BP paying a high price for blowout in Gulf



is struggling almost as hard to limit the damage to its reputation over the Gulf of Mexico oil spill as it is to bring the leaking well itself under control – which may take three months, it became clear yesterday.

Although BP did not own or operate the Deepwater Horizon exploration rig which exploded and sank, leading to the spill, the company had leased the rig and owned the licence to drill in the seabed. That means that under US law it has to take full responsibility for the clean-up operation.

This may end up costing the firm as much as $500m (£327m) if the leaking well, which is pouring oil into the sea at a rate of 5,000 barrels a day, cannot be capped and can only be stopped by the drilling of a relief well, which is likely to take two to three months. The present clean-up operation, involving more than 70 vessels, is costing the firm $6m a day, and the relief well may be a $150m operation.

Yet the enormous costs are far from the only problem for the British company. In the US the incident is being seen as "BP's oil drilling disaster" even though the operation which led to the blowout was run by the Swiss-based oil drilling company Transocean, which owned and operated the Deepwater Horizon rig; only six of the 126 people on board at the time of the accident were BP employees.

BP's reputation in the US was already fragile after an accident at its Texas City refinery in 2005, which killed 15 workers and injured more than 170 others. The company's safety practices were ferociously criticised in an official inquiry.


No doubt BP will pay a price for the disaster beyond the actual costs. As far as I can see the company has acted responsibly and had not tried to dodge its responsibility. The big problem is that it has not been able to get the shut off valve closed and teh equipment it has been relying on has not been up to the task. This si a problem that the offshore drilling business needs to address and it is much bigger than BP's problems with this well.

Those responsible for offshore technology are going to have to show they have an effective means of dealing with a blowout, or they are going to be dealing with a blowout in Washington and not just the Gulf.

As I have said before, there are some very smart engineers in this business and they need to be put on solving the problem most ricki tick.


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