Partner puts blame on BP as spill costs grow
BP Plc's costs for the worst oil spill in US history appeared set to rise as a partner in the out-of-control well laid the blame at BP's feet and the new federal tsar overseeing damage claims said BP would pay more if $20 billion (£13.5m) was not enough.
The British oil company said it would not be distracted by a dispute with Anadarko Petroleum Corp. The owner of a quarter of the well gushing into the Gulf broke its near-silence on the spill to squarely pin blame - and financial responsibility - on BP.
"There appears to be gross negligence or willful misconduct," Houston-based Anadarko Chairman and CEO Jim Hackett said in an interview that helped to drive his company's shares up 2.2 per cent in after-hours trading on the hopes it could avoid multi-billion-dollar liabilities.
BP said it "strongly disagrees" with the assessment of gross negligence but would keep its focus squarely on the Gulf, cleaning up the spill and plugging the well.
The new federal administrator of a fund to pay for damages told CBS News it would be a "horror" if BP went bankrupt but the $20 billion fund agreed upon by BP and the White House could rise if it proved insufficient.
President Barack Obama has seen his popularity slip over his handling of the spill and lawmakers in both major parties used hearings with BP and other oil industry officials this week to gather ammunition ahead of November elections.
Gulf residents, from state officials to citizens on the blighted beaches, see costs skyrocketing with the collapse of the fishing industry, a deep water oil drilling moratorium and growing environmental destruction along the coast.
"I think it's going to go over $100 billion (£67.4m)," said Brian Miguez, a food service salesman from New Orleans, at his vacation property in Grand Isle, Louisiana, where the spill has forced the closure and cleanup of six miles of sandy beach.
"They haven't even felt the wrath of the lawsuits that are going to come in," he said.
The Center for Biological Diversity on Friday filed what it said was the largest citizen enforcement act ever under the Clean Water Act, suing BP and rig operator Transocean Ltd (RIGN.S) for up to $19 billion (£12.8m), if the spill flows until August.
The first of a pair of relief wells meant to stop the flow in August is within 200 feet of the side of the blown well, said Kent Wells, BP's senior vice president of exploration and production. But it must be drilled down farther before it can intersect with the blown well.
As the crisis entered its 61st day, BP is capturing record amounts of crude - with 25,000 barrels siphoned off on Thursday, the US Coast Guard admiral leading the relief effort said.
But Admiral Thad Allen said 35,000 barrels a day, and possibly as much as 60,000 barrels, are pouring from the well, which ruptured after an April 20 explosion on an offshore oil rig which killed 11 workers.
Kenneth Feinberg, the man picked by Obama to oversee the $20 billion compensation fund, pledged during a visit to the Gulf Coast state of Mississippi yesterday to pay legitimate claims quickly. BP and Obama have agreed that if necessary BP would pay more, he told CBS News.
BP is seeking up to $7 billion (£4.7m) in loans from seven banks, banking sources told Thomson Reuters LPC, and sources have told Reuters the company may offer up to $10 billion (£6.7m) in debt as early as next week.
Its debt is currently trading at junk levels, and Moody's yesterday cut its rating three notches on concerns about spill liabilities. Moments after Anadarko said BP would have to pay all claims, Moody's cut Anadarko debt to junk on similar concerns it might not avoid contributing to damage claims.
After falling 6.8 per cent in a week of volatility driven by politics in Washington, BP's US-listed shares hovered nearly unchanged on yesterday. The shares are down 26 per cent so far in June, their worst month since the October 1987 market crash.
The Wall Street Journal reported last night that BP's well used a cheaper technology than the industry standard and was less secure against natural gas blowouts of the type that destroyed it. The newspaper's analysis found that BP used the cheaper technology much more frequently than rivals.
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