Gulf's Offshore Oil Disaster

by John M. Curtis
(310) 204-8700

Copyright May 4, 2010
All Rights Reserved.                                

               Offshore oil drilling’s worst nightmare occurred April 20 when the British Petroleum rig exploded, killing 11 oil workers and releasing millions of gallons of oil into the ecologically fragile Gulf of Mexico, off the coast of Louisiana.  Compounding the problem on the BP rig is the 5,000 ft. deepwater and unknown depth of the actual drilling tap, perhaps penetrating an addition 5,000 ft. below the ocean’s bottom.  Federal Emergency Management Agency was even more helpless to manage this man-made disaster potentially eclipsing the economic and social disaster of Category 3 hurricane Katrina that decimated the Gulf Aug. 23, 2005, killing 1.826 Gulf Coast residents and costing $81 billion.  Unable to cap the leaks, U.S. and BP officials have no estimate of when they can stop the spill, promising to exceed the March 24, 1989 Exxon Valdez ecological disaster.

            Offshore oil drilling has been a hot potato during times of petroleum shortages, growing demand and spiraling prices.  President Barack Obama halted new offshore oil drilling April 30, realizing the extreme environmental risk to the practice.  Mississippi, Alabama and Louisiana account for roughly 19% of U.S. refining capacity according to the Department of Energy.  While the BP oil spill doesn’t directly impact refining, it does indirectly affect the fragile ecosystem, especially among the Gulf Coast fishing industry, where shrimp and crab hatcheries could be indefinitely shut down.  “Traders are nervous about how fast the slick could grow,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston, concerned that the oil slick could hurt the Gulf’s natural gas industry.  Spewing oil could increase fire dangers in the Port of New Orleans, a common shipping corridor.

            Federal officials are worried about oil fires causing intolerable atmospheric conditions, said BP spokesman Steve Rinehart, coordinating the federal disaster response.  Three Gulf natural gas platforms have been shut down, at least one evacuated because of growing dangers to shipping in the contaminated zone.  Neither BP nor federal officials could hazard any guess about stopping the leak.  Like the Volcano in Iceland, there’s no way yet to predict an end to the current oil spill.  Obama is under increased pressure to mobilize U.S. government and private sector resources to cap what looks like the worst ecological disaster in U.S. history.  “Everything is clear and the forecast is clear through Tuesday,” said Port of New Orleans executive assistant Ted Knight, speculating about keeping open the Southwest Pass, the busiest U.S. waterway at the mouth of the Mississippi River.

            Eastbound currents and winds could shift the oil slick toward the East Coast, eventually hitting Chevron’s Pascagoula, Miss. refinery, producing 330,000-barrel a day of refined products.  So far, shipping to and from Pascagoula’s refinery hasn’t been affected, according to Chevron spokesman Lloyd Avram.  “This spill, it can fundamentally change our way of life here,” said Louisiana Gov. Bobby Jindal, commenting about the 130-mile-by-70-mile oil slick that promises, despite the Coast Guard’s best efforts, to hit the Gulf Coast, potentially devastating the fishing industry.  BP has worked feverishly on completing the first of three steel and concrete caps that it expect to use to plug the underwater well.  “We will load that on the ship tomorrow along with other associated equipment, and transport it to the site,” said BP Chief Operating Officer Doug Suttles.

            Oil prices spiked May 3 to $86 a barrel anticipating some supply problems from commitments for future offshore drilling.  Traders on the New York Mercantile Exchange anticipate interference to offshore oil drilling and shipping at least in the short-term.  “In many ways, the timing of the incident could not have been worse as President Obama recently supported the expansion of drilling activity to areas where its was previously prohibited,” said Argus Research, down grading rig-operator Transocean and BP.  Since the explosion April 20, BP has not had emergency plans in place, allowing the destroyed rig to spew 5,000 barrels of crude oil a day into the ecologically sensitive Gulf Coast.  Unless BP succeeds in capping the spill soon, the Gulf Coast disaster could far exceed the Exxon Valedez, where 250,000 barrels or 10.8 million gallons contaminated Alaska’s Price William Sound.

              When the Sierra Club and other environmental groups warn about offshore oil drilling off the U.S. Continental Shelf, they know how bereft oil companies are to deal with possible disasters.  Even right wing advocates of offshore drilling must be getting second thoughts to the complete inadequacy of oil companies to deal with disasters. While there’s been relatively few to date, BP’s paralysis slams home the hazards of offshore drilling.  While BP apparently accepts full liability, they can’t be let off the hook for having no real emergency plan in place.  It’s not enough to blame the delayed disaster response on deep-water drilling, when offshore oil companies routinely accept the profits without considering the potential risks.  Instead of bashing the White House, conservatives would be far better off asking the right questions of offshore-drilling oil companies for having no real disaster plan.

John M. Curtis writes politically neutral commentary analyzing spin in national and global news. He's editor of OnlineColumnist.com and author of Dodging The Bullet and Operation Charisma.