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Transocean Rig Explosion Update

POSTED ON October 1, 2010

BP says oil spill costs rise to $11.2 billion

(AP)

October 1, 2010

LONDON – BP PLC said Friday that it has pledged royalty revenues from several Gulf of Mexico assets to guarantee payment of claims from the disastrous blowout of its Macondo well.

The oil company said it has spent $11.2 billion so far reacting to the blowout, which began April 20 with an explosion that killed 11 workers aboard the Deepwater Horizon drilling rig. The well was declared to be fully sealed on Sept. 19.

BP announced in June that it would set up a $20 billion trust fund to guarantee payment of individual damage claims.

So far, BP said it has contributed $3 billion to the fund, and would add $2 billion in the fourth quarter. In following quarters, BP said the contribution would fall to $1.25 billion.

As collateral, BP said it had pledged the royalty interest in the Thunder Horse, Atlantis, Mad Dog, Great White and Mars, Ursa and Na Kika fields in the Gulf of Mexico.

“The pledging of these assets underscores our commitments to the trust which we set up to pay all legitimate claims arising from the tragedy,” said Lamar McKay, chairman and president of BP America Inc. and BP’s Gulf Coast Restoration Organization.

BP said it had paid $399 million to settle 127,000 claims up to Aug. 23, when the Gulf Coast Claims Facility took over the program. The GCCF has paid $806 million for 44,000 claims, BP said.

Friday’s announcement coincided with the first day on the job for new Chief Executive Bob Dudley, who replaces Tony Hayward.

On Wednesday, Dudley announced a major shake-up in the company, including the creation of a Safety & Operation Risk unit which will have the authority to intervene in all of BP’s technical activities.

He also said the Upstream division, would be divided into three units responsible for exploration, development or production

BP shares were up 2.8 percent in morning trading on the London Stock Exchange to 439.75 pence, the highest level since May 28.

April 26, 2010

LONDON (Dow Jones) BP PLC (BP) is pursuing several options for shutting off or containing an oil leak of around 1,000 barrels a day in the Gulf Of Mexico following an explosion that sunk a Transocean Ltd. (RIG) drilling rig last week, said a spokesman for the company Monday.

BP is still trying to shut off the oil well at the seabed using remotely operated subsea robots, although, for unknown reasons, this method has so far been unsuccessful, he said.

BP is also looking at deploying a dome immediately above the leaking pipes to capture the oil as it leaks out, although the technology is designed for much shallower waters than the 1,522-meter-deep well that is currently leaking.

If attempts to shut down the well at the seabed continue to be unsuccessful, the first of two rigs will arrive Monday at the location of the leak to drill a relief well that could halt the flow of oil from the seabed, although this approach could take two to three months, the spokesman said.

Oil leaking from pipes close to the seabed attached to the well has formed a slick of light oil 20 miles wide and 30 miles long, the spokesman said. It remains at least 40 miles offshore and the National Oceanic and Atmospheric Administration forecasts that prevailing winds and tides mean the slick will remain offshore for at least another 72 hours, he said.

BP said in a statement Sunday afternoon that 100,000 gallons of oil dispersant are ready to be deployed, although rough weather was hampering those operations over the weekend. Thirty-two spill response vessels and five aircraft are ready to deploy the dispersant and skim oil from the surface of the water.

“Given the current conditions and the massive size of our response, we are confident in our ability to tackle this spill offshore,” said BP Chief Executive Tony Hayward, who has flown to the U.S. to oversee the operation.

BP doesn’t take outside insurance to cover the cost of cleaning up oil spills so will be paying for this large operation from its own pocket. “We’ve already spent millions,” said the spokesman.

Costs and liabilities directly related to the blast aboard the rig Deepwater Horizon will be borne by Transocean. Insurer Hannover Re AG (HNR1.XE) said Friday it expects a large claim related to the accident. The rig alone is worth $600 million, analyst estimate.

Eleven crew members are missing, presumed dead, and several were seriously injured in the blast, which occurred at 0300 GMT Wednesday during the completion of an oil discovery well on the Macondo prospect.

By James Herron, Dow Jones Newswires; james.herron@dowjones.com

 

Rob Ammons is Board Certified in Personal Injury Trial Law by the Texas Board of Legal Specialization, in addition to being Board Certified in Civil Law by the National Board of Trial Advocacy.  Rob Ammons’ law practice, The Ammons Law Firm, is located in Houston, Texas.  The Ammons Law Firm practice is exclusively personal injury law, handling such cases as: tire defects, oil rig explosions, truck accidents, plant explosions, refinery accidents, wrongful death, post-collision fires, seat belt defects, airbag defects, SUV rollovers and workplace accident injuries.

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