BP oil spill price tag hits $2B
Written by on Monday, June 21st, 2010 in Latest News.
BP said Monday it has spent $2 billion US so far responding to the massive oil spill in the Gulf of Mexico.
Smoke billows from a controlled burn of spilled oil off the Louisiana coast in the Gulf of Mexico. BP says the Deepwater Horizon oil spill has cost the company $2 billion US so far. (Sean Gardner/Reuters)
“The cost of the response to date amounts to approximately $2 billion, including the cost of the spill response, containment, relief well drilling, grants to the Gulf states, claims paid and federal costs,” the company said in a statement Monday.
That $2 billion US figure is only a fraction of the $20 billion the company agreed to hold in escrow last week to compensate victims of the disaster, which started more than nine weeks ago when the Deepwater Horizon oil rig sank, rupturing the wellhead more than a mile below the surface and causing it to spill oil into the water.
The $2 billion figure will undoubtedly rise, especially as many of BP’s attempts to stem the flow of oil have failed. But it provides a rare glimpse of exactly how much the disaster has cost BP, which has seen its share price more than halve during the unfolding crisis.
“It is too early to quantify other potential costs and liabilities associated with the incident,” the company said. “Our focus has been on getting money into the hands of fishermen, shrimpers, condo owners and others who have not been able to earn income due to the spill,” said Darryl Willis, spokesman for BP’s claims team.
Relief wells progressing
While it has managed to capture a significant amount of the oil being released, much of the company’s efforts at the moment are focused on drilling of relief wells designed to stop the flow entirely. That process started on May 2 and is still months away from completion.
The company said Monday it is progressing on two wells, one of which has reached a measured depth of 4,800 metres below the surface, and the other more than 3,000 metres.
“Both wells are still estimated to take approximately three months to complete from commencement of drilling,” the company said.
It’s a risky process as the teams are attempting to hit a target the size of a dinner plate from a distance of more than five kilometres away. And few of the workers drilling the relief wells have any experience with them, since interventions that deep underwater are so rare.
The company also said Monday that of that $2 billion US figure, it has spent $105 million US paying out 32,000 claims for hurts so far. That’s out of a total number of 65,000 claims for hurts it has received to date.
Three-month stock chart of BP’s U.S.-listed stock. (CBC)
The company also went to dispel any notion that it was trying to wriggle out from under its financial commitments after bickering over the weekend suggested in-fighting with the company that has a stake in the original well.
BP said its partners in the leaking Gulf of Mexico oil well must share responsibility for the costs in dealing with the disaster. The go was a strike back at Anadarko Petroleum Corp., which has a 25 per cent stake in the gushing well, following Anadarko’s statement on Friday that accused BP of yucky negligence in operating the drilling rig.
Anadarko had no employees on the well and was a non-operating partner in the project. A subsidiary of Mitsui & Co. Ltd. of Japan had a 10 per cent stake. BP’s share is 65 per cent.
The rig was owned by Transocean Ltd. of Switzerland and operated by BP.
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