Federal judge Barbier ordered Anadarko, a non-operated partner in the Macondo well in the Gulf of Mexico when in blew out in 2010, to pay a fine of $159 million for its role.

Today, the Obama administration cancelled planned lease sales in the offshore Arctic.  Apparently (and thankfully) offshore drilling above the Arctic Circle is dead for the foreseeable future.



LNG Export Wave Dies on the Vine

Interesting article from gCaptain about LNG export projects dying on the vine.

Tonight at 9:50 pm will be the 5th anniversary of the worst blowout in US history that took the lives of eleven men and spilled over 5 million barrels of oil into the Gulf of Mexico. At the height of the crisis in the late spring of 2010 we, as a society, had a moment in time to grapple with our energy future fueled by an insatiable appetite for hydrocarbons. The moment passed, and we failed seize that moment. In true form our elected leaders simply kicked the can down the road, confident in the short memory and shallow engagement of the American electorate in issues that are critical and generational to all of us. After a brief interlude and re-arranging of deck chairs, the US government resumed issuing deepwater drilling permits with no substantial improvements in drilling technologies or requirements.

Today, BP is still in court fighting the US government about its own culpability in the blowout, and even went all the way to the Supreme Court appealing the financial settlement agreement that it had negotiated three years before, claiming the company didn’t really mean to agree to what it agreed to in the original settlement. The Court rejected it’s appeal last December. Government agencies, as well as the press, have gone easy on BP in recent years, having long since moved on to the latest contestants on The Voice and breathlessly reporting on the ebola outbreak in Africa, at least up to election day last November.

BP’s biggest accomplishment since the blowout? Succeeding in obfuscating the amount of oil that flowed into the Gulf of Mexico for the 87 days in 2010. The amount of oil that fouled the Gulf will determine the amount of the fine that BP will ultimately pay. Even though BP had equipment on site in the Gulf to contain the entire flow of the well, BP never actually captured (or measured) 100% of the flow. Not measuring total flow allowed BP to argue that we really couldn’t calculate the actual number of barrels that spilled, and that argument worked. Consensus from the scientific community was that the well flowed over 5 million barrels into the Gulf (4.2 million after collection efforts). BP argued that mysteriously it was only 2.5 million barrels after collection. In January, Judge Barbieri in New Orleans split the baby, calling it 3.2 million barrels. The lower number will save BP billions of dollars in fines. After getting a huge break from the court, BP, of course, is appealing. The company is also arguing that its US unit can only afford to pay $2.3 billion or it will go insolvent, ignoring it’s parent’s global presence and resources. The court battles continue.

As long as we burn hydrocarbons to fuel our economy, and that is for the foreseeable future, we must find those hydrocarbons more safely. That includes extreme deepwater environments where the margin for error is narrow, if not zero in certain conditions. Earlier this month, almost 5 years after the BP disaster, the BSEE (Bureau of Safety and Environmental Enforcement) issued proposed rules touting improved safety standards, but these rules really just codify current drilling practices adopted after the blowout. It does improve blowout preventer centering capability, a key failure in the BP blowout, and increases accumulator size that increases capability to close the BOP. It also mandates redundancy in shear rams by mandating a minimum of two shear rams in the stack. All that helps, but the real problem here? Congress. Congress has been MIA since the 2010 elections, killing all legislation to put new rules into law or increasing the statutory limited for liability which is still pegged at $75 million as it has been since adoption in 1990. As long as Congress shirks its responsibility to govern, all these changes made to offshore drilling safety can easily be undone by a future president more friendly to the oil and gas industry.

We are at the 5 year mark from this tragedy. Unlike virtually every other developed country on the planet, there have been no proposals from our government for comprehensive US energy policy. Many states are seeking to undo clean air standards and kill alternative fuels including wind and solar. With oil price now in a 50% decline, burning of hydrocarbons continues unabated, and our politicians are clearly more concerned for their own re-election and satisfying their largest donors who are contributing into huge dark pools of money than actually governing. I fear that we are, once again, at risk for another Macondo like event. When (not if) it happens again, my fervent hope is that the American electorate finally wakes up and demands accountability from those who represent us. I’m not optimistic. I mean, after all, Dancing with the Stars is on tonight.

Note: The Great Invisible, the award winning documentary about the the BP oil spill and its aftermath airs tonight on PBS’s Independent Lens. The film was produced by Peabody winner Margaret Brown. I was proud to play a small part in the making of the film.

Cross posted on the Huffington Post.

Pemex Extinguishes Platform Fire

Pemex announced last night via Twitter that the fire on their Bay of Campeche platform had been extinguished and that there was no oil spill.  The platform  was a processing facility and had no wells directly connected.

Platform Explosion in the Bay of Campeche

Pemex has confirmed that 4 workers were killed and 2 injured in a fire on a production platform in the Bay of Campeche off of the Yucatan Peninsula in Mexico.  Water there is generally pretty shallow, around 100 feet deep, and well control is usually performed above water level.  The platform is still on fire and 8 fireboats are battling the blaze.

We’ll keep following the story.



Saudi Prince Alwaleed bin Talal said in an interview yesterday that “oil is never going back to $100.”  Let me translate: “We are sick of Americans and Russians taking our market share, and we’re taking it back forever.”  These were strong words from one known to publicly disagree with his government, and whose personal wealth has been estimated at over $20 billion.

Continued weak oil prices are seriously damaging US energy companies with companies like Breitburn Energy, Goodrich Petroleum, and Continental Resources among it’s biggest losers in recent months.  I remain very bearish for several reasons…the Saudis’ apparent serious resolve to reset the markets, downward trend in heavy hydrocarbon demand, and the high break-even costs for unconventional resources.  I believe we are in for a long haul here.

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