The BP Macondo well was announced as “effectively dead” this morning by the US National Incident Commander Thad Allen. Pressure tests were completed and the announcement was made that brings to an end the work being done to officially close the blown oil well that brought about the worst environmental disaster in US History. The well was blown during an explosion on April 20th that killed 11 workers and sank the Deepwater Horizon oil rig.
The well leaked oil into the Gulf of Mexico until it was temporarily capped on July 15. The event led to a loss of over 45 billion pounds off BP’s market value, cost the BP chief executive his job, brought a moratorium on deepwater drilling in US waters, and caused the financial ruin of thousands of people in the Gulf area, and forever changed the environmental area of the Gulf. The amount of wildlife that died in the event was astonishing and it was recently discovered that the Gulf seabed has approximately 2 inches of oil sludge.
It was estimated that 5,000 barrels or 210,000 gallons a day leaked into the Gulf. Clean up is still underway and so far BP has had expenditures for clean up amounting to 8 billion pounds. There are over 400 lawsuits pending against BP over the oil spill.
The Obama Administration forced BP to set up a fund with $20 billion to help reimburse losses incurred by fishermen and businesses in the Gulf area.
Relief wells were drilled to the well and it is expected that despite the news of the closing of the well’s drill hole there will be more plugs required before BP is finished.
Many oil companies are reviewing their own safety procedures and are fearful of a similar event occurring again. Oil companies ExxonMobile, Chevron, Conoco Philips and Royal Dutch Shell have banned together and pledged $1 billion towards technology development that would allow oil capture underwater should there be another deepwater blowout.
Peter Hitchens, an analyst at Panmure Gordon said: “The whole industry is terrified it could happen to them. The whole way we drill wells could actually change. They’re going to take a lot longer. They’re going to be a lot more scrutinised.”
The event hit BP’s investors hard as dividends were halted for the first time in 18 years. BP was at one time responsible for supplying over 15 per cent of all dividend income in London. The oil well may be dead but it will be years before the issue is dead for BP.