Friday, July 30, 2010

Open Thread

I'll be out of town and largely away from a computer for the next week.

Let me know what's on your mind, what stories you think are most important, what you think about issues of the day such as the Gulf oil spill, the economy, investing, gold, China, the wars in Afghanistan and Iraq (or the threats against Iran), the assault on the Constitution, breakthroughs in alternative energy, the odds that the people will awaken from their deep slumber, unexplained neutrino measurements, or anything else on your mind.

Let me know what you think I should write about when I get back ...

Wednesday, July 28, 2010

Mainstream Economists: "Mission Accomplished"

Numerous current stories show how disconnected mainstream policy-makers are from reality.

For example, Ryan Grim points out that there is an "unbelievable disconnect" between the American people (who are people are against the Afghanistan war) and Congress and the political elite (gung-ho to escalate this never-ending war):

Even after the Wikileaks revelations, even though there is no logical reason to be in Afghanistan, even though the war won't help the economy, and even though most Americans want us to get out, Congress keeps increasing funding for the endless war.

And Alan Blinder (economist, banking consultant and former Vice Chairman of the Board of Governors of the Federal Reserve System) and chief Moody's economist Mark Zandi wrote a paper yesterday called How We Ended the Great Recession:

How We Ended the Great Recession

A source on Capitol Hill sent this to me, telling me that the paper is making the rounds on the Hill.

In the paper, Blinder and Zandi congratulate the Bush and Obama administrations for saving us from the Great Depression 2.0:
Eighteen months ago, the global financial system was on the brink of collapse and the U.S. was suffering its worst economic downturn since the 1930s. The Great Recession gave way to recovery as quickly as it did largely because of the unprecedented responses by monetary and fiscal policymakers.
In other words: "Mission Accomplished".

In the real world, however, the economy is on the second leg down of the crash, and the government's policies have not addressed the real problems. See this and this (no wonder consumer confidence is plunging but Wall Street is partying like it's 1999).

Indeed, while Blinder and Zandi and Congress are patting themselves on the back for a job well done, the facts simply do not bear out their claims. As just one example, they claim that the TARP bank bailouts helped the economy. But as I pointed out in March 2009, the bailout money didn't actually go to any productive economic uses:

The bailout money is just going to line the pockets of the wealthy, instead of helping to stabilize the economy or even the companies receiving the bailouts:

  • A lot of the bailout money is going to the failing companies' shareholders
  • Indeed, a leading progressive economist says that the true purpose of the bank rescue plans is "a massive redistribution of wealth to the bank shareholders and their top executives"
  • The Treasury Department encouraged banks to use the bailout money to buy their competitors, and pushed through an amendment to the tax laws which rewards mergers in the banking industry (this has caused a lot of companies to bite off more than they can chew, destabilizing the acquiring companies)
And as the New York Times notes, "Tens of billions of [bailout] dollars have merely passed through A.I.G. to its derivatives trading partners".


In other words, through a little game-playing by the Fed, taxpayer money is going straight into the pockets of investors in AIG's credit default swaps and is not even really stabilizing AIG.
The super-wealthy have been bailed out, and life is great for them. For everyone else, things are not so good.

The system is rigged to benefit the elites and their sycophants at the expense of the country. See this, this, this, and this.

And - because Congress members tend to be wealthy, and because they can engage in insider trading without having to worry about pesky things like the law - they continue (with only a handful of exceptions who challenge status quo thinking regarding finance and war) to make decisions which benefit their own bank accounts, instead of working for the American people.

Tuesday, July 27, 2010

Of Course Clean Up Workers Can't Find the Oil ... BP Used Dispersants to Temporarily Hide It, So Now It Will Plague the Gulf For Years

News headlines state that cleanup workers are having a hard time finding oil.

Sounds good, right?

Actually, if BP had let things run their course:

  • Oil-skimming vessels could have sucked up most of the oil
  • Booms would have stopped most of the oil from hitting the shore
  • And oil-eating bacteria would have broken down most of the remaining oil

Instead, BP has used millions of gallons of dispersants to hide the oil by breaking it up, so it sinks beneath the surface.

That means that oil-skimming vessels can't find it or suck it up. As the Times-Picayune pointed out on July 16th:

The massive "A Whale" oil skimmer has effectively been beached after it proved inefficient in sucking up oil from the Gulf of Mexico spill.

The oil is too dispersed to take advantage of the converted Taiwanese supertanker's enormous capacity, said Bob Grantham, a spokesman for shipowner TMT.

He said BP's use of chemical dispersants prevented A Whale, billed as the world's largest skimmer, from collecting a "significant amount" of oil during a week of testing that ended Friday.

"When dispersants are used in high volume virtually from the point that oil leaves the well, it presents real challenges for high-volume skimming," Grantham said in a written statement that did not include oil-collection figures from the test.

Similarly, the use of dispersants means that Booms can't stop it from hitting the shore. As marine biologist and oil spill expert Paul Horsman explains, using dispersants and oil booms are competing strategies. Specifically, breaking something down into tiny bits and dispersing it throughout a mile-plus deep and hundreds-miles wide region (the reason massive amounts of dispersants are being applied at the 5,000 foot-deep spill site as well as at the surface) makes it more difficult to cordon off and contain oil on the surface (the reason booms are being used).

And Corexit might be killing the oil-eating bacteria which would otherwise break down the oil. University of Georgia scientist Samantha Joye notes that scientists have no idea how the large quanties of dispersant will effect the Gulf's microbial communities (for more information, watch part 1, part 2, part 3, part 4 and part 5 of Dr. Joye's July 13th press conference).

Moreover, as MSNBC notes, oil-eating bacteria are less active in deepwater, where much of the oil sinks after treatment with dispersants:

Some note that little is known about the deepwater ecosystem — or how the oil and dispersants will react under extremely high water pressure, very low temperatures, limited oxygen and virtually no light.


The conditions at the bottom of the Gulf also could affect the bacteria that help break down the oil near the surface, as they are less active in cold temperatures than in the warm surface waters, and they may be less abundant in the deep.

“We know that the surface material has been degrading,” says Ralph J. Portier, professor of environmental studies at LSU. “But what about the microbial population at depth?”

As Scientific American points out:

The last (and only) defense against the ongoing Deepwater Horizon oil spill in the Gulf of Mexico is tiny—billions of hydrocarbon-chewing microbes, such as Alcanivorax borkumensis. In fact, the primary motive for using the more than 830,000 gallons of chemical dispersants on the oil slick both above and below the surface of the sea is to break the oil into smaller droplets that bacteria can more easily consume.

“If the oil is in very small droplets, microbial degradation is much quicker,” says microbial ecologist Kenneth Lee, director of the Center for Offshore Oil, Gas and Energy Research with Fisheries and Oceans Canada, who has been measuring the oil droplets in the Gulf of Mexico to determine the effectiveness of the dispersant use. “The dispersants can also stimulate microbial growth. Bacteria will chew on the dispersants as well as the oil.”


[But] colder, deeper waters inhibit microbial growth. "Metabolism slows by about a factor of two or three for every 10 degree[s] Celsius you drop in temperature," notes biogeochemist David Valentine of the University of California, Santa Barbara, who just received funding from the National Science Foundation to characterize the microbial response to the ongoing oil spill. "The deeper stuff, that's going to happen very slowly because the temperature is so low."

At the same time, the addition of ... dispersants deep beneath the surface is having uncertain effects; it may even end up killing the microbes it is meant to help thanks to the fact that Corexit 9527A contains the solvent 2-butoxyethanol, which is a known human carcinogen and toxic to animals and other life.

Mother Jones provides additional details:

David Valentine ... warns the stuff may be riskier than just its toxicity. Corexit may undermine the microbes that naturally eat oil.

Some of the most potent oil-eaters—Alcanivorax borkumensis —are relatively rare organisms that have evolved to eat hydrocarbons from naturally occurring oil seeps. Valentine tells Eli Kintisch at Science Insider that after spills, Alcanivorax tend to be the dominant microbes found near the oil and that they secrete their own surfactant molecules to break up the oil before consuming the hydrocarbons. Other microbes don't make surfactants but devour oil already broken into small enough globs—including those broken down by Alcanivorax.

What we don't know is how the surfactants in Corexit and its ilk might affect the ability of Alcanivorax and other surfactant-makers to eat oil. Could Corexit exclude Alcanivorax from binding to the oil? Could it affect the way microbes makes their own surfactants? Could Corexit render natural surfactants less effective?

The National Science Foundation has awarded Valentine a grant to study the problem.

So it's not a good thing that clean up workers can't find the oil. It means that the oil will lurk under the surface, in deeper waters where bacterial activity is slower, poisoning the sealife that lives beneath the surface, and washing back up during storms for years to come.

Even Admiral Thad Allen, the government's point man for the crisis, said that breaking up the oil has complicated the cleanup. As AP reported on June 7th:

The hopeful report was offset by a warning that the farflung slick has broken up into hundreds and even thousands of patches of oil that may inflict damage that could persist for years.

Coast Guard Adm. Thad Allen, the government's point man for the crisis, said the breakup has complicated the cleanup."

Dealing with the oil spill on the surface is going to go on for a couple of months," he said at a briefing in Washington. But "long-term issues of restoring the environment and the habitats and stuff will be years."

And Admiral Allen admitted in his press conference yesterday that oil could re-surface far into the future:

[Question] There have been reports of very large undersea plumes of oil thousands of feet below the ocean’s surface. So when you say there’s the possibility of the shore being impacted for four to six weeks, how do you come up with that four to six week number? And are you taking into account these very large plumes of oil that are out there and very difficult to sort of gauge where they’re going?

[Admiral Allen] What we’re going to continue to watch for is the oil we can’t see.... But the ultimate impact of this spill… whether or not oil surfaces at a later date will be the subject of long-term surveillance.... Impacts are going to go on for a long, long time.

As Congressman Markey said today, BP has made the Gulf “a toxic bowl” that will “haunt this region” for years, because “all of that oil is still under the surface”:

And see this, this, this:

and this:

Admiral Allen Says Gas Seep is from the Rigel Gas Field ... Did BP Accidentally Tap Into the Rigel Gas Field?

On July 23rd, Admiral Thad Allen said that the seep 3 kilometers from the leaking BP well was from the Rigel gas field:

David Dishneau: Admiral, this is David Dishneau from The Associated Press. I have a question regarding that seep that we’ve been trying to, that was identified within three kilometers… And I know that the Interior Department now is trying to assist with identifying that but the AP has developed a map that shows the two old wells within the radius that you described. And I wondered if I could show you this map and you could point out which of those you believe.

Admiral Allen: You caught me without my glasses. I think I can answer your question. I think we believe it might be attributed to what’s called the Rigel well, r-i-g-e-l

Rigel is a huge deepwater gas field.

Portions of the gas field are directly south of the blownout BP well in Mississippi Canyon Block 296 (MC296), as well as in Mississippi Canyon Block 252 (MC252), where BP's blownout oil well is located:

In a series of 3 articles, Florida Oil Spill Law (FOSL) rounds up information on the Rigel gas field, and its potential interaction with BP's oil well.

Initially, FOSL provides general background on the Rigel field:

Federal officials visit oil spill area, talk with BP, Oil & Gas Journal, April 30, 2010:

Transocean Ltd.’s Deepwater Horizon semisubmersible was on contract to BP to drill the Macondo well on Mississippi Canyon Block 252 in 4,992 ft of water near Rigel gas field. An Apr. 20 explosion and fire rocked the semi, leaving 11 crew members missing and presumed dead and injuring 17.

Westside – Rigel Deepwater Field Appraisal and Development, Westside Study Group, November 16, 2005

The Rigel exploration well, the Texaco OCS-G-18207 #1, was drilled in 1999 in Gulf of Mexico block MC 252 in 5200’ water depth. The well targeted a Miocene age, low-relief downthrown closure/stratigraphic trap that was supported by a strong amplitude response on the 3D seismic data. … The well encountered what was interpreted to be a 176’ thick gas-charged, low-permeability siltstone in the Rob E-age target. …

The appraisal drilling by Dominion, the operator, with its partners, Mariner and Newfield, was highly successful. As a result, the Rigel field is currently being developed as a one-well subsea tieback, as part of a larger subsea system. The project is nearly complete.

MTS Houston presentation May 25 to feature Dominion’s Rigel/17 Hands Subsea Development in the GOM, Oil Online, April 6, 2006:

Rigel/17 Hands is a two-well, subsea, dry gas development in the Mississippi Canyon 252 area of the Gulf of Mexico, in water depths ranging from 3400 feet to 5800 feet. The two wells are tied back to the Chevron VK 900 host facility via the alrea flowline. All the equipment and controls were designed to be compatible with the existing Chevron system.

The distance from the host facility to the Rigel and 17 Hands wells is approximately 40 and 50 miles, respectively. Combined flow rates from the two dry gas wells is around 150 MMCFPD.

Dominion Makes Deepwater Discovery at Rigel Prospect, Rig Zone, November 05, 2003:

Dominion Exploration and Production has made a deepwater discovery at its Rigel prospect, located at Mississippi Canyon Block 296 in the Gulf of Mexico. The discovery is located in about 5,200′ of water… drilled to a total depth of about 16,200′ and encountered 140′ of gross gas pay in the main Rob E objective. Additional pay was found in a shallow objective that may allow for a future recompletion. The well has been temporarily abandoned for future use as a subsea completion.

Cal Dive Installs 17 Hands and Rigel Flowline System, Rig Zone, June 06, 2005:

Cal Dive International recently completed the installation of Dominion Exploration & Production’s 17 Hands and Rigel flow line system. The project included the installation subsea to subsea of 121,072 feet of 8 inch diameter pipe in water depths ranging from 3,500 to 5,883 feet from CDI’s reel lay vessel Intrepid. The pipe lay operation was initiated at the 17 Hands well location in MC 299 utilizing Cal Dive’s hinge over Pipeline End Termination (“PLET”) system, an in-line PLET was installed at the Rigel well in MC 252 then the flowline system was terminated with a standard second end PLET at the Gemini manifold location in MC 292.

Speculation about a possible impact on the Rigel well did occur at the Oil Drum. Once. About a month ago.

BP’s Deepwater Oil Spill – The Admiral on Casing and Connections, Oil Drum, June 21, 2010:

[Comment by Lurking]

Anybody happen to know if the Rigel or 17 Hands gas fields are in danger of being affected by fluids from the BP stovepipe?…

The reason I ask is that over the last few days, I’ve seen what appear to be more gas in the plume… as if I can tell what it is when I see it. I’m referring to the globs of bluish white that you see in the plume.. not the milky dispersant from the nozzles. I have no idea what the pay depth for those two fields are, but if they are contributing to the flow… that would be bad.

[Response by Bignerd]

Funny, I was looking at that the other day.

I’ve got a map which shows what I think is the Macondo well over to the east side of the 252 block, whereas the Rigel field straddles the southern boundary.

The Seventeen Hands gas line and an oil export line from Na Kika both cross the block in the south and west.

So all other on block infrastructure looks to be about 3 km to the south and west of the Macondo well.

[Response by Lurking]

The Rigel prospect has a measured depth of 16,200 feet. Macondo was drilled to 18,000 feet (and change). … [My comment: there is "weakness" in the blown out Macondo well at 9,000 and 17,000 feet]

[I]t seems to me that 3 to 7 miles is not that far in strata that is as close as 340 vertical feet apart and that varies from impermeable to highly porous.

[The Macondo well] had to drill past (through?) that level [of the Rigel well] with what is now a casing of dubious integrity.


Next, FOSL asks whether it is possible that gas from the Rigel field is flowing in to BP's blown out oil well:
Is the Rigel gas field why Congressman Markey’s wrote the mysterious June 23 letter about oil flowing into the well?

See 'Clear Shot to the Surface' (Times-Picayune)

“Experts say that the open annulus could be how [a methane bubble] that destroyed the Deepwater Horizon got to the surface.” - Times Picayune

The nearby Rigel gas deposits are at a similar depth to the compromised section of BP's Macondo well.


Congressman Markey’s June 23 letter to BP question[ed] if hydrocarbons may also be rushing IN to the damaged casing, instead of pouring out. His questions were revealing, and now more relevant than ever:

Are there significant deposits of oil and gas in formations above the target reservoir?

Please provide an estimate of the total amount of oil and gas that is contained in i) the Macondo well target formation and ii) each formation above the target formation that could leak hydrocarbons into the annulus

Please provide documents related to the possibility that the initial drilling encountered leakage from other formations above the target reservoir

A May 23, 2010 article… in the Orlando Sentinel stated that well records indicate that in late February, there was a loss in drilling mud pressure. According to the article, this could mean that the mud fractured layers of sand or shale in the formation and vanished. The article goes on to state that in early March, the pressure of the oil and gas encountered overwhelmed the pressure of the drilling mud. In mid-April, a loss of drilling mud was reportedly again experienced. Do any or all of these events indicate that oil and gas could be flowing from somewhere other than the target reservoir? If so, please explain fully, and if not, why not?

How does Conressman Markey know to pursue such unique and specific questions about the well integrity? Previous to this letter, no mention had been made of leakage INTO BP’s well, the possibility of oil or gas escaping out.

Markey likely already knows the answers to these questions, but is unable to reveal this information because it is under some level of classification.

He recently made a statement to this effect on CNN:

MARKEY: They have not responded. And, again, I wrote back there on June 23, so that we could publicly disclose what the integrity of the wellbore is, we could publicly disclose what the integrity of the geology around the wellbore, so that we could better understand. …

YouTube Video

Given the heated debates as to whether or not BP's oil reservoir is becoming depleted, what the pressure readings from the BP well mean, and whether a "static kill" (top kill version 2.0) attempt is safe, it is crucial that we get to the bottom of this one way or the other.

Finally, FOSL points out that - instead of Rigel gas leaking into the BP well - the BP oil spill could have leaked out through the area of the Rigel gas field:
The seeps were identified by the Joint Analysis Group and research vessel Thomas Jefferson.

The Joint Analysis Group is comprised of the National Oceanic and Atmospheric Administration (NOAA), the U.S. Environmental Protection Agency (EPA) and the White House Office of Science and Technology Policy (OSTP).

Several seeps southwest of the BP blow-out were first reported on June 21, 2010 by scientists aboard the R/V Thomas Jefferson. The seepage “appears to be natural gas” (methane) according to the NOAA report.

Did these seeps exist before BP began exploration of the doomed Macondo prospect?

Former Shell Oil executive and current Berkeley engineering professor Robert Bea is “troubled that we’re just now hearing about seeps three kilometers away, because a survey of the seabed conducted before BP drilled its well didn’t indicate anything like that,” according to the Times-Picayune.

He said, “There was nothing that indicated the presence of such a seep… I wonder why we’re just now finding that out?”

Bea has “very little confidence in what’s been said publicly about the seeps.”

This July 23 JAG report image shows areas of seepage near the BP blow-out, with the majority appearing near the Rigel gas field. Seeps are identified by purple cylinders:

BP blow-out = white cylinder (NOAA)

Seeps shown as ‘red and yellow columns’ & ‘purple cylinders’ in the June 21 report by the R/V Thomas Jefferson:

BP blow-out = solid bright red cylinder

I have no idea whether or not FOSL is correct that a substantial interaction between the blownout BP well and the Rigel gas field has occurred. I have repeatedly noted that the oil gusher could make nearby natural seeps larger. And the crude from BP's well is 40% methane, while crude oil usually contains only 5% methane. Is this because of a naturally high methane content in the oil reservoir, or because BP accidentally tapped into the Rigel field while it was drilling?

It is better to raise the hypothesis that the BP oil well is interacting with the Rigel field and have it debunked - or confirmed - than not to discuss it at all ... especially since Thad Allen has raised the issue himself.

Better yet, BP should be forced to answer Congressman Markey's questions, so that we don't have to speculate.

Numerous people have also sent me the link to Alexander Higgins' post claiming that the large methane seep in the area of the Rigel field was not there before BP capped its well. I have no idea whether or not he's right (someone with better map skills and more time can let us know).

Saturday, July 24, 2010

Osama Bin Lyin?

Everyone knows that Osama Bin Laden confessed to 9/11 on videotape.

Admittedly, German experts say (rough English translation here) that the Bin Laden confession tape was mistranslated. But what do the Germans know, other than how to make beer?

Sure, an American computer expert says that a Bin Laden video released in 2007 was spliced together from earlier footage, and that:

There are so many splices that I cannot help but wonder if someone spliced words and phrases together. I also cannot rule out a vocal imitator during the frozen-frame audio. The only way to prove that the audio is really bin Laden is to see him talking in the video....

But he's just a pencil-neck computer geek, so why should we listen to him?

Yeah, Swiss scientists are 95% certain that an early post-9/11 Bin Laden tape was a fake. They conclude that all of the later Bin Laden tapes are probably fakes as well. But what do the Swiss know, besides banking and milk chocolate?

Okay, one of the world's top experts on Bin Laden - Bruce Lawrence of Duke University - says that recent Bin Laden tapes are fake. He also says that the tape in which Bin Laden confessed to 9/11 is a fake, and that the top Bin Laden experts in the Department of Homeland Security agree. But he must be a communist or something.

And it is interesting that - as confirmed by the Washington Post's Spy Talk columnist - the CIA admitted to faking a Bin Laden videotape using CIA personnel:

The agency actually did make a video purporting to show Osama bin Laden and his cronies sitting around a campfire swigging bottles of liquor and savoring their conquests with boys, one of the former CIA officers recalled, chuckling at the memory. The actors were drawn from “some of us darker-skinned employees,” he said.

But that is obviously just an isolated incident which doesn't mean that any other Bin Laden tapes are fake.

Because everyone knows that America doesn't engage in propaganda.

Note: This essay does not have anything to do with 9/11 itself or Bin Laden's role in 9/11. It doesn't have to do with the war in Afghanistan. It focuses solely on the question of whether or not America ever engages in propaganda and disinformation.

Friday, July 23, 2010

Matthew Simmons: Lightning Rod for Gulf Oil Controversy

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.

And remember, BP is still one of the largest suppliers of oil to the U.S. military. See this and this.

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.

Indeed, as Dr. Joye notes, scientists have no idea how the large quanties of dispersant will effect the Gulf's microbial communities (for more information, watch part 1, part 2, part 3, part 4 and part 5 of Dr. Joye's July 13th press conference).

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.

However, conventional explosives - in the hands of top underwater demolition experts working closely with top Gulf geologists - might be helpful if the relief wells fail.

There is a Second, Bigger Leak Miles from the Leak We've Seen on the Videos

Perhaps Simmons' best-known claim is that there is a second, bigger leak miles away from the leak we've seen on the videos. Simmons claims that what we've watched on the underwater videos is a smaller leak at the riser, and that the main well is miles away and gushing 130,000 barrels a day. He claims that there is a conspiracy by BP to cover this up.

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:

China Calls Our Bluff: "The US is Insolvent and Faces Bankruptcy as a Pure Debtor Nation but [U.S.] Rating Agencies Still Give it High Rankings"

America's biggest creditor - China - has called our bluff.

As the Financial Times notes, the head of China's biggest credit rating agency has said America is insolvent and that U.S. credit ratings are a joke:

The head of China’s largest credit rating agency has slammed his western counterparts for causing the global financial crisis and said that as the world’s largest creditor nation China should have a bigger say in how governments and their debt are rated.

“The western rating agencies are politicised and highly ideological and they do not adhere to objective standards,” Guan Jianzhong, chairman of Dagong Global Credit Rating, told the Financial Times in an interview.


He specifically criticised the practice of “rating shopping” by companies who offer their business to the agency that provides the most favourable rating.

In the aftermath of the financial crisis “rating shopping” has been one of the key complaints from western regulators , who have heavily criticised the big three agencies for handing top ratings to mortgage-linked securities that turned toxic when the US housing market collapsed in 2007.

“The financial crisis was caused because rating agencies didn’t properly disclose risk and this brought the entire US financial system to the verge of collapse, causing huge damage to the US and its strategic interests,” Mr Guan said.

Recently, the rating agencies have been criticised for being too slow to downgrade some of the heavily indebted peripheral eurozone economies, most notably Spain, which still holds triple A ratings from Moody’s.

There is also a view among many investors that the agencies would shy away from withdrawing triple A ratings to countries such as the US and UK because of the political pressure that would bear down on them in the event of such actions.

Last week, privately-owned Dagong published its own sovereign credit ranking in what it said was a first for a non-western credit rating agency.

The results were very different from those published by Moody’s, Standard & Poor’s and Fitch, with China ranking higher than the United States, Britain, Japan, France and most other major economies, reflecting Dagong’s belief that China is more politically and economically stable than all of these countries.

Mr Guan said his company’s methodology has been developed over the last five years and reflects a more objective assessment of a government’s fiscal position, ability to govern, economic power, foreign reserves, debt burden and ability to create future wealth.

The US is insolvent and faces bankruptcy as a pure debtor nation but the rating agencies still give it high rankings ,” Mr Guan said.


A wildly enthusiastic editorial published by Xinhua , China’s official state newswire, lauded Dagong’s report as a significant step toward breaking the monopoly of western rating agencies of which it said China has long been a “victim”.

“Compared with the US’ conquest of the world by means of force, Moody’s has controlled the world through its dominance in credit ratings,” the editorial said...

China is right. U.S. credit ratings have been less than worthless. And - in the real world - America should have been downgraded to junk. See this, this, this, this, this, this, this, this and this.

China is not shy about reminding the U.S. who's got the biggest pockets. As the Financial Times quotes Mr. Guan:

“China is the biggest creditor nation in the world and with the rise and national rejuvenation of China we should have our say in how the credit risks of states are judged.”

Might Makes Right Economic Collapse

Indeed, Guan is even dissing America's military prowess:
“Actually, the huge military expenditure of the US is not created by themselves but comes from borrowed money, which is not sustainable.”
As I've repeatedly shown, borrowing money to fund our huge military expenditures are - paradoxically - weakening our national security:

As I've previously pointed out, America's military-industrial complex is ruining our economy.

And U.S. military and intelligence leaders say that the economic crisis is the biggest national security threat to the United States. See this, this and this.

[I]t is ironic that America's huge military spending is what made us an empire ... but our huge military is what is bankrupting us ... thus destroying our status as an empire ...
Indeed, as I pointed out in 2008:

So why hasn't America's credit rating been downgraded?

Well, a report by Moody's in September states:

"In superficially similar circumstances, the ratings of Japan and some Scandinavian countries were downgraded in the 1990s.


For reasons that take their roots into the large size and wealth of the economy and, ultimately, the US military power, the US government faces very little liquidity risk — its debt remains a safe heaven. There is a large market for even a significant increase in debt issuance."

So Japan and Scandinavia have wimpy militaries, so they got downgraded, but the U.S. has lots of bombs, so we don't? In any event, American cannot remain a hyperpower if it is broke.

The fact that America spends more than the rest of the world combined on our military means that we can keep an artificially high credit rating. But ironically, all the money we're spending on our military means that we become less and less credit-worthy ... and that we'll no longer be able to fund our military.

The Scary Part

I chatted with the head of a small investment brokerage about the China credit rating story.

Because he gives his clients very bullish, status quo advice, I assumed that he would say that China was wrong.

To my surprise, he simply responded:

They're right. What's scary is that China knows it.
In other words, everyone who pays any attention knows that we're broke. What's scary is that our biggest creditor knows it.

Tricks Up Their Sleeves?

China has been threatening for many months to replace the dollar as the world's reserve currency (and see this). And China, Russia and other countries have made a lot of noises about replacing the dollar with the SDR. See this and this.

Gordon T. Long argues that the much talked about gold swaps are part and parcel of the plan to replace the dollar with the SDR. Time will tell if he's right.

China, of course, is not without its own problems. See this and this.

In related news, Germany's biggest companies are starting to shun Wall Street as too risky.

Thursday, July 22, 2010

Abandoning the Capped Oil Well: What Could Possibly Go Wrong?

BP will leave the cap on the oil well while it vacates the area for a number of days to avoid the coming tropical storm.

What could possibly go wrong?

One expert warns that increasing pressure might have an unintended danger:

Bill Gale, a California engineer and industrial explosion expert who is a member of the Deepwater Horizon Study Group, said… that gas hydrate crystals could be plugging any holes in the underground portion of the well, and they could get dislodged as pressure builds.
(Gale was formerly Chief Loss Prevention Engineer for Bechtel in San Francisco, obtained his undergraduate degree in Chemical Engineering, Masters in Civil Engineering and PhD in Fire Safety Engineering Science from the University of California, Berkeley. Gale is a registered professional engineer in both mechanical engineering and fire protection engineering, and has more than forty years of industrial loss prevention, process safety management, and fire protection/fire safety engineering experience.)

In other words, there may have been a destruction of a portion of the steel well casing which was temporarily plugged by methane hydrate crystals. Leaving the well cap may slowly raise the pressure in the well to the point where the hydrate crystals are dislodged, in which case the well might really start leaking.

Sound farfetched?


But remember that the "top hat" containment dome failed because it got plugged up with methane hydrate crystals.

And remember that there's a lot of methane down there. Indeed, while most crude oil contains 5% methane, the crude oil gushing out of the blown out well is 40% methane.

Although even less likely, scientists say that the methane could disturb the seafloor itself. As the St. Peterburg Times points out:

Disturbing those [methane hydrate] deposits — say, by drilling an oil well through them — can turn that solid methane into a liquid, leaving the ocean floor unstable, explained [Carol Lutken of the University of Mississippi, which is part of a consortium with SRI which has been conducting methane research in the Gulf of Mexico for years].


Generally the oil industry tries to avoid methane areas during drilling for safety reasons. But the U.S. Energy Department wants to find a way to harvest fuel from those methane deposits, Lutken said. [I've previously discussed that issue in detail.]

So what's the bottom line?

I am not predicting that anything bad will happen. Hopefully, when the storm is over and the underwater ROV submersibles return to the spill site, everything will be peaceful and stable.

But there are many variables such as methane hydrates which - in a worst-case scenario - could complicate matters.

Big Storm to Hit Gulf of Mexico ... All Oil Relief Operations Will Be Suspended ... Cap Will Stay On, Unattended

As oil industry expert Bob Cavnar writes:

The National Hurricane Center this morning forecasted a 70% chance that Invest 97, now just south of the Bahamas, would form into a tropical cyclone. Destination? The central Gulf. In his McBriefing yesterday, Kent Wells announced that instead of running and cementing the last liner into relief well 1, they had already run in a storm packer to temporarily seal the well and were preparing to shut down. Here's the storm track by computer model.

July 22 storm.jpg

In other words, BP is shutting down its drilling of the relief wells until the storm passes.

Cavnar points out that this could be awhile:

A hurricane, or even a tropical storm, will cause 10 days to 2 weeks of delay. Yesterday, [Admiral Thad] Allen said that the decision whether to open the capping stack or leave it closed was currently being discussed. Without monitoring, there is fear of a major leak causing serious damage to the wellhead endangering future containment efforts. He also said that they would leave an ROV boat as last boat out, since it can travel faster than the service vessels.

I agree with what Cavnar as written previously: instead of doing the "well integrity test", BP might have been able to kill the well by now if it hadn't suspended drilling of the relief wells so that it could run that test.

It is not yet clear whether the storm will turn into a hurricane. As I warned on May 14th, there is a possibility that a hurricane could spread the oil inland.

The Weather Channel notes today:

"The oil movement will be strongly impacted not only by what the storm track is but how large the storm is," says Luettich. "A small storm that has very strong winds could have a very large impact. But also a weaker storm that is larger will also have an impact."


"A hurricane on Katrina's path would push a lot of stuff onto shore, given where a lot of the oil is right now," says Luettich.

A storm that moves up the west coast of Florida may be the best case scenario for the oil slick, if there is such a thing. It may push the oil farther out to sea and help disperse it more.


What happens when the hurricane moves inland? It's not just coastal residents affected by the massive storms. The remnants can affect communities hundreds of miles inland.


As the hurricane moves inland it will pick up particles of oil. That will become part of the sea spray that moves inland with the storm. According to Chris Zappa, an oceanographer at Columbia University, we're likely to see a light coating of oil on electrical wires and trees. He likens it to standing in sea spray for a while. You'll walk away with a light sheen of salt water on your skin. Instead of salt water, it will feel like oil water.

However, this would be a very localized effect. For example if a hurricane made landfall in Alabama, the coastal communities would feel the oily sea spray. However, it wouldn't make it to Montgomery or even Dothan, which are both more than hour inland.

Thinking about a sheen of oil on your skin may give you the heebie jeebies, but it won't hurt you. Experts at NOAA (National Oceanic and Atmospheric Administration) say the amount of oil that would be carried inland in water vapor would be less than normal levels of pollution.

(And see this.)

I don't believe anyone has studied the potential effect of a hurricane on the large amounts of methane released by the oil gusher, and the millions of gallons of Corexit sprayed into the Gulf. While some blithely dismiss any danger and others are giving apocalyptic visions, I don't think anyone really knows how bad it could be.

The government has just announced that the cap will stay on - unattended - throughout the storm. Specifically, National Incident Commander Thad Allen just announced:

The decision has been made to leave the cap on, even if the well is unattended.

I hope and pray that the well does not blow out while no one is looking.

Hurricanes can also tear up the seafloor, but probably only in shallow waters. As pointed out in a study conducted by the U.S. Naval Research Laboratory at Stennis Space Center, Mississippi (via Science Daily):

Based on unique measurements taken directly under a powerful hurricane, the new study's calculations are the first to show that hurricanes propel underwater currents with enough oomph to dig up the seabed, potentially creating underwater mudslides and damaging pipes or other equipment resting on the bottom.


Based on unique measurements taken directly under a powerful hurricane, the new study's calculations are the first to show that hurricanes propel underwater currents with enough oomph to dig up the seabed, potentially creating underwater mudslides and damaging pipes or other equipment resting on the bottom.


The research team found that strong currents along the sea floor pushed and pulled on the seabed, scouring its surface. "Usually you only see this in very shallow water, where waves break on the beach, stirring up sand," says David Wang, co-author of the study. "In hurricanes, the much bigger waves can stir up the seafloor all the way down to 90 meters [300 feet]."


Hurricanes considerably weaker than Ivan, which was category-4, could still tear up the seafloor, causing significant damage as deep as 90 meters.

But even thought the ill-fated well is too deep to suffer a direct hit by a hurricane, there are many things which could still go wrong.

Did BP Keep Drilling Even Though It Had Lost Control of the Oil Well Much Earlier?

The New York Times noted yesterday:

Even though it was more than a month before the explosion, the [Deepwater Horizon] rig’s safety audit was conducted against the backdrop of what seems to have been a losing battle to control the well.

On the March visit, Lloyd’s investigators reported “a high degree of focus and activity relating to well control issues,” adding that “specialists were aboard the rig to conduct subsea explosions to help alleviate these well control issues.”

As I pointed out last month:

The Deepwater Horizon blew up on April 20th, and sank a couple of days later. BP has been criticized for failing to report on the seriousness of the blow out for several weeks.

However, as a whistleblower previously told 60 Minutes, there was an accident at the rig a month or more prior to 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.

As Bloomberg reports today, 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.


The company attempted a “cement squeeze,” which involves pumping cement to seal the fissures, according to a well activity report. Over the following week the company made repeated attempts to plug cracks that were draining expensive drilling fluid, known as “mud,” into the surrounding rocks.

BP used three different substances to plug the holes before succeeding, the documents show.

“Most of the time you do a squeeze and then let it dry and you’re done,” said John Wang, an assistant professor of petroleum and natural gas engineering at Penn State in University Park, Pennsylvania. “It dries within a few hours.”

Repeated squeeze attempts are unusual and may indicate rig workers are using the wrong kind of cement, Wang said.

In other words, the well started losing integrity in February, and may have never been permanently stabilized. If cracks in the well were never properly sealed, then the well may have been unstable starting in February and continuing until the April 20 explosion. (There is substantial evidence that there are cracks in the well now.)

Bloomberg continues:

In early March, BP told the minerals agency the company was having trouble maintaining control of surging natural gas, according to e-mails released May 30 by the House Energy and Commerce Committee, which is investigating the spill.


While gas surges are common in oil drilling, companies have abandoned wells if they determine the risk is too high.


On March 10, BP executive Scherie Douglas e-mailed Frank Patton, the mineral service’s drilling engineer for the New Orleans district, telling him: “We’re in the midst of a well control situation.”

The incident was a “showstopper,” said Robert Bea, an engineering professor at the University of California, Berkeley, who has consulted with the Interior Department on offshore drilling safety. “They damn near blew up the rig.”

And the wives of oil rig workers killed in the blast testified that their husbands reported that the rig had problems controlling well pressure weeks before explosion.

In other words, not only is it possible that the well casing was somewhat unstable for months before the blow out, but BP may have ignored standard drilling practices by failing to abandon the well when the natural gas began surging too violently.

Sure, the rig didn't actually catch fire and sink until April, but cracks in the well and dangerous natural gas surges may mean that BP never fully had control of the well.

I'm not the only one asking such questions. It is worth re-reading the following passage from the Bloomberg article quoted above:

On Feb. 13, BP told the minerals service it was trying to seal cracks in the well ... drilling documents obtained by Bloomberg show. Investigators are still trying to determine whether the fissures played a role in the disaster.

Damaged Blowout Preventer

Whether or not BP had lost control of the well earlier, it was confirmed yesterday that BP had damaged its key piece of safety equipment - the blowout preventer - earlier, yet kept drilling.

The Los Angeles Times reported Monday:

BP officials knew about a problem on a crucial well safety device at least three months before the catastrophic April 20 explosion in the Gulf of Mexico but failed to repair it, according to testimony Tuesday from the company's well manager.

Ronald Sepulvado testified that he was aware of a leak on a control pod atop the well's blowout preventer and notified his supervisor in Houston about the problem, which Sepulvado didn't consider crucial. The 450-ton hydraulic device, designed to prevent gas or oil from blasting out of the drill hole, failed during the disaster, which killed 11 men on the Deepwater Horizon rig and set off the worst offshore oil spill in U.S. history.

Investigators said BP did not disclose the matter to the appropriate federal agency and failed to suspend drilling operations until the problem was resolved, as required by law.

The New York Times adds the following details:

Federal investigators said Tuesday at a panel that continuing to drill despite problems related to the blowout preventer might have been a violation of federal regulations that require a work stoppage if the equipment is found not to work properly.

While the equipment report says the device’s control panels were in fair condition, it also cites a range of problems, including a leaking door seal, a diaphragm on the purge air pump needing replacement and several error-response messages.

The device’s annulars, which are large valves used to control wellbore fluids, also encountered “extraordinary difficulties” surrounding their maintenance, the report said.

And as I pointed out in May:

Several weeks before the Gulf oil explosion, a key piece of safety equipment - the blowout preventer - was damaged.

As the Times of London reports:

[Mike Williams, the chief electronics technician on the Deepwater Horizon, and one of the last workers to leave the doomed rig] claimed that the blowout preventer was then damaged when a crewman accidentally moved a joystick, applying hundreds of thousands of pounds of force. Pieces of rubber were found in the drilling fluid, which he said implied damage to a crucial seal. But a supervisor declared the find to be “not a big deal”, Mr Williams alleged.
UC Berkeley engineering professor Bob Bea told 60 Minutes that a damaged blowout preventer not only may lead to a catastrophic accident like the Gulf oil spill, but leads to inaccurate pressure readings, so that the well operator doesn't know the real situation, and cannot keep the rig safe.
There are many other examples of criminal negligence by BP, Halliburton and Transocean as well. See this, this, this, this, this, this, this, this, this, this, this, this, this, this, this, this, this, this and this.