- converting your family car to CNG could cost 10 to 20k
- if your home isn't currently using Nat Gas then you would be hard pressed to find an outlet
- the gov't can't mandate CAFE standards without someone yelling" socialism, liberal tree hugger , Obamafuel , Kyoto slut or one world government conspiracy "
- the US needs to produce Nat Gas/electric hybrids that are the best in the world
but we won't because someone might lose a job in Saudia Arabia.
So, for the next 20 years "drill baby drill" and buy Exxon , Chevron and Conoco .
Follow posts
"The rig's blowout preventer also known as BOP, made by Cameron International Corporation of Houston,[65][66] is a fail-safe device fitted at source of the well, did not automatically cut-off the oil flow as intended when the explosion occurred. BP planned to use ROVs to close the blowout preventer valves on the well head 5,000 feet below the surface of the water.[67] The valve closing procedure was estimated to take 24 to 36 hours as of April 25.[53] As of May 2, 2010, BP had sent six ROVs unsuccessfully to try to activate the blowout preventer that could turn off the oil supply.["
1 Mile Under Water... and No Solution... BP Sucks
buydow, thanks for the update, Very interesting turn of events. My Father the small buisness owner will be happy to learn that while the federal gov. requires him to purchase liability insurance, it doesn't hold the standards accross the board.
OF, lets look at Min/Max impacts on Bp cashflow.
BP's TTM profit is 60.5 billion. with a free cash supply of 10 billion.
Max impact: assuming transocean and chevron dump the full check on BP. Lets take what exxon had to pay for the valdez and *tripple it for inflation 500million*3= 1.5 billion. or roughly 2.5 % of their annual profits. not including free cash. available.
Min impact: Since its too boring to say that transocean should get stuck with the check. lets put the same cost model, but mitigated simply shared amonst the 3 companies. Since Transocean owns the platform and the companies own the oil, lets say these two are equal parties with a further split between BP and chevron. 65-35.
So then the cost is divided, transocean 50%, BP 32.5% and chevron 17.5%. so then BP owes 32.5% or roughly 500 million of 1.5 billion total. This is roughly .8 % of annual profits.
Now back to you OF, assuming they start setting money aside, this cost is further dividend by the number of years it takes for atleast the initial legal wave to go through. Yes the money could be charged interest, but it would be unreasonable to charge interest on the money until after the initial settlement offer.
Meanwhile BP is looking forward to a summer where oil is going to break 100 dollars per barrel. BP is also hedged in solar, wind technology which is looking to receive another bump as the market is looking back into that sector. Furthermore BP bought anacanda copper which is sure to go up in value as the economy returns.
Lastly I don't see BP cutting dividends now if their profit sankover 10-12 % during the recession and they didn't have to cut dividends then.
OF, lets look at Min/Max impacts on Bp cashflow.
BP's TTM profit is 60.5 billion. with a free cash supply of 10 billion.
Max impact: assuming transocean and chevron dump the full check on BP. Lets take what exxon had to pay for the valdez and *tripple it for inflation 500million*3= 1.5 billion. or roughly 2.5 % of their annual profits. not including free cash. available.
Min impact: Since its too boring to say that transocean should get stuck with the check. lets put the same cost model, but mitigated simply shared amonst the 3 companies. Since Transocean owns the platform and the companies own the oil, lets say these two are equal parties with a further split between BP and chevron. 65-35.
So then the cost is divided, transocean 50%, BP 32.5% and chevron 17.5%. so then BP owes 32.5% or roughly 500 million of 1.5 billion total. This is roughly .8 % of annual profits.
Now back to you OF, assuming they start setting money aside, this cost is further dividend by the number of years it takes for atleast the initial legal wave to go through. Yes the money could be charged interest, but it would be unreasonable to charge interest on the money until after the initial settlement offer.
Meanwhile BP is looking forward to a summer where oil is going to break 100 dollars per barrel. BP is also hedged in solar, wind technology which is looking to receive another bump as the market is looking back into that sector. Furthermore BP bought anacanda copper which is sure to go up in value as the economy returns.
Lastly I don't see BP cutting dividends now if their profit sankover 10-12 % during the recession and they didn't have to cut dividends then.
I spent a couple of hours this weekend reading about the spill and its effects.
My analysis is that it will be much worse than I originally thought so I put in a stop loss before the market this morning. Naturally, as always seems to happen when I use a stop loss, it gapped open below my sell price so I was not stopped out.
YP, you can not compare this to the cost of the Valdez spill. The potential liability here is very different and will be significantly higher.
Which bring me to an intersting point. BP owns 65% this oil with Anadarko (APC) (25%)and Mitsui (10%) owning the rest. Does anyone know if Anadarko is also self insured? I'm guessing not as their stock has been largely unaffected. I wonder who they are getting their insurance throught, that might be a good short.
The platform is owned by Transocian (RIG) but the well was drilled by Haliburton (HAL) and the blowout preventer which appears to have failed is a Cameron Internation (CAM) product. It seems to me that all three are safe unless you prove incompetence or can prove that the blowout preventer did not function as intended which is always hard. These are probably safe ways to play this as they shouldn't have any direct liability.
The really scary thing is if BP/Anadarko/Mitsui are responsible for the loss of not only the livlihood of the shrimp and fishing fleets, the loss of tuirism to the area, the damage from the oil but what about the 1000's of people that are being mobilized to clean up the oil when it hits land. When Obama says BP will pay all costs does that include the cost of the Coast Guard and other federal and state support? I'm guessing it does.
Read Rigzone.com and Oilprice.com. Nobody on those sites believe they will be able to cap this leak due to the depth and currents in that area. This has only ever been done in shallow water. If they can't, which we should know in a week or two, we are 2-3 months before the other well can possible stop the flow and that is also going to be extremely difficult.
This means we could have this level of oil leaking for 3-6 months (multiple oportunities for the new well to get close enough they can stop the leak. The cost at that point will likely bankrupt BP and Anadarko if they are self insured.
We should be looking at public companies in Florida and Luisiana that earn the bulk of their revenue from tourists in the GOM. What about the fish farms in the area, are they public? Shipping companies with a large presence in the GOM. What about other oil platforms in the area, will they need to be shut down? If so, who owns them? If the platforms get shut down what percentage of US oil is produced there? Will it cause the price of oil to rise significantly?
What else will be effected?
My analysis is that it will be much worse than I originally thought so I put in a stop loss before the market this morning. Naturally, as always seems to happen when I use a stop loss, it gapped open below my sell price so I was not stopped out.
YP, you can not compare this to the cost of the Valdez spill. The potential liability here is very different and will be significantly higher.
Which bring me to an intersting point. BP owns 65% this oil with Anadarko (APC) (25%)and Mitsui (10%) owning the rest. Does anyone know if Anadarko is also self insured? I'm guessing not as their stock has been largely unaffected. I wonder who they are getting their insurance throught, that might be a good short.
The platform is owned by Transocian (RIG) but the well was drilled by Haliburton (HAL) and the blowout preventer which appears to have failed is a Cameron Internation (CAM) product. It seems to me that all three are safe unless you prove incompetence or can prove that the blowout preventer did not function as intended which is always hard. These are probably safe ways to play this as they shouldn't have any direct liability.
The really scary thing is if BP/Anadarko/Mitsui are responsible for the loss of not only the livlihood of the shrimp and fishing fleets, the loss of tuirism to the area, the damage from the oil but what about the 1000's of people that are being mobilized to clean up the oil when it hits land. When Obama says BP will pay all costs does that include the cost of the Coast Guard and other federal and state support? I'm guessing it does.
Read Rigzone.com and Oilprice.com. Nobody on those sites believe they will be able to cap this leak due to the depth and currents in that area. This has only ever been done in shallow water. If they can't, which we should know in a week or two, we are 2-3 months before the other well can possible stop the flow and that is also going to be extremely difficult.
This means we could have this level of oil leaking for 3-6 months (multiple oportunities for the new well to get close enough they can stop the leak. The cost at that point will likely bankrupt BP and Anadarko if they are self insured.
We should be looking at public companies in Florida and Luisiana that earn the bulk of their revenue from tourists in the GOM. What about the fish farms in the area, are they public? Shipping companies with a large presence in the GOM. What about other oil platforms in the area, will they need to be shut down? If so, who owns them? If the platforms get shut down what percentage of US oil is produced there? Will it cause the price of oil to rise significantly?
What else will be effected?
Moby said
"YP, you can not compare this to the cost of the Valdez spill. The potential liability here is very different and will be significantly higher."
agreed. However the interesting thing is I agree for probably the opposite reason. I unless something bad emerges, BP is **less liable here both from a ownership perspective as well as an ethical perspective. Exxon supposedly handled the valdez crisis terribly, and their mismanagement magnified the impact. Bp on the other hand has actually been extremely quick to respond and very transparent and forthcoming. I don't think you could ask them to do anything more.
"Will it cause the price of oil to rise significantly"
Yes, extremely, but in my opinion, more because of speculation, greed and opportunity.
"Read Rigzone.com and Oilprice.com. Nobody on those sites believe they will be able to cap this leak due to the depth and currents in that area. This has only ever been done in shallow water. If they can't, which we should know in a week or two, we are 2-3 months before the other well can possible stop the flow and that is also going to be extremely difficult."
I've heard several cool solutions. One of which is essentially dropping a big umbrella device on top of the pipe, which would collect the oil under a negative vacuum as the oil floats upward. 3 months is the maximum it should take.
"The cost at that point will likely bankrupt BP and Anadarko if they are self insured."
I realize you have the valdez isn't directly the same case. But really, you can look at several case examples throughout history, large companies do not go bankrupt over things like this. Check out Bhopal, india chemical release.
"When Obama says BP will pay all costs does that include the cost of the Coast Guard and other federal and state support? I'm guessing it does."
When obama says this I believe it was specifically in reference to a question on who would pay for the Coast guard to be doing all this cleanup. I'm guessing it may also imply some intent on habitat repair, but probably the farthest thing from original intent is to pay the shrimping industry. I don't believe the shrimping industry is a huge campaign contributor unfortunately. In addition, the same logic would imply that a motorist who breaks down on the highway during rush hour should have to pay the hourly wages of all those behind him he screws over as everyone is late for work. Believe me I'd love to be compensated on a daily basis for the horrible traffic conditions, but it just aint gonna happen.
Good discussion here though, I'm enjoying the back and forth.
"YP, you can not compare this to the cost of the Valdez spill. The potential liability here is very different and will be significantly higher."
agreed. However the interesting thing is I agree for probably the opposite reason. I unless something bad emerges, BP is **less liable here both from a ownership perspective as well as an ethical perspective. Exxon supposedly handled the valdez crisis terribly, and their mismanagement magnified the impact. Bp on the other hand has actually been extremely quick to respond and very transparent and forthcoming. I don't think you could ask them to do anything more.
"Will it cause the price of oil to rise significantly"
Yes, extremely, but in my opinion, more because of speculation, greed and opportunity.
"Read Rigzone.com and Oilprice.com. Nobody on those sites believe they will be able to cap this leak due to the depth and currents in that area. This has only ever been done in shallow water. If they can't, which we should know in a week or two, we are 2-3 months before the other well can possible stop the flow and that is also going to be extremely difficult."
I've heard several cool solutions. One of which is essentially dropping a big umbrella device on top of the pipe, which would collect the oil under a negative vacuum as the oil floats upward. 3 months is the maximum it should take.
"The cost at that point will likely bankrupt BP and Anadarko if they are self insured."
I realize you have the valdez isn't directly the same case. But really, you can look at several case examples throughout history, large companies do not go bankrupt over things like this. Check out Bhopal, india chemical release.
"When Obama says BP will pay all costs does that include the cost of the Coast Guard and other federal and state support? I'm guessing it does."
When obama says this I believe it was specifically in reference to a question on who would pay for the Coast guard to be doing all this cleanup. I'm guessing it may also imply some intent on habitat repair, but probably the farthest thing from original intent is to pay the shrimping industry. I don't believe the shrimping industry is a huge campaign contributor unfortunately. In addition, the same logic would imply that a motorist who breaks down on the highway during rush hour should have to pay the hourly wages of all those behind him he screws over as everyone is late for work. Believe me I'd love to be compensated on a daily basis for the horrible traffic conditions, but it just aint gonna happen.
Good discussion here though, I'm enjoying the back and forth.
I spent 7 years working in the Gulf of Mexico as a commercial hardhat diver. I worked on many drilling rigs and with my experience I may be able to shed some light on some of the rumors. First off, the valve which is referenced many times in these posts is called a Blow Out Preventer (BOP). After the well casing is driven and before drilling begins the blow out preventer is installed on the well casing just above the sea floor. The drilling then takes place through the BOP. I have installed many. http://en.wikipedia.org/wiki/Blowout_preventer The purpose of the BOP is to control sudden increase in pressure (see link). There are 3 way to activate (close) the BOP valve. The first is automatic, the auto close will close when it senses a sudden increase in pressure. The second is by remote control. The person in control of the drill floor is known as the “Tool Pusher”, The Tool Pusher has the remote BOP shut on his control panel. The third is a manual valve on the side of the BOP that can be operated by a diver or ROV. In this accident the auto close FAILED. The Tool Pusher tried and FAILED several times to close the valve before he was force to leave the drill floor due to the catastrophic blow out. The final attempt to shut the valve was by a ROV operating the manual valve on the side of the BOP, it FAILED. So lets look at some facts. Transocean, not BP own and operated the rig. Transocean, not BP owned, maintained, and installed the BOP. There are safe guards to prevent these types of accidents. It’s the BOP. One mile down or 100 feet down if the BOP fails you got trouble. And guess what, if this well was in 100 feet of water it would still be leaking, The BOP has failed and there is no way to close the valve. However, the well killing process will take longer due to the water depth. BP is liable to clean up the spill because they had leased the rig to drill their well. BP is also an easy target of anger. The truth is there are thousands of working wells in the gulf with hundreds of new wells drilled every year. Many of those wells are deep water. This accident could have happened to any oil company. In my opinion in the end, the cause of this tragic accident will be attributed to either mechanical failure of the BOP or Human error in maintenance or installation of the BOP. Neither of the factors are within BP’s control. The Gulf Coast indeed a beautiful place that will be horribly affected, as are the families of the 11 men who died.
LU 47 I to have had the same but different work experience. At Conoco Philips refinery there was also tragedy that put the whole community up in arms. There is a unit that’s called the cracker; most in refining biss would know what I’m talking about. It’s almost like a big clay pot kilm that is super heated by natural gas. We’ll there was an electrical storm that knocked out power to the control house & the unit. When power came back on the grid showed the cracker was not firing. The safe guard for the gas flow was a valve that would not only sense flow but temperature so it would turn off if cold or if there were no volume of gas. Hence the Failure it was either old needed maintenance of just was never working when installed. Short story operated kept pushing igniter to relight unit only to find out that it was full of gas. Power can back on moments later at the unit & the story 15 dead. You could see the flames for miles. Moral not all things can be controlled or stopped accidents do happen. I will wait to lay blame until the jury is in.
Closer
I would like to add this to my earlier post. All the fail safe devices that are mentioned in the various news reports out there refer to fail safe's that close the BOP valve. In the 3 ways I mentioned to close the valve the second was remotely. Along with the Tool Pusher controls there are many other remote devices to close the valve such as the "Dead Man" or Acoustic triggers. The simple fact remains, the BOP valve has malfunctioned and will not close. No amount of fail safe triggers would change that fact. Also the BOP in question the Cameron Type TL 18¾in 15K double preventer was equipped by cameron with a dead man fail safe. There are a few BOP back up systems out there. Shear seals are an "all else fails" device that can be used in conjunction with a BOP. They are not required by law but may be after this terrible oil spill.Why are these devices not commonly used or required you might ask. The likelihood of such a catastrophic blowout of a US operated drilling rig in the US OCS Gulf of Mexico is infinitesimally small. Since 1964 only 14 rigs have been lost or seriously damaged by blowouts in the US OCS of the Gulf of Mexico. Since 1970 there have only been 2 blowout accidents with fatalities (1970 and 1987, each with 4 fatalities). From January 1980 through January 2008 there were 173 blowouts/well releases from the US GoM OCS. Almost 30,000 wells were drilled in the US Gulf of Mexico OCS over that same period of time (0.87% incident rate). Most of those blowout/well release incidents were minor and were quickly controlled. Only 11 of those blowout incidents resulted in serious damage or the total loss of drilling rigs (0.06% incident rate) and only 1 incident (Zapata Lexington, 1987) resulted in 4 fatalities (0.01% incident rate).
sorry so big not sure what happened!
Thanks for the info Lineman, it's always great to hear from people who have worked in the industry.
Thanks for the information, Lineman. It gets so tiring to read a bunch of conjecture from people that assume that that BP is an evil company, that BP is going to go bankrupt, that BP is on the hook for hundreds of billions of dollars, and so on (insert any horrible thought about BP here). I wish that more people that post on investing sites would use the analytical side of their brain instead of their emotional. Yes, it's a heartbreaking situation with the loss of life and the possible damage to the environment, but my business (analytical side) mind tells me that BP will be just fine (long-term) and that in a couple of weeks this story will become less and less of a story. The newscasters and the American public, in general, have the attention span of a gnat, so this story may not even get mentioned during a newscast the next time Paris Hilton does something stupid or there is a winner on either American Idol or Dancing with the Stars.
I pray for the day that CNN, Fox, or one of the other networks would use facts when reporting about stories like this one. Instead, I have to read stories that are written by "business" reporters that start out a sentence like this (this is the actual way a "professional reporter started their story), "This probably could be the worst blah, blah, blah............." This probably could be....this probably could be?? My grade school teachers probably fainted when they read that story. Probably and could used together???? Wow. SORRY FOR THE RANT, but it slays me that people are paid to write crap like that. Probably could be? WTF does that mean? Is it probable or could it happen? I could win the lottery, but is it probable that I will win the lottery????
I pray for the day that CNN, Fox, or one of the other networks would use facts when reporting about stories like this one. Instead, I have to read stories that are written by "business" reporters that start out a sentence like this (this is the actual way a "professional reporter started their story), "This probably could be the worst blah, blah, blah............." This probably could be....this probably could be?? My grade school teachers probably fainted when they read that story. Probably and could used together???? Wow. SORRY FOR THE RANT, but it slays me that people are paid to write crap like that. Probably could be? WTF does that mean? Is it probable or could it happen? I could win the lottery, but is it probable that I will win the lottery????
In the forty years that I worked in the construction industry, I saw many things ‘overbuilt’. In fact I can’t remember one instance of a time where someone decided to downsize a construction, even after it was remarked that some design was over built. You see I can’t remember one ignoramus (and I worked for and with a few) who ever would accept it on their conscience to have a building they worked on ‘fall down’. I remember the tragedy of the mall collapse in Kansas City, and I can’t imagine anyone on that project (even those financially/legally clean) ever having a good night’s sleep.
Those people who build and fly planes. I think, must feel the same. They can’t be unaware of the effect that a crash has on the public, even though plane travel is the safest of all travel.
So I find the claim that “the cost/benefit ratio” isn’t there, to be specious. That the BOP failed, because although all efforts were made “these things happen”, that I can/will accept. If I hear a legal/economic justification for why all due caution was not taken, I vote to hang the f##ker.
Thanks for the insight lineman. I also noticed you said the fail safe is installed after the casing is driven. I think fox news said the well casing wasn't finished yet. That was the phase this rig was in. Do we know for sure the BOP was installed yet?
From what I have read the BOP is one of the first things to be installed.YoungPunk said: Thanks for the insight lineman. I also noticed you said the fail safe is installed after the casing is driven. I think fox news said the well casing wasn't finished yet. That was the phase this rig was in. Do we know for sure the BOP was installed yet?
"The rig's blowout preventer also known as BOP, made by Cameron International Corporation of Houston,[65][66] is a fail-safe device fitted at source of the well, did not automatically cut-off the oil flow as intended when the explosion occurred. BP planned to use ROVs to close the blowout preventer valves on the well head 5,000 feet below the surface of the water.[67] The valve closing procedure was estimated to take 24 to 36 hours as of April 25.[53] As of May 2, 2010, BP had sent six ROVs unsuccessfully to try to activate the blowout preventer that could turn off the oil supply.["
I am watching Fast Money right now, according to the guys on the show the ships that need to go up the Mississippi must be with clean hulls, no oil. And there are major issues cleaning the ships. Why it is always me bring the disaster situations ....?
If it isn't one thing, it is another..
Can someone (Lineman?) explain to me what powers this BOP please. It takes a lot of energy to power a hydraulic ram that will crush drill pipe and casing. What is the source of this energy? Is there an electric hydraulic pump in the BOP that receives electric power via a cable from the surface?
"The Cameron U II BOP takes all of the features of the U BOP and adapts them for subsea use in the 18-3/4" 10,000 and 15,000 psi WP sizes. Like all other Cameron preventers, the rams in the U II BOP are pressure-energized. Wellbore pressure acts on the rams to increase the sealing force and maintain the seal in case of hydraulic pressure loss. Seal integrity is actually improved by increased well bore pressure."anonor123 said: Can someone (Lineman?) explain to me what powers this BOP please. It takes a lot of energy to power a hydraulic ram that will crush drill pipe and casing. What is the source of this energy? Is there an electric hydraulic pump in the BOP that receives electric power via a cable from the surface?
I'm hoping Lineman see's this.
I have one, incredibly silly question.
Why can't the oil that's floating just be harnessed?
At a rate of over 200,000 gallons per day just being spewed to sit atop the ocean, I can't understand why no one hasn''t drummed up a way to gather it.
That's a lot of money, 30 gallons per barrel at $85 each, that's $567K per day just floating off into the sunset.
Anonor, most BOP designs seal around the drill pipe, inner casing or what ever is down well. Once a BOP has sensed pressure and sealed, the rig can then use drill mud to control the pressure then reopen the BOP and resume work. There are many different types of BOP’s with very complex systems form operating them, I can tell you though that under normal operating conditions the BOP operates on rig supplied hydraulic pressure. There are devices like you described that shear through the outer/inner casing as well as drill pipe or anything down well, this seals the well but also destroys it. These are known as shear seals and they are hydraulically operated.
YoungPunk, the BOP is attached to the outer most well casing. In short, when a rig drills a well they install outer casing first then the BOP. Then they drill. Then if the well is viable they will install inner or production casing. Then they cement between outer and inner casing. Then they cement plug the inner casing to temporarily plug the well. Then they test for leaks remove the BOP and leave a well stub protruding about 10 feet out of the sea floor, then they leave. Then a production platform can built or anchored(deep water) over the well stub. So, the Deepwater Horizon had drilled a viable well and installed the inner casing. They cemented the inner casing 20 hours before the accident. The cement plug was the next step.
Incubus, The answer to your question is I don’t know!! I have always felt that the oil recovery system in place in the gulf worked very well. I guess the shear amount of oil is overwhelming the containment and recovery systems. The bigger question is why they have not attempted to place pollution domes over the leaks. This is not new technology. They are quit often used by diving companies while performing pipeline repairs. It’s real simple. A large steel pyramid is lowered by crane over the leak. A hose that leads to the surface is attached to the top of the pyramid. The oil, lighter than water enters the dome collects at the top where it can be pumped out via the hose into a waiting barge.
They said they are currently working on the domes. The current domes can't be used at that depth so they are designing and fabing ones as we speak. They said it =should take two months for it to be operational.LinemanLU47 said:
Incubus, The answer to your question is I don’t know!! I have always felt that the oil recovery system in place in the gulf worked very well. I guess the shear amount of oil is overwhelming the containment and recovery systems. The bigger question is why they have not attempted to place pollution domes over the leaks. This is not new technology. They are quit often used by diving companies while performing pipeline repairs. It’s real simple. A large steel pyramid is lowered by crane over the leak. A hose that leads to the surface is attached to the top of the pyramid. The oil, lighter than water enters the dome collects at the top where it can be pumped out via the hose into a waiting barge.
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