(BP oil spill story updated for BP stock gains, static kill effort)
NEW YORK( TheStreet) --The U.S. government and BP have both issued good news about the oil spill.
BP: After the Cap
|Click here for the issues that loom for BP. |
BP ( BP) shares reached the $40 mark for the first time since the end of May, closing at exactly $40 on Tuesday afternoon and staying above that level on Wednesday morning.
It wasn't all good news for BP. The government sponsored team of scientists conducting research on the oil spill flow rate announced on August 2 that the BP oil spill may have been leaking as much as 62,000 barrels of oil a day at the outset of the crisis, higher than the previous high-end estimate of 60,000 barrels.
The BP static kill, to be followed by the relief well attempt, can be dubbed the "kill and drill" final plug operations on the leaking Macondo well.
APC) and Mitsui Offshore, are resisting efforts by BP to exact a portion of oil spill liability payments from them. President Obama has even referred specifically to BP being made to pay all claims resulting from its "recklessness" in causing the oil spill.
BP has made some fairly large financial concessions too, and its oil spill liabilities are still unquantifiable.
Estimates still vary widely about the potential liabilities BP will face before all is said and done, and even as the progress is made on the final well seal.
A BP dividend cut was a major issue for BP shareholders, but a minor issue compared with the unquantifiable total costs BP will face, maybe for years to come, from the oil spill.
In more quantifiable oil spill risks, independent scientists in the Gulf of Mexico who have been saying for some time that huge underwater oil plumes are spreading unseen in the Gulf, received government confirmation in June of underwater oil plumes that can wreak havoc with all forms of sea life.
The government and BP still don't have an exact flow rate, but one thing the government has conceded is that the impact of the BP oil spill will be measured in years.
The newest, worst-case scenario for the BP oil spill was presented by Dan Pickering, the head of research at energy investor Tudor Pickering Holt , who said that if BP's relief wells don't work as quickly as expected, once they are completed in August, the oil spill could continue until Christmas.
The government full press on BP has been in place for months, though with its success, albeit, mixed at best.
In mid-May, when Kevin Costner arrived to the Gulf Coast with his oil centrifuges to help BP in its efforts to contain the oil spill, it was the most absurd turn yet in the worsening environmental disaster. Nevertheless, the absurd turns in the BP oil spill continue.
BP is far from alone in energy sector companies dealing with the market impact of the oil spill.
Meanwhile, the estimates for the amount of oil leaking in the Gulf of Mexico from the BP well indicate it far surpassed the Exxon Valdez disaster.
White House environmental advisor Carol Browner has upped her own negative outlook for the BP oil spill, from calling it the worst oil spill in the country's history, to describing the BP oil spill as simply the "worst environmental disaster" ever suffered by the U.S.
Thursday, May 27, was supposed to be judgment day for BP and it's top kill in the oil giant's biggest bid to take control of the oil spill, but the only concrete action turned out to be President Obama's formal ban on offshore drilling in the Arctic and the Gulf of Mexico.
One constant lightening rod throughout the BP oil spill has been the Interior Department's Minerals Management Service, and the government is still trying to set the right tone in its relationship with the oil industry.
Comments made by BP's chief executive, Tony Hayward, throughout the oil spill crisis have given the public plenty of reason to make the BP chief the N0. 1 lightening rod for abuse.
BP has already paid $4 billion in its failed effort to contain the oil spill, but that price tag would be nothing compared to a federal ban on BP operating in the U.S.
All the polling has certainly defied BP's best efforts to massage the public message. And BP CEO Hayward has had company in the BP public relations game throughout the oil spill crisis.
On Monday, May 24, BP said it had pledged $500 million to create an independent scientific research fund to work on the oil spill, but that seemed like little in the face of the worsening oil spill crisis by the time June arrived without a fix in sight.
More than a month into the oil spill, and there's still no clear explanation for what caused the spill.
BP Chief Operating Officer Doug Suttles told CNN as far back as May 10, "What we've been doing is pushing parallel paths because we don't know which one's going to work."
BP CEO Hayward told the the BBC, "We will ultimately win it because ultimately one of the interventions to stop the leak will stop the leak."
BP had no shortage of potential oil spill containment techniques; it was just short of one that has been proven at a depth of 5,000 feet, or is comprehensive in attacking the root problem of the leaking underwater well.
The list of BP's failed techniques to stop the oil spill is not long, but it is distressing.
Bad weather, which has proved to be an on-and-off unintentional help to the oil spill, became a more prominent factor with hurricane season officially beginning on June 1.
It's been a few weeks since the oil spill first hit the most sensitive barrier islands off the coast of Louisiana.
Louisiana barrier islands remain shuttered by the government, where the first oil reached shore.
Help in the form of boats, workers and government agencies, has been flooding the Gulf of Mexico for weeks.
Even after last week's BP success in shutting down one of the three leaking valves, the oil spill had not been slowed before the dome's failure.
One Coast Guard strategy has been to use 500-foot long fire-resistant booms to contain areas of the thickest oil on the ocean's surface, tow them to remote areas, and light them on fire.
Predictions for the level of environmental damage from the oil spill continued to worsen.
"Obviously, what's occurring now will also be taken into consideration as the administration looks to how to advance that plan and what makes sense and what might need to be adjusted," said Carol Browner, Obama's adviser for energy and climate change.
Gov. Charlie Crist of Florida, expected to leave the Republican party and run for U.S. Senate as an independent, flew over the spill and said it made him reconsider his support for drilling off Florida's coast.
All along the congressmen were concerned that BP's and Transocean's efforts to control the oil spill were using unproven methods, and with the failure of the dome, those concerns were well placed.