BP’s Efforts on the Oil Spill in the Gulf of Mexico

BP published another press release on Thursday, May 20, 2010 about their continued efforts to contain the oil spill that happened in the Gulf of Mexico.

BP said that they were working with other experts and the government authorities on their subsea efforts. Their main focus has been to intervene via the BOP (blow out preventer) in order to stop the oil from flowing from the well, and to collect its flow from the points where there are leaks.

Their RITT (riser insertion tube tool) containment system has been able to collect 3000 barrels of oil and 14M standard cubic feet of gas a day at the end of the leaking riser. The team continues to collect and store the oil and flare the gas on Discoverer Enterprise, their drillship, 5000 feet above at the surface.

Apart from these attempts, they are preparing for an operation called as “top kill” with which they hope to seal the well. As per their plans, they are hoping to begin this operation in a few days.

For the surface spill, they have employed more than 930 vessels to collect the escaped oil and disperse it. With the help of these efforts, they have skimmed around 7.8 million gallons of oily liquid off the surface.

In order to be able to accurately determine the rate at which oil is flowing from the riser, the US government has put together a team called as the Flow Rate Technical Team (FRTT), which is responsible for developing more precise estimates than the ones available from several parties at the moment. This is because the third parties’ estimates are often based on the dimensions that the riser had before the incident. However, during the incident, the riser structure has gotten altered, due to which those estimates aren’t accurately applicable.

BP has agreed to fully support the FRTT by proving them with whatever information they need to be able to do their job well.

BP has also launched a live feed on their website, www.bp.com, in order to help all readers see their efforts directly on the Internet. So far, this was available only to the government entities including the US Coastguard, the MMS (Minerals Management Service) etc. in addition to the scientists and engineers involved in the attempts to curb the spill.

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All Energy Show in Aberdeen to Reveal Offshore Valuation Study

In its tenth consecutive year the All Energy show kicks off today in Aberdeen. According to the organisers this year’s show will feature 400 participating companies from the renewable energy sector representing 16 different countries.

Already a reference in the renewables sector the fair will feature a series of sessions about wind power, marine energy innovations and a few others all focused obviously in renewable energy generations. But one session in special is causing a lot of buzz.

For the first time ever a full economic valuation of Britain’s offshore renewable energy resources will be presented by the Offshore Valuation Group, a group of organisations from the public and private sector, chaired be the Public Interest Research Centre.

In short, the report said wind and wave power has the potential to generate the same amount of electricity as is currently achieved by North Sea oil and gas production. By achieving only a third of its full potential 145,000 jobs could be created and by 2050 the UK could export electricity.

Tim Helweg-Larsen, Director of PIRC, said: “To discover that we own a resource with the potential to return the UK to being a net power exporter, and on a sustainable basis, is genuinely exciting, and a wake-up call to those in a position to foster the further development of this industry.”

Such potential associated with Government incentives, private funding, technical expertise and development projects in hand is pushing the Highlands and Island into pole position globally when the subject is green energy generation.

The co-operative Bank, a bank specialised in small to medium renewable projects of up to £25m will use the event to launch a new Scottish renewables team. The Co-operative also announced that it has designated £200m for renewable projects which will be mostly spent in Scotland.

Meanwhile governing bodies are preparing the sector to avoid the same errors committed by the oil and gas industry. Brian Nixon, Chief Executive of Aberdeen based industry forum Decom North Sea wants companies planning to invest in renewable energy operations to present a decommissioning plans to demonstrate how they will fund these projects at the end of their life spans.

“Where the oil and gas industry did not always think ahead and consider what would happen to installations at the end of their lifespan, the people behind the ongoing wind developments can think about how they are getting infrastructure in place and how it will be taken away afterwards.” he said

And added:

“By taking this action, they will ensure future projects are truly sustainable and environmentally appropriate.”

If all the predictions made by the Offshore Valuation Study are met, Britain is on its way towards a low carbon economy not to mention that this is a huge boost towards meeting our Climate Change Bill agreements.

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BP have now resorted to sucking oil away from the massive Gulf of Mexico oil leak using a long mile tube.  In a recent statment engineers have finally succeeded in keeping some of the oil gushing from a blown well out of the Gulf of Mexico after more than 3-weeks of failures.

httpv://www.youtube.com/watch?v=-yJlJOaR1jA

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BP Starts to Make Progress to Contain Oil Spill

After nearly 3 weeks and thousands of barrels of crude oil spilled over the Gulf of Mexico BP finally managed to make progress in containing the spill. On Sunday underwater robots managed to insert the small tube into a broken 21 inch pipe known as the riser which will now be funnelled to a drilling ship on the surface.

The siphoning plan became an alternative after the failure of containment dome thought to be the best way to plug the leak. However, this wasn’t enough to calm US authorities including President Barack Obama; new case studies revealed that crude oil may be leaking 10 times faster than estimated.

Scientist have found a plume of oil 10 miles long, three miles wide and 300ft thick pouring into the ocean at a rate of between 25,000 to 80,000 barrels a day – compared to the current estimate of 5,000 barrels a day.

How the Siphoning Works

* The insertion tube is a five foot long steel pipe about four inches in diameter with specially designed rubber baffles. The tube will be inserted into the Horizon’s riser to provide a direct connection.

* The direct connection, combined with the injection of methanol, will minimize the formation of hydrates that could block the flow of hydrocarbons.

* The riser insertion tube will be installed about 600 feet from the wellhead.

* The insertion tube will be connected to a 5,000 foot riser that will convey the hydrocarbons to the Transocean Discoverer Enterprise drillship on the surface.

* Once in place, oil will flow up into the Enterprise’s riser to the surface.

* Once at the surface, the hydrocarbons will be processed and oil will be separated from water and gas. The oil will then be temporarily stored before being offloaded and shipped to a designated oil terminal onshore.

* The Enterprise is capable of processing 15,000 barrels of oil per day and storing 139,000 barrels.

* A support barge will also be deployed with a capacity to store 137,000 barrels of oil.

What’s next?

* This riser insertion tube is on site and is being prepared for installation in the next few days.

* ROVs will assist in the installation and connections to the riser (tubing) back to the surface.

This catastrophic oil spill is not only devastating the area but it will also start to have its effects in the economy as oil prices are likely to rise backed by concerns about higher costs and tighter regulations for the energy majors.

We asked one of our energy consultants Chris Hurcombe if he thinks the oil spill will propel crude oil prices to higher levels.

He said “That this current oil disaster is having little impact on oil prices as prices are currently at their lowest level since February”.  He continued “This is supported by the fear that demand for energy will be hampered by the current economic instability in Europe”.

What do you think will happen to oil prices? Will this catastrophic disaster influence in oil prices in the long run or do you think there will be an immediate impact on the crude oil prices?

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Despite several efforts to stem the flow of oil from the leak, nothing so far has worked.  A new effort from BP will see them launch a smaller dome, after attempts with a larger dome have failed.  The new called Hat Dome could be deployed within 72-hours a BP spokes person has revealed.

httpv://ww.youtube.com/watch?v=9O8oIssrGqE

Which ever method they choose to use, there has never been an oil leak at this depth before, so all of the time its completely new territory for the clean up team.

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Worst Oil Leak in History is Costing BP £6.5m a day

In 25 years of deep water drilling the oil industry has never seen such a catastrophic event like the one BP is dealing with now. The failure of the ultimate safety system that every drilling operation must have is what caused which looks like the worst environmental disaster in American history.

So far BP’s Gulf of Mexico spill has cost the oil giant £350m, however, the final bill is likely to be much higher thanks to the 5,000 barrels of crude pumped daily into the sea.

With crude oil dealing at around 78 US dollars per barrel, BP is loosing 390,000 US dollars per day only with the oil leak. Add to that another $10m daily clean up bill instead of the initial $6m a day revealed last week.

Right now BP’s priority is to minimise the impact of the situation. Over the weekend attempts to put a giant cap over the leak failed because ice-like crystals clogged the cap’s top when it was over the leak and now engineers must wait before they can try again.

BP’s chief executive Tony Hayward admitted he wasn’t confident that the dome would work. This so called “dome” is designed to collect oil from leaks and it can be siphoned off at any time but it had never been used at such deep levels.

“The oil industry has been drilling wells in deep water for 25 years, drilling 5,000 plus wells, maybe 10,000, around the world and this has never occurred. It was a catastrophic event,” said Mr Hayward.

Despite failures in attempts to stop the leakage, the oil company’s Chief Executive is confident they will fix this catastrophic problem any time soon.

“For sure we will fix it; it’s simply a matter of time. Clearly, the sooner the better, but we will fix it, that’s certain.” stated Mr Hayward.

The spill may lead to tighter rules on offshore oil exploration which will consequently lead to higher crude oil prices and a reduction in investment on the sector.

BP is not the only company quantifying the losses. Two companies, Lancashire Holdings and Catlin, said their losses caused by the sinking of Transocean’s rig two weeks ago could be the worst in history. JP Morgan estimates that the incident may cost insurers $1.6bn, approximately £1bn, and lead to an overhaul of the relationship between insurance companies and the oil industry.

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Rockhopper Struck Oil in the North Falkland Basin

British oil and gas exploration company Rockhopper struck oil in its Sea Lion prospect locate in the North Falkland basin. The find could help improve UK’s tax for income drilling but could heat up the diplomatic row over the sovereignty of the Falkland Islands.

Rockhopper findings were made at a depth of approximately 2,750 metres and the company is now considering whether to drill an appraisal well. The successful strike was made at the company’s Sea Lion prospect located 137 miles north of the British territory.

The Company has run a suite of wireline logs and logging data collected thus far indicates that the well has encountered a 150 metre gross interval of sand and shares.  The data show that the well has 53 metres of net pay distributed in multiple pay zones, the thickest of which has a net pay of 25 metres.  These pay zones have an average porosity of 19%.

“We are extremely excited by the results,” said Samuel Moody, the Managing Director of Rockhopper. “While we are presently acquiring additional data, current indications are that we have made the first oil discovery in the North Falkland Basin.”

The find sent Rockhopper’s shares soaring by 150%, to 94p following the announcement. Rockhopper shares were not the only ones to shoot up yesterday, Desire Petroleum shares rose 23¾, or 63%, to 61½p.

But investors should be cautious until Rockhopper’s well is determined commercially viable or not. The next step is the more serious of all; a series of complex “wireline” analysis will have to be completed to establish further details. The key will be an estimate of the permeability of the rock, which governs how fast the oil can flow and whether the reservoir will be commercially viable.

“The volume of oil could be quite significant but we don’t know yet if it will flow. That is the big question mark.” said Richard Rose, an Analyst at Oriel Securities.

It is too early to jump into to conclusions at this stage but such findings in the area could change the game if Rockhopper’s well proves to be commercially viable. Not only on the economical side of the coin but also it could spark up another diplomatic row between Britain and Argentina over the sovereignty of the Falkland Islands.

Back in February, Argentinean President, Cristina Kirchner, forced British ship passing through Argentina to obtain permits to do so. Right now the only thing Argentina could do is ban British oil companies from using their ports, but with a little investment the Harbour at Port Stanley in the Falklands could be used instead. Especially now that crude oil prices are on the rise.

We want to hear from you now.   Will this discovery spark up another diplomatic row between the UK and Argentina? Share your thoughts below in our comments section.

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BP still struggles to stop crude oil pouring from a well a mile under the sea as the growing oil slick attacks the US coastline.

httpv://www.youtube.com/watch?v=9clFanq4zI8

According to the US Coast Guard, the amount oil that could be leaking is now five times greater than any previous estimates.  The massive oil spill, which began when an offshore oil rig exploded and sank into the Gulf of Mexico last week, has proved difficult to clean-up due to its distance below sea level.

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Peak in Crude Oil Prices Could Stall Economic Recovery – Back in July 2008 when oil prices peaked at $147 per barrel we were paying 119.7p per litre at the pump. Now crude oil is trading at around $80 (£50) a barrel and prices at the pump have reached a record high of 120p per litre.

So who is to blame for the current surge in UK petrol and diesel prices?

A substantial proportion of it can be put down to a falling pound. When the price of Brent crude peaked at $147 two years ago, the dollar to pound exchange rate was almost two to one. This meant that the sterling cost of a barrel of oil was about £70.

Today, Brent crude is trading at $85 a barrel – but the petrol price has crossed the 120p a litre threshold. However, the pound is now trading at 1.53 to the dollar. This means one barrel of oil in sterling terms costs about £55, so oil is only 20pc lower than its 2008 price for those buying in British pounds.

Another reason why we are paying more for petrol than at the start of the economic downturn two years ago is because the Government has edged up petrol duty by yet another 1p to 57.19p per litre on 1 April, which is the fourth rise in 18 months.

“High fuel cost effects the entire economy. When prices at the pumps go up, nearly every business and consumer in the UK suffers. It is probably no coincidence that the previous record high prices in the summer of 2008 were soon followed by full-blown recession,” said Matt Goodman, the Forum of Private Business policy representative.

High petrol prices are clearly not good news just as the economy was showing signs of recovery.

According to the International Energy Agency (IEA), global economic recovery could be put at risk if oil prices remain above $80 (£50) a barrel.

The IEA predicted the global demand for oil would hit a record high this year, revising up its consumption estimates. It said demand would reach an average of 86.6m barrels per day, up from 84.93m in 2009. The previous record high was 86.5m barrels per day in 2007, before the onset of the global financial crisis.

The Catalyst Business Energy Market Brief – April 2010

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Oil prices plunged in a busy trading session on Friday, triggering big losses across the commodities markets, as investors went back to buying into the US dollar.  Crude oil prices did have a partial recovery, with March US Light oil futures contract settling at $71.19 a barrel on the NYMEX, down 2.7%, while in London, Brent crude oil futures for March delivery dropped to close trading at $69.59 per barrel on ther ICE Futures Exchange. (more…)

The world could start to run out of oil in the next ten years, sparking soaring energy prices and a rush for even more polluting fossil fuels, an influential new study by the UK Energy Research Council has warned.The world could start to run out of oil in the next ten years, sparking soaring energy prices and a rush for even more polluting fossil fuels, an influential new study by the UK Energy Research Council has warned.

The exact date of “peak oil” – when the amount of oil being pumped out of the ground every day reaches its highest point before beginning an inexorable decline – has been hotly debated for decades. Environmentalists have tended to warn oil could run out at any moment, while oil companies insist there are plently more oil fields yet to be discovered.

The most recent estimation from the International Energy Agency, that advises Governments around the world, said conventional oil would not peak until after 2030.

However an authoriative new study from the Government-funded UK Energy Research Council called this prediction “at best optimistic and at worst implausible”. The peer-reviewed research looked at 500 studies from around the world and took into account the difficulty of accessing new oil fields as well as growing demand. It predicted oil will begin running out before 2030 and there is a “significant risk” peak oil will be reached before 2020.

“In our view, forecasts which delay a peak in conventional oil production until after 2030 are at best optimistic and at worst implausible. And given the world’s overwhelming dependence on oil and the time required to develop alternatives, 2030 isn’t far away,” said the report’s lead author Steve Sorrell. “The concern is that rising oil prices will encourage the rapid development of carbon-intensive alternatives which will make it difficult or impossible to prevent dangerous climate change.”

Robert Gross, Head of Technology and Policy Assessment at UKERC, said as soon as oil begins to run out it will make energy more expensive, sparking a knock on effect on industry and economies around the world. Petrol prices would rise and long distance travel become more expensive.

“The age of easy and cheap oil is coming to an end,” he said. “It doesn’t suddenly come to an end, obviously it’s a gradual change, but we’re moving away from easy and cheap oil to increasingly difficult and expensive oil.”

At the moment oil is around ($70) per barrel after peaking at around ($147) per barrel in 2008 during the height of the economic crisis.

Dr Gross said the spectre of peak oil should encourage Governments to invest in more energy-efficient vehicles such as electric cars, renewable energy like wind or solar and improving energy efficiency in industry and homes.

But he said there was a risk that instead the world will start to look at even more intensive forms of fossil fuels, therefore producing more carbon emisions and causing “catastrophic climate change”. Alternatives include heating tar sands to produce oil at huge cost both environmentally and financially.

“The danger is high oil prices push us into high carbon resources just as much as they might help push us towards renewables,” he said.

“The challenge for policy makers is to make sure, on a global scale, that that isn’t the response to more difficult and expensive oil.”

The world produces around 85 million barrels of oil every day. It is estimated this could rise to more than 100 million barrels per day before declining.

Oil companies like BP claim billions more barrels are availabe in new oil fields discovered in the Gulf of Mexico.

However Mr Sorrell said these new supplies are extremely difficult to access and will only delay peak oil by a few weeks or even days.

Even if the new fields are exploited, he said the world needs to move away from oil in order to stop global warming.

But Mr Sorrell said the UK Government had no contingency plans for oil peaking before 2020.

“If these problems are ignored and we do not make these changes ahead of time, we are heading for trouble,” he warned.

The IEA is due to release its latest report on peak oil this November, just before the world meets in Copenhagen to decide a new deal on climate change. The report will be a key influence on whether the rich world is willing to agree to set targets to cut greenhouse gas emissions, while also helping poor countries to switch to a low carbon economy.

The Department for Energy and Climate Change is currently considering the UKERC report.

“We are already well aware of the significant challenges for investment in future oil production and that there is a role for Governments to play in reducing demand for fossil fuels,” a spokesman said. “Our climate change, energy efficiency and energy security policies outlined in the UK low carbon transition plan are not only reducing the UK’s carbon emissions, but are consistent with the need to reduce our use of fossil fuels.”

Crude oil rose for a third day after Nigerian militants targeted an Agip pipeline, while speculation grew that fuel demand will increase as the global economy recovers. The Movement for the Emancipation of the Niger Delta, or MEND, said it blew up an Agip link that delivers crude to the Brass export terminal. The index of U.S. leading economic indicators rose for a second month and European Union leaders said the region is on course for a “sustainable” economic recovery. Protests in Iran over the result of last week’s election entered a seventh day. “Missing flows from Nigeria are starting to add,” said Olivier Jakob, managing director of Petromatrix GmbH in Zug, Swizerland. “We will need to keep an Iranian risk premium for the weekend and to it we will add a Nigerian risk premium.” Crude oil for July delivery rose as much as 93 cents, or 1.3 percent, to $72.30 a barrel in electronic trading on the New York Mercantile Exchange, trading for $72.07 at 12:55 p.m. London time. Prices have risen 60 percent this year and reached a seven- month high of $73.23 on June 11. The July contract expires June 22. The more-active August contract was at $72.63 a barrel, up 72 cents. Petroleum products demand in the U.S., the world’s largest energy user, fell 6 percent in the four weeks to June 12 from a year earlier, the Energy Department said June 17.

Crude futures may fall next week on speculation U.S. fuel stockpiles will increase as the recession and rising prices sap consumption, according to a Bloomberg News survey. Fourteen of 32 analysts surveyed, or 44 percent, said futures will decline through June 26. Thirteen respondents, or 41 percent, forecast that the market will be little changed and five said prices will climb. Last week, 49 percent of analysts said oil would increase. In Iran, the second-largest producer in the Organization of Petroleum Exporting Countries, supporters of presidential contender Mir Hossein Mousavi took to the streets to protest against June 12 re-election of President Mahmoud Ahmadinejad.

Brent crude for August settlement was at $71.77 a barrel, up 71 cents, on London’s ICE Futures Europe exchange at 12:53 p.m. London time.

Crude oil prices rose above $71 a barrel yesterday for the first time in seven months and will soon test the $80 a barrel level, industry analysts said yesterday. West Texas Intermediate light crude for July delivery rose to a high of $71.79 a barrel before pulling back slightly to trade up $1.12 at $71.13 on the New York Mercantile Exchange. In London, North Sea Brent crude gained 95 cents to $70.57 a barrel. Analysts said investors were also pouring money into the commodity as a hedge against a recent weakening in the dollar. Gerard Rigby, an energy analyst with Fuel First Consulting, commented: “I wouldn’t be surprised if we’re testing $80 in a week or two. The momentum right now is too strong.” The latest rally came after the US Energy Department predicted that average oil prices could rise to $67 a barrel in the second half of 2009 – about $16 higher than the first six months of the year and significantly stronger than the £55 a barrel it forecast a month ago. The department’s Energy Information Administration also said global consumption of crude, which has fallen by nearly two million barrels of oil a day this year, will begin to rebound in 2010 as the global economy recovers.

With oil prices doubling from below $35 a barrel in March, UK motorists have seen a return of average petrol prices in excess of £1 a litre.  Meanwhile, oil company BP said the world’s proved oil reserves fell in 2008, the first drop in a decade. Proved reserves of 1.258 trillion barrels in 2008 was three billion barrels less than in 2007, the company said.

Goldman Sachs raised its oil price forecast for the end of 2009 to $85 a barrel from $65, anticipating dwindling supply and rising demand this year and next. Its forecast also put prices at $95 by the end of 2010, led by economic recovery in China. Influenced by these predictions, US light crude rose $2.39 to $68.51, while Brent was up $2.52 to $68.40, sparking fears of a further increase in prices at the petrol pump.  The Goldman Sachs research note, by Jeffrey Currie in London and David Greely in New York, said that the recent rally in US crude was likely to be the first stage in a sustained oil price rally.

The bank’s forecast of recovery in economic activity centres on China and other emerging market countries outside the rich West. Goldman Sachs expects Chinese oil demand to decline by 115,000 barrels per day in 2009, but to grow by 343,000 barrels in 2010.

It has ruled out a strong rebound in US oil demand over the next 12 months, as the pace of American economic activity is expected to remain low. Demand in the US is down 7.7 per cent year-on-year and Goldman Sachs expects that it will decline by 980,000 barrels per day in 2009 and by a further 60,000 in 2010.

Key to the anticipated recovery in the oil price will be the willingness of the production cartel Opec, in particular Saudi Arabia, to keep down production and draw inventories back to ten-year average levels, as non-Opec production continues to decline. Goldman Sachs warned that constraints on storage capacity remained a risk.

However, John Hall, an independent energy analyst, accused Goldman Sachs, one of the world’s largest oil traders, of scaremongering. He said that last December the bank had slashed its forecast for crude oil prices to just $45 a barrel for 2009, in a sharp U-turn from its prediction of $200 made just months earlier in May 2008.

Oil prices peaked at $147 a barrel in July 2008 and then fell sharply to less than $35 in December, as the rapidly deepening global economic downturn reduced demand for energy.

Mr Hall said: “Goldman’s numbers are all over the place. You need to consider the fact that the world is awash with oil on land and sea. And if the recession is really over, tell that to General Motors and LDV.”

Referring to Goldman Sachs’ forecast of a spike to $95 by the end of 2010, he asked: “Who would pay those prices? I don’t think that the Chinese would go that far.”

Mr Hall said he expected a correction in the oil price in the not too distant future: “It could hover where it is now and then come down.”

Last week Opec held production levels, saying that weak demand was “likely to remain for some time”.

Luke Bosdet, a spokesman for the AA, which represents 13 million motorists in the UK, said that at 100.6p per litre, prices at the petrol pump were already 10p up on March, adding £5 to the cost of a full tank.