Tuesday, August 3, 2010

Government releases suspect tally of oil in the Gulf

Call this the government's "asking price," if you will.  Yesterday, the government's Flow Rate Technical Group (FRTG) released a refined estimate of the ... stuff that flowed from the blown out Macondo well that was drilled by the Deepwater Horizon rig.  The story appears in today's online version of The Washington Post.

The blown-out well in the Gulf of Mexico gushed 12 times faster than the government and BP estimated in the early weeks of the crisis and has spilled a whopping 4.9 million barrels, or 205.8 million gallons, according to a more detailed analysis announced late Monday.

BP's Macondo well spewed 62,000 barrels of oil a day initially, and as the reservoir gradually depleted itself, the flow eased to 53,000 barrels a day until the well was finally capped and sealed July 15, according to scientists in the Flow Rate Technical Group, supervised by the U.S. Geological Survey and the U.S. Department of Energy.

The new numbers once again have nudged upward the statistical scale of the disaster. If correct -- the government allows for a margin of error of 10 percent -- the flow rate would make this spill significantly larger than the Ixtoc I blowout of 1979, which polluted the southern Gulf of Mexico with 138 million gallons over the course of 10 months. That had been the largest unintentional oil spill in history, surpassed only by the intentional spills in 1991 during the Persian Gulf War.

First things first--the WaPo story gets a few facts wrong.  BP has never publicly or independently estimated a flow rate from the well.  The initial numbers came from a US Coast Guard estimate on April 24, and all subsequent estimates of hydrocarbon flow came from either the Coasties, or the government's Flow Rate Technical Group. BP may have agreed to (or at least did not dispute) the government estimates, but all of the flow rate estimates are government numbers. Also, the Ixtoc I blowout spilled between 10,000 and 30,000 barrels of oil a day for ten months. Most estimates of the total amount spilled hover in middle of the range at around 18,000 to 20,000 barrels.  That means Ixtoc I spilled between 227 and 252 million gallons.  The Macondo spill is the worst in US history, but Ixtoc I remains as the worst spill in Gulf of Mexico history and the worst accidental spill in world history.

But the WaPo story also glosses over the fact that the FRTG's numbers are estimates of "stuff" coming out of the well, only some of which is oil.  Other "stuff" coming out of the busted riser included reservoir brine, expanding natural gas, CO2 (released and entrained), inert gases, sand and debris. It's not all oil, and it's not all toxic material for the purposes of determining fines. That said, it's still a lot of stuff.

Last of all, keep in mind that the runaway Ixtoc spill--even at its peak discharge--was spewing "only" about 30,000 barrels a day. Are we to believe that the Macondo well tapped such a large prospect that it was discharging more than twice that amount? I think  these numbers are highly suspect, which is why I think the FRTG's estimate is just the government's "asking price" for the looming legal battles. While BP never publicly estimated the flow rate, you can bet your last share of the company's common stock that they have been running numbers too, and their numbers won't even be in the same neighborhood as those we're seeing from the FRTG.

Whatever the final numbers turn out to be, Ed Morrissey at HotAir.com puts it all in perspective:

To put this in another perspective, the total amount lost in the Gulf represents what the US normally consumes — in six hours. The US consumes just under 20 million barrels of oil a day. That’s less than a couple of years ago, before the economic collapse curtailed energy demand, but still puts us in the number 1 position, almost three times more than China, our closest competitor for the resource (the latter data as of January 2009).

As the Post reports, the calculation of the spill has legal ramifications. At the least, BP will pay $1100 for every barrel spilled, assuming it didn’t act with negligence. If a court finds “gross negligence,” the fine ascends to $4300 per barrel. It’s the difference between $4.5 billion and $17.6 billion, and that is separate from the $20 billion fund to cover damage claims from the spill, which may or may not cover all of the claims.

BP has a big bill coming, and we have a lot of questions to ask about the quality of information coming from the administration’s response team in the first weeks of the disaster.

It's also separate from the $3 to $4 billion BP has already spent on response and recovery operations and separate from the $100 million fund for laid off oil rig workers. Ed's right--BP is going to get a whopper of a bill.  And yes, the quality of the information (indeed, the quality and timeliness of the response) from the government in the opening days of the slow-motion disaster is suspect as well.


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