Spill now the worst ever in US

COVINGTON, La. (AP) -- The Gulf oil spill has surpassed the Exxon Valdez as the worst in U.S. history, according to new estimates released Thursday, but the Coast Guard and BP said an untested procedure to stop it seemed to be working.

A team of scientists trying to figure out how much oil has been flowing since the offshore rig Deepwater Horizon exploded April 20 and sank two days later found the rate was at least twice and possibly up to five times as high as previously thought.

Even using the most conservative estimate, that means the leak has grown to nearly 19 million gallons, surpassing the size of the 1989 Exxon Valdez disaster, which at about 11 million gallons had been the nation's worst spill. Under the highest estimate, nearly 39 million gallons may have spilled.

U.S. Geological Survey Director Marcia McNutt said two different teams of scientists calculated that the well has been spewing between 504,000 and more than 1 million gallons a day.

BP and the Coast Guard estimated soon after the explosion that about 210,000 gallons a day was leaking, but scientists who watched underwater video of well had been saying for weeks it was probably more.

Last week, BP inserted a mile-long tube to siphon some of the oil into a tanker. The tube sucked up 924,000 gallons of oil, but engineers had to dismantle so they could start the risky procedure known as a top kill to try to cut off the flow altogether by shooting heavy drilling fluid into the well.

If that works, BP will then inject cement into the well to seal it. The top kill has been used above ground but has never before been tried 5,000 feet beneath the sea. BP pegged its chance of success at 60 to 70 percent.

Lt. Commander Tony Russell, an aide to Coast Guard Adm. Thad Allen, said Thursday that the flow of mud was stopping some oil and gas but had a ways to go before it proved successful.

"As you inject your mud into it, it is going to stop some hydrocarbons," he said. "That doesn't mean it's successful."

BP spokesman Tom Mueller also discounted news reports that the top kill had worked.

"We appreciate the optimism, but the top kill operation is continuing through the day today -- that hasn't changed," he said Thursday morning. "We don't anticipate being able to say anything definitive on that until later today."

Oil has been coating birds and delicate wetlands along the Louisiana coast, and the political fallout from the spill has reached all the way to Washington, where Democratic sources said Thursday that the Obama administration has fired the head of the U.S. Minerals Management Service in response to blistering criticism over lax oversight of offshore drilling.

The sources, speaking on condition of anonymity before the official announcement, told The Associated Press that President Barack Obama would announce the decision Thursday. Elizabeth "Liz" Birnbaum had run the service in the Interior Department since July 2009.

Fishermen, hotel and restaurant owners, politicians and residents along the coast are fed up with BP's failures to stop the oil, and the anger has turned toward Obama and his administration. Polls show the public is souring on their handling of the catastrophe.

On Wednesday, the Coast Guard pulled commercial fishing boats from oil cleanup efforts in Breton Sound off the Louisiana coast after several people became ill. Crew members on three vessels reported nausea, dizziness, headaches and chest pains, the Coast Guard said. Four people were hospitalized, including one who was flown to a hospital.

If the top kill fails, BP says it has several backup plans, including sealing the well's blowout preventer with a smaller cap, which would contain the oil. An earlier attempt to cap the blowout preventer failed. BP could also try a "junk shot" -- shooting golf balls and other debris into the blowout preventer to clog it up -- during the top kill process.

The only permanent solution is drilling a second well, but that will take a couple of months.

Though the spill is now the biggest in U.S. history, it's not the biggest ever in the Gulf. An offshore drilling rig in Mexican waters -- the Ixtoc I -- blew up in June 1979, releasing 140 million gallons of oil.

Chrysler 1.9B loss to tax payers

Martin Crutsinger, AP Economics Writer, On Monday May 17, 2010, 9:25 pm

WASHINGTON (AP) -- The Treasury Department said Monday it will lose $1.6 billion on a loan made to Chrysler in early 2009. Taxpayer losses from bailing out Chrysler and General Motors are expected to rise as high as $34 billion, congressional auditors have said.

Treasury said Monday that Chrysler repaid $1.9 billion of a $4 billion loan, which was extended before the company filed for Chapter 11. The government hopes to get another $500 million from the company that emerged from bankruptcy, Chrysler Group LLC.

Treasury officials said that the government had no plans to boost its stake in the new Chrysler to cover those losses. It also acknowledged another $1.9 billion in potential losses from a separate loan that had been made to the company that went through bankruptcy proceedings. It indicated slim hopes of recouping much if anything from that separate $1.9 billion loan.

The original $4 billion loan was made in January 2009, when the Bush administration was scrambling to rescue Chrysler, GM and their auto financing arms.

The Congressional Budget Office estimated in March that the government's $85 billion bailout of the automakers would cost taxpayers $34 billion.

Much of it will depend on how much the government recovers from its eventual sale of nearly 61 percent of GM and about 10 percent of Chrysler.

GM has said it could conduct a public stock offering later this year. Chrysler officials have said a public stock offering is not likely before 2011.

The Treasury Department made the announcement about the loss from Chrysler on a day when GM reported its first quarterly profit in nearly three years. That moved GM closer to a stock offering that would repay at least part of the $43 billion it owes the government.

Chrysler Holding is the parent company of the old Chrysler. It is owned by private equity firm Cerberus Capital Management. Cerberus bought Chrysler from Daimler AG in 2007.

Chrysler came close to running out of money at the end of 2008, so the U.S. government stepped in, authorizing $15.5 billion in aid and appointing Fiat SpA to run the new Chrysler after it emerged from bankruptcy protection. The old Chrysler's assets, along with its finance arm, became Chrysler Holding.

Treasury said it has received repayments of $3.9 billion to date, including the $1.9 billion repayment and a $1.5 billion loan paid off by Chrysler Financial. Chrysler also assumed $500 million of Old Chrysler's debt, reducing the debt to the government.

Dome doesn't work

(Reuters) - BP Plc suffered a setback on Saturday in an attempt to contain oil gushing into the Gulf of Mexico with a huge metal dome when crystallized gas filled the structure, a blow to hopes of a quick, temporary solution to a growing environmental disaster.

U.S. | Green Business

Word of the snag came as balls of tar appeared in waters off a popular Alabama island beach in what may be the first evidence of spilled oil washing into a populated area.

BP engineers have moved the four-story containment dome -- which was seen as the best short-term way to stem the flow from a ruptured oil well -- off to the side on the sea floor and will take two days trying to come up with a solution, Doug Suttles, chief operating officer, told reporters.

The problem is gas hydrates, essentially slushy methane gas that would block the oil from being siphoned out the top of the box. As BP tries to solve it, oil keeps flowing unchecked into the Gulf in what could be the worst U.S. oil spill.

"I wouldn't say it's failed yet. What I would say is what we attempted to do last night didn't work because these hydrates plugged up the top of the dome," Suttles said.

"What we're currently doing, and I suspect it will probably take the next 48 hours or so, is saying, 'Is there a way to overcome this problem?'"

The company, under pressure from the Obama administration to limit the damage to the Gulf and coastlines of four states, expected hydrates, but not the volumes encountered after a crew lowered the dome nearly a mile to the sea floor.

Possible solutions may involve heating the area or adding methanol to break up the hydrates, Suttles said.

Officials had already warned there was no guarantee that the technology would work at such water depth. It hopes to attach a pipe to the 98-ton dome to pump oil to a tanker, with the aim of capturing about 85 percent of the leaking crude.

The spill threatens an economic and ecological disaster targeting beaches, wildlife refuges and fishing in Louisiana, Mississippi, Alabama and Florida. It has forced President Barack Obama to rethink plans to open more waters to drilling.

On Dauphin Island, Alabama, a barrier island and beach resort full of weekend swimmers and beachcombers, workers assisting the protection operation found tar balls and tar beads washing ashore on Saturday.

They will be tested to determine if they come from the oil slick in the Gulf. Such balls were not uncommon and previously had washed up on the Gulf coast.

"No, we cannot confirm that it's from the oil spill, but we certainly assume that to be the case. We won't know for certain until some tests are completed," Dauphin Island Mayor Jeff Collier said.

The only shore contact so far has been in the uninhabited Chandeleur Islands off Louisiana, mostly a wildlife reserve.

"I have never seen this and I am here once a week every summer. This is the first time I have seen any thing like this here," said Molly Hunter, 34, of Mobile, holding up a chunk of tar about the size of an open hand.

RELIEF WELL

Suttles said BP may now try to plug up the damaged blowout preventor on the well or attach a new one on top of it.

It also is drilling a relief well to halt the leak -- which began after the Deepwater Horizon rig exploded on April 20, killing 11 crew members -- but it could take three months.

In the initial blast, a natural gas cloud enveloped the rig and exploded just as visiting BP officials were celebrating seven accident-free years in the rig's crew quarters, according to accounts by survivors of the blast.

According to transcripts of interviews obtained by Robert Bea, a University of California Berkeley engineering professor, a giant methane bubble rushed up the drill pipe and filled the air above the deck of the drilling platform with flammable gas, followed by a scalding flood of crude that spilled onto the drill deck and ignited.

After several days of calm weather, winds began to pick up on Saturday, preventing controlled burns of the thickest concentrations of oil. Crews conducted five burns on Friday.

Nearly 200 boats deployed protective booms and used dispersants to break up the thick oil on Saturday. Crews have laid almost 900,000 feet of boom, and spread 267,000 gallons (1 million liters) of chemical dispersant.

In Bayou La Batre, the heart of Alabama's seafood industry, the docks were largely quiet as thousands of shrimpers and seafood processors remained idled by fishing restrictions.

About 30 oyster-processing plants have run out of product and shut down, putting as many as 900 people out of work, said Wayne Eldridge, owner of J&W Marine Enterprises and an oyster plant operator himself.

"I'm screwed," Eldridge said. "The biggest thing is I've got 35 people unemployed there."

LIABILITY

BP Chief Executive Tony Hayward said a $75 million legal cap on the liabilities for economic damages under federal law, which some U.S. lawmakers now want to raise, would not be a limit and renewed promises to meet all "legitimate" claims.

BP suffered another blow on Friday when ratings agency Standard & Poor's lowered its outlook to negative from stable and indicated a ratings downgrade was likely.

S&P also cut its outlook for Anadarko Petroleum Corp, which has a 25 percent stake in the ill-fated well, to stable from positive, saying it is "potentially liable for significant costs and liabilities relating to the clean-up."

Oil has been gushing into the Gulf at a rate estimated at a minimum of 5,000 barrels (210,000 gallons/795,000 liters) a day since the well ruptured. Ian MacDonald, biological oceanographer at Florida State University, told Reuters this figure was too conservative, putting his guess as high as 25,000 barrels (1.05 million gallons/4 million liters) a day.

In New Orleans, about 200 people holding banners saying "Clean It Up" protested on Saturday against BP, the spill and its environmental consequences.

The rally, organized by the environmental group Sierra Club, is one of a series of demonstrations due to take place across the country in the next 10 days, organizers said.

A sheen of oil has engulfed much of the Chandeleur Islands, barrier islands that are part of Louisiana's Breton National Wildlife Refuge, the first confirmation of the oil slick hitting land. Some oiled birds have been found in recent days.

(Additional reporting by Matt Bigg in New Orleans; Chris Baltimore in Houston; Tom Brown and Pascal Fletcher in Miami; Steve Gorman in Dauphin Island, Alabama; writing by Jeffrey Jones and John Whitesides; Editing by Xavier Briand)