BP will settle all legitimate Mexican Gulf oil spill claims

Author : Paul Gay

04 May 2010

Oil giant BP is once again at the centre of a major US industrial accident with the oil spill that followed an explosion and eventual sinking of the offshore oil drilling rig Deep Water Horizon. Since the vessel sank, with the loss of 11 workers, the Macondo field’s well head has been leaking around 5000 barrels of crude oil per day into the waters of the Gulf of Mexico, creating what could become the world’s worst ever man-made environmental disaster.

Tony Hayward, BP chief executive has promised to meet all ‘legitimate’ claims for damages. “It is indeed BP’s responsibility to deal with this, and we are dealing with it,” he told National Public Radio. “We will absolutely be paying for the clean-up operation.” The company has posted claim forms on the disaster response website, and says it plans to pay all small damages claims quickly.

The spill threatens BP with a bill for the clean-up, compensation and damages of about $8bn – two-thirds of an estimated total cost of about $12.5bn – and has done incalculable damage to its reputation in the US.

While accepting responsible for cleaning up the ever growing spill, Hayward said the firm was not to blame for the accident which sank the Deepwater Horizon rig on 22 April, causing the slick. The equipment that failed, he suggested, belonged to drilling company Transocean.

In a BBC interview, Hayward dismissed talk of a rift between BP and US officials. "Despite some of the rhetoric we have established an incredible co-operative relationship with the federal authorities," he said. "It's clear that we're working very well together. In terms of the responsibility, I want to be clear, this was not our accident but it is our responsibility to deal with the leak and clean up the oil."

While touring some of the areas likely to be affected by the incident, US President Barack Obama described the oil spill as ‘a massive and potentially unprecedented environmental disaster’. “Let me be clear,” he said. “BP is responsible for this leak; BP will be paying the bill. But as president of the United States, I'm going to spare no effort to respond to this crisis for as long as it continues.”

Thousands of barrels of oil have been leaking into the Gulf of Mexico every day since the rig sank. Some oil has washed ashore, but officials say the bulk of the slick remains a few miles from the Louisiana coastline. The oil is already having a devastating effect on the area's fishing industry, and officials fear much wider environmental damage if the full slick hits land.

A containment vessel has been sent to the site to suck up the escaped oil. BP is drilling a new well to help relieve the pressure and stem the flow from the rupture. Experts warn that the cost of clearing up the spill could run into billions of dollars.

BP hoped to deploy a steel canopy to cover the site of the leak. Doug Suttles, BP chief operating officer, said a containment system for the escaped oil would take the form of giant steel chamber constructed onshore, which is designed to be placed over the leak and funnel the oil to a surface vessel. The main container chamber weighs around 65 tons,” he said.

Suttles told a press conference at Robert, Louisiana, that chemical dispersants were being injected directly on to the leak as of Sunday and work had also begun on a relief well that would go down to 18,000 feet. It would be injected with drilling fluids and eventually cement.

Reacting to the disaster, the US administration has banned oil drilling in new areas of the US coast while the cause of the Macondo oil spill is investigated and Florida Governor Charlie Crist declared a state of emergency on Friday.

California's Governor Arnold Schwarzenegger has withdrawn his support for a plan to expand oil exploration off the state's coast. Last year he pushed for more oil drilling off California's coastline but the spill in the Gulf of Mexico had changed his mind about the safety of oil platforms in the Pacific Ocean.

The state already knows the dangers of offshore drilling. In 1969 a leak from an undersea well just 9.6km off the coast of Santa Barbara coated pristine beaches with oil and killed thousands of animals. This spill led to a ban on new offshore development and helped galvanise the state's environmental lobby into the powerful voice it is today.