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Disaster that never was: Why claims that BP created history's worst oil spill may be the most cynical spin campaign ever

By David Jones

Last updated at 10:31 PM on 6th August 2010

Comments (74) Add to My Stories The warm, white sand stretches for miles as clean and flat as a freshly laundered bed sheet.

The turquoise sea is so clear that I can see silvery fish playing around my toes as I take a cooling paddle.

If there is any more pristine resort in which to spend a summer holiday than Pensacola Beach, on the Gulf Coast of Florida, I would like to find it.

And yet, at a time of year when usually there is barely room to unfold a deckchair, the shore is eerily deserted.

Ask Pensacola’s fretfully quiet seafront traders why the tourists have all stayed away and they angrily recall one chaotic day back in late June.

Then, hungry for dramatic TV footage to support Barack Obama’s announcement, that the BP - or, as he preferred, ‘British Petroleum’ - oil spill was ‘the worst environmental disaster America has ever faced’, news networks descended on their town.

They quickly found what they were looking for: shocking images of Pensacola’s famously white beaches thickly-coated with sticky, black crude oil and apparently beyond salvation.

The apocalyptic message was reinforced in doom-laden interviews with locals. ‘It’s damn near biblical. This place is done for!’ lamented 36-year-old Kevin Reed, whose family have swum and sunbathed in the area for generations.

His anguish was understandable.

Broader success: Pensacola Beach is no isolated success story. The beach at Pass Christian, Mississippi, has also been cleaned remarkably
Yet, as I saw this week, nothing could be further from the truth. Strolling along the beach for an hour, I found just one, pea-sized tar-ball which crumbled to nothing between my fingers.

When, as a young boy, I played on Morecambe beach in Lancashire, worse things often washed up from the nearby ICI refinery.

Moreover, if the U.S. TV news crews had returned just three days after their original visit, they would have seen that the black morass had already been removed by some of the 20,000 clean-up workers hired by BP.

The workers are still there - only now they are using toothbrushes to sift out even the tiniest particles of oil.

But, of course, after a ‘catastrophic’ oil spill, a spotless beach doesn’t make dramatic viewing and who wants to know?

Bouncing back: Experts, both from the government and from BP's oil recovery teams, say wildlife his recovered well - fish stocks especially. Certainly not the politicians, nor the green-lobby tub-thumpers, nor the compensation claimants and their mega-bucks lawyers.

Until this week, it didn’t fit with the White House’s British-bashing script, either. In recent days, though, we have witnessed an extraordinary U-turn in America’s attitude towards the great spill.

It began when a respected Time magazine environmental writer voiced the near-heretical proposition: that the effects of the Deepwater Horizon disaster on April 20 had been massively hyped.

His article was largely based on the opinions of Professor Ivan van Heerden, a brilliant but controversial marine scientist fired by Louisiana State University after publishing a book about Hurricane Katrina that said cataclysmic flooding was inevitable because the protection given to the coast was wholly inadequate.

He said: ‘There is just no data to suggest this is an environmental disaster - although BP lied about the size of the oil spill, we’re not seeing catastrophic impacts.’

Emboldened by the academic’s willingness to go against the accepted wisdom, other leading scientists have concurred, with similar views being expressed in influential U.S. newspapers such as the New York Times and Washington Post.

It was against this background that the Obama administration made its own dramatic U-turn this week.

In a humiliating climb-down, it conceded in an official report from the U.S. National Oceanic and Atmospheric Administration (NOAA) that the ‘vast majority’ of the spilled oil had already gone.

The rest, it said, had probably diluted and didn’t appear to pose much of a threat.

According to 25 leading U.S. government and independent scientists, the feared catastrophe to the coast’s fragile ecosystem had been averted.

The cynical spin from Washington suggested that Obama had successfully browbeaten BP into mopping up its mess - with Mother Nature lending a helping hand.

What more suitably upbeat message with which to mark the president’s 49th birthday?

So were the doom-mongers really so wrong, and if so, then why?

Why was one of Britain’s greatest companies so demonised? Why did America’s politicians and president so hysterically over-react?
In order to get to the bottom of one of the most shameful buck-passing operations in recent times, I spent this week with those involved at the sharp end.

BP's Gulf of Mexico oil spill could actually lead to an INCREASE in fish stocks

Pensacola just happened to be my first stop. Quite clearly, one clean beach doesn’t begin to tell the full story - particularly as it is relatively easy to remove oil from sand, whereas the sensitive wetlands further west are altogether more difficult to repair.

Journeying from Florida, through Alabama to the vast, swampy bays of southern Louisiana, however, what struck me most forcibly was that everything looked so normal.

What a contrast to the scenes I witnessed 21 years ago reporting on America’s previous worst oil disaster, when the Exxon Valdez supertanker spilled hundreds of thousands of barrels of crude oil into the Prince William Sound, Alaska.

Taking a close look: Even when U.S. President Barack Obama visited the Gulf coast at the beginning of the crisis, it was difficult to see the impact
Then, I flew over huge, multi-coloured ribbons of oil and waded into thigh-deep pools of the stuff - horrible proof that the Exxon chiefs were lying when they claimed no oil had reached the remote bays.

I spent another grim day helping animal rescuers to scrub matted seabirds and otters.

The area’s ecology was devastated, and an estimated 250,000 birds and 2,800 otters died, plus hundreds of seals and at least 22 killer whales.

But last Wednesday in the Gulf of Mexico, when I went out with one of the Shore Clean-up Assessment Teams (SCAT), whose job is to observe the coastline and chart the location and condition of oil pollution, I felt at times as though I was on an enjoyable sea-nature tour.

One British journalist, who was guided by a populist Louisiana politician whose agenda was obviously to exaggerate the problems, reported seeing extensive areas of oil and claimed ‘fresh waves’ were still swamping wetland areas - even though the BP rig was finally capped three weeks ago.

PR disaster: CEO Tony Hayward's hapless bungling caused untold damage to BP's image in the U.S.
Of course, since an estimated 200 million gallons has gushed into the Gulf since April and around 50 million gallons remain in the water or on the shore (four times more than the entire Exxon Valdez spill), it is hardly surprising that some heavy pockets can be still found.

But what is truly remarkable is that they are so few and far between. Sailing from early morning to mid-afternoon in sweltering heat on Wednesday, the team I accompanied charted the coastline of two marshy islands off Louisiana’s southernmost tip, Casse-tete and Calumet, covering some 25 miles.

With fishermen still banned from returning to the waters until a final all-clear is given - and charging $2,000 (£1,250) a day to rent their flat-bottom boats to spill response workers, it is clear why BP has been forced to make available a staggering £12.5billion for the clean up, compensation and other legal obligations.

But as our team leader, 41-year-old scientist Stephane Grenon, told me as we skimmed across the shallows, using a craft able to reach the shore is the only sure way to tell whether oil is present.

This is because the wetland fringes in this region are always surrounded by a thick, dark-brown plant sediment known as ‘coffee ground’ for its resemblance to the dregs left at the bottom of the cup.

Even from a few feet away, this sediment can be very easily mistaken for oil, and often when passing boats or aircraft report spotting oil on the shore, this is what they have really seen.

This is one reason why the extent of the coastal oiling has been exaggerated. Indeed, Grenon, a veteran of 25 spills, says he is constantly amazed at how little pollution he finds.

He says: ‘I know it sounds ridiculous, but it’s probably the largest spill there has ever been and yet there’s hardly any oil.

‘The ecosystem around here is also used to oil. It’s been here forever, and there are more than 4,000 oil wells in the Gulf.

‘So there are spills and natural seepage all the time, and the fish and plants adapt to deal with them. I’m confident the area will make a full recovery.’

Grenon works for a BP-contracted spill clean-up company, but suspicions that he may have been painting an over-rosy picture were allayed by the three other scientists in the team who represented the federal and state governments.

‘I expected to see miles of oil, but I haven’t seen that,’ said one of the team, David Culpepper, a geologist with NOAA.

‘I’ve been out on the water about 25 days, and I’ve only seen one dead bird - and I’m not even sure if that had any oil on it. And I’ve probably seen ten dead fish.’

Our skipper, Gerrard Cheramie - no BP apologist, but a gnarled Creole fisherman who knows these waters so well that he can sniff the scent of speckled trout shoals - was equally realistic.

He said: ‘The waves here are like a washing machine and you can already see they’re rinsing the oil away. Because the fisheries have been closed down as a precaution, I think our catches will be bigger than ever when we are allowed back.’

His one nagging worry, though, is that the oil may have sunk to the bottom of the sea or that the 1.8 million gallons of chemical dispersant will cause some as-yet unrevealed damage to the fish and shrimp breeding grounds.

It is a fear that has been voiced by some scientists, including Professor Ian MacDonald, an eminent Florida State University oceanographer, who dismisses this week’s U.S. government’s report that 75 per cent of the oil has gone as an unsatisfactory mixture of science and spin and warns that worrying unknowns remain.

'I know it sounds ridiculous, but it’s probably the largest spill there has ever been... and yet there’s hardly any oil. The ecosystem around here is also used to oil. It’s been here forever, and there are more than 4,000 oil wells in the Gulf. So there are spills and natural seepage all the time, and the fish and plants adapt to deal with them. I’m confident the area will make a full recovery.'However, our captain’s fleeting doubts evaporated when he spotted a plump shrimp jumping magically from the waves.

‘Look at that! Sure looks healthy enough, don’t it?’ he exclaimed.

On Bird Island, we passed hundreds of pelicans nestling unsullied in the mangrove thickets. Then later we spotted pods of dolphins at play, redfish and the fin of a blacktip shark.

Surely these species wouldn’t have been so plentiful in a sick or dying environment? Although parts of the shoreline were stained with what David Culpepper termed a ‘bathtub ring’ of oil residue, new green shoots were already sprouting through, indicating that their roots were undamaged.

And at the day’s end, the team concurred that almost all the area they surveyed had improved or at least remained in the same condition in which it was found when last inspected a few weeks ago.

According to Dr Ed Owens, the veteran British oil spill expert who runs the SCAT teams, there are several reasons why the Gulf appears to have escaped so incredibly lightly.

First, the type of light oil that leaked here dissipates far more quickly than the medium crude that pumped from the Exxon Valdez, particularly in these warm waters.

Second, powerful currents from the enormous Mississippi Delta swept much of the oil away from the shore. In addition, there is the undeniable success of the clean-up effort, which is far more sophisticated and effective than those used to tackle previous disasters.

The combined result of these factors is clear from the statistics. Although more than 9,000 miles of shoreline lies within reach of the Deepwater Horizon rig, just 369 miles have been oiled - and only 53 of them with what are classed as ‘heavy’ deposits.

Compare this with the Exxon when, though the spill was 20 times smaller, the oil was so persistent and spread so widely that more than 2,000 miles of coastline were hit - and even today lumps of tar are occasionally found trapped between the rocks.

So, in Barack Obama’s words, which of these two terrible spills was ‘the worst environmental disaster America has ever faced’?

Back in mid-June, with approval of his presidency at an all-time low in the opinion polls, and critics drawing parallels between his mishandling of the BP crisis and the Hurricane Katrina fiasco that forever tarnished George Bush’s reputation, the answer was obvious.

Not only was it important for him to be seen to recognise the worst-case scenario - and appear to be doing everything he could to avert it - but he needed to find a scapegoat.

Thus, he turned on BP - a nominally British company, though half of its top executives and the majority of its workers are Americans - with a vengeance.

The company’s response was a public relation’s horror show, with its now sacked chief executive Tony Hayward the chief culprit.

He stonewalled questions put to him by a U.S. congressional sub-committee and at the height of the crisis he went yachting at Cowes.

And though it now seems he was right to describe the spill as a ‘drop in the ocean’, his timing and choice of phrase were appallingly ill-judged, especially as 11 oil rig workers died in the Deepwater explosion.

As a result, a staggering £43 billion has been wiped off the value of BP, and the company’s share price has plunged from 655p before the will to 425p, hitting many ordinary British people whose pension portfolios include the company’s stock.

What a terrible mess. And now, far too late, Obama tells us, without any hint of apology, that it isn’t really so bad after all.

If he had heard the pathetic cries of dying otters and seabirds in Alaska two decades ago, perhaps he would have chosen his words more carefully.

BP's Troubled Waters

Obama and others are demanding cash -- now. Ironically, it may turn out that BP will hire many unemployed workers to clean the mess now accumulating in the Gulf. For taxpayers, this is good news. Instead of collecting government benefits, formerly unemployed workers might begin collecting paychecks from BP. Moreover, all the businesses harmed by the leaking oil will most likely receive full compensation from BP. Of course to ensure BP's ability to write checks to injured parties, the government should consider opening more territory to oil drilling. That way BP will have the funds to pay all its bills, even if the bills are inflated by opportunists.

BP Submits Capture Plan, Obama Seeks Escrow Account

June 14 (Bloomberg) -- BP Plc sent a revised oil-capture plan for its leaking Gulf of Mexico well to the Obama administration as the government demanded an escrow account for damages claims related to the biggest petroleum spill in the nation’s history.

BP said 53,000 barrels of oil a day can be captured by the end of June, two weeks sooner than previously proposed, according to a copy of the plan provided by the administration. BP also proposed having the capacity to get up to 80,000 barrels by mid-July. The London-based company has been collecting about 15,000 barrels a day from the leak for the last week.

The U.S. Coast Guard asked BP to capture more oil after a federal scientific panel said twice as much oil is leaking as previously estimated. White House Adviser David Axelrod yesterday called on BP to establish an escrow account for claims. Senate Majority Leader Harry Reid is requesting BP set up a $20 billion fund administered by an independent trustee, according to a draft letter issued by his office.

“We want to make sure the money is escrowed for the businesses and want to make sure the money is independently administered so it’s not slow-walked,” Axelrod said yesterday on NBC’s “Meet the Press.”

BP’s board meets today to discuss whether to reduce or defer its second-quarter dividend. The shares fell as much as 6.6 percent in London trading.

No Decision Expected

“The board will be looking at a number of options when it meets,” Sheila Williams, a spokeswoman for BP, said yesterday. “No decision is expected this week.”

Jon Pack, a BP spokesman in Houston, said he was unaware of the revised recovery plan and couldn’t immediately comment on it.

BP and the Coast Guard expect some leakage to continue at least until mid-August, when the first of two so-called relief wells can plug the bottom of the damaged well.

The company will start taking oil and natural gas from the damaged well to a ship on the surface through a separate pipe in the next few days, and a “more permanent and flexible” system with floating risers is set to begin operations around the end of the month, according to a statement today.

“Plans are being developed to further develop these systems and also for further options to provide additional containment capacity and flexibility, in line with requests made by the U.S. Coast Guard,” BP said. The company was able to capture 127,000 barrels from June 4 until June 12.

Obama Address

Obama will address the nation at 8 p.m. tomorrow, after he returns from a two-day visit to Alabama, Mississippi and Florida, said Ben LaBolt, White House spokesman.

The president is scheduled to meet June 16 at the White House with BP’s chairman, Carl-Henric Svanberg, and other company officials. BP Chief Executive Officer Tony Hayward is also expected to attend, Coast Guard Admiral Thad Allen said yesterday.

Establishing the reserve account will be a subject for “discussion,” Axelrod said. “But it has to be substantial. BP has the resources to meet the claims and we’re going to make sure they do.”

Allen said having an independent administrator for the escrow account would make sure that the response to claims “happens quicker.”

“We’ve been very concerned about the claims process,” he said yesterday on CBS’s “Face the Nation” program. “This is not a core function of an oil-producing company.”

$37 Billion Cost

The cleanup costs and legal liabilities resulting from the leak may reach $37 billion, according to Credit Suisse Group AG. BP said today it has spent $1.6 billion so far on the response to the spill.

BP fell 23.85 pence, or 6.1 percent, to 368.05 pence at 2:19 p.m. in London trading. The shares are down 44 percent since the April 20 explosion aboard the Deepwater Horizon drilling rig in the Gulf, resulting in the deaths of 11 workers.

BP’s revised plan calls for keeping more oil-recovery ships at the spill site and adding vessels that can process and shuttle the captured oil ashore.

Oil gushed from the well at a daily rate of 20,000 barrels a day to 40,000 barrels through June 3, when BP removed a kinked pipe that may have been curtailing the flow, a panel of government scientists said June 10. One research team said the rate might have been 50,000 barrels a day.

Installing Sensors

BP, at the request of the government’s flow-rate group, was installing pressure sensors yesterday on the well to help determine the leak rate, said Mark Proegler, a company spokesman.

In its application for the well, BP told the government it was prepared for a worst-case oil spill of 250,000 barrels a day.

The spill has closed as much as 37 percent of the Gulf of Mexico to fishing, cut the number of offshore drilling rigs in the nation by half and polluted 140 miles of shoreline from Louisiana to Florida.

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.

Obama's Enron Katrina Moment

It now looks like the Obama Administration has embarrassed itself. This time it has demonstrated its inability to police and maintain safety standards in the oil industry. Inspectors were failing to do their jobs, much like the corrupt New York City crane inspectors who were accepting bribes.

Will Obama fire people working in the Minerals Management Service segment of the Interior Department who are responsible for offshore oil-rig safety?

AP IMPACT: Fed'l inspections on rig not as claimed

LOS ANGELES – The federal agency responsible for ensuring that the Deepwater Horizon was operating safely before it exploded last month fell well short of its own policy that the rig be inspected at least once per month, an Associated Press investigation shows.

In fact, the agency's inspection frequency on the Deepwater Horizon fell dramatically over the past five years, according to federal Minerals Management Service records. The rig blew up April 20, killing 11 people before sinking and triggering a massive oil spill in the Gulf of Mexico.

Since January 2005, inspectors issued just one minor infraction for the rig. That strong track record led the agency last year to herald the Deepwater Horizon as an industry model for safety.

The inspection gaps are the latest in a series of questions raised about the agency's oversight of the oil drilling industry. Members of Congress and President Barack Obama have criticized what they call the cozy relationship between regulators and oil companies and vowed to reform MMS, which both regulates the industry and collects billions in royalties from it.

Earlier AP investigations have shown that the doomed rig was allowed to operate without safety documentation required by MMS regulations for the exact disaster scenario that occurred; that the cutoff valve which failed has repeatedly broken down at other wells in the years since regulators weakened testing requirements; and that regulation is so lax that some key safety aspects on rigs are decided almost entirely by the companies doing the work.

The AP sought to find out how many times government safety inspectors visited the Deepwater Horizon, and what they found. In response, MMS officials offered a changing series of numbers. The MMS has had long-standing issues with its data management.

At first, officials said 83 inspections had been performed since the rig arrived in the Gulf 104 months ago, in September 2001. While being questioned about the once-per-month claim, the officials subsequently revised the total up to 88 inspections. The number of more recent inspections also changed — from 26 to 48 in the 64 months since January 2005.

No explanation was given for the upward revisions. AP granted the officials anonymity because without that condition, communications staff at the Interior Department, which oversees MMS, would not have let them talk.

Based on the last set of numbers provided, the Deepwater Horizon was inspected 40 times during its first 40 months in the Gulf — in line with agency policy for offshore drilling rigs.

Even using the more favorable numbers for the most recent 64 months, 25 percent of monthly inspections were not performed. The first set of data supplied to AP represented a 59 percent shortfall in the number of inspections.

Interior Department spokeswoman Kendra Barkoff would not comment on the inspection numbers. Instead, she offered a general statement: "We are looking at all the questions that are coming out of the Deepwater Horizon incident."

In response to a Freedom of Information Act request filed by AP, the agency has released copies of only three inspection reports — those conducted in January, February and April. According to the documents, inspectors spent two hours or less each time they visited the massive rig. Some information appeared to be "whited out," without explanation.

Since the explosion, the agency has reiterated several times the inspection-once-per-month assertion, which appeared on its website at least as early as 1999.

In an e-mail to AP, an Interior Department official emphasized with italics that the MMS inspects rigs "at least once a month" when drilling is under way. Monthly inspections of offshore drilling rigs are an agency policy, though not required by regulation, said David Dykes, chief of the agency's office of safety management for the Gulf region.

Last week, at a joint Coast Guard-MMS investigatory hearing in Kenner, La., MMS official Jason Mathews asked Michael Saucier, MMS's regional supervisor for field operations in the Gulf, "And how often do we perform drilling inspections in the Gulf of Mexico?"

"We perform them at a minimum once a month, but we can do more if need be," Saucier said.

The job falls to the 55 inspectors in the Gulf who are supposed to visit the 90 drilling rigs once per month and the approximately 3,500 oil production platforms once per year.

The Deepwater Horizon's inspection frequency numbers struck Kenneth Arnold, a veteran offshore drilling consultant and engineer.

"I'd certainly question it," he said. "I'd ask, 'Why aren't you doing it?'"

When the AP did ask, MMS and Interior would not answer directly. Instead providing a set of conditions when a rig would not typically be inspected — including during bad weather, when it is jumping among short-term jobs, when a rig is preparing to drill or is done drilling but hasn't left for another site.

Transocean Ltd., which owned the Deepwater Horizon and leased it to BP PLC, would not provide a detailed accounting of the rig's activity history. According to RigData, a Texas firm that monitors offshore activity in the Gulf, the Deepwater Horizon was working approximately 2,896 days of the 3,131 days since it started its first well — about 93 percent of the time. That number represents the total number of days between when the Deepwater Horizon broke the sea floor during a drilling operation to when it was released to another site.

A summary of the inspection history that the MMS officials provided AP said the Deepwater Horizon received six "incidents of noncompliance" — the agency's term for citations.

The most serious occurred July 16, 2002, when the rig was shut down because required pressure tests had not been conducted on parts of the rig's blowout preventer — the device that was supposed to stop oil from gushing out if drilling operations experienced problems.

That citation was "major," said Arnold, who characterized the overall safety record related by MMS as strong.

A citation on Sept. 19, 2002, also involved the blowout preventer. The inspector issued a warning because "problems or irregularities observed during the testing of BOP system and actions taken to remedy such problems or irregularities are not recorded in the driller's report or referenced documents."

During his Senate testimony last week, Transocean CEO Steven Newman said the blowout preventer was modified in 2005.

According to MMS officials, the four other citations were:

• Two on May 16, 2002, for not conducting well control drills as required and not performing "all operations in a safe and workmanlike manner."

• One on Aug. 6, 2003, for discharging pollutants into the Gulf.

• One on March 20, 2007, which prompted inspectors to shut down some machinery because of improper electrical grounding.

Late last week, several days after providing the detailed accounting, Interior officials told AP that in fact there had been only five citations, that one had been rescinded. The officials said they could not immediately say which of the six had been rescinded.

The agency's problems with providing information extends to the data on display on its website. For example, the accounting of accident and incident reports is incomplete, making it very difficult to perform a thorough data analysis of the agency's performance and preventing a full accurate tracking of safety records of the rigs.

Data problems date back at least a decade. According to John Shultz, who as a graduate student in the late 1990s studied MMS' inspection program in depth for his dissertation, the agency's data infrastructure was severely limited.

"The thing I regret most is that, to my knowledge, MMS has not fixed the data management problem they have," said Shultz, who now works in the Department of Energy's nuclear program. "If you have the data you need, the analysis becomes fairly straightforward. Without the data, you're simply stuck with conjectures."

Whatever the correct citation total — five or six — the Deepwater Horizon's record was exemplary, according to MMS officials, who said the rig was never on inspectors' informal "watch list" for problem rigs. In fact, last year MMS awarded the rig an award for its safety history.