BP Gets 72 Hours to Produce Oil Recovery Plan

WASHINGTON, DC, June 10, 2010 (ENS) – The U.S. government has given BP a 72 hour deadline to provide the company’s plans for recovering all the oil and gas still spilling from the damaged Deepwater Horizon wellhead. A steel containment cap is now recovering a portion of the leaking oil.

Oil has been spilling into the Gulf of Mexico since April 20 when the Deepwater Horizon rig, leased by BP, exploded and later sank off the coast of Louisiana, killing 11 workers.

In a letter to BP’s Chief Operating Officer Exploration and Production Doug Suttles dated June 8, Federal On-Scene Coordinator U.S. Coast Guard Rear Admiral James Watson gave the company 72 hours to establish plans for a system for full oil recovery and communicate that plan to him.

Drillships and oil platforms hover over the damaged Deepwater Horizon wellhead 5,000 below on the seafloor. (Photo courtesy U.S. Coast Guard)

“The discharge of oil from the BP Deepwater Horizon oil spill is unprecedented in American history,” wrote Admiral Watson. “This crisis has resulted in devastating damages to the economic, environmental, social interests of every community in the Gulf Coast and the nation as a whole.”

“The system(s) established must have appropriate redundancies to maintain complete collection rates in the event that operational problems are encountered in any part of the system,” the admiral demanded.

Redundancies must ensure that the possible failure of a vessel does not reduce the capacity of the system for continuous recovery of oil, Admiral Watson wrote.

“Plans and processes must be put into place to ensure that, in the event that a hurricane or other severe weather causes recovery vessels to go off station, those vessels (or alternate vessels) can be brought back on station as quickly as possible after the storm passes and that collection efforts can resume without delay,” he wrote.

BP is bringing two vessels to the gulf that will be able to withstand heavier weather. A shuttle tanker called the Loch Rannoch is coming from the North Sea with an estimated arrival time next week. The other one, the Toisa Pisces, a production ship that will offload oil to the shuttle tanker, should be in the gulf around 19 June.

BP is starting to put together a subsea mooring that will create a permanent riser pipe to bring oil from the broken wellhead to a ship on the surface and also allow more flexibility for the surface ships in case of hurricane activity.

Financial and political pressure on BP increased Wednesday as the White House demanded compensation for thousands of oil industry workers laid off as a result of a freeze on drilling in the Gulf of Mexico. The six-month moratorium imposed by the Obama administration on May 27 has meant a work stoppage on 33 oil rigs, affecting thousands of workers.

The demand sharply lowered the value of BP shares and also BP Plc bonds and credit-default swaps, financial newswires report.

BP said today the company “notes the fall in its share price in U.S. trading last night. The company is not aware of any reason which justifies this share price movement.”

“BP faces this situation as a strong company. In March, we indicated that the company’s cash inflows and outflows were balanced at an oil price of around $60/barrel. This was before the costs of the incident,” the company stated.

Oil on the surface of the Gulf of Mexico, June 8, 2010 (Photo by Kate Davison courtesy Greenpeace)

“Under the current trading environment, we are generating significant additional cash flow. In addition, our gearing is currently below the bottom of our targeted range. Our asset base is strong and valuable, with more than 18 billion barrels of proved reserves and 63 billion barrels of resources as at the end of 2009,” BP said.

“All of the above gives us significant capacity and flexibility in dealing with the cost of responding to the incident, the environmental remediation and the payment of legitimate claims,” the company stated.

BP said June 7 it has spent $1.25 billion so far, or about $27 million a day, on costs related to the oil spill.

The Obama administration says it will continue to hold the responsible parties accountable for repairing the damage, and repaying Americans who have suffered a financial loss as a result of the BP oil spill.

To date, BP reports that 41,958 claims have been opened, from which more than $52.9 million have been disbursed. “No claims have been denied to date,” the company states.

But the Obama administration doubts BP’s claim that no claims have been denied.

At the direction of President Obama, National Incident Commander Coast Guard Admiral Thad Allen held an oversight meeting Wednesday with BP claims officials at the National Pollution Funds Center in Arlington, Virginia.

The claims oversight meeting was a result of President Obama’s June 4 meeting with Gulf Coast governors and local leaders in New Orleans, during which several concerns were raised regarding BP’s claims processing practices.

President Obama will be visiting the Gulf Coast again next Monday to further assess the federal response to the oil spill, now in its 51st day.

At the claims meeting, Admiral Allen expressed to BP the American people’s urgent need for additional transparency into BP’s claims process, including how the process works, and how quickly claims are being processed for both individuals and for businesses impacted by the oil spill.

From left: Tee Roy, Seth, and Roy Borne of Leeville, Louisiana, three generations of Cajun shrimpers out of work due to the BP oil spill. (Photo by Chesapeake Climate)

“BP, as a responsible party, is accountable for making the communities, individuals and business impacted by this spill whole again,” said Admiral Allen. “We need more detail and openness from BP to fulfill our oversight responsibilities to the American people and ensure that BP is meeting its commitment to restore the Gulf Coast.”

Admiral Allen discussed his concerns about a variety of claims issues – including delayed processing time for large loss claims; claims pending with no action taken; payment calculations for individual loss of income claims, particularly for seasonal workers; translation of claims material; and accessibility for the hearing impaired.

He directed BP to provide more information about the company’s plan for continuing to pay monthly loss of income claims, the mediation program BP is putting in place, and BP’s placement of coordinators in each state and how these liaisons will engage with local officials.

Admiral Allen was joined by Tracy Wareing from the U.S. Department of Health and Human Services, who he has directed to oversee the BP claims process from start to finish. He reiterated his directive for BP to establish a senior official to work with and provide information to Wareing regarding the company’s actions to fully address the needs of impacted individuals and businesses.

This was the first in a series of meetings Allen and Wareing will be conducting to ensure that BP’s claims process is transparent, prompt, and responsive to the unique needs of the impacted communities citizens and businesses.

Additional meetings will be held in each of the four impacted states from June 11-13 to ensure they are afforded the opportunity to provide their input into improving the claims process.

The National Incident Command has developed community relations teams to ensure that communities have the information they need regarding the BP claims process and any additional avenues for assistance. NIC representatives will be available at local events, such as town halls or community meetings, to answer specific questions individuals may have.

The NIC has also provided state level support to work closely with the governors of impacted states to ensure that any concerns regarding the process are quickly communicated and addressed by BP.

To file a claim, visit www.bp.com/claims or call toll free number 1-800-440-0858-open 24 hours a day, seven days a week. Any claim that is denied by BP or not settled within 90 days of submission to BP may be presented to the Coast Guard for relief from the Oil Spill Liability Trust Fund through the National Pollution Funds Center. The NPFC claims support number is 1-800-280-7118.

Copyright Environment News Service (ENS) 2010. All rights reserved.