Clear Answers on Gulf Oil Spill Elusive

By John W. Schoen
|  Tuesday, May 4, 2010  |  Updated 1:11 PM PDT
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Clear Answers on Gulf Oil Spill Elusive

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NEW ORLEANS - APRIL 28: A boat makes its way through crude oil that has leaked from the Deepwater Horizon wellhead in the Gulf of Mexico on April 28, 2010 near New Orleans, Louisiana. An estimated leak of 1,000 barrels of oil a day are still leaking into the gulf. (Photo by Chris Graythen/Getty Images)

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The ongoing effort to contain a massive oil spill in the Gulf of Mexico is proceeding on multiple fronts, and the full impact on the region won’t be known for some time.

Here’s what’s known about the spill — and what’s not — so far:

What caused the accident?
The Deepwater Horizon was an exploratory rig that drilled down about 18,000 feet (according to BP) to get to pockets of oil and gas under pressure. At some point a surge in pressure overwhelmed the system designed to contain it and the oil and gas ignited.

The explosion on April 20 killed 11 workers on the rig, which eventually sank after burning for days.

A Congressional committee has already announced that it will investigate the cause of the accident; various other agencies are conducting separate investigations.

A major focus of the investigation will be the failure of a “blowout preventer” installed at the opening of the well. The probe will look at work done the day before the explosion to cement cracks in the ocean floor around the pipe that carries oil to the surface. Several other pieces of equipment designed to stop the flow of oil also failed.

Investigators will also have to unravel who is responsible for the failure. Although BP has overall responsibility, the drilling rig is owned and operated by another company, Transocean. A third company, Halliburton, did the cement work.

 

How big is the spill?
As of Tuesday, the National Oceanic and Atmospheric Administration's map shows the spill covering an area more than 60 miles across, with the heaviest concentrations extending roughly 15 miles from the source of the spill. So far, relatively small amounts have reached land. Shifting winds have complicated forecasts about where the spill will make landfall.

The spill continues to expand, but it's not clear exactly how fast. BP was criticized early on for understating how fast oil was flowing from the well, but the U.S. Fish and Wildlife Service estimates oil is flowing at a rate of about 210,000 gallons a day. As of Tuesday, that would put the total at about 3 million gallons — though some of that has been recovered or dispersed. The 1989 Exxon Valdez oil spill amounted to about 11 million gallons.

How does BP plan to stop the oil from flowing?
BP is working on several solutions. One involves drilling a “relief” well next to the original to intercept the oil before it flows to the surface. That’s not easy: the target is only 7 inches wide and it's several miles deep in the seabed under 5,000 feet of water. It's like threading a needle in the dark with your toes. Even if it succeeds in hitting the bull's-eye, the new well will take more than two months to drill.

In the short term, BP is also trying to deploy a “dome” to capture the oil as it comes out of the ocean floor. That involves dropping a giant steel box over the well and pumping the oil from the box up to the surface where it can be collected in a tanker. The technique has worked before, but it’s never been tried in water as deep as the BP well.

What’s being done to clean up the mess?
An armada of ships — some 200 barges, skimmers, tugs and other vessels — is attacking the slick several ways. Some are working to collect the oil from the surface. As of Tuesday more than a million gallons of oil-water mix had been picked up. More than 40 miles of booms have been laid to try to contain the oil until it can be recovered or dispersed. The slick is also being attacked by airplanes dropping dispersant. BP has estimated the cost at about $6 million a day.

The Coast Guard has also tried burning off some of the oil. All of these efforts have been hampered by bad weather and heavy seas. The weather seems to have calmed, however, and clean-up crews were expecting several days of quiet seas.

 

Who’s going to pay for the damage?
BP is on the hook for the cost of the cleanup, and already faces dozens of lawsuits from commercial fishermen, tour boat operators and beach front property owners. The company has also set up a claims center at 1-800-440-0858.

It’s not clear how much the company will have to pay out for those damage claims. The Oil Pollution Act, passed after the Valdez spill in 1990, created a federal trust fund with taxes paid by oil companies. That law caps BP’s liability at $75 million, but a bill introduced in the Senate Monday would raise that to $10 billion.

A lot will depend on the final determination of what caused the accident; sorting out liability between BP and Transocean could involve a protracted legal battle. BP CEO Tony Hayward said Monday that “this wasn’t our accident.”

 

How much damage is the spill going to cause?
The impact is potentially catastrophic; the Gulf coast is still recovering from Hurricane Katrina and marine wildlife is already struggling with various manmade stresses. Commercial fishing represents a $3 billion industry.

But a lot depends on the weather, the ongoing clean-up effort and how quickly the flow of oil can be stopped.

What’s this going to do to oil and gasoline prices?
In the short run, not much. The amount of oil lost is a drop in the barrel of Gulf production, which so far hasn’t been affected by the spill or the cleanup effort. If the spill spreads, it could slow down the shipment of oil to Gulf Coast refineries, which produce roughly half of all gasoline and diesel consumed in the U.S. There’s no sign of any production slowdown so far. 

Oil prices have been rising for other reasons: the economic recovery is boosting demand; and investors have been big buyers of oil, which has helped drive up prices over the past year.

 

Longer term, the spill could bring more drilling restrictions in the Gulf, which could slow the expansion of new production. But it’s hard to predict how much impact that would have on prices.

Is there any evidence that the accident was caused by sabotage?
None whatsoever, but that hasn’t stopped people from speculating. Some conspiracy theorists have suggested the rig was blown up to prompt restrictions on offshore drilling or stall legislation on carbon cap and trade.

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