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Friday, April 30, 2010

BP CEO says will pay oil spill claims

BP joins the Axis of evil!

According to many British commentators, Obama is treating BP CEO the way he treated Saddam Hussein. BP's wepaons of mass destruction were unleashed in the Gulf of Mexico. Unfortunately no hurricane is in the horrizon yet to make the mission accomplished. One can't help but be happy to see America is in deep muck. The slogan must be "Weaken America and defeat Israel".

What is in common between Israel and BP oil leakage
Both BP and Israel are defying and undermining Obama presidency. Obama wanted Israel to stop building illegal settlements in the occupied Palestinian territories but his call was completely ignored. Yesterday, 29.05.10, Israel rejected a call to sign the nuclear non-proliferation treaty by 2012 as demanded by 189 countries including the US. Similarly, the stubborn BP oil leak in the Gulf of Mexico is becoming as toxic to Obama presidency as the Israelis. Furthermore, both BP and Israel have a huge lobby inside America which will put pressure on Obama to compromise US interests and to re-phrase his preaching-style speeches. Despite the above, Obama continues his efforts to impose sanctions on Iran. One has to feel sorry for the position of the president of super-power America led from the nose by the Jewish lobby and the business cartel.

The uncivilized US cowboys who are fighting wars and killing people deserve the fleecing of Goldman Sachs and the black poison of BP. Similarly, BP deserves cough up $$ billions for unfairly manipulating energy prices.
Last year BP made $20 billion in profit. As a cartel it can easily play with the petrol prices at the pump and is a major player in gas production. Similarly, the Jews take a cut from all deals done on Wall Street.
As to oral sex, it is known that Jews like eating shish kebab as long as it is kosher.

In a mid-term election year, Obama opponents wanted to score political points by accusing him of not doing enough to tackle the oil leak disaster in the Gulf of Mexico. As a raection, Obama started to hit hard at BP causing its shares to go down by over 40% in 60 days or from over $60 a share to less than $33 at NYSE Opening today 10.06.10. This means huge losses for the shareholders and BP may suspend payment of its generous annual dividends of $3.36 per share. This may not affect the wealthy shareholders like the Queens of England and Holland or the Sheikh of Kuwait, but will hit hard at the UK pension funds. The British who were the first to help G.W. Bush in his war on Iraq and are currently having over 9000 military personnel and intelligence agents in Afghanistan didn’t like what Obama is doing to their beloved company. One British commentator said we are not Toyota of Japan to be bashed but we are America's best friends and allies and deserve a better treatment. But the British forget that interests come before friendship when dealing with the Americans. The anti-American forces are celebrating the row between the two evil empires and the muck Obama is in.

To start with, we don't want Al-Qaeda to fight on our behalf against the American savages. It was our people who were killed and our country that was destroyed.There are four million orphans in Iraq who will avenge the blood of their parents killed by the American trigger-happy and uncivilised cowboys. According to you, it is safe for an American to sit down and enjoy a cup of tea in downtown Baghdad. I can easily guarantee that such an American will either be blown up to pieces or filled with lead before finishing his drink. The Americans have marched on Baghdad to Israeli drums and will pay for it for years to come.

Adnan Darwash, Iraq Occupation Times

30 Apr 2010 14:43:29 GMT
Source: Reuters
By Tom Bergin

LONDON, April 30 (Reuters) - BP Plc will compensate all those affected by an oil spill from one of its wells in the Gulf of Mexico, its Chief Executive said, accepting the disaster could hit plans to open new areas off the U.S. coast to drilling. "We are taking full responsibility for the spill and we will clean it up and where people can present legitimate claims for damages we will honour them. We are going to be very, very aggressive in all of that," Tony Hayward told Reuters in an interview on Friday.

The massive spill, which started when an oil rig caught fire and sank last week, washed up to wildlife refuges and seafood grounds on the Louisiana coast on Friday. [ID:nSPILL]

The cost to the fishing industry in Louisiana could be $2.5 billion while the impact on tourism along Florida's Paradise coast could be $3 billion, Neil McMahon, analyst at investment firm Bernstein, said in a research note on Friday.

The spill could also hit President Barack Obama's plans to open some offshore areas of the U.S. where oil exploration is currently barred, to drilling, Hayward said.

"There may be an industry issue around what may or may not be opened," he said.

However the CEO hopes an effective response to the spill, including a flotilla of around 80 vessels and several aircraft, would reassure people about the risks from drilling.

"It would be bizarre to say it shouldn't influence the debate. How the debate will come out, I think ultimately will be judged by the success we have in dealing with this incident".

Regulations on drilling safety will also come under scrutiny, Hayward predicted.

"Rightly, there will be a reaction. Whenever you have something of this significance, it's right that regulators should look very hard at what they can do to further ensure that something like this never happens again," he said.

He said possible changes could relate to testing of equipment like the blow-out preventer on the ocean floor which failed to operate correctly and shut off the flow of oil, although he added it would be impossible to say how testing could be improved until the cause of the accident was known.

Failures of blow-out preventers are extremely rare and the equipment is regularly tested.

The scale of the disaster could also lead to changes in the rules on who is allowed to operate licences in the deeper waters of the Gulf of Mexico, analysts said.

The government could limit operating licences to larger companies, like BP, which have the deep pockets and operational capability to mount large cleanup operations.

(Reporting by Tom Bergin, +44 207 542 1029; Editing by Andrew Callus)


BP CEO to meet with Obama adm officials on spill
03 May 2010 16:33:40 GMT
Source: Reuters
WASHINGTON, May 3 (Reuters) - BP Chief Executive Tony Hayward will meet Monday afternoon with the U.S. Interior and Homeland Security secretaries and other Obama administration officials to discuss how to control the widening oil spill in the Gulf of Mexico, a government official said.

The meeting will take place at the Interior Department and also include BP America Chairman and President Lamar McKay. The company will provide an update on its mitigation plans for Gulf Coast areas that may be hit by the oil spill, the official said.

(Reporting by Tom Doggett)


TIMELINE-Gulf of Mexico oil spill
10 May 2010 22:21:38 GMT
Source: Reuters
May 10 (Reuters) - A drilling rig explosion on April 20 left 11 workers missing and presumed dead, and the rig's subsequent collapse unleashed a major oil spill that threatens the ecosystems and economy of the U.S. Gulf of Mexico.

Also threatened is the heart of U.S. energy production, both on and offshore, as a giant, unprecedented underwater leak spreads oil across the northern Gulf of Mexico, threatening areas from Florida to the mouth of the Mississippi River.

President Barack Obama's plans to widen offshore drilling have been suspended, and energy giant BP Plc faces another blow to its reputation and a multibillion dollar bill for cleaning up the mess and paying damages.

Below is a chronology of the spill and its impact:

* April 20, 2010 - Explosion and fire on Transocean Ltd's drilling rig Deepwater Horizon licensed to BP; 11 workers missing, 17 injured. The rig was drilling in BP's Macondo project 42 miles (68 km) southeast of Venice, Louisiana, beneath about 5,000 feet (1,525 metres) of water and 13,000 feet (4 km) under the seabed. A blowout preventer, intended to prevent release of crude oil, failed to activate.

* April 22 - The Deepwater Horizon rig, valued at more than $560 million, sink and a five mile long oil slick is seen.

* April 23 - The U.S. Coast Guard suspends search for missing workers. All were thought to have been near the site of the blast and are presumed dead.

* April 25 - The Coast Guard says remote underwater cameras detect the well is leaking 1,000 barrels of crude oil per day. The agency calls the leak a "very serious spill" that threatens ecosystems along the Gulf Coast. It approves a plan to have remote underwater vehicles activate a blowout preventer and stop leak. Efforts to activate the blowout preventer fail.

* April 26- BP's shares fall 2 percent on fears that the cost of cleanup and legal claims will deal the London-based energy giant a heavy financial blow.

* April 27 - U.S. departments of Interior and Homeland Security announce plans for a joint investigation of the explosion and fire. The Coast Guard says the leaking crude may be set ablaze to slow the spread of oil in the Gulf.

* April 28 - The Coast Guard says the flow of oil is 5,000 barrels per day (bpd) (210,000 gallons/795,000 litres) -- five times greater than first estimated. A controlled burn is held on the giant oil slick.

* April 29 - Obama pledges "every single available resource," including the U.S. military, to contain the spreading spill, which Homeland Security Secretary Janet Napolitano says is of "national significance." Obama also says BP is responsible for the cleanup. Louisiana declares state of emergency due to the threat to the state's natural resources.

* April 30 - An Obama aide says no drilling will be allowed in new areas, as the president had recently proposed, until the cause of the Deepwater Horizon accident is known.

* BP Chairman Tony Hayward says the company takes full responsibility for the spill and would pay all legitimate claims and the cost of the cleanup. The Interior Department orders safety inspections of all 30 deepwater drilling rigs and 47 deepwater production platforms.

* May 1 - Coast Guard says leak will affect the Gulf shore.

* May 2 - Obama visits the Gulf Coast to see cleanup efforts first hand. U.S. officials close areas affected by the spill to fishing for an initial period of 10 days. BP starts to drill a relief well alongside the failed well, a process that could take two to three months to complete.

* May 5 - A barge begins towing a 98-ton containment chamber to the site of the leak. BP says one of the three leaks has been shut off by capping a valve, but that would not cut the amount of oil gushing out. Officials conduct controlled burns to remove oil from the open water, the first since April 28.

* May 6 - Oil washes ashore on the Chandeleur Islands off the Louisiana coast, uninhabited barrier islands that are part of the Breton National Wildlife Refuge and important nesting and breeding areas for many bird species.

* May 7 - BP engineers use undersea robots to move the containment chamber over the larger of the two remaining leaks on the seabed. The firm abandons efforts to close valves on a failed blowout preventer with underwater robots. A fishing ban for federal waters off the Gulf is modified, expanded and extended to May 17.

* May 8 - BP's containment dome hits a snag when a buildup of crystallized gas forces engineers to postpone efforts to place the chamber over the oil leak and syphon oil to the surface. "Tar balls" suspected to come from the leak wash up along a half-mile stretch of Dauphin Island, Alabama.

* May 9 - BP says it might try to plug the undersea leak by pumping materials such as shredded up tires and golf balls into the well at high pressure, a method called a "junk shot."

* May 10 - Latest forecasts suggest the oil spill could move significantly west of the Mississippi River delta as brisk onshore winds prevail. BP announces plans to place a small containment dome, known as a "top hat," over the blown out well to funnel oil to the surface.

(Reporting by Erwin Seba and Ros Krasny; Editing by David Gregorio)


BP struggles with latest bid to contain US oil spill
16 May 2010 03:30:09 GMT
Source: Reuters
* White House keeps up heat on BP over oil spill

* U.S. officials ask BP to clarify paying spill costs

* BP wants to get siphoning tube inserted late on Saturday

* BP CEO calls spill "tiny" compared to "very big ocean"

(adds New York Times report)

By Steve Gorman and Patricia Zengerle

GALLIANO, La./WASHINGTON, May 15 (Reuters) - BP Plc struggled on Saturday to get its latest effort to contain the massive Gulf of Mexico oil spill to work as the Obama administration demanded the British energy giant clarify its intentions on paying for damage caused by the accident.

The accident at the offshore oil rig is threatening an ecological and economic calamity along the U.S. Gulf Coast.

As BP pushed forward with its tricky undersea effort to redirect the flow of oil after another setback, two members of President Barack Obama's Cabinet demanded that BP Chief Executive Tony Hayward explain in detail the company's commitment to pay for the enormous spill's damage.

"The public has a right to a clear understanding of BP's commitment to redress all of the damage that has occurred or that will occur in the future as a result of the oil spill,"
Interior Secretary Ken Salazar and Homeland Security Secretary Janet Napolitano said in a letter to Hayward. [ID:nN15228597]

"Therefore, in the event that our understanding is inaccurate, we request immediate public clarification of BP's true intentions," they added.

With crude oil gushing unabated into the sea from its blown-out offshore well a mile (1.6 km) deep on the floor of the Gulf, BP sought to guide undersea robots to insert a small tube into a 21-inch (53-cm) pipe, known as a riser, to funnel the oil to a ship at the surface. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

TAKE A LOOK on the spill [ID:nSPILL]

INSIDER TV: http://link.reuters.com/rad93k

Graphic: http://link.reuters.com/teb93k

Breakingviews column [ID:nLDE64C1D1]


BP's initial attempt to insert the tube into the riser ran into trouble when the metal frame that supports the siphon shifted, BP Chief Operating Officer Doug Suttles told reporters in Robert, Louisiana on Saturday. [ID:nN15212364]

Suttles said BP hopes to get the siphoning tube inserted late on Saturday night and operational overnight.

"We did have to pull it back to surface (Friday) to make some adjustments so that we could connect it properly to the pipework," Suttles said. "We expect to begin operation of that equipment overnight tonight."

A BP spokesman did not respond immediately to inquiries late on Saturday about progress on the latest attempt.

The company's previous try to contain the oil using a giant containment dome failed last week.

The spill began after an April 20 explosion on the Deepwater Horizon rig, which killed 11 workers. It threatens to eclipse the 1989 Exxon Valdez spill off Alaska as the worst U.S. ecological disaster.

A New York Times report on Saturday said scientists had found huge oil plumes in the Gulf, including one as large as 10 miles long, 3 miles wide and 300 feet thick. It said the discovery provided evidence the leak could be "substantially worse" than previously estimated by the government and BP.


In an interview published in a British newspaper on Friday, Hayward appeared to play down the disaster.

"The Gulf of Mexico is a very big ocean. The amount of volume of oil and dispersant that we are putting into it is tiny in relation to the total volume of water,"
Hayward was quoted as saying in Britain's Guardian newspaper.

Hayward also acknowledged his job was on the line and that he would be judged by the company's response to the disaster. BP's shares have tumbled and wiped out $30 billion of market value since the disaster began last month.

Questions have been raised about current U.S. law that limits to $75 million energy companies' liability for lost business and local tax revenues from oil spills.

Writing to Hayward, Salazar and Napolitano cited statements by BP executives that the company was taking responsibility for the spill and would cover spill-related costs.

"Based on these statements, we understand that BP will not in any way seek to rely on the potential $75 million statutory cap to refuse to provide compensation to any individuals or others harmed by the oil spill, even if more than $75 million is required to provide full compensation to all claimants,"
Salazar and Napolitano wrote.

Earlier, BP spokesman Mark Proegler said oil washed up in Mississippi for the first time in the state on Saturday, when tar balls were discovered at Long Beach. Oil has now contaminated several beaches in three states after it was also located at sites in Louisiana and Alabama.

Officials said that so far the spill has had minimal impact on the shoreline and wildlife, but a massive operation is underway to protect areas seen as vulnerable along the coast.


Seeking to curb the volume of oil reaching the surface, the U.S. Coast Guard and Environmental Protection Agency have authorized more undersea use of chemical dispersants at the source of the leak. Dispersants are designed to break the oil into small droplets more likely to sink to the sea floor.

Suttles, speaking to reporters after flying over the scene of the spill, said the
use of the chemical dispersants appears to be working. "The oil in the immediate vicinity of the well and the ships and rigs working in the area is diminished from previous observations,"
Suttles said.

Some environmental groups and the Gulf's shrimping industry have raised concerns about the effect of the chemicals, saying the oil might not sink all the way, but become suspended in the water column and ingested by fish and other wildlife.

Cleanup crews continue attacking the oil slick using surface dispersants, skimming and controlled burns.

Inland, BP contractors assisted by flotillas of hired shrimp boats continued to string containment booms around sensitive coastal areas. National Guard teams with bulldozers and helicopters pressed on to plug gaps in booms protecting Louisiana's storm-battered shoreline to prevent oil from reaching the fragile marshlands behind them.

The vast but dwindling marshes are the nurseries for shrimp, oysters, crabs and fish that make Louisiana the leading producer of commercial seafood in the continental United States and a top destination for recreational anglers.

Obama on Friday gave a tongue-lashing to all the companies involved in the spill -- BP, Halliburton and Transocean Ltd -- and said he would not rest until the leak was stopped at its source.

Estimates of the rate of escaping oil range widely from the official BP figure of 5,000 barrels per day (210,000 gallons/795,000 liters), adopted by the government, to 100,000 barrels (4.2 million gallons/15.9 million liters) per day.

(Additional reporting by Shaleem Thompson in Buras, Louisiana, Chris Baltimore in Houston and by Tony Pyle and Don Pessin in New Orleans; editing by Ed Stoddard, Jeff Mason, Will Dunham and Paul Simao)


FACTBOX-What are tar balls and what is their impact?
19 May 2010 16:32:19 GMT
Source: Reuters
May 19 (Reuters) - Tar balls found on beaches in the Florida Keys this week are not from the Gulf of Mexico oil spill leaking from a well owned by BP , the U.S. Coast Guard said on Wednesday, citing laboratory tests. [ID:nN19221677]

But tar balls linked to the spill have been found elsewhere on the Louisiana and Alabama coastlines, raising concerns about the disaster's ecological impact.

Following are some facts about tar balls:

- They are the remnants of crude oil dumped into the ocean by marine vessels or, in this case, by a blown-out undersea well. They are "little, dark-colored pieces of oil that stick to our feet when we go to the beach," according to the National Oceanic and Atmospheric Administration.

- During the initial stages of a spill, the oil will spread into a thin slick, leaving it susceptible to tearing by wind and wave action. The smaller patches that result often disperse over a wide area and some of the crude mixes with water to form an emulsion that looks like chocolate pudding.

- This mix is thicker and stickier than the original oil in the spill, but it can still be torn by wind and waves. The smaller pieces it breaks into are tar balls.

_ They can be as big as pancakes but are mostly coin-sized, according to NOAA.


- Tar balls "are very persistent in the marine environment and can travel hundreds of miles," NOAA said

- "For most people, an occasional brief contact with a small amount of oil, while not recommended, will do no harm. However, some people are especially sensitive to chemicals, including the hydrocarbons found in crude oil," it said. "They may have an allergic reaction or develop rashes."

- Sea turtles are known to eat tar balls. Dr Gilly Llewellyn, the Oceans Program Manager for WWF-Australia, a conservation group, said tar balls can "attract a curious or hungry turtle" with often fatal results.

- Tar balls can also heat up and ooze into the sand, fouling crucial nesting habitat for turtles, said John Hocevar, the Oceans Campaign Director for Greenpeace USA.


- "There is no magic trick to making tar balls disappear. Once tar balls hit the beaches, they may be picked up by hand or by beach-cleaning machinery. If the impact is severe, the top layer of sand containing the tar balls may be removed and replaced with clean sand," NOAA said. (Sources: Reuters, NOAA, WWF, Greenpeace)

----(Compiled by Ed Stoddard)


WASHINGTON: Louisiana Gov. Bobby Jindal said today that his state doesn't have what it needs to fight the spread of BP's oil.

"We need more boom, more skimmers, more jack-up barges," Jindal said at an angry news conference in Venice, Louisiana, complaining that Louisiana has received a fraction of the supplies it requested to protect itself from the oil spill in the Gulf of Mexico.

"More than 100 miles of our shoreline has been impacted by the oil spill. That is more than the entire sea coastline of Mississippi and Alabama combined," the governor said.

Democratic strategist James Carville, a Louisiana native, joined Jindal on a tour of coastal areas today, seeing firsthand the effect of the oil on the marshlands. Carville said he hoped that President Obama would take a similar tour when he visits the region on Friday.

"This is not oil, this is crude," said Carville. "This is not what you put in your car, this is some of the most vicious stuff you can imagine."

Jindal joked that he wants Obama to pack hard boom onto Air Force One and bring it with him on Friday, but the governor was serious about his promise to move forward with building barrier islands without the federal government's permission.

"We cannot let bureaucracy and red tape delay our action while oil hits our wetlands week after week," he said.

While the governor asks for more supplies, a number of countries said today that the U.S. government and BP had yet to take them up on offers of assistance, including booms and skimmers.

The State Department said in a briefing today that 17 countries had offered assistance, including Canada, Mexico, South Korea, Croatia, France, Germany, Ireland, Japan, the Netherlands, Norway, Romania, Russia, Spain, Sweden, the United Arab Emirates, the United Kingdom and Vietnam.

BP added another two countries to that list, Brazil and Saudi Arabia.

While BP has accepted some supplies, including booms and skimmers from Norway, most other countries said they were waiting for a response from the U.S. government.

"We have the equipment," said Ferran Tarradellas, a spokesman for the European Union agency coordinating Europe's response, "but at this point in time, we have not received any requests."


Gulf oil spill hits Day 40 with no end in sight
29 May 2010 05:02:55 GMT
Source: Reuters
* Top kill outcome should be announced over weekend

* Obama under fire for slow response to largest oil spill

* Residents angry about lack of cleanup

* BP investors sell shares over top kill delays

By Tom Bergin and Ed Stoddard

NEW ORLEANS/VENICE, La., May 29 (Reuters) - The worst oil spill in U.S. history hits its 40th day on Saturday with Gulf residents clinging to one tenuous hope: that BP's complicated "top kill" operation will plug the gushing well.

Beleaguered Louisiana residents heard from President Barack Obama and BP CEO Tony Hayward on separate visits to the Gulf coast on Friday as they tried to get a handle on a crisis damaging the credibility of both the government and BP .

Obama, facing criticism that he responded too slowly to the environmental catastrophe in the Gulf of Mexico, assured Louisianians during his five-hour visit that they "will not be left behind" and that the "buck stops" with him.[nN28228296]

Hayward, on a visit to the site of the April 20 rig explosion that killed 11 workers and unleashed the oil, said the energy giant needed up to two more days to determine if the top kill will stop the underwater gusher once and for all.


TAKE A LOOK on the spill [ID:nSPILL]


INSIDER TV: http://link.reuters.com/wuw64k

Graphic: http://link.reuters.com/neh56k


The top kill, however, is a tricky maneuver that involves injecting heavy fluids, material and cement into the well to stifle the flow. It has never been done at this depth, one mile (1.6 km) under below sea level.

Hayward dismissed concerns about delays, which made investors jittery and drove BP shares down 5 percent Friday.

"We're continuing because we are making progress," Hayward said on a drilling ship at the site, with perspiration dripping from under a white plastic BP safety hat.

Obama is caught in a tight spot: there is not much he can do about the well other than apply pressure to BP to get it right and put his best scientists in the room. The government has no deep-sea oil technology of its own.

That fact is not lost on the people of Louisiana's coast, a hub of the U.S. oil industry and now the site of the country's largest oil spill after it surpassed the 1989 Exxon Valdez disaster in Alaskan waters.


"I wouldn't know what to ask him to do, other than stop the leak," said John Bourg, a resident of Grand Isle who watched the president's motorcade roar by on Friday. "And I'd put more faith in an oil company to stop a leak than anybody else."

But that doesn't mean the public will forgive the first-term president, who is anxious to avoid comparisons to President George W. Bush after his government's much-criticized response to Hurricane Katrina in 2005.

Polls show that Americans are losing faith in the Obama's administration's response to the spill as oil seeps farther into fragile marshlands and shuts down a good chunk of the lucrative fishing industry.

Still, BP gets worse marks and faces anger over lack of proper clean-up of the 100 miles (160 km) of Louisiana coastline and the oil in the gulf.

In Grand Isle, 17-year old Hanna Lemoie posted a sign she painted that read "BP...we want our beach back."

"The beach, the waves had like orange oil coming in and it made me mad because there was nobody cleaning it up and I felt helpless," Lemoie said.

The frustration, the anger and the delays all were taking their toll -- on Obama, Hayward, the residents and those working to plug the well.

Bruce Simokat, the captain of the Discoverer Enterprise drill ship assisting in the BP containment effort, said the crew found it difficult to hear all the criticism about the response effort on television.

But were they still watching the TV?

"It's hard not to," said Simokat.

(Additional reporting by Katharine Jackson in Grand Isle, Louisiana; Writing by Mary Milliken; Editing by Bill Trott)


FACTBOX-BP's 'top kill' out, spill containment cap in
30 May 2010 00:59:21 GMT
Source: Reuters
May 29 (Reuters) - BP Plc abandoned its failed "top kill" effort to plug a leak in the Gulf of Mexico on Saturday after it failed to stop the flow of oil and gas.

BP's next step is to install a containment cap on top of a lower marine riser package, or LMRP -- a piece of equipment that sits atop the failed blowout preventer at the seabed.

Here is an explanation of how the LMRP cap is supposed to work, as well as other technologies BP is employing to attempt to bring the well under control:


* BP will cut off a pipe that extends out from the top of the LMRP and cover the opening with a cap and grommet seal. Oil and gas are currently leaking from two places along the pipe.

* The cap will be connected by pipe to a drillship at the water's surface.

* The cap is intended to corral the majority of the leak and channel oil and gas to the ship through the pipe.

* BP expects the process to take four to seven days, though Chief Executive Tony Hayward said they would need about four days.

* Chief Operating Officer Doug Suttles said BP monitored pressure data from the failed blowout preventer during the top kill operation, and determined that cutting off the pipe at the top of the LMRP would not have a significant impact on the flow of the leak.

* The cap effort is, in theory, similar to a much larger 98-ton containment dome placed at the end of the broken pipe in early May. That dome also was connected to the ship by pipe and was intended to corral and channel oil and gas to the surface.

However, too much seawater got inside, and mixed with natural gas at high pressures and cold temperatures and formed ice-like hydrates that blocked oil from flowing up the pipe to the ship.

Suttles said the smaller cap and seal are designed to exclude seawater and avoid the hydrate problem.


* Drilling continued on a relief well begun on May 2 intended to intercept and cap the leaking well beneath the seabed. BP estimates it will be finished in late July or early August.

* Drilling on a second well, which began on May 16, was suspended this week while the top kill was in progress. That rig was ready to resume drilling if needed.

* A relief well is widely considered the best option to shut down the Macondo well. The method was used effectively to plug the Ixtoc well in Mexico, which blew out in 1979.


* The second relief well drilling was suspended so its blowout preventer could be on standby in case BP decides to place it atop the failed blowout preventer to stop the leak. (Reporting by Kristen Hays; Editing by Mary Milliken)


BP ditches 'top kill,' moves to cap option
30 May 2010 00:36:39 GMT
Source: Reuters
* BP ready with containment cap

* Cap should capture majority of oil, not all

* Relief well best option, but two months away (Recasts with top kill failure)

By Kristen Hays

HOUSTON, May 29 (Reuters) - BP Plc gave up on its failed "top kill" effort to smother a Gulf of Mexico oil leak on Saturday and focused on a plan to cap a piece of equipment at the wellhead and corral spewing oil and gas.

"We do think it will capture the majority of the oil if it works. We can't guarantee that," BP Chief Operating Officer Doug Suttles said of the next step at a daily briefing on Saturday with the U.S. Coast Guard. He said it could take four days or longer to show results.

Suttles said the top kill, or the pumping of heavy fluids and materials into a failed blowout preventer to quell the leak in the well, did not stop the flow of oil and gas into the Gulf.

Although Chief Executive Tony Hayward said on Friday that BP would not know until Sunday whether the top kill was a success or failure, Suttles said company and government officials decided on Saturday to give it up and move on.

"It was an option we felt was best to pursue based on the information we had," he said. "Obviously we didn't know."

Hayward said in a statement that he was disappointed that the top kill failed, but BP is ready to move immediately to the containment cap.

"Based on what we know now, we believe the containment cap is the most effective way to minimize the impact of the oil leak on the Gulf ecosystem and the people of the region," Hayward said.

Coast Guard Admiral Mary Landry, who spoke at the briefing alongside Suttles, said the only certain solution is a relief well that is being drilled to intercept and plug the leaking well far beneath the seabed.


The other efforts haven't been tried a mile (1.6 km) beneath the water's surface, where only underwater robots can tolerate the extreme pressures and temperatures.

Suttles said BP has tried to keep increasingly skeptical officials and the public informed of the progress of its efforts to plug the well.

"I can also say this scares everybody. The fact that we can't make this well stop flowing, or we haven't succeeded in that so far," he said.

The containment cap is the next effort to quell the leak, which was discovered after Transocean Ltd's Deepwater Horizon rig exploded on April 20, killing 11 workers. BP owns the well.

BP's plan is to saw off a bent pipe on top of a lower marine riser package, or LMRP, that sits atop a failed blowout preventer at the wellhead.

That pipe was connected to the rig, and the two leaks are spewing from it.

The cap with a grommet seal will cover the opening left when the pipe is sawed off. Captured oil and gas would be channeled through a pipe that connects the cap to a drillship, where it would be stored.

"We haven't done it to this date because we needed the diagnostic data to make sure we didn't make the situation worse," Suttles said at a news conference earlier on Saturday.

Suttles said the company also is preparing to place a working blowout preventer on top of the failed one if the cap option fizzles.

Drilling continues on a relief well intended to intercept the leaking well and plug it far beneath the seabed. BP expects the first well to be finished by late July or early August. (Additional reporting by Ed Stoddard in Fourchon Beach, Louisiana; editing by Mary Milliken and Mohammad Zargham)


BP to know by week's end if new plan contains spill
30 May 2010 15:18:02 GMT
Source: Reuters
(Adds comments from BP and White House)

WASHINGTON, May 30 (Reuters) - BP Plc will know by the end of the week whether its latest plan to contain the oil gushing into the Gulf Mexico is successful, BP Managing Director Bob Dudley said on Sunday.

The London-based energy giant will now try to capture and contain the oil a day after its complex "top kill" maneuver to plug the leak failed.

The latest plan is designed to capture most of the oil on the sea floor and channel it to the surface for collection.

"I think engineering on this is simpler than the top kill ... It will be a 4 to 7 day operation," Dudley said on NBC's "Meet the Press."

Dudley said the probability of BP's latest plan working was better than the top kill and added they would know whether it worked by the end of the week.

"These guys that are working offshore are incredibly skilled at this. We are asking them to do the equivalent of open heart surgery on television for everyone," he said.

BP Chief Executive Tony Hayward had initially given the top kill procedure a 60 to 70 percent chance of success.

When asked whether Hayward should resign once the Gulf spill was contained, Dudley said no. "I think (Hayward) has done a great job of leading a company to stand up and do the right thing."

For 40 days, oil has been gushing into the Gulf, surpassing the 1989 Exxon Valdez spill in Alaskan waters.

"This is probably the biggest environmental disaster we have ever faced in this country," top White House energy adviser Carol Browner said on the same show. "It is certainly the biggest oil spill and we are responding with the biggest environmental response."

(Reporting by Ayesha Rascoe and Rachelle Younglai, Editing by Sandra Maler)


ADVISORY-PDF of special report on BP's war room
02 Jun 2010 14:12:58 GMT
Source: Reuters
Five weeks into the worst man-made environmental disaster in U.S. history, BP Chief Executive Tony Hayward locked himself in a room on the third floor of the British oil giant's U.S. headquarters in Houston. The atmosphere inside BP's "intervention room" was intense: "It's kind of like NASA and the Apollo 13 mission in there," said one insider.

During four days inside the Houston command center and traveling with Hayward to the site of the oil leak late last week, Reuters correspondent Tom Bergin got an up-close picture of a company under siege.

To read his special report in PDF format, click here: http://static.reuters.com/resources/media/editorial/20100602/BPWarRoom2.pdf


Transocean Ltd - The Zug, Switzerland-based company
owned and operated the Deepwater Horizon Rig. The rig
went into service in 2001 and was drilling the Macondo
prospect about 40 miles off the coast of Louisiana.

• BP Plc - BP hired Transocean’s rig at a rate of about $500,000
per day to drill the well. BP is the project’s operator and has
a 65 percent working interest in the well.

• Anadarko Petroleum Corp - The Houston company owns a 25
percent nonoperating interest in the well.

• Cameron International Corp - The Houston company supplied
a piece of equipment known as a blowout preventer. Blowout
preventers are put in place to stop an uncontrolled flow of oil
or gas. The Deepwater Horizon’s blowout preventer failed to
operate and seal the well.

• Halliburton Co - The oilfield services company, which has
headquarters in Dubai and Houston, provided a number
of services on the Deepwater Horizon. The company was
providing cementing on the well to stabilize its walls,
according to Transocean’s website.


02 Jun 2010 14:30:40 GMT
Source: Reuters

Several hours after mud began pumping into the well, Hayward emerged from the intervention room in what has become his trademark open-necked shirt. Flanked by the head of Britain's largest financial public relations firm and by his own head of press, a former editor of the Financial Times, Hayward gave a brief update to Reuters and a local TV new crew in the "simops" room.

Behind Hayward, five large flat-screen televisions streamed video from the sea floor. On one, drilling mud was seen gushing from the well head while another screen showed a yellow panel with dials and controls and, in red letters, the name Cameron International Corp, the Houston-based company which manufactured the failed blowout preventer that BP initially blamed for the oil spill.

Under pressure from Washington, BP had added a video stream of the leaking oil well to its website. With "top kill" underway, Hayward cautioned against anyone trying to interpret changes in the size of the plume of oil as indication of success or failure. Not everybody listened to that warning. One BP insider said a few days later that there were "hedge funds trading the plume".

Hayward looked strained, and sounded cautious. "The operation is proceeding as we planned it," he said.


The April 20 explosion on the Deepwater Horizon rig, which was drilling the Macondo oil prospect -- named for a fictitious down-at-heel town in a number of Gabriel Garcia Marquez stories -- killed 11 workers and triggered the disastrous oil leak.

So far, it has also lopped about $65 billion off BP's market capitalization and hit industry plans to expand deepwater drilling in the Gulf and in other parts of the U.S.. As the environmental disaster drags on, it is likely to have a profound impact on the way Americans and others view deepwater drilling.

At first, BP responded to allegations that it had cut corners and put savings ahead of safety by diverting blame to its partners in the Gulf well. Now it says it is solely focused on stopping the leak.

Behind the scenes, though, BP workers have taken on a defensive, even defiant, mood. An employee who walked into the command center canteen last week found colleagues watching CNN.
"So are they accusing us of covering stuff up again?"
she asked sarcastically.

As public anger has grown, BP's press team has taken to routing all media calls straight through to voicemail, in part because of the volume of calls urging violence against Hayward. The worst abuse comes in the early hours of the morning, press officers say, when callers appear to have had a few drinks.

Louisiana-born political consultant James Carville has regularly demanded that President Barack Obama tell BP "I'm your daddy" and suggested that Obama might be inclined to shoot Hayward given the chance. People posting comments on U.S. newspaper websites have called Hayward a "jerk" with a "toffee-nosed accent."

"I understand perfectly why everyone is angry and frustrated that this leak has not been stopped," Hayward told Reuters late last week. "I am angry and frustrated. I want this thing stopped as fast as I can, as we can. We want it stopped and we're doing everything we can to stop the damn leak and we're going to continue to do everything we can to stop the damn leak. The reality is that's it's a very challenging technological challenge."


Two days after "top kill" began, Hayward touched down at Houma airport in Louisiana after a one-hour flight from Houston in a white Falcon corporate jet. He hopped into a Chevrolet Suburban -- black with blacked out windows -- and made the short drive across the parking lot to a trailer, where a group of medics tested the respiratory function of everyone booked to fly out to the spill site by helicopter.

Hayward, his executive assistant and a press officer then drove the 100 yards back to the heliport, a grey one-story building whose waiting room consisted of prefabricated cabins bolted together.

As Hayward left Houston earlier that morning, President Obama had arrived in Louisiana to meet with the Coast Guard, state officials and to visit a local beach.

The slow-motion disaster has not spared the White House. Opinion polls say 60 percent of Americans are unhappy with the government's response. Many in the Gulf region think the government should have acted more quickly to stop the oil spreading and should be doing more to help the thousands employed in the fishing industry.

That's the view of Carol Terrebonne, who sells shrimp to the public from a cramped roadside office in the steamy Louisiana shrimping hamlet of Golden Meadow. "I blame both (Obama and Hayward,)" Terrebonne said a day after Obama's visit to the state.
"They should have done more before the oil got into our marshes. They could have brought in big skimmers right away."

Under a bright blue sky on Friday morning, Obama and Coast Guard commander Admiral Thad Allen, the president's point man on the spill response, met with local officials on an otherwise deserted Fourchon beach. A sign at the entrance to the beach read "Have fun, be safe and help keep our beach clean."

The president walked to the edge of the water, which was lined with brightly colored oil-absorbing plastic sponges that looked a bit like cheerleader pompoms as well as a long thin tubular boom designed to catch the oil. After chatting with officials, Obama called the press over and pointed out the gooey black balls that had washed up on the sand. "If you can see these little balls, these are the tarballs they were talking about," he said. "Obviously, the concern is that until we stop the flow, we've got problems."

Standing beside the president was Charlotte Randolph, LaFourche Parish President. Randolph regularly fished from the beach, Obama explained. "We want to be sure she can come back."

A reporter asked the president if the tar balls might be natural. "We attribute all oil that you see right now to BP," said Randolph.

Later that day, Obama was asked how confident he was that "top kill" would work.
"All I can say is that we've got the best minds working on it and we're going to keep on at it until it is plugged,"
the president said.


Halliburton prepares for long drilling ban
02 Jun 2010 17:24:59 GMT
Source: Reuters
* Deepwater activity in hiatus six months or longer

* Halliburton says not a dead period, plenty of work to do

* Halliburton shrs up 11 pct; debt protection cost doubles (Adds executive's quotes, business outlook, Gulf of Mexico operation details, updates shares)

HOUSTON/SAN FRANCISCO, June 2 (Reuters) - Halliburton Co , which did cementing work on the ruptured Gulf of Mexico well, said on Wednesday it expects to move people and equipment out of the region due to the U.S. government halt of deepwater drilling.

The company now has 2,200 of its 50,000 employees working in the region, accounting for 13 percent of its business in the first quarter, of which two-thirds was deepwater activities.

"Halliburton is engaged in discussions with its customers and anticipates relocating equipment and personnel to other markets as appropriate," the company said in a filing with regulators.

Halliburton expects a Gulf of Mexico deepwater hiatus for at least six months, and possibly longer. But executive Tim Probert noted on a conference call that the U.S. moratorium did allow for well completions and maintenance, so activity would not completely stop.

Probert, the president of global business lines who was recently also named chief health, safety and environment officer, said the industry had plenty of work to do in the down time to prepare for a new regulatory regime.

"We shouldn't consider the next six months to be a completely dead period," he said. "Clearly, it's in the interest of the nation to ensure we have the ability to continue to produce hydrocarbons safely in offshore waters, and I think everybody's going to work diligently toward that."

BP Plc was the operator on the well which ruptured on April 20, killing 11 workers and sinking a Transocean Ltd drilling rig. The well has since spewed as much as 19,000 barrels of oil a day into the Gulf of Mexico.

Investors are increasingly worried about Halliburton's financial exposure to the spill. The company's credit default swaps, protecting its debt, rose 35 basis points to 157 basis points on Wednesday, more than double their level a few days before, according to Markit Intraday data. [ID:nN02168753]

Executives repeated on the call that the company was indemnified under its contract with BP, but Halliburton has $600 million of general liability insurance, and $3.2 billion of cash and $1.2 billion in revolving credit to cope with any uncertainties.

Asked about the potential liability for gross negligence, Chief Financial Officer Mark McCollum said while this was theoretically possible, it would not apply in this case.

"I'm not a lawyer, but the general standard for gross negligence is a wilful disregard for life and property," he said. "When we make the statement that we believe we followed BP's instructions, you can't develop a legal argument around gross negligence if you follow their instructions."

Shares of Halliburton, with headquarters in Houston and Dubai, rose 11 percent to $23.49 in midday trading, reversing the losses of the previous day amid a sector-wide sell-off.

Probert said Gulf of Mexico shallow-water activity would start picking up within weeks, but anticipated pricing pressure on services during the moratorium due to excess capacity.

As for the rest of its business, McCollum said U.S. on-shore activity was growing stronger in the second quarter and international activity, of which about half is offshore, would continue recovering through this year. (Reporting by Anna Driver in Houston and Braden Reddall in San Francisco; Editing by Robert MacMillan)


Effort to contain Gulf oil stalls with stuck saw

PORT FOURCHON, La. – As the crude crept closer to Florida, the risky effort to contain the nation's worst oil spill hit a snag Wednesday when a diamond-edged saw became stuck in a thick pipe on a blown-out well at the bottom of the Gulf.

Coast Guard Adm. Thad Allen said the goal was to free the saw and finish the cut later in the day. This is the latest attempt to contain — not plug — the gusher. The best chance at stopping the leak is a relief well, which is at least two months from completion.

"I don't think the issue is whether or not we can make the second cut. It's about how fine we can make it, how smooth we can make it," Allen said.

If the cut is not as smooth as engineers would like, they would be forced to put a looser fitting cap on top of the oil spewing out. This cut-and-cap effort could temporarily increase the flow of oil by as much as 20 percent, though Allen said officials wouldn't know whether that had happened until the cut could be completed.

Engineers may have to bring in a second saw awaiting on a boat, but it was not immediately clear how long that could delay the operation. Live video showed oil spewing out of the new cut, and crews were shooting chemicals to try to disperse the crude. The cap could be placed over the spill as early as Wednesday.

The effort underwater was going on as oil drifted close to the Florida Panhandle's white sand beaches for the first time and investors ran from BP's stock for a second day, reacting to the company's weekend failure to plug the leak by shooting mud and cement into the well, known as the top kill.

The Justice Department also has announced it started criminal and civil probes into the spill, although the department did not name specific targets for prosecution.

Meanwhile, President Barack Obama said in prepared remarks that it was time to roll back billions of dollars in tax breaks for oil companies and use the money for clean energy research and development. He said the catastrophic Gulf oil spill shows the country must move toward clean energy, tapping natural gas and nuclear power and eliminating tax breaks for big oil.

Shares in British-based BP PLC were down 3 percent Wednesday morning in London trading after a 13 percent fall the day before. BP has lost $75 billion in market value since the spill started with an April 20 oil rig explosion and analysts expect damage claims to total billions more.

In Florida, oil was about seven miles south of Pensacola beach, Allen said.

Thunderstorms were making it difficult to track the slick, Escambia County emergency director John Dosh said, and officials hoped the weather would clear so they could get an aerial view.

It was raining and cloudy at the beach off and on. The four pirate flags on top of Peg Leg Pete's Oyster Bar on the beach where flapping eastward, which could send the oil closer to shore. Peg Leg Pete's is a beach institution frequented by boaters who pull up behind the restaurant in a cove off Pensacola Bay.

It was a slow Memorial Day weekend. Hundreds of tourists enjoyed the turquoise waters, but it wasn't as busy as usual.

"We are looking at a Wednesday to Friday shoreline impact, but there is a line of uncertainty that depends on the wave action and the winds," Dosh said.

"Today we are in a monitoring mode."

Emergency crews began scouring the beaches for oil and shoring up miles of boom, though choppy waters from thunderstorms could send the oil over the protective lines. County officials are using the boom to block oil from reaching inland waterways but plan to leave beaches unprotected because they are easier to clean up.

"It's inevitable that we will see it on the beaches," said Keith Wilkins, deputy chief of neighborhood and community services for Escambia County.

The oil has been spreading in the Gulf since the Deepwater Horizon rig exploded six weeks ago, killing 11 workers and eventually sinking. The rig was being operated for BP, the largest oil and gas producer in the Gulf.

Crude has already been reported along barrier islands in Alabama and Mississippi, and it has polluted some 125 miles of Louisiana coastline.

Allen, the national incident commander for the spill, said the threat of oil hitting the coast was shifting east and skimmer vessels would be working offshore to intercept as much crude as possible.

Earlier this week, BP officials said they were concentrating cleanup efforts in Louisiana because they did not expect oil to reach other states. The company has set up floating hotels on barges to house cleanup crews closer to the Louisiana shores.

In Venice, La., hundreds of oil response workers were grounded by storms and many local fishermen hired in the so-called vessels of opportunity program were sent home early. Venice is a major staging center for the oil response, with nearly 1,500 workers and dozens of boats in this small town in the marshes.

"Boats were staged and ready to go" in case there was a break in the weather, said BP spokesman Mike Abendoff.

Some work continued, including at a 32-acre site where an "employee village" is being built to eventually house as many as 1,500 workers in trailers. Abendoff hoped to start putting some workers there by early next week.

More federal fishing waters were closed, too, another setback for one of the region's most important industries. More than one-third of federal waters were off-limits for fishing, along with hundreds of square miles of state waters.

Fisherman Hong Le, who came to the U.S. from Vietnam, had rebuilt his home and business after Hurricane Katrina wiped him out. Now he's facing a similar situation.

"I'm going to be bankrupt very soon," Le, 53, said as he attended a meeting for fishermen hoping for help. "Everything is financed, how can I pay? No fishing, no welding. I weld on commercial fishing boats and they aren't going out now, so nothing breaks."

BP has tried and failed repeatedly to halt the flow of the oil, and the latest attempt like others has never been tried before a mile beneath the ocean. Experts warned it could be even riskier than the others because slicing open the 20-inch riser could unleash more oil if there was a kink in the pipe that restricted some of the flow.


Bluestein reported from Covington, La. Associated Press writers Darlene Superville and Pete Yost from Washington, Curt Anderson from Miami, Kevin McGill in Schriever, Melissa Nelson in Pensacola, Fla., Brian Skoloff in Port Fourchon, Mary Foster in Boothville, and Michael Kunzelman in New Orleans also contributed to this report.


BP shares plunge on oil spill containment failure
01 Jun 2010 13:40:26 GMT
Source: Reuters
* BP drops 17 percent, cost of protecting BP debt surges

* Obama to meet leaders of oil spill panel

* Winds could push oil onto Mississippi, Alabama coast (Adds quotes)

By Ed Stoddard and Sarah Young

VENICE, La.,/LONDON, June 1 (Reuters) - BP shares plunged on Tuesday as markets reacted to the failure of the energy giant's latest effort to contain an oil spill in the Gulf of Mexico rated the worst in U.S. history.

BP fell close to 17 percent in London trading, wiping $23 billion off its market value, on weekend news that its latest attempt to plug its blown-out seabed well had not worked sparked fears oil could leak into the Gulf until August.

The shares have lost more than a third of their value, or about 46 billion pounds ($67 billion), since the leak started six weeks ago. The cost of dealing with the crisis now totals $990 million.

At the same time, the cost of protecting the debt of what was once Britain's biggest company against default rose sharply as the five-year BP credit default swap widened by 71 basis points to 173 basis points, CDS monitor Markit said.

One one-hundredth of a percent, used in measuring yield differences among bonds.

The leak is a financial and public relations nightmare for BP. It has also damaged President Barack Obama, who is fighting accusations that he reacted too slowly to a disaster that threatens Louisiana fishing communities, the state's multibillion dollar seafood industry and Gulf coast ecology.

Obama will meet with the co-chairs of a commission he created to make policy recommendations about offshore drilling in the light of a spill that has sloshed oil onto the fragile wetlands of Louisiana and threatens Mississippi and Alabama.

The commission will be similar to those that looked into the explosion of the space shuttle Challenger in 1986 and the Three Mile Island nuclear accident in 1979.


TAKE A LOOK on the spill [nSPILL]


INSIDER TV: http://link.reuters.com/wuw64k

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In its latest bid to contain the spill that has eclipsed the 1989 Exxon Valdez disaster in Alaska, BP is preparing an untested plan to use a dome to funnel oil to a tanker on the surface.

"We are intent on minimizing the flow of the oil into the Gulf and we've begun a series of operations to ensure just that," BP managing director Bob Dudley told CNN.

"Later on this morning we should see ... robots putting giant shears and cutting parts of that pipe about 35 feet (11 meters) away from the wellhead followed by a robot making a clean diamond saw cut across the top of it. That will allow us to put this dome down," he said on CBS's Early Edition show.

If that fails, it is possible that up to 19,000 barrels of oil a day 3 million litres will leak into the Gulf until relief wells, due in August, are completed.

White House advisor Carol Browner described that as a "deeply, deeply troubling" possibility.


In evidence of the slew of litigation the slick will likely generate, U.S. Attorney General Eric Holder will meet with federal prosecutors and state attorneys general in New Orleans.

It will be Holder's first trip to survey the damage before what legal experts believe will be a criminal investigation into the disaster. [ID:nN31216033]

The fate of BP's shares weighed on investors but was of little concern to residents of Louisiana's coast half a world away, who have suffered crippling losses because of the closure of some Gulf waters to fishing.

"I really don't care much about it (the share price)," said Kimberly Mertz, who works at a marina in rural Venice, Louisiana. "We want to get everything cleaned up."

The slick has spread over 100 miles (160 km) of Louisiana's coast but Mississippi and Alabama have escaped so far with only scattered tar balls and oil debris reaching its coasts.

That could change as National Oceanic and Atmospheric Administration said moderate southerly and southwesterly winds this week may start moving oil closer to the Mississippi and Alabama coasts.

The forecast was a reminder that oil from the unchecked spill, broken up and carried by winds and ocean currents, could threaten tourism mecca Florida, as well as Cuba and Mexico.

Raising the stakes still further, Tuesday is the official start of the 2010 Atlantic hurricane season, which forecasters say may be the most intense since 2005.

That year Hurricane Katrina ravaged the region and disrupted offshore oil and gas output. [ID:nN2798815] Experts fear a big storm could drive more oil ashore and force BP and the U.S. government to suspend cleanup efforts. (Additional reporting by Jeremy Pelofsky and Matt Spetalnick in Washington; writing by Matthew Bigg, editing by Philip Barbara)


BP cuts ruptured oil pipe, hopes to collect oil soon
03 Jun 2010 21:51:20 GMT
Source: Reuters
* BP to try to funnel oil to surface later Thursday

* BP CEO Hayward: Next 12 to 24 hours critical

* Obama to make third visit to Louisiana coast

* Analyst says BP expected to suspend dividend payment

* Fitch Ratings, Moody's downgrade BP debt (Tar balls spotted near Florida Keys; updates developments)

By Ed Stoddard

VENICE, La., June 3 (Reuters) - BP cleared the way on Thursday for an attempt to cap the runaway oil spill in the Gulf of Mexico and funnel escaping crude to the surface in a high-stakes bid to slow the 45-day-old undersea gusher.

The energy giant's robot submarines sheared off the pipe rising above the crippled wellhead assembly after more than two days of trying, setting the stage for an attempt to lower a containment apparatus over the oil-spewing pipe.

Despite the initial success in its latest effort to curb the flowing crude, BP's financial outlook was further clouded as two credit-rating agencies downgraded the company's debt, reflecting assessments that BP faces lasting damage.

Hours later, the Obama administration said it had sent a preliminary bill for $69 million to BP and "other responsible parties" to cover oil spill costs. [nN03238751]

The U.S. disaster response chief, Coast Guard Admiral Thad Allen, said BP would begin trying later on Thursday to position a containment cap over the wellhead assembly to start bringing at least some of the escaping oil and gas to the surface, where it would be collected on ships and safely removed.

BP chief executive Tony Hayward said the next 12 to 24 hours will determine whether the capping operation will succeed.

"It's an important milestone," Hayward said in Houston, adding, "This is simply the beginning." [nN03208673]

It was the first glimmer of hope for BP after many futile attempts to contain an oil leak that is belching 19,000 barrels of oil per day into the Gulf of Mexico. Allen called the day's developments a "significant step forward." [nLDE6511P3]

BP does not expect to be able to fully halt the oil flow until August, when two relief wells are due for completion.

President Barack Obama, seeking to contain political fallout from the disaster, planned to visit the Louisiana Gulf coast again on Friday to view what has eclipsed the 1989 Exxon Valdez disaster as the worst oil spill in U.S. history.

Obama told CNN's "Larry King Live" to be broadcast on Thursday night that he is "furious at this entire situation" in the Gulf because "somebody didn't think through the consequences of their actions." Obama said he has not seen enough of a rapid response from BP.

The U.S. National Center for Atmospheric Research projected that the oil slick would be driven by wind and currents around the Florida peninsula by early summer and up the East Coast, possibly as far as North Carolina. [nWAT014520.]

The Coast Guard said late on Thursday that oil spill investigators were responding to renewed reports of tar balls and other oily debris near several islands in the Florida Keys, which extend from the southern tip of the Florida peninsula.

But the substances will be tested to see if they originated from the Gulf spill. Tar balls found in the Keys weeks ago were determined to be unrelated to the blowout.


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Ratings agencies Moody's and Fitch Ratings downgraded BP's credit ratings on Thursday and said they might cut them further on rising concerns over clean-up and legal costs. [nLDE6521AK]

Fitch, which in May admitted it had been wrong to assume that the impact of the spill on BP's finances would be eased by insurance, said clean-up costs could exceed its worst-case scenario of around $5 billion in any one year.

Shares in BP, which are traded in London and New York, had a roller-coaster day but eventually jumped in New York by 4 about percent.

Elsewhere in the sector, shares of Halliburton Co. were down about 0.4 percent and Cameron International dropped 0.7 percent in late trading.


Two U.S. lawmakers have called on BP to suspend shareholder dividends until the full costs of the oil spill cleanup are calculated.

London-based investment bank Evolution Securities said in a research note: "We believe BP will bow to political pressure in the U.S. and suspend dividend payments for the remainder of 2010."

Hayward, seeking to reassure the rattled residents of the Gulf coast, vowed BP would work to sop up the mess and would stay "until every drop of oil has been recovered" and will "meet our obligations to our stakeholders."

Oil has been gushing nonstop into the Gulf since April 20, when a Transocean Ltd drilling rig licensed to BP exploded, killing 11 workers. The resulting spill has threatened to wreak havoc on the fragile ecology and economies of the Gulf Coast states while confronting the Obama administration with a key test of its ability to handle a complex and evolving crisis.

In another development, the U.S. Minerals Management Service said it would no longer approving drilling permits for shallow waters in the Gulf of Mexico, effectively extending a federal drilling ban the White House had said last week would end soon. [nWNA2706]

Obama, whose reputation is on the line over the spill, scheduled his third visit to the Gulf on Friday. His spokesman, Robert Gibbs, dismissed suggestions by some pundits that the president should drop his calm demeanor and show more emotion.

"Pounding on a podium is not going to fix a hole in the ocean," Gibbs said.

Washington Post columnist David Broder wrote on Thursday that Obama "will have to hope he doesn't end up as Jimmy Carter," the U.S. president who lost his 1980 reelection bid after failing to secure the release of hostages held in Iran for 444 days.


Government forecasters said part of the far-flung oil sheen had crept to within 6 miles (10 km) of Florida's Gulf coast panhandle and was expected to reach the white, sandy shore there in days.

Emergency planners kept a wary eye on two powerful currents in the Gulf, the loop ring that circles the bulk of the spill and the loop current that would carry oil south toward the Florida Keys and then up around the U.S. Eastern seaboard. They were expected to converge in 48 to 72 hours.

"Once those connect, that's it," state meteorologist Amy Godsey said.

Louisiana is the state hardest hit so far by oil, though the spill has fouled beaches in Mississippi and Alabama.

Thousands of fishermen, shrimpers and other seafood workers have been idled for weeks by government-imposed fishing restrictions that cover 37 percent of U.S. federal waters in the Gulf.

BP could face billions of dollars in fines and penalties if a Justice Department investigation finds wrongdoing, in addition to billions from the economic liability and damages, according to legal experts.

It may also find it more difficult to meet targets for expanded production in the future, analysts said. (Additional reporting by Verna Gates on Dauphin Island and Michael Peltier in Tallahassee, Florida, Chris Baltimore and Kristen Hays in Houston and Deborah Zabarenko in Washington) (Writing by Steve Holland; editing by Alan Elsner)


BP puts containment cap on gushing Gulf well pipe
04 Jun 2010 13:49:26 GMT
Source: Reuters
* U.S. Coast Guard says some oil from gusher captured

* BP exec says the cap "should work"

* Effectiveness of cap should become clear later on Friday

* BP puts off decision on dividend for shareholders *

* Obama, feeling political heat, set for third visit

* President calls off trip to Australia, Indonesia (Updates BP stock, conference call, dividend pressure)

By Anna Driver

VENICE, La., June 4 (Reuters) - BP began capturing some oil spewing from a 46-day gusher on Friday after installing a containment cap atop a ruptured Gulf of Mexico well as President Barack Obama was set to make his third trip to the area since the disaster.

BP Plc executives sought to reassure jittery investors with a conference call but put off a decision on whether to suspend paying its next quarterly dividend as some U.S. politicians had demanded. [nLDE65319Q]

BP shares had been up 4 percent but the gains were pared back in Friday's session after company CEO Tony Hayward issued the statement.

The U.S. Coast Guard said the containment cap placed atop the gusher a mile deep (1.6 km) beneath the Gulf's surface was now collecting about 1,000 barrels a day. [nN04111508]

The collection rate is a small portion of 19,000 barrels per day that the U.S. government has estimated could be gushing from the well.

The captured amount should increase as BP closes vents to trap more oil, Coast Guard Admiral Thad Allen told reporters in a conference call.

"Sometime later today we'll probably be able to get ... an approximation of how much oil we are capturing," Allen said.

Earlier on Friday, BP Chief Operating Officer Doug Suttles told U.S. networks the containment cap "should work" by capturing upward of 90 percent of the gushing oil.

Pressure had been building on BP to suspend dividend payments, which total $10.5 billion a year, and divert cash to dealing with the spill and clean-up.

The BP statement was murky on the issue.

"Future decisions on the quarterly dividend will be made by the Board, as they always have been, on the basis of the circumstances at the time. All factors will be considered and the decision taken in the long-term interests of the shareholders," the statement said.


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Confronting one of the biggest tests of his presidency as his party girds for tough congressional elections in November, Obama called off a trip to Australia and Indonesia set for this month to focus on the oil spill.

He was making his third visit to the Gulf. The president has faced criticism as to whether he is doing enough or showing enough emotion in dealing with the crisis. Obama told CNN's "Larry King Live" on Thursday that "venting and yelling at people" was not the job he was hired to do.

(Additional reporting by Verna Gates on Dauphin Island and Michael Peltier in Tallahassee, Florida, Chris Baltimore and Kristen Hays in Houston and Deborah Zabarenko in Washington; Writing by Steve Holland; editing by Alan Elsner)


BP: will pay legitimate claims "as long as it takes"
05 Jun 2010 21:05:05 GMT
Source: Reuters
MIAMI, June 5 (Reuters) - BP has no specific pre-allocated budget to pay damages claims resulting from the Gulf of Mexico oil spill, but will pay all those "hurt, harmed or damaged" until all legitimate claims are satisfied, a BP executive said on Saturday,

"We will make these payments for as long as it takes ...There is no budget, we'll do this until it's finished," BP America Vice President of Resources Darryl Willis said in a conference call from Orange Beach, Alabama. (Reporting by Pascal Fletcher)


FACTBOX-Developments in the Gulf of Mexico oil spill
09 Jun 2010 18:12:48 GMT
Source: Reuters
June 9 (Reuters) - Here are developments in the Gulf of Mexico oil spill, the largest in U.S. history:


* BP said on Wednesday it had collected a little more than 15,000 barrels of oil with its containment cap system on Tuesday at the 7-week-old leak in the Gulf of Mexico, U.S. Coast Guard Admiral Thad Allen said at a press briefing in Washington on Wednesday.

* That brings the cumulative total for five days to more than 57,000 barrels. [ID:nWEN5670]

* Coast Guard Admiral Thad Allen said by next week BP would bring in equipment that could handle up to 28,000 barrels per day (bpd), 3,000 barrels more than the highest estimate to date of spill volume. [ID:nLDE658211]


* BP continues to play down reports of an undersea oil plume. "We have not found any significant concentration of oil below the surface," BP Chief Operating Officer Doug Suttles told ABC's "Good Morning America" on Wednesday.

* Northwest Florida officials are warning the public not to swim on six miles (10 km) of oil-hit beach on Perdido Key from the Alabama-Florida boundary to the Gulf Islands Seashore national park.

* The spill could put nearly 195,000 Floridians out of work and cost the state $10.9 billion, according to a study by University of Central Florida economist Sean Snaith.


* U.S. Interior Department Secretary Ken Salazar told a Senate panel on Wednesday he expects BP to pay the salaries of oil workers laid off because of the six-month U.S. moratorium on deepwater drilling. [ID:nWNA3076]

* Salazar also told the panel the government could lift the moratorium sooner than six months if it receives a commission's regulatory reform recommendations before that period ends. [ID:nWNA3076]

* Three other congressional committees also were to take up the spill on Wednesday. [ID:nN0895608]

* President Barack Obama plans to visit the Gulf Coast again next week [ID:nN0893671]

* BP Chief Executive Tony Hayward will testify before a U.S. House of Representatives Energy and Commerce subcommittee on June 17, a company spokesman said. [ID:nN08272907]


* BP depositary shares were down more than 9 percent in New York at midday, down more than 4 percent in London.

* The shares of offshore oil and gas driller Transocean Ltd ticked up 0.1 percent at midday but stayed near 18-month lows.

* BP in its annual energy review Wednesday said oil output in the Gulf of Mexico increased 390,000 bpd, triple the previous high in annual growth. BP also said world oil consumption fell by 1.2 million bpd in 2009 due to recession. [ID:nLDE6582H2]


"If we can get this thing up to 28,000 barrels per day, that's where we want to be," Coast Guard Admiral Thad Allen told reporters in a conference call, referring to BP's plan to increase capacity to recover spilled oil.


BREAKINGVIEWS-BP uncertainty is an opportunity for the brave
10 Jun 2010 15:42:59 GMT
Source: Reuters
-- The author is a Reuters Breakingviews columnist. The opinions expressed are her own --

By Fiona Maharg Bravo

MADRID, June 10 (Reuters Breakingviews) - BP investors seem to have hit the panic button. The $76 billion drop in the UK oil major's market value since the start of the Gulf of Mexico disaster looks out of proportion to the cost of the clean-up the bill. But then again, maybe not.

Of the total fall, $10 billion reflects the 13.5 percent drop in world stock markets since the April 20 explosion. That leaves a $67 billion hit to market capitalisation.

The cost of the clean-up should account for one big chunk of that, with Credit Suisse putting BP's share of the tab to as much as $12 billion, taking Exxon Mobil's Valdez spill in 1989 as benchmark and including $4 billion of fines. Then there is the cost of paying damages to those whose livelihoods have been wrecked. That could easily cost another $12 billion. In theory, BP is on the hook for just 65 percent, but assume, for the sake of pessimism, that it pays for it all.

That still leaves $43 billion of value destruction to account for. Some of that may reflect investor panic, but there is other hard-to-quantify damage too. The biggest unknown is the government and regulatory response.

BP's business in the United States accounts for 46 percent of the company's value, according to Citigroup. Hereon, BP will have to have the highest safety standards in the industry. It may struggle for years to win new exploration licenses. And likely restrictions on deep-water exploration will hurt all drillers. Assume BP's U.S. business has lost 25 percent of its pre-spill value. Adjusted for the wider stock-market drop, that would be another $17 billion destroyed.

That still leaves a $26 billion shortfall to explain. But other outstanding risks justify a further hit to the shares. One factor would be the continuing uncertainty around when the leak will be plugged, which makes the costs open-ended. Analyst estimates of $4 billion in fines could prove hugely overoptimistic too. There is also the damaged management credibility reflecting poor handling of the crisis.

Finally, there is the outside risk of total bankruptcy. This looks far-fetched. At the end of the first quarter, BP had net debt of $25.1 billion and shareholders' equity of $105 billion. Analysts predict about $35 billion of cash generation this year, and around $40 billion next. BP could spend $35 billion on the spill response and still afford its dividend and capital expenditure plans -- without breaching its self-imposed gearing limit of 30 percent.

But the wildcard is the official investigation into the incident, which is likely to probe BP's long-term safety record hard. This could conceivably in end the confiscation of assets.

Tot it all up, and allow a margin for error, and there may well be some upside -- for the brave.


-- Reuters stories on the spill: http://link.reuters.com/hed87k

-- For previous columns by the author, Reuters customers can click on [BRAVO/]

(Editing by Chris Hughes and David Evans)


FACTBOX-Developments in the Gulf of Mexico oil spill
10 Jun 2010 23:49:38 GMT
Source: Reuters
June 10 (Reuters) - Here are developments in the Gulf of Mexico oil spill, the largest in U.S. history:


* U.S. scientists on Thursday doubled their high-end estimate of the amount of crude oil flowing from BP's stricken well to as much as 40,000 bpd (1.68 million gallons/6.36 million liters). [ID:nN10259129]

* Florida demanded $2.5 billion in escrow to cover potential losses funds as heavier oil washed ashore. [ID:nN10252916]

* Mexico said it expects oil to reach its shores by December and is considering how to sue BP for damages. [ID:nN10229727]


* BP said it collected 15,800 barrels (660,000 gallons/2,500,000 liters) of oil in 24 hours on Wednesday, a small increase over 15,010 barrels collected in the previous 24 hours. [ID:nN10223170]

* That brings the cumulative total for six days to more than 73,000 barrels (3,080,000 gallons/11,660,000 liters ).

* BP said it is reconfiguring a service rig used in the failed "top kill" attempt to receive and burn an additional 5,000 to 10,000 barrels per day.


* President Obama and senior officials will meet BP Chairman Carl-Henric Svanberg in the White House next Wednesday. [ID:nNAHO38451]

* The government has powers to penalize BP beyond civil and criminal cases, including suspending or canceling offshore leases. [ID:nN10245428]

* British Prime Minister David Cameron pledged help fighting the spill and plans to discuss the company with Obama by telephone this weekend. [ID:nLDE659160]

* Obama said on Thursday he and Congress need to update laws on spill compensation and cannot ignore the need for new energy policy despite the disaster. [ID:nNAHO12345]

* U.S. Attorney General Eric Holder repeated an assurance that the Obama administration will make BP pay for cleanup and damages from the spill. [ID:nWBT013974]

* U.S. House of Representatives Speaker Nancy Pelosi accused BP of a "lack of integrity" in saying it could drill safely for oil at great depth in the Gulf, and said "yes, of course" the company should halt dividend payments. [ID:nN10264561]


* The chances of BP declaring bankruptcy to deal with oil-spill claims are remote for now, experts said, although the option remains if claims become overwhelming. [ID:nN10213505]

* A BP official told a congressional subcommittee on Thursday he had heard no internal discussion of a possible bankruptcy filing due to spill costs. [ID:nWNA3193]

* J.P. Morgan Securities said the drilling moratorium will hurt offshore drillers severely and lowered its forecast for lease rates and targets for share prices. [ID:nSGE6590HL]

* A BP source told Reuters the company could be headed for a showdown with the White House over ever-increasing demands that it cover oil spill costs. [ID:nLDE6582NC]

* BP depositary shares rebounded about 12 percent Thursday in New York after the stock fell nearly 7 percent in London.

* An analyst cited speculation that PetroChina 0857.HK, Asia's top oil firm, was studying a bid for BP. [ID:nN09136035]

* The shares of Transocean Ltd , driller of the blown-out well, and Anadarko Petroleum Corp , a BP partner in the well, also rebounded on Thursday.


* The International Energy Agency called the spill a potential energy "game changer," restricting future subsea development and limiting oil and gas supply. [ID:nLDE6590IR]

* British business leaders are criticizing the Obama Administration for the intense political pressure it is putting on BP due to the spill. [ID:nLDE6590WC]


"You probably get to about 50,000 (barrels per day) if you make some assumptions that they weren't quite willing to make," U.S. Geological Survey Director Marcia McNutt, referring to leak estimates debated by the Flow Rate Technical Group.

(Writing by Bruce Nichols, Editing by Sandra Maler)


Obama invites BP Chairman at White House June 16
10 Jun 2010 23:23:40 GMT
Source: Reuters
(Adds background)

WASHINGTON, June 10 (Reuters) - President Barack Obama has invited BP Chairman Carl-Henric Svanberg to meet him and senior administration officials at the White House next Wednesday, the White House announced on Thursday.

The invitation to Svanberg was relayed through U.S. disaster response chief Thad Allen. Obama has taken some heat from critics for not having yet talked to BP CEO Tony Hayward.

White House spokesman Robert Gibbs, asked earlier if Obama would meet Hayward soon, said it was more important to meet the BP chairman instead because "the corporate structure of the company makes the chairman of the board the relevant entity in approving ... the obligations that BP has to live up to." (Reporting by Steve Holland)


Q+A-How would penalties apply to the Gulf oil spill

11 Jun 2010 19:23:49 GMT
Source: Reuters
By Jeremy Pelofsky

WASHINGTON, June 11 (Reuters) - With the U.S. government doubling its estimate of oil coming out of the broken well on the sea floor of the Gulf of Mexico, companies linked to the spill, including BP Plc , face an increasing liability and potential penalties. Following are some questions and answers for how it could play out.


A: The U.S. Justice Department has launched both a criminal and civil investigation into the oil spill but officials have not identified the targets. However, the likely companies that will be the focus of the investigation include BP, Transocean Ltd , which operated the drill rig, Cameron International , which provided the blowout preventer, and Halliburton Co , which was in charge of the cement for the oil well.


A: In addition to the payments for the cleanup and recovery from the biggest oil spill in U.S. history, the companies that are deemed to be responsible for the oil spill could be subject to penalties under a number of laws. They include:

* Clean Water Act - makes it illegal to discharge any pollutants into major bodies of water such as the Gulf. Civil penalties can be up to $1,100 per barrel of oil spilled in waterways but if negligence is found and proven, the fines can go up to as much as $4,300 per barrel.
(4300X40,000=172000 Per day loss)
* Migratory Bird Treaty Act - protects migratory birds and makes it illegal to harm some 836 species of birds as well as their nests and eggs. That list (found here: http://www.fws.gov/migratorybirds/RegulationsPolicies/mbta/taxolst
includes the brown pelican, which have been particularly affected by the oil spill. Fines can be up to $15,000 per violation.

* Endangered Species Act - makes it illegal to harm or kill any animal or plant on the endangered species list, including acts that change or degrade the habitat, feeding or breeding. The list includes several types of sea turtles and already a few dozen have been affected by the oil slick. Civil fines can go up to $25,000 per violation. (http://www.fws.gov/endangered/)

* Criminal violations: experts note that criminal penalties could be assessed and they could be as much as double the economic loss and recovery costs, however that will likely be negotiated.


The White House has already estimated that the costs for the response, cleanup and penalties will reach into the billions of dollars. Before the new flow rate of up to 40,000 barrels (1.68 million gallons/6.36 million litres) per day was revealed, some financial analysts estimated that the Clean Water Act fines could stretch from $700 million to as much as $4.2 billion.

With the new estimates, as much as 2 million barrels (84 million gallons/318 million litres) of oil may have spilled from the well when it ruptured on April 20 through June 3 when the underwater pipe was sawed off to clear the way for a new cap to be placed on it. The flow was estimated to have increased as much as 5 percent after that cut.

Just based on that initial 2 million barrels of oil, the range of civil penalties could be between $2.2 billion and $8.6 billion. Penalties could be applied to each company found responsible for the leak, though one expert said that they would likely share the burden instead and that there would probably be a limit to those penalties imposed.

"At some point there is a limit to how much BP is going to be able to pay ... particularly since they also have to pay the clean up costs and have to address national resource and economic damage claims," said Professor David Uhlmann, from the University of Michigan Law School and former chief of the Justice Department's environmental crimes section.


The closest comparison available is the Exxon Valdez spill in 1989 when 260,000 barrels of oil spilled into Alaska's Prince William Sound. Exxon ended up paying $125 million in criminal penalties as well as $900 million in civil penalties and damages.

In 2006, more than 5,000 barrels of oil spilled onshore on Alaska's North Slope due to a leak in a BP-owned pipeline. The company was fined $20 million for negligence under the Clean Water Act.


A: Questions have been raised whether the companies can afford the cost of the cleanup, recovery and penalties, however most experts consider the chances of default to be small. Here is a snapshot of how much the companies earned last year in net income and how much cash they had on hand at the end of 2009.

BP posted about $16.8 billion in net income last year and had $8.3 billion in cash and cash equivalents at the end of the year.

Cameron earned $475.5 million in net income in 2009 and had about $1.86 billion in cash and cash equivalents at the end of last year.

Halliburton posted about $1.15 billion in net income in 2009 and had $2.1 billion in cash and equivalents at the end of the year, plus $1.3 billion in short-term U.S. Treasury securities.

Transocean earned almost $3.2 billion in 2009 and had $1.1 billion in cash and cash equivalents at the end of the year.


A: Put simply, yes. As has occurred in the past cases, the responsible parties could try to negotiate a plea agreement and civil settlement with the Obama administration over the charges, damages and penalties related to the oil spill. Exxon and BP have negotiated pleas in similar spill cases and experts have said that could and likely will happen in this disaster.

There are a couple factors that could play into any negotiation. One is the growing tension between the Obama administration and BP, including about whether the company has been as forthright as possible in the eyes of the government. A second factor is that BP has been held criminally liable for past acts, including the spill in Alaska and a fatal explosion at a refinery in Texas. In those cases, BP negotiated a settlement with the U.S. government rather than face a court battle.

"There's no question that BP will pay a larger criminal fine for its role in the Gulf oil spill than they would have had they not had a criminal history," Uhlmann said, but added that the company would likely cut a deal.

"They're not going to seek the maximum because this is all going to be resolved through a plea agreement on the criminal side, through a consent decree on the civil side," he said. The companies are going to negotiate for some middle ground and the government's likely to agree to a middle ground."


A: Experts have said the investigation and possible settlement negotiations could take years and could depend on how adversarial it gets between the companies and the Obama administration. In comparison, the government is still today pursuing about $92 million from Exxon from the Valdez case. (Editing by Eric Beech)


Obama, Cameron to discuss BP oil spill crisis
12 Jun 2010 13:09:15 GMT
Source: Reuters
* Obama, Cameron under pressure to take tough line

* BP examines options on dividend, board to meet Monday

* British officials stress economic importance of BP

By Jeffrey Jones

BURAS, La., June 12 (Reuters) - BP Plc's handling of the Gulf of Mexico oil spill is likely to dominate talks on Saturday between U.S. President Barack Obama and British Prime Minister David Cameron.

The leaders will discuss the crisis against a backdrop of public anger and political pressure on both sides of the Atlantic over the spill, which has fouled coastlines, closed rich fishing grounds and battered BP's share price.

BP has been the target of stinging attacks by the White House and its share price has gyrated on London and New York stock exchanges this week. Obama administration officials have threatened to increase BP's liabilities for the spill.

BP said it was considering suspending its dividend payments after U.S. politicians said it should pay all damage claims before making payouts to shareholders.

BP accounts for around 12 percent of all dividend payouts made by British companies, and suspension would hit British pension funds hard.

BP said the company's board would meet on Monday to discuss a range of issues -- it has been meeting weekly since the crisis started.

However, a source said a decision on the dividend may not be made until after BP Chairman Carl-Henric Svanberg has met Obama on Wednesday.


For full coverage http://link.reuters.com/hed87k

Breakingviews: [ID:nN11189792]

Insider TV: http://link.reuters.com/zyx77k

Graphics: http://link.reuters.com/run88k


Concerns about the London-based energy giant's future -- it faces a U.S. government criminal and civil investigation and the prospect of a slew of lawsuits and hefty fines -- prompted Cameron and his finance minister on Friday to defend the firm.

The British prime minister was quoted by a spokesman as saying after speaking to Svanberg that "it is in everyone's interests that BP continues to be a financially strong and stable company".

The political backing helped the company's share price to claw back 7 percent in London.


Cameron, who took office in May, is due to speak to Obama by telephone call at 11 a.m. EDT (1500 GMT) on Saturday.

A Cameron spokeswoman said the call would be "statesmanlike and workmanlike". A White House official played down the BP focus, saying it would be just one of a number of issues raised.

The call will be a tricky test for the two leaders as both are under pressure to appear tough to voters at home.

Obama, criticized by some in the United States over his handling of the unfolding environmental and economic disaster that threatens lucrative fishing and tourist industries, has been seeking to direct public anger toward BP.

For his part, Cameron must show Britons that he is not caving in to pressure from his country's most powerful ally at a time when the two nations shoulder many common burdens and problems such as the bitter conflict in Afghanistan.

Business leaders, politicians and newspapers have pressed Cameron to defend BP against the Obama administration, whose criticism has been viewed domestically as Britain-bashing.

Efforts to contain the spill and clean up the oil were set to continue on Saturday with clean-up operations in gear as BP scrambled to siphon more crude from the well.

It has been capturing oil from the well since installing a containment system last week, though the well will not be sealed until August, when two relief wells now being drilled are due to be completed.

It remains unclear how much oil is pouring into the Gulf, but U.S. scientists this week doubled their estimate of the flow to as much as 40,000 barrels per day, stoking the ire of environmentalists.

Bob Deans of the Natural Resources Defense Council, an environmental group, said he was shocked by the new estimates.

"We knew it was bad when BP was telling us 5,000 barrels a day. Now that we're up to as much as eight times that amount ... it's exponentially worse," Deans said outside a wildlife cleaning facility in Buras, Louisiana.

The new estimates could have huge financial implications because under the U.S. Clean Water Act, BP and others face fines up to $4,300 for every barrel of oil leaked.

BP expects the total bill for the clean-up of the spill, which has affected 120 miles (190 km) of U.S. coastline, will be $3-$6 billion, an analyst briefed by BP said in a research note on Friday.

The slick has fouled wildlife refuges in Louisiana, while tar balls have washed up on Florida's famous white beaches. One third of the Gulf's federal waters remain closed for fishing. (Additional reporting by Tom Bergin in London, Writing by Keith Weir in London and Ed Stoddard in Dallas; Editing by Alison Williams)


BP oil storage tank washes ashore on Florida beach
13 Jun 2010 15:51:46 GMT
Source: Reuters
MIAMI, June 13 (Reuters) - An oil storage tank suspected to have been on the Deepwater Horizon rig has washed ashore on a northwest Florida beach, local officials said on Sunday.

The 550-gallon (2,080-liter) tank that washed up on Panama City Beach on Saturday morning had markings suggesting it could have come from the rig that exploded and sank on April 20, killing 11 people and unleashing a catastrophic gush of oil into the Gulf of Mexico.

"It had 'BP' and it said 'Horizon' on it," Bay County spokeswoman Valerie Lovett said. "But it could have come from a ship or any number of things."

The rectangular metal tank had an undetermined type of oil in it and was leaking, Lovett said. Hazardous materials crews loaded the 5,000-pound (2,250-kg) tank onto a trailer and took it to a Coast Guard station for transport to Louisiana, where it will be turned over to investigators probing the BP Plc oil spill.

The white sandy beach where it came ashore, the Laguna Beach area of Panama City Beach, has not seen any tar balls or oily sheen from the spill, Lovett said. It was about 60 or 70 miles (95 to 110 km) east of the Florida Gulf Coast area where oil has washed ashore.

(Reporting by Jane Sutton; Editing by Eric Walsh)


FACTBOX-Candidates who could become BP CEO

16 Jun 2010 14:36:51 GMT
Source: Reuters
By Tom Bergin

LONDON, June 16 (Reuters) - BP Chief Executive Tony Hayward has come under increasing pressure since a Gulf of Mexico well blew out on April 20, killing 11 workers and starting a 60,000 barrels per day crude spill.

Investors and analysts have backed his response and his stewardship of BP since he took office in 2007.

But U.S. President Barack Obama said he would have sacked Hayward, if he worked for the President, for comments that appeared to play down the damage of the spill, and for saying he wanted his life back.

The following are the candidates seen as most likely to succeed Hayward if he goes. The list is limited to internal candidates, because BP and its peers tend to hire internally. All the CEOs of the five biggest Western oil companies -- Exxon Mobil, Chevron, France's Total and Royal Dutch Shell -- spent all or almost all of their careers at their current employer.

Andy Inglis - the Engineer

Inglis (pronounced Ingalls), head of BP's core exploration and production division, might under normal circumstances be the favourite to replace Tony Hayward.

The division is responsible for the vast majority of BP's earnings and the last two people to head it went on to become CEO.

Inglis, 50 was considered for the top job back in 2006 when, as deputy head of E&P, he lost out to his then boss, Hayward.

However, the oil spill could play against him this time -- especially if it is found that, as some lawmakers have claimed, corners were cut to expedite the drilling of the well.

Inglis is from the North of England and has an accent to match, although his many years living in the U.S. also come across in his voice.

Colleagues say Inglis has a love of the nuts and bolts of the oil business. He joined BP from the prestigious Cambridge University and, like his father before him, he has been made a fellow of both the Institute of Mechanical Engineers and of the Royal Academy of Engineering.

Inglis is married, with five children -- three with his current wife, and two by his first wife, who died in 1994.

Iain Conn - the Trader

Iain Conn, the head of BP's refining and marketing unit and another BP lifer, is seen by many as the favourite to succeed Hayward. Of all the candidates, bookie Paddy Power is offering the shortest odds on his elevation.

Although also an engineering graduate, Conn speaks more frequently about, and is better known for, his time as a trader.

He spent the first eight years of his career with BP in the oil trading department, where he pioneered the use of technical analysis.

Conn, 47, was also on the 2006 shortlist as possible successors to former CEO John Browne.

Conn has bolstered his reputation in recent years, successfully turning around BP's troubled refining unit, improving performance at facilities and cutting costs.

He also has experience in exploration and production gleaned from roles in the United States and Colombia.

However, continued regulatory criticism of safety at BP's U.S. refineries could play against him too, given bolstering its reputation in the U.S. will be a key focus for BP in future.

The always smartly attired Conn is married with three children and, like Hayward, he met his wife at BP, where she worked in the trading department.

He likes playing jazz and blues music on the piano and saxophone and is a passionate fisherman who travels to the West of Ireland most summers to catch salmon.

Bob Dudley - the Diplomat

Bob Dudley has the ill-defined role of "Managing Director" with responsibility for oversight of the Americas and Asia.

Hayward has described Dudley as "the management team's Foreign Secretary -- or perhaps Secretary of State in American terms".

These diplomatic skills are currently being employed on U.S. TV networks, acting as a more palatable, U.S. face of the oil giant's oil spill response.

Dudley has also been named to head a unit that will be responsible for managing the aftermath of the oil spill, when the leak is capped.

However, some think he has the skills to manage BP itself.

Dudley is best known for his role as head of BP's Russian joint venture, TNK-BP, from its formation in 2003 until 2008.

Supporters say this shows he knows how to run a big oil company. Under Dudley, TNK-BP, which BP formed by merging assets with a group of billionaire oligarchs, grew oil output 33 percent to 1.6 million barrels per day.

His time there also gave him considerable experience of the political risks involved in the industry. BP fell out with its partners when they tried to exercise more control over TNK-BP. Things got ugly, and Dudley was forced to flee the country as BP accused the government of doing nothing to defend its interests.

Dudley was born in New York, which would help offset some of the anti-British sentiment that has stuck to the company many U.S. politicians insist on calling "British Petroleum", the name the company ditched over a decade ago.

Dudley joined BP through its takeover of Amoco, which he had joined as a field engineer in Texas. He has also worked in the field in China and Scotland.

With his thinning grey hair and calm manner, Dudley seems a little older than his 54 years -- a factor that may play against him in a company where executives are expected to retire at 60.

Dudley is married with two children at university. (Reporting by Tom Bergin; Editing by Andrew Callus)


BREAKINGVIEWS-Tony Blair for BP chair
16 Jun 2010 14:25:28 GMT
Source: Reuters
(refiles to remove title in paragraph 4) -- The author is a Reuters Breakingviews columnist. The opinions expressed are his own --

By Neil Collins

LONDON, June 16 (Reuters Breakingviews) - It's not a sinecure after all, being chairman of an international oil company. Nobody blames Carl-Henric Svanberg for taking the job at BP -- it was an honour to be asked, and lack of experience in the oil business did not prevent his predecessor, Peter Sutherland, coping with his own crisis well enough.

Unfortunately, Svanberg's crisis is of a different order. The fall of chief executive John Browne when Sutherland was chairman was awkward for BP; the gusher in the gulf is potentially life-threatening. Svanberg has failed to provide leadership and public support for his CEO, Tony Hayward. He will have to go. There seems little prospect of Hayward keeping his job, either. The BP directors have dithered about the dividend so long that they have lost control; the fate of the payout is now effectively in the hands of the U.S. president.

The board must face the task of finding replacements. It would help to have an American as CEO, which favours Bob Dudley or Lamar McKay. They both saw BP through the crisis over TNK-BP, its Russian joint venture, but Dudley was in charge. Andy Inglis, the senior Brit who runs BP's exploration activities, is tainted by his association with drilling in the Gulf of Mexico.

As for the chairman, the senior non-executive director is Ian Prosser, who was vetoed by the big shareholders as chairman of UK retailer J Sainsbury. It's unlikely that either William Castell or Paul Anderson, the only two credible internal candidates, would relish the task of rebuilding BP's name in its most important market. It requires political skills of a high order, from someone who is respected in the United States and whose name opens doors.

Preferably, he should also have something to prove to a UK audience, perhaps to overcome the legacy of an even worse disaster than the Macondo well.

It's a task for Tony Blair.

Restoring BP to its former glory would help atone for the Iraq war, earning the thanks of a grateful nation of pensioners and fund managers. And unlike his worthy but almost impossible mission to broker peace in the Middle East, it's a job that can, with hard work, be accomplished.


-- Reuters coverage: http://link.reuters.com/hed87k

-- Gulf oil spill in graphics: http://r.reuters.com/qam39k

-- For previous columns by the author, Reuters customers can click on [COLLINS/]

(Editing by Chris Hughes and David Evans)


BP spill fund echoes in India's Bhopal justice cry
17 Jun 2010 10:52:16 GMT
Source: Reuters
By Krittivas Mukherjee

NEW DELHI, June 17 (Reuters) - Indian activists seeking justice in the world's worst industrial disaster are accusing the United States of "double standards", saying it was punishing firms polluting American soil but ignoring their mistakes abroad.

The Obama administration on Wednesday pushed oil giants BP Plc to agree a $20 billion fund to pay damages for a massive oil spill in the Gulf of Mexico that has threatened fishing and tourism and killed birds and marine life.

That fund has ignited calls in India for Washington to show similar accountability for U.S. firm Union Carbide. Its Indian factory in the central city of Bhopal leaked a poisonous gas 26 years ago, killing 3,500 people.

Activists say 25,000 people died in the immediate aftermath and ensuing years. Former chairman of Union Carbide, Warren Anderson, who lives in the United States, has been classified as an absconder in the case by an Indian court.

The first convictions in the disaster came this month, a quarter century late, partly due to India's slow-moving justice system. The verdict -- 2 years jail and small fines for Union Carbide's seven Indian employees -- has sparked outrage in India.

Activists of Bhopal Group for Information and Action (BGIA) said on Thursday while BP Plc was made to set up a damage claims fund within two months of the oil spill, victims of the Bhopal disaster have had no "real justice".

"You (Obama) hold the corporate accountable in your country but why is it that you are not holding American companies responsible for what they do abroad?" BGIA's Rachna Dhingra said.

"If this is not double standards, what is?" she told Reuters.

Activists have called on the Obama administration to ensure more compensation for the victims and cleanup of the Bhopal site.

Dow Chemical , which owns Union Carbide, denies any responsibility saying it bought the company a decade after Union Carbide had settled its liabilities with the Indian government in 1989 by paying $470 million for the victims.


Activists and health workers say 100,000 people who were exposed to the gas continue to suffer today.

Sicknesses range from cancer, blindness, respiratory difficulties immune and neurological disorders, female reproductive disorders as well as birth defects among children.

"My only request to the U.S. government is that as they are learning from their pain, they should share that pain and understand the pain of other countries," Sunita Narain, head of New Delhi-based Centre for Science and Environment said.

While the "very light punishment" in the Bhopal case has become a lightning rod for calls to reform the country's judicial system, it has also led to calls to inquire into how Anderson was able to leave India and charges of political conspiracy. India's Congress party, which heads the ruling coalition, faces potential embarrassment in the case as the party was in power when the accident happened.

In the light of public outrage after the verdict, the government has set up a ministerial panel to look into issues of compensation, justice and pursuing the extradition of Anderson. (Editing by Alistair Scrutton)


FACTBOX-Key political risks to watch in U.S. oil spill
17 Jun 2010 16:47:40 GMT
Source: Reuters
By Rick Cowan

WASHINGTON, June 17 (Reuters) - It has been 59 days since an oil rig explosion in the Gulf of Mexico triggered an uncontrolled oil spill that has become the worst environmental accident in U.S. history.

Day after day, the world is exposed to pictures showing a heavy stream of crude pouring from the ruptured underwater well, workers on Gulf Coast beaches with oil dripping from their hands and wildlife covered in oily slick.

BP , the oil giant that leased the doomed rig, has become a target of scorn. But with each passing day that its well pollutes fragile wetlands along the Gulf coast and harms local economies, politicians also face increased risk.

Here are some key political factors to watch:


U.S. presidents get blamed for just about any bad news on their watch and Barack Obama is not immune in this disaster.

For weeks, Republicans have accused the Democratic president of either being slow to respond, or fumbling(To touch or handle nervously or idly: fumble )when it does act.

The White House is laboring to prevent the words "Obama's Katrina" from sticking to this president. That's a reference to the widely-perceived poor response by former President George W. Bush to the devastating Hurricane Katrina in 2005. Bush was never able to shake the perception that he was detached and ineffective and it likely contributed to Republican Party election losses in 2006 and 2008.

Obama's frustration over the oil spill was evident earlier this month when he observed: "I can't dive down there and plug the hole. I can't suck it up with a straw."

But Obama can now point to a major accomplishment: He and fellow Democrats in Congress pressured BP to establish an independently-run $20 billion escrow fund to help compensate victims of the oil spill and clean up the mess. Obama made it clear if more money is needed, BP will have to cough it up.

Obama faces continued risks, however. Early this year, he began pushing for a renewal of offshore oil drilling, even though his Interior Department had not yet reformed the agency that oversees the activity and it was widely viewed as an industry lap-dog. A presidential commission investigating the oil spill could have scathing words for both the Bush and Obama administrations.

Republicans also are hammering Obama for imposing a moratorium:
(An authorization to a debtor, such as a bank or nation, permitting temporary suspension of payments.
An authorized period of delay in the performance of an obligation.)

on new deep water drilling projects. That, they say, will scare off the industry and encourage it to move deep water equipment to foreign shores.

While environmental concerns abound, U.S. voters' concerns about jobs and the economy also loom large.


On Nov. 2, U.S. voters will elect all 435 members of the House of Representatives and 36 of the 100 Senate seats.

The political party in power, in this case the Democrats, usually suffers losses in mid-term congressional elections, in which the presidency is not on the ballot.

The president's popularity is one of the factors in how many seats the opposition party picks up. Obama's approval rating has dipped below 50 percent and polls show a strong belief that the government has done a bad job of handling the BP disaster.

Republicans might gain from these developments. But they also risk turning off some voters with their backing for offshore drilling and opposition to Democratic legislation uncapping oil company liability in accidents.

One prominent House Republican, Joe Barton of Texas, may not have helped his party on Thursday when he called the creation of the BP escrow account:(es·crow (ĕs'krō', ĕ-skrō')
Money, property, a deed, or a bond put into the custody of a third party for delivery to a grantee only after the fulfillment of the conditions specified.) "a tragedy of the first proportion, that a private corporation can be subjected to what I would characterize as a shakedown, a $20 billion shakedown."

Meanwhile, there are high-profile races for Senate or governor in some of the states hurt most by the oil spill, namely Louisiana and Florida. The environmental disaster no doubt will play a role in those races, especially if the oil well keeps spilling until August or later, as expected.


Obama's move toward more domestic offshore oil drilling has already taken a hit with the suspension of drilling at 33 deep water exploration rigs and the cancellation of a project off Virginia's coast.

Democrats in Congress, working with environmentalists, are looking at several other steps, including lifting oil company liability caps and toughening laws governing offshore drilling.

The oil spill has also hurt chances of broad climate control legislation passing Congress this year because an expansion of offshore oil drilling was to be included in a Senate bill to lure some needed Republican support. The BP spill made it politically impossible to move a robust offshore oil drilling expansion now.

If Congress cannot pass a climate bill this year, the effort could reemerge next year, even if the congressional elections weaken Democrats. That's because some Environmental Protection Agency regulations imposing costly restrictions on greenhouse gas pollution could kick in.

Lawmakers in both parties could get a wake-up call if those regulations are triggered as business may realize it's far more preferable to have climate legislation they can mold than relying on EPA.

The oil spill could mark the end of the era of government deregulation that caught fire in the United States starting in the late 1970s with the airline industry. The 2008 financial industry meltdown coupled with severe auto industry woes and poor oversight of offshore oil drilling is prompting policymakers to reassert themselves.

All this could undercut the message of conservative "Tea Party" activists clamoring for less government.


The 38-year-old governor of Louisiana and former U.S. representative is thought to have a bright future in the Republican Party. Some speculate he might run for president in 2016.

Jindal has complained that BP and federal authorities did not react quickly enough in the early days of the disaster, and were slow to bring in the equipment needed to keep the oil slick from reaching Louisiana's shores.

Jindal has received plenty of media coverage from the oil spill that could raise his national profile. But it is unclear whether people will simply associate him with the disaster or see him as a rising star.

Before the spill, Jindal was best known for his lackluster televised speech in 2009 responding to Obama's first address to a joint session of Congress. Not surprisingly, in that speech Jindal spoke of the need to "increase drilling for oil and gas here at home."


The energy company's shares have plummeted, BP could face criminal investigations for actions taken either before or during the crisis, and nobody knows how high its tab will be in clean-up costs and compensating for economic losses suffered by local fishing and tourism industries.

Members of Congress are accusing BP of misleading the public on the scope of the disaster and causing the disaster by cutting corners to save money.

The company has deep pockets, with net profits of $5.6 billion just in the first quarter this year. Nevertheless, some are wondering about the long-term impact on BP.

More broadly, it's unknown whether the Gulf of Mexico spill will be to the offshore oil industry what the 1979 partial core meltdown at Three Mile Island was to the U.S. nuclear industry: The disaster stopped it dead in its tracks for decades.

(Editing by Vicki Allen)


BP CEO the ghost at the feast as Russia fetes (To celebrate or honor with a festival, a feast, or an elaborate entertainment.
To pay honor to.) big oil

19 Jun 2010 13:05:17 GMT
Source: Reuters
By Vladimir Soldatkin

ST PETERSBURG, Russia, June 19 (Reuters) - The leaders of the global oil industry gathered as usual at Russia's top annual business forum this week but there was one ghost at the party.

BP chief executive Tony Hayward, normally a regular, was conspicuous by his absence this year and his company's woes were a constant topic of discussion among those who did come.

Leaving the forum on Friday evening, one BP-connected oil industry executive looked at his watch ruefully. "Hayward is due to testify in 45 minutes," he said, his mind clearly elsewhere.

In Washington, Hayward faced the wrath of U.S. lawmakers over BP's failure to stop oil spewing out of a Gulf of Mexico well but the repercussions could be felt in St Petersburg.

Russian President Dmitry Medvedev speculated about BP on the eve of the forum, telling the Wall Street Journal that the Kremlin was "not indifferent to their future" and adding: "Hopefully, they can absorb the losses."

Oil executives echoed his sentiments.

"I think we are all at stake and I do wish BP will survive," Total CEO Christophe de Margerie, told Reuters on the sidelines.

"I think we have to do our best in the industry to make sure this will never happen again."

In Moscow, it briefly appeared as if the unwinding of BP's empire had begun as a $500 million stake in Rosneft changed hands on the local stock exchange, triggering speculation that the British major was disposing of its 1.2 percent stake in Russia's top producer.

BP's most senior official at the forum, Russia manager David Peattie, denied the major had begun a fire sale of assets to pay for a $20 billion damage fund ordered by U.S. authorities.

"We believe that a powerful company like BP can easily form the fund and asset sales will be minimal, if any," Rosneft CEO Sergei Bogdanchikov told reporters.

"Big losses, but it will survive. In theory, a friendly takeover is possible," Russian oil company Gazprom Neft's CEO Alexander Dyukov told Reuters when asked about BP's likely fate.

The prospect of a bonanza for BP's rivals held no appeal.

"We are not wolves," LUKOIL President Vagit Alekperov said. "We don't eat the weak."

The accident is particularly poignant for Russia, the world's largest oil exporter, which earns 60 percent of its tax revenues from hydrocarbons and must find safe ways to develop complex, expensive offshore projects to maintain supply.

Russia's top oil official, Deputy Prime Minister Igor Sechin, noted in remarks to a forum audience including the chief executives of ConocoPhillips , Royal Dutch Shell and ENI , that the spill could affect key projects such as the giant Shtokman gas field in the Barents Sea.

"Every time I think of the accident I break out in a cold sweat," Sechin, a close ally of Prime Minister Vladimir Putin, told Reuters later in an interview.

"The consequences are so grave and I understand the actions of the U.S. administration, which is focusing its attention on cleanup, but I also sympathise with BP." (Additional reporting by Katya Golubkova, Polina Devitt, Dmitry Sergeyev and Melissa Akin; writing by Michael Stott and Melissa Akin; editing by Patrick Graham)

BP restarts drillship system after 10-hour lapse
19 Jun 2010 18:20:10 GMT
Source: Reuters
* Drillship system restarted after shutdown, ramping up

* System shut down for 10 hours to fix problem, storm

* Second oil-burning system operating normally (Adds details, background)

By Kristen Hays

HOUSTON, June 19 (Reuters) - BP Plc restarted one of its oil-capture systems at the gushing leak in the Gulf of Mexico on Saturday after a 10-hour shutdown to fix a problem on a piece of fire-prevention equipment.

Spokesman Robert Wine said a "flame arrestor" on the vent atop an oil storage tank on the oil-collecting drillship was blocked, so it was shut down at 8:23 p.m. CDT (0123 GMT) to allow crews to clean it out.

A flame arrestor is a device on the vent designed to dissipate heat to reduce the risk of fire, Wine said.

When a lightning storm blew in, BP decided to wait until it passed to restart the drillship system.

BP disclosed the shutdown in its daily 9 a.m. CDT (1400 GMT) update of oil collected posted on its website. About three hours later, the company issued an announcement that said the system restarted at 6:30 a.m. CDT (1130 GMT), before the shutdown was disclosed.

Wine said the company announced the restart when that operation, which takes several hours, was complete. "It's a process, it's not instantaneous," he said.

The second system, where more oil is being burned off at a service rig, operated normally throughout the time the drillship system was shut down, Wine said.

Before the shutdown, the two systems captured 24,500 barrels a day of oil, or 87.5 percent of the systems' total capacity of 28,000 barrels a day.

The drillship system, in which a containment cap at the top of failed blowout preventer equipment at the seabed channels oil to Transocean Ltd's Discoverer Enterprise a mile (1.6 km) above at the water's surface, collected 14,400 barrels, down from the 16,020 barrels collected in the previous uninterrupted 24-hour period, BP said.


The company said the second system, where oil is siphoned through a hose connected to the blowout preventer to Helix Energy Solution's Helix Q4000 service rig at the surface, burned off 10,100 barrels of oil. That is the rig's daily oil-handling capacity, according to BP.

The Q4000 must burn off oil because it has no storage or processing capacity, unlike the drillship, BP said.

The total amount of oil collected by the containment cap system since it was installed on June 3 reached 205,570 on Friday. The total burned off by the service rig since it began siphoning oil early Wednesday reached 23,220 barrels on Friday, according to BP figures.

BP aims to increase the surface oil-handling capacity to up to 53,000 barrels a day by bringing in another vessel to siphon oil from the blowout preventer through another hose and bring it to the surface. That vessel will be able to process up to 25,000 barrels a day, according to BP.

The latest estimate of the leak's flow rate from a team of U.S. scientists is 35,000 to 60,000 barrels a day. U.S Coast Guard Admiral Thad Allen, the top U.S. official overseeing the spill response, said Friday that range represents varied opinions and the actual flow is more likely at the low end.

But BP plans to increase capacity to up to 80,000 barrels a day by mid-July in response to Coast Guard demands for more oil-handling capability and and backup systems.

That upgrade also will include switching the current containment cap for a larger one with what the company says is a better seal. That cap also will allow vessels at the surface to disconnect quickly and move if a hurricane approaches, unlike the current cap system.

Allen said the Coast Guard and BP might consider not switching caps at the end of June if the 53,000-barrel capacity appears to be capturing all the oil. The leak would gush unchecked when the current cap is removed and before the new one is secured, Allen has said.

But the current system does not allow the drillship to disconnect and move quickly if a storm comes, which is a critical part of the July containment phase, he said. (Reporting by Kristen Hays; Editing by Doina Chiacu) (For full coverage of the spill, http://link.reuters.com/hed87k))


Storm threatens spill cleanup, BP says CEO to stay
28 Jun 2010 22:03:33 GMT
Source: Reuters
* Tropical storm Alex poses potential threat to clean-up

* BP defends CEO after Russia says expects Hayward to go

* BP shares fade after early gains

* NY Fed gives bank exposure to BP passing grade - source (Updates storm effects, share moves; adds NY Fed on exposure to BP, Feinberg on compensation fund, senator's comments)

By Kristen Hays and Tom Bergin

HOUSTON/LONDON, June 28 (Reuters) - A growing storm delayed efforts to capture more oil gushing into the Gulf of Mexico as BP Plc and Russia's government traded words on Monday over the future of the energy giant's chief executive.

The Federal Reserve Bank of New York, probing the exposure of big financial firms to the British energy giant, gave banks a "passing grade," one source told Reuters. [ID:nN28255360]

High waves from tropical storm Alex will delay BP's plan to add more oil-siphoning capacity to its leaking well until next week, a company executive told reporters in Houston, while state officials said Alex would hinder clean-up efforts.

Alex is the first in a new season of storms, raising concern about prolonged efforts to get control of the undersea leak that has spewed oil since April 20, threatening fisheries, tourism and wildlife in four states along the U.S. Gulf Coast.

Kent Wells, BP executive vice president of exploration and production, said the current siphoning systems should not be affected "unless unfortunately a storm heads directly our way." But waves as high as 12 feet (3.7 metres) would delay hooking up a third system to capture oil, he said. [ID:nN28258499]

In London, BP said Tony Hayward was still its CEO, with no change under discussion, after Russian Deputy Prime Minister Igor Sechin said he expected the embattled boss to resign soon and Moscow to be told the name of his successor on Monday.

Adding credence to BP's statement, Sechin's office said later that management changes were not raised when he met Hayward, who has been criticized over his response to the disaster and was in Russia to address Moscow's worries about BP's local operations in the leak's wake. [ID:nNLDE65R12K]


For full spill coverage http://link.reuters.com/hed87k

How much oil is really gushing? [ID:nN24203958]

Breakingviews [ID:nN23236063]

Insider TV http://link.reuters.com/ned73m

Graphics http://link.reuters.com/fyc93m



Forecasters at the National Hurricane Center said Alex was expected to become a hurricane on Tuesday, with winds of 96-110 mph (157-180 kph) by late on Wednesday before striking near the Texas-Mexico border and moving inland. [ID:nN28260590]

Shell shut subsea production at two platforms and BP evacuated some personnel from three platforms due to the threat of Alex, the companies said on Sunday. [ID:nN27622581]

Florida officials said swells churned up by Alex would hinder clean-up operations.

"Over the next several days the winds and current are going to hamper some offshore operations and the current is going to be pushing things more onto shore," said state meteorologist Amy Godsey.

While a hurricane could also interrupt BP's efforts to cap the well, some specialists say the heavy weather could actually help mitigate environmental damage by dispersing the oil.

U.S.-listed shares of BP rose about 3 percent in morning trade on Monday, the first session after a sell-off that sent the stock to a 14-year low, but faded in the afternoon to close just 0.3 percent higher.

The shares, a staple of pension funds, have lost more than half of their value since the spill began two months ago and are down some 24 percent since the start of June.

The New York Fed has been probing exposure to BP to ensure Wall Street and the global financial system would not be at risk if the oil giant buckles under the costs of the spill, according to two sources familiar with the matter.

After poring over documents and asking banks about their exposure to BP over the past two weeks, the New York Fed found no systemic risk and had not asked firms to alter their credit relationships with BP, the sources told Reuters.

"The Fed gave banks' exposure to BP a passing grade," said one of the sources on condition of anonymity.

Beyond's BP survival prospects, the examination underscores market uncertainty about how the spill's staggering clean-up bill might affect Wall Street, a fragile economic recovery and the multitrillion-dollar energy market.

BP said on Monday its spending to cap the well, clean up the spill and compensate those affected had accelerated to $100 million a day, bringing the total so far to $2.65 billion.

The company has set up a $20 billion compensation fund under U.S. government pressure.

Kenneth Feinberg, the independent administrator of the fund, has said it made "absolutely no sense" to drive BP into bankruptcy, while promising to streamline the claims process and even let some victims file online.

BP's earlier handling of compensation on its own came under fire as unduly bureaucratic and time-consuming.

Feinberg expressed doubt on Monday that compensation could stretch as far as a New Orleans strip club that says it has lost business because the fishermen who are its customers are out of work due to the spill.

"I don't think they'll get money out of this fund," he said in an interview with Fox News, adding the $20 billion "should be reserved for the most directly impacted claims."


While Alex remained at a safe distance, people in southeastern Louisiana had more immediate concerns as lightning lit up the sky and a torrent of rain flooded roads.

Some residents were also concerned about BP and the Coast Guard's continued use of chemical dispersants. On Monday, crews sprayed the material far offshore using airplanes.

Dispersants help oil dissolve within months, breaking it down into small particles that can be easily digested by organisms living in the Gulf. [ID:nLDE65R167]

But they are controversial as the long-term health implications are not clear. The Environmental Protective Agency is studying the use of dispersants.

"They should stop using them," said Mary Tompkins of Nairn, Louisiana.

Nalco, the company that makes the primary dispersant being used, Corexit, says the product is safe in the environment.

"I don't believe that," Tompkins said. "They need to stop."

U.S. Senator George LeMieux, a Republican, toured Pensacola Beach on the Florida Panhandle before returning to Washington to file a bill aimed at loosening restrictions he said prevented more oil skimmers from helping clean up the Gulf.

"There are 2,000 skimmers in the United States," LeMieux said. "Why they are not all here, makes no sense to me." (Additional reporting by Darya Korsunskaya and Katya Golubkova in Moscow, Jane Sutton and Michael Peltier in Miami, Ernest Scheyder in Nairn, Louisiana, Sarah Young in London and Joshua Schneyer and Kristina Cook in New York; Writing by Jerry Norton; Editing by Simon Denyer and John O'Callaghan)


SPECIAL REPORT-Hustle and flow: how much oil is really gushing?

28 Jun 2010 14:30:39 GMT
Source: Reuters

For a real-world measurement, you'd need to be able to compare the globs(small drop)and their movement to a stationary object that's also in the video, whose size you know for sure. That would be the broken riser pipe from which all the globs are spilling. That pipe is, for now, not going anywhere.

The outer diameter of the riser pipe is 21.5 inches. Wereley figured out how many pixels that was in the video, and from that was able to calculate the size of the turbulent structures and how fast they were moving in inches per second. He then used that figure to calculate how much was coming out, and how fast, producing a figure measured in barrels per day.

That figure, which Wereley arrived at using computer codes that make thousands of measurements, was 70,000.

But fluid mechanics can be a tricky business, especially with an opaque liquid like oil.

While Wereley and other experts could reasonably estimate the speed and amount of oil coming from the outside of the jet of oil spurting from the pipe, they didn't know for certain how fast the oil coming from the inside of the jet was going -- because they couldn't see it. It was obscured by the dark oil at the outside.

Imagine it this way: you can see all of the water coming from a faucet, no matter what the diameter of the faucet is, because water is clear. But what if chocolate syrup suddenly started pouring out of the faucet? You'd be able to see the syrup on the outside of the stream coming from the tap, but you'd only be able to guess at what was on the inside, because chocolate syrup is opaque, like oil.

If you knew a bit about fluid mechanics, you'd probably assume that the center of the flow -- the part you can't see -- is moving a bit faster than the chocolate syrup at the edges.


Why? Because the stuff in the middle is largely unaffected by things at the edges that work to slow liquid down. In the chocolate syrup example, the inside of the faucet and possibly the air in the room could act as a drag on the outside of the chocolate stream.

Similar forces apply to the oil coming out of the broken wellhead. The sea water around it acts as a brake on the oil on the outside of the stream, without having as much of an effect on the oil that's on the inside, Wereley said.

Mindful of BP's criticism of his initial estimate, Wereley wanted to be conservative when he was working on his updated calculation. So he based it on the assumption that the flow inside the jet of oil was moving at about the same speed as the flow at the outside of the jet, all but guaranteeing that the estimate would be on the low side.

Until mid-May, Wereley and other experts -- including Timothy Crone of Columbia University's Lamont-Doherty Earth Observatory and Eugene Chiang at the University of California-Berkeley -- were working on their own on this question.

Then Congress got involved, and things changed.

On May 19, Representative Ed Markey, the Massachusetts Democrat who chairs the House global warming subcommittee, asked BP to show the public live high-resolution video from the broken wellhead. (This video feed is available at http://globalwarming.house.gov/spillcam)

Wereley testified that day, along with Frank Muller-Karger, a University of South Florida professor of biological oceanography. Wereley couldn't fathom any realistic way BP's estimate of the flow rate at that time -- 5,000 barrels per day -- could be right.

Lamar McKay, BP America's president, said at the hearing that officials still couldn't say which estimates were correct. The higher estimates were "theoretically possible," he said, "but I don't think anyone who's been working on this thinks it's that high."


Soon after Wereley's testimony, he was chosen as a member of the government's Flow Rate Technical Group, a collection of academics whose job it is to determine the magic flow rate number.

"The government doesn't want to trust a couple of scientists working in their spare time, so they set up the Flow Rate Technical Group to come up with an official government-sanctioned number,"
he said.

The team studied the new high-resolution spill-cam video, and estimated the flow at 20,000 to 40,000 barrels a day, before the June 3 operation to cut the riser and cap it so oil could be collected and sent up to the surface. After that June 3 procedure, the flow was estimated at 35,000 to 60,000 bpd.

After that, Wereley considered the technical group's job largely complete, but that was before an underwater robot bumped into a containment cap on the wellhead on June 23, prompting BP to take it off to assess any damage. The result: a new surge of oil until the cap was reinstalled 10 hours later. Even an untrained eye could see the difference between the flow with the cap on and the increased flow with the cap removed.

Which brings up BP's worst-case-scenario estimate of 100,000 barrels per day, provided to Congress in early May and publicized the following month by Markey.

While 100,000 barrels per day is a high number, the company document that mentions it calls this a low probability scenario of what could happen if the blowout preventer -- which didn't prevent a blowout but which is still keeping some percentage of the oil and gas from leaking -- and the wellhead were removed.

Wereley did not hazard a guess about how likely this is, calling it hypothetical.

"But what it also tells you is, if you're throwing around numbers like 100,000 barrels per day, you know pretty well that it's not 1,000 barrels per day. It stands to reason that if you put the blowout preventer on there, it's not going to stop 99 percent of the flow. They should have expected a much larger flow than 1,000 barrels per day."

(Additional reporting by Kristen Hays in Houston and Steve Holland in Washington; Editing by Jim Impoco and Claudia Parsons)


FACTBOX-How BP will switch oil leak caps?
10 Jul 2010 20:24:43 GMT
Source: Reuters
July 10 (Reuters) - On Saturday, BP removed an oil containment cap from its stricken Gulf of Mexico well so it could be replaced with a bigger cap and seal within four to seven days.http://www.blogger.com/img/blank.gif

Unlike the initial cap, the new one should be able to contain all crude leaking from the top of failed blowout preventer equipment at the seabed.

Here is how the process will play out, according to BP's written plan and Kent Wells, BP's senior vice president of exploration and production, as well as future plans.


* On July 10, BP removed the containment cap installed June 3 atop failed blowout preventer equipment at the seabed 1 mile (1.6 km) beneath the water's surface.

* Crude gushed gush unchecked from the jagged remnant of a pipe that the cap had covered.

* Underwater robots will remove the pipe remnant and flange.

* A pair of side-by-side drillpipes jutting out (To extend outward or upward beyond the limits of the main body; project: ) the top of the blowout preventer equipment will be tied together with a strap.

* A new flange will be lowered over the top of the pipes, and then bolted on after the strap is cut away.

* A 160,000-pound (73 tonne) "capping stack" will be lowered onto the new flange.

* The new cap is designed to seal the entire opening with a complete cover of the flange, unlike the previous cap that just covered the pipe remnant.

* If the cap and seal work as designed, there should be no more crude leaking from the top of the failed blowout preventer equipment.

* The previous cap allowed oil to leak out from the its bottom and top to prevent seawater from getting inside. Cold seawater at extreme pressures can mix with natural gas, which leaks alongside crude, and form ice-like hydrates that block collection efforts.

* BP has another cap similar to the one that was removed at the seabed to place atop the leak if the new cap and seal do not work.


* On July 10 BP was hooking up and testing a rig, the Helix Producer, that can collect up to 25,000 barrels a day.

* BP connected a hose at the blowout preventer to a floating pipe, which in turn was connected by hose to the Producer.

* The floating-pipe setup allows the vessel to quickly disconnect from the pipe and move out of the way if a hurricane approaches.

* Another rig -- the Q4000, installed on June 16 -- will continue to siphon and burn off an average of 8,000 barrels of oil per day from the leak.


* The cap switch and ramp-up of the Helix Producer are two crucial steps to installing a four-vessel oil-capture system that is hurricane ready.
* By the end of July, the Toisa Pisces, a well-testing ship revamped to process up to 25,000 barrels a day, will replace the Q4000 and be connected to the blowout preventer via a second floating pipe.

* Transocean Ltd's Discoverer Enterprise, which had collected crude via the containment cap removed on July 10, and a second drillship, Transocean's Discoverer Clear Leader, will each be connected to the new cap and seal via hoses and drillpipes.

* The four vessels will have a combined capacity of up to 80,000 barrels a day and can disconnect quickly to move out of a hurricane's path.

* If a storm forced a disconnect, crude would gush unfettered until the vessels return and reconnect.


* Drilling continues on two relief wells intended to intercept the well and plug the leak well beneath the seabed.

* The first well was 12,810 feet (3,904 metres) beneath the seabed on July 10, or 190 feet (58 metres) from the bottom of the blown-out well.

* BP expected to try to drill into the stricken well once the optimal target is found by the week of July 19.

* Plugging the leak could take until mid-August, depending on how deep the relief well must bore into the stricken well and how many times BP must pump in heavy drilling fluid and cement.

* The second relief well, a backup to the first relief well, had bored 10,961 feet (3,341 metres) beneath the seabed by July 10.

* The second relief well would stop drilling once piping to hold it open was cemented in place so it would not interfere with the first relief well's use of sensors to find the right intercept target. (Reporting by Kristen Hays in Houston; editing by Mohammad Zargham)


BP in talks to sell assets as spill costs mount
12 Jul 2010 16:37:31 GMT
Source: Reuters
* BP says spill costs around $3.5 billion

* Installing new system to capture more oil

* BP shares hit highest level in nearly a month

* Obama's spill commission starts first public hearing (Adds more on potential asset sale, Obama commission)

By Ayesha Rascoe and Megan Davies

NEW ORLEANS/NEW YORK, July 12 (Reuters) - BP Plc is in talks with U.S. oil and gas company Apache Corp and others to sell assets worth up to $10 billion as it grapples with the costs of its spill in the Gulf of Mexico.

BP shares surged more than 9 percent in London and nearly 8 percent in New York on Monday, driven by the potential asset sales and hopes for a new system to capture almost all of the spewing oil that has fouled coastlines and hurt tourism and fisheries in five states.

"The political rhetoric is not as negative as it once was and that allows people to focus on all the value that lies within BP," said Kurt Wulff, president at McDep LLC, an energy investment research company in Needham, Massachusetts.

The British energy giant is in talks with Apache and others about potential asset sales, including stakes in its Alaskan oil fields, said a source familiar with the situation.

The talks are at an exploratory stage and it was not certain whether any plans would be advanced enough to be disclosed before BP announces second quarter earnings later this month, the source said. [ID:nN11156383]

BP and Apache declined to comment on the reports.

The asset sale talks come as scrutiny of BP ramps up with President Barack Obama's independent commission holding its first public hearings in New Orleans on Monday and Tuesday.

The panel of seven engineers, environmentalists and former politicians will investigate decisions by oil companies and government regulators that may have led to the worst oil spill in U.S. history. [ID:nN12183528]][ID:nN12173926]

Bob Graham, the panel's co-chair, said on Monday it was possible the commission could make recommendations in less than six months on the deepwater drilling moratorium that the Obama administration has sought to enforce after the disaster.

Interior Secretary Ken Salazar is expected to issue a more flexible moratorium in coming days after a U.S. appeals court last week refused to halt deepwater drilling. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ For full spill coverage http://link.reuters.com/hed87k Breakingviews [ID:nN12184998] Special Report: Should BP nuke well? [ID:nLDE6610K6] Insider TV http://link.reuters.com/qyk76m Graphics http://link.reuters.com/fuc76m ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>


BP, whose shares have fallen about 40 percent since an explosion on its Deepwater Horizon rig on April 20 unleashed the oil into the Gulf of Mexico, is under enormous pressure to halt the leak.

It expects to attach a new containment system later on Monday that could capture up to 80,000 barrels of oil per day (3.4 million gallons/12.7 million liters), more than triple current levels of about 25,000 barrels. [nN12179653]

"We have the cap very close and later today we'll be attaching it," Doug Suttles, BP's chief operating officer, told a media briefing. "It could take well through the day to complete."

BP, which said the cost of the spill was now about $3.5 billion, expects its first relief well to reach the blown-out well late this month -- a first step in finally plugging the gusher by the first half of August as planned. [ID:nLDE66B09X]

Obama is also under pressure to show his administration can resolve the spill and hold BP accountable. The disaster now sits atop his domestic agenda and has complicated the close ties between the United States and Britain.

Part of the recovery in BP shares, which had lost $100 billion in market capitalization at one stage, is due to speculation the company is approaching sovereign wealth funds for cash to ward off a takeover and to help pay for the spill.

BP Chief Executive Tony Hayward met an Abu Dhabi state investment fund last week. [ID:nLDE6660B7] (Additional reporting by Raji Menon in London, Alexandria Sage in Louisiana, Kristen Hays in Houston, and Matthew Lynley in New York; Writing by Sitaraman Shankar and Timothy Gardner, Editing by John O'Callaghan)


Relief well could intercept blown well end July-exec
11 Jul 2010 20:40:06 GMT
Source: Reuters
* Relief well could intercept leaking well by end July

* Cap switch progressing

* New oil-capture vessel to start up late Sunday (Adds detail, quotes, byline)

By Kristen Hays

HOUSTON, July 11 (Reuters) - The first of two relief wells is expected to intercept BP Plc's blown-out well in the Gulf of Mexico by the end of July and the leak could be plugged by early to mid-August, a BP executive said on Sunday.

"The anticipation is that toward the end of July is when we'll be able to intercept the Macondo well," Kent Wells, senior vice president of exploration and production for BP, told reporters.

Wells explained, however, that intercepting the well is only the first step to killing the leak and BP still expects to plug it with heavy drilling fluid and cement by early to mid-August.

Wells also said that BP made progress on a delicate undersea operation to install a new containment cap on the leaking wellhead, and planned to activate a new oil-siphoning system later on Sunday.

The new oil-capture system, a rig called the Helix Producer, had gone through all necessary startup procedures and was expected to begin siphoning oil, Wells said.

The new cap and startup of the Helix Producer are critical steps toward an upgraded oil-capture system with four vessels that can collectively handle up to 80,000 barrels of oil per day (3.4 million gallons/12.7 million liters), according to BP and the Coast Guard.

BP expects to have that four-vessel system in place within two to three weeks, Wells said.

BP on Saturday removed a cap on the well and began working to install the bigger cap and seal.

"If everything goes extremely well, we'll be on the short end of four to seven days" to install the new cap, Wells said.

When fully operational, the new cap will capture virtually all of the oil spewing from the well, according to retired Coast Guard Admiral Thad Allen, the top U.S. oil spill official.

Meanwhile, oil is spewing mostly unchecked from the well. Another rig, the Q4000, is siphoning and burning off about 8,000 barrels a day from the leaking well, Wells said.

U.S. government experts have pegged the leak's flow at up to 60,000 bpd (2.5 million gallons/9.5 million liters). (Additional reporting by Chris Baltimore and Lesley Wroughton, Editing by Sandra Maler and Alan Elsner)


12 Jul 2010 22:23:40 GMT
Source: Reuters


FACTBOX: Some differences in new US drilling moratorium
12 Jul 2010 22:08:31 GMT
Source: Reuters
July 12 (Reuters) - The U.S. Interior Department issued its new offshore drilling moratorium that it hopes will help it get around a federal court decision that blocked the government's initial drilling ban imposed in response to the BP oil spill.

The new ban employs different language and gives different justifications from the old ban but suspends activity on the same set of deepwater drilling rigs as the previous order.

Here are some key details of the new moratorium.

* The new drilling ban will last until Nov. 30, but it could be lifted sooner if Interior Secretary Ken Salazar determines that oil companies have improved safety at their operations.

* The first moratorium prevented exploratory drilling in waters more than 500 feet deep. The department said the new drilling ban was not based on water depths, but suspends offshore activities on the basis of "the drilling configurations and technologies." However the same rigs, about 21, are affected as another 12 were previously allowed to continue operations.

* The moratorium is based on new safety concerns, blowout containment shortcomings and the lack of available skimmers and other cleanup equipment. The agency said companies would not be able to respond to a new oil spill because most of those resources are being used to clean up the BP spill.

* The Interior Department will gather and analyze information from the public, experts, stakeholders and the industry that could possibly allow certain deepwater drilling activities to resume.

* The six-month moratorium will allow a special presidential commission to investigate the oil spill and allow the Interior Department to develop interim safety rules for offshore drilling.

* The revised moratorium applies to drilling operations that use subsea blowout preventers or surface BOPs on floating facilities.

* Offshore platforms producing oil would be allowed to continue to operate under the revised drilling ban. (Reporting by Tom Doggett; Editing by Sofina Mirza-Reid)


BP delayed test out of concern for wellbore status-exec
14 Jul 2010 16:58:07 GMT
Source: Reuters
HOUSTON, July 14 (Reuters) - BP Plc and U.S. government scientists delayed a key pressure test on the gushing Gulf of Mexico oil well late on Tuesday because of concerns that the test could damage the wellbore, a BP executive said on Wednesday.

"There were a couple of other concerns around ways flow could escape and we needed to go examine those before we proceeded," Doug Suttles, BP chief operating officer of exploration and production, told CNN.

(Reporting by Kristen Hays and Chris Baltimore, Editing by Sandra Maler)


BP starts crucial test on leaking Gulf oil well
14 Jul 2010 23:14:51 GMT
Source: Reuters
* Crucial well test underway

* BP shares down as investors await test results

* Cap would stay even if test called off (Updates with test started)

By Kristen Hays

HOUSTON, July 14 (Reuters) - BP Plc on Wednesday started a crucial test on its ruptured Gulf of Mexico oil well that could be a prelude for permanently halting flow from the runaway well after nearly three months.

Kent Wells, BP's senior vice president of exploration and production, said undersea robots working a mile below the surface had started shutting a series of three valves designed to ultimately stop the oil flow completely.

BP began the process, which could stretch up to 48 hours, after getting the green light from top U.S. government officials who had delayed the plan by 24 hours citing concern that the test could irreparably damage the well.

Retired Coast Guard Admiral Thad Allen, the top U.S. official overseeing the spill response, said earlier on Wednesday that a closer analysis of the test reinforced confidence it would not exacerbate the leak.

The decision was taken after a day of intense deliberation that reached the level of President Barack Obama and his cabinet, underscoring the size of the stakes involved.

The disaster has soiled hundreds of miles of shoreline, shut down about one third of Gulf fisheries, put BP on the hook for billions of dollars in clean-up costs and legal liabilities and prompted Obama to temporarily halt deepwater drilling.

In Washington, the White House said that after discussions between BP and senior government officials it had been decided that "the test should now proceed with several modifications and safety requirements."

The leak, which began after a deepwater rig exploded on April 20 killing 11 oil workers, is the worst offshore spill in U.S. history. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ For full spill coverage http://link.reuters.com/hed87k Breakingviews [ID:nN12184998]

[ID:nLDE66C1IV] Special Report: Should BP nuke well? [ID:nLDE6610K6] Insider TV http://link.reuters.com/qyk76m Graphics http://link.reuters.com/dyp37m

http://link.reuters.com/vuc27m Graphic on BP shares http://r.reuters.com/dez27m ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

If the tests indicate that sealing the well might cause even further damage, the current capping device would stay in place and would become part of the system to capture the oil and siphon it to ships on the surface.

Nansen Saleri, former head of reservoir management for the world's largest oil company Saudi Aramco, had told Reuters before the announcement that BP should forego the test and keep using surface vessels to collect leaking crude until a relief well intercepts and plugs the leak by mid-August.

"They already have a relatively robust remedial program in place. It's the safe option," said Saleri, now president and chief executive of Quantum Reservoir Impact in Houston.

While they waited for BP to move ahead, some investors sold off their shares but trade was thin as they watched to see what would happen.

"I think we've reached a wait-and-see point, it might be too late to take profits but it might be too early to buy the stock," said Hugh Johnson, chief investment officer of Hugh Johnson Advisors LLC in Albany, New York.

In response, shares in BP ended 2.3 percent down in London in slow trade and were off about 1.9 percent in New York, with some analysts saying investors were likely cashing in profits ahead of further news on the new cap. (Additional reporting by Richard Cowan, Timothy Gardner and Tom Doggett in Washington, Chris Baltimore in Houston and Matthew Lynley in New York; Writing by Ed Stoddard and Deborah Charles)


BREAKINGVIEWS-Latest punishment could get BP some sympathy
15 Jul 2010 08:49:35 GMT
Source: Reuters
-- The author is a Reuters Breakingviews columnist. The opinions expressed are his own --

By Christopher Swann

NEW YORK, July 15 (Reuters Breakingviews) - A U.S. legislative proposal to ban drilling by oil groups with poor safety records looks tailor-made for BP . While it's true more industry safeguards are warranted in the aftermath of the massive oil spill in the Gulf of Mexico, this latest idea could compromise the rule of law. It might also have the effect of making it easier for the UK oil major to marshal support.

The rush by lawmakers to protect their citizens and environment is to be expected. Lax regulation seems to have been a big part of what led to the Gulf disaster. And as a repeat offender with three big recent accidents to its name, BP deserves to be treated with a high level of skepticism, and be forced to pay for the mess it has caused -- something it has pledged to do.

But designing instruments of torture specifically for BP isn't the answer. The proposal from Representative George Miller, a Democrat from California, looks to be doing just that. It would allow the government to blackball companies that had more than 10 fatalities at drilling operations -- one less than died on the Deepwater Horizon rig that exploded in the Gulf in April. It also disqualifies from offshore drilling any companies fined more than $10 million under the Clean Air and Water Act over the preceding seven years -- capturing BP's Prudhoe Bay spill of 2006.

Though BP isn't mentioned by name, Congress could scarcely have been more obvious than if it had stamped a yellow and green sunflower on the amendment. This road has been perilously trod before. An effort in May to hike the legal liability for oil spills retroactively -- backdated to April 15, or five days before the Gulf explosion -- is still kicking around Congress.

Going after BP this way might not just be unfair, but illegal. The U.S. courts can overturn rules that seek targeted punishments. Such "special treatment" would give the British government, legal scholars and possibly others more justification for coming to BP's aid. That would be a rather unintended consequence.


-- A U.S. House committee on July 14 passed an amendment to a broader piece of legislation preventing U.S. oil and gas companies from getting new offshore exploration leases from the Interior Department if they failed to pass safety and environmental requirements. BP's track record would prevent.

The amendment did not mention BP specifically, but it would not allow any company to get leases that had more than 10 fatalities at drilling and production facilities or refineries which resulted from violations of federal or state health and environment laws within the last seven years.

-- Representative George Miller statement: http://link.reuters.com/kuq67m

-- Reuters story: BP runs crucial test on Gulf oil leak [ID:nN15195845]

-- Related view: BP's U.S. political risk goes well beyond rhetoric [ID:nN11189792]

-- For previous columns by the author, Reuters customers can click on [SWANN/]

(Editing by Jeffrey Goldfarb and David Evans)


BP to resume capturing oil post-well test-USCG
15 Jul 2010 15:32:29 GMT
Source: Reuters
HOUSTON, July 15 (Reuters) - A new cap atop BP Plc's leaking oil well in the Gulf of Mexico is not intended to shut off all the oil flow until a relief well intercepts and kills the leak, the top U.S. official overseeing the spill response said on Thursday.

Retired Coast Guard Admiral Thad Allen said the cap could shut in the flow, but BP will proceed with a four-vessel oil-capture system at the ocean's surface after finishing a pressure test on the well.

"We can certainly consider shutting in the well -- that is a possibility and we would like to do that," he said. (Reporting by Kristen Hays)

BP: Well cap may bottle oil until permanent plug

By COLLEEN LONG and HARRY R. WEBER, Associated Press Writers Colleen Long And Harry R. Weber, Associated Press Writers – Sun Jul 18, 2:39 am ET

NEW ORLEANS – Scientists got an extra day to evaluate whether the giant cork bottling BP's busted well in the Gulf of Mexico will hold, while officials overseeing the disaster pondered their next step.

After days of watching, engineers still saw no signs of any leak in the well cap that has shut in the crude for three days. The oil giant and the government were becoming increasingly confident in the temporary stopgap.

"Everybody has been so worried about it blowing," said Willianet Barksdale, a security guard on the public beach at Gulf Shores, Ala. "Maybe this means it's holding and this is almost over."

But the pressure readings were still lower than expected. Scientists were mapping the seafloor and conducting tests to determine if the well simply bled more than initially thought, leaving less oil to put pressure on the cap. Robots patrolled the sea floor in search of any problems.

The trial run — which began Thursday and was extended Saturday — is now set to end Sunday afternoon.

Initially, BP and the government said it was possible the cap could shut in the oil until relief wells were completed and heavy cement and mud is blasted in to plug the bandaged wellbore permanently.

But instead, the cap is to be hooked up through nearly a mile of pipes stretching to ships on the surface that will collect the oil, according to retired Coast Guard Adm. Thad Allen, the government's point man on the crisis.

That decision likely means crude will be released back into the Gulf to temporarily relieve pressure, although it still would not be gushing at the rate it had been before BP's latest fix.

The cap, which on Thursday stopped the crude for the first time since the April 20 explosion unleashed the spill, lets BP shut in the oil, which would be important if a hurricane were to hit the Gulf and force ships to leave the area.

Pressure readings Saturday morning were 6,745 pounds per square inch and rising slowly, Wells said. The figure was below the 7,500 psi that would have reassured scientists the well was not leaking, but still high enough that it could be all right.

A low pressure reading, or a falling one, could mean the oil is escaping. BP LLC vice president Kent Wells said pressure continued to rise very slowly, lessening concern that cap could cause oil to break out of the well at the sea floor.

It will take months, or possibly years for the Gulf to recover. But there were signs that people were trying to get life — or at least a small part of it — back to normal.

The public beach at Gulf Shores, Ala., had its busiest day in weeks on Saturday despite oil-stained sand and a dark line of tar balls left by high tide.

Darryl Allen of Fairhope, Ala., and Pat Carrasco of Baton Rouge, La., came to the beach to throw a Frisbee just like they've been doing for the past 30 years. With oil more on people's minds than the weather, Allen asked what's become a common question since the well integrity test began:
"How's the pressure? I hope it's going up,"
he said. "You don't want to be too optimistic after all that's happened."

People also were fishing again, off piers and in boats, after most of the recreational waters in Louisiana were reopened late this week. More than a third of federal waters are still closed and off-limits to commercial fishermen.

"I love to fish," said Brittany Lawson, hanging her line off a pier beside the Grand Isle Bridge. "I love to come out here."

And even though it has been only days since the oil was turned off, the naked eye could spot improvements on the water. The crude appeared to be dissipating quickly on the surface of the Gulf around the Deepwater Horizon site.

Members of a Coast Guard crew that flew over the wellhead Saturday said far less oil was visible than a day earlier. Only a colorful sheen and a few long streams of rust-colored, weathered oil were apparent in an area covered weeks earlier by huge patches of black crude. Somewhere between 94 million and 184 million gallons have spilled into the Gulf, according to government estimates.

BP is drilling two relief wells, one of them as a backup. Wells said work on the first one was far enough along that they expect to reach the broken well's casing, or pipes, deep underground by late this month. Then the job of jamming it with mud and cement could take "a number of days through a few weeks."


Associated Press Writer Harry R. Weber in Houston, Allen Breed in Grand Isle, La., Mary Foster in Boothville, La., and Jay Reeves in Gulf Shores, Ala., contributed to this report.


British PM's visit to U.S clouded by BP worries
19 Jul 2010 08:57:13 GMT
Source: Reuters
* Cameron making first trip to Washington as prime minister

* Talks with Obama to cover Afghanistan, global economy

(Updates with Cameron quotes on bomber release)

By Matt Falloon

LONDON, July 19 (Reuters) - David Cameron hopes his first trip to Washington as British prime minister will showcase a flourishing friendship with President Barack Obama but it may be overshadowed by U.S. concerns over BP.

BP Plc's role in the U.S. Gulf Coast oil spill and speculation about any influence the British oil giant may have had over the release of the Lockerbie bomber from a Scottish prison last year has complicated relations in the run-up to this week's talks. [nTOPNOW4]

Cameron's office has tried to play down the concern, saying the U.S. debate over how the terminally ill Libyan convicted of the 1988 bombing of a Pan Am flight was allowed to return home "may come up" but is not a "major issue".

Asked in an interview with BBC television whether the oil giant lobbied to have Libyan intelligence officer Abdel Basset al-Megrahi released, Cameron replied: "I've no idea what BP did. I'm not responsible for BP."

BP has confirmed it lobbied the British government in late 2007 over a prisoner transfer agreement with Libya but said it was not involved in talks on the release of al-Megrahi.

There is no evidence BP was involved in his release or that the decision to free him was made to facilitate oil deals for BP, British Foreign Secretary William Hague said last week.

Cameron said that as the opposition leader at the time he thought the release decision was "completely and utterly wrong".

He said he was convicted "of being the biggest mass murderer in British history. I saw no case for releasing him from prison and I said that a year ago, remember, a year ago when we were all told, of course, he had only two months to live."

Megrahi remains alive today.

A spokesman for Cameron said the focus of the U.S. trip would be on "the big issues on which we have a strong common agenda: Afghanistan, the global economy and the Middle East".

Cameron, in power since May, has said he will stand up for BP in Washington, worried that the firm could face unreasonable compensation claims from businesses and families affected by the worst oil spill in U.S. history.

The BP saga and concerns the U.S. has decoupled from Europe in its approach to economic policy at an important juncture for the global recovery will test Cameron's aptitude for diplomacy.


British leaders have long treasured a "special relationship" with the United States, which has helped the smaller country punch above its weight on the global stage. Cameron, an outspoken fan of the American way of life, will be no different.

His new Conservative-Liberal Democrat coalition government is aware Britain needs to build other special ties to maintain its influence and help its economy bounce back from recession.

"I think this is a government that is cautious about being seen as being in America's pocket or being instinctively and automatically a follower," said Robin Niblett, director of the Chatham House think tank.

A Cameron trip to India with several business leaders due after the U.S. visit will underline the importance Britain is placing on emerging markets for future trade.

Cameron will pitch for business during meetings with industry leaders in New York on Wednesday, conscious that an increase in British exports is important for recovery at home.

In Washington, Afghanistan will dominate several of Cameron's meetings. Britain wants to pull its troops out of Afghanistan within five years, an announcement that has raised some eyebrows in military circles.

Talks at the White House and the Pentagon on Tuesday and Wednesday, coinciding with an international conference in Kabul, could address how realistic that timetable is given the slow progress made in improving security on the ground. [nKABCON]

"This will be a good opportunity for the leaders to take stock of progress in this vital year," Cameron's spokesman said.

Fiscal policy differences between Europe and the United States will also come under the spotlight.

Britain leads European attempts to cut budget deficits which have ballooned in the wake of the global financial crisis, while the United States has urged caution.

Officials say both sides have agreed to disagree on fiscal policy for now but markets remain nervous over the health of the U.S. economy -- the world's biggest -- and analysts say reducing borrowing too fast could hinder the fragile global recovery.

(additional reporting by Stefano Ambrogi)

(Editing by Mark Heinrich)

Engineers detect seepage near BP oil well
19 Jul 2010 01:43:50 GMT
Source: Reuters
* U.S. concerned over seep detected near BP well

* BP aims to keep new cap closed as long as possible

* British PM Cameron visits Washington this week (Adds US govt letter on seepage concerns)

By Chris Baltimore

HOUSTON, July 18 (Reuters) - Engineers monitoring BP Plc's damaged well in the Gulf of Mexico detected seepage on the ocean floor that could mean problems with the cap that has stopped oil from gushing into the water, the U.S. government's top oil spill official said on Sunday.

Earlier on Sunday, BP officials had expressed hope that the test of the cap which began Thursday could continue until a relief well can permanently seal the leak next month. Oil gushed from the deepsea Maconda well for nearly three months until the new cap was put in place last week.

But late on Sunday, the U.S. government released a letter to BP Chief Managing Director Bob Dudley from retired Coast Guard Admiral Thad Allen that referred to seepage near the mile-deep (1.6 km-deep) well as well as "undetermined anomalies at the well head."

"I direct you to provide me a written procedure for opening the choke valve as quickly as possible without damaging the well should hydrocarbon seepage near the well head be confirmed," Allen wrote.


For full spill coverage http://link.reuters.com/hed87k

Breakingviews [ID:nN15261343]

Insider TV http://link.reuters.com/hyr57m

Graphic on BP shares http://r.reuters.com/dez27m


The worst oil spill in U.S. history has caused an economic and environmental disaster in five states along the Gulf Coast, hurt President Barack Obama's approval ratings and complicated traditionally close ties with Britain.

Those concerns are sure to be discussed when British Prime Minister David Cameron meets Obama in Washington on Tuesday.

The plan had been for BP to resume siphoning the oil after the completion of the pressure tests on the well, which extends 2.5 miles (4 km) under the seabed, to judge if it is able to withstand the process to seal the leak.

But Doug Suttles, BP's chief operating officer, said the company now hopes to keep the damaged well shut until the relief well is completed in August and the leak is sealed off with heavy drilling mud and cement.

"We're hopeful that if the encouraging signs continue that we'll be able to continue the integrity test all the way to the point that we get the well killed," he told reporters before Allen issued his statement. "Clearly we don't want to reanimate flow into the Gulf if we don't have to." (Additional reporting by Paul Eckert in Washington, Eileen O'Grady in Houston, Alexandria Sage in Louisiana; Writing by Deborah Charles; Editing by John O'Callaghan and Jackie Frank)


PREVIEW-Investors eargerly await BP's oil spill provision
22 Jul 2010 11:38:32 GMT
Source: Reuters
* BP to make provision for total oil spill bill

* Cash pile, lending facilities to be touted

* Underlying net profits seen up 77 pct to $5.0 billion

* CEO expected to stay for now, go later

By Tom Bergin

LONDON, July 22 (Reuters) - BP Plc will give an estimate for the total cost of its Gulf of Mexico oil spill next Tuesday when it unveils second-quarter profits that, were it not for the spill, would likely have risen 77 percent to $5 billion.

Accounting rules force BP to make a provision for the likely costs related to its leaking Macondo well, which spewed up to 60,000 barrels of crude a day for three months until it was capped last week.

Analysts are predicting BP will face a final bill of between $15 billion and $60 billion.

The wide range reflects uncertainties over the cost of the clean up and compensating those effected, the level of fines and whether BP's partners in the well will share the burden.

"With so many unknowns, BP has quite rightly dodged the question as to the total cost up until now. People will be very interested to see if the provision is more than the $30 billion figure that a lot of analysts are converging on," said Will Riley co-manager of the Guinness Global Energy Fund, which holds BP shares.

BP spent around $3 billion in the second quarter on the containment and clean up operation. This should be more than covered by its earnings.

"Whether balance sheet gearing rises or falls will probably depend on the scale of provisioning rather than cash effects,"
Gordon Gray, oil analyst at Collins Stewart, said in a note.

However, BP's provision will likely only be a fraction of the total bill it will potentially face.

For one, the estimate of fines included in the provision is likely to be below the maximum possible in law.

Under the Clean Water Act, a polluter faces fines of $1,100 per barrel for a spillage, although this can be increased to $4,300 if the spill is deemed to be due to gross negligence.

BP is expected to assume it will not be found guilty of gross negligence in setting its estimate of likely fines.

This also implies BP's provision assumes its partners will contribute, as proving gross negligence is the only basis on which Anadarko Petroleum and Mitsui 8031.T will not be liable for their share -- 35 percent -- of the total bill.

Consequently, the charge taken next week is unlikely to be the last. "It will be a permanent feature in the results for some time," Tony Shepard at Charles Stanley said. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ For a related story please double click on [ID:nSGE66K02I] For full spill coverage http://link.reuters.com/hed87k ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>


Investors will also be looking for reassurance BP has the firepower to deal with the longer-term liabilities. The group, which agreed a $7 billion asset sale on Tuesday, said last month it had $5 billion in cash on hand and $10 billion in bank lending facilities, while banking sources said the group was also lining up more debt facilities.

The company could further bolster its position next week by outlining plans to raise another $5 billion to $10 billion by securitising cash flows from its assets, one industry banker said.

"We believe BP is able to fund up to $34 billion of costs and liabilities pretax ($29 billion post-tax) over the next 18 months," analysts at Credit Suisse said in a research note.

Questions about the future of Chief Executive Tony Hayward are expected to resurface, but investors and analysts do not expect him to step down in the near future, although, longer term, Hayward's position is appearing increasingly untenable.

"Providing the cap and relief wells work, we imagine he'll be there for the clean up and will almost certainly then be on his way," a top-10 shareholder said on condition of anonymity.

"The whole operation post explosion has not been managed that well, so somebody has to pay and the CEO and Chairman seem obvious (targets)".

Yet sources close to the company said if BP ditched Hayward before the well was capped and significant progress made on the cleanup, his successor could also tarred by the spill fallout.


Apart from the oil spill, BP's core business is booming.

Last month, refining boss Iain Conn, who was effectively running BP while Hayward was overseeing the oil spill response, said core operations were running "very effectively".

It was a typically understated comment from the Scotsman and a Reuters poll of 11 analysts gave an average forecast of $4.98 billion for BP's underlying net profits, a 77 percent rise on the same period last year.

Higher oil and gas prices and stronger refining margins are expected to boost all the big oil companies, but analysts at Citigroup said BP's predicted result "represents the strongest momentum in the peer group".

The London-based company is also expected to brave a another potential public relations quagmire by revealing it will offset its spill-related costs against tax.

"If you make lower profits, you should pay lower taxes,"
one source said close to the company said. (Additional reporting by Cecilia Valente, Quentin Webb and Alex Chambers)


BP launches image overhaul, ditches CEO
27 Jul 2010 13:47:15 GMT
Source: Reuters
* Hayward to be replaced as CEO by American Bob Dudley

* Second-quarter loss $17 bln after $32 bln spill charges

* Costs to be offset against tax, taxpayers lose $10 bln

* Underlying profit of $4.98 bln in line with estimates

* Shares up 0.5 percent in early London trading

(Adds detail, protest, Russian welcomes, updates shares)

By Tom Bergin

LONDON, July 27 (Reuters) - Oil giant BP Plc launched a plan to repair its battered image in the United States on Tuesday, ditching its gaffe-prone chief executive and promising to slim down by trebling an asset sale target to $30 billion.

However, the company, facing public anger over the biggest oil spill in U.S. history, tempted further ire by denying it needed cultural change and by offsetting the costs of the spill, including expected fines, against its taxes.

The tax move will cost the U.S. taxpayer almost $10 billion.

BP said Tony Hayward would stand down in October, to be replaced by American Bob Dudley, as it unveiled a $17 billion quarterly loss due to the costs of the Gulf of Mexico spill.

"I believe that it is not possible for the company to move on in the United States with me remaining as the face to BP," Hayward told reporters on a conference call. "So I think that for the good of BP, and particularly for the good of BP in the United States, it is right for me to... step down."

BP's leaking well was capped a fortnight ago after gushing up to 60,000 barrels per day into the Gulf, ruining fishing and tourism industries, and polluting the shoreline with slimy goo.

BP Chairman Carl-Henric Svanberg said the company would take a "hard look" at itself in the aftermath of the spill: "BP... will be a different company going forward". [ID:nLDE66Q060]

However, Dudley denied BP's culture contributed to the disaster in the Gulf of Mexico and said the company would continue to target the industry's harder projects.

Investors and analysts say BP's culture encourages greater risk-taking than rivals, contributing to more higher returns. Critics have also blamed this culture for the explosion on the Deepwater Horizon, which killed 11 workers and led to the spill.

"A total change in the culture of this company is necessary," Democratic Congressman Ed Markey said on CBS's "The Early Show" on Monday.

Svanberg said he had no intention of resigning and that no one on the board had suggested he should, despite some investors claiming he did too little to help defend BP against critics.

Shares in BP, which has seen some $70 billion wiped off its market value since the blast, traded up down 0.6 percent at 1247 GMT, against a 0.68 percent rise in the oil sector <.SXEP>. Investors had cheered reports of Hayward's imminent departure on Monday, sending BP shares up nearly 5 percent.


For full spill coverage http://link.reuters.com/hed87k

Special report on US spill response chief [ID:nN21101035]

Breakingviews [ID:nLDE66Q0PO]

Reuters Insider http://link.reuters.com/xaz69m

Graphic BP assets http://link.reuters.com/byn78m

Profile of Dudley [ID:nLDE66P0IF]



BP said it planned to sell assets worth up to $30 billion over the next 18 months to pay for its liabilities and create a leaner company with the potential for higher growth.

"Overall we see BP being reinvigorated by the new strategy in play, a new CEO and the worst news for the company concerning U.S... (Gulf of Mexico) costs now being out there," Jason Kenney, oil analyst at ING in Edinburgh, said.

Aside from the spill, BP's business is steaming ahead with underlying profits up 77 percent on the second quarter of 2009, thanks to higher oil and gas prices and better refining margins.

Excluding a $32.2 billion charge for the disaster and other non-operating costs, the replacement cost profit was $4.98 billion, in line with the average forecast from a Reuters poll of 11 analysts. Replacement cost profit strips out gains or losses related to changes in the value of fuel inventories and is comparable with net income under U.S. accounting rules.

Dudley said on ABC's "Good Morning America" program he expected no more oil flowing into the Gulf, but added: "we've got to really kill that well to be absolutely certain."

BP could begin the final procedure to kill the well late next week, the top U.S. spill response official said on Monday.

That will involve pumping mud and cement through a relief well that has been drilled since May 2 to a spot close to the bottom of the damaged well. [ID:nN26223934]

Meanwhile, Greenpeace activists forced BP to close at least 30 petrol stations in London, by activating safety alarms.


Some Gulf Coast residents, seething about the spill and BP's compensation process, said they were happy to see Hayward go.

"He will not be missed," said Larry Hooper of Empire, Louisiana, who runs an offshore fishing charter business.

Dudley, 54, who was raised in Mississippi, would be the first non-Briton to become chief executive of BP.

He was previously head of BP's Russian joint venture, TNK-BP, until he was forced to flee the country amid a spat between BP and its partners. [ID:nLDE66P0IF]

But Russia's top energy official Igor Sechin welcomed Dudley's nomination. [ID:nLDE66Q1GU] German Khan, one of the billionaire oligarchs with whom BP had the spat, also welcomed the appointment. [ID:nLDE66Q15G]

Hayward will receive one year's salary or 1.045 million pounds ($1.61 million) and be appointed a non-executive director at TNK-BP as part of his departure deal. He will also keep his pension pot of around 11 million pounds.

The CEO was pilloried in the United States for complaining he wanted his "life back" weeks after the deadly rig explosion.

Hayward may still not escape another round of testimony before the U.S. Congress. Senator Robert Menendez said he wants Hayward to testify on whether BP influenced the release of the convicted Lockerbie bomber to aid the firm's business interests.

"Tony Hayward, regardless of his status whether he is going to be the CEO tomorrow or not, we believe that he was in the midst of the negotiations with the Libyans as it related to this oil deal," Menendez, a Democrat, said in New York. (Additional reporting by Kristen Hays in Houston, Rachelle Younglai in Venice, Louisiana, Angela Moon and Daniel Trotta in New York, and Paul Hoskins in London; Writing by Michael Shields and Tom Bergin, Editing by Lin Noueihed)


BP to conduct test to show if Gulf well dead
18 Sep 2010 22:21:45 GMT
Source: Reuters
HOUSTON, Sept 18 (Reuters) - BP Plc will conduct a pressure test on its ruptured Gulf of Mexico oil well late on Saturday to make sure that cement pumped into the bottom killed it for good, the company said.

The test is the last step toward declaring the well dead and closing the seabed chapter of the worst oil spill in U.S. history. The disaster began nearly five months ago with a blowout and explosion that killed 11 men and sank a drilling rig. No announcement declaring the well dead is expected until Sunday.

BP faces years of litigation, multiple investigations and the daunting job of repairing its tattered image in the United States, where the London-based oil giant conducts 40 percent of its business. That includes the Gulf, where BP is the largest producer.

The blown-out Macondo well spewed more than 4 million barrels of oil into the Gulf before BP sealed it shut with a cap on the wellhead on July 15. The spill damaged coastlines along the U.S. Gulf Coast, killing wildlife and hurting the livelihood of fishermen and others.

BP pumped cement into the well from the top on Aug. 5. Repeating that procedure at the bottom through a relief well has long been considered the final assurance the well is dead.

The relief well intercepted the Macondo well late on Thursday near its bottom about 13,000 feet (4,000 metres) beneath the seabed. On Friday, BP pumped in cement for seven hours and waited for it to finish curing on Saturday before conducting the final test.

Retired Coast Guard Admiral Thad Allen said last week that if the test showed the reservoir was completely sealed off from the well and no oil could flow upward, he would declare the Macondo well dead. (Reporting by Kristen Hays; Editing by Peter Cooney)


W.House blocked BP oil spill estimates-Govt panel
06 Oct 2010 15:36:38 GMT
Source: Reuters
WASHINGTON, Oct 6 (Reuters) - The White House in the spring blocked release of government estimates on the worst-case scenario of the amount of oil that was spewing from BP's well in the Gulf of Mexico, the presidential commission looking into the accident said on Wednesday.

The commission said its staff was told that in late April or early May that the National Oceanic and Atmospheric Administration wanted to make public some of its long-term, worst-case spill models for the Deepwater Horizon accident and requested approval from the White House's Office of Management and Budget to make the information public.

"Staff was told that the Office of Management and Budget denied NOAA's request," the commission said in a draft report on the amount of oil spilled and what happened to it.

(Reporting by Tom Doggett; Editing by David Gregorio)


Tests warned of cement troubles before BP blowout


FILE - In this April 21, 2010 file aerial photo taken in the Gulf of Mexico more than 50 miles southeast of Venice, La., the Deepwater Horizon oil rig AP – FILE - In this April 21, 2010 file aerial photo taken in the Gulf of Mexico more than 50 miles southeast …

* Gulf Coast Oil Spill Slideshow:Gulf Coast Oil Spill
* Six Months Later: Oil Victims Feel Abandoned Play Video Video:Six Months Later: Oil Victims Feel Abandoned AP

By DINA CAPPIELLO, Associated Press Dina Cappiello, Associated Press – 2 mins ago

WASHINGTON – Tests performed before the deadly blowout of BP's oil well in the Gulf of Mexico should have raised doubts about the cement used to seal the well, but the company and its cementing contractor used it anyway, investigators with the president's oil spill commission said Thursday.

It's the first finding from the commission looking into the causes of the April 20 explosion that killed 11 workers and led to the largest offshore oil spill in U.S. history. And it appears to conflict with statements made by Halliburton Co., which has said its tests showed the cement mix was stable. The company instead has said BP's well design and operations are responsible for the disaster.

The cement mix's failure to prevent oil and gas from entering the well has been identified by BP and others as one of the causes of the accident.

BP and Halliburton decided to use a foam slurry created by injecting nitrogen into cement to secure the bottom of the well, a decision outside experts have criticized.

The panel says that of four tests done in February and April by Halliburton, only one — the last — showed the mix would hold. But the results of that single successful test were not shared with BP, and may not have reached Halliburton, before the cement was pumped, according to a letter sent to commissioners Thursday by chief investigative counsel Fred H. Bartlit, Jr.

BP had in hand at the time of the blowout the results of only one of the tests — a February analysis sent to BP by Halliburton in a March 8 e-mail that indicated the cement could fail. The slurry tested in that case was a slightly different blend, and assumed a slightly different well design, but there is no indication that Halliburton flagged the problem for BP, or that BP had concerns, the letter says.

"Halliburton (and perhaps BP) should have considered redesigning the foam slurry before pumping it at the Macondo well," Bartlit writes.

Independent tests conducted for the commission by Chevron on a nearly identical mixture were also released Thursday. The results conclude the cement mix was unstable, raising questions about the validity of Halliburton's final test.

BP, as part of its internal investigation, also conducted tests that showed the cement mix was flawed, but its analysis was criticized by Halliburton, which said it was not the correct formula. The company also said the testing Halliburton did on the cement was incomplete.

By contrast, the commission obtained proprietary additives from Halliburton as well as a recipe to recreate the slurry that was used on the well.

A spokeswoman for Halliburton said the company was reviewing the findings and would have a response later Thursday.
Larger version
Interactive map: 2010 race snapshot

In testimony before the joint Coast Guard-Bureau of Ocean Energy Management investigative panel, Halliburton engineer Jesse Gagliano, when asked if he would pour the same cement again, said he would.

"I am comfortable with the slurry design," he said.

The independent investigators do not address other decisions that could have contributed to the cement's failure, such as BP's decision to use fewer centralizers than recommended by Halliburton. Centralizers make sure the well's piping is centered inside the well so the cement bonds correctly. BP has also been criticized for not performing a cement bond long, a test that checks after the cement is pumped down whether it is secure. There are also questions about whether BP pumped down enough cement to seal off the bottom of the well, which was located more than three miles below sea level.



Presidential Oil Spill Commission: http://www.oilspillcommission.gov


Halliburton used flawed cement on BP well-panel
28 Oct 2010 22:00:19 GMT
Source: Reuters
* Halliburton stock down nearly 8 pct on commission report

* Halliburton, BP aware of cement flaws before blowout (Recasts lead, adds closing stock prices, lawmaker comment)

By Chris Baltimore

HOUSTON, Oct 28 (Reuters) - Halliburton Co. used flawed cement in BP Plc's doomed Gulf of Mexico well, which could have contributed to the blowout that sparked the worst offshore oil spill in U.S. history, a White House panel said on Thursday.

Halliburton's shares tumbled as much as 16 percent after the National Oil Spill Commission released a letter detailing the panel's findings, before recovering to close down nearly 8 percent at $31.68 per share on the New York Stock Exchange [ID:nN28264019]. BP's U.S.-listed shares closed up 1.3 percent at $40.60 per share.

While not absolving BP of responsibility, the report heaped criticism on Halliburton's cement job, raising investor concerns it could be forced to bear some of the clean-up costs. BP has taken a $32.2 billion earnings charge to cover the cleanup.

The cost to insure Halliburton's debt jumped on the news. [ID:nN28225928]

Halliburton had run a series of tests that showed the material was unstable in the weeks before the April 20 explosion on the Deepwater Horizon rig, which killed 11 workers and spurred a temporary ban on deepwater U.S. drilling.

In an emailed statement, Halliburton said it is reviewing the report and will publish a response later on Thursday. A BP spokesman declined to comment.

Both Halliburton and BP were aware of flaws in the cement slurry, similar to the one used to seal the mile-deep Macondo well, as early as March 8, over a month before the spill, "but neither acted upon that data,"
according to National Oil Spill Commission chief counsel Fred Bartlit.

"The fact that BP and Halliburton knew this cement job could fail only solidifies their liability and responsibility for this disaster," said Rep. Edward Markey, a Democratic lawmaker who has criticized BP and its well partners.

The industry has developed tests to identify faulty cement jobs in offshore wells, but "BP and/or Transocean personnel misinterpreted or chose not to conduct such tests at the Macondo well,"
Bartlit wrote.

Tests conducted by industry cement experts show "the foam cement used at Macondo was unstable," Bartlit wrote in a letter to co-chairs Bob Graham and Bill Reilly. "Halliburton (and perhaps BP) should have considered redesigning the foam slurry before pumping it at the Macondo well."

(To read the letter, click on http://www.oilspillcommission.gov/letter/letter-mr-bartlit-oil-spill-commission)

The report supports claims by BP that it shares the responsibility for the disaster with its Macondo partners, including Swiss-based Transocean Ltd , which owned the Deepwater Horizon rig.

In an interim report BP issued in September, it said Halliburton used an "unstable" cement mixture that allowed hydrocarbons to flow up the drill pipe and onto the floor of the rig, where they ignited.

The resulting spill marred the coasts of four U.S. Gulf states, prompted a ban on new deepwater drilling and left BP's image in tatters in the United States, home to 40 percent of the London-based oil giant's business. (Additional reporting by Anna Driver in Houston, Braden Reddall in San Francisco and Ayesha Rascoe in Washington; Editing by Stacey Joyce and Jerry Norton)


BP shares up after contractor criticised on spill
29 Oct 2010 08:52:02 GMT
Source: Reuters
* Presidential panel says Halliburton knew of flaws

* Analysts see blame shifting away from BP, lower fines

* Shares rise 1.1 percent

(Adds analyst)

By Tom Bergin

LONDON, Oct 29 (Reuters) - BP shares rose 1 percent on Friday after investigators said its contractor Halliburton Co. used flawed cement in the Gulf of Mexico well that caused the worst offshore oil spill in U.S. history. [ID:nN28101677]

A U.S. Presidential panel appointed to probe the rig blast that led to the spill said late on Thursday that tests on the type of cement used on the well showed it was prone to failing. It added that Halliburton knew this and told BP.

"This is the first time that anyone apart from BP has been seen to be responsible for the disaster," Peter Hitchens, oil analyst at Panmure Gordon, said in a research note.

"If BP can show that this is an unfortunate accident rather than its own gross negligence, it will lead to lower fines and costs".

Richard Griffith, oil analyst at Evolution Securities said BP shares were factoring in costs of nearly $65 billon - reflecting fears that gross negligence could be found but he is optimistic the eventual costs will be half this level.

"(The panel's statement) may make the gross negligence case against BP more difficult to prove,"
he said.

BP shares traded up 1.1 percent at 428 at 0842 GMT, against a 0.4 percent rise in the STOXX Europe 600 Oil and Gas index <.SXEP>.

Halliburton's shares tumbled as much as 16 percent on Thursday on the panel's comments, on fears it could have to shoulder some of the spill costs. (Editing by Jon Loades-Carter)


BP ups spill cost estimate by $8 bln, profits dive
02 Nov 2010 07:20:27 GMT
Source: Reuters
* Total likely cost of spill rises to $39.9 billion

* Q3 replacement cost profit down 63 pct to $1.8 bln

(Adds details)

LONDON, Nov 2 (Reuters) - BP lifted its estimate of the likely cost of its Gulf of Mexico oil spill by $7.7 billion to $39.9 billion on Tuesday, pushing its profits down sharply in spite of higher oil and gas prices.

BP, the world's biggest non-government controlled oil company by production last year, said delays in capping its blown out well prompted the increased charge for ending the leak, cleaning up the damage and compensating those affected.

BP said third-quarter replacement cost profit, which strips out unrealised gains or losses related to changes in the value of fuel inventories, fell 63 percent to $1.8 billion.

Stripping out one-offs, including the oil spill costs, the underlying results rose 18 percent to $5.53 billion, well ahead of an average forecast $4.60 billion from a Reuters poll of seven analysts.


Feds sue BP, other companies for oil spill damages

EmailPrint.. AP – FILE - In this June 12, 2010, file photo, crude oil from the Deepwater Horizon oil spill washes ashore …
. Slideshow:Gulf Coast Oil Spill .
Play Video Video:U.S. sues BP, 8 other companies in Gulf spill AP .
Related Quotes Symbol Price Change

– 49 mins ago
NEW ORLEANS – The Justice Department sued BP and several other companies involved in the Gulf oil spill Wednesday, an opening salvo in the government's effort to get billions of dollars for untold economic and environmental damage.

The government accuses the companies of disregarding federal safety regulations in drilling the well that blew out April 20 and triggered a deadly explosion on the Deepwater Horizon rig. The lawsuit is separate from a Justice Department criminal probe that has not resulted in any charges.

"The department's focus on investigating this disaster and preventing future (spills) is not over," Attorney General Eric Holder said during a news conference in Washington. "Both our civil and criminal investigations are ongoing."

The federal lawsuit filed in New Orleans names BP, rig owner Transocean and some other companies involved in the ill-fated drilling project, but not Halliburton — the project's cement contractor — or the maker of a key cutoff valve that failed. Both could be added later.

BP said it would respond to the claims at a later date but noted that it stands "alone among the parties" in having already stepped up to pay for the cleanup. It said in a statement that it will continue to fulfill its commitments to the Gulf and to cooperate with ongoing investigations.

"The filing is solely a statement of the government's allegations and does not in any manner constitute any finding of liability or any judicial finding that the allegations have merit,"
BP said.

The lawsuit makes it possible for the federal government to seek billions of dollars in penalties for polluting the Gulf of Mexico, beaches and wetlands, and reimbursement for its cleanup costs. More than 300 lawsuits filed previously by individuals and businesses, and now consolidated in the New Orleans federal court, include claims for financial losses and compensation for the families of 11 workers killed in the blast.

The judge overseeing those lawsuits had set Wednesday as the deadline to file certain types of complaints, though it was unclear whether the government was bound by that time frame.

"The Justice Department has left its options open to argue that there was gross negligence and therefore should be higher penalties,"
said David Uhlmann, a law professor at the University of Michigan who headed up the Justice Department's environmental crimes section for seven years.
"The government has not limited itself in any way with the filing of its civil lawsuit."

The suit asks that the companies be held liable without limitation under the Oil Pollution Act for all removal costs and damages caused by the spill, including damages to natural resources. The lawsuit also seeks civil penalties under the Clean Water Act.

The government did not set a dollar figure in the lawsuit, saying the amount of damages and the extent of injuries sustained by the United States are not yet fully known.

Under the Clean Water Act alone, BP faces fines of up to $1,100 for each barrel of oil spilled. If BP were found to have committed gross negligence or willful misconduct, the fine could be up to $4,300 per barrel.

That means that based on the government's estimate of 206 million gallons released by the well, BP could face civil fines of between $5.4 billion and $21.1 billion. BP disputes the government's spill estimate.

The government did not specify in its lawsuit whether it believes there was gross negligence, but it left open the possibility for such a finding later.

Besides BP Exploration & Production Inc., the other defendants in the case are Anadarko Exploration & Production LP; Anadarko Petroleum Corp.; MOEX Offshore 2007 LLC; Triton Asset Leasing GMBH; Transocean Holdings LLC; Transocean Offshore Deepwater Drilling Inc.; Transocean Deepwater Inc.; and Transocean's insurer, QBE Underwriting Ltd./Lloyd's Syndicate 1036. Anadarko and MOEX are minority owners of the well that blew out.

Transocean disputed the allegations and insisted it should not be held liable.

"No drilling contractor has ever been held liable for discharges from a well under the Oil Pollution Act of 1990," Transocean said in a statement. "The responsibility for hydrocarbons discharged from a well lies solely with its owner and operator."

Anadarko said ultimate responsibility may rest solely with the operator of the well — BP.

"As a non-operating minority interest holder in the well, we were not involved in the operations or decisions that occurred on the drilling rig," Anadarko said in a statement. "We recognize that we may have obligations under federal law, and we will continue to look to the operator to pay all legitimate claims as it has committed to do."

The staff of a presidentially appointed commission looking into the spill has said the disaster resulted from questionable decisions and management failures by BP, Transocean and Halliburton Energy Services Inc. The panel found 11 decisions made by these companies increased risk. Most saved time, and all but one had a safer alternative.

Halliburton and Cameron International, which made the rig's failed blowout preventer, weren't named as defendants in the suit. Halliburton did not immediately respond to a request for comment.
Eric Schaeffer, who led the Environmental Protection Agency's civil enforcement office from 1997 to 2002, cited three possible explanations for omitting Halliburton. The company could be close to a settlement, Justice needs more time to develop its case against Halliburton, or the government thinks it doesn't have a strong enough case against Halliburton.

Schaeffer said he doubts the government will let Halliburton completely off the hook.

"I would be inclined more toward the first explanation," Schaeffer said. "If they think Halliburton is maybe less culpable, they may be able to reach a settlement quicker. That could help them build their case against the rest of the companies."

Bruce Parris, manager of The Dock restaurant and bar just a few feet off the sand in Pensacola Beach, Fla., said "it's about time" President Obama started to hold BP accountable. He was standing on the restaurant's deck, watching large tractors sift through the sand as part of BP's beach cleanup operations.

"I'm all for anything. I don't care how they get money out of BP. Just get it," Parris said.

Separately, an administrator is doling out money to spill victims from a $20 billion fund of BP money.

The government's lawsuit alleges that safety and operating regulations were violated in the period leading up to the explosion.

It says the defendants failed to keep the well under control and failed to use the best available and safest drilling technology to monitor the well's conditions. They also failed to maintain continuous surveillance, and to maintain the equipment and material necessary to protect workers, natural resources and the environment, the suit charges.

The Justice Department isn't the first government entity to sue BP. Alabama Attorney General Troy King filed federal lawsuits in August on behalf of the state against BP, Transocean, Halliburton and other companies that worked on the project.


BP, Transocean shares shrug off U.S. oil spill report EmailPrint..

Reuters – A BP logo is seen on a petrol station in London November 2, 2010. REUTERS/Suzanne Plunkett
Play Video Energy & Oil Video:Panel: Massive oil spill could happen again 11 News Houston .
Play Video Energy & Oil Video:Crude Oil Futures Turn Positive CNBC .
By Tom Bergin Tom Bergin – Thu Jan 6, 6:50 am ET
LONDON (Reuters) – Shares in BP and Transocean rose on Thursday as investors bet a new U.S. Presidential panel report that spread the blame for the country's worst-ever oil spill meant the firms would avoid the massive costs of a gross negligence charge.

BP's London-listed shares were up 1.6 percent at 507.6 pence at 1100 GMT (6 a.m. ET), while shares in Transocean's Swiss-listed shares were up 3.9 percent. The STOXX 600 European oil and gas sector index was up 1.2 percent, on higher oil prices.

One top 10 investor in BP said the fact that the blame for the blowout was shared with drilling contractor Transocean and well cementer Halliburton suggested the London-based oil major was less likely to face gross negligence charges.

Under U.S. law, BP faces fines of $5 billion because the spill happened on its exploration block.
However, the fine could rise above $21 billion if Europe's second-largest oil company by market value was found to have been grossly negligent in the run-up to the blast.

Peter Hitchens, oil analyst at Panmure Gordon, said comments made in the report that the management failure which caused the explosion on the Deepwater Horizon rig reflected industry-wide flaws, also made BP appear less culpable.

And while the report was damning, Richard Griffith, analyst at Evolution Securities said it could also mean BP can offload some of the costs of cleaning up the spill onto its contractors.
"The report may provide grounds for BP to claw back monies from license partners and possibly Transocean and Halliburton," he said in a research note.

(Additional reporting by Raji Menon and Sarah Young; Editing by Greg Mahlich)


By ROBERT BARR, Associated Press Robert Barr, Associated Press – 7 mins ago
LONDON – BP announced Tuesday it is resuming dividend payouts for the first time since the Gulf of Mexico well disaster, despite suffering its first full-year loss since 1992, and plans to sell off almost half of its U.S. refinery business.

BP said a stronger-than-expected end to 2010, in which high oil prices lifted fourth quarter profit by 30 percent, was not enough to avoid a full-year loss of $3.7 billion.

It raised to $40.9 billion its estimate for the overall cost of the spill. The charge covers the cost of the explosion aboard the Deepwater Horizon rig, which killed 11 workers in April, as well as plugging the well and cleaning up the southern U.S. coast. BP said the final total "is subject to significant uncertainty."
BP, which suspended dividends following the Macondo well blowout in the Gulf of Mexico in April, said it would pay out 7 cents per share, or about $1.25 billion over all — half the amount paid in the fourth quarter of 2009.

"We believe now is the right time to resume payment of a dividend to our shareholders," said Chairman Carl-Henric Svanberg.

"We have chosen a prudent level that reflects the company's strong underlying financial and operating performance but also recognizes the need to fully meet our obligations in the Gulf of Mexico and to maintain financial flexibility."

The company's fourth quarter profit of $5.6 billion was up from net earnings of $4.3 billion a year earlier. However, for the full year BP booked a loss of $3.7 billion compared with a profit of $16.6 billion in 2009.

Replacement cost profit — a closely watched industry measure which reflects inventory gains and losses — was $4.6 billion for the quarter, up from $3.4 billion a year earlier. For the full year BP saw a replacement cost loss of $4.9 billion, compared with a profit of $14 billion in 2009.

BP PLC shares were down 2.9 percent at 482 pence in early trading on the London Stock Exchange.

"The market may be slightly underwhelmed by the lack of a more radical restructuring plan but with Macondo still an ongoing issue it may be too early for BP to implement more radical plans," said Richard Griffith, analyst at Evolution Securities.

BP did not say how much it expected to gain from the sale of its U.S. refineries, which include the Texas City refinery where 15 workers died in a massive explosion in 2005.

It said it had spent more than $1 billion modernizing the Texas City plant, but noted it "lacks strong integration into any BP marketing assets." However, BP said it will keep the chemicals complex at Texas City.

The company said it also hopes to sell the Carson refinery near Los Angeles along with its marketing business in southern California, Arizona and Nevada. The company plans to concentrate its U.S. refining and marketing activity at Whiting, Indiana and Cherry Point, Washington, as well as in its 50 percent stake in the Toledo, Ohio facility.

"2011 will be a year of recovery and consolidation as we implement the changes we have identified to reduce operational risk and meet our commitments arising from the spill," said BP Chief Executive Bob Dudley. "But it will also be a year in which we have the opportunity to reset the company, adjusting the shape of our business, and focus on growing value for shareholders."

Meanwhile, BP's lawyers were due in court in London on Tuesday to contest a challenge to the company's ambitious plans to explore for offshore oil in the Arctic with its new Russian partner, Rosneft.
BP's current Russian joint venture, TNK-BP, is seeking an injunction to block the deal on grounds that it violates their agreement. TNK-BP now accounts for a quarter of BP's oil production.

BP's Russian partners in the AAR consortium, which owns the other half of TNK-BP, on Monday voted against a $1.8 billion dividend payout for the fourth quarter, a move that would deprive BP of $900 million.

In the Gulf of Mexico, BP said activity has been winding down since no significant volume of oily liquid has been recovered from the Gulf since July 21, and 98.8 percent of the waters formerly closed to fishing had been reopened. The number of people employed on the cleanup had dropped from 20,000 to about 6,200, BP said.

As of this weekend, about 91,000 people and businesses had filed for final settlements of claims from the $20 billion fund, administered by Washington lawyer Kenneth Feinberg. Thousands of people have received some money to tide them over until a final settlement amount is offered, but only one has been fully paid — a $10 million claim which BP called a unique situation.


BP claims process enters new, uncertain phase

10 Feb 2011 13:00

Source: reuters // Reuters

* BP claims process in new phase of uncertainty

* Claimants could try to reopen settled claims

* Ruling puts BP fund under court jurisdiction

By Moira Herbst

NEW YORK, Feb 10 (Reuters Legal) - Kenneth Feinberg, the formerly freewheeling administrator of BP Plc's fund to compensate victims of last year's oil spill, could be forced to revamp dramatically how he handles claims now that the fund has come under the jurisdiction of a federal judge in New Orleans.

A ruling last week by U.S. District Judge Carl Barbier that Feinberg stop telling potential claimants that he is "completely independent" of BP brings Feinberg and the fund -- created in the wake of the largest oil spill in U.S. history -- under judicial oversight for the first time.

Beyond the immediate directive about how the fund describes itself, Barbier's decision also opens the door for more changes to how the fund operates, according to experts in mass torts and legal ethics. Specifically, it could lead to the renegotiation or undoing of settled claims, ongoing court intervention in the fund's operations, and more claimants seeking legal representation.

"It's a significant assertion of oversight, if not control, of the claims process by the judge," said David Logan, dean of Roger Williams University School of Law in Bristol, Rhode Island. "There is now a question mark looming over the accuracy of the decisions made up to this point by the (fund) and over how it will work moving forward."
The unprecedented $20 billion Gulf Coast Claims Facility (GCCF) was set up after a meeting between BP and President Barack Obama last June. The White House said at the time that the claims process would be independent and Obama tapped Feinberg, who ran the 9/11 victims' compensation fund, to administer it. BP pays $850,000 a month to Feinberg's Washington, D.C., firm, Feinberg Rozen, for his services.

Feinberg, who has promoted his claims process as faster and less costly than litigation, has paid out more than 250,000 awards to individuals and businesses worth more than $3.36 billion.

Of those, more than 86,000 claimants signed releases saying they will not sue BP or its partners. Until last week's ruling by Barbier, who is overseeing hundreds of spill-related lawsuits against BP, Feinberg did not answer to any court or government agency.

To be sure, some scholars and practitioners are downplaying the potential impact of Barbier's order and say the court is unlikely to intervene further in the fund's operations. In his ruling, Barbier called his own order a "narrowly focused remedy" that "will not unduly burden BP's, Mr. Feinberg's and the GCCF's ability to speak on their own behalf."

But several academics and plaintiffs' attorneys said that, based on Barbier's ruling, settlements already made with the fund could be reevaluated. A court could invalidate the agreements or allow them to be renegotiated if claimants can prove there was deception on the part of the fund, said Monroe Freedman, a professor at Hofstra University School of Law and contributor to the Legal Ethics Forum, a popular legal blog.
The court's opinion makes it clear that Feinberg acted "misleadingly, at best," by saying he was independent of BP, Freedman said. "As a result, tens of thousands of claimants who were effectively defrauded will have the opportunity to open the settlements they entered into." In an e-mail, BP said, "We do not believe that there is any basis to undo or challenge the settlements that have been concluded." Feinberg declined to comment.

Kevin Dean, an attorney with the plaintiffs' firm Motley Rice in Mount Pleasant, South Carolina, said he has reached out to clients who had accepted settlements and given up the right to sue to inform them of the judge's ruling. He said his clients were forced to accept these settlements under financial duress and were not informed of their rights before they signed legal releases. If the court takes no further action in the next 30 to 60 days, Dean said he will confer again with his clients to explore their legal options. "My firm believes that clients were forced financially to take an ill-advised settlement, and that that's a violation of the Oil Pollution Act."

The Oil Pollution Act of 1990 requires the responsible party -- in this case, BP -- to set up a claims fund to compensate victims, but does not specify how the fund should resolve claims and makes no mention of claimants signing legal releases giving up the right to sue. Now that Barbier has brought the fund under his jurisdiction in the Eastern District of Louisiana, he could rule on whether the fund can ask claimants to sign away their legal rights. And he could appoint a special master to supervise the fund's oral and written communications, including release forms.
In addition, more claimants or would-be claimants could seek legal representation for their dealings with the fund. As of this week, fewer than 3 percent of those filing claims had their own lawyers. Plaintiffs' attorney Daniel Becnel, who heads a 21-lawyer firm based in Reserve, Louisiana, said his firm has taken on hundreds of new clients in the days following Barbier's ruling -- most of them looking for help bargaining with the claims fund.

Claimants now understand that the process is adversarial, according to Byron Stier, a professor of mass tort litigation at Southwestern Law School in Los Angeles. "It's much more one of haggling and negotiation than of processing paperwork and tendering contracts," Stier said. "It's now clear that claimants need counsel to determine if the fund is the right path for them."

Barbier has asked plaintiffs and defense in the consolidated case against BP to submit briefs by Feb. 11 on the claim fund's compliance with the Oil Pollution Act. (Reporting by Moira Herbst of Reuters Legal; Editing by Eddie Evans and Eric Effron) (This article first appeared on Westlaw News & Insight, www.westlawnews.com)

BP sues rig owner for $40B; blames it for disaster

By HARRY R. WEBER, Associated Press Harry R. Weber, Associated Press – 2 hrs 14 mins ago
NEW ORLEANS – BP on Wednesday sued the maker of the device that failed to stop last year's calamitous Gulf oil spill and the owner of the rig that exploded, alleging that negligence by both helped cause the disaster.

The British company said in papers filed in federal court in New Orleans that it is suing rig owner Transocean for at least $40 billion in damages, accusing it of causing last year's deadly blowout in the Gulf of Mexico that led to the worst offshore oil spill in U.S. history. BP says every single safety system and device and well control procedure on the Deepwater Horizon rig failed.

It also is suing Cameron International, which provided a blowout preventer with a faulty design, which caused an unreasonable amount of risk that harm would occur. Both companies have filed counter claims against BP.

The filings are essentially legal maneuvers to preserve the companies' claims. A federal trial is scheduled for next year that will determine which companies are at fault and how much their liability should be.

The lawsuits, filed on the first anniversary of the explosion that led to the spill, seeks damages to help BP pay for the tens of billions of dollars in liabilities it has incurred from the disaster. Though BP has estimated its liabilities at $40.9 billion, it still could face tens of billions of dollars more in civil and criminal fines and penalties from the U.S. government.

"The Deepwater Horizon BOP was unreasonably dangerous, and has caused and continues to cause harm, loss, injuries, and damages to BP (and others) stemming from the blowout of Macondo well, the resulting explosion and fire onboard the Deepwater Horizon, the efforts to regain control of the Macondo well, and the oil spill that ensued before control of the Macondo well could be regained,"
BP said in the lawsuit against Cameron.

BP wants the court to award the oil giant damages against Cameron and to declare that the device maker caused or contributed to the disaster and is responsible for some or all costs incurred by BP.

Eleven people were killed when the Deepwater Horizon rig exploded on April 20, 2010, leading to more than 200 million gallons of oil spewing from an undersea well.

A testing firm hired by the government determined last month the blowout preventer had a faulty design. But it also cited other problems related to rig crew actions.
BP said in a statement that it wants Transocean to pay its "proportionate" share of all damages and liabilities from the disaster.

In a statement, Transocean called BP's lawsuit "desperate," "specious," and "unconscionable."
"The Deepwater Horizon was a world-class drilling rig manned by a top-flight crew that was put in jeopardy by BP, the operator of the Macondo well, thorough a series of cost-saving decisions that increased risk — in some cases, severely," Transocean said.

Also Wednesday, Transocean filed court papers demanding that judgments be made against BP, Cameron and other companies in its favor. Among other things, Transocean wants a judgment against BP for $12.9 million and a judgment against cement contractor Halliburton and other companies for $20 million.

Transocean said the figures stem from contractual obligations and the money it lost when the rig sank.

unconscionable: Beyond prudence or reason; excessive:

Specious: Having the ring of truth or plausibility but actually fallacious: a specious argument.
Deceptively attractive.

Houston-based Cameron noted in a statement emailed to AP that Wednesday was the deadline under the relevant statute for all parties to file claims against each other.

"It is not surprising that the companies are filing to protect their indemnity rights (except in the case of BP) and whatever claims they believe they have," Cameron said. "Additionally, in order to protect ourselves, we, too, have filed crossclaims and counterclaims, including our indemnity claims, against other parties to the litigation."

Cameron, one of the largest makers of blowout preventers, has defended the integrity of its devices and workmanship.


For $20 bln BP claims fund, legal challenges loom

20 Apr 2011 23:25

Source: reuters // Reuters

* Fund accused of distributing money slowly and unfairly

* Feinberg says fund is "working as intended"

* Mississippi AG considers suing Feinberg (Adds details)

By Moira Herbst

NEW YORK, April 20 (Reuters) - On the one-year anniversary of the Gulf oil spill, BP Plc BP.L is facing challenges to its effort to contain another kind of disaster: mass litigation.

The oil giant last June established a $20 billion compensation fund for victims such as shrimpers, fishermen and property owners, with certain incentives for those who agreed not to sue the company and partners.

In an interview, Kenneth Feinberg, who oversees the fund, said it is "working as intended." Some 280,500 claimants have applied for the final phase of the process, of whom roughly 126,500 have been paid for a total of about $1.3 billion. Virtually all claims from an earlier, emergency phase have been resolved for a total of $2.6 billion. "The sheer volume of claims processed demonstrates the success of the program, and the fact that almost $4 billion has gone out in less than nine months," Feinberg said.

However, Feinberg is under attack from Mississippi Attorney General Jim Hood, other Gulf-state officials, victims's; advocacy groups and plaintiffs's lawyers, who allege that he is distributing the money slowly and unfairly. Hood told Reuters that he is considering suing Feinberg for failing to turn over fund-related documents in response to a February subpoena seeking "unfettered access" to fund records.

Earlier this month, Hood filed a notice in New Orleans federal court seeking an independent, court-appointed audit of the fund, known as the Gulf Coast Claims Facility. Hood accuses Feinberg of delaying or denying awards to victims -- especially those who don't give up their rights to sue the company and its partners. So far, according to Reuters calculations of claims processed by the Gulf Coast Claims Facility, awards have been paid to approximately 17 percent of these so-called "interim" claimants, for a total of $83.3 million. By comparison, awards have been paid to 67 percent of claimants who have signed away their rights to litigate, for a total of $1.18 billion.

Hood argues that the fund is processing fewer interim claims and is instead "using its resources to extract releases from claimants" through what is known as the "Quick Pay" option. Under this option, individuals who received emergency money in the first phase are eligible to receive $5,000, and businesses are eligible to receive $25,000, in exchange for an agreement not to sue BP and its partners.

Feinberg disputed the idea that the claims facility is pushing claimants to take the Quick Pay option. "I categorically disagree with the proposition advanced by some that there is institutional favoritism in favor of Quick Pay," he said. "I have not heard the 110,000 people who took it complaining." He said many claimants chose the option because they feel adequately compensated or cannot document or prove any additional damage.

In a response to Hood's subpoena, Feinberg argued that further intervention would slow claims processing. The matter is currently before Judge Carl J. Barbier of the Eastern District of Louisiana. In February, Barbier brought the Gulf Coast Claims Facility under court supervision and ordered Feinberg to stop calling it "completely independent" of BP.

Legal experts say Barbier could potentially order changes to legal release forms signed by some claimants or call for an audit of the fund. "I wouldn't be surprised if (Barbier) is inclined to get even further involved if he is presented with additional examples of fundamental unfairness," said David A. Logan, dean of Roger Williams University School of Law in Bristol, Rhode Island.


Victims's advocacy groups say some claimants who suffered similar losses are not receiving the same treatment. "There is an inconsistency in result despite similar or identical fact situations," said John Jopling, an attorney for the Mississippi Center for Justice, a group receiving funding from the Gulf Coast Claims Facility to assist claimants who don't have lawyers.

Eddie Patingo, a ship fitter for Edison Chouest Offshore in Gulfport, Mississippi, said that in the wake of the oil spill, his average work week shrank from 52 hours to 40, and over the course of three months he lost $8,800 in pay. He submitted a claim for emergency funding in September, which he said was denied. He submitted another claim in January and said he has not yet heard back. Patingo said he works alongside 200 people doing the same work and who faced similar losses, and estimates that 175 have been compensated and 25 have not. "We're all in the same situation and only some of us have been paid. How does that happen?" he asked.

Feinberg acknowledged in an April 19 news conference that there have been "too many" inconsistent claims awards, and that the fund is working to resolve that problem. "It rankles me when claimants say, 'I received x and my neighbor received x plus y; we were in the same job, location, et cetera," he said. "There may be some very valid reasons for discrepancies, like documentation of the next-door neighbor. But we try to make right by the neighbor and fix the payment."

Fishermen and others operating on a cash basis complain they cannot produce the proof required to have a claim approved. "The document list the fund requires is in many instances nonsensical(Lacking intelligible meaning:), and is clearly drawn up by people who don't understand the shrimping, oyster, or crab businesses," said Gerard Nolting, an attorney with Faegre & Benson LLP, who represents hundreds of clients submitting claims to the Gulf Coast Claims Facility, most of them Vietnamese-Americans. "They're asking for documents these people never generate or keep," such as profit-and-loss statements, Nolting said.

Feinberg said he is willing to talk with claimants and attorneys about how claimants can prove their lost profits or earnings, but he refuses to pay claims with no documentation.

Nolting said he is not yet prepared to assess Feinberg and the fund's work. "We think it's too early to be judging the fund; you don't review a movie after watching 15 minutes of it," he said. "The jury is out on the fund right now."

(Reporting by Moira Herbst; Editing by Amy Stevens)


Obama seeks more drilling in Alaska, Gulf of Mexico

14 May 2011 17:21

Source: reuters // Reuters

* Calls for annual lease sales at Alaskan reserve

* Still opposed to drilling in wildlife refuge (Adds quotes from Obama, Republicans, U.S. official)

By Jeff Mason and Tom Doggett

WASHINGTON, May 14 (Reuters) - U.S. President Barack Obama, under pressure from Republicans and the public to bring down gasoline prices, announced new measures on Saturday to expand domestic oil production in Alaska and the Gulf of Mexico.

High fuel prices have dented Obama's ratings in opinion polls and threaten to dampen the economic recovery that is critical to his re-election in 2012.

The president, a Democrat, has pushed for reducing U.S. oil consumption and expanding renewable energy sources while also encouraging domestic oil and gas production -- an area Republicans want to expand dramatically.

In his weekly radio and Internet address, the president met some of those Republican demands, outlining ways to boost domestic drilling and streamline the process of issuing permits in Alaska.

"I am directing the Department of Interior to conduct annual lease sales in Alaska's National Petroleum Reserve, while respecting sensitive areas, and to speed up the evaluation of oil and gas resources in the mid and south Atlantic," Obama said in the address.

"I believe that we should expand oil production in America -- even as we increase safety and environmental standards."

Government lease sales give energy companies the chance to rent offshore or onshore federal tracts, which can be drilled for oil or natural gas. Companies with the highest bids generally lease the tracts for 10 years.

Alaska's National Petroleum Reserve (NPRA) is a 23 million acre area originally set aside in 1923 as a fuel source for the U.S. military. It is located in the northwest corner of Alaska near the Arctic National Wildlife Refuge (ANWR), which the Bush administration tried to open for exploration against objections from environmental groups.

The Obama administration remains firmly opposed to drilling on that site. "Drilling in the Arctic Refuge is off the table," a senior administration official said.

The NPRA is a different story, however. Rising crude prices have boosted the amount of oil that can be recovered economically from that area, even though it holds less oil than previously thought, the government said last week.

Lease sales on the site have been held periodically but not on an annual basis.


The White House is increasingly concerned about the effects of rising oil prices on U.S. consumers and on Obama's political prospects. While acknowledging the importance of domestic drilling, it has repeatedly said domestic production is not a panacea to solve the country's energy woes.

Taking new measures to boost drilling addresses criticism from some lawmakers in both parties, who put pressure on the administration to make it easier for energy exploration to continue in the Gulf of Mexico after the BP oil spill.

"The policy changes (the president) announced are not terribly substantial, but should pave the way for legislation -- like the bills the House passed in the past two weeks -- to reduce the damage from the restrictions he imposed in the past," said Brendan Buck, spokesman for Republican House of Representatives Speaker John Boehner.

The administration banned new exploration on offshore leased tracts for about six months after the spill.

The president said the Interior Department would extend the life of the affected leases to make up for the lost time companies had to explore for oil. That was a requirement of Republican-backed legislation approved this week in the House.

The legislation would also require the government to hold certain lease sales in the Gulf, which administration officials said the department would do by mid-2012.

"We plan to lease new areas in the Gulf of Mexico as well, and work to create new incentives for industry to develop their unused leases both on and offshore," Obama said.

The president also promised to create an inter-agency group to streamline the permitting process for Alaska drilling.

That drew praise from Senator Lisa Murkowski, a Republican from Alaska. "Permitting is the single greatest obstacle to domestic production and the president's establishment of a new team to coordinate work on Alaska drilling permits is a positive development," she said.

That plan comes as Royal Dutch Shell relaunches its long-delayed push to drill off the coast of Alaska.

Over the past two weeks, the oil giant has submitted plans to the Interior Department to drill up to 10 wells in the Beaufort and Chukchi Seas in 2012 and 2013.

Opposition from environmental groups and other regulatory hurdles have scuttled Shell's Arctic drilling plans thus far, but the company said it has received more positive signals from government this time around. (Editing by Laura MacInnis)


Transocean investors back exec liability for 2010

18 May 2011 18:39

Source: reuters // Reuters

* 44 pct support discharge of execs from 2010 liability

* 94 pct of shareholders backed same proposal a year ago

SAN FRANCISCO, May 18 (Reuters) - Shareholders of rig contractor Transocean Ltd voted down a proposal by a healthy margin to discharge its board members and executives from liability for activities in 2010, according to a filing.

Votes in favor represented 44 percent of those cast, while 55 percent were against and the rest abstained, the Transocean filing with U.S. financial regulators said on Wednesday.

Last year's BP well blowout, which sank a Transocean rig and caused a disastrous oil spill in the Gulf of Mexico, led to a flurry of legal actions as the parties involved and those affected by it seek to attribute blame and recover damages. [ID:nLDE73K094]

The same proposal a year before, to discharge Transocean's board directors and executive officers from liability for activities in 2009, received 94 percent of the votes.

At the most recent shareholder meeting in Switzerland, the company also named a new chairman to succeed retiring Robert Rose, bringing back a former chief executive and chairman, Michael Talbert, to head its board. [ID:nN13112948] (Reporting by Braden Reddall, editing by Maureen Bavdek)


BREAKINGVIEWS-BP no longer fighting Macondo battle alone

20 May 2011 09:03

Source: reuters // Reuters

By Fiona Maharg Bravo

MADRID, May 20 (Reuters Breakingviews) - The UK oil major has reached a $1.1 bln settlement with Mitsui, one of its minority partners in the Macondo well. This represents a fraction of BP's estimated $41 bln bill. But BP could get a higher proportion from Anadarko and Transocean. The chances that BP is found grossly negligent look slimmer, too.

Full view will be published shortly.


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-- Reuters story: Mitsui to pay BP $1bln to settle oil spill claims [ID:nLDE74J06S]

-- The author is a Reuters Breakingviews columnist. The opinions expressed are her own --

-- For previous columns by the author, Reuters customers can click on [BRAVO/]

(Editing by Chris Hughes and David Evans)


BP cuts oil spill burden with $1bln Mitsui deal

20 May 2011 09:19

Source: reuters // Reuters

* Settlement excludes fines, any punitive damages

* Moex could have faced bill of around $4 bln

* Moex drops allegation BP negligence

* Moex joins BP in criticising Transocean safety systems

(Repeats to add Breakingviews link)

By Tom Bergin

LONDON, May 20 (Reuters) - BP struck a key victory in its battle to share the cost of the Gulf of Mexico oil spill on Friday when partner Mitsui & Co agreed to pay $1.1 billion towards the cleanup bill and possibly billions more in fines.

Japanese trading house Mitsui's <8031.T> exploration unit MOEX owned 10 percent of the doomed Macondo well but had sought to avoid paying its share of the costs, claiming BP's negligence exempted it from this obligation.

MOEX has dropped this claim and analysts said this weakened the case of 25 percent well shareholder Anadarko Petroleum , which has also invoked the same argument.

"This is the first recognition by one of the partners that actually...blame is shared and should be shared and therefore the costs should be shared as well," Societe Generale analyst Irene Himona said.

"It is very significant because clearly now it means that BP can try and ensure that everybody else who is involved will also meet their obligations,"
she added.

BP's shares jumped 3.6 percent on the news.

BP has estimated the cost of capping the well, cleaning up the damage from America's largest ever offshore oil spill and compensating those affected is over $41 billion, including fines, which analysts believe make up about $4 billion of the provision.

This suggests the Japanese company is paying less than a third of its potential liability in respect of the actual damages -- that is the cost of the clear-up, capping the leak and paying out to local businesses affected. On this basis, Anadarko could be liable for almost $2.7 billion.

However, one source close to the matter said BP was likely to seek a higher rate of recovery from Anadarko than it received from Mitsui, which did not have a direct liability to pay since it invested through MOEX, which had few assets.

Anadarko on the other hand does have a direct legal liability as it has invested directly in the well.

"Anadarko, BP's other partner in the Macondo licence is likely to come under pressure to settle as well now," said Richard Griffith at Evolution Securities.

In addition to actual damages, fines and punitive damages could double the $41 billion bill, lawyers have said.

Even at the bottom end of the range for fines and with no punitive damages, Moex is now liable for around another $1 billion in payments, while it could be on the hook for much more, potentially reducing BP's worst case scenario by several billion dollars. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

Breakingviews-BP no longer alone [ID:nLDE74J0H0] ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

MOEX has now joined BP in blaming the accident principally on Transocean , the company which BP hired to drill the well, under BP's instruction. BP has sought to extract the full cost of the disaster from the Swiss-based driller.

Transocean's contract with BP indemnifies it against environmental damage but if BP can prove gross negligence, it can overrule this indemnity.

The Commission appointed by President Barack Obama to investigate the rig blast which led to the United States's worst ever spill said BP was responsible for most of the bad decisions on the rig.

Mitsui said it had no plan to change its forecast net profit or dividend in 2011/2012 after the settlement. (Additional reporting by Sarah Young)


BREAKINGVIEWS-BP no longer fighting Macondo battle alone

20 May 2011 13:14

Source: reuters // Reuters

-- The author is a Reuters Breakingviews columnist. The opinions expressed are her own --

By Fiona Maharg Bravo

MADRID, May 20 (Reuters Breakingviews) - BP is no longer fighting the Macondo battle alone. For over a year since the tragic explosion on the Deepwater Horizon rig in the Gulf of Mexico, BP's partners in the well have blamed the UK oil major for the accident and refused to pay any bills. Now Mistui <8031.T>, with a 10 percent stake in the well, has agreed to pay BP $1.1 billion. The amount may be small, but the move is significant.

Mitsui's settlement represents just 3 percent of BP's own estimate of $41 billion for the spill, including fines. That's far less than its notional share. Anadarko, which has a 25 percent stake in the well, has so far said it doesn't owe anything to BP. Assuming it pays in the same proportion to Mitsui, BP would get another $2.7 billion from its partners. This is less than a third of Mitsui's and Anadarko's theoretical $14 billion allocation of the total cost if liability is shared, excluding fines.

But Mistui had a strong bargaining position. Its investment in the Macondo well was via Moex, a special purpose vehicle in the United States without direct recourse to Mitsui. Anadarko's participation, in contrast, was direct. It recently opened the door to a possible settlement "under the right circumstances". Mitsui's move piles on more pressure.

This may still not move the dial much for BP. The critical risk for shareholders is whether BP is found to be grossly negligent under the Clean Water Act. This would quadruple fines for the spill to more than $17 billion. But Mitsui probably would not have settled if it believed BP was grossly negligent, since it might then have argued BP should be liable for everything. And Mitsui might even contribute to the cost of CWA fines. Its settlement excludes any share of punitive damages or fines, implying Mitsui would be on the hook for this.

BP's market capitalisation added as much as 3.4 billion pounds in morning trading on May 20, or $5.5 billion, reflecting some cautious optimism. That looks conservative. Mitsui is now siding with BP in concluding that Transocean was at least partly to blame for the accident. If BP can obtain just a fraction of the $40 billion claim it has filed against Transocean , plus settle with Halliburton and Cameron , which were involved in well construction and rig equipment respectively, then its bill will rapidly shrink.


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-- BP, the UK oil major, said it had reached a $1.1 billion settlement with Mitsui to help pay for the costs of the Gulf of Mexico oil spill. Moex, an affiliate of the Japanese trading house, had a 10 percent stake in the Macondo well.

-- In a statement on May 20, BP said the settlement excluded punitive damages and fines.

-- BP called on other parties involved in the well, including Anadarko with a 25 percent stake, to follow the lead of Mitsui. It added that Mitsui had acknowledged that the safety management systems of both Transocean and its Deepwater Horizon rig were partly to blame for the accident. -- Reuters story: Mitsui to pay BP $1 bln to settle oil spill claims [ID:nLDE74J06S]

-- For previous columns by the author, Reuters customers can click on [BRAVO/]

(Editing by Chris Hughes and David Evans)


Transocean report pins oil spill blame on BP

22 Jun 2011 14:16

Source: reuters // Reuters

* Says BP failed to asses risks, used flawed well design

* Transocean, BP locked in battle over liability

* Transocean shares up, BP slips slightly (Adds background, analyst comment, byline)

By Matt Daily

NEW YORK, June 22 (Reuters) - Oil driller Transocean Ltd blamed BP Plc in a report released on Wednesday for last year's Gulf of Mexico spill in the latest skirmish between the two companies over paying the costs for the maritime oil disaster.

Transocean, the owner of the drilling rig that exploded and sank in the Gulf of Mexico last year, and BP are locked in a legal battle over which company was at fault in the disaster that killed 11 workers and gushed crude oil into the Gulf for three months.

Costs for capping the Macondo well, cleaning up the damage and paying claims for people hurt by the catastrophe are likely to top $41 billion, including an estimated $4 billion to $5 billion in fines.

BP has struck deals with a partial owner of the well and an oilfield service company that will give it about $1.2 billion to help cut its liability, but its dispute with Transocean centers over the key issues that led to the accident.

Transocean CEO Steven Newman has held discussions with BP and was keeping an "open mind" on reaching a financial settlement that could avert a courtroom battle, Chief Financial Officer Ricardo Rosa said last month.

One market analyst said the report would probably not affect those discussions, and said indemnity clauses contained in Transocean's contract with BP have good chance of shielding it from liability.

"If I was Newman I'd make a go at it and take my chances (in court)," said Joe Hill, analyst with Tudor, Pickering, Holt & Co in Houston.

Still, BP was also not likely to let Transocean settle the matter easily, and any deal would likely be in the billions of dollars, according to analysts.

In London, BP Chief Executive Bob Dudley, who took the helm from Tony Hayward after the spill, said ahead of the report's release BP was not the only party involved.

"We're certainly encouraging our partners, our other partners, to step up and meet some of the obligations from the accident," he told reporters at an industry event.


The Transocean report, which repeated many of the issues raised by U.S. government investigators, said BP failed to properly assess the risks around the troubled well and did not communicate the danger to Transocean.

BP also used a poor well design which led to the failure of cement around the well casing, allowing gas to escape and reach the rig, causing the explosion, the report said.

Transocean also said its blow-out preventer, a device designed as a last resort to close off a well, was properly maintained, but the extreme pressure from the well forced drill pipe to bend, preventing the shears from cutting the pipe.

Transocean workers did not see that gas was shooting up the well until too late,
the report said.

BP has struck deals to cut its liability for the spill with partner Mitsui & Co 8031.T, which will pay $1.1 billion toward the clean-up, and oilfield services company Weatherford International Ltd , which will pay $75 million.

It has said it is seeking deals with other partners in the well, including Anadarko Petroleum Corp , Transocean and Halliburton Co , to also contribute to clean-up costs.

Hundreds of spill-related lawsuits are expected to come to trial in February 2012.

U.S.-listed shares of Transocean rose 1.1 percent to $62.56 in early trading on the New York Stock Exchange, while BP shares were down 0.2 percent to 444.95 pence on the London Stock Exchange. (Reporting by Matt Daily, additional reporting by Tom Bergin in London, editing by Gerald E. McCormick, John Wallace, Dave Zimmerman)


BP blamed for Gulf of Mexico disaster in new report

Wed, 22/06/2011 - 16:09 | Fiona Bond

BP (BP.) found itself in the firing line on Wednesday afternoon, after an internal investigation by rig owner Transocean (RIG) found BP largely responsible for the catastrophic Gulf of Mexico oil spill.

The offshore drilling contractor blamed a "succession of interrelated well design, construction and temporary abandonment decisions," many made by operator BP, as the cause of the Deepwater Horizon rig explosion on 20 April 2010 and the subsequent oil spill.

Transocean said the decisions, many made by BP in the two weeks leading up the incident, were driven by the British oil giant's knowledge that the "geological window for safe drilling was becoming increasingly slow."

It goes on to note that BP was specifically concerned that downhole pressure - whether exerted by heavy drilling mud used to maintain well control or by pumping cement to seal the well - would exceed the fracture gradient and result in fluid losses to the formation, thus costing money and jeopardising future production of oil.

The Swiss firm said BP also failed to properly communicate risk to its contractors, such as the absence of adequate testing on the cement or the uncertainty surrounding critical tests and procedures used to confirm the integrity of the barriers intended to inhibit the flow of hydrocarbons into the well.

However, the company made clear that the findings of the report did not represent the legal position of Transocean, nor attempt to assign legal responsibility or fault.

Nevertheless, it is in stark contrast to BP's own internal report, which blamed a series of causes on multiple parties, in line with government investigations which have also held a number of companies to account.

The companies involved in the worst offshore oil spill in US history have sued each other in a bid to recoup their losses.


Over-reaction to BP Gulf spill costing U.S. jobs

(The author is a Reuters Breakingviews columnist. The opinions expressed are his own.)

By Christopher Swann
NEW YORK, Aug 16 (Reuters Breakingviews) - U.S. oil regulators may have swung from gung-ho(Extremely enthusiastic and dedicated.) to too cautious. Painfully slow drilling approvals mean America could be missing out on 230,000 jobs -- and tax revenue, too. Safety matters. But with unemployment and the deficit top national concerns, red tape should be kept in check.
When President Barack Obama called a temporary halt to deep sea drilling after BP's blowout in the Gulf of Mexico last year there were howls( A long wailing cry.
A loud derisive call: the howls of an angry mob.
Slang. Something uproariously funny or absurd.) of protest from the oil industry. But the pause was necessary. The accident laid bare the cozy relationship between the industry and its watchdog along with alarming complacency at oil firms.
Since then, much has been done to make deep sea drilling less perilous. The regulatory structure is being restructured to eliminate a conflict of interest by splitting drilling approvals from revenue collection. Aspiring drillers also face higher safety standards. And oil companies have banded together to create two groups that pool technology and expertise to improve containment and minimize damage should there be spills in the future.

Yet the approval process is still painfully slow, with the median permit now taking over four months to clear against just one month before BP's Macondo disaster. Even much safer shallow water permits have been put on go-slow.
This cumbersome approach is costly. Boosting domestic oil production will not lower gasoline prices, as some politicians have claimed, since the United States is a bit player in a huge global market. But the red tape is holding back employment -- to the tune of 230,000 jobs in 2012, according to consultancy IHS. That's meaningful given the entire U.S. economy added just 117,000 jobs in July.

The lack of new permits could also be suppressing U.S. production by about 400,000 barrels of oil a day, IHS reckons. This adds to the nation's oil import bill but also means the cash-strapped Treasury is missing out on $12 billion in annual revenue.
Exxon Mobil's discovery in June of a giant Gulf of Mexico well, containing about 700 million barrels of crude, is a reminder that the renaissance in U.S. offshore production has further to run. America's new oil regulator needs to ensure its understandable zeal to eliminate risks doesn't stifle(To interrupt or cut off (the voice, for example).) oil's economic potential.

-- It now takes almost four times longer to win oil and gas drilling permits in the Gulf of Mexico than prior to BP's Macondo oil spill in April 20, according to a report by consultancy IHS. The report, published on July 21, said the median permit was now taking 131 days to process, against 36 before the accident.
-- IHS calculates that the slow pace of approvals, if continued, would cost more than $44 billion in GDP in 2012 and 400,000 barrels of oil per day of lost production.
-- The Bureau of Ocean Energy Management, Regulation and Enforcement in 2010 replaced the discredited Minerals Management Service as the regulator for offshore oil and gas in the United States. BOEMRE itself is in the process of splitting into two separate entities.
-- IHS report: http://link.reuters.com/teb92s

(Editing by Richard Beales and Emily Plucinak)

Spill probe faults BP, Transocean and Halliburton
14 Sep 2011 14:40

Source: reuters // Reuters

Sept 14 (Reuters) - The likelihood of a blowout of BP Plc's Gulf of Mexico Macondo well would have been less if workers from the British oil company, Halliburton Co and Transocean had been more careful, investigators probing the disaster said on Wednesday.

Increased awareness and vigilance from personnel at those companies "would have reduced the likelihood of the blowout occurring," according to a 217-page report issued by the U.S. offshore regulator. (Reporting by Anna Driver in Houston)


BP oil spill poses long-term threat - US study
21 Sep 2011 06:16

Source: reuters // Reuters

By Kelli Dugan

MOBILE, Ala., Sept 20 (Reuters) - Oil mats submerged in the seabed more than a year after the biggest oil spill in U.S. history pose a long-term threat to coastal ecosystems across the northern Gulf of Mexico, according to Auburn University researchers.

A study released on Tuesday by the school's engineering department showed that tar balls churned to the surface by Tropical Storm Lee and deposited along Alabama beaches this month had "essentially identical" chemical composition as samples taken from mats after the BP Plc oil spill from the Deepwater Horizon drilling rig blowout.

The civil engineering study -- conducted before, during and after the tropical storm's landfall on Alabama beaches -- indicated the spill's remnants were largely unchanged 17 months after the Deepwater Horizon oil rig exploded and sank off the coast of Louisiana.

The data directly linked the recently deposited tar balls to the 2010 spill of more than 200 million gallons of oil.

"The data question the validity of the widely held belief that submerged oil from the Deepwater Horizon accident is substantially weathered and thus depleted of most polycyclic aromatic hydrocarbons," the study said.

"Also, it supports the hypothesis that submerged oil may continue to pose some level of long-term risk to nearshore ecosystems," it said.

BP spokesman Scott Dean said the Auburn research has not had any immediate effect on the oil company's ongoing response to the spill.

"We're looking at the study, but it doesn't change our commitment to the response," Dean said. "We'll continue to have crews out collecting tar balls as the reports come in."

BP said it sent teams to assess the clean-up to the affected areas after Tropical Storm Lee and provided additional cleanup crews. (Editing by Cynthia Johnston and Vicki Allen)