Former CEO of Shell: How to Fix Our Energy Problems
By Barry Ritholtz - June 16th, 2010, 6:43PM
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Afternoon Reading
By Barry Ritholtz - June 16th, 2010, 4:22PM
These are the reads that I found most informative and important today:
• BP Cancels Dividend to Set Aside $20 Billion for Spill Costs (Bloomberg); See also BP well leaking as much as 60K barrels/day: U.S. (Marketwatch)
• Hulbert: Avoiding a (Dow Theory) death sentence (Marketwatch)
• Who’s Spending Again? The Rich and the Old (Economix)
• Fannie, Freddie Delisted (Daily Finance)
• Gillian Tett: Ideas on curbing bankers’ appetite for risk (FT.com)
• Reforming Both Big Banks And Big Oil Companies (Dow Jones)
• Apple, AT&T Cite Record iPhone Sales (WSJ)• How to write a “Malcolm Gladwell Bestseller” (JGC)
• The Philadelphia Chorus Opera Company became a Flash Opera Crowd (mobera ?) at the Reading Terminal Market. (You Tube)
What’s on your browser?
Time To Nuke The Leak? – Part 2
By James Bianco - June 16th, 2010, 3:00PM
quote>Matt Simmons was on Bloomberg earlier, adding some additional perspective to his original appearance on the station, in which he initially endorsed the nuclear option as the only viable way to resolve the oil spill. Simmons refutes even the latest oil spill estimate of 45,000-60,000 barrels per day, and in quoting research by the Thomas Jefferson research vessel which was compiled late on Sunday, quantifies the leak at 120,000 bpd. What is scarier is that according to the Jefferson the oil lake underneath the surface of the water could be covering up to 40% of the entire Gulf of Mexico. Simmons also says that as the leak has no casing, a relief well will not work, and the only possible resolution is, as he said previously, to use a small nuclear explosion to convert the rock to glass. Simmons concludes that as punishment for BP’s arrogance and stupidity the government “will take all their cash.” Now if only our own administration could tell us the truth about what is really happening in the gulf…
The Oil Drum (Blog) – BP’s Deepwater Oil Spill – Why the Flow Rates are Increasing
Now you will notice that this says nothing about those ideas such as that propounded by Dougr that the casing has been cracked and oil is escaping into the surrounding rock., and that the casing is becoming a lot weaker. There are two reasons for this, firstly if there was a crack, in the same way as with the BOP, then over time that would have been eaten away as oil, gas and mud flowed through it. Once a flow starts it will rapidly eat out a larger passage, as the above has demonstrated. Once that passage was created then oil flow through it to the surface would make it impossible to see what was going on around the well (look at the cloud above the BOP). In fact there are very clear pictures from under the BOP. This would seem to show that there is no oil leaking there at present. The other thing to remember is that BP are planning on using the second LMRP cap effectively as a seal on the well. They could not do that if the upper segments of the casing were damaged, and I imagine that they have enough data from the Top Kill testing to reassure themselves of that.
Comment
Let us summarize the two posts above.
Both speculate that the well casing (the pipes in the ground) might be cracked or damaged. If so, this is a very serious problem. It also means that BP might actually be telling the truth.
If the casing is cracked or damaged then oil is flowing out around the casing. They argue this is confirmed by the live video showing mud flowing from the leak. This mud is a sign of erosion, so the well hole is increasing in size and a larger hole means a larger leak. So, BP is not hiding the true size of the leak. Rather, the erosion is making it constantly increase. They also argue here that the “top kill” and “junk shot” attempts to bury the leak with mud and junk have made the situation worse as it forced more oil out of the damaged casing and increased the erosion, thus increasing the rate of the leak.
It also means the relief well will not work as the leak is literally a hole in the ground or a crack in the earth. Pumping cement or mud from a relief well into a cracked or damaged casing will just leak out the top as the oil pressure carries it out.
So, other than waiting 25 years or so for the pressure to naturally stop the leak, how does one stop this kind of leak? Two weeks ago we highlighted another Matt Simmons interview where he suggested drilling a hole next to the leak and inserting a nuclear bomb to collapse the hole. Simmons noted that this would be a low level nuke under 5,000 feet of water and possibly another 1,500 to 2,000 feet under the seabed. At this level one would not notice such a detonation even if sitting in a row boat above it. Radiation leaks would be minimal. Simmons also noted that the Russians used this method several times to stop leaks from the 1960s to 1980s. This post also highlights an early May Russian TV interview that details nuke use to stop a leak in the mid-1960s.
That said, can you imagine the political ramifications of nuking the seabed? It would be nothing short of pandemonium.
Maybe this analysis is correct, maybe not. That said, this crisis continues to search for solutions.
