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President Has Another "Skip Gates Moment", Declares BP Will Pay All Costs Of Spill

President Obama found time in his schedule (after the White House Correspondent's Dinner last night) to fly over an oil spill caused by the catastrophic failure of the Deep Water Horizon rig owned by Swiss based Transocean Ltd and leased by oil giant British Petroleum. Speaking to reporters after the tour Obama declared:

The president vowed that the administration, while doing all it could to mitigate the environmental and economic disaster, would require well-owner BP America to bear all costs.

"BP is responsible for this leak. BP will be paying the bill," Obama, with rain dripping from his face, said in Venice, a Gulf Coast community serving as a staging area for the response.

In a reminder of his "Cambridge Police acting stupidly" moment last year, the President is once again acting like the Red Queen: "sentence first, verdict later". How does he know BP is solely responsible? Why is he poisoning a potential jury pool when the facts of the accident are not known? Here is a more responsible analysis that gives another side to a matter that will undoubtedly be litigated for years:

BP America Inc. Chairman Lamar McKay, appearing on ABC's "This Week" program, said fail-safe mechanisms on the rig that were designed to prevent an oil spill had not worked as predicted and that a "failed piece of equipment" was to blame for the spill, according to the New York Times and other media outlets.

BP spokesman Bill Salvin said McKay was talking about the blowout preventer as the failed equipment that caused the April 20 explosion of the Deepwater Horizon rig, which killed 11 people. The blowout preventer typically activates after a blast or other event to cut off any oil that may spill.

The cause of the blast remains undetermined, and Salvin said, "We're not ruling anything out." The leak began on April 20 after a device on the BP rig exploded.

The rig, Deepwater Horizon, was owned by Transocean Ltd. and leased by U.K.-based BP PLC to drill the test well.

I suspect the Obama administration is lining up BP for the public firing squad because they know a villain must identified, and quick, or people might start asking questions about the administration's slow response to this disaster. Doug Ross is asking why the pre approved emergency plans to deal with a catastrophic event such as this were not implemented.

On April 29th, Ron Gouget, who once managed Gulf spill response teams, publicly pilloried the administration's response to the tragic oil rig explosion in the Gulf of Mexico. Gouget is an expert when it comes to these matters: he helped create the 1994 plan that allowed expedited burning of oil as soon as a major spill had occurred -- without having to wait for permission or approvals.

..."They had pre-approval. The whole reason the plan was created was so we could pull the trigger right away instead of waiting ten days to get permission," Gouget said. "If you read the pre-approval plan, it speaks about Grand Isle, where the spill is. When the wind is blowing offshore out of the north, you have preapproval to burn in that region. If the wind is coming onshore, like it is now, you can't burn at Grand Isle. They waited to do the test burn until the wind started coming onshore."

Asked why officials waited for a week before conducting even a test burn, Gouget said, "Good question. Maybe complacency was the biggest issue. They probably didn't have the materials on hand to conduct the burn, which is unconscionable."

He said the NOAA officials involved at the Unified Command Center in Louisiana know how to respond to spills, and know burning should have started as soon as possible after the initial release was detected. Gouget said they may have been overruled... "This whole thing has been a daily strip tease. At first they thought it was just the diesel, then they said the well wasn't leaking. It's unfortunate they didn't get the burning going right away. They could have gotten 90 percent of the oil before it spread."

I think the media would be all over this angle but for two missing words which drain the story of the motive they require: Cheney and Halliburton. Meanwhile, President Obama, being the brilliant constitutional law professor that he imagines he is, says the bill is already on the way to BP. There are several hundred maritime law experts in Houston and New Orleans that beg to differ with this hasty judgment and perhaps will use the President's words to establish prejudice against their clients.


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Comments (22)

Just our Community Organize... (Below threshold)
GarandFan:

Just our Community Organizer "speaking truth to power". Oh, wait, he IS the power. Never mind.

The Narcissist-in-Chief NEV... (Below threshold)
codekeyguy:

The Narcissist-in-Chief NEVER SPOKE THE TRUTH IN HIS LIFETIME

While he was busy ripping B... (Below threshold)
Sadie:

While he was busy ripping BP a new 'well' (keeping it clean here) he has yet to voice condolences to the families of the 11 presumed dead and missing workers.

That's a big 'effin' deal where I come from.

Since Barry cant claim "BU... (Below threshold)
914:

Since Barry cant claim "BUSH DID IT" and he inherited this mess from the previous administration he is vainly trying to minimize his culpability. Barry it happened on your watch, you own it.

Since Barry can... (Below threshold)
Since Barry cant claim "BUSH DID IT"
Give him time.
Another example of why we n... (Below threshold)
Digital Amish:

Another example of why we need to shrink the federal government to where it can be drowned in a bath tub. It's obvious that what is needed is more deregulation so market solutions can be put in place. If only BP et.al. had been allowed to sink 10, 20 or 50 times the number of deep water rigs we could have sucked that oil field dry years ago. And mark my word, the enviro-fascist lefties with their socialist, anti-American environmental laws will prevent any development of the future Gulf Coast oil sands. So once again a precious and valuable resource will be left untapped.

HughS is unfamiliar with th... (Below threshold)
txred99:

HughS is unfamiliar with the legal liabilities associated with drilling, completing, producing and plugging and abandoning wells. President Obama is exactly correct in his statement. It is the law that the operator, in this case BP, has complete and sole liability for anything that goes wrong. Oil companies are always held liable for blow outs that occur on wells which they are drilling, and if something does go wrong, it is automatically deemed to be their fault, in a legal sense. It is incumbent upon them to take all necessary steps to prevent accidents, of all magnitude, and to remediate them when they do occur. All service companies, such as Halliburton, Trans Ocean et al, serve at the direction of the operating company, and perform their work according to industry standards and specifications as directed by the operating oil company.

I have worked in the oilfield for 37 years, much of it as a supervisor on rigs, much of it for a major oil company. The operating company always foots the bill for what ever may go wrong, up to and including bank ruptcy. As attributed to Red Adair, "If you don't have enough money to fill up a dump truck and pour it down a hole in the ground, you shouldn't be in the oil business."

I really hate conspiracy th... (Below threshold)
Burt:

I really hate conspiracy theories! They seem to be a complete waste of time and resources. That said, I have a nagging suspicion that there may have been some sabotage involved in this "accident". The timing is just little too cute for me, coming this soon after Presidemt Obama gave the go ahead to more offshore drilling. Could a GreenPeace/ELF agent get a job on a drilling platform? What kind of background checks are done on the employees?

Nice to see you've already ... (Below threshold)
ODA315:

Nice to see you've already figured out who to blame txred. Maybe you could share the root cause and associated analysis with the authorities. They seem to be in the dark

The point is that liability... (Below threshold)
Jim Addison:

The point is that liability isn't Comrade Obama's call to make. It's determined by applicable maritime law and may be influenced by various private contracts (such as insurance).

He's trying to create a villain in the public mind before even the docile, servile press corps begins asking why he took so long to act.

"He's trying to create a... (Below threshold)
Oyster:

"He's trying to create a villain in the public mind ..."

That's always what he does first. Lay blame, demonize, and then talk tough. It matters not to him what happened. He has an uncontrollable compulsion to deflect criticism, first from himself and then, if possible, from "my administration".

txred,It is not clea... (Below threshold)
DaveD:

txred,
It is not clear to me in your response to Hugh what you mean by the term "liability". From my understanding it is true that the oil company is responsible for the cleanup. However, does not the Oil Spill Liability Trust limit the property damages that other parties can claim directly from the oil company? Another point is I have heard this off-shore rig was leased by BP. Since you have been closely associated with the oil industy for a very long time as a supervisor, who is responsible for standards of safety/maintenance since BP would not "own" this rig if is in fact leased?

I'll add that it's just really tiring listening to Obama go into every problem/disaster making sure everyone and his cousin knows who he thinks the offending party is. There are actually times I wish Pelosi would loan him her testicles so he would act like a man. I hate her politics but I grudgingly admire her persistence. As far as Obama goes, he's such a peevish Nancy boy most of the time.

I think the media would ... (Below threshold)
Steve Crickmore:

I think the media would be all over this angle but for two missing words which drain the story of the motive they require: Cheney and Halliburton.

These are early days to speculate, but I'm not as convinced as our host that Halliburton will be so missing in the blame game due to negligence, when the full inquiry of the spill is completed.

Halliburton performed a variety of services on the rig, including cementing...

•Halliburton completed the cementing of the final production casing string 20 hours prior to the incident.


•The company also claims it tested the production casing string."


•It also stated that "at the time of the incident, well operations had not yet reached the point requiring the placement of the final cement plug which would enable the planned temporary abandonment of the well, consistent with normal oilfield practice."

(Background)
cementing was a factor in 18 of 39 well blowouts in the Gulf of Mexico over a 14-year period....the single largest factor, ahead of equipment failure and pipe failure."

The administration did not ... (Below threshold)
hcddbz:

The administration did not act appropriately.
When managing a critical situation or Casualty response.
Implement the plan
View initial reports with skepticism
Implement the Plan
Investigate evaluate work the actual problem.
Implement the plan
Get your Teams on the ground as soon as possible.
Implement the Plan


Fix the issue.
Get the facts
Then you can start the blame game,
Blaming first limits the flow of information and delays the fix.
Now you may need to adjust the Plan because of facts on the ground but you always carry it out.

I do not know what they mean by swat teams but we used call technical experts and troubleshooters swat teams and you try and get them onsite quickly, depending on where they are based 6 -24 hours.


We have seen this behavior before. When the pirates took the ship the specialist aka NAVY SEALS were not called in fro a while.
I wonder if this is the same issue where people feel they have the brightest people so they do not need to defer issues to the right people.

To DaveD"liability" ... (Below threshold)
txred99:

To DaveD
"liability" means that the oil company is liable for the costs associated with clean up and remediation of any problems associated with its operations. BP is legally required to undertake whatever actions are required to remediate the problem and damage caused by the accident, and they are required to pay for it. Again, problems and accidents associated with oil field operations, are initially deemed to be the "fault" of the operator. In as much as the oil company assumes universal responsibility for the operation, and is responsible for clean up and remediation, regardless of what other entity may be deemed to be partly or wholly responsible after the fact.
Even when there is clearly a 3rd party cause, such as a ship running over a platform, the oil company still has to undertake remediation and clean up at its own expense. Any money retrieved from the shipping company is collected after the fact, usually after years of legal fighting. The Oil Pollution Act "Provides that if a responsible party can establish that the removal costs and damages resulting from an incident were caused solely by an act or omission by a third party, the third party will be held liable for such costs and damages." After the legal fight.
The Oil Spill Liability Trust is an industry funded insurance policy, similar to FDIC. It is funded at the rate of 8 cents surcharge on each barrel of oil produced. It provides initial payout of up to $1 billion to repay government costs in cleanup efforts. The fund also is able to borrow up to $500mm to provide for costs above the $1bb. The fund currently has $1.6bb. Agencies involved in the clean up can also recoup costs from future revenues of the Liability Trust, with interest. It is intended that these costs are not to be borne by tax payers. I anticipate that the charge will increase in the near future. As I read the law, the Oil Pollution Act provides that the monies from the Oil Spill Trust can only be used to repay government entities for their costs incurred in cleanup efforts. The oil company is not relieved of any of its out of pocket costs involved in remediation. This fund is used for damages, not remediation.
"Up to $1 billion of the $1.6 billion reserve could be used to compensate for losses from the accident, as much as half of it for what is sometimes a major category of costs: damage to natural resources like fisheries and other wildlife habitats."
"Under the law that established the reserve, called the Oil Spill Liability Trust Fund, the operators of the offshore rig face no more than $75 million in liability for the damages that might be claimed by individuals, companies or the government, although they are responsible for the cost of containing and cleaning up the spill." I don't like the $75mm cap on legal liability for damages to 3rd parties, not near enough, but it is what it is. I believe this is damages such as lost revenue to fishermen. I am not clear on the difference in the categories of damages between the $1bb and the $75mm clauses? BP is still liable for all costs associated with remediation, fines and civil penalties.
It is also illegal for the oil company to transfer liability for problems resulting from drilling operations, or any other operations, to a 3rd party. The oil company retains all liability, in perpetuity, until the well, installation or property is abandoned and remediated according to prevailing law. This means plugging wells, removing platforms, removing buildings, enviornmental remediation for the area etc. If an oil company sells one of its wells to a 3rd party, and the 3rd party fails to perform, usually due to bankruptcy, liability reverts to the previous owner. Even if the 3rd party plugs and abandons a well, and the well starts to leak oil later on, the 1st party can still be held liable for costs of remediation.
Safety procedures have several components. The API has written recommendations which the oil companies are not required by law to follow. These are often referred to "standard industry practice" or similar. However in court, if these recommendations are proved to have not been followed, it can be used as evidence of incompetence or maleficence. The MMS often adopts these recommendations, and they then become law, as a minimum standard practice. MMS procedures are enforced through rig visits, inspections and post incident findings. The rig owner, in this case Trans Ocean, has their own safety procedures which they will enforce, sometimes in conflict with the oil company. The rig contractor and service companies sometimes refuse to perform acts which they deem to put its people or equipment at unacceptable levels of risk. And last, the oil company has its own safety rules which it enforces through its representatives / supervisors on the rig. These safety procedures are detailed and comprehensive, especially among majors.

Did somebody take my name i... (Below threshold)

Did somebody take my name in vain?

To ODA315It is not m... (Below threshold)
txred99:

To ODA315
It is not my opinion as to who is at fault, it's the law. If it wasn't BPs fault, why would they be responsible for performing and paying for the remediation? If it wasn't BPs fault, perhaps EXXON or Chevron will volunteer to kill the well and clean up the mess? Service companies and equipment involved are secondary in the assignment of fault. They commence their work at the oil company's behest and direction. They work as agents of the oil company. The oil company specifies equipment to be rented or bought and is responsible to ensure that it is properly maintained and tested. The oil company has universal control and responsibility for service company actions. Regardless what the post incident root cause analysis may identify as contributing factors, it is still the oil companies fault for not ensuring that those contributing factors did not exist, or were not remediated, in the first place. It is the law, as included in MMS regulations, that it is incumbent upon the oil company to undertake any and all actions that are needed in order to prevent accidents. While MMS regs state many specific safety rules to be undertaken by the oil companies, there is a universal caveat included in the regs which states that whether or not the oil company followed all of the regs to both the letter and intent of the law, it is still responsible , "at fault" for any and all accidents which occur in its operations. It is a shame that you don't have the opportunity to sit in on a post mortem meeting between the MMS and an oil company. There would be no doubt in your mind as to who was accountable, or who was deemed to be at fault for the accident.

txred,Thanks for the... (Below threshold)
DaveD:

txred,
Thanks for the response. It helps my understanding of this situation. Much appreciated.

Just out of morbid curiosit... (Below threshold)
DJ Drummond:

Just out of morbid curiosity, txred99, what code are you citing when you say "it's the law"?

MMS regulations?

Lloyd's Maritime Quarterly?

U.S. Department of Commerce?

U.S. Department of Energy?

U.S. Department of the Interior?

U.S. Department of Transportation?

The Eastern District Court of Louisiana (U.S. Federal Court)?

The EPA?

OSHA?

State of Louisiana Department of Fisheries?

OCSLA?

It's laughable to imagine that this event will be limited to only one legal venue, after all.

Looks like it time to follo... (Below threshold)
hcddbz:

Looks like it time to follow the money.

The reason why the US Government did not set the Oil on fire to contain the spill area, is that the US did not have any fire booms in the area. They had to wait one week to find one. Then they had to ask BP to ask around the world to get more.
There should have been 10 station in the Gulf to deal with spills. This agains points to a systemic problem. just like money was to be go towards levies in LA it seems money was to go towards have the booms in place in the Gulf area but never made it. The plan to deal with spills went into place in 1994 that means that 3 administrations dropped the ball.

Also reading the blogs from DJ looks like their might be an obstructions in the well which is why it did not close. So a second method to 4th method to close it doubtfully would work.

Also this attack hurts because as BP becomes a pariah the specialized gear it need to handle this will become difficult to get as the company's viability comes into question.

I suspect the Obama admi... (Below threshold)
Tina S:

I suspect the Obama administration is lining up BP for the public firing squad because they know a villain must identified, and quick, or people might start asking questions about the administration's slow response to this disaster.

HughS,


We all know that businesses make desisions primary on cost analysis. For instance if BP were to do a cost analysis that showed it would save the company money to just let the oil flow into the ocean until the well went dry, that is what they would do. Letting BP know that they will be financial responsible for reimbursing the fishermen(and other businesses) for damages had the affect of ensuring BP does everything they can to stop and contain the leak as quickly as possible. The quicker BP stops the leak, the less they will end up having to spend in reimbursing other business for damages. Obama is pretty saavy and I suspect this was his motivation.

most of you gop idiots are ... (Below threshold)
jose:

most of you gop idiots are sick..oh..morons and rednecks




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