Sunday, December 05, 2010

BP Disputes Government Numbers in Gulf Oil Spill

The Deepwater Horizon Oil Spill and Offshore Drilling commission have experienced a come to Jesus moment. They feign surprise upon learning of BP's intention to protest the government's numbers on the amount of oil spilled into the Gulf of Mexico. Or, maybe the members now realize that the administration's insistence of squeezing BP for a multi-billion dollar down payment as quickly as possible to appear as though the White House had a handle on the situation was a charade. BP negotiated the amount of $20 billion to be set aside to compensate the victims of the spill.

Now that the time frame has expired to file claims for individual and business compensation, the government is moving to the business of restoring the Gulf coast. Previously, the administration - and by administration, I mean Carol Browner - has admitted the estimates of the spill and the damage to the Gulf were misquoted on their end. We all remember the talk of the mysterious appearance and disappearance of those oil plumes here and there spotted in the Gulf, right?

So, now, BP tells the commission that the numbers the company will present is not going to be the same as those the commission presents. BP will be charged per barrel of oil spilled and rest assured, the company does not intend to pay any bigger fines than necessary.

BP said on Friday it has presented its position to the U.S. Justice Department, which would likely be involved in any settlement or litigation. The Justice Department had earlier led talks that prompted BP to agree to set aside $20 billion into a fund to compensate those harmed for economic losses.

The fines facing BP under the Clean Water Act could at a minimum amount to $4.5 billion, which would be $1,100 for each of the 4.1 million barrels (out of a total of 4.9 million emanating from the well) that spilled out into the waters. A maximum fine could be $21 billion if gross negligence is found by the courts. That fine would carry a $4,300 penalty for each of the total of 4.9 million barrels.

"BP has not offered its own numbers yet, but BP has told us that it thinks the government's numbers are too high," Priya Aiyar, deputy chief counsel at the BP Deepwater Horizon Oil Spill and Offshore Drilling commission, said Friday on the panel's final day of public deliberations. "It thinks the actual flow rate could be 20% to 50% lower."

The response reported from William Reilly, co-chair of the commission was "wow".

To shrink the fines that would be imposed on BP, they say the estimates used by the government were the higher end of what could have spilled, not what most likely really spilled. Rep Edward Markey is quoted as saying he thought BP was motivated by a fear of higher fines. Yeah. No kidding. Is that a light bulb moment for the Representative? It shows the travesty that was this commission from the beginning. Politicians, retired or in office, mixed with former cabinet members and advisers does not a good commission make when it comes to something as specialized as oil drilling. Who are they kidding? The chair, former Senator and Governor Graham is vehemently anti-drilling in offshore waters and makes no bones about it. What kind of good faith would BP put into these people?

The Gulf coast must be restored. The initial damage done to the coastline was overestimated and exaggerated so that the White House could get the initial monies set aside from BP. Right result, wrong method. Drama does not inspire faith in the people in charge. The situation was a human tragedy - eleven men were killed and several were injured in the explosion. The Gulf waters were harmed, that is certain.

Here's hoping the waters will be righted and businesses recovered. Let's deal with reality.

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