Random thoughts on a variety of subjects
By Sam Redman
Recently, I have read several news articles and editorials describing how BP’s latest miscalculation about the amount of oil coming from the well is an indication of their dishonesty.
However, I interpreted the latest information in exactly the opposite way . BP isn’t being dishonest as much as they simply didn’t (and don’t) know how much oil is coming out and really won’t until they are able to be capturing all of it. Here is the reasoning. It is in BP’s interest to capture all the oil they can on the surface. Having a ship ready to receive with (only) a capacity of 15,000 barrels a day was considered totally adequate because by all indications they didn’t know (other than from estimates) how much was being propelled from the well. The reason estimates have not been considered reliable is because the amount of natural gas (which is flared off at the ocean’s surface) coming from the well, not only has varied, but has been difficult to measure. Earlier when they had placed a pipe inside of the riser and they had been able to successfully take some oil out into a waiting ship and flare off the accompanying gas they were able to have some data regarding the relative proportions of oil to gas. They were using that data for their calculations and it indicated a much higher ratio of gas to oil.
In addition, prior to the explosion, the oil rig was producing oil and that capacity amount was only about four to five thousand barrels a day… which is another source BP had for determining how much was spewing out down below after the disaster struck.
Therefore with this latest capping attempt their assumption was of a particular amount of natural gas in relation to an amount of oil. They weren’t lying to anyone (and especially not to themselves)… they just didn’t know. Based on what they knew, a ship’s capacity of 15,000 barrels a day would have been more than sufficient. That’s why they only had that level of capacity in place. They were prepared over the weekend to begin slowly shutting down the four relief windows on the cap which would increase the flow to the point of retrieving about 90 percent of the oil coming out. However, they had to back off from that after only closing one because they were completely surprised by the volume of oil arriving at the ship after the gas was flared off. So, they suspended closing any more of the remaining three windows until increased surface capacity is in place.
BP might find it in their interest to lie to the public (but, really there is a very weak argument for that), but they won’t find it in their interest to “lie” to themselves. Recovering oil, worth around $100 per barrel, is most important to them (that’s why corporations exist… to make money) and they are vitally interested in retrieving all of the oil they possibly can. With that objective it is their top priority to deploy all resources necessary to get all of the oil which is coming to the surface and had they thought (or calculated) that what they would be getting was more than the 15,000 barrels per day they would have had the capacity in place to handle it.
Their comment about the volume of flow is one of true surprise… “this is a monster of a well” and now they are bringing in additional resources on the surface to handle it. If they are able to recover 20,000 barrels a day (at $100/barrel), that would have a value of $2,000,000 in gross revenue a day (which will be a tremendous aid in funding the damage from this catastrophe). So, that surprise to BP is actually a pleasant one… after all that’s what the purpose of the well was in the first place, to harvest oil to be sold for processing eventually by refineries (BP’s and everyone else’s).
This constant skepticism that the BP corporation is just evil and everything they say is dishonest is not based on the reality that they are motivated as highly as any interested entity to capture all the oil they can and they wouldn’t have been unprepared to handle it if they had been in possession of data which would have given them a volume amount other than what they anticipated (and told the public and prepared themselves to receive).
Now if we want to get into the corporate “greed” argument… a better position is that the truth is that it is in BP’s financial interest to capture and process all the oil coming from the well and not to shut it off. If they shut it off then that $2,000,000 per day is lost. But, if that well keeps going for years, then all of this could be profitable for them. However, if it’s merely capped and the flow ceases… then they are left with liabilities which would have to be funded from their other income sources. Now that’s what a business does… tries to make money and so it wouldn’t surprise me if the previous “top kill” mud injection was purposefully half hearted. And there is where there might be some actual dishonesty. Perhaps all of that was just a “show,” just buying time for them to get the present capture system fabricated and in place in order to preserve the revenue stream (that argument should make the anti-corporation theorists happy).
But, I guess we really should be happy with the (capturing not plugging) end result… because it helps to keep up with the demand for oil that everyone of us (yes, you too) continuously “fuels.”