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Bp Faces Extra $60Bn In Legal Costs As Us Loses Patience With Gulf Clean-Up

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http://www.guardian.co.uk/environment/2010/may/26/bp-extra-60bn-legal-costs

The oil disaster unfolding in the Gulf of Mexico could present BP with much higher costs than previously thought as a result of US government penalties of up to $60bn (£40bn), according to City analysts.

The penalties are in addition to BP's already huge bill for the clean-up mission, which stood at $760m yesterday, and potentially unlimited damages payable by the company to fishermen and other affected local communities. BP also faces billions of dollars of lost earnings as a result of its damaged reputation in the US, which could result in it being barred from bidding for future contracts.

The Guardian has obtained a confidential briefing, from a top-level US environmental lawyer who specialises in oil industry litigation, to stockbroker Canaccord, assessing the financial impact of impending legal action on BP.

He warned that, under US law, BP is liable for $1,100 in civil penalties for each spilt barrel of oil and gas, to be paid to the US federal and affected state governments. If BP is found to have acted with gross negligence – and there is no evidence so far that it has – this fine would rise to $4,300 for each barrel.

The issue of legal liability for the accident is complex, involving US federal and state laws. City analysts' calculations of the bill faced by BP have ignored the potentially ruinous cost of civil penalties.

They also highlight the implications for BP of establishing how much oil is leaking from the damaged pipeline, which is hard to measure – unlike a leaking tanker, which holds a finite amount of oil.

BP had been relying on official estimates for the spill of 5,000 barrels per day, which are based on satellite images taken of the surface of the sea above the leaking pipeline. But BP has been pumping hundreds of thousands of gallons of chemical dispersant close to the leak, resulting in vast underwater oil slicks. The company recently admitted that the actual figure is likely to be higher and some scientists say 115,000 barrels of oil per day are spewing into the Gulf. BP would be liable for $60bn in civil penalties if oil continues to leak at the highest estimated level for the next two months, when a relief well being drilled to plug the reservoir is completed. With the spill in its fifth week, pressure is mounting as all attempts to stem the leak have been delayed or largely failed.

The Environmental Protection Agency has indicated BP faces fines over the disaster, and there is speculation that it could eventually face a criminal investigation.

BP is preparing to carry out its latest attempt to staunch the flow of oil from the damaged Deepwater Horizon well. The operation, which the firm hopes to start tomorrow, will involve pumping heavy fluids into the broken pipe and then capping it with cement.

The technique has proven successful in previous surface oil spills but it has never been tried at a depth of 1.6km under the sea and BP can only hazard that it has a 60% or 70% chance of working this time. BP said last night it will broadcast live video of the "top kill" during the procedure.

Clearly the US govt has a huge incentive to bill BP for the maximum to make up for lost tax revenue during the economic collapse. This spill can clearly be used as a protectionist measure and get rid of an international competitor via the back door.

This mess is clearly going to affect BP profits for years if not decades. No wonder BP wants to underestimate the amount of oil spilt as it's going to affect the amount of cash it has to cough up in fines.

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If they actually try fines and lawsuits into the billions of dollars.. no sane oil company would ever invest in America again. You invest in places like Angola offshore, and sell the oil to an American company who will deliver it to America.

The litigation fears have already driven countless factories out of America. You can think you understand everything but then something unexpected happens.. or since we are dealing with humans, accidental errors happen. The only way to be sure to avoid the lawsuits is to not have the industry in America at all.

Hopefully after this is out of the news and calmer heads can prevail, a reasonable settlement will come about for those honestly affected. Like a few million dollars for fishermen who can prove their catch was smaller this year.

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Where's the fines for the widespread and intentional release of financial toxic waste in the worldwide environment by US companies?

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If they actually try fines and lawsuits into the billions of dollars.. no sane oil company would ever invest in America again. You invest in places like Angola offshore, and sell the oil to an American company who will deliver it to America.

sure they would , just the onshore rigs

i've heard the US still has plenty of land based oil reserves

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Like a few million dollars for fishermen who can prove their catch was smaller this year.

Since when did the fishermen own the fish in the sea?

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If costs look to be getting like that, BP will just walk away... especially if it looks like BP will be shut out of US drilling anyway. BP execs will all agree not to go to America on holiday ever again to avoid being arrested, and they'll tell the Americans to go swivel.

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I thought it was the subcontractors who were at fault. Didn't BP lease the rig and employ US subcontractors to work on it?

yes they did.

and they will have insurance either at LLoyds or AIG....or both.

probably pass the liability to a bucket insurance agent in Penge at the end of the day.

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As someone who works in the Offshore Drilling Industry as a Drilling Supervisor, hence know more than Joe Public, I think you'll find it's the American company Transocean that will come out of this very badly.

Read the latest memo from the Senate committee on Energy and Commerce. I clearly states the catalogue of errors associated with the disaster. Poor maintenance of the BOP stack, changes to the BOP stack, non functioning of critical components.....................................

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Guest sillybear2

If that's the outcome then OPEC should write Obama a big thank you letter, decades worth of additional funding for terrorist groups indirectly paid for by the American motorist can be assured. They need to very mindful of unintended consequences.

9/11 was actually the biggest oil related disaster in history.

Edited by sillybear2

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9/11 was actually the biggest oil related disaster in history.

Don't be stupid, it wasn't a disaster. In fact it went exactly as the US government planned it would.

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As someone who works in the Offshore Drilling Industry as a Drilling Supervisor, hence know more than Joe Public, I think you'll find it's the American company Transocean that will come out of this very badly.

Read the latest memo from the Senate committee on Energy and Commerce. I clearly states the catalogue of errors associated with the disaster. Poor maintenance of the BOP stack, changes to the BOP stack, non functioning of critical components.....................................

I thought Haliburton were also responsible for sub standard well plugs - have they not been in trouble for this before?

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Guest sillybear2

Don't be stupid, it wasn't a disaster. In fact it went exactly as the US government planned it would.

:rolleyes: You want the denial thread.

It's amazing that the US are so capable of masterminding such things yet a leaky oil well confounds everyone.

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Guest sillybear2

If the US subcontractors are at fault why is it all we are hearing from the media is BP this and BP must put right that?

Because the oil belongs to BP, it's their block, if that oil happens to be washing up on shore then it's their job to clear it up.

As for the general attitude towards "British Petroleum" I guess addicts have a wierd psychology with their suppliers, Americans behave like they have a God given entitlement to cheap oil and they don't like being reminded of the negative consequences of that. When filling up a gasguzzler nobody questions why people are drilling 1 mile under the sea for them, it might as well be magicked into existence by a fairy as far as they're concerned.

Edited by sillybear2

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If the US subcontractors are at fault why is it all we are hearing from the media is BP this and BP must put right that?

Didnt your Ford ever have a stuck accelerator?

didnt your vauxhall ever have a recall?

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Guest sillybear2

Wait......

...you mean it's not?

:o

Everyone knows all oil is actually synthetic and created by a secret facility in Area 51 after being molecularly formulated by the NSA with assistance of Goldman Sachs, then special stealth submarines are used to inject it deep under the seabed. The constituent parts of the oil are a combination of Mountain Dew and belly button fluff.

Edited by sillybear2

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http://www.nytimes.com/2010/05/27/us/27rig.html?hp

Several days before the explosion on the Deepwater Horizon oil rig, BP officials chose, partly for financial reasons, to use a type of casing for the well that the company knew was the riskier of two options, according to a BP document.

The concern with the method BP chose, the document said, was that if the cement around the casing pipe did not seal properly, gases could leak all the way to the wellhead, where only a single seal would serve as a barrier.

Using a different type of casing would have provided two barriers, according to the document, which was provided to The New York Times by a Congressional investigator.

Workers from the rig and company officials have said that hours before the explosion, gases were leaking through the cement, which had been set in place by the oil services contractor, Halliburton. Investigators have said these leaks were the likely cause of the explosion.

The approach taken by the company was described as the “best economic case” in the BP document. However, it also carried risks beyond the potential gas leaks, including the possibility that more work would be needed or that there would be delays, the document said.

BP’s decision was “without a doubt a riskier way to go,” said Greg McCormack, director of the Petroleum Extension Service at the University of Texas at Austin. Several other engineers agreed with Mr. McCormack’s assessment of the BP document.

Andrew Gowers, a spokesman for BP, said that there was no industry standard for the casing to be used in deepwater wells and that the approach by the Deepwater Horizon had not been unusual. “BP engineers evaluate various factors for each well to determine the most appropriate casing strategy,” he said.

The role of financial and time pressures in the rig blast is one focus of a series of hearings by the Coast Guard and the Minerals Management Service that began Wednesday in Kenner, just outside New Orleans.

Douglas H. Brown, the chief mechanic for the Deepwater Horizon, testified Wednesday that he witnessed a “skirmish” on the rig between a BP well site leader and crew members employed by Transocean, the rig’s owner, the morning of the blast.

Mr. Brown said the disagreement followed BP’s decision to replace heavy drilling fluid with lighter saltwater before the well was sealed with a final cement plug.

“Well, this is how it’s going to be,” the BP official said, according to Mr. Brown.

Screwed?

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Everyone knows all oil is actually synthetic and created by a secret facility in Area 51 after being molecularly formulated by the NSA with assistance of Goldman Sachs, then special stealth submarines are used to inject it deep under the seabed. The constituent parts of the oil are a combination of Mountain Dew and belly button fluff.

I assume according to the creationistas in America, God put the oil there?

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Guest sillybear2

I assume according to the creationistas in America, God put the oil there?

Yes, God put oil there to tempt us, the leak occured because a number of states now approve of gay marriage. It's punishment, fags kill turtles.

Edited by sillybear2

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http://www.telegraph.co.uk/finance/newsbysector/energy/7773325/BP-shares-rally-on-hope-company-is-close-to-plugging-oil-leak.html

BP is attempting to stop the oil leak caused by an explosion on a drilling rig leased from Transocean more than a month ago using a technique called "top kill". This involves pumping viscous drilling fluid into the well, which will then be capped with a concrete plug.

Observers were cautiously optimistic on the progress, with Thad Allen, US Coast Guard Commandant, saying that the procedure had had "some success". However, he cautioned that "there's no reason to declare victory yet".

BP shares, which have fallen 29pc since the disaster, yesterday rose 28.8 to 520.8p on hopes the crisis was nearing an end, although the clean-up is likely to take months.

The BP oil spill is now the worst in American history, according to estimates from the US government. The damaged well may have pumped more than twice as much oil into the Gulf than was dumped by the Exxon Valdez in Alaska two decades ago, according to Dr Marcia M*****t, director of the US Geological Survey.

She said oil has been spewing from the well at a rate of 12,000 to 19,000 barrels per day (bpd), well above BP's 5,000 bpd estimate. This means about 527,000 barrels may have been leaked, compared with 257,000 barrels from the Exxon Valdez.

President Barack Obama said yesterday that BP will "pay every dime" for the damage the spill has caused. The President also criticised the "cosy and sometimes corrupt" relationship between regulators and the oil industry.

The President also extended a moratorium on deepwater offshore drilling permits, delaying a planned Royal Dutch Shell drilling programme in the Arctic off the Alaskan coast.

Russian President Dmitry Medvedev also questioned the future of BP, saying the "uncertainty" could ruin the company. BP gets a quarter of its oil output from its Russian venture TNK-BP.

So the share price recovers a bit, but at the same time it appears the Russians might dump BP as well.

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http://www.nytimes.com/2010/05/28/us/28spill.html?hp

BP on Thursday night restarted its most ambitious effort yet to plug the oil leak in the Gulf of Mexico, trying to revive hopes that it might cap the well with a “top kill” technique that involved pumping heavy drilling liquids to counteract the pressure of the gushing oil.

BP officials, who along with government officials created the impression early in the day that the strategy was working, disclosed later that they had stopped pumping the night before when engineers saw that too much of the drilling fluid was escaping along with the oil.

It was the latest setback in the effort to shut off the leaking oil, which federal officials said was pouring into the gulf at a far higher rate than original estimates suggested.

If the new estimates are accurate, the spill would be far bigger than the Exxon Valdez disaster in 1989 and the worst in United States history.

President Obama, who planned to visit the gulf on Friday, ordered a suspension of virtually all current and new offshore oil drilling activity pending a comprehensive safety review, acknowledging that oversight until now had been seriously deficient.

Mr. Obama said at a news conference in Washington that he was angry and frustrated about the catastrophe, and he shouldered much of the responsibility for the continuing crisis.

“Those who think we were either slow on the response or lacked urgency, don’t know the facts,” Mr. Obama said. “This has been our highest priority.”

But he also blamed BP, which owns the stricken well, and the Bush administration, which he said had fostered a “cozy and sometimes corrupt” relationship between oil companies and regulators at the Minerals Management Service.

So share price up on the fact that misleading statements are being made over the success of plugging the hole.

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http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/9524523/BP-suffers-further-blow-as-Hurricane-Isaac-dredges-up-more-oil-from-Gulf-of-Mexico-spill.html

Since Isaac made landfall more than a week ago, the water the storm has receded and tar balls and oil have been reported on shores in Alabama and Louisiana, where officials closed a 13-mile stretch of beach on Tuesday.

BP said some of that oil was from the spill, but said some of the crude may be from other sources, too, AP reported.

"If there's something good about this storm it made it visible where we can clean it up," BP spokesman Ray Melick said.

..

Garret Graves, a top coastal aide to Louisiana Governor Bobby Jindal, accused BP of not being aggressive enough with its initial cleanup.

"If they would put just a fraction of the dollars they're putting into their PR campaign into cleanup, we'd certainly be much farther ahead than we are now," he said.

On Wednesday the US government reiterated that it would seek to prove that the oil major’s “gross negligence” caused the Gulf of Mexico disaster

Looks like the US is going to be blaming BP for a long time over this.

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M*****t.

WTF!  Fubra censor a kernel which is edible? How about coconut?  That worked, so it must be an anagram of *****.

Well, jigger me. A lady's name is censored, because you could re-arrange some of the letters to describe a female genital orifice. A bit over the top methinks. Sorry for the out-of-thread posting.

Edited by corevalue

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