In early August, four months or so after the now infamous Macondo well began leaking oil into the Gulf, I started hearing that this particular disaster story was “over.” I heard this from cynical media types in New York, who did not find stories about chemical dispersants or peculiar rashes quite as sexy as shots of dead pelicans or a roiling plume of oil that looked like an aquatic version of the Smoke Monster on Lost. But I also heard it from oil and gas people in Houston. “The emotion is dying,” one investor relations manager explained to me, which I understood to mean that it was time, hopefully, to get back to making money.
What’s bad for the rest of the planet has often been good for Houston (see the energy crisis of the late seventies), but the hysteria that gripped this place in the weeks after the rig exploded was like the aftermath of a terrorist attack. “BP screwed the pooch for the world,” one drilling executive told me. Quietly, some offshore experts suspected this wasn’t going to be another Exxon Valdez, as it was played in the media, because (1) the Macondo spill took place in a large, warm-water gulf instead of a contained, cold-water bay and (2) the oil was light, as opposed to heavy, crude, so evaporation would occur more quickly. But no one dared to say so out loud, not when yet another oil company had proved itself deserving of the title of public enemy number one.
Houston may be a global energy capital, but within the oil and gas business, it’s a small town. The players all know one another—they gossip in the locker room at the River Oaks Country Club and lunch at the Coronado Club downtown, and their wives chair galas together and hire the same divorce lawyers. And when an energy company steps on its own private parts, everyone in that world braces for the pain.
The congressional hearings that began on May 10 were watercooler talk up and down Louisiana Street, as was the June 14 letter to then CEO Tony Hayward from congressmen Henry Waxman and Bart Stupak that detailed BP’s sins. Initially, everyone hoped this would be BP’s problem, not the industry’s (“We would not have drilled the well the way they did,” ExxonMobil chief Rex Tillerson told Congress). But now that the story is “over,” Act III of Disaster in the Gulf has begun, and it’s clear that in the energy business in general and Houston in particular the catastrophe has triggered a realignment of power and profits.
The controversy over Matt Simmons’s comments, for example, showed just how frightened some in the community have become. Simmons was an investment banker, peak oil proponent, and media darling (I profiled him in 2008). Then he told Bloomberg News on May 28 that the only way to stop the flow at Macondo was to nuke the well and that, no matter what, BP was finished. He went on to say that there was a separate, secret leak five miles away that was much bigger. This made Simmons a hero among conspiracy theorists in the blogosphere—and a pariah everywhere else. Specifically, his colleagues at Simmons & Co. had had enough and informed all their clients that Simmons’s opinions were not those of the company and that, oh, by the way, Simmons would be retiring as chairman emeritus. Worse was the fact that Simmons was discovered to have been shorting BP stock during much of the time he was dissing BP. Simmons, a maverick who could always be counted on to speak his mind, might have recovered from this, except that on August 8 he died suddenly in the hot tub at his summer home in Maine.
In contrast, the disaster birthed a new media star: silver-haired Robert L. Cavnar, the rare oilman who also happens to be a Democrat who also happens to support the Obama administration’s moratorium on deepwater drilling. MSNBC, for one, couldn’t get enough. “Nobody wants to be seen publicly going against the industry,” Cavnar said about energy executives who privately support his view. “I’m more worried about more guys getting killed.” Cavnar has been in the energy business for more than thirty years—as CEO of a Houston oil company and as an executive at El Paso Corporation—and was himself injured in an East Texas gas well pit fire decades back. But since most of his experience is on land, his commentary elicited some sniping in the offshore world, which probably makes things dicey at the society galas where he and his wife, Gracie, are regulars. No matter. Lately he hasn’t had much time for such things, as he has been racing to be first out of the gate with a book on the spill. Disaster on the Horizon, one of six now in the works, is due in bookstores on October 22. Houston Chronicle business columnist Loren Steffy is also writing a book about BP, which would normally give much of Houston’s corporate community chest pains, except that at this point they might hate BP more than they hate Steffy.
Since April, however, BP has gone from being a terminal company to one that is most likely going to survive the spill just fine. Sure, it will have trouble getting operating permits for new drilling projects—and who knows which companies will be willing to partner with BP in the future. But the $20 billion the company put in escrow to help victims of the accident looks less painful when measured against the $82 billion BP has netted in the past four years. And though it was initially suggested that BP’s days of operating in the Gulf were over, it now appears that the oil company might be able to negotiate a deal with the government in which some of that $20 billion will be paid out of future Gulf revenues. In the meantime, BP’s stock price has rebounded: It was trading at $60.48 the