BP -- Big Producer of Black Gold

The hysteria of the Gulf Oil Spill has passed and oil is trading at more than $90 a barrel. That's good news for BP, but oil prices are impinging on drivers and others who are now paying more for refined petroleum products. Obama, with his moratorium on Gulf well-drilling, did his best to push oil prices higher. However, in a moment of clarity, he removed the drilling ban on some Gulf drilling. Of course if he were truly thinking of ways to stimulate the US economy he would remove all limits on domestic oil drilling and end all mileage requirements on US-made vehicles.

But Obama is a job killer, so empowering business leaders to decide how to build their businesses is out of the question -- unless the business involves sunshine, wind or batteries. Then the government tries to help. However, the word from consumers will arrive soon. They won't spend $40,000 for electric cars that travel only 40 miles on a single charge of the battery. And they do not want to pay more for electricity because it was made from sunlight.

BP is back. The stock price is up and will surpass its levels of last spring before the well catastrophe. This year the company will resume payments of dividends and hopefully it will find a way to extract oil from places that have been off-limits to oil drillers since the environmental nuts have been driving our energy policies.

BP shares hit 6-month high after Shell bid report

January 4, 2011

LONDON (Reuters) - Shares in oil major BP hit a six-month high on Tuesday after The Daily Mail newspaper reported rival Royal Dutch Shell had considered a takeover bid during the Gulf of Mexico oil spill.

BP shares were up 5.0 percent to 488.85 pence at 1000 GMT (5 a.m. ET).

The paper, citing sources close to the Anglo-Dutch group, reported Shell weighed an opportunistic bid for BP as crude gushed into the Gulf, but was discouraged by the potentially uncapped legal liabilities.

The newspaper said Shell could yet bid for BP if another suitor emerged but Europe's largest oil company by market value was unlikely to be the "first mover."

Mic Mills, head of electronic trading at ETX Capital said BP was also being boosted by comments late on December 31 from the lawyer running BP's gulf spill oil compensation fund that suggested damages payments could be half the expected level.

Ken Feinberg told Bloomberg Television about half the $20 billion fund set up by BP should be adequate to cover claims for economic losses.

One dealer said the news reports focused minds on the fact BP shares were cheap compared to rivals. "BP remains cheap and vulnerable at these levels but I do not think a bid is likely."

BP shares trade on a price-earnings ratio of 6.5 times, consensus 2011 earnings, while Shell trades at 8.9 times, partly reflecting the fact BP's actual earnings could be far lower if it was found to have been grossly negligent in causing the oil spill which would boost legal costs and fines.

However, Feinberg's comment highlighted how the picture could also be brighter than the company has predicted.

Analysts and industry sources said during the crisis last summer it was likely that both U.S. oil giant Exxon Mobil and Shell -- the only companies considered large enough to mount a bid -- would run the slide-rule over BP.

However, the two notoriously conservative companies were seen as likely to be discouraged by the open-ended nature of BP's liabilities.

Now BP's shares have rebounded 65 percent from their June low at 296 pence, to give BP a market value of around $140 billion, a bid would be much harder to mount, especially for Shell which is worth over $210 billion.

Exxon has a market value of almost $370 billion.

It is uncertain whether regulators on either side of the Atlantic would support a tie-up in top tier of the industry.

The New Alchemy

Some day, after we find the world's next Einstein, the breakthrough we've been dreaming about will occur. But until our next towering scientific genius arrives, we have to do what we can with what we've got, which is a lot.

Batteries have been around for 200 years. Cars have been on the road for over a century and the first cars were powered with batteries. After two centuries we've learned a few things about the physics and chemistry of batteries. Number one, they have a huge disadvantage that limits their appeal.

What is the limitation? The article explains. In short, batteries hold very little energy. Thus, makers of battery-powered devices have learned to design their devices around the limitations of the batteries rather than expect batteries to improve. Devices are made smaller and smaller, using the technology advances made almost daily in that end of thing. Thus, the improving devices need less and less power to do more and more.

But that strategy will not work with cars. They cannot shrink like semiconductors have. Therefore, we have to change something else. What? One option is to remove the import tariff on Brazilian ethanol. Brazil can meet its internal needs for ethanol and has the capacity to export. Using imported ethanol will lower the cost of the ethanol mixed into our gasoline. At the same time, using imported ethanol will take the pressure off the domestic corn market, which will lower the cost of corn used to feed livestock. Diverting domestic corn production to ethanol production has driven up corn prices and subsequently the food derived from corn-fed livestock.

Meanwhile, if the US were to end its embargo of Cuba, it's likely the island would become an ethanol producer. The ensuing prosperity and the arrival of Americans would destroy the Castro regime. What more could we want?

Beyond Fossil Fuels

Finding New Ways to Fill the Tank

CAMBRIDGE, Mass. — Most research on renewable energy has focused on replacing the electricity that now comes from burning coal and natural gas. But the spill in the Gulf of Mexico, the reliance on Middle East imports and the threat of global warming are reminders that oil is also a pressing worry. A lot of problems could be solved with a renewable replacement for oil-based gasoline and diesel in the fuel tank — either a new liquid fuel or a much better battery.

Yet, success in this field is so hard to reliably predict that research has been limited, and even venture capitalists tread lightly. Now the federal government is plunging in, in what the energy secretary, Steven Chu, calls the hunt for miracles.

The work is part of the mission of the new Advanced Research Projects Agency - Energy, which is intended to finance high-risk, high-reward projects. It can be compared to the Defense Advanced Research Projects Agency, part of the Pentagon, which spread seed money for projects and incubated a variety of useful technologies, including the Internet.

The goal of this agency, whose budget is $400 million for two years, is to realize profound results — such as tens of millions of motor vehicles that would run 300 miles a day on electricity from clean sources or on liquid fuels from trees and garbage.

One miracle would be a better battery. A pound of gasoline holds about 35 times more energy than a pound of lead-acid batteries and about six times more than lithium-ion batteries. Cars must carry their energy and expend energy to carry it, so the less weight per unit of energy, the better.

David Danielson, an Energy Department official, oversees a program to invest in start-up companies with new approaches to batteries, which is a new strategy; in the early 1990s, the department decided to concentrate all its efforts in lithium-ion research and gave up on other chemistries.

One new technology would allow every car, at modest extra cost, to shut down automatically at each stop sign or red light; when the driver tapped the accelerator, the battery would instantly get it going again. (Hybrids like the Prius do that, but at a substantial cost premium.)

A team at an infant company is using tiny carbon structures called nanotubes to store electricity. The goal is to create something the size of a flashlight battery, holding only about 30 percent as much energy, but able to charge or discharge in two seconds, almost forever.

The technology could form part of the battery pack for a car, cheaply delivering the energy for a jackrabbit start, without damaging conventional chemical batteries, which can store vastly more energy but can only accept or deliver it slowly.

It could also provide a cellphone battery that would charge in five minutes. That kind of battery is called a capacitor.

Joel E. Schindall, a professor at the Massachusetts Institute of Technology and a scientist on the project, pointed out that a capacitor was the original battery. Benjamin Franklin built a set of glass bottles that stored electricity and released it all at once; he called it a battery because, like guns, the bottles fired simultaneously.

But the nanotubes are modern. The walls of the tubes are about 12 atoms thick, and they grow, like leaves of grass, with just enough space between them to provide docking stations for charged particles. So a lot of charged particles can fit into a small space, with very light structures. He compares the device to a book shelf with very thin shelves placed exactly far enough apart to accommodate the books. Because the connection is physical, not chemical, the charged particles can attach and detach almost instantly. The result is a small, light, powerful package.

The project started out with a Ph.D candidate, Riccardo Signorelli, using tweezers to put tiny squares of aluminum into a vacuum chamber and then pumping in a hydrocarbon gas. When heated, the hydrogen burns away and the carbon atoms arrange themselves into tubes. The breakthrough was doing that on a surface that would conduct electricity.

Dr. Signorelli, now with his Ph.D, is chief executive of FastCap Systems, which, with government help, is converting an industrial loft into a factory.

In another M.I.T. lab, Gerbrand Ceder is developing a “materials genome,” using computers to predict the qualities of materials that could be used in batteries, and then fabricating the ones that the computer finds promising. A materials genome would speed the distribution of knowledge about materials and make development of new materials faster, he said, an idea that impresses officials at the Energy Department.

ARPA-E invested $3.2 million in a battery developed with a materials genome in a start-up company, run by Professor Ceder, that is exploring magnesium.

In batteries today, whether they are lithium-ion or old-fashioned lead-acid, an atom shuttles between the positive and negative terminal, carrying a single electron, as the battery charges and discharges. But a magnesium atom would carry two electrons, so a battery storing a given amount of energy could be nearly halved in size and weight.

Another approach being financed by ARPA-E is to convert the tremendous amount of energy stored by plants and trees to a car fuel.

Scientists are tantalized by plants and trees because they store far more energy than is consumed by cars, trucks, trains and planes, and they do it by taking carbon out of the atmosphere. But they do not give that energy back in an easy-to-use form, at least not without taking millions of years to turn into oil. Instead, they make energy-bearing sugars in a form called cellulose, which forms the sinew or skeleton of the plant.

Cellulose is hard to break down. “Cotton is pure cellulose,” said Eric Toone, who is Mr. Danielson’s counterpart for biofuels at the Energy Department. “When you take your cotton shirt and put it in a washing machine, it still comes out as a cotton shirt.”

Engineers have tried using steam, acids and enzymes to break cellulose into useful sugars. The enzymes are usually made by gene-modified bacteria or fungi and resemble the saliva of termites, which is notoriously good at dissolving cellulose. So far, none are commercial, but with Energy Department help, some researchers are trying new methods.

Take Michael Raab, whose start-up, Agrivida, in Medford, Mass., is tinkering with the genes of grass and sorghum to develop plants that make the enzymes internally and digest their own cellulose on cue, leaving behind a murky brown concoction of sugars that can be converted into gasoline, diesel or jet fuel.

Deep inside their cells, his plants produce a smooth, nonreactive molecule, but when the plant is exposed to heat and a change in acidity, the molecule breaks open, like a beer bottle smashed against the bar. The jagged edges are enzymes. They rip apart cell walls and leave fragments that are useful sugars.

Sugars — both the common kind that comes in paper packets for coffee and some more exotic types — can be converted by yeast into ethanol, a technology known since ancient times. Or they can be fed to gene-altered bacteria that will excrete diesel or gasoline components. Or they can be converted chemically, with catalysts.

All these steps, including the tricky one of recovering sugar from cellulose, can be done already, but not cheaply enough to produce tens of billions of gallons a year.

The Energy Department is putting $4.6 million into Agrivida, and similar sums into other start-up firms, many of them intent on finding gasoline substitutes. It is, said one department official, “real science fiction stuff,” ideas promising enough to attract a few million dollars for research but not quite promising enough to draw the private capital required for small-scale production.

Closing in on closing the Gulf oil leak

Efforts to drill the relief well are underway. Capturing the escaping oil is working, and soon the process will improve to the point where it is capturing virtually all the oil. British Petroleum has responded to the Gulf catastrophe with speed and growing success. The company is gaining control over a bad situation. But it is moving toward the resolution of the crisis.

Not that stock investors have noticed. The price of BP shares fell below $34 when trading began today. That's a drop of more than 45% from its 2010 peak of $62.

BP earns more than $20 BILLION a year, which means it is prepared and capable of paying the full cost of cleaning the mess made by the leaking oil. Meanwhile, BP is a British company, which means the president of the US and the US government have little to say about the company's management outside of enforcing drilling and safety rules.

Investigations of the operation of the Transocean rig show its managers were attempting to following mandated safety and drilling rules. The operators may have made errors, but they were, nevertheless, attempting to operate according to regulatory requirements.

It is beginning to appear that the regulations themselves were the weak link in this chain.

BP says 'virtually all' oil to be captured soon

June 8

GULF SHORES, Ala. (AP) - A top BP executive says the company expects to be capturing virtually all the oil leaking from the Gulf floor by early next week.

Chief operating officer Doug Suttles told The Associated Press on Tuesday in Gulf Shores, Ala., that the flow should decrease "to a relative trickle" by Monday or Tuesday.

President Barack Obama plans to visit the region the same days.

Suttles says a second pumping ship should improve the process. And he says a new containment cap being built will seal better and reduce leakage.

He says BP believes the oil now washing up on the coast was spilled soon after a rig exploded about 50 days ago and sank.

Suttles says oil will probably continue to wash up for about the same period after the well fully shuts down.

A relief well expected to stop the flow is expected to be done in August.

The Peter Principle Updated by Obama

President Obama is not in charge. It is beginning to appear that some people are noticing. For a long time he disguised it well, but despite his manner of speech, he's a bumbler. Whether the problem is oil leaking in the Gulf of Mexico or muslims who want to destroy Israel and drive all Jews out of the middle east, his inability to project power has convinced the worst people in theworld that he is an incompetent wimp.

Spill reveals Obama's lack of executive experience

In mid-February 2008, fresh from winning a bunch of Super Tuesday primaries, Barack Obama granted an interview to "60 Minutes" correspondent Steve Croft. "When you sit down and you look at [your] resume," Croft said to Obama, "there's no executive experience, and in fact, correct if I'm wrong, the only thing that you've actually run was the Harvard Law Review."

"Well, I've run my Senate office, and I've run this campaign," Obama said.

Seven months later, after receiving the Democratic presidential nomination, Obama talked with CNN's Anderson Cooper. At the time, the news was dominated by Hurricane Gustav, which was headed toward New Orleans and threatening to become a Katrina-like disaster. "Some of your Republican critics have said you don't have the experience to handle a situation like this," Cooper said to Obama. "They in fact have said that Governor Palin has more executive experience. ..."

"Governor Palin's town of Wasilla has, I think, 50 employees," Obama answered. "We have got 2,500 in this campaign. I think their budget is maybe $12 million a year. You know, we have a budget of about three times that just for the month. So, I think that our ability to manage large systems and to execute, I think, has been made clear over the last couple of years."

Obama ignored Palin's experience as governor of Alaska, which was considerably bigger than the Obama campaign. But his point was clear: If you're worried about my lack of my executive experience, look at my campaign. Running a first-rate campaign, Obama and his supporters argued, showed that Obama could run the federal government, even at its most testing moments. He could set goals, demand accountability, and, perhaps most importantly, bend the sprawling federal bureaucracy to his will.

Fast forward to 2010. The oil leak in the Gulf of Mexico is gushing out of control. The Obama administration is at first slow to see the seriousness of the accident. Then, as the crisis becomes clear, the federal bureaucracy becomes entangled in itself trying to deal with the problem. "At least a dozen federal agencies have taken part in the spill response," the New York Times reports, "making decision-making slow, conflicted and confused, as they sought to apply numerous federal statutes."

For example, it took the Department of Homeland Security more than a week to classify the spill as an event calling for the highest level of federal action. And when state officials in Louisiana tried over and over to win federal permission to build sand barriers to protect fragile coastal wetlands from the oil, they got nowhere. "For three weeks, as the giant slick crept closer to shore," the Times reports, "officials from the White House, Coast Guard, Army Corps of Engineers, Fish and Wildlife Service, National Oceanic and Atmospheric Administration and Environmental Protection Agency debated the best approach."

The bureaucracy wasn't bending to anyone's will. The direction from the top was not clear. And accountability? So far, the only head that has rolled during the Gulf crisis has been that of Minerals Management Service chief Elizabeth Birnbaum.

But during a May 27 news conference, Obama admitted he didn't even know whether she had resigned or been fired. "I found out about it this morning, so I don't yet know the circumstances," the president said. "And [Interior Secretary] Ken Salazar's been in testimony on the Hill." Obama's answer revealed that he hadn't fired Birnbaum, and he couldn't reach a member of his Cabinet who was a few blocks down Pennsylvania Avenue.

Given all that, perhaps candidates in future presidential races will think twice before arguing that running their campaign counts as executive experience.

A few days before Obama won the White House, Bill Clinton joined him for a late-night rally in Kissimmee, Fla. Clinton, who became president after 12 years as a governor, told the crowd not to worry about Obama's lack of executive background. Given the brilliance of Obama's campaign, Clinton said -- and here the former president uncharacteristically mangled his words a bit -- a President Obama would be "the chief executor of good intentions as president."

Chief executor of good intentions? Perhaps that's what Obama is now. But with oil gushing into the Gulf, that's just not good enough.

BP's Crude Solution

BP is capturing more than half the oil spewing from the well and when its current effort is in high gear, it might catch ninety percent of the escaping oil.

BP Increases Oil-Capture Rate; U.S. Braces for Siege

June 6 (Bloomberg) -- BP Plc said it is capturing more of the oil spewing into the Gulf of Mexico from its damaged well as U.S. officials said they expect the battle against pollution from the disaster to continue for months.

“This is a siege across the entire Gulf,” U.S. Coast Guard Admiral Thad Allen said on CBS’s “Face the Nation” broadcast today. “There will be oil out there for months to come. This will be well into the fall.”

BP said it captured 10,500 barrels of oil from its leaking well yesterday, up from 6,077 barrels in the previous 24-hour ending at midnight June 4. The well was estimated by government scientists to be gushing 12,000 to 19,000 barrels a day. The spill is the worst oil spill in U.S. history.

A “cap” over the well is capturing “probably the vast majority” of the leaking oil, Chief Executive Officer Tony Hayward told the British Broadcasting Corp. today in an interview in London. BP is preparing a second system to capture even more oil that will be implemented within the week, he said. BP plans to swap out those temporary systems with one that is more hurricane-proof by the end of the month.

The well began gushing oil after the Deepwater Horizon rig BP leased from Transocean Ltd. exploded on April 20 and sank two days later, resulting in the deaths of 11 workers. The leak is 40 miles (64 kilometers) off Louisiana’s coast under about 5,000 feet (1,524 meters) of water.

Oil Ashore

Gulf winds are moving the oil now in the water closer to the coasts of Mississippi, Alabama and Florida, according to Allen. He said oil in tar balls and patties is affecting areas from western Mississippi to Pensacola, Florida.

The spill, which has cost BP more than $1 billion, has soiled about 140 miles of shoreline in Louisiana, Alabama and Mississippi, along with some 80 miles in Florida, the Coast Guard said yesterday.

Oil that washed ashore on beaches in Florida’s northwest Panhandle region was quickly removed, and crews are attacking tar balls that are left on the sand, Florida Governor Charlie Crist said on CNN’s “State of the Union” broadcast. A cleanup command post has been set up in Pensacola, he said.

More oil is expected to arrive in northwest Florida within the next three days, according to a statement today from the Florida Deepwater Horizon Response team, which cited National Oceanic and Atmospheric Administration forecasts.

Slow Payments

Mississippi Governor Haley Barbour said state beaches remained clear of tar balls or other deposits, though he fears tourists will still stay away because they think the coast from Florida to Texas is “ankle-deep in oil.”

Both Crist and Allen faulted BP for taking too long to compensate businesses and workers for losses tied to the oil.

“We want these claims to be responded to much more quickly,” said Crist said on CNN. “These people need help. And we have to be there to try to make them as whole as we can during this very difficult process.”

President Barack Obama’s moratorium on offshore drilling, which has idled 33 deepwater rigs in the Gulf of Mexico, will cost as many as 6,000 jobs this month and 20,000 by the end of next year, Louisiana Governor Bobby Jindal said in a letter to Obama on June 2.

Lost Livelihoods

Mississippi Governor Haley Barbour today endorsed the call by Jindal to resume offshore drilling in the Gulf, which produces 30 percent of all U.S. oil and gas. If not, rigs in the region will be moved to oil fields overseas, further delaying the resumption of drilling in the Gulf, he said.

Obama said communities along the Gulf Coast suffering because of the oil spill will be “made whole” with payments from BP and government aid. In his weekly address on the radio and Internet, which was taped June 4 in Grand Isle, Louisiana, Obama said livelihoods that have spanned generations are in danger of being lost.

BP has paid about half of the 35,000 claims submitted by Gulf residents and companies for income lost because of the spill, Darryl Willis, vice president of resources at BP America, said yesterday on a conference call. BP is awaiting documentation before it can pay the remaining claims, he said. Willis said the company’s spending on claims through June may top $84 million.

BP said it will continue to try increasing the amount of oil it is capturing with its latest containment system.

Still Leaking

“I’d like to see us capture 90-plus percent of this flow,” Doug Suttles, BP’s chief operating officer for exploration and production, said June 4 on CBS’s “Early Show.” “That’s possible with this design.”

The oil is funneled to a drillship at the surface that can capture and separate as much as 15,000 barrels of oil, gas and water a day, Kent Wells, a BP senior vice president, said in a conference call with reporters last week.

Jagged edges left when the pipe was cut for the containment cap may prevent a tight seal and allow some oil to continue leaking, Allen said. Government scientists expected the cut, which removed a kink in the pipe, to increase the flow of oil by as much as 20 percent.

“History has taught us to be cautiously optimistic, not overly optimistic,” Dan Pickering, an analyst at investment bank Tudor Pickering Holt & Co. in Houston, said. Capturing 90 percent of the flow would be a “huge home run,” he said.

Kuwait Investment Authority, the country’s sovereign wealth fund, isn’t considering selling its 1.75 percent stake in BP and believes there is no threat to the company’s future as a result of the spill, the Al-Rai newspaper reported today.

‘First Call’

Hayward told investors June 4 on a conference call the spill has the “first call” on the company’s funds and financial consequences of the spill will be “severe.”

Allen said relief-well operations to stop the leak permanently will involve pumping mud to reduce pressure and placing a cement plug. He said this effort will be the “bottom kill exercise.”

“In the long term, the threat from this well will not go away until the relief well has been drilled, pressure has been taken off and the well has been plugged,” Allen said. “In the meantime, we need to optimize our containment efforts.”

BP -- Better Plans -- Maybe Success This Time

The latest attempt to stop oil from flowing into the Gulf is showing some promising signs.

BP's cap funneling oil to the surface-Coast Guard

Fri Jun 4, 2010 10:08am EDT

* Cap on leak, funneling fraction of oil to drillship

* BP hopes cap will eventually capture 90 pct of oil

HOUSTON, June 4 (Reuters) - BP Plc.'s containment cap over its stricken Gulf of Mexico well is collecting about 1,000 barrels per day, the top U.S. official overseeing the cleanup effort said on Friday.

A top BP executive overseeing containment efforts told CNN earlier that as that collection rate increases, it could corral "90-plus percent" of the oil.

One thousand barrels is a small fraction of the 19,000 barrels per day that the U.S. government has estimated could be gushing from the well, but the amount should increase as BP closes vents at the bottom of the cap to trap more oil, Coast Guard Admiral Thad Allen told reporters in a conference call.

"Sometime later today we'll probably be able to get ... an approximation of how much oil we are capturing," he said.

The containment cap is BP's latest attempt to trap oil, after its' "top kill" plan to plug the well failed on Saturday. BP's strategy is now to trap the oil at the well and funnel it to a tanker on the surface until it can drill a relief well to staunch the flow, which could take until mid-August.

Doug Suttles, BP's chief operating officer of exploration and production, told CNN earlier on Friday that the containment cap "should work."

"I'd like to see us capture 90-plus percent of this flow," Suttles said. "I think that's possible with this design."

Both Allen and Suttles said BP would continue working to seal the cap on jagged remnants of a pipe on equipment at the wellhead.

"Of course what we have to do is work through the next 24 or 48 hours to optimize that. But that would be the goal ... We want to stop this oil from spilling to the sea," Suttles said.

Suttles was the first BP official to publicly discuss the cap -- its latest attempt after a series of failures to try to contain a gushing oil and gas leak in the Gulf of Mexico.

BP spent Thursday lowering the cap onto the jagged remnants of a pipe that had been sheared from the top of equipment at the wellhead.

A rubber seal on the bottom of the cap is intended to capture most of the oil, but some is still expected to escape.

Meanwhile, drilling continues on two relief wells expected to intercept and plug the leaking well far beneath the seabed. Drilling began May 2 on the first relief well and May 16 on a second. Both are expected to be finished in August.

Progress in the Gulf Oil Leak

BP stock is trading about $45 a share, giving the company a market capitalization of $140 billion. Last month, before the explosion and start of the leak, the stock was at $60 and the company had a market cap of $188 billion.

The nightmare for BP has lowered its market cap by $48 billion. Is the company really headed for a hit that large? Not according to any credible sources.

Maybe that means now is a good time to buy BP shares. Based on today's price, the dividend yield is 7.9%. Thus, investors will enjoy significant income while they watch the stock price inch up again.

BP Has ‘Some Success’ in Bid to Halt Leak, U.S. Says

May 27 (Bloomberg) -- BP Plc temporarily stopped the flow from a leaking well in the Gulf of Mexico, indicating progress on its plans to plug a well that’s been spewing oil for more than a month, U.S. Coast Guard Admiral Thad Allen said.

“They’ve had some success overnight,” Allen, National Incident Commander for the spill, said in an interview on WWL radio in New Orleans today. “Everybody is cautiously optimistic, but there’s no reason to declare victory yet.”

The company began pumping mud-like drilling fluid into the well at 2 p.m. New York time yesterday in a procedure known as “top kill.” BP will need another 24 hours before it can be “sure of success” for the process, Robert Dudley, managing director for the London-based company, said on NBC’s “Today” show this morning.

Success of top kill would bring to an end a leak that has poured an estimated 22 million gallons of oil into the Gulf and soiled 100 miles (161 kilometers) of coast. BP rose 28.8 pence, or 5.9 percent, to 520.8 pence at 4:35 p.m. in London trading.

The process uses the drilling fluid to “arm wrestle” the gusher of oil and natural gas back into the well, said Dudley, and then allow engineers to seal it with cement. BP has halted the flow of oil and gas and now must drop the pressure in the well to zero for the seal, Allen said.

Shares Rise

BP jumped as much as 6.6 percent in London trading after the Los Angeles Times quoted Allen as saying that the top kill had succeeded. The Coast Guard issued a “technical clarification” in an e-mail, saying the temporary halt in flow doesn’t mean the effort was successful.

“The operation is ongoing, we’re not giving a commentary on it,” David Nicholas, a BP spokesman in Houston, said in a telephone interview.

The well began leaking after an April 20 explosion and fire on the Deepwater Horizon drilling rig. BP leased the rig from Geneva-based Transocean Ltd., the largest deep-water driller.

Transocean rose as much as 9.1 percent today. The shares gained $3.47, or 5.9 percent, to $62.05 at 11:38 a.m. in New York Stock Exchange composite trading. Halliburton Co., which provided services on the rig, rose $1.29, or 5 percent, to $27.08. Cameron International Corp., which provided equipment to the rig, rose $1.60, or 4.4 percent, to $37.68.

Anadarko Petroleum Corp., which owns a 25 percent stake in the well, rose $3.40, or 6.4 percent, to $56.74.

Junk Shot

“It will be Friday night or Saturday at the earliest before we know definitively that the well has been killed,” Robert MacKenzie, a Houston-based analyst for FBR Capital Markets, wrote today in a note to clients. “They are in the process of mixing more mud or perhaps even a junk shot to pump before they switch to cement to seal the well.”

BP has said a “junk shot” injection of rubber scraps, may be used as needed to seal leaks in the well piping so that enough pressure can be exerted on the column of oil and gas.

A plume from the spill may reach northeast 22 miles toward Mobile, Alabama, a research vessel from the University of South Florida found in a preliminary report. The Weatherbird II made initial tests that show the highest concentrations of “dissolved hydrocarbons” were 400 meters underwater.

Congress has scheduled at least 20 hearings on the Deepwater Horizon and offshore drilling since the incident, and the Minerals Management Service and Coast Guard held another day of hearings in Louisiana on the explosion and sinking of the rig.

Drilling Delay

President Barack Obama today extended by six months a moratorium that began after oil started to spill from BP’s well. The president also canceled a proposal to drill for oil off the coast of Virginia and planned drilling by Royal Dutch Shell Plc of exploratory wells in the Arctic off Alaska.

Obama said the changes were the result of a 30-day safety review on offshore drilling the president ordered from Interior Secretary Ken Salazar.

The well may have leaked more than twice the oil that the Exxon Valdez spilled in 1989, according to figures from a U.S. government panel.

The BP well may have gushed 12,000 to 19,000 barrels a day, Marcia McNutt, director of the U.S. Geological Survey, said today in a conference call. Based on the midpoint of the estimates released by the Flow Rate Technical Group, the well may have leaked about 527,000 barrels from April 22, when the rig sank, through yesterday. That is more than double the Exxon Valdez’s 257,000-barrel spill in Alaska.

The amount of oil being spilled will help determine BP’s liability for the leak.

Spill Costs

The spill has cost BP a total of $760 million, or about $22 million a day, the company said May 24. Average daily profit last year was $45 million a day, according to data compiled by Bloomberg.

The federal government has spent more than $100 million responding to the spill and will be reimbursed by BP, Landry of the Coast Guard said.

BP said yesterday in an e-mailed statement it has paid more than $36 million in damage claims and will appoint an independent mediator to review and assist claims.

The leaking well can be permanently sealed only by one of two relief wells it’s drilling, which won’t be complete before August.

If the top of the well can’t be plugged, the company plans to replace the damaged riser pipe at the well. That requires cutting away a kink in the existing pipe, at least temporarily increasing the size of the leak, BP Senior Vice President Kent Wells said May 25.

The top kill “procedure has not been carried out in 5,000- feet (1,524-meter) water depth before and BP has stressed its success cannot be assured,” Andrew Whittock, an analyst in London at Oriel Securities Ltd., said in a note yesterday. “Many commentators believe the chance of success is less than 50 percent.”

Oil's Well that Ends Well

Looks like some smart engineers and iron-workers have designed and built something that will cap the leaking oil well. That's great news, though hardly unexpected. American engineers have always shown an impressive capacity for creating solutions to big problems when the pressure is on.

Inasmuch as the search for oil and gas now means we must drill deeper and drill in more hostile settings, it is time to give more study to preventing and stopping catastrophes that can occur at these remote and hazardous sites. In addition, we need to develop better methods for removing leaked oil from seawater. Because we are driven by our need for oil crossed with our need to keep sea habitats healthy, this technical dilemma, like every technical problem we face, will succumb to the innovation of American engineers.

Robots position giant box over oil-spewing well

May 7 02:09 PM

ON THE GULF OF MEXICO (AP) - Underwater robots positioned a giant 100-ton concrete-and-steel box over a blown-out well at the bottom of the Gulf of Mexico on Friday as workers prepared to drop the device to the seafloor in a first-of-its-kind attempt to stop oil gushing into the sea.

A spokesman for oil giant BP PLC, which is in charge of the cleanup, said the box was suspended over the main leak just after noon EDT Friday and was being moved into position.

Several undersea cameras attached to the robots were making sure it was properly aligned before it plunged all the way to the bottom.

"We are essentially taking a four-story building and lowering it 5,000 feet and setting it on the head of a pin," Bill Salvin, the BP spokesman, told The Associated Press.

If the device works, it could be collecting as much as 85 percent of the oil spewing into the Gulf and funneling it up to a tanker by Sunday. It's never been tried so far below the surface, where the water pressure is enough to crush a submarine.

Once the device in place later Friday, the robots will secure it over the main leak at the bottom, a process that will take hours.

The seafloor is pitch black, but lights on the robots illuminate the area where they are working and they have found no problems so far. The cameras are off to the side, not in the path of the oil, Salvin said.

An estimated 200,000 gallons a day have been spewing ever since in the nation's biggest oil spill since the Exxon Valdez disaster in Alaska in 1989.

The containment device will not solve the problem altogether. Crews are still drilling a relief well and working on other methods to stop the well from leaking.

The quest took on added urgency as oil reached several barrier islands off the Louisiana coast, many of them fragile animal habitats. Several birds were spotted diving into the oily, pinkish-brown water, and dead jellyfish washed up on the uninhabited islands.

"It's all over the place. We hope to get it cleaned up before it moves up the west side of the river," said Dustin Chauvin, a 20-year-old shrimp boat captain from Terrebonne Parish, La. "That's our whole fishing ground. That's our livelihood."

Out at sea, the crew of the semi-submersible drilling vessel Helix Q4000 waited hours longer than expected to hoist the containment device from the deck of the Joe Griffin supply boat because dangerous fumes rose from the oily water. Joe Griffin Capt. Demi Shaffer told an Associated Press reporter aboard his boat the fear was that a spark caused by the scrape of metal on metal could cause a fire. Crew members wore respirators while they worked.

Conditions were safe enough to allow the crane to lift the device into the Gulf after 10 p.m. CDT, dark oil clinging to its white sides as it entered the water and disappeared below the surface.

The box—which looks a lot like a peaked, four-story outhouse, especially on the inside, with its rough timber framing—must be accurately positioned over the well, or it could damage the leaking pipe and make the problem worse.

BP spokesman Doug Suttles said he is not concerned about that happening. Underwater robots have been clearing pieces of pipe and other debris near where the box will be placed to avoid complications.

"We do not believe it could make things worse," he said.

"I'm worried about every part, as you can imagine," said David Clarkson, BP vice president of engineering projects.

If the box works, a second one now being built may be used to deal with another, smaller leak from the sea floor.

Seas were calm Friday, and the Coast Guard hoped to continue skimming oil from the ocean surface, burning it at sea and dropping chemicals from the air to break it up.

Oil and Water

It should be obvious that less offshore drilling is unlikely to prevent or reduce oil spills. Prior to the current leak in the Gulf of Mexico, the biggest leak came from the Exxon Valdez, a ship. Not a producing well. If we drill less, then we will import more, and more of the imported oil will arrive by ship. More ships means more potential for leaks.

Drilling in Deep Water
A ban on offshore production won't mean fewer oil spills

It could be months before we know what caused the explosion and oil spill below the drilling rig Deepwater Horizon. But as we add up the economic costs and environmental damage (and mourn the 11 oil workers who died), we should also put the disaster in some perspective.

Washington is, as usual, showing no such restraint. As the oil in the Gulf of Mexico moves toward the Louisiana and Florida coasts, the left is already demanding that President Obama reverse his baby steps toward more offshore drilling. The Administration has partly obliged, declaring a moratorium pending an investigation. The President has raised the political temperature himself, declaring yesterday that the spill is a "massive and potentially unprecedented environmental disaster."

The harm will be considerable, which is why it is fortunate that such spills are so rare. The most recent spill of this magnitude was the Exxon Valdez tanker accident in 1989. The largest before that was the Santa Barbara offshore oil well leak in 1969.

Workers load oil booms onto a crew boat to assist in the containment of oil from a leaking pipeline in the Gulf of Mexico.

.The infrequency of big spills is extraordinary considering the size of the offshore oil industry that provides Americans with affordable energy. According to the Interior Department's most recent data, in 2002 the Outer Continental Shelf had 4,000 oil and gas facilities, 80,000 workers in offshore and support activities, and 33,000 miles of pipeline. Between 1985 and 2001, these offshore facilities produced seven billion barrels of oil. The spill rate was a minuscule 0.001%.

According to the National Academy of Sciences—which in 2002 completed the third version of its "Oil in the Sea" report—only 1% of oil discharges in North Americas are related to petroleum extraction. Some 62% of oil in U.S. waters is due to natural seepage from the ocean floor, putting 47 million gallons of crude oil into North American water every year. The Gulf leak is estimated to have leaked between two million and three million gallons in two weeks.

Such an accident is still unacceptable, which is why the drilling industry has invested heavily to prevent them. The BP well had a blowout preventer, which contains several mechanisms designed to seal pipes in the event of a problem. These protections have worked in the past, and the reason for the failure this time is unknown. This was no routine safety failure but a surprising first.

One reason the industry has a good track record is precisely because of the financial consequences of accidents. The Exxon Valdez dumped 260,000 barrels of oil, and Exxon spent $3.14 billion on cleanup. Do the math, and Exxon spent nearly 600 times more on cleanup and litigation than what the oil was worth at that time.

As for the environmental damage in the Gulf, much will depend on the weather that has made it more difficult to plug the leak and contain the spill before it reaches shore. The winds could push oil over the emergency containment barriers, or they could keep the oil swirling offshore, where it may sink and thus do less damage.

It is worth noting that this could have been worse. The Exxon Valdez caused so much damage in part because the state of Alaska dithered over an emergency spill response. Congress then passed the 1990 Oil Pollution Act that mandated more safety measures, and it gave the Coast Guard new powers during spill emergencies. We have seen the benefits in the last two weeks as the Coast Guard has deployed several containment techniques—from burning and chemical dispersants to physical barriers. America sometimes learns from its mistakes.

On the other hand, Washington's aversion to drilling closer to shore has pushed the industry into deeper, more difficult, waters farther out to sea. BP's well is 5,000 feet down, at a depth and pressure that test the most advanced engineering and technology. The depth complicates containment efforts when there is a disaster.

As for a drilling moratorium, it is no guarantee against oil spills. It may even lead to more of them. Political fantasies about ending our oil addiction notwithstanding, the U.S. economy will need oil and other fossil fuels for decades to come. If we don't drill for it at home, the oil will have to arrive by tanker and barges. Tankers are responsible for more spills than offshore wells, and those spills tend to be bigger and closer to shore—which usually means more environmental harm.

The larger reality is that energy production is never going to be accident free. No difficult human endeavor is, whether space travel or using giant cranes to build skyscrapers. The rest of the world is working to exploit its offshore oil and gas reserves despite the risk of spills. We need to be mindful of such risks, and to include prevention and clean up in the cost of doing business, but a modern economy can't run without oil.