~ Has the Gusher Really Stopped? An Oily Update

That sense of relief, that the Deepwater Horizon gusher in the gulf was stopped, was nice while it lasted.

All three days.

Unfortunately, pressure tests have exposed a seep (a.k.a. a leak) and “undetermined anomalies” (via CNN):

The federal government’s oil spill response director says testing has revealed that there is a “detected seep a distance from the well” and has ordered BP to quickly notify the government if other leaks are found.

“When seeps are detected, you are directed to marshal resources, quickly investigate, and report findings to the government in no more than four hours,” retired Adm. Thad Allen said in a letter to BP Chief Managing Director Bob Dudley. “I direct you to provide me a written procedure for opening the choke valve as quickly as possible without damaging the well should hydrocarbon seepage near the well head be confirmed.”

BP spokesman Mark Salt said Sunday night that he had no information about the leak mentioned in Allen’s letter. The letter does not provide further details about where the leak was spotted or how big it is.

And it seems BP and the Obama administration are having a little disagreement over how to move forward. (via WaPost):

Sunday morning, BP Chief Operating Officer Doug Suttles told reporters that, because a new mechanical cap seems to be holding, “there is no target set to open the well back up to flow.” That seemed to be an open-ended plan to keep the well closed. Suttles said that if no problems arose, the well could stay closed until a “relief well” shuts it down for good.

But then, Sunday afternoon, Coast Guard Admiral Thad W. Allen (ret.), the federal government’s point man in the disaster, said in a statement that concrete plans for the well had not been made past 4 p.m. Sunday. After that, Allen said, there was “the potential for additional extensions [of the test] in 24-hour increments” — but also, implicitly, the possibility that the well would be re-opened.

The issue is not just about a possible leak, but the current and future integrity of the well.  The custom-built cap holding back the gusher from BP’s broken well might be working just a little too well and putting too much pressure on damaged or weakened areas.  Removing the cap would be a temporary measure to help prevent further damage that may make the well unstoppable. (via AP):

…the plan the federal government laid out a day earlier, in which millions more gallons of oil could be released before the cap is connected to tankers at the surface and oil is sent to be collected through a mile of pipes.

Federal officials wary of making the well unstable have said that plan would relieve pressure on the cap and may be the safer option, but it would mean three days of oil flowing into the Gulf before the collection begins.

Another issue weighing on the reopen decision (via NYTimes):

If the well is not reopened, it could mean that the precise volume of oil that leaked — the well has been estimated to be flowing at a rate of 35,000 to 60,000 barrels a day — may never be known. That raises the question of whether the company might escape some liability for the spill.

On the plus side, work on the relief wells (to permanently kill the well) seem to be progressing on schedule.  At least for now. (via AP)

The company said work on the first one was far enough along that officials expect to reach the broken well’s casing, or pipes, deep underground by late this month. Then the job of jamming the busted well with mud and cement could take “a number of days through a few weeks.”

And the gulf is loosing some of its oily glow.  Which sounds encouraging.

Members of a Coast Guard crew that flew over the wellhead Saturday said far less oil was visible than a day earlier. Only a colorful sheen and a few long streams of rust-colored, weathered oil were apparent in an area covered weeks earlier by huge patches of black crude. Somewhere between 94 million and 184 million gallons have spilled into the Gulf, according to government estimates.

But what about the quality of the water?  If the water looks clear of oil, is it safe to swim in?  WKRG in Alabama decided to test the waters that beach goers and swimmer were returning to, despite posted warnings, this weekend.  And as the video below shows, the results were a bit explosive.

Vodpod videos no longer available.

Ninety days in to this and finally some answers on air quality may soon be at hand. (via CSMonitor):

Researchers at Tulane University and the Louisiana Bucket Brigade – an environmental non-profit started after Katrina – soon will release air quality findings based on their independent research and analysis of data provided by the EPA and state monitoring agencies. At the University of New Orleans, Dr. Bhaskar Kura is completing a separate analysis which he will present the week of July 26.

Kura, of the University of New Orleans, is heading an interdisciplinary research effort examining air quality issues related to the spill, which will include scientists from several universities. …

The multi-pronged study will also look at water quality issues, including whether soot and other pollutants created by burn-offs of oil in the Gulf have created acid rains and so-called “black rains,” which may affect groundwater and soil compositions.

“Air pollution is by far the most important factor in terms of human health, but the particulates created by burning oil on the surface are particularly toxic, and when they go up in the clouds they will come down with the rain,” Kura said.

Though none of it sounds hopeful for the fish and wildlife. (via WSJ)

… new research suggests oil may be poised to enter the Gulf food chain. Scientists from the University of Southern Mississippi and Tulane University have found oil droplets in young crabs along a broad swath of the Gulf coastline, from Grand Isle, La., to Pensacola, Fla.

The crabs “are prey for a lot of our estuary fishes and other crabs, so there is the potential for other species to ingest this oil through the crabs,” said Harriet Perry, fisheries director for the University of Southern Mississippi’s Gulf Coast Research Laboratory and one of the scientists involved in the work.

Laboratory tests should show in the next week whether the droplets match the oil from the BP well, she said.

Anyone else waiting for another shoe to drop?

*****

On the economic front, Dr. Joseph R. Mason, Endowed Chair of Banking at LSU has just released a paper (h/t NQ writers LJ, BH, CDP – download PDF here.) pointing to the very high cost of the Obama administrations deepwater drilling moratorium.   It is hard not to be impressed with the numbers presented for even a temporary shut down.

The effective six-month moratorium on offshore oil and natural gas production will result in the loss of approximately $2.1 billion in output, 8,169 jobs, over $487 million in wages, and nearly $98 million in forfeited state tax revenues in the Gulf states alone.

And at a time when state are starved for tax revenue, this is only going to add to the very real pain of the gulf coast residents and their communities.

Decrease in State and Local Tax Revenues

from a Six-month Moratorium of Deepwater Drilling

Texas                      -$22,843,972

Alabama                   -$7,247,044

Mississippi                 -$8,418,401

Louisiana                  -$59,356,236

Total GOM                -$97,865,652

But I have a hard time with sweeping statements like these.

The data are clear. The moratorium will cost the Gulf Coast region jobs, money, and economic development. In fact, the moratorium could be more costly, than the oil spill itself,” Dr. Mason said “The region is already struggling from devastating losses from Hurricane Katrina, Hurricane Gustav, and the nation’s depressed economy. By stifling one of the area’s primary economic engines, the administration is crippling the local economy and risking long term consequences.”

Without counting the offset of jobs, wages and output that will be generated through evaluating and fixing the wells, and bringing them into stricter compliance!

And more importantly what would be the cost of one or more additional spills? Even ones that are a half, a third, or an eight of the Deepwater Horizon spill?

According to BP PLC on Monday (via AP):

… the cost of dealing with the oil spill has now reached nearly $4 billion. The company said it has made payments totaling $207 million to settle individual claims for damages from the spill along the southern coast of the United States. Almost 116,000 claims have been submitted and more than 67,500 payments have been made, totaling $207 million.

*****

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