BP blamed a poor cement job and mistakes by contractors for the worst oil spill in US history, in an internal report into the Deepwater Hiorzon disaster.

The Irish Times – Thursday, September 2, 2010

ÁINE RYAN

THE CONTROVERSIAL Corrib gas project is arguably the most forensically examined project in the 88-year history of the State, a northwest Mayo parish priest said in support of the project yesterday.

Fr Kevin Hegarty of Kilmore-Erris was the first of two parish priests to address the An Bord Pleanála hearing, in Belmullet, Co Mayo, into Shell’s revised application.

His diocesan colleague, Fr Michael Nallen, the parish priest of Kilcommon, where the project is located, is scheduled to address the hearing today and express the concerns and fears of his parishioners.

Heckled at one stage during his delivery yesterday morning, Fr Hegarty said: “I believe that Shell has sought to fulfil the requirements of Irish, European and international environmental laws in its planning, construction to date and proposed operation of the development.”

Noting the project’s strategic importance for Erris, Mayo, and Ireland, he said: “I also believe that, particularly from late 2005 onwards, the company has shown a willingness to be a good neighbour and contribute positively to the community.”

Fr Hegarty said he believed the vast majority of those in the Erris community supported the development.

“I know there are sincere people among the protesters. I believe, however, their fears about the safety of the pipeline have been grossly inflated by the sulphurous rhetoric of those who wish to prevent the delivery of the gas on ideological grounds.

“I also sense that some of those opposed to the development abhor the extreme tactics of a minority of their group.

“The main thing that gives me confidence about the human and the environmental safety of the Corrib gas development is that there are stringent Irish, European Union and international laws and directives governing planning applications,” Fr Hegarty said.

The resumed planning appeals board hearing is under the remit of the Strategic Infrastructure Act and will deliberate on a revised application by Shell, which involves tunnelling a section of the pipeline route under the Sruwaddacon estuary, a special area of conservation. It will also examine compulsory acquisition orders by Shell for access to lands along this newly modified route – the third proposed by the developer.

Solicitor Paul Brennan made a submission on behalf of local farmer and postman John Barrett, whose home “was almost destroyed” during the devastating 2003 landslide on Dooncarton mountain. “The [Barrett] family is concerned that the pipeline tunnels [proposed under nearby Sruwaddacon Bay] and other works close to their home could cause further landslides during the construction stage and into the future,” Mr Brennan said.

Supporting the project on behalf of Belmullet GAA, John Gallagher, chairman, argued that the stringency applied by Shell in its funding schemes challenged the veracity of any notion that the company had tried to buy the support of local organisations.

The hearing continues today.

SOURCE ARTICLE

Responding, Esmonde Keane, senior counsel for Shell, said he “absolutely rejected” that it was manipulating the community. He argued the company’s grants and schemes were established to “give back to the community”.

The Irish Times – Friday, September 3, 2010

ÁINE RYAN

A RETIRED Department of Education psychologist has criticised Shell’s public relations strategy of targeting schools with Corrib Natural Gas “baubles and trinkets”.

He also claimed the company “was manipulating the community in a shameless way in order to achieve their own ends”.

Former educational psychologist Tom McAndrew told the resumed planning appeals board hearing on Shell’s revised gas pipeline it was hard to blame schools and boards of management – desperately short of funds – for being tempted by such obvious generosity.

“Principals and boards of management were placed in an invidious position and under pressure from some of their parents to engage with Shell,” he said.

Mr McAndrew added it was clear from Shell’s own documentation they “had handed over significant amounts of money to schools and young people’s groups over the past number of years”.

Responding, Esmonde Keane, senior counsel for Shell, said he “absolutely rejected” that it was manipulating the community. He argued the company’s grants and schemes were established to “give back to the community”.

Afterwards, members of the board of Pullathomas national school made a brief submission about their concerns on the pipeline route, which runs close to the school. They sought a “guarantee for the future health and safety of those using the school and the playing fields”.

Meanwhile, Fr Michael Nallen accused Minister for the Environment John Gormley of using one rule for his own constituency in Dublin and another for Kilcommon parish, where he ministers.

“Just because we are not living in John Gormley’s constituency does not mean we don’t have human rights,” he said.

The hearing under the remit of the Strategic Infrastructure Act will deliberate on a revised application by Shell, which involves tunnelling a section of the pipeline route under the Sruwaddacon estuary, a special area of conservation.

In a submission in favour of the project, regional director of business lobby group Ibec, John Brennan, said there would be 130 permanent jobs when the Corrib gas refinery was operational.

He said towns in the west were already benefiting because of infrastructural development in relation to the project. “We are highly dependent on imported fossil fuels and need to develop our own fields, and hence the requirement to proceed with the delivery of the Corrib gas,” he said.

“This project is several years behind schedule, for a variety of reasons, and this could damage Ireland’s international reputation regarding foreign direct investment, including by energy companies.”

SOURCE ARTICLE

Expert comment from Bill Campbell (right), retired HSE Group Auditor, Shell International

John

The attachment ( A Can of Worms) is a reaction to the BBC News/Robert Peston article posted on your website. Please publish all or part as you see fit or otherwise file for reference.

Yesterday’s event in context

The explosion yesterday in the Gulf of Mexico again highlights the dangers of having an explosive gas air mixture concurrent with a source of ignition.  It seems a miracle that 13 men apparently blown into the sea survived. Ironically many such accidents happen when facilities are shutdown and vessels are opened up.

A major explosion on Cormorant A in 1989 occurred when gas leaked from the open end of the Western leg pipeline thought to have been purged free of gas.  There were 240 souls on board.  The cellar deck on Cormorant was known to be weak and unable to withstand the explosive overpressure but was protected in this instance by the relief vents on top of the enclosed column opening.  Methane/air explosions contribute to the largest loss of life worldwide due to industrial activity.  This should be no surprise as natural gas, mainly methane is the biggest killer in the industrialised world – for example thousands on miners in the unregulated Chinese coal mining industry have died in recent years.

Deepwater Horizon

Returning to the Gulf of Mexico, the explosion yesterday will again bring focus to that region in the follow up to Deepwater Horizon.  This incident happening in a region of the world which had dominated the blow-out league table.  The historic data (including Shell’s Bay Marchand in 1970) shows in the Gulf of Mexico in the 37 year period 1964 to 2001 that there were 11 blowouts there has been a mean time between blowouts of just 3.4 years and the consequences of these blowouts was often disastrous with 31 associated fatalities and massive environmental pollution.  This represents a quarter of all blowouts worldwide with a third of the associated fatalities. By comparison, with similar levels of drilling activity over the same period, the UK North Sea has had the three blowouts and one fatality, with negligible pollution.

Yet Big Oil, some 85 energy companies including Shell and BP, having forked out $3.5 billion for leases, in its presentation to the US Government to allow it to go into deepwater, stated that blowout are rare events.  Not as rare it seems as they should have been.

Testimony from the inquiry into Deepwater Horizon continues to open up a can of worms.  Why was a modern, technologically advanced, so called fifth generation rig apparently falling apart with defect lists growing by the day and no adequate response to that.  And to answer the Robert Peston question, who was the guilty party that allowed this to happen.

Bill

A Can of Worms

Accountability is inexorably linked to responsibility

Whether it be under the formality of the UK Health and Safety at Work Act or under less formal state or federal law in the US the concept of accountability is clearly set out in statute with precedence set over many years.

In simple terms, it is the person or persons primarily responsible for an activity who will be held accountable in Law for that activity.

So with reference to the Robert Peston article How Guilty is BP published on your web-site today I would argue not guilty because BP did not design, operate or maintain Deepwater Horizon.  That was the sole responsibility of the owner Transocean.

Opening up a Can of Worms

As testimony gathers, page after page, it becomes clearer and clearer that there were so many warnings but so little action ahead of the Disaster such that this disaster was not only foreseeable, it was probably inevitable. This despite the US regulator request to exercise caution.

Transocean, one of the largest drilling contractors in the world

If you visit the web you will read that Transocean were no Mickey Mouse outfit.  They state that they are the world’s largest offshore drilling contractor, providing the most versatile fleet of mobile offshore drilling units to help clients find and develop oil and natural gas reserves. Building on more than 50 years of experience with the highest specification rigs, our 18,000 employees are focused on safety and premier offshore drilling performance.

Deepwater Horizon according to Transocean fleet specifications was a modern, 5th Generation Deepwater exploration rig, technologically advanced and built in South Korea as recently as 2001.  This rig was contracted by BP to drill into their functional asset, the reservoir, but BP had no responsibility whatsoever for the design, construction, operation and maintenance on a day by day basis of the rig.  This belonged solely to Transocean.

Again with reference to the web in their highest level policy statement on responsibilities they say quote Transocean makes safety a fundamental aspect of what we do — the safety of our people and everyone associated with our operations; the protection of the environment; and the operational integrity of our equipment. We firmly believe that we can conduct our operations in an incident-free environment — all the time, everywhere. We intend to achieve that vision unquote.
However in a relatively short space of time this state of the art vessel was apparently falling apart by 2009?

The large defect list was growing every day, maintenance was needed to return equipment to a functional state.  This maintenance was not getting done, obsolescence was apparently a factor in that spare parts were difficult, if not impossible to obtain, and all this in what was said to be a modern facility.

Jostling for position, we see in testimony, Lawyers for BP, Transocean and Haliburton trying to shift blame bur repeatedly it is reinforced that Transocean staff, who operated and owned the rig, had the authority to stop operations at any time.  Their Installation Manager needed no approval from any party.  It was he who was singularly responsible for the health and safety of all the direct employees on the rig, including indirect employees from BP et al.

So what were Transocean responsible for?

From the testimony of survivors it is apparent that high levels of gas were being released on Deepwater Horizon in the months and weeks prior to the fateful day on the 20th May.  All activities were halted on several occasions with gas being emitted from the drilling cuttings in the mud treatment area.  There was no general platform alarm sounded during these events workers were informed of the situation via PA systems.

There appears to be have been a tolerance by Transocean to the risks of all those on board from the repeated presence of flammable atmospheres on the rig despite the warning from the Regulator to exercise caution.

Testimony from various sources confirms that the gas alarms on the rig had been in inhibited mode for a year prior to the incident to prevent false alarms disturbing the crew.

NB:The Washington Post July 23rd indicates from their research that this inhibition of safety critical systems was not unique to Deepwater Horizon.  In case after case they say that rig operators paid fines for allegedly bypassing safety systems that could impede routine operations.

Testimony also describes that systems designed to prevent combustible gases from reaching potential sources of ignition had also been deliberately disabled.  In the event of a major gas leak the rig was equipped to shutdown ventilation inlets to for example the engine rooms.  But this safety feature was also disabled and according to the testimony of witnesses it appears the seat of the explosion was Engine Room No 3.

Hundreds of pages have been written about concerns that back-up supplies to operate the BOP were known to be unserviceable and the BOP itself may have been functionally impaired.

Testimony describes how safety critical computer control systems to monitor and control drilling operations, including mud flow and balance etc, intermittently froze.  This was collectively referred to on the rig as the blue screen of death where for periods of time at least the driller and the mud engineer would be as they say flying blind.

From previous testimony whether damaged by the explosion or otherwise it is a recorded fact that the emergency disconnect that would allow the vessel to move away from the BOP in the minutes following the explosion did not operate when most needed.

Witnesses told federal panels probing the disaster that the gas and fire alarm system was just one of an array of critical systems that had been functioning unreliably in the run up to the blow-out.

Inspections of the rig in the spring, shortly before the disaster found extensive maintenance problems and the rig would need to be in the shipyard for a lot longer than anticipated because the rig was in very bad condition.

This is supported by testimony from a BP attorney.  He provided evidence that an Audit carried out by BP in September 2009 had a litany of findings including the inhibition of the fire and gas alarm system and it listed 390 other general issues that needed addressing.

My observation and opinion on all of this is that the Transocean maintenance regime for Deepwater Horizon appeared to hinge on what we in the business call batch, or campaign maintenance.

In summary, every 5 years at the time of the vessel class inspection it would plan to return to a shipyard for extensive work to rectify failed equipment or return degraded equipment to as designed functionality.  But clearly the operational life of much of the equipment was less than the period between visits to the yards and it was failing leading to a long defect list that grew over time.

Perhaps in reference to the North Sea all the above would be more understandable if the rig was a first generation installation well past its original design life where equipment obsolescence and the ravishes of the North Sea weather had caused corrosion making maintenance costly and difficult.  But Deepwater Horizon declares Transocean was a modern vessel, technologically advanced, the best that was available for the task in hand.

Despite the warning by the US Regulator to exercise caution the reverse of this appears true.  On the rig operated and owned by Transocean shortcuts were taken, danger signals ignored and employee concerns (like many of the safety systems) were overridden.

Summary

The owner and operator of the Deepwater Horizon who publicly declares they were focussed on safety allowed intolerable risk levels to be attained.

When significant gas levels were occurring, rather than bolstering the reactive defences to mitigate against any undesirable event, gas alarms were inhibited and automatic actions to prevent gas from entering areas where ignition sources were present were purposefully overridden.

I have no doubt that the witness testimony will stand audit in criminal proceedings, and this testimony paints a picture of criminal neglect of maintenance on a significant scale including the operation of equipment whilst it was known to be in a degraded condition with its functionality impaired.

That BP may have contributed to this state of affairs may make them partially culpable but at all times on board they were under the management control of Transocean.  Transocean had a duty of care to stop any operations that they considered unsafe.  This duty could not be overridden.  Not by BP, or for that matter any other member of the Deepwater Horizon alliance team.

In the last analysis it was Transocean stated policy that they were singularly responsible to maintain the operational integrity of their rig, to protect the environment and provide an incident free workplace for all the persons employed on board including BP personnel.  That they did not do that is self evident from the resulting Disaster and the immediate reaction to it for which they will be held accountable in due course.

Comment by Tim Bartram on Sep 5th, 2010 at 9:44 am

AlaskaDispatch

Jill Burke | Sep 3, 2010

Calling his visit a “whirlwind trip through Alaska,” U.S. Interior Secretary Ken Salazar stood before reporters in Anchorage on Friday — dressed in cowboy boots, jeans with notes tucked in a back pocket, a blue collared shirt and a baseball cap  — explaining the mission of his two-day visit to Alaska this week as a chance to see key regions of the state first-hand before making decisions about oil and gas development.

Salazar held a town hall meeting in Barrow and flew over the Beaufort Sea coast for a look at current and proposed oil and gas sites. He also toured the National Petroleum Reserve-Alaska and the Arctic National Wildlife Refuge. He held briefings with the Alyeska Pipeline Services Co. about the trans-Alaska oil pipeline, ConocoPhillips about a proposed drilling project in NPR-A, and with Shell Alaska about proposed offshore exploration projects in the Beaufort and Chukchi seas.

Earlier this year ConocoPhillips was denied a permit by the U.S. Army Corps of Engineers, which ruled the company had other, less environmentally disruptive options — like directional drilling — to access its target instead of relying on the construction of a new drilling pad. Salazar indicated Friday that he was getting involved to “see if we can resolve” the concerns of the U.S. Fish and Wildlife Service and the Environmental Protection Agency with the company’s drilling plan and “move forward.”

He also tried to clear up confusion on whether the drilling moratorium issued in the wake of BP’s oil spill in the Gulf of Mexico applies to Alaska. The moratorium does apply, he said, explaining that while Alaska may not be mentioned in the explicit language, he had simultaneously decided not to authorize new drilling or exploration activity in the Arctic, citing a new level of cautiousness in response to the Gulf spill.

“We will not be allowing that program to move forward” until the Interior Department is confident that drilling can be conducted responsibly in the Chukchi and Beaufort seas, he said.

Nationwide, three main questions are driving whether new offshore oil and gas activity will be allowed, Salazar said. Are the regulations for oil well blowout preventers, cementing and casing strict enough to ensure drilling and workplace safety? Can potential oil spills be adequately contained? And are oil spill response plans thorough and realistic?

Salazar said he hasn’t been comfortable with the level of science gathered about the Arctic’s unique environment or the oil and gas resources it may hold. Of specific concern is the lack of information about the pressure levels that might be encountered while tapping an offshore oil reservoir. He’s also concerned about the apparent inability to mount a large-scale response to a severe spill in the Arctic on the scale seen in the Gulf of Mexico in April.

Shell has said it needs a decision by the end of the year in order to plan for a 2011 exploratory season in the Arctic. Salazar, aware of the company’s need for certainty, said efforts were being made to resolve that question within the next several months, but offered no promises on the timeline.

SOURCE ARTICLE

Comment by a former employee of Shell Oil USA

John,

I have a comment about Shell’s drilling plans in the Alaskan offshore Arctic.

Shell packed it in and walked away from this area 20 years ago. Now, they are suddenly in a ‘big rush’ to get back to drilling what will probably be delineation wells for some of their previously abandoned discoveries. What is the rush? Shell sat back and putzed around for 20 years trying to decide what to do in this area, they can now wait a few more years for the appropriate studies to be conducted.

In the mean time, maybe they could arrange to contract for a modern drilling rig to drill these wells.

THE WALL STREET JOURNAL

SEPTEMBER 3, 2010

Accident Intensifies Debate on Drilling in the Gulf; All Aboard Are Rescued

By LESLIE EATON, JEFFREY BALL And STEPHEN POWER

Times-Picayune /Landov

Crew boats pump water Thursday onto the oil-and-gas production platform Vermilion 380-A, after an explosion in the Gulf of Mexico off the Louisiana coast, 93 nautical miles south of Vermilion Bay.

HOUMA, La.—The fire that engulfed an oil and gas platform Thursday in the Gulf of Mexico heightened pressure on the energy industry, which is battling greater regulation and a deep-water drilling ban.

The accident on Mariner Energy Inc.’s shallow-water platform sent 13 workers tumbling into the ocean, but there were no casualties and little or no oil appears to have been spilled.

But the towering column of smoke in the Gulf, 245 miles from where the Deepwater Horizon exploded April 20, provoked an outcry from environmental groups and politicians in Washington already skeptical of offshore drilling.

And it complicated the energy industry’s effort to portray BP PLC’s massive Deepwater Horizon oil spill as a fluke that shouldn’t have provoked a drilling moratorium, some energy experts said.

Kevin Book, managing director of research at ClearView Energy Partners LLC, a consulting firm with many energy clients, said that another accident in the Gulf, albeit minor compared with the April blowout, could prompt the Democratic Congress to push for greater changes.

Certain lawmakers’ perceptions “that oil and gas production is safe is not affirmed by this disaster,” he said. “And worse, the idea that regulation is adequate is definitely not affirmed.”

The platform in Thursday’s incident wasn’t covered by the moratorium, because it didn’t involve drilling and wasn’t in deep water.

But the accident comes as the oil industry is trying to persuade the Obama administration to relax its drilling moratorium, on the grounds that offshore companies have taken sufficient steps to prevent another accident like the one aboard the Deepwater Horizon. That accident killed 11 workers and unleashed the worst offshore oil spill in U.S. history.

The administration has said it could lift or scale back the moratorium prior to its scheduled expiration on Nov. 30 if it determines that certain categories of rigs “present fewer risks than others.”

The industry remains hopeful that will happen. “It’s dispiriting, but it shouldn’t be an impediment to progress,” Lee Hunt, president of the International Association of Drilling Contractors, said of Thursday’s accident. Mr. Hunt noted that the Mariner facility was a production platform, not a drilling rig, and was pumping mostly natural gas.

“What you have is an industrial-style accident that could have happened onshore,” he added.

Louisiana Gov. Bobby Jindal, a Republican who has been leading the fight against the drilling ban, said the incident shouldn’t be used as political ammunition in support of a federal moratorium on offshore drilling. Speaking at the hospital here where the platform’s crew were being examined, he said, “Energy exploration can and should be done safely.”

Mr. Jindal said he welcomed increased federal safety oversight of drilling, but not a ban on drilling. “It’s important for the federal government to do their job, so thousands of Louisianans don’t lose their jobs.”

The American Petroleum Institute, an industry trade group that has mounted an aggressive push to overturn the drilling moratorium, said it was too soon to comment on the impact of the accident. “We don’t know at this point what impact this will have,” said spokesman Bill Bush.

But critics of offshore drilling said the fire showed the danger of offshore drilling, in both deep and shallow water.

“The half-measures and happy talk need to end,” said Rep. Raúl M. Grijalva, an Arizona Democrat. The latest accident, he said, “is the starkest possible reminder that oil rigs in this country are not safe, have not been safe for years and are not currently being inspected for safety.”

Senior Democrats on the House Energy and Commerce Committee, which has been investigating the Deepwater Horizon disaster, fired off a letter to Mariner requesting a briefing on the incident by Sept. 10.

The cause of the fire, which began a little after 9 a.m. CDT, and was extinguished by midafternoon, remained under investigation Thursday. One worker on the platform, who wasn’t on board when the fire broke out, said a paint crew had joined the usual four-man crew on Wednesday.

None of the 13 workers aboard was seriously injured, Gov. Jindal said, though only 12 were able to grab life vests; they held their colleague afloat in the Gulf until rescuers arrived.

Edwin Stanton, commander of the Coast Guard’s operations in New Orleans, said six commercial offshore supply boats were on the scene, continuing to spray cooling water onto the platform. He said the sheen of oil seen around the rig probably amounted to about 10 gallons.

Fires aren’t uncommon offshore, especially at older platforms like Mariner’s, said Ray Kizer, an analyst at energy consultancy IHS. Mariner took over the platform, known as Vermilion 380-A, several years ago, but it has been operating for three decades.

The platform has a history of maintenance and repair issues, according to federal records. Government inspectors found an unusually high number of serious problems aboard the platform in both 2004 and 2005, and the facility was later damaged by Hurricane Ike.

Mariner is the sole owner of the platform, which it said recently produced an average of 9.2 million cubic feet of natural gas a day, equivalent to 1,533 barrels of oil, and about 1,400 barrels a day of oil and other liquids.

Apache Corp. said in April it would buy Mariner for $2.7 billion, acquiring a foothold in the deepwater Gulf of Mexico, which in recent years has become a major growth area for big oil companies.

The Deepwater Horizon incident, which is costing U.K. oil giant BP billions of dollars, also has cast doubt on whether smaller oil companies would be able to handle the high costs of responding to offshore accidents.

Bruce Bullock, director of Maguire Energy Institute at Southern Methodist University, noted that a majority of the public didn’t appear to support the moratorium. “But that didn’t stop the administration from imposing it,” he said, “so I don’t think this is going to do anything to help convince the administration to lift it.”

—Russell Gold and Jennifer S. Forsyth contributed to this article.

Write to Leslie Eaton at leslie.eaton@wsj.com, Russell Gold at russell.gold@wsj.com and Stephen Power at stephen.power@wsj.com

Copyright 2009 Dow Jones & Company, Inc. All Rights Reserved

WSJ ARTICLE

BBC NEWS

Robert Peston | 12:15 UK time, Friday, 3 September 2010

How important will be BP’s report into the causes of the Deepwater Horizon oil disaster, which is due to be published in the coming week or so?

Well it certainly won’t be the last word on the subject: BP faces official investigations and court cases galore on how 11 rig workers lost their lives in April and why so much oil leaked into the Gulf of Mexico.

And some will refuse to believe any analysis by BP, on the basis that it can’t help but be tendentious.

But even if you see the report as the case for the defence, it still matters – partly because it is the first detailed evaluation of what went wrong.

And (call me naive) but I don’t see how it can be an utter whitewash. It is imperative for BP’s owners – its shareholders – to understand the risks their company runs when drilling in deep waters: any attempt to disguise those risks would not be tolerated by them (surely); it would be seen as grotesque negligence on the part of BP’s executives.

So I would expect a long, detailed, technical evaluation – which, even if it’s not the final word on BP’s culpability, will have implications for how oil companies endeavour to extract hydrocarbons from fields deep below the ocean.

In that sense, it should matter to more than just investors in BP. It should influence estimates of how much more tappable oil exists in the world – and what kind of price (direct financial, environmental) will have to be paid to tap it.

The investigation for BP was carried out by Mark Bly, BP’s Group Vice President for Safety and Operations, and a team of more than 70 engineers, technical specialists and business people, some from outside the company.

For what it’s worth, he has assured colleagues that he has felt no pressure from senior BP executives to cover anything up or deliver a particular verdict. And he feels he has had the resources to do the job (or so I’m told).

That said, he hasn’t had all the relevant data he requested from the important contractors, viz Transocean, which owned and operated the Deepwater rig on behalf of BP, and Halliburton, which cemented the well. So he has been forced to make some assumptions in reaching his conclusions.

What has he found?

Well we know he has not concluded that BP produced a shoddy design for the well or forced its contractors to cut corners in a significant way.

How so?

Well BP’s chairman, Carl-Henric Svanberg, said in July – when BP was announcing its second quarter results – that he was confident BP won’t be found guilty of gross negligence.

Now it’s impossible to know whether he’ll be proved right as and when BP’s culpability under the Clean Water Act is finally determined. But he couldn’t possibly have made the claim if his own colleague, Mark Bly, had uncovered proof of grotesque dereliction of duty.

That said, any report which doesn’t raise questions about safety practices would not be believable.

So as the named party on the relevant oil lease – for Mississippi Canyon Block 252 – BP (which owns 65% of property) will be embarrassed (at the very least) by its own investigation.

Even if there turned out to be important errors by employees of Transocean as operator of the platform, that would not absolve BP of blame: regulators and BP’s owners (and presumably the rest of us) would expect BP to assess, monitor and correct the quality of its contractors’ performance.

In a perverse way, the best that BP can hope for is that Bly has found systemic safety failures. Because it is unlikely those systemic problems would apply only to BP’s management of this one new well.

If questions are raised about the quality of safety kit, or the robustness of procedures for monitoring performance or about the skills of employees, these would probably be questions for the oil industry in general when drilling in deeper water, not just for BP.

One lesson from the debacle is that the catastrophic potential of drilling in deep water is (arguably) only marginally less than what can happen when a plane falls out of the sky or a nuclear power plant goes badly wrong.

Are the safety practices in oil on a par with standard practice in nuclear generation or the airline industry? I would be very surprised if that reassuring conclusion will be drawn from Mr Bly’s report.

SOURCE ARTICLE

BBC NEWS

The company said it had paid out about $399m in claims to those affected by the spill.

Last week, responsibilty for the claims was transfered to the Gulf Coast Claims Facility (GCCF), which has so far paid out a total of $38.5m.

Plans to permanently seal the well were also progressing well, BP said.

The final sealing of the well is now expected to be completed later this month.

BP said the capping stack placed on top of the well in July was removed on Thursday.

This will allow the failed blow-out preventer from the Deep Water Horizon rig to be removed, and a new blow-out preventer put in place.

BP said this would allow the drilling of the relief well to continue. It is now expected to be completed in mid-September.

Meanwhile, the company said no new oil had flowed from the damaged well into the Gulf since the leak was stopped in mid-July.

BP shares rose slightly during the morning trading session. They have risen by about 20% since they hit a low of 303 pence in late June.

Separately, it was reported that the company is concerned that it may not be able to afford to pay for all the costs of the oil spill if US legislation bars it from applying for new offshore drilling permits.

The New York Times says BP is worried that such a ban would have a substantial impact on its cashflow.

BBC ARTICLE

September 3rd, 2010

Dublin/Los Angeles—An Irish documentary film, in competition at the 2010 Toronto Film Festival, has a surprising life-imitating-art-imitating-life quality to it in the wake of the Canadian oil sands pipeline spill in Michigan, late July 2010.

THE PIPE, from Galway based Director Risteard Ó Domhnaill and Producer Rachel Lysaght, premieres on Friday, September 10^th (AMC 2, 09:45pm), and repeats again on September 11^th(AMC 2, 09:00am) and 19^th (AMC 9, 12:15pm) at the Toronto Film Festival (www.tiff.org).

THE PIPE tells the story of the local, grassroots community effort in Rossport, County Mayo (Ireland) to halt the planned laying of a gas pipeline by Shell Oil, across fishing grounds and pastoral farmland, following the discovery of a large supply field offshore.

Shell Oil, with the taciturn approval of the Irish State government, had planned to begin the laying of the pipeline underwater, off the Mayo coast. The proposed pipeline would then snake over working farms and pristine landscape for miles to its destination. The local community, fearing loss of livelihood, environmental disasters, non-transparent corporate profits and the invoking of “eminent domain”, rose up in non-violent rebellion. Unfortunately, not all sides knew about the non-violent clause.

Shell Oil is also one of the three largest owners of the Canadian Oil Sands projects in Alberta and Saskatchewan. The Canadian oil industry has been looking to expand pipeline access and exports to the U.S. via a planned Northern Gateway project to the West Coast and the TransCanada Keystone XL Line to the U.S. Gulf Coast.

The Enbridge ENB-T pipeline break on July 27, 2010 has, to date, spilled some three million litres of crude into Michigan’s Kalamazoo River (source: http://www.theglobeandmail.com/globe-investor/enbridge-spill-yields-fresh-ammo-for-oil-sands-critics/article1654445/).

THE PIPE Director Risteard Ó Domhnaill and Producer Rachel Lysaght will be in attendance at TIFF, and will be conducting enhanced Q/A sessions after the screenings to include questions from the Canadian communities opposing the oil sands projects.

SOURCE ARTICLE

THE NEW YORK TIMES

By CLIFFORD KRAUSS and JOHN M. BRODER

BP is warning Congress that if lawmakers pass legislation that bars the company from getting new offshore drilling permits, it may not have the money to pay for all the damages caused by its oil spill in the Gulf of Mexico.

The company says a ban would also imperil the ambitious Gulf Coast restoration efforts that officials want the company to voluntarily support.

BP executives insist that they have not backed away from their commitment to the White House to set aside $20 billion in an escrow fund over the next four years to pay damage claims and government penalties stemming from the April 20 explosion of the Deepwater Horizon drilling rig. The explosion killed 11 workers and spewed millions of barrels of oil into the gulf.

The company has also agreed to contribute $100 million to a foundation to support rig workers who have lost their jobs because of the administration’s deepwater drilling moratorium. And it pledged $500 million for a 10-year research program to study the impact of the spill.

But as state and federal officials, individuals and businesses continue to seek additional funds beyond the minimum fines and compensation that BP must pay under the law, the company has signaled its reluctance to cooperate unless it can continue to operate in the Gulf of Mexico. The gulf accounts for 11 percent of its global production.

“If we are unable to keep those fields going, that is going to have a substantial impact on our cash flow,” said David Nagle, BP’s executive vice president for BP America, in an interview. That, he added, “makes it harder for us to fund things, fund these programs.”

The requests keep coming for BP to provide additional money to the Gulf Coast to help mitigate the effects of the spill. This week, Bobby Jindal, the governor of Louisiana, reiterated his request that BP finance a five-year, $173 million program to test, certify and promote gulf seafood.

BP has already agreed to pay for some measures that exceed its legal obligations. For instance, to help promote tourism in affected regions, it donated $32 million to Florida’s marketing efforts and $15 million each to Louisiana, Mississippi and Alabama.

But the company, which is based in London, now appears to be using such voluntary payments as a bargaining chip with American lawmakers.

BP is particularly concerned about a drilling overhaul bill passed by the House on July 30. The bill includes an amendment that would bar any company from receiving permits to drill on the Outer Continental Shelf if more than 10 fatalities had occurred at its offshore or onshore facilities. It would also bar permits if the company had been penalized with fines of $10 million or more under the Clean Air or Clean Water Acts within a seven-year period.

While BP is not mentioned by name in the legislation, it is the only company that currently meets that description.

The provision was written by Representative George Miller, Democrat of California, who is a strong environmental advocate and a close ally of Nancy Pelosi, the House speaker.

It was specifically designed to punish BP for its past transgressions, including the Deepwater Horizon explosion, and deny the company access to American offshore oil and natural gas.

“The risk of having a dangerous company like BP develop new resources in the gulf is too great,” said Daniel Weiss, Mr. Miller’s chief of staff. “Year after year after year, no matter how many incidents they’re involved in, no matter how many fines they’ve had to pay, they never changed their behavior. BP has no one to blame but themselves.”

BP’s concerns are becoming public as the company begins final preparations for permanently sealing its stricken well. On Thursday, it removed the temporary cap on top of the well, which had earlier been blocked with cement, so that it could replace the blowout preventer. The blowout preventer, a massive piece of equipment whose valves failed to shut down the oil flow after the explosion, is a crucial piece of evidence in the investigation.

Andrew Gowers, a BP spokesman, said that BP had shown good will by going beyond its legal obligations to clean up the spill and compensate those affected.

“We have committed to do a number of things that are not part of the formal agreement with the White House,” he said. “We are not making a direct statement about anything we are committed to do. We are just expressing frustration that our commitments of good will have at least in some quarters been met with this kind of response.”

Mr. Gowers suggested that the proposed legislation contradicted President Obama’s stated desire to keep BP a strong and viable company after the agreement to set up the escrow fund. He added, “I am not going to make a direct linkage to the $20 billion, but our ability to fund these assets and the cash coming from these assets that are securing these funds would be lost” if the House bill were enacted by Congress.

BP executives have said that regulators in other countries have not circumscribed their deepwater operations since the gulf accident. The only exception came in Greenland, where officials quietly told BP that it was not welcome to join in an auction for offshore leases in a new Arctic drilling zone.

BP is the largest producer of oil and gas in the gulf, pumping 400,000 barrels a day and accounting for about 20 percent of total production from deepwater reservoirs in the region. The company operates 89 production wells and shares a stake in 60 other wells operated by partner companies.

As BP has tried to raise cash to pay for damages caused by the spill, it has suspended its dividend and intends to sell off as much as $30 billion of assets around the world.

But the Gulf of Mexico remains crucial to the company’s finances.

“The gulf is the most profitable barrel in BP’s portfolio,” said Fadel Gheit, a managing director at Oppenheimer & Company. He estimated that the gulf generated $5 billion to $7 billion in profits annually for BP, or about a quarter of the company’s total.

Mr. Weiss dismissed BP’s warning that it might not be able to meet its financial obligations. “BP has substantial assets, whether they develop them or sell them,” he said. “If BP needs to sell assets to meet its financial obligations, that’s a decision they have to make.”

BP said that the House bill would stymie new drilling and cripple the company’s existing gulf operations.

Mr. Nagle said BP had discussed the matter with House leaders, and that company executives intended to discuss the matter with Senate leaders after the summer recess. The Senate version of the drilling reform bill does not specifically ban BP from future leases, but it grants regulators explicit authority to deny leases to companies with safety or environmental problems.

The Obama administration endorsed the overall House bill, but has been silent on the Miller amendment. An Interior Department official said that the agency already had the authority to deny a company guilty of safety or environmental regulations the right to bid on offshore leases.

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