Anadarko Petroleum Corp., owner of one-fourth of the Gulf Disaster well, "broke its near-silence on the spill" on Friday and said that "BP's behavior and actions likely represent gross negligence or willful misconduct," Reuters reported.[1]  --  Bloomberg reported early Saturday that "Costs of the spill may climb to as much as $50.8 billion if the well is capped at the end of August, according to a June 16 research note from ClearView Energy Partners LLC, a Washington- based policy analysis firm."[2] ...



By Kristen Hays and Braden Redall

June 18, 2010

As BP Plc rushed to raise cash to pay for the Gulf of Mexico disaster, a partner in the out-of-control well said the British company was likely guilty of "willful misconduct" and should shoulder the financial burden for the worst U.S. oil spill.

Anadarko Petroleum Corp, owner a quarter of the well gushing into the Gulf, broke its near-silence on the spill to squarely pin blame -- and financial responsibility for claims -- on BP.

"Frankly, we are shocked," Houston-based Anadarko Chairman and CEO Jim Hackett said in a statement.

"BP's behavior and actions likely represent gross negligence or willful misconduct," he added, driving his company's shares up 2.2 percent in after-hours trading.

BP, which has survived a tough week answering to Congress for the spill, said it "strongly disagrees" with the assessment of gross negligence.

It is scrambling to line up resources to pay for a $20 billion damage claims fund demanded by President Barack Obama.

Banking sources told Reuters the British energy giant was seeking $1 billion in loans from each of seven banks, and CNBC said it was hoping to raise $5 billion with a bond.

The financial outlook is far from clear.  Moments after Anadarko's statement, credit rating agency Moody's cut BP's rating to junk level, citing potential liability from the spill, and earlier in the day it cut by three notches its rating on BP debt, which is trading around junk levels.

As the crisis entered its 60th day, the U.S. Coast Guard admiral leading the U.S. government relief effort said BP had increased the amount of oil it was siphoning off from its blown-out deep-sea well to 25,000 barrels (1.05 million gallons/3.97 million liters) on Thursday.

It was the largest pool of oil from the gusher yet collected by BP.  On Wednesday, it siphoned off 18,600 barrels.

But putting that figure in context, Admiral Thad Allen said 35,000 barrels a day, and possibly as much as 60,000 barrels, were gushing from the well, which ruptured after an April 20 explosion on an offshore oil rig which killed 11 workers.

A device called a blowout preventer failed in the Gulf well, and the U.S. Interior Department on Friday changed rules for new wells, requiring drillers to submit plans for stopping blowouts and to gauge the chances of such a failure.

The *Wall Street Journal* reported late on Friday 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.

The spill -- actually hundreds of thousands of small oil patches -- has idled much of the U.S. Gulf Coast's multibillion dollar fishing industry and seeped into ecologically sensitive marches and wetlands despite the efforts of an army of workers to keep it at bay with oil-soaking booms.

Hollywood star Kevin Costner joined cleanup efforts on Friday, showing off his "dream" machines to separate oil from water.  He has developed them over 17 years -- while the oil industry virtually ignored oil spill cleanup research -- and BP has acquired 32 of the centrifuges.

Still Gulf Coast residents worried this week that BP executives' bruising encounters with Obama at the White House and lawmakers on Capitol Hill had diverted attention from the daily battle to clean up the spill.

Individuals and businesses have claimed an estimated $600 million in damages from BP, but the company had paid only $71 million, less than 12 percent, by early this week, the U.S. House Judiciary Committee said on Friday.

"BP is stiffing too many victims and short-changing others," Democratic Representative John Conyers, the committee chairman, said in a statement.

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 on Friday to pay legitimate claims quickly.

A senior banker told Reuters BP's outreach to banks, including Barclays, HSBC, and Royal Bank of Scotland, was part of an effort to raise capital for the claims fund. BP declined to comment.

BP Chairman Carl-Henric Svanberg told Sky News Television on Friday that his company had "strong underlying performance -- strong cash flow, strong operations."


Feinberg told CBS News on Friday $20 billion may not be enough to meet all legitimate claims.  "No one knows for sure yet, but the president made clear, and as I understand it BP went along, that if $20 billion is not enough, there will be additional funds provided," he said.

After falling 6.8 percent in a week of volatility driven by politics in Washington, BP's U.S.-listed shares hovered nearly unchanged on Friday.  The shares are down 26 percent so far in June, their worst month since the October 1987 market crash.

Investors appeared unimpressed by BP chief executive Tony Hayward's performance at a U.S. congressional hearing on Thursday.  Lawmakers accused him of being evasive and of failing to take responsibility for the spill.

"Hayward's performance wasn't great, but it could have been worse.  As a shareholder, our absolute top priority is to see that all energies are being diverted to cap this wretched well," said one top 10 investor.

Investors and analysts said Hayward may cling on despite calls by some U.S. lawmakers for BP to "clean house," but the future was less certain for Svanberg, who earlier in the week described those hurt by the oil spill as "small people," for which he later apologized.

Some shareholders say changing BP's leadership now would be counterproductive when it is in the midst of a battle to cap its blown-out Macondo well.

The problems could continue past the one well.  The *Wall Street Journal* reported that the blowout used a cheaper technology than main 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.

BP hopes a pair of relief wells now being drilled will halt the leak in August.  The aim is for one or both relief wells to intersect with the leaking well at its bottom to pump in heavy drilling fluids and cement to seal it.

The first relief well 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.

(Additional reporting by Chris Baltimore in Houston and Raji Menon, Sarah Young, Tom Bergin and Matt Falloon in London; Writing by Peter Henderson and Ross Colvin; editing by Will Dunham and Todd Eastham)



By Edward Klump

Bloomberg Businessweek
June 19, 2010

Anadarko Petroleum Corp., the Texas oil company that owns 25 percent of the damaged well pouring crude into the Gulf of Mexico, said BP Plc, the project’s operator, should pay the costs from the spill because it acted recklessly and unsafely at the drilling site.

BP didn’t monitor or react to warning signs as the Macondo well was drilled, Chief Executive Officer Jim Hackett said yesterday in a statement.  BP is responsible for damages under such conditions, Anadarko said.

“BP’s behavior and actions likely represent gross negligence or willful misconduct and thus affect the obligations of the parties under the operating agreement,” Hackett said in the statement.

BP said in a statement that it “strongly disagrees” with Anadarko’s position.  Chief Executive Officer Tony Hayward said his company expects other parties that may have responsibility for costs and liabilities to meet their obligations.

“These allegations will neither distract the company’s focus on stopping the leak nor alter our commitment to restore the Gulf Coast,” Hayward said in yesterday’s statement.

The well is gushing as much as 60,000 barrels of oil a day, according to a government estimate.  The leak was triggered by an April 20 explosion at a drilling rig leased to BP by Transocean Ltd. Costs of the spill may climb to as much as $50.8 billion if the well is capped at the end of August, according to a June 16 research note from ClearView Energy Partners LLC, a Washington- based policy analysis firm.


Anadarko, at yesterday’s market close, had plunged 42 percent in New York trading since April 20.

BP’s partners should be held accountable and should set aside money to pay their share, U.S. Representative Edward Markey said yesterday in an interview for Bloomberg Television’s “Political Capital With Al Hunt.”

BP has announced plans to eliminate its dividend for three quarters, raise $10 billion from asset sales and put $20 billion into a fund to pay claims related to the spill.

Mitsui Oil Exploration Co., which is 70 percent-owned by Japan’s second-biggest trading house, Mitsui & Co., has a 10 percent stake in the well.  BP owns 65 percent.

“With regard to the issue of the escrow account, drawing an immediate conclusion about the underlying matters at hand would be premature,” a Mitsui Oil Exploration subsidiary said in a statement.

Co-owners of the project entered into a written agreement that BP would act as the operator and all parties would share the costs based on their ownership interests, including expenses to clean up any spill resulting from drilling, BP said in its statement.


The co-owners also filed documents with the U.S. government certifying that each would be “jointly and severally liable” along with any other responsible parties for oil spill removal costs and damages in accordance with the Oil Pollution Act of 1990, according to BP’s statement.

Anadarko will consider what its remedies may be, John Christiansen, an Anadarko spokesman, said yesterday in an interview.  Those options may include not paying BP’s bills or litigation. Anadarko previously said it was reviewing an invoice from BP on spill costs.

Hackett said that Anadarko recognizes it has “obligations under federal law related to the oil spill, but will look to BP to continue to pay all legitimate claims as they have repeatedly stated that they will do.”


Also yesterday, Moody’s Investors Service said it downgraded Anadarko’s long-term debt rating to non-investment grade, dropping it to Ba1 from Baa3, with further reductions possible.

Hackett, in a telephone interview yesterday, called the decision by Moody’s “premature and unwarranted.”  He said Anadarko has a “strong financial position.”

U.S. Representatives Henry Waxman of California and Bart Stupak of Michigan said in a June 14 letter to BP that “time after time, it appears that BP made decisions that increased the risk of a blowout to save the company time or expense.”

If that happened, the lawmakers said, “BP’s carelessness and complacency have inflicted a heavy toll on the Gulf, its inhabitants, and the workers on the rig.”

In a televised address June 15, President Barack Obama vowed he would make BP set aside however much is needed to “compensate the workers and business owners who have been harmed as a result of his company’s recklessness.”


The extent to which BP is seen as “the chief villain of the entire world helps Anadarko,” said Jeff Rensberger, a professor at the South Texas College of Law.  A finding of negligence requires a determination that a party to a contract did something a reasonable person wouldn’t, while gross negligence shows more recklessness, he said.

Even if BP is at fault, Rensberger said, Anadarko might still be liable if it’s determined that abnormally hazardous activities occurred at a project in which the company has an interest.

Anadarko also said yesterday that it will donate to Gulf Coast charities or civic agencies any revenue it is entitled to receive from oil recovered in cleanup efforts.

--With assistance from Mark Chediak in San Francisco and Jim Snyder in Washington. Editors: Charles Siler, Susan Warren

--To contact the reporter on this story: Edward Klump in Houston at This email address is being protected from spambots. You need JavaScript enabled to view it..

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