Opec oil output rises in April

http://www.tradearabia.com/news/newsdetails.asp?Sn=CM&artid=178993

Opec crude oil supply has risen in April, led by Nigeria and Saudi Arabia, a Reuters survey showed, as compliance with agreed output targets extended a year-long slide.

Supply from the 11 members of the Organization of the Petroleum Exporting Countries with output targets, all except Iraq, has averaged 26.88 million barrels per day (bpd), up from a revised 26.78 million bpd in March, according to the survey of oil firms, Opec officials and analysts.

The survey implies Opec is making 51 percent of supply cutbacks versus 54 percent in March. Oil prices have almost doubled since the start of 2009 to more than $85 a barrel, encouraging members to pump more crude.

'For the moment, I think as long as they're getting away with it at these current price levels, Opec are going to maximize production as much as they can without destabilizing the market,' said Helen Henton, head of commodities research at Standard Chartered in London.

Rising supply is unlikely to push prices lower, analysts said, given that outside factors such as a weak dollar and stronger equity markets have been major drivers of oil's gain, rather than rising demand.

'The oil price is being set on Wall Street not by the fundamentals, so the fact that Opec production is up further probably won't matter very much to the market,' said Paul Tossetti, senior energy adviser at PFC Energy.

Opec has left its output ceiling unchanged for more than a year since announcing a record supply curb of 4.2 million bpd in December 2008 to combat lower demand and prices, which were both hit by the economic crisis.

Supply from the Opec-11 is 2.04 million bpd higher in April than their target of 24.84 million bpd, the survey found, meaning the group lowered output by 2.16 million bpd of the promised curbs. Compliance peaked at 81 percent in April and March 2009 according to Reuters estimates.

With a day left of April, the final figures for the month may change.

Including Iraq, total Opec supply has risen 60,000 bpd to 29.16 million bpd, the survey found. That was within sight of February's total of 29.21 million bpd, which was the highest since December 2008.

Nigeria contributed the most to the supply increase in April as exports climbed and oil use at domestic refineries increased.

Exports rose to 2.05 million bpd, despite disruption to shipments of Brass River crude at the end of April, according to loading schedules and sources at oil companies that produce Nigeria's oil.

Saudi Arabia, Opec's top producer, nudged supply up to 8.25 million bpd, the survey found, reflecting increased crude oil use in power plants. One source estimated the increase in Saudi supply at 100,000 bpd.

Iran's output slipped by 50,000 bpd, the survey found. The country has been storing increasing amounts of crude on tankers at sea because of weak demand, shipping industry sources say. - Reuters

Nigeria: Militant group claims oil pipeline attack

http://www.google.com/hostednews/ap/article/ALeqM5gHJyop68FyJkZy4mhXIgmHhzZRvwD9FDF8KG1

LAGOS, Nigeria — A militant group claimed Friday to have attacked an oil pipeline in Nigeria that is operated by a subsidiary of Royal Dutch Shell PLC, which said no such assault took place.

A statement sent by a group calling itself the Joint Revolutionary Council of the Niger Delta said it carried out the attack on the pipeline at Buguma. A Shell spokesman, though, said oil production in the region showed no signs of a disruption.

The group also threatened to strike again in the coming days.

"We shall strike in a way that the international community will be forced to come into this conflict," it said in the statement.

Militants in the troubled Niger Delta have attacked pipelines, kidnapped petroleum company employees and fought government troops since January 2006.

Even claims of attacks have affected global oil prices in the past. Nigeria exported almost 1 million barrels of crude a day to U.S. in January alone, more than Saudi Arabia.

Gulf Oil Spill: Cost-cutting to Blame?

http://liveshots.blogs.foxnews.com/2010/04/30/gulf-oil-spill-cost-cutting-to-blame/?test=latestnews

Greg Palkot

LONDON Critics of British Petroleum have told Fox News past cost-cutting by the London-based oil giant helped to contribute to the rig explosion and oil spill disaster now unfolding in the Gulf of Mexico.

Tom Bower, author of the 2009 book “The Squeeze, Oil, Money and Greed in the 21st Century,” told Fox, British Petroleum’s economizing led to a lack of engineers, an overdependence on out-sourcing, and even a lack of supervisors to keep an eye on the sub-contractors.

The explosion which led to the oil spill in Gulf while occurring on an oil rig operating for BP was run by another company, Transocean. BP has said while it assumes responsibility for the incident, it is still waiting for an investigation to show Transocean’s role .

Critics say if there was at least a supervisor on the rig, BP would already have a better understanding of the incident

It is also charged a voluntary remote control cut-off switch might have headed off the oil spill. When Fox put that to BP spokesman Robert Wine, he told us that was Transocean’s responsibility.

As to the broader charge that BP has stripped its engineering ranks, spokesman Wine told Fox News those numbers are being built back up and that subcontractors are actually bringing “expertise to the operation.”

BP’s Wine DID admit to Fox News, in the wake of a series of other safety-related incidents involving BP including the deadly fire at a Texas City refinery in 2005, the company is in the midst of a “renewal” of “procedures” aiming at improved safety and a reduction of oil spills.

While the exact dimensions of the spill are still being assessed, its already taking its financial toll on the BP oil giant.

Nick McGregor, oil analyst for London-based Red Mayne Bentley told Fox News that 20 billion dollars has been written off the market value of the company. He said thats four to five times the total cost of the devastating 1989 Exxon Valdez spill.

“People are uncertain how this is going to go,” McGregor told us, “they don’t know how bad it’s going to get.”

As to the charge that engineering cut-backs at BP might have contributed to the disaster, McGregor said that only during the “post-mortem” stage of the probe would it be clear where the exact fault lies.

He did acknowledge the broader difficulties of running such a large company in situations like this. Sometimes, McGregor noted “…the folks at the top don’t know everything that is going on throughout the firm.”

For British Petroleum, much of this analysis will have to wait. It is in full damage control…and prevention mode.

“It is not a question of whether we WILL stop the spill,” BP’s Robert Wine told us, “it’s a question of WHEN.” He went on to say, “The most important thing is, it doesn’t happen again.”

Air Force sends planes to help with Gulf oil spill

http://www.google.com/hostednews/ap/article/ALeqM5hcQbMtXZDcPDlXZpUwoIlgV6z7zAD9FDE7I80

By PAULINE JELINEK (AP)

WASHINGTON — Two Air Force planes have been sent to Mississippi and were awaiting orders to start dumping chemicals on the oil spill threatening the coast, as the government worked Friday to determine how large a role the military should play in the cleanup.

The C-130 Hercules cargo planes, specially designed for aerial spraying, were sent Thursday from the Youngstown Air Reserve Station in Ohio, said a spokesman there, Master Sgt. Bob Barko Jr.

The planes and crews were standing ready in case they're needed, said Maj. David Faggard, an Air Force spokesman at the Pentagon.

"If this mission comes to pass, it would be first time we have done this in a real world scenario," Barko said, adding that the 910th Airlift Wing at Youngstown has trained for such a mission and has done other spraying such as mosquito-abatement flights after Hurricane Katrina in 2005.

The Navy also has sent equipment for the cleanup. But no larger Pentagon role in the crisis has been announced. Officials said Friday that the military was still talking with the Department of Homeland Security to lay out what needs there are in the cleanup that the nation's armed forces might be able to fill.

The Navy said Thursday that some of equipment had already begun arriving in Gulfport, Miss. It was 66,000 feet of inflatable boom and seven skimming systems. Fifty contractors who use the equipment also were being sent.

The help is being provided under an existing pollution cleanup agreement from the 1980s between the Navy and Coast Guard, officials said. Booms are commonly used as a floating barrier or fence to control the movement of spills in bodies of water.

The Navy also was making facilities available for use as staging areas. In addition to the base in Gulfport, the Pensacola Naval Air Station in Florida was being used as a staging area for more booms, recovery barges, tractor trailers, pumps and other related equipment used by Coast Guard contractors, Lt. Myers Vasquez, a Navy spokesman, said.

Rig explosion dirties BP's green image

http://www.google.com/hostednews/ap/article/ALeqM5icc6xlqlvdR0kRGU3JvyfLZFXbhAD9FDA7504

By CHRIS KAHN (AP)

NEW YORK — BP brands itself a friend of the environment, an energy company that goes "beyond petroleum."

That image, worth billions of dollars, is being sullied by the company's inability to contain a massive oil spill in the Gulf of Mexico.

As the expanding oil slick threatens marshlands and wildlife along the coasts of Louisiana and Mississippi, BP faces perhaps the biggest public relations challenge an oil company has experienced in the U.S. since the Exxon Valdez tanker disaster in Alaska in 1989.

BP's environmentally friendly image — its logo is a green and yellow sunburst — has outlasted past accidents, including a Texas refinery blast and Alaska pipeline spill. But last week's deadly explosion on a BP-operated oil rig and the looming environmental damage are shaping up to be a major problem, experts said.

Since the accident, BP's stock market value has declined by roughly $25 billion.

An estimated 5,000 barrels of oil per day are spewing into the Gulf, and the company is spearheading the cleanup. But on Thursday, the government sent in equipment to support BP's efforts as the spill was reaching the coast. The Obama administration said BP is responsible to pay for the cleanup, which the company says is costing millions of dollars per day.

Marketing experts and environmentalists say BP's response so far has been superior to Exxon's treatment of the Valdez crash. BP devoted most of its home page on its Web site to the disaster, and it's held regular news conferences.

But it's had some slips. Most notably, BP appeared to initially downplay the extent of the oil spill. It estimated that 1,000 barrels of oil were seeping from the sea bed each day. The government later corrected that figure to five times as much.

In addition, local officials in communities in the path of the spill have expressed frustration with the lack of communication from BP officials, as well as the government.

"They have to repair the problem. I'm not sure if anything else is going to matter until they do," said Kelly O'Keefe, managing director of the Virginia Commonwealth University Brandcenter. "And they should apologize."

BP says it's not focusing on its public relations effort.

"It's about tackling an oil spill as aggressively as we can," said Robert Wine, a spokesman at BP's headquarters in London.

BP has had its share of recent high-profile accidents:

_ An explosion at a BP refinery in Texas City in 2005 killed 15 people and injured 170. Regulators in October hit BP with a record $87 million fine for failing to correct safety hazards at the plant. BP has formally contested the fine.

_ More than 200,000 gallons of oil spilled from a BP pipeline in Alaska in March 2006, the largest-ever spill on Alaska's oil-rich North Slope. BP paid about $20 million in fines, including $4 million to the National Fish and Wildlife Foundation for Arctic environmental research.

_ Last year, BP paid nearly $2 million in fines for not operating with the proper equipment at oil fields along the North Slope.

The costs could be much higher this time. Besides cleanup expenses now running at $6 million a day, BP faces potential fines and costs to ensure better safety on the rigs it operates in the Gulf. And there will be legal costs. Two lawsuits have already been filed related to the blast and potential damage to the commercial shrimping industry.

The immediate concern was the oil slick threatening hundreds of species of fish, birds and other wildlife along the Gulf Coast.

Eileen Campbell, chief executive of market research company Millward Brown, said BP risks becoming associated with photos of oil-soaked wildlife.

That would stand in stark contrast to the green image that BP took years to build. The company has invested in solar and wind energy projects. It devoted $500 million on biofuels research, and CEO Tony Hayward supports capping carbon emissions. It spent nearly $76 million in the United States on radio and TV last year, according to Kantar Media.

Altogether, the company's efforts have contributed to a brand name worth about $17.3 billion, according to the marketing firm Millward Brown.

BP is considered the most environmentally friendly of major oil companies, the firm said. In contrast, Exxon's brand is based more on its reputation for innovation, corporate citizenship and communication with shareholders.

In the grand scheme, BP hasn't gone much beyond its core business of petroleum. Of its $73 billion in revenue in the first quarter, about $72.3 billion of that came from the exploration, production, refining and marketing of oil and natural gas. The rest came from "other businesses" such as solar and wind energy.

David Oesting, an Alaska lawyer who represented the plaintiffs in a class-action suit that followed the Valdez crash, doesn't believe BP will suffer as much as Exxon did.

Exxon eventually spent more than $4.3 billion on the cleanup and on lawsuits to compensate residents. Two decades later, it continues to pay for the damages. Oesting said he won $1 billion in the suit, and years later he's still cutting checks to the victims.

BP will benefit from the Oil Spill Liability Trust Fund, which was established after the Valdez crash by collecting 8 cents from the industry for every barrel of oil produced or imported to the U.S. The fund has about $1.6 billion available to cover damages suffered by coastal residents, fishermen and other affected businesses, according to the Coast Guard.

BP now is at the front lines of what is likely to be a renewed attack on Big Oil.

The Obama administration signed off a few weeks ago on a plan to allow more drilling along the East and Gulf coasts. Edward Markey, the chairman of a House energy committee, has asked the heads of BP and four other oil companies to testify at a hearing about the spill.

Richard Charter, senior policy adviser for Defenders of Wildlife said the rig explosion will reverberate for years in public debates about whether to expand offshore drilling. He said the unfolding environmental damage along Louisiana's coast will linger in memories of the American public.

"It will remind people that there is a risk with this kind of industrialization of the coast," he said.

Gulf Coast oil spill could eclipse Exxon Valdez

http://news.yahoo.com/s/ap/20100430/ap_on_bi_ge/us_louisiana_oil_rig_explosion

By CAIN BURDEAU and HOLBROOK MOHR, Associated Press Writers Cain Burdeau And Holbrook Mohr, Associated Press Writers

VENICE, La. – An oil spill that threatened to eclipse even the Exxon Valdez disaster spread out of control with a faint sheen washing ashore along the Gulf Coast Thursday night as fishermen rushed to scoop up shrimp and crews spread floating barriers around marshes.

The spill was bigger than imagined — five times more than first estimated — and closer. Faint fingers of oily sheen were reaching the Mississippi River delta, lapping the Louisiana shoreline in long, thin lines.

"It is of grave concern," David Kennedy of the National Oceanic and Atmospheric Administration, told The Associated Press. "I am frightened. This is a very, very big thing. And the efforts that are going to be required to do anything about it, especially if it continues on, are just mind-boggling."

The oil slick could become the nation's worst environmental disaster in decades, threatening hundreds of species of fish, birds and other wildlife along the Gulf Coast, one of the world's richest seafood grounds, teeming with shrimp, oysters and other marine life. Thicker oil was in waters south and east of the Mississippi delta about five miles offshore.

The leak from the ocean floor proved to be far bigger than initially reported, contributing to a growing sense among many in Louisiana that the government failed them again, just as it did during Hurricane Katrina. President Barack Obama dispatched Cabinet officials to deal with the crisis.

Cade Thomas, a fishing guide in Venice, worried that his livelihood will be destroyed. He said he did not know whether to blame the Coast Guard, the federal government or oil company BP PLC.

"They lied to us. They came out and said it was leaking 1,000 barrels when I think they knew it was more. And they weren't proactive," he said. "As soon as it blew up, they should have started wrapping it with booms."

The Coast Guard worked with BP, which operated the oil rig that exploded and sank last week, to deploy floating booms, skimmers and chemical dispersants, and set controlled fires to burn the oil off the water's surface.

The company has requested more resources from the Defense Department, especially underwater equipment that might be better than what is commercially available. A BP executive said the corporation would "take help from anyone."

Government officials said the blown-out well 40 miles offshore is spewing five times as much oil into the water as originally estimated — about 5,000 barrels, or 200,000 gallons, a day.

At that rate, the spill could eclipse the worst oil spill in U.S. history — the 11 million gallons that leaked from the grounded tanker Exxon Valdez in Alaska's Prince William Sound in 1989 — in the three months it could take to drill a relief well and plug the gushing well 5,000 feet underwater on the sea floor.

Ultimately, the spill could grow much larger than the Valdez because Gulf of Mexico wells tap deposits that hold many times more oil than a single tanker.

Doug Suttles, chief operating officer for BP Exploration and Production, had initially disputed the government's larger estimate. But he later acknowledged on NBC's "Today" show that the leak may be as bad as federal officials say. He said there was no way to measure the flow at the seabed, so estimates have to come from how much oil rises to the surface.

Mike Brewer, 40, who lost his oil spill response company in the devastation of Hurricane Katrina nearly five years ago, said the area was accustomed to the occasional minor spill. But he feared the scale of the escaping oil was beyond the capacity of existing resources.

"You're pumping out a massive amount of oil. There is no way to stop it," he said.

An emergency shrimping season was opened to allow shrimpers to scoop up their catch before it is fouled by oil. Cannons were to be used to scare off birds. And shrimpers were being lined up to use their boats as makeshift skimmers in the shallows.

This murky water and the oysters in it have provided a livelihood for three generations of Frank and Mitch Jurisich's family in Empire, La.

Now, on the open water just beyond the marshes, they can smell the oil that threatens everything they know and love.

"Just smelling it, it puts more of a sense of urgency, a sense of fear," Frank Jurisich said.

The brothers hope to get all the oysters they can sell before the oil washes ashore. They filled more than 100 burlap sacks Thursday and stopped to eat some oysters. "This might be our last day," Mitch Jurisich said.

Without the fishing industry, Frank Jurisich said the family "would be lost. This is who we are and what we do."

Louisiana Gov. Bobby Jindal declared a state of emergency Thursday so officials could begin preparing for the oil's impact. He said at least 10 wildlife management areas and refuges in his state and neighboring Mississippi are in the oil plume's path.

The declaration also noted that billions of dollars have been invested in coastal restoration projects that may be at risk. He also asked the federal government if he could call up 6,000 National Guard troops to help.

As dawn broke Thursday in the oil industry hub of Venice, about 75 miles from New Orleans and not far from the mouth of the Mississippi River, crews loaded an orange oil boom aboard a supply boat at Bud's Boat Launch. There, local officials expressed frustration with the pace of the government's response and the communication they were getting from the Coast Guard and BP officials.

"We're not doing everything we can do," said Billy Nungesser, president of Plaquemines Parish, which straddles the Mississippi River at the tip of Louisiana.

Tension was growing in towns like Port Sulphur and Empire along Louisiana Highway 23, which runs south of New Orleans along the Mississippi River into prime oyster and shrimping waters.

Companies like Chevron and ConocoPhillips have facilities nearby, and some residents are hesitant to criticize BP or the federal government, knowing the oil industry is as much a staple here as fishing.

"I don't think there's a lot of blame going around here. People are just concerned about their livelihoods," said Sullivan Vullo, who owns La Casa Cafe in Port Sulphur.

A federal class-action lawsuit was filed late Wednesday on behalf of two commercial shrimpers from Louisiana, Acy J. Cooper Jr. and Ronnie Louis Anderson.

The suit seeks at least $5 million in compensatory damages plus an unspecified amount of punitive damages against Transocean, BP, Halliburton Energy Services Inc. and Cameron International Corp.

In Buras, La., where Hurricane Katrina made landfall in 2005, the owner of the Black Velvet Oyster Bar & Grill couldn't keep his eyes off the television. News and weather shows were making projections that oil would soon inundate the coastal wetlands where his family has worked since the 1860s.

It was as though a hurricane was approaching, maybe worse.

"A hurricane is like closing your bank account for a few days, but this here has the capacity to destroy our bank accounts," said Byron Marinovitch, 47.

"We're really disgusted," he added. "We don't believe anything coming out of BP's mouth."

Signs of the 2005 hurricane are still apparent here: There are schools, homes, churches and restaurants operating out of trailers, and across from Marinovitch's bar is a wood frame house abandoned since the storm.

A fleet of boats working under an oil industry consortium has been using booms to corral and then skim oil from the surface.

BP conducted a test burn on Wednesday, but abandoned a plan to set fire to more oil after weather conditions deteriorated. The attempt to burn some of the oil came after crews operating submersible robots failed to activate a shut-off device that would halt the flow.

Adm. Mike Mullen, chairman of the Joint Chiefs of Staff, was briefed Thursday on the issue, said his spokesman, Capt. John Kirby. But Kirby said the Defense Department has received no request for help, nor is it doing any detailed planning for any mission on the oil spill.

Obama dispatched Homeland Security Secretary Janet Napolitano, Interior Secretary Ken Salazar and Environmental Protection Agency administrator Lisa Jackson to help with the spill. The president said the White House would use "every single available resource" to respond.

Obama has directed officials to aggressively confront the spill, but the cost of the cleanup will fall on BP, White House spokesman Nick Shapiro said.

___

Mohr reported from Jackson, Miss. Associated Press writers Janet McConnaughey, Kevin McGill, Michael Kunzelman and Brett Martel in New Orleans, and Melinda Deslatte in Baton Rouge also contributed to this report.

Experts: Most of the Gulf Oil Spill Won't Be Cleaned Up

http://news.yahoo.com/s/livescience/20100429/sc_livescience/expertsmostofthegulfoilspillwontbecleanedup

Jeanna Bryner
LiveScience Managing Editor
LiveScience.com jeanna Bryner
livescience Managing Editor

BP is attacking the oil spill in the Gulf of Mexico on all fronts, from the traditional skimmers and booms to more advanced technologies. But history and science suggest this clean-up effort probably won't end in a spotless environment.


BP Chief Executive Tony Hayward said the company would do "everything in our power to contain this oil spill and resolve the situation as rapidly, safely and effectively as possible," according to news reports. The company, which was leasing the Transocean oil rig that exploded and sank on April 22 in the Gulf, is responsible for the clean-up.


And yes, all hands are on deck - skimmers, booms, domes, controlled burning and chemical dispersants - to try to clean up the 1,000 to 5,000 barrels a day estimated to be leaking out of the well.


However, for an oil spill at sea, typically only 10 to 15 percent of the oil is recovered, Gerald Graham, president of Worldocean Consulting, a marine oil spill prevention and response planning firm based in British Columbia, told LiveScience.


So far, BP claims it has recovered 685,062 gallons (more than 2.5 million liters) of an oil-and-water mix. That mix is almost entirely water, with oil stirred in like vinaigrette. Until the entire recovery process finishes, it will be impossible to tell how much crude oil BP has recovered, Graham said.


The rest of the oil that doesn't get cleaned up evaporates, breaks up and floats on the surface, or sinks to the bottom, Graham said.


"It's kind of overwhelming," U.S. Coast Guard Petty Officer 3rd Class Cory Mendenhall said of the cleanup effort.


"A lot of it cannot be collected," Mendenhall said. "95 percent [of the oil] is a rainbow-y sheen. It's too thin to scoop up. Most of that breaks up naturally, so about 3 percent of the oil is what people think of as big globs of oil that you can skim off the water. Now, how much of that 3 percent has been collected is still unsure."


History attests to the lingering problem of oil spills. Exxon Valdez, one of the worst oil spills ever, dumped more than 10 million gallons of crude into Prince William Sound, Alaska, on March 24, 1989. And there's still a lot of oil that didn't get cleaned up, which has continued to impact wildlife in the area for the past 20 years, experts say.


"Despite spending $2 billion dollars and using every known clean-up method there was, they recovered 8 percent of the spilled Exxon Valdez oil," said Jeffrey Short, Pacific science director for Oceana, a Washington, D.C.-based ocean conservation organization. "That is typical of these exercises when you have a large marine oil spill. You're doing really great if you [get] 20 percent."


Cleanup under way


So far, the most effective method has been chemical dispersants. Least effective: booms, according to Mendenhall. Here's what's being done to capture the oil:


Chemical dispersants: About 100,000 gallons of chemical dispersant has been dropped from the air into the Gulf, where it breaks up the oil slick into smaller droplets. The droplets then get mixed into the water, where they are subjected to ocean currents and natural degradation processes, according to the Minerals Management Service (MMS). "This potentially exposes the water column and near shore shallow bottom-dwelling organisms to oil," according to MMS.


Skimmers: Once broken up, skimming vessels come in and collect what's left. The droplets are collected in drums and some of that material gets cleaned and recycled. The rest is "properly disposed," Mendenhall said. But skimmers can only capture about 10 percent of the volume of spilled oil, according to Charlie Henry of the National Oceanic and Atmospheric Administration (NOAA).


Controlled burn: On Wednesday, BP and the Coast Guard, along with other agencies, conducted an in-situ burn in which they used a fireproof boom to corral dense parts of the oil spill, moving it to another location and then burning it.


In general, burning is probably the most effective method for cleaning up heavy oil like that leaking in the Gulf, according to said Edward Overton, a professor emeritus of environmental sciences at Louisiana State University. But it has drawbacks. When you burn near the coast, you have to destroy wildlife, and offshore burning is harder to do.


"I have no idea what we're going to do, this is trial and error to see what works and what doesn't work," Overton said. And news reports suggest since the oil is really an oil-water mix, burning actually might not do the trick.


Collection domes: BP has also started to put together a subsea oil collection system, and when used will be the first time this shallow-water technology has been adapted for the deep water. The oil leaks in the Gulf are nearly a mile down. It is expected to be ready for deployment within the next four weeks, according to BP.

When ready, here's how the oil-spill technology would work: The dome would be placed on the seabed to capture the leaking oil. This oil would then be pumped up to surface vessels that could collect the oil and take it away. Similar systems have been used in shallow water, but never at depth of 5,000 feet. The Coast Guard has said the construction could take two to four weeks.

New method: However, Thursday afternoon officials said they might try an experimental oil-dispersal method that would involve releasing chemicals from under the water. "We were notified that this technique might be more effective in spreading the dispersant at the source on the riser than by using aircraft to spread it on the sea," said Doug Suttles, BP's Chief Operating Officer.

Leftover oil

As for what happens to the "dispersed oil," that doesn't get skimmed off or burned off or otherwise collected, "We're told it disperses naturally. It eventually breaks up and evaporates. There are different ways, but we're told it just kind of goes away," U.S. Coast Guard's Mendenhall said.

Bacteria can also help degrade most components of oil.

But not all oils are created equally. At first, reports suggested the oil leaking into the Gulf was standard Louisiana crude oil, a type of oil that biodegrades pretty well, Overton said. But sample testing revealed that the leaking oil was a different type, one that contains a very high concentration of components that don't degrade easily, called asphaltenes, according to Overton. He estimates that the concentration of these asphaltic components could be as high as 50 percent in this oil spill, while in other types of crude oil it might be as low as 1 or 2 percent.

"That is bad, bad news, because this oil is going to be very slow to degrade," Overton said today.

Some of the oil sinks to the sea bottom, where it can get buried into an anaerobic zone where there's no oxygen. Oil in these zones stays in a chemically reduced form and doesn't degrade as much, Overton said. But, he added, there's not much life down there to be contaminated.

The oil slick could reach the Mississippi Delta coast as early as Friday, so at least some oil will hit shore.

History as a guide

The 1989 Exxon Valdez spill that fouled over 1,200 miles (1,900 kilometers) of shoreline in Alaska in 1989 has shown that once an oil slick makes landfall and soaks into the beach, it can take decades for the pollution to break down and disappear. About 40 percent of the 10.8 million gallons spilled reached shore in Prince William Sound, according to Short.

"There's still a lot of oil that didn't get cleaned up," from the area around Prince William Sound where the spill occurred, said Daniel Esler, a University Research Associate, based at the Centre for Wildlife Ecology at the Simon Fraser University in British Columbia, Canada.

Some beaches didn't get cleaned up as much as others, and certain coastal environments (with particular types of sediments and patterns of water flow) tend to hold on to the oil for longer than others. While it can't be seen if you walk along the beach, digging down into the sediments at certain spots can lead to pools of oil that remain in much the same condition as when they first spilled.

For instance, in 2001, 2003 and 2007, researchers dug over 12,000 pits at dozens of beach sites that had been covered in oil back in 1989. The team found black, oily liquid in over half of the holes dug in 2001.

This subsurface oil was "fingerprinted" back to the Exxon Valdez as the ultimate source (the star-crossed region also had an earthquake-caused oil spill back in 1964). This hidden oil contained the same proportions of polycyclic aromatic hydrocarbons in it as the Exxon Valdez oil collected right at the initial time of the spill. "There was no question we were looking at Exxon Valdez oil," Short, who led the three surveys, told Livescience.

The lingering oil estimate for affected Alaskan beaches stood at 21,000 gallons (80,000 liters) in 2004. This Exxon Valdez oil is decreasing at a rate of 0 to 4 percent per year according to the Exxon Valdez Oil Spill Trustee Council (EVOSTC) - though the lower rate is much more likely - meaning it will take decades or even centuries for the oil to disappear entirely.

Though the lingering oil has broken down, in some locations it remains almost as toxic to the environment as the freshly spilled variety, according to EVOSTC's Web site. (EVOSTC oversees restoration use of civil money to clean up the Sound.)

And even though this leftover oil is "just a teeny fraction of what was originally spilled," Esler said, certain species can still be exposed to it.

Esler and his colleagues used a biomarker that indicates exposure to hydrocarbons (of which oil is one) to look at the potential exposure of harlequin ducks, a particularly vulnerable species, in the area affected by the spill. They found that these ducks were coming into contact with the spilled oil even 20 years after the incident.

Take-home

The findings suggest that oil spills can have an impact on the environment for much longer than previously thought, even decades later.

In the case of the Gulf spill, the oil won't last as long if it stays in open ocean - there it will either evaporate or congeal into clumps and sink to the ocean floor, Esler explained. But if it reaches the coast, it could encounter the types of environments where it can stick around for a long time.

Given the number of places where oil spills have happened and oil has remained even after clean-up efforts, "it's not unreasonable" to think that oil could remain for some time if reaches the Gulf coast, Esler said in a telephone interview Thursday.

The situation at Prince William Sound isn't all bad though, as it seems some species are out of the woods in terms of exposure threats and "there are lots of hints that things are getting better," Esler said.

OPEC's Speculative Position

http://online.wsj.com/article/SB10001424052748704423504575212371687358814.html?mod=WSJ_Stocks_MIDDLE_Heard

By LIAM DENNING
Like comedy, correlation analysis rests on timing.

In its latest monthly report, the Organization of the Petroleum Exporting Countries put a chart front and center showing the price of oil tracking closely the level of open interest in Nymex oil contracts. The message was that speculators are driving oil prices higher.

The timing is interesting in several respects. The Commodity Futures Trading Commission wants to limit the size of positions taken by speculators in the oil futures market. The deadline for public comment on the draft regulations passed Monday.


TKk

Oil facility in Jubail, Saudia Arabia
.Position limits are aimed at curbing speculative excesses, which some blame for the spike in oil prices in 2008 and the 65% increase in prices over the past 12 months. A particular target is the passive investors putting money into buy-and-hold oil futures funds.

These funds do create demand for futures. But the effect on oil spot prices is more subtle. Passive investors raise the price of futures relative to the spot price of oil. That's a big reason why the oil futures curve has sloped upward for most of the past five years, corresponding with when investment in commodity funds really took off.

As energy economist Phil Verleger observes, that premium for oil delivered further out in the future can create an incentive for sellers of futures to buy physical oil, store it and sell it forward. The result is bigger inventories of oil, acting as a buffer against shortages arising from unexpected swings in oil supply or demand. Mr Verleger points to this winter's cold snap, which should have caused heating-oil prices to spike but did not due to the security provided by high inventories.

.It's worth remembering that after oil prices crashed in 1998, OPEC specifically targeted cutting global oil inventories to raise prices. As the past decade has demonstrated, it certainly helped in that regard.

This is why OPEC would love to see passive money forced out of the futures market. This would reduce the premium to spot prices and, hence, the incentive to store oil. Initially, the unwinding of these trades might cause oil prices to drop significantly as barrels flooded onto the market. Longer term, however, lower inventories would hand market power back to those producers controlling the world's swing spare production capacity: Step forward OPEC.

In another interesting twist of timing, OPEC's chart only begins in September 2009. As Deutsche Bank points out, extending the analysis back just to early 2008 would show a period during which net long positions on Nymex were falling yet crude was racing toward its all-time peak. It puts correlation between changes in net positions on Nymex and oil price moves at 17%—positive but hardly in lock step.

Even if OPEC's timing is off, the sight of a cartel bemoaning market distortions really should raise a smile.

Write to Liam Denning at liam.denning@wsj.com

Venezuela Depleted Savings Amid Oil Revenue Plunge: Fonden

http://www.businessweek.com/news/2010-04-29/venezuela-depleted-savings-amid-oil-revenue-plunge-update1-.html

By Corina Rodriguez Pons and Daniel Cancel

April 29 (Bloomberg) -- Venezuelan President Hugo Chavez tapped $19.6 billion of government development funds last year after oil revenue plunged and drove the OPEC nation into its first recession since 2003, according to the Finance Ministry.

Chavez spent $7.2 billion of a $12 billion fund created with China last year and $12.4 billion from the off-budget development fund known as Fonden, a report on the ministry’s website says. The government issued 37 billion bolivars ($8.6 billion) of local and international debt to compensate for a 67 percent plunge in oil revenue, boosting the country’s overall debt-to-GDP ratio to 17.2 percent from 13.8 percent.

“The savings accumulated between 2005 and 2008 have been declining and a good part of that was spent in 2009,” said Juan Pablo Fuentes, an economist at Moody’s Economic.com in West Chester, Pennsylvania, in a phone interview. “Now the ability to spend dollar savings is even more restricted.”

Venezuela, which depends on oil for more than 90 percent of export revenue, is tapping allies from Brazil to China to secure financing this year after drawing down the savings funds last year. China agreed to provide a $20 billion credit line to Venezuela on April 17 and to be repaid with future oil shipments. Chavez said yesterday that Brazilian development bank BNDES may provide a $1 billion loan to build a shipyard.

$12.3 Billion Transfer

Petroleos de Venezuela SA, or PDVSA as the oil company is known, transferred $616 million to Fonden amid a drop in production and oil prices, 5 percent of what it contributed in 2008. Fonden, which has amassed $58.1 billion since it was created in 2005, received $12.3 billion of central bank reserves in 2009, the report says.

The government used the funds from Fonden last year on infrastructure, housing, energy and defense, the report says.

Venezuela cut oil production by more than 300,000 barrels a day last year in line with OPEC quotas. Along with a decline in imports, factory output and investment, that caused the economy to contract 3.3 percent.

Chavez devalued the bolivar in January by as much as 50 percent amid a sputtering non-oil export market to boost government revenue by doubling the amount of bolivars for each dollar from oil sales.

The central bank, which was ordered to transfer $7 billion of reserves to Fonden in the first half of this year, has sent $5 billion to the fund, causing reserves to plunge 21 percent in the first four months of the year.

Oil Company Cash

PDVSA will likely transfer $1.5 billion of oil revenue to Fonden this year, company President Rafael Ramirez said on April 22.

The $58.1 billion that Fonden has received since 2005 represents 19 percent of the government’s spending during that period, Boris Segura, an economist at RBS Securities Inc. in Stamford, Connecticut, said today in a phone interview.

“The government has been using Fonden as an implementing agency for spending since its creation and depended on it more last year when oil revenue fell,” Segura said. “Despite the $5 billion transfer this year from the central bank, the fund is being depleted.”

--Editors: Bill Faries, Harry Maurer.

To contact the reporter on this story: Corina Rodriguez Pons in Caracas at crpons@bloomberg.net; Daniel Cancel in Caracas at dcancel@bloomberg.net.

To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net

The Long Straddle: Win Big or Lose Trying: I will stick with physical product!

http://www.favstocks.com/the-long-straddle-win-big-or-lose-trying/2710175/

A long straddle is an options strategy that uses both calls and puts. It takes advantage of the market volatility by profiting from either a large upward move or a large downward move. This straddle is not without a downside, though. That is the cost. The cost of a straddle is much more than buying a bull call or bear put spread.

Normally, the strategy entails buying a call and a put with the same strike price. One can also use different strike prices for there to be an adjustment to the break-even point. Another adjustment can be made when also writing calls, creating a butterfly spread. The strike prices plus the cost of the call and the put equals the break-even price. That means that a market that is not very volatile will not be profitable using this strategy.

Imagine, for example, that the strike price chosen is $80, the cost of the straddle is $160 and the point value is $10. That means the price of the commodity has to climb to 96 or fall to 64 in order for the strategy to break even. If the price stays between 96 and 64, the cost of the straddle is lost as maximum loss.

Oil Volatility Sinks as Shortage Concern Eases: Energy Markets

http://www.businessweek.com/news/2010-04-28/oil-volatility-sinks-as-shortage-concern-eases-energy-markets.html

By Alexander Kwiatkowski

April 28 (Bloomberg) -- Crude oil volatility is falling to the lowest level in almost three years as brimming stockpiles and rising OPEC investment in production capacity eases concern of shortages.

Oil’s 50-day historical volatility, a measure of how much crude fluctuates around its average price during that period, declined to 23 percent yesterday, the lowest since July 2007. The measure rose to a record 108 percent at the beginning of 2009 as prices collapsed following the demise of Lehman Brothers Holdings Inc. and the onset of global recession.

The Organization of Petroleum Exporting Countries said it is planning 140 oil projects over the next five years and that its 6 million barrels a day of unused production is enough to meet demand and avoid a repeat of the price swings of 2008. U.S. crude stockpiles rose to 356 million barrels on April 2, the highest since June, and inventories held on ships are climbing, according to Morgan Stanley.

“When inventories go up, the precariousness of the market starts to fall as there is so much of this stuff sloshing around,” said Michael Lewis, head of commodity research at Deutsche Bank AG in London. “People are not so fearful of a supply event because spare capacity is higher.”

BP Plc, the biggest oil producer in the Gulf of Mexico, said yesterday that crude’s declining volatility may limit profits from its trading this quarter.

Oil has held between $69 and $88 a barrel in New York this year and is up 3.1 percent amid speculation the global economic recovery will spur demand. Prices slumped from a record $147 a barrel in July 2008 to $32 in December that year.

Creeping Higher

Crude oil for June delivery fell for a third day, dropping 1.4 percent to $81.29 a barrel on the New York Mercantile Exchange at 10:56 a.m. in London. Fluctuations have abated as prices have moved “gently” through successively higher price ranges during the past few months, said Paul Horsnell, head of commodities research at Barclays Capital in London, unlike the rapid price swings of 2008.

Oil’s diminishing price swings also reflect increased liquidity, a phenomenon seen across most asset classes, Lewis said. Governments and central banks provided an estimated $11 trillion to rescue financial institutions and cut interest rates to spur the economy.

In stock markets, volatility has decreased for the Standard & Poor’s 500 index, falling as low as 9.6 percent last week on the same 50-day historical basis, the lowest since June 2007. The measure jumped yesterday to 10.8 percent after equities tumbled the most since February as credit-rating agencies downgraded Greece and Portugal, spurring concern Europe’s debt crisis will derail the global economic recovery.

Goldman’s View

The measure of natural gas’ volatility increased to 42 percent yesterday after falling to an eight-month low of 35 percent on March 29. Gas futures traded in New York, prone to swings during the summer hurricane season as storms threaten to halt offshore production, traded near $4.22 per million British thermal units yesterday.

Goldman Sachs Group Inc. analysts Jeffrey Currie and David Greely said in a March 31 report that commodity markets are set for “violent price spikes,” as investment constraints on new supplies and emerging market demand threaten shortages.

Barclays’ Horsnell said that price swings may intensify as global oil demand grows faster than supply and spare production capacity diminishes. Barclays Capital estimates that West Texas Intermediate crude will average $85 a barrel in New York this year, then rise to $97 in 2011.

Predictable Prices

“Volatility is going to be related to the amount of slack there is in the system,” Horsnell said. Barclays sees “a steady erosion of spare capacity and that is a recipe for high volatility.”

Traders attempt to profit from an increase or decrease in price swings by purchasing or selling options contracts.

When volatility is expected to rise, investors may use a strategy known as a long straddle, in which they buy both a call option and a put option on the same commodity, at the same strike price. The buyer gains in relation to how far the price of the underlying stock or commodity moves, regardless of the direction, while their potential losses are limited to the cost of the options.

Saudi Arabia, OPEC’s biggest producer, has sought to rein in oil, expecting that more predictable prices will allow producers to invest the billions needed to meet future demand. The nation has spare capacity of about 4 million barrels a day, Khalid al-Falih, the chief executive of state-run Saudi Aramco, said in an April 19 speech.

OPEC’s Capacity

OPEC, supplier of 40 percent of the world’s oil, pumped 29.2 million barrels a day in March, with another 5.6 million barrels idle, according to data compiled by Bloomberg. The group’s spare capacity was as low as about 2 million barrels a day in July 2008, when oil prices peaked.

Saudi Arabia’s spare capacity acts as a “bridging loan” to meet future demand, said Lawrence Eagles, head of commodities research at JPMorgan Chase & Co. in New York.

While OPEC has been increasing production, “it has been behind the curve in adding supply to meet demand,” Eagles said in an e-mail. “OPEC’s failure to respond to higher prices with higher output today has market implications that could result in a much more serious thrust higher,” he said.

OPEC Secretary General Abdalla El-Badri said on Feb. 1 that the group will add 12 million barrels a day of capacity over five years. The extra oil more than offsets field declines and is enough to “satisfy demand and provide a cushion of spare capacity,” he said.

--With assistance from Grant Smith in London. Editors: Rob Verdonck, Mike Anderson.

To contact the reporter on this story: Alexander Kwiatkowski in London at akwiatkowsk2@bloomberg.net;

To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net

Why it doesn’t matter that there’s ‘plenty of oil left’. Great article!

http://www.greenbang.com/why-it-doesnt-matter-that-theres-plenty-of-oil-left_14292.html

Peak oil felt like a very real and immediate possibility around the time of the oil price peak in mid-2008, but the “oil-is-here-to-stay” crowd has enjoyed something of a resurgence since then.

Oil prices are down (though back to more than twice the low seen after the financial meltdown). Furthermore, 2009 was a banner year for new oil field discoveries — more than 10 billion barrels in potential reserves of black gold, which was the most found since 2000. Then there’s the fossil fuel riches of the Arctic that will likely be opening up in years to come, thanks to climate change.

Don’t get too excited, though. While there might be plenty of oil left below the surface of our planet, it won’t be enough to prevent an oil shock in the short-term future. Here’s why:

•What’s left is deep, hard to drill for and expensive to get at: BP’s Tiber find in the Gulf of Mexico, for example, lies below more than 3/4 of a mile of water … and then below an additional 6.6 miles of ocean crust. There are no more easy-to-reach, gushing Spindletops awaiting us just one-fifth of a mile below dry land.
•With rising technological challenges comes rising risk: The Deepwater Horizon rig that exploded in flames and then sank in the Gulf of Mexico last week was drilling a well nearly 3 1/2 miles deep below the ocean at the time. The disaster, which has caused a massive leak of oil into the environmentally sensitive and economically important Gulf, is being blamed on a blowout preventer failure. Blowout preventers are needed to cope with the steep pressures and temperatures encountered while drilling such deep wells … and the risks of them failing grow ever higher the deeper we drill. (Ironically, it was the Deepwater Horizon responsible for last year’s Tiber find, courtesy of the deepest well ever drilled.)
•One word: rust: Oil industry expert Matthew Simmons (pdf) has an expression for the oil industry’s looming infrastructure problem: “Rust never sleeps.” The combination of ageing, rusting oil and gas pipes — coupled with a high-skill workforce that’s also ageing — create “almost insurmountable obstacles” for the industry, he argues.
•Price volatility: OPEC ministers now say an $80 barrel of oil is about the right price to keep the fuel flowing. (It’s trading at around $85 today.) That might be fine for OPEC, but it puts a bit of a pinch on a global economy that just over seven years ago was used to a price just a third as high. Bring the price much higher, and the economy can’t cope — people stop spending on other purchases to free up cash for the oil-related essentials, which include not just fuel but food. Bring the price much lower, and the energy companies lose their incentive to invest in new exploration, much less infrastructure upkeep and development of non-traditional fuel sources like oil sands, which require a high oil price to justify.
Government officials and business leaders, take heed: you’d be a lot better off tuning out the soothing reassurances from OPEC and the oil giants, and tuning in the warnings being given by everyone from Virgin’s Sir Richard Branson and the UK Industry Task Force on Peak Oil & Security.

As the Task Force noted upon releasing it latest report earlier this year, “Our message to government and businesses is clear. Act now. If we don’t, we run the risk of a return to the oil price shocks of the 1970s and 2008 with all the inherent uncertainty and trauma that brought.”

Anybody listening?

Venezuela's Chavez says OPEC policies have avoided 'catastrophic scenario' in oil market

http://www.canadianbusiness.com/markets/market_news/article.jsp?content=D9FBRQVO1

CARACAS, Venezuela (AP) - Venezuelan President Hugo Chavez says he's pleased that OPEC policies have helped stabilize world crude prices.

Chavez, whose country is a major crude exporter and OPEC member, said in televised remarks that "we managed to leave behind the catastrophic scenario, thanks to OPEC and the allies of OPEC."

Oil prices on Tuesday dropped $1.76 to settle at $82.44 a barrel on the New York Mercantile Exchange.

The Organization of Petroleum Exporting Countires has left its members' production quotas unchanged since December 2008, when it announced the last of a series of cuts aimed at bringing their output down by 4.2 million barrels per day. The cuts helped engineer a rebound in crude prices, which had collapsed to the low $30s from a mid-2008 high of almost $150 per barrel.

Nigeria orders elections chief to step down: Goodluck makes a great decision!

http://www.washingtonpost.com/wp-dyn/content/article/2010/04/28/AR2010042803846.html

ABUJA (Reuters) - Nigeria's acting president on Wednesday ordered the OPEC member's elections chief to step down immediately over widespread concern that next year's vote would not be credible under his leadership.

Acting President Goodluck Jonathan ordered Maurice Iwu, chairman of the Independent National Election Commission, to hand over his responsibilities to his deputy until a replacement could be found.

"The acting president ... has directed ... Iwu to proceed on pre-disengagement leave with immediate effect," said Ima Niboro, spokesman for Jonathan.

Iwu, whose five-year term as chairman expires on June 13, has faced considerable criticism at home and abroad for his role in the flawed 2007 election that brought President Umaru Yar'Adua to power.

(Reporting by Felix Onuah; Writing by Randy Fabi; Editing by Mark Heinrich)

Kidnap, oil theft plague Nigeria as amnesty falters

http://www.washingtonpost.com/wp-dyn/content/article/2010/04/29/AR2010042901398.html

By Austin Ekeinde
Reuters
Thursday, April 29, 2010; 1:09 PM

PORT HARCOURT, Nigeria (Reuters) - Former militants fed up with a Nigerian government amnesty program are regrouping and are behind a renewed wave of kidnappings, robberies and oil theft, security officials say.

A group of ex-rebels are believed to be responsible for a "major attack" on an oil pipeline in Brass River that forced Italian oil firm Agip to declare a force majeure -- freedom from contractual obligations -- on its exports on Wednesday, industry and security sources said.

"They were former militants looking for an easy way to make money," said a security source working in the oil industry.

Nigeria's plan to rehabilitate, educate and employ thousands of former rebels has stalled since ailing President Umaru Yar'Adua left last November for treatment for a heart ailment. He has since returned, but remains too sick to rule.

Acting President Goodluck Jonathan, who assumed executive powers in February, has made security in the oil-producing Niger Delta one of his top priorities -- but has yet to get the amnesty program back on track.

"The fear is that if the amnesty program is not fully implemented, most of them will easily return back to crime," said Bestman Woka, amnesty coordinator for Rivers state.


One industry source said a recent flight over the creeks of the delta revealed many of the waterways polluted by spillages caused by oil thieves, indicating a sharp rise in thefts of industrial quantities of crude.

Columns of smoke also suggested a plethora of illegal refineries where the stolen crude was being processed.

Kidnapping particularly of prominent local Nigerians has also risen in recent weeks, including in Abia state on the fringe of the Niger Delta, where two German men were also seized by gunmen this month and held for almost a week.

Five officials from Nigeria's drug administration agency NAFDAC were kidnapped in Abia on Wednesday after visiting the family of a colleague shot dead by gunmen. Two, including a pregnant woman, were later released, but a 15 million naira ($100,000) ransom was demanded for the others, NAFDAC said.

Police shot dead four gunmen trying to kidnap a Nigerian oil worker in Port Harcourt on Tuesday, while a local government official was abducted the same day.

AMNESTY CENTRES SHUT

Hundreds of former rebels surrendered arms last year to participate in Yar'Adua's amnesty program, the most serious attempt yet to resolve years of unrest which has prevented Nigeria from pumping more than two thirds of its oil capacity.

But the government has been slow in fulfilling its promises of a better life in the impoverished Niger Delta.

Amnesty centres in Rivers state, which housed dozens of former rebels, have been shut down since February but those responsible for the program say they remain in close contact with ex-militants and that stipends are being paid.

Security officials say the crime wave mainly involves small gangs rather than the large, organized militant groups responsible for years of attacks on oil industry infrastructure.

Rebel leaders have accepted the amnesty offer in return for huge payouts, but many of their followers have not reaped similar rewards, forcing them to fend for themselves.

"Who do you think is carrying out these kidnappings and armed robberies all over the place? The former militants are the ones doing it," said Suleiman Abba, police commissioner for Rivers state.

Still, fewer major attacks have allowed oil firms like Royal Dutch Shell to ramp up production in the Niger Delta.

Shell said it had pumped 80,000 barrels of oil equivalent per day more in the first quarter than the same period last year because of the improving security situation.


(Writing by Randy Fabi; Editing by Nick Tattersall and Mark Heinrich)

Obama speaks about the Gulf oil spill @ 2:00 PM EST today! Here is my recap.

• BP is paying for all clean up.
• The Department of Defense will be utilized for any services needed to clean up this mess.
• The US governenemt will be sending "SWAT" members to various Gulf oil rigs for immedaite inspections.

BP welcomes military help for larger Gulf oil leak. What a mess!

http://news.yahoo.com/s/ap/us_louisiana_oil_rig_explosion

By CAIN BURDEAU, Associated Press Writer Cain Burdeau, Associated Press

VENICE, La. – A massive oil spill in the Gulf of Mexico that has become far worse than initially thought crept toward the coast Thursday as government officials offered help from the military to prevent a disaster that could destroy fragile marshlands along the shore.

An executive for BP PLC, which operated the oil rig that exploded and sank last week, said on NBC's "Today" that the company would welcome help from the U.S. military.

"We'll take help from anyone," BP Chief Operating Officer Doug Suttles said.

The Coast Guard has urged the company to formally request more resources from the Defense Department.

But time may be running out: Oil from the spill had crept to within 12 miles of the coast, and it could reach shore as soon as Friday. A third leak was discovered, which government officials said is spewing five times as much oil into the water as originally estimated — about 5,000 barrels a day coming from the blown-out well 40 miles offshore.

Suttles had initially disputed the government's estimate, and that the company was unable to handle the operation to contain it.

But early Thursday, he acknowledged on "Today" that the leak may be as bad as the government says. He said there was no way to measure the flow at the seabed and estimates have to come from how much oil makes it to the surface.

If the well cannot be closed, almost 100,000 barrels of oil, or 4.2 million gallons, could spill into the Gulf before crews can drill a relief well to alleviate the pressure. By comparison, the Exxon Valdez, the worst oil spill in U.S. history, leaked 11 million gallons into Alaska's Prince William Sound in 1989.

As dawn broke Thursday in the oil industry hub of Venice, about 75 miles from New Orleans and not far from the mouth of the Mississippi River, crews loaded an orange oil boom aboard a supply boat at Bud's Boat Launch. There, local officials expressed frustration with the pace of the government's response and the communication they were getting from the Coast Guard and BP officials.

"We're not doing everything we can do," said Billy Nungesser, president of Plaquemines Parish, which straddles the Mississippi River at the tip of Louisiana.

"Give us the worst-case scenario. How far inland is this supposed to go?" Nungesser said. He has suggested enlisting the local fishing fleet to spread booms to halt the oil, which threatens some of the nation's most fertile seafood grounds.

Louisiana has opened a special shrimp season along parts of the coast so shrimpers can harvest the profitable white shrimp before the spill has an effect.

Michael Nguyen, 58, was aboard his 82-foot shrimp boat, the Night Star III, waiting for news Thursday morning on what has happening with the slick.

"My boat is ready: New nets, did repairs. I'm ready to go," he said.

He wasn't panicking, but was clearly worried.

"The oil come in everywhere, the shrimp die, the crabs die, the fish die. What do I do? Stay home a long time?"

The spill has moved steadily toward the mouth of the Mississippi River and the wetland areas east of it, home to hundreds of species of wildlife and near some rich oyster grounds.

A federal class-action lawsuit was filed late Wednesday over the oil spill on behalf of two commercial shrimpers from Louisiana, Acy J. Cooper Jr. and Ronnie Louis Anderson.

The suit seeks at least $5 million in compensatory damages plus an unspecified amount of punitive damages against Transocean, BP, Halliburton Energy Services Inc. and Cameron International Corp.

Jim Klick, a lawyer for Cooper and Anderson, said the oil spill already is disrupting the commercial shrimping industry.

"They should be preparing themselves for the upcoming shrimp season," he said. "Now they're very much concerned that the whole shrimp season is out."

Mike Brewer, 40, who lost his oil spill response company in the devastation of Hurricane Katrina nearly five years ago, said the area was accustomed to the occassional minor spill. But he feared the scale of the escaping oil was beyond the capacity of existing resources.

"You're pumping out a massive amount of oil. There is no way to stop it," he said.

The rig Deepwater Horizon sank a week ago after exploding two days earlier. Of its crew of 126, 11 are missing and presumed dead. The rig was owned by Transocean Ltd. and operated by BP. Coast Guard Rear Adm. Mary Landry said BP is responsible for bringing resources to shut off the flow and clean up the spill.

"It has become clear after several unsuccessful attempts to determine the cause" that agencies must supplement what's being done by the company, she said.

A fleet of boats working under an oil industry consortium has been using booms to corral and then skim oil from the surface.

Landry said a controlled test to burn the leaking oil was successful late Wednesday afternoon. BP was to set more fires after the test, but as night fell, there were no more burns. No details have been given about when more were planned were given during the news conference.

The decision to burn some of the oil came after crews operating submersible robots failed to activate a shut-off device that would halt the flow of oil on the sea bottom 5,000 feet below.

Adm. Mike Mullen, chairman of the Joint Chiefs of Staff, was briefed Thursday morning on the issue, said his spokesman, Capt. John Kirby. But Kirby said the Defense Department has received no request for help, nor is it doing any detailed planning for any mission on the oil spill.

President Barack Obama has directed officials to aggressively confront the spill, but the cost of the cleanup will fall on BP, spokesman Nick Shapiro said.

___

Associated Press writers Janet McConnaughey, Kevin McGill Michael Kunzelman and Brett Martel in New Orleans, Melinda Deslatte in Baton Rouge and Holbrook Mohr in Jackson, Miss., contributed to this report.

Giant underwater dome could contain the oil spill in the Gulf of mexico!

http://inhabitat.com/2010/04/28/giant-underwater-dome-could-contain-gulf-of-mexico-oil-spill/
by Ariel Schwartz,

The massive oil spill in the Gulf of Mexico is growing worse, with 1,000 barrels pouring into the ocean every day over a span of 28,600 square miles. As the spill creeps closer to Louisiana’s coastline, which contains 40% of the country’s wetlands, scientists continue to scramble for a solution. One possible fix: a giant underwater dome that could be placed over the leak to suck up the oil.

BP engineers are working on designing and lowering a giant dome over the leak in an attempt to suck up oil and stop the gusher from reaching the coastline. The idea isn’t new — it was first tried and abandoned in a 1979 oil spill after two months of sustained damage from harsh seas. Domes have been used since then, but never at the depth of the Gulf of Mexico spill (5,000 feet).

Even if the dome idea does work, it can’t come fast enough. Scientists expect the oil to hit the coastline in a matter of days, and a dome isn’t likely to be ready for at least two weeks. Still, we have to hope that the dome will make some sort of difference — it’s the only hope for the fragile Louisiana coast.

Spill Response: Burn Baby Burn

http://dotearth.blogs.nytimes.com/2010/04/28/spill-response-burn-baby-burn/

By ANDREW C. REVKIN
As federal officials prepare to test whether they can ignite a patch of the oil slick spreading from the seafloor wreckage of the Gulf of Mexico well, seasoned specialists say the logic in pursuing this option is clear and well established by decades of testing.


Environment Canada

In 1993, Canadian and American government scientists conducted a test burn of an oil slick off the coast of Newfoundland.One of the biggest such tests was undertaken off Newfoundland in 1993. Called the Newfoundland Offshore Burn Experiment, the joint Canadian and American project concluded that combustion consumed most of the more problematic compounds and the levels of harmful compounds in smoke were below danger thresholds outside 150 yards of so of the fire zone. The water beneath the burn area showed no detectable levels of harmful compounds. I’ve appended the summary at the bottom of this post.

I spoke this morning with David F. Dickins about burning spilled oil. He’s an environmental engineer who’s a veteran of decades of spill cleanups and studies. I first interviewed him for our “Big Melt” series on the implications of the growing human push into the warming Arctic in search of oil and gas and shipping routes. (He’s done tests of oil cleanup methods that may be needed in Arctic waters — and sea ice — someday.) He’s very bullish on burning where possible:

I really believe that if there’s any possibility of burning the oil on the surface that should absolutely be carried out and attempted. There are huge net environmental benefits compared to letting it stay on the surface or hit the coast. There’s lots of evidence that there are no human health risks. After burning, there are fewer carcinogens and toxics than in the actual original oil. You really have a chance to remove 70, 80 or 90 percent of the oil. No other technique is going to take that much oil out of the environment.

Nancy Rabalais, who studies pollution impacts on coastal ecosystems and led a study of oil impacts for the National Academy of Sciences, deferred on weighing the wisdom of burning, but said that if the oil crosses the 23 remaining miles of sea and soaks the fragile coastline, substantial impacts are inevitable. “If this hits shore, with all the sea-grass beds and marshes, it will be a mess,” she told me this morning.

Here’s the Newfoundland project summary:
A group of 25 agencies from Canada and the United States conducted a major offshore burn experiment near Newfoundland, Canada. Two lots of oil, about 50 cubic meters (50 tons) each, were released into a fireproof boom. Each burn lasted over an hour and was monitored for emissions and physical parameters. Over 200 sensors or samplers were employed to yield data on over 2000 parameters or substances. The operation was extensive; more than 20 vessels, 7 aircraft and 230 people were involved in the operation
at sea.

The quantitative analytical data show that the emissions from this in-situ oil fire were less than expected. All compounds and parameters measured more than about 150 meters from the fire were below occupational health exposure levels; very little was detected beyond 500 meters. Pollutants were found to be at lower values in the Newfoundland offshore burn than they were in previous pan tests.

Polyaromatic hydrocarbons (PAHs) were found to be lower in the soot than in the starting oil and were consumed by the fire to a large degree. Particulates in the air were measured by several means and found to be of concern only up to 150 meters downwind at sea level. Combustion gases including carbon dioxide, sulphur dioxide, and carbon monoxide did not reach levels of concern. Volatile organic compounds (VOCs) were abundant, however their concentrations were less than emitted from the nonburning spill.

Over 50 compounds were quantified, several at levels of concern up to 150 meters downwind. Water under the burns was analyzed; no compounds of concern could be found at the detection level of the methods employed. Toxicity tests performed on this water did not show any adverse effect. The burn residue was analyzed for the same compounds as the air samples. Overall, indications from these burn trials are that 150 meters or farther from the burn source emissions from in-situ burning are lower than
health criteria levels.

Russia Begins Large-scale Commercial Oil Production In Caspian Sea

http://www.rttnews.com/Content/GeneralNews.aspx?Id=1284458&SM=1

(RTTNews) - Russia's largest independent oil producer, LUKOIL, has begun commercial oil production in the Russian sector of the Caspian Sea.

Prime Minister Vladimir Putin visited the Yuri Korchagin oil platform on Wednesday to mark the beginning of the oil production, Russian media reported.

The Korchagin oil field, off the coast of south-western Russia, is being developed by LUKOIL-Nizhnevolzhskneft, a subsidiary of LUKOIL.

Drilling to yield a maximum annual output of 2.5 million tons (18 million barrels) of oil and 1 billion cubic meters of natural gas is being carried out from a stationary platform installed in September last year.

It has an estimated reserves of 28.8 million tons (211 million barrels) of oil and 63.3 billion cubic meter natural gas.

It is one of the six oil and gas deposits LUKOIL discovered in the northern part of the Caspian Sea before 2005, with total reserves of 4.7 billion barrels of oil equivalent.

There was a 1.5% increase in Russia's oil output in 2009, reaching 493 million tons.

Analysts estimate that Russia ousted Saudi Arabia as the world's top oil exporter due to output quota cuts by OPEC members and Russia starting operations in three new oil fields in Siberia.

Russia boosted its federal budget revenues from energy product exports to 1.8 trillion rubles ($60 billion) in 2009, 31% more than that of the previous year.

A major share of the revenues -- 1.1 trillion rubles ($36.7 billion) -- came from crude oil exports.

by RTT Staff Writer

For comments and feedback: contact editorial@rttnews.com

Worlds Top 10 Worst Oil Spills

http://www.livescience.com/environment/Top-10-Worst-Oil-Spills-100428.html

By Remy Melina, Life's Little Mysteries Staff Writer

The oil gushing from the well where the Deepwater Horizon oil rig exploded and sank is now spreading through the Gulf of Mexico. Oil spills can kill wildlife, pollute the air and water, and alter the ecosystem for years to come. Here are some of the worst oil spills in history:

10. The Odyssey: 132,000 tons

In November 1988, the American-owned oil tanker Odyssey split in two 700 miles off the coast of Nova Scotia. The tanker spewed about 132,000 tons of crude oil into the sea and caught fire as it sank, setting the spill aflame. Because of hazardous weather conditions, the Canadian Coast Guard could not immediately reach the spill, and much of the oil burned.

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www.OilSkim.com9. The Haven: 145,000 tons

A violent explosion aboard the Cyprus-based tanker the Haven killed six members of the crew and spilled 145,000 tons of oil off the coast of Italy in April 1991. About 70 percent of the oil burned in the ensuing fire. In most oil spills, oil remains near the surface of the water, but in this spill some of it sank. Oil from the Haven was later found in ocean beds at depths of up to 1,640 feet (500 meters).

8. The Amoco Cadiz: 223,000 tons

Stormy weather drove the Amoco Cadiz Very Large Crude Carrier (VLCC) aground on the Portsall Rocks, a 90-foot deep outcrop off the coast of Brittany, France, in 1978. The ship split in two and quickly sank before its 1,604,500 barrels of oil load could be pumped from the wreck.

7. Castillo de Bellver: 252,000 tons

In August 1983, a fire aboard the Castillo de Bellver led to an explosion that caused the tanker to break in two. Oil spilled into the sea 24 miles off the coast of Cape Town, marking the largest spill to date in South Africa. Luckily, the oil caused minimal environmental damage as the direction of the wind moved the oil slick offshore, where it dissipated naturally.

6. ABT Summer: 260,000 tons

ABT Summer tanker, traveling from Iran to Rotterdam, leaked oil and caught on fire about 700 miles off the Angolan coast in 1991. The disaster killed five of the 32 crew members on board.

5. Nowruz oil field: 260,000 tons

During the first Gulf War, a tanker collided with a platform on Feb. 10, 1983, spilling approximately 1,500 barrels each day, until the platform was attacked by Iraqi planes in March and the slick caught fire. The Nowruz oil field was not immediately capped, because the field was located in the middle of the Iran/Iraq war zone. The well was finally capped by Iran in September of that year – an effort that resulted in the deaths of 11 people.

4. Fergana Valley: 285,000 tons

The Fergana Valley, one of Central Asia's most densely populated agricultural and industrial areas, was the site of the largest inland oil spills in history in 1992.

3. Atlantic Empress/Aegean Captain: 287,000 tons

In July 1979, a Greek oil tanker called the Atlantic Empress collided with another ship, the Aegean Captain, during a tropical storm off of the island of Tobago in the Caribbean Sea. The Atlantic Empress disaster killed 26 crew members and is the largest ship-based oil spill.

2. Ixtoc I oil well: 454,000 tons

The Ixtoc I oil well exploded in the Gulf of Mexico in June 1979. The oil drilling platform then caught fire and collapsed, rupturing valves and making it difficult for rescue personnel to control the damage. The spill continued until March 1980.

1. Gulf War oil spill: 1,360,000 -1,500,000 tons

The worst oil spill in history, the Gulf War oil spill spewed an estimated 8 million barrels of oil into the Persian Gulf after Iraqi forces opened valves of oil wells and pipelines as they retreated from Kuwait in 1991. The oil slick reached a maximum size of 101 miles by 42 miles and was five inches thick.

Iran leader leaves Uganda without oil deal

http://edition.cnn.com/2010/WORLD/africa/04/25/uganda.iran.oil/

Entebbe, Uganda (CNN) -- Iran's President Mahmoud Ahmadinejad left Uganda without striking a deal on the African nation's oil, President Yoweri Museveni indicated Sunday.

"We have not concluded anything on oil," the Ugandan president said at a press conference as the visit ended, apparently cutting off Ahmadinejad's answer to a journalist.

Iran's government-backed Press TV reported Sunday that the two countries signed several agreements, but did not list oil among them.

During a visit to Tehran last year, Museveni invited Iranian investors to build an oil refinery in Uganda's northwest region, which is believed to hold at least 2 billion barrels of oil.

But on Saturday he said he wanted clarification from the United States about sanctions against Iran.

"We are just students on this matter. It is a debate I have not been following," he said when asked about international pressure on Iran.

The United States and its allies fear Iran is trying to build a nuclear bomb, despite Tehran's repeated denials.

Museveni has recently sought guidance from British Prime Minister Gordon Brown and Iranian Foreign Minister Manounchehr Mottaki "to hear from them why they are in dispute over nuclear use," he said.
Video: Ahmadinejad in Uganda to talk oil "Now I'm going to engage the United States to hear their version, then come back to and consult with our African brothers whom I represent on the U.N. Security Council," Museveni said.

Uganda is a non-permanent member of the U.N. Security Council.

The country's foreign minister, Sam Kutesa, Sunday denied that Iran had tried to use an oil deal to win Uganda's backing on the Security Council.

"No!" he said, adding, "They have no leverage." Kutesa pointed out that many other countries around the world had companies that could built a refinery in Uganda.

"We are not the agents of Iran or anybody else... Nobody can blackmail us about that oil -- including the Iranians," he said.

Museveni said the day before that Uganda will be not be doing the bidding of the United States, either.

"We are not agents of the West on the U.N. Security Council -- we are representatives of Africa and we follow what Africa decides," he said.

The British-Irish firms Tullow Oil and Heritage Oil have already signed contracts with Uganda to develop its oil reserves, the non-profit group Platform said in a highly critical report in February.

The contracts "place profits before people," in the words of the report's title. Platform called for more environmental protections, greater accountability for military forces protecting oil installations, and more equitable distribution of revenues.

"We are not agents of the West on the U.N. Security Council.

Ahmadinejad, who arrived in Uganda on Friday to seek support for his country's controversial nuclear program, said he discussed the sanctions, which he described as a "joke."

"We want Uganda to understand that our nuclear program is for peaceful purposes, but Iran is being denied the right to develop it on baseless suspicions by the West," Ahmadinejad said.

Earlier, during a state dinner, Ahmadinejad accused the West of trying to deny countries the right to nuclear energy.

Museveni, on the other hand, called for a "nuclear weapons-free world," defending nations' rights to have access to nuclear technology, but only for "peaceful purposes" such as medical uses.

"Nuclear weapons are dangerous for humanity -- even more dangerous than all the other previous weapon systems," Museveni said. "We should, therefore, work for a nuclear weapons-free world. This means that those who have these weapons should work to get rid of them under an internationally agreed and verifiable treaty."

Uganda was one of two African nations Ahmadinejad visited this week. He also made a two-day trip to Zimbabwe, where he launched a tractor production line and attended a trade fair.

Zimbabwe President Robert Mugabe said he and Ahmadinejad have the "same policy and same stance -- anti-imperialist, anti-colonialist and a stance to protect our sovereignty and our right of ownership of our resources."

CNN's Ben Brumfield and David McKenzie contributed to this report.