Gulf Oil Spill Just Latest Black Mark on BP’s Reputation in America

Alaska Pipeline Fractures, Deadly Texas Refinery Fire Among Past Disasters

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By Terry Macalister, Guardian

Tony Hayward, BP’s chief executive, will be made to work for his £4 million salary this year as the boss of Britain’s biggest oil company stands up to its biggest crisis since the Texas City refinery fire in 2005 killed 15 workers and scorched the firm’s reputation in the U.S.

The latest rig explosion threatens to link BP with an environmental accident that some are speculating could be worse than the Exxon Valdez oil spill.

Texas City, Alaskan pipeline fractures and damage to another offshore platform, Thunder Horse, all turned BP into one of America’s least liked firms and helped trigger the premature departure of former boss John Browne. 

Hayward has been slowly trying to rebuild BP’s image as a responsible and caring employer with its eye on safety and technical excellence rather than corporate takeovers and glossy green spin, of which critics accused Browne.

The future view of BP will depend on what unfolds in the next days and weeks as the company tries to stem the oil, which is spilling into the Gulf of Mexico from the site of the rig explosion at an estimated 5,000 barrels a day and which could eventually threaten beaches.

But the real test will come when a spate of investigations by U.S. government agencies conclude whether any blame can be attached to BP for the demise of the Transocean Deepwater Horizon rig.

City investors are already panicking, even though BP said there was no reason to presume Exxon Valdez-scale environmental damage.

No doubt there will be some who fear BP will be guilty until proven innocent in the court of public opinion. As recently as last October it was fined over £50 million by the U.S. occupational health and safety administration for ongoing safety problems at Texas City.

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By Chris McGreal, Terry Macalister and Adam Gabbatt

The United States mobilized its military today in an attempt to help deal with the vast oil slick spreading across the Gulf of Mexico amid predictions that it will begin to hit the Louisiana coast within hours and could cause one of the country’s biggest environmental disasters.

The U.S. Coast Guard said today that oil was flowing into the sea at five times the rate previously estimated.

The government has taken broad control of efforts to contain the spill from last week’s blowout on the Deepwater Horizon rig, with the White House saying it had imposed "oversight" of BP’s efforts and is pursuing an "aggressive" response that includes mobilizing naval ships. Louisiana has declared a state of emergency, and the White House said President Obama and the joint chiefs of staff were being briefed regularly on the situation.

Today, Obama said the British company was "ultimately responsible" for the spill.

The reassessment of the scale of the disaster, which came after a third leak was discovered, sent BP’s share price plunging.

Under U.S. law, the company is responsible for the costs of dealing with the crisis, including paying for use of the military.

Environmentalists warned that the spill, which covers an area about the size of Cornwall and is just a few miles off the Mississippi river delta, could turn out to be as catastrophic as the impact of the Exxon Valdez tanker spill off Alaska was 21 years ago.

The most immediate threat is to birds, dolphins and turtles in the area and to the Louisiana coast, as strengthening winds push the slick toward the shore. Environmentalists say the oil is likely to hit the delta and a series of barrier islands that have still not fully recovered from hurricane Katrina six years ago and which are home to more than 400 species. If the oil continues to spread, it could hit Mississippi, Alabama and Florida.

The Coast Guard estimates that 5,000 barrels a day are gushing from beneath the destroyed rig 50 miles off the coast. Eleven rig workers are still missing.

The U.S. homeland security secretary, Janet Napolitano, is to visit the Gulf of Mexico tomorrow after declaring the spill of "national significance" — a decision that permits the government to mobilize a variety of resources, including the military.

"We will continue to push BP to engage in the strongest response possible and we will continue to oversee their efforts, to add to those efforts where necessary," she said.

BP has been using a mix of chemical dispersant, booms and burning to contain the spread. One method is to tow booms out to sea to surround parts of the spill and then set the oil on fire. Once the fire burns out, the remaining tar is removed by nets or skimmers. High winds prevented the final stage today.

BP is also planning to cap the well and capture the leaking oil, but this will take four weeks to put in place, by which stage more than 150,000 barrels could have been spilled. If the steel cap does not work, BP will have to try drilling a relief well, which would take three months.

By then, the spill could be more than 300,000 barrels — larger than the 258,000 leaked by the Exxon Valdez.

The Wall Street Journal reported that the oil well lacked a remote-control shutoff switch required by some other major producers, including Norway and Brazil. BP was at the forefront of recent lobbying of the US government against stronger safety controls for offshore drilling.

BP’s chief executive, Tony Hayward, said:

"The scale of the surface response is truly unprecedented, both for BP and for the oil industry."

However, a BP spokesman said the environmental damage from and cost of tackling the leak would not be in the same range as the Exxon Valdez tragedy, which happened close to shore in the narrow Prince William Sound in Alaska. Exxon spent $3.5 billion cleaning up the Valdez spill and had hundreds of millions of dollars in damages awarded against it.

Fund managers and analysts in the City said they were deeply worried about the financial cost to BP of the kind of legal action that could be taken in the US by those damaged by the accident.

Over £13 billion has so far been knocked off the oil company’s stock market value since the Deepwater Horizon rig caught fire. The City of London was alive with rumors that the spill could even be 10,000 barrels, according to one oil analyst who asked not to be named: "We have also heard that the state of Louisiana is threatening to sue the company," he added.

The Gulf incident is particularly damaging for BP because it is still recovering from the damage to its reputation caused by the Texas City fire, pipeline fractures in Alaska and a rig accident in the Gulf.

(Republished with permission of the Guardian)


See also:

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(Photo: NASA/MODIS Rapid Response Team; Chart: NOAA)