BP estimates spill up to 100,000 bpd in document


  • World
  • Monday, 21 Jun 2010

LONDON/BURAS, La. (Reuters) - An internal BP document released by a U.S. lawmaker estimated that a worst-case scenario rate for the Gulf of Mexico oil spill could be about 100,000 barrels per day, far higher than the current U.S. figure.

Shares in the oil giant, which have nearly halved in value since an explosion at an oil well in the Gulf of Mexico on April 20, slid 4.3 percent in early trade.

The group said the cost of its response to the spill had hit $2 billion and it had paid out $105 million in damages to those affected by the disaster.

It rejected claims by its partner in the oil well, Anadarko Petroleum, that it had been negligent in the way operated the installation.

"It's a combination of things (affecting the share price)," said Barclays Capital analyst Lucy Haskins.

"Over the weekend we were getting the newsflow about Anadarko refusing to pay and then there's these stroies about higher flow rates in an internal memo.

"The shares are very vulnerable to any movement in terms of newsflow," she added.

The estimate in the undated BP document released by U.S. Representative Ed Markey, chairman of the energy and environment subcommittee of the House of Representatives Energy and Commerce Committee, compares with the current U.S. government estimate of up to 60,000 barrels (2.5 million gallons/9.5 million liters) gushing daily from the ruptured well.

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BP spokesman Toby Odone said the document appeared to be genuine but the estimate applied only to a situation in which a key piece of equipment called a blowout preventer is removed.

"Since there are no plans to remove the blowout preventer, the number is irrelevant," Odone said.

STRUGGLING TO COPE

The British energy giant, still struggling to stop a leak that began on April 20 and is causing an economic and environmental disaster along the U.S. Gulf Coast, is planning to raise $50 billion to cover the cost of the largest oil spill in U.S. history, London's Sunday Times reported.

The newspaper, without citing sources, said BP planned to raise $10 billion from a bond sale, $20 billion from banks and $20 billion from asset sales over the next two years to cover the cost of the spill.

The Financial Times said that BP CEO Tony Hayward was planning to travel to Russia to reassure President Dmitry Medvedev that the oil group is not on the brink of collapse. A BP spokeswoman said she had no knowledge of any trip.

BP said last week it would suspend dividend payments to its shareholders and increase the pace of asset sales to $10 billion this year to offset liabilities from the spill, which began after an explosion on an offshore rig that killed 11 workers.

The amount of oil spewing from the well has been a matter of considerable controversy in the two months since the spill erupted, with critics saying BP has understated the flow rate.

"Right from the beginning, BP was either lying or grossly incompetent," Markey told NBC's "Meet the Press" on Sunday, the 62nd day of the spill.

"First they said it was only 1,000 barrels, then they said it was 5,000 barrels."

The document was posted on the Internet at http://globalwarming.house.gov/files/WEB/flowrateBP.pdf

The spill has dealt a body blow to fishing and tourism industries across four Gulf states, soiling coastlines that are a playground for tourists and a key habitat for wildlife.

QUICK SETTLEMENT

Huge amounts of oil continue to leak into the sea from the ruptured well a mile (1.6 km) below the ocean surface despite BP containment systems.

BP said on Sunday that 21,040 barrels of oil (883,680 gallons/3.34 million litres) leaking from the well was collected by its siphoning systems on Saturday. One of the two systems was restarted on Saturday after a 10-hour shutdown to fix a problem with fire-prevention equipment, BP said.

Kenneth Feinberg, the independent administrator running the $20 billion fund set up by BP to compensate victims, said on Sunday he would make sure that "every eligible, legitimate claim is paid and paid quickly."

Appearing on "Meet the Press," Feinberg also rejected the complaint of a senior Republican congressman, Joe Barton, who last week likened the fund, set up under pressure from President Barack Obama, to a government "shakedown" of the company.

"I don't think it helps to politicize this program," Feinberg said.

Feinberg, an arbitration lawyer, dispensed hundreds of millions of dollars to victims of the Sept. 11, 2001 attacks on the United States.

'NOTHING IS SATISFACTORY'

The spill threatens the coastal economies of four states including hard-hit Louisiana. It has also severely dented BP's finances and reputation and eroded Obama's popularity.

Mississippi Republican governor Haley Barbour, also appearing on "Meet the Press," said he was anxious to see the well capped, the spill cleaned up and BP cover the entire tab.

"Nothing is satisfactory until the well is shut in. When the well is capped, then clean up the oil, and then BP pays the bills. Until all of that is done, nothing is satisfactory," he said said.

Despite assurances of swift compensation, Louisiana Gulf residents remained sceptical.

"Every time they say there's a fund for fishermen, we wait years and years," said Tal Plork, whose fisherman husband, Phan, faced long waits for aid after two hurricanes rampaged across the Gulf region in 2008. "It was like that for Gustav and Ike. Hopefully, now they will go faster."

(Additional reporting by Thomas Ferraro and Will Dunham in Washington, Bruce Nichols in Houston and Sarah Young and Victoria Bryan in London; Writing by Sitaraman Shankar and Tim Gaynor, editing by David Cowell)

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