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U.S. Gulf States Mobilize for Oil Spill Reminiscent of Valdez

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By Jessica Resnick-Ault and Jim Polson

April 30 (Bloomberg) — U.S. Interior Department inspectors began boarding deep-water platforms in the Gulf of Mexico, and Louisiana asked for help from the National Guard as an oil sheen reportedly washed ashore in the worst rig spill in four decades.

The U.S. will “use every single available resource at our disposal,” in response to the spill, President Barack Obama said yesterday. BP Plc, which owns the leaking well, is “ultimately responsible” for paying for the cleanup, the president said. A faint sheen washed ashore on the Louisiana coastline last night, the Associated Press reported. Oil may hit Mississippi tomorrow, Alabama in two days and Florida in three, according to a government forecast.

Oil is escaping from the well at a rate of about 5,000 barrels a day, five times faster than previously estimated, according to the U.S. Coast Guard. At that rate, the volume of the leak will exceed Alaska’s 1989 Exxon Valdez accident by the third week of June, making it the worst U.S. oil spill.

“This has a danger of becoming an utter ecological disaster,” said Ken Medlock, a fellow in energy and resource economics at Rice University’s Baker Institute for Public Policy in Houston. “This is going to result in remediation costs, and is going to be burdensome, to say the least.”

Louisiana Governor Bobby Jindal declared a state of emergency and demanded extra oil barriers from BP and the U.S. Coast Guard to protect wildlife preserves that nurture a $1.8 billion seafood industry, the richest in the U.S. behind Alaska.

National Guard

Jindal also requested federal funding for 90 days of military duty for as many as 6,000 National Guard troops.

Shrimpers and fishermen filed suit in federal court on April 28 against BP and Transocean Ltd., owner of the sunken rig. The lawsuits say Louisiana supplies 25 percent of the seafood for the continental U.S.

Families of some of the 11 workers killed when the rig exploded and sank have also filed suit.

Louisiana is training crews to remove oil from marshes and plans to use prisoners, adding hands to the cleanup effort, Jindal said at a press conference.

BP, unable to staunch the leak that began when a drilling rig burned and sank a week ago, yesterday proposed injecting detergent 5,000 feet below the surface in an effort to disperse oil before it can form a slick. U.S. Coast Guard Rear Admiral Mary Landry said she was considering the “novel” request.

Permanent Solution

BP has a rig on site to drill to the base of the damaged well and plug the leak, the only permanent solution, according to the company and federal officials. Drilling may start within 48 hours, Doug Suttles, chief operating officer of exploration and production, said yesterday at a press conference in Robert, Louisiana. The work may take three months, he said.

“It’s the biggest U.S. offshore platform incident in 40 years,” Dagmar Schimdt Etkin, a Cortland, New York-based oil spill consultant who has worked for BP, the Coast Guard and the National Oceanic and Atmospheric Administration, said yesterday. “Well blowouts are extremely rare events and usually when they occur it’s only a few barrels.”

Oil from the leaking well is lighter than the Alaskan crude spilled by the Exxon Valdez, Etkin said. “There are going to be more toxic impacts than the heavy black oil you saw with the Exxon Valdez.”

Florida, Alabama and Mississippi dispatched all their marine research vessels to begin sampling water for oil and fish for taint, Robert L. Shipp, chairman of the department of marine sciences at the University of South Alabama in Mobile, said yesterday.

Shares Plunge

BP summoned offshore experts from Exxon Mobil Corp., Chevron Corp. and Royal Dutch Shell Plc to devise other ways to halt the leak, Suttles said. BP also called in Anadarko Petroleum Corp., its partner in the Macondo field where the rig was drilling.

BP’s shares plunged the most in more than a year on concern costs will escalate. BP declined 6.5 percent to 584.2 pence in London, the sharpest drop since December 2008.

Transocean Ltd. fell 7.5 percent to $78.51 in composite trading on the New York Stock Exchange, also the biggest drop in more than a year.

BP’s costs, now $6 million a day, will rise as it adds people and equipment, Neil Chapman, company spokesman, said in an interview in Robert. The company would welcome additional assistance, including from the U.S. Defense Department and from volunteers, he said.

Interior, Homeland Security

The secretaries of the Interior and Homeland Security departments will join the head of the Environmental Protection Agency to visit the site today, Obama said. The president has contacted governors of states that may be affected, he said.

Sixteen federal agencies are responding to the spill. Minerals Management Service inspectors will immediately check testing records of blowout preventers at all deep-water rigs, moving to safety inspections of all deep-water oil and gas producing platforms, Mike Saucier, an agency spokesman, said at the press conference in Robert.

Blowout preventers are stacks of valves intended to cut off any unexpected pressure surge from a well. BP doesn’t know why the blowout preventer failed to avert last week’s explosion and fire that destroyed the rig, Suttles said. Crew aboard the Deepwater Horizon activated controls that should have triggered it, he said yesterday.

The spill may cost the insurance industry as much as $1.5 billion in claims, according to Transatlantic Holdings Inc.

Oil Executives Summoned

Chief executive officers of BP, Exxon Mobil, ConocoPhillips, Royal Dutch Shell and Chevron have been summoned to testify on the spill before the Select Committee on Energy Independence and Global Warming, according to an e-mailed statement from the chairman, Representative Edward Markey, a Massachusetts Democrat.

Representative Henry Waxman, chairman of the House Energy and Commerce Committee, sent letters to the heads of BP and Transocean seeking inspection reports for the Deepwater Horizon.

There are 90 rigs searching for oil and natural gas in the U.S. Gulf of Mexico, according to the Minerals Management Service, which oversees drilling in federal waters as part of the Interior Department.

The Exxon Valdez caused the worst oil spill in U.S. history. The tanker dumped about 260,000 barrels of crude into the Prince William Sound, for which Exxon Mobil paid $900 million in fines.

–With assistance from Katarzyna Klimasinska in Louisiana, David Wethe in Houston, Julianna Goldman in Washington, Moming Zhou in New York, and Laurel Brubaker Calkins in Houston. Editors: Charles Siler, Alex Devine.

To contact the reporters on this story: Jessica Resnick-Ault in New York at [email protected]; Jim Polson in New York at [email protected]

To contact the editor responsible for this story: Susan Warren at [email protected]

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