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'Who cares, it's done, end of story... we'll be fine': Email from BP engineer claims oil spill was a disaster waiting to happen

June 15, 2010, 3:10 pm

Originally posted by Daniel Bates - Mail Online - June 15, 2010

Confidential emails have been released which congressional investigators say prove BP negligently put safety at risk on the Deepwater Horizon oil rig in order to increase profits.

They appeared to show that concerns raised within the company and by contractors were disregarded for financial reasons.

One BP engineer warned a colleague that the oil well had become a 'nightmare' while executives were given a list of recommended safety measures which they chose to ignore.

And a BP official wrote a note that read: 'Who cares, it’s done, end of story, will probably be fine.'

BP has been cleared to start burning oil and gas piped up from its broken well as part of a pledge to more than triple how much crude it stops from spewing into the Gulf of Mexico.

Federal authorities gave permission for BP to use a new method that involves pumping oil from the busted wellhead to a special ship on the surface, where it will be burned off rather than collected.

The British oil giant said it hopes to trap as much as 2.2million gallons of oil daily by the end of June as it deploys additional containment equipment, including the flaring system.

The plan, unveiled after the federal government pressed BP to work faster on containing the gusher, came as President Barack Obama paid his fourth visit to the stricken Gulf and promised residents that life would return to normal after the worst oil spill in US history, which has disrupted fishing and tourism and spoiled ecologically rich estuaries.

Meanwhile Rex W. Tillerson, chairman of Exxon Mobil, told the U.S. Congressional hearing today that if companies follow proper well design, drilling, maintenance and training procedures accidents like the Deepwater Horizon explosion 'should not occur', implying that BP had failed to do so.

John S. Watson, chief executive of Chevron, also pointed a finger at BP according to the New York Times, saying that every Chevron employee and contractor has the authority to stop work immediately if they see anything unsafe.

'Our internal review confirmed what our regular audits have told us,' said Mr Watson.

'Chevron’s deepwater drilling and well control practices are safe and environmentally sound.'

The claims come as BP lines up a £5billion war chest from some of the world's biggest banks in order to help boost its finances as it copes with the fallout from the Gulf of Mexico oil spill.


BP's chief financial officer Byron Grote is heading the talks, which are believed to include HSBC and either BNP Paribas or JP Morgan and come as the oil giant faces a flood of compensation claims.

'BP has taken steps in recent days to bolster its liquidity position and balance sheet, working with a number of its regular banking partners,' a source told Sky News.

Efforts to ensure the oil giant has enough cash to withstand the expected flood of compensation claims as well as continue its financial operations come as U.S. senators pressure the company to set aside a $20billion (£13.5billion) compensation fund.

A letter from Democrats to the oil giant's boss Tony Hayward emerged, urging him to establish the account as an 'act of good faith.'

The letter says: 'Establishment of this account..would serve as a first step towards ensuring that there will be no delay in payments or attempt to evade responsibility for damages.'

The special account would be managed by an independent third party, according to the letter, and would pay for clean up costs and lost compensation to individuals and businesses affected by the oil spill.

BP refused to comment on the demands, which dwarf many analysts' previous estimates of the compensation costs the company could face.

BP is being accused by a U.S. congressional committee of ignoring warnings and industry guidlines and opting for risky procedures to cut costs and save time before the Deepwater Horizon oil rig explosion.

The committee on energy and commerce has warned Mr Hayward that it intends to give him the hardest grilling has yet faced since the start of the 56-day crisis.

Henry Waxman, the committee's chariman said: 'Time after time it appears BP made decisions that increased the risk of a blowout to save the company time or expense.'

News of the letter comes as BP executives face U.S. Congress today ahead of Mr Hayward's visit to the White House tomorrow before testifying on Capitol Hill on Thursday.

Shares in BP fell more than nine per cent after the senators' announcement yesterday and fell two per cent in London this morning before rallying to just under the opening price.


In further bad news for the company, credit rating agency Fitch Ratings downgraded BP's credit rating by six notches, from AA to BBB. 

The decision means Fitch is less confident of the company's ability to repay its debts, and of its 'fundamental financial flexibility.'

The change in rating could mean BP finds it more costly to borrow money from investors, but due to the value of its assets analysts predict the initial impact will be small.

Meanwhile Barack Obama, who is on a two-day tour of the spill site as he continues to face criticism of his handling of the disaster, was described as 'cruel' yesterday for comparing the environmental disaster to the 9/11 terror attacks.

The U.S. president said there were ‘echoes’ between the Gulf of Mexico disaster and the Al Qaeda suicide attacks which killed 2,995 people, including 67 Britons.

He said that just as the events of September 11, 2001, had profoundly shaped ‘our view of our vulnerabilities and our foreign policy’, so the oil disaster would shape thinking on the environment and energy for years to come.

Those who lost loved ones when terrorists flew hijacked planes into the Twin Towers of New York’s World Trade Centre said Mr Obama’s remarks were yet another attempt to slur the UK.

Joy Bennett, 66, a mother of two from Amersham in Buckinghamshire whose son Oli, a 29-year-old financial journalist, died, said: ‘It is an unfair parallel and is really a cruel thing to say.

‘I can see what he is trying to say but to compare a manmade deliberate terrorist attack to something that is an accident is absolutely wrong. Mr Obama seems intent on causing as much offence to Britain as possible.

‘By saying this he is distracting from what his government is doing, or not doing enough of.’

Charles Berkeley from Shrewsbury, who lost his 37-year-old son Graham, an IT consultant, on 9/11, added: ‘I don’t think it is a fair parallel and I can understand why people feel aggrieved.’

Further criticism came from America. Ed Kowalski, of the U.S-based 9/11 Families for a Secure America Foundation, said: ‘It is a very cheap attempt to draw attention away from himself. He is desperate to be able to pull attention away from his failings.’

Former New York Fire Department Chief Jim Riches, who lost a son on 9/11, said: ‘I think he’s off-base.

'These were terrorist attacks, these 9/11 murders, not something caused by people trying to make money.’

And Jack Lynch, the father of a fireman who died, said: ‘To compare an environmental accident, if that’s what you call it, to a premeditated terrorist attack is ridiculous.’

Relations between London and Washington have cooled because of Mr Obama’s anti-British rhetoric over the oil spill, forcing him to phone David Cameron to reassure him of his support.

The president has been under increasing pressure over his handling of the disaster and is this week attempting to prove he is in control of events. He visited Louisiana, the hardest-hit state, for the fourth time in recent weeks yesterday and will address the American people tonight from the Oval Office, emphasising the seriousness with which the disaster is being treated.

Before the broadcast senior BP officials will appear in front of the energy and environment sub-committee of the House of Representatives to answer questions on the company's handling of the catastrophe.

Tomorrow Mr Obama will meet BP's chairman Carl-Henric Svanberg and is also expected to come face to face with chief executive Mr Hayward for the first time.

On Thursday Mr Hayward will finally be grilled by the committee on energy and commerce.

With his relentless criticism of BP, Mr Obama has been accused of threatening British pensions – which are heavily invested in the company – and the UK economy.

Energy Secretary Chris Huhne finally hit back yesterday, breaking days of public silence from the Government.

He emphasised that a string of U.S. firms were also heavily involved in the events leading up to the April 20 explosion on the Deepwater Horizon offshore rig and said BP, which Mr Obama has pointedly referred to as British Petroleum, was ‘effectively an Anglo-American company’.

In a coded criticism of the president, he warned: ‘I think we have seen what can happen if people attempt to flam up the rhetoric on this.’

BP is now collecting around 15,000 barrels of oil per day but the equivalent of 35,000 is still escaping and may not be stopped until August when relief wells are completed.

Shares in the company plummeted 9.3 per cent on the FTSE index yesterday as the BP board decides whether to suspend its hefty dividend because of the spill.

The shares, which were down ten per cent at one stage, wiped more than £6.5billion off the stock value of the firm - as nervous investors headed for the exit.


BP stock has been especially volatile over the past week. It dropped to a 14-year low on Wednesday, only to rebound on Thursday and Friday.

The firm has a number of options regarding dividend payments. Analysts believe the company is unlikely to scrap it altogether. It can also defer it, pay it into shares or put it into an escrow account.

BP said it would not make a statement on dividend payments following today's board meeting.

Along with the ecological fallout, relations with Britain have come under strain amid President Obama's belligerent rhetoric towards BP which led him to phone Prime Minister David Cameron and assure him that BP, and not Britain in general, was to blame.

Mr Obama compared 9/11 to the disaster in an interview with the respected US political website Politico.

'In the same way that our view of our vulnerabilities and our foreign policy was shaped profoundly by 9/11,' he said, 'I think this disaster is going to shape how we think about the environment and energy for many years to come.'

In a sign he will use the catastrophe to push for energy and climate change reform, he vowed to 'move forward in a bold way in a direction that finally gives us the kind of future-oriented… visionary energy policy that we so vitally need and has been absent for so long.

'One of the biggest leadership challenges for me going forward is going to be to make sure that we draw the right lessons from this disaster,' he said.

Mr Obama said he did not know if America would shift from an oil-based economy in his lifetime however he added that now was the time to 'start making that transition'.

'What we can predict is that the availability of fossil fuel is going to be diminishing; that it's going to get more expensive to recover; that there are going to be environmental costs that our children… our grandchildren and our great-grandchildren are going to have to bear,' he said.

Not all the 9/11 families said Mr Obama's comments were upsetting.

Sally Regenhard, who lost a son, said: 'Just like on 9/11, there were no plans for emergency preparedness, coordination of response.

'It's a failure of the system and the government. I'm not offended by the comment.'

BP HIT FOR £7BN OVER DIVIDEND FEARS


Nearly £7billion was wiped off the value of BP yesterday amid growing fears that its crucial dividend payout to shareholders will be suspended.

The shares fell 9.3 per cent, with City analysts warning that they will fall even lower in the coming weeks.

Since the oil rig explosion in April, the market capitalisation of the company has almost halved, losing about £55billion in value.

The BP board met in London to discuss whether or not to pay a dividend, which Barack Obama has put the company under pressure to scrap in favour of refunding victims of the oil spill. Yesterday a BP spokesman said the company would not be revealing the outcome of the crucial meeting.

But scrapping the dividend would hit, in particular, elderly investors who rely on the income.

Last year, BP handed out around £7billion, paying £1 in every £7 of dividends paid out by companies in the FTSE 100.

BP said it had so far spent around £1billion on its ‘response’ to the disaster, but it was ‘too early to quantify other potential costs and liabilities associated with the incident’.

More than 50,000 claims have been submitted to BP, which has repeatedly insisted that it promises to meet every legitimate one.

To date, it has paid out £42million to more than 26,500 claimants, which is equal to nearly £1,600 each.

Rival oil giant Chevron told the Wall Street Journal that the Gulf of Mexico explosion was a ‘preventable’ incident.

Chief executive John Watson said his company had policies and procedures in place that could have avoided the explosion that triggered the spill.



 

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