A Transocean Ltd. oil-drilling rig in the Gulf of Mexico sank after burning for more than a day, creating the risk of a major oil spill as attempts continued to find 11 missing workers.
The sinking of the Deepwater Horizon rig left a sheen of oil on the surface 1 mile wide and 5 miles long, U.S. Coast Guard Rear Admiral Mary Landry said at a press conference today in New Orleans. The Guard said 115 of 126 workers aboard the nine-year-old vessel were rescued and the search for the rest will extend about another 12 hours.
If the 11 missing workers died, it would be the deadliest U.S. offshore rig explosion since 1968, when 11 died and 20 were injured at a platform owned by Gulf Oil Corp., according to data from the Minerals Management Service. A 1987 helicopter crash aboard a Forest Oil Corp. platform killed 14 people.
Transocean and BP Plc, which leased the floating rig to drill an exploratory well, failed to staunch the blaze by using remote-operated vehicles to shut valves on the sea floor before the rig sank. “This certainly has the potential to be a major spill,” should the well continue leaking, David Rainey, BP’s vice president for Gulf of Mexico production, said at today’s press conference.
Two undersea pipelines, one a mile away from the rig, were shut as a precaution against damage should the sunken rig drift into them, Landry said. The premium for Light Louisiana Sweet crude oil rose by $1.35 after the shutdown, at 3:56 New York time, according to data compiled by Bloomberg.
Vessels hired by BP began skimming oil from the surface, Rainey said. The company rushed miles of oil-slick containment boom to the site and prepared to try to disperse the slick with chemicals from the air if necessary, he said.
Underwater robots equipped with cameras will look for the cause of the explosion once they locate the sunken rig, Landry said.
The Deepwater Horizon has a replacement value of about $500 million to $750 million, Michael Price, chief executive officer of Bermuda-based Platinum Underwriters Holdings Ltd. said today in conference call with investors.
It cost $365 million to build, according to RigZone, but construction costs have soared since then, inflating the rig’s replacement value.
Price said it is unclear where liability may fall because the rig is owned and leased by separate companies.
“It’s not clear, really, that BP has any liability at all,” said Mark Gilman, an analyst with Benchmark Co. LLC in New York. “There’s an intricate working relationship between the contractor and the operator.”
The family of missing roustabout Shane Roshto of Amite County, Mississippi, filed suit today against Geneva-based Transocean and London-based BP. The suit, filed in New Orleans federal court, said the blast threw some workers, including Roshto, overboard and killed others on the deck.
Michael Kersey, brother of 33-year-old rescued worker Jonathan Kersey, told reporters in the New Orleans suburb of Kenner, Louisiana, today that his brother “said it was the scariest thing he saw in his life.”
Seventeen of the workers rescued were sent to hospitals for treatment. Jennifer Steel, a spokeswoman for West Jefferson hospital, said they had four patients and all were discharged yesterday.
Some of the 115 survivors and their families milled about the lobby of the Crowne Plaza Hotel in Kenner, where physicians and nurses set up an impromptu clinic to treat minor injuries. Rig workers still carried the safety helmets they’re required to wear offshore.
“We hope and pray they’re all somewhere where they can be found,” Dee Payne, a 29-year-old worker who said he witnessed the Deepwater Horizon disaster from a nearby rig, said of the missing workers. “You always think about it, you know -- we’re dealing with gas, with things that are explosive.”
BP agreed in September to extend its lease on the Deepwater Horizon rig for three years and pay an additional $3.4 million a year in rent. The rig, which measured 396 feet (121 meters) by 256 feet, could drill wells as deep as 30,000 feet.
The company agreed to pay $544 million, or $496,800 a day, during the three-year period, Transocean said at the time. That was above the prior rent, which averaged about $487,500 a day.
Transocean has property and casualty insurance on the rig, Gregory Panagos, a company spokesman, said yesterday. He wasn’t able to give details on the coverage.
“We are determined to do everything in our power to contain this oil spill and resolve the situation as rapidly, safely and effectively as possible,” Tony Hayward, chief executive officer of BP, said in a statement.
President Barack Obama last month proposed expanding offshore drilling in some areas, including off Virginia’s coast and off the western coast of Florida in the Gulf of Mexico.
“This incident is a grim reminder of the risk involved in developing public energy resources off America’s shores,” Representative Jim Costa, a California Democrat and chairman of the House Energy and Mineral Resources Subcommittee, said in a statement.
There are 90 rigs drilling in the federal waters of the Gulf of Mexico, Eileen Angelico, spokeswoman for the U.S. Minerals Management Service, said in an e-mail yesterday.
Drilling in federal waters of the gulf provides 1.7 million barrels of oil a day, according to the Minerals Management Service -- about 31 percent of total U.S. production as of January. The region supplies 6.6 billion cubic feet of gas a day, which is about 9 percent of U.S. production.
Transocean fell 8 cents to $90.29 at 4:01 p.m. in composite trading on the New York Stock Exchange. BP fell 11.8 pence, or 1.8 percent, to 636.40 pence in London.