Oil disaster 100 days old
Jul-30-2010

The Gulf of Mexico oil spill reached the 100-day mark Wednesday as BP, the oil giant behind the disaster, made drastic moves, including replacing its gaffe-prone chief executive and selling assets, to repair its damaged image and rejuvenate its business.

However, a crush of challenges remain as the battered BP struggles to cover the costs related to the environmental catastrophe, repair its reputation, streamline its structure and deal with the various probes and legal actions.



The London-based company is replacing CEO Tony Hayward with Managing Director Robert Dudley, selling 30 billion in assets and setting aside 32.2 billion U.S. dollars to cover the long-term cost of the spill which has spewed more than 5 million barrels of oil into the sea and sapped about 40 percent, or 60 billion dollars of BP's market value.



Hayward was heavily criticized after he described the spill's impact as "modest," grumbled about wanting to have his life back, and attended a yacht race off the coast of England while American residents were busy grappling with gooey blobs along the Gulf shores.



BP said its whip will be handed over on Oct. 1 to Dudley, the first American to lead the company. Placing safety among his highest priorities, Dudley has vowed to learn from the oil spill disaster and to "change the culture" of how the company handles safety-related issues.



In addition to the CEO change, BP on Tuesday also reported a 17- billion-U.S.-dollar loss in the second quarter this year, after setting aside 32 billion dollars to cover spill-related costs.



Meanwhile, the company announced that it plans to sell 30 billion dollars in assets over the next 18 months to help cover its liabilities and streamline the company into a smaller, higher- quality business.



The sell-off would help reduce its net debt to somewhere between 10 billion dollars and 15 billion dollars within one and a half years, from the 23 billion dollars at the end of June, the company said.



But many analysts doubt the amount set aside by BP will be enough to cover the actual cost for cleaning the waters and shores, repairing local ecosystems and compensating affected residents and businesses.



Some analysts believe BP will eventually pay between 30 billion and 60 billion for the worst oil spill in U.S. waters.



The underwater leak in the Gulf of Mexico was plugged two weeks ago, after a variety of BP's failed attempts to kill the leak, which was triggered by the April 20 explosion on BP-leased Deepwater Horizon drilling rig off the Louisiana coast.



BP aims to start the so-called "static kill" on Sunday or Monday, a method involving pumping heavy drilling fluids, known as mud, through the blowout preventer valve system that sits on top of the well, and then injecting cement to seal it.



However, the ultimate solution is drilling relief wells. The first of the two relief wells under construction is expected to be completed in August, yet it is still contingent on the weather.



Though the blown-out well is finally on the verge of being sealed, years of legal wrangles and probes lie ahead, and myriad questions remain about the long-term effects of the massive oil spill on wildlife, the environment and the life of Gulf residents.



BP is beleaguered by a variety of investigations. The U.S. Securities and Exchange Commission and the Department of Justice have launched "informal enquiries" into securities matters related to the spill.



The U.S. Senate is also pondering a probe into whether BP played a role in the release of Abdelbaset Ali Mohmet al-Megrahi, a Libyan national and the only man convicted over the 1988 Lockerbie bombing that killed 270.



Meanwhile, several U.S. government agencies are reportedly preparing a criminal investigation into whether BP and at least two other companies committed crimes in the leadup to the Gulf of Mexico incident, such as making false statements to regulators, obstructing justice, or falsifying test results.



There are of course piles of private lawsuits and a probe by Texas authorities into possible excessive pollution in April and May at a BP refinery in Texas City, which suffered a deadly explosion in 2005 that killed 15 and injured 180.



Though the well has been finally plugged and the visible effects of the oil spill have largely disappeared, scientists are still assessing the long-term environmental damage.



An argument is already brewing over the long-term impact, with some scientists warning that the whole biological network in the Gulf of Mexico could be changed by the spill and others saying the effect could be quite small.



Some scientists cautioned that a large amount of runaway oil is still in the Gulf but its quantity and whereabouts remain unknown. They feared that much of the oil had been trapped below the surface following the use of millions of liters of chemical dispersant. Evidence has been found that large clouds of oil suspend in the water.



As this oil can affect the food chain and deplete oxygen in the water, scientists say that they want to know how fast the oil is being eaten by microbes and being diluted and where it is heading for.

Posted by jc at 3:21 AM - Link to this entry  |  Share this entry  |  Print