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Business Title: BP May Lose U.S. Oil Leases, Contracts as Obama Considers Spill Punishment June 14 (Bloomberg) -- BP Plc may lose control of its U.S. oil and natural gas wells and be barred from doing business with the federal government as punishment for the worst oil spill in U.S. history, industry and regulatory analysts said. President Barack Obama and lawmakers are debating penalties that would cripple the company’s ability to do business in the U.S. as public outrage intensifies. In addition to BP’s culpability in the Gulf of Mexico spill, a 2005 explosion at BP’s Texas City refinery that killed 15 workers and a 2006 pipeline leak that dumped 200,000 gallons of crude at Prudhoe Bay, Alaska, will figure in the debate, said Michael Wara, associate professor of environmental law at Stanford University in Palo Alto, California. “The government weighs whether there is a pattern and practice,” Wara said. “They’ll consider whether BP runs these incredibly complicated systems, where accidents can and sometimes do happen, or whether the company has a culture that disfavors safety and environmental compliance.” The U.S. may revoke BP’s status as operator of producing wells in the Gulf of Mexico, such as Thunder Horse, or of leases at Prudhoe Bay, said David Pursell, a managing director at Tudor Pickering Holt & Co. LLC, a Houston investment bank. Separately, Congress is considering measures to bar BP from contracts with the Department of Defense and Environmental Protection Agency. Escrow Demand Lawmakers including House Speaker Nancy Pelosi are demanding that BP defer the payment of any dividends until fishermen and others are compensated for losses from the spill. BP should set up an escrow account to cover claims, Obama aide David Axelrod said on NBC’s “Meet the Press” yesterday. The spill’s cost may reach $40 billion, Standard Chartered Bank estimated last week. BP’s board is meeting today. It’s unlikely to make any announcements until Chairman Carl-Henric Svanberg meets with Obama on June 16 in response to a request from the administration, according to two people familiar with the matter. Chief Executive Officer Tony Hayward is scheduled to appear before the House Energy and Commerce oversight panel the following day. The administration has the power to force BP out as operator of existing leases on federal lands and offshore tracts. The operator, typically the partner with a majority interest, is designated before drilling begins. The Interior Department tracks each operator’s performance and may “disapprove or revoke your designation as operator” based on accidents, pollution events or other cases of noncompliance, according to federal regulations. ‘Good Chance’ “We think there’s a good chance the government not only doesn’t allow BP to operate going forward, but could rescind operating control,” Pursell, an oil specialist, said in an interview. “It’s a way to keep BP alive and a way for the government to say we’ve really done something to penalize BP.” Such a move would force BP to sell part or all of its interest in some of its most profitable oil and gas fields, said Michael McKenna, president of MWR Strategies, a consulting firm in Washington. Other partners in a lease are unlikely to take on the risk of being the operator without also taking the lion’s share of profits, McKenna said. Even if BP breaks even on the sale of its stake, it would lose the profits from future oil production. “It’s exceedingly possible and exceedingly unwise,” McKenna said. “You engage in the economic deterioration of a company that’s already under stress.” Oil Pollution Act “The BP Deepwater Horizon oil spill raises several fundamental questions about safety and about industry’s ability to respond to spills,” Kendra Barkoff, a spokeswoman for the Interior Department, said in an e-mail. She declined to say if the administration may revoke BP’s operator status. BP also faces a fine of as much as $4,300 for each barrel of oil leaked under the 1990 Oil Pollution Act, said David Pettit, a senior attorney for the Natural Resources Defense Council in Los Angeles. That may mean a bill of as much as $8.6 billion based on more than 50 days of oil spilling at a rate of up to 40,000 barrels per day. David Nicholas, a BP spokesman, declined to comment on possible U.S. sanctions. “It’s not the sort of thing that we would react to,” Nicholas said in an interview. “Clearly throughout the response to this event we have been working extremely closely with the administration and we continue to do so.” Shares Plunge BP’s American depositary receipts have fallen 49 percent since the explosion, wiping out $92 billion in market value. Investors buying so-called put options are wagering that the shares will extend their drop and slash $140 billion from BP’s market capitalization, according to U.S. stock-options trading. The ADRs fell 7.8 percent to $31.32 as of 10:38 a.m. in New York trading today. In addition to the Deepwater Horizon rig that exploded and sank in April, BP operates the Gulf platforms Thunder Horse, the second-largest producing well in the U.S. at about 300,000 barrels per day, and Atlantis, which produces 200,000 barrels of oil a day. BP also operates the Prudhoe Bay oil field on Alaska’s North Slope. Representative Luis Gutierrez, an Illinois Democrat, will write Interior Secretary Ken Salazar urging him to ban BP from future lease sales because of the company’s “abhorrent environmental and safety record,” said Gutierrez spokesman Douglas Rivlin. “Oil leases are a license to print money, said Rivlin. “Why should we be giving them to these guys?” EPA Sanctions The EPA can disqualify companies convicted of Clean Water Act or Clean Air Act violations from receiving federal contracts or financial assistance, according to an agency e-mail responding to questions. Those penalties apply to individual facilities, not an entire company, it said. BP’s facility in Prudhoe Bay and its Texas City refinery are already under EPA sanctions. Negotiations to lift them were suspended after the Deepwater Horizon explosion and leak, the agency said. The EPA declined to discuss details of the current investigation into the Deepwater Horizon spill. “We are taking all the steps necessary to enforce our laws and to ensure that the responsible parties pay for the cost of cleaning up the spill,” the agency said. Last month, Gutierrez successfully pushed through an amendment to a broader Defense Department bill requiring the secretary of defense to review whether BP is a “responsible” contractor. Debarment Option If BP doesn’t meet that standard, which includes having a “satisfactory record of integrity and business ethics,” the legislation would require Secretary Robert Gates to bar the oil giant from defense contracts, according to Gutierrez’s office. BP has six contracts with the Pentagon worth a combined $2.1 billion, mostly for fuel. In a letter last week, the consumer group Public Citizen called on Obama and Gates to “debar” BP from all government contracts and terminate the six Pentagon agreements. “It’s a pretty disturbing pattern in the company,” Tyson Slocum, director of Public Citizen’s energy program, said in an interview. “There has to be a point when a financial slap on the wrist is no longer adequate.” Debarment is “definitely not an extreme option,” said Robert Meunier, former EPA debarment officer who is now head of Debarment Solutions in Arlington, Virginia. “It’s been used against 70,000 individuals and businesses. It’s fairly routine,” even if the public never hears about it, he said. “While debarment makes for good politics, it makes terrible public policy,” Meunier said. “But you’d have to be a fool not to consider it when the president is saying he’s looking for somebody’s ass to kick.”
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#1. To: Brian S (#0)
And what of the hundreds of thousands of Americans, not to mention 7% of the British population, who's pension plans are subsidized by BP Oil? Thats a lot of votes here.
Just 10 days prior to the explosion, the Obama administration’s regulators gave the oil rig a pass, and last year the Obama administration granted BP a National Environmental Policy Act (NEPA) exemption for its drilling operation.
" It certainly should not have taken days for Mr. Obama to get publicly involved in the oil spill, or even longer for his administration to start putting the heat on BP for its inadequate response and failure to inform the public about the size of the spill. (Each day, it seems, brings new revelations about the scope of the disaster.) It took too long for Mr. Obama to say that the Coast Guard and not BP was in charge of operations in the gulf and it’s still not clear that is true. He should not have hesitated to suspend the expanded oil drilling program and he should have moved a lot faster to begin political and criminal investigations of the spill. If BP was withholding information, failing to cooperate or not providing the ships needed to process the oil now flowing to the surface, he should have told the American people and the world. These are matters of competence and leadership. This is a time for Mr. Obama to decisively show both." New York times Editorial
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Soros bought 811 Million into Petrobas after the installation of OBama. After Obama gave a Tax payer backed loan to Petrobas. Recall Obama removing the Churchill bust.
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