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As BP severs riser, false report sends oil prices up

WASHINGTON — On a day when BP took a successful step in its most recent effort to cap a runaway Gulf of Mexico oil well, an apparently false rumor about new restrictions on offshore drilling in shallow water drove the price of oil up $1.75 to more than $74 a barrel.

The false report that the Obama administration would extend its six-month moratorium on deepwater drilling to water less than 500 feet deep was carried by a variety of news outlets, including the Washington Post, the Associated Press and the Wall Street Journal.

That reporting was based on an e-mail obtained by the Associated Press and several other news outlets. In the e-mail, Michael Saucier, the regional supervisor of field operations for the Minerals Management Service's Gulf of Mexico region, told one company seeking a permit that "until further notice we have been informed not to approve or allow any drilling no matter the water depth."

The Washington Post reported that just three days earlier, Saucier had told the same company that the deepwater moratorium would not apply to wells in water shallower than 500 feet.

Interior Department spokeswoman Kendra Barkoff said there is no moratorium on shallow water exploration or drilling. And Obama denied the rumor Thursday during an interview with CNN's Larry King.

"Actually the moratorium is not extended to the shallow waters," the president said.

Some of the confusion may stem from an order Wednesday by the acting director of the Minerals Management Service, Bob Abbey. That order required oil companies to overhaul and resubmit dozens of exploration plans that had already been approved but were virtually identical to BP's and that called major spills and environmental damage "unlikely."

The action came after McClatchy informed the White House and Interior officials that it had reviewed 31 deepwater exploration and development plans approved for the Gulf under the Obama administration and found that all of them downplayed the threat of spills to marine life and fisheries.

For many in the Gulf region, the rumor only reinforced concerns that the oil spill will have long-term economic consequences as more and more restrictions are placed on offshore drilling.

Wednesday, Louisiana Gov. Bobby Jindal, a Republican, sent a letter to Obama and Interior Secretary Ken Salazar asking them to rethink the administration's six-month deepwater moratorium.

"Already, Louisiana has suffered severe negative economic and ecological impacts from the BP oil spill," Jindal wrote. "During one of the most challenging economic periods in decades, the last thing we need is to enact public policies that will certainly destroy thousands of existing jobs while preventing the creation of thousands more."

The suffering seemed certain to spread, however.

Florida Gov. Charlie Crist, who flew over the oil spill Thursday, said he'd spotted oil less than four miles from his state's Pensacola Beach — "much closer than we'd like it to be'' — and the National Oceanic and Atmospheric Administration told members of Congress Thursday afternoon that winds from the southwest would continue to push the spill toward Mississippi, Alabama and Florida.

Even the good news that the riser — the twisted pipeline that once connected the runaway oil well with the doomed Deepwater Horizon drilling rig 5,000 feet above on the Gulf's surface — had successfully been severed came with a leavening of the bad.

Engineers failed in their efforts to get a clean cut after the shifting pipe trapped the saw's diamond studded blade, and they were forced instead to use the undersea equivalent of massive garden shears to sever the pipe.

That left a jagged edge that is unlikely to form a tight seal when a so-called "top hat" is fitted over it to capture the spewing oil and pipe it to a waiting tanker on the surface. Without a tight seal, some oil — no one knows how much — is expected to seep out and into the surrounding water for months to come.

As if to acknowledge the possibility that the top hat, like every previous effort, would fail to stop the oil gusher, the federal government announced that it was forming a "solution group" made up of the Coast Guard, NOAA, EPA and the MMS to review suggestions from the public. A toll free number, (866) 448-5816, was set up to take ideas.


BP, feds could make millions from runaway well's oil

Obama orders firms to change drill plans that mimic BP's

What Congress was told Thursday about the oil spill

Follow McClatchy's oil spill coverage.

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