In Houston, Texas, an Offshore Technology Conference got underway Monday.
The gathering of people representing offshore-oil companies, including BP, had promised to be a platform for British Petroleum to tout its success in becoming the largest oil producer in the U.S. Gulf of Mexico.
Instead, it’s hanging its head in shame.
A massive oil leak emanating 5,000 feet beneath the surface at the Deepwater Horizon well was very much on the minds of the 65,000 participants who joined in opening ceremonies including a minute of silence for the 11 crew who lost their lives when the oil rig caught fire and sank April 22.
The problem was not only with the fire and explosion, which caused the well being dug to leak, but the failure of a blowout preventer, which is supposed to seal a well in case of a pressure burst.
Bob Fryar, a senior VP of operations for BP said of the blowout preventer, it “has lots of redundancies, there are lots of opportunities to shut these off – none of these worked.”
Who is Responsible?
So far, BP CEO Tony Hayward says the oil giant will pay for the cleanup of sections of the Gulf fouled from the oil spill.
Hayward told NPR in an interview Monday that the company would pay “all necessary and appropriate clean-up costs” from the disaster which are “legitimate and objectively verifiable” claims of property damage, commercial losses and personal injury.
“We will clean it up.”
But expect years of litigation ahead as each company debates its contribution and responsibility for the spill.
BP was the operating partner but leased Transocean to drill the well. Cameron International built the blowout prevention equipment and Halliburton was in charge of the cementing the well by pouring material between the hole drilled and the drilling pipe, which had just been completed before the explosion. Some speculate tht may have contributed to the explosion.
Anadarko Petroleum is 25% owner of the project.
Transocean claims it is insured for up to $950 million in losses and could shift some of the blame to Halliburton.
Sen. Bill Nelson today requested the Interior Department determine whether the oil and gas industry had an undue influence over regulators from 2000 to 2004. That is when the companies themselves were given the freedom to select back-up systems to protect in case of a rig blowout. The Deepwater rig was not equipped with backup controls used in other oil producing countries.
Sen. Nelson has called for a halt in new oil drilling and California Gov. Arnold Schwarzenegger Monday withdrew his support for plans to allow new wells to be drilled off the coast of Santa Barbara.
The Real Losers
Ultimately the shoreline, fish and wildlife will be the real losers. The fishing industry is already impacted with more than 6,800 miles of federal fishing area closed stopping the industry for at least 10 days.
Fisherman have received assurances that BP would offer reimbursements for their lost earnings.
The Wall Street Journal reports lawyers from around the country are preparing lawsuits for businesses that could lose billions as a result of the offshore oil spill.
Attorney Mark Lanier of Houston is seeking class action status for Louisiana residents who derive their income from the coast line activities such as fishing which could take a $2.5 billion hit, as well as the Louisiana tourism industry.
Last Friday, lawsuits were filed in New Orleans federal court as damage is expected to exceed the $1.6 billion federal fund to compensate victims of offshore oil disasters which comes from a tax on drilled oil.
The federal government limits liability for BP to $75 million for damages in addition to the cleanup costs. Liability costs can exceed that number if BP or any other defendants are found to be grossly negligent or in violation of the law.
Late Monday, Sens. Bill Nelson of Florida and Robert Menendez and Frank Lautenberg of New Jersey introduced legislation to raise the $75 million cap to $10 billion. The legislation includes a proposal that claimants could collect damages from future revenues of the fund if damages are in excess of $1.6 billion in the trust fund
The Obama administration will put pressure to clean up the spill under the Oil Pollution Act, which was established after the Exxon Valdez oil spill and allows plaintiffs to recover losses sometimes within weeks. That's important to seasonal inustries such as restaurants and the fishing industry.
BP reports there has been some progress in efforts to stem the leak. BP has constructed a containment dome, a four story 70-ton structure that is lowered into place to catch the escaping oil and allow it to be pumped to the surface.
In all, three domes are planned to be in place over the weekend to catch oil from three leaks. The company says it has over 2,500 personnel involved in the response to the oil spill with efforts to stem the flow of oil in areas including Venice, Louisiana; Pascagoula and Biloxi, Mississippi; Mobile, Alabama; and Pensacola, Florida.
Bill Slavin, a company spokesman told the New York Times “That will essentially eliminate most of the issues you have with oil in the water.”
Plan B - 52 miles of booms have been deployed to fend off oil from vulnerable shorelines, even though the oil broke through the booms were damaged this past weekend by rough seas. So far most of the booms are protecting the cost of Alabama. #