Day 63: Deepwater Horizon/BP Oil Spill Update

Jun 21: Information from BP indicates that for the last 12 hours on June 20th (noon to midnight), approximately 7,780 barrels of oil were collected and approximately 4,430 barrels of oil and 25.1 million cubic feet of natural gas were flared. On June 20th, total oil recovered was approx. 23,290 barrels: (approx. 14,570 barrels of oil were collected; approx. 8,720 barrels of oil were flared & approx. 48.3 million cubic feet of natural gas were flared). BP said total recovery was slightly down on June 20th due to "shut-ins" from a lightning storm in the area of the Enterprise and Q4000 heading changes to accommodate wind shifts.

 

    In a release from BP today, the company reports that two systems continue to collect oil and gas flowing from the MC252 well and transport them to vessels on the surface. The first is the lower marine riser package (LMRP) containment cap located on top of the Deepwater Horizon's failed blow-out preventer (BOP). This system, which was installed on June 3, takes oil and gas to the Discoverer Enterprise. A second system, which started on June 16, is connected directly to the BOP and carries oil and gas through a manifold and hoses to the Q4000 vessel on the surface. The Q4000 uses a specialized clean-burning system to flare both oil and gas captured by this second system.

    On June 19, a total of approximately 11,050 barrels of oil was collected and 25.6 million cubic feet of natural gas was flared on the Discoverer Enterprise. This is less than recent averages because process facilities were shutdown for part of the day. In the same 24-hour period, 9,990 barrels of oil and 17.8 million cubic feet of natural gas were flared on the Q4000. The total volume of oil recovered from both the LMRP containment cap system and the Q4000 since they became operational is approximately 249,500 barrels. Approximately 103,000 barrels of collected oil were transferred from storage on the Discoverer Enterprise to the Overseas Cascade tanker on June 17 and June 18. The Overseas Cascade left the MC252 site on June 18.

 

    On June 20, the Unified Command reported that The Development Driller III continues to drill the first relief well to a depth of approximately 11,000 feet below the sea floor, and crews have begun the process of cementing and casing the well liner. The Development Driller II has drilled the second relief well -- a redundancy measure taken at the direction of the administration -- to a depth of approximately 5,000 feet below the sea floor.

   

    The Unified Command also reported that the Administration will continue to hold the responsible parties accountable for repairing the damage, and repaying Americans who've suffered a financial loss as a result of the BP oil spill. To date, 65,703 claims have been opened, from which more than $107.4 million have been disbursed. No claims have been denied to date. There are 720 claims adjusters on the ground.

 

    NOAA announced some preliminary finding on the extent of subsurface oil from the Deepwater Horizon/BP oil spill [See article below]. The NOAA Ship Thomas Jefferson returned to Galveston, Texas, on June 11 from an eight-day research mission which began in New Orleans on June 3, to investigate the presence and distribution of subsurface oil from and collected water samples for chemical analysis and tested the feasibility of using acoustic and flourometric scanning to help find potential pockets of subsurface oil clouds. The science team onboard included researchers from NOAA, U.S. EPA, the University of New Hampshire and the Woods Hole Oceanographic Institution.

 

    Politically, following Representative Joe Barton (R-TX) now very public apology to BP and comments characterizing the $20 billion oil spill claims fund agreement as an Administration "shakedown," the Democratic National Committee has now broadened its criticism to what they are calling the "BP 114" -- i.e. the member of the House Republican Study Committee (RSC). On June 16, one day before Rep. Barton comments, the RSC, chaired by Representative Tom Price (R-GA), issued a release calling the $20 billion agreement "Chicago-style shakedown politics." Ironically, many of the Republican members criticizing Barton's comments and some calling for him to resign his leadership position on the Energy and Commerce Committee, are members of the RSC and many are Gulf Coast Representatives [See WIMS 6/18/10].

 

    Access additional information updates and links to releases and briefings on the Administration's response from the Unified Command website (click here). Access the BP response website for links to visuals more information on the recovery work (click here). Access a report on the BP 114 from The Hill blog (click here).

Rep. Barton May Be Fall Guy For Republican "Shakedown" Comments

Jun 17: Representative Joe Barton (R-TX), former Chairman of the House Energy & Commerce Committee and now Ranking Member, could be stripped of his powerful Committee assignments for his widely publicized public apology to BP and his comments about being "ashamed" of the $20 billion oil spill claims fund agreement which the White House negotiated with BP. In his opening statement at the Energy and Commerce, Subcommittee on Oversight and Investigations hearing with BP CEO Tony Hayward, Barton apologized to BP and called the agreement a "shakedown."

 

    Rep. Barton issued a release with his original complete statement [now withdrawn] and said, "Now I'm going to speak totally for myself. I'm not speaking for the Republican party, I'm not speaking for anyone in the House of Representatives but myself -- I'm ashamed at what happened in the White House yesterday. I think it is a tragedy in the first proportion that a private corporation can be subjected to what I would characterize as a shakedown – in this case a $20 billion shakedown. The attorney general of the United States, who is legitimately conducting a criminal investigation and has every right to do so to protect the interests of the American people, participated in what amounts to a $20 billion slush fund. That's unprecedented in our nation's history, has no legal standing and which sets, I think, a terrible precedent for the future. . ."

 

    House Minority Leader John Boehner (R-OH) and other Republican leaders Eric Cantor (R-VA) and Mike Pence (R-IN), immediately issued a statement responding directly to Barton's comments. They said, "The oil spill in the Gulf is this nation's largest natural disaster and stopping the leak and cleaning up the region is our top priority. Congressman Barton's statements this morning were wrong. BP itself has acknowledged that responsibility for the economic damages lies with them and has offered an initial pledge of $20 billion dollars for that purpose. The families and businesspeople in the Gulf region want leadership, accountability and action from BP and the Administration. It is unacceptable that, 59  days after this crisis began, no solution is forthcoming. Simply put, the American people want all of our resources, time and focus to be directed toward stopping the spill and cleaning up the mess."

 

    Rep. Barton, widely regarded as the House Republican point-man on energy and environmental issues, returned to the hearing in the afternoon and issued a statement retract his apology and withdrawing his previous statement and issuing a replacement statement saying, "I apologize for using the term 'shakedown' with regard to yesterday's actions at the White House in my opening statement this morning, and I retract my apology to BP. As I told my colleagues yesterday and said again this morning, BP should bear the full financial responsibility for the accident on their lease in the Gulf of Mexico. BP should fully compensate those families and businesses that have been hurt by this accident. BP and the federal government need to stop the leak, clean up the damage, and take whatever steps necessary to prevent a similar accident in the future. I regret the impact that my statement this morning implied that BP should not pay for the consequences of their decisions and actions in this incident."

 

    Democrats reacted immediately to Barton's comments. In a blog posting, the White House indicated, "some in Congress have attacked this common sense step, including Congressman Joe Barton who called the agreement 'shameful' and a 'tragedy,' and apologized to BP for it during a Congressional hearing today." White House Press Secretary Robert Gibbs responded, What is shameful is that Joe Barton seems to have more concern for big corporations that caused this disaster than the fishermen, small business owners and communities whose lives have been devastated by the destruction. Congressman Barton may think that a fund to compensate these Americans is a 'tragedy', but most Americans know that the real tragedy is what the men and women of the Gulf Coast are going through right now. Members from both parties should repudiate his comments. . ."

 

    Jim Manley, spokesman for Senate Majority Leader Harry Reid (D-NV), issued a statement saying, "It takes an appalling amount of chutzpah for Congressman Barton to apologize to the BP CEO this morning about Democrats' efforts to hold BP accountable. Where is his apology for the families of the 11 men who lost their lives and the industries along the Gulf that have been devastated because of this disaster? Where is his sympathy for the ecosystem in the Gulf of Mexico that will be damaged for generations because of BP's negligence? And shouldn't he be apologizing to the people of the Gulf Coast for decades of Republican policies that ignored oversight and accountability for the oil industry? Republicans should get their priorities straight:  are they going to keep protecting and apologizing for Big Oil or will they finally stand up for families and businesses whose lives have been upended by the BP oil spill?"

 

    While Rep. Barton said he was only speaking for himself, House Speaker Nancy Pelosi (D-CA) pointed out in a blog posting that Representative Tom Price (R-GA), Chairman of the Republican Study Committee (Representing over 100 Republicans in the House) said, "BP's reported willingness to go along with the White House's new fund suggests that the Obama Administration is hard at work exerting its brand of Chicago-style shakedown politics."

 

    Pelosi reported that, "Gulf Coast citizens literally applauded this announcement and a new CNN poll shows that an overwhelming majority of Americans -- 82 percent -- support the BP disaster compensation fund."

 

    In the June 16 release from the Republican Study Committee entitled, "Chicago-Style Political Shakedown," responding to the BP agreement, Rep. Price said further, ". . .in an administration that appears not to respect fundamental American principles, it is important to note that there is no legal authority for the President to compel a private company to set up or contribute to an escrow account. BP's reported willingness to go along with the White House's new fund suggests that the Obama Administration is hard at work exerting its brand of Chicago-style shakedown politics. These actions are emblematic of a politicization of our economy that has been borne out of this Administration's drive for greater power and control.  It is the same mentality that believes an economic crisis or an environmental disaster is the best opportunity to pursue a failed liberal agenda. The American people know much better."

    Access the statement from House Republican leaders (click here). Access the replacement statement from Rep. Barton (click here). Access the White House blog post and comments (click here). Access the blog posting from Speaker Pelosi (click here). Access the release from Rep. Price (click here). Access the Republican Study Committee website for a list of members (click here).

Day 59 BP Oil Spill: More On $20bn Agreement

Jun 17: Following yesterday's meeting with President Obama, BP issued a release providing further details on the agreed package of measures to meet its obligations as a responsible party arising from the Deepwater Horizon spill [See WIMS 6/16/10]. According to the release, agreement was reached to create a $20bn claims fund over the next three and a half years on the following basis:

• BP will initially make payments of $3bn in Q3 of 2010 and $2bn in Q4 of 2010. These will be followed by a payment of $1.25bn per quarter until a total of $20bn has been paid in.
• While the fund is building, BP's commitments will be assured by the setting aside of U.S. assets with a value of $20bn. The intention is that this level of assets will decline as cash contributions are made to the fund.
• The fund will be available to satisfy legitimate claims including natural resource damages and state and local response costs. Fines and penalties will be excluded from the fund and paid separately. Payments from the fund will be made as they are adjudicated, whether by the Independent Claims Facility (ICF) referred to below, or by a court, or as agreed by BP.
• The ICF will be administered by Ken Feinberg. The ICF will adjudicate on all Oil Pollution Act and tort claims excluding all Federal and state claims.
• Any money left in the fund once all legitimate claims have been resolved and paid will revert to BP.

    The fund does not represent a cap on BP liabilities, but will be available to satisfy legitimate claims. Further and more detailed terms regarding the establishment and operation of the claims fund and the ICF will be finalized and announced as soon as possible.

    BP said, "As a consequence of this agreement, the BP Board has reviewed its dividend policy. Notwithstanding BP's strong financial and asset position, the current circumstances require the Board to be prudent and it has therefore decided to cancel the previously declared first quarter dividend scheduled for payment on 21st June, and that no interim dividends will be declared in respect of the second and third quarters of 2010. The Board remains strongly committed to the payment of future dividends and delivering long term value to shareholders. The Board will consider resumption of dividend payments in 2011 at the time of issuance of the fourth quarter 2010 results, by which time it expects to have a clearer picture of the longer term impact of the Deepwater Horizon incident."

    BP said further, "The Board believes that it is right and prudent to take a conservative financial position given the current uncertainty over the extent and timing of costs and liabilities relating to the spill. BP's businesses continue to perform well, with cash flows from operations expected to exceed $30bn in 2010 at current prices and margins before taking into consideration costs related to the Deepwater Horizon spill. BP's gearing level remains at the bottom of its targeted band of 20-30 per cent. In addition, the Company has over $10bn of committed banking facilities. To further increase the Company's available cash resources, the Board intends to implement a significant reduction in organic capital spending and to increase planned divestments to approximately $10bn over the next twelve months."

 

    BP Chairman Carl-Henric Svanberg said, "We appreciated the constructive meeting conducted by the President and his senior advisers and are confident that the agreement announced today will provide greater comfort to the citizens of the Gulf coast and greater clarity to BP and its shareholders. We welcome the administration's statements acknowledging that BP is a strong company and that the administration has no interest in undermining the financial stability of BP. This agreement is a very significant step in clarifying and confirming our commitment to meet our obligations. We regret the cancellation and suspension of the dividends, but we concluded it was in the best interests of the Company and its shareholders." 

   

    In other matters, BP reported on June 17, that optimization of the dual system, LMRP Cap and the Q4000 Direct Connect, will continue over the next few days. For the last 12 hours on June 16th (noon to midnight), approximately 7,710 barrels of oil were collected and approximately 2,600 barrels of oil and 22 million cubic feet of natural gas were flared. On June 16th, a total of approximately 14,750 barrels of oil were collected and approximately 3,850 barrels of oil and 40 million cubic feet of natural gas were flared. Total oil recovered from both the LMRP Cap and Q4000 systems since they were implemented is approximately 179,000 barrels. In testimony before the Energy and Commerce, Subcommittee on Oversight and Investigations today, Tony Hayward, Chief Executive Officer, BP PLC said, "We expect to optimize collection over the next few days to levels well above what was previously accomplished."

 

    Also, NOAA has expanded the closed fishing area in the Gulf of Mexico to capture portions of the oil slick moving beyond the area's current northern boundary, off the Florida panhandle's federal-state waterline. The boundary was moved to Panama City Beach.The Federal closure does not apply to any state waters. Closing fishing in these areas is a precautionary measure to ensure that seafood from the Gulf will remain safe for consumers. The closed area now represents 80,806 square miles, which is approximately 33.4 percent of Gulf of Mexico federal waters. 

 

Note: In our daily report to subscribers we also reported on Three BP Gulf Oil Congressional Hearings Today; GAO's Report On Effective Independent Oversight Of Oil & Gas; and Groups Issue Statement On Climate-Energy Legislation -- all related to the BP Oil Spill.

    Access a release from BP on the $20bn commitment (click here). Access the White House fact sheet on the $20 billion funding and other funds (click here). Access a White House blog posting on the BP meeting with links to the President's remarks (click here). Access a June 16, Investor Briefing from BP (click here). Access additional information updates and links to releases and briefings on the Administration's response from the Unified Command website (click here). Access the BP response website for links to visuals more information on the recovery work (click here). Access details on the NOAA fish closing area (click here).

 

 

Day 58 BP Oil Spill: 60,000 Bbl/day; Oval Office Address; $20b Fund

Jun 16: At approximately 2:30 PM this afternoon, the President announced that the Administration and BP executives had reached an agreement on establishing a $20 billion dollar fund to be administered by an impartial third party to begin processing claims for damages and losses as a result of the Gulf oil spill. The President said the $20 billion is not a cap and does not limit BP's liability, responsibility or legal challenges. The funding would be provided over a four-year period at a rate of $5 billion per year, including $5 billion within 2010. Additionally, a $100 million fund will be established for unemployed oil workers (See link below for details).

 

    On June 15, in his first Oval Office address of his presidency, President Obama outlined his commitment to fighting the full impacts of the BP oil spill with everything we've got for as long as it takes. In his prime time address the President said, "The millions of gallons of oil that have spilled into the Gulf of Mexico are more like an epidemic, one that we will be fighting for months and even years. But make no mistake: We will fight this spill with everything we've got for as long as it takes. We will make BP pay for the damage their company has caused. And we will do whatever's necessary to help the Gulf Coast and its people recover from this tragedy. . ."

 

    On the cleanup efforts the President said, "We now have nearly 30,000 personnel who are working across four states to contain and clean up the oil.  Thousands of ships and other vessels are responding in the Gulf.  And I've authorized the deployment of over 17,000 National Guard members along the coast. . . millions of gallons of oil have already been removed from the water through burning, skimming and other collection methods. Over five and a half million feet of boom has been laid across the water to block and absorb the approaching oil. We've approved the construction of new barrier islands in Louisiana to try to stop the oil before it reaches the shore, and we're working with Alabama, Mississippi and Florida to implement creative approaches to their unique coastlines. 

 

    He said secondly, the government is focused on is the recovery and restoration of the Gulf Coast. He said, "Tomorrow, I will meet with the chairman of BP and inform him that he is to set aside whatever resources are required to compensate the workers and business owners who have been harmed as a result of his company's recklessness.  And this fund will not be controlled by BP.  In order to ensure that all legitimate claims are paid out in a fair and timely manner, the account must and will be administered by an independent third party. Beyond compensating the people of the Gulf in the short term, it's also clear we need a long-term plan to restore the unique beauty and bounty of this region." He announced that he asked Ray Mabus, the Secretary of the Navy, and a former Governor of Mississippi and a son of the Gulf Coast, to develop a long-term Gulf Coast Restoration Plan as soon as possible.

 

    Thirdly, the President said, we're taking steps to ensure that a disaster like this does not happen again." He reminded that a few months ago [See WIMS 3/31/10], he approved a proposal to consider new, limited offshore drilling under the assurance that it would be "absolutely safe." He said, "That obviously was not the case in the Deepwater Horizon rig, and I want to know why. . . "I've established a National Commission to understand the causes of this disaster and offer recommendations on what additional safety and environmental standards we need to put in place. Already, I've issued a six-month moratorium on deepwater drilling.  I know this creates difficulty for the people who work on these rigs, but for the sake of their safety, and for the sake of the entire region, we need to know the facts before we allow deepwater drilling to continue."

 

    He announced that Michael Bromwich, who was a tough Federal prosecutor and Inspector General, has been charged to over the next few months, overhaul the Minerals Management Service within the Department of Interior and "build an organization that acts as the oil industry's watchdog -- not its partner."  He said, ". . .one of the lessons we've learned from this spill is that we need better regulations, better safety standards, and better enforcement when it comes to offshore drilling. But a larger lesson is that no matter how much we improve our regulation of the industry, drilling for oil these days entails greater risk."

 

    His final point focused on the need to accelerate efforts to develop alternatives to fossil fuels. He said, "The tragedy unfolding on our coast is the most painful and powerful reminder yet that the time to embrace a clean energy future is now. Now is the moment for this generation to embark on a national mission to unleash America's innovation and seize control of our own destiny. This is not some distant vision for America. The transition away from fossil fuels is going to take some time, but over the last year and a half, we've already taken unprecedented action to jumpstart the clean energy industry."

 

    He reminded that last year, the House of Representatives acted and passed what he called "a strong and comprehensive energy and climate bill -- a bill that finally makes clean energy the profitable kind of energy for America's businesses." He continued, "Now, there are costs associated with this transition. And there are some who believe that we can't afford those costs right now. I say we can't afford not to change how we produce and use energy -- because the long-term costs to our economy, our national security, and our environment are far greater.

 

    In a major new development the researchers working on the critical question of how much oil is leaking into the Gulf released their latest estimates. Based on updated information and scientific assessments, Department of Energy (DOE) Secretary Steven Chu, Secretary of the Interior Ken Salazar, and Chair of the National Incident Command's Flow Rate Technical Group (FRTG) Dr. Marcia McNutt (Director of the U.S. Geological Survey) announced an improved estimate of how much oil is flowing from the leaking BP well [See WIMS 6/15/10]. Working together, U.S. government and independent scientists estimate that the most likely flow rate of oil today is between 35,000 and 60,000 barrels per day (bbl/day). The improved estimate is based on more and better data that is now available and that helps increase the scientific confidence in the accuracy of the estimate.  

    At the direction of the Federal government, BP is implementing multiple strategies to significantly expand the leak containment capabilities at the sea floor even beyond the upper level of the latest flow rate estimate. The Lower Marine Riser Package (LMRP) cap that is currently in place can capture up to 18,000 bbl/day. At the direction of the Federal government, BP is deploying a second containment option, called the Q4000, which could expand total leak containment capacity to 20,000-28,000 bbl/day.   Overall, the leak containment strategy that BP was required to develop projects containment capacity expanding to 40,000-53,000 barrels per day by the end of June and 60,000-80,000 barrels per day by mid-July. 

    Energy Secretary Steven Chu said, "This estimate brings together several scientific methodologies and the latest information from the sea floor, and represents a significant step forward in our effort to put a number on the oil that is escaping from BP's well. As we continue to collect additional data and refine these estimates, it is important to realize that the numbers can change.  In particular, the upper number is less certain -- which is exactly why we have been planning for the worst case scenario at every stage and why we are continuing to focus on responding to the upper end of the estimate, plus additional contingencies." Over the weekend, at the insistence of Secretary Chu and the science team, pressure meters were added to the top hat to assist with these estimates.  

    The scientists stressed the need for continued and refined pressure measurement, but emphasized that the "improved" estimates have a greater degree of confidence than estimates that were possible prior to the riser cut. They said the estimates are better because of more and different kinds of data that is available now and a single flow is easier to estimate versus prior to the riser cut, when oil was flowing both from the end of the riser and from several different holes in the riser kink. 

    The FRTG was assembled at the direction of National Incident Commander Admiral Thad Allen, and is led by United States Geological Survey Director Dr. Marcia McNutt.  The FRTG, and a scientific team led by Energy Secretary Steven Chu, continue to analyze new data and use several scientific methodologies to develop updated estimates of how much oil is flowing from BP's leaking oil well in the Gulf of Mexico. 

    Its important to note that over a month ago, Purdue University mechanical engineering professor Steven Wereley, the researcher that testified before Representative Markey's hearing on May 19, that the BP leak was much larger than previously estimated. Wereley indicated that the flow rate was at least "an order of magnitude higher" than the 5,000 bbl/day being reported by BP and the Unified Command. Wereley, who is now one of the researchers on the FRTG, used an initial 30-second video clip of the oil gushing from the 21.5-inch pipe that was released by BP on May 12, Wereley deployed a technique called particle image velocimetry (PIV) to create freeze-frame shots of the video. From his calculation, Wereley determined that 56,000-84,000 barrels of oil, plus gas, had been leaking daily into the Gulf -- a flow that was nearly 10 times higher than other estimates at that time [See WIMS 5/29/10].

    On June 15, 2010, the President signed into law S. 3473 - Amending the Oil Pollution Act of 1990 to authorize advances from Oil Spill Liability Trust Fund for the Deepwater Horizon oil spill. The bill authorizes the Coast Guard to obtain multiple advances (up to $100 million each), with the total amount of all advances not to exceed the incident cap under current law ($1 billion), from the Oil Spill Liability Trust Fund to underwrite Federal response activities with regard to the discharge of oil that began in connection with the explosion on, and sinking of, the mobile offshore oil unit Deepwater Horizon. The bill was introduced on June 9, by Senate Majority Leader Harry Reid (D-NV) and passed the Senate by unanimous consent and received a 410-0 vote in the House.

    In other activities NOAA and Coast Guard seized shrimp taken from the closed fishing area in Gulf; Administration officials met with BP officials on the containment and recovery plans; established three Deputy Incident Commanders under Incident Commander Admiral Thad Allen, to lead oil impact mitigation and cleanup efforts in Alabama, Mississippi and Florida; the Administration continued its oversight over the BP claims process; and more (See link below).

   Access a fact sheet on the $20 billion funding and other funds (click here). Access the complete Presidential address (click here). Access links to a video of the address (click here). Access a release on the updated flow rate estimate (click here). Access legislative details on S.3473 (click here). Access a White House summary of the last 24 hours of oil spill activities with extensive links to more information (click here). Access additional information updates and links to releases and briefings on the Administration's response from the Unified Command website (click here). Access the BP response website for links to visuals more information on the recovery work (click here). 

Day 57 BP Oil Spill: Calls For Increased Recovery & Funding

Jun 15: Potential cost estimates for the overall BP oil spill disaster continue to climb, with talk in the $50 billion range (up from $20-30 billion); the company's market price holds at about $98 billion (down about $80 billion); and the company's credit rating was cut to BBB from AA by Fitch, one of the three big credit agencies. The President will speak to the nation this evening from the Oval Office following his two day visit to the Gulf. Then, tomorrow he will meet directly with BP officials. Media reports are beginning to surface over a possible lever the Administration may have over BP -- i.e. mineral leases valued at $55 billion which the government controls. The New York Post is reporting on a possible tradeoff where BP keeps its leases and agrees to some sort of $50 billion Gulf Oil cleanup fund including payments to businesses and individuals that have suffered economically.

 

    BP indicates that it has spent some $1.6 billion to date on the cleanup and compensation. BP announced that it has approved initial payments toward 90% of commercial large loss claims that have been filed as a result of financial losses of the Deepwater Horizon incident and spill. Using an accelerated process BP approved payments of 337 checks for a total amount of $16 million to businesses that have filed claims in excess of $5,000. Initial payments began over the weekend and will be completed this week. The remaining outstanding commercial large loss claims are awaiting documentation and are continuing through the process.

 

    BP indicated that the acceleration of commercial large claims payments will help ease the burden on impacted businesses by providing access to money in a short period of time. Improvements to the commercial large claims process have been made as a result of applying learning from the existing individual claims process, as well as consultations with local, state, Department of Homeland Security and United States Coast Guard officials. BP also announced a number of future process improvements.

 

    BP's Claims Team said, "We hope that these changes will help those whose businesses and livelihood have been hurt by the oil spill. "We are working hard to fine-tune our claims process so that it's as simple, straightforward and effective as possible. We will keep doing everything we can to address the impact of the spill on the Gulf region." The company said to date, it has opened 25 claims offices and issued approximately 25,000 claims checks totaling $63 million. By the end of the week it expects to have paid out $85 million inclusive of these initial large loss claims payments.

 

    The lower marine riser package (LMRP) containment cap, installed on June 3, continues to collect oil and gas flowing from the MC252 well and transport them to the Discoverer Enterprise drillship on the surface. In the first 12 hours of June 13 (midnight to noon), approximately 7,720 barrels of oil were collected and 16.9 million cubic feet of natural gas were flared. On June 12, a total of approximately 15,000 barrels of oil were collected and 32.9 million cubic feet of natural gas were flared. The total volume of oil collected by the LMRP cap system since it began operation is approximately 127,000 barrels. A further approximately 22,000 barrels of oil previously had been collected through use of the Riser Insertion Tube Tool and stored in the Discoverer Enterprise.

 

    In the early evening of June 10, the Flow Rate Technical Group (FRTG), which is led by United States Geological Survey Director Dr. Marcia McNutt, and a scientific team led by Energy Secretary Steven Chu provided an update on their analysis of new data and bringing together several scientific methodologies to develop an updated estimate of how much oil is flowing from BP's leaking oil well in the Gulf of Mexico. Dr. McNutt announced that three of the scientific teams analyzing flow rates have reached updated assessments, based on new data or analysis, of flow rates from BP's well before the riser was cut on June 3. [Note: most experts have commented that the flow rate would increase following the riser cut, e.g. +10-20%).

 

    The FRTG reported that the Plume Modeling Team which has originally estimated 12,000 to 25,000 barrels of oil per day updated its estimate to between 25,000 to 30,000 barrels per day, but could be as low as 20,000 barrels per day or as high as 40,000 barrels per day. The Mass Balance Team which had originally estimated 12,000 to 19,000 barrels of oil per day refined its estimate and has concluded that the best estimate for the average flow rate was in the range of 12,600 to 21,500 barrels of oil per day. The Reservoir Modeling Team and the Nodal Analysis Team are continuing to work on independent estimates that will be completed later this month (See link below for details on estimates).

 

    On June 9, BP submitted a plan to the Unified Area Command outlining a plan to build additional capacity and redundancy for the containment of oil. In summary the plan called for various elements that might result in recovery of 20-28,000 bbl/day by mid-June and 25-38,000 bbl/day by mid-July. Another "permanent riser system" is proposed to recover as much as 40-50,000 bbl/day. On June 11, Federal On-Scene Coordinator Rear Adm. James Watson's issued a letter directive to BP to build greater capacity and redundancy for oil containment to address the revised and "substantially higher flow of oil from the well." Watson said, ". . .your current plans do not provide for maximum mobilization of resources to provide the needed collection capacity consistent with the revised flow estimates." Watson requested a response from BP within 48 hours.

 

    On June 15, BP also announced that it was making its first round of funding for a half-billion dollar pledge to the Gulf of Mexico Research Initiative (GRI). Three research institutions in the Gulf region will receive a total of $25 million in fast-track funding for high-priority studies of the distribution, composition and ecological interactions of oil and dispersant. Three initial studies will help establish critical baseline data as the foundation for subsequent research. In this first round of funding, GRI is providing: $5 million to Louisiana State University; $10 million to the Florida Institute of Oceanography (FIO) hosted by the University of South Florida; and $10 million to the Northern Gulf Institute (NGI), a consortium led by Mississippi State University (NGI). 

   

    Access a report on BP credit rating (click here). Access NYP report on the $50 billion deal (click here). Access a BP release on recent response progress (click here). Access a release on the new FRTG flow estimates with links to details on each method (click here). Access links to the exchange of letters on increasing the recovery capacity (click here). Access a BP release on the GRI (click here). Access additional information updates and links to releases and briefings on the Administration's response from the Unified Command website (click here). Access the BP response website for links to visuals more information on the recovery work (click here).

Day 52 BP Oil Spill: BP Stock Plunges; Presidential Update

Subscribers Note:
WIMS will not be publishing Friday, June 11, or Monday, June 14, 2010.  
We will resume publication on Tuesday, June 15, 2010.

 

Jun 10: As the Administration ratchets up the pressure on BP to pay claims and recover oil, and Congressional hearings (three more today) on the oil spill continue to dominate Congress, the company's stock price continue to plummet -- now hovering around $30 per share; down from $60 before the Gulf Coast disaster. The company has lost around $80 billion in market value since the Deepwater Horizon accident and is now valued at now around $98 billion. Projections of the ultimate cleanup cost range from a low of $10-15 billion to a high from Goldman Sachs analysts who are now estimating figures around $33 billion. Concerns and discussions are now taking place about possible bankruptcy. Concerns increase yesterday when Department of Interior Secretary Ken Salazar testified before the Senate Energy & Natural Resources (ENR) Committee that the Administration would consider claims for loss of work from energy workers in the Gulf due to the drilling moratorium as legitimate.

    BP issued a release on June 10, saying, "The company is not aware of any reason which justifies this share price movement. BP continues to keep the market updated on the Gulf of Mexico oil spill through regular announcements. The response to this incident is our top priority. 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. 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 18bn barrels of proved reserves and 63bn barrels of resources as at the end of 2009. 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." 

    BP reported that for the last 12 hours on June 9 (noon to midnight), approximately 7,890 barrels of oil were collected and 15.4 million cubic feet of natural gas were flared. On June 9th, a total of approximately 15,800 barrels of oil were collected and 31 million cubic feet of natural gas were flared. The total oil collected .since the LMRP Cap containment system was implemented is approximately 73,300 barrels. BP said it expects to increase the recovery of oil in the coming days. The volume of oil captured and gas flared is being updated twice daily on BP's website.

    Preparations for additional planned enhancements to the LMRP containment system continue to progress. The first planned addition will use the hoses and manifold that were deployed for the "top kill" operation to take oil and gas from the failed Deepwater Horizon blow-out preventer (BOP) through a separate riser to the Q4000 vessel on the surface, in addition to the LMRP cap system. This system is intended to increase the overall efficiency of the containment operation by potentially increasing the amount of oil and gas that can be captured from the well and is currently expected to be available for operation in mid-June.

    The second planned addition is intended to provide a more permanent LMRP containment cap system by directing the oil and gas to a new free-floating riser ending approximately 300 feet below sea level. It is then proposed that a flexible hose be attached to a containment vessel. This long-term containment option is designed to permit more effective disconnection and reconnection of the riser to provide the greatest flexibility for operations during a hurricane. It is expected to be implemented in early July. In the meantime, work on the first relief well, which started May 2, continues and has currently reached a depth of 13,978 feet. The second relief well, which started May 16, is at 8,576 feet, and preparing to drill ahead. Both wells are still estimated to take approximately three months to complete from commencement of drilling.

    BP reported that to date, almost 42,000 claims have been submitted and more than 20,000 payments already have been made, totaling over $53 million. BP has received more than 173,000 calls into its help lines. The company says the cost of the response to date is approximately $1.43 billion, including the cost of the spill response, containment, relief well drilling, grants to the Gulf states, claims paid, and Federal costs. This also includes the first $60 million in funds for the Louisiana barrier islands construction project. BP said, "It is too early to quantify other potential costs and liabilities associated with the incident."

    This morning President Obama hosted Congressional leaders from both parties to talk through the months ahead and make sure they are as productive as possible. In comments following the meeting, the President said, the top priorities have to be the BP oil spill and putting people back to work. He said, "Obviously the top of our list was our continued response to the crisis in the Gulf and what's happening with the oil spill. We gave them an update on all the measures that are being taken, the single largest national response in United States history to an environmental disaster. But we had a frank conversation about the fact that the laws that have been in place have not been adequate for a crisis of this magnitude. The Oil Pollution Act was passed at a time when people didn't envision drilling four miles under the sea for oil.

    "And so it's going to be important that, based on facts, based on experts, based on a thorough examination of what went wrong here and where things have gone right, but also where things have gone wrong, that we update the laws to make sure that the people in the Gulf, the fishermen, the hotel owners, families who are dependent for their livelihoods in the Gulf, that they are all made whole and that we are in a much better position to respond to any such crisis in the future. So that was a prominent part of the discussion, and I was pleased to see bipartisan agreement that we have to deal with that in an aggressive, forward-leaning way."

    At the President's direction, National Incident Commander Admiral Thad Allen met with top BP claims officials to assert the administration's oversight of BP's claims process in order to ensure that every legitimate claim is honored and paid in an efficient manner. He expressed 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 businesses impacted by the oil spill. Additional meetings will be held in each of the four impacted states from June 11-13. Allen also reported on the progress of the Flow Rate Technical Group (FRTG). He said he had hoped to have new estimates today (June 10); however, information is still being evaluated and should be available very soon.

    Access yesterday's ENR hearing website for Salazar's testimony and a video (click here). Access a Wall Street Journal article on BP stock prices and related issues (click here). Access a release from BP on its stock price (click here). Access a June 10 update release from BP (click here). Access more information on the President's meeting with Congressional leaders (click here). Access a late June 9, updated from the Unified Command center (click here). Access additional information updates and links to releases and briefings on the Administrations response from the Unified Command website (click here). Access the BP response website for links to visuals more information on the recovery work (click here). Access a full timeline of the Administration-wide response to Gulf crisis (click here).

Day 51 BP Oil Spill: More Pressure On BP; Oil Recovery Increases

Jun 9: As Congress held five hearing on the BP Gulf spill, the Administration appeared to be putting more pressure on BP to increase and continue oil recovery continuously, and to make its claims process more transparent. One Senator says its time to convert BP's pledges of payment into a binding agreement. Finally, the major unknown of how much oil is leaking from the well, remains. Officials continue to say that new estimates will be available very soon. In the meantime they continue to use the 12,000 to 19,000 barrels per day estimate of the Flow Rate Technical Group (FRTG).

 

    National Incident Commander Admiral Thad Allen sent a letter to BP CEO Tony Hayward regarding clarification of the claims filing, review and processing procedures. The letter indicates that the oil spill is having a "devastating impact" on the environment and  economy in the Gulf Coast. The letter indicates that although BP has "accepted responsibility for the spill and that you are committed to paying all related expenses. Allen said, the Federal Government and State partners need to ensure that all affected parties receive "just and timely reimbursement for their economic damages." He said, "We need complete, ongoing transparency into BP's claims process including detailed information on how claims are being evaluated, how payment amounts are being calculated, and how quickly claims are being processed." The parties were to meet today to address the issues in Allen's letter.

 

    On June 8, Federal On-Scene Coordinator Rear Admiral James Watson sent a letter to BP COO Doug Suttles. The letter indicates that, "Now that the so-called 'top hat' containment system has begun to capture and recover some of the oil escaping from the wellhead, it is imperative that you put equipment, systems and processes in place to ensure that the remaining oil and gas flowing can be recovered, taking into account safety, environmental and meteorological factors."

 

    The letter appears to ramp up the pressure on BP to not stop its oil recovery efforts or delay efforts in any way because of equipment or logistical concerns. Watson says, "I am instructing BP to establish system(s) capable of safely collecting the oil and gas flowing from the Macondo 252 well. 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. For example, if multiple oil recovery vessels are employed for collection/recovery efforts, redundancies must ensure that the failure of a vessel(s) does not reduce the capacity of the system for continuous recovery of oil. There should be no interruptions of the recovery effort while awaiting another recovery vessel to arrive on scene. Further, 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."

    On June 8, and again today at a Senate hearing, Senator Byron Dorgan (D-ND) said it is time to make BP's commitment to paying for the damage caused by its oil spill in the Gulf binding. Dorgan is the second ranking Democrat on the Senate Energy Committee and chairs a key energy appropriations subcommittee. In a release, Dorgan explained, "BP has consistently said it will provide the funding necessary to pay for the damages caused by the oil spill in the Gulf Coast. But when I asked the Justice Department, in a recent hearing, whether the BP pledge would be binding on the company the answer from the Justice Department was that it is not binding."

    He said, "On this 50th day of the oil spill with the incalculable costs of the disaster still rising, I think it is time to nail down a binding commitment that BP will provide the full funding for the cleanup as well as the economic costs that have resulted from the oil gushing into the Gulf of Mexico. I propose that the Justice Department enter into a formal arrangement with BP that would have them pay $10 billion into a Gulf Coast Recovery Fund that would be jointly managed and dispersed by a Special Master selected by the government and a Counselor selected by BP. . .

    "BP has averaged $15 billion a year in profits over the past ten years. Asking them to make a payment of much less than one year's profits into a Gulf Coast Recovery Fund that will be jointly managed with public as well as private sector management will be a start to nailing down the commitment that I believe is necessary to respond to the growing costs of this disaster. Some estimate that the ultimate costs will far exceed the $10 billion that I propose be the first commitment from BP. If that is so, BP should be prepared to meet that as well. But for now, there needs to be more certainty to the BP pledge, and this approach is the first step in determining whether the BP pledge is going to be met in full. . ."

    BP announced that as part of its commitment to restore the environment and habitats in the Gulf Coast region, it will donate the net revenue from oil recovered from the MC252 spill to create a new wildlife fund to create, restore, improve and protect wildlife habitat along the coastline of Louisiana, Mississippi, Alabama, and Florida. The creation of this fund is over and above BP's obligations under the Oil Pollution Act of 1990. BP's net revenue from the sale of oil recovered from skimming operations and the well containment systems will be deposited into this newly-created fund. At this point, BP said it cannot predict the total of amount of net revenue that will be deposited into the wildlife fund. The amount of funding will be contingent upon the amount of oil collected during operations and the price at which the oil is sold. BP will provide regular updates on the amount of proceeds being deposited into the fund.

    Tony Hayward, BP's chief executive officer said, "We believe these funds will have a significant positive impact on the environment in this region." BP indicated that on May 24, 2010, it also announced a commitment of up to $500 million for an open research program studying the impact of the Deepwater Horizon incident, and its associated response, on the marine and shoreline environment of the Gulf of Mexico.

 

    BP reported that for the last 12 hours on June 8 (noon to midnight), approximately 7,160 barrels of oil were collected and 13.9 million cubic feet of natural gas were flared. On June 8, a total of approximately 15,000 barrels of oil were collected and 29.4 million cubic feet of natural gas were flared. Total oil collected in the last four days since the containment system was implemented is approximately 57,500 barrels.

 

    Access the letter from Allen to Hayward (click here). Access the letter from Watson to BP (click here). Access a release from Sen. Dorgan (click here). Access a release on the BP commitment on recovered oil and the wildlife fund (click here). Access additional information updates and links to releases and briefings on the Administrations response from the Unified Command website (click here). Access the BP response website for links to visuals more information on the recovery work (click here).

Day 50 BP Oil Spill: Presidential Ass Kicking & More Oil Recovery

Jun 8: Adm. Thad Allen, National Incident Commander for the BP oil spill reported earlier today that BP had recovered nearly 15,000 barrels of oil in the past 24 hours. BP reported that on June 7, approximately 14,800 barrels of oil were collected and 30.6 million cubic feet of natural gas flared. BP said the total oil collected in the last four days since the riser pipe cap was installed was approximately 42,500 barrels. However, the overriding question remains as to how much oil is actually being leaked from the well -- estimates seem to range from 15,000 to 95,000 and perhaps more. A new update from the Flow Rate Technical Group (FRTG) is expected soon [See WIMS 6/7/10].

 

    In an interview with Matt Lauer on NBC's Today broadcast, President Obama defended his actions on the Gulf oil spill crisis and reminded that he was in the Gulf a month ago before "most of these talking heads were even paying attention." The President also said that BP's CEO Tony Hayward "wouldn't be working for me" based on the statements he's made about the "wanting his life back" and characterizing the spill damage as "modest." Also, in response to a question from Lauer about whether someone's butt should be kicked, President Obama said, ""I don't sit around just talking to experts because this is a college seminar. We talk to these folks because they potentially have the best answers, so I know whose ass to kick." 

    As part of the previously announced commitment to fund the entire $360 million cost of six berms in the Louisiana barrier islands project, BP announced that it would make an immediate payment of $60 million to the State of Louisiana. In a letter to Louisiana Governor Bobby Jindal and as previously announced, BP detailed its plans to make payments in stages based on the project's completion milestones. The initial $60 million payment is intended to permit the State to begin work on the project immediately. BP will then make five additional $60 million payments when the Coastal Protection and Restoration Authority of Louisiana.

 

    National Oceanic and Atmospheric Administration's (NOAA's) independent analysis of water samples provided from the May 22-28 research mission of the University of South Florida's R/V Weatherbird II confirmed the presence of very low concentrations of sub-surface oil and PAHs (polycyclic aromatic hydrocarbons) at sampling depths ranging from 50 meters to 1,400 meters. The Weatherbird II samples came from three stations: 40 and 45 nautical miles to the northeast of the well head and 142 nautical miles southeast of the well head. NOAA's analysis of the presence of subsurface oil determined that the concentration of hydrocarbons is in the range of less than 0.5 parts per million, and PAH levels in range of parts per trillion. NOAA announced its analysis in conjunction with the University of South Florida.

 

    Dr. Steven Murawski, chief scientists for NOAA Fisheries said, "NOAA's analysis of the Weatherbird II samples shows that concentrations of hydrocarbons decrease with depth, with a notable exception of samples at 300 meters from Station 07, which warrants additional research attention. Also, PAH levels are very low in all samples, with only five of 25 having reportable concentrations of the priority pollutant PAHs." NOAA Administrator Dr. Jane Lubchenco said, "We have always known there is oil under the surface; the questions we are exploring are where is it, in what concentrations, where is it going, and what are the consequences for the health of the marine environment? This research from the University of South Florida contributes to this larger, three-dimensional puzzle we are trying to solve, in partnership with academic and NOAA scientists."

 

    NOAA also announced that it has opened 339 square miles of previously closed fishing area off the Florida panhandle -- the northern boundary now ends at the Florida Federal-state water line on the east side of Choctawhatchee Bay.The area was initially closed on June 5 as a precaution because oil was projected to be within the area over the next 48 hours. However, the review of satellite imagery, radar and aerial data indicated that oil had not moved into the area. The Federal closed area does not apply to any state waters. Closing fishing in these areas is a precautionary measure to ensure that seafood from the Gulf will remain safe for consumers. The closed area now represents 78,264 square miles, which is approximately 32 percent of Gulf of Mexico Federal waters. This leaves approximately 68 percent of Gulf federal waters available for fishing.

 

    The Incident Command Post in Mobile, AL indicated that a Sentry plan has been initiated to provide real-time ocean monitoring off the Florida Keys and Dry Tortugas. Vessels will be used to conduct maritime patrols to provide early identification of any weathered oil products such as light sheen, which will naturally dissipate, or mousse mats and tar balls that could potentially threaten the Florida Keys and east coast of Florida. A vessel departed from John's Pass, near St. Petersburg, Fla. on the first patrol and patrols will generally last from four to 10 days.  Additional vessels and aircraft Sentry patrols may be implemented as necessary to provide early warning detection of any weathered oil products. These vessels are intended to provide a minimum of 48-hours additional notice so responders can maximize preparedness and response activities and notify the public. A June 6, release indicates, "There have been no reports of Deepwater Horizon/BP Oil Spill-related oil products reaching shore in the Florida Peninsula and there is no indication that it will have impacts from weathered oil products in the near future." 

 

    Yesterday (June 7) at a Cabinet meeting on the BP spill, the President offered promise and encouragement. He stated that he is confident that the Gulf Coast ecosystems and people affected by the crisis will make a full recovery. He said, Let me just make one final point, and I think this was something that was emphasized by everybody here, and it's something that I want to say to the American people. This will be contained.  It may take some time, and it's going to take a whole lot of effort. There is going to be damage done to the Gulf Coast and there is going to be economic damages that we've got to make sure BP is responsible for and compensates people for.

 

    "But the one thing I'm absolutely confident about is that as we have before, we will get through this crisis.  And one of the things that I want to make sure we understand is that not only are we going to control the damages to the Gulf Coast, but we want to actually use this as an opportunity to reexamine and work with states and local communities to restore the coast in ways that actually enhance the livelihoods and the quality of life for people in that area. It's going to take some time.  It's not going to be easy. But this is a resilient ecosystem. These are resilient people down on the Gulf Coast. I had a chance to talk to them, and they've gone through all kinds of stuff over the last 50, 100 years. And they bounce back, and they're going to bounce back this time. And they're going to need help from the entire country. They're going to need constant vigilant attention from this administration. That's what they're going to get."

    Access more information and a video of the NPC interview with the President (click here). Access a release from BP on the berm payment plan (click here). Access a release on the NOAA sampling and link to the sampling report (click here). Access a release and map on the NOAA closed fishing area report (click here). Access a release on the Sentry plan (click here). Access the President's statement at the Cabinet meeting and a video (click here).

Day 49 BP Oil Spill: Oil Recovery & BP Reimburses 14,000 For Losses

Jun 7: President Obama met with officials in Louisiana as he made a trip to the Gulf Coast on Friday afternoon to view the and be briefed on the latest efforts to stop the leak and cleanup the spreading oil slick. Also on Friday BP reported, that following the first full day since the cap was installed over the well, they had collected over 6,000 barrels of oil. Now, today (June 7) they are claiming to be recovering over 10,000 barrels of oil per day (bbl/day) -- a figure which BP Group Chief Executive Tony Hayward said was a "vast majority" of the oil being leaked.

 

    However, that estimate is based on the latest "official" estimate of between 12,000 and 19,000 bbl/day made by the Flow Rate Technical Group (FRTG) [See WIMS 6/1/10]. Other experts, including those the are participating on the FRTG, have estimate a flow rate that is much higher. Purdue University mechanical engineering professor Steven Wereley, a researcher that testified before Representative Markey's hearing on May 19, and is on the FRTG, has indicated the flow rate may be around 95,000 barrels/day with a plus or minus 20% degree of accuracy [See WIMS 5/29/10]. Also, the FRTG estimate was made before the riser pipe was sheared off to allow the cap placement -- a move that experts say could increase the flow by 10-20%.

 

    Following BP's "vast majority" claim, Representative Markey sent a letter to BP asking for clarification on the total amount of oil that is coming out of the well. In his letter to BP America CEO Lamar McKay, Markey says, "At this time, BP appears to know how much oil is being captured, which is encouraging. Yet BP still does not appear to know precisely how much oil is actually escaping, which is discouraging." Markey notes that BP will face potential fines of up to $4,300 per barrel of oil spilled.

 

    At a White House press briefing today with Adm. Thad Allen, the national incident commander and Press Secretary Robert Gibbs, Allen reminded that the FRTG had two estimates on the size of the leak -- one was a range of 12,000 to 19,000 bbl/day. The other one was a range of 12,000 to 25,000 bbl/day. He said, "We are now approaching production that will get up around 15,000 barrels a day" [speaking of the amount recovered]. WIMS contacted a member of the FRTG who indicated that the group will likely have a new leak flow estimate on Tuesday or Wednesday.

 

    On his visit to the Gulf the President said, "The most obvious area of progress was, coming out of the meeting last week, trying to bridge what seemed to be differences with respect to the berm, the barrier islands that Governor Jindal had proposed, and we now have that authority and dredging is beginning.  And now we want to make sure that BP is paying up, but it seems like we're making progress on that front.

    "We spent a lot of time here just talking about the logistics of the response on the shore as oil begins to come in.  And everybody here has particular concerns because we've got limited resources. . . One of the things that we've done to make sure that organizationally things are working the way they should is we now have a Coast Guard official who is stationed with each parish president and we actually have a BP representative who is stationed with each parish president, so that they have direct access to making sure that any information, any problems that they've got, are immediately being shot up to Thad and he can respond quickly.  And we want to set that up not just in Louisiana, but in Alabama as well as in Florida -- we want county equivalents to have that same kind of representation and rapid response.

    "We also talked about claims.  And this is an area where I think everybody has a lot of concern.  My understanding is, is that BP has contracted for $50 million worth of TV advertising to manage their image during the course of this disaster.  In addition, there are reports that BP will be paying $10.5 billion -- that's billion with a B -- in dividend payments this quarter. Now, I don't have a problem with BP fulfilling its legal obligations.  But I want BP to be very clear, they've got moral and legal obligations here in the Gulf for the damage that has been done.  And what I don't want to hear is, when they're spending that kind of money on their shareholders and spending that kind of money on TV advertising, that they're nickel-and-diming fishermen or small businesses here in the Gulf who are having a hard time. . ."

    As WIMS previously reported, BP indicated to it shareholders on June 4, that it has already spent over $1 billion in gross direct costs for the response, clean up and relief wells and spending at this rate is expected to continue for some time beyond successful completion of work to stop the flow of oil from the damaged well. Any fines and penalties would present additional costs; but the company said the costs of containment, removal and clean up are likely to be largely complete in 2010. BP reports that 34,656 claims have been opened, from which more than $45.9 million have been disbursed. No claims have been denied to date, and there are more than 516 claims adjusters on the ground. The Administration reports that it is providing aggressive oversight of the BP claims process from start to finish that will ensure that every legitimate claim is honored and paid in an efficient manner, and its strong commitment to providing residents with full, streamlined access to available assistance programs [See WIMS 6/4/10].

    The President said, "We've assigned federal folks to look over BP's shoulder and to work with state and local officials to make sure that claims are being processed quickly, fairly, and that BP is not lawyering up, essentially, when it comes to these claims. They say they want to make it right. That's part of their advertising campaign.  Well, we want them to make it right.  And what that means is that if a fisherman got a $5,000 check, and the next time he goes in, because it's a new month, suddenly BP is saying, well, we need some documentation and this may take six months to process, or 60 days to process -- or 30 days to process, for that matter -- that fisherman, with all his money tied up in that boat, just may not be able to hang on for another 30 days. He may lose his boat and his livelihood. . ."

    We've [the Federal Government] already submitted one bill [$69 million, See WIMS 6/3/10] and they haven't said that they're not paying it, so I don't want to anticipate problems. But we are already starting to see at the local level folks experiencing problems. And we don't want those problems to build up -- we want to nip that at the bud right now. And the fact that BP can pay a $10.5 billion dividend payment is indicative of how much money these folks have been making.  And given the fact that they didn't fully account for the risks, I don't want somebody else bearing the costs of those risks that they took.  I want to make sure that they're paying for it."

    On June 4, BP announced it will be sending a second advance payment during June to individuals and businesses along the Gulf Coast to compensate for the loss of income or net profit due to the cleanup of the Deepwater Horizon Incident in the Gulf of Mexico. With the second advance payments, BP estimates it will have spent about $84 million for loss of income or net profit through June, based on the claims it has received to date. This number will grow as additional claims are filed. About 14,000 individuals and businesses in Louisiana, Mississippi, Alabama and Florida have received an initial advance payment for loss of income or net profit to date.

    According to a BP release, "With the second payment, about 7900 individuals and businesses in Louisiana will have received about $50 million for loss of income or net profit by the end of June. The numbers for Alabama are about 3000 claimants receiving about $16 million, in Mississippi about 1900 individuals and businesses receiving about $10 million, and in Florida about 1200 claimants receiving about $8 million. BP expects these numbers will grow as claims continue to be filed during the month." BP said the second advance payment will be the same amount as the first payment received; no check will be reduced. The mailings will start this week (June 4). Individuals and businesses will receive their second payment about 30 days after their initial advance payment was received.

 

    BP said it has moved to pay advances as fast as possible and, therefore, is still conducting evaluations of losses by claimants. "Payment adjustments may be required in the future when evaluations are completed; however, BP will not seek repayment if it overpaid advances. Loss of income or net profit payments are made in advance because individuals and businesses need to pay their bills. Claimants, who have provided documentation that demonstrates their loss of income or net profit was larger through May than the initial advance payment received, also will receive a supplemental payment for those losses. This payment will be provided after direct consultation with a claims adjuster."

    Access the June 7 press briefing from Thad Allen (click here). Access the June 6 release from Rep. Markey (click here). Access the President's full remarks on June 4 in Louisiana (click here). Access the BP release on claims processing (click here). Access the BP response website for links to visuals on how the LMRP is supposed to work (click here). Access additional information updates and links to releases and briefings on the Administrations response from the Unified Command website (click here). Access EPA's environmental monitoring site (click here). Access the White House website on the BP spill which contains links to all Federal agency response websites and more (click here).