Is BP Rejecting Skimmers to Save Costs?

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Readers may recall that we harped on BP’s refusal to try to contain oil around the site of the leak, and later, its failure to do proper booming to contain and remove oil and so reduce the amount that came ashore (note that the US also failed abjectly as a second line of defense; the Coast Guard did cosmetic, ineffective booming and the US turned down advice and assistance from the Netherlands, which has world class expertise).

Per McClatchy (hat tip Doc Holiday), now appears to have put in place a slow, bureaucratic process as a way to cover for the fact that it isn’t very keen about hiring skimmers (boats outfitted to collect oil offshore) since it’s cheaper for them to remediate onshore, even though the damage is greater. BP may well be betting on the fact that, in contrast to its slow environmental response, it has been lightening fast on the legal front, and already locked up experts plaintiffs would typically hire to sue BP.

From McClatchy:

From Washington to the Gulf, politicians and residents wonder why so few skimming vessels have been put to work soaking up oil from the Deepwater Horizon catastrophe.

Investment banker Fred D. McCallister of Dallas believes he has the answer. McCallister, vice president of Allegiance Capital Corp. in Dallas, has been trying since June 5 to offer a dozen Greek skimming vessels from a client for the cleanup.

“By sinking and dispersing the oil, BP can amortize the cost of the cleanup over the next 15 years or so, as tar balls continue to roll up on the beaches, rather than dealing with the issue now by removing the oil from the water with the proper equipment,” McCallister testified earlier this week before the U.S. Senate Committee on Commerce, Science and Transportation. “As a financial adviser, I understand financial engineering and BP’s desire to stretch out its costs of remediating the oil spill in the Gulf. By managing the cleanup over a period of many years, BP is able to minimize the financial damage as opposed to a huge expenditure in a period of a few years.”…

A report released Thursday by the U.S. House Committee on Oversight and Government Reform included a photo depicting “a massive swath of oil” in the Gulf with no skimming equipment in sight. The report concluded: “The lack of equipment at the scene of the spill is shocking, and appears to reflect what some describe as a strategy of cleaning up oil once it comes ashore versus containing the spill and cleaning it up in the ocean.”…

BP spokesman Beaudo said McCallister was notified his offer of skimming vessels has been declined because the vessels will not pick up heavy oil near shore. Beaudo said he did not know when McCallister was informed. McCallister said he received communications from BP on Thursday that indicated his proposal was still under review. In fact, he sent supplemental material Thursday, which was accepted, to show the skimming vessels will pick up heavy oil like that bombarding Mississippi’s coastline. The 60-foot vessels, he said, can skim high-density crude up to 20 miles offshore. Equipment on board separates the oil from water…

“Just because it’s a skimmer doesn’t mean it’s effective,” Malvaney [who heads the Mississippi Coast cleanup effort for BP subcontractor U.S. Environmental Services] said. “There’s a lot of people out there saying, ‘We’ve got skimmers.’ Some are effective, some are not. That’s what we’re trying to wade through right now.”

Yves here. At a minimum, this is clearly a company utterly lacking in the sense of urgency that this disaster warrants. And as McCallister contends, it is probably by design.

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  1. Tom Crowl

    Unfortunately BP sees beaches as the cheapest boom. And this is sadly the case when you can depend on a sclerotic legal system and accommodating government friends to efficiently externalize costs.

    The ‘banality of evil’ is echoed by a ‘banality of design’.

    Things like financial products, mechanisms of governance and regulation, corporate ‘legal’ strategies, electoral districts, even ‘money’ itself…

    They ALL are technologies that operate within very complex/chaotic systems.

    And together they’ve formed a synergy that’s tearing the social contract to pieces.

    I have no magic solutions or magic wands… (though I’m not without some ideas) BUT I know this… we can no longer allow these social technologies to operate as corruptly as they have.

    Actually, we don’t have to worry about that… they won’t!

    The only question is how we handle these ‘design’ failures we so plainly see coming home to roost. So far ‘remedies’ have been in favor of those most benefiting (and running) those same broken technologies.

    The re-set process will be messy.

    P.S. Anybody here ever read the novel “Earth” by David Brin? He’s actually a rather amazing prognosticator. It was written in the late ’80’s… in the ‘backstory’ (its set in about 2035 if I remember correctly) he posits what he calls the “Helvetian War”… taking place around 2015.

    Its predicated on the idea that a combination of communication technology and the global drive towards transparency it brings catalyzing sort of a global ‘aha!’ moment which provokes an actual war against the ‘gnomes of Zurich’ with the idea of finding out where all the damn money really is. Of course its metaphorical which he acknowledges (he’s in my LinkedIn network) but its an accurate reflection of a rapidly developing chink in the armor of the social contract.

    1. doc holiday

      That is nice that gulfblog is forbidden. here is another way in, but same result. As I recall from about a month ago, many of these federally funded research vessels being used in the gulf, were directed to not disclose information from the gulf research projects. Nonetheless, you would think the research people involved in this BP charade would have some backbone — because if the research people are going to withhold data — they will also manipulate it and falsify stuff — which is criminal – and in reality, this is obstruction of justice, so I hope these cushy profs and grad-student kids realize they will be held accountable in a court of law, for falsifying data in a criminal investigation. This is increasingly sad to see how are system is corrupted!

      I’ll see if I can find that link, where researchers are told to shut their traps…

    1. skim this

      Coast Guard is still testing skimmers and their environmental impact.

      The Coast Guard is still researching everything about the BP oil spill and they seem to be very confused about everything. As I recall, they have no clue as to what the flow rate for the spill is, after 75 days, most likely, because BP is telling the CG what to do.

  2. Bernard

    oh please!! BP is doing whatever it takes to save money. Money is the only thing that matters to this Monster. BP is doing what it takes to “save” itself/image/money, no matter the “collateral” damage.

    this is a war about OIL. that is nothing new. i would imagine BP would do these things. so Please No Outrage at the “efforts” to save BP money or its’ image.

    if it is cheaper for (BP)to have the oil to come ashore, be assured BP will do or not do whatever it takes. Remember folks: the bottom line is what matters here! It’s all about MONEY! America is all about making money! Remember!!

    let’s stay real here. we are dealing with people/BP who care about Money first and foremost. lol. to pretend otherwise just shows how foolish the pretensions are.

  3. doc holiday

    Mandy Joye warns of danger of methane gas in Gulf oil plumes

    Blogs from the Southern Miss Oil Spill Response Team

    Welcome to Deepwater Horizon Oil Spill Portal

    >> This is good stuff: Gulf Gusher: Oil-spill science has advanced, but data is sparse

    Q: Can you describe where the oil from the Deepwater Horizon spill is going?

    JF: The oil seems to be bubbling up from the bottom similar to what one might see from a smokestack. There is both gas and oil coming out under great pressure and at elevated temperature, sometimes as much as 180 degrees Fahrenheit…. The oil is mixing and coming up in little droplets that can be moved by currents. … It’s not a uniform plume of oil droplets, like a big blob; what you have is more like a marble cake mix with filaments at different layers.

    It’s a very mixed system, like what you have from a smokestack with a lot of wind – some smoke goes here, some there – and as you get further away you see clouds of it all over in the atmosphere.

    ==> As a National Academies Report called Oil in the Sea III reports, most of the oil that usually enters the ocean comes from run-off from sources on land, discharges from ships during normal operations, and natural undersea oil seeps. [According to the report, an estimated 140,000 tons of oil (or about 3.7 million gallons) released from natural seeps into the Gulf of Mexico each year. By comparison, as of June 25, estimates of the total amount of oil released from the Deepwater Horizon well were 80 million to 150 million gallons]

    … And the leak continues, as if it isn’t a big deal, and of course, no one knows how much oil is leaking, and BP likes it that way!

  4. doc holiday

    Corps denies Jefferson Parish’s requests to use rocks to block oil from Barataria Bay

    he denial leaves local officials with little recourse, said Parish Councilman Chris Roberts, a chief advocate for the plan.
    “It’s very disheartening,” he said. “Obviously, it’s not what we were led to believe from the beginning.”
    Gov. Bobby Jindal’s press secretary, Kyle Plotkin, issued a statement saying: “Only a government bureaucrat would say rocks are more harmful to our water and marshes than oil. The corps took weeks to review the plan only to reject it today — and this denial is another unfortunate example of the federal government’s lack of urgency in this war to protect our coast.
    An open oil well on the floor of the Gulf of Mexico entered its 75th day of gushing Saturday as skimming vessels sat idled by inclement weather and six-foot-high waves. Nonetheless, crews continued working throughout the day to reposition and, in some cases, reattach miles of oil-catching boom displaced by the passing of Hurricane Alex and the formation of another low pressure area east of the leak’s epicenter off the Louisiana coast, said Petty Officer Kelly Parker, a Coast Guard spokesman stationed in Houma.
    Parker said federal authorities began field tests Saturday on “A Whale,” the 1,100-foot Taiwanese oil skimmer that can reportedly hold up to two million barrels of crude — dwarfing the capacity of other collection vessels in the gulf waters. The testing is expected to take two days.

    ==> Mental Note: A Whale travels at 18 mph and has an area the size of Utah to sweep…. Nice PR, but total bullshit!

    1. Paul Repstock

      LOL Doc. The question begs: why would it be necessary to “Test A Whale”. There are thousands of miles of ‘real oilslick to work on. Just put the ship out there and let it work….If it recovers lots of oil. Then pay them. If it recovers little or no oil, then there is no harm done by the “experiment”. ‘Testing’ suggests that there is a benifit to not approving the vessel???

      1. doc holiday

        “why would it be necessary”

        > That is funny really — what happens if the skimmer test fails…. whoa, would EPA be accountable for something, or would the skimmer be converted for another test … hmmmm? Seems like EPA should think long and hard about the damage the skimmer may cause and maybe they should re-test the skimmers out there already. Maybe, EPA should also take a look at BP and deepwater drilling environmental impacts plans … nahhh… that would be illogical.

  5. psychohistorian

    I think that putting one or more BP managers in jail for what seems to be obvious crimes would give BP a greater sense of urgency.

    But that would take a government that wasn’t a corporate tool and that is not what America is anymore.

  6. Glen

    BP is in the business of finding, drilling, pumping and selling oil. They are not in the business of advancing oil spill clean-up technology or cleaning up spills. They should not be in charge of the clean up as doing a through clean up does not make good business sense for BP. They are all about minimizing clean up costs and liabilities.

    The mismatched of priorities created by letting BP call the shots and then enforce those priorities by CG Adm Allen is increasingly making the Feds look like a bunch of (pardon the term, but it fits) fucking idiots:

    Exclusion zones complete with felony charges for press trying to report on the spill?
    Denial of use of state of the art skimmers from other countries due to EPA and safety concerns?

    Obama and all the Democratic party deserve to have their asses handed to them in the 2010 and 2012 elections if they keep this shit up.

  7. doc holiday

    A Whale’, World’s Largest Oil Skimmer, Being Tested In Gulf Oil Spill

    The vessel will cruise a 25-square-mile test site through Sunday, according to TMT Shipping, the company that created A Whale by retrofitting an oil tanker after the explosion sent millions of gallons of crude spilling into the Gulf.

    Also see: On June 28, the National Oceanic and Atmospheric Administration expanded the closed area of the Gulf to cover 80,228 square miles, about 33% of Gulf of Mexico federal waters. This leaves more than 66% of Gulf federal waters available for fishing. This does not include any closures in state waters.

    Did I mention the speed this public relations vessel travels at?

    The only real skimming going on, is the money being skimmed off the taxpayers saving accounts, by BP and Uncle Sam! Happy 4th….

  8. Paul Repstock

    A curious thing I have found in all these accidents: There has never been one instance where there was a true ‘pay for performance’ compensation. eg. a price could be set per ton of crude oil recovered. That way anyone who had a viable method or workable equipment could move onsite as a ‘contractor’, cover their own liabilities and expenses, and collect oil. This “bounty on spilled oil” would be easy to administer and would ensure maximum effort. In the absence of such a mechanism the slick spreads while the ball and the responsibility is kicked from one side to the other.


      The oil bounty?

      The oil that has escaped from the BP lease area, in this spill — may not technically belong to BP, and thus any oil collected is not unlike the fish that are captured in various areas by local fishing prospectors. However, as far as actual bounty hunting, the oil on the surface has about the same economic value, as the tarballs on the beaches. The giant skimmers coming in, may capture cleaner oil which can be processed, but I continue to doubt that skimming can keep up with the current flow rate and that which is already spreading to a size larger than the state of Utah. I imagine this will be at least the size of California by the end of Summer.

      I’m not sure at all what is going on with the oil collection, e.g., who captures it, where it is taken, processed, etc … we know they claim to be burning some amount, and of course, BP is conveniently being allowed to continue falsify the flow rate (for 72 days and counting?) . We also keep hearing various figures about amounts collected by BP, but how does this play out on a day-to-day basis, as more oil escapes and travels further from the well? What is the fate of this oil?

      BP may not want to claim that oil near the Florida coast (any coast) belongs to them, and hence they may continue to claim they don’t know where these oil plumes came from — and thus, this helps draw out the process of accountability even further — which is also related to economically drawing this process out so that hurricane season can help spread the mess around a bit more, and add to the confusion.

      Nonetheless, BP wants to maintain an image that they’re in control of the well and the leak is somewhat contained — and in the meantime, they are continuing to cover the spill with dispersants to hide the on-going underwater flow which is traveling along in multiple chains, plumes, envelopes, bubbles, currents, canyons, beach-to-beach … and have a few people on the beaches rake up dead animals.

      Everyone in the Gulf is obviously being played for suckers — and IMHO, they all better wake up and push for greater accountability from a long list of crooked players.

      1. Paul Repstock

        The chemical fingerprint of the oil would prove origin. Obviously any barrels recovered by skimmers are outside the control of BP. And penalties/fines per barrel spilled are established. So there should not be any problem even if the recovered oil proved uneconomical to refine. I was not thinking of a payment based on economic value. Obviously nobody could skim oil for $75/ barrel.

  9. flubber

    Dunno about this theory. It’s not like the existence of the cleanup liability is unknown, so amortized or not, the stock price should reflect the adjustment of a best guess at the cleanup cost. And then there’s the uncertainty – investors generally dislike that more than a one-off loss. Often the market prefers a huge charge-off, then a return to recurring operating business rather than a slow trickle of expenses.

    I don’t know. The quoted McCallister guy is trying to get a huge piece of the action there, so, like all politicians, businessmen and lawyers, is probably full of shit.

    1. Yves Smith Post author

      BP has been consistently dishonest throughout this affair.

      And you assume investor rationality? Where were you during the dot com era and the credit bubble? Look how investors are fixated on quarterly earnings. No stock analyst forecasts beyond the eighteen month horizon. And anyone with an operating brain cell knows to the extent BP can force people who are hurt into having to go to court to get compensation, it will win.

      Plus you seem to miss the NPV point entirely. Exxon deferred much of its payout on Exxon Valdez 20 years. That’s a massive PV discount vs. a full bore cleanup at the time of the accident.

      1. Paul Repstock

        Yves. Under the scheme I posted above, (payment per ton recovered/ funded by the ‘escrow account’.) this could be front loaded with the added benifit of less environmental damage. But, until funds are actually transfered to such an account there is no guarantee that BP will pay anything.

  10. e willis

    You Americans sure are a bunch of paranoid over reacting overdramatising ego maniacs. One would think the whole universe revolved around the gulf of Mexico listening to your rants. !0 times as much oil was spilled into the Pusian Guld during desert storm without lasting ill effects….10 times as much is spilled in Nigeria every year. One little spill in the Gulf, a couple of temporarily stained beaches and one would think it was the end of history for you whiny idiots.

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