Tags: US | Gulf | Oil | Spill

BP Exec Gives Pep Talk Amid US Tensions Over Spill

Sunday, 13 Jun 2010 08:03 AM

 

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A top BP executive acknowledged the growing tensions between the oil giant and the federal government but also gave workers at a command center a much-needed pep talk, reminding them of the huge challenge they faced as they try to stop a massive oil leak and keep the crude away from the fragile Gulf Coast.

BP's public image has taken a beating and its stock price has plunged since the April 20 explosion of a deep-sea rig that killed 11 people and triggered a massive oil spill that has coated parts of the Gulf Coast with stinking, dark piles of crude and created environmental and economic devastation.

Hours before BP's chief operating officer, Doug Suttles, thanked hundreds of BP workers, government officials and contractors at the command center, the Coast Guard made public a testy letter sent to him demanding the energy giant pick up its pace and present a better plan to contain the spill by the time President Barack Obama arrives at the beleaguered coast on Monday.

Suttles didn't address the letter when he spoke with workers who crammed into the center on the Louisiana coast, but admitted there were "big frustrations out there." Nearby wall postings reminded the bleary eyed that emergency operations had gone on for 53 days.

"It's a huge challenge, we're doing something that we hoped we'd never have to do, but we're doing something that no one's ever done before," he said. "And I want to say thank you. You guys are doing a tremendous job under horribly difficult circumstances."

Saturday's meeting was a tightly staged event. Though media were invited, reporters were escorted into the command center for his speech but had to watch from the sidelines as Suttles greeted four BP employees in a side hallway.

Suttles later said in an interview that the company would respond to the letter by Sunday night.

As the federal government ramped up pressure on BP, Gulf states affected by the disaster also were putting the squeeze on the company, seeking to protect their interests amid talk of the possibility that BP may eventually file for bankruptcy.

The attorney general in Florida and the state treasurer in Louisiana want BP to put a total of $7.5 billion in escrow accounts to compensate the states and their residents for damages now and in the future.

"At the end of the day, my concern is Louisiana," state treasurer, John Kennedy, told The Associated Press on Saturday. "BP ultimately will do what BP thinks is best for BP."

Alabama doesn't plan to take such action, and Mississippi and Texas haven't said what they will do.

But even with Florida and Louisiana, BP might have a hard time complying, and if it did, it could hasten the company's spiral downward.

That's because as of March 31, BP had $6.8 billion in cash and cash equivalents available.

Experts say BP wouldn't necessarily need to use cash to fund the accounts the states are asking for. Instead, the company could borrow money to comply. That, however, presents a potential problem because the company's borrowing costs are likely to be a lot higher due to investor concerns.

BP said in a statement to the AP that it's considering the Florida request. It didn't address the comments by Kennedy.

"We have received a variety of funding requests from different states and have been responding to them in due course based on the particular issues raised in each," BP said, adding that it already has made grants totaling $245 million to four Gulf states and is committed to spending up to $360 million to fund construction of six barrier island berms in Louisiana.

And as to the concerns raised about a possible bankruptcy filing, BP said only that as of Saturday it was "not in discussions with" and had "not engaged any bankruptcy experts."

Along the Gulf coast, ominous new signs of the tragedy emerged on the beaches of Alabama. Waves of unsightly brown surf hit the shores on Saturday in Orange Beach, leaving piles of oil that dried in the hot sun and extended up to 12 feet from the water's edge for as far as the eye could see.

It was the worst hit yet to Alabama beaches.

"This is awful," said Shelley Booker of Shreveport, La., who was staying in a condominium with her teenage daughter and her friends near the deserted beach about 100 miles from the site of the spill.

Scientists have estimated that anywhere between about 40 million gallons to more than 100 million gallons of oil have spewed into the Gulf since a drilling rig exploded. The latest cap installed on the blown-out well is capturing about 650,000 gallons of oil a day, but large quantities are still spilling into the sea.

BP is hard at work trying to find new ways to capture more oil, but officials say the only way to permanently stop the spill is a relief well that will drill sideways into the broken well and plug it with cement.

To boost its capacity, BP also plans to trap oil using lines that earlier shot heavy drilling mud deep into the well during a failed attempt to stop the flow. This time, those lines will work in reverse. Oil and gas from the well will flow up to a semi-submersible drilling rig where it will be burned in a specialized boom that BP estimates can vaporize a maximum 420,000 gallons of oil daily. Suttles said this system could be working by early next week.

Another ship should be in place by mid-July to process even more oil.

——

Henry reported from Schriever, La., Weber from Houston. Associated Press Writer Jay Reeves in Orange Beach, Ala., contributed to this report.

© Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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