Saint Louis - Business and Technology News

St. Louis Business & Technology News

"When you think Saint Louis, think Saint Louis Front Page," a weekly publication covering the news and events in the greater St. Louis area.

Power & Light District

Sprint Center

KC Hotel Guide

How To Reach Us:
St. Louis Front Page
P.O. Box 1354
St. Louis, MO 63188

Voice: 314-771-0200
Fax: 314-771-0300

To submit news, contact:
editor@slfp.com

To advertise, contact:
advertising@slfp.com

BP's massive oil spill in the Gulf of Mexico will lead to sweeping changes in how the industry drills wells and produces oil and natural gas from deepwater plays

BP Oil Spill May Lead to Changes in Offshore Drilling
ST. LOUIS, MO, (PRNewswire), June 17, 2010 - BP's massive oil spill in the Gulf of Mexico will lead to sweeping changes in how the industry drills wells and produces oil and natural gas from deepwater plays, two experts said Tuesday at a Platts Energy Podium here.

The pair also said BP's runaway Macondo well, the site of the April 2010 Deepwater Horizon drilling rig explosion, likely won't stop spilling oil into the gulf until the first relief well is completed in mid-August.

"The relief well is the solution," Eric Smith, a Tulane University professor and associate director of the Tulane Energy Institute, told Platts Energy Podium, a newsmaker media briefing in Washington. Smith was joined at the podium by Brad Beitler, vice president of technology with subsea equipment maker FMC Technologies.

Both men agreed that investigators ultimately will find that human errors in drilling the well -- rather than equipment or technical failures -- caused the April blowout.

"The technical limits haven't been reached in ultra deepwater drilling," Beitler said. "The process limits, maybe."

Beitler said the 1988 explosion of the Piper Alpha production platform in the North Sea, which killed 167 workers, led governments and operators to completely revamp their approaches to drilling and production in that region. He said he expects similar changes will follow the current disaster.

"Piper Alpha was a turning point," the 35-year industry veteran said, with many questioning whether production from the North Sea should continue. A commission, investigating the accident, eventually recommended 106 safety "best practices", all of which were adopted by the industry.

Both Smith and Beitler said they believe the government may start to require mandatory relief wells in the deepwater Gulf of Mexico, as Canada and Norway have done off their coasts.

Beitler also predicted that another outcome of Macondo will be more standardization of well design requirements worldwide, with the U.S. adopting regulations such as requiring acoustic activators for blowout preventers.

BP Establishes $20 Billion Claims Fund for Deepwater Horizon Spill
WASHINGTON, D.C., (SLFP.com), June 17, 2010 - Following a meeting with the President of the United States, June 16, the BP Board has announced an agreed package of measures to meet its obligations as a responsible party arising from the Deepwater Horizon spill.

Agreement was reached to create a $20bn claims fund over the next three and a half years on the following basis:

BP will initially make payments of $3bn in Q3 of 2010 and $2bn in Q4 of 2010. These will be followed by a payment of $1.25bn per quarter until a total of $20bn has been paid in.
While the fund is building, BP's commitments will be assured by the setting aside of U.S. assets with a value of $20bn. The intention is that this level of assets will decline as cash contributions are made to the fund.
The fund will be available to satisfy legitimate claims including natural resource damages and state and local response costs. Fines and penalties will be excluded from the fund and paid separately. Payments from the fund will be made as they are adjudicated, whether by the Independent Claims Facility (ICF) referred to below, or by a court, or as agreed by BP.
The ICF will be administered by Ken Feinberg. The ICF will adjudicate on all Oil Pollution Act and tort claims excluding all federal and state claims.
Any money left in the fund once all legitimate claims have been resolved and paid will revert to BP.

The fund does not represent a cap on BP liabilities, but will be available to satisfy legitimate claims. Further and more detailed terms regarding the establishment and operation of the claims fund and the ICF will be finalized and announced as soon as possible.

As a consequence of this agreement, the BP Board has reviewed its dividend policy. Notwithstanding BP's strong financial and asset position, the current circumstances require the Board to be prudent and it has therefore decided to cancel the previously declared first quarter dividend scheduled for payment on 21st June, and that no interim dividends will be declared in respect of the second and third quarters of 2010.

The Board remains strongly committed to the payment of future dividends and delivering long term value to shareholders. The Board will consider resumption of dividend payments in 2011 at the time of issuance of the fourth quarter 2010 results, by which time it expects to have a clearer picture of the longer term impact of the Deepwater Horizon incident.

The Board believes that it is right and prudent to take a conservative financial position given the current uncertainty over the extent and timing of costs and liabilities relating to the spill. BP's businesses continue to perform well, with cash flows from operations expected to exceed $30bn in 2010 at current prices and margins before taking into consideration costs related to the Deepwater Horizon spill. BP's gearing level remains at the bottom of its targeted band of 20-30 per cent. In addition, the Company has over $10bn of committed banking facilities. To further increase the Company's available cash resources, the Board intends to implement a significant reduction in organic capital spending and to increase planned divestments to approximately $10bn over the next twelve months.

Chairman Carl-Henric Svanberg said: "We appreciated the constructive meeting conducted by the President and his senior advisers and are confident that the agreement announced today will provide greater comfort to the citizens of the Gulf coast and greater clarity to BP and its shareholders. We welcome the administration's statements acknowledging that BP is a strong company and that the administration has no interest in undermining the financial stability of BP. This agreement is a very significant step in clarifying and confirming our commitment to meet our obligations. We regret the cancellation and suspension of the dividends, but we concluded it was in the best interests of the Company and its shareholders."

Chief Executive Tony Hayward said: "From the outset we have said that we fully accepted our obligations as a responsible party. This agreement reaffirms our commitment to do the right thing. The President made it clear and we agree that our top priority is to contain the spill, clean up the oil and mitigate the damage to the Gulf coast community. We will not rest until the job is done."

Advertisement

The Saint Louis Front Page is owned and maintained by the Moore Design Group for the sole purpose of disseminating news and information about the Metropolitan Saint Louis area. Text or graphics may not be copied, rewritten or distributed in any manner whatsoever without written permission. For more information, contact editor@slfp.com All rights reserved world wide © 1996 - 2010 Moore Design Group.