BP's insurance to cushion impact of oil spill

[Stuart G]

Source: Reuters

BP's insurance to cushion impact of oil spill--Fitch
Fri Apr 30, 2010 10:43am

NEW YORK, April 30 (Reuters) - Containment and cleanup costs of a massive oil spill in the Gulf of Mexico could top $3 billion, but financial impacts on BP Plc will be limited by the oil company's insurance, Fitch Ratings said on Friday.

An oil drilling rig on lease to London-based BP (BP.L) (BP.N) exploded in flames on April 20 and collapsed two days later, leading to a massive oil spill that threatened to become the worst U.S. ecological disaster ever.

The spreading oil has deepened fears of severe damage to fisheries, wildlife refuges and tourism in Louisiana, Mississippi, Alabama and Florida. Shrimp fishermen in Louisiana have filed a class action lawsuit against BP, accusing it of negligence.

"The ultimate financial impact on BP will depend on how the environmental and economic impact develops when the spill reaches land," Fitch said in a statement.

Costs could be more than $3 billion, depending on how long it takes to arrest the flow of oil into the Gulf, Jeffrey Woodruff, senior director in Fitch's energy team in London, said in the statement.

Insurance will likely cover the majority of BP's costs, limiting rating pressure, Fitch said. It now rates BP AA-plus, just one notch below its top rating of AAA.


Read more: http://www.reuters.com/article/idAFN3017954620100430?rpc=44

---

Oh, so we thought that BP might actually have to pay for most if not all of this? I guess not if this story is correct... Insurance..

[Joanne98]

1. I'm surprised they didn't declare the rig had a "pre-existing" problem.

[rfranklin]

2. didn't Exxon skate on most of the costs for the Exxon Valdez?

http://www.cbsnews.com/stories/2009/02/02/eveningnews/main4769329.shtml

In total, Exxon spent more than $3.8 billion in clean up costs, fines and compensation. But in 1994, an Anchorage jury found Exxon acted recklessly and awarded victims of the spill $5 billion in punitive damages. An appeals court later cut that award in half.

But after nearly 15 years in appeals, the case finally reached the U.S. Supreme Court last year. The justices reduced that $2.5 billion in punitive damages to just more than $507 million.

Platt's share of the settlement is expected to be close to $400,000. But he still owes the state of Alaska $600,000 for his commercial fishing licenses. So his check will go straight to the state. But here's the kicker: he has to pay the taxes on it.

"A lot of people aren't going to make it," warns Platt.

At least 6,000 of the original plaintiffs have died, and 8,000 plaintiffs have liens on their settlements - ranging from child support to back taxes.

[Stuart G]

4. Thanks for this post..explaining that

the exact same thing will probably happen again. Ok, clean it up, screw everyone else.

[wordpix]

22. ahhh, another stellar verdict from SCOTUS & their "corporations are people" decisions

:puke: blech, next time I'm sick I'll think of the Supremes while vomiting

[ShamelessHussy]

3. I thought I read that rig didn't have any? so who is luck Ins. carriers?

I wonder who came up with the numbers already?

[dipsydoodle]

5. I'd have been suprised if they hadn't been insured.

It took nearly 20 years for the Exxon Valdez claim to be settled. :shrug:

[FailureToCommunicate]

8. Umm, is Valdez "settled"? I heard not yet...

[robcon]

6. Of course they had insurance. They would have been irresponsible if they didn't.

n/t

[FailureToCommunicate]

7. As one of four big oil firms to corral the Iraq war oil fields profits, I 'spect BP could afford

good insurance...

(Shell, Exxon, and Chevron are the others set to benefit from all that death and destruction in Iraq)

[ensho]

9. money cannot bring back what will be lost - gone is gone

nt

[SkyDaddy7]

10. WE THE PEOPLE will pay for this disaster!!

The cost will be past down to us! BP will continue on with this being a temporary headache at the most!

[Jumping John]

11. BP has a lousy safety record. Texas City BP explosion because a dollar is more important than.......

life of the people working in their refinery.

and this

Texas City Refinery disaster
Main article: Texas City Refinery (BP)

One of BP's largest refineries in the USA exploded in 2005 causing 15 deaths. The fall-out from the accident continues to cloud BP's corporate image because of the mismanagement at the plant. There have been several investigations of the disaster, the most recent being that from the U.S. Chemical Safety and Hazard Investigation Board. It was preceded by the Baker report and BP's own internal investigation.<48>


On 30 October 2009 the US Occupational Safety and Health Administration (OSHA) imposed an $87 million fine on the company for failing to correct safety hazards revealed in the 2005 explosion. The fine was the largest in OSHA's history.

Baku-Tbilisi-Ceyhan pipeline

BP's image has been tarnished somewhat by its involvement with the controversial Baku-Tbilisi-Ceyhan pipeline, criticised for human rights abuses, environmental and safety concerns.<50>
Colombian pipeline

In July 2006, a group of Colombian farmers won a multi million pound settlement from BP after the British oil and gas company was accused of benefiting from a regime of terror carried out by Colombian government paramilitaries to protect a 450-mile (720 km) pipeline. <51>
Mist mountain project

There have been some calls for BP to halt its "Mist Mountain" Coalbed Methane Project in the Southern Rocky Mountains of British Columbia. The proposed 500 km² project is directly adjacent to the Waterton-Glacier International Peace Park.<52>

BP was named by Mother Jones Magazine as one of the "ten worst corporations" in both 2001 and 2005 based on its environmental and human rights records.<54><55> In 1991 BP was cited as the most polluting company in the US based on EPA toxic release data. BP has been charged with burning polluted gases at its Ohio refinery (for which it was fined $1.7 million), and in July 2000 BP paid a $10 million fine to the EPA for its management of its US refineries.<56> According to PIRG research, between January 1997 and March 1998, BP was responsible for 104 oil spills.<57> BP patented the Dracone Barge to aid in oil spill clean-ups across the world. <58>

http://en.wikipedia.org/wiki/BP

The TCR explosion also injured 174 people.

[edwinmathews]

12. BP

should be bled dry for not having a stop loss valve on this rigg .

[Nihil]

13. They had one - it didn't work.

Now as to *why*, that is the big question ... was it just another
Halliburton "shave costs to boost profits" or something else?

[dipsydoodle]

14. Wasn't it because

the USA has no such obligation to use that device unlike Europe ? If so then the problem of its absense is more deep rooted.

[Nihil]

15. No obligation but apparently fitted anyway ...

> ... crewmembers tried to activate the BOP from the rig's bridge before the
> fire forced them to evacuate, but the BOP did not close off the well.
>
> Suttles also revealed that BP remotely-operated vehicles (ROVs) had hit
> "subsea access points" that should close the BOP, but that they also failed
> to trigger the mechanism to shut.
>
> "We don't know why the BOP failed to stop the flow," he said. "Ultimately
> we will recover the BOP, get it to the surface and find out."
>
> "I'm sure Transocean, who actually owned blowout preventer, will be interested
> to find out why it didn't work," Suttles said.

(http://www.upstreamonline.com/live/article213497.ece?WT.mc_id=rechargenews_rss)


(FWIW, Horizon was a semi-submersible drilling rig owned by Transocean contracted
to BP)

[dipsydoodle]

16. Ta for that

I'm sure somebody mentioned few days ago that there was no actual requirement but can see it was used anyway - just tragic it didn't function as it should've.

I notice Transocean are mentioned in the litigation suit. :

"Others named in the action include Transocean and Cameron International, a Houston-based oil well services company." http://news.bbc.co.uk/1/hi/world/americas/8652448.stm

[Merchant Marine]

17. You're confusing the actual blow-out-preventer with an optional remote activation method

The DWH crew activated all three failsafes. The BOP has failed, not its activation methods.

1. Manual Control, hardwired
2. Deadman activation
3. Manual ROV actuation of valves.

[dipsydoodle]

18. The ones to which I refered

are US$500,000 auto shut off valves as are apparently used in Europe. Which ones are those on your list ?

[Merchant Marine]

19. The half-million device that has been on the news is a transceiver that uses sonar pulses

to command the BOP to activate. There is only one valve, that is the BOP. There were three methods to activate it on the DWH. All were tried.

The BOP has failed. An extra method of telling a broken valve to close would not do a damn thing.

[wordpix]

20. read they didn't have a remote shut-off device

[wordpix]

21. probably 'cause BushCo's idea of regulation was putting the foxes in charge of henhouse