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Topics: Gulf oil spill's 'trial of the century' could end before it begins, BP Emails Reveal Company Veiled Spill Rate, What BP knew early in the Deepwater Horizon disaster: An editorial, Fuel Fix » Steffy: When BP keeps secrets, it’s time to worry, BP Must Indemnify Halliburton in Gulf Spill Claims, Judge Says, BP Is Spending $500 Million To Fix Its Brand And Get Everybody To Forget About Deepwater Horizon, BP helps boost technology at local school, Latest Effect of BP Oil Spill - Waves of Cash for Texas Coast, BP's decision to change contractors is an insult to Alabama (editorial), Chicago Gasoline Surges After BP Whiting Catalytic Cracker Shut, BP chief Bob Dudley out of the fire?, BP safety committee chief to leave board

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What is not mentioned in the article is that the government has strong motivations to avoid the embarrassment of a trial as well as BP. They were as seriously remiss in their regulatory duties as BP was in ensuring safe well operations. While the trial would not focus on the governments industry captive regulator it will undoubtedly become painfully obvious that regulators were snoring loudly at the switch.

If there is a settlement the public will be denied knowing much critical information about what lead to the Deepwater Horizon/Macondo catastrophe. That doesn't bode well for moving forward in preventing the next one.

I guess we had best put the popcorn deliveries on hold until we learn more.

Gulf oil spill's 'trial of the century' could end before it begins

Sunday, February 05, 2012, 7:01 AM

Some leading analysts and legal observers believe the highly anticipated "trial of the century" over the 2010 Gulf of Mexico oil spill, set to begin in three weeks, will end before it starts. BP and negotiators for federal and state governments are frantically working to confect a settlement so they won't have to leave the fate of billions of dollars in potential pollution fines and spill damage payments in the hands of U.S. District Judge Carl Barbier.

The experts all agree any settlement would have to be a "global settlement" -- one that will resolve federal civil fines under the Clean Water Act, Endangered Species Act and other laws; compensate federal and state governments for damages to natural resources; and settle any criminal violations as well.

A whole other settlement effort deals with the thousands of private claims that are also part of the sweeping litigation, but those claims, expected to amount to a few billion dollars at most, are a relatively small part of the case.

David Uhlmann, a University of Michigan law professor who headed the Justice Department's Environmental Crimes Section for seven years, predicts there's a 70 percent to 80 percent chance that BP will settle with the government before Feb. 27, for both criminal and civil violations, for between $20 billion and $25 billion.

Uhlmann believes it would be foolish for BP to fight a government that also regulates a huge chunk of its business.

"BP decided to continue drilling in the Gulf (after the oil spill) and in fact is looking to expand its footprint in the Gulf," Uhlmann said. "BP cannot be successful if the company is in a legal war with the government that controls drilling leases. Making peace with the federal government is of enormous value to BP's business model."

And if the case does go to trial, embarrassing evidence is sure to come out in depositions and internal BP memos that will remind the public how BP cut corners while drilling and sealing the well in an effort to save money and time.

It isn't only BP that wants to avoid trial. The government does not want to risk the chance an unfavorable judge or appellate court will slash the fines it stands to collect.

Alabama Attorney General Luther Strange, the point man for a coalition of states suing BP, rig owner Transocean, contractor Halliburton and others, said Justice Department officials, states attorneys general and BP met in Washington last month to sketch out a settlement.

In terms of settling with the government, there are three main types of claims: civil penalties, mostly under the Clean Water Act; environmental costs under the Natural Resources Damage Assessment; and criminal fines if the Justice Department charges companies or individuals with environmental crimes or manslaughter for the 11 crew members killed.

People like Blaine LeCesne, a tort law professor at Loyola University who has been following the litigation closely, say that would be selling the Gulf Coast short.

"Louisiana stands to gain a huge amount from this, which is why I don't want it to settle," LeCesne said. "It's ironic that the worst environmental damage that Louisiana has ever endured at the hands of an oil company could be its salvation."

The Obama administration made an unusual show in 2010 of announcing a criminal probe into the spill, and in this election year, the president will be under pressure from his Democratic base to get tough on Big Oil's poster children. It's unclear, though, whether those political realities favor a trial -- which might impose more pain on the oil companies, but probably not before the election -- or a near-term settlement that yields criminal guilty pleas and possibly smaller monetary penalties.

Also in the consolidated lawsuit are more than 100,000 private plaintiffs seeking compensation and punitive damages. The committee of lawyers representing them say they are going to trial Feb. 27 whether the government plaintiffs are with them or not.

The question is, how many of those suing claimants still have legitimate cases in court?

BP says that before claimants can seek relief in court under the Oil Pollution Act, they must formally present their claims through a separate process run by mediator Kenneth Feinberg. Appointed by BP and the White House, Feinberg has settled claims from 192,000 individuals and businesses, collecting releases from them that render them ineligible to collect any more from BP or other defendants.

"My understanding is that a lot of the claims that haven't settled are fairly weak," said Ed Sherman, a Tulane law professor who studies complex litigation and has attended many of the pretrial hearings. "There's every incentive for them to stay in the (litigation), but the truth is that those claims may not amount to a lot."

Uhlmann agreed, but noted that even a small group of strong plaintiffs could easily have claims totaling $1 billion. If Barbier agrees that they deserve punitive awards as well, it would be well worth the lawyers going to trial, Uhlmann said.

If BP settles with the government but not the rest of the plaintiffs, it will still have to endure the embarrassment, the uncertainty and the cost of a trial, meaning the oil giant might be motivated to settle the private claims, too.
Even given the powerful incentives to settle, the obstacles are formidable. Time is short. There is an incredible number of parties to the case, each with its own interest. Uhlmann said there are "too many" Justice Department divisions involved, not to mention five Gulf states. And on the defense side, BP has settled with investment partners and some smaller contractors, but is still fighting with rig owner Transocean, cementer Halliburton and blowout preventer manufacturer Cameron over how much fault they share.

On the plaintiffs' side, there's plenty of discord. Several key lawyers who weren't appointed by Barbier to a plaintiffs steering committee routinely blast this leadership group in court filings. They don't think the committee deserves a cut of their clients' awards, and they are threatening to opt out of any settlement the committee might strike.

"There are 130 lawyers in our consortium representing tens of thousands of plaintiffs that would opt out," said Danny Becnel, who has settled hundreds of cases with Feinberg but won't settle any more now that Barbier has ruled that his clients must share 6 percent of any Feinberg payments with the steering committee. "I'm going to trial with the ones I have left, unless BP agrees to settle with my clients individually for top dollar."

Sherman thinks all that complexity, along with the lack of any true precedent in the case, makes settlement before Feb. 27 unlikely.
But Uhlmann is convinced it won't go that far, at least not on the government side.

"A global settlement will be difficult to reach. It will not occur until the eve of trial, but it will get done," he said.

Given BP's track record of being a Scrooge with the truth it shouldn't have come as any surprise to anyone that BP would blatantly lie about how much filth their underwater Macondo gusher was releasing into the Gulf. However, what remains an unanswered questions is why the Coast Guard and the Department of Interior let BP get away with the the ridiculous flow rates.

BP is currently trying to beat the EPA down on their estimates of the amount of oil released in the Gulf. It remains to be seen whether the EPA will use this latest revelation of BP's deliberate concealment of the estimated flow rate as leverage in their negotiations.

Despite the absurdity of BP's claims of the Macondo's flow rate being 1,000 barrels a day, Ken Salazar, head of the Department of the Interior, took his own sweet time in gathering together independent experts to come up with realistic flow rates. To add insult to injury, Salazar made the highly risky decision to shut the well in rather than making the safer choice to produce the well which would have also given the government accurate flow rate numbers as well as reducing pressure on the well before shutting it in.

BP Emails Reveal Company Veiled Spill Rate

February 2, 2012

On the day the Deepwater Horizon sank, BP officials warned in an internal memo that if the well was not protected by the blow-out preventer at the drill site, crude oil could burst into the Gulf of Mexico at a rate of 3.4 million gallons a day, an amount a million gallons higher than what the government later believed spilled daily from the site.

The email conversation, which BP agreed to release as part of federal court proceedings, suggests BP managers recognized the potential of the disaster in its early hours, and company officials sought to make sure that the model-developed information wasn’t shared with outsiders. The emails also suggest BP was having heated discussions with Coast Guard officials over the potential of the oil spill.

The official amount of oil that flowed from the well was pegged at 206 million gallons from at least April 22 until the well was capped on July 15, a period of 85 days. That’s a daily flow rate of about 2.4 million gallons — two-thirds of the way to BP’s projection of what could leak from the well if it was an “open hole.” BP has disputed the government’s estimates.

In the memo, a BP official urges not to share the flow-rate projections and refers to the “difficult discussions” the company was having at the time with the Coast Guard.

Gary Imm, a BP manager, told Rob Marshall, BP’s subsea manager in the Gulf, to tell the modeler doing the estimates “not to communicate to anyone on this.”

“A number of people have been looking at this we already have had difficult discussions with the USCG on the numbers,” Imm said in the email string, referring to the Coast Guard and flow estimates.

On May 24, BP informed Congress they used an “undisclosed method to generate much higher figures” than the official estimates, according to a report from a presidential commission investigating the spill. BP estimated that the flow rates were between 210,000 gallons and 1.6 million gallons a day, the January 2011 report said.

As the spill grew into weeks and months, and soiled fishing grounds, beaches and coastal marshes, independent scientists questioned the official flow rates. Eventually, the federal government convened teams of government and independent scientists to determine how much oil leaked out of the well. They came up with an official estimate of about 2.4 million gallons of oil a day on average.

This Times-Picayune belated editorial huffiness is lacking any sort of apology for their role in failing to aggressively challenge the outrageous BP lies they ware being told early and often. While their community was being befouled by BP the Times-Picayune reporters were too disinterested and lazy to do some quick back-of-the-envelope calculations or at least make a  quick phone call to the water company to ask some questions about liquid flow rates. Either would have made it obvious BP and the Coast Guard were feeding them a huge whopper.

There are 42 gallons in a barrel of oil which means the initial BP estimates of 1,000 barrels per day for the Macondo underwater gusher was 42,000 gallons a day. The average size of trash cans people use to take their trash to the curb is about 50 gallons.

For nine days BP and the Coast Guard were asking us to believe that 35 containers the size of a residential trash container would be sufficient to capture all the oil that was coming from the Macondo in an hour's time. (42,000 gallons per day divided by 50 gallons equals 840 trash containers per day would be needed to catch all the oil coming from the blown out Macondo. Divide the 840 trash barrels by 24 hours to come up with 35 trash containers one would need to capture all of the oil in an hour's time.)

The inside dimension of the Macondo oil pipe is 20 inches. Imagine, if you will, that a 20 inch water main was gushing water under tremendous pressure and that someone told that you that you could capture all the leaking water water by putting a trash barrel under the pipe at the leisurely pace of using a little more than one container every two minutes.

That is exactly the ridiculous fiction that BP and the Coast Guard spewed forth in front of packed press conferences for the first nine critical days that the Macondo was spewing forth its filth. The sheeple press, Times-Picayune included, obediently went about their stenography duties and printed such tripe without ever seriously questioning the utter absurdity of what they were being told.

What BP knew early in the Deepwater Horizon disaster: An editorial

January 31, 2012 John McCusker/The Times-Picayune

It's long been clear that BP sought to low-ball estimates of the Macondo oil spill during the 2010 disaster and since then. But recently disclosed company correspondence shows that BP officials knew right away how disastrous the spill could be -- and chose to hide that critical information.

Internal e-mail messages disclosed in a federal suit reveal that as the Deepwater Horizon rig sank on April 22, 2010, an expert reported to BP that the well would spill 82,000 barrels a day if unobstructed. Instead of sharing the data with government officials preparing the disaster response, BP executives demanded that the estimate be kept secret, according to the messages.

The first official estimate of the spill was set on April 24, 2010, at an absurdly low rate of 1,000 barrels a day. An expert task force later determined that the true flow at that time was 62,000 barrels a day, a figure closer to the maximum flow estimate BP had received on April 22.

Well into the summer of 2010 company executives were still dodging the flow rate issue. That September, BP chief operating officer Doug Suttles told The Times-Picayune that estimating the flow rate "is horribly difficult to do, you can't put a meter on it." Mr. Suttles insisted that the flow rate was irrelevant to the disaster response anyway, because BP had marshaled adequate resources even without having an estimate.

"I know this is so hard to believe," Mr. Suttles said of his argument.

It was hard to believe because it wasn't true. BP's efforts to hide the gravity of the disaster affected the urgency and magnitude of the government response. For that, the company must be held accountable.

The Atlantis is a much, much more complex project than the Deepwater Horizon and we've seen how well BP managed to run that. BP is stretching the law protecting trade secrets far past the breaking point in this whistleblower lawsuit.

It is deeply troubling that the judge in the case seems more than willing to dance to BP's secrecy tune. I hope that another deepwater horror show doesn't prove how unhealthy it is for a democracy when its officials favor the interests of large corporations over those of the public.

Fuel Fix » Steffy: When BP keeps secrets, it’s time to worry

February 3, 2012

So when BP asks a federal judge to suppress information pertaining to possible safety violations at another offshore project, it’s a red flag.

Kenneth Abbott, a former BP contractor and 30-year energy industry veteran, sued the company in Houston federal court in 2009 claiming BP didn’t complete or document almost 90 percent of the necessary engineering inspections on its massive Atlantis offshore platform in the Gulf of Mexico.

BP has insisted that all inspections were done properly and were thoroughly documented, and it disputes Abbott’s contention that financial concerns overrode safety in Atlantis’ construction. An investigation by the Department of the Interior, the same government regulator that inspected the Deepwater Horizon days before the accident, concluded Abbott was wrong.

Early in the Abbott case, the judge issued a protective order allowing either side to designate documents or other evidence as confidential. Typically, such orders are used to hide trade secrets or other competitive information. In this case, BP has asked to keep much of Abbott’s evidence sealed.

Abbott’s attorneys filed a motion accusing BP of using the judicial protection “in an abusive manner, with overbroad blanket confidentiality designations, in an effort to shield this litigation from public scrutiny.”

As many as three out of four documents that BP has wanted sealed don’t actually fall under the confidentiality order, Abbott’s attorneys argued.

For example, BP claimed that testimony from an official with the old Minerals Management Service should be confidential, even though BP itself had filed the same deposition publicly earlier in the case, Abbott argued.

Among the things BP deemed confidential: the official’s interpretation of MMS rules and the parts of the Atlantis rig that are subject to MMS oversight. MMS, though, is a taxpayer-funded agency, and all its business is, by definition, a matter of public record, something that U.S. District Judge Kenneth Hoyt specifically said shouldn’t be covered by his protective order. Yet Hoyt sided with BP anyway, without giving a reason for his decision.

In another instance, BP sought to seal testimony from the company employee responsible for Atlantis’ regulatory compliance.

Meanwhile, BP’s lawyers are using similar hide and stall tactics in the Deepwater Horizon case, set for trial later this month in New Orleans.

They’ve asked to seal or strike potentially embarrassing evidence related to its Texas City refinery explosion, documents linking employee compensation to cost cutting and portions of former chief executive Tony Hayward’s testimony.

They also want to exclude testimony from outside experts who have been critical of the company.

It's a shame that double claims can't be awarded victims from both BP and Halliburton. A pox on both their houses.
BP Must Indemnify Halliburton in Gulf Spill Claims, Judge Says
Published: January 31, 2012

A judge ruled that BP must cover some of the direct damage claims awarded against Halliburton for the $40 billion in cleanup costs and economic losses caused by the 2010 oil well explosion and Gulf of Mexico spill.

BP, which is based in London, must indemnify Halliburton for compensatory damage claims under its drilling contract, Judge Carl J. Barbier of the United States District Court in New Orleans ruled on Tuesday. BP sued Halliburton, which provided cementing services for the project, in April to recover a share of any damages and costs from the spill. Any punitive damages awarded against Halliburton do not have to be paid by BP, the judge said.

“BP is required to indemnify Halliburton for third-party compensatory claims that arise from pollution or contamination that did not originate from the property or equipment of Halliburton located above the surface of the land or water, even if Halliburton’s gross negligence caused the pollution,” Judge Barbier wrote.

Any civil penalties under the Clean Water Act against Halliburton, which is based in Houston, also will not have to be covered by BP, the judge said.

The decision follows an earlier ruling that BP must indemnify Transocean, owner of the Deepwater Horizon rig that exploded and sank.

It is enough to make one weep to know that a half a billion dollars will be going to peddle BP hogwash when the money could be so helpful to BP's victims who have been treated so shabbily by BP and Kenneth Feinberg.

It is interesting that even a business publication is regarding BP's PR efforts with a huge dose of cynicism.

BP Is Spending $500 Million To Fix Its Brand And Get Everybody To Forget About Deepwater Horizon - Business Insider

February 03, 2012

BP North America is putting $500 million into marketing in the US over the next two years, in an attempt to revamp its brand, reports Convenience Store News (via brandchannel).

BP's "Beyond Petroleum" marketing message started in 2000, but the environmental focus seemed at odds with the company's record -- especially after the high-profile accident in the gulf. Its message was great, but simply not believable.

As Gardiner Morse at HBR noted shortly after Deepwater Horizon, "BP seems to have forgotten the number-one rule in marketing and management: walk the talk. BP is a victim of a disingenuous ad campaign that worked too well, and you have to wonder if its reputation will ever fully recover."

The first step in its new campaign is to launch a big ad campaign for BP Invigorate -- a gasoline that cleans your engine as you drive, saving you some money, according to BP. It says that the campaign "will emphasize the increased mileage benefits of continuous use of Invigorate compared to low-detergency fuels."

Also, there will be a "Pump Rewards" loyalty program starting up in March.

No one seems the slightest concerned about how taking money from a company with such a horrible reputation might taint the curriculum for school children which means that it is highly unlikely that such safeguards have been put in place. Democracy is best served by a population with excellent critical thinking skills. This is not the way to achieve that goal.

BP helps boost technology at local school

February 2, 2012

When Mike Utsler stood in the middle of Jessica Naccio's sixth-grade science classroom at Caldwell Middle School on Thursday afternoon, he looked jealous.

Naccio was teaching Newton's laws of motion. When she asked the class questions, nobody raised their hands — instead, the students typed furiously on handheld devices, registering their answers.

When the results popped up on a big screen at the front, Naccio dragged each out individually and started discussing them.

Utsler, the Gulf Coast Restoration Organization CEO for oil giant BP, chuckled lowly.

“I need to get me one of those,” he said. “I need this in my board room.”

Utsler was at the school getting a personal look at the four interactive white boards and remote systems the company donated to Caldwell what teachers called “the best Christmas present ever.” BP recently donated $40,000 to the school in an effort to boost the use of technology in teaching math and science.

Last month, for example, the company announced it was donating $4 million to Fletcher Technical Community College to add a state-of-the art petroleum-production lab to the college's campus-expansion project.

Carol Davis, assistant superintendent of Terrebonne Parish schools, said the company's timing was perfect.

Davis said implementing expensive interactive technology is proving almost impossible for the school district, especially given stagnant cash-flow from the state.

“We wouldn't be able to do this without [BP],” she said.

While it is good to see that BP money will be used for worthy environmental projects it is deeply disturbing to see that it requires a horrendous tragedy to generate a windfall of political pork to fund much needed environmental projects. I wonder what future generations will think of us refusing to make environmental preservation and improvement a part of our political DNA.

Latest Effect of BP Oil Spill - Waves of Cash for Texas Coast

February 2, 2012

SOUTH PADRE ISLAND — Sand dunes rise above a windy, desolate stretch of beach, miles beyond where most tourists venture. Occasional flocks of brown pelicans are visible, arcing through the sky above the water.

“I love watching them fly,” said Sonny Perez, manager of the Laguna Atascosa National Wildlife Refuge, which includes some of the remote northern reaches of South Padre. “They’re like little bombardiers going across.”

In the coming years, the 97,000-acre refuge could add more land on the island to its holdings. At least $100 million, and possibly much more, will be funneled to Texas as part of the cleanup financing from BP after the Deepwater Horizon oil spill in the Gulf of Mexico in 2010. So far, Texas officials have received more than 150 suggestions on how to spend the money, including expansion of parkland, restoration of oyster reefs and a campaign to reduce litter that ends up in the Gulf.

For environmental groups involved in coastal restoration, this money, as yet unspent, represents a huge opportunity. Besides the $100 million that BP is allocating to each of the five Gulf states, Texas can also seek a chunk of an additional $500 million in BP funds that the federal government will disburse to Gulf states. All of the money, $1 billion in total, is earmarked for “early restoration,” and the amounts could increase further, said James Tripp, senior counsel for the Environmental Defense Fund.

Pending developments in court and in Congress, Texas could also get hundreds of millions of dollars more as a result of Clean Water Act penalties assessed against BP and other companies involved in the spill. (BP America is a corporate sponsor of The Texas Tribune.)

“These are definitely good sources of restoration dollars for the Texas coast,” said Bob Stokes, president of the Galveston Bay Foundation, which has proposed several projects. The money is especially welcome, he said, because state financing for coastal restoration has shrunk considerably, even as relentless population growth has put pressure on fragile marshlands and waterways and wildlife habitats.

It may seem surprising that Texas stands to receive so much money from the spill. The Deepwater Horizon rig explosion, which killed 11 crew members and spewed nearly five million barrels of oil into the Gulf over three months, occurred hundreds of miles from Texas shores. Unlike the other Gulf states, Texas was not hit with oil, aside from a smattering of tar balls on the Galveston coastline.

But Texas has been affected indirectly. For example, bird and turtle species harmed by the oil also spend time in Texas. Photographs of oil-soaked brown pelicans became emblematic of the spill two years ago. The birds, which were on the federal endangered species list until 2009, regularly use Texas beaches. Similarly, endangered sea turtles swim in the Gulf and nest on islands like South Padre in the spring.

Apart from BP, other federal money is also available to aid conservation of the Gulf. The Natural Resources Conservation Service, an arm of the United States Department of Agriculture, is disbursing up to $50 million in farm bill financing to Gulf state farmers and ranchers to encourage conservation practices that will result in cleaner water flowing to the Gulf. In Texas, the projects will target the San Antonio River and its Gulf outlet, the San Antonio Bay, according to Sonny Vela, a Corpus Christi-based liaison for the conservation service. The money should start coming around March, he said.

Another channel for federal money, the Coastal Impact Assistance Program, which taps federal royalties from offshore oil and gas leases, began disbursing money years ago. Projects have included plugging abandoned oil and gas wells in the waters off Jefferson County and the Houston Parks Board’s purchase of a bayou in Harris County.

BP must figure that they own a sufficient number of Alabama and Florida politicians to have no need to further woo their favor. BP is arrogantly flipping the finger to their Alabama and Florida victims in favor of saving a buck or two.
BP's decision to change contractors is an insult to Alabama (editorial)
Published: Monday, February 06, 2012, 6:04 AM
By Press-Register Editorial Board

CROWDERGULF, THE company that has been in charge of keeping Alabama beaches free of oil, is intimately familiar with the areas its workers patrol.

But beginning this week, BP will contract with Danos and Curole Marine Contractors of Louisiana to clean the beaches in Alabama and Florida. CrowderGulf, based in Theodore, will no longer oversee the work, though it has a strong track record and is well respected locally.

By replacing it with a Louisiana company, BP starts all over again on beach cleaning in the two states. What’s more, the oil giant’s decision sends the message that it’s not interested in investing in local companies to help the area economy recover.

To make matters worse, the contract goes to a company that was sued for its role as the staff leasing firm for the Vessels of Opportunity program. The program was supposed to put private boat owners to work containing the oil spill, but it was riddled with problems from the beginning.

It’s little wonder, then, that any company linked to that debacle still draws suspicion along the coast.

Another unplanned maintenance story that seem to appear with alarming regularity about BP's U.S. refineries. To add insult, local consumers are forced to bear the cost of BP's shoddy maintenance by having to pay higher prices at the pump.
Chicago Gasoline Surges After BP Whiting Catalytic Cracker Shut
Feb 3, 2012 1:08 PM CT

Chicago gasoline strengthened after BP Plc (BP) shut a fluid catalytic cracker for unplanned repairs at the Whiting refinery in Indiana.

The unit is one of two catalytic crackers at the 420,000- barrel-a-day plant, according to a person familiar with refinery operations who declined to comment because the information isn’t public.

The discount for conventional, 87-octane gasoline in Chicago (CHCG87PC) narrowed 5.5 cents to 14.5 cents a gallon versus futures traded on the New York Mercantile Exchange at 12:52 p.m. The fuel has strengthened from a discount of 33 cents on Jan. 24. Prompt delivery rose 8.46 cents to $2.7535 a gallon.

Unsurprisingly, it doesn't seem as if business competence is a job requirement for being CEO of BP. The Russian deal was child-like in its naive stupidity. The fact that Dudley was allowed to hang onto his job after that faux pas is pretty strong evidence that BP share holders will tolerate pretty much any warm body as CEO.

In the unlikely event that Dudley does get the boot it seems unlikely that his replacement would be any sort of improvement. It's difficult to imagine anyone with a good reputation wanting to risk sullying it with BP's name.
BP chief Bob Dudley out of the fire?

04 Feb 2012

Bob Dudley, the BP chief executive, has proved much more careful with his words than his foot-in-the-mouth predecessor, Tony Hayward. But he must hope one phrase does not return to haunt him.

In October, unveiling the oil major’s third-quarter results, he told a room full of analysts that BP had “turned the corner”.

But one looming event will overshadow all of this. It is the fall-out from the catastrophe that effectively gave Dudley his promotion – the Gulf of Mexico oil spill. On February 27, Court C268 in New Orleans will open its doors to what promises to be an incendiary civil trial. It will apportion blame for the explosion and spill at the Macondo well, determining who should pay and how much. But the trial will also determine the degree to which BP has really turned the corner.

Irene Himona, an analyst at Societe Generale, said: “The market is still looking at BP as a special case because of the trial. And until this legal situation is clarified it will remain a special case.”

Known as “multi-district litigation”, the trial will pull together the civil suit brought by the US government, claims from Gulf states such as Alabama and more than 100,000 lawsuits filed by businesses ranging from those in Louisiana’s oyster industry – which may take years to recover – to hoteliers who rely on clean Florida beaches for their trade.

The scale of the case is underlined by the surprise expressed by legal experts that the trial is about to start less than two years after the spill. “I think it may be the most complex piece of litigation we’ve had in this country, given the enormity of the potential damages and the number of parties,” said Ed Sherman, a professor of law at Tulane University in New Orleans.

“It’s the first stage of the trial that’s important. Not only does it allocate the blame, it indicates the degree of any negligence,” said Peter Hutton, of RBC Capital. “Proving gross negligence is very difficult, but it means that the needle on any fine could swing a lot.”

BP is braced for a three-week blitz of bad publicity as prosecutors put their case, promising echoes of the furore immediately after the spill when BP was dubbed America’s most hated company. The media coverage alone threatens BP’s gradual rehabilitation on the Gulf coast, where last October it won its first deep-water drilling permit since the spill.

The likely length of the trial provides little comfort to shareholders either, with BP sources expecting it to last into next year. Which partly explains why some analysts remain convinced that BP will try to settle with the US Department of Justice before the trial begins. Martijn Rats, at Morgan Stanley, wrote in a note to clients in January: “We expect a settlement of $20bn-$25bn.”

Whatever the outcome, one thing is clear: Dudley has no intention of retreating from the US.

Besides, Dudley’s already tried another big one – and that backfired. While Dudley inherited the mess of Macondo, his failed Rosneft adventure in Russia was all his own doing. Back in January 2011, it seemed a highly symbolic move. While writs and insults flew over the US Gulf, Dudley switched BP’s focus from west to east. He struck what he hailed as a “major equity-linked partnership” and “ground-breaking strategic alliance” with Rosneft, the state-backed oil major.

That company is a 50:50 joint venture between BP and Alfa–Access–Renova (AAR), an umbrella grouping of Mikhail Fridman, Len Blavatnik, Viktor Vekselberg and German Khan. The four produced a shareholder agreement stipulating that TNK-BP was BP’s “primary vehicle” for all oil and gas exploration in Russia and Ukraine. The move caused enough trouble at the Stockholm Arbitration Tribunal to block both the Rosneft share-swap and BP’s Arctic oil developments. Last August, Dudley suffered the ignominy of seeing rival Exxon replace BP as Rosneft’s exploration partner for the three areas.

However, all is not going so swimmingly on the TNK-BP board. AAR is awaiting the verdict of the Stockholm tribunal on whether BP breached the TNK-BP shareholder agreement. It is due in the spring or early summer and, if it finds in AAR’s favour, BP can expect a damages claim of up to $5bn.

And BP’s reversals don’t stop there. In November, it was forced to pull the £4bn sale of its 60pc stake in Argentina’s Pan American Energy – the proceeds of which were earmarked for its target $45bn of disposals. BP now says it’s happy to hang on to its Argentina stake, at least for a while, believing it could be sold later.

Argentina may be small beer, but it is just another example of Dudley’s difficulties in shaping BP’s destiny. The shares are down 26pc since the Gulf catastrophe, with BP’s market value of £92bn dwarfed by Royal Dutch Shell’s £144bn. It wasn’t so long ago that BP was the bigger company. It rather puts into perspective Dudley’s claims about turning the corner.

It shouldn't come as comfort to anyone that it took nearly two years for the board member responsible for BP's safety to resign. The fact that he wasn't summarily booted given BP's atrocious safety record is a strong indication that safety culture at BP isn't about to change for the better.

BP safety committee chief to leave board

February 3, 2012

Sir William Castell, the head of BP’s safety committee, will retire from the board of the UK oil group this April, in the latest shake-up at the top of the company since the Gulf of Mexico disaster almost two years ago.

Sir William, who is also the senior independent director at BP, had decided not to stand for re-election at the annual meeting in April, BP said in a statement on Friday.

Sir William has been on the board for nearly six years. His decision to leave comes after he suffered a big vote against his re-election at last year’s annual meeting, with 43 per cent of shareholders unwilling to support him.

Andrew Shilston, already a non-executive on the BP board and previously finance director of Rolls-Royce, will succeed Sir William as the senior independent director.

BP also announced that Ann Dowling, head of the department of engineering at the University of Cambridge, will join the board as a non-executive.

PLEASE visit Pam LaPier's diary to find out how you can help the Gulf now and in the future. We don't have to be idle! And thanks to Crashing Vor and Pam LaPier for working on this!

Previous Gulf Watcher diaries:

2-03-12 05:55 PM Gulf Watchers Friday Block Party - Much Too Early for the Ides of March Lorinda Pike
1-27-12 06:30 PM GW Friday Block Party---Emergency Fill-in Edition Phil S 33
1-23-12 05:11 PM Gulf Watchers Monday - Halliburton Makes Out Like the Bandits They Are - BP Catastrophe AUV #577 Lorinda Pike
The last Mothership has links to reference material.

Previous motherships and ROV's from this extensive live blog effort may be found here.

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