Image: Oil flows from well
BP via AP
Oil flows out of BP's Macondo well on July 12.
msnbc.com news services
updated 12/3/2010 2:59:41 PM ET 2010-12-03T19:59:41

BP is mounting a new challenge to U.S. government estimates of how much oil flowed from the runaway well deep below the Gulf of Mexico. The issue will be critical in determining the size of federal pollution fines the company will pay.

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Staff working for the presidential oil spill commission said Friday that BP is arguing that the government overestimated by 20 percent to 50 percent the amount of oil that spilled.

"They are going to argue it was less," said Priya Aiyar, the commission's deputy chief counsel. "BP has not offered its own numbers yet, but BP has told us that it thinks the government's numbers are too high and thinks the actual flow rate can be actually 20 to 50 percent lower."

BP's request could save it as much as $10.5 billion or as little as $1.1 billion, depending on factors such as whether the government concludes that BP acted negligently. For context, the U.S. Environmental Protection Agency's entire federal budget for 2010 was $10.3 billion.

President Barack Obama has said he wants Congress to set aside money BP pays for fines for the Gulf's coastal restoration.

William Reilly, the Republican co-chair of the presidential commission, expressed amazement at BP's case. Reilly headed the Environmental Protection Agency under President George H.W. Bush.

"They are going to argue that (it) is 50 percent less?" Reilly asked. "Wow."

Under the Clean Water Act, the oil giant — which owned and operated the well — faces fines of up to $1,100 for each barrel of oil spilled. If BP were found to have committed gross negligence or willful misconduct, the fine could be up to $4,300 per barrel. One barrel contains 42 gallons.

That means that based on the government's estimate of 206 million gallons spilled, BP could face civil fines alone of between $5.4 billion and $21.1 billion.

BP, in written comments submitted to the commission in October but only released Friday, said the U.S. estimates "rely on incomplete or inaccurate information, rest in large part on assumptions that have not been validated, and are subject to far greater uncertainties than have been acknowledged."

BP added that the estimates seemed to be biased toward the maximum amount of oil that could have been discharged instead of the amount most likely to have been released.

BP said more information, such as an analysis of the rig's blowout preventer, was needed before it can develop its own estimate of the well flow rates. But ultimately, the company said, a full review will show "possibly far less oil" was spilled than the government estimated.

In a statement Friday, the company said the government's estimates failed to account for equipment that could obstruct the flow of oil and gas, such as the blowout preventer, making its numbers "highly unreliable."

BP's argument could be bolstered by the federal government's missteps in coming up with a final estimate for the spill's volume. The Obama administration has offered nearly 10 estimates of how much oil flowed from the BP well, coming up with a refined conclusion late last month of 206 million gallons, which is likely its last.

The repeated adjustments of the spill's volume will compromise the government's ability in negotiations or the courts to argue for the highest possible penalty under the Clean Water Act, said David Uhlmann, a University of Michigan law professor who spent seven years as chief of the Justice Department's environmental crimes section. Uhlmann said if BP succeeds in lowering the number, the government could increase the fine it assesses per barrel.

"The first advantage (BP) has is there is no way to come up with a completely accurate number," Uhlmann said, referring to how there were no measuring devices at the well head on the sea's floor. "The second advantage they have is the government has been all over the place when it comes to this thing, which undermines the government's credibility."

Initially, federal officials adopted BP's estimate that 42,000 gallons each day were gushing out. They raised it to 210,000 gallons per day and stuck with that number for weeks. Then the government set up a special team of experts to estimate the spill size; that group came up with a range of estimates that was criticized by independent scientists as still too low.

In mid-June, about two months after the oil rig accident that caused the deepwater gusher, the federal government said the well could be leaking as much as 2.4 million gallons a day.

The latest version estimates that soon after the April 20 explosion, oil was spewing out of the well at a rate of 2.6 million gallons a day. That rate slowly dropped as the oil and gas reservoir more than three miles below the water's surface was depleted. At the time the well was plugged in mid-July, the government assumes oil was flowing at 2.2 million gallons daily.

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The comments came as the commission weighed proposals that would call for requirements for more accurate flow rate estimates from the start of a major oil spill.

Some commissioners said they believed the government should be responsible for independently measuring flow rates, and not be reliant on the companies responsible for spills.

Lack of accurate flow rate estimates at the start of the BP spill in April eroded public confidence in the government's ability to handle the accident response, the panel said.

Charged with guiding the future of offshore drilling, the commission is working to develop policy recommendations to prevent or better respond to spills.

The seven-member panel's official report is set to be released on Jan. 11, but it will be up to the Obama administration, lawmakers and the oil industry to decide whether to implement whatever framework the panel lays out.

The Associated Press and Reuters contributed to this report.

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