New thread, please redirect to http://www.theoildrum.com/node/6533. Caution is needed in interpreting results. I find in reviewing my analyses that I was at times misled by appearances of transparency, when it really wasn't there. And of course it isn't now, So, I have tried to explain why, for example, we shouldn't be too discouraged after the second injection stopped (which I suspect was earlier than BP have said, thanks to the eagle eyes that have been watching and commenting on these posts). Those thoughts on the junkshot attempts and the starts and stops are under the fold (click "there's more" below.)

Latest: NYT says the "BP’s Effort to Plug Oil Leak Suspended a Second Time". 29/05/2010 1:18 am There are small indications of some success in the plume shots, can you tell what they are? Out in the Gulf BP are going through the preparations for the next stage in the attempt to top kill the deep water well that has been leaking oil and gas for more than a month. The kill attempt has now been underway for a couple of days, and so this is initially a recap on what I believe has happened to date, and what they are currently planning on doing. I will include in this explanation the two attempts that BP have made so far, and what I expect that they will do next.

To help with the explanation I am going to use some very simple models, which oversimplify the situation, but hopefully will help explain it. To start with I am going to break the overall system down into a very simple diagram.

Simple approximation of the situation

Basically BP are sending mud through a series of feed lines, which I have simplified for the explanation into one feed pipe that I have called the choke line (grey). It has an internal diameter of, at most, of 3 inches. (I say "at most" because most fittings on these lines have smaller diameters). It feeds into the top of the well, which I have colored brass, and which is the pipe (casing) that feeds from the seabed down to where the oil is emerging from the rock, some 13,000 ft further down.

The casing and choke line sit underneath the Blowout preventer (which is the large assembly at the top of the rig). I have colored this bronze, and simplified the shape, for this explanation, to represent a pipe that has been partially closed by the action of the BOP.

Now, here is the problem. BP want to feed mud through the choke line at such a pressure and flow that it will push the oil and gas flowing up out of the well back down the well. To do that they have to create enough resistance to the flow that the combination of the mud flow and the oil can’t all escape out through the hole in the BOP.

They can do this since, as you increase the flow through a hole (or nozzle), it has to move faster to get through the space in a given time. It takes a driving pressure to get the fluid moving at that speed, and for a given driving pressure the fluid will only move at a certain speed, and so only a fixed volume of fluid can go through the hole.

Thus if BP pump more fluid into the well than this volume, for that given pressure (which is higher than the pressure that the oil was flowing at) then all the flow out of the well will change to mud, and the excess mud that is not flowing out of the hole will be at enough pressure over the oil (and gas) in the well that it pushes it back down the well and back into the rock.

Now that was the first step. The idea was that once the column of mud filled the well, down to where the rock reservoir lies, that the weight of the mud would exert a pressure on the oil in the rock, that was higher than the fluid pressure, and the flow would stop.

The first time they did this, the density of the mud (weight of a cubic foot) was not high enough for the full column to balance the pressure in the rock, and the leakage of mud out of the hole in the top of the BOP was higher than BP had thought, so they were losing too much mud to the Gulf.

So they moved to step two. The first part of this is to try to reduce the size of the hole in the BOP. And for this they used a variety of what everyone is calling a junk shot. It actually isn’t. Given the problem that I am about to outline, they have an ally that folks normally don’t have. As Secretary Chu has pointed out there is the full intellectual strength of the Federal Labs behind this attempt, so where one would normally just chop up tires and similar materials, there is a fascinating mathematical problem in designing plug pieces of the right shape that will fit the constraints, and which will accelerate the blocking of the flow path. So I suspect that some of the shapes that will appear in the flow will have been specificially designed for the problem.

Not being familiar with their answer I’m going to stick with the spheres and triangles of the more traditional, shall we say old fashioned, way of addressing the problem.

It is one of these problems where the bounding conditions can make life rather difficult. Let me redraw the problem with a different orientation. What we have to do is to block (the term that is being used is bridge) the passage through the BOP. This will stabilize the flow, and will allow the cement plug time to set up. (We’ll talk about cements another time).

So here is the slit: through the BOP – it is going to be a more complex shape, but this allows some explanation of the problems.

Simplified picture of the slot to be sealed

Now to block the slot we have to have some pieces of material (although they are quite large for simplicity I am going to call them all particles) that are big enough to wedge in the slot, but small enough to get through the feed lines to that point.

Now here’s the first catch, we don’t want them to be hard enough that we will damage the passages, nor soft enough that they will bend distort and compress and squeeze through the hole. Rubber turns out to fit the bill, and though there are other materials that could be better, in this initial explanation that’s what I am going to use.

The easy thing to do is to use some spheres, not easy to get, though golf balls are an example. Unfortunately they are a bit too big. The reason is that the feed line through the choke has a maximum inner tube size of probably 2.75 inches. A golf ball is about 1.6 inches, which is more than half this, so that two balls together could block the feed line – a definite no-no. (And don’t say it can’t happen, I’ve seen it with smaller particle ratios than this).

The maximum size that you can get through the line should be about a third of the minimum diameter – say 0.9 inches, stretch a point and make it a maximum ball size of an inch. So we fill the mud with miniature golf balls, pump enough of them down that they end up going through the BOP and wait for the effect. Let me show you, using pearl spheres, how the problem evolves:

Spheres in slot

See all the open space around the spheres, and how much of the slot remains open. We really haven’t made much of a blockage in the slot area of contact, and we have made it hard to push other materials into the slot area itself. However the smallest open area now may be at the maximum diameter of the spheres, which is further back, where the feed pipe is larger. Putting more spheres of the same size down won’t improve the situation much, because they still leave room, around the spheres, for fluid to flow.

There are two ways to go, once the initial building blocks for the bridge have been established. The first might be to use triangular pieces of rubber (as we saw protruding from the crack in the riser). These can fit closer together and fill more of the slot and flow passage.

Ideal case of three rubber strips blocking flow

Here the strips have aligned in the right way and have been driven into the slot, reducing the flow path. But note, as with the spheres that the gaps that are left are now too small for more strips of that size to feed into the slot and do more blocking.

So in either case what has to happen is that there should be a second pass, where smaller particles are used. These couldn’t be used before, because they would push through the slot, but now the slot size is smaller, and so these can start to fill in the gaps. Let me illustrate with the spheres:

Filling the gaps with a smaller second set of spheres.

So now the gaps that remain are even smaller, and so in a third shot, with even smaller gaps the feed particles have to be even smaller.

It can take a number of different slugs of material going through the choke line (and being pushed into the BOP instead of falling down the well, before the slot is sufficiently “bridged” that there isn’t much flow out of the BOP.

So expect that there will be a number of these shots, after each of which mud will be pumped in to see how much progress in filling the holes they have made. Bear again in mind that there is this restriction on how big a piece they can feed in, and just hope that all the gaps in the BOP are small enough that big enough particles can be fed into the lines to block it.

Now, as I said, they are probably using more sophisticated shapes from the National Labs, that will allow the number of shots to be reduced, but the relative sequence still has to be followed, as they build the bridge. Let's see how it goes, and be patient, each shot takes time to set up.

And at the same time, given that they have to balance the weight of the column of mud against the rock pressure, they are using the interval to change the mud weight increasing it each time, to seek that balance. (They don't want it higher than it has to be or it could hydraulically fracture the rock and lose the mud into the crack).

(Oh and if some of you remember the class in school where the teacher filled a jar with big pebbles and asked you if it was full, you said yes, then he/she poured in smaller pebbles, now is it full? Then came sand - now is it full? And then the jar was filled with water - its the same basic idea).

Jim Morin of the Miami Herald:

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Hat tip Mike R

There are a variety of estimates as to the total spillage from the Deepwater Horizon disaster.

As of yesterday, they were all significantly losses worse than the 10.8 million gallons of crude the drunk captain of the Exxon Valdez spilled. The range is 23.2 million gallons by the US government, to the worst case scenario of BP itself at 92.5 million gallons.

And counting.

When this is done, it will dwarf the Valdez in total spillage, economic an d environmental damage.

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Tracking the Oil Spill in the Gulf

click for interactive timeline

Graphic via the NYT

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Source:
Size of Oil Spill Underestimated, Scientists Say
JUSTIN GILLIS
NYT, May 13, 2010
http://www.nytimes.com/2010/05/14/us/14oil.html

About the Oil Slick Areas Shown on the Map: The “probable extent” of the oil slick is an estimate by the National Oceanic and Atmospheric Administration of where oil is mostly likely to go based on wind and ocean current forecasts, as well as analysis of aerial photography and satellite imagery. The “observed extent” show areas where oil was visible on the surface of the water during aerial surveys of the Gulf. The observed extents are not available every day. The extents may vary widely from day to day because of changes in wind patterns and ocean currents.

The loop currents are from NOAA and from Roffer’s Ocean Fishing Forecasting Service.

I hope you’ve enjoyed Bert’s Brownie series as much as I have. For me, its really exciting to see authentic, late 40s hot rod photographs that have never been widely published, and much like finding any undiscovered media from over 60 years ago, the chance of this happening again keeps getting rarer. Hot Rodders like Bert and other folks his age from the “Greatest Generation” are thinning in ranks everyday, giving us one less eye (or camera) witness to how it really was to be racing on the dry lakes or the salt just after the war. Please enjoy the images.

………….

As the chart below shows, the S&P/Case-Shiller Composite-20 Home Price Index bottomed in January 2009 on an annual basis. The quarterly change has once again turned lower, leading some to speculate that home prices may not be out of the woods yet. Now that the first time homebuyer’s credit has expired, what should be expected of home prices in the near future?

<Click on chart for larger image>

In a March 2, 2010 post on home prices, we pointed to the disparity between high-tier house prices and low-tier house prices as evidence that the housing market was being artificially propped up by the government. As we originally wrote:

If housing as a whole were rebounding for reasons other than the [first time home buyers] tax credit, we would not expect to see the large levels of disparity between the high-tier and low-tier markets…Since we do, it suggests that government subsidies, and not a proper equilibrium between supply and demand, caused the Case-Shiller Index to bottom last April.

A Low-Tier Rally

Below are a couple of charts showing the latest update for the Boston and Denver markets. To see similar charts for all 10 markets in the Case Shiller Composite-10 Home Price Index, click here.

<Click on chart for larger image>

<Click on chart for larger image>

Most housing markets across the country have seen much faster price appreciation in low-tier homes during the life of the homebuyer’s credit (which ended April 30). This could partially be attributed to the fact that low-tier prices fell faster, motivating the creation of the tax credit, and could have been expected to rebound more. However, most think the tax credit did create demand from non-homeowners (who typically rent) and assisted the low-tier price rally.

Although we will have to wait a few months after the April 30 expiration of this tax credit to see its effects, we would expect the low- and high-tier markets to return to a more stable relationship. Because so much demand has already been pulled forward by the tax credit to purchase low-tier priced homes, we look for slower appreciation or even price drops on the low-tier while the high-tier continues to be unaffected. This should serve to slow the appreciation of the overall home price indices.

WJB’s John Roque looks at the past 4 cycles in Gold relative to the valuation of the S&P500:

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click for ginormous chart

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Source:
It takes two to make a thing go right
John Roque
WJB Capital Group. Inc.
Technical Review May 17, 2010

The final look at May UoM confidence came in at 73.6, a touch above estimates and up from the preliminary reading of 73.3 and up from 72.2 in April. The gain was lead by a rise in the Outlook as Current Conditions were unchanged. The one interesting tidbit within the data was one year inflation expectations which rose to 3.2%, up .3% from April and up from 3.1% in the preliminary report. It’s now at the highest level since Oct ‘08 and comes at a time when many are talking deflation again. The survey was done within the last few days so it is a timely measure of sentiment. Of course it could easily reverse soon if economic concerns grow but consumers are not as sanguine as the Fed when it comes to the inflation outlook b/c consumers live in the real world and the Fed relies on government statistics.

The May Chicago PMI was a bit weaker than expected at 59.7 vs the forecast of 61 and its down from 63.8 in April. The figure overall however is still good as the 20 yr average is 54 but the components were mixed. New Orders fell by 2.5 pts to 62.7 and Order Backlogs showed a sharp drop, falling to 52.7 from 61.4 to the lowest since Dec. Employment fell sharply too, down by 8 pts to 49.2 and is below 50 for the 1st time since Dec. Inventories rose 6.3 pts to 56.4 to the most since Nov ‘06. Prices Paid fell by 7.4 pts to 64, the lowest since Dec. Net-net, all eyes are on the May and upcoming June data as we search for any clues to see what impact the European slowdown will have on global growth. While this could be company specific, BCSI last night said they saw “across the board weakness in virtually every country in Europe starting in April.” Our eyes are peeled for more color from others.

Very cool! Bloomberg names Bailout Nation as one of the top 50 Business books:

May 28 (Bloomberg) — With so many business books spilling from the shelves, we’re often asked for a comprehensive list of recommendations. Here are 50 of our favorite titles published since Jan. 1, 2009.

“Animal Spirits” by George A. Akerlof and Robert J. Shiller (Princeton). The two economists explore how psychology drove us from boom to bust.

“Bailout Nation” by Barry Ritholtz (Wiley). A financial blogger chronicles why the U.S. came to embrace bailouts.

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Source:
Top 50 Business Books, ‘Animal Spirits’ to ‘What the Dog Saw
James Pressley
Bloomberg, May 28 2010
http://www.bloomberg.com/apps/news?pid=20601088&sid=aPJsasCVoVEk

My friend James Altucher is completely whacko:

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Source:
It’s Not a ‘V’, It’s Even Better, Altucher Says: Look for New Highs by 2012
Peter Gorenstein
Yahoo Tech Ticker, May 28, 2010
http://finance.yahoo.com/tech-ticker/it’s-not-a-’v'-it’s-even-better-altucher-says-look-for-new-highs-by-2012-496236.html

New thread, please redirect to http://www.theoildrum.com/node/6523. As I write this, I see see that the monitoring ROV is back in position to watch the leaks as BP, perhaps, is about to restart pumping mud – if they really are.

9:52 pm the camera is focusing on the cracks in the riser, and it seems that they may be injecting rubber pieces one of which is now stuck in one of the cracks in the riser. (Not very securely it seems)

Piece of "junk" (?) in the riser crack, as BP apparently work to reduce the size of the path through the BOP.

Note that this piece has had to pass through the BOP, and it is sealing the BOP path which is more critical to success. It could also be a piece of the rubber from the annulus seal that broke loose and got caught in the riser. Without knowledge of what BP is trying it is hard to decide, but the flow looks to be still gas and oil without mud, and I would expect that BP would have to use mud as the carrier if they were injecting material into the flow, so this could just be a piece of seal that got caught. If you can't tell where it is, it is in the crack to the immediate right of the center line (without the paint) on the riser. (The view has changed)

UPDATE 1: Mud is clearly visible in the change in the look of the flows out of the riser. But at the moment it does not appear to be under the pressure of the flows on Wednesday. (This could be because it is being pumped in at a lower pressure, or it could be that they have sealed some of the leaks in the BOP and that is cutting back the driving pressure at the riser).

Leak shot at 10:25 pm Central

The problem we saw on Wednesday night with mud being heavier than oil and thus settling more readily and obscuring the view, is also evident.

UPDATE 2: 12:18 AM So it appears that BP have injected "rubber strips" into the flow, and that some of these have lodged in the BOP, reducing the flow channel, while one made it through and is trapped in one of the leaks in the bent portion of the riser.

Now what may happen is that they will slowly increase the mud flow/pressure to a) find out how much the leak rate has been reduced and b) to make sure that the restrictions in the flow channel are stable, and won't blow out. (If they do then they will have to repeat the process). Once they have a sure reduction in leakage then they will re-generate the higher pressures that overcome the pressure in the reservoir and start forcing the oil and gas back down the well, as the mud begins to fill the pipe.

The mud seems to have a slightly different texture from last time, so they could have increased the mud weight so that when the column of mud is re-established that this time it weighs a little more and overcomes the slight pressure imbalance that they were left with the first time they tried this.

Now is a good time for caution and, though the fill time may be reduced because of the smaller leak rate into the Gulf, they may still pump at relatively only slightly higher pressure that that in the reservoir, to slowly sweep down the well, getting into the necessary channels, and giving time for the oil and gas to be pressed back into the rock that it came from.

UPDATE 3: 9:30 AM The latest report from the Gulf Hayward told CNN BP engineers had injected a "junk shot" of heavier blocking materials into the failed blowout preventer of the ruptured wellhead, and would also pump in more drilling "mud"- all part of the top kill procedure being attempted.

"We have some indications of partial bridging which is good news," he said.

"I think it's probably 48 hours before we have a conclusive view," he added. Admiral Allen also noted at that time that the leak had been stopped, but that they were not sure that they could sustain the halt in flow. However at 8:10 am, Sterling925 who was watching and commenting on The Oil Drum saw some sort of event occur around the BOP. Chaotic images - looks like an explosion!

09:14 et 5/28/2010 and from SteinarN It looks like A LOT of gas is coming up from the seabed around the BOP. Considering the large water pressure and the possibly large area this gas is emanating from it ought to be a large flow. This indicate the integrity of the well is not good? Unfortunately I did not see any of this and haven't been able to see the BOP apart from one short shot since, though in that shot it did not appear to have any problem. The PBS viewed ROV at the moment is working with a chain, while the ROV that was monitoring the plume is now staring out into the ocean.

The CNN shot however shows that we are back with oil and gas apparently coming out of the leaks at the top of the riser, which is no different than the conditions before they started pumping mud into the well last evening. So the second filling of the well has apparently all been washed out, and they will try again later. The comment from BP was that this might take another couple of days.

UPDATE 4: 10:24 AM Well, I am not sure that the CNN feed was actually live and there are other stories catching their attention at the moment, but there is a Youtube recording of what took place (h/t Jessica in Pensacola).

UPDATE 5: 11:09 AM The feed has gone back to the riser, and we are back to the oil and gas flows that we were saw at the beginning. Not quite the same shapes as earlier, so perhaps the block in the BOP was partially effective, but BP have now apparently filled the well twice and failed to get enough weight into the mud to hold the driving pressure from the rock. They could try again with a higher density mud, I am presuming that the second shot had a higher weight than the first, and that while the first left a small pressure imbalance, that the second was closer, but as yet no banana. (Though the Admiral did say that they had stabilized the flow). My presumption is that they will mix up another batch and try again - though whether they will try another junk shot is not clear.

Flow at 11:09 am

The way in which you try to stop leaks is that you put the big stuff in first. If you can get enough of that to stick, it still leaves large flow channels, and so the second shot uses smaller pieces that fit into the gaps. Then you try smaller shots etc until you get as good a seal as you can. Doing this to plug water flows into tunnels can take several shots to get a total seal, working with sequentially smaller sizes of particles.

BP Assesses 'Top Kill' Effort to Plug Gulf Well

The top kill involves pumping heavy fluid under pressure into the failed blowout preventer, the huge stack of valves that stands on the seabed. Theoretically the fluid should be heavy enough to counteract the pressure of the oil surging upwards. If it's successful, cement would then be injected into the well to seal it.

So far, BP engineers have notched up a partial success: oil stops flowing out of the well when the fluid, known as kill mud, is being forced in. But they haven't reached their objective of killing the well, the point where the weight of the mud column overwhelms the oil gusher completely. A BP spokesman compared the current situation to two cars pushing against each other with the accelerator pedal down.

Obama arrives in Gulf as top-kill effort continues

US President Barack Obama arrived in Louisiana Friday to tour what has become the worst-ever US oil disaster, as energy company BP's critical top-kill operation to cap the ruptured well in the Gulf of Mexico entered its third day.

BP CEO gives 'top kill' 48 hours in Gulf spill

BP Plc's (BP.L) critical "top kill" effort to smother a gushing oil leak in the Gulf of Mexico is making progress, but the company can't call it a success or failure until Sunday, Chief Executive Tony Hayward said.

Hayward said on Friday in a series of television interviews that the procedure, which began Wednesday afternoon, was operating "according to plan" and it would be another 48 hours before BP had "a conclusive view."

Loop Current Shift Could Spare Florida

A dramatic change in the Gulf of Mexico's loop current has trapped a slick of oil in a huge circular eddy that scientists said Thursday appears likely to push slowly west instead of pumping the oil south into the Florida Keys.

The shift, which oceanographers have been watching strengthen for a week, has at the least reduced the imminent environmental threat for Florida. Tar balls predicted to be floating in the Florida Straits by now instead might not arrive for weeks, months or -- depending on lots of variables -- maybe at all.

The Gulf Of Mexico Before The Oil Spill (Dave Cohen)

The oil leak on Mississippi Canyon seafloor of the Gulf of Mexico proceeds apace. It is not clear that recent actions have succeeded in plugging the leak. The widely dispersed petroleum is a great disaster, but I get the distinct impression that this oil is seen as despoiling a pristine environment. Nothing could be further from the truth. I get this impression because, to my knowledge, the sorry state of the Gulf of Mexico before the oil spill has not been discussed. Before the oil spill, the Gulf of Mexico was being ravaged by—

• coastal erosion
• hypoxia (very low oxygen)
• harmful algal blooms (red tides)

These ongoing, slower-acting environmental disasters have a common cause: human activity.

OPEC Oil Output Climbs to 17-Month High in May, Survey Shows

Production climbed 187,000 barrels, or 0.6 percent, to an average 29.372 million barrels a day, the highest level since December 2008, according to the survey. Output by members with quotas, all except Iraq, climbed 167,000 barrels to 27.042 million barrels a day, 2.197 million above their target.

OPEC cut its quotas by 4.2 million barrels to 24.845 million barrels a day beginning in January 2009 as fuel demand fell during the worst recession since World War II. Compliance among the 11 members with quotas fell to 48 percent from 52 percent in April. All members with quotas exceeded their production limits.

Company: Restart of Alaska pipeline likely Friday

The operator of the trans-Alaska pipeline system says oil should once again flow through the 800-mile line sometime Friday.

Alyeska Pipeline Service Co. had hoped that the line — shut down since a spill earlier in the week — could be restarted by Thursday night, but officials said the process of coming back online has taken longer than expected.

Iraqi Kurdistan oil output 'could hit 200,000 bpd this year'

"Volumes could be quickly ramped up to 100,000 bpd and hit 200,000 bpd by year end," Natural Resources Minister Ashti Hawrami told the Middle East Economic Survey (MEES) in its edition to appear on Monday.

Iraqi Kurdistan halted oil exports -- of about 60,000 bpd, through a pipeline to neighbouring Turkey -- in October last year due to a payment dispute with Baghdad.

NOAA Research Ship Gordon Gunter Expands Gulf Mission

The NOAA Ship Gordon Gunter conducting sampling in the Gulf will expand its mission to use its sophisticated sonar equipment and other scientific instruments to help define the subsurface plume near the BP Deepwater Horizon oil spill site and adjacent area. The mission is a collaborative project among NOAA, academia and the private sector.

The Gunter will sail to the vicinity of the well head and begin a systematic survey using its 18 and 38 kHz sonar to define the shape and extent of the underwater plume. University of New Hampshire Joint Hydrographic Center scientists onboard will explore the feasibility of using mid-water mapping sonar to image the submerged plume in combination with new software that could result in 3-D images of what is happening underneath the surface.

If potential plumes are identified, the Gunter will deploy a unique autonomous underwater vehicle provided by the Monterey Bay Aquarium Research Institute. Called the Gulper, the vehicle will take discrete water samples at various depths to allow precise characterization of any oil, dispersants, or other substances in the plume.

Oil spill halted but unclear if it can be sustained

The flow of oil and gas from the broken well in the Gulf of Mexico has been stopped by pumping mud into it however the challenge will be whether that can be sustained, the U.S. incident commander Admiral Thad Allen said on Friday.

Allen said the next 12 to 18 hours will be "very critical" in the effort to stop the gusher which has sent thousands of barrels of oil into the fragile ecosystem there, he said on ABC's "Good Morning America".

Obama halts deepwater drilling in Gulf

President Barack Obama ordered all 33 deepwater oil rigs in the Gulf of Mexico to halt drilling and extended a moratorium on new deepwater wells, as BP temporarily suspended its latest effort to contain the US’s biggest oil spill.

Declaring that BP was now operating under his administration’s orders, Mr Obama used a rare televised press conference to try to assert control over the “tragedy” in the Gulf, as public frustration over the five-week-long disaster reaches boiling point.

Fixing oil spill my responsibility, Obama says

Thrown on the defensive, President Barack Obama acknowledged his administration could have done better in dealing with the biggest oil spill in the nation's history and misjudged the industry's ability to cope with a worst-case scenario. Obama will make his second tour of the battered Gulf Coast on Friday.

"I take responsibility. It is my job to make sure that everything is done to shut this down," Obama declared in a lengthy news conference at the White House on Thursday. As he spoke, well owner BP struggled anew to plug the blown well that exploded five weeks ago, killing 11 workers and sending millions of gallons of polluting oil gushing out.

Obama's words marked a clear shift of emphasis for an administration that previously had said it was generally "in charge" but there were limits to what it could do — and that oil giant BP was responsible for stopping the flow and cleaning up the disastrous damage.

There Was 'Nobody in Charge'

After the Blast, Horizon Was Hobbled by a Complex Chain of Command; A 23-Year-Old Steps In to Radio a Mayday

The vessel's written safety procedures appear to have made it difficult to respond swiftly to a disaster that escalated at the speed of the events on April 20. For example, the guidelines require that a rig worker attempting to contain a gas emergency had to call two senior rig officials before deciding what to do. One of them was in the shower during the critical minutes, according to several crew members.

The written procedures required multiple people to jointly make decisions about how to respond to "dangerous" levels of gas—a term that wasn't precisely defined—and some members of the crew were unclear about who had authority to initiate an emergency shutdown of the well.

BP spill brakes deep-water drilling industry expansion

The Gulf accounts for 30% of the USA's domestic oil production. Existing production won't be affected by the president's initiatives, nor will exploration in shallow waters.

The restrictions won't boost consumer gas prices in the short term because there's currently excess oil production globally, says Robert Peterson, industry consultant with Charles River Associates. The delays in drilling today will, instead, affect production years from now. . .

The delays will add up, says a report from consulting firm Wood Mackenzie. Earlier this month, before work was ordered halted on the 33 exploratory wells, Wood Mackenzie estimated that a six-month ban on new drilling would cause a 4% drop in deep-water Gulf oil production in 2011. Tighter safety regulations will also drive drilling costs higher, which could make some areas in the Gulf too costly to explore further.

More immediately, companies will have to adjust drilling plans. That may include deploying to other areas drilling rigs that cost up to $500,000 a day to lease.

BP shows the need for a rethink of regulation

One thing at least is certain after BP’s makeover of the Gulf of Mexico into a sludge pit: corporate self-regulation and public oversight have failed. We need to rethink how companies operate in a fragile world and how governments monitor them.

BP well disaster stuns hardened oil men

"It has a psychological effect not only on America, but our industry, and you try to overcome that," Farris told the Reuters Global Energy Summit in Houston this week.

Even energy lobbyists are changing their tack. Catherine Reheis-Boyd, president of the Western States Petroleum Association, readily conceded at a debate in San Francisco last week that what happened with the Horizon was a "game-changer."

Spill Could Make BP Vulnerable

BP is likely to eventually stop the flow of oil from its explosion in the Gulf of Mexico. After that happens, the autopsy of the spill will begin in earnest. But if the information dribbling into the public domain proves correct, the British energy giant will be a weakened creature — so weak it will be vulnerable to a takeover.

BP Risks Big Fines and Loss of Major U.S. Contracts

White House lawyers are beginning to wrestle with whether BP's actions leading up to the disaster warrant barring the company from future federal contracts or oil leases, a process called debarment.

BP is the single biggest supplier of fuel to the Department of Defense, with Pentagon contracts worth $2.2 billion a year, according to government records. BP is also the largest producer of oil on federal waters in the Gulf of Mexico, which makes it a significant contributor of revenue to the government.

BP, Regulators Are Grilled On Hill Over Key Decisions

Rep. Jay Inslee, (D., Wash.) asked Mr. McKay why oil rig workers started putting cement in the well to ensure the pipes were sealed in place, despite insufficient equipment.

Some "centralizers," designed to prevent voids in cement, were missing because "somebody delivered the wrong ones to them," so BP used only six instead of 20, Mr. Inslee said at a later hearing. . .

During another of five congressional hearings Thursday into the disaster, two Transocean Ltd. workers who were aboard the rig when it exploded told members of the House Judiciary Committee that there were safety issues with the rig.

Douglas Harold Brown, the chief mechanic and acting second engineer on the rig, said Transocean, the rig's operator, had reduced the number of crew members in the engine room from six to three, which put employees behind in completing preventative maintenance. One worker was eventually added back, but "that still left us two people short," Mr. Brown said.

Storm: Hurricane outlook, oil spill a possible double whammy for Gulf

That early outlook issued Thursday by the National Oceanic and Atmospheric Administration doesn't say that any one part of the Atlantic or Gulf is targeted, only that there will be more tropical-storm bullets to dodge than normal -- 14 to 23 -- with as many as 14 developing into hurricanes and up to seven becoming major hurricanes, with sustained winds of at least 111 mph. . .

NOAA climate scientists say several factors are making for more storms being predicted this year. Seawater-surface temperatures, for example, are up to 4 degrees Fahrenheit above normal in the area of the Atlantic where storms need heat to fire up.

Another major factor is that the El Nino pattern that causes tropical-wind patterns to break up hurricanes has disappeared. NOAA forecaster Gerry Bell said the higher-end estimates for the season were included because it appears the reverse La Nina pattern that encourages hurricane development is taking hold.

Hurricane plus oil equals more problems

A predicted busy hurricane season this summer is on a collision course with an unprecedented oil spill in the Gulf of Mexico, and the results are anyone's guess, weather experts say.

"The problem is that this is a man-made experiment we wish we hadn't made," said Jenni Evans, a professor of meteorology at Penn State University.

Alaska oil pipeline supply cut to 8 pct of normal

Alaska North Slope oil producers have cut their flow of crude to 8 percent of normal levels as the Trans Alaska Pipeline remained closed for a third day, the pipeline operator said on Thursday.

There is still no estimate of when the pipeline will reopen, after it was closed on Tuesday following an unexpected power outage that triggered a spill from an overflowed storage tank at a pump station along the 800-mile (1,287-km) pipeline.

Sen. Kerry makes his case for an energy bill

Senator Kerry made three basic arguments for the bill, and they deserve to be heard.

The first is jobs and the economy. He says the bill will create 200,000 jobs annually over 10 years, and return America to leadership in the “mother of all markets.” The technology boom of the 1990s was a $1 trillion market with 1 billion users, he said; the market for energy is $6 trillion, with 6 billion users.
Not one American business is among the world’s top 10 solar producers, he laments. Meanwhile, China is investing $400 billion in alternative and renewable energy.

Second, national security. The bill will lead to a 40 percent to 50 percent drop in dependence on OPEC, he claims. “We send $100 million a day to [oil-producing] Iran. Does that make sense?”

Third, health and environmental reasons: melting glaciers, “climate refugees” of displaced people around the world, diminished wildlife habitat from a warming planet.

Interestingly, he put these reasons last. It’s at the core of climate change legislation, but as even Al Gore found out, the environment doesn’t poll among voters the way the economy does.

The Eternal Energy Crisis

In the nearly 40 years since Mr. Nixon’s warnings about oil’s threat to national independence, and the more than 30 years since President Carter donned his cardigan beside the roaring White House fireplace and told the nation to lower its thermostats, U.S. oil consumption has almost doubled, the dollar has been substantively devalued, the price of a barrel of oil has risen to $80 with spikes to $125, and the U.S. now imports 60 percent of its oil, a billion dollars a day piled on to its bone-cracking current-account deficit.

No easily imaginable tactical blunder has gone unimplemented. As the American automobile industry floundered toward bankruptcy, the one popular area that was tariff-protected was relatively high-gasoline-consumption SUVs and small trucks. As the financial storm clouds gathered over Detroit (well before that city’s skies were made even murkier by the smoking crotch of the Nigerian petro-panties bomber), General Motors drove into the future and over the cliff in the gas-guzzling Hummer, like the Polish army deploying more horse cavalry to meet German and Soviet tanks in 1939.

Stocks, oil prices rally amid news over China’s holdings

Oil prices climbed for the second day in a row Thursday after Chinese officials denied reports that they're reconsidering the country's holdings in European bonds.

Drilling and Dollars

In case you can't read the reduced-size text above, it shows that when President Obama announced that he was opening more areas to offshore drilling at the end of March, oil prices shot up. Then when the moratorium on offshore drilling was put in place after the Deepwater Horizon tragedy, oil prices took a nosedive. As the freeze was expanded and extended, prices kept moving down.

Wyoming aims to save the next generation of coal with carbon sequestration

“There’s more than enough capacity to handle all the CO2 emissions Wyoming is going to generate for almost the next 100 years,” said State Geologist Ron Surdam.

Even if CO2 injections began today, state leaders believe it would do little to preserve Wyoming’s existing coal-fired power generation and coal-export industry. The latter accounts for about one-third of state revenue.

That’s because the CO2 would not come from Jim Bridger or any other existing coal-fired power plant in the 37 states that burn Wyoming coal.

The technology to capture CO2 from existing coal-fired power plants remains technically and economically elusive, according to both those who support and those who oppose coal. Most agree that today’s carbon capture technology would create a parasitic load, gobbling up about 20 percent of the electrical generation output on a coal-fired unit.

Geothermal Companies Vie for African Development Contracts

East Africa is famous for its national parks like the Serengeti, the continent's highest mountain Kilimanjaro, and its exceptional safaris, but now it's being celebrated by energy companies for its geothermal resources.

Most of Africa’s geothermal resources are located in its Rift Valley, one of the geologic wonders of the world. The Rift Valley spans roughly 3,700 miles (6,000 kilometers) across East Africa and runs through Kenya, Ethiopia, Djibouti, Eritrea, Tanzania, Uganda, and Zambia.

Daimler looks beyond Tesla with BYD electric-car partnership

Daimler announced today that it is partnering with BYD to build a new brand of electric cars via a joint venture called Shenzhen BYD Daimler New Technology. Together, they have invested $88 million into the development of the product, which will be targeted at Chinese consumers.

Enbridge Asks Regulators to Approve Northern Gateway Oil Pipeline

Enbridge filed a regulatory application for the construction of two 728-mile underground pipelines stretching from Edmonton, Alberta, to Kitimat, British Columbia. One pipeline would export up to 525,000 barrels a day of crude oil from Alberta's oil sands region and the other would import up to 193,000 barrels a day of condensate, which is used to dilute thick oil sands oil so it can flow through pipelines.

Social conflicts jeopardize Peru’s growth engine

Peru (Reuters) - Peru has lured mining companies to pour $35 billion into new projects over the next decade, but more and more investors are facing unpredictable local opposition and the threat of violence or lawsuits.

Building the mines, almost all financed by foreign companies, will bolster Peru's position as a top global minerals exporter and strengthen the engine that made it the fastest growing economy in Latin America for much of the past decade.

IEA sees downside risk to oil demand

The IEA's next monthly Oil Market Report is due to be released on June 10. The May report said global demand would rise by 1.62 million barrels per day (bpd) in 2010 -- a slight downward revision from the previous estimate.

Crude prices have fallen from a 19-month high of $87.15 a barrel reached in early May to around $73 on concern that Europe's debt crisis would derail the global economic recovery.

Bankruptcy talk spreads among Calif. muni officials

Antioch's leaders earlier this month said bankruptcy could be an option for the cash-strapped city of roughly 100,000 on the eastern fringe of the San Francisco Bay area.

Orange County Treasurer Chriss Street would not be surprised if more local governments across the Golden State sound a similar alarm.

Shell Agrees to Buy Natural-Gas Exploration Company

Royal Dutch Shell PLC said Friday it has agreed to buy East Resources Inc., a closely held U.S. natural-gas explorer, for $4.7 billion, in a transaction that underscores the frenzied global interest in North American shale-gas production.

Warrendale, Pa.-based East Resources is one of the biggest players in a natural-gas exploration area known as the Marcellus Shale, with control of 1.25 million acres across a territory that stretches from West Virginia to New York.

Barreling Toward Peak Oil

People throw around the term "peak oil," but that doesn't mean the system will run out of oil. It means the amount of oil you're gaining by finding new oil fields—and bringing them onstream—is equal to the losses you're taking as other fields run down. The U.S. was the first country to peak in 1970, but that was a seamless transition since the oil companies just brought in more oil on tankers. Now the U.S. is importing about 67 percent of its oil.

The business of peaking is now usual: There are 30 non-OPEC countries with significant production. Thirteen of these have peaked or are about to peak, and they contribute some 52 percent of the oil volume outside OPEC.

World oil production will peak sometime between 2015 and 2020. The plateau should last for three to five years. The price will go up, since the supply isn't rising and demand will be strong. That will scare people.

BP: Not 'Beyond Petroleum' but just beyond peak; Market cap blues

For all its blunders, greed and abysmal safety and environment record, BP isn't solely to blame. That's akin blaming illegal aliens for being in Arizona. They are there and elsewhere because of our insatiable appetite for cheap labor. The financial mess: the "American dream and endless, debt-based consumption. And how many of those angry with BP will be willing to give up their long, single-occupancy auto commute.

This is what peak oil looks like: Not merely higher costs to find and refine the largely inferior petroleum remaining, nor the national security implications of the worldwide chase for remaining oil supplies. It means riskier and riskier means of production. Welcome to the future. What author James Howard Kunstler calls the "era of happy motoring" is over.

Vestas, Siemens Wind Bets at Risk on Cheap Gas, Subsidy Loss

Vestas Wind Systems A/S, Siemens AG and Suzlon Energy Ltd. may end up with underused U.S. factories as cheap natural gas and a lack of federal support reduce wind turbine deliveries this year by as much as 50 percent.

Vestas, the world’s largest maker of wind turbines, is spending $1 billion to expand annual production capacity in Colorado to 3,000 megawatts and hire 2,000 workers to sell and build turbines. Siemens plans to open a parts factory in Kansas this year, and already manufactures blades in Iowa.

They’re betting that the U.S. will pass a law that requires utilities in every state to buy electricity from renewable resources.

Rich countries pledge $4B to stop deforestation

OSLO, Norway (AP) -- Developed nations pledged more than $4 billion Thursday to finance a program meant to help poor countries protect their forests and slow global warming.

An agency monitoring the aid will be up and running before U.N. climate talks start in Cancun, Mexico, later this year, the European Union's climate commissioner said at a conference on deforestation in Oslo.

Also, Indonesia agreed to a two-year moratorium on issuing new permits for forest destruction as part of a $1 billion deal with Norway that would pay Indonesia a fixed sum per ton of CO2 emissions reduced through rain forest preservation. Norway has had a similar deal with Brazil since the mid-1990s.

EPA Encourages Ways to Travel Green by Checking into an Energy Star Labeled Hotel

WASHINGTON - The U.S. Environmental Protection Agency (EPA) is encouraging people to travel green while on the road this summer, and choosing hotels that have earned EPA’s Energy Star is a great place to start. Energy Star labeled hotels are independently verified to meet strict energy efficiency performance levels set by EPA. Hotels that have earned the Energy Star perform in the top 25 percent of hotels nationwide, use at least 35 percent less energy and emit at least 35 percent less greenhouse gas emissions than their peers - making an environmentally friendly lodging choice a snap when planning a summer vacation.

This Reuters analysis looks at what comes next in crisis resolution, especially in terms of European debt:

“It took $5 trillion and an unprecedented global coalition of G20 countries to stabilize the economy after investment bank Lehman Brothers collapsed in 2008. Quelling the next phase of the financial crisis may be even harder.

To stop the panic that erupted nearly two years ago, governments transferred a mountain of debt from private to public accounts. Now, those government debts are distressing financial markets and there is nowhere left to shift the burden.

Europe’s clumsy response to Greece’s debt woes highlighted the economic and political headaches that await debt-laden countries and those who finance their borrowing.

European leaders have yet to convince investors that they have a credible short-term plan to contain government deficits and a long-term answer to the region’s slow growth. Until they do, financial markets will remain volatile, and the hard-fought economic recovery is in jeopardy…

Fixing the problem will require money and political will. One cannot work without the other, and both are lacking.

I’ve said before “you cannot borrow your way out of debt anymore than you can drink yourself sober.” The various crisis leaders should keep that in my mind as they take the easy route — throw more and more money at the problems, but fail o make the hard choices when it comes to resolving them.

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Source:
Next phase of financial crisis may be the hardest
Emily Kaiser
Reuters May 21, 2010
http://www.reuters.com/article/idUSTRE64K6B120100521

April Income rose .4%, in line with expectations but Spending was flat vs a forecasted rise of .3%. With this, the Savings Rate rose to 3.6% from 3.1%. The headline PCE price deflator was unchanged so REAL income and spending was the same as the nominal change. While spending was flat m/o/m, it is still up 4.6% y/o/y relative to a 2.5% y/o/y gain in income. Thus, after seeing a drop in the savings rate over the past few months, it’s now back in line with the average over the past few years. With this said it’s still well below the 50 yr average of 6.9% and I believe we will continue to trend in that direction and would be very healthy if it did. While it will impact consumer spending, the savings provide a basis for long term investment and domestic financing and would make us less dependent on foreign financing.

New thread, please redirect to http://www.theoildrum.com/node/6523.

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Those are some pretty serious numbers above. The Nazz up nearly 4%; The Global Dow up over 6%.

Is this merely a deeply oversold snapback, or the start of something more lasting? Might as well open up the floor for whatever thoughts, comments and ideas you have about this crazed & crazy market.

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What say ye?

iPad + Velcro from Jesse Rosten on Vimeo.

Hat tip kottke

Source: Visual Economics

Although I suspect BR is at least as much of a gadget lover as I am, if not more, I’ll just preface the post by saying it’s Invictus. (My history here has demonstrated that most readers don’t check the byline.) That said:

I’ve been an early adopter my whole life. Can’t help myself; it’s in my blood. Probably my biggest miscalculation was a Sony Digital Audio Tape deck — and a Walkman to accompany it. I’ve often wondered if I was the only person in the States who bought that technology.

Anyway, fast-forward (pun intended) to late 2007/early 2008 and the introduction of the Dash Express GPS, which I could not wait to get my hands on. (Here is my first GPS device, circa mid-90s, and I thought I’d died and gone to Heaven.)

The beauty of the Dash was its always-on two-way internet connectivity and the features that sprung from it:

• Local Yahoo! search
• Real-time, crowd-sourced traffic updates via other Dash users on the network, often suggesting re-routes well before hitting heavy traffic
• Send2Car — to which I became addicted, allowed me to simply send an address to the unit over any internet connected device, which it would receive and provide a route to

Although it was not without its bugs, customer service was great. Dash had some active forums, and its open source technology allowed users to develop all sorts of useful and interesting applications for it. It developed a loyal (but apparently small) cult-like following. I make no bones about loving my Dash — always have, always will. It was a device ahead of its time.

Premiering in the early months of the recession and not doing a very good job marketing their product, Amazon (initially the sole vendor) slashed the price 25% in no time flat. Things were not looking good. But everyone soldiered on.

In little more than one year (June 2009), with the company apparently faltering, they were snatched up by RIMM, presumably for their software, and probably for a song.

And now, finally, comes this:

We will be discontinuing service and support of the Dash Express product effective June 30, 2010, no new month to month subscriptions will be sold after today (May 24, 2010). Your loyalty to our product for the last few years is truly valued and appreciated.

We will issue prorated refunds to customers with an outstanding balance on their remaining pre-paid subscription. Our month-to-month subscribers will simply see their service expire automatically on June 30, 2010.

In order for us to process your refund, we will need you to verify/enter your mailing address here

We thank you for your support of the Dash Express product.

I’d hoped and prayed for Dash to make it. Although I’ll readily admit it was a bulkier device than I would have liked, I found its feature set superior to any of its competitors.

But such is life in the dog-eat-dog world of high tech. As I’ll be in the market for a replacement device, feel free to drop some comments on what’s caught your fancy in the PND space.

New thread, please redirect to http://www.theoildrum.com/node/6523.

The leakage rate is significant (I calculated earlier that it was around 17,000 bd, which lies within the newly reported range of 12,000 to 19,000 bd, and may have been higher than BP were actually anticipating. (Though the leak may also have increased a little as the mud was injected at higher pressures). The operation has already used all the mud on one of the supply boats, and has moved to the second (there is a third standing by so they won't run out). The concern, however is now with the volume of cement that will be required for the seal.

The high volume that is leaking would require that additional amount to the volume needed for the seal itself, and that may be closer to the available capacity of the system that they have in place, or the supplies that they have on site to achieve the seal. If that is the case, one can understand the desire to at least partially plug the leaks in the BOP, and to wait until the mud column fully balances the pressure in the oil reservoir before starting this phase of the operation.

Until this point in the operation the volume of cement required to create an effective plug has not been seen as an issue.

Edit - New Section Added:

Unfortunately as I write the feed from the leak has moved to look at other things, but the last glance I had seemed to suggest that they have been able to reduce the flow somewhat, though I guess not enough. Just to remind you of the problem, this is what the internal flow path through the BOP looks like:


Section through the BOP, showing the anticipated mud flow path (initially from BP)

Now they have to get relatively large particles (larger than the smallest diameter of the flow path) through the feed lines, which have a size of 3-inches, and those of us who pump particles in fluids much prefer that the particle diameter be no more than 30% of the pipe diameter - which is to say in this case an inch. And so if the orifice in the BOP is larger than that, then there is a problem in working out how to get something in there that will be effective, remembering that it has to work through all the flow convolutions of the supply line that has just been installed for the mud.

I was just discussing this with a friend in California . . .

Tax Policy Center:

It is not news that state tax revenues have been absolutely hammered in the current economic downturn. But you may be surprised to learn that one local tax has held up relatively well. It is, of all things, the property tax. How can that be, you ask, if so much of the economic mess was caused by a collapse of a housing bubble?

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Source:
The Property Tax: Unsung Hero
Kim Rueben
Tax Policy Center, Wed 26 May 2010
http://taxvox.taxpolicycenter.org/blog/_archives/2010/5/26/4538181.html