BP and the oil spill

Court tester

The Obama administration battles the courts while BP battles the slick

Can’t afford to waste a drop

THOSE seeking to stem the flow of oil from the deep waters of the Gulf of Mexico are now struggling on land as well as at sea. A wayward robot briefly interrupted the flow from the “top hat” BP is using to suck up oil from the ruptured pipes of its Macondo well this week, although another supplementary system attached to the well’s failed blowout preventer was working well. Meanwhile, a court threw out the six-month moratorium on drilling in deep water imposed by the administration after the original accident, despite fears that the practice is inherently unsafe.

On June 22nd a federal judge sided with the oil industry and issued an injunction against the moratorium, arguing that it was “arbitrary and capricious” to assume that because one oil well had failed all the others might be at risk too. The White House said it would appeal and reimpose the moratorium. Drilling is unlikely to resume amid the uncertainty.

At least BP’s latest efforts to siphon off the black goo gushing from the seabed are improving. It has been collecting 25,000 barrels a day (b/d) out of a flow estimated at 35,000-60,000 b/d. Further improvements should boost its hoovering capacity to 50,000 b/d in the coming weeks. And relief wells are still on course to stem the leak entirely in August, although the onset of the hurricane season could yet undo these plans.

BP’s share price merely slid, rather than plummeted, to a 13-year low, although the stock of Tony Hayward, the firm’s beleaguered boss, continues to crumble. His defensiveness before a congressional committee earlier this month did him no favours, and his latest public-relations gaffe—participating in a yacht race in Britain—has further infuriated residents of the oil-soaked gulf coast. To bring in a fresh face (and an American accent), BP appointed Bob Dudley, a former head of its troubled Russian joint venture, to lead the campaign to tackle the spill.

The signs are that Mr Hayward is resigned to his fate. Mr Dudley will report to a boss whom he is the leading candidate to replace—perhaps sooner rather than later. But what will he inherit?

New allegations are surfacing about BP’s awareness of problems with the well before the accident on April 20th. Anadarko, a 25% partner in the project, has accused BP of “gross negligence”. If the charge sticks, the smaller oil company will be off the hook for 25% of the clean-up costs—which BP says have now exceeded $2 billion—along with fines and damages. The final bill could be $40 billion or more. BP is preparing to sell assets and raise cash in the bond market to pay. Keeping the cash flowing to maintain huge investment commitments is as important to BP’s future as stanching the oil still pouring from the seabed.