Friday, July 23, 2010
Matthew Simmons has made a lot of big claims about the oil spill (see videos below).
Because of his background, Simmons has been interviewed repeatedly in television, newspaper and radio media. Simmons was an energy adviser to President George W. Bush, is an adviser to the Oil Depletion Analysis Centre, and is a member of the National Petroleum Council and the Council on Foreign Relations, and is former chairman and CEO of Simmons & Company International, an investment bank catering to oil companies.
People have become polarized around Simmons as a lightning rod. For example, people who believe all of Simmons' claims believe that anyone who questions any of Simmons's claims is working for BP. On the other extreme, people who think Simmons has gone senile or is simply talking his book (he's short BP) tar and feather anyone who questions BP's version of the Gulf narrative as being a crazy Simmons follower.
So let's assess Simmons' claims one-by-one. And - more importantly - let's refocus the discussion away from one person and towards the Gulf itself (Simmons himself will either be vindicated, proven off-base, or something in between. But that is his personal concern, not ours).
BP's stock Will Go to Zero
Simmons predicts that BP's stock will go to zero. he might be right. Fines under the Clean Water Act are $4,300 per barrel of oil spilled into the Gulf of Mexico. And civil and criminal damages could be substantial.
But BP has been doing everything in its power to lowball the amount of oil spilled into the Gulf (and see this), even though it easily could have easily quantified how much oil is spilling. If the government allows BP to get away with lowballing the spill number, the fines won't bankrupt BP.
Similarly, if the government let's BP maintain its $75 million liability cap on economic damages, let's BP hide the extent of the damage to the Gulf (see this and this), to perform only a superficial clean up of the Gulf and fails to press criminal charges (or let's BP off with a slap on the wrist), then BP might survive by selling assets.
In addition, Gordon T. Long argues that the failure of BP would have a greater affect on the U.S. economy than the failure of Lehman.
So some say that - even if it's wrong - BP will be considered "too big to fail" and will be bailed out.
There is a "Lake of Oil" in the Gulf
Simmons claims there is a "lake of oil" in the Gulf, 30 feet thick and miles long.
I don't know about this claim, but scientists have found giant underwater plumes, and NOAA has just announced traces of oil 30 meters thick stretching for quite a ways. See this, this, this and this. Specifically, because millions of gallons of Corexit have been applied, many solid plumes have been broken up into giant bodies of solution ... mixtures of water, oil, methane and dispersant.
But these solutions can contain levels of oil and other chemicals which are at or near the levels which are toxic to marine life (see below).
BP Has Killed the Gulf
Simmons told Bloomberg that BP has "killed the Gulf".
Obviously, the effect on the Gulf will be severe - at least in the short run - especially because BP has used millions of gallons of Corexit dispersant, which is highly toxic to animals.
An independent scientist from the University of Georgia - Dr. Joye - says that government scientists are underestimating the amount of oxygen depletion in the Gulf waters. Dr. Joye says that it's not a conspiracy. Rather, government scientists have only been studying oxygen levels close to the blown out well. However, oxygen levels are much lower 3-15 kilometers from the leaking wellhead (the water right near the wellhead has been recently exposed to oil, and so the oil and methane-eating bacteria haven't had a chance to start breaking it down yet. Further away from the spill site, the bacteria breaks down the oil and methane more, depleting oxygen in the process.) See this Wall Street Journal article.
The bottom line is that the use of so much Corexit in combination with such huge amounts of oil is a science experiment, and no one knows the outcome. This might kill the Gulf. Or the Gulf might bounce back surprisingly fast.
Rob Kendall, director of Texas Tech’s Insitute of Environmental & Human Health, says:
This is a catastrophe of enormous proportions. To me, this is the biggest environmental toxicology experiment we’ve ever conducted.
And Kim Withers, a coastal ecologist at Texas A&M University in Corpus Christi notes:
It's like the biggest science experiment ever. Unfortunately, it's a completely uncontrolled experiment.We Should Evacuate the Gulf
On one extreme, Simmons says that the health effects from the huge quantities of oil and methane released from the oil gusher, plus the huge quantities of Corexit used by BP, have created a toxic brew which could kill 20 million Gulf coast residents. He therefore says we should evacuate the Gulf coast.
On the other extreme, the EPA, NOAA and other government agencies have tried to downplay all potential health effects, according to a senior EPA analyst and many others. Indeed, the head of the EPA said:
I am walking a fine line between truth and hysteria. We don't want to create a panic.Hurricanes could - under the right conditions - spread oil and toxic chemicals inland. See this and this.
Marine toxicologist Dr. Ricki Ott and senior EPA analyst Hugh Kaufman both say that Gulf coastal communities should be evacuated.
And University of California Santa Barbara scientist and marine geochemistry expert Dr. David Valentine says that - at least when BP is burning oil or gas - the area around the spill site “had a cloud of smoke hanging over it at all times”, composed of surface burn smoke and the methane flair-up. He said the burns form “one thick mass of clouds, and when it rains, a lot of junk comes down from the particulate“.
I simply don't know enough about how Corexit, oil and methane combine to know how toxic a brew it could really become, so I don't know whether evacuations should be implemented.
We Should Nuke the Well
Simmons says that the only thing which will stop the oil spill is a small nuclear bomb inserted deep into the well.
I have researched this issue, and believe that the use of a nuke has more risk than benefit.
There is a Second, Bigger Leak Miles from the Leak We've Seen on the Videos
The claim that BP has hid the real well from the American people seems contradicted by the evidence we have at this point. And while I can't say for sure that the claim of a second, bigger leak somewhere else is false, I have seen nothing to confirm this to date.
However, given that BP has not provided even basic information to the Congressional Committee chairman who demanded it in writing, that BP has done everything it could to cover up the severity of the problems in the Gulf (see this, this and this), and that we only see what BP chooses to aim its cameras at, we need to discover some basic facts about the situation before we can even discuss this intelligently.
Moreover, because NOAA has discovered other nearby leaks or seeps and because Admiral Thad Allen says that the seep 3 kilometers away from the blown out well is from the Rigel gas field, it is vital to find out what's really going on. See this, this and this.
And a whistleblower previously told 60 Minutes, there was an accident at the rig a month or more before the April 20th explosion:
[Mike Williams, the chief electronics technician on the Deepwater Horizon, and one of the last workers to leave the doomed rig] ... says going faster caused the bottom of the well to split open, swallowing tools and that drilling fluid called "mud."
"We actually got stuck. And we got stuck so bad we had to send tools down into the drill pipe and sever the pipe," Williams explained.
That well was abandoned and Deepwater Horizon had to drill a new route to the oil. It cost BP more than two weeks and millions of dollars.
Where did this incident occur? Was there any leak of oil, or only a loss of equipment into the drilling mud? Have the underwater cameras, seismic and sonar equipment taken a look at this location to make sure everything is stable and is not leaking?
Similarly, as Bloomberg reports, problems at the well actually started in February:
BP Plc was struggling to seal cracks in its Macondo well as far back as February, more than two months before an explosion killed 11 and spewed oil into the Gulf of Mexico.
It took 10 days to plug the first cracks, according to reports BP filed with the Minerals Management Service that were later delivered to congressional investigators. Cracks in the surrounding rock continued to complicate the drilling operation during the ensuing weeks. Left unsealed, they can allow explosive natural gas to rush up the shaft.
“Once they realized they had oil down there, all the decisions they made were designed to get that oil at the lowest cost,” said Peter Galvin of the Center for Biological Diversity, which has been working with congressional investigators probing the disaster. “It’s been a doomed voyage from the beginning.”
On Feb. 13, BP told the minerals service it was trying to seal cracks in the well about 40 miles (64 kilometers) off the Louisiana coast, drilling documents obtained by Bloomberg show. Investigators are still trying to determine whether the fissures played a role in the disaster.
Why do investigators think fissures back then might have played a part in the April 20 explosion and blowout?The answers to the above questions must be disclosed so that we can assess what's really going on in the Gulf of Mexico.
To watch Simmons make the claims addressed above, watch these videos: