Protecting What's Right

Despite the desperate need for companies harmed by the Deepwater Horizon explosion and resulting oil spill to receive remuneration, the financial fight over which companies will pay for the Gulf Spill mess lingers.

Cleaning up the spill, the largest in United States history, is expected to cost about $42 billion, and the finger pointing is worthy of a sum that large.

In its latest move, London-based BP has asked a court to force its cement contractor, Halliburton, to help pay its share, claiming that Halliburton provided shoddy workmanship in capping the well with cement prior to the blowout.

Not surprisingly, Halliburton attorneys responded by reminding BP of a contract between the two companies that limits Halliburton’s liability against possible cleanup costs.

The “he did, she did” antics began almost immediately after the Deepwater Horizon rig exploded in April 2010, and continue today, with hearings set to begin in New Orleans federal court Feb. 27.

A federal report released last fall clearly placed the blame for the blowout on several companies, including BP, which owned the well; Halliburton, for failing in its effort to divert portions of the well with cement; Transocean, which owned the rig; and Cameron International, which manufactured the blowout preventer. Yet deciding responsibility did not lead to a smooth financial resolution.

The court is expected to decide which party will compensate those affected by the spill and which companies should be held liable for the explosion that killed 11 workers and unleashed 4 million barrels of oil into the Gulf.

In the meantime the responsible companies face billions of dollars more in Clean Water Act fines and civil claims, but the injured companies and residents face an even longer wait.

The National Academy of Engineering released its independent report earlier this week about what possibly caused the Deepwater Horizon rig explosion and led to the resulting oil spill. Though the report offers little new insight, it repeats key findings presented in previous newspaper reports and other investigations about key human errors that led to the disaster. The most common being that British oil giant BP failed to assess risks and chose less expensive actions that likely facilitated the explosions that killed 11 workers and caused the worst oil spill in U.S. history.

In his first interview since resigning in July, former BP CEO Tony Hayward admitted that the British oil giant’s contingency plans to deal with the gulf oil spill were inadequate. Not only were the plans inadequate, but Hayward also states that he and BP were completely unprepared for the intense media scrutiny.

“BP’s contingency plans were inadequate,” he said. “We were making it up day to day.”

In the interview, part of a BBC documentary, Hayward describes his experience at the helm of BP during the disaster and, particularly, the how the high level of media interest caught him off guard.

In the latest hearings before the White House oil spill commission, co-chair Bill Reilly stated there was a culture of complacency at all three companies responsible for the spill. He says that, given all the evidence thus far, he has concluded that a “sweep of bad decisions” were made by BP, Transocean, and Halliburton.

New BP chief executive officer Bob Dudley is making some unprecedented changes at the British oil giant in an attempt to promote a new corporate culture. After being heavily criticized for placing profits over safety after an April explosion on the Deepwater Horizon drilling rig resulted in one of the largest environmental disasters in U.S. history, BP has been trying to clean up its act.

In a new attempt to shift the company’s culture to one of safety, Dudley told staff in an e-mail this week that their next bonuses will be based solely on how they meet safety guidelines. BP usually determines bonuses based on how employees meet operational and financial goals, as well as the safety rules.

While bonuses in the first three quarters of the year will be still be based on all these qualifications, safety will be the only measure in determining employee bonuses in the fourth quarter, said BP spokesperson Toby Odone.

It has been almost six months since the BP oil rig explosion, yet federal officials say that the cleanup will continue through the winter in some Gulf areas. Federal on-scene coordinator for the Deepwater Horizon spill, Rear Adm. Paul Zukunft , says that the 87 consecutive days of major spill is unlike any other oil spill in terms of damage because the oil was able to go into a very deep water column. However, Zukunft does believe there are some areas where cleanup will close down within a matter of weeks.

Federal officials still maintain that Gulf of Mexico seafood is safe to eat and urge consumers to disregard the false stigmas as the Gulf’s seafood industry has been suffering. According to Christine Patrick, a spokeswoman for the National Oceanic and Atmospheric Administration Fisheries Service, more than 2,700 seafood samples have undergone thorough sensory and chemical testing and none have come up positive for oil or dispersants.

BP asked U.S. District Judge Carl Barbier in New Orleans to require virtually all oil spill claimants to exhaust the economic damage claims process run by third-party administrator Kenneth Feinberg before they are allowed to sue.

Requiring claimants to first present their claims to the Feinberg Fund could delay the start of litigation against oil giant BP for months while administrators sort out which claims qualify for payment.

Judge Barbier has scheduled a hearing on BP’s proposal for Sept. 16. BP’s request is opposed by most spill claimants.

The Gulf Coast Claims Facility (GCCF) will begin accepting business and personal claims on Monday from those affected by the Gulf oil spill.

BP said last week that it was no longer accepting claims as the transition to the new entity was taking place. The oil giant, which said it has paid hundreds of millions of dollars in claims so far, will continue to handle claims put in by government entities.

Attorney Kenneth Feinberg, the man in charge of the $20 billion escrow account established to compensate oil spill victims for damages, emphasized Sunday that his facility is independent of the government and BP. Eligible businesses claims that submit a claim will be paid in no more than seven days and eligible individuals will receive a check within 48 hours, according to Feinberg.

Meanwhile, federal investigators are hearing testimony from BP executives in a joint probe into the cause of the explosion that led to the oil spill.

The hearings will continue through Friday.

A new report set to be released Tuesday renews concern about the long- term environmental impact of the Gulf Coast oil disaster. Researchers at the University of South Florida, who have been studying the effects of the spill since it began, have concluded that oil from the

Deepwater Horizon spill may have settled on the bottom of the Gulf of Mexico further east than previously suspected and at levels toxic to marine life.

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BP said Tuesday it will suspend drilling activity on the relief well in the Gulf of Mexico, citing a National Hurricane Center prediction of a 60 percent chance of a tropical cyclone forming just off the coast of southwestern Florida. It was previously believed that the relief well would intercept the broken well by the end of the week.

According to the National Hurricane Center, there is a high chance the system could become a tropical or subtropical cyclone in the next 48 hours. As a precaution, BP has installed a device known as a “storm packer” at the base of the well, said BP spokeswoman Elizabeth Adams.

BP also announced Monday that their oil spill response costs have reached $6.1 billion, which includes costs for spill response, relief well drilling, the “static kill” operation, grants to Gulf states, claims paid and federal costs.