It appears that BP's
Indeed, the approach, which involved cutting the damaged riser pipe at the well 5,000 feet beneath the surface, and placing a wellhead cap atop the remaining stub, is capturing a reasonable amount of the oil gushing from the well. The captured oil is siphoned to a tanker floating on the surface. Saturday's "catch" at the tanker was about 441,000 gallons, a decided improvement from Friday's 250,000-gallon figure.
But a sizable amount of the estimated 500,000 to 1 million gallons coming from the well every day are wreaking havoc on a progressively larger portion of the gulf. For instance, although it appears that the lion's share of the damage remains off the coast of Louisiana, the weekend brought news that, for the first time, dead, oil-soaked birds were found in Texas. On the gulf's other side, it appeared that oil was spotted 150 miles from Tampa.
And although it isn't likely that the flow of escaped oil will be halted until two relief wells are completed -- probably in August -- BP has unleashed a communications campaign in an effort to soften public opinion regarding its catastrophe. In the process, it's brought in Hilary Rosen and former Dick Cheney press secretary Anne Womack-Kolton to salvage its public relations. BP is no stranger to D.C.: In this year's first quarter, before the spill, the British oil giant spent an amount on lobbying that took second place only to the cash ConocoPhillips
Tony on the Tube
And then there is the company's advertising campaign, featuring CEO Tony Hayward apologizing for the spill and pledging to do everything possible to make things right. President Obama has criticized the ads, maintaining that the money could be better spent on cleanup efforts.
Speaking of the president, on Friday he traveled for the third time to Louisiana, the area hardest hit by the spill. He spent much of his time there with the fishermen, shopkeepers, and others who face threats to their livelihoods from the events following the April 20 blowout and fire aboard Transocean's
On Thursday, before Obama's trip, White House Press Secretary Robert Gibbs indicated that the administration was preparing to send BP a $69 million bill to cover cleanup expenses thus far. That figure was, however, dwarfed by the additional $1.25 billion that the mishap has already cost the company.
Not only will those costs continue to spike, but I'm betting on years of litigation as all the parties involved point fingers and maintain that the catastrophe's fault lay with the other companies that were in any way connected with the Deepwater Horizon's blowout. On that basis alone BP, cementing contractor Halliburton
It may also be telling that a recent and lengthy Wall Street Journal article traced the events leading up to the tragedy in the gulf. The Journal's findings included several instances in which BP allegedly took shortcuts as the work on the behind-schedule well neared completion.
Among those shortcuts was the devoting of less than optimum time to a drilling-fluid procedure that was intended to detect the presence of gas in the well, while a cement-quality test was completely ignored. At the same time, because the well had exceeded its allotted drilling time, BP apparently pushed workers to complete jobs in less time than usual. And it also apparently ignored the Halliburton's advice to use more devices to center the drill pipe before cementing; otherwise a "severe gas flow problem" could result, potentially leading to a blowout.
Please don't stop
So where do we go from here? The president has already dictated a six-month moratorium in the granting of permits for wells deeper than 500 feet. At the same time, he has cancelled a lease sale in the Western Gulf, has put the kibosh on another sale off Virginia, and has taken similar steps regarding plans, primarily by Royal Dutch Shell
By late Monday, however, it appeared that the president had received an earful of complaints from Louisiana locals regarding the number of lost jobs that a total drilling moratorium in the gulf would cause. So it now appears that the Minerals Management Service is drafting new safety rules that could almost immediately result in a resumption of drilling in shallower waters.
I don't think the U.S. can afford a severe reduction in its offshore oil and gas operations. If anything, crude prices are likely to escalate as the spill affects domestic production. On that basis, my Foolish friends will be well served by continued energy representation in their portfolios. For now, ExxonMobil
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