BP and the Unmitigated Disaster

By Alan Caruba

The Gulf of Mexico could turn into a giant dead zone if some means cannot be found to staunch the flow of oil and toxic gases emerging from the damaged well beneath the Deepwater Horizon. Industry insiders who understand the engineering of wells are beginning to speak openly among themselves of an unmitigated disaster.

It is essential to understand that the oil business is like no other. Oil companies that drill too many dry holes go out of business. Oil is too often in places run by despots and gangsters that would make Hollywood villains seem tame by comparison. Oil companies must deal with them even at the risk they will renege on their promises; something they do a lot.

The oil business depends on technology that attempts to give geologists an idea of what is hidden way below the surface of the land or water. It often means having to team up with your competitors to finance an operation such as building a pipeline so both can move their crude oil to refineries.

Beyond that, oil companies do not set the price of oil. OPEC does not set the price of oil. Traders do that and they do it 24/7. You can lose money by not having enough oil and you can lose money from having too much oil that has to be stored until the price improves.

With the exception of a tanker spill in the 1980s, among the major oil companies ExxonMobil has an extraordinary record of safety. Its company ethos is such that decisions are made only after serious consideration and its emphasis has always been on managing to achieve the best results with the least amount of risk, primarily by paying attention to good practices. Its management is not flashy and does not seek the spotlight.

In contrast, British Petroleum has always been about risk and about cutting corners. Prior to CEO Tony Hayward who was pushed aside by its board of directors after two months of saying the wrong thing at the wrong time during the Deepwater Horizon disaster, BP was largely a reflection of John Browne, an egotist who was driven to build the company through mergers and buy-outs. His interest in the engineering and technological aspects of the business was minimal.

As Tom Bowers, the author of “Oil: Money, Politics and Power in the 21st Century”, put it, Browne’s “mantra of ‘more for less’ to boost BP’s share price was a poisoned chalice.”

The result was that BP routinely paid multi-million dollar fines for breaking U.S. environmental and safety laws, including admitting to outright fraud. No other oil company has a comparable record of safety violations. In two separate incidents prior to the Gulf oil rig explosion, 30 BP workers had been killed and more than 200 were seriously injured.

By skimping on safety a Texas City refinery explosion not only dealt a blow to BP’s reputation, but the estimated minimum cost in lost profits and compensation was calculated to be $4 billion. BP had decided to save money by not insuring the facility against the possibility of such an accident. By extension, it increased the public’s distrust of the oil industry.

In an article about its safety record, it was noted that Occupational Safety and Health Administration statistics showed that BP “ran up 760 ‘egregious, willful’ safety violations,” while Sunoco and Conoco-Phillips each had eight, Citgo had two and ExxonMobil had only one such citation.

Oil companies run their own trading operations and BP ran afoul of the law when it conspired to manipulate the propane gas market, ripping off $53 million from consumers who depended on it to heat their homes.

BP through its lobbyists and corporate representatives worked to influence Congress and reportedly played “a major role in drafting the Kerry-Lieberman bill”, the Cap-and-Trade Act currently waiting for a vote in the Senate. It is based on blatantly false "global warming science" and is a tax on energy use.

Under the leadership of John Browne, BP more than any other oil company, actively sought to re-brand itself from being an oil company to being an advocate for the environment, using an advertising motto, “Beyond petroleum” and supporting the fraudulent “global warming” hoax. With Browne at the helm, he promised that BP would invest $1 billion in solar energy by 2010 and invest $8 billion in alternative energies over ten years.

It did not, apparently, invest in the kind of engineering and inspection of rig construction that might have prevented the explosion on the Deepwater Horizon. The event and previous explosions at its refineries were the result of years of an internal BP philosophy that focused on profits before safety. Whether it was accident prone refineries or corrosion in the Alaska pipeline, BP cut corners.

Even when Browne reached the mandatory retirement age of 60 in 2008, he did everything in his power to avoid it. He had run out of support in the company he had built through his quest to be among the largest, if not the largest, oil company in the world. By then, however, it was too late to save BP from what, in hindsight, was an inevitable disaster.

Suffice it to say that everything that could go wrong following the Deepwater Horizon explosion has gone wrong. The oil industry has never been faced with an engineering failure of this magnitude.

For the creatures of the Gulf, it is an ecological disaster of biblical proportions. For the coastal states affected, it is an economic disaster that will rapidly eat through the $20 billion BP has pledged to set aside for remediation over the next five years. The losses to the nation as a whole are probably incalculable at this point.

Industry insiders believe that neither BP, nor the Obama administration, are telling the public the truth, nor the full ramifications of what will occur if the blowout preventer, all 450 tons of it, literally tips over deep below the waters of the Gulf.

“It won’t be long after that the entire system fails,” predicted a writer in Oil Drum.com. “BP must be aware of this. They are mapping the sea floor sonically and that is not a mere exercise. Our government must be aware too, but they are just not telling us.”

It is essential to keep in mind that this is a BP problem. It is not something for which the entire oil industry should be blamed. America runs on oil and, if the politicians will just get out of the way, we shall have it.

© Alan Caruba, 2010

It Doesn't Matter What Obama Says About the Oil Spill

By Alan Caruba

It doesn’t matter what President Obama says from the Oval Office Tuesday evening. He can lay out all manner of things that BP must do in the wake of what is shaping up to be a major ecological disaster, but he and Congress are also working to put a cap on BP’s financial liability. Both know that this leak will ultimately cost upwards of a trillion dollars or more to ameliorate.

It’s not that BP isn’t liable for the leak, but rather that it had the great, good fortune to tap what in the oil industry are called “elephants”, discoveries of huge multi-million barrel reserves. It had the bad fortune to have the huge rig blow up and a leak so far down only robots can attempt to shut it off.

What one rarely hears about are the “dry” holes that oil companies drill. They don’t make news, but they spell disaster for an oil company that does it too many times. As Tom Bower says in his timely new book, “Oil: Money, Politics, and Power in the 21st Century”, “In recent years, dry holes had wrecked major oil companies. The skeletons of Gulf, Texaco, Arco and other past icons mercilessly testified that only the fittest and bravest survived.”

The amount of investment in a single hole is significant. When that hole is in deep water, a billion dollars can be spent at a rate of hundreds of thousands a day to rent a rig. Naturally, the oil companies use every form of technology available to geologists to decide where to drill, but even then it is a high risk gamble.

To cite one BP gamble, when in 1969 Arco drilled in Alaska it only found non-commercial gas. BP geologist, Jim Spence, concluded the oil was closer to the rim of a potential reservoir instead of its “sweet spot.” The result saved BP. The company then put its chips on the Gulf of Mexico. It became the largest acreage-holder and owned a third of all the oil discovered there.

All the major oil companies knew that the Gulf of Mexico represented a treasure of oil, but it was BP that rolled the dice the most. In 2005, one deep water rig called Thunder Horse was nearly ready when Hurricane Dennis hit the Gulf and it had to be abandoned. When the engineers returned, they found flaws in some of its valves. In hindsight, it foretold the problems encountered by the Deepwater Horizon.

The irony was that BP’s latest discovery was the mother lode of oil reservoirs. Vladimir Kutcherov is a Russian specialist in the theory of the abiogenic deep origin of oil, the view that it is not created from the activity of living organisms; that oil is the result of dead dinosaurs.

Oil, it would appear, is created deep within the Earth. Kutcherov believes that BP drilled into “a migration channel”, a deep fault on which hydrocarbons generated in the depth of the planet migrate to the crust.

The other irony is that the BP disaster should put an end to the widely disseminated “peak oil” theory that says the Earth is running out of oil. If Kutcherov is right—and I think he is—that means the “hole” that President Obama and BP wants “plugged” is comparable to trying to plug a volcano. The effort could take months, if not years.

That is why whatever President Obama tells Americans and the rest of the world is probably going to be something far less than the truth. Obama faces some fearful political consequences no matter what he says. BP is heavily invested in America. It employs several thousand. It pays huge royalties. Many British pensioners depend on its dividends as do other investors.

The unions to which Obama owes much for his election are resistant to allowing non-union workers to help protect against the growing spill affecting Louisiana, Mississippi, Alabama, and Florida. The spill also threatens to reveal how closely associated BP was with many leading environmental organizations.

As F. William Engdahl, the author of “A Century of War: Anglo-American Oil Politics and the New World Order, points out in a June 11th Global Research commentary, “”The deafening silence of leading green or ecology organizations such as Greenpeace, Nature Conservancy, Sierra Club and others may well be tied to a money trail that leads right back to the oil industry, notably to BP.”

“Leading environmental organizations have gotten significant financial payoffs in recent years from BP in order that the oil company could remake itself with an ‘environmentally friendly face’, as in ‘beyond petroleum’, the company’s new branding.”

Among those groups have been the Nature Conservancy, Conservation International, the Environmental Defense Fund, Sierra Club, and Audubon.

The drive to drill in deep waters off shore was in part driven by the resistance by environmental organizations to doing so far more safely on land. The refusal to allow drilling in Alaska’s ANWR is a glaring example. The fact that oil companies began decades ago to look far afield of the U.S. and its forbidden offshore reserves of oil is another.

A president who has already managed to destroy whatever popularity he had when he took office a scant year and a half ago is not likely to survive the BP disaster no matter what he says or does.

All Americans must be especially watchful for an effort by Obama to impose what was called “Cap-and-Trade”, then called a “climate” bill, and now is touted as a “Jobs” bill. It will require a major effort to thwart the Senate from signing yet another suicidal piece of legislation that would impose huge taxes on all energy use.

As always, Mother Nature will have the final word.

© Alan Caruba, 2010

BP, PR, and the Oil Spill

By Alan Caruba

I have plied the magic arts of public relations since I left journalism in the late 1960s. There was no difficulty making the transition. PR is a form of journalism insofar as it packages information, but it adds the element of advocacy. The objective is the maintenance and protection of a good reputation and good will.

By contrast, the media’s natural instinct is to go for the kill. Bad news sells and there is always plenty of bad news.

I built my PR practice telling clients that they must tell the truth. The worst kind of PR person is the one who is so eager to “spin” the story they forget that telling lies always, always, always comes back to bite them and their client.

I tell you this as someone who has watched the BP oil spill story unfold with the same fascination that a reticulated python has for a prey that is about to become dinner.

The irony is that BP, taking a page from the 1989 Exxon Valdez spill, avoided its mistakes. BP went out of its way to be as open to questions and to provide as much information as it thought it reasonably could. I have no doubt that BP lawyers immediately advised its management to keep its mouth shut, say as little as possible.

Lawyers always advise clients to say nothing. PR people always advise them to get out in front of the public as quickly as possible with a statement, followed by an endless series of advisories.

No one has said a word about the fact that no oil company has ever had to cap a deepwater well at such depths. Just consider how many ways BP has tried thus far.

I have a friend who, after graduation from West Point and service, spent fifty years in the oil industry. He began as a petroleum reservoir engineer and later as an oil and gas attorney.

In a discussion of the event with him, he said, “No one yet has noted that BP drilled into a monstrous oil and gas reservoir; a reservoir which could replace much of our imported foreign oil. Such a well dwarfs the best Saudi wells.”

That’s a major part of the story and that is why the oil spill is so large.

There appears to be enough oil out there under the Gulf of Mexico to free the United States from having to import 60% of the oil it uses, but only if the federal government lets oil companies drill for it. This applies to all our oil reserves, on-shore and off.

When it comes to bad PR, there is seldom anything worse than the photos of oil-drenched birds struggling for life. Here, though, is the other side of the story that is rarely reported by the mainstream press, so hats off to the St. Petersburg Times PoliFact.com.

“The latest independent reports estimate the number of birds killed by wind turbines at 100,000 per year. That’s according to a 2007 report from the National Research Council called ‘Environmental Impacts of Wind Energy Projects.’” And that may be a low estimate.

Those wonderful “clean energy” wind turbines that the Greens and the Obama administration are touting routinely kill more birds than the BP oil spill ever could or will. One of the dependable “green jobs” around wind turbines involves picking up the carcasses of dead birds.

PR experts are already weighing in on what BP has done right or wrong. I found one fascinating tidbit of news that BP has hired “a former U.S. Department of Energy official as head of U.S. media relations, as it fights to defend its reputation in the face of political attacks and public rage over its oil spill in the Gulf of Mexico.” Anne Kolton is the former head of public affairs at the DOE.

This takes on significance in light of the way President Obama is actually criticizing BP for its advertising campaign to explain what it is doing and to apologize to the public for the spill. That is precisely what BP should be doing!

Meanwhile, the president has been vacillating between trying to look like he’s been doing something “since day one” while at the same time putting all the blame on BP. That is grade-school petulance and incompetence.

Fraser P. Seitel, a communications consultant, author and teacher, writes for Jack O’Dwyer’s PR Newsletter, one of the most respected trade publications. Seitel wrote that, “BP has tried admirably to be candid and transparent in dealing with a terrible situation.”

Seitel cited two critical PR errors. He gave BP low marks for offering predictions early in the spill as to how much would be involved. In a crisis like this one, you never make predictions. The other error was the failure to tamp down expectations as to when the well could be capped. Other experts have discussed the hits taken to BP stock and, ultimately its reputation.

Say “Exxon” and the only thing the public thinks of is “Valdez.” There is much more to this corporation, but don’t expect to find it in the nation’s press. And, yes, Exxon’s handling of the spill in 1989 is now a textbook case of what not to do.

The BP oil spill will cause immeasurable harm to those immediately affected by it, the beaches, the tourism, and the fishing industry of the states where the oil is washing up. There is no way, nor reason, to minimize that. Keep in mind, however, the well will be capped. The cleanup will continue. The wildlife will return. The spill will become history.

The still untold story, however, is that there is an unimaginably huge amount of oil in the U.S. territorial waters of the Gulf and this is true also for the vast continental shelf of Alaska and the lower 48. That’s the good news.

© Alan Caruba, 2010

The Invisible Dr. Chu

By Alan Caruba

While we all are now familiar with Secretary of the Interior, Ken Salazar’s remark about keeping the government’s boot on the neck of BP, one of the most remarkable aspects of the oil spill drama has been the near absence of Dr. Steven Chu, the Secretary of Energy.

Other than an appearance MSNBC’s Rachel Maddow Show, the Nobel Prize laureate for physics has not been the designated spokesman for the Obama administration. That job has fallen to Carol Browner, the energy and environment advisor to the president. One might think the man overseeing the Department of Energy might logically also be addressing the oil spill, but no.

Perhaps the answer can be found in the fact that Secretary Chu has been double-dipped in all the environmental lies about global warming and no one has told him that the Earth has been cooling for the past decade or that a huge batch of leaked emails is evidence of massive data tampering to support the global warming hoax.

Well, he has a lot on his plate. It’s hard to be Secretary of Energy when you pretty much hate most hydrocarbons, coal, oil and natural gas, blaming them and the six billion people on Earth for generating the greenhouse gas, carbon dioxide. That carbon dioxide has nothing to do with the Earth’s average mean temperature is one of those details he’s overlooked.

As Secretary Chu was saying back in September 2008, “Coal is my worst nightmare.” Well, if your resume sported the fact that you headed up the “Helios Project” (named for the Sun) when you were working at the Lawrence Berkeley National Laboratory, focusing on biofuels, you too might take a dim view of the other sources that represent the energies everybody uses.

Before the BP oil spill accident, Secretary Chu was unhappy that the United States was dependent on oil (like every other nation on Earth.) The Secretary said that “most proven reserves…are now off-shore. It will cost more to extract from tar sands and (there would be) more CO2 emissions.” Earth to Dr. Chu! There’s millions of barrels of oil in Alaska, but it is off limits for fear a caribou might be harmed.

The Secretary of Energy is no big fan of nuclear power either. He cites waste problems, but apparently is unaware that the huge billion-dollar depository, Yucca Mountain in Nevada, was abandoned by the Obama administration despite having been built specifically for storing nuclear waste.

It’s more like wasting money than nuclear waste, but the United States Recovery Act, the ill-famed stimulus act, allocated $80 billion to research and use of “clean” energy such as wind and solar, and to “efficiency.” The problem is that, without a dependable supply of electricity, all the efficiency in the world will not make much difference if the lights go out.

Perhaps it’s not a good idea to send out Secretary Chu to discuss the oil spill. As reported in the May 27, 2009 edition of The Times (UK), at the opening of the St. James’s Palace Nobel Laureate Symposium, he suggested that painting the world’s roofs, roads and pavements white would be a great way to cut carbon emissions. They would “reflect up to 80% of the sunlight that falls on them.” He added that “a global initiative” would be a way to save us from global warming.

Only there is no global warming, carbon dioxide has nothing to do with the climate, and one rig out of more than three hundred in the Gulf has sprung a leak. Ironically, years ago when he was an academic at University of California-Berkeley, he received a winning bid for a $500 million grant funded by BP to study something or other.

Too many years ago than I want to recall, I was the publications director for a major northeastern institute of technology. It was filled with engineers who actually know how to make things work, build bridges, fix oil leaks and such. There were also some brilliant physicists on the faculty. The latter had trouble parking their cars between the yellow lines and other mundane tasks.

© Alan Caruba, 2010

And the credit goes to....

This is going to be messy

Obama's News Conference: Blah, Blah, Blah

By Alan Caruba

5/27/10 - The President, after a lapse of 309 days, held a news conference Thursday. It came shortly after news that earlier in the day the director of the Mineral Management Service, Elizabeth Birnbaum, had either resigned or been fired. Obama professed to not know the circumstances. Yeah. Sure.

What we do know is that Obama’s method of dealing with a news conference is to talk each question to death. In addition, he makes sure that we all know that, no matter what the problem under discussion, it was all George W. Bush’s fault.

Watching Obama’s head swivel back and forth between the TelePromters as he read his opening prepared statement for the first fifteen minutes or so was mildly comical and it occurred to me that he has become a real life parody of a Saturday Night Live parody, the latter of which is at least entertaining.

The press conference was devoted largely to blaming oil company, British Petroleum, for the mess while, at the same time, saying that “BP is acting at our direction.” This is known as having it both ways. Somehow, knowing that the federal government is in charge is not all that reassuring. And, of course, the real problem began “under the previous administration.”

The president then used one of his snore-inducing answers to segue to the usual blather about a “clean energy” economy. This is pure fiction. America and the rest of the advanced nations of the world depend entirely on oil, natural gas, and coal. Long after all of us and our grandchildren are dead these hydrocarbons will still be used.

By then, however, Obama’s nonsense about clean energy jobs will have been long forgotten. They don’t exist now and they will not until the last drop of oil is extracted, the last cubic meter of natural gas, and the last lump of coal is dug from the ground. Wind and solar energy is largely a huge fraud based on the even bigger fraud of “climate change.”

And of course the President took the opportunity to push the legislation before the Senate that would put the federal government in charge of who gets energy, how much they get, and how much they will pay for it. Using the bogus claim that carbon dioxide is a threat to human life the EPA is currently trying to gain control all energy use. Cap-and-Trade, a huge tax, would destroy what little hope is left for the economy to recover.

The highlight of the conference for me was when the insane old crone, Helen Thomas, asked about Afghanistan after Obama had seemingly exhausted the subject (and the audience) on the topic of the Deepwater Horizon oil rig disaster.

Later questions dealt with the Arizona law and the White House criticism of it and border security. Obama used them to push amnesty for illegal aliens without actually saying amnesty. Meanwhile, more and more states are fashioning their own version of the Arizona bill in lieu of the federal government’s failure to stop illegal aliens. Amnesty is a strictly Democrat “answer” to the problem.

Responding to a question about the oil spill, the President earlier had said, “I intend to use the full force of the government to protect our fellow citizens” on the southern state borders affected by the spill. One could only wish that he had the same resolve regarding the thousands of illegal Mexicans and “others” that continue to pour across.

The issue of a possible White House bribe to a candidate to drop out of the Pennsylvania primary race got danced away with the usual assurances from what we were told was going to be the most transparent White House ever.

I feared for my sanity after an hour and stopped watching and listening.

© Alan Caruba, 2010