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Rig firm profits $270m from deadly spill

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    Rig firm s $270m profit from deadly spill Danny Fortson The Sunday Times May 9, 2010
    Message 1 of 1 , May 13 4:10 PM
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      Rig firm's $270m profit from deadly spill
      Danny Fortson
      The Sunday Times
      May 9, 2010
      http://business.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article7120655.ece


      THE owner of the oil rig that exploded in the Gulf of Mexico, killing 11 people and causing a giant slick, has made a $270m (£182m) profit from insurance payouts for the disaster.

      The revelation by Transocean, the world's biggest offshore driller, will add to the political storm over the disaster. The company was hired by BP to drill the well.

      The "accounting gain" arose because the $560m insurance policy Transocean took out on its Deepwater Horizon rig was greater than the value of the rig itself. Transocean has already received a cash payment of $401m with the rest due in the next few weeks.

      The windfall, revealed in a conference call with analysts, will more than cover the $200m that Transocean expects to pay to survivors and their families and for higher insurance costs.

      BP's name is stained by its barrels of hubris

      Browne's legacy of cost cutting stored up barrels of trouble
      Congressional hearings begin this week. Lamar McKay, chairman of BP's American arm, Steve Newman, Transocean's chief executive, and managers of several other companies involved in the drilling will testify.

      The total cost of the clean-up and compensation could reach $30 billion, according to some estimates. Transocean said that virtually all of that must be covered by BP and two smaller partners, Anadarko Petroleum and Mitsui of Japan.

      In a stock exchange filing, Transocean said that BP was contractually obliged to take "full responsibility for and defend, release and indemnify us from any loss, expense, claim, fine, penalty or liability for pollution or contamination". Newman added: "Our industry has a long history of contract sanctity and we expect BP to honour that."

      BP said the leaking well in the Gulf of Mexico could be contained this week. The giant box lowered over it this weekend must first be connected to an oil-treatment barge by a 5,000ft pipe.

      ===

      Interviews with surviving Deepwater Horizon rig workers show how explosions led to what may be the world's worst oil spill


      Million gallons of oil a day gush into Gulf of Mexico
      By David Randall
      Sunday, 9 May 2010
      http://www.independent.co.uk/news/world/americas/million-gallons-of-oil-a-day-gush-into-gulf-of-mexico-1969472.html


      An extraordinary account of how the Deepwater Horizon disaster occurred emerged yesterday in leaked interviews with surviving workers from the rig. They said that a methane gas bubble had formed, rocketed to the surface and caused a series of fires and explosions which destroyed the rig and began the gushing of millions of gallons of oil into the Gulf of Mexico, threatening wildlife and coastal livelihoods. Oil-covered birds caught by the outer edges of the 135-mile slick are now being found.

      Word also came yesterday that the oil spill may be five times worse than previously thought. Ian MacDonald, a biological oceanographer at Florida State University, said he believed, after studying Nasa data, that about one million gallons a day were leeching into the sea, and that the volume discharged may have already exceeded the 11 million gallons of the 1989 Exxon Valdez disaster, widely regarded as the world's worst marine pollution incident. Mr MacDonald said there was, as of Friday, possibly as much as 6,178 square miles of oil-covered water in the Gulf.

      Meanwhile, at the site of the ill-fated well, a mile beneath the surface, a massive metal chamber had been positioned over the rupture so it could contain and then capture the bulk of the leaking oil. The operation, which uses undersea robots, and has never before been attempted at this depth and pressure. But last night, the formation of ice crystals meant the dome had to be moved away from the leak.

      The interviews with rig workers, described to the Associated Press by Robert Bea, a University of California Berkeley engineering professor, recall the chain reaction of events that led to the disaster. They said that on 20 April a group of BP executives were on board the Deepwater Horizon rig celebrating the project's safety record. Far below, the rig was being converted from an exploration well to a production well.

      The workers set and then tested a cement seal at the bottom of the well, reduced the pressure in the drill column and attempted to set a second seal below the sea floor. But a chemical reaction caused by the setting cement created heat and a gas bubble which destroyed the seal.

      As the bubble rose up the drill column from the high-pressure environs of the deep to the less pressurised shallows, it intensified and grew, breaking through various safety barriers. "A small bubble becomes a really big bubble," Professor Bea said. "So the expanding bubble becomes like a cannon shooting the gas into your face."

      Up on the rig, the first thing workers noticed was the sea water in the drill column suddenly shooting back at them, rocketing 240ft in the air. Then, gas surfaced, followed by oil. "What we had learned when I worked as a drill rig labourer was swoosh, boom, run," he said. "The swoosh is the gas, boom is the explosion and run is what you better be doing." The gas flooded into an adjoining room with exposed ignition sources, he said. "That's where the first explosion happened," said Professor Bea, who worked for Shell Oil in the 1960s during the last big northern Gulf of Mexico oil well blow-out. "The mud room was next to the quarters where the party was. Then there was a series of explosions that subsequently ignited the oil that was coming from below."

      According to one interview transcript, a gas cloud covered the rig, causing giant engines on the drill floor to run too fast and explode. The engines blew off the rig and set "everything on fire". Another explosion below blew more equipment overboard. The BP executives were injured but nine crew on the rig floor and two engineers died. "The furniture and walls trapped some and broke some bones, but they managed to get in the lifeboats with assistance from others," said the transcript. The workers' accounts are likely to be presented in some form to the hearings held by the US Coastguard and Minerals Management Service, which begin next week.

      By then, the success of the dome-lowering, if it is resumed, will be known. On Friday, a BP-chartered vessel lowered a 100-ton concrete and steel vault on to the ruptured well in an attempt to stop most of the gushing crude from fouling the sea. "We are essentially taking a four-storey building and lowering it 5,000ft and setting it on the head of a pin," said BP spokesman Bill Salvin. With the contraption on the seafloor, workers needed at least 12 hours to let it settle and stabilise before the robots could hook up a pipe and hose that will funnel the oil up to a tanker. By today, the box the size of a house could be capturing up to 85 per cent of the oil.

      The task became urgent as toxic oil crept deeper into the bays and marshes of the Mississippi Delta. A sheen of oil began arriving on land last week, and crews have been laying booms, spraying chemical dispersants and setting fire to the slick to try to keep it from coming ashore. But now the thicker, stickier goo is drawing closer to Louisiana's coastal communities.

      There are still untold risks and unknowns with the containment box. The approach has never been tried at such depths, where the water pressure is enough to crush a submarine, and any wrong move could damage the leaking pipe and make the problem worse. The seafloor is pitch black and the water murky, though lights on the robots illuminate the area where they are working. If the box works, another one will be dropped on to a second, smaller leak at the bottom of the Gulf. At the same time, crews are drilling sideways into the well in the hope of plugging it up with mud and concrete, and they are working on other ways to cap it.

      ===

      BP plans to park oil box; unload new equipment
      By HARRY R. WEBER and SARAH LARIMER (AP)
      http://www.google.com/hostednews/ap/article/ALeqM5gIXWYBTpLtSayJtg41LKXpxSxVPAD9FJF2LG1


      ON THE GULF OF MEXICO — Crews planned Sunday to park the giant oil containment box on the bottom of the Gulf of Mexico, and offload equipment that could be used in a new attempt to stem the flow of gushing into the sea.

      The equipment to be offloaded from another vessel would use a tube to shoot mud and concrete directly into the well's blowout preventer, a process that could take two to three weeks. But BP PLC spokesman Mark Proegler told AP that no decisions have been made on what step the company will take next.

      The company was considering several options, including the technique known as a "top kill," Proegler said.

      Crews planned to secure the box about 1,600 feet from the massive leak site, much farther away from where it was placed Saturday after icelike crystals clogged the top when it was over the leak, according to a daily activity sheet reviewed by The Associated Press.

      It could be at least a day before BP can make another attempt at putting a lid on a well spewing thousands of gallons of crude into the Gulf each day.

      The company's first attempt to divert the oil was foiled, its mission now in serious doubt. Meanwhile, thick blobs of tar washed up on Alabama's white sand beaches, yet another sign the spill was spreading.

      It had taken about two weeks to build the box and three days to cart the containment box 50 miles out and slowly lower it to the well a mile below the surface, but the frozen depths were just too much. BP officials were not giving up hopes that a containment box — either the one brought there or another one being built — could cover the well. But they said it could be Monday or later before they decide whether to make another attempt to capture the oil and funnel it to a tanker at the surface.

      "I wouldn't say it's failed yet," BP chief operating officer Doug Suttles said of the containment box. "What I would say is what we attempted to do ... didn't work."

      Early Sunday, there was little visible new activity at the site of the oil spill. The skies were clear, but the waves on the sea were kicking up and the wind was more breezy than in previous days.

      There was a renewed sense of urgency as dime- to golfball-sized balls of tar washed up Saturday on Dauphin Island, three miles off the Alabama mainland at the mouth of Mobile Bay and much farther east than the thin, rainbow sheens that have arrived sporadically in the Louisiana marshes.

      "It almost looks like bark, but when you pick it up it definitely has a liquid consistency and it's definitely oil," said Kimberly Creel, 41, who was hanging out and swimming with hundreds of other beachgoers. "... I can only imagine what might be coming this way that might be larger."

      About a half dozen tar balls had been collected by Saturday afternoon at Dauphin Island, Coast Guard chief warrant officer Adam Wine said in Mobile, and crews in protective clothing patrolled the beach for debris. Authorities planned to test the substance but strongly suspected it came from the oil spill.

      In the nearly three weeks since the Deepwater Horizon rig exploded April 20, killing 11 workers, about 210,000 gallons of crude a day has been flowing into the Gulf. As of Sunday, some 3.5 million gallons had poured into the sea, or about a third of the 11 million gallons spilled in the Exxon Valdez disaster.

      Until Saturday none of the thick sludge — those indelible images from the Valdez and other spills — had reached shore.

      It had taken more than 12 hours to slowly lower to the seafloor the peaked box the size of a four-story house, a task that required painstaking precision to accurately position it over the well for fear of damaging the leaking pipe and making the problem worse. Nothing like it had been attempted at such depths, where water pressure can crush a submarine.

      Company and Coast Guard officials had cautioned that icelike hydrates, a slushy mixture of gas and water, would be one of the biggest challenges to the containment box plan. The crystals clogged the opening in the top of the peaked box, BP's Suttles said, like sand in a funnel, only upside-down.

      Options under consideration included raising the box high enough that warmer water would prevent the slush from forming, or using heated water or methanol. Even as officials pondered their next move, Coast Guard Rear Adm. Mary Landry said she must continue to manage expectations.

      "This dome is no silver bullet to stop the leak," she said.

      The captain of the supply boat that carried the hulking, concrete-and-steel vault for 11 hours from the Louisiana coast last week wasn't giving up hope.

      "Everybody knew this was a possibility well before we brought the dome out," Capt. Demi Shaffer, of Seward, Alaska, told an AP reporter stationed with the 12-man crew of the Joe Griffin in the heart of the containment zone. "It's an everyday occurrence when you're drilling, with the pipeline trying to freeze up."

      The spot where the Deepwater Horizon rig exploded and sank now teems with vessels working on containing the rogue well. There are 15 boats and large ships at or near the site — some being used in an ongoing effort to drill a relief well, considered a permanent if weeks-away fix.

      Settling in to a wait-and-see mode, the vessels were making sure they were ready for the long haul. Late Saturday night, the Joe Griffin pumped roughly 84,000 gallons of fresh water into the tanks of the Ocean Intervention III, one of the vessels with the undersea robots helping in the containment effort.

      News that the containment box plan, designed to siphon up to 85 percent of the leaking oil, had faltered dampened spirits in Louisiana's coastal communities.

      "Everyone was hoping that that would slow it down a bit if not stop it," said Shane Robichaux, of Chauvin, a 39-year-old registered nurse relaxing at his vacation camp in Cocodrie. "I'm sure they'll keep working on it till it gets fixed, one way or another. But we were hopeful that would shut it down."

      The original blowout was triggered by a bubble of methane gas that escaped from the well and shot up the drill column, expanding quickly as it burst through several seals and barriers before exploding, according to interviews with rig workers conducted during BP PLC's internal investigation. Deep sea oil drillers often encounter pockets of methane crystals as they dig into the earth.

      As the bubble rose, it intensified and grew, breaking through various safety barriers, said Robert Bea, a University of California Berkley engineering professor and oil pipeline expert who detailed the interviews exclusively to an Associated Press reporter.

      Larimer reported from Dauphin Island, Ala. Associated Press writers Ray Henry in Hammond, La., John Curran in Cocodrie, La., and AP Global Media Services Production Manager Nico Maounis in Dauphin Island contributed to this report.

      ===

      BP oil dome found not to work
      Big News Network.com
      Sunday 9th May, 2010
      http://feeds.bignewsnetwork.com/?sid=632799


      The BP oil dome that was to have contained oil from the Gulf of Mexico disaster has not been working as well as first hoped.

      The potential for environmental damage has become worse since it was found that crystals had been building up in the dome, making it more buoyant and clogging up the pipes that were meant to suck up the oil from the damaged pipe.

      The 100-tonne steel-and-concrete dome, while initially working well, has been closed down temporarily while crews decide how to solve the problem.

      The dome had been expected to collect about 85 per cent of the leaking crude, though a siphoning method.

      BP officials have said they are considering other methods to stop the flow from the Deepwater Horizon rig, which BP was leasing when it exploded on April 20th.

      Since then, a major environmental crisis has emerged with an estimated 800,000 litres of oil spewing into the water each day.

      BP has ascertained the rig disaster was triggered by a bubble of methane gas that shot up through the drill column and exploded.

      The BP oil dome that was to have contained oil from the Gulf of Mexico disaster has not been working as well as first hoped.

      The potential for environmental damage has become worse since it was found that crystals had been building up in the dome, making it more buoyant and clogging up the pipes that were meant to suck up the oil from the damaged pipe.

      The 100-tonne steel-and-concrete dome, while initially working well, has been closed down temporarily while crews decide how to solve the problem.

      The dome had been expected to collect about 85 per cent of the leaking crude, though a siphoning method.

      BP officials have said they are considering other methods to stop the flow from the Deepwater Horizon rig, which BP was leasing when it exploded on April 20th.

      Since then, a major environmental crisis has emerged with an estimated 800,000 litres of oil spewing into the water each day.

      BP has ascertained the rig disaster was triggered by a bubble of methane gas that shot up through the drill column and exploded.

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