Something is up at BP. I don't follow the company, don't own stock or bonds of theirs, but something just ain't right. Within the last year, BP has gone through all of the following, courtesy of the Wall Street Journal:
"Among the problems it has faced: an explosion last year at BP's Texas City, Texas, refinery that killed 15; a large oil spill at Prudhoe Bay earlier this year; and allegations of energy-market manipulation by BP traders this summer."
Plus now an corroded pipeline is causing the company to shut down their Prudhoe Bay oil field. As an outsider, it seems grossly irresponsible that the corrosion was allowed to go so far as to cause a complete shut down of an entire oil field. Couple this with the other problems, and it just sounds like a company that is cutting corners.
As an investor, nothing makes me more nervous than a company that seems all too willing to cut corners. That kind of attitude permeates an organization, and often results in cultivating less than honest people. See trading scandal. The company may also start sacrificing the long-term for the short-term, like ignoring basic maintenance to cut expenses now. See pipeline problem.
Again, I haven't done in depth research into BP, but where there is smoke...
Tuesday, August 08, 2006
Beyond Problematic
Subscribe to:
Post Comments (Atom)
2 comments:
I'm no oil field expert, but to shut down a 400,000 barrel/day pipeline for a 4-5 barrel leak doesn't seem like a legitimate reason to me, more like testing new highs in the oil market.
I bet the economic cost in this case far outweighs environmental benefits. So BP doesn't have a large enough bucket to place underneath for now and keep the oil flowing??
I'm sure there's more oozing through the cracks along the pipeline every day than 4 barrels...
Yes, but any new highs in the market will be serving their competitors, not themselves, as this is their motherlode.
From what I've read they've found that the pipe corrosion is such that it's basically like a tinfoil pipe at this point.
Shutting it down will actually probably cause more leaks, simply due to jarring / altering the pressure.
They're also inviting heavy legal scrutiny into their actions, as this kind of issue if often turned into political hay by politicians looking for a dog to beat.
Bottom line, they needed a new pipe, like, 2 years ago, and simply wanted to stretch, stretch, and keep stretching the timespan before replacement as they watched the oil market go up. Now they're burned at the peak, when they could have been raking it in.
That's why we get oil changes, tune-ups, and overhauls on everything from cars to airplanes. It sucks a lot more when it breaks while in operation.
Post a Comment