By GUY CHAZAN
European Pressphoto Agency
Fire raged April 22 on the Deepwater Horizon, two days after an explosion unleashed a five-month scramble to seal a BP well.
.BP PLC's rogue Gulf of Mexico well was declared permanently sealed Sunday as a page turned on a disaster that fouled huge swaths of the Gulf Coast, damaged the Obama White House and rocked the U.S. oil industry.
The U.S. government's point man for the spill-response effort said Sunday that BP had killed the well by pumping in mud and cement from below through a relief well.
BP's well "is effectively dead," said Coast Guard Adm. Thad Allen in a statement after tests verified the strength of a cement plug placed at its bottom.
"Additional regulatory steps will be undertaken, but we can now state, definitively, that the Macondo well poses no continuing threat to the Gulf of Mexico," he said.
It was the last act of a struggle to subdue a well that blew out five months ago off the Louisiana coast, destroying the Deepwater Horizon rig that drilled it, killing 11 men and triggering the worst offshore spill in U.S. history.
The "bottom kill" involved flooding the gap between the well casing and the rock formation that surrounds it with cement through a relief well that intersected the Deepwater Horizon well at a depth of 18,000 feet. The operation finished Friday, and cement tests early Sunday morning confirmed that "the well has been permanently sealed with cement plugs," a U.S. government statement said.
"This is a significant milestone in the response to the Deepwater Horizon tragedy and is the final step in a complex and unprecedented subsea operation," said Tony Hayward, the outgoing BP chief executive, in a statement.
Though the well is now plugged for good, the repercussions of the disaster will be felt for years, possibly decades, to come. The U.S. offshore oil industry, which was unprepared for a disaster on this scale, is bracing for change as government regulation and oversight increases. BP is facing civil and criminal probes and a wave of litigation that could tie it up in the courts for years. And the work of restoring the tarnished ecosystems of the Gulf Coast is only just beginning.
Curbs on drilling placed by the U.S. government in the wake of the disaster have also hit the region hard, putting hundreds out of work. With rigs now leaving the area, some even predict the U.S. offshore industry could forfeit its leading position. "The Gulf Coast is the Silicon Valley of the oil industry, but that innovation could easily migrate elsewhere," said Dan Yergin, head of IHS Cambridge Energy Research Associates.
On Sunday, BP said the spill has so far cost about $9.5 billion, including the spill response, containment, relief-well drilling, static kill and cementing, grants to Gulf states, claims paid and federal costs.
The process of identifying just who was to blame for the disaster and who should pay for the damage could drag on for months, if not years. Already the blowout has become one of the most scrutinized maritime disasters ever, with parallel probes by the Coast Guard and Interior Department, the Justice Department and the U.S. Chemical Safety Board, among other agencies.
Lawyers representing BP, Transocean Ltd., which owned the Deepwater Horizon rig, and Halliburton Co., which did the cement job on the doomed well, are digging in for a long, high-stakes fight over culpability, the outcome of which could determine who picks up the tab for one of America's worst industrial accidents.
BP earlier this month issued the findings of its own internal investigation into the incident, which spread the blame among employees of BP, Transocean and Halliburton. But it's unlikely to be the last word in what promises to be a long, multi-pronged search for the truth of what actually happened April 20 and why.
The difficulties of drawing a line under the disaster have been underscored by the lack of consensus on how much damage the spill actually caused. In August, the government released a study that indicated that nearly 75% of the five million barrels spilled from BP's well was already gone from the Gulf or being rapidly broken down by bacteria, raising hopes that the long-term environmental impact of the spill might not be as great as initially feared.
But that optimistic view has come under sustained attack. Scientists at the University of Georgia say the rate of evaporation and biological breakdown has been greatly exaggerated. Recent findings by scientists from the Woods Hole Oceanographic Institution showed that oil from the spill has formed an underwater plume of hydrocarbons 22 miles long, more than a mile wide and 3,500 feet under the sea, proof that the oil was persisting longer than expected.
The debate reflects the deep uncertainty about the long-term environmental consequences of the incident and fears that much of the oil could elude conventional detection and cleanup efforts.
John Wright, the driller responsible for drilling the relief well to seal the Macondo well, the source of the Deepwater Horizon rig explosion and oil spill, on the helo deck of the Development Driller III, after cement was poured into the well to seal it Saturday.
.Even the recordable damage inflicted by the spill has been grave. The release of crude fouled nearly 700 miles of coastline, gumming up coastal marshlands, washing up as tar balls on Florida beaches, and coating hundreds of seabirds in gunk. The local economy was devastated as authorities closed thousands of square miles of federal waters to fishing.
BP and the government mobilized an effort to stem the tide of oil, with a 30,000-strong army recruited to protect the Gulf shore and more than 5,000 ships deployed in the recovery effort. The company said Sunday that about 25,000 people, 2,600 vessels and dozens of aircraft continued to be engaged in the response effort.
And a mile below the surface of the sea, BP worked to stem the flow of oil with a string of ad hoc contraptions, few of which proved effective. The company finally got lucky in mid-July, using subsea robots to install a new cap it had designed and built from scratch. Since then, no oil has been leaking into the Gulf. Still BP and the government held off from declaring the well sealed until the relief well could be completed.
But the failure of procedures like the "junk shot"—in which shredded tires and golf balls were pumped into plug the leak—seemed to underline how ill-prepared the company had been for an underwater blowout, despite its long experience of offshore drilling.
That has galvanized BP's rivals—including Exxon Mobil Corp and Royal Dutch Shell PLC—into action. In July, they said they were forming a $1 billion joint venture to design, build and operate a new rapid-response system for containing a massive deepwater oil spill.
As well as forcing greater collaboration between the majors, the Gulf disaster is also redefining Big Oil's relationship with the U.S. government. Authorities have shed their hands-off approach as they rush to make offshore drilling safer. Companies are bracing for new government rules, particularly on the capability and strength of well-control equipment.
"Regulators both in the U.S. and abroad will become more engaged in our and our customers' business," said Jack Moore, chief executive of Cameron International Corp., a major manufacturer of subsea equipment, in early August.
The oil companies themselves are also likely to become more cautious, especially in their drilling operations. "The attitude will be "we are going to take as long as the job needs, no longer and no less," said David Dismukes, associate director of the Louisiana State University Center for Energy Studies.
Working Out the Kinks
BP tried several methods to plug the well before finding one that worked
That extra cautiousness, combined with tougher regulation, could profoundly affect oil and gas production in the deeper waters of the Gulf of Mexico, one of the fastest-growing oil provinces in the world.
"Companies with exposure to the Gulf are going to have to reduce their production guidance," said Douglas Ober, chief executive of Petroleum & Resources Corp., an investment fund. "So far, their share prices don't reflect that."
Yet the major oil companies could emerge as winners in the post-Deepwater Horizon world, as smaller players that have often been at the forefront of deepwater exploration are squeezed out.
"Raising liability limits will drive up insurance costs and that could exclude the independents," says Robin West, chief executive of consultancy PFC Energy.
BP itself has been laid low by a disaster that at times appeared to put its future in doubt. It saw its market value halve as investors dumped the stock, spooked by the mounting costs of the clean-up and the prospect of unlimited liability for oil spill-related damage. It dumped its chief executive, Tony Hayward, who had been savaged in the U.S. for his handling of the spill.
BP has already taken a huge hit, recording a $17 billion loss in the second quarter—the largest in U.K. corporate history. It says it will sell $30 billion of assets over the next 18 months to pay for the spill, shedding around 8% of its production.
Meanwhile, its future in the U.S. remains under a cloud, with legislation proposed in Congress that would bar it from new offshore drilling permits. It must finish cleaning up the Gulf, mend fences with Congress and the Obama administration and fight off the hundreds of oil spill-related lawsuits it now faces.
—Russell Gold and Angel Gonzalez contributed to this article.
Monday, 20 September 2010
China resorts to blackouts in pursuit of energy efficiency
With end of current five-year plan looming, many regions are desperately pulling the plug to meet usage targets
Jonathan Watts, Asia environment correspondent guardian.co.uk, Sunday 19 September 2010 17.06 BST Reuters
No TV. No internet. No air conditioning. Traffic lights off. Hospitals deprived of electricity. Tens of thousands of household fridges and freezers without power. Milk curdling. Vegetables rotting. The risks of delaying energy-saving measures have been all too apparent in a Chinese region where the authorities initiated draconian rationing last month to achieve the state's efficiency targets.
Anping County, in Hebei Province, cut electricity to homes, factories and public buildings for 22 hours every three days in a radical move that has highlighted both the serious last-minute effort that China is making to achieve environmental goals and the immense long-term difficulty of shifting away from a dirty, wasteful model of economic growth.
There are less than four months left until the end of China's current five-year plan, during which the economy is supposed to have become 20% more energy efficient. That target (which measures energy use relative to GDP growth) is crucial for a nation that wants to move up the economic value chain and prove to the world that it is making a significant contribution toward tackling greenhouse gas emissions.
Progress towards this goal was initially good, with a 14.4% gain in efficiency until last year. But it was tilted off track in the first three months of 2010 by huge infrastructure spending – largely on energy-intensive steel and cement projects – aimed at warding off the worst effects of the global economic downturn.
This meant China's economy surged forward at more than double-digit pace, but was having to burn more coal for each yuan of productivity. After this was revealed, the state council – China's cabinet – ordered the provinces to step up their efforts to reach the energy efficiency target by the end of the year.
During the summer, Zhejiang and Jiangsu – two of the most industrially advanced provinces – began intermittently cutting power supplies to factories. Similar measures have since been adopted in other regions and applied at a local level in different ways.
Last month, Anping went further than anyone by introducing rolling 22-hour electricity cuts among subunits. According to local media, at least two hospitals – Boai and Renmin – and one set of traffic lights were affected. Residents were given advance notice to stock up on candles and make other preparations.
"It was extremely inconvenient," grumbled a Mrs Wang, who declined to give her first name. "All the food in our fridge went off." But she said her shop, which sells diesel-powered generators, did a strong trade among local factories, most of which make wire fencing.
The indiscriminate cuts impacted industrial estates and poor rural communities alike. In Liukou village, one farmer – a Mr Liu – said he was told the measures were being applied for energy conservation.
"We don't have many electrical appliances in our home so it didn't affect me that much. We just had to hang around because we couldn't watch TV as usual."
After a media outcry and central government criticism of Anping's "unscientific approach", the local authorities rescinded the rolling cuts and apologised to residents.
The China News Service quoted Shi Yuehui, the county's deputy head, admitting the plan was simple-minded and inadequately thought through.
But the challenge of making up lost ground remains fierce, prompting speculation that tighter energy controls will be introduced in the worst performing provinces and the most energy intensive industries, such as steel-making, coking and cement production.
Last month, the government ordered the closure of more than 2,000 highly polluting, unsafe or energy inefficient plants. The prime minister, Wen Jiabao, said this week that such measures would continue regardless of the cost. "We will achieve this goal even if it means losing GDP growth," he told a press conference in Tianjin.
In Hebei, local media report that several steel companies are intermittently idle. Last week, the largest steel producer, Hebei Iron and Steel Group, announced plans to trim output by 6%. HSBC forecasts a rise in global steel prices due to falling production in China until at least the end of the current five year plan.
Reliant on coal and energy intensive industries – often outsourced from the west – China is trying to improve efficiency by replacing old industrial centres and transport networks with state-of-the-art power plants, high-speed rail networks and greater use of renewables. But the speed and scale pose unprecedented challenges.
In the past year, China has overtaken the US as the world's biggest consumer of energy, according to the International Energy Agency. It has also become the biggest car market and the main emitter of greenhouse gases. Whether China's economy cannot just become bigger, but leaner, healthier and more efficient is an increasingly pressing question for the global environment.
• Additional reporting by Cui Zheng
Jonathan Watts, Asia environment correspondent guardian.co.uk, Sunday 19 September 2010 17.06 BST Reuters
No TV. No internet. No air conditioning. Traffic lights off. Hospitals deprived of electricity. Tens of thousands of household fridges and freezers without power. Milk curdling. Vegetables rotting. The risks of delaying energy-saving measures have been all too apparent in a Chinese region where the authorities initiated draconian rationing last month to achieve the state's efficiency targets.
Anping County, in Hebei Province, cut electricity to homes, factories and public buildings for 22 hours every three days in a radical move that has highlighted both the serious last-minute effort that China is making to achieve environmental goals and the immense long-term difficulty of shifting away from a dirty, wasteful model of economic growth.
There are less than four months left until the end of China's current five-year plan, during which the economy is supposed to have become 20% more energy efficient. That target (which measures energy use relative to GDP growth) is crucial for a nation that wants to move up the economic value chain and prove to the world that it is making a significant contribution toward tackling greenhouse gas emissions.
Progress towards this goal was initially good, with a 14.4% gain in efficiency until last year. But it was tilted off track in the first three months of 2010 by huge infrastructure spending – largely on energy-intensive steel and cement projects – aimed at warding off the worst effects of the global economic downturn.
This meant China's economy surged forward at more than double-digit pace, but was having to burn more coal for each yuan of productivity. After this was revealed, the state council – China's cabinet – ordered the provinces to step up their efforts to reach the energy efficiency target by the end of the year.
During the summer, Zhejiang and Jiangsu – two of the most industrially advanced provinces – began intermittently cutting power supplies to factories. Similar measures have since been adopted in other regions and applied at a local level in different ways.
Last month, Anping went further than anyone by introducing rolling 22-hour electricity cuts among subunits. According to local media, at least two hospitals – Boai and Renmin – and one set of traffic lights were affected. Residents were given advance notice to stock up on candles and make other preparations.
"It was extremely inconvenient," grumbled a Mrs Wang, who declined to give her first name. "All the food in our fridge went off." But she said her shop, which sells diesel-powered generators, did a strong trade among local factories, most of which make wire fencing.
The indiscriminate cuts impacted industrial estates and poor rural communities alike. In Liukou village, one farmer – a Mr Liu – said he was told the measures were being applied for energy conservation.
"We don't have many electrical appliances in our home so it didn't affect me that much. We just had to hang around because we couldn't watch TV as usual."
After a media outcry and central government criticism of Anping's "unscientific approach", the local authorities rescinded the rolling cuts and apologised to residents.
The China News Service quoted Shi Yuehui, the county's deputy head, admitting the plan was simple-minded and inadequately thought through.
But the challenge of making up lost ground remains fierce, prompting speculation that tighter energy controls will be introduced in the worst performing provinces and the most energy intensive industries, such as steel-making, coking and cement production.
Last month, the government ordered the closure of more than 2,000 highly polluting, unsafe or energy inefficient plants. The prime minister, Wen Jiabao, said this week that such measures would continue regardless of the cost. "We will achieve this goal even if it means losing GDP growth," he told a press conference in Tianjin.
In Hebei, local media report that several steel companies are intermittently idle. Last week, the largest steel producer, Hebei Iron and Steel Group, announced plans to trim output by 6%. HSBC forecasts a rise in global steel prices due to falling production in China until at least the end of the current five year plan.
Reliant on coal and energy intensive industries – often outsourced from the west – China is trying to improve efficiency by replacing old industrial centres and transport networks with state-of-the-art power plants, high-speed rail networks and greater use of renewables. But the speed and scale pose unprecedented challenges.
In the past year, China has overtaken the US as the world's biggest consumer of energy, according to the International Energy Agency. It has also become the biggest car market and the main emitter of greenhouse gases. Whether China's economy cannot just become bigger, but leaner, healthier and more efficient is an increasingly pressing question for the global environment.
• Additional reporting by Cui Zheng
Where there's bugs, there's brass: UK firm lands $500m biofuel contract
TMO Renewables wins contract with US firm Fiberight using its 'turbo-charged' GM bacteria that convert rubbish into biofuels
Shanta Barley
The Guardian, Monday 20 September 2010
TMO Renewable's bacteria converts rubbish and waste into biofuels
A British company that uses a genetically modified compost-heap bug to produce biofuel from rubbish has signed a $500m (£319m) contract with a US firm.
TMO Renewables developed a strain of "turbo-charged" bacteria that can turn tea bags, cardboard, wood and other household waste into fuel for cars and trucks. The Guildford-based company signed a 20-year, $25m-a-year deal with US firm Fiberight.
The technology is part of a wave of "second generation" biofuels that are not made from crop plants. The use of rubbish is aimed at addressing concerns that growing plants for fuel will raise food prices.
"With TMO's bacteria on board, which speeds up the breakdown of cellulose in the waste, the efficiency with which we convert rubbish into bioethanol will rise by around 35%," said Craig Stuart-Paul, chief executive of Iowa-based Fiberight. "[TMO Renewables] is three to five years ahead of most of its competition in the US."
In 2008, TMO Renewables built the UK's first bioethanol plant that runs on grasses, cardboard and other waste. Key to its success was the incorporation of genetically engineered bacteria that can break down cellulose into simpler sugars, which can then be fermented to produce bioethanol. The TMO process relies on a strain of bacteria known as TM242 which grows at high temperatures of around 60C. "It has an unusually broad appetite, such that Fiberight's process will be able to turn waste into bioethanol is just 24 hours," said Hamish Curran, CEO of TMO Renewables. The Fiberight deal is TMO's first commercial contract.
"We can finally roll out a technology that will truly break the mould of fuel generation. It's going to reduce how much garbage ends up in landfill generating methane, and provide extremely sustainable transport fuels," he added. In the next five years, 15 plants using TMO's process will be built.
Stuart-Paul said the potential market in the US is considerable. By 2011, US legislation calls for 17.1m gallons of bioethanol to be used in cars. "We're going to be making 50% of that," he said.According to Curran, developing TMO's process in the US rather than in the UK was a logical and commercially attractive proposition. "The US government is substantially ahead of Europe, and in particular the UK when it comes to making biofuel companies feel welcome. The debate the UK had last week about scaling back biofuel production is just another example of this."
Claire Wenner, head of biomass and transport at the Renewable Energy Association in London, agrees. "It's just so sad that we are losing these companies to the US," she said. "Why aren't we building these plants in the UK? Sustainable development in the UK keeps getting knocked back by skittish politicians. We just need to go for it, like the US is."
Next up, TMO hopes to partner with companies in China. "Shanghai has 20 million people and Beijing has 19 million so there's an awful lot of waste that's ready to be turned into bioethanol. What's more, there's not much room in China for landfills and China's biofuel mandates are more advanced than they are in Europe, so yes we're interested."
Shanta Barley
The Guardian, Monday 20 September 2010
TMO Renewable's bacteria converts rubbish and waste into biofuels
A British company that uses a genetically modified compost-heap bug to produce biofuel from rubbish has signed a $500m (£319m) contract with a US firm.
TMO Renewables developed a strain of "turbo-charged" bacteria that can turn tea bags, cardboard, wood and other household waste into fuel for cars and trucks. The Guildford-based company signed a 20-year, $25m-a-year deal with US firm Fiberight.
The technology is part of a wave of "second generation" biofuels that are not made from crop plants. The use of rubbish is aimed at addressing concerns that growing plants for fuel will raise food prices.
"With TMO's bacteria on board, which speeds up the breakdown of cellulose in the waste, the efficiency with which we convert rubbish into bioethanol will rise by around 35%," said Craig Stuart-Paul, chief executive of Iowa-based Fiberight. "[TMO Renewables] is three to five years ahead of most of its competition in the US."
In 2008, TMO Renewables built the UK's first bioethanol plant that runs on grasses, cardboard and other waste. Key to its success was the incorporation of genetically engineered bacteria that can break down cellulose into simpler sugars, which can then be fermented to produce bioethanol. The TMO process relies on a strain of bacteria known as TM242 which grows at high temperatures of around 60C. "It has an unusually broad appetite, such that Fiberight's process will be able to turn waste into bioethanol is just 24 hours," said Hamish Curran, CEO of TMO Renewables. The Fiberight deal is TMO's first commercial contract.
"We can finally roll out a technology that will truly break the mould of fuel generation. It's going to reduce how much garbage ends up in landfill generating methane, and provide extremely sustainable transport fuels," he added. In the next five years, 15 plants using TMO's process will be built.
Stuart-Paul said the potential market in the US is considerable. By 2011, US legislation calls for 17.1m gallons of bioethanol to be used in cars. "We're going to be making 50% of that," he said.According to Curran, developing TMO's process in the US rather than in the UK was a logical and commercially attractive proposition. "The US government is substantially ahead of Europe, and in particular the UK when it comes to making biofuel companies feel welcome. The debate the UK had last week about scaling back biofuel production is just another example of this."
Claire Wenner, head of biomass and transport at the Renewable Energy Association in London, agrees. "It's just so sad that we are losing these companies to the US," she said. "Why aren't we building these plants in the UK? Sustainable development in the UK keeps getting knocked back by skittish politicians. We just need to go for it, like the US is."
Next up, TMO hopes to partner with companies in China. "Shanghai has 20 million people and Beijing has 19 million so there's an awful lot of waste that's ready to be turned into bioethanol. What's more, there's not much room in China for landfills and China's biofuel mandates are more advanced than they are in Europe, so yes we're interested."