Saturday, May 8, 2010

Probable Facts of Oil Spill in Gulf of Mexico

Probable Facts of Oil Spill in Gulf of Mexico

Current numbers as per Friday April 7th 2010

More than 5,000 barrels of oil have poured into the Gulf of Mexico since a deep-water drilling rig leased to BP exploded, caught fire and sank last week. The Oil spills are estimated at a rate five times that suggested by initial estimates of a thousand barrels a day, based on underwater cameras that recorded the flow from leaks 5,000 feet (1,524 meters) below water.



According to the U.S. National Oceanic and Atmospheric Administration (NOAA), evidence points to the spill being five times worse—about 5,000 barrels a day.


Rear Adm. Mary E. Landry of the Coast Guard said a scientist from the National Oceanic and Atmospheric Administration had concluded that oil is leaking at the rate of 5,000 barrels a day, from observations made in flights over the slick, studying the trajectory of the spill and other variables.


Wind patterns may push the spill into the coast of Louisiana. Part of the oil slick was only 16 miles offshore and closing in on the Mississippi River Delta, the marshlands at the southeastern tip of Louisiana where the river empties into the ocean.


In-Situ Burn: On Wednesday May 5th 2010 Cleanup crews began conducting an in-situ burn, a process that consists of corralling concentrated parts of the spill in a 500-foot-long fireproof boom, moving it to another location and burning it. Such burning also works only when oil is corralled to a certain thickness. Burns may not be effective for most of this spill, of which 97 percent is estimated to be an oil-water mixture. Until Wednesday 5th may 2010, the well had been estimated to be leaking 1,000 barrels, or 42,000 gallons, each day.

The response team has tried in vain to engage a device called a blowout preventer, a stack of hydraulically activated valves at the top of the well that is designed to seal off the well in the event of a sudden pressure release — a possible cause for the explosion on the rig.

The pressure of the oil coming from below might be so great that the valves cannot make an adequate seal. Or in the case of a shear ram, which is designed to cut through the drill pipe itself and seal it off, it might have encountered a tool joint, the thicker, threaded area where two lengths of drilling pipe are joined.


Assumptions of Continued Spillage

Friday 7th May 2010: Around 210,000 gallons of oil are pouring into the Gulf each day which is not close to the 11 million gallons of oil leaked into Alaska's Prince William Sound by the Exxon Valdez tanker 20 years ago. But if the leaks aren't repaired soon, the BP spill may overtake the Exxon Valdez tragedy in volume by the third week of June 2010.

The oil slick from the April 20 2010 explosion and blowout of the offshore oil rig Deepwater Horizon continues to affect the Louisiana coast near the mouth of the Mississippi River, and along the Chandelier Islands off the coast of Mississippi. Strong south to southeast winds blowing at 15 - 25 knots will continue through, which will push oil onto portions of the eastern Louisiana coast from the mouth of the Mississippi River northwards towards the Mississippi border.


However, the current trajectory forecasts now show the advance of the oil will slow over the next few days, despite the strong onshore winds.


Market Prices of the Oil Spillage

Shares in BP fell nearly 5% in the first week of June after the company warned that the cost of tackling the oil spill exceeds $6m (£4m) per day, and will keep rising as it intensifies its efforts to deal with the accident.

BP shares dropped to a low of 546p when trading in London began as City investors took their first opportunity to offload BP shares following the long weekend. This knocked more than £5bn off on Friday's 30th April 2010 market capitalization taking it to around £102.5bn. At the start of last week, the company was valued at £122bn.

Whilst difficult to accurately estimate, the cost to the MC252 owners of the efforts to contain the spill and secure the well is currently estimated to be more than $6m per day. This figure is rising as activity increases. It is too early to quantify other potential costs and liabilities associated with the incident.

Until BP can stop the oil leak, it will be impossible to estimate quite how badly this drama will play out. On a financial level, independent estimates on 2nd of May 2010 have put the final bill at anywhere between $3bn and $12bn (£2bn- £7.8bn).

Experts are warning that the rate at which the oil is pouring out from the mile-deep well could soon increase 10-fold, that one of the world's richest fisheries could be ruined for years, that Louisiana's vital wetlands could be destroyed, and that the slick could even work its way around the Florida peninsula to blacken its way up the American East Coast.

Cost of Clean Up

The leak is said to cost BP £4M a day - and may take 90 days to resolve - that's a cost of c. £360M. Revenue from this region's oil amount to $75Bn. On very rough figures the cost of this clean up around 0.7% of annual revenue compared to BP's profits for last year at $14BN.


The Gulf of Mexico has 3500 oil production platforms, producing 1 billion barrels of oil per year, or approximately $75 billion-worth at current prices.


The effect of the spill in Numbers from April 29th 2010

11 workers are missing and presumed dead following the BP rig explosion. (Source: Huffington Post) The explosion and sinking rig left 11 of the 126-member crew dead.

Leakage estimated at 5,000 barrels a day from the Deepwater Horizon rig -- five times faster than was originally estimated. (Source: New York Times)

April 30th 2010 - Spillage is costing BP $300 million to plug up the leaking oil spill, not including environmental clean-up costs. (Source: New York Times)

The Market Value Loss estimated at $25 billion in stock since last week's rig explosion. (Source: Huffington Post) on 29th April 2010.

16: Miles off the coast of Louisiana the oil slick has crept. (Source: New York Times) 29th April 2010.

By 30th April 2010 At least 30: Species of birds the Audubon Society says are potentially threatened by the oil spill. These include marsh birds, ocean-dwelling birds, and migratory songbirds. All reside in "Important Bird Areas," according to Audubon, designated because of their "essential habitat value."

25 million: Number of birds that traverse the Gulf Coast per day and which are potentially at risk from the oil spill. According to the LA Times Green space blog, "Late spring is the peak time for neo-tropical songbirds moving from the Yucatan Peninsula to make their first landfall in Louisiana," and "more than 70% of the country's waterfowl frequent the gulf's waters."(Source: LA Times Greenspace blog)

11 million: Number of gallons of oil leaked into Alaska's Prince William Sound in 1989 by the Exxon Valdez oil leak. It is widely considered the worst oil spill in U.S. history, although a number of larger spills have happened around the world, including the 2002 Prestige spill off Spain. (Source: CBS News) 29th April 2010.

400: Number of wildlife species threatened by the spill. Threatened species include sea life such as whales, tuna, and shrimp; dozens of species of birds; land animals such as the gray fox and white-tailed deer; and amphibians such as the alligator and the snapping turtle. (Source: New Orleans Times-Picayune) 30th April 2010

600 square miles: Latest reported size of the oil slick. In response to reports of the blooming size of the spill, Louisiana Governor Bobby Jindal declared a state of emergency, anticipating that it would reach Louisiana's shores soon. (Source: CNN) 29th April 2010

Insurance Costs Reports from 29th April 2010

$1.5 billion: Amount in insurance claims experts believe the BP spill will cost insurers. (Source: Business Week) The growing oil spill in the Gulf of Mexico, caused by a leaking BP Plc well, may cost the insurance industry as much as $1.5 billion in claims, according to Transatlantic Holdings Inc.

Transatlantic, the reinsurer divested by American International Group Inc., said its own costs from the spill may be less than $15 million. Partner Re Ltd., the reinsurer that purchased Paris Re Holdings Ltd., faces claims of $60 million to $70 million.

Montpelier Re Holdings Ltd., a Bermuda-based reinsurer, may have costs tied to the explosion of as much as $20 million. Hannover Re, Germany's second-biggest reinsurer, estimated a net loss of about 40 million euros ($53 million) from the accident.

The insurer holds contracts for the rig that may trigger two payments of $10 million each. JPMorgan Chase & Co. had estimated the insurance-industry cost would be $1.6 billion, in a report dated April 23.

Gulf Oil Spill - Bigger Than Exxon Valdez

The spill in the Gulf that could soon surpass the sorry benchmark set 20 years ago by the 11-million-gallon Exxon Valdez spill.



10 Famous Spills Since 1976

Amoco Cadiz

The Amoco Cadiz encountered stormy weather and ran aground off the coast of Brittany, France on March 16, 1978. Its entire cargo of 68.7 million gallons of oil spilled into the sea, polluting about 200 miles of Brittany's coastline.


Arabian Gulf Spills

Beginning in late January of the 1991 Gulf War, the Iraqi Army destroyed tankers, oil terminals, and oil wells in Kuwait, causing the deliberate release of an estimated 6-8 million barrels of oil.


Argo Merchant

On December 15, 1976, the Argo Merchant ran aground on Fishing Rip (Nantucket Shoals), 29 nautical miles southeast of Nantucket Island, Massachusetts in high winds and ten foot seas. Six days later, the vessel broke apart and spilled its entire cargo of 7.7 million gallons of No. 6 fuel oil.


Barge Bouchard 155

On August 10, 1993, three ships collided in Tampa Bay, Florida: the barge Bouchard 155, the freighter Balsa 37, and the barge Ocean 255. The Bouchard 155 spilled an estimated 336,000 gallons of No. 6 fuel oil into Tampa Bay.


Barge Cibro Savannah

On March 6, 1990, the Cibro Savannah exploded and caught fire while departing the pier at the Citgo facility in Linden, New Jersey. About 127,000 gallons of oil remained unaccounted for after the incident. No one knows how much oil burned and how much spilled into the environment.


Burmah Agate

On November 1, 1979, the Burmah Agate collided with the freighter Mimosa southeast of Galveston Entrance in the Gulf of Mexico. The collision caused an explosion and a fire on the Burmah Agate that burned until January 8, 1980. An estimated 2.6 million gallons of oil were released into the environment, and another 7.8 million gallons were consumed by the fire.


Exxon Valdez

On March 24, 1989, the Exxon Valdez ran aground on Bligh Reef in Prince William Sound, Alaska. The tanker was traveling outside the normal shipping lanes in an attempt to avoid ice. It spilled 10.8 million gallons of oil (out of a total cargo of 53 million gallons) into the marine environment, and impacted more than 1,100 miles of non-continuous Alaskan coastline. State and Federal agencies continue to monitor the effects of this spill, which was the largest oil spill in U.S. history.


Ixtoc I

The 2-mile-deep exploratory well, Ixtoc I, blew out on June 3, 1979 in the Bay of Campeche off Ciudad del Carmen, Mexico. By the time the well was brought under control in March, 1980, an estimated 140 million gallons of oil had spilled into the bay. The Ixtoc I spill is currently #2 on the all-time list of largest oil spills of all time.



On September 16, 1990, the tank vessel Jupiter was offloading gasoline at a refinery on the Saginaw River near Bay City, Michigan, when a fire started on board and the vessel exploded.



The Megaborg released 5.1 million gallons of oil as the result of a lightering accident and subsequent fire. The incident occurred 60 nautical miles south-southeast of Galveston, Texas on June 8, 1990.



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