The Country - Oil

“Don’t buy it at the station, you can get it now for free, Just come on down to the shoreline where the water used to be.” The Oil Song, Steve Forbert

Some positive and negative reports regarding oil this week.

On the negative side, if you are a Gulf Coast resident affected by last summer's disaster, came reports that the BP is contesting as too generous,  the formulas used by the Gulf Coast Claims Facility responsible for the management and processing of claims against the $20 Billion escrow fund that BP set aside, and that the fund administrators are  too slow in payments.  As is to be expected unfortunately, funds like this will draw out people trying to game the system (e.g. one individual filed a claim for the entire $20B) and slow down the process for those truly in need.  As a corporation serving the needs of its shareholders, BP is well within its right to contest the formulas used, but this adds another blotch to its public image.

I think even more disturbing are the assertions that what was once touted as being an open and transparent public process, is anything but.  With these sums of money involved, everything should be on the public record.

On an environmental front, there are conflicting reports on the long term environmental impact of the disaster - one  report, indicated that the state of the Gulf is much worse than expected, and another report commissioned by the Gulf Coast Claims Facility, and completed from start to finish in less than 2 months, indicates that the gulf, for the most port, should return to normal by next year.  I do not envy the judge having to weigh the merits of claims in this case...

On a positive note, I was somewhat encouraged to read this week an article in the NY Times  on a consortium called The Marine Well Containment Company (“MWCC”) which appears to be an industry-wide effort to mitigate the impact of future Deepwater Horizon type catastrophes.  

This was one of the things that I called for in my letter to the Obama administration last year (see the P.S. in my first posting on this blog). 

While it is a good start, some key questions which need answering are: 

Are the services and product limited to the Gulf of Mexico?

In the company documentation, it appears that these services and capabilities are limited to the Gulf of Mexico (“Membership is open to all oil and gas operators in the U.S. Gulf of Mexico.”)

In my opinion this type of system should be required/replicated in all areas where underwater oil exploration(http://en.wikipedia.org/wiki/Offshore_drilling#Main_offshore_fields ) is taking place (like having a fire extinguishers co-located in the areas where fires are likely to occur, or in strategic locations – stairwells and exits) so that if/when a blowout occurs, we don’t have to wait while it is transported across the globe to where it is needed.

What are the targeted response times?

Once a blow-out occurs and  the proverbial “911” call has been made, what are MWCCs targeted response times to:
a) contain the “spill”, and
b) cap and seal the well.

Will membership be a pre-requisite to the issuance of any underwater drilling permits?

If no, and the drilling company does not have a tested proven alternative, then the drilling company should be required to post costs of using the equipment “on-demand” in an escrow account.