Monday, May 23rd, 2022

Gulf States Mobilize for Valdez-Like Oil Spill

April 30 (Bloomberg) — U.S. Interior Department inspectors began boarding deep-water platforms in the Gulf of Mexico and Louisiana mobilized the National Guard as an expanding oil slick that may rival the Exxon Valdez spill approached the coast.

Future drilling must safeguard against a recurrence, President Barack Obama said today in remarks at the White House, promising a “thorough review” of the BP Plc well leak the government estimates is spewing 5,000 barrels a day.

Interior Secretary Ken Salazar was ordered to report in 30 days the additional precautions needed, Obama said. The department’s Minerals Management Service, regulator of offshore drilling, is focusing on the blowout preventer, equipment used by all drillers that should have prevented the spill and an explosion that resulted in the death of 11 people, Mike Saucier, an agency spokesman, said yesterday at a press conference.

“I continue to believe that the domestic oil production is an important part” of U.S. energy policy, Obama said in remarks at the White House. “But I’ve always said it must be done responsibly, for the safety of our workers and our environment.”

No additional drilling will be authorized until its determined what happened aboard the rig, owned by Transocean Ltd., White House senior Advisor David Axelrod said today on ABC’s “Good Morning America.” U.S. Attorney General Eric Holder dispatched a team of lawyers to New Orleans to meet the U.S. Attorney and spill responders.

Coastal Waters Closed

A sheen washed ashore on the Louisiana coastline last night, the Associated Press reported. Oil may hit Mississippi tomorrow, Alabama in two days and Florida in three, according to a government forecast.

Louisiana closed some coastal waters to shrimping and expects to close its entire eastern coastline to fishing to protect health and safety, said Randy Pausina, spokesman for the Department of Wildlife and Fisheries.

At the rate the National Oceanic and Atmospheric Administration estimates oil is escaping from the well, the volume of the spill would exceed Alaska’s 1989 Exxon Valdez accident by the third week of June.

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

BP Shares Fall

BP dropped for a second day in London trading after an analyst estimated that its cost for the spill may reach $8 billion before taxes. The shares dropped 8.7 pence, or 1.5 percent, to 575.5 pence. BP, the largest oil and gas producer in the Gulf of Mexico, has lost 10 percent of its value since the rig exploded April 20.

BP and partners Anadarko Petroleum Corp. and Mitsui & Co. may have to pay as much as $12.5 billion before tax to control and clean up the oil spill, Sanford Bernstein & Co. analyst Neil McMahon said in a note to investors today.

“The cost for BP will be heavily influenced by how much oil reaches the Gulf coast and where this occurs,” McMahon wrote.

Louisiana Governor Bobby Jindal declared a state of emergency and requested a federal disaster declaration to aid commercial fisherman, providing funds and potentially suspending loan repayments to the government.

National Guard

Jindal, a Republican, also requested federal funding for 90 days of military duty for as many as 6,000 National Guard troops and demanded extra oil barriers from BP and the U.S. Coast Guard to protect wildlife reserves that nurture a $1.8 billion seafood industry, the richest in the U.S. behind Alaska.

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

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

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

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

Permanent Solution

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

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

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

Sampling Water

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

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

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

The secretaries of the Interior and Homeland Security departments will join the head of the Environmental Protection Agency to visit the site today.

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