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BP Faces Financial Pressure From Oil Spill | 24-7-news.com cialis online

BP Faces Financial Pressure From Oil Spill

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Could the Deepwater Horizon oil spill push BP into bankruptcy? Investors in the oil giant are jittery, and at least one analyst says it’s a real possibility.

The cost of the response effort to date has been around $1.43 billion. Recently, respected oil industry analyst Matt Simmons told “Fortune” magazine that a bankruptcy is a real possibility.

“They’re going to run out of cash from lawsuits, cleanup and other expenses,” Simmons said. “Once BP realizes the extent of this, my guess is that they’ll panic and go into Chapter 11.”

Shares in BP have been on a roller coaster since the April 20 explosion aboard the Deepwater Horizon rig, which killed 11 workers and spawned the worst oil spill in U.S. history. Yesterday, BP’s shares fell 15.8 percent over concerns about the spill’s costs, but this morning they bounced back, jumping 9.1 percent to $31.85.

Meanwhile, the federal government is upping the pressure on BP regarding its spill response. In a letter to Doug Suttles, BP’s chief operating officer for exploration and production, the Coast Guard’s Rear Adm. James A. Watson has given the company three days to provide plans for “parallel, continuous and contingency collection processes,” according to the Times report. Among other things, the Coast Guard wants BP to devise a method to reduce disruptions from hurricanes.

BP was able to deploy a containment system at the site of the Deepwater Horizon oil spill last week, but even though it has been capturing as much as 15,000 barrels of crude per day, oil continues to gush into the Gulf of Mexico from the undersea well. Government scientist had put the flow rate at 12,000 to 19,000 barrels a day prior to the system’s deployment. The continuing rush of oil from the sea floor has many fearing that the flow is much higher than that, and there is some speculation that deploying the new containment system actually increased the rate.

BP continues to maintain that it will eventually be able to capture most of the oil. On NBC’s “Today” show, Suttles said a new containment system now being installed could capture another 5,000 to 10,000 barrels. The new system will use pipes and other equipment installed for the failed “top kill” effort to siphon some oil and gas out of the well closer to the seabed.

In the near future, BP plans to replace the current containment cap with a tighter-sealing one. According to the Times, the new cap calls for the construction of a riser system that could be quickly connected and disconnected in the event of a hurricane.

The feds also want the company to do a better job paying claims to fisherman and other individuals and businesses who are suffering economically because of the spill. Earlier this week, Coast Guard Adm. Thad Allen, who is overseeing the cleanup, wrote to BP demanding “more detail and openness” about how it is handling claims. Allen reminded BP that it “is accountable to the American public for the economic loss caused by the oil spill.”

According to the Associated Press, administration officials raised the issue yesterday in a meeting with BP executives. Tracy Wareing, of the National Incident Command office, said today the company would change the way it processes such claims and expedite payments. Among other things, it will drop the current practice of waiting to make such payments until businesses have closed their books for each month.

Under federal law, BP is required to pay for a range of losses, including property damage and lost earnings.

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