How BP played BO like a cheap fiddle

Updated with link to Bloomberg story on Dudley's experience in Russia.

Today, British Petroleum called Tony Hayward home to London and replaced him in the day-to-day role of managing the oil spill response with Mississippi-raised Bob Dudley, the Managing Director of BP North America.

This was three days after Barack Obama hauled BP's Chairman of the Board into a closed-door White House meeting for a $20 billion shakedown, and exactly one day after Hayward sat before grandstanding Democrats and heard how his company was responsible for everything except the 2008 mortgage and banking crisis.

The Democrats thought they'd extracted their pound of flesh.  After all, they'd just raked the two top dudes at BP over red hot, election-year coals.  They got a $20 billion promise from the Chairman and quite nearly brought a groveling, apologetic CEO to tears.  What does BP do?

Brings in a real "big gun."  Bob Dudley is no man to be trifled with.  He had previously led a joint venture with Russia and while doing so, grew hydrocarbon production by 26 percent, replaced proven crude reserves at an annual average rate of 138 percent and increased earnings nearly five-fold.  His unit also had the lowest average exploration cost  of any Russian oil companies and provided the highest shareholder return of any major Russian oil company.

He did this by playing hardball with...  Vladimir Putin.

Dudley had to survive near constant raids by Putin's secret thug army,  "defeated" bureaucratic red tape that kept his employees from getting construction permits and outlasted a Putin sponsored no-confidence vote of the joint venture's board.  He was eventually forced out of the country, but not before BP had made billions of dollars and locked up reserves for decades to come.  Part of Dudley's success is why, when the Obama regime demanded a $20 slush fund to compensate victims of the spill, Chairman Carl-Henric Svanberg didn't blink.  Drop in the bucket, champ.  Let me introduce you to Bob Dudley...

In American Spectator today, Daniel Oliver laid out a powerful case for Obama as a President who is in way over his head.  Oliver calls it being in a "square box."  In business, being in "the box" means you are working within a well defined set of limits to one's experience and capabilities.  You have no solutions to the problem before you because your life experience has never presented you with a set of challenges even remotely similar.  Failure is inevitable, because your imagination is limited by your experience, capability and education.

Svanberg has shrewdly shrunken the box by replacing Hayward with Dudley.  Hayward is a British gentleman.  Dudley is a bare-knuckles brawler who beat Vladimir Putin on Putin's own turf.  BP is playing Obama like a cheap fiddle.  The company knows he's in way over his head, and they just hired the man who's more likely than not to break the ankle holding the boot on BP's throat.

Extra point:  Tony Hayward took all the Waxman - Stupak hate back to London with him.  Dudley didn't get the grill job, and that really has to chap their collective ass.

Shocker: BP's Response Plan Flawed!

Via NOLA.com:

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Professor Peter Lutz is listed in BP's 2009 response plan for a Gulf of Mexico oil spill as a national wildlife expert. He died in 2005.

Under the heading "sensitive biological resources," the plan lists marine mammals including walruses, sea otters, sea lions and seals. None lives anywhere near the Gulf
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BP PLC's 582-page regional spill plan for the Gulf, and its 52-page, site-specific plan for the Deepwater Horizon rig are riddled with omissions and glaring errors, according to an Associated Press analysis that details how BP officials have pretty much been making it up as they go along.

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The AP analysis of the response plans is scathing and damning. Go read the story at the link, if you've the stomach for it.

Given the tragically comic collection of "engineering" solutions the company has attempted over the last seven weeks, including top hats, top kills, junk shots and such, the fact that BP's planning documents were fatally flawed is no great surprise at all. No, the real shocker is that the government approved these documents last year.

Expert dead for four years?  No problem.  No adverse impacts to marine life such as turtles, birds and mammals?  No problem.  What's that?  Those critters don't even live in this part of the world?  No problemo, dude!  Pass the joint and party on!


Extra Point: Both BP and MMS mouthpieces said something to the effect that these issues are being "investigated." What's the likelihood that, when Mr. Holder announces the results of a criminal probe, BP executives are indicted, while MMS employees walk?

The abysmal oil recovery effort

NOTE: Click the image for the full size version
The chart above shows that, to date, the effort to recover some of the lost oil from the Deepwater Horizon well has not been as effective as Gulf Coast residents would have hoped.  The Deepwater Horizon rig, owned by Transocean and leased by British Petroleum, suffered a catastrophic blowout on April 20, 2010.  The ensuing explosion and fire claimed 11 lives, and the vessel sunk two days later.  As she went down, the riser pipe attached to the well was damaged, allowing oil to spew nearly uncontrolled one mile below the surface.  On April 24, the US Coast Guard announced that it had discovered the leak, but, believing that the leak was not as significant as it would turn out to be, did not activate a plan in place since 1994 to immediately contain and burn off oil as it reached the surface.

Several days of bad weather dispersed the oil, and the the size of the spill grew beyond the capability to trap and burn it.  This caused the cleanup strategy to change from one of collect-and-burn to collect-and-treat.  The results have been disappointing.

The dark brown line shows the cumulative release of oil from the well since the day the leak was discovered.  For this series, I've chosen the mid-point of the government's range estimate of 500,000 to 1 million gallons per day.  The actual amount of oil released could be anywhere from around 23 million to 46 million, and officials have said that the flow rate has varied on an almost daily basis.  So, the mid-point of the range seems reasonable.

The red line shows the amount of oily water recovered over time by skimming, booming and other collection methods at sea.  Officials have said that the oil-and-water mixture contains about 80% water and about 20% oil (on average).  So, the blue line represents the actual amount of crude oil recovered from the Gulf waters.

To date, somewhere in the neighborhood of 35 million gallons of hydrocarbons have been spilled into the Gulf.  Some of that material is also natural gas, and there is no way of ascertaining the proportion of gas to oil.  So the actual figure could be somewhat less, or somewhat more, depending on how much material is being ejected and what the actual hydrocarbon mix is.  But less than half of that amount, or about 15 million gallons, has been collected in the diluted oil-water mix.  And, since that mixture only represents about 20% oil, somewhere in the neighborhood of 3.0 million gallons of actual crude have been recovered, leaving more than 30 million gallons to foul marshes, wash up on beaches, destroy wildlife habitat and kill untold numbers of wildlife.

Both BP and the federal government bear some responsibility for the failed cleanup and containment effort.  BP bears some of the blame because mobilizing equipment in a large enough scale to perform a robust collection effort is expensive.  They wouldn't volunteer the option if they didn't think they had other, less expensive options.  But the federal government shoulders the blame, as well.

For starters, reports issued in the aftermath of the accident showed that there was a culture of substance abuse and promiscuity between regulators with Minerals Management Service and oil company officials.  Reports also documented lax inspection and safety controls for years, but particularly in the weeks leading up to the disaster.

Secondly, after the incident, the government didn't begin to fully mobilize resources under the Oil Pollution Act until April 29, nine full days after the incident and five full days after the spill was discovered.  President Obama did not name an Incident Commander until May 1, eleven days after the incident and a full week after the spill was detected.  For federal officials to claim that they've been on the job "since day one" is a laughable farce.

Furthermore, the 1994 in-situ burn plan called for the staging of specialized fire boom in the area so that the plan could be implemented without delay.  However, neither the Coast Guard, nor BP, nor Minerals Management Service had even one linear foot of the material on hand. Indeed, in order to conduct the alleged "test burn" on April 28, the Coast Guard had to order the boom material from a supplier in Illinois!

And lastly, under the Oil Pollution Act of 1990, the United States government has the authority to direct the "responsible party" to take whatever action the government deems necessary in order to minimize damage and protect property.  Knowing as soon as April 24 that the Deepwater Horizon incident could morph into an unprecented environmental disaster, the government essentially allowed BP to tell them what the plan was.  No one seemed to have a clue; no one seemed to be in charge.

Extra Point: What else could Obama and his regime have done to contain and cleanup this spill?  Hmmm...

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America watched and waited through the failures of the sequential solutions: from Top Hat to Top Kill. What made it all the more frustrating is that a few enterprising media reports mainly outside the media mainstream told us President Obama apparently had options that could have -- and probably should have -- been ordered while we waited for the leak to be plugged.

Especially the supertanker vacuuming solution.

We learned of it from the web sites of Esquire Magazine and America Online. Esquire was the first to tell us about a 1993 effort in which Saudi Arabia used empty oil tankers to siphon away a huge oil spill at sea. Saudi Aramco, the huge oil company, reportedly kept the leak and the solution secret so the world wouldn't focus on the fact that perilous oil leaks can happen.

Esquire and aol.com interviewed a Saudi Aramco engineer at the time, Nick Pozzi, who detailed what had occurred: a flotilla of empty tankers pumped the vast oil-and-water slick into their cargo holds, then sailed to ports where the oil was removed and the water was returned to the sea.

Former Shell Oil Company president John Hofmeister also told reporters from both organizations that the tanker-vacuuming plan had worked -- and urged that it be tried in the Gulf of Mexico. He repeated his recommendation on NBC's Today Show -- so it got into the media mainstream, even though no tankers were commandeered and sent into the Gulf.

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The Deepwater Horizon Incident - A Timeline

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