Energy News  
ENERGY TECH
BP hit by 69-million-dollar bill for US oil spill

BP rocked by ratings downgrades over oil spill disaster
London (AFP) June 3, 2010 - British energy giant BP was hit Thursday by two ratings downgrades over the Gulf of Mexico oil disaster and admitted that it had been ill-prepared for the worst spill in US history. International ratings agency Fitch said it had cut BP's long-term issuer default rating and senior unsecured rating from AA+ to AA and had placed them on negative watch, citing risks from the enormous oil spill. "The downgrade of BP's ratings reflects Fitch's opinion that risks to both BP's business and financial profile continue to increase following the Deepwater Horizon accident in the US Gulf of Mexico," Fitch said. "The company has so far repeatedly failed to stop the resultant oil leak and has instead reverted to containment methods that are yet to be fully implemented and are subject to potential weather related disruption." Moody's Investor Service also lowered BP's long-term debt ratings, from Aa1 to Aa2 and placed them on review for further possible downgrade.

"Today's downgrade of BP's long-term debt ratings reflects Moody's expectation that the protracted oil spill ... caused by the explosion on the Transocean Deepwater Horizon drilling rig, will result in significant containment and clean-up costs as well as litigation costs," it said. "Moody's expects these costs to weigh significantly on BP's free cash flow generating capacity and to constrain its ability to focus on other key areas of the company's business in the near to intermediate term." In a further twist, Moody's will seek to ascertain how the disaster will affect BP's long-term US business prospects, particularly in the Gulf of Mexico where it is the biggest operator and producer. It will also look to assess BP's future drilling and producing costs in the United States and elsewhere, as well as the group's business profile and future financial performance. For the last six weeks, the BP has failed in all its attempts to cap or contain the leak since an April 20 explosion ripped through the BP-leased rig.

The White House announced Thursday that President Barack Obama will make his third trip to the Gulf of Mexico region on Friday to survey the latest efforts to respond to the massive oil spill there. Earlier on Thursday, BP pledged 360 million dollars for the construction of six sand barriers to help keep oil from reaching Louisiana's fragile wetlands, in a move which will push its total costs to 1.35 billion dollars. Fitch forecasts that BP's costs could reach between 2.0-3.0 billion dollars this year, depending on how much oil hits the US shoreline. BP chief executive Tony Hayward admitted Thursday that the oil giant had not been prepared for a deep-water leak. "What is undoubtedly true is that we did not have the tools you would want in your tool-kit," Hayward told the Financial Times newspaper.

Although he said BP had been "very successful" in keeping oil away from the coast, he accepted it was "an entirely fair criticism" to say the firm had not been fully prepared for a deep-water oil leak. BP has meanwhile successfully cut an underwater wellpipe using hydraulic shears and will now work to place a containment vessel over the leak, the senior US official overseeing the response said Thursday. The London-listed giant added that it will pay for the construction of six sand barriers to help keep oil from reaching fragile wetlands, supporting the US government's Louisiana barrier islands proposal. US officials had ordered the company on Wednesday to pay for five more sand barriers in the Mississippi Delta to help minimize potential damage to vulnerable shorelines. Fitch also warned Thursday that an official US investigation was another negative factor for BP, while it could still face more downgrades.
by Staff Writers
New Orleans, Louisiana (AFP) June 3, 2010
The US government sent BP a 69-million-dollar bill for the Gulf of Mexico oil spill Thursday, warning it was only the first invoice, as undersea robots poised to try to curb the leak.

"The federal government will, at some point today, send what I would call a bill for 69 million dollars of expenses incurred up to this point to BP," White House spokesman Robert Gibbs said.

He said the bill was to reimburse American taxpayers for the government's costs so far in battling the worst oil spill in US history, with thousands of barrels of oil pouring into the Gulf every day.

Thousands of people have been deployed to the southern states to try to contain the spill, and clean up the slick as it washes ashore, and President Barack Obama was preparing to make his third trip to the region on Friday.

Speculation is also growing that the disaster will prompt the president to call off a scheduled visit to Indonesia and Australia for the second time, after an original journey was put off during the push for health care reform.

In a ray of good news, BP engineers managed to slice off the rig's fractured riser pipe with a pair of giant shears and were preparing Thursday to cover the jagged hole with a cap topped with a siphon and linked to a surface ship.

"We have cleared the riser from the top of the wellhead, and the team is currently working to complete the cleanup operation before we put the cap onto top of the well," under-fire BP chief executive Tony Hayward said.

"It's an important milestone," he added.

But he warned it could take 12 to 24 hours after the cap is put in place to know if it is managing to contain the worst of the spill, amid warnings that now the broken pipe has been cut off, the oil flow will increase initially.

"In some senses... it's just the beginning. It's been an extraordinary endeavor on the part of many, many people," Hayward said.

BP has battled unsuccessfully to cap or contain the disastrous leak since an April 20 explosion tore through the BP-leased Deepwater Horizon rig just off the Louisiana coast.

Hayward acknowledged earlier in an interview with the Financial Times that the British energy giant had been unprepared for the disaster and "did not have the tools you would want in your tool kit."

The US government has estimated the flow of oil before the riser was cut away at 12,000 to 19,000 barrels a day -- meaning at least 20 million gallons have already poured into the Gulf.

BP's operation to drill two relief wells -- seen as the only way to permanently cap the failed wellhead -- is on target to be completed in mid-August, US officials said.

The slick, floating along in a myriad of oily ribbons, is now threatening Alabama, Mississippi and Florida after contaminating more than 125 miles (200 kilometers) of Louisiana coastline.

With the slick expected to arrive within days in the Florida panhandle, Coast Guard investigators were probing unconfirmed reports that tar balls and an oily substance had been found in the famed Florida Keys.

Meanwhile, Admiral Thad Allen, who is coordinating the government's response to the spill, said nearly one million gallons of dispersants have been used to break up the oil in the Gulf.

"We're approaching the million gallon mark and it's a milestone and there are concerns about that and we will continue to work the dispersants very, very closely."

Many environmentalists have voiced concern over the unprecedented use of so much dispersant, warning its long-term effect on wildlife -- already threatened by the huge oil spill -- is unknown.

A University of Miami study showed the oil slick's surface area now stretches across 9,435 square miles (24,435 square kilometers) of the Gulf -- triple the size of satellite imagery from May 1.

Experts also warn the majority of the oil is contained in vast underwater plumes that cannot be measured from above.

US officials have closed more than a third of Gulf of Mexico waters, extending a fishing ban to 88,502 square miles (229,219 square kilometers) -- about 37 percent of the Gulf's federal waters.



Share This Article With Planet Earth
del.icio.usdel.icio.us DiggDigg RedditReddit
YahooMyWebYahooMyWeb GoogleGoogle FacebookFacebook



Related Links
Powering The World in the 21st Century at Energy-Daily.com



Memory Foam Mattress Review
Newsletters :: SpaceDaily :: SpaceWar :: TerraDaily :: Energy Daily
XML Feeds :: Space News :: Earth News :: War News :: Solar Energy News


ENERGY TECH
Canadian Research Examines Effects Of Scientific Claims On Oil
Alberta, Canada (SPX) Jun 03, 2010
A University of Alberta researcher says people generally do not act on information about the effects fossil fuel-based products are having on the environment. And the reason, says English and film studies researcher Imre Szeman, is because of the way discussions on environmental issues are structured. In a recently published study, Szeman says the main assumption among scientists-that with ... read more







The content herein, unless otherwise known to be public domain, are Copyright 1995-2010 - SpaceDaily. AFP and UPI Wire Stories are copyright Agence France-Presse and United Press International. ESA Portal Reports are copyright European Space Agency. All NASA sourced material is public domain. Additional copyrights may apply in whole or part to other bona fide parties. Advertising does not imply endorsement,agreement or approval of any opinions, statements or information provided by SpaceDaily on any Web page published or hosted by SpaceDaily. Privacy Statement