BP’s oil spill bill reaches $2B

by Associated Press

Published: June 21,2010

Tags: disaster, energy, environment, offshore drilling, oil and gas, oil spill

GULF OF MEXICO — BP said today it has now spent $2 billion responding to the massive oil spill in the Gulf of Mexico. And with no end yet in sight, that number is expected to keep rising.

BP PLC agreed last week to set up a $20-billion fund to compensate victims of the disaster on the Gulf coast. The company said today it has so far paid out $105 million to 32,000 claimants. Its shares were down 4 percent today in early trading in London at $5.12.

The news came as teams drilling the relief wells designed to stop the oil gushing into the Gulf continue a daunting task — hit a target roughly the size of a salad plate about three miles (5 kilometers) below the water’s surface.

If the workers aboard Transocean Ltd.’s Development Driller II or its sister rig DDIII miss or move too slowly, oil will keep pouring into the sea. No one on the rig has ever done this before because these deep sea interventions are so rare.

Still, the workers said they’re confident they can stop the worst oil spill in U.S. history.

“It’s really not a tough thing to do,” says Mickey Fruge, the wellsite leader aboard the DDII for BP, which was leasing the rig that blew April 20 and is responsible for stopping the oil.

The relief wells are slowly grinding their drill bits 13,000 feet (4,000 meters) below the seafloor until they intersect the damaged Deepwater Horizon, the Transocean rig that exploded, killing 11 workers and triggering the massive oil leak. A group of reporters that included The Associated Press had a rare chance to tour the rig Saturday.

Reporters flew by helicopter above the patchy wetlands along the Mississippi River Delta and past the floating boom and skimmers that have failed to protect the Gulf Coast.

About 40 miles from the Coast, a fleet of ships becomes visible. They look like toys packed in a two-mile-square patch of dull water. The approaching drill rig is easy to spot with its 200-foot derrick, offering what is likely the best chance for permanently stopping the nation’s worst environmental disaster.

After the Sikorsky chopper settles on its landing pad, the thwack of the rotors quiets down, and a rig worker steps into the helicopter cabin.

“OK, welcome to the DDII,” he says.

Out in the distance, another drilling rig is siphoning off oil and natural gas from the undersea well and burning it in a multi-nozzled flare. It looks like the flames are radiating from an oversized showerhead. Other ships hose off that rig’s deck to keep the heat from building.

Meanwhile, a boom attached to a drill ship called the Discoverer Enterprise flares off natural gas taken from a containment cap that is sucking up oil from the well head. The distant flames are a constant reminder that crude and gas are leaking beneath the feet of those aboard the DDII as they walk across the see-through grating on its floor.

The Enterprise sits where the Deepwater Horizon rig exploded. Some of the DDII crew knew Transocean workers on that rig.

It’s “always, always on our mind,” said Wendell Guidry, Transocean’s drilling superintendent on the rig.

BP has said a relief well should be ready by August, and the DDIII is farther along, having reached a depth of nearly 11,000 feet below the seafloor. Still, Guidry said, it’s unclear which rig will hit the target first.

“Never know what will happen,” he said. “You never know.”

Work goes around-the-clock on the DDII, which can hold 176 people. Eight thrusters on the rig keep it precisely positioned over the well it’s drilling. The ship is so large that those aboard cannot feel it move on the water most of the time — unusually still for a vessel at sea.

Coast Guard Adm. Thad Allen, the top federal official in the spill response, has said construction on the relief wells remains ahead of schedule. Jackson, however, noted that setbacks are routine on a drilling rig. Hydraulic hoses can snap. Early Saturday morning, one set of tongs used to tighten the casings broke down, forcing the teams to switch to a backup set.

“It’s business as usual, man,” said Eric Jackson, a tourpusher. “Everybody tells us to be, ‘Hey, don’t let the pressure get to you.’ This is what we do for a living, man. We drill wells. It’s the same as any other day.”

Once one of the two relief wells intersects the damaged line, BP plans to pump heavy drilling mud in to stop the oil flow and plug the blown-out well with cement.

It’s a tricky task and it’s not guaranteed to work. A pair of relief wells took months to stop an undersea gusher in Mexico that started in the summer of 1979.

In London, BP PLC also said today that its partners in the leaking Gulf of Mexico oil well must share responsibility for the costs in dealing with the disaster. The move was a strike back at Anadarko Petroleum Corp., which has a 25 percent stake in the gushing well, following Anadarko’s statement on Friday accusing BP of gross 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 percent stake. BP’s share is 65 percent.

The rig was owned by Transocean Ltd. of Switzerland and operated by BP.

Moody’s Investor Services downgraded Anadarko’s long-term debt on Friday and placed the company under review for further possible downgrades.

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