NEW YORK ( TheStreet) - Total ( TOT) is paying a big price -- as measured by the market reaction -- for the natural gas leak in its North Sea Elgin platform on Tuesday, which the oil major said could take as much as six months to contain. The six-month time-frame to drill a relief well sounds eerily similar to the "last resort" emergency plan that BP ( BP) pursued during the Macondo well disaster. A deep water natural gas disaster, though, can't compare to an oil spill when it comes to potential environment damage. The 7% decline in Total shares on Tuesday is a punishment born of the post-Macondo era. Energy investors shoot first and ask questions later. Indeed, the firing was rapid in ADR shares of Total -- 27 million shares traded for an ADR that usually trades less than 3 million shares.
Total faces the biggest deepwater disaster response test since the BP Macondo well disaster. The environment may be luckier this time.
Take it from Chevron ( CVX) CEO John Watson, who recently said in response to a question about the company's woes in Brazil, that the only strategy for an oil major is, "Don't put oil in the water." Watson didn't say "Don't put natural gas in the water." Not that Chevron or Total would want to put anything in the water other than perfectly performing deep sea platforms. There are human health risks from gas at the surface -- the rig was evacuated and other majors have evacuated nearby rigs -- as well as the risk of a blast caused by the concentration of gas. There is also the fact that BP's initial comments on the Macondo well disaster proved to be far from accurate in assessing the scope of what was about to occur. Therefore, sensitivity to any bad news from the deepwater drilling industry might make all incidents equal as far as headline events, but the fear of billions upon billions in environmental fines and lawsuits to come that would put the Total incident in the category of the BP Macondo well disaster isn't supported by some basic science. Here are some of the most important distinctions that need to be made between a subsea natural gas leak and an oil spill.
Most oil spills include some natural gas and vice versa. The Macondo spill also leaked natural gas, and it's likely to assume that the Total Elgin leak includes liquid hydrocarbons, even if it's predominantly methane gas.
Total says that the leak isn't coming from the seafloor, but from a "gas-bearing zone" at the level of the Elgin platform.
Natural gas leaks from the seafloor are common and exist in the Gulf of Mexico as well
In the case of these seafloor leaks, or "seeps" as scientists refer to them, the natural gas serves as nutrient for microbial life.
In the case of the BP disaster, there was evidence that microbes moved in and oxidized the methane gas. It's a marine food chain effect that can be measured in a declining level of oxygen in the water. This nutrient cycle would be the same in the North Sea.