Tags: US | Gulf | Oil | Spill | Worst | Case

Documents: BP Estimated 4.2M Gallon in Worst Case

Sunday, 20 Jun 2010 05:53 PM

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BURAS, Louisiana – BP Plc estimates that a worst-case scenario rate for the Gulf of Mexico oil spill could be about 100,000 barrels of oil per day, according to an internal company document released Sunday by a senior U.S. congressional Democrat.

Its estimate of up to 100,000 barrels (4.2 million gallons/15.9 million liters) of oil per day is far higher than 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 offshore well into the sea.

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," he said.

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 oil spill is now in its 62nd day and has dealt a blow to fishing and tourism industries across four Gulf states, soiling coastlines that are a playground for tourists and vital habitat for wildlife.

The amount of oil spurting from the well has been a matter of considerable controversy in the past two months, with critics saying BP consistently understated the flow rate.

The internal BP document, which is undated, was released by U.S. Representative Ed Markey, chairman of a subcommittee of the House Energy and Commerce Committee.

The document appears to estimate the highest potential flow of oil if key components of the well fail. It does not indicate that the 100,000 barrels per day is BP's estimate of the actual amount gushing from the ruptured Gulf of Mexico well.

"Right from the beginning, BP was either lying or grossly incompetent," Markey told NBC's "Meet the Press."

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

But BP's Odone said, "I don't think there's been any underestimating. We've always said we would deal with whatever volume of oil was being spilled and that's exactly what we're doing."

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

RAISING MONEY

London's Sunday Times, without citing any 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.

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 Financial Times reported BP is considering doubling the $10 billion asset sale program as part of a push to strengthen the company's liquidity as it comes under financial pressure.

BP said 21,040 barrels of oil (883,680 gallons/3.34 million liters)) leaking from the well was collected by its siphoning systems Saturday. A large amount of oil continues to leak into the sea from the ruptured well a mile below the ocean surface despite the BP containment systems.

Kenneth Feinberg, the independent administrator appointed to run the $20 billion fund set up by BP to compensate victims for financial losses due to the oil spill, said he would make sure that "every eligible, legitimate claim is paid and paid quickly."

Appearing on NBC's "Meet the Press," Feinberg rejected the complaint of a senior Republican congressman, Joe Barton, who said last week that the fund set up by BP under pressure from President Barack Obama amounted to a government "shakedown."

"I don't think it helps to politicize this program," said Feinberg, an arbitration lawyer who dispensed hundreds of millions of dollars to victims of the September 11, 2001 attacks.

"This a voluntary program. No one is compelled to come into this fund."

'NOTHING IS SATISFACTORY'

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

"Every time they say there's a fund for fisherman, 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."

Plork, 42, has had to go to work since the oil leak began because her husband's fishing income has dried up. She works at a cafeteria at the BP camp in Venice, Louisiana, and has been supporting her five children mainly on credit cards.

Mississippi 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 cost.

"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," said Barbour, a Republican.

Barbour said he thought the U.S. federal government "has done more right than wrong" in its handling of the disaster.

After falling 6.8 percent last week, BP's shares are down 26 percent so far in June, their worst month since the October 1987 market crash.

Despite the battering to its reputation and stock stemming from the disaster, hedge fund T2 Partners said it likes shares in the British oil firm, according to a Barron's article published Sunday.

In a column titled "Other Voices," T2's managing partners said their reasons for recently taking a new position in BP are that it is "extraordinarily cheap," and that the firm is "highly likely" to be able to cover clean-up, damages, fines and lawsuits relating to the disaster.

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