Q&A: BP's role in Gulf of Mexico oil spill

[cnn-photo-caption image=http://i2.cdn.turner.com/money/galleries/2008/fortune/0806/gallery.retire_rich_Fortune40.fortune/images/bp.jpg caption="BP took over two big American oil companies in the 1990's, ARCO and AMOCO which gives BP access to many U.S. oil fields and refineries."]

CNN

A major oil spill in the Gulf of Mexico is expected to cause substantial environmental damage along the Louisiana and Florida coastline.

Here CNN's Jim Boulden explains the circumstances behind the leak and the consequences for oil giant BP as efforts to limit the disaster get underway.

What caused the oil spill? It seems workers on the Transocean Deepwater Horizon drilling rig (not owned by BP) were attempting to cap this new exploratory well when it suffered a "blow" causing the fire and sinking of the rig and the rupture of the line which brings extracted oil to the shore. Investigators will want to see what caused the explosion.

What are BP's offshore operations? BP took over two big American oil companies in the 1990's, ARCO and AMOCO which gives BP access to many U.S. oil fields and refineries. There has been a slew of new oil and gas finds in the Gulf of Mexico in deep water. BP, like many of its competitors, is drilling exploration wells there to gauge the oil and gas potential. The well, known as Mississippi Canyon (MC) Block 252, is in the 'Macondo prospect'. The well in question is 65 percent owned by BP and has other oil companies as minority partners. It's the norm these days for competitors to invest in these speculative wells.

Keep Reading...