Charles Dharapak  /  AP
In this Oct. 25, 2007 file photo, the BP (British Petroleum) logo is seen at a gas station in Washington. If the spill damages fragile marshlands along the coasts of Louisiana and Mississippi, BP faces one of the biggest public relations challenges the industry has seen since the Exxon Valdez disaster in 1989. news services
updated 4/30/2010 4:19:37 PM ET 2010-04-30T20:19:37

BP brands itself a friend of the environment, an energy company that goes "beyond petroleum."

That image, worth billions of dollars, is being sullied by the company's inability to contain a massive oil spill in the Gulf of Mexico.

As the expanding oil slick threatens marshlands and wildlife along the coasts of Louisiana and Mississippi, BP faces perhaps the biggest public relations challenge an oil company has experienced in the U.S. since the Exxon Valdez tanker disaster in Alaska in 1989.

BP's environmentally friendly image — its logo is a green and yellow sunburst — has outlasted past accidents, including a Texas refinery blast and Alaska pipeline spill. But last week's deadly explosion on a BP-operated oil rig and the looming environmental damage are shaping up to be a major problem, experts said.

Since the accident, BP's stock market value has declined by roughly $25 billion. On Friday, BP CEO Tony Hayward told Reuters in an interview that it will clean up the spill, compensate those affected and accept that it could stall plans to open new drilling areas off the U.S. coast.

"We are taking full responsibility for the spill and we will clean it up and where people can present legitimate claims for damages we will honor them. We are going to be very, very aggressive in all of that," Hayward said.

An estimated 5,000 barrels of oil per day are spewing into the Gulf, and the company is spearheading the cleanup. But on Thursday, the government sent in equipment to support BP's efforts as the spill was reaching the coast. The Obama administration said BP is responsible to pay for the cleanup, which the company says is costing millions of dollars per day.

Marketing experts and environmentalists say BP's response so far has been superior to Exxon's treatment of the Valdez crash. BP devoted most of its home page on its website to the disaster, and it's held regular news conferences.

But it's had some slips. Most notably, BP appeared to initially downplay the extent of the oil spill. It estimated that 1,000 barrels of oil were seeping from the sea bed each day. The government later corrected that figure to five times as much.

In addition, local officials in communities in the path of the spill have expressed frustration with the lack of communication from BP officials, as well as the government.

"They have to repair the problem. I'm not sure if anything else is going to matter until they do," said Kelly O'Keefe, managing director of the Virginia Commonwealth University Brandcenter. "And they should apologize."

BP says it's not focusing on its public relations effort.

"It's about tackling an oil spill as aggressively as we can," said Robert Wine, a spokesman at BP's headquarters in London.

BP has had its share of recent high-profile accidents:

— An explosion at a BP refinery in Texas City in 2005 killed 15 people and injured 170. Regulators in October hit BP with a record $87 million fine for failing to correct safety hazards at the plant. BP has formally contested the fine.

— More than 200,000 gallons of oil spilled from a BP pipeline in Alaska in March 2006, the largest-ever spill on Alaska's oil-rich North Slope. BP paid about $20 million in fines, including $4 million to the National Fish and Wildlife Foundation for Arctic environmental research.

— Last year, BP paid nearly $2 million in fines for not operating with the proper equipment at oil fields along the North Slope.

The costs could be much higher this time. Besides cleanup expenses now running at $6 million a day, BP faces potential fines and costs to ensure better safety on the rigs it operates in the Gulf. And there will be legal costs. Two lawsuits have already been filed related to the blast and potential damage to the commercial shrimping industry.

The immediate concern was the oil slick threatening hundreds of species of fish, birds and other wildlife along the Gulf Coast.

Eileen Campbell, chief executive of market research company Millward Brown, said BP risks becoming associated with photos of oil-soaked wildlife.

That would stand in stark contrast to the green image that BP took years to build. The company has invested in solar and wind energy projects. It devoted $500 million on biofuels research, and CEO Tony Hayward supports capping carbon emissions. It spent nearly $76 million in the United States on radio and TV last year, according to Kantar Media.

Altogether, the company's efforts have contributed to a brand name worth about $17.3 billion, according to the marketing firm Millward Brown.

BP is considered the most environmentally friendly of major oil companies, the firm said. In contrast, Exxon's brand is based more on its reputation for innovation, corporate citizenship and communication with shareholders.

In the grand scheme, BP hasn't gone much beyond its core business of petroleum. Of its $73 billion in revenue in the first quarter, about $72.3 billion of that came from the exploration, production, refining and marketing of oil and natural gas. The rest came from "other businesses" such as solar and wind energy.

David Oesting, an Alaska lawyer who represented the plaintiffs in a class-action suit that followed the Valdez crash, doesn't believe BP will suffer as much as Exxon did.

Exxon eventually spent more than $4.3 billion on the cleanup and on lawsuits to compensate residents. Two decades later, it continues to pay for the damages. Oesting said he won $1 billion in the suit, and years later he's still cutting checks to the victims.

BP will benefit from the Oil Spill Liability Trust Fund, which was established after the Valdez crash by collecting 8 cents from the industry for every barrel of oil produced or imported to the U.S. The fund has about $1.6 billion available to cover damages suffered by coastal residents, fishermen and other affected businesses, according to the Coast Guard.

BP now is at the front lines of what is likely to be a renewed attack on Big Oil.

The Obama administration signed off a few weeks ago on a plan to allow more drilling along the East and Gulf coasts. Edward Markey, the chairman of a House energy committee, has asked the heads of BP and four other oil companies to testify at a hearing about the spill.

Richard Charter, senior policy adviser for Defenders of Wildlife said the rig explosion will reverberate for years in public debates about whether to expand offshore drilling. He said the unfolding environmental damage along Louisiana's coast will linger in memories of the American public.

"It will remind people that there is a risk with this kind of industrialization of the coast," he said.

Reuters contributed to this story written by The Associated Press reporter Chris Kahn.

Video: Oil slick reaches Gulf Coast

  1. Closed captioning of: Oil slick reaches Gulf Coast

    >>> 30th, 2010 .

    >>> and welcome to "today" on this very busy friday morning. i'm meredith vieira .

    >> i'm ann curry in for matt this morning. as you know, this morning long thin lines of oil leaking into the gulf now lapping up on the shore of louisiana 's ecologically sensitive shorelines.

    >> much thicker oil is now just a few miles from shore. on thursday homeland security secretary janet that pa that know says it is now a spill of national significance. she'll head to the region today. an official at the oceanic and atmospheric association calls the situation a very, very big thing. did the obama administration wait too long to respond? we'll ask the woman overseeing the government 's response to the disaster in a moment.

    >>> first, we've got nbc's anne thompson in venice , louisiana where the spill has now reached land. anne, good morning.

    >> reporter: good morning, ann. the oil came ashower during the night. this morning there are reports the oil hit an area at the mouth of the mississippi in louisiana . here in venice , bp and local officials have put together a team of some 150 people who are poised to go out and search for that oil in an effort to fend off what could be a potentially catastrophic invasion. on louisiana 's fragile coastline, these plastic barriers called booms are the last line of defense. the well 40 miles out to sea is pouring five times more oil into the gulf than first thought. now some 5,000 barrels a day. despite efforts with underwater robots like this ten days after the explosion, bp is no closer to plugging the leak.

    >> absolutely nobody wants to get this oil flow stopped more than i do. and we have people working 24 hours a day in four different locations to both stop the flow to actually fight this thing offshore an protect the shorelines.

    >> reporter: thursday's weather did not allow any more controlled burns. those fires can consume as many as 1,000 barrels of oil at a time. but bp is getting help from the highest level . president obama mobilized a team of cabinet secretaries to monitor the investigation and the cleanup.

    >> my administration will continue to use every single available resource at our disposal, including potentially the department of defense to address the incident.

    >> reporter: louisiana 's governor bobby jindal declared a state of emergency and asked the homeland security department to respond to the slick. u.s. security officials tell nbc news a list of options are being put together that could include sending additional planes, boats, skimmers and booms. state officials opened the shrimp season early to try and beat the oil. in the small fishing town , 69-year-old walter has an uneasy feeling of deja vu .

    >> it's going to do the same thing katrina did.

    >> reporter: the spill could do serious damage to louisiana 's wetlands. at this time of year, the marshes are breeding grounds for hundreds of different kinds of wildlife. an ecological marvel threatened by a slow- motion invasion. these floodwaters behind me are home to one-third of the nation's seafood production. now all of this clean-up comes with a very high price tag estimated at $6 million a day. since bp owns the well and the oil, it is responsible for paying that bill. something federal officials have been quick to point out in recent days as frustration has grown with bp 's inability to stop the leak.

    >> anne thompson , thank you so much. rear admiral sally o'hara


Discussion comments


Most active discussions

  1. votes comments
  2. votes comments
  3. votes comments
  4. votes comments

Data: Latest rates in the US

Home equity rates View rates in your area
Home equity type Today +/- Chart
$30K HELOC FICO 3.79%
$30K home equity loan FICO 4.99%
$75K home equity loan FICO 4.69%
Credit card rates View more rates
Card type Today +/- Last Week
Low Interest Cards 13.83%
Cash Back Cards 17.80%
Rewards Cards 17.18%