Saturday, May 1, 2010

Atlantis Sinks, Taking British Petroleum With It

British Petroleum discovered the rich Atlantis oil field under about 6,000 feet of water, off the Mississippi Delta, about 12 years ago. The company has invested billions into turning this project into a showpiece. As the exploratory aspects of this project turned toward production, some employees voiced concern, as anonymous whistleblowers. They claimed the whole idea was becoming sketchy.

Last year at least one whistleblower approached Obama administration oil exploration regulators with concerns about both safety and physical plant emergency response documentation problems. Friday, Truthout's investigative reporter, Jason Leopold, reported that the whistleblower complaints may have a bearing on the most likely cause of April 20th's drill rig blowout. That explosion and its consequences are turning into Exxon Valdez meets 3-Mile Island meets space shuttle Challenger meets hurricane Katrina.

BP's insurance in this case is nowhere as adequate as was Exxon's in 1989. The liability for BP in 2010 on this rapidly creeping spill is growing more quickly than is the spill itself. The company will need liquid mobility by next Wednesday that might make AIG's situation in mid-2008 look like a coffee pot shorting out in the employee break room. They'll be mired in images of guck, when they need to appear to be fleet of foot, adept and audacious.

Without a massive bailout, BP is going to go down to the bottom of the Gulf of Mexico. Within three weeks.

BP isn't an American company. Obama can't bail them out. Even if he could, he'd have to face the teabaggers' complaint, backed up by the LaRouchies, that our Kenyan President had just bailed out the Queen of England.

This may have some profound effects on the Alaska economy. The best thing we might think about doing right now, though, is helping divide BP into small parts, and buy the Alaska one with the fund. At bottom-of-the Gulf of Mexico prices.

If Wally were governor, there'd be a team working on a deal already.

Were Palin governor, the list of people to blame for the sinking in Atlantis, would be three miles long by now.

These are containment booms early Friday. They're meant to keep hundreds of thousands of birds and zillions of oysters and other estuary creatures from being killed by BP. They will fail in many cases, for one reason or another. In this picture, the wind is doing to the booms what BP never thought about thinking about. This is just the beginning.

I don't give BP's odds of survival to be much more than those of millions of creatures in the Gulf of Mexico.


funkalunatic said...

Maybe I'm cynical, but I doubt this will sink BP. Sure there will be the token outrage, lawsuits, etc, but when push comes to shove, BP will lobby(bribe) government officials to get their backs, because oil is a national security issue, is important in these serious economic times, or some BS like that, and the public won't give enough of a damn about that part of the country to hold anybody accountable. Environmentally, it's Exxon Valdez (or worse), but politically I bet it will just be Katrina-lite. Hopefully I'm wrong.

Anonymous said...

Uh, even if Obama could bail out BP, he would be face a lot more than just "teabaggers" and "LaRouchies" complaints, try every American taxpayer.

Why would anyone support bailing out BP other than BP stockholders or paid for politicos?

Philip Munger said...

anon @# 8:07 - I'm not suggeting bailing BP out. I'm suggeting scarfing up the Alaskan part at fire sale prices.

Bones AK said...

I think that this will make Exxon/PWS and Katrina pale in comparison. I like your idea of buying the Alaska piece as BP sinks into oblivion.

@1:22am "but politically I bet it will just be Katrina-lite." wrong so wrong. This is not a "spill". This is a broken off fire hydrant 5,000 ft. deep that BP hasn't a clue as how to plug.

Anonymous said...,0,2641014.story

The White House said that no new offshore oil drilling will take place until a full investigation into the Deepwater Horizon explosion is completed.

Obama " has said is that he's not going to continue the moratorium on drilling but... no additional drilling has been authorized and none will until we find out what happened here and whether there was something unique and preventable here," White House senior adviser David Axelrod said on "Good Morning America" today.

Haliburton goes before the Congress in 10 more days.

HarpboyAK said...

Phil isn't kidding about bailing out the Queen; BP's largest shareholders are members of the British Royal Family, including the Queen, Prince Charles, Princess Margaret, and the Duke & Duchess of Kent.

If BP is underinsured (or not insured at all because of negligence or corruption), and if the Royal Family doesn't cough up some cash, Gulf fishing & tourism folks and the US and state gummints could be left trying to recover damages from a bankrupt company.

This could make the Exxon Valdez court case look like a piker. Phil's right that this is the time for the State to move to purchase BP's Alaska operations at a song --- it might not even have to be the Perm Fund, but state retirement funds and/or Treasury surplus funds.

Phil, you should call Wally tomorrow and ask him to suggest just that to Parnell.

Anonymous said...

Not sure about who owns BP but I would hazard a guess it is not Princess Margaret - she died in 2002

Anonymous said...

Beyond the costs of the cleanup, the Oil Spill Liability Trust Fund of 1990 might limit BP's exposure to 75 million dollars tops.

If that comes to pass, the corporations win again.


Anonymous said...

BP's market cap is ~$155 bn.

Estimated cleanup costs are ~$8 bn.

"The cost of dealing with the Deepwater Horizon oil spill could reach up to $12.5bn, according to City analysts, with BP's share totalling $8bn.

Neil McMahon of Bernstein Research estimated a total of $7.5bn for the clean-up and subsequent damages, with another $5bn for losses suffered by the fishing and tourist industries in the area. BP owns 65% of the licence, so would pay the bulk of this figure."

I think they have deep enough pockets to not go bankrupt from this. Their stock has gone down a few points but certainly isn't at firesale prices.

jim said...

What's next? Chukchi Sea? Beaufort Sea? Bristol Bay?

jim said...

Also, at:

"The "Big Oil Bailout Prevention Act" would also eliminate the $1-billion cap on claims against the Oil Spill Liability Trust Fund. That fund is funded by an 8 cents tax on every barrel of oil produced or imported into the US. The senators say that fund is projected to have $1.6-trillion in it by the end of this year."

Huh? 1.6 TRILLION?? Again-- 1.6 TRILLION? Is that a typo? That must be a typo. Did they mean 1.6 billion? I doubt there would be a cleanup fund cashed with such a large percentage of our country's entire gross domestic product. If true, that's incredible. 1.6 trillion is one-thousand six-hundred billion dollars-- more than 50 times as large as Alaska's permanent fund.

jim said...

must be a typo-- I wish they did have 1.6 trillion to throw at it. Unfortunately they probably only have 1.6 billion at most, which is probably a tenth or less what they will need.

jim said...

Perhaps we should send polite and respectful letters to Queen Elizabeth, (a primary BP shareholder), suggesting her company BP might tactfully consider more classy, aristocratic and tasteful ways to exploit our planet.

Her mailing address is (couldn't find an email; you'll need 98 cents for postage):

Her Majesty The Queen
Buckingham Palace
London SW1A 1AA

If you wish to write a formal letter, you can open with 'Madam', and close the letter with the form 'I have the honour to be, Madam, Your Majesty's humble and obedient servant'.

(I guess she may figure the Gulf of Mexico is one of her humble and obedient servants).

Buckingham Palace also indicates "However you should feel free to write in whatever style you feel comfortable."

I'd enjoy reading copies of letters to HRH Queen BP shareholder.

Could we have a contest for best letter to the queen?

jim said...

((my 98 cents worth)):

Dear Madam:

As an Alaskan, I worry that a company you partially own, British Petroleum, may not exercise sufficient environmental responsibility and safeguards. Recently, In Alaska, BP experienced crude oil pipeline spills and pipeline corrosion in the area we call our "North Slope". More recently, another BP-financed project may have generated a catastrophic environmental calamity in the Gulf of Mexico.

I'm not a citizen of the United Kingdom. I'm an Alaskan. British Petroleum has significant holdings in my U.S. state. I'm concerned British Petroleum, a company that you partially own, may not be environmentally responsible. I'm not a shareholder, but I would encourage shareholders including you to try to influence your company to stop damaging the rest of our world.

Please refrain your company from further destructive activities. I wonder if places in Alaska like the Arctic National Wildlife Refuge, Chukchi Sea, Beaufort Sea, and Bristol Bay may be next on your company's damage/ destruction list.

Anything you could do as the United Kingdom's Head of State, and as a British Petroleum shareholder, would be appreciated.

I have the honour to be, Madam, Your Majesty's humble and obedient servant.

Anonymous said...

Usually, tossing in one's 'two cents' worth can be recognized as likely not to be the most considerate of opinions, a quick 'two cent' spur of the moment opinion, likely as not, to be found to be well short of addressing the complexities necessary to comprehensively or realistically encompass the issue addressed.

Tossing in one's 'two cents' is one thing, investing 98 cents in one's opinion should reflect some more serious and reasoned comprehension before one describes their investment being near total in their invested given opinion.

The Queen of England participates and operates within one of the most exclusive insider trading cartels known. All part of the 'succession' of the 'royal family'. The royal family, despite the publicity stunts and image management, has long been recognized as a very willing and active member of the world oligarchy.

Jim can crib language from the 'Write the Queen' websites, (a favorite letter is how to get birthday greetings from the queen), but the Queen of England isn't going to lift a finger that might imperil her profits or the profits of the rest of the cartel she's a party to.

The queen's holding run to some of the most exploitive, most human rights oppressing, and most environmentally damaging corporations in the world. The queen holds stock in, not only BP, but Royal Dutch Shell, Rio Tinto, and multinational weapons corporations.

Wtite the Queen ? Appeal to her finer sensibilities and count on her reining in BP ?

You might just as well write a fawning letter to Rush LImbaugh and ask if he'd please nicely stop lying nonstop.

Think the Queen and her family members hadn't heard polite appeals from her subjects and others around the world when the British Empire's exploitive and oppressive colonialism was at it's peak ? Think the Queen's mailbox isn't overflowing with appeals for the Queen to step in and stop today's exploitation and oppression by the multinational corporations sledge-hammering their way through the third world ?

The suggestion to write the Queen is nothing but a case of 'magical thinking' taking the place of having a realistic view of the world and an attempt to excuse oneself from having to participate in the real world.

Fantasy and magical thinking isn't a credible method of problem solving.

If you're going to expend energy trying to solve the problems caused by the exploitive extraction industries, direct that energy towards the enactment of sufficient controls and regulation of those extraction corporations.

Asking the Queen to take BP out for tea and crumpets and expecting her to lecture BP on responsible development practices is a foolhardy waste of time.

The issues we face and the seriousness of the problems we need to solve don't leave time for nonsense and fantasy. Magical thinking contributes to the mess we're in, more magical thinking is only going to compound our problems and delay addressing our problems seriously, logically and rationally.

Forget the magical thinking, it's childish nonsense.


jim said...


I'll send her a letter. I think others should too. You should send her a letter (although with your writing style they might put you on the no-flight list or something).

I'll let you know if she replies.