This is likely going to drag on for years, but...

The Feds have started lawsuits against nine companies that were involved in this. Some of the suits seem pretty far fetched to me. I mean, suing the company that put together the loan for the project?

Anyway, lawsuits like this, at least the ones I have seen, are usually done to get the facts in front of a Judge so everyone can know what is fact and what is not. I am sure there is something to some of them and nothing to some of them since that is the way it always seems to be.

One thing that will come out of this will be new regulations for drilling. There is no need to panic over this as hearings will be held for about 15 years before a final rule is issued. That 15 years is just an estimate. The last rule change I was involved in took 18 years to make final, but everybody had a chance to say their piece and a lot of good stuff was bought out by industry people that will save lives later.

There may also be criminal charges filed, but the Feds always say that. I think these old boys were just drilling at the edge of science and they fell off the edge of the Earth. When you are doing something that has almost never been done before then how do you know if you are doing it right?

Anyway.... There may be a lot made of this in the news over the next few days or weeks or years and I just wanted to throw some stuff out there so you might be better able to understand just what is being discussed.

BP Restarts Dividend Payments, Selling TX and CA Refineries

$0.07 dividend per share for the last part of 2010.

That's true, but the Deepwater Horizon debacle was much worse than just not being sure that they were doing it right. Some of those guys knew for sure that they were doing a bunch of things wrong. They also knew that they had no idea what to do if anything went wrong. The 1979 spill proved that. I don't know who was at fault, but these arrogant SOB's had no business drilling at that depth in the frigging Gulf of Mexico without being much more careful about what they were doing.

Thank you for posting that. I hope the case gets the attention it deserves.

There are already new rules for drilling, in place for 8 months or so. And yes, they are a burden and do increase the cost of drilling, which will make Gulf oil & gas a bit more expensive to produce and the price will be passed to the consumer (from the companies) and to the taxpayer who must pay regulators and bureaucrats to administer increased regulation.

Consumers and taxpayers will also pay for any remediation and/or damages.

And your knowledge and experience that leads you to your conclusions concerning the oil industry derives from ....?

News reports and other articles concerning the jackleg blowoff preventer and the first attempts to seal the Deepwater Horizon.

The descriptions I read about the blowoff preventer reminded me of my 52-year-old Massey Furguson. The difference is that my tractor's job is to pull a manure spreader. When my tractor fails (rare), I have to switch to my other tractor until I fix it. It doesn't threaten an entire eco-system.

And their attempts to seal the leak were the same ones that failed, in much shallower water, in 1979. In 30 years, they didn't even try to come up with new methods?

I'm sure there are other things I've read, but those are what comes to mind. If you can cite me to sources that disprove either of those points, I would love to see them.

Based on what I've seen, it was outrageously arrogant for them to play Russian roulette with the Gulf of Mexico.

Someone asked why I thought I should comment on this......

I spent more years than most people have been alive in the oil refinery and transportation business with one of the biggest companies in the world.

I used to do recreations of accidents in order to put together what took place, and I also operated and designed transportation systems for crude oil, LPG and refined products.

I have been retired for several years and really do not miss any thing about the job. Currently my part of the world is encased in ice and snow, but when I was working we called that just another day.

I did not work for BP. Also, in all the years I was employed when I was put in charge of an operation no one ever got hurt and nothing ever blew up. There have been advances in well protection since the blow-out in 1979, but someone has to make the decision to use these advances before they will do any good and sometimes people decide not to use them.

You can do a job fast and bad or slow and good. In the oil business slow and good is always the most profitable.

Additional cost to drill a well will be passed on to consumers, but it is helpful to put this into perspective.

A producer might net-back $43 on a bbl of oil these days. A good well in the Gulf might produce 100,000 a day. At least most of ours did.

That is a net of $4,300,000 a day, or $1,569,500,000 a year if you could produce year round which you really cannot when you consider down time and Hurricanes.

Drilling a well and putting a platform in place might cost $50,000,000 or more, but that can be paid out over three years if you wish. Most companies take longer; more like ten years.

All the whining about the additional cost of the new regulations is just that: Whining. When I started you could dump PCB's on the ground. Today that is a criminal offense. Somehow, we all kept out of the poor house.

The new regulations might mean one less jet in the hanger, but that's OK. We had twelve of them and never used all of them at one time anyway.

If everyone acted responsibly there would be no need for new regulations, but sadly they don't.

If you want to see regulations at work then breeze on over the Texas Railroad Commission's web-site and see what real regulations look like. When it comes to regulations for the oil and gas biz these guys wrote the book on it.

I mean really. They wrote the book that almost every state in the US uses for their oil production.

Well I'll be damned. I'm so accustomed to dealing with armchair experts and Monday morning quarterbacks that I completely underestimated you. For that I apologize.

A long time ago I worked in the oil industry for about 10 years or so, mostly in exploration.

Since late April of last year I've been working on natural resources damage assessment due to the Gulf oil spill. I've talked with engineers and scientists on various sides of different issues. Also a fair number of government solicitors. All of them agree BP is the major party responsibility for the spill, which is why BP came out so early admitting responsibility and struggling to pay its "fair share".

Exactly how much is "fair" will likely end up being negotiated for the most part. Some parts will be litigated and there will be suits between the various responsible parties.

On the other side, the state and federal trustee agencies are struggling with assessment means, methods, results and interpretation.

To me, that's all a good sign. There's still a lot of sausage to be ground, no question. But it seems to me that the various parties are mostly on convergent trajectories. I wouldn't be surprised if some major settlements aren't reached before mid-summer.

You might want to check on that rate you quoted, I bet you won't find many 100,000 BOPD wells out there (maybe a large PLATFORM). And take the 25% right off the top for the MMS royalty. This is why when people ***** about Exxons profits, the Federal tax payment (not royalties) by Exxon is more than most companies make, the fed gets it for just being there, no risk to them at all.

And add in the wells that are dry that cost 20 million each and you can start to see the picture. Oh and add in the lease payments to the MMS for the initial purchase, and the shooting and interpretation of seismic....

And when you do business in multiple states, it becomes REAL clear that everybody is doing their own thing. Nobody followed the RRC book. They might have snagged an idea or 2, but every state is REAL different.

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MB-less

BP was an accident waiting to happen. They have a horrible safety record. They damn near sunk a huge platform because the ballast valves were installed backwards...

It is a perfect case of more regulation is not the answer. It is similar to a hate crime. If you kill someone, why does it being a hate crime matter? You already committed the ultimate sin, you should be punished for that. Hate crime designation is just stupid.

The regulations are there, (as are the laws). The key is enforcing them.

And when it comes to deep water drilling experts, you won't find any working at the MMS. There are few and they work for the majors.

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MB-less

On the other hand.
Is the Obama Administration in contempt of a federal court ruling regarding their shutdown of that entire industry in the Gulf? Seems I remember a federal judge in New Orleans issuing an injunction.

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1982 300SD " Wotan" ..On the road as of Jan 8, 2007 with Historic Tags

Sec of Interior's lawyers reworded the shutdown and issued the reworded document. The suit about it has not been heard, IIRC.

It's such a burden being you.

Cute.