Q+A-What's next after BP's Gulf of Mexico well is plugged?

HOUSTON, Sept 17 Fri Sep 17, 2010 5:18pm EDT

HOUSTON, Sept 17 (Reuters) - BP Plc (BP.L) (BP.N) said it expects to permanently plug its runaway Macondo well on Saturday, closing the first chapter in the worst oil spill in U.S. history [ID:nN17187116].

Here are some questions and answers on how things might play out for BP, the U.S. offshore industry and the Gulf's fragile ecosystem.

WHAT ARE BP'S BIGGEST CHALLENGES GOING FORWARD?

* The spill has wiped about $70 billion from BP's market value and spurred the company to ditch its gaffe-prone British chief executive, Tony Hayward, to be replaced by an American, Bob Dudley.

* BP now faces billions of dollars in fines and penalties from civil and possibly criminal prosecution by the U.S government. BP has set aside about $32 billion for spill liabilities, but experts say that amount could soar for BP and its partners if they are found criminally negligent.

* BP must defend its dominant North America position -- it is one of the largest U.S. oil and natural gas producers and the largest acreage holder in the Gulf of Mexico, which generates a large percentage of earnings growth. BP could have trouble finding partners willing to enter joint ventures for deepwater projects due to a higher risk profile, experts said.

WILL BP TAP THE MACONDO WELL IN THE FUTURE?

* BP has remained mum about its intentions for the Macondo reservoir, which could hold upward of 100 million barrels of oil. In coming years, BP could unveil plans to retap Macondo despite its dark history, said Eric Smith, associate director of the Tulane Energy Institute in New Orleans.

Especially if oil prices rise, such a plan could gain the blessing of the U.S. government, which might be enticed by the royalties that BP would pay to extract the oil, Smith said.

WHAT ARE THE LONG-TERM IMPACTS FOR OFFSHORE DRILLING?

* The Obama administration has slapped a moratorium on new U.S. offshore oil drilling, spurring some rig operators to set their sights on other offshore basins like Brazil and Africa.

* The spill has fundamentally recast the risk-reward equation for drilling in the oil-rich Gulf of Mexico, long considered a prime target for energy companies looking to escape the political uncertainty of Venezuela and Russia.

* Deepwater operators are having trouble obtaining permits for activities that are allowed under the government's drilling halt. A return to normal is not seen for years [ID:n16256754].

* Delays and regulation could add 10 percent to the marginal cost of deepwater oil production, and a one-year delay in nascent deepwater projects could impact global oil supply by 500,000 barrels per day between 2013 and 2017, according to Bernstein Research.

HOW HAS THE SPILL IMPACTED THE GULF COAST ECOSYSTEM?

* A U.S. government report showed that about three-fourths of the oil spewed by the Macondo well had disappeared from the Gulf. But environmental groups warn of an undersea oil plume that could cause lasting detrimental effects to the Gulf's ecosystem and vibrant fishing and tourism businesses. (Reporting by Chris Baltimore; editing by Chris Wilson)

FILED UNDER:
We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
Comments (1)
jsparks101 wrote:
Well this is wonderful! Maybe we can find another way for people to wastefully create money out of thin air (or rather crude oil) and spur extinction on a global scale…what about it folks! Let’s find another resource to plunder and waste while our values and proclivities degrade even further, shall we?

Sep 17, 2010 6:08pm EDT  --  Report as abuse
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.