BP shares nosedived this morning on the news that the cost of the Gulf of Mexico clean up is nearing the $1 billion marker.
Crude has now been spewing into the Gulf for over a month after the Deepwater Horizon rig exploded on 20th April killing 11 of the crew.
The initial estimates of both the cost of the clean up and the amount of oil released into the gulf have proved to fall well short of the mark. The initial cost was put at $625 million but having reached over $900 million already there is still no end in sight.
But more alarmingly it was initially thought that 40,000 gallons of oil was leaking into the sea, which sounds catastrophic. But now the updated figures put this at a vast 504,000 to over one million gallons a day.
Even the most optimistically low figures make this a worse disaster than the 11 million gallons that leaked from the Exxon Valdez Alaskan episode.
So far the BP attempts to stem the flow have been unsuccessful. But the high risk ‘top kill’ approach of pumping thick mud at high speed into the fractured pipe 5,000 ft below the surface is so far going to plan says BP. The plan is expected to continue for a couple more days and the mud may be followed soon by additional materials to help plug the well.
The pipe could still fracture under the pressure and BP has mentioned the use of a ‘junk shot’ of golf balls, tyres and debris into the ocean floor. BP is also drilling two relief wells, but these will not be ready until at least August.
There is also concern that the dispersants used may also be damaging the environment. There is also a prediction of 8-14 hurricanes in the area, of which 3-7 could be category 3 (Katrina level) or above.