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Test BP says it's spent $2 billion so far on oil spill

BP has spent $2 billion in two months of fighting its Gulf of Mexico oil spill and compensating victims, with no end in sight to the disaster or the price tag.
/ Source: staff and news service reports

BP has spent $2 billion in two months of fighting its Gulf of Mexico oil spill and compensating victims, with no end in sight to the disaster or the price tag.

The British oil giant released its latest tally of response costs Monday, including $105 million paid out so far to 32,000 claimants. The figure does not include a $20 billion fund that BP PLC last week agreed to set up to continue compensating Gulf residents and businesses. There are also scores of lawsuits piling up against BP for the April 20 rig explosion that killed 11 workers and ensuing oil spill that has yet to be capped.

In New Orleans, meanwhile, a federal judge hearing an oil industry challenge to the Obama administration's six-month ban on deepwater drilling in the Gulf of Mexico said on Monday that he will rule on the case no later than Wednesday.

Also Monday, the man President Barack Obama picked to run the $20 billion damage fund said many people are in "desperate financial straits" and need immediate relief.

"Do not underestimate the emotionalism and the frustration and the anger of people in the Gulf uncertain of their financial future," Kenneth Feinberg told interviewers. "It's very pronounced. I witnessed it firsthand last week."

Feinberg, who ran the victims claim fund set up in the wake of the Sept. 11, 2001, terrorist attacks, said he is determined to speed up payment of claims.

Shares of BP, which have lost about half their value since the rig Deepwater Horizon burned and sank off the Louisiana coast, were down nearly 5 percent Monday in London trading at $5.06. The rig was owned by Transocean Ltd. but run by BP.

BP also argued that its partners in the oil well project must share responsibility for the disaster costs. BP owned 65 percent of the well, while Anadarko Petroleum Corp. had 25 percent stake and a subsidiary of Mitsui & Co. Ltd. of Japan had a 10 percent stake.

Anadarko said Friday the joint operating agreement made BP responsible for any damage due to gross negligence or willful misconduct. BP shot back Monday that all the partners shared in liability for oil spill damages.

Hayward in hot water
BP chief executive Tony Hayward could be in more hot water over his day off attending a yacht race.

Hayward has been criticized for being tone-deaf to U.S. concerns about the worst oil spill in American history. He's already angered Gulf residents by saying he wanted his "life back."

British environmental groups immediately slammed Hayward's outing as did Rahm Emanuel, Obama's chief of staff.

A company statement calls it "a rare moment of private time" for Hayward and says "no matter where he is, he is always in touch with what is happening within BP."

Greenpeace says by taking part in the glitzy event, Hayward is "rubbing salt into the wounds" of those whose livelihoods have been wrecked by the oil spill.

On CBS's 'Face the Nation," Senator Richard Shelby (R-AL) called on Hayward to resign. He described his attendance at the yachting race as the "height of stupidity."

On Monday, BP announced that Hayward had canceled a scheduled appearance at a London oil conference on Tuesday. Spokesman Jon Pack said that Hayward's "very heavy schedule of commitments to the Gulf of Mexico" had led him to cancel his appearance at the World National Oil Companies Congress.

125 million gallons so far
Meantime, the best hope of ending the disaster rests on teams drilling two relief wells meant to stop the seafloor oil gusher, a daunting task: Their drills have to hit a target roughly the size of a salad plate about three miles below the water's surface.

If the workers aboard Transocean's Development Driller II or its sister rig DDIII miss or move too slowly, oil will keep pouring into the sea. As much as 125 million gallons of oil has gushed into the Gulf.

No one on the rig has done this before because these deep sea interventions are so rare. But rig workers brushed off worries and the pressure to succeed.

"It's really not a tough thing to do," says Mickey Fruge, the wellsite leader aboard the DDII for BP, which was leasing the rig that blew up and is responsible for stopping the oil.

Problems with the rig?
Separately, a Deepwater Horizon worker identified a leak in the doomed rig's safety equipment weeks before the explosion which sparked the worst environmental disaster in U.S. history, the BBC reported Monday.

Tyrone Benton told the Panorama program that the faulty blowout preventer was shut down. A second device was relied on.

Benton said a problem was found with the blowout preventer's control pods, which contain  electronics and hydraulics. The d blowout preventer is considered a critical piece of safety equipment.

Benton said his supervisor here contacted BP and rig owner Transocean about the leaks when they were discovered. He said he does not know whether or not the leaking pod was turned back on before the Gulf of Mexico disaster.

When the Deepwater Horizon rig exploded on April 20, the blowout preventer failed.

"Too many jobs were being done at one time," Benton told the BBC. "It should have just really slowed down and just took one job at a time, to make sure everything was done the way it should have been." Benton is now suing BP and Transocean for negligence.

According to the BBC, BP responded to the claims by saying that Transocean was responsible for the operation and maintenance of the blowout preventer. Transocean said the device had been successfully tested before the disaster.