserve is out of tricks -- Fed chief Ben Bernanke said so last Wednesday. Congress won't approve more stimulus -- indeed, the House won't even raise the debt limit without major cuts in spending. Europe's central bank, too, is tired of providing extraordinary aid.  We've wasted more than three years without admitting the real problem.

In America, people still bear their bubble-era debt -- with no bubble to show for it. Remember, mortgage debt doubled between 2000 and 2007, and is down only 5 percent now.  Banks pretend that Americans can pay this back without suffocating growth. Americans are pretending right back -- 'cuz they don't want to admit that the house value they needed for retirement isn't coming back.  Europe, meanwhile, has spent more than a year pretending that Greece can afford debt of more than 150 percent of GDP. Greece has half-heartedly pretended, too. But it's getting old.

Fantasy finance has frozen the West's economy. Nobody can do anything until they find out what debt will be repaid, and what debt won't -- and until they learn whether the banks can withstand the shakeout. Until then, banks are just sloshing around money and making fees.

That the West will do almost anything to avoid reality adds to the unease.  The White House and regulators are afraid to pull the trigger on forcing faster foreclosures and writedowns of bad housing debt. They'd rather let banks "work out" bad mortgages by delaying forever and then tacking impossible mortgage payments into the future (worked well in 2005, with "teaser-rate" mortgages). If banks had to face the real housing market, they'd eat right through their reserves.

And Europe is afraid to pull the trigger on Greece - because nobody knows what would happen to global banks and money-market funds.

We need to burn up some of that bad debt, and let lenders suffer the free-market consequences of their bad decisions. A brief oil gusher may confuse markets for a while, but Western economies won't leave the doldrums till our leaders face reality.

Nicole Gelinas is a contributing editor to the Manhattan Insti tute's City Journal.


So was the oil spill a contributor?
Climate: UN report highlights ocean acidification
YAHOO
Thu Dec 2, 2010, 6:01 pm ET

CANCUN, Mexico (AFP) – Carbon emissions from fossil fuels may bear a greater risk for the marine environment than thought, with wide-ranging impacts on reproduction, biodiversity richness and fisheries, a report at the UN climate talks here on Thursday said.

Each year, billions of tonnes of carbon dioxide (CO2), the principal greenhouse gas, are absorbed by the sea and are very gradually turning the water more acidic, according to the study launched by the UN Environment Program (UNEP).  In the coming decades, the consequences are likely to be felt throughout the marine food chain, it said.

Rising acidity levels have an impact on calcium-based lifeforms, ranging from tiny organisms called ptetropods that are the primary food source, to crabs, fish, lobsters and coral, it said.  The report was compiled by scientists from Plymouth Marine Laboratory and the National Oceanography Centre in Britain, and the Intergovernmental Oceanographic Commission, part of the UN Educational, Scientific and Cultural Organisation (UNESCO).

"We are seeing an overall negative impact from ocean acidification directly on organisms and on some key ecosystems that help provide food for billions," said Carol Turley, a senior scientist at Britain's Ocean Acidification Research Programme, who headed the report.

"We need to start thinking about the risk to food security."

Turley cautioned there many unknowns about ocean acidification.

For instance, some research indicated that adult lobsters might actually increase shell-building in response to rising acidity levels, but it may be the juveniles who are less able to build healthy skeletons, she said.
Similarly, the smelling systems of some species of young fish could be impaired, but adults may be unaffected.  There could be some winners as well as losers, she said.

"It is clearly not enough to look at a (single) species. Scientists will need to study all parts of the life cycle to see whether certain forms are more or less vulnerable," Turley said.

UNEP chief Achim Steiner described ocean acidification as "yet another red flag being raised" about greenhouse gases.

"It is a new and emerging piece in the scientific jigsaw puzzle, but one that is triggering rising concern."

The report calls for cuts in man-made CO2 emissions to reduce acidification and support for further work to quantify the risk and identify species that could be most in peril.  The "greenhouse" effect from CO2 is already a known problem for the sea. By trapping solar radiation, the gas warms the atmosphere and thus the Earth's surface.

Warming has already been linked to changes in fish migration, and some biologists fear that cases of coral die-out in recent years are clearly linked to higher temperatures.

Report: White House altered drilling safety report
YAHOO
By DINA CAPPIELLO, Associated Press
10 November 2010

WASHINGTON – The Interior Department's inspector general says the White House edited a drilling safety report in a way that made it falsely appear that scientists and experts supported the administration's six-month ban on new drilling.  The inspector general says the editing changes resulted "in the implication that the moratorium recommendation had been peer reviewed." But it hadn't been. The scientists were only asked to review new safety measures for offshore drilling.

The investigation is the latest in a string of incidents where the Obama administration has been accused of overstating the science behind official reports and political decisions made after the massive Gulf oil spill. In the wake of the April 20 disaster, the administration struggled to portray that it — not BP — was in charge of responding to the blowout, which killed 11 and spewed millions of gallons of oil into the Gulf.  Last month, staff for the presidential oil spill commission said that the White House's budget office delayed publication of a report by federal scientists that forecast how much oil could potentially reach the Gulf's shores. Federal scientists initially used a volume of oil that did not account for the administration's various cleanup efforts. A smaller volume was ultimately presented.

The same report said that President Barack Obama's energy adviser, Carol Browner, and National Oceanic and Atmospheric Administration head Jane Lubchenco contributed to the public's perception that a government report on where the oil had gone was more exact than it was by emphasizing peer review. Browner, the commission's staff said, also mischaracterized the analysis on national TV, saying it showed most of the oil was "gone." The report said it could still be there.

The IG report says Browner's staff could have implied scientists had endorsed the moratorium, by moving up a reference to peer review in the drilling safety report. Steve Black, an adviser for Interior Secretary Ken Salazar who reviewed the final version of the text from the White House at 2 or 3 a.m. the day it was released, said he did not have any issues with the changes.

"There was no intent to mislead the public," said Kendra Barkoff, a spokeswoman for Salazar, who also recommended in the May 27 safety report that a moratorium be placed on deepwater oil and gas exploration. "The decision to impose a temporary moratorium on deepwater drilling was made by the secretary, following consultation with colleagues including the White House."

The Interior Department, after one of the reviewers complained about the inference, promptly issued an apology during a conference call, with a letter and personal meeting in June.  At least eight of the 15 experts asked to review the Interior Department's work expressed concern about the change made by the White House, saying that it differed in important ways from the draft they had signed off on. But the experts also questioned the basis for the drilling ban.

"We believe the report does not justify the moratorium as written and that the moratorium as changed will not contribute measurably to increased safety and will have immediate and long-term economic effects," the scientists wrote in a fax sent to Louisiana Gov. Bobby Jindal, and Louisiana Sens. Mary Landrieu and David Vitter, earlier this year. "The secretary should be free to recommend whatever he thinks is correct, but he should not be free to use our names to justify his political decisions."

A federal judge in New Orleans struck down the Interior Department's first moratorium in June, saying the government didn't justify it. U.S. District Judge Martin Feldman also ruled that the department improperly issued safety rules because it issued them without soliciting public comment.  Jindal, in a statement released Wednesday, said the Obama administration should have listened to the experts who backed specific steps to improve oversight and safety of offshore drilling.

"Instead, the Obama administration issued an arbitrary and capricious moratorium...which has threatened the livelihoods of thousands of Americans," Jindal said.

The inspector general's report, which was originally requested by Vitter and Rep. Steve Scalise in June, said the administration did not violate federal rules because the executive summary did not say the experts approved the recommendations, and the department offered a formal apology and had publicly clarified the nature of the expert review.  The report also says the engineer that levied the concerns accepted Salazar's explanation that the language was a mistake rather than an intentional attempt to use the peer-reviewers' names to justify a political decision.

The conclusion, however, did little to assuage Gulf Coast lawmakers, and will likely fuel Republicans taking over the House next year to push for further inquiries into administration decisions following the oil spill.

Vitter said the Obama administration appears to have "deliberately violated" a law that sets government-wide procedures to ensure the integrity of information put out by federal agencies. "This report reveals exactly what I suspected all along," he said. "I wanted to make sure that the federal government was basing policy decisions that would directly impact so many Louisianians on science — not politics. Unfortunately, this report reveals the contrary."

Louisiana Rep. Bill Cassidy, a Republican, agreed.

"Candidate Obama promised that he would guided by science, not ideology," he said.
Other findings?
Panel: Dollars did not trump safety in Gulf spill
YAHOO
By DINA CAPPIELLO and SETH BORENSTEIN, Associated Press
8 November 2010

WASHINGTON – The presidential commission investigating the massive Gulf oil spill has found no instance where a decision deliberately sacrificed safety to cut costs.

Fred H. Bartlit, Jr., the panel's chief counsel, in a presentation Monday said the probe did not uncover any case where an individual made a conscious choice to "favor dollars over safety."

That statement conflicts with investigations by Democrats in Congress who have accused BP of cutting corners when it made several critical well design decisions. Those decisions have also been questioned by other major oil companies.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.

WASHINGTON (AP) — The early findings of the president's independent commission into what caused BP's Gulf oil spill will support many of the conclusions the oil company made in its own internal investigation.

Fred H. Bartlit, Jr., the panel's chief investigator, said Monday he agreed with about 90 percent of BP's findings. He said there were some areas where the panel's probe conflicted.

BP PLC's report found flaws with contractor Halliburton's cement job and maintenance performed by rig owner Transocean Ltd. The company's report has been criticized as self-serving, and a preview of its legal case.

Bartlit said the findings he will present later Monday are not meant to assign blame or liability but to get to the root cause "without a lot of bickering and self-serving statements."

Panel: Gov't blocked worst-case oil spill figures
YAHOO
By DINA CAPPIELLO, Associated Press Writer
6 October 2010

WASHINGTON – The White House blocked efforts by federal scientists to tell the public just how bad the Gulf oil spill could have been, according to a panel appointed by President Barack Obama to investigate the worst offshore oil spill in U.S. history.

In documents released Wednesday, the national oil spill commission's staff reveals that in late April or early May the White House budget office denied a request from the National Oceanic and Atmospheric Administration to make public the worst-case discharge from the blown-out well. The Unified Command — the government team in charge of the spill response — also was discussing the possibility of making the numbers public, the report says, citing interviews with government officials.

The White House did not immediately respond to a request for comment.

But Jerry Miller, head of the White House science office's ocean subcommittee, told The Associated Press in an interview at a St. Petersburg, Fla., conference on the oil's flow that he didn't think the budget office censored NOAA.

"I would very much doubt that anyone would put restrictions on NOAA's ability to articulate factual information," Miller said.

The April 20 blowout and explosion in the Gulf of Mexico killed 11 workers, spewed 206 million gallons of oil from the damaged oil well, and sunk the Deepwater Horizon drilling rig.
After the Gulf oil spill, is it "clean energy now" or still "drill, baby, drill"?

BP's drilling permit for the Macondo well originally estimated the worst scenario to be a leak of 6.8 million gallons per day. In late April, the Coast Guard and NOAA received an updated estimate of 2.7 million to 4.6 million gallons per day.

While those figures were used as the basis for the government's response to the spill — they appeared on an internal Coast Guard Situation report and on a dry-erase board in NOAA's Seattle war room — the public was never told.

In the meantime, government officials were telling the public that the well was releasing 210,000 gallons per day — a figure that would be later adjusted to be much closer to the worst-case estimates.

"Despite the fact that the Unified Command had this information, relied on it for operations, and publicly states that it was operating under a worst-case scenario, the government never disclosed what its...scenario was," the report says.

University of South Florida oceanographer David Hollander, who was also at the St. Petersburg meeting of 150 scientists studying the oil flow on Wednesday, said he was surprised to find that the White House budget office gagged NOAA. He said public disclosure would have helped scientists to figure out what was going on.

"It would have been much better to know from a scientific point of view the reality," he said in an interview with The Associated Press.

Cement sealing off BP well
New Haven Register
Published: Saturday, September 18, 2010

NEW ORLEANS — Crews started pumping cement Friday deep under the sea floor to permanently plug BP’s blown-out well in the Gulf of Mexico.  A spokesman for BP said there no longer was a need to use mud in tandem with the cement because pressure from the well wasn’t an issue.  BP expects the well to be completely sealed today. The government had previously said it expected the well to be declared dead by Sunday, but Friday the Coast Guard indicated it was likely to be today.

Cement began flowing at 1:30 p.m. CDT. It was expected to flow for several hours and then take up to 24 hours to set, according to BP.  The pumping of cement followed the successful intersection late Thursday between a relief well drilled nearly 2 1/2 miles beneath the floor of the Gulf and the blown-out well.  An April 20 explosion killed 11 workers, sank a drilling rig and led to the worst offshore oil spill in U.S. history.

“I am ready for that cigar now,” John Wright, who led the team drilling the relief well, said in an e-mail Friday from aboard the Development Driller III vessel.

Wright, who is not a BP employee, but is working on a contract basis, had said in August that he was looking forward to finishing his mission and celebrating with a cigar, a dinner party with his crew and a trip somewhere quiet to unwind with his wife.  He has never missed his target over the years, with this relief well being the 41st he’s successfully drilled.  The gusher was contained in mid-July after a temporary cap was successfully fitted atop the well. Mud and cement were later pushed down through the top of the well, allowing the cap to be removed. But the blown-out well cannot be declared dead until it is sealed from the bottom.

The blast sank the Deepwater Horizon rig and triggered the spill that spewed 206 million gallons of oil from the well.  BP PLC is a majority owner of the well and was leasing the rig from owner Transocean Ltd.

The disaster caused an environmental and economic nightmare for people who live, work and play along hundreds of miles of Gulf shoreline from Florida to Texas. It also spurred civil and criminal investigations, cost gaffe-prone BP chief Tony Hayward his job and brought increased governmental scrutiny of the oil and gas industry, including a costly moratorium on deepwater offshore drilling that is still in place.

Gulf residents will be feeling the pain for years to come. There is still plenty of oil in the water, and some continues to wash up on shore.

Many people are still struggling to make ends meet with some waters still closed to fishing. Shrimpers who are allowed to fish are finding it difficult to sell their catch because of the perception — largely from people outside the region — that the seafood is not safe to eat. Tourism along the Gulf has taken a hit.

BP took some of the blame for the Gulf oil disaster in an internal report issued earlier this month, acknowledging among other things that it misinterpreted a key pressure test of the well. But in a possible preview of its legal strategy, it also pointed the finger at its partners on the doomed rig.



On the way up...above left.  And it arrives at the surface, with only government, BP and AP present.

Key oil spill evidence raised to Gulf's surface
YAHOO
By HARRY R. WEBER, Associated Press
5 September 2010

ON THE GULF OF MEXICO – Investigators looking into what went wrong in the Gulf of Mexico oil spill are a step closer to answers now that a key piece of evidence is secure aboard a ship.  Engineers took 29 1/2 hours to lift the 50-foot, 300-ton blowout preventer from a mile beneath the sea. The five-story high device breached the water's surface at 6:54 p.m. CDT, and looked largely intact with black stains on the yellow metal.

FBI agents were among the 137 people aboard the Helix Q4000 vessel, taking photos and video of the device. They will escort it back to a NASA facility in Louisiana for analysis.  The AP was the only news outlet with a print reporter and photographer on board the ship.  The blowout preventer was placed into a metal contraption specifically designed to hold the massive device at 9:16 p.m. CDT Saturday. As it was maneuvered into place, crew members were silent and water dripped off the device.

Crews had been delayed raising the device after icelike crystals — called hydrates — formed on it. The device couldn't be safely lifted from the water until the hydrates melted because the hydrates are combustible, said Darin Hilton, the captain of the Helix Q4000.  Hydrates form when gases such as methane mix with water under high pressure and cold temperatures. The crystals caused BP PLC problems in May, when hydrates formed on a 100-ton, four-story dome the company tried to place over the leak to contain it.

As a large hatch opened up on the Helix to allow the blowout preventer to pass through, several hundred feet of light sheen could be seen near the boat, though crews weren't exactly sure what it was.

The April 20 explosion aboard the Deepwater Horizon killed 11 workers and led to 206 million gallons of oil spewing from BP PLC's undersea well.  Investigators know the explosion was triggered by a bubble of methane gas that escaped from the well and shot up the drill column, expanding quickly as it burst through several seals and barriers before igniting.  But they don't know exactly how or why the gas escaped. And they don't know why the blowout preventer didn't seal the well pipe at the sea bottom after the eruption, as it was supposed to. While the device didn't close — or may have closed partially — investigative hearings have produced no clear picture of why it didn't plug the well.

Documents emerged showing that a part of the device had a hydraulic leak, which would have reduced its effectiveness, and that a passive "deadman" trigger had a low, perhaps even dead, battery.  Steve Newman, president of rig owner Transocean, told lawmakers following the disaster that there was no evidence the device itself failed and suggested debris might have been forced into it by the surging gas.  There has also been testimony that the blowout preventer didn't undergo a rigorous recertification process in 2005 as required by federal regulators.

Testimony from BP and Transocean officials also showed that repairs were not always authorized by the manufacturer, Cameron International, and that confusion about the equipment delayed attempts to close the well in the days after the explosion.

A Transocean official has said he knew the blowout preventer was functioning because he personally oversaw its maintenance, and he said the device underwent tests to ensure it was working. The device, he said, had undergone a maintenance overhaul in February as it was being moved to the Deepwater Horizon to be placed over BP's well.

Also, according to testimony, a BP well site leader performed a pressure test April 9 on the blowout preventer, and he said it passed.  Some have cautioned that the blowout preventer will not provide clues to what caused the gas bubble. And it is possible a thorough review may not be able to show why it didn't work.  That could leave investigators to speculate on causes using data, records and testimony.

Lawyers will be watching closely, too, as hundreds of lawsuits have been filed over the oil spill. Future liabilities faced by a number of corporations could be riding on what the analysis of the blowout preventer shows.

A temporary cap that stopped oil from gushing into the Gulf in mid-July was removed Thursday. No more oil was expected to leak into the sea, but crews were standing by with collection vessels in case.  The government said a new blowout preventer was placed on the blown-out well late Friday.


Officials Assess Damage From Blast in Gulf of Mexico
NYTIMES
By CAMPBELL ROBERTSON and SARAH WHEATON
September 2, 2010

NEW ORLEANS — An oil platform exploded and caught fire in the Gulf of Mexico on Thursday morning, forcing 13 workers overboard from the rig. Officials were scrambling to see if any oil had seeped into the Gulf.

Coast Guard officials said there was no sign of an oil leak near the damaged platform late Thursday afternoon, despite earlier reports that a sheen had been sighted.

“The boats and aircraft on scene cannot see a sheen,” said Capt. Peter Troedsson, the chief of staff for the Coast Guard’s Eighth District. He could not explain an earlier report of a visible layer of oil — which he said came from one of Mariner Energy’s response vessels — but simply said that Coast Guard responders could not spot any signs of oil.

The platform’s owner said the structure had not been producing at the time of the accident, and a spokesman for the company, Mariner Energy, told CNBC that there was no evidence of any spill.

The explosion unnerved a region still recovering from the environmental and financial toll of the months-long spill at a BP well this year. It occurred around 9 a.m. Thursday, touching off a fire that had been contained but not extinguished by the afternoon. The production platform was positioned in relatively shallow waters — 340 feet deep — and to the west of where a drilling rig leased by BP blew up and sank in April, killing 11 people and touching off an environmental calamity.

All 13 members of the work crew on board Thursday were accounted for, the Coast Guard said, though there were conflicting reports about whether one worker had been injured. The crew were pulled from the water by a civilian boat that had been in the area, the Crystal Clear, and taken to a nearby rig, Coast Guard officials said.

Rescuers, who arrived about an hour after receiving reports of the explosion, took the crew to Terrebonne General Medical Center in Houma, La. Hospital officials did not respond to requests for comment on the condition of the workers.

It was unclear what had touched off the blast on the structure, known as Vermilion Block 380, but the Mariner spokesman told CNBC that crews had been painting and sandblasting at the time.

In a statement, Mariner said that during the last week of August, the platform had produced about 9.2 million cubic feet of natural gas a day and 1,400 barrels of oil and condensate.

The company said it would begin an investigation into the accident and cooperate with federal officials.

The platform, roughly 100 miles off the Louisiana coast, has been the site of at least four accidents — two of them fires — since 2000, according to federal records.

In June 2007, a welder using a torch to cut a pipe was injured when oily sand in the pipe flared up, reddening his face, neck and ears. In December 2002, before Mariner owned the rig, a mechanic suffered burns when exhaust from a pump fueled by natural gas caught fire.

In May 2008, a crew member was seriously hurt when a chain came loose and struck him in the face. And a pipeline leak was reported in 2000, when the platform was operated by a different company.

The platform was not affected by the Obama administration’s recent moratorium on deepwater oil drilling, imposed on projects more than 500 feet deep in the wake of the BP spill.

The moratorium is currently scheduled to expire on Nov. 30, but Michael R. Bromwich, the director of the Interior Department’s Bureau of Ocean Energy Management, Regulation and Enforcement, is reviewing safety policies and records of the deepwater drilling companies to determine whether the suspension could be modified or lifted sooner.

An Interior Department spokeswoman said that the Nov. 30 date had not been revised in light of Thursday’s accident.

Shallow-water drilling companies have complained that new safety and environmental rules adopted after the BP spill have slowed and in many cases stopped projects in shallow water, imposing a de facto moratorium.

Interior Department officials insist that there is no hold on shallow-water wells and that work on them can resume as soon as operators meet the new rules, which require safety certifications, additional inspections of blowout preventers and other cautionary steps.

The accident was first reported at 9:19 a.m. Thursday when helicopters in the area spotted a rig on fire, Coast Guard officials said. The Coast Guard scrambled seven helicopters to reach the site of the explosion, located 80 miles south of Vermilion Bay in Louisiana.

For Dan Shaw, captain of the Crystal Clear, the radio call for a rescue boat marked a moment he was prepared for, but did not really expect.

“This isn’t something that happens everyday,” said Mr. Shaw. “But everyone out here trains for this just in case.”

His team of four men reached the scene at 10:30 a.m., and by 11 a.m., there were seven Coast Guard helicopters on the scene, five from New Orleans and two from Houston, and five Cutters.

The workers, who “huddled together,” had been in the water for about two hours and floated about a mile away from the rig, which Mr. Shaw could see buring in the distance as he pulled them into his boat, he said.

“They all were remaining calm. They all got aboard pretty quickly. Nobody looked panic stricken,” Mr. Shaw said.

Mariner Energy, which describes itself as one of the largest independent oil and gas companies in the Gulf, has 195 active drilling leases.

A spokesman for Mariner Energy, whose stock slid on Wall Street following news of the blast, told CNN that the platform was not engaged in any active drilling.

Robert Gibbs, the White House spokesman, said that President Obama was in a national security meeting in the White House Situation Room when news of the explosion began to circulate, and he was not certain whether the president had been informed.

“We obviously have response assets ready for deployment should we receive reports of pollution in the water,” Mr. Gibbs said, during a regular televised briefing.

He noted that the experience gained from the BP oil spill could prove useful in dealing with the latest incident, but said that he did not know who the highest ranking official near the scene might be.

On Thursday afternoon, the three ranking House Democrats in the energy field were demanding to know what had happened. Henry A. Waxman of California, the chairman of the Energy and Commerce Committee, along with Bart Stupak of Michigan and Edward J. Markey of Massachusetts, sent a letter to Scott D. Josey, the chairman and chief executive of Mariner Energy asking for a briefing by next Friday.

Workers in Gulf oil fields described an explosion of this magnitude as unusual.

“They’ve got a lot of safety systems out there, a lot of them,” said Jim Shugart, executive vice president of ERA helicopters, of Lake Charles, La., which specializes in oil field operations. In response to the blast, the Coast Guard asked ERA to send two helicopters.

“For the most part, they take care of any abnormality, just like on an automobile or a helicopter,” said Mr. Shugart, who said his company gets a call for help like the one on Thursday less than once a year.

Campbell Robertson reported from New Orleans and Sarah Wheaton from New York. Matt Wald, John M. Broder, Brian Knowlton, Andrew W. Lehren, Jack Healy and Clifford Krauss contributed reporting.



BP: "Static kill' gusher plug holding
NYPOST
Last Updated: 8:39 AM, August 4, 2010
Posted: 7:21 AM, August 4, 2010

A "static kill" procedure to plug the Macondo oil well in the Gulf of Mexico achieved the "desired outcome," BP said Wednesday, calling the success a "significant milestone."

It came as the U.S. government prepared Wednesday to announce that much of the oil from the Deepwater Horizon was now gone and that the remaining spill was so diluted that it may not pose much of an additional environmental threat.

In a company statement, BP said: "The well pressure is now being controlled by the hydrostatic pressure of the drilling mud, the desired outcome of the static kill procedure,"

The procedure involved pumping heavy drilling fluid, known in the trade as mud, into the busted well to push leaking crude oil back into its source rock.

"The pumping of heavy drilling mud was stopped after about eight hours of pumping drilling mud down the well. The well is now being monitored, per the procedure, to ensure the well remains static," BP said.

"Further pumping of mud may or may not be required depending on the results observed during monitoring. BP will continue to work with the National Incident Commander and other government officials to determine the next course of action, which includes assessing whether to inject cement in the well via the same route."

BP said operations on drilling two relief wells were continuing as planned to permanently plug the well.  The good news for BP was set to continue Wednesday with the publication of a new government report, which concludes just 26 percent of the oil released from the Macondo leak is still in the water or onshore; most of it light sheen at the surface of the ocean or in a dispersed form.

"The scientists are telling us about 25 percent was not captured or evaporated or taken care of by mother nature," said Carol Browner, a top energy adviser to President Barack Obama, on ABC's "Good Morning America" program.

"This is an initial assessment by our scientists in the government and outside the government. We think it's important to make this available to the public. That's what we'll be doing today."

"Mother nature will continue to break it down," she said. "But some of it may come onshore, as weathered tar balls. And those will be cleaned up. They can be cleaned up. And we will make sure they are cleaned up."

Two thirds of the oil has dispersed, been captured or evaporated, the New York Times reported earlier Wednesday, with the rest so diluted that it poses little additional threat.  People on the Gulf Coast have voiced fears more oil could surface bringing a fresh wave of environmental problems but this was discounted by federal scientists who believe the oil is breaking down rapidly.

“There’s absolutely no evidence that there’s any significant concentration of oil that’s out there that we haven’t accounted for,” said Jane Lubchenco, head of the National Oceanic and Atmospheric Administration, the lead agency in producing the new report.

Lubchenco said the government was still concerned about the ecological damage already done and said it would continue to monitor the situation.

“I think we don’t know yet the full impact of this spill on the ecosystem or the people of the gulf,” Lubchenco said.

The updated condition of the well emerged after the Financial Times reported that BP faced penalties of more than $20 billion for the oil spill if it was found liable for gross negligence.  Under the U.S. Clean Water Act, fines range from $1,100 a barrel spilled to as high as $4,300 per barrel.  BP, which insists it can rebut the charge of gross negligence, could therefore face a total fine of $21 billion -- given the latest estimates of 4.9 million barrels having gushed from the well since April.

An official at the Department of Energy said the most recent estimates would be a part of the calculation for any potential BP fines under the act.  Jane Barrett, director of the Environmental Law Clinic at the University of Maryland School of Law, explained: “Given the political and economic ramifications of this spill, the loss of life and extensive damage to the Gulf ecosystem, the government is going to seek the highest fine possible.”

Official penalties aside, the battle for compensation after American’s worst oil spill is likely to blight BP for decades, with tens of thousands of individuals and businesses already preparing to lodge claims.  Law firms are queuing up to represent anybody who can come forward with even the most tenuous claim to have suffered loss of earnings as a result of the explosion and subsequent oil spill across thousands of miles of U.S. coastline.

Highway 23, the route to Louisiana’s most badly affected fishing ports, is lined with giant billboards carrying pictures of grinning lawyers and the slogan “Oil spill claim? Call toll-free.”

Adding to BP's troubles is a new $10 billion class action lawsuit, myFOXhouston.com reported Tuesday.  The complaint, on behalf of more than 2,000 people, is related to alleged releases of benzene from the company's Texas City refinery in April and May.

Patrick Semansky/AP Photo
In this Wednesday, July 14, 2010, photo, a commercial fishing vessel assists in a controlled burn of contained oil on the Gulf of Mexico near the coast of Louisiana.

BP, scientists try to make sense of well puzzle
YAHOO
HARRY R. WEBER and COLLEEN LONG, Associated Press Writers
17 July 2010

NEW ORLEANS – Engineers kept vigil Saturday over the massive cap holding back oil from BP's busted Gulf well, their eyes glued to monitors in a faraway control room that displayed pressure readings, temperature gauges and underwater images.

Their round-the-clock work deciphering a puzzle of data from undersea robots and instruments at the wellhead is helping BP and the government determine whether the cap is holding tight as the end of a critical 48-hour testing window approaches. Signs so far have been promising but inconclusive.

Saturday afternoon will mark two full days since BP stopped the oil from leaking into the Gulf and entered into the pressure-testing phase. At that point engineers could offer more definitive evidence that the cap is working, or call for more testing. At any time before then, they could also reopen the cap and allow some oil to spill into the sea again. Scientists are watching for leaks either in the well itself or the sea floor.

Kent Wells, a BP PLC vice president, said on an evening conference call that engineers had found no indication that the well has started leaking underground.

"No news is good news, I guess that's how I'd say it," Wells said.

One mysterious development was that the pressure readings were not rising as high as expected, said retired Coast Guard Adm. Thad Allen, the government's point man on the crisis.

Allen said two possible reasons were being debated by scientists: The reservoir that is the source of the oil could be running lower three months into the spill. Or there could be an undiscovered leak somewhere down in the well. Allen ordered further study but remained confident.

"This is generally good news," he said. But he cautioned, "We need to be careful not to do any harm or create a situation that cannot be reversed."

Inside BP's command center hundreds of miles away in Houston, engineers, scientists and technicians have been carefully monitoring reams of data around the clock, BP's chief operating officer, Doug Suttles, told The Associated Press Friday. Other engineers watched on monitors aboard ships at sea.

"You've got a very, very focused group of people because this is very important," Suttles said.

Asked if people are nervous, knowing the whole world is watching and government officials are sitting with them to monitor their work, Suttles replied: "I wouldn't say they are nervous. I would use the word focused."

Throughout the day, no one was declaring victory — or failure. President Barack Obama cautioned the public "not to get too far ahead of ourselves," warning of the danger of new leaks "that could be even more catastrophic."

Even if the cap passes the test, more uncertainties lie ahead: Where will the oil already spilled go? How long will it take to clean up the coast? What will happen to the region's fishermen? And will life on the Gulf Coast ever be the same again?

On Thursday, BP closed the vents on the new, tight-fitting cap and finally stopped crude from spewing into the Gulf of Mexico for the first time since the April 20 oil-rig explosion that killed 11 workers and unleashed the spill 5,000 feet down.

With the cap working like a giant cork to keep the oil inside the well, scientists kept watch in case the buildup of pressure underground caused new leaks in the well pipe and in the surrounding bedrock that could make the disaster even worse.

Pressure readings after 24 hours were about 6,700 pounds per square inch and rising slowly, Allen said, below the 7,500 psi that would clearly show the well was not leaking. He said pressure continued to rise between 2 and 10 psi per hour. A low pressure reading, or a falling one, could mean the oil is escaping.

But Allen said a seismic probe of the surrounding sea floor found no sign of a leak in the ground.

Benton F. Baugh, president of Radoil Inc. in Houston and a National Academy of Engineering member who specializes in underwater oil operations, warned that the pressure readings could mean that an underground blowout could occur. He said the oil coming up the well may be leaking out underground and entering a geological pocket that might not be able to hold it.

But Roger N. Anderson, a professor of marine geology and geophysics at Columbia University, said the oil pressure might be rising slowly not because of a leak, but because of some kind of blockage in the well.

"If it's rising slowly, that means the pipe's integrity's still there. It's just getting around obstacles," he said. He added that "any increase in pressure is good, not bad."

The cap is designed to prevent oil from spilling into the Gulf, either by keeping it bottled up in the well, or by capturing it and piping it to ships on the surface. It is not yet clear which way the cap will be used if it passes the pressure test.

Either way, the cap is a temporary measure until a relief well can be completed and mud and cement can be pumped into the broken well deep underground to seal it more securely than the cap. The first of the two relief wells being drilled could be done by late July or August.

In a positive sign, work on the relief wells resumed Friday. The project had been suspended earlier this week for fear that the capping of the well could interfere with it.

There was no end in sight to the cleanup in the water and on shore. Somewhere between 94 million and 184 million gallons have spilled into the Gulf, according to government estimates.

In Orange Beach, Ala., long strands of white absorbent boom strung along the shore were stained chocolate brown after a fresh wave of BB-size tar balls washed up. Charter boat captains who can't fish because of the spill patrolled the shore, looking for oil slicks. Fishing guides spent their time ferrying Coast Guard personnel. A flotilla of fishing boats operating as skimmers plied the waters across the Gulf.

Large sections of the Gulf Coast have been closed to fishing and shellfish harvesting. Many fishermen have been hired out by BP to do cleanup work.

Cade Thomas, a 38-year-old fishing guide from Pine, La., said the whole mentality of the place is different.

"It's all changed dramatically. The fishing stories aren't there," he said. "There's no stories to tell except where we went to today and how much oil we saw."

In Grand Isle, La., most of the summer rental cottages are vacant, tables at the single high-end seafood restaurant are empty, and souvenir shops are barely doing enough business to pay the bills. A hand-painted sign along the main road rechristens the tourist town "Grand Oil."

Folks are grateful the gusher has been stopped, but many say it is too late to save this summer. Thousands of tourists have gone elsewhere.

Scientists cannot say for certain what the long-term environmental effect will be. But long after the well is finally plugged, oil could still be washing up in marshes and on beaches as tar balls or patties.

There is also fear that months from now, those tar balls could move west to Corpus Christi, Texas, or travel up and around Florida to Miami or North Carolina's Outer Banks.

Capping the well was a milestone in the long catastrophe, but people shouldn't let their guards down, said Billy Nungesser, the president of Plaquemines Parish, one of the hardest hit areas along the Gulf.

"For the first day, we'll be pulling more oil out of the Gulf than is leaking in," Nungesser said Friday. "We can see the light at the end of the tunnel, but that's a very long tunnel."
BP: No oil leaking into Gulf from busted well
DAY
The Associated Press
Article published Jul 15, 2010

NEW ORLEANS (AP) _ BP says oil from its broken well has stopped gushing into the Gulf of Mexico for the first time since April.

The announcement Thursday came after company officials said all valves had been shut on a new cap over the busted well in an experiment to stop the spill.

Kent Wells, a BP PLC vice president, said at a news briefing that oil stopped flowing into the water at 2:25 p.m. CDT.

It was a long-awaited milestone in one of the nation's worst environmental disasters.

While not a permanent solution to plug the busted well, the success in capturing the oil spewing out was welcome news.

The crisis began when BP's deepwater rig exploded, killing 11 workers.

The cap is not a permanent fix. BP is drilling two relief wells so it can pump mud and cement into the leaking well in hopes of plugging it for good.


Hitting a Tiny Bull’s-Eye Miles Under the Gulf
NYTIMES
By HENRY FOUNTAIN
July 5, 2010

HOUSTON — To hear the people at Baker Hughes tell it, a drill string — length after length of narrow pipe that can extend for miles into the earth — is far from a rigid assembly of high-strength steel. It is more like a wet noodle.

“The challenge is not to get it to bend,” said Aravindh Kaniappan, a product manager for Baker Hughes, a drilling equipment and services company. “It’s to get it to not bend.”

Because a string of drill pipe, along with the rotating bit at its cutting end, tends to go this way and that, drillers need critical information about the location of a well as it is being drilled.

“First you need to know where you are,” Mr. Kaniappan said. “Then you need to know from where you are, where you need to go.”

The need for accurate location information — in a subterranean environment that Global Positioning System satellite signals cannot reach — is true now more than ever, as oil and gas wells go deeper and become more complex, veering off horizontally through narrow hydrocarbon reservoirs or parallel existing wells.

But it is especially true right now in the Gulf of Mexico, where BP is drilling a relief well to intersect the runaway well that has been spewing oil since April.

The relief well will be used to pump heavy drilling mud, followed by cement, into the damaged well to stop the gusher permanently. But first it, or a second relief well being drilled nearby as a backup, must hit the target — the existing well’s steel casing pipe, only seven inches in diameter, more than 3 miles below the surface of the gulf.

The first relief well is currently about 20 feet horizontally and less than 1,000 feet vertically from the interception point. “We feel very good about the progress we’ve made,” Kent Wells, a BP vice president overseeing the relief well effort, said at a recent news conference, but did not revise an estimated completion date of early August.

Baker Hughes and other companies are helping BP reach the target, providing specialized techniques and tools for measuring and surveying the relief wells as they are drilled, and steering them in the right direction.

Many of these services — variously described as “measuring while drilling,” “logging while drilling” and “directional drilling” — are used in almost all wells, and have been for decades. But the techniques have been improved and expanded over the years, aided by advances in sensors and processing.

Baker Hughes and companies like Halliburton, Schlumberger and Vector Magnetics use sophisticated accelerometers and magnetometers to determine the inclination, or angle, and azimuth, or compass direction, of the hole, sending the data back to the drill rig as binary pulses in the drilling mud that circulates through the drill pipe. If the drill bit has strayed, it can be steered back on course by several means, one of which uses pressure pads against the well bore to change the bit’s direction.

With the relief wells, magnetometers are also being used to locate the target, by detecting the electromagnetic field created by an electric current induced in the runaway well’s casing pipe. The relief wells are then being steered closer and closer to the intercept point, nearly 18,000 feet down.

More than direction and location, though, sensing tools — hollow pipes that resemble thin, shiny torpedoes, up to 30 feet long, with sensors and processors installed in precisely machined cavities — can help oil companies better understand rock and hydrocarbon reservoirs, often in real time as they are drilling through them.

“During the last five to 10 years there has been a step change in the technology,” said Mattiass Schlecht, Baker Hughes’s vice president for drilling systems. Tools measure the natural gamma radiation emitted by rock, the electrical resistance of any fluids within, and even, through a kind of inverse M.R.I. device, the magnetic resonance of the nuclei of hydrocarbon atoms.

Gamma measurements can determine whether the bit is drilling through sand (which is more likely to contain hydrocarbons) or shale. Resistance information shows whether the formation contains oil, gas or water. And nuclear resonance data indicates how easily the oil will flow out of the porous rock. “How much of that fluid you can really move out of the pores and into the well bore,” Dr. Schlecht said.

Stephen Prensky, a consultant in Silver Spring, Md., who follows trends in drilling technology, said that many of the changes have been evolutionary, improvements to existing measurements using newer electronics. But the move toward more real-time data collection is crucial, he said, with deepwater and other complex wells costing upward of $100 million.

“You want to have as much information as possible to make sure you drill the best well possible,” Mr. Prensky said. “Real-time information is essential in those circumstances.”

But even in relatively simple vertical wells, measurement and other data is crucial. Geologists may have mapped the various rock formations in advance based on seismic surveys, but formations are far from homogeneous, so it can be important to know precisely what kind of rock the well has traveled through. And a well cannot be allowed to veer across a lease line, for example.

Drill bits stray all the time, as the bit encounters pockets of softer or harder rock. “Drilling straight down doesn’t necessarily mean you go straight down,” said Scott Schmidt, Baker Hughes’s president of drilling and evaluation services. “The bit wants to follow the path of least resistance.”

In any well, one goal is to keep the well bore smooth and any turns gradual, avoiding what drilling engineers call “high dogleg severity.”

“Once you have a kink in there it will hurt you for the rest of the well,” Dr. Schlecht said. It will create higher friction for the drill string, he said, and make it more difficult to send casing pipe down the well.

Decades ago, well surveys were done only after pulling the drill pipe out of the hole, a process that, depending on depth, could take a day or more. Instruments were lowered on a wire, readings were taken, and the instruments were brought back up. (Some of the earliest equipment, called single-shot tools, actually took a photograph of a compass rose lowered deep in the hole; drillers would have to wait for the film to be developed to determine azimuth.)

Now the high-tech tools usually form a permanent part of the drill string, assembled at the very end. Together with the drill bit, perhaps a mud-driven motor to rotate it and steering equipment, the tools form a “bottom hole assembly” that can be well over 100 feet long — and easily worth several million dollars, particularly since the bit is usually encrusted with synthetic diamonds.

Because the tools form part of the drill string, they must be hollow to allow the drilling mud to pass through to the bit, where it provides lubrication and cooling and carries the rock cuttings back to the rig. That makes the job of the tool designer more difficult, as all the sensors, silicon chips and power supplies have to sit in the walls of the pipe. At a long and low building near Houston’s international airport where Baker Hughes makes its tools, workers regularly perform extreme feats of machining, like drilling a small hole for wires down through 30 feet of pipe wall.

Not all the tools can provide data while the well is being drilled, however. Accelerometers, tiny silicon devices that measure gravitational pull along three axes, work best when there is not much external vibration, so drilling is usually stopped to take measurements, although the drill pipe remains in place.

Magnetometers work best when there is no magnetic interference from other steel, so in the early stages of drilling BP’s relief wells, “ranging” runs to determine how close the relief wells were to the runaway well were performed with the drill pipe pulled out of the hole and a separate magnetometer lowered on a wire. A device sent a current into the formation, inducing a current in the metal casing pipe of the runaway well. The magnetometer detected the field created by the induced current, and software sorted out the signal to determine the distance to the pipe.

In later ranging runs, however, the drillers have been using a faster system that does not require the drill string to be pulled completely out of the well. The system also has a sensor directly behind the bit, which gives drillers a more accurate reading of the most important piece of information: where the actual bit is in relation to the runaway well.

Those magnetometers are connected to the surface by a wire that can handle a lot of data. For other tools that form part of the drill string, however, data is usually sent to the rig through mud pulse. A simple valve raises and lowers the pressure in the mud inside the drill string, and a sensor on the rig measures the small pressure changes.

With the data being transmitted at about 10 bits per second, it takes about 30 seconds to transmit basic measurement data, and that is with much of the data being crunched in processors on the tool.

That is glacially slow by modern standards, but as Mr. Kaniappan describes it, still a remarkable feat to distinguish the small pressure changes that make up the signal from all the background noise. “It’s amazing the technology we have,” he said.

This article has been revised to reflect the following correction:

Correction: July 5, 2010

An earlier version of this article incorrectly stated that rock formations were "far from heterogeneous." They are far from homogeneous.


SURFS UP - Hurricane Alex throws cleanup for a loop (r)
This image (l) provided by NOAA was acquired Tuesday June 29, 2010, at 5:32 p.m. EDT shows Hurricane Alex churning through the western Gulf, taking aim at the Mexico-Texas border and far away from the massive oil spill. (AP Photo/NOAA)This image provided by NOAA was acquired Tuesday June 29, 2010, at 5:32 p.m. EDT shows Hurricane Alex churning through the western Gulf, taking aim at the Mexico-Texas border and far away from the massive oil spill. (AP Photo/NOAA)

Tar balls from Gulf oil spill turn up in Texas
YAHOO
By JUAN A. LOZANO, Associated Press Writer
5 July 2010

GALVESTON, Texas – A Texas official said Monday that tar balls from the Gulf oil spill have been found on state beaches, becoming the first known evidence that gushing crude from the Deepwater Horizon well has now reached all the Gulf states.

Land Commissioner Jerry Patterson said two crews were removing tar balls found on the Bolivar Peninsula and Galveston Island on Sunday.

"We've said since day one that if and when we have an impact from Deepwater Horizon, it would be in the form of tarballs," Patterson said in a news release. "This shows that our modeling is accurate. Any Texas shores impacted by the Deepwater spill will be cleaned up quickly and BP will be picking up the tab."

The state said responders have recovered about 35 gallons of waste material tainted by the oil from the two sites.

Signs of landfall by oil from the Deepwater Horizon spill had previously only been reported in Louisiana, Mississippi, Alabama and the Florida Panhandle.

The distance between the westernmost reach of the spill in Texas and the easternmost reports of oil in Florida is about 550 miles. Oil was first spotted on land near the mouth of the Mississippi River on April 29.

And the spill is reaching deeper into Louisiana. Strings of oil were also seen Monday in the Rigolets, one of two waterways that connect Lake Ponchartrain, the large lake north of New Orleans, with the Gulf.

"So far it's scattered stuff showing up, mostly tar balls," said Louisiana Office of Fisheries Assistant Secretary Randy Pausina. "It will pull out with the tide, and then show back up."

Pausina said he expected the oil to clear the passes and move directly into the lake, taking a backdoor route to New Orleans.
UPDATE: The National Oceanic and Atmospheric Administration has released a new interactive BP oil spill map.

It may have become the most popular video on the internet. The National Center for Atmospheric Research (NCAR), part of the Commerce Department, created a computer simulation of the direction of the Deepwater Horizon oil spill from the day the leak began to Day 132. It shows the slick moving to the tip of Florida, up the East Coast nearly to Washington D.C., and then thousands of miles into the Atlantic Ocean by the end of the summer.

The interactive map, made using computer models by NCAR scientists and collaborators, shows one scenario of how oil from the leak could move. It is based on the behavior of dye -- not oil -- in water. "This is not a forecast, but rather, it illustrates a likely dispersal pathway of the oil for roughly four months following the spill. It assumes oil spilling continuously from April 20 to June 20," the NCAR writes.

The public seems to have ignored the caveat as the video has been picked up by website after website. The NCAR adds,"The computer simulations indicate that, once the oil in the uppermost ocean has become entrained in the Gulf of Mexico's fast-moving Loop Current, it is likely to reach Florida's Atlantic coast within weeks. It can then move north as far as about Cape Hatteras, North Carolina, with the Gulf Stream, before turning east. Whether the oil will be a thin film on the surface or mostly subsurface due to mixing in the uppermost region of the ocean is not known."

The model assumes that the oil flow could carry crude that lies as deep as 65 feet beneath the surface. Other simulations assume that the crude sits in a thin film on the top of the water. By the time this pool of crude reaches the East Coast, it could move north at a rate of 100 miles per day.

The simulation will increase the debate about the potential damage of the catastrophe. Current estimated are extremely wide-ranging -- from a few billions dollars to tens of billions -- depending on which direction the oil goes and how much of the Gulf shoreline and fishing industry is affected.

Should the simulation be correct, beaches all along the Eastern Seaboard could be impacted, and tourism and fishing could be in trouble as far north as the Carolinas. In other world, the costs would be unimaginable.

See full article from DailyFinance: http://srph.it/9rRzfG
At-sea oil cleanup idled by poor weather in Gulf
YAHOO
By BRENDAN FARRINGTON and TOM BREEN, Associated Press Writers
5 July 2010

PASS CHRISTIAN, Miss. – Across a wide stretch of the Gulf of Mexico, the cleanup of the region's worst-ever oil spill has been essentially landlocked for more than a week, leaving skimmers stuck close to shore.

Last week, the faraway Hurricane Alex idled the skimming fleet off Alabama, Florida and Mississippi with choppy seas and stiff winds. Now they're stymied by a succession of smaller storms that could last well into this week.

"We're just lying in wait to see if we can send some people out there to do some skimming," said Courtnee Ferguson, a spokeswoman for the Joint Information Command in Mobile, Ala.

Officials have plans for the worst-case scenario: a hurricane barreling up the Gulf toward the spill site. But the less-dramatic weather conditions have been met with a more makeshift response.

Skimming operations across the Gulf have scooped up about 23.5 million gallons of oil-fouled water so far, but officials say it's impossible to know how much crude could have been skimmed in good weather because of the fluctuating number of vessels and other variables.

Jerry Biggs, a commercial fisherman in Pass Christian, Miss., who has had to shut down because of the spill, is now hiring out his 13 boats and 40-man crew to BP for cleanup. He said the skimming operation is severely hampered by the weather.

"We don't even have the equipment to do the job right," Biggs said. "The (equipment) we're trying to do this with is inoperable in over 1 foot of seas."

From Louisiana, where skimming resumed after a three-day halt last week, to Florida, there are about 44,500 people, nearly 6,600 boats and 113 aircraft enlisted in the cleanup and containment effort, according to BP PLC.

The British company has now seen its costs from the spill reach $3.12 billion, a figure that doesn't include a $20 billion fund for damages the company created last month.

For many involved in the cleanup effort, nagging storms have whipped up choppy seas and gusty winds that make offshore work both unsafe and ineffective, stranding crews on dry land.

"We have to send our guys out every day and look at the weather and ask, 'Can we do this?'" said Courtnee Ferguson, a spokeswoman for the Joint Information Command in Mobile, Ala., which oversees operations in Alabama, Florida and Mississippi.

In the absence of offshore skimming, efforts in the three Gulf states east of Louisiana have turned largely on containment boom, about 550 miles of which has been deployed along the entire Gulf, and shoreline efforts to clean tar balls and other oily debris from beaches.

"We're operating 24 hours a day on the beaches, and anything that washes ashore we're able to get," Ferguson said.

It may be days before those beach crews are aided by skimming vessels, though, according to weather forecasters.

Heavy rain and scattered thunderstorms are predicted throughout the region into Wednesday, National Weather Service meteorolgist Tim Destri said Monday. The National Hurricane Center is also watching a low pressure system in the Caribbean Sea that has a low chance of becoming a tropical depression in the next two days.

If it does develop, it would more likely head toward northern Mexico or southern Texas, Destri said. But it's too early to predict its path with certainty.

The storms have not affected drilling work on a relief well that BP says is the best chance for finally plugging the leak. The company expects drilling to be finished by mid-August.

As it works to both clean up and contain the spill, BP is billing partners Anadarko Petroleum Corp. and Japan's Mitsui for their shares of the cleanup. BP has billed Anadarko, a 25-percent stakeholder in the blown-out well, for more than a quarter billion dollars so far. It also has reportedly billed Mitsui, a 10-percent partner, for $111 million.

Biggs, clearly angry over the situation, said the hurricane season will just further hurt the cleanup effort, saying one big storm will push the oil everywhere.

"This isn't going away. This isn't a sneeze or a hiccup. This is diarrhea for a long time," he said. "My lifestyle is screwed. It's over. The thing that I love the most I'm not going to be able to do anymore."
Oil spill cleanup takes hit as Hurricane Alex kicks oily waves onto Gulf coast shores
NY Daily News
BY Sean Alfano
Wednesday, June 30th 2010, 11:36 AMAs

Hurricane Alex  sweeps toward the Texas-Mexico  coast, the storm's high winds have kicked up oily waves that are slamming into Gulf coast beaches.

For some residents, the Category 1 storm has washed away progress made in fighting the massive oil spill plaguing the Gulf of Mexico.  Tar balls have popped up on Louisiana beaches that had been relatively oil-free for a few weeks.  Alex's 80 mile-per-hour winds have forced boats fighting the spill to suspend their efforts, making beaches more vulnerable to oil washing ashore.

"With this weather, we lost all the progress we made," Michael Malone, a marine science technician, told The Associated Press.

The storm is expected to make landfall Wednesday evening and drench the Gulf coast through Thursday.  Until then, oil spill workers can only sit and wait.  The worst oil disaster in U.S. history started April 20 when the Deepwater Horizon rig exploded off the Louisiana coast, killing 11 workers.  The government estimates between 70 million and 137 million gallons of oil have leaked into the Gulf.

BP, the oil giant that leased the rig, continues to try to contain the spill, while drilling a relief well, which government officials say is the best chance of permanently stopping the underwater gusher.
Hurricane Alex churns toward Mexico, Texas coasts
Washington Times
By Christopher Sherman and Paul J. Weber ASSOCIATED PRESS
5:14 a.m., Wednesday, June 30, 2010

BROWNSVILLE, Texas (AP) — Hurricane Alex churned westward through the Gulf of Mexico early Wednesday, far from oil spill cleanup efforts but on a collision course with Mexico and the southern Texas coastline.

The National Hurricane Center in Miami upgraded the storm to a Category 1 hurricane — the least powerful type — shortly before 10 p.m. CDT Tuesday after measuring sustained winds of 75 mph. Alex became the first June hurricane in the Atlantic since 1995, the center said.

Texas residents had been preparing for the storm for days, readying their homes and businesses and stocking up on household essentials. But the storm was expected to deal only a glancing blow to the state and to make landfall Wednesday evening south of Matamoros, Mexico, and some 100 miles south of Brownsville.

The storm was expected to pack winds of at least 90 mph when it comes ashore, but wasn't expected to become one of the more powerful categories of hurricane...
NOTE:  Tropical Storm Ida shown above is in the Pacific
Storm could be latest problem in spill cleanup
YAHOO
By MICHAEL KUNZELMAN, Associated Press Writer
26 June 2010

NEW ORLEANS – A tropical storm churning in the Caribbean could be the latest bad news for BP crews trying to contain and clean up the massive oil spill in the Gulf, an effort that has been plagued by setbacks for more than two months.

It is still too early to tell exactly where Tropical Storm Alex might go, or how it might affect oil on and below the surface of the Gulf of Mexico, forecasters said. An armada of ships is working on the spill. That includes those drilling two relief wells, projected to be done by mid-August, which are the best hope for halting the crude that has been gushing since an April 20 explosion touched off the biggest offshore oil spill in U.S. history.

BP's effort to drill through 2 1/2 miles of rock is on target, the oil giant said Friday. But BP's stock tumbled anyway over the mounting costs of the disaster and the company's inability to plug the leak sooner.  The crew that has been drilling the relief well since early May ran a test to confirm it is on the right path, using a tool that detects the magnetic field around the casing of the original, blown-out well.

"The layman's translation is, 'We are where we thought we were,'" said BP spokesman Bill Salvin.

Once the new well intersects the ruptured one, BP plans to pump heavy drilling mud in to stop the oil flow and plug it with cement.  Despite the encouraging news, BP stock tumbled 6 percent in New York on Friday to a 14-year low on news that BP has now spent $2.35 billion dealing with the disaster.  BP has lost more than $100 billion in market value since its deep-water drilling platform blew up, and its stock is worth less than half the $60 or so it was selling for on the day of the explosion.  If the bad weather heads toward the Gulf, it could add to BP's problems.

Forecasters can't say yet if Alex — which blew into a tropical storm early Saturday — will hit the northeastern part of the Gulf, where the spill has spread over the past 10 weeks.  Somewhere between 69 million and 132 million gallons of crude have spewed into the water since the Deepwater Horizon drilling rig exploded April 20, killing 11 workers.  Most storm prediction models show it traveling over the Yucatan Peninsula over the weekend and into the southern Gulf by Monday. Where it goes next is the question.

Jack Bevins, a forecaster with the National Hurricane Center in Miami, said early prediction models Saturday morning no longer had it going across the oil spill. But Alex's track could quickly change in the coming days as conditions shift.  The effort to capture the oil gushing from the sea bottom could be interrupted for up to two weeks if a storm forces BP to move its equipment out of harm's way, said Coast Guard Adm. Thad Allen, the government's point man on the crisis.

BP would need about five days to secure or move all its equipment to safety from an approaching storm but is working to shorten that to two days, Salvin said. The equipment includes ships that are processing the oil sucked up by the containment cap on the well and the rigs drilling the two relief wells.

In other news:

• A financial disclosure report released Friday shows that the Louisiana judge who struck down the Obama administration's six-month ban on deep-water drilling in the Gulf has sold many of his energy investments. U.S. District Judge Martin Feldman still owns eight energy-related investments, including stock in Exxon Mobil Corp. Among the assets he sold was stock in Transocean, which owned the rig that exploded. The Justice Department asked a federal appeals court Friday to delay Feldman's ruling "to preserve the status quo" during the government's appeal.

• Labor Secretary Hilda Solis slammed BP — along with Massey Energy, owner of the West Virginia coal mine where 29 workers died in an explosion in April — saying they need better safety measures. "We are not saying go out of business," she said. "Do your job better. Make an investment in your employees. We want you to make a profit, but not at the expense of killing your employees."

• Vice President Joe Biden will head to the Gulf on Tuesday to visit a command center in New Orleans and the oil-fouled Florida Panhandle.

• The IRS said payments for lost wages from BP's $20 billion victims compensation fund are taxable just like regular income. Payments for physical injuries or property loss are generally tax-free.

BP is capturing anywhere from 840,000 to 1.2 million gallons of oil a day. Worst-case government estimates say 2.5 million gallons a day are leaking from the well, though no one really knows for sure.

BP is working to develop a different containment system that would be easier to disconnect and hook back up if a storm interrupted the work.

More oil gushing into Gulf after problem with cap
YAHOO
By MICHAEL KUNZELMAN, Associated Press Writer
23 June 2010

NEW ORLEANS – Tens of thousands of gallons more oil gushed into the Gulf of Mexico on Wednesday after an undersea robot bumped a venting system, forcing BP to remove the cap that had been containing some of the crude.

It was yet another setback in the nine-week effort to stop the gusher, and it came as thick pools of oil washed up on Pensacola Beach in Florida and the Obama administration tried to figure out how to resurrect a six-month moratorium on deepwater drilling.

When the robot bumped the system just before 10 a.m. Wednesday, gas rose through the vent that carries warm water down to prevent ice-like crystals from forming, Coast Guard Adm. Thad Allen said.

Crews were checking to see if crystals had formed before putting it back on. BP spokesman Bill Salvin could not say how long that might take.

"We're doing it as quickly as possible," he said.

Before the problem with the containment cap, it had collected about 700,000 gallons of oil in 24 hours. That's oil that's now pouring into the Gulf. Another 438,000 gallons was burned on the surface by a different system that was not affected by the issue with the cap.

A similar problem doomed the effort to put a bigger containment device over the blown-out well in May. BP had to abandon the four-story box after the crystals called hydrates clogged it, threatening to make it float away.

The smaller cap, which had worked fine until now, had been in place since early June. To get it there, though, crews had to slice away a section of the leaking pipe, meaning the flow of oil could be stronger now than before.

The current worst-case estimate of what's spewing into the Gulf is about 2.5 million gallons a day. Anywhere from 67 million to 127 million gallons have spilled since the April 20 explosion on the Deepwater Horizon rig that killed 11 workers and blew out the well 5,000 feet underwater. BP PLC was leasing the rig from owner Transocean Ltd.

Meanwhile, the Obama administration plotted its next steps after U.S. District Judge Martin Feldman in New Orleans overturned its moratorium on new drilling, saying the government simply assumed that because one rig exploded, the others pose an imminent danger, too.

Feldman, a 1983 appointee of President Ronald Reagan, has reported extensive investments in the oil and gas industry, including owning less than $15,000 of Transocean stock, according to financial disclosure reports for 2008, the most recent available. He did not return calls for comment on his investments.

The White House promised an immediate appeal of his ruling. The Interior Department imposed the moratorium last month in the wake of the BP disaster, halting approval of any new permits for deepwater projects and suspending drilling on 33 exploratory wells.

Interior Secretary Ken Salazar said in a statement that within the next few days he would issue a new order imposing a moratorium that eliminates any doubt it is needed and appropriate.

"It's important that we don't move forward with new drilling until we know it can be done in a safe way," he told a Senate subcommittee Wednesday.

Several companies, including Shell and Marathon Oil, said they would await the outcome of any appeals before they start drilling again.

Asked about it Wednesday on NBC's "Today" show, BP managing director Bob Dudley said his company will "step back" from the issue while it investigates the rig explosion.

BP said Wednesday that Dudley has been appointed to head the new Gulf Coast Restoration Organization, which is in charge of cleaning up the oil spill. He takes over from BP CEO Tony Hayward, who has been widely criticized for his handling of the crisis.

In Florida, dozens of workers used shovels to scoop up pools of oil that washed up overnight, turning the sand orange.

Tar balls have been reported as far west as Panama City, Fla., and heavier oil is predicted to wash ashore further east along the coast line in the coming days. Oil has also washed up on beaches in Alabama and coated wetlands in Louisiana.

Gulf paymaster: People are in 'desperate' shape
YAHOO
Mon Jun 21, 8:01 am ET

WASHINGTON – The man President Barack Obama picked to run the $20 billion Gulf oil spill damage fund said Monday many people are in "desperate financial straits" and need immediate relief.

"Do not underestimate the emotionalism and the frustration and the anger of people in the Gulf uncertain of their financial future," Kenneth Feinberg told interviewers. "It's very pronounced. I witnessed it firsthand last week."

Feinberg, who ran the victims claim fund set up in the wake of the Sept. 11, 2001 terror attacks, said he is determined to speed up payment of claims.

His appearance came a week after the administration worked out an arrangement with oil giant BP to establish an independent claims fund — initially $20 billion — and pledged to reconfigure the system and expedite payments. Feinberg said BP has paid out over $100 million so far, and various estimates place total claims so far in excess of $600 million.

"The top message is the message conveyed to me by the president," Feinberg said. " ... We want to get these claims out quicker. We want to get these claims out with more transparency." He said people can file electronically for relief, if they wish, and they need not hire a lawyer. He also said he believes that "when a person comes in and asks for emergency assistance, they shouldn't have to keep coming back," suggesting lump-sum emergency payments.

Asked how officials can guard against false claims, Feinberg said he didn't think that would be a major problem, and said that in the 9/11 experience, there were only a handful of such claims. He did say there could be an issue involving claimants who say they were indirectly harmed by the spill, such as a Boston restaurateur theoretically arguing that his business was hurt by the inability to bring shrimp in from the Gulf.

In such instances, Feinberg said, officials might have to resort to whatever existing state law says on that issue.

In another interview, he said, "The emergency payments going out under my watch do not require that any claimant give up rights to litigate or go forward in court ... If you want to litigate, go ahead."

But he added that he considers that "very unwise," because it could take years to resolve the issue that way.

"The emergency payments are without any conditions," Feinberg said.

He appeared on ABC's "Good Morning America," CNN and NBC's "Today" show.

BP could face 'annihilation', says Medvedev
Page last updated at 12:18 GMT, Friday, 18 June 2010 13:18 UK

Russian President Dmitry Medvedev has questioned the future of BP, saying the oil giant may face "annihilation" after the Gulf of Mexico oil spill.

In an interview with the Wall Street Journal, he described the spill as a "wake-up call", and said that "hopefully [BP] can afford the losses".

Moody's rating agency also downgraded BP's credit rating by three notches.

BP, which says its finances are sound, has agreed to put aside $20bn (£13.5bn) to compensate victims of the oil spill.

Moody's said the full costs of the oil spill would have a negative impact on the company's cash flow for "a number of years".

As a result, it downgraded BP from A2 to Aa2.

However, it said the company's payments into the compensation fund were "manageable".

Earlier this week, the two other major international credit ratings agencies, Fitch and Standard & Poor's, also downgraded BP.

Despite the downgrade, BP shares were up 1.7% in early afternoon trading, having climbed almost 7% on Thursday.

'Complacency'

Mr Medvedev was less sure about BP's ability to cover its payments in the coming months.

"What I know is that BP will have to pay a lot of money this year," he said.

"Whether the company can digest those expenditures, whether they will lead to the annihilation of the company or its break up is a matter of expediency".

BP has said that it continues to perform well, with cash flow "expected to exceed $30bn in 2010 before taking into consideration costs related to the Deepwater Horizon spill."

On Thursday, BP boss Tony Hayward was grilled by US congressmen who accused the company of "astonishing complacency" in ignoring dangers when drilling in the Gulf of Mexico.

Asset sale

BP has agreed to pay $5bn into the compensation fund this year, followed by quarterly payments of $1.25bn until the total $20bn is paid.

The company has also said it will be selling about $10bn worth of "non-core" assets to raise cash, and has cancelled dividend payments this year.

There has been a great deal of speculation about what assets it might sell.

In Russia, BP holds a 50% stake in TNK-BP - a joint venture with AAR, which is owned by a group of Russian billionaires.

According to analysts at Moscow investment bank Troika Dialog, BP's stake in TNK-BP is worth about $16-$18bn.

However, analysts said that BP may have to take a hit on the price if it is forced to sell.

"If BP decides to sell its [stake in TNK], it will have to do so with a discount to find a buyer faster," Viktor Mishnyakov, energy expert from Uralsib, told the BBC Russian Service.

BP also owns about 1% of the Russian state-run company Rosneft, which is worth another $900m. Rumours about a possible sell-off caused Rosneft's share price to fall by 6% on Thursday.

The head of BP's Russian operations was forced to deny the rumours on Friday, saying that BP has yet to decide exactly which assets to dispose of.

For its part, Lukoil, one of Russia's biggest oil producers, said it would not be interested in buying any of BP assets should the UK oil company decide to sell.

"We are not wolves, we do not eat the weak," said the company's boss Vagit Alekperov.

Rising costs

BP made a profit last year of $14bn, down from $25bn a year earlier.

Analysts say that the compensation fund and initial clean-up costs would, therefore, be easily affordable for BP.

However, they also warn that the threat of legal action and significant fines means it needs to conserve cash.

Standard Chartered warned last week that the total cost to the company, including legal costs, could top $40bn.


David Willis, BBC News, Washington

Maybe it was President Obama's decision to dispatch the Attorney General - Eric Holder - to the Gulf Of Mexico a few weeks back to look into the possibility of criminal charges against BP that made the company's CEO so cautious as he gave testimony.

Time after time, to their growing frustration, Tony Hayward told members of Congress that it would be "premature" to prejudge the outcome of investigations into the explosion on the Deepwater Horizon well nearly two months ago.

Mr Hayward's reticence to be drawn further into the causes of the disaster led to growing frustration on the part of committee members, one of whom accused him of "stonewalling".

Another recurring theme of Mr Hayward's testimony was that he wasn't personally involved in decisions relating to the construction of the well which could have impacted on safety.

Committee members had accused BP of cutting corners in order to get the well into operation, but Mr Hayward professed himself out of the loop on those matters.

""With respect, sir, we drill hundreds of wells a year around the world," he informed Republican committee member Michael Burgess.

"Yes I know, Mr Burgess replied dryly, "That's what's scaring me right now."

Not coming to the Gulf, we trust?
Tropical depression forms off Mexico's coast
YAHOO
16 June 2010

MIAMI – A tropical depression has formed in the Pacific off Mexico's southwestern coast and a tropical storm warning was issued for the area.

The National Hurricane Center in Miami says the tropical storm warning is for the coast of Mexico from Salina Cruz to Lagunas de Chacahua. A tropical storm watch was in effect for the Mexican coast from west of Lagunas de Chacahua to Punta Maldonado.

The depression has maximum sustained winds near 30 mph (45 kph). Forecasters say some gradual strengthening is expected during the next 48 hours and the depression could become a tropical storm by Thursday.

The depression is centered about 100 miles (160 kilometers) south-southwest of Salina Cruz and is expected to be within the warning area over the next day or two.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.

MIAMI (AP) — A tropical depression has formed in the Pacific off Mexico's southeastern coast and a tropical storm warning was issued for the area.

The National Hurricane Center in Miami says the tropical storm warning is for the coast of Mexico from Salina Cruz to Lagunas de Chacahua. A tropical storm watch was in effect for the Mexican coast from west of Lagunas de Chacahua to Punta Maldonado.

The depression has maximum sustained winds near 30 mph (45 kph). Forecasters say some gradual strengthening is expected during the next 48 hours and the depression could become a tropical storm by Thursday.

The depression is centered about 100 miles (160 kilometers) south-southwest of Salina Cruz and is expected to be within the warning area over the next day or two.

(This version CORRECTS APNewsNow. corrects that depression is off southwestern coast, not southeastern.)

BP executives arrive at WH to meet with Obama
YAHOO
16 June 2010

WASHINGTON – Top BP oil company officials, including chief executive Tony Hayward, have arrived at the White House for a meeting Wednesday with President Barack Obama.

Obama told the nation Tuesday night that he intends to make BP pay for the damage it has caused to the Gulf of Mexico and coastal areas.

Obama wants the company to create a multibillion dollar fund to compensate Gulf Coast residents who are suffering economically after an oil rig BP was leasing exploded and sank in April. Millions of gallons of oil have spewed into the Gulf since then, creating the worst environmental disaster in U.S. history.


HERO IN REAL LIFE?
Kevin Costner hopes that his device can help to quickly clean up the Gulf of Mexico. BP has purchased 32 of his machines and is testing them now in the hopes of getting them to the spill site soon.

BP to test out actor Kevin Costner's oil spill clean-up machine for possible use in Gulf Coast spill
BY Nick Klopsis, DAILY NEWS WRITER
Monday, June 14th 2010, 10:09 AM

Kevin Costner  hopes his invention can make the oil spill saga have a Hollywood ending.

The "Field of Dreams" actor called his oil separator a "life preserver," saying that his device can help clean up the Gulf and that it's not too late to put it into action.

Costner told ABC's Sam Champion on "Good Morning America" that BP has already purchased 32 of the machines.

"I'm not on a white horse," Costner said. "I'm not the savior to this thing. But I'm kind of saying, like, I got a life preserver."

The device, which is designed to be brought to the spill site on barges, can separate 99% of oil from water and recycle up to 2,000 barrels per day. Costner spent 15 years and $20 million of his own money to develop the machine.

"If 20 of my V20s would have been at the Exxon Valdez, 90 percent of that oil would have been cleaned up within the week," Costner said.

The "Dances with Wolves" and "Waterworld" star said he got the idea to develop the centrifuge while watching the Exxon-Valdez spill in 1989.

"... [W]hat happened is as a young man, as a boy, I would see these things, these images, and I could tell my parents would stop and look at the TV," he said. "And when you're young, you look at them and you go, 'Something stopped them.' And what stopped them was these images.

"So I looked at those images myself and it was rubber boots. And it was straw. And it was pitch forks. And then I looked at it again ten years later and I wasn't a boy anymore. And I'm looking at it. And now I'm going, the same images, the oil coming up like pudding and people again on beaches with rubber boots and straw."

BP tested a version of Costner's device earlier this year, but the test failed after the machine gave the oil a peanut butter-like consistency. That problem has since been fixed, and BP is retesting the machine now in the hopes of getting it to the Gulf soon.

Despite the fact that the oil has reached the shores of Mississippi, Louisiana, and Alabama, Costner is confident that his oil separator can step in and make an immediate impact on the clean-up process.

"That oil's going to keep coming towards those people," Costner said. "That well has not stopped. So we have to be out at the source, sucking it up on some major, I mean, we have to treat it a little bit like a war. We mustered logistically everything we had to get the Beaches of Normandy. We have to muster everything we can to keep it from hitting our beaches.

And the actor hopes that the machine can help prevent large-scale incidents like this from occurring in the future.

"... [W]e know accidents are going to happen, "Costner said. "But if we're going to operate on our high seas, we have to have-- we have to have this equipment there and ... it should be able to operate the minute the oil comes into contact with water."

How We're Fighting the Gulf Oil Spill
With everything from fiber optics and high-speed centrifuges to antifreeze and pantyhose.
National Review
Daniel Foster
June 7, 2010 4:00 A.M.
 
The BP spill is giving Man, and his works to assert mastery over nature, a bad name. But just as technology caused this mess, technology will eventually end it. Below, the five most impressive technological forces at work in the Gulf saga.

THE RIG
Yes, the scorched hulk of the Deepwater Horizon that set this catastrophe in motion now lies in ruins at the bottom of the Gulf of Mexico, but before it became the site of tragedy for eleven families and a symbol of capitalist hubris for the enemies of domestic drilling, the $500 million Horizon was a record-breaking technological dynamo, and an innovation spurred by the political pressures that are pushing drilling ever farther off our shores. Designed by Houston’s Reading & Bates Corp. and built by Hyundai in 2001, the Deepwater Horizon was one of a small number of semi-submersible, dynamically positionable ultra-deepwater rigs. That is, unlike “jackup” rigs, with legs that rest on the ocean floor, the Deepwater Horizon floated on four massive stabilizing pontoons, which kept it stationary and level as waves washed beneath it. This allowed the rig to move anywhere it was needed, withstand 40-foot waves and 100-knot winds, and operate in water as deep as 10,000 feet. Powered by two 9,775-hp, 7,000-kilowatt AC generators, and outfitted with awesome-sounding machinery like the “heave compensator,” “cascading shaker,” “hydraulic power choke,” and “iron roughneck,” it obliterated the previous world record — and its own nominal capacities — for offshore drill depth when it hit 35,055 feet in the Gulf.


THE COSTNER SOLUTION
In a world in which the combination of Hollywood and politics is often nauseating, Kevin Costner’s unlikely emergence as a potential hero of the Gulf cleanup effort is a welcome exception. After the 1989 Exxon Valdez spill, and inspired by a fictional machine that turned urine into drinking water in his notorious 1995 flop Waterworld, Costner collaborated with his scientist brother and invested $24 million of his own money to develop a series of machines that can separate oil from water. Essentially powerful vacuums attached to centrifuges, Costner’s contraptions can reportedly remove oil from water at a rate of 200 gallons a minute with a level of 97 to 99 percent purity. Six of them are currently being tested by BP and the Army Corps of Engineers. Costner calls them “Ocean Therapy” machines, but if they manage to keep some of those oil plumes from hitting the Gulf coast, the region’s inhabitants might call them “The Bodyguard.”

THE MIGHTY MISSISSIPPI
The effort to contain the oil that has already escaped the well is unprecedented in size and scope, encompassing a vast fleet of ships and nearly 20,000 workers employing a variety of often ingenious mitigation methods. In favorable weather conditions, controlled fires are burning through oil slicks pooled at the surface. Deeper underwater, powerful chemical dispersants are breaking up monolithic oil plumes into micro-layers, zillions of little oil droplets distributed throughout the water instead of heading toward the marshlands in sheets. Miles and miles of oil booms — floating fences meant to collect oil and keep it from hitting vulnerable coastlines — are being deployed (some reportedly using human hair wrapped in recycled pantyhose, an excellent absorbent and proven oil collector). But perhaps the most powerful weapon that responders have turned to is the force that has instigated so many catastrophes in the past: the mighty Mississippi. Swollen with floodwaters from the Ohio River, the Mississippi in mid-May was emptying into the Delta at a rate of half a million cubic feet per second. This gave the engineers manning the complex system of levees and spillways that protects New Orleans and its surroundings a bold idea: Open the floodgates and provide what one Louisiana flood engineer called “a freshwater wedge” to push back against the oil being being carried ashore by the Gulf currents.

THE DISASTER-BOTS
With its immense pressures, frigid temperatures, and pitch-black darkness, the crippled wellhead of the Deepwater Horizon might as well be on the dark side of the moon — if the dark side of the moon were also under water and gushing oil at a rate of 20,000 barrels a day. Shallow-water rigs have traditionally employed human divers to install and repair equipment under water. But since no conventional manned vessel can reach the depths of the leak, every effort to contain it must be done via truck-sized Remote-Operated Vehicles, or ROVs. Piloted by joystick-wielding BP engineers from mission-control centers aboard command ships, ROVs like Oceaneering’s 8,800-pound Millenium Plus model feature precision-grip hydraulic arms that are uncannily human in their movements. Most of the vehicles are fed power and telemetry via fiber-optic cables that link them back to the surface, but an increasing number are wireless and “autonomous.” The machines have been instrumental in each successive effort to repair the wellhead, from the early attempt to reactivate the blowout preventer to the ill-fated containment-dome and “top kill” operations.


PLAN F
The robots were also instrumental in the latest and (fingers crossed) most successful effort to contain the leak, using a “Lower Marine Riser Package” (LMRP) to fit a new cap over the failed blowout preventer. How did it work? First, ROVs were brought in to clear the mangled pipes from atop the failed blowout preventer, using a diamond-tipped circular saw and eventually a pair of giant shears. Then the drill-ship Enterprise, with an exposed “moon pool” and derrick amidships, positioned itself over a newly fabricated cap, which sat on the seabed near the blowout preventer. It carefully lowered its LMRP drill pipe and maneuvered it into position to latch onto the cap, continuously pumping hot seawater and methanol “anti-freeze” through the system to keep it free of hydrates — compounds formed at the low temperatures and high pressures around the oil plume that would quickly crystallize and block up the works. The cap was brought alongside the newly smooth cut over the leak and swiftly wedded to it. At first, opened valves allowed high-pressure oil and gas to flow through the cap, until hydrogen pumped down the LMRP could equalize the pressure, allowing oil to be directed up through the riser to be collected by the Enterprise at the surface. ROVs were then dropped in again to close the valves. With this system in place, BP is now keeping up to 10,000 barrels of oil a day from reaching the Gulf coast.






Oil Could Reach Atlantic Coasts
By ANDREW C. REVKIN, NYTIMES
June 3, 2010, 12:17 pm

For weeks there have been discussions about the potential for the spreading Gulf of Mexico oil slick to slip around Florida and flow up the East Coast. Now a suite of simulations, run by an international team of ocean and climate scientists, shows this is a likely outcome should the flow remain unabated this summer. The researchers stress there are caveats and uncertainties, most notably related to the state of the gulf’s highly variable loop current in coming weeks.

But nearly all of the simulations end up with oil flowing east and north. There’s even a small chance some of the oil could cross the Atlantic Ocean and reach Europe, although Martin Visbeck, a German oceanographer involved with the work, noted that it would most likely be extremely diluted and degraded by then.

If some of the gulf oil starts coating beaches in the Hamptons while media and political power players relax there this summer, will President Obama’s call for a new American energy revolution get more momentum?

I doubt it, given that the coastal states are already relatively engaged on the issue. Overall, it still seems to take a shock to the wallet to have a deeper impact.

Here’s some more background on the modeling effort, sent to me by Visbeck, the head of the physical oceanography unit at the Leibniz Institute of Marine Sciences at Kiel University in Germany. In mid-May, he was in Boulder, Colo., to attend a research meeting at the National Center for Atmospheric Research. I’ll provide links to clarify the acronyms a bit later today.
Martin Visbeck:

During that meeting the first news of some amounts of the oil reaching the loop current broke and several news agencies contacted IFM-GEOMAR to get a perspective of the risk of the oil reaching the European shore lines. I have made some very rough and ready forecasts based on my general knowledge of the ocean circulation. That same day I met Synte Peacock, a former Ph.D. student of mine, in the cafeteria and we decided to use the NCAR-LANL high resolution model to perform some dye release studies. A few days later, Mathew Maltrud from Los Alamos National Lab had secured some computing time and the first dye release experiments could start.

Synte and Mat scanned through 100 years of control simulations of the model to find a situation in the Gulf of Mexico that somewhat resembles the current state of the Loop Current. Two days later the first results were available and we all were surprised how quickly the dye was spreading into the Florida Current and Gulf Stream system.

Within three months significant concentrations were present along the U.S. South Atlantic Bight. Since the we have performed many more simulations to explore how typical the first run was. Several robust feature became apparent.

We were still hoping that our simulations would be a purely academic exercise and that the oil leak would have been stopped by now. However, we also performed some simulations with a dye injection of four months’ duration.

There are several caveats with the current simulation. First we are using climatological wind forcing and can not take into account the real weather situations. Second the evolution of the Loop Current system is a very critical factor in influencing how much of the the dye (a proxy for the oil) remains in the Gulf of Mexico and what fraction can reach the Florida Current.

The oil will begin to disintegrate to a wide range of chemical reactions that depend on the biological activity. We have made no attempt to include that into our calculations.

We cannot be sure that this model is very realistic. With a grid cell size of slightly less than 10 square kilometers the model can not resolve near shore processes and might underestimate the lateral exchange in the Gulf Stream system. On the other hand, models of this type have also been criticized to have still to slow currents and to much numerical diffusion. More scientific work needs to be done to have a better idea of the fate of the spilled oil.




BP says so far, Gulf well plug isn't working
YAHOO
By BEN NUCKOLS, Associated Press Writer
29 May 2010

COVINGTON, La. – A risky procedure to stop the oil spewing into the Gulf of Mexico has yet to show much success, and BP is considering scrapping it in favor of a different method to contain the worst oil spill in U.S. history, an executive said Saturday.

The comments from BP PLC chief operating officer Doug Suttles came amid increasing skepticism that the "top kill" operation — which involves pumping heavy drilling mud into a crippled well 5,000 feet underwater — would halt the leak.

The top kill began Wednesday, and "to date it hasn't yet stopped the flow," Suttles told reporters at Port Fourchon. "What I don't know is whether it ultimately will or not."

If the top kill fails, BP would cut off the damaged riser from which the oil is leaking and cap it with a containment valve that's already resting on the seafloor. BP is already preparing for that operation, Suttles said.

Since the top kill began Wednesday, BP has pumped huge amounts mud into the well at a rate of up to 2,700 gallons per minute, but it's unclear how much is staying there. A robotic camera on the seafloor appeared to show mud escaping at various times during the operation. On Saturday, the substance spewing from the well appeared to be oil, experts said.  BP has also tried several times to shoot assorted junk into the well's crippled blowout preventer to clog it up and force the mud down the well bore. That, too, has met with limited success.

Interior Secretary Ken Salazar, addressing reporters after he spoke at a high school graduation ceremony in Denver, echoed what Suttles said and said officials were evaluating the next step. He said the relief well was the ultimate solution, but said something was needed to stop the spill until then.

"We're doing everything with the best minds in the world to make sure that happens," he said.

The oil spill began after the Deepwater Horizon drilling rig exploded in April, killing 11 people. It's the worst spill in U.S. history — exceeding even the Exxon Valdez disaster in 1989 off the Alaska coast — dumping between 18 million and 40 million gallons into the Gulf, according to government estimates.  Experts and other observers were growing increasingly skeptical that BP would be able to plug the well. Eric Smith, associate director of the Tulane Energy Institute, said Saturday that the top kill appeared headed for failure.

"They warned us not to draw too many conclusions from the effluent, but ... it doesn't look like it's working," he said.

BP had pegged the top kill's chances of success at 60 to 70 percent. The company says the best way to stop the flow of oil is by drilling relief wells, but those won't be completed until August.  Chris Roberts, a councilman in Louisiana's Jefferson Parish, said he was frustrated by BP's failures and perceived lack of transparency.

"We're wondering whether or not they're attempting to give everybody false hope in order to drag out the time until the ultimate resolution to it" — the completion of the relief wells, Roberts said.

Meanwhile, Coast Guard and Minerals Management Service officials heard a sixth day of testimony during hearings into the disaster in Kenner.

David Sims, BP's drilling operations manager for exploration and appraisal in the Gulf of Mexico, testified he was aware of well problems experienced by the Deepwater Horizon's drilling crew in the weeks and months leading up to the explosion. He said there were no serious problems the day the rig exploded.


Judge blocks Gulf offshore drilling moratorium
YAHOO
By MICHAEL KUNZELMAN, Associated Press Writer
22 June 2010

NEW ORLEANS – A federal judge on Tuesday blocked a six-month moratorium on new deepwater drilling projects imposed after the massive Gulf oil spill.

The White House promised an immediate appeal. President Barack Obama's administration had halted approval of any new permits for deepwater drilling and suspended drilling of 33 exploratory wells in the Gulf.

Press Secretary Robert Gibbs said Obama believes strongly that drilling at such depths does not make any sense and puts the safety of workers "at a danger that the president does not believe we can afford."

Several companies that ferry people and supplies and provide other services to offshore drilling rigs asked U.S. District Judge Martin Feldman in New Orleans to overturn the moratorium, arguing it was arbitrarily imposed.

Feldman agreed, saying in his ruling the Interior Department assumed that because one rig failed, all companies and rigs doing deepwater drilling pose an imminent danger.

"The Deepwater Horizon oil spill is an unprecedented, sad, ugly and inhuman disaster," he wrote. "What seems clear is that the federal government has been pressed by what happened on the Deepwater Horizon into an otherwise sweeping confirmation that all Gulf deepwater drilling activities put us all in a universal threat of irreparable harm."

The moratorium was imposed after the April 20 explosion on the Deepwater Horizon drilling rig that killed 11 workers and blew out the well 5,000 feet underwater that has spewed millions of gallons of oil into the Gulf.

The Interior Department said it needed time to study the risks of deepwater drilling. But the lawsuit filed by Hornbeck Offshore Services of Covington, La., claimed there was no proof the other operations posed a threat.

Company CEO Todd Hornbeck said after the ruling that he is looking forward to getting back to work.

"It's the right thing for not only the industry but the country," he said.

The moratorium was declared May 6 and originally was to last only through the month. Obama announced May 27 that he was extending it for six months.

In Louisiana, Gov. Bobby Jindal and corporate leaders said the moratorium would force drilling rigs to leave the Gulf of Mexico for lucrative business in foreign waters.

They said the loss of business would cost the area thousands of lucrative jobs, most paying more than $50,000 a year. The state's other major economic sector, tourism, is a largely low-wage industry.

Tim Kerner, the mayor of Lafitte, La., cheered Feldman's ruling.

"I love it. I think it's great for the jobs here and the people who depend on them," said Kerner, whose constituents make their living, primarily, from commercial fishing or oil.

But in its response to the lawsuit, the Interior Department said the moratorium is necessary as attempts to stop the leak and clean the Gulf continue and new safety standards are developed.

"A second deepwater blowout could overwhelm the efforts to respond to the current disaster," the Interior Department said.

The government also challenged contentions the moratorium would lead to long-term economic harm. Although 33 deepwater drilling sites were affected, there are still 3,600 oil and natural gas production platforms in the Gulf.

Catherine Wannamaker, a lawyer for environmental groups that intervened in the case and supported the moratorium, called the ruling "a step in the wrong direction."

"We think it overlooks the ongoing harm in the Gulf, the devastation it has had on people's lives," she said. "The harm at issue with the Deepwater Horizon spill is bigger than just the Louisiana economy. It affects all of the Gulf."



Endangered?  Dispersant only soooooooooo much, says E.P.A. Administrator Lisa Jackson (c).  New species eats oil.

New microbe discovered eating oil spill in Gulf
By RANDOLPH E. SCHMID, AP Science Writer
Wed Aug 25, 10:32 am ET

WASHINGTON – The Gulf of Mexico oil spill has revealed a previously unknown type of oil-eating bacteria, which is suddenly flourishing.  Scientists discovered the new microbe while studying the underwater dispersion of millions of gallons of oil spilled into the Gulf following the explosion of BP's Deepwater Horizon drilling rig.  And the microbe works without significantly depleting oxygen in the water, researchers led by Terry Hazen at Lawrence Berkeley National Laboratory reported Tuesday in the online journal Science Express.

"Our findings, which provide the first data ever on microbial activity from a deepwater dispersed oil plume, suggest" a great potential for bacteria to help dispose of oil plumes in the deep-sea, Hazen said in a statement.

Environmentalists have raised concerns about the giant oil spill and the underwater plume of dispersed oil, particularly its potential effects on sea life. A report just last week described a 22-mile long underwater mist of tiny oil droplets.

"Our findings show that the influx of oil profoundly altered the microbial community by significantly stimulating deep-sea" cold temperature bacteria that are closely related to known petroleum-degrading microbes, Hazen reported.

Before the spill the microbes in the deepest parts of the Gulf were not well known and there was little carbon present in the area of cool temperatures and high pressure.

"We deployed on two ships to determine the physical, chemical and microbiological properties of the deepwater oil plume," Hazen said. "The oil escaping from the damaged wellhead represented an enormous carbon input to the water column."

Their findings are based on more than 200 samples collected from 17 deepwater sites between May 25 and June 2. They found that the dominant microbe in the oil plume is a new species, closely related to members of Oceanospirillales.

This microbe thrives in cold water, with temperatures in the deep recorded at 5 degrees Celsius (41 Fahrenheit).  Hazen suggested that the bacteria may have adapted over time due to periodic leaks and natural seeps of oil in the Gulf.  Scientists also had been concerned that oil-eating activity by microbes would consume large amounts of oxygen in the water, creating a "dead zone" dangerous to other life. But the new study found that oxygen saturation outside the oil plume was 67 percent, while within the plume it was 59 percent.

The research was supported by an existing grant with the Energy Biosciences Institute, a partnership led by the University of California, Berkeley and the University of Illinois that is funded by a $500 million, 10-year grant from BP. Other support came from the U.S. Department of Energy and the University of Oklahoma Research Foundation.

Sciencexpress is the online edition of the journal Science.

Online: http://www.sciencexpress.org.

Oil Plume May Be Breaking Down Slowly
By THE NEW YORK TIMES
August 19, 2010, 3:04 pm

In the first ambitious journal article related to the gulf oil spill, scientists report that a huge plume of dispersed oil may not be breaking down rapidly. The data used to form their conclusion was gathered in late June.
-------------------

Gulf Oil Plume Is Not Breaking Down Fast, Research Says
NYTIMES
By JUSTIN GILLIS and JOHN COLLINS RUDOLF
August 19, 2010

New research confirms the existence of a huge plume of dispersed oil deep in the Gulf of Mexico and suggests that it has not broken down rapidly, raising the possibility that it might pose a threat to wildlife for months or even years.

The study, the most ambitious scientific paper to emerge so far from the Deepwater Horizon spill, casts some doubt on recent statements by the federal government that oil in the gulf appears to be dissipating at a brisk clip. However, the lead scientist in the research, Richard Camilli, cautioned that the samples were taken in June and circumstances could have changed in the last two months.

The paper, which is to appear in Friday’s issue of the journal Science, adds to a welter of recent, and to some extent conflicting, scientific claims about the status of the gulf. While scientists generally agree that the risk of additional harm at the surface and near shore has diminished since the well was capped a month ago, a sharp debate has arisen about the continuing risk from oil in the deep waters.

So far, scientific information about the gulf has emerged largely from government reports and statements issued by scientists. Many additional research papers are in the works, and it could be months before a clear scientific picture emerges.

The slow breakdown of deep oil that Dr. Camilli’s group found had a silver lining: it meant that the bacteria trying to eat the oil did not appear to have consumed an excessive amount of oxygen in the vicinity of the spill, alleviating concerns that the oxygen might have declined so much that it threatened sea life. On this point, Dr. Camilli’s research backs statements that the government has been making for weeks.

Dr. Camilli, of the Woods Hole Oceanographic Institution in Woods Hole, Mass., said the plume, at the time he studied it, was dissipating so slowly that it could still be in the gulf many months from now. Assuming that the physics of the plume are still similar to what his team saw in June, “it’s going to persist for quite a while before it finally dissipates or dilutes away,” he said.

Concentrations of hydrocarbons in the plume were generally low and declined gradually as the plume traveled through the gulf, although Dr. Camilli’s team has not yet completed tests on how toxic the chemicals might be to sea life.

In a report on Aug. 4, a team of government and independent scientists organized by the National Oceanic and Atmospheric Administration estimatedthat 74 percent of the oil from the leak had been captured directly from the wellhead; had been skimmed, burned, dispersed chemically or by natural processes; had evaporated from the ocean surface; or had dissolved into the water in microscopic droplets.

The report found the remaining 26 percent of the oil had mostly washed ashore or been collected there, was buried in sand and sediment, or was still on or below the water surface as sheen or tar balls.

While the government report expressed concern about the continuing impact of the spill, it was widely viewed as evidence that the risk of additional harm in the gulf was declining.

This week, scientists at the University of Georgia, who in May were among the first to report the existence of the large plume studied by Dr. Camilli’s team, sharply challenged the government’s assessment. They contended that the government had overestimated rates of evaporation and breakdown of the oil.

“The idea that 75 percent of the oil is gone and is of no further concern to the environment is just incorrect,” said Samantha Joye, a professor of marine sciences at the University of Georgia. She has studied the spill extensively but has not yet published her results.

Responding to the University of Georgia criticism, Jane Lubchenco, the NOAA administrator, said that the government stood by its calculations. “Some of those numbers we can measure directly,” she said. “The others are the best estimates that are out there.”

Dr. Lubchenco has noted repeatedly that some of the remaining oil existed in the form of undersea plumes and cautioned that this subsurface oil could pose a threat to marine life.

In another report this week, researchers from the University of South Florida said they had found oil droplets scattered in sediment along the gulf floor and in the water column, where they could pose a threat to some of the gulf’s most important fisheries.

The dispersed oil appeared to be having a toxic effect on bacteria and on phytoplankton, a group of micro-organisms that serves as a vital food for fish and other marine life, the scientists said, although they cautioned that further testing was needed.

Dr. Camilli’s paper tends to support the view that considerable oil may be lingering below the surface of the gulf. He said he was not especially surprised by the slow rate of breakdown, considering that the deep waters of the gulf are cold, about 40 degrees Fahrenheit in the vicinity of the plume.

“In colder environments, microbes operate more slowly,” Dr. Camilli said. “That’s why we have refrigerators.”

For weeks, BP, the company that owned the out-of-control well, disputed claims from scientists that a huge plume of dispersed oil droplets had formed in the gulf, with its chief executive at the time, Tony Hayward, declaring at one point, “There aren’t any plumes.”

NOAA, while initially skeptical, ultimately confirmed the existence of such plumes in two reports. The new paper appears to dispel any lingering doubt, providing detailed evidence that one major plume and at least one minor plume existed and that they contained large quantities of hydrocarbons, albeit dispersed into tiny droplets.

Dr. Camilli’s team measured the main plume at roughly 3,600 feet below the surface; it extended for more than 20 miles southwest of the well. It was more than a mile wide in places and 600 feet thick, traveling at about four miles a day.

At the time his team studied it in June, the plume appeared to have narrowed from measurements reported early in the spill by a team that included Dr. Joye and Vernon Asper, a marine scientist from the University of Southern Mississippi, but Dr. Camilli’s results otherwise matched their report.

The slow breakdown of the plume, if verified by additional research, suggests that scientists may find themselves tracking the toxic compounds from BP’s well and trying to discern their impact on sea life for a long time.

“I expect the hydrocarbon imprint of the BP discharge will be detectable in the marine environment for the rest of my life,” Ian MacDonald, an oceanographer at Florida State University, told Congress in prepared testimony on Thursday. “The oil is not gone and is not going away anytime soon.”
Major study charts long-lasting oil plume in Gulf
YAHOO
By SETH BORENSTEIN, AP Science Writer
19 August 2010


WASHINGTON – A 22-mile-long invisible mist of oil is meandering far below the surface of the Gulf of Mexico, where it will probably loiter for months or more, scientists reported Thursday in the first conclusive evidence of an underwater plume from the BP spill.

The most worrisome part is the slow pace at which the oil is breaking down in the cold, 40-degree water, making it a long-lasting but unseen threat to vulnerable marine life, experts said.

Earlier this month, top federal officials declared the oil in the spill was mostly "gone," and it is gone in the sense you can't see it. But the chemical ingredients of the oil persist more than a half-mile beneath the surface, researchers found.

And the oil is degrading at one-tenth the pace at which it breaks down at the surface. That means "the plumes could stick around for quite a while," said study co-author Ben Van Mooy of the Woods Hole Oceanographic Institution in Massachusetts, which led the research published online in the journal Science.

Monty Graham, a scientist at the Dauphin Island Sea Lab in Alabama who was not involved in the study, said: "We absolutely should be concerned that this material is drifting around for who knows how long. They say months in the (research) paper, but more likely we'll be able to track this stuff for years."

The underwater oil was measured close to BP's blown-out well, which is about 40 miles off the Louisiana coast. The plume started three miles from the well and extended more than 20 miles to the southwest. The oil droplets are odorless and too small to be seen by the human eye. If you swam through the plume, you wouldn't notice it.

"The water samples when we were right in the plume look like spring water," study chief author Richard Camilli said. "You certainly didn't see any oil droplets and you certainly didn't smell it."

The scientists used complex instruments — including a special underwater mass spectrometer — to detect the chemical signature of the oil that spewed from the BP well after it ruptured April 20. The equipment was carried into the deep by submersible devices.

With more than 57,000 of these measurements, the scientists mapped a huge plume in late June when the well was still leaking. The components of oil were detected in a flow that measured more than a mile wide and more than 650 feet from top to bottom.

Federal officials said there are signs that the plume has started to break into smaller ones since the Woods Hole research cruise ended. But scientists said that wouldn't lessen the overall harm from the oil.

The oil is at depths of 3,000 to 4,000 feet, far below the environment of the most popular Gulf fish like red snapper, tuna and mackerel. But it is not harmless. These depths are where small fish and crustaceans live. And one of the biggest migrations on Earth involves small fish that go from deep water to more shallow areas, taking nutrients from the ocean depths up to the large fish and mammals.

Those smaller creatures could be harmed by going through the oil, said Larry McKinney, director of Texas A&M University's Gulf of Mexico research center in Corpus Christi.

Some aspects of that region are so little known that "we might lose species that we don't know now exist," said Graham of the Dauphin Island lab.

"This is a highly sensitive ecosystem," agreed Steve Murawski, chief fisheries scientist for the National Oceanic and Atmospheric Administration. "The animals down at 3,300 to 3,400 feet grow slowly." The oil not only has toxic components but could cause genetic problems even at low concentrations, he said.

For much of the summer, the mere existence of underwater plumes of oil was the subject of a debate that at times pitted outside scientists against federal officials who downplayed the idea of plumes of trapped oil. Now federal officials say as much as 42 million gallons of oil may be lurking below the surface in amounts that are much smaller than the width of a human hair.

While federal officials prefer to describe the lurking oil as "an ephemeral cloud," the Woods Hole scientists use the word "plume" repeatedly.

The study conclusively shows that a plume exists, that it came from the BP well and that it probably never got close to the surface of the Gulf of Mexico, Camilli said. It is probably even larger than 22 miles long, but scientists had to stop measuring because of Hurricane Alex.

Earlier this week a University of South Florida team reported oil in amounts that were toxic to critical plant plankton deep underwater, but the crude was not necessarily in plumes. Those findings have not been reviewed by other scientists or published.

The plume is probably still around, but moving west-southwest of the BP well site at about 4 miles a day, Camilli said.

While praising the study that ended on June 28, Murawski said more recent observations show that the cloud of oil has "broken apart into a bunch of very small features, some them much farther away." Texas A&M's McKinney said marine life can suffer harm whether it is several smaller plumes or one giant one.

NOAA redirected much of its sampling for underwater oil after consulting with Woods Hole researchers. The federal agency is now using the techniques that the team pioneered with a robotic sub and an underwater mass spectrometer, Murawski said.

Previous attempts to define the plume were "like watching the Super Bowl on a 12-inch black-and-white TV and we try to bring to the table a 36-inch HD TV," said Woods Hole scientist Chris Reddy. The paper, fast-tracked for the world of peer-reviewed science, was written on a boat while still in the Gulf, he said.

Reddy said he could not yet explain why the underwater plume formed at that depth. But other experts point to three factors: cold water, the way the oil spewed from the broken well, and the use of massive amounts of dispersants to break up the oil before it gets to the surface.

The decision to use 1.8 million gallons of dispersants amounted to an environmental trade-off — it meant less oil tainting the surface, where there is noticeable and productive life, but the risk of longer-term problems down below.

At a federal science conference, officials looked at the relative risks and decided "it was worth the effort" to use dispersants, Murawski said.

Given the slow rate at which the oil is degrading in the cold water, Samantha Joye of the University of Georgia, and others say it is too early to even think about closing the books on the spill: "The full environmental impacts of the spill will thus not be felt for some time."
Despite Rule, BP Used Dispersant, Panel Finds
NYTIMES
By MATTHEW L. WALD
31 July 2010

The Coast Guard approved dozens of requests by BP to spread hundreds of thousands of gallons of surface oil dispersants in the Gulf of Mexico despite the Environmental Protection Agency’s directive on May 26 that they should be used only rarely, according to documents and correspondence analyzed by a Congressional subcommittee.

In some cases, the Coast Guard approved BP’s requests even though the company did not set an upper limit on the amount of dispersant it planned to use.

The dispersants contributed to “a toxic stew of chemicals, oil and gas, with impacts that are not well understood,” Representative Edward J. Markey of Massachusetts, the Democratic chairman of the House Subcommittee on Energy and Environment, wrote in a letter sent late Friday to Thad W. Allen, the retired Coast Guard admiral who is leading the federal response to the oil spill.

In a conference call on Saturday morning, Admiral Allen and Lisa P. Jackson, the E.P.A. administrator, said they had worked together closely and had come very near to achieving the agency’s goal of reducing dispersant amounts by 75 percent.

On May 26, the E.P.A. directed BP to stop using dispersants on the ocean surface, except in “rare cases when there may have to be an exemption,” and to limit use of the chemicals underwater.

But Mr. Markey’s letter pointed to more than 74 exemption requests in 48 days, of which all but 10 were fully approved by the Coast Guard. In some cases, BP asked for permission after it had already applied the chemicals, the letter said. And in one case, the Coast Guard approved the use of a larger volume of dispersants than the company had applied for.

As an example of the conflicting numbers, Mr. Markey said that in a request filed on June 16, BP told the Coast Guard that in the previous several days it had used a maximum of 3,365 gallons of dispersant in a single day. But in e-mails to members of Congress giving updates on the spill response, the company said it had used 14,305 gallons of dispersant on June 12 and 36,000 gallons on June 13.

Admiral Allen and Ms. Jackson said they had reduced dispersant use by 72 percent. “In any government program I’ve worked in, that’s pretty significant progress,” Admiral Allen said.

Admiral Allen said his agency would try to reconcile the conflicting numbers that were issued during what he called “the equivalent of an environmental war.”

The two officials said the government would conduct a postmortem evaluation of the effectiveness of skimming, burning and spreading dispersants to determine what had worked best.

But Ms. Jackson said, “There’s absolutely no doubt that use of dispersants was one of several essential tools to mitigate this spill’s impact.”

A spokesman for BP, Scott Dean, also said he could not respond in detail because the company had not seen Mr. Markey’s letter. But he said, “From the outset we’ve operated in a unified command that has included E.P.A. and the Coast Guard.”

Mr. Dean said BP had worked “hand in glove” with the two agencies on dispersant decisions. Under the “joint command” structure set up in the Oil Pollution Act of 1990, the federal government and the oil company mount a response to a spill.

While it was known that BP continued the use of surface dispersant after the May 26 directive, it was not clear how much was being used. According to the documents analyzed by the committee, the company did cut back substantially on the use of underwater dispersants after the directive was issued.

The E.P.A. and the Coast Guard have both described the use of the dispersants as a trade-off. The chemicals break down blobs of oil into smaller droplets that are easier for naturally occurring bacteria to digest. But they can also have harmful effects on marine animals. And if the dispersants are too successful and allow a proliferation of bacteria, the bacteria can use up all the oxygen in the water and kill the fish and other organisms.

In testimony before Congress on July 15, Ms. Jackson said her agency had been looking for signs of unusually low oxygen levels and had not found them.

In his letter, Mr. Markey said the May 26 directive had “become more of a meaningless paperwork exercise than an attempt to abide by the directive and eliminate surface applications of chemical dispersants.”

In fact, other government correspondence disclosed by Mr. Markey indicates a dispute within the E.P.A. about the proper use of dispersants. At one point, the Dallas regional office of the agency agreed that the incident command center, run by the Coast Guard and BP, should get blanket approval to use 5,000 gallons of dispersant a day, to “improve operational efficiency.”

But the next day, the Dallas office rescinded that policy, saying that the center should make a request each evening about the amount it wanted to use the next day and that the agency would make a decision overnight.

Mr. Markey said that while the agency said on May 26 that applications for surface dispersant use should be rare, the Coast Guard, in approving the applications, cited routine factors like there being too much oil to skim.
 


16 June 2010 Last updated at 08:32 ET

Q&A: Why estimates of the BP oil spill keep changing

Estimates of the amount of oil escaping from BP's damaged well in the Gulf of Mexico have risen 60-fold since the disaster unfolded on 20 April. So why have the calculations varied so much and how is the spill measured?  Just how sharply have the estimates changed?

US scientists issued a figure of 35,000-60,000 barrels (1.5-2.5 million gallons) per day on 15 June.

The figure was accepted by US Energy Secretary Steven Chu as "a significant step forward in our effort to put a number on the oil".

By contrast, an estimate announced by US officials on 26 April put the flow at just 1,000 barrels per day. That figure was later revised to 5,000 barrels. Then it was 12,000-19,000, then 20,000-40,000.

Why does the flow rate keep rising?

Normally the flow from a well is measured on a rig but the flow meters on the Deepwater Horizon were destroyed along with the rig in the explosion.  The 15 June estimate is based partially on data gathered from pressure meters placed on the sea-bed on BP's containment cap, which is collecting some of the oil.

Another method scientists have used to measure the flow is to combine data from satellite photos of the slick on the sea surface with estimates of the oil's thickness. But the reliability of this approach depends partly on how much oil has reached the surface, says Geoffrey Maitland, professor of energy engineering at Imperial College, London.

Experts in fluid mechanics have been tracking particles coming out of the broken riser pipe and measuring their velocity. They have been refining their models of the flow based on the levels of oil, gas and solid particles coming from the well.  Other estimates are based on video from the downhole of the well.

A team from the Woods Hole Oceanographic Institution in the US is also using acoustic techniques to measure flow rates.
How much oil is being collected by BP?

BP says the containment cap (the lower marine riser package, or LMRP) it placed on the well's damaged blowout preventer (BOP) on 3 June is collecting about 15,000 barrels a day, piping it up to a ship on the surface. Even if the amount of oil escaping is the low-end figure of 35,000 barrels, that leaves 20,000 leaking into the sea daily.

The British company was due, as of mid-June, to start up a second containment system (SCS) that would increase collection to 20,000-28,000 barrels a day.

The SCS is meant to take oil and gas from the BOP's choke line through a separate riser pipe to another vessel on the surface, where the fuels will be burnt off.

The company plans to be able to handle 80,000 barrels of escaped oil per day by mid-July.

BP "under-estimated the flow rate" and "over-estimated their ability to fight against that flow rate", says Ian MacDonald, professor of oceanography at Florida State University.

He told the BBC: "This was perhaps a fatal miscalculation... with the result that this crisis has continued much longer, with much greater release of oil than would have been necessary had they [BP] made much more accurate flow rates at the very start."
How accurate are the latest measurements?

It is very difficult to say because the models are constantly being revised and combined with observation.

The main plume of oil is being treated with dispersants and surfactants, wetting agents which lower the surface tension of the oil so it can mix with the water. These make an emulsion which brings the oil more quickly to the surface, where it can be scooped up by collection vessels.

There are concerns that some of the oil is forming separate, smaller plumes below the surface, Professor Maitland says. This may make it more difficult to estimate the total size of the spill.

Not all the oil has surfaced yet, but it will eventually, because oil is lighter than water.

The uncertainty in measuring the total size of the spill is harming BP, Professor Maitland warns.

"It depletes confidence that BP have complete control of what is going on and their ability to collect the oil or cap it eventually."

Scientists Build Case for Undersea Plumes
NYTIMES
By JUSTIN GILLIS
May 28, 2010

IN THE GULF OF MEXICO — The ocean caught fire.

As it blazed, a dense column of black smoke rose toward the sky. Oily water, the color of strong tea, slopped up the sides of boats. The breeze carried an acrid smell, like gasoline fumes.  Aboard the research vessel F.G. Walton Smith, anxiety was growing.  Five scientists and six students had come to study the oil leak and its effect on the sea. They brought flasks and gloves, refrigerators and freezers, tiny tools and huge cylinders of gas.

They were not looking for oil on the surface, where it was so thick in places that it was being burned off, but for plumes of fine oil droplets far beneath the waves.

The stakes were high. Two weeks earlier, when some of these scientists had disclosed evidence of undersea oil plumes, their claim had been greeted skeptically by the government. The scientists’ credibility was on the line.  If the plumes did exist, much of the wisdom about combating oil spills might need to be reconsidered. The plumes would suggest that any future oil leak in deep water could be expected to do much of its damage in the sea, not on shore.

But where were the plumes?

After a slow start, American science is finally beginning to tackle the oil disaster in earnest. The National Oceanic and Atmospheric Administration, the federal agency charged with monitoring the health of the oceans, is sending multiple boats into the gulf. The National Science Foundation, another arm of the government, is issuing rapid grants to finance academic teams, including the one aboard the Walton Smith. BP, the oil company responsible for the spill, has pledged $500 million for research. And scientists like those aboard the Walton Smith are getting emergency financing from the government for their studies.

This stepped-up effort is starting to bear fruit. This week, another research vessel confirmed the existence of a huge undersea plume. And on Thursday, a team of scientists appointed by the Obama administration offered a more credible estimate of the flow rate at the broken well, putting it at two to four times the previous calculation.

That higher estimate only added to the sense among academic scientists that much of the oil must be hovering in the deep sea, instead of surfacing. The goal of the researchers aboard the Walton Smith was to nail the existence of such deep-sea plumes beyond any doubt.

They sailed early this week from Gulfport, Miss., and went back to the spot where they had originally discovered a large plume. It was no longer there.

All one afternoon, the Walton Smith hopscotched across the gulf. The top scientists on board, Samantha Joye of the University of Georgia and Vernon Asper of the University of Southern Mississippi, peered intently at instrument readouts, hoping for a signal.  Down to the bottom of the sea went a huge apparatus designed to test the water and grab samples of it. The results kept coming up clean.  Then, late in the afternoon of the second day at sea, the entire scientific crew suddenly leapt to attention.

The boat had arrived at a new sampling site, west of the oil leak, and the instruments were traveling once again to the bottom. In a clean ocean, they would be expected to produce fairly straight lines on a graph.

Instead, wild squiggles were showing up. The display looked like one of those seismograph readings taken in the throes of an earthquake. At three different depths, the instruments picked up plumes of material drifting through the deep ocean.  Dr. Asper stood back, arms crossed, watching the squiggles appear. “To see something like this is a once-in-a-lifetime thing,” he said. “It’s really remarkable.”

Soon, a giant winch on the rear of the boat hauled special bottles back from the deep, carrying water samples. The younger researchers rushed to the rear deck.  Working quickly in a daisy chain, circling the bottles, they filled small vials and other containers, then hustled back to their makeshift laboratory on the main deck of the Walton Smith.  Over the next few hours, they filtered some of the water. They shook some samples. They stirred some. They pickled some. They bubbled gases through the water. They refrigerated some vials. They froze some more.

Then they got ready to do it all again.

Within a day, word would come that a separate university vessel, the Weatherbird II, had discovered a giant plume stretching in the other direction from the broken well, toward Mobile Bay. That one threatens some of the finest fishing territory in the gulf.  It will take weeks of laboratory work to confirm with certainty that the plumes are made of oil droplets, or more likely, some complex mixture of oil and natural gas. If that idea holds up, the existence of these undersea plumes may well turn out to be the major scientific discovery of the great oil spill of 2010.

It could take years for scientists to assess the deep-sea damage fully, if that is even possible. Among other problems, gulf researchers have long been hobbled by a critical shortage of vessels equipped for oceanography.  Only a handful of such ships ply the Gulf of Mexico, and the best-outfitted boats tend to work for the oil industry. Exploring and protecting the gulf has simply not been as high a national priority as drilling it for oil.

Still uncertain are the fates of deep coral reefs that live in the gulf, as well as the condition of a unique cluster of bottom-dwelling organisms only nine miles from the damaged well. The ultimate impact the spill will have on commercially important fish like tuna and snapper is anyone’s guess.

As the week wore on, the Joye-Asper team found more and more evidence for the existence of the plumes.  The water samples they pulled up suggested that any oil in the plumes was highly diffuse — not even visible to the naked eye. But when several gallons of the water were forced through a fine filter, tiny black oil droplets appeared.  Even in that diffuse form, the plumes were having a drastic impact on the chemistry of the ocean, with dissolved oxygen levels plunging as each plume drifted through the sea.

That, Dr. Joye said, was most likely because bacteria were ramping up to consume the oil and gas — a good thing, over all, but it was creating a heavy demand for oxygen and other nutrients. Aside from the toxic effect of the oil, the declining oxygen was a potential threat to sea life.

Slowly, as the Walton Smith and other boats worked the gulf this past week, the weird physics of a deep-water well blowout came into better focus. The idea that oil rises quickly to the surface of an ocean may be one of the casualties of this disaster.

“Nothing really makes sense out here,” Dr. Joye said as her ship plowed through orange slicks of oil. “I don’t know that you can necessarily trust your intuition.”

From the bridge of the ship, Capt. Shawn Lake made an announcement. Everyone rushed to the outside decks.

Once again, in the middle distance, the ocean was burning.
22-mile oil plume under Gulf nears rich waters
San Francisco Chronicle
By MATTHEW BROWN and JASON DEAREN, Associated Press Writers
Friday, May 28, 2010 (05-28) 07:40 PDT

New Orleans (AP) --

A thick, 22-mile plume of oil discovered by researchers off the BP spill site was nearing an underwater canyon, where it could poison the foodchain for sealife in the waters off Florida.

The discovery by researchers on the University of South Florida College of Marine Science's Weatherbird II vessel is the second significant undersea plume reported since the Deepwater Horizon exploded on April 20. The plume is more than 6 miles wide and its presence was reported Thursday.

The cloud was nearing a large underwater canyon whose currents fuel the foodchain in Gulf waters off Florida and could potentially wash the tiny plants and animals that feed larger organisms in a stew of toxic chemicals, another researcher said Friday.

Larry McKinney, executive director of the Harte Research Institute for Gulf of Mexico Studies at Texas A&M University-Corpus Christi, said the DeSoto Canyon off the Florida Panhandle sends nutrient-rich water from the deep sea up to shallower waters.

McKinney said that in a best-case scenario, oil riding the current out of the canyon would rise close enough to the surface to be broken down by sunlight. But if the plume remains relatively intact, it could sweep down the west coast of Florida as a toxic soup as far as the Keys, through what he called some of the most productive parts of the Gulf.

The plume was detected just beneath the surface down to about 3,300 feet, said David Hollander, associate professor of chemical oceanography at USF.

Hollander said the team detected the thickest amount of hydrocarbons, likely from the oil spewing from the blown out well, at about 1,300 feet in the same spot on two separate days this week.

The discovery was important, he said, because it confirmed that the substance found in the water was not naturally occurring and that the plume was at its highest concentration in deeper waters. The researchers will use further testing to determine whether the hydrocarbons they found are the result of dispersants or the emulsification of oil as it traveled away from the well.

The first such plume detected by scientists stretched from the well southwest toward the open sea, but this new undersea oil cloud is headed miles inland into shallower waters where many fish and other species reproduce.

The researchers say they are worried these undersea plumes may be the result of the unprecedented use of chemical dispersants to break up the oil a mile undersea at the site of the leak.

Hollander said the oil they detected has dissolved into the water, and is no longer visible, leading to fears from researchers that the toxicity from the oil and dispersants could pose a big danger to fish larvae and creatures that filter the waters for food.

"There are two elements to it," Hollander said. "The plume reaching waters on the continental shelf could have a toxic effect on fish larvae, and we also may see a long term response as it cascades up the food web."

Dispersants contain surfactants, which are similar to dishwashing soap.

A Louisiana State University researcher who has studied their effects on marine life said that by breaking oil into small particles, surfactants make it easier for fish and other animals to soak up the oil's toxic chemicals. That can impair the animals' immune systems and cause reproductive problems.

"The oil's not at the surface, so it doesn't look so bad, but you have a situation where it's more available to fish," said Kevin Kleinow, a professor in LSU's school of veterinary medicine.

Court Backs Oil Project
NYTIMES
By WILLIAM YARDLEY
May 13, 2010

A federal appeals court on Thursday rejected an effort by environmental and Native American groups to stop exploratory oil drilling off the coast of Alaska that could begin this summer.

The decision, by a three-judge panel of the United States Court of Appeals for the Ninth Circuit, rejected several claims by the groups, including that the United States Minerals Management Service did not adequately consider the possibility that the project could cause a large oil spill in the remote Arctic.

The project is led by Shell Oil, which paid $2.1 billion in 2008 for rights to drill in the Beaufort and Chukchi Seas, off Alaska’s north coast.

The project could still be delayed. Last week, Interior Secretary Ken Salazar ordered a halt to all new offshore projects while his department reviewed safety measures for the work in light of the spill in the Gulf of Mexico. As part of the review, the minerals service asked Shell to explain ways it could improve its ability to prevent and respond to a spill. Shell is supposed to respond by Tuesday. The Interior Department report is to be submitted to the White House by May 28.

Erik Grafe, a lawyer for Earthjustice in Alaska, one of the groups that challenged the Shell plan, said the court’s decision left the fate of the project “squarely in Secretary Salazar’s and Obama’s hands.”


U.S. Said to Allow Drilling Without Needed Permits
NYTIMES
By IAN URBINA
May 13, 2010

WASHINGTON — The federal Minerals Management Service gave permission to BP and dozens of other oil companies to drill in the Gulf of Mexico without first getting required permits from another agency that assesses threats to endangered species — and despite strong warnings from that agency about the impact the drilling would likely have on the gulf.

Those approvals, federal records show, include one for the well drilled by the Deepwater Horizon, which exploded on April 20, killing 11 workers and resulting in thousands of barrels of oil spilling into the gulf each day.  The Minerals Management Service, or M.M.S., also routinely overruled its staff biologists and engineers who raised concerns about safety and environmental impact of certain drilling proposals in the gulf and in Alaska, according to a half dozen current and former M.M.S. scientists.

Those scientists said they were also regularly pressured by agency officials to change the findings of their internal studies if they predicted an accident was likely to occur or if wildlife might be harmed.  Under the Endangered Species Act and the Marine Mammal Protection Act, the Minerals Management Service is required to get permits to allow drilling anywhere that might harm endangered species or marine mammals.

The National Oceanic and Atmospheric Administration, or NOAA, is responsible for protecting endangered species and marine mammals. It has said on repeated occasions that drilling in the gulf affects these animals, but the minerals agency has approved since January 2009 at least three huge lease sales, 103 seismic blasting projects, and 346 drilling plans.  Agency records also show permission for those projects and plans was granted without getting the permits required under federal law.

“M.M.S. has given up any pretense of regulating the off-shore oil industry,” said Kieran Suckling, director of the Center for Biological Diversity, an environmental advocacy group in Tucson, which filed notice of intent to sue the agency over its noncompliance with federal law concerning endangered species. “The agency seems to think its mission is to help the oil industry evade environmental laws.”

Kendra Barkoff, a spokeswoman for M.M.S., said her agency had full consultations with NOAA about endangered species in the gulf. But she declined to respond to additional questions about whether her agency had obtained the relevant permits.  Federal records indicate that these consultations ended with NOAA instructing the minerals agency that continued drilling in the gulf was harming endangered marine mammals and that the agency needed to get permits to be in compliance with federal law.

Responding to the accusations that agency scientists were being silenced, Ms. Barkoff added, “Under the previous administration, there was a pattern of suppressing science in decisions, and we are working very hard to change the culture and empower scientists in the Department of the Interior.”

The explosion of the Deepwater Horizon has led to accusations that M.M.S. provided lax oversight.  On Tuesday, the secretary of the interior, Ken Salazar, announced plans to reorganize the agency to improve its regulatory role by separating safety oversight of the division that collects royalties from oil and gas companies. But that reorganization is not likely to have any bearing on how and whether the agency seeks required permits from other agencies like NOAA.

Criticisms of the minerals agency have grown in recent days as more information has emerged about how it handled drilling in the gulf.  In a letter from September 2009, obtained by The New York Times, NOAA accused the minerals agency of a pattern of understating the likelihood and potential consequences of a major spill in the gulf and understating the frequency of spills that have already occurred there.

The letter accuses the M.M.S. of highlighting the safety of the offshore oil drilling operations, while overlooking more recent evidence to the contrary. The data used by the agency to justify its approval of drilling operations in the gulf plays down the fact that spills have been on the increase and the “risks and impacts of accidental spills and chronic impacts are understated,” the letter states. NOAA declined several requests for comment.

The allegation that the minerals agency has ignored risks is also being levied by scientists working for the agency.  Managers at the agency have routinely overruled staff scientists whose findings highlight the environmental risks of drilling, according to a half dozen current or former M.M.S. scientists.  The scientists, none of whom wanted to be quoted by name for fear of reprisals by the agency or by those in the industry, said they had repeatedly had their scientific findings changed to indicate no environmental impact or had their calculations of spill risks downgraded.

“You simply are not allowed to conclude that the drilling will have impact,” said one scientist who has worked for the minerals agency for more than a decade. “If you find the risks of a spill are high or you conclude that a certain species will be affected, your report gets disappeared in a desk drawer and they find another scientist to redo it or they rewrite it for you.”

Another agency biologist who left the agency in 2005 after more than five years, and now works as an industry consultant, said agency officials go out of their way to accommodate the oil and gas industry.  He said, for example, seismic activity from drilling can have a devastating impact on mammals and fish, but agency officials rarely enforced the regulations meant to limit those effects.  He also said that the agency routinely ceded to the drilling companies the authority and responsibility for the monitoring of species that live or spawn near the drilling projects.

“What I observed was M.M.S. was trying to undermine the monitoring and mitigation requirements that would be imposed on the industry,” he said.

Aside from allowing BP and other companies to drill in the gulf without getting the required permits concerning endangered species from NOAA, the minerals agency has also given BP and other drilling companies in the gulf blanket exemptions from having to provide environmental impact statements.  Much as BP’s drilling plan asserted that there was no chance of an oil spill, the company also claimed in federal documents that its drilling would not have any adverse affect on endangered species.

The gulf is known for its bio-diversity. Various endangered species are found in the area where the Deepwater Horizon was drilling, including sperm whales, blue whales and fin whales.  In some instance, the minerals agency has indeed sought and received permits in the gulf to harm certain endangered species like green and loggerhead sea turtles. But the agency has not received these permits for endangered species like the sperm and humpback whales that are more common in the areas where drilling occurs and thus are more likely to be affected.

Tensions between scientists and managers at the agency erupted in one case last year involving a rig in the gulf called the BP Atlantis. An agency scientist complained to his bosses of catastrophic safety and environmental violations. The engineer said these complaints were ignored, so he took his concerns to higher officials at the Department of the Interior.

“The purpose of this letter is to restate in writing our concern that the BP Atlantis Project presently poses a threat of serious, immediate, potentially irreparable and catastrophic harm to the waters of the Gulf of Mexico and its marine environment, and to summarize how BP’s conduct has violated federal law and regulations,” wrote the M.M.S. scientist, Kenneth Abbott, in a May 27, 2009, letter to officials at the Interior Department, a copy of which was obtained by The Times.

The letter added: “From our conversation on the phone, we understand that MMS is already aware that undersea manifolds have been leaking and that major flow lines must already be replaced. Failure of this critical undersea equipment has potentially catastrophic environmental consequences.”

Almost two months before the Deepwater Horizon exploded, Representative Raúl M. Grijalva, Democrat of Arizona, sent a letter to M.M.S. raising concerns about the BP Atlantis and questioning the agency’s oversight of the rig.  After the disaster, Mr. Salazar said he would delay granting any new oil drilling permits.

But the minerals agency issued at least five final approval permits to new drilling projects in the gulf since last week, records show. Despite being shown records indicating otherwise, Ms. Barkoff said her agency had granted no new permits since Mr. Salazar made his announcement.  Other agencies besides NOAA have begun criticizing the minerals agency.

At a public hearing in Louisiana this week, a joint panel of Coast Guard and Minerals Management Service officials investigating the explosion grilled agency officials for allowing the offshore drilling industry to be essentially “self-certified,” in the phrase of Capt. Hung Nguyen of the Coast Guard, a co-chairman of the investigation.

In addition to the minerals agency and the Coast Guard, the Deepwater Horizon was overseen by the Marshall Islands, the “flag of convenience” under which it was registered.

No one from the Marshall Islands ever inspected the rig. The nongovernmental organizations that did were paid by the rig’s operator, in this case Transocean.

Campbell Robertson contributed reporting from New Orleans, and Andy Lehren from New York.

Gulf oil spill washes up on political shores
http://news.bbc.co.uk/2/hi/americas/8665312.stm
By Paul Adams, BBC News, Louisiana

Schwarzenegger at a press conference
Governor Arnold Schwarzenegger withdrew support for expanded drilling

The full environmental impact of the oil spill deep under water in the Gulf of Mexico has yet to emerge. But there has already been a sizeable political fallout.

Two Republican governors, in California and Florida, have withdrawn their support for the idea of expanded offshore drilling and a number of Democrats in Congress have warned that they can no longer support energy reform legislation if it includes such provisions.

President Barack Obama recently announced that he was willing to lift a decades-long moratorium on drilling in new areas of the Gulf of Mexico and the Atlantic coastline.

At the time, he said any new exploration would "balance the need to harness domestic energy resources and the need to protect America's natural resources".

The president clearly hoped to win support for his wider energy policies among Republicans who are sceptical about his efforts to combat climate change and believe that America should make the most of its own energy resources.

Win over some of the "drill, baby, drill" crowd, the thinking went, and you can persuade them to contemplate legislation that tackles climate change.

But along came a spill, and look what happened.

Less appetising

"You turn on television and you see this enormous disaster," said California Governor Arnold Schwarzenegger, "and you say to yourself, why would we want to take that risk?"

The governor promptly announced that he was no longer in favour of expanded drilling off the California coast, despite that fact that the state's empty coffers could badly use some extra cash.

Florida's Governor Charlie Crist also withdrew his support.

But if the thought of renewed offshore drilling seems rather less appetising now, where does that leave the sort of wider energy legislation the president wants to see passed?

Another Floridian, Democratic Senator Bill Nelson, bluntly suggested that the sop to conservatives was no longer an option.

"If offshore drilling off the continental coast of the United States is part of it, this legislation's not going anywhere," he told reporters on Tuesday.

Of course, not everyone agrees. Mary Landrieu, Democratic senator for Louisiana, told the Senate last week the US could not afford to bury its head in the sand over its energy needs and "must continue to drill".

Speaking to a New Orleans TV station on Sunday, she said: "Our country needs this oil, there is no question about that.

"We have to produce this oil at home unless we want to be completely reliant. We've got to investigate, fine, clean up and do the research necessary to make sure this will never happen again. We have to continue to go forward."

And in a statement on Monday, Republican House leader John Boehner insisted that the US needed a "real, comprehensive energy plan" - one that would include drilling.

Democratic leaders are still hopeful the bill will go through. "I don't think this is something that will stop" the bill, Democratic House Speaker Nancy Pelosi told reporters on Tuesday.

But the fate of the bill, and its offshore drilling provisions, remain open questions.

'Game-changer'

Among the ranks of environmental activists, meanwhile, there is a feeling that this is a decisive opportunity.

This is an opportunity where we can say... the cost of using petroleum and other fossil fuels should be deadly clear
Damon Moglen, Greenpeace

"There have been two game-changing developments," says Damon Moglen, global warming campaign director for the environmental group Greenpeace.

"This terrible accident in the coal mine in West Virginia [which killed 29 workers] has really called into question the notion of more funding for coal," he says. "At the same time, this horrific oil spill... has really changed the dynamics."

Greenpeace was already highly critical of the energy reform bill working its way, very slowly, through the Senate. The bill would reduce carbon emissions, but, says Damon Moglen, offers far too many concessions to oil, coal and nuclear energy.

"This is a terrible, terrible tragedy and it is a historic, teachable moment for this president," he says.

"This is an opportunity where we can say... the cost of using petroleum and other fossil fuels should be deadly clear."

And if lifting the moratorium on new offshore drilling is no longer on the table, he says, then this will be more than made up for by renewed pressure for better legislation.

"In the political calculations of a month ago, it looked like success on the climate change legislation might lie in wooing a few Republicans over and taking Democrats for granted. That dynamic has changed entirely."

Blame game

But with the true consequences of the spill yet to be determined, this is perhaps a little premature. What is more clear is that making history seems less of a priority right now than establishing blame.

Last week, it was Wall Street "fat cats" who were being roasted by members of Congress. This week, it's been representatives of BP and Transocean Ltd.

Boat clean-up in Louisiana
A boat continues with clean-up efforts near Louisiana's Chandeleur Islands

But while venting anger and debating when and how to reintroduce a moratorium might make people feel good, what does it actually achieve?

"That's what's sad about this opportunity," says Lisa Margonelli of the New America Foundation.

"We're going to expend a lot of energy towards these moratoriums when we could be addressing the underlying problem, which is the oil consumption itself."

Perhaps, if the worst fears are realised, something will emerge that addresses such fundamental issues. If so, it wouldn't be the first time a disaster spawned a piece of legislation.

"After the Exxon Valdez oil spill of 1989, that helped to create a political environment that was more favourable to restricting pollution and making polluters pay," says Daniel Weiss, director of climate strategy at the liberal Centre for American Progress.

One indirect result, Mr Weiss says, was passage of the Clean Air Act Amendments in 1990, even though the act and the spill were completely unrelated.

"The same is possible here," he suggests.

Of course all of this depends on a disaster which hasn't quite materialised yet. But it seems clear that the fate of energy legislation, just like the fate of beaches, wildlife and livelihoods along the Gulf Coast, rests to great extent on the wind, the tide and human ingenuity.



http://www.bbc.co.uk/news/10298342



Scientists find damage to coral near BP well
YAHOO
By CAIN BURDEAU, Associated Press
Fri Nov 5, 7:07 pm ET

NEW ORLEANS – For the first time, federal scientists have found damage to deep sea coral and other marine life on the ocean floor several miles from the blown-out BP well — a strong indication that damage from the spill could be significantly greater than officials had previously acknowledged.

Tests are needed to verify that the coral died from oil that spewed into the Gulf of Mexico after the Deepwater Horizon rig explosion, but the chief scientist who led the government-funded expedition said Friday he was convinced it was related.

"What we have at this point is the smoking gun," said Charles Fisher, a biologist with Penn State University who led the expedition aboard the Ronald Brown, a National Oceanic and Atmospheric Administration research vessel.

"There is an abundance of circumstantial data that suggests that what happened is related to the recent oil spill," Fisher said.

For the government, the findings were a departure from earlier statements. Until now, federal teams have painted relatively rosy pictures about the spill's effect on the sea and its ecosystem, saying they had not found any damage on the ocean floor.

In early August, a federal report said that nearly 70 percent of the 170 million gallons of oil that gushed from the well into the sea had dissolved naturally, or was burned, skimmed, dispersed or captured, with almost nothing left to see — at least on top of the water. The report was blasted by scientists.

Most of the Gulf's bottom is muddy, but coral colonies that pop up every once in a while are vital oases for marine life in the chilly ocean depths.

Coral is essential to the Gulf because it provides a habitat for fish and other organisms such as snails and crabs, making any large-scale death of coral a problem for many species. It might need years, or even decades, to grow back.

"It's cold on the bottom, and things don't grow as quickly," said Paul Montagna, a marine scientist at the Harte Research Institute for Gulf of Mexico Studies at Texas A&M University in Corpus Christi. He was not on the expedition.

Montagna said the affected area is so large, and scientists' ability to explore it with underwater robots so limited that "we'll never be able to see everything that happened down there."

Using a robot called Jason II, researchers found the dead coral in an area measuring up to 130 feet by 50 feet, about 4,600 feet under the surface.

"These kinds of coral are normally beautiful, brightly colored," Fisher said. "What you saw was a field of brown corals with exposed skeleton — white, brittle stars tightly wound around the skeleton, not waving their arms like they usually do."

Fisher described the soft and hard coral they found seven miles southwest of the well as an underwater graveyard. He said oil probably passed over the coral and killed it.

The coral has "been dying for months," he said. "What we are looking at is a combination of dead gooey tissues and sediment. Gunk is a good word for what it is."

Eric Cordes, a Temple University marine scientist on the expedition, said his colleagues have identified about 25 other sites in the vicinity of the well where similar damage may have occurred. An expedition is planned for next month to explore those sites.

When coral is threatened, its first reaction is to release large amounts of mucus, "and anything drifting by in the water column would get bound up in this mucus," Cordes said. "And that is what this (brown) substance would be: A variety of things bound up in the mucus."

About 90 percent of the large coral was damaged, Fisher said.

The expedition was funded by the Bureau of Ocean Energy Management and the National Oceanic and Atmospheric Administration. The mission was part of a four-year study of the Gulf's depths, but it was expanded this year to look at oil spill damage.

In a statement released Thursday night, NOAA Administrator Jane Lubchenco said the expedition underscored that the damage to marine life from the oil spill is "not easily seen." She added that more research was needed to gain a "comprehensive understanding of impacts to the Gulf."

"Given the toxic nature of oil, and the unprecedented amount of oil spilled, it would be surprising if we did not find damage," she said.

NOAA did not provide any officials or scientists of its own who went on the expedition. The Bureau of Ocean Energy Management said its researcher on the expedition was unavailable.

Cordes said that the expedition did not find dramatic visual evidence of coral damage in other sites north of the well. But he said it was premature to say coral elsewhere in the Gulf was not damaged.

The new findings, though, could mean long-term trouble for the coral southwest of the well, where computer models and research cruises mapped much of the deepwater oil.

Referring to one type of coral known as "gorgonians," Cordes said he had never seen them "come back from having lost so much tissue. It would have to be re-colonization from scratch."
Page last updated at 13:51 GMT, Friday, 30 April 2010 14:51 UK
Manatee mother and calf
 The already threatened manatee could be a casualty of the oil leak

Oil slick threatens 'frightening' impacts
By Richard Black Environment correspondent, BBC News 

How bad will the Gulf of Mexico oil spill turn out to be - for wildlife and for people whose jobs depend on wildlife, such as fishermen?

At the moment, the only completely accurate answer would appear to be: we do not know.

For David Kennedy from the US National Ocean Service, it is "a very very significant event, and of great concern".

"I'm frightened," he adds.

But Clifford Jones, an oil and gas engineering specialist from the UK's Aberdeen University, suggests it should not be considered in the same category as the Exxon Valdez spill of 1989, with which it is regularly being compared.

It is a threat to the ecosystem, he allows: but "Exxon Valdez was a supertanker holding 11 million barrels, and exit of oil from it was simply by gravity.

"Whereas this current incident involves a well that's under the sea, and at most about four million barrels will have leaked out before the pressure within the well drops sufficiently for there to be no further discharge."

Whether or not the estimate of four million barrels turns out to be correct - and it is disputed - there is no doubt that the oil is coming out much more slowly than is normal from a tanker spill.

In principle, this allows the authorities greater time to deal with it - although clearly in this case their efforts have met with mixed success.

Oil breaks down naturally in seawater, and in the warm Gulf of Mexico water, this would proceed much faster than in Alaska's Prince William Sound, where the Exxon Valdez ran aground.

Boom time

In oil spills, as in medicine, prevention is always better than cure. And the first priority for authorities in Louisiana and elsewhere along the Gulf coast is to stop oil washing up on shore.

Booms are being deployed, dispersants sprayed, and some patches of oil are being burned. The Louisiana Coastal Protection and Restoration Authority is increasing the flow of water through two inland water channels in an attempt to wash oil-tainted seawater out of ecologically important wetlands.

"Home not only to a thriving fishing industry but also a substantial nature reserve, the potential for damage is enormous," says Simon Coxall from the UK's National Oceanography Centre in Southampton.

Satellite photo of coastline
The coastline sees land interlacing delicately with the sea (oil slick bottom right)

"Booming the area off with floating dams to protect these areas is the best option; but the size of the spill will exhaust the world's supply of oil booms very quickly."

What makes this region ecologically special is the unusual patterns of land and sea conjured into existence by the lazy and variegated exit of the mighty Mississippi into the Gulf.

Here lie about 25% of US wetlands - areas rich with life, where human occupancy is low, and birds and other animals can thrive.

"For birds, the timing could not be worse; they are breeding, nesting and especially vulnerable in many of the places where the oil could come ashore," warns Melanie Driscoll, a Louisiana-based bird conservation director with the National Audubon Society, the leading US bird conservation group.

"We have to hope for the best, but prepare for the worst, including a true catastrophe for birds."

The society's list of species potentially affected includes resident seabirds, waders and waterfowl, including heron, brown pelicans and oystercatchers, and migratory birds such as plovers, swallows and buntings that use the Gulf wetlands as a stopover.

The society points out that for some species, this is the now only home they have, with human development further inland having fenced them into these extremities.






































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































The oil slick changes shape and direction rapidly, so predicting where it will make landfall and with what frequency is a hazardous business.

Clearly, the longer it takes BP to stem the flow, the greater the chance that its impacts will be felt further around the shores of the Gulf of Mexico, and indeed in its open water.

If the oil flows east, it will encounter the seagrass beds that form a key habitat for manatees, among other species.

"If you've got seagrass beds badly contaminated, clearly the manatees could be seriously affected," says Carl-Gustaf Lundin, head of the Marine Programme at the International Union for the Conservation of Nature (IUCN).

Here again is a species that is already under severe stress. Fewer than 2,500 adults remain, and the IUCN Red List says the Florida subspecies is expected to decline by at least 20% over the next 40 years, with various factors implicated, including climate change and impacts from boats.

Bluefin tuna
Spawning of bluefin tuna takes place in the oil-affected waters

The Gulf waters are already affected annually by fertilisers washing down from southern US farmlands, resulting in a "dead zone" where algae have consumed most of the dissolved oxygen and nothing else can grow.

The Atlantic bluefin tuna is another possible victim.

Over the next six weeks, the western population of this heavily depleted species will spawn in the Gulf of Mexico - principally in the northern portion where the slick is growing.

"The oil would have an impact - it might be toxic to eggs or to the young fry," says Dr Lundin.

"Also, the young hide in sargassum (floating marine plants) - they're very vulnerable at this stage - and this could also be affected by oil."

Human face

Each of these possible impacts on wildlife translates into human consequences.

For tuna and shrimp, you can read jobs in the fishing industry and food supplies for US consumers.

For birds and manatees, you can read tourist income.

No two oil spills are alike; and given the vagaries of winds and sea currents, predicting the likely impact of this one is very difficult.

But you can see why local authorities and conservation groups are beginning to be seriously concerned.

US to set fire to oil rig leak
Page last updated at 15:41 GMT, Wednesday, 28 April 2010 16:41 UK
satellite image shows oil slick near Louisiana/Florida coast

The US coast guard has said it will set fire to an oil spill in the Gulf of Mexico on Wednesday as efforts to stem a leak after a rig blast are failing.

Officials are concerned that, unless controlled, the leak could cause one of the worst spills in US history.

Coast Guard Rear Adm Mary Landry has said work on sealing leaks using robotic submersibles could take months.

Around 1,000 barrels are leaking every day after the Deepwater Horizon rig exploded and sank last week.

Eleven of the rig's workers are still missing and presumed dead in the disaster off the Louisiana coast.

Controlled burn

A "controlled burn" would involve setting fire to an area of oil trapped by special containment booms on the water's surface.







































































































































































































































































































































































































































































































































































































































































































































































Environmental experts say birds and animals are more likely to escape a burning patch of water than an oil slick, although toxic fumes could endanger wildlife.

"We fully understand there are benefits and trade-offs," said Adm Landry.

But she noted that with the spill moving toward land, the impact on Louisiana's coastline, which contains some 40% of the nation's wetlands and spawning grounds for countless fish and birds, had to be considered.

Controlled burns had been tried and tested before, and had been shown to be "effective in burning 50 to 95% of oil collected in a fire boom", she said.

She warned that if the well was not secured soon, "this could be one of the most significant oil spills in US history".

The leaks - about 5,000ft (1,525m) under the surface - were found on Saturday, four days after the Deepwater Horizon platform, to which the pipe was attached, exploded and sank.

About 1,000 barrels (42,000 US gallons; 35,000 imperial gallons) of oil a day have been gushing into the sea since the blast.

The resulting oil slick now has a circumference of about 600 miles (970km) and covers about 28,600 sq miles (74,100 sq km).

The slick is now about 20 miles (32km) off the coast of Louisiana, but wind projections indicate it will not reach land before Saturday.

It would have to continue for more than eight months to match the 11m-gallon spill from the oil tanker Exxon Valdez off Alaska in 1989.

Possible solutions

Workers on a nearby oil platform were evacuated by the US authorities on Monday after the oil slick came dangerously close.

British oil company BP, one of the firms operating the rig, has not been able to activate a device known as a blow-out preventer, designed to stop oil flow in an emergency.

OIL SPILL DISASTERS
1991: 520m gallons were deliberately released from Iraqi oil tankers during the first Gulf War to impede the US invasion
1979: 140m gallons were spilt over nine months after a well blow-out in the Bay of Campeche off Mexico's coast
1979: 90m gallons leaked from a Greek oil tanker after it collided with another ship off the coast of Trinidad
1983: 80m gallons leaked into the Gulf over several months after a tanker collided with a drilling platform
1989: 11m gallons were spilt into Alaska's Prince William Sound in the Exxon Valdez disaster

Doug Suttles, the chief operating officer for exploration and production at BP, said it had not yet given up on engaging the valve, but was considering other possible solutions.

These include placing a dome directly over the leaks to catch the oil and send it up to the surface, where it could be collected by ships. This has only been done in shallow water before and is still two to four weeks from being operational.

BP will also begin drilling a "relief well" intersecting the original well, but it is also experimental and could take two to three months to stop the flow.

Forty-nine vessels - oil skimmers, tugboats barges and special recovery boats that separate oil from water - were working to round up oil, BP said.

An investigation has been ordered into the cause of the leak by the interior and homeland security departments.

It will have the power to compel witnesses to testify, and will look into possible violations by the operators of the rig, Transocean.

Graphic of ROV on seabed


Worker operates valves at Rumaila oil field, near Basra, southern Iraq
Iraq has the world's third largest oil reserves, after Saudi Arabia and Iran

Page last updated at 11:28 GMT, Saturday, 12 December 2009
Iraq oil capacity 'to reach 12m barrels per day'

Iraq's oil capacity could reach 12 million barrels per day (bpd) in six years, the country's oil minister says.

Hussein al-Shahristani told reporters in Baghdad that oil producers would not necessarily operate at full capacity, but would take into account demand.

Saudi Arabia, the world's largest oil exporter, has a capacity of 12.5m bpd.

Earlier, a joint bid by Russian and Norwegian oil firms won the contract for the "supergiant" West Qurna field, said to have reserves of 13bn barrels.

Lukoil and Statoil will get $1.15 a barrel and will work to raise output from West Qurna Phase 2, in the Basra region, to 1.8m bpd. In June, a winning bid to develop another Iraqi field received $2 a barrel.

The terrorists tried to send a message to the companies through the bombings... But [it] was not delivered and never deceived them
Hussein al-Shahristani

On Friday, the contract to develop the 12.6bn-barrel Majnoon field in southern Iraq was won by a consortium led by Shell. It also pledged to increase daily production to 1.8m barrels, up from only 46,000.

Rights for the eastern Halfaya field, with 4.1bn barrels of reserves, went to a consortium led by the Chinese state oil company, CNPC.

But the East Baghdad field, part of which lies under the city's Sadr City area, and another in the Diyala province attracted no bids.

'Big achievement'

At a news conference on Saturday, Mr Shahristani called the result of Iraq's second international oil auction since 2003 a "major success".

"It is a big achievement for Iraq to win such contracts at the current prices," he said.

The minister said the contracts awarded over the past two days, coupled with those from the last auction in June and government efforts, would allow Iraq to boost daily production from 2.5m barrels to 12m.

The projected plateau production from the winning bids of the second round alone was 4.765m bpd, he said.

Map: oilfields in southern Iraq

If a daily total of 12m barrels was achieved, Iraq would overtake Russia and challenge Saudi Arabia for the position of the world's largest oil producer. However, Riyadh says it could produce 15 bpd.

Iraq's proven reserves now stand at 115bn barrels, below Iran's 137bn and Saudi Arabia's 264bn. But Iraq's data dates from the 1970s, before improvements in technology transformed the industry.

Mr Shahristani declared that Iraq had "scores" of oilfields, including "supergiants" - fields of 5bn barrels or more - to offer international companies in the future.

On Friday, he insisted that bidders had not been deterred by security concerns, pointing out that they had agreed to help develop Iraq's biggest oil fields at remuneration levels lower than they hoped for.

A series of bombings in Baghdad on Tuesday left 127 people dead.

"The terrorists tried to send a message to the companies through the bombings... that Iraq is unstable and investment will be overshadowed by risks," he told state television.

"But this message was not delivered and never deceived them. They came and submitted competitive offers that surprised the global oil industry," he added.

Nevertheless, correspondents say the failure to attract bids for more than half of the oilfields suggests Iraq's abundance of easily extractable oil was not enough to overcome many firms' concerns about security, as well as Iraq's political and legal system.


Page last updated at 02:50 GMT, Thursday, 8 October 2009 03:50 UK
 Oil worker in Iraq
The report warns the situation will be "extremely challenging"
Warning over global oil 'decline'
By Sarah Mukherjee, Environment correspondent, BBC News

There is a "significant risk" that global production of conventional oil could "peak" and decline by 2020, a report has warned.

The UK Energy Research Centre study says there is a consensus that the era of cheap oil is at an end.

But it warns that most governments, including the UK's, exhibit little concern about oil depletion.

The report's authors also state that the 10 largest oil producing fields in the world are all in decline.

Reliable gauge

As this report points out, the debate about peak oil is a polarised one.

On one side, there are those who say that global supplies have already reached their zenith, and we are unprepared for the crisis that will hit world economies in the years to come.

On the other, there are oil companies and many energy analysts who dismiss the notion that supplies are running out.

The report's authors admit it is hard to tell who is right, as the world lacks a reliable gauge with which to measure oil depletion.

More than two-thirds of current crude oil production capacity may need to be replaced by 2030
UK Energy Research Centre

Problems are created by "inconsistent definitions", it says, noting the "paucity of reliable data, the frequent absence of third-party auditing of that data and the corresponding uncertainty surrounding the data that is available".

It goes on: "The difficulties are greatest where they matter most, namely the oil reserves of Opec countries.

"But they also apply at a much more basic level, such as uncertainties over the amount of oil produced by a given country in a given year.

"The resulting confusion both fuels the peak oil debate and creates substantial risk in relying on any particular set of numbers."

Part of the difficulty in estimating the amount of oil left is that those with the reserves are often unwilling to divulge what can be commercially very sensitive information.

Countries and companies are notoriously reticent about their oil reserves.

But the report suggests the easy oil has already been found, and new reserves will become increasingly difficult and expensive to extract, and will not make up for the current major oil fields as they decline.

It says: "More than two-thirds of current crude oil production capacity may need to be replaced by 2030, simply to keep production constant.

"At best, this is likely to prove extremely challenging."

More attention urged

This report does not contain new research, but is a review of data already available.

But the authors say the risk presented by global oil depletion deserves much more serious attention by the research and policy communities.

"Much existing research focuses upon the economic and political threats to oil supply security and fails to either assess or to effectively integrate the risks presented by physical depletion," they argue.

"This has meant that the probability and consequences of different outcomes has not been adequately assessed."

Despite the evidence, the report notes with some surprise that the UK government rarely mentions the issue in official publications.


Contractor, Laboratory Owner Accused Of Scheme Involving Removal Of In-Ground Oil Tanks
The Hartford Courant
By ALAINE GRIFFIN
September 8, 2009

When Michael and Elizabeth McGrath converted the heating system in their Fairfield home from oil to natural gas, they had the underground oil storage tank removed from their yard.

But the initial $1,400 bill for the tank removal soon jumped to $30,994.01 when they were informed of some bad news — their soil was contaminated with oil that had leaked from the tank.

Prosecutors in the environmental crimes unit of the chief state's attorney's office say the remediation work was unnecessary and have taken the issue to criminal court. They say that Ronald J. Passaro Jr., president of Envirotech of Fairfield, and Michael Zubarev, owner of Brooks Laboratory of Norwalk, worked together to scam the McGraths and two other homeowners out of tens of thousands of dollars.

Dennis Schain, a spokesman for the state Department of Environmental Protection, said that such cases are rare.

"If these charges are substantiated, this would be a highly unusual case of a licensed professional in the environmental field violating legal and ethical standards that people depend upon," Schain said.

Passaro, 45, of Bethel, has pleaded not guilty to multiple counts of first-degree larceny, conspiracy to commit first-degree larceny, attempt to commit first-degree larceny and perjury charges. Zubarev, 40, of Norwalk, has also pleaded not guilty to charges of first-degree larceny, attempt to commit first-degree larceny and conspiracy to commit first-degree larceny.

According to arrest warrant affidavits, police said the scheme involved Envirotech performing unnecessary remediation while Brooks Laboratories provided false sample analysis reports to justify the work.On Aug. 31, Passaro and Zubarev appeared in Superior Court in Danbury, where motions were discussed for an upcoming criminal trial. Both Passaro's attorney, Andrew J. Buzzi Jr., and William A. Pelletreau, who represents Zubarev, declined to comment.

Authorities started investigating Envirotech in June 2007 when a former employee of the company made an anonymous complaint to the DEP. Citing a sworn statement, the arrest warrant affidavit states that the whistle-blower, Terry McGuinness, said she began making copies of company documents when she suspected Envirotech was doing phony remediation.

"I could not sleep at night knowing what [Passaro] was doing to his clients," McGuinness said, according to the affidavit.

McGuinness, the company's office manager, told investigators that she tried talking to Passaro about the allegedly unneeded remediation, but "his response was to begin to withhold information from her that was necessary for her to do her job," the warrant said.

In April 2007, McGuinness was fired. She told investigators that the firing followed a dispute about a lack of heat in the office. She then went to the DEP with the photocopied documents relating to the McGraths' home and two other residences, those of Howard and Karen Sulzman of New Fairfield and James and Sarah Naphen of Newtown.

McGuinness claimed the documents showed that when initial analysis reports for each of the properties showed that total petroleum hydrocarbon levels in the soil were below the suggested remediation level published by the DEP, Passaro would contact Zubarev, who "within a matter of minutes was able to produce a report listing the TPH levels as being above" the suggested limit, the arrest warrant states.

Neither the McGraths nor the Sulzmans returned calls for comment. The arrest warrant alleges that the McGraths were scammed out of $29,594 and the Sulzmans out of $34,190. James Naphen declined to comment, citing an ongoing civil court matter related to the case.

According to the arrest warrant, the Naphens fired Envirotech before remediation could be completed at their home. The warrant alleges that the Naphens were scammed out of $10,661.

Copyright © 2009, The Hartford Courant


U.S. Considers Curbs on Speculative Trading of Oil
NYTIMES
By EDMUND L. ANDREWS
July 8, 2009

WASHINGTON — Reacting to swings in oil prices in recent months, federal regulators announced on Tuesday that they were considering trading restrictions on hedge funds and other “speculative” traders in markets for oil, natural gas and other energy products.

In a big departure from the hands-off approach to market regulation of the last two decades, the chairman of the Commodity Futures Trading Commission, Gary Gensler, said his agency would consider new limits on the volume of energy futures contracts that purely financial investors would be allowed to hold.

The agency also announced that it would pull back part of the veil on the oil and gas markets, publishing more detailed information about the aggregate activity of hedge funds and traders who arbitrage between domestic and foreign energy prices.

“My firm belief is that we must aggressively use all existing authorities to ensure market integrity,” Mr. Gensler said in a written statement.

Mr. Gensler announced that his agency will hold several hearings in July and August, the first of which will examine whether to impose federal “speculative limits” on futures contracts for energy products.

Oil prices have swung wildly in the last year, hitting about $145 a barrel last summer, then plunging to $33 in December before rising to about $70.

Much of that gyration stemmed from chaos in the global financial system, as banks and much of Wall Street came perilously close to collapse last September and the global economy fell into the most severe recession in decades.

But a growing number of critics have blamed some of the extreme volatility on the role of purely financial investors — those who are simply betting on the direction of energy prices, as opposed to those who actually use such products, like airlines.

The Commodity Futures Trading Commission, an independent regulatory agency that regulates the trading of futures contracts for commodities ranging from wheat and corn to oil, precious metals and currencies, has for years followed a deregulatory path that rarely interfered with the burgeoning markets they regulated.

Federal officials said “speculative” traders were primarily those that the agency defines as “non-commercial,” which are essentially financial investors who are not users or producers of the commodities and are primarily interested in betting on the direction of prices. “Commercial users,” by contrast, include farmers, airlines and oil companies that want to hedge against the risk of rapid price changes.

Non-commercial traders accounted for almost a fifth of the activity in several major oil and gas products for the week that ended June 30, according to data compiled by the commodities agency.

Mr. Gensler, who was nominated by President Obama and took over the agency earlier this year, made it clear that he is pushing toward tighter regulation on several fronts. His efforts mirror actions taken by the Justice Department to strengthen antitrust enforcement and by financial regulators to police banks and investment firms much more closely.

Mr. Gensler noted that his agency already imposes volume limits on speculative trading in agricultural products like wheat and corn. But in the case of energy products, the agency allows the futures exchanges — primarily the New York Mercantile Exchange — to set limits.

A future is a contract to buy or to sell a particular volume of a commodity by a particular date. Futures contracts were originally created to help farmers shield themselves from price volatility between the time they planted their crops and the time of harvest. But futures are now used to hedge price swings in everything from oil and gas to electricity, Treasury bonds and foreign currencies.

In the case of energy products, Mr. Gensler said, the exchanges were not required to set or enforce position limits aimed at preventing “excessive speculation.” The contrast between approaches taken for agricultural and energy commodities, he said, “deserves thoughtful review.”

Mr. Gensler added that the agency would be reviewing the manner in which traders receive exemptions from trading limits by claiming the need to carry out “bona fide hedging transactions.”

Chavez to Seek Arab Backing for 'Petro-Currency'
NYTIMES
By THE ASSOCIATED PRESS
Filed at 10:51 a.m. ET
March 31, 2009

DOHA, Qatar (AP) -- Venezuelan President Hugo Chavez sought Arab support Tuesday for a proposed oil-backed currency to challenge the U.S. dollar in his latest swipe at Washington's dominance in global financial affairs.  It's highly unlikely Chavez will gain any serious momentum for his ''petro-currency'' proposal at a summit of South American and Arab League leaders, but it represented another attempt to undercut the dollar's standing as the world's leading commercial currency.

China has struck deals -- most recently this week with Argentina -- to conduct trade in currencies other than the dollar. Iran has proposed replacing the dollar with the euro or other currencies to set worldwide oil prices.  Chavez plans to visit both Iran and China following the one-day Qatar gathering, whose agenda focuses on trade issues but also touches on Arab worries about rival Iran's growing influence in Latin America.

Key oil-producing members of the Arab League, such as Saudi Arabia and Gulf states, have close ties to Washington and will almost certainly reject any plan to shun the dollar. But the summit kicks off another high-profile foreign trip for Chavez in his efforts to build economic and diplomatic links to confront the United States.

''A new world is being born. Empires fall. There is a world crisis of capitalism, it's shaking the planet,'' Chavez told Venezuelan state radio after arriving in Qatar.

OPEC members -- including Venezuela and many Arab Leagues states -- have been hit hard by falling oil prices, which edged toward $50 a barrel on Tuesday. Leaders also are seeking to boost the current $21 billion trade between the two regions, which includes oil and gas from the Middle East and steel and agricultural products from South America.  Delegates also plan to discuss ways to expand technology exchanges, including nuclear engineering. Argentina helped build one of Egypt's nuclear reactors and hopes to continue civil nuclear cooperation.

Brazilian President Luiz Inacio Lula da Silva told the gathering that the economic crisis is having ''deep repercussions'' on all economies, but it offers an opportunity ''to correct the financial system and restore balance to global trade.''

He repeated his appeals for major developing nations to have a greater voice in global financial bodies, such as the International Monetary Fund.  Commercial ties are a way for Arab leaders to counter Iran's increasing footholds in Latin America, particularly through Chavez and Bolivian President Evo Morales. In November, Chavez was hosted by Iranian President Mahmoud Ahmadinejad in Tehran and said the two nations were ''united like a single fist.''

Chavez's bonds with Tehran give Arab leaders pause.

He is wildly popular among ordinary Arabs for his public support for Palestinians, including cutting diplomatic relations with Israel in response to the offensive into Gaza that ended in January. In a recent interview with Al-Jazeera television, Chavez said he saw no immediate chance to restore ties with Israel.  But his close rapport with Ahmadinejad is viewed with suspicion by governments in many Arab capitals.

Chavez said he plans to seek Arab League backing for his proposed new currency, which would be supported by the oil reserves of major producers such as Venezuela and other OPEC members, according to a government statement.  Chavez also backed the Arab League's declaration Monday to reject the International Criminal Court charges against Sudanese President Omar al-Bashir for alleged war crimes in Darfur.

''Why don't they order the capture of (former President George W.) Bush? Or the president of Israel?'' Chavez said on Venezuelan state television. ''It's a monstrosity of justice and a disrespect to the people of the Third World.''

Other South American leaders at the summit include Morales and Chile's president, Michelle Bachelet.

Total, the French Oil Company, Places Its Bets Globally
By JAD MOUAWAD
SANA, Yemen
February 22, 2009

IT’S been a tough first year for Martin Deffontaines in this arid, impoverished and secluded country on the southern tip of the Arabian peninsula.

Since moving here 13 months ago as the local manager for Total, the French oil giant, Mr. Deffontaines has seen his main export pipeline damaged by terrorists, endured devastating flash floods and sent expatriate families back home because of security concerns.  Despite these challenges, Mr. Deffontaines, a lanky, 43-year-old Parisian, doesn’t appear overly anxious. Indeed, Yemen is a showcase for Total, whose experience here shows how far an oil company will go these days to unearth new energy supplies.

Because of the endlessly complicated interplay of geology and geopolitics, access to petroleum resources is increasingly constrained, costs have soared and energy projects are becoming more complex. Add the recent, dizzying collapse in oil prices to that picture, and you have a raft of companies rethinking their investments and scurrying to cut costs.

So Mr. Deffontaines was philosophical, and a little amused, when he recounted some of the challenges the company had faced here, like negotiating with tribal leaders and sending actors to remote villages to stage a play about the hazards of gas pipelines. In meetings with government officials to thrash out problems, participants typically chew khat, a mildly narcotic plant that is widely consumed in Yemen but banned in many places around the world.

This is a country where tribes are often better armed than government troops, where piracy runs rampant along the coastline, and where many trappings of modern life are absent.

The risks are so pervasive that Total employees can’t travel around town without an escort and are not allowed to leave Sana, the Yemeni capital, on their own. A wave of attacks linked to Al Qaeda occurred last year, including suicide bombings at the United States Embassy in September that left almost 20 dead, 6 of them attackers.  But Total has still gained a strong foothold here. It will soon start shipping liquefied natural gas from the Gulf of Aden, completing a $4 billion project begun less than four years ago. Those shipments will make Yemen the newest member of the world’s small club of gas exporters — and earn the government as much as $50 billion in tax revenue over the next 25 years.

“If we can build this here, we can do it anywhere,” says Stéphane Venes, a construction manager at Total’s natural gas plant in Balhaf, a coastal town. Building the plant required about 10,000 workers, a monumental endeavor in such an isolated place. It also meant building a 210-mile pipeline that had to snake through 22 different tribal lands and one of the world’s most unforgiving deserts.

Such “audace” is precisely what Christophe de Margerie, Total’s chief executive, says he would like to instill throughout his company.

“I make a big distinction between being risky and being bold,” says Mr. de Margerie, 57, in an interview at Total’s headquarters in La Défense, the business district on the outskirts of Paris.

“If you’re in a desert without water, that’s not bold, that’s dumb,” he says. “If you storm out of the trenches with your sword drawn while machine guns fire at you, it’s not bold, it’s dumb. Times have changed.”

Total doesn’t have much choice but to charge ahead. Although it managed for years to expand its hydrocarbon production — even as larger rivals like Exxon Mobil and Royal Dutch Shell struggled to keep output from falling — that run ended last year when it reported a production drop.  Like its competitors, Total now faces one of the sharpest downturns in the history of the oil business, with consumption collapsing and oil prices shedding 73 percent of their value since peaking in July. At the same time, public opinion is sharply divided about oil companies themselves as environmental concerns take an increasingly important place in debates about the future of the energy business.

With no domestic production but deep roots in the Middle East and Africa, Total — as well as its longtime domestic rival Elf Aquitaine, which it acquired in 2000 — has always been forced to blaze or bully its way through faraway lands.  It has struck deals in countries where few wished to do business, like Sudan and Myanmar, or sailed against the tide when it saw lucrative opportunities, as it did in Iran in the 1990s. Such forays have come with complications: in separate investigations, French judges have been examining Total’s role in the United Nations oil-for-food program in Iraq, and whether it made secret payments to enter the Iranian market.

Total’s appetite for risk has also turned it into the top-ranked Western oil company in Africa, and the second-largest in the Middle East, after Exxon. Total pumps an average of 2.3 million barrels of oil and gas a day, and it earned more than $15 billion last year.

While the company has operations throughout the Middle East, some of its biggest bets in the region have not yet paid off.

During the 1990s, Total negotiated with the government of Saddam Hussein and laid the groundwork to eventually develop Iraqi oil fields. But now, some Iraqi officials prefer American companies to European ones and view Total with suspicion because of this past. In Iran, a political confrontation with the West has forced a reluctant Total to walk away — at least for now — from a multibillion-dollar investment to develop a huge natural gas field there.

Total still has its eyes on other targets. It’s aggressively developing assets around the world, whether in Angola’s deep offshore sites, the Sahara in Libya or the forests of Venezuela. And it has decided that part of its future lies in developing expertise in nuclear energy.

“They are very good at capturing deals,” says J. Robinson West, the chairman of PFC Energy, a consulting firm based in Washington that counts Total as a client. “They are also prepared to ride through storms where American companies aren’t. And they are more commercial and agile than others.”

NESTLED at the foot of the Pyrenees near the Basque country in southwestern France, the town of Pau is home to Total’s global research center and a communication hub linking its global operations.

Teams from around the world send core samples from wells — which the French call “carottes” — for analysis there. Lab workers use magnetic imaging technology, also employed in the medical industry, to look for traces of oil in the samples. The center is home to one of the world’s most powerful computers, which can crunch billions of bits of seismic information and provide invaluable clues as to where oil deposits are hidden. Geologists analyzing that data can then consult with drill sites thousands of miles away, using technology that links the research center to platforms around the world.

Total spends about $1 billion on research annually to find better ways to discover, squeeze or refine oil and gas.

Technological advantages are becoming crucial in the race for petroleum resources. The world’s easy oil reserves have mostly been found, forcing companies to drill at ever-greater depths — sometimes exceeding 30,000 feet — and to look for hydrocarbons in remote places, like the Arctic.

“I don’t think we should be alarmed about reserves’ running out,” says Manoelle Lepoutre, Total’s vice president for research and development. “The potential is there. Engineers know how to extract resources. It’s not a question of resources, but more of production capacity.”

Yet there are increasing limits to oil exploration, which are worrying both engineers and energy experts. At a conference in London two years ago, Mr. de Margerie shook up his colleagues and challenged the industry’s consensus when he warned that the world would not be able to pump enough oil to meet energy demands in coming decades.  At the time, most energy forecasters, including those at the Department of Energy in the United States, expected that supplies would rise above 120 million barrels a day by 2030, up from around 85 million barrels.

But in Mr. de Margerie’s estimation, world production will struggle to rise to 95 million barrels a day, mostly because of geopolitical constraints but also because oil fields produce less and less as they mature.

“In a wine cellar, you know exactly how much wine you have,” says Jean-Jacques Mosconi, Total’s director of strategy. “For oil, it’s different. You only know your final reserves once you run out.”

More recently, Total has warned that a “major oil supply crisis” will emerge if oil prices remain at today’s lower levels and companies cut their investments.

Of course, Total has long been accustomed to provoking the status quo. After buying Petrofina of Belgium in 1999, Total surprised the French establishment when it started a hostile takeover bid for Elf. Total prevailed after a corporate battle by paying about $50 billion for the company, which was nearly twice its size.  Overnight, the hard-fought merger propelled Total into the small club of “super majors,” pitting it against much larger American corporations.

Total recently outplayed its rivals when it grabbed a piece of a huge offshore natural gas field in Russia, beating out Chevron and ConocoPhillips to snare 25 percent of the project. The field, Shtokman, in the Barents Sea, about 350 miles northeast of Murmansk, will cost $20 billion to $25 billion to develop. It is likely to be one of the biggest energy projects of the next decade.

While that deal was a success, the company suffered a setback more recently in Saudi Arabia’s treacherous Rub al-Khali desert, where the kingdom in 2001 had taken the rare step of allowing foreign investors to look for natural gas.

The new policy initially generated great enthusiasm among Total and other foreign oil companies, which saw it as the kingdom’s first step toward reopening its oil sector after nationalizing Aramco in the early 1980s.

But the excitement quickly waned after the Saudis imposed strict limits on foreign partners, including mandates that all oil discoveries belonged solely to the kingdom and that all gas found there had to be sold on the Saudi market at a cut rate. Total left Rub al-Khali early last year, after its program there ran far over its budget and its teams drilled three wells that came up dry. Shell, another shareholder in the venture, has decided to stick with the project.

No hard feelings, however. After Total left Rub al-Khali, Aramco renewed its commitment to build a new refinery with the French company in the Red Sea port town of Jubayl, said Michel Bénézit, Total’s president for refining and marketing.  The refinery is expected to be completed by around 2013.

IN a conference room at Total’s headquarters, Mr. de Margerie lingered with a visitor recently, joking, stretching his schedule after an already long day and straining the nerves of his assistants, who complain that the boss is always late.  A few years ago, after arriving nearly two hours late for a meeting with Qatar’s oil minister, Abdullah al-Attiyah, Mr. de Margerie fell to one knee to apologize for his tardiness.

Such bonhomie has endeared him to colleagues, clients and analysts since his days as Total’s chief for the Middle East in the 1990s. But it also made him an unlikely choice to replace Thierry Desmarest as C.E.O. two years ago.  Mr. Desmarest, who was seen as cold and reserved, is nonetheless widely credited for the success of the merger with Elf, and he remains the company’s chairman.

Mr. de Margerie is neither an engineer nor a geologist. He joined Total in 1974, just after graduating from the École Supérieure de Commerce in Paris, a business school, and picked oil over diplomacy or a career running the family business. His grandfather, Pierre Taittinger, founded the Champagne company that bears his name. Mr. de Margerie’s family also once owned the Crillon hotel in Paris and Baccarat, the maker of crystal and jewelry.

A gregarious talker with a taste for fine whiskey, Mr. de Margerie can be alternately humorous, rambling or serious and single-minded. He is a bon vivant who enjoys long lunches, preferably with a good bottle of wine and pleasant company.

His bushy, starburst mustache, which The Economist magazine once said “would look right at home on the face of a British cavalry officer,” earned him the nickname “Big Mustache” in the French press.

He also used to have a Kazakh Army hat on hand, which he would wear when he wanted to scold his assistants. (“It was a joke,” he cautions.)

Now he keeps nearby a graceful Indonesian figurine from the island of Java to “keep evil people at bay.” It was given to him by an employee after he was investigated on suspicion of corruption two years ago.  The episode still rankles him. In March 2007, a little more than a month after being named chief executive, he was held in an investigative judge’s chambers for nearly 36 hours to answer questions about a 10-year-old gas deal in Iran. The judge ordered that Mr. de Margerie’s tie, shoelaces and belt be removed, lest he try to harm himself.

It was not the first time that he had found himself in such an uncomfortable position. The previous year, he was questioned about his role in the United Nations oil-for-food program in Iraq, which Saddam Hussein used to skim billions of dollars in fees.  Total and Mr. de Margerie deny any wrongdoing. No charges have been brought forward, and neither case is part of an active prosecution.  For his part, Mr. De Margerie says other issues demand his attention.

At a time when national oil companies — like Aramco, Petronas in Malaysia, Petrobras in Brazil and Gazprom in Russia — control large shares of the world’s reserves, and nationalistic governments tighten the screws on foreign companies, the traditional role of Western oil companies is under threat.

“Being accepted simply means being able to perform your job even in the most hostile environments,” Mr. de Margerie says.

THE Hadhramaut region of central Yemen offers a stunning natural backdrop of deep gorges and lush valleys interlacing one another like delicate fingers.  It also provides a good window on how Total balances the requirements of its oil business and its relationship with the locals.  Total operates its main oil-producing block on a desert plateau about 700 feet above the valley. The company’s rigs are practically invisible from below. On the plateau, the scene feels like a lunar landscape. The facility, called Block 10, produces around 50,000 barrels a day, a relatively small operation compared with the huge fields found in neighboring Saudi Arabia.

Despite its size, the operation exemplifies the hardships that Total is willing to take on in its hunt for new energy sources.  The company, which has been in Yemen since the 1980s, is now the country’s largest outside investor. While the government has welcomed foreign concerns, dealings can be complicated.  In 2006, a joint venture between the Hunt Oil Company and Exxon ended abruptly after Yemen canceled a contract to explore a field known as Marib al-Jawf.

Total’s managers here believe that their work with local communities — building schools or financing computer classes and sewing tutorials — can help them avoid similar problems.  But dealing with local residents can still be tricky. A few months ago, torrential rains devastated the region that lies beneath Total’s operations, uprooting nearly half the palm trees in the area and killing 44 people. The company says it has provided more than $300,000 in emergency aid to help deal with the flooding, in addition to $800,000 it spends each year for its own local development programs.

On a recent morning, Mr. Deffontaines, Total’s general manager in Yemen, was meeting with residents hit by the floods. Sitting among tribal representatives, Mr. Deffontaines grew uncomfortable as Dr. Awad al-Jabery, a local politician, asked Total for more money for reconstruction in the region.

“We are like kids demanding things from their father,” Dr. al-Jabery said. “Oil will one day be depleted in this area for Total, but if you contribute to this project, you will be remembered here for centuries.”

Mr. Deffontaines defused the tension with a broad smile and a quick joke.

“I prefer to keep a brotherly relationship with you rather than one of father and son,” he said.

So it goes for Mr. Deffontaines, who says he spends about a third of his time on community-related issues in Yemen — in addition to attending to such matters as the explosive charge placed on his pipeline by terrorists last year that punched a fist-size hole in the tube.  More recently, he has had to contend with thorny personnel issues. In April, in response to growing security concerns, he decided to send the families of his workers back to France. His own wife, son and twin daughters were among those forced to depart.

Mr. Deffontaines says that sending loved ones home was among the hardest choices he’s had to make, but it may have been very wise. A few months later, militants disguised as soldiers detonated two car bombs outside the American Embassy compound here.

While Mr. Deffontaines chalks up all of this to the ups and downs — and the thrills — of working for Total, he says his family is less enamored of the hardships.

“My wife’s not too thrilled,” he says. “You could say she doesn’t fill up at Total these days.”
Bodman: oil supply less than demand
CT POST
SEBASTIAN ABBOT Associated Press Writer
Article Last Updated: 06/21/2008 10:35:32 PM EDT

JIDDAH, Saudi Arabia (AP) — The U.S. energy secretary said Saturday that insufficient oil production, not financial speculation, was driving soaring crude prices.
Secretary Samuel Bodman's comments on the eve of an energy summit in the Saudi port city of Jiddah set the stage for a showdown between the U.S. and conference host Saudi Arabia, which has largely blamed speculation in the oil markets for record prices.

The U.S. and many other Western nations have put increasing pressure on Saudi Arabia, the world's top oil exporter, to increase production. Saudi officials have been hesitant to do so, arguing that soaring prices have not been caused by a shortage of supply.  Bodman disputed that assertion Saturday, saying oil production has not kept pace with growing demand, especially from developing countries like China and India.

"Market fundamentals show us that production has not kept pace with growing demand for oil, resulting in increasing prices and increasingly volatile prices," Bodman told reporters. "There is no evidence that we can find that speculators are driving futures prices" for oil.

He said commodities markets have experienced a huge influx of money from financial investors in recent years, but they have been following the market upward rather than driving the increase in the price of oil.

Saudi Arabia called the unusual meeting in Jiddah between oil producing and consuming nations as a way to show that it was not deaf to international cries that high oil prices have caused social and economic turmoil.  The Gulf nation has also become increasingly concerned that record oil prices could hinder growth in the U.S. and other major industrialized economies, potentially leading to a decline in oil demand and a sharp drop-off in prices.

While Saudi Arabia has been reluctant to drastically increase production, it has announced several small increases recently that it says were made to satisfy increased customer demand. The country has consistently said that it will produce enough oil to ensure the market is supplied.

The kingdom increased oil production by 300,000 barrels a day in May, and a Saudi official confirmed Saturday that the country would add another 200,000 barrels a day in July. The official spoke on condition of anonymity because of the sensitivity of the information.

Saudi Oil Minister Ali al-Naimi also confirmed the increase ahead of the conference. But neither announcement has done much to stem the run-up in the price of oil, which closed near $135 on Friday.  Saudi assistant oil minister, Prince Abdulaziz bin Salman, told a news conference Saturday that the delegates were "congregating to achieve results" and try to draw "a collective way forward for how to attend to this situation."

"This situation as we see it today as it exists needs everybody's attention simply because it no longer is a luxury to talk about it or ... to keep bouncing back and forth blame," he added.

The prince said that Saudi Arabia has been working with several international organizations to put together a background paper to focus Sunday's discussions and reiterated that the kingdom was ready to meet demand from its customers and foster stable prices.  He said it would be "wrong" to judge the success of the meeting by oil prices the day after it ends.

Many countries around the world have experienced social unrest by populations angry that rising fuel prices have driven significant increases in the cost of food and other basic goods.

Bodman said that every 1 percent increase in the demand for oil requires a 20 percent rise in price to balance the market. Demand in China, India and the Middle East has been soaring in recent years as the countries consume more energy to fuel economic growth.  Rising demand in the developing world has coincided with historically low levels of spare oil production capacity, which fell below two million barrels per day among OPEC countries in May for the first time since the third quarter of 2006, according to the International Energy Agency.

Bodman made clear that the responsibility for reducing oil prices did not simply fall on the shoulders of producing nations, saying consuming countries must increase energy efficiency and invest in the development of alternative fuels. But he saved his strongest words for oil producers like Saudi Arabia, who he said must step up long-term investment in production and spare capacity.

"The incentive (for investing) is simply reasonable prices so that we're not faced with having to drop everything and race to Jiddah for a meeting that was called on a week's notice," said Bodman.

Saudi Arabia is completing a $50 billion plan to increase capacity to 12.5 million barrels a day but has signaled it would not go beyond that.  CNBC said Saturday that Saudi Arabia's current capacity is 11.3 million barrels per day, quoting al-Naimi's adviser, Ibrahim al-Muhanna. Previous estimates by the International Energy Agency put current Saudi capacity at about 10.7 million barrels per day. The kingdom currently produces about 9.5 million barrels per day.
Tests Suggest Major Oil Discovery In Gulf Of Mexico;  Scientists see potential for 15 billion barrels, but impact years away
DAY
By Brad Foss, AP Writer  
Published on 9/6/2006
 
Washington — Move over, Alaska. Geoscientists have made what may be the nation's largest oil discovery off the coasts of Louisiana and Texas.
It could be the biggest domestic oil find in 38 years, but production is years away, and even then it won't reverse America's growing reliance on imports or have any meaningful effect at the gasoline pump.

A group led by Chevron Corp. has tapped a petroleum pool that lies 270 miles south of New Orleans — and almost four miles beneath the ocean floor — in a region that could hold as much as 15 billion barrels of oil, or more than Alaska's Prudhoe Bay.

“It confirms a new frontier, a new horizon in the ultra-deep water,” said Daniel Yergin, chairman of Cambridge Energy Research Associates and author of “The Prize,” the Pulitzer Prize-winning history of the oil industry. “It isn't energy independence,” he added.

Nevertheless, the announcement of a test well that sustained a flow rate of more than 6,000 barrels per day is a boon to Western oil companies at a time when they are finding it harder and more expensive to gain access to countries such as Russia and Venezuela, and when foreign supplies are increasingly at risk because of political unrest across Africa and the Middle East.

The proximity of the Gulf of Mexico to the world's largest oil consuming nation makes the new discovery extra attractive to the industry; however, analysts said the new find could bring pressure on Florida and other states to relax limits they have placed on drilling in their offshore waters for environmental and tourism reasons.

Chevron estimated that the 300-square-mile region known as the lower tertiary, a rock formation that is 24 million to 65 million years old, contains between 3 billion and 15 billion barrels. The upper end of that range would be enough oil to expand the country's reserves by 50 percent. But the first drop of oil from the lower tertiary isn't expected to hit the market until at least 2010 and at best it will only slow the decline in annual U.S. production.

Some analysts urged caution in inferring too much, too soon.

“One well doesn't tell you a lot of information,” said Matthew Simmons, a Houston investment banker and author of “Twilight in the Desert: the Coming Saudi Oil Shock and the Global Economy.”

At its height in 1988, the Prudhoe Bay field produced an average of 1.6 million barrels per day; in 2005, it yielded less than 400,000 barrels per day. (An Alaska wildlife refuge the industry has sought to drill is believed to contain some 10 billion barrels.)

Output from the lower tertiary could eventually reach 750,000 barrels a day, or more, analysts said, but it won't significantly dent the country's energy imbalance.

“It's a nice positive, but the U.S. still has a big difference between its consumption and indigenous production,” said Art Smith, chief executive of energy consultant John S. Herold. “We'll still be importing more than 50 percent of our oil needs.”

While the industry was mostly upbeat about the potential of this new discovery, it also acknowledged some challenges, including a dearth of rigs capable of drilling in such deep water and the long lead times required to drill and complete deep-water wells.

The U.S. consumes roughly 5.7 billion barrels of crude-oil in a year, while its reserves currently exceed 29 billion barrels, according to the U.S. Energy Department. To put that into perspective, Saudi Arabia's reserves are believed to exceed 250 billion barrels.

Chevron's test well, called “Jack 2,” was drilled in about 7,000 feet of water. Chevron has a 50 percent stake in the field, while partners Statoil ASA of Norway and Devon Energy Corp. of Oklahoma City own 25 percent each.

The financial implications of “Jack 2” and other prospects in the lower tertiary are most significant for independent oil and gas producer Devon, which is the smallest of the three partners. Devon's shares soared about 15 percent on the New York Stock Exchange.

“Relative to its size, Devon has one of the greatest exposures to the deepwater Gulf of Mexico,” said Oppenheimer & Co. analyst Fadel Gheit.

That said, many companies, including BP PLC, Exxon Mobil Corp. and Anadarko Petroleum Corp., stand to benefit from their own projects in the lower tertiary. “If the current thinking is correct, this is only a beginning,” Gheit said.

The well was drilled in the Walker Ridge area of the Gulf, 175 miles off the coast of Louisiana. It is an area the industry has been exploring for about five years.

San Ramon, Calif.-based Chevron said the well set a variety of records, including the deepest well successfully tested in the Gulf of Mexico. Chevron said the well was drilled more than 20,000 feet under the sea floor.
 


From Russia with...well, the crisis may be over for now...as of January 2009

In New England, a Natural Gas Trap
By MATTHEW L. WALD, NYTIMES
February 15, 2013

Electricity prices in New England have been four to eight times higher than normal in the last few weeks, as the region’s extreme reliance on natural gas for power supplies has collided with a surge in demand for heating.

Frigid temperatures and the snowstorm that hammered parts of the Northeast last week have revived concerns about the lack of alternatives to natural gas. Many plants that ran on coal or oil have been shuttered, and the few that remain cannot be put into service quickly enough to meet spikes in demand. The price of electricity is determined by the price of gas.

Last year, natural gas provided 52 percent of New England’s electricity, and that share is expected to grow. Gas is generally cheaper than other energy sources, and the lower costs have spurred the retirement of aging coal generators and nuclear reactors. The six-state New England region and parts of Long Island are the most vulnerable now to overreliance on gas, a vulnerability heightened by a shortage of natural gas pipeline capacity, but officials worry that similar problems could spread to the Midwest.

“We are sticking a lot of straws into this soft drink,” said William P. Short III, an energy consultant whose clients include companies that move and burn gas. “This is a harbinger of things to come in New England, as well as New York.”

James G. Daly, vice president for energy supply at Northeast Utilities, a company that, through its subsidiaries, provides electricity to homes and businesses in Connecticut, Massachusetts and New Hampshire, said: “There is concern we don’t have enough capacity to supply heating and electricity generation.”

Northeast and many other companies are temporarily insulated from the spot market because they sign long-term contracts for electricity supply. But Northeast’s energy charges next year could be 10 percent higher than they are now, Mr. Daly said, because the companies that sell power on a long-term basis will charge more to absorb the risk of short-term spikes in prices.

“It is certainly true that a region like New England that relies on a single fuel source like natural gas for the bulk of its power does leave itself open for more disruptions than a region with a more diverse fuel mix,” said Jay Apt, executive director of the Electricity Industry Center at Carnegie Mellon University in Pittsburgh. “It’s not a knock against natural gas; it’s a knock against a single fuel source.”

The American Public Power Association has warned since 2010 that demand is outpacing the delivery capacity of gas infrastructure. At coal plants, “you can look out the window and see that 60-day supply of your fuel,” said Joe Nipper, the group’s senior vice president of government relations. But gas plants tend to deliver fuel just as it is needed.

The gyrations of the spot market are hard to follow because prices are set in units few consumers understand. Electricity is sold on the wholesale market in megawatt-hours, or thousands of kilowatt-hours; a megawatt-hour is enough to run a big suburban house for a month. Natural gas is sold in a unit called an MMBtu, or a million British thermal units. An MMBtu equals 10 therms, the unit home heating customers pay for.

Normally, a megawatt-hour costs $30 to $50, and an MMBtu less than $4. But not lately.

The problem began late last year. During a cold snap around Thanksgiving, electricity prices in New England shot up to the highest in the country: $103.20 per megawatt-hour and $12.37 per MMBtu on Nov. 27.

On Jan. 24, the cost of an MMBtu of natural gas at Algonquin Citygate, a spot near Boston where gas is traded, rose to $31.20, pushing the price of a megawatt-hour over $200. Constellation Energy, which operates plants in the region, attributed the jump to temperatures 15 to 20 degrees below average.

A megawatt-hour cost about $150 early this month, according to weekly reports from ISO New England, the independent operator that maintains the region’s electricity market. A year ago, the price was around $30.

New England’s problems have been moderated somewhat by imports. “Without Indian Point, New England would have been toast,” Mr. Short said. “We’re importing 1,400 megawatts out of New York.” Indian Point is a twin-unit nuclear plant on the Hudson River that New York State is seeking to close.

But the region is littered with 1950s- and 1960s-era coal and oil plants that have been retired in the last few years. The 214-megawatt, coal-fired AES Thames unit near Uncasville, Conn., shut down in 2011; Somerset Station, a 174-megawatt, coal-fired plant in Somerset, Mass., closed in 2010.

The Salem Harbor plant in Salem, Mass., once had four coal and oil units, with a capacity of 745 megawatts. Two have closed, and the others will probably close next year. A new owner intends to build a 630-megawatt plant that will run on natural gas.

The underlying issue in New England is that gas pipeline capacity is inadequate to keep prices steady in times of high home heating demand, said Vamsi Chadalavada, executive vice president and chief operating officer of ISO New England. ISO is leading a study focused mainly on reliability, but reliability is intertwined with price, he said.

Importing liquefied natural gas would help, Dr. Chadalavada said, but cargoes are going instead to Europe and South America, where prices are higher.

Several companies want to liquefy and export gas from the continental United States because of the shale gas glut, and the events in New England could affect that debate. Opposition has come mostly from domestic industries that use the gas. A spokesman for Senator Ron Wyden, Democrat of Oregon and chairman of the Senate Committee on Energy and Natural Resources, said Mr. Wyden saw the price gyrations in New England as a reason to “look before we leap ahead with unfettered exports of gas.”

But the biggest problem may be the inadequacy of existing pipelines. On Feb. 7, ISO New England told the Federal Energy Regulatory Commission that it was concerned about “increasing reliance on natural gas-fueled generators at times when there is an increasingly tight availability of pipeline capacity to deliver natural gas from the south and west to New England.”

Additionally, experts say that the natural gas market and the electric market mesh poorly, because while the electric market runs around the clock, the gas market closes down at night.

During the storm last week, with transmission lines being knocked out by snow and high winds, ISO asked some gas-fired generators to start running in the middle of the night, Dr. Chadalavada said, and found they could not. “We were sitting here, 3 in the morning, trying to get gas generators to start up, and we started seeing where they couldn’t access that market in the overnight hours,” he said.

About 30 percent of the generators in the region burn coal and oil, Dr. Chadalavada said, but they produce less than 1 percent of the energy because they run so seldom. Some can take 24 hours to return to service.

ISO and the Federal Energy Regulatory Commission, which oversees interstate electricity and gas markets and transmission, are trying to make the systems mesh better.

Facing Frack hysteria
NYPOST
By KEVIN D. WILLIAMSON
Last Updated: 11:16 PM, February 8, 2012
Posted: 11:03 PM, February 8, 2012

Learning how to exploit the rich vein of natural gas buried in the Marcellus Shale beneath Pennsylvania, Ohio and New York has been a boon to the nation, but another remarkable discovery’s gone along with it. The Keystone State has devised a system of environmental-protection regulations that actually works.

Exploiting shale gas to its full capability has the potential to radically alter some fundamental economic and national-security equations. After all, oil imports account for about half of the total US trade deficit, and US policymakers suffer insomnia every time some random ayatollah starts making scary noises about the Strait of Hormuz.

Environmental ones, too. About half of US electricity comes from burning coal — which, on its best day, is a lot more environmentally problematic than natural gas (something to think about while tooling down to Trader Joe’s in your 45 percent coal-powered Chevy Volt or Nissan Leaf).

Then there’s the jobs.

Since Marcellus production really picked up around 2008, tens of thousands of jobs have been created. (Want $60,000 a year to drive a water truck with a $2,000 signing bonus? Pennsylvania is calling.) What’s more, tens of billions of dollars in new wealth have been injected into the ailing US economy.

Pennsylvania and West Virginia saw 57,000 new Marcellus jobs in a single year. (New York, which still severely restricts gas development, gets none of that.)

So what’s not to love?

The problem is hysteria over the gas-drilling technique known as hydraulic fracturing, or “fracking.”

Fracking uses a blend of water and sand to create tiny fractures in the shale through which natural gas can escape. Critics have raised fears that the practice could contaminate aquifers (the main source of our drinking water), but there’s a mile or more of impermeable stone between the Marcellus shale and the water table.

There are real environmental concerns about gas drilling, says John Hanger, an environmental activist, former Pennsylvania environmental secretary and sometimes sharp critic of the gas industry — but the concerns have little to do with fracking.

Fracking is in many ways less likely to pollute groundwater than are other forms of gas drilling, because it happens so far from the groundwater, with so much rock in between — which isn’t the case with shallower wells and more traditional gas exploration.

“Prior to the Marcellus [exploitation], there have probably been 50 to 150 private water wells, out of more than a million in the state, that have had methane contamination as a result of mistakes in the drilling process — but that has nothing to do with fracking,” Hanger says. “Some in the industry deny that it ever happens, and that is false.

“But frack fluids returning from depth, from 5,000 to 8,000 feet under the ground, to contaminate an aquifer? When the industry says that’s never happened, that has in fact never happened. And fracking has had no impact on the public water supply.”

In fact, the advent of fracking actually moved Pennsylvania to crack down. The sudden sea change in industrial practices prompted the state Department of Environmental Protection to overhaul its regulatory regime, working closely with individual firms and industry groups to develop best practices and high environmental standards.

The real environmental challenge, it turns out, isn’t any exotic concern on fracking, but the age-old problem of disposing of wastewater.

“Drilling wastewater is highly polluted,” says Hanger. But “when the Pennsylvania industry was small, we were dumping drilling wastewater untreated into rivers and streams and hoping that dilution would keep concentrations below levels that would cause damage to aquatic life or drinking water. There is probably less water going untreated into the rivers today than before the first Marcellus well. It’s a success story.”

There’s also money to be made treating wastewater, as a number of Pennsylvania startups have found. By raising standards for water that can be discharged into streams, the state pushed drillers to start recycling their wastewater instead. The DEP estimates that most frackers in Pennsylvania today are recycling 70 percent to 75 percent of their wastewater, with some recycling 100 percent.

Says Hanger: “If you look at the top 10 things impacting water in Pennsylvania right now, the gas industry would not be on the list, and certainly not fracking. Industry, environmentalists and regulators all ought to be celebrating.”

Kevin D. Williamson, a deputy managing editor at National Review, adapted this column from his article in the Feb. 20 NR.
The New York Times and natural gas: Don’t facts matter any more?
June 27, 2011 | Posted by Ken Cohen, for Exxon/Mobil blog

You really have to wonder why the New York Times is campaigning against cleaner-burning, domestically produced natural gas.

In the latest installment (stories published yesterday and today), the Times questions the value of our  country’s vast shale gas resources with little more than anonymous sourcing, two-year-old emails and analysis unsupported by fact. Ironically, author Ian Urbina did not call ExxonMobil, the largest natural gas producer in the United States, for comment. You would think an investigative journalist for one of the world’s great newspapers would have been curious to know why the world’s largest publicly traded energy company has invested billions of dollars in a so-called “Ponzi scheme.” Of course we’re doing no such thing, no matter how hard the article works to imply otherwise.
 
What does the Times have against an industry that supports more than 2.8 million American jobs and contributes $385 billion annually to the U.S. economy? In Pennsylvania alone, more than 48,000 jobs were created in 2010 because of the development of the Marcellus Shale resources there. U.S. natural gas production in 2010 was at its highest level since 1973 thanks to industry breakthroughs in shale gas production – facts which the Times fails to mention.

Though he did not bother talking to us, the writer did seem to put a lot of weight on the word of a retired geologist who just two years ago wrote that it was “difficult to imagine” that the “Haynesville Shale can become commercial.” Ironically, the Haynesville Shale is now the largest gas producer in the United States.

The writer also invokes the Federal Reserve to try to lend credibility to his premise that the shale gas revolution is a flash in the pan like the dot-com bubble and built upon misleading or even illegal accounting practices – in this case reserves reporting – like the Enron scandal.

A closer read and a quick Google search shows that the person he is quoting from the Fed was appointed to the Dallas Fed’s advisory committee and is a long-time shale gas opponent. The writer conveniently omits a report issued last year by economists who actually work for the Dallas Fed that notes that “the Texas experiment in the Barnett Shale proved the technical feasibility of shale gas development and brought costs within bounds that promise to give shale gas an important role in global energy supplies for decades to come.”

The current low price of natural gas, which may indeed make certain wells for some companies uneconomic to drill at this time, is in part a result of increased supply on the market. And that’s a function of the industry’s ingenuity in applying technology to tap resources that had been uneconomic to develop before. These increased supplies of domestic natural gas enhance U.S. energy security and economic competitiveness.
 
Risks are inherent in the oil and natural gas business. There is no guarantee that oil and gas will be found in quantities that will make it economic to produce. There is always uncertainty in predicting ultimate recoveries, particularly in the early stages of development. The U.S. oil and gas industry is experienced in reducing this uncertainty through studies and the integration of production histories and other data. For example, in the Bakken Formation of North Dakota and Montana, the U.S. Geological Survey now says 3 billion to 4 billion barrels of undiscovered oil are available – 25 times more than the original estimate made in 1995.

If the writer had bothered to call us, we would have told him that ExxonMobil’s investment approach is disciplined and based on a long-term view of global market conditions. We invest through market cycles and are not driven to hasty decisions because of day-to-day commodity market volatility. It was this long-term vision that led to the acquisition of XTO and subsequent shale gas ventures. Today, we are the largest producer of natural gas in the United States, and we are positioned to double our U.S. unconventional production over the next decade with an inventory of approximately 50,000 drillable well locations. We have strong positions in the Barnett, the Woodford, the Haynesville, the Fayetteville, the Eagle Ford, Marcellus and the Bakken Shales.

Technology development and application are and will remain key elements in maximizing the full value of these large, long-life resources. Here are some examples: Unconventional production from Haynesville increased four-fold in 2010, while production in Fayetteville doubled in 2010. The Barnett Shale, where we currently have gross production of approximately 900 million cubic feet per day of gas, is another good example of value creation through technology. We have been able to maximize long-term ultimate recovery with longer lateral lengths and improved drilling and completion efficiency. And our net unit development cost in this shale play is about $1 per thousand cubic feet equivalent, a 50 percent improvement in the last five years, which is yielding attractive drilling program returns.  Our confidence in per-well recoveries in the Barnett is underpinned by a decade of production history of early vertical wells drilled in the play – hardly a flash in the pan.

On the Enron allegation, reserve filings with the Securities and Exchange Commission are taken very seriously by the oil and gas industry and come with serious consequences for misreporting.  ExxonMobil takes a rigorous and methodical approach to booking proved reserves.  All reserve additions are subject to a long-standing, thorough management review process regarding the reasonable certainty of recovery, which is the standard set by the SEC.

It is unfortunate that the words “rigorous” and “methodical” can’t be applied to the New York Times’ recent articles. Understanding the facts surrounding the potential for development of our nation’s energy resources is every American’s business.  Our economic recovery, environmental progress and energy security depends in part on a sound, stable and sensible policy and regulatory framework informed by honest, fact-filled debate.  The Times’ current campaign undermines this debate and is a disservice to its readers.

Gov. Malloy To Unveil Friday A Sweeping Energy Plan
The Hartford Courant
By MARA LEE, maralee@courant.com
11:32 PM EDT, October 4, 2012

HARTFORD — Converting up to 300,000 households to natural gas by 2020 is the most ambitious piece of a sweeping energy plan that the governor will unveil Friday.

Aiming to provide residents with "cheaper, cleaner and more reliable electricity," the Connecticut Comprehensive Energy Strategy outlines various methods to encourage individuals and businesses to move to cleaner sources of energy for heating, to buy more efficient appliances and to use additional insulation.

An executive summary of the energy strategy calls for millions of dollars for electric and natural gas fueling stations for cars and trucks and for alternative energy research to be based at the University of Connecticut. It also suggests that the existing requirement that utilities buy 20 percent renewable power by 2020 could be raised, and that an energy efficiency standard for new construction should be established.

The report notes that just 31 percent of Connecticut homes have natural gas heat — which is significantly less expensive than oil heat — compared with 47 percent in Massachusetts and 48 percent in Rhode Island. New Jersey has 70 percent of homes using natural gas.

For about 40,000 Connecticut homes, the switch from heating oil or propane would be easy because they already have gas lines in their houses for stoves or water heaters. There are another 187,000 houses within 150 feet of a gas line.

The typical oil-heat customer in Connecticut spends $2,650 a year on fuel, and the typical natural gas customer spends just $1,100 — which includes the whole year's costs for gas cooking, water heaters and dryers.

Ron Araujo, manager of conservation for Connecticut Light & Power and Yankee Gas, has some experience with showing customers how spending some money now on insulation; a more efficient water heater, furnace or refrigerator; or other investments can save them money.

"Customers are very unwilling to take on debt," Araujo said. "We have greater uptake on the zero percent for insulation. They look at it more as a repayment plan."

The investment to buy and install a new furnace is substantial — about $7,500.

The state proposes that it link banks or other lenders with customers for loans, which would be paid back through utility bill payments over 10 years. If the interest rate was 5 percent — the highest interest rate now for loans for high-efficiency appliances subsidized through the utilities' conservation programs — such a loan would cost $80 a month. Even after subtracting the cost of paying back the loan, a family would still save $600 a year by switching.

The state currently helps low-income families convert through its Connecticut Housing Investment Fund, but the scale of this proposed program is far larger. It would be available to families at all income levels, and would cost $6 billion over seven years, if demand materializes.

The utilities paid the full freight for 11,578 low-income households so far this year, with an average $1,500 in improvements.

So far this year, another 16,003 households that make too much money to qualify for free insulation or appliances have had energy audits, which include caulking and replacement light bulbs. Just 12 percent, or fewer than 2,000, ever go further, adding insulation or replacing appliances or windows. And that's when the utilities are offering an interest-free loan for insulation projects of less than $2,500.

There have been 87 customers who accepted the interest-free loans for insulation, 57 customers who did more than one project and borrowed at 2.99 percent, and 32 customers who did a single project and borrowed at 4.99 percent.

Both of these programs are paid for with $123 million in the state's energy efficiency fund. That fund also subsidizes businesses' energy conservation investments, and pays for education promoting conversation and the financing of large-scale renewable energy installations to provide electricity to the utilities.

About $90 million of that fund comes from a surcharge on United Illuminating and CL&P bills. The draft plan would increase that surcharge by 0.37 cents a kilowatt hour, which would roughly double the money available.

Araujo said the residential and business audit and retrofitting programs — together close to $50 million a year — almost always have enough money to meet the demand.

"Demand isn't as high as we would like it to see," he said, although he expects to be able to spend it all by the end of the year. Last year, CL&P had $8 million left over, which rolled over to this year.

Araujo said that more people need to take out loans for thousands of dollars in improvements for the fund to be fully subscribed. He thinks that within three years, the spending could be doubled.

"There's a commitment from the current administration making energy efficiency a key means of meeting its environmental and energy goals," he said. Past administrations either diverted the surcharge or threatened to do so, he said, which dampened interest in the programs and led to energy auditor layoffs.

But if the current programs don't have demand past $50 million, how is the state going to inspire almost $1 billion a year worth of spending on natural gas conversions?

A member of the administration of Gov. Dannel P. Malloy who asked to remain anonymous said there could be incentives to sign up, possibly a tax credit on the state income tax, or some kind of Groupon model that could persuade most households on a street to sign up, even where there is not a gas line now.

The cost to tap into a line at the street is small, Araujo said, but bringing a gas line to a street that doesn't now have one is more expensive. There are about 80,000 homes in Connecticut near a gas main, but the street itself doesn't have a gas line.

"We're like uniquely missing the boat," the source said, especially because Connecticut doesn't have the excuse that New Hampshire and Maine do, that many people live in rural areas, where natural gas infrastructure isn't as cost-effective.

If the marketing campaign can persuade people to borrow to realize immediate heating savings, the administration believes it will be easy to find private lenders for the billions needed. Defaults when loans are repaid through utility bills are exceedingly rare, so a 5 percent rate of return is considered good for such a low-risk loan.

Copyright © 2012, The Hartford Courant

More Gas from the New York Times
Weekly Standard
The Scrapbook
August 11, 2011 9:15 AM

While the New York Times can barely conceal its glee at the phone-hacking scandal embroiling the rival Murdoch empire, The Scrapbook confesses to a certain schadenfreude of its own at the Gray Lady’s latest embarrassment. The Times’s slanted coverage of the natural gas industry continues to generate radioactive fallout.

Steven F. Hayward explained round one in our August 1 issue (“New York Times Passes Gas”). In a pair of long front-page stories in late June, the Times purported to expose the prospects of the “gas revolution” as not just hyped but likely fraudulent: Industry dissidents were likening the shale gas boom to the dot-com bubble and a Ponzi scheme.

Hayward’s chief criticism of the series was its “stupefying economic ignorance and disregard for any data analysis.” But he also faulted its reliance on “the sensational views of two would-be whistle-blowing ‘insiders,’ along with leaked emails and documents.” The Times posted online hundreds of pages of source materials but took care to black out the names of email senders and recipients.

The series brought a hail of criticism, including from the paper’s own ombudsman. His column in mid-July argued that “such a pointed article needed more convincing substantiation.”

In particular, he deplored the misleading identification of one of the few sources actually named, Deborah Rogers. Far from being an energy industry insider, Rogers is a goat farmer proud of her prize-winning artisanal cheeses. While the Times correctly stated that she once worked as a stockbroker and is a member of an advisory council to the Federal Reserve Bank of Dallas, it failed to note that this group of business-people, academics, and local notables meets twice a year to offer thoughts about business conditions, for which participants receive $100 a pop. Also left out was Rogers’s personal clash “with Chesapeake Energy, a leading shale gas producer, over its drilling on land next to hers” and her activism with the anti-shale-gas Oil and Gas Accountability Project.

Oddly, the author of the piece, reporter Ian Urbina, and his editors, instead of admitting missteps and moving on, dug in their heels. National editor Richard L. Berke defended the story as “deeply sourced, meticulously reported and measured.” The editors, he said, “would not change a word.”

Time for round two, or “Why Redacting E-Mails Is a Bad Idea.” That headline announced the second column by ombudsman Arthur S. Brisbane on July 30. By now, Brisbane had read, unredacted, the internal emails from the Energy Information Administration, the independent data branch of the Department of Energy, of which the series made extensive use. He found that some redactions of content had distorted the writers’ meaning. Most preposterously, an intern hired out of college in 2009 and promoted to an entry-level position this past March had been given pumped-up billing. Wrote Brisbane:
One of his emails was attributed to “one official” who said the shale industry may be “set up for failure.” Later, he was an “energy analyst” wondering, “Am I just totally crazy, or does it seem like everyone and their mother are endorsing shale gas without getting a really good understanding of the economics at the business level?” Next he was “one federal analyst” who said, “It seems that science is pointing in one direction and industry PR is pointing in another.”

Brisbane concluded with admirable restraint: “Anonymous material says to the reader: Trust us. But if the reader ends up feeling burned​—​if, for example, an ‘official’ proves to be an intern​—​the trust won’t be there the next time.”

Conceding nothing, the editors stand by Urbina, whose latest contribution to a well-rounded view of his subject is an August 3 piece on the only publicly documented instance of contamination of a drinking well by the controversial drilling process known as fracking​—​which occurred, as he reveals in paragraph 11, in 1984. When he finishes speculating that evidence of similar atrocities may lie hidden in sealed case files somewhere, Urbina no doubt - will unleash his reportorial zeal on the technological advances in gas extraction made in the past 27 years.

Behind Veneer, Doubt on Future of Natural Gas
NYTIMES (click above to the TIMES' research file)
By IAN URBINA
June 26, 2011

Energy companies have worked hard to promote the idea that natural gas is the fossil fuel of tomorrow, and they have found reliable allies among policy makers in Washington.

“The potential for natural gas is enormous,” President Obama said in a speech this year, having cited it as an issue on which Democrats and Republicans can agree.

The Department of Energy boasts in news releases about helping jump-start the boom in drilling by financing some research that made it possible to tap the gas trapped in shale formations deep underground.

In its annual forecasting reports, the United States Energy Information Administration, a division of the Energy Department, has steadily increased its estimates of domestic supplies of natural gas, and investors and the oil and gas industry have repeated them widely to make their case about a prosperous future.

But not everyone in the Energy Information Administration agrees. In scores of internal e-mails and documents, officials within the Energy Information Administration, or E.I.A., voice skepticism about the shale gas industry.

One official says the shale industry may be “set up for failure.” “It is quite likely that many of these companies will go bankrupt,” a senior adviser to the Energy Information Administration administrator predicts. Several officials echo concerns raised during previous bubbles, in housing and in technology stocks, for example, that ended in a bust.

Energy Information Administration employees also explain in e-mails and documents, copies of which were obtained by The New York Times, that industry estimates might overstate the amount of gas that companies can affordably get out of the ground.

They discuss the uncertainties about how long the wells will be productive as well as the high prices some companies paid during the land rush to lease mineral rights. They also raise concerns about the unpredictability of shale gas drilling.

One senior Energy Information Administration official describes an “irrational exuberance” around shale gas. An internal Energy Information Administration document says companies have exaggerated “the appearance of shale gas well profitability,” are highlighting the performance of only their best wells and may be using overly optimistic models for projecting the wells’ productivity over the next several decades.

While there are environmental and economic benefits to natural gas compared with other fossil fuels, its widespread popularity as an energy source is relatively new. As a result, it has not received the same level of scrutiny, according to some environmentalists and energy economists.

The Energy Information Administration e-mails indicate that some of these difficult questions are being raised.

“Am I just totally crazy, or does it seem like everyone and their mothers are endorsing shale gas without getting a really good understanding of the economics at the business level?” an energy analyst at the Energy Information Administration wrote in an April 27 e-mail to a colleague.

Another e-mail expresses similar doubts. “I agree with your concerns regarding the euphoria for shale gas and oil,”wrote a senior officialin the forecasting division of the Energy Information Administration in an April 13 e-mail to a colleague at the administration.

“We might be in a ‘gold rush’ wherein a few folks have developed ‘monster’ wells,” he wrote, “so everyone assumes that all the wells will be ‘monsters.’ ”

The Energy Information Administration’s annual reports are widely followed by investors, companies and policy makers because they are considered scientifically rigorous and independent from industry. They also inform legislators’ initiatives. Congress, for example, has been considering major subsidies to promote vehicles fueled by natural gas and cutting taxes for the industry.

In any organization as big as the Energy Information Administration, with its 370 or so employees, there inevitably will be differences of opinion, particularly in private e-mails shared among colleagues. A spokesman for the agency said that it stands by its reports, and that it has been clear about the uncertainties of shale gas production.

“One guiding principle that we employ is, ‘look at the data,’ ” said Michael Schaal, director of the Office of Petroleum, Natural Gas and Biofuels Analysis within the Energy Information Administration. “It is clear the data shows that shale gas has become a significant source of domestic natural gas supply.”

But the doubts and concerns expressed in the e-mails and correspondence obtained by The Times are noteworthy because they are shared by many employees, some of them in senior roles. The documents and e-mails, which were provided to The Times by industry consultants, federal energy officials and Congressional researchers, show skepticism about shale gas economics, sometimes even from senior agency officials.

The e-mails were provided by several people to The Times under the condition that the names of those sending and receiving them would not be used.

Some of the e-mails suggest frustrations among the staff members in their attempt to push for a more accurate discussion of shale gas. One federal analyst, describing an Energy Information Administration publication on shale gas, complained that the administration shared the industry’s optimism. “It seems that science is pointing in one direction and industry PR is pointing in another,” wrote the analyst about shale gas drilling in an e-mail. “We still have to present the middle, even if the middle neglects to point out the strengths of scientific evidence over PR.”

The Energy Information Administration, with its mission of providing “independent and impartial energy information to promote sound policymaking” and “efficient markets,” was created in response to the energy crisis of the 1970s because lawmakers believed that sound data could help the country avoid similar crises in the future.

As a protection from industry or political pressure, the Energy Information Administration’s reports, by law, are supposed to be independent and do not require approval by any other arm of government.

Its administrator, Richard G. Newell, who announced this month his plans to resign to take a job at Duke University, has hailed the prospects for shale gas, calling it a “game changer” in the United States energy mix. “The energy outlook for natural gas has changed dramatically over the past several years,” Mr. Newell told the Natural Gas Roundtable, a nonprofit group tied to the American Gas Association. “The most significant story is the transformative role played by shale gas.”

A number of factors have also helped create more interest in shale gas. The nuclear disaster in Japan in March has focused attention on the promise of natural gas as a safer energy source.

And last year, as energy market analysts warned about tougher federal regulations on oil and coal, particularly after the BP oil spill and the Massey coal mining accident, they also pointed to natural gas as a more attractive investment.

But a look at the Energy Information Administration’s methods raises questions about its independence from energy companies, since the industry lends a helping hand to the government to compile those bullish reports.

The Energy Information Administration, for example, relies on research from outside consultants with ties to the industry. And some of those consultants pull the data they supply to the government from energy company news releases, according to Energy Information Administration e-mails. Projections about future supplies of natural gas are based not just on science but also some guesswork and modeling.

Two of the primary contractors, Intek and Advanced Resources International, provided shale gas estimates and data for the Energy Information Administration’s major annual forecasting reports on domestic and foreign oil and gas resources. Both of them have major clients in the oil and gas industry, according to corporate tax records from the contractors. The president of Advanced Resources, Vello A. Kuuskraa, is also a stockholder and board member of Southwestern Energy, an energy company heavily involved in drilling for gas in the Fayetteville shale formation in Arkansas.

The contractors said they did not see any conflict of interest. “Firstly, the report is an extremely transparent assessment,” said Tyler Van Leeuwen, an analyst at Advanced Resources, adding that many experts agreed with its conclusions and that by identifying promising areas, the report heightened competition for Southwestern.

Intek verified that it produced data for Energy Information Administration reports but declined to comment on questions about whether, given its ties to industry, it had a conflict of interest.

Some government watchdog groups, however, faulted the Energy Information Administration for not maintaining more independence from industry.

“E.I.A.’s heavy reliance on industry for their analysis fundamentally undermines the agency’s mission to provide independent expertise,” said Danielle Brian, the executive director of the Project on Government Oversight, a group that investigates federal agencies and Congress.

“The Chemical Safety Board and the National Transportation Safety Board both show that government agencies can conduct complex, niche analysis without being captured or heavily relying upon industry expertise,” Ms. Brian added, referring to two independent federal agencies that conduct investigations of accidents.

These sorts of concerns have also led to complaints within the administration itself.

In an April 27 e-mail, a senior petroleum geologist who works for the Energy Information Administration wrote that upper management relied too heavily on outside contractors and used “incomplete/selective and all too often unreal data,” much of which comes from industry news releases

“E.I.A., irrespective of what or how many ‘specialty’ contractors are hired, is NOT TECHNICALLY COMPETENT to estimate the undiscovered resources of anything made by Mother Nature, period,” he wrote.

Energy officials have also quietly criticized in internal e-mails the department’s shale gas primer, a source of information for the public, saying it may be “on the rosy side.”

The primer is written by the Ground Water Protection Council, a research group that, according to tax records, is partly financed by industry.

The Ground Water Protection Council declined to respond to questions.

Tiffany Edwards, a spokeswoman for the Department of Energy, said that the shale gas primer was never intended as a comprehensive review and that further study was continuing.

Asked about the views expressed in the internal e-mails, Mr. Schaal says his administration has been very explicit in acknowledging the uncertainties surrounding shale gas development.

He said news reports and company presentations were included among a range of information sources used in Energy Information Administration studies. Though the administration depends on contractors with specialized expertise, he added, it conforms with all relevant federal rules.

And while production from shale gas has not slowed down and may not any time soon, he said, a lively debate continues within the administration about shale gas prospects.

Robbie Brown contributed reporting from Atlanta. Kitty Bennett contributed research.


'Last chance' gas talks stumble 
 Russia's Vladimir Putin and Ukraine's Yulia Tymoshenko are in Moscow

High-level talks in Moscow between the prime ministers of Russia and Ukraine have so far failed to resolve the dispute disrupting supplies of gas.

Moscow has indicated that the Ukrainian PM Yulia Tymoshenko does not have the full authority needed to negotiate a deal, a claim denied by Ukraine.

Almost 20 countries in Europe have been affected. Russia supplies gas to Western Europe via Ukraine.

It switched off the gas this month amid payment and theft allegations.

Earlier, the EU said the talks were Kiev and Moscow's "last chance".

Some central and east European states have been reduced to rationing gas, while others have been seeking alternatives to the pipelines carrying Russian gas via Ukraine.

Russia's President Dmitry Medvedev said he hoped gas deliveries would begin in the next few days.

The BBC's Richard Galpin in Moscow says Brussels stepped up pressure to bring an end to the EU's worst ever energy crisis, ahead of Saturday's meeting between Russian Prime Minister Vladimir Putin and the Ukrainian PM.

European Commission spokesman Johannes Laitenberger said the talks "offer the last and best chance for Russia and Ukraine to demonstrate they are serious about resolving this dispute".
 
Ukrainians burn a poster of Mr Putin as a Gollum figure turning off a gas pipe
"The gas must flow. We will regard this period as a test case for judging whether or not they are credible partners."

EU states import a quarter of their gas from Russia and 80% of supplies come via Ukraine.

Russia halted supplies of gas to Ukraine on 1 January after talks on the price Kiev should pay in 2009 collapsed.

A week later it cut the supply to Europe via Ukraine, saying it was forced to do so because Kiev was stealing the gas.

Ukrainian officials deny the allegation and accuse Russia of provoking the crisis.

Rival positions

Mr Putin, fresh from a visit to Germany, one of Moscow's biggest gas clients, said on Friday that a deal could be nearer after he discussed the formation of a gas transit consortium.

He said a deal was being brokered between Russia's Gazprom and EU firms to cover part of the cost of pumping gas from Russia to Europe.

It is not clear whether Ukraine would accept such a deal.

Meanwhile, divisions exist in Ukraine over the domestic supply and transit supplies.

Ukrainian President Viktor Yushchenko has said the two contracts were linked but Mrs Tymoshenko, his political rival, argued they were not connected.

"The issue of natural gas supplies to Ukraine and the issue of transit are interlinked and must be discussed as a single package," Mr Yushchenko's office said on the eve of the Moscow talks.

Speaking the same day, Mrs Tymoshenko said: "The Ukrainian government does not link the issue of concluding an agreement on [Russian] gas supplies to Ukraine with the issue of resuming gas transit to Europe."
Such a link, she added, would be "groundless and unfair".

She also demanded that Ukraine speak with one voice in the negotiations.

"Simply speaking, I need two things: Don't throw a spoke in the wheel and don't stab any backs," she said in Kiev.

Russian President Dmitry Medvedev has invited EU leaders to an emergency gas summit on Saturday but it appears that only envoys will be sent, including EU Energy Commissioner Andries Pielbags.

Russian Foreign Minister Sergei Lavrov was scathing about the decision not to send EU heads of state.

"We expect anyone interested in resolving the problem as soon as possible to come to the summit being held in Moscow tomorrow," he said on Friday.

He urged the EU to "show its famous solidarity" and put pressure on Ukraine.  
Gazprom Dispute With Ukraine Entangles Europe
NYTIMES
By DAVID JOLLY and JULIA WERDIGIER
January 7, 2009 - dated ahead again (guess they are checking it out!)

PARIS — Russia’s gas price dispute with Ukraine escalated Tuesday, disrupting deliveries to the European Union in the midst of a bitter cold spell, with a number of countries reporting that gas supplies had been suspended or reduced, and Germany predicting a possible shortage.

Bulgaria, Romania, Greece, the Czech Republic, Austria and other countries including Croatia, Macedonia and Turkey reported that gas supplies had been suspended or reduced after Gazprom, the Russian gas monopoly, reduced gas shipments through Ukraine.  Aleksandr I. Medvedev, a deputy chief executive of Gazprom, said at a news conference in London that three export pipelines within Ukraine had been shut down early Tuesday morning.

“The flow to Europe through the Ukraine is now about seven times less than the norm and the situation continues to deteriorate,” Mr. Medvedev said. “The Ukraine is in obvious breach of its commitments.”

“We face this challenge together with our European colleagues,” he added. “It’s a question of absolute irresponsibility,” and he called on the European Union to “go after Ukraine.”

Nonetheless, he said, Gazprom is “ready to go to the negotiation table any day, any minute.”

The European Commission and the European Union presidency responded to the Russian move with a statement demanding that “gas supplies be restored immediately to the E.U. and that the two parties resume negotiations at once with a view to a definitive settlement of their bilateral commercial dispute.” They said the E.U. would seek to “intensify the dialogue with both parties so that they can reach an agreement swiftly.”

E.ON Ruhrgas, the German gas company, said its gas supplies via Ukraine at its Waidhaus station had been “massively reduced,” and predicted that deliveries would completely stop in the next few days. E.ON said it would soon be unable to meet demand if supplies were not restored and temperatures remained low.

The Bulgarian Energy Ministry said that its deliveries were suspended early Tuesday, including gas intended for transit to Turkey, Greece and Macedonia. Bulgaria gets the vast majority of its gas from Russia. Bulgarian leaders announced that natural gas supplies would be slashed by two thirds on Tuesday, forcing the nation to rely on reserves in the village of Chiren in central Bulgaria that could last up to two months. 
Prime Minister Sergey Stanishev said that the storage facility had reserves of 570 million cubic meters of gas and could provide about 4.5 million cubic meters daily — about a third of the country’s normal consumption.

The Turkish energy minister, Hilmi Guler, on Tuesday told reporters in Ankara that the Russian gas from a pipeline that transits Ukraine had been completely cut. But Turkey is seeking to increase deliveries of Russian gas via a Black Sea pipeline, he said.

In Prague, the Czech pipeline operator RWE Transgas said the flow of gas “delivered by the transit pipe line system through the Ukraine and Slovakia to the Czech republic and other EU countries has dropped significantly.” It said it would increase purchases of Norwegian gas delivered via another pipeline.

The Romanian Economy Ministry also released a statement saying that a pipeline delivering Gazprom gas had been shut down. A second pipeline in the north of the country continues to operate, however. In Vienna, the Austrian energy company OMV said its supply of Russian gas via Gazprom was down 90 percent Tuesday. Werner Auli, a member of the OMV board said in a statement: “The supply of natural gas to our customers is still secured for the time being.”

Gazprom began reducing deliveries Monday for transit through Ukraine to Western European customers, saying it was seeking to make up for gas stolen by Ukraine. The Gazprom chief executive, Aleksei B. Miller, said in a conversation with Prime Minister Vladimir V. Putin broadcast Monday on Russian state television that Gazprom would reduce exports bound for Western Europe through Ukrainian pipes by the same amount that it accused Ukraine of diverting. Gazprom had already cut off all fuel supplies meant for Ukraine over the dispute.

It said that any countries that suffer shortages as a result should blame Ukraine for not paying a fair price for Russia’s natural gas. Russia and Ukraine, which has a pro-Western government, have been haggling over gas prices for years, in disputes that often carry political overtones. In the current fracas, Ukraine resisted an increase in Russian gas to $250 per 1,000 cubic meters from the current $179.50. Russia then raised the price to $418 for the same volume and again to $450.

The Russian announcement Monday was, in essence, a partial Russian fuel embargo of Europe, something policy makers in Western capitals have feared for some time as relations with Moscow bottomed out last summer following the war in Georgia. The announcement took the form of a conversation between Mr. Putin and Mr. Miller during an evening newscast. As they have in the past, the men accused Ukraine of diverting gas from pipelines that send it through Ukraine to Europe, something the Ukrainian government has denied doing.

Mr. Putin asked Mr. Miller how much Ukraine had diverted. About 65.3 million cubic meters of natural gas since Jan. 1, the executive said. “What are you going to do?” Mr. Putin then asked. Mr. Miller responded that he was considering ordering Gazprom to immediately cut exports bound for Western Europe through Ukrainian pipes by this same amount.  He said Gazprom would seek to mitigate shortages by shipping more gas through Belarus and Turkey, and by withdrawing gas from storage. But he suggested that European nations should blame Ukraine for likely deficits of heating fuel. Mr. Putin asked, “How about the supplies to our Western European consumers under long-term contracts?”

Mr. Miller said that Europe would only lack what “Ukraine had stolen.” Mr. Putin then said: “Good, I agree, cut it from today.”

In the days ahead, Mr. Miller added, Gazprom would each day reduce the volume of gas supplied at Ukraine’s border and intended for re-export to Europe by the amount it suspects Ukraine of diverting from the pipelines. Russia diminished the flow of gas to Ukraine on Jan. 1 by about 100 million cubic meters per day. Since then, Russia has accused Ukraine of withdrawing gas from the export pipelines.  Ukraine countered that it was diverting only enough fuel, about 21 million cubic meters, to power compressors. Authorities in Kiev said they were meeting internal demand from reserves and domestic production.

While ostensibly intended to force higher payments on Ukraine, the latest cuts directly affect gas bound for Western markets, something that energy experts said was seemingly designed to drag the European Union into the dispute, forcing it to assume a mediating role, assist Ukraine with payments or face shortages in its member nations’ markets. In 2006, a similar dispute prompted the European Union to side with Kiev. This time the bloc has urged a swift end to the crisis, but it has so far refused to get involved. “It has to be resolved by the two parties,” said Ferran Tarradellas Espuny, an energy spokesman for the European Commission in Brussels.

The global recession has reduced demand for energy and allowed many countries to salt away stockpiles in national reserves, making any embargo easier to weather than in 2006.

David Jolly reported from Paris, and Julia Werdigier from London. Andrew E. Kramer contributed from Moscow, and Doreen Carvajal from Paris.
3 January 2008 - I-BBC graphic (above)

Gas pipeline in Ukraine
Several gas pipelines run through Ukraine to the rest of Europe
Russian gas theories abound
By Rupert Wingfield-Hayes
BBC News, Moscow

Winston Churchill once famously described Russia as "a riddle wrapped in a mystery inside an enigma". This week Russia has once again lived up to its difficult reputation.

As an outsider it's extremely easy to be desperately confused by the way this country behaves.

Is Russia's decision to cut gas supplies to Ukraine simply a commercial dispute?

Is it the Kremlin extracting political revenge for Ukraine's Orange Revolution?

Or is it an even more convoluted conspiracy involving powerful political figures in Moscow and Kiev?

Depending on who you talk to, it's all of the above.

Political tool?

Talk to the deputy chairman of Russia's state gas giant Gazprom, Alexander Medvedev, and he'll tell you it's purely a commercial dispute.

"The rest of Europe pays more than $400 for each thousand cubic metres of gas it gets from Russia."
Gazprom's Alexander Medvedev
Alexander Medevdev says Gazprom needs 'alternative transit routes'

He tells me: "We have offered Ukraine extremely favourable terms for gas deliveries in 2009, but they have still refused to sign a new contract.

"So now we have no legal basis to continue supplying gas to them."

All of this is true. Up to now Ukraine has got its gas at just $179 per thousand cubic metres. This year Russia wants to raise that to $250.

That's still far below what the rest of Europe pays.

But talk to Masha Lipmann, a well-known political commentator at the Carnegie Endowment for International Peace in Moscow, and you'll hear a very different story.

"Moscow can't pretend this is purely a commercial dispute" she says.

"There's little doubt that Russia is using its energy resources as a political tool."

But why? What does the Kremlin want to achieve?

According to those who subscribe to the political weapon theory, Russia's purpose is to bring down the government of Ukrainian President Victor Yushchenko.

The Kremlin has never forgiven Mr Yushchenko for leading the Orange Revolution in 2004, and for moving Ukraine out of the Russian fold and towards a much closer relationship with Europe and the US.

Mr Yushchenko has applied to join Nato, and says he wants Ukraine to eventually join the European Union.

This is anathema to many Russians who consider Ukraine a part of the Slavic heartland.

Prime Minister Vladimir Putin is famously supposed to have told US President George W Bush once that "Ukraine isn't even a state".

And then there are the conspiracy theories.

The first goes like this: Gazprom wants to build a pipeline down the Baltic Sea, bypassing Ukraine, to supply its gas directly to the rich markets of Western Europe.

But the project, known as "Nordstream" is hugely expensive, fraught with environmental problems, and unnecessary.

The current pipeline network through Ukraine is perfectly adequate. Except, that is, if Ukraine keeps jeopardising supplies to Europe.

Far-fetched?

Consider this from Gazprom's Alexander Medvedev on Friday: "The question is can we rely on a transit country like Ukraine? Obviously there is no positive answer to this question.

"This is why we believe it is necessary to develop, as soon as possible, alternative transit routes. We hope that Europe takes the necessary steps to support this."

Perhaps not so far-fetched then.

But the final theory is even more outlandish: that powerful political figures in Ukraine are colluding with the Kremlin to foment the crisis and bring down President Yushchenko.

That would allow his political enemies to gain power.

Who would benefit from such a scenario? Ukraine's increasingly powerful Prime Minister Yulia Timoshenko.

Supporters of this theory say we can expect Ms Timoshenko to turn up in Moscow some time next week, sign a deal with the Kremlin, and return home to Kiev in triumph, having saved Ukraine from disaster.

Gazprom Cuts Off Gas Deliveries to Ukraine
NYTIMES
By ANDREW E. KRAMER
January 2, 2009

MOSCOW — Gazprom, the Russian energy monopoly, shut the entire flow of natural gas intended for Ukraine’s domestic consumption Thursday morning after negotiations over prices and transit fees unraveled the day before.

“Gas deliveries in the Ukrainian direction were reduced by 90 million cubic meters per day,” Gazprom said in a statement carried by the Interfax news agency, or about the average daily consumption of the country of 46 million people which is at the peak of the winter heating season now.

Ukraine’s national energy company confirmed pressure in the country’s natural gas pipeline system had begun to drop Thursday morning, Reuters reported.

If the interruption continues, customers in Western Europe would likely experience shortages, since the same pipelines in Ukraine that are used for internal distribution are also used for export. That is a problem that has bedeviled Europe’s energy supplies from Russia for years.

About 80 percent of Russia’s gas exports to Europe go through Ukraine. In the statement Thursday, Gazprom said it was continuing to ship gas to Ukraine that was intended for re-export to Europe.

The transit of Russian natural gas across former Soviet states to customers in Western Europe is a pivotal economic and security interest of the Russian government: taxes on exports of oil and natural gas account for about 60 percent of its budget.

How quickly Western European consumers may go cold from a shortage of natural gas was unclear. While the European Union as a bloc depends on Russia for about a quarter of its natural gas imports, some countries are more vulnerable. Bulgaria, for example, gets all of its gas from Gazprom, while Ireland imports no Russian gas.

The effect on Western Europe will depend on the scale and duration of the supply cutoff that began Thursday morning.

The conflict could sharply escalate tensions between Ukraine and Russia, the two largest successor states of the former Soviet Union.

In comments broadcast Wednesday evening on Russian state television, Russia’s prime minister, Vladimir V. Putin, said that any interference with Russia’s gas exports to Europe would carry “serious consequences for the transit country itself.” He did not elaborate.

Underlying the gas dispute are long-running tensions between Russia and Ukraine, a former Soviet republic. In 2004, after the street protests known as the Orange Revolution installed a pro-Western government in Ukraine, talks over gas supply and its transit became strained.

In 2006, Russia halted supplies to Ukraine for three days, in an ostensible dispute over pricing and transit fees. A drop in pressure in the integrated European pipeline system led to shortages as far away as Italy, as Ukraine withdrew gas from its export shipments to meet internal demand. This year, Ukrainian authorities say they have sufficient reserves of gas to meet internal demand for three months.

Moscow’s renewed pressure on Ukraine comes after Russia’s war in August with Georgia, another former Soviet republic, and the Kremlin’s subsequent claim to a renewed sphere of influence in the region. Like Georgia, Ukraine has angered Russia by seeking NATO membership.

Ukraine said it paid $1.5 billion on Tuesday to RosUkrEnergo, the Swiss-based gas trader Gazprom uses to supply Ukraine. President Viktor A. Yushchenko issued a statement saying that Ukraine had settled for all deliveries in 2008. Gazprom maintains that Ukraine must also pay $600 million in late fees.

By Wednesday evening, the sides had not settled on the price for 2009 deliveries or the tariff that Ukraine would charge for shipping Russian natural gas to customers in Western Europe.

Mr. Putin said that Gazprom is asking Ukraine to pay $250 per 1,000 cubic meters in 2009, up from $179 for the same volume in 2008. He characterized the 2009 fee as a subsidized rate. Bohdan I. Sokolovsky, Mr. Yushchenko’s energy adviser, had said Wednesday evening that Ukraine would not accept that price unless Russia offset the increase by paying Ukraine more to export gas to Europe.


http://www.nytimes.com/imagepages/2009/01/27/us/27coal.map.html

Geography Is Dividing Democrats Over Energy
NYTIMES
By JOHN M. BRODER
January 27, 2009

WASHINGTON — President Obama is moving quickly to act on the environmental promises that were a centerpiece of his campaign. But tackling global warming will be far more difficult — and more costly — than the new emissions standards for automobiles he ordered with the stroke of a pen on Monday.

Already, the Congressional Democrats Mr. Obama will need to carry out his mandate are feuding with one another.

By coincidence or design, most of the policy makers on Capitol Hill and in the administration charged with shaping legislation to address global warming come from California or the East Coast, regions that lead the country in environmental regulation and the push for renewable energy sources.

That is a problem, says a group of Democratic lawmakers from the Midwest and Plains States, which are heavily dependent on coal and manufacturing. The lawmakers have banded together to fight legislation they think might further damage their economies.

“There’s a bias in our Congress and government against manufacturing, or at least indifference to us, especially on the coasts,” said Senator Sherrod Brown, Democrat of Ohio. “It’s up to those of us in the Midwest to show how important manufacturing is. If we pass a climate bill the wrong way, it will hurt American jobs and the American economy, as more and more production jobs go to places like China, where it’s cheaper.”

This brown state-green state clash is likely to encumber any effort to set a mandatory ceiling on the carbon dioxide emissions blamed as the biggest contributor to global warming, something Mr. Obama has declared to be one of his highest priorities. Mr. Obama has said he intends to press ahead on such an initiative, despite opposition within his own party in Congress and divisions among some of his advisers over the timing, scope and cost of legislation to curb carbon emissions.

The centrist Democrats who urge a slower-paced approach represent states that are crucial electoral battlegrounds and that stand to lose the most from such regulation. They say they believe that global warming is a serious threat and they will support legislation to address the problem — but not at the expense of their already-strained workers and industries.

These Democrats are concerned, they say, that climate bills will be written by committees in the House and Senate led by two liberal California Democrats, Senator Barbara Boxer and Representative Henry A. Waxman, and shaped by Mr. Obama’s team of environmental and energy advisers, virtually all of whom are from California or the East Coast.

For decades, California has led the nation in environmental regulation, including the most sweeping effort to address global warming by imposing mandatory caps on greenhouse gas emissions starting in 2012.

Following California’s lead, a group of Northeastern States have created a partnership known as the Regional Greenhouse Gas Initiative to control carbon emissions.

But California and many East Coast States also differ sharply in the extent to which they depend on coal — a fossil fuel that is a major culprit in producing carbon emissions. California, for example, derived only 20.7 percent of its electricity from coal and 40 percent from hydroelectric power and renewable sources in 2005, while Ohio drew 86 percent of its electricity from coal that year, according to the Department of Energy. Other states of the Great Lakes and Plains are much more like Ohio than California in energy usage.

In the space of a single afternoon this month, Ms. Boxer, Mr. Waxman and the House speaker Nancy Pelosi, another California Democrat, issued statements declaring their intent to work with Mr. Obama to act quickly on comprehensive climate and energy legislation, with a goal of passage this year. Mr. Waxman said he expected to move a climate bill out of his Energy and Commerce Committee by Memorial Day. Ms. Boxer said “the writing is on the wall that legislation to combat global warming is coming soon.”

Rahm Emanuel, the new White House chief of staff, endorsed the lawmakers’ timetable and said he believed the goal of passage of a broad climate change bill this year was “realistic,” given the substantial Democratic majorities in the House and Senate.

Mr. Obama and leaders in Congress have endorsed a so-called cap-and-trade system in which power plant owners and other polluters could meet limits on heat-trapping gases like carbon dioxide by either reducing emissions on their own or buying credits from more efficient producers.

Mr. Obama’s energy and environmental advisers include Lisa P. Jackson, the former head of the New Jersey environmental agency who will head the Environmental Protection Agency; Steven Chu, former director of the Lawrence Berkeley National Laboratory in California, who is the new secretary of energy; and Nancy Sutley, former deputy mayor of Los Angeles for environmental affairs, the new chairwoman of the White House Council on Environmental Quality.

Carol M. Browner, who will occupy the new post of White House coordinator for climate and energy policy, is a former head of the E.P.A., a former director of Florida’s environmental agency and was a senior adviser to former Vice President Al Gore.

The appointees come to office with a mandate from the president to transform the nation’s energy economy and to lead the world in addressing climate change.

But their ambitions confront a brutal reality of a weak economy, fading public concern about climate change and serious qualms within their own party about the costs of taking on global warming and who will pay them.

They will also have to deal with bruised feelings among many Democrats over the coup Mr. Waxman mounted last November to wrest the gavel of the Energy and Commerce Committee from its longtime leader, Representative John D. Dingell, Democrat of Michigan and a longtime champion of the auto industry and other Midwest manufacturers.

“For us, it’s still a big disappointment,” said Senator Debbie Stabenow, Democrat of Michigan, referring to the unseating of Mr. Dingell, who was pursuing a more moderate climate proposal than those advocated by Ms. Boxer and Mr. Waxman.

“My message over all is that for us to support what needs to be done in addressing global warming we need to demonstrate that, in fact, jobs are created,” Ms. Stabenow said. “It’s not a theoretical argument. We have to come up with a policy that makes sense, that is manageable on the cost end, that creates new technology — and that treats states equitably and addresses regional differences.”

Ms. Stabenow is a leader of the so-called Gang of 10, representing the coal-dependent states in the middle of the country; the group was formed after the failure of a Senate global warming bill pushed by Ms. Boxer last June. The members’ goal is to assure that their concerns are met in any future legislation.

The other original members are Senators Brown of Ohio, John D. Rockefeller IV of West Virginia, Carl Levin of Michigan, Blanche Lincoln of Arkansas, Mark Pryor of Arkansas, Jim Webb of Virginia, Evan Bayh of Indiana, Claire McCaskill of Missouri, and Ben Nelson of Nebraska.

In the fall, six more Democratic senators joined the group: Jeff Bingaman of New Mexico, Kent Conrad and Byron L. Dorgan of North Dakota, Robert C. Byrd of West Virginia, Tim Johnson of South Dakota and Ken Salazar of Colorado.

Mr. Salazar has since left the Senate to become secretary of the interior.

“We will play an important role in the final bill,” Ms. Stabenow said.

Representative Edward J. Markey, the Massachusetts Democrat who has been a leader in Congress on environmental matters for three decades, has been assigned by Mr. Waxman to write the House’s version of global warming legislation. Mr. Markey said he was very aware of the concerns of coal-state Democrats.

He noted that Mr. Obama, who comes from Illinois, a coal-dependent state, had traveled to Ohio last week to speak at a factory that produces parts for wind turbines.

“Every single wind turbine takes 26 tons of steel to construct,” Mr. Markey said. “A lot of new jobs will be created if we craft a piece of global warming legislation correctly, and that is our intention.”



Large China oil spill threatens sea life, water
YAHOO
By CARA ANNA, Associated Press Writer
21 July 2010

BEIJING – China's largest reported oil spill emptied beaches along the Yellow Sea as its size doubled Wednesday, while cleanup efforts included straw mats and frazzled workers with little more than rubber gloves. 
An official warned the spill posed a "severe threat" to sea life and water quality as China's latest environmental crisis spread off the shores of Dalian, once named China's most livable city. 
One cleanup worker has drowned, his body coated in crude.

"I've been to a few bays today and discovered they were almost entirely covered with dark oil," said Zhong Yu with environmental group Greenpeace China, who spent the day on a boat inspecting the spill.

"The oil is half-solid and half liquid and is as sticky as asphalt," she told The Associated Press by telephone.

The oil had spread over 165 square miles (430 square kilometers) of water five days since a pipeline at the busy northeastern port exploded, hurting oil shipments from part of China's strategic oil reserves to the rest of the country. Shipments remained reduced Wednesday.  State media has said no more oil is leaking into the sea, but the total amount of oil spilled is not yet clear.

Greenpeace China released photos Wednesday of inky beaches and of straw mats about 2 square meters (21 square feet) in size scattered on the sea, meant to absorb the oil.  Fishing in the waters around Dalian has been banned through the end of August, the state-run Xinhua News Agency reported.

"The oil spill will pose a severe threat to marine animals, and water quality, and the sea birds," Huang Yong, deputy bureau chief for the city's Maritime Safety Administration, told Dragon TV.

At least one person died during cleanup efforts. A 25-year-old firefighter, Zhang Liang, drowned Tuesday when a wave threw him from a vessel, Xinhua reported.  Officials, oil company workers and volunteers were turning out by the hundreds to clean blackened beaches.

"We don't have proper oil cleanup materials, so our workers are wearing rubber gloves and using chopsticks," an official with the Jinshitan Golden Beach Administration Committee told the Beijing Youth Daily newspaper, in apparent exasperation.

"This kind of inefficiency means the oil will keep coming to shore. ... This stretch of oil is really difficult to clean up in the short term."

But 40 oil-skimming boats and about 800 fishing boats were also deployed to clean up the spill, and Xinhua said more than 15 kilometers (9 miles) of oil barriers had been set up to keep the slick from spreading.

China Central Television earlier reported an estimate of 1,500 tons of oil has spilled. That would amount roughly to 400,000 gallons (1,500,000 liters) — as compared with 94 million to 184 million gallons in the BP oil spill off the U.S. coast.

China's State Oceanic Administration released the latest size of the contaminated area in a statement Tuesday.  The cause of the explosion that started the spill was still not clear. The pipeline is owned by China National Petroleum Corp., Asia's biggest oil and gas producer by volume.  Friday's images of 100-foot-high (30-meter-high) flames at China's second largest port for crude oil imports drew the immediate attention of President Hu Jintao and other top leaders. Now the challenge is cleaning up the greasy plume.

"Our priority is to collect the spilled oil within five days to reduce the possibility of contaminating international waters," Dalian's vice mayor, Dai Yulin, told Xinhua on Tuesday.

But an official with the State Oceanic Administration has warned the spill will be difficult to clean up even in twice that amount of time.  Some locals said the area's economy was already hurting.

"Let's wait and see how well they deal with the oil until Sept. 1, if the oil can't be cleaned up by then, the seafood products will all be ruined," an unnamed fisherman told Dragon TV. "No one will buy them in the market because of the smell of the oil."