Friday, May 21, 2010

BP (LON:BP) Siphoning Less Oil Than Originally Believed

The amount of oil BP (LON:BP) (NYSE:BP) is recovering from the pipe they inserted in the well isn't as much as they originally estimated, with measurements now revised at about 2,200 barrels, rather than the prior estimates of 5,000 barrels.

On Saturday, a team assembled by the U.S. government should come up with a more precise estimate, which they are charged with ascertaining by the end of Saturday work day.

This will actually a good thing, in the sense that wild and inaccurate estimates have been put forth by those who are clueless about the matter, and based on faulty assumptions, with outrageous estimates up to 10 times what is thought to be leaking into the ocean at this time.

The major faulty assumption by the third-party theorists is that the pipe the oil is leaking out of is 19.5 inches wide, which while the actual width before the accident, has been reduced by 30 percent according to BP as a result of the accident, and there are other obstacles in the path of the oil which is reducing the flow by another 10 percent.

Another key factor is that oil is only making up about 50 percent of the flow, while natural gas is the other 50 percent, reducing the oil flow estimates by a lot more.

So in that regard, getting more accurate information, even though it's highly irrelevant in general, will help stop the over-reactive theorists from taking advantage of an unfortunate accident to make it look much worse than it actually is.

I say it's largely irrelevant because it's more important to plug the flow than to find out the size of the flow. The flow is going to continue on no matter what, and focusing on stopping it is by far the highest priority, and should really be the only priority.

The only reason some people and media outlets want the information is in hopes of attacking the oil industry in hopes of slowing it down, or to make it look so bad as to keep it from expanding offshore.

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