WASHINGTON – BP’s runaway deepwater well could still become a money producer for the company, even as it tries to stem the gush of crude oil that’s fouling the Gulf of Mexico.
If the current containment effort works – and BP and the government say they’re optimistic that it will – the oil giant will salvage much of the oil that’s now spewing from the crumpled pipes on the ocean floor. That captured oil, McClatchy Newspapers estimates, could generate more than $1.4 million in revenue for BP each day.
Once the oil is piped to the surface to the drill ship Discoverer Enterprise, it will be processed and sent by tanker to a refinery to be sold.
“It’s exactly the same as if it’s normally produced oil,” BP spokesman Graham MacEwen said.
Based on government estimates of the flow rate, the mangled well could produce oil valued at as much as $85 million over the next 60 days, until a relief well is complete and the well is capped permanently.
The people who own the deepwater site that’s leased to BP – U.S. taxpayers – could see a more modest windfall. The Treasury could be due as much as $328,125 in royalties daily, or about $19 million total over 60 days. Further, under its lease BP also must pay royalties on the oil lost in the spill, which would mean another $13.5 million.
McClatchy’s calculation uses a government tally of 25,000 barrels flowing from the well each day and the 18.75 percent royalty rate applicable to oil from the BP well, and assumes that oil is selling at an average of $70 a barrel. Thursday’s spot price hovered around $74.
Yet any revenue BP derives from the crippled well is only a fraction of the cost of mopping up oil-soaked marshes and beaches, compensating fishermen and other business owners for lost business, and operating some of the world’s most sophisticated underwater robotics in an effort to contain the spill.
BP already has paid out an estimated $1 billion, and this week the government ordered it to spend an additional $360 million to construct six barrier islands to prevent oil from reaching the Louisiana shoreline.
Nor will the revenue come close to the billions of dollars in value the publicly traded company has lost as its stock has dropped 34 percent since the April 20 explosion.
The money that would be due Uncle Sam and the added new revenue for BP from capturing the leaking oil raise many questions about the financial penalties that could be levied when something goes badly wrong with a deepwater oil well.
They also underscore the need for accurate measurements of how much oil has been flowing from the BP well since the disaster.
It remains unclear how much oil can be captured. An effort to cut the damaged pipe with a more precise diamond saw failed Wednesday, and underwater robots instead made a cruder cut Thursday with shears. So instead of the tight-fitting device the company had hoped to use, it’s installing a looser-fitting top hat containment dome.
Getting a tally on the amount of oil that’s flowing has been difficult. BP initially said the rate was 1,000 barrels a day. The government-appointed Flow Rate Technical Group put the rate at 12,000 to 25,000 barrels a day. Attaching the pumping apparatus probably would increase the flow by 20 percent.
“Obviously, when we start producing it to the ship, we will be able to more accurately tell what the rate is, but at the moment we can’t tell,” BP’s MacEwen said. “We’re pretty confident it will take the vast majority of the oil, but we can’t be absolutely sure.”
From the Associated Press