X

BP says it's tackling oil spill, will pay claims

With its reputation battered by a catastrophic oil spill threatening the Gulf shore, BP promises to pay for cleanup, compensate "legitimate" claims.

Reuters
5 min read

VENICE, La.--Energy giant BP, its reputation battered by a catastrophic oil spill threatening the U.S. Gulf shore, said on Monday it is working to stem the gushing undersea leak and promised to pay for the cleanup and compensation claims.

As black, oil-infused water neared the Louisiana shoreline, the London-based company has come under heavy criticism and pressure from President Barack Obama and the U.S. public to do more to stop, or at least control, what is fast turning into the worst oil spill in U.S. history.

The swelling slick, estimated to be at least 130 miles by 70 miles, threatened shipping, wildlife, beaches and one of the United States' most fertile fishing grounds and Obama has called the situation "a massive and potentially unprecedented environmental disaster."

Massive oil spill imperils Gulf Coast (images)

See all photos

U.S. experts and BP officials say it is impossible to know exactly how much crude oil has spilled since the rig sank on April 22, but the government estimates 5,000 barrels (210,000 gallons or 795,000 liters) a day are flooding into the Gulf.

Oil prices edged above $86 a barrel on Monday, as analysts said the market remained supported by speculation the spill would help draw down U.S. crude inventories.

Shares in BP fell further as fears grew that the amount of oil gushing from one of its wells, and the cost of cleaning it up may be far greater than previously thought.

BP shares dropped 6.4 percent to $48.84 in U.S. trading Monday.

BP CEO Tony Hayward on Monday acknowledged his company's responsibility in appearances on American TV and radio shows, a day after U.S. Interior Secretary Ken Salazar said the administration would "keep the boot on the neck" of BP to fulfill its legal responsibilities.

"We are responsible not for the accident but we are responsible for the oil and for dealing with it and cleaning the situation up," Hayward told NBC's "Today" show.

He told National Public Radio the company would pay all "legitimate claims" from the spill.

U.S. Attorney General Eric Holder said on Monday the Justice Department is part of the government's investigation of the spill but an official said it was not a criminal probe.

In Louisiana, people living along the coast were bracing for the slick.

"We have an opportunity to lose our entire fishery down here. I mean, not just the customers. It's everything," said Ross Barkhurst, a boat owner in Venice.

Complex technical challenge
In a visit to Louisiana, one of four coastal states at risk, Obama stressed on Sunday BP was responsible for paying for the cleanup involving hundreds of boats and planes and thousands of military and civil personnel.

BP has not put an estimate on the costs of the spill, which follows the explosion and sinking of a drilling rig operated by Swiss-based driller Transocean nearly two weeks ago. But analysts say the total could exceed $14 billion.

Related story
Gulf Coast oil spill responders employ latest tech
Oil spill cleanup is largely a low-tech field, but there are a growing number of new technologies being used in the Deepwater Horizon disaster.

BP said last week that it and its partners in the well, including Anadarko Petroleum, were paying $6 million a day in cleanup efforts but admitted costs would rise sharply when the oil slick hit land, as would claims for damages.

Hayward said the technical options his company was working on to try to seal the ruptured well included an undersea containment system that would capture the leaking oil and channel it to a tanker on the surface.

Another option was the drilling of a relief well to intersect the ruptured well and try to control and plug the flow that way, Hayward added.

"The worst-case scenario is that we would need to contain this for two to three months whilst relief oil is drilled," Hayward told NBC.

BP was also using undersea robots to try to fix the well blowout preventer, a mechanism he said had failed to keep the oil from gushing from the stricken rig after the accident.

BP officials have likened efforts to fix the failed preventer to performing "open-heart surgery at 5,000 feet in the dark."

"No one understands why it's failed," Hayward said.

The slick appeared likely to move toward the Alabama and Florida coasts and engulf the Chandeleur Islands off Louisiana's southeast tip in the next few days, the U.S. National Oceanic and Atmospheric Administration said.

Impact on wildlife feared
Fishing in a wide swathe of federal waters between Louisiana and Florida's Pensacola Bay was restricted for 10 days on Sunday to avoid any chance that contaminated seafood will make its way to store shelves.

The Gulf supports a seafood industry that is second only to Alaska in the United States. The area accounts for the bulk of U.S. production of oysters and shrimp.

Wildlife experts also fear a heavy toll on animals and birds. Near Gulfport, Mississippi, 19 sea turtles were found dead and necropsies were being done by experts at the National Marine Fisheries Services. But they had no external oil soiling and it was not clear if the deaths were linked to the slick.

U.S. energy output from the Gulf has not been not strongly affected and shipping operations at the Louisiana Offshore Oil Port were normal, a spokeswoman for the port said on Monday.

Attorneys general from five U.S. Gulf states--Louisiana, Mississippi, Alabama, Florida and Texas -- met in Mobile, Ala., on Sunday. They said they would draft letters to Obama and to BP seeking the swiftest possible delivery of federal aid and corporate compensation to those affected.

"We need to make sure if BP is picking up the check, they do so in a pretty big hurry," said Louisiana Attorney General Buddy Caldwell.

Many of the coastal communities in the path of the oil slick, including Venice on the west bank of the Mississippi River, were devastated by Hurricane Katrina in 2005.

"It's just like Katrina, catastrophic," said Frances Lacross, a local resident.

The looming disaster in the Gulf threatens to eclipse the 1989 Exxon Valdez catastrophe in Alaska, the worst previous U.S. oil spill to date.