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BP: Let Us Drill – or We May Not Have Cash to Pay Gulf Claims
BP appeals to Congress as it considers banning firm from exploring US waters
The new confrontation emerged yesterday as BP announced that total costs arising from the explosion of the Deepwater Horizon rig on 20 April, in which 11 workers died in one the worst environmental disasters in US history, rose by a further $2bn last month to around $8bn.
BP announced that total costs from the Deepwater Horizon explosion rose to about $8bn last month The law in question was passed by the House of Representatives just before Congress's summer recess but is still awaiting approval in the Senate. It would bar any company from drilling on the US outer continental shelf if more than 10 people had been killed in accidents at facilities it operates - either onshore or offshore - or if it has been fined $10m or more in the past seven years for violating US anti-pollution laws.
BP is not specifically mentioned in the measure but it is the only company that would qualify for such a ban. The Bill's chief sponsor, the California Democrat George Miller, has made it clear that BP was the intended target.
For the company, such a ban would strike at its biggest source of revenue and profits. BP is the biggest single oil company operating in the Gulf, and the 400,000 barrels a day it produces there represent 11 per cent of its total global output, accounting for an estimated 25 per cent of annual profits that reached $14bn in 2009.
"If we are unable to keep those fields going, that is going to have a substantial impact on our cash flow, David Nagel, the executive vice-president of BP America, told The New York Times, "and that makes it harder to fund things, fund these programmes."
BP insists it is standing by its promised $20bn clean-up fund, which would also pay government fines and meet compensation claims for the spill that spewed 206 million gallons of crude for three months until it was provisionally plugged in mid-August. But Mr Nagel's words are a heavy hint that other projects, including a $500m research programme on the impact of the spill, could be endangered if the Miller Bill became law.
Meanwhile, plans proceed for a final sealing of the rogue well. This week, engineers removed its temporary cap as a prelude to raising the massive blowout preventer whose failure caused the disaster. The preventer is now a crucial piece of evidence in the investigation of the calamity.
It will be replaced by a new one to deal with pressure that may be caused when a relief well BP has been drilling finally intersects its blown-out Macondo well. This will allow engineers to permanently seal the broken well from the bottom with mud and cement. The operation is expected some time next week after the Labor Day public holiday.
In another piece of good news, it seems clear that a second explosion on an oil platform in the Gulf on Thursday caused no long-term damage. Unlike the BP incident, the blast took place not on a rig but on a fixed platform, Vermillion 380, owned by the Mariner Energy group.
All 13 workers were rescued and there was no report of any spillage at the seabed. Moreover, the accident happened in waters only 300ft deep, compared with a sea depth of a mile in the case of BP's Macondo well, about 200 miles to the east.
The Coast Guard initially reported that an oil sheen a mile long and 100ft wide had begun to spread. Hours later, however, it said crews were unable to find any spill.
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15 Comments so far
Show AllAnybody ask the people affected or ponder the the after affects of this disaster? Tony
Many of the locals work for the oil companies or related services. The after effect they DON'T want is losing their jobs. It must be an interesting local conflict. Big money oil jobs vs. fishing and crabbing, environmentalists and the tourism industry.
I mean really, what's more vital? Having a healthy ecosystem to support fishing and outdoor activities or temporary high paying oil jobs that are destroying the area?
Big Oil is playing nice right now. Gas prices are low, low, low! Get the message?
Another corporate crime in the making.
BP has ownership of proven reserves around the world.
http://www.bp.com/genericarticle.do?categoryId=2012968&contentId=7014337
"He said the company had replenished reserves by 100 per cent on a UK reporting basis and 95 per cent under SEC rules which take account of year-end prices, giving it a proven reserve base of over 18 billion barrels of oil and gas equivalent at end-2005.
On top of proven reserves, BP also added nearly 2 billion new barrels to its non-proven resource base last year, taking it to a total of 41 billion barrels, of which the company expects to convert some 11 billion barrels into proven reserves by 2010."
Those "assets" should be seized until such time that all Deep Horizon related damages are covered by BP.
And if this puts BP out of business, there are other oil corporations with a much better safety track record.
At $75 a barrel, BP's proven reserves of about 20 Billion barrels just might be enough money to fix the Gulf ecosystem and cover all related damages now and into the future.
Its just business, right, good old capitalism without regulation, control, or laws to abide.
But then , what do you expect from our leadership, our elected officials, the executive branch, the very people we entrust with our civil liberties and constitutional rights.
Oh, silly me, I forgot, Patriot Acts.
The single most destructive piece of legislation passed in American history.
You know, if your not doing anything wrong , you have nothing to worry about.
What did BP do wrong, there was accident, and now we have taken from them something they have have dictated our government to go to war for, oil control.
Suck it up America, the super rich and the powerful elite run our country, government ,our military and our police state.
Signed sealed delivered, we belong to them, and they will cap us like a leaking well, when they need to.
If I can't pay my mortgage, why can't I set up a limited liability company for my kids to sell lemonade out in front of my house and to pay my mortgage? If my kids don't sell enough lemonade then the bank can't foreclose on my house -- my corporate subsidiary simply can't earn enough money to pay the mortgage, so all the bank can seize is the pitcher of lemonade, some cups and the lemonade table. Somehow I don't see my bank playing along with this charade.
So why, if BP owes $20 to $50 billion in already racked up criminal negligence debts, can BP spin off an underfunded subsidiary charged with paying off the debts?
The company as a whole currently has enough to pay all the negligence claims. They have fraudulently created a sub-company, the BP Gulf of Mexico drilling and claim paying company. If the spinoff company can't drill (and if they can't sell the Brooklyn Bridge), no American will get any claim money. Why does this tactic smack of criminal intent?
Dear PaulK:
Excellent points! And we now have a new crime in America, Oil Laundering.
We are all and truely caught inside the progress trap.
To completely consume all of the tempting bait,
requires moving down between the closing jaws as they snap.
To pay huge ecological debts by taking more seals our fate.
To escape the danger requires no sacrifice of limbs and pain.
It only requires that the siren lure of easy riches be forsaken.
Leave them and retreat to seek a solar harvest of steady gain,
and share it with all the species before the earth is broken.
With our carbon price piled for so long and high up in the sky.
and soaked into the oceans till all creatures bones in acid fry,
the private profits from any new carbon extractions to try,
can last at most a brief infinitesimal, before all of us must die.
Help us destroy planet Earth and we will give you the world!
Plunder Is Groundless.
...Remember, America doesnt have a thirst for finite resources; America has a legislated demand for them. This has been going on for generations--crushing sovereignty. And we certainly cant speak of resolve w/out looking at the globe trotting, victimizing, banking system.
And boy, to hear people talk about 'small' government while not wanting uni healthcare is beyond belief.
CORPORATION doesnt want small gov., it wants a strong state minus representative gov.!
So people, here in America, are pushing for a dead planet Earth...for nothing! For nothing...
The only evidence there is less gov. is the more "breaking down" of things.
WOW.
When BEEP and our government signed the agreement for the poor British energy corporation to pay damages for their latest tragic Gulf spill the agreement only involved the branch that dealt with drilling in the Gulf of Mexico and not the deep pocket of the whole corporation. The rest of the huge corporation is saying it is not responsible for paying for the mistakes of this branch.
This seems to me to be a huge blunder by our inJustice Department. Yet another Obummer (crony) appointee screws up. Way to go Arnie. Your future is assured a job in BP's lagal department. Good of you to leave our congress open to legal blackmail by the Brits. Wake up dude and do your job for us and not the corporations!
Then, maybe you'll go under? And if you do so recklessly or craftily, maybe you, the big-wigs responsible, will be sued personally.
Insufferable blackmail--the stuff of capitalism.
But BP, aren't you BEYOND Petroleum? Why do you need our oil?
Oh, wait, you're not Beyond Blackmail then, are you?
Go Henry Waxman! Somebody has to look out for our Earth and it's natural resources. We are tired of certain politicians sucking oil and leaving the people and the planet with only an oily sheen.
I have an idea! When the Senate goes to vote, they must all stand and pull down their pants.
Anyone afflicted with "tar balls," has to leave and can't vote! ( sometimes, conflict of interest is easier to see than you think!)