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BP never could have imagined an accident such as the Deepwater Horizon. Not in a million billion zillion quadrillion years. Who could possibly have envisioned something so horrifying and catastrophic? Especially when no such event had ever taken place before.
Well, turns out just such an event did. BP should have known better (not that it comes as any surprise to those of us living in the world of non-polluting plebeians). Nineteen months earlier, in September of 2008, a nearly identical accident occurred on a BP Azerbaijan rig in the Caspian Sea. Plenty of time to have made adjustments to safety protocols.
Especially since, in 2008, reasonable safety procedures were followed.
A BP offshore oil platform suddenly shows signs of a potentially devastating leak. Bubbles form in the seawater. Alarms sound. Panicked oil workers flee the rig. That may sound like the moments that preceded last April's Deepwater Horizon explosion in the Gulf of Mexico, but it actually describes an event 19 months earlier, in the Caspian Sea waters of tiny Azerbaijan. There are uncanny echoes of the Azerbaijan incident in the Deepwater Horizon tragedy, including the likely cause — a faulty cement job. But there was one marked difference: While the Gulf explosion created an ongoing political firestorm, the Azerbaijan leak remained almost forgotten until last week, when another leak — this time of diplomatic cables, released by WikiLeaks — showed just how close BP had come to a major disaster in the Caspian.
A series of cables by then U.S. Ambassador in Baku, Anne E. Derse, chronicled a growing testiness between BP and the government of Azerbaijan, whose long borders with Russia and Iran and vast Caspian energy reserves give it strategic importance way beyond its small size. BP commands enormous clout in Azerbaijan, having invested $4 billion in gas and oil pipelines from Baku, which travel through Georgia to the Turkish port of Ceyhan, giving energy-hungry Western Europe a supply channel that bypasses Russia.
The incident caused the evacuation of 212 workers from BP's gas-injection well in the Azeri-Chirag-Guneshi field, the largest production field in the Caspian Sea; caused massive oil production delays for Azerbaijan; and strained relations between BP and the Azerbaijan government (GOAJ).
The ACG field is the GOAJ's main revenue-earner, and it is likely that this event is going to seriously impact its income stream in (at best) the short-term. Additionally, President Aliyev is likely to see this as the latest in a series of disappointments from BP, at a time when he is seeking to develop ACG Deep Gas and other Azerbaijan hydrocarbon assets. At least some of BP's ACG partners are similarly upset with BP's performance in this episode, as they claim BP has sought to limit information flow about this event even to its ACG partners. Although it is too early to ascertain the cause, if in fact this production shut-down was due to BP technical error, and if it continues for months (as seems possible), BP's reputation in Azerbaijan will take a serious hit. There have been no indications that the problems were caused by anything other than operator error or a geological problem.
...
That accident deprived the Azerbaijan government of revenues of up to $50 million a day during the weeks when production plummeted, according to the leaked cables. "It is possible that BP Azerbaijan 'would never know' the cause of the gas leak," Ambassador Derse wrote to her bosses in Washington on Oct. 8, 2008, citing confidential talks with the American head of BP Azerbaijan, Bill Schrader. "BP is continuing to methodically investigate possible theories." A later cable says BP concluded that "a bad cement job" caused the leak. BP has not said which company was responsible for that cement work, and its 2008 annual report offered few details. The leak is mentioned on page 28 of the report, where it is stated only that production had resumed "following comprehensive investigation and recovery work."
A bad cement job? Really?
[...T]he Azerbaijan leak... was barely covered in the local press. "Unless you were on the inside you didn't know how serious it was," says Edward Chow, senior fellow at the Center for Strategic and International Studies in Washington...
...
Chow also suggests that the suspicion that both accidents were caused by cement work around the wells could suggest a "systemic" problem with regard to BP's wells. "If you look at the larger picture, BP has had safety problems for more than five years now," Chow says. "It has been well documented, even before the Azerbaijan news."
The history of BP's bad cement jobs is far more extensive, even, than the two we now know of. A few months later, in January of 2009, according to another Wikileaks release:
[BP] closed off a "few suspect wells" from which they think a bad cement job caused the leaking gas...
It's all so miserably familiar.
The account can be gradually pieced together from a variety of leaked US Embassy cables.
ACG Operator BP has been exceptionally circumspect in disseminating information about the ACG gas leak, both to the public and to its ACG partners. However, after talking with BP and other sources, Embassy has pieced together the following picture:
- On September 17 bubbles appeared in the waters around the Central Azeri (CA) Platform, one of the major platforms in Azerbaijan's offshore ACG oil mega-field and the platform's gas detector alarm went off, signaling the presence of abnormally high levels of gas in the water around the platform.
At least those alarms were on.
- Shortly thereafter, a related gas-reinjection well for Central Azeri had a blowout, expelling water, mud and gas.
- The BP Offshore Installation Manager decided to evacuate the platform, sounding the "muster" alarm at 0900 hours, evacuating the 211 workers on the CA Platform.
Much better safety response than the Deepwater Horizon's Captain Kaluza choking on the order to abandon ship.
- BP then shut in production at the Central Azeri field and the Eastern Azeri field. Shortly thereafter production from the Western Azeri field was also shut down for putatively unrelated reasons (problems with a generator), with an overall decrease in daily production from approximately 900,000 to 250,000 bpd (overall ACG production has subsequently increased to 300,000 bpd).
- There have been no visible signs of gas noted on the water's surface since September 19 (which does not mean gas is no longer flowing). However, the ROV has noted small holes and bubbling on the seabed floor.
Two of the possible causes were reported in the Embassy cables as:
Well Failure: Simply put, this is operator error, most likely a bad cement job around a well, or a split casing, causing a gas leak. The fact that surface bubbling was no longer noticed shortly after well production was shut down indicates that well failure might be the cause. If this is the cause, repair could take weeks or months, and one or some wells would have to be plugged in and subsequently re-drilled.
Formation Damage: A geologic event in the sub-seafloor around the platform, to include a sea breach of the oil/gas formation (possibly due to the operator's failure to maintain formation pressure above the 'bubble point,' which would allow the gas trapped in the oil to change from liquid to gaseous form, and thus permeate the overlying rock formation), or fracturing of faulting of the undersea formation.
Gulf Watchers have witnessed just such formation damage around the Macondo wellhead. This report of a similar possibility, particularly one that could, as is likely the case with Macondo, have been caused by BP, is sobering in the extreme.
If formation damage is the leak's cause, the length of time needed to fix the problem, if indeed it can be fixed, will be substantial.
In the face of all this economic furor, brought on, apparently, by yet another BP failure, BP held that their relationship with GOAJ was undamaged.
"BP continues to have a successful and mutually beneficial partnership with the government of Azerbaijan. This cooperation has produced and [continues] to produce benefits to all parties involved and most importantly to the nation of Azerbaijan. The Government of Azerbaijan has entrusted us with the development of its major oil and gas development projects on the basis of Production Sharing Agreements (PSAs) that are enacted as laws in Azerbaijan. The operatorship of PSAs of this scale and size require cooperation and alignment between contractors and the Government. BP in Azerbaijan enjoys the continued support and goodwill of the Government and the people of Azerbaijan to meet its obligations."
The "continued support and goodwill of the government and the people of Azerbaijan" seems to be just another media fabrication, another of BP's specialties and one at which they had been, until recently, highly skilled.
From September 2008:
The ACG field is the GOAJ's [the Azeri government] main revenue-earner, and it is likely that this event is going to seriously impact its income stream in (at best) the short-term. Additionally, [Azeri] President [Ilham] Aliyev is likely to see this as the latest in a series of disappointments from BP, at a time when he is seeking to develop ACG Deep Gas and other Azerbaijan hydrocarbon assets. At least some of BP's ACG partners are similarly upset with BP's performance in this episode, as they claim BP has sought to limit information flow about this event even to its ACG partners. Although it is too early to ascertain the cause, if in fact this production shut-down was due to BP technical error, and if it continues for months (as seems possible), BP's reputation in Azerbaijan will take a serious hit. There have been no indications that the problems were caused by anything other than operator error or a geological problem.
The accident had a major impact on both Azerbaijan's economic stability and that of SOCAR, the State Oil Company of Azerbaijan Republic, responsible for the marketing of 80% of ACG's oil. It takes about a month, once transport is requested to bring oil to suppliers in Ceyhan, Turkey, for tankers to arrive at ACG. The work stoppage caused by the accident meant that there were tankers heading for the ACG field which SOCAR had no way of filling. (See also Baku–Tbilisi–Ceyhan pipeline
SOCAR is concerned about the demurrage fines and the penalties to be charged by buyers and refineries. [SOCAR Marketing VP] Elshad Nasirov Nasirov said that it was his understanding that SOCAR can declare force majeure only if the cause were a natural one (such as an underwater mud volcano); if the problem resulted from ACG Operator error (such as BP erring when pouring concrete around the well), he didn't think that SOCAR would be able to declare force majeure.
...
When asked to hazard a guess as to how much money the GOAJ was losing as a result of this incident, knowledgeable Embassy interlocutors have estimated approximately USD 45 million each day (600,000 barrels per day at approximately USD 100 per barrel equals 60 million...
That loss seems trifling by comparison to the $40 billion or more in cleanup costs and legal liabilities that BP faced over the Gulf disaster, even before last week's Obama Administration decision to sue BP and eight other companies involved in Deepwater Horizon. And the revelations about the Caspian incident may have government lawyers picking over the details in search of a pattern of lax safety on BP platforms.
Only a month before the September accident Azerbaijan came to a new peace with BP, after turbulent negotiations with Russia, Georgia, and Turkey, and threats to sell oil to Iran endangered the relationship between the oil company and GOAJ.
Last year, the Azerbaijani State Oil Company (SOCAR) was threatening to have BP Azerbaijan's President [Bill Schrader] arrested and tried for theft of state resources. In contrast, [British Petroleum's Chief Executive Officer for Exploration and Production Andrew] Inglis described the mood about BP in Azerbaijan as having come full circle. Aliyev made positive comments to the press about BP and SOCAR being friends in difficult times.
The President told Inglis that Azerbaijan still needs BP. He asked rhetorically, "If SOCAR owned BTC [the Baku-Tbilisi-Ceyhan pipeline] would it still be there?" The President said he knows that he needs to keep BP motivated and interested in Azerbaijan.
Zip back to the present day, and find things are just as hinky between BP and Azerbaijan now as they were three years ago:
British energy company BP holds most of the cards in Azerbaijan despite a diplomatic push to diversify the regional energy sector, leaked cables reveal.
Azerbaijan is situated to become Europe's answer to breaking the Russian stranglehold on the regional energy sector... BP is making the decisions in Baku, however.
...
Azeri Energy Minister Natiq Aliyev said, as depicted in a 2007 cable from the U.S. Embassy in Baku, that his country depends on BP "for much, if not most" of his country's natural gas production. Baku, he adds, is "ready and willing to cooperate" with the Europeans but the government can't do much without the energy company.
"We can't answer Europe without BP," he said.
...
Baku "can't punish (BP)," the minister said, a 2006 cable states, "BP provides gas production estimates to the government of Azerbaijan, but these aren't obligations, and BP can change them anytime."
BP on its Web site for Azerbaijan operations describes the country as "a focal point of the global energy market and a gateway through which international investments reach the Caspian region and beyond."
Making friends and strong-arming nations across the globe.
For more on earlier (equally unstable) dealings between BP, SOCAR, and GOAJ, see thisWikiLeaks release.
Then there's this from the US Embassy -- providing more stuff to keep us up at night:
Senior BP [officials] believe that XXXXXXXXXXXX offshore platforms are vulnerable to terrorism. As BP Azerbaijan President Bill Schrader routinely tells U.S. officials, "all it would take is one guy with a mortar or six guys in a boat" to wreak havoc in Azerbaijan's critical energy infrastructure. Although Azerbaijan has a system and plans in place to deal with security threats at its on- and offshore installations, the GOAJ's plans are hampered by a lack of resources, a lack of coordination among GOAJ agencies, and a fundamental lack of recognition of the vulnerabilities. The GOAJ is eager for U.S. views on this topic and plans to present its own assessment of critical energy infrastructure security needs at the July 9-10 bilateral security consultations. We strongly recommend that the Department explore options to help Azerbaijan better assess these vulnerabilities, in line with the NATO Riga Summit declaration on energy security.
Very likely we'll hear more of this in the near future.
*****
Oystermen in the Gulf are finding a precipitous decline in oyster populations.
Economic uncertainty is something the fishermen of the Gulf of Mexico know all too well. The period between Thanksgiving and Christmas is traditionally their busiest season. But this year most of the oysters are dead.
The oysters are not covered in oil, as the BBC's Paul Adams reports from Louisiana, but killed off by massive freshwater diversions that were meant to contain the slick.
There is an excellent video on the subject at the link.
*****
Politicians continue to do what they do best: confound us by believing that altering perceptions makes Gulf seafood safe, and by arguing that in the wake of the BP disaster it makes sense to issue new drilling permits faster.
[Alabama seafood industry leaders]...are grateful that one of Gov. Bob Riley’s top priorities in the coming weeks is to create a state panel whose purpose will be to reverse the widespread belief that Gulf of Mexico seafood is contaminated by oil and dispersants.
"The governor understands that correcting perception is the first step, and we’re thankful for that," said Ernie Anderson, president of the Organized Seafood Association of Alabama based in Bayou La Batre.
The Alabama Coastal Recovery Commission on Wednesday presented Riley and other state leaders with a report [pdf] that detailed the impact of the BP oil spill on south Alabama and offered a series of recommendations on how to protect the coast from future catastrophes.
Riley announced that he would soon enact one of the report’s recommendations by creating the Alabama Fisheries Marketing Board.
...
The board would not only market Gulf seafood, but also fund scientific testing for contaminants, he said.
...
Such a board could do much to mitigate against unsettling news, such as the decision late last month by the U.S. National Oceanic Atmospheric Administration to close 4,213 square miles of the Gulf of Mexico to deep-water trawling for the specialty shrimp royal red, Crozier said.
The closure was done in reaction to a royal red shrimper finding tarballs in his net, not in response to tests showing chemical contamination in the flesh of shrimp themselves.
"Without the data to justify the closure, you’re just hammering the fishery," Crozier said. "It’s not digestible, anyway. There’s always been plenty of other stuff on the bottom of the Gulf that people also wouldn’t want to eat, but the shrimp don’t digest it, either."
Louisiana’s two U.S. Senators are objecting [to] the Obama administration’s call to extend the review time for sections of oil drilling permits from 30 to 90 days.
...
Under the current rules, permits that aren’t approved by the federal government within 30 days get rubber stamped for proposals that include its environmental plan and impact statement. BP received what was called a "categorical exclusion" for the Macondo well with the federal Mineral Management Services office giving it a pass because it had already introduced its environmental and impact plan for the region. The BP plan said it could handle a spill of 250,000 barrels a day and impact to the region would be minimal. The well discharged oil into the Gulf of Mexico for three months at a rate of up to 60,000 barrels a day.
Democratic U.S. Sen. Mary Landrieu of Louisiana joined in a letter with Republican U.S. Sen. Lisa Murkowski of Alaska to "strenuously object" to members of the Senate Appropriations Committee over the 90 day proposal for environmental and impact plans.
The move would further delay drilling in the gulf, which was halted by the Obama administration for five months after the BP spill, Landrieu wrote.
...
Regional supervisors already have 15 days to determine whether a proposed plan is deemed submitted and complete, she said. If the supervisor deems the plan deficient then it is held up, Landrieu said.
...
[David] Vitter, likewise, complained about the extra time in a letter to the appropriations committee.
"Allowing the DOI to continue to drag its feet in the permitting process is unacceptable and will result in the loss of thousands of jobs, especially in the Gulf of Mexico," Vitter wrote in a letter backed by four other Gulf Coast Senators.
Vitter called it a "job-killing provision" that has not been appropriately analyzed and scrutinized by the appropriate Senate committees. The move will open the door for lawsuits from the environmental community, Vitter said.
...
Environmental groups want the permits to receive more scrutiny, not less.
"It is time to put an end to the practice of rubber stamping exploratory drilling plans," said Aaron Viles of the Gulf Restoration Network. "This modest change will allow time for an honest assessment of the plans."
Athan Manuel, director of the Sierra Club’s lands protection program, called the proposal reasonable for the industry.
"They’ve shown that they don’t deserve the benefit of the doubt any longer," Manuel said. "The least we could do is take more time to review permits."
"Thirty days is just not long enough to do a thorough review," Manuel said.
On a more enjoyable note, a letter to the St. Petersburg Times demands an apology from Joe Barton for his apology to BP.
Well Mr. Barton, I get it, and thousands of my fellow working Americans are getting it, right in their pocketbooks. Since you issued that heartfelt apology to one of the world's richest entities, the price of the product they dispense to the American public has risen over 50 cents a gallon. With approximately 160,000 motor powered vehicles in Hernando County, and each vehicle consuming only an average of 10 gallons of fuel each month, that's an $800,000 drain each month on Hernando County workers, their families and their community.
There are 3,140 counties and parishes across the United States, and using Hernando County as the median, Joe Barton's apology is costing the American consumer more than $2.5 billion a month. Mr. Barton, may I respectfully suggest that working Americans can't afford any more of your apologies? Unless, of course, you would consider manning up and apologizing for the subsequent financial shakedown that I and my fellow Hernando County neighbors have suffered.
While you're at it, you may want to include working Americans all across the United States. In case you haven't noticed, they're hurting. Be careful what you're voting for, you just might get it.
*****
So this lawyer walks into a courtroom, and says...
Brent Coon caused a bit of a stir during Friday's status conference for the multi-district litigation (MDL) regarding the BP oil spill when he introduced around seven million documents from a previous class action against BP.
...
Coon [who serves on a plaintiff's discovery committee] said that the plaintiff steering committee asked to go through the files from discovery he conducted while representing plaintiffs in a suit regarding an explosion at BP's Texas City refinery. The files were contained on an external computer hard drive that Coon brought to the hearing.
And the Judge says...
"I'm not sure what just happened," Barbier said after Coon had presented the hard drive.
Then the other lawyer says...
BP attorney Andrew Langan said he learned about the documents "about five seconds ago" when Barbier asked if he was aware of their content. Coon said that it was all the discovery he completed in the Texas City case which he made sure were left open to the public.
Wait... Who's on first? And what happens next?
*****
There's a sudden flurry of Gulf Coast Claims stories out of Florida.
Attorney General Bill McCollum has issued a consumer advisory warning Floridians about final or quick payments options from BP.
Gulf Coast Claims (GCCF) Administrator Kenneth Feinberg announced the GCCF’s next phase which will include three payment options: interim payments, final payments and quick final payments. Claimants accepting of either of the final payment options would be required to sign an extensive release that would bar them from future recovery for damages caused by the Deepwater Horizon Oil Spill.
"I urge all Floridians to proceed with caution when evaluating whether to accept an offer of final payment from BP," said Attorney General McCollum. "I encourage consumers to consult with their counsel before signing any release."
Claimants considering making a quick final payment claim should also evaluate whether their total possible damages exceed the set amount offered for such claims – $5,000 for individuals or $25,000 for businesses. Due to the speculative nature of estimating a final claims value and the breadth of the GCCF release, claimants are advised against accepting any form of final payment or signing a release without first thoroughly understanding the GCCF’s terms.
The state's Chief Financial Officer, Alex Sink, and AG Bill McCollum "appealed to fund administrator Kenneth Feinberg to improve a claims process that has left in the lurch thousands of Floridians seeking compensation."
Sink and McCollum pointed out that Feinberg's operation has paid or approved just 44 percent of the 155,000 claims filed by Floridians. The vast majority of claims for lost earnings or property damage related to the spill have either been denied or are still under review. Sink faulted the process as inefficient and said Floridians had no "meaningful" channel of communication with officials deciding their claims. In her letter to Obama, she called on the president to intervene, charging Feinberg's operation had "exacerbated" the economic hardship across the entire gulf.
...
Even Feinberg seems to have acknowledged as much. This week, he unveiled a new "Quick Payment" scheme that could move a big number of claimants off the books.
The option provides a fixed payment of $5,000 to individuals and $25,000 to businesses that waive the right to sue or to file a future claim. The option is open to those who previously received emergency payments under BP's claims process, and claimants would not need to provide any further documentation of their losses. Feinberg even offers to cut a check within two weeks.
[...] Feinberg's job is to ensure that payments are both speedy and fair — not one or the other. That's the whole point of the claims fund: to settle damages and spare both sides the cost and delays of going to court. And $5,000 seems like a small incentive for walking away when the full environmental and economic impact of the spill may not be known for years. The last thing the claims process should do is undermine a victim's ability to recover for the long term.
Feinberg should instead beef up assistance and outreach efforts... With investigators still exploring the full impact of the spill — and BP's responsibility for it — gulf residents will have a hard time assessing what the best course is for them. Feinberg said he will unveil a program soon to provide victims with free legal counsel to explore their options. But he needs to be more creative and aggressive in addressing the backlog.
Florida Keys residents and businesses have banked more than $64.3 million from the BP Deepwater Horizon oil-spill threat -- more than any county outside the Florida Panhandle.
But with nearly half of the local claims denied or still pending as of Dec. 14, that's not enough, said former Monroe County Commissioner Mario Di Gennaro.
"I'm very frustrated," said Di Gennaro, a governor-appointed member of the Florida Oil Spill Economic Recovery Task Force. "I'm getting a lot of complaints." "These people who have been rejected can't find out why, and I can't get any answers, either," Di Gennaro said Friday. "This has got to stop."
...
According to the Gulf Coast Claims Facility report of Dec. 14, Monroe County residents and businesses have been paid $64,364,800 to cover 3,704 claims submitted for the first phase of the process.
Another 3,070 local claims -- 45 percent of the 6,774 submtted from the Keys -- have been either rejected or remain in limbo.
Monroe County has received more in claims payments than any Florida county south of the Panhandle, the area closest to the April oil spill. Five Panhandle counties -- Escambia, Santa Rosa, Okaloosa, Walton and Bay -- have received more. Escambia County, bordering Alabama, includes Pensacola. Businesses there have received $133.22 million for 10,638 paid claims.
A list of pay-outs by county is available at the link.
Last week, Gulf Watchers reported on 36-year-old Candi Cook in Naples, whose claim was denied by the GCCF. With her claim denied, she was going to send her sixteen-year-old son to live with his grandmother, sell her home, and live in her truck in order to save enough to keep her business running.
Things have taken a sudden and unexpected turn for the better. Can't say that too often these days. "They showed up today with a check," Cook reports.
"You sit there as a small business owner, you start to think I'm going to have to lay off my employees, I'm not going to be able to help them."
Like 82-year-old Barb Brown, who not only likes working at the shop, it's a paycheck she depends on. "I need this job to keep going. I really do and I'm not ashamed to admit it. I mean Social Security only goes so far," Brown explains.
Thankfully, no employees will be laid off. Today, Cook received a check from the claims facility for the full amount requested in damages, $25,000.
...
The claims office wouldn't answer any questions about why Cook's claim was all [of a] sudden paid out. Cook says she didn't send in any further paperwork since her denial.
Said Cook, "It means I can save my business, I can save my house, I can save my son."
*****
PLEASE visit Pam LaPier's diary to find out how you can help the Gulf now and in the future. We don't have to be idle! And thanks to Crashing Vor and Pam LaPier for working on this!
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